Download - Mocha Bplan

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Mocha Café Chain

Business Plan Blue Print

Sherif Afifi

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Table of Contents

1.0 Executive Summary

1.1 Goals/Objectives

1.2 Vision, Mission and Core values

1.3 Keys to Success

2.0 Company Summary

2.1 Company Ownership

2.2 Start-up Plan

2.3 Company Locations and Facilities

3.0 Products

3.1 Product Description

3.2 Competitive Comparison

3.3 Sourcing

3.4 Technology

3.5 Future products

4.0 Market Analysis Summary

4.1 Market Segmentation

4.2 Target Market Segment Strategy

4.2.1 Market Needs

4.2.2 Market Trends

4.2.3 Market Growth

4.3 Industry Analysis

4.3.1 Industry Participants

4.3.2 Competition and Buying Patterns

4.3.4 Main Competitors

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5.0 Strategy and Implementation Summary

5.1 Strategy

5.2 Value Proposition

5.3 Competitive Edge

5.4 Marketing Strategy

5.4.1 Positioning Statements

5.4.2 Pricing Strategy

5.4.3 Promotion Strategy

5.4.4 Distribution Strategy

5.4.5 Marketing Programs

5.5 Sales Strategy

5.5.1 Sales Forecast

5.5.2 Sales Programs

5.6 Strategic Alliances

5.7 Milestones

6.0 Management Summary

6.1 Organizational Structure

6.2 Management Team

6.3 Management Team Gaps

6.4 Personnel Plan

7.0 Financial Plan

7.1 Important Assumptions

7.2 Key Financial Indicators

7.3 Break-even Analysis

7.4 Projected Profit and Loss

7.5 Projected Cash Flow

7.6 Business Ratios

7.7 Exit-Strategy

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1. Executive Summary

1.0 Executive Summary

A Drive- Thru Cafes in the most logical and accessible locations. The Drive-thru facilities are designed to

handle two-sided traffic and dispense customer-designed, specially ordered cups of premium coffees in

less time than required for a visit to the locally owned cafe or one of the international chains.

In addition to providing a quality product and an extensive menu of delicious items, to ensure customer

awareness and loyalty.

Mocha financial picture will be quite promising. Since Mocha is operating a cash business, the initial cost

is significantly less than many start-ups these days. The process is labor intensive and Mocha recognizes

that a higher level of talent is required. The financial investment in its employees will be one of the greatest

differentiators between it and Mocha`s competition. There will be minimum inventory on hand so as to

keep the product fresh and to take advantage of price drops, when and if they should occur.

Mocha chooses to become the local Drive-thru virgin of Starbucks









FY 2008 FY 2009 FY 2010


Gross Margin

Net Profit

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1.1 Goals/Objectives

strategic goals

1. To expand and diversify aggressively and offer above-average returns to shareholders

2. To become the leading company within the Food Service market segments

Mocha has established three firm objectives it wishes to achieve in the next three years:

1. Twenty five Drive-thru ,Three In-Line and Seven Mall locations by the end of the year 2010.

2. Gross Margin of 55% or more.

3. Net -Profit above 10% of Sales.

1.2 Vision

“In five years, Mocha Café International will be well established in Saudi Arabia , Known

throughout the KSA and expansion plans will be developed for company owned and

franchise locations in other GCC countries”

Company Mission

Mocha Mission is three-fold, with each being as integral to our success.

Provide customers the finest quality beverage in the most efficient time.

.Operate and grow at a profitable rate through sound economic decisions.

The high quality of attitude, fairness, understanding, and generosity between management, staff,

customers, and vendors. Awareness of all these factors and the responsible actions that result will give

our efforts a sense of purpose and meaning beyond our basic financial goals.

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Core Values

Integrity - We act with honesty and sincerity in everything we do. We say what we mean, do what we say and build confidence in our team.

Teamwork - We work towards common goals through open communication, mutual support and win-win attitudes. We respect our differences and build upon

our strengths.

Recognition - We ensure that people's individual needs and successes are

supported and recognized.

Innovation - We are open minded, challenging conventional thinking, improving

our processes and implementing new ideas faster than our competitors.

Continuous Growth - We provide an environment where our colleagues and our

business can flourish and grow.

People Focus - We focus on our colleagues, customers and business associates

and they acknowledge us as preferred partners.

1.3 Keys to Success

There are four keys to success in this business.

1. The greatest locations - visibility, high traffic pattern, convenient access.

2. The best products - freshest coffee beans, cleanest equipment, premium serving containers,

consistent flavor.

3. The friendliest servers - cheerful, skilled, professional, articulate.

4. The finest reputation - word-of-mouth advertising.

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2. Company Summary

2.0 Company Summary

Mocha is a specialty beverage retailer. Mocha provides hot and cold beverages in a convenient and time-

efficient way. Mocha provides its customers the ability to drive up and order from a trained Barista their

choice of a custom blended Latte drink, freshly brewed coffee, or other beverage. Mocha is offering a high

quality option to the fast-food and International Café.

2.1 Company Ownership

Mocha Café International is a Limited Liability Corporation. membership shares are currently owned by

Mr. Omar Sulaiman Al-Rajhi 35%

Mr. Abd Allah Al Fawzan 27.5%

Mr. Mahar Al-Rajhi 10%

Mr. Mohamed Salah El Khalil 27.5%

2.2 Start-up Summary

Mocha's start-up expenses total just SR 1,277,700. The majority of these expenses--will be used to build

the first facility, pay deposits, and provide capital for six months of operating expenses, initial inventory and

other one-time expenses.

Start-up Expenses

Cash for Invent.& Operating .Exp. .‏011,111‏‏ر.س

‏11,,,,‏‏ر.س. .Pre-Opening Exp‏

‏011,111‏‏ر.س. Concept development‏

‏311,111‏‏ر.س. Salaries‏

‏311,111‏‏ر.س. Land Lease‏

‏11,,,,0,7‏‏ر.س. Total‏

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2.3 Company Locations and Facilities

Mocha Café International will open ten-eleven drive-thru facilities, two- three mall facilities and

one in- line facility on Riyadh over the first year. Twenty five or more drive-thru facilities will be

placed throughout KSA over the next three years.

The demographic and physical requirements for a location are:

Traffic of 40,000+ on store side.

Traffic of 20,000 + for the malls.

Visible from roadway {Drive –Thru, In-Line}.

Easy access with light if less than 30,000 {Drive –Thru, In-Line}.

Suitable capacity for customers {In-Line }

Established retail shops in area.

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3.0 Products

Mocha International provides its patrons the finest hot and cold beverages, specializing in

specialty coffees and blended teas. In addition, Mocha will offer select domestic soft drinks,

Italian sodas, fresh-baked pastries and cold cuts sandwiches. Mocha will add beverages such

as hot chocolate, frozen coffees, and more.

3.1 Product Description

Mocha provides its customers, whether at a Drive-thru facility or other facility, the ability to

custom order a coffee beverage that will be blended to their exact specifications. Each of

Mocha's Baristas will be trained in the fine art of brewing, blending, and serving the highest

quality hot and cold beverages, with exceptional attention to detail.

Besides coffees, Mocha will offer teas, Italian sodas, frozen coffee beverages, pastries, cold

cuts sandwiches and other baked goods. Mocha will market premium items such as coffee

mugs, T-shirts and sweatshirts, ball caps, and more.

3.2 Competitive Comparison

Mocha considers itself to be a player in the retail coffee house industry. However, it knows that

competition for its products range from soft drinks to other beverages.

Mocha primary competition will come from three sources:

1. International coffee houses such as Starbucks, Costa Café and Dunkin Donuts.

2. Locally owned and operated cafes as Dr. Café, Coffee Day and Coffee Time etc….

3. Fast food chains and convenience stores.

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What will make Mocha Cafe stand out from all its competitors is:

Mocha Café will be providing products in the most convenient and efficient way available--ei at

one of Drive-thru shops. This separates Mocha from the competition in that its customers won't

need to find a parking place, wait in a long line, wait for a seat, and clean up the mess left by a

previous patron. Mocha customers can drive or walk up, order their beverage, receive and pay for

the beverage, and drive off.

3.3 Sourcing

Mocha purchases its coffees from LAWEIN. Mocha also has wholesale purchasing

agreements for other products with Major Brands.

Fulfillment equipment suppliers include Rezaza , joetrade and other suppliers.

Mocha's computer equipment is provided by Digicom

3.4 Technology

Mocha will be using state-of-the-art, two-sided, Drive-thru facilities to provide

convenience and efficiency for its clientele.

3.5 Future Products

As seasons change, Mocha will be offering products that will enhance sales and satisfy its

customers' desires. During summer months, Mocha will subsidize lower hot beverage sales

with frozen coffee drinks, as well as soft drinks, and other cold beverages such as

FCB{carbonated slush beverage}and FUB{uncarbonated slush beverage} . Mocha will also

have special beverages during seasons, such as Karkada, Qamar el din during Ramadan


Mocha`s primary desire will be to listen to its customers to ascertain what they are looking for

most, and provide it.

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4.Market Analysis Summary

4.0 Market Analysis Summary

Mocha International will focus on two markets:

1. The Daily Commuter- someone traveling to or from work, out shopping, looks for a

place to hangout, delivering goods or services, or just out for a drive.

2. The Captive Consumer- someone who is in a restricted environment that does not allow

convenient departure and return while searching for refreshments, or where refreshments

stands are an integral part of the environment.

4.1 Market Segmentation

Mocha will focus on two different market segments: Commuters and Captive Consumers. To

access both of these markets, Mocha has two different delivery systems. For the commuters,

Mocha has the Drive-thru and Mall coffee house. For the captive consumer, Mocha has the

Mobile Cafe.

Commuters are defined as any one or more individuals in a motorized vehicle traveling from

point "A" to point "B." Mocha's greatest concentration will be on commuters heading to or from

work, out shopping, looking for a place to hangout, or those out on their lunch break.

Captive Consumers would include those who are tethered to a campus environment, or in a

restricted entry environment that does not allow free movement to and from. Examples would

include high school and college campuses, where there is limited time between classes, and

corporate campuses where the same time constraints are involved.

4.2 Target Market Segment Strategy

Mocha's target market is the mobile individual who has more money than time, and excellent

taste in a choice of beverage, but no time to linger in a cafe. By locating the Drive-Thrus in high

traffic/high visibility areas, this unique--and abundant--consumer will seek Mocha out and

become a regular guest.

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4.2.1 Market Needs

Islamic Legislation Continues To Impact Eating-out Habits

Saudi Arabia is a very strict Islamic country and is governed according to Islamic rules and

legislation. Consumption of alcohol is forbidden in the country, which has resulted in the non-

existence of bars and pubs in the country. Furthermore, cinemas, entertainment clubs and other

activity related clubs are illegal therefore dining out is the only source of entertainment outside of

the home. However, the separation of men and women has a detrimental effect on the

performance of some types of consumer foodservice outlets, for example women are not

allowed to consume meals in full-service restaurant outlets unless accompanied by a male

member of their family, which limits their ability to eat in such an outlet to either the evening or



Despite anticipation of legal reform in Saudi Arabia and the implementation of more liberal

legislation, it is not expected that such reform will take place in the near future, thus eating out

and for example frequenting coffee shops outlets is expected to remain as one of the only

sources of entertainment over the forecast period. This is expected to have a positive effect on

the expansion of shopping centers in Saudi Arabia, as people will choose to gather in shopping

centers and spend time with their friends and family.


The restrictions on various types of entertainment and the strict Islamic legislation in Saudi

Arabia have a positive impact on consumer foodservice overall, as the lack of cinemas, night

clubs, recreational parks and other such entertainment related establishments has increased the

popularity of consumer foodservice outlets such as cafés outlets, fast food outlets and full-

service restaurants outlets.

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Changes to Lifestyles Drive Growth

Similarly to in other parts of the world, consumer lifestyles in Saudi Arabia have undergone

change, from traditional to modern. Increased exposure to expatriates, predominantly from the

Western world, has led to changes in lifestyle among the local population, with people adopting a

more westernized lifestyle.

The number of expatriates in the kingdom exceeds six million people comprised of Asian

expatriates, Arab expatriates and Western expatriates from Europe and the US. The diversity of

the community in Saudi Arabia has contributed to the increase in popularity of sectors such as

full-service restaurants, for example outlets that serve Indian, Indonesian and other types of

Asian food, cafés/bars, fast food and 100% home delivery/take away.


Despite the trend in Saudi Arabia towards nationalization, the economy of Saudi Arabia is

expected to remain dependent on foreign labor and therefore the change in lifestyles, towards

modern lifestyles, is expected to accelerate over the forecast period.


The impact of the change in lifestyles of local consumers and the continued steady influx of

expatriates are expected to be most obvious in certain sectors of consumer foodservice, such as

fast food and full-service restaurants. Demand for food from such channels will come mainly

from Asian and Western expatriates and local consumers with high incomes.

It is also expected that 100% home delivery/take away will witness much stronger growth over

the forecast period as a result of the change in lifestyles of local people who are expected to

increasingly favor freshly prepared meals from this channel.

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Demographic Changes Boost Value Sales of Consumer Foodservice

In 2005 Saudi Arabia experienced the second strongest demographic growth among the

countries in the Middle East. Since 1980 it has witnessed average annual growth in its

population of over 4%, so that in 2006 the total population was approximately 24,891 million.

Saudi Arabia has a young population, as around 52% of the total population is comprised of 15-

to-64-year-old citizens, many of whom work. This and the strong expatriate community in Saudi

Arabia are demographic factors that have contributed to the strong growth of fast food. Chained

fast food outlets are popular with young citizens, especially students, as they offer rapidly

served, inexpensive meals and they provide an informal location in which young people can

spend time with their friends. Most fast food outlets also contain a play area, which encourages

families with children to visit fast food outlets rather than other types of consumer foodservice

outlets such as full-service restaurants outlets.


The working age population of Saudi Arabia, namely 15-to-64-year old citizens, is expected to

increase from over 14 million in 2006 to well over 18 million in 2015 at an average annual growth

rate of 3%. The population of Saudi Arabia is expected to remain relatively young and thus to

further drive the growth of consumer foodservice. All sectors of consumer foodservice are

expected to record positive constant value growth over the forecast period owing to these

demographic factors.


While these demographic factors are expected to continue to have a positive impact on value

sales of consumer food service over the forecast period, they are expected to particularly benefit

fast food and cafés/bars, owing to the popularity of chained fast food outlets and cafés outlets

among the younger generation and citizens of working age, who are keen to mix with different

cultures and adopt a Western lifestyle.

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Innovation and Diversification Play a Central Role in Competition

Competition in consumer foodservice in Saudi Arabia is intense especially among multinational

brands. The ever-increasing popularity of consumer foodservice is placing pressure on all

players. Therefore, marketing and public relations play a major role in helping to increase

awareness of specific brands and to increase their value as a result.

TV advertising and printed marketing alone is not sufficient to maintain a strong position in

consumer foodservice in Saudi Arabia due to the escalating competition. As a result companies

are forced to be more innovative with regard to their product offerings and to focus on the needs

of consumers, for example by using more local ingredients and local flavors, as well as to target

specific consumer groups.


Competition between the different players in consumer foodservice is expected to continue and

to increase over the forecast period in line with the growth of consumer foodservice, owing to

expansion in the product portfolios of existing brands and the entrance of new brands.

The number of shopping centers is also expected to increase over the forecast period, mainly

due to the extremely hot climate and this is also expected to affect the level of competition

between leading brands such as Starbucks, Burger King and McDonald’s and between local

brands such as Herfy and Mochachino, as they strive to establish greater presence.


The impact of competition on consumer foodservice is positive and is expected to be to the

benefit of consumers. As traditional methods of marketing such as TV advertising and printed

advertising is not enough, players are expected to become more innovative. For example,

greater diversification of menu choices, adoption of local products and ingredients and more

generous rewards and promotions will be key. Furthermore, renovation of outlets and the offer of

more facilities such as access to the internet and home delivery will hugely contribute to the

success of a brand.

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4.2.2 Market Trends

Consumer Foodservice Achieves Rapid Growth

Consumer foodservice has grown rapidly in Saudi Arabia, driven by increases in the GDP, which

have been fuelled by rising oil prices and which have led to higher disposable incomes for all

citizens. This growth has also been supported by the strong culture of eating out, which provides

citizens with one of the few sources of entertainment, owing to the absence of bars and pubs in

Saudi Arabia.

Religious Tourism Has A Positive Impact

More than two million people visit Saudi Arabia on an annual basis during the Hajj season. In

addition, approximately another million people visit the country throughout the year to perform

Umrah with the highest number of visitors arriving during the holy month of Ramadan.

The high number of visitors, whether for religious or other reasons, has a large and positive

effect on the performance of consumer foodservice, especially sectors such as fast food, full-

service restaurants and cafés/bars (owing to the popularity of coffee shops).

Increasing Popularity of Shopping Centers

The number of large-scale developments for shopping centers in all regions of Saudi Arabia increased significantly over the review period. This has boosted the popularity of fast food outlets, coffee shop outlets and ice cream parlours in particular. Due to the extremely hot climate, many people tend to stay indoors where there is air-conditioning, for example in shopping centers, which is a major reason for the increasing popularity of shopping centres in Saudi Arabia. The lack of entertainment options has also given shopping centres an edge, as people often opt to socialize in them. A large number of new shopping centers are expected to open in Saudi Arabia over the forecast period

4.2.3 Market Growth

Overall growth was seen throughout the foodservice industry in 2006 with increases in both General value sales for consumer foodservices as well as outlet numbers. Among the different sectors, café are achieving the highest growth rates; however, other sectors Including fast food and full-service restaurants continue to perform well. Strong expansion strategies for chained outlets to expand across the Kingdom has enabled them to capture a Wider market and aided in the growth in value terms.

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Table 1 Units, Transactions and Value Sales in Consumer Foodservice: 2001-2006

2001 2002 2003 2004 2005 2006 Units 11,605.0 12,173.0 12,706.0 13,170.0 14,256.0 14,730.0 Transactions (mn) 1,333.6 1,424.1 1,517.0 1,585.8 1,707.2 1,799.2 SR million current prices 12,689.1 13,504.2 14,423.6 15,332.8 16,758.9 17,683.5 SR million constant 12,689.1 13,473.2 14,306.6 15,158.3 16,450.4 17,186.2 prices Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor

International estimates

Table 2 Units, Transactions and Value Sales in Consumer Foodservice: % Growth 2001-2006

% growth 2005/06 2001-06 CAGR 2001/06 TOTAL Units 3.3 4.9 26.9 Transactions 5.4 6.2 34.9 Value current prices 5.5 6.9 39.4 Value constant prices 4.5 6.3 35.4 Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor

International estimates

4.3 Industry Analysis

The coffee industry has grown by tremendous amounts in K.S.A. over the past five years. Even

general coffee sales have increased with international brands such as Folgers, and Maxwell

House reporting higher sales and greater profits.

KSA is definitely a coffee country and the coffee industry is reaping the rewards.

Consumer Foodservice by Independent Vs Chained Outlets: Units/Outlets 2006

outlets Independent Chained Total Consumer foodservice by type and 11,674 3,056 14,730 chained/independent Cafés/bars 1,549 189 1,738 Full-service restaurants 776 274 1,050 Fast food 8,982 2,371 11,353 100% home delivery/takeaway - 63 63 Self-service cafeterias 8 22 30 Street stalls/kiosks 359 137 496 Pizza consumer foodservice 107 269 376 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International


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Consumer Foodservice by Eat in Vs Takeaway 2006

% value analysis Eat in Takeaway Total 100% home delivery/takeaway - 100.0 100.0 Cafés/bars 91.6 8.4 100.0 Consumer foodservice by type and 73.6 26.4 100.0 chained/independent Fast food 63.0 37.0 100.0 Full-service restaurants 93.0 7.0 100.0 Self-service cafeterias 74.6 25.4 100.0 Street stalls/kiosks - 100.0 100.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International


Consumer Foodservice by Food Vs Drinks Split 2006

% value analysis Food Drink Total 100% home delivery/takeaway 95.0 5.0 100.0 Cafés/bars 63.0 37.0 100.0 Consumer foodservice by type and 73.1 26.9 100.0 chained/independent Fast food 75.5 24.5 100.0 Full-service restaurants 71.0 29.0 100.0 Self-service cafeterias 70.5 29.5 100.0 Street stalls/kiosks 55.0 45.0 100.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International


Sales in Consumer Foodservice by Location 2001-2006

% value 2001 2006 Stand-alone 56.7 52.5 Retail 21.6 25.6 Travel 11.6 9.8 Leisure 4.1 4.9 Hotels 6.1 7.2 Total 100.0 100.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International


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Eating out patterns differ in Saudi Arabia The consumer foodservice industry increased by 36% in terms of outlets, 45% for transactions and 44% in value sales over the review period. Eating out patterns differ from other countries in the Middle East and North Africa. Islamic regulations forbid serving alcohol in any restaurants or public premises. Therefore, there are no bars or pubs in the Kingdom. Foodservice restaurants are required to diversify by finding products other than alcohol to attract consumers. Most restaurants also try to adapt to the traditions and cultures in Saudi Arabia, by for example, having separate sections for men, women and families allowing the two groups to use different

entrances to the outlet.

Great potential in the Saudi Arabian industry Growth of the consumer foodservice industry was dynamic over the review period. In value terms, sales reached SR20 billion in 2004 demonstrating a constant CAGR of 7%. This was mainly due to strong population growth. 8,400 units operating in 2004 generated 1 billion transactions in the year. Eating out is a very important leisure activity among Saudi Arabians as there is not much entertainment at night. Families like to go out to a restaurant, especially at weekends as a change from dining at home. As outings are restrained, and women are not allowed to go out alone, eating out becomes the main activity at the weekend along with shopping.

Fast food popular among young Saudi Arabians and families Fast food was the most popular area within the consumer foodservice industry during the review period. Fast food registered 45% growth in outlets, 51% and 57% in transactions and value sales respectively. Fast food chains are very popular among the young generations, especially students, who have a lot of spare time and like to meet at night for a quick meal. In addition, satellite TV channels are a great influence towards Western trends in fast food such as McDonald’s and KFC. However, the boycotting of American companies affected their sales during the review period, although they recovered in 2004. Families also prefer fast food to full-service restaurants, as the whole family can dine together. International brands are the most popular although they face stiff competition from Saudi chains and independent fast food. Saudi chains offer Arabic food and are very popular especially in chicken fast food. Saudi investors are aggressive with regard to marketing and many Saudi chains now have a presence in Egypt,

Lebanon, Kuwait, and countries in Asia.

Saudi Government consolidates efforts to attract more tourists There are more than 10,000 natural, historical and cultural sites in Saudi Arabia. The Kingdom also plays host to 534 literary and story-telling events and 61 folklore festivals, including the annual Janadriyah festival. The Kingdom needs an additional 50,000 hotel rooms and 74,000 furnished units by 2020 to meet the expected growth in the number of tourists as well as to service domestic tourists. Saudi Arabians had been spending more than $25 billion on foreign tourism at the beginning of the review period, although many stopped visiting America and Europe for holidays, partly after 11 September 2001 and partly for economic reasons. The arrival of more tourists is welcomed by the foodservice industry. When group’s of tourists come for the Hajj, it is common for travel agencies to order menus from delivery outlets for the entire group for

the duration of the visit.

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4.3.1 Industry Participants

Leading Chained Café/bars Brands by Number of Units 2006

Brand Global Brand Owner outlets Cone Zone Cone Zone Co 250 Baskin-Robbins Dunkin' Brands Inc 165 House of Donuts House of Donuts 115 Seattle's Best Coffee Focus Brands Inc 71 Mövenpick Mövenpick 55 Holding AG Starbucks Starbucks Corp 50 Restaurant Co Dunkin' Donuts Dunkin' Brands Inc 34

Consumer Foodservice by Independent Vs Chained Outlets: Units/Outlets 2006

outlets Independent Chained Total chained/independent Cafés/bars 1,549 189 1,738

4.3.2 Competition and Buying Patterns

There are four general competitors in Mocha's drive-thru market. They are the international

specialty beverage chains, such as Starbucks and Costa Café, local coffee houses--or cafes--

with an established clientele and a quality product, fast food restaurants, and convenience

stores. There is a dramatic distinction among the patrons of each of these outlets.

Patrons to a Starbucks, or to one of the local cafes, are looking for the "experience" of the coffee

house. They want the ability to "design" their coffee, smell the fresh pastry, listen to the soothing

music, and read the local paper or visit with an acquaintance. It is a relaxing, slow paced


Patrons of the fast food restaurants or the convenience stores are just the opposite. They have

no time for idle chatter and are willing to over-pay for whatever beverage the machine can spit

out, as long as it's quick. They pay for their gas and they are back on the road to work. Although

they have the desire and good taste to know good from bad, time is more valuable to them.

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Competitors to the Mobile Cafes on campuses would include fast food restaurants--assuming

they are close enough to the consumer that they can get there and back in the minimal allotted

time, vending machines, and company or school cafeterias. The consumers in this environment

are looking for quick, convenient, fairly priced, quality refreshment that will allow them to

purchase the product and return to work, class, or other activity.

4.3.4 Main Competitors

When measuring head-to-head, direct competitors, we have found that there are none in the

area. Mocha will be the first double-sided, drive-thru coffee house in the area. However, there is

still significant competition from traditional coffee houses and other retailers.

International Chains:

Starbucks, one of the international leaders with 50 outlets across the kingdom

Seattle's Best Coffee from 71 franchised locations in fiscal year 2006. Dunkin Donuts with 34


Mocha believes it has a significant competitive advantage over these chains because of the

following benefits:

Drive-thru Service

More Substantial Customer Service

Community Benefit


Higher Product Quality

Local Cafes:

The toughest competitor for Mocha is the established locally owned cafe. Mocha knows the

quality and pride that the local cafe has in the product purchase by their customers. Any local

cafe has a customer base that is dedicate. The quality of beverages served at an established

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cafe will surpass any of the international chains.

The competitive edge Mocha has on the local cafes is based on the attributes of:

Drive-thru Service

Consistent Menu

Quality Product

Drive-thru Coffee Houses:

There is not a drive-thru specialty beverage retailer with significant market presence in KSA. The

only company with similar depth to that of Mocha is Dr. Cafe; However, Dr.Cafe has limited its

corporate footprint to Mid-Region and the Western Region.

In the drive-thru specialty beverage market, Mocha has a competitive edge over the smaller

retailers, and even Dr. Cafe , due to:

Consistent Menu

Quality Product

Supply Discounts

Valued Image

Greater Product Selection

Fast Food and Convenience Stores:

These are two industries where Mocha will experience a certain level of competition. The

international fast food chains and convenience store chains already serve coffee, soda, and

some breakfast foods. The international fast food chains obviously know the benefits and value

to customers of drive-thru. Mocha knows that within the specialty coffee and tea market, the

quality of the products sold will be much greater than what can currently be purchased at fast

food and convenience stores. Mocha knows the quality of our products, along with the addition

of domestic soft drinks and the ease of drive-thru, gives it a competitive edge over fast food and

convenience stores.

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Other competition:

The Mocha knows that once it has entered the market and established a presence, others will try

to follow. However, Mocha believes that the corporate missions and even the organizational

design will be imitated, but never duplicated. Mocha will constantly evaluate its products,

locations, service, and corporate missions to ensure that it remains a leader in the specialty

beverage industry

5.Strategy and Implementation Summary

5.0 Strategy and Implementation Summary

Mocha will penetrate the commuter and captive consumer markets by deploying Drive-thru ,mall

,In-Line facilities and Mobile Cafes in the most logical and accessible locations. The Drive-thrus

are designed to handle two-sided traffic and dispense customer-designed, specially ordered

cups of specialty beverages in less time than required for a visit to the locally owned cafe or one

of the national chains.

Mocha has identified its market as busy, mobile people whose time is already at a premium, but

desire a refreshing, high quality beverage or baked item while commuting to or from work.

In addition to providing a quality product and an extensive menu of delicious items, to ensure

customer awareness and loyalty, as well as positive word of mouth and four walls marketing.

5.1 Strategy Pyramids

Mocha's strategy is to show people that it has an excellent product and convenient accessibility.

Page 24: Mocha Bplan


To execute on this strategy, Mocha is placing the Drive-thrus and Mobile Cafes at easily

accessible locations throughout the country. Mocha is pricing its product competitively and

training the production staff to be among the best Baristas in the country. Then, through coupons

and display ads at the locations,

In so doing, Mocha has:

1. Provided a customer with a quality product at a competitive price.

2. Provided the customer with a more convenient method for obtaining their desired


3. Provided the customer direct -mailing programs and community involvement programs.

5.3 Value Proposition

The Drive-thru facilities provide a substantial value proposition in that the customer does not

have to find a parking place, exit the vehicle, stand in line to order, wait for the beverages ahead

of him to be produced, pay a premium price for average product, find a place to sit, clean up the

previous patron's mess, then enjoy their coffee ... assuming they have sufficient time to linger

over the cup.

Mocha concept is that the customer drives up, places the order, receives a high quality product

at a competitive price, and drives away, having wasted little time in the process.

5.3 Competitive Edge

Mocha's competitive edge is simple. Mocha International provides a high quality product at a

Competitive price in a Drive-thru environment that saves time.

5.4 Marketing Strategy

First and foremost, Mocha will be placing its facilities in locations of very high visibility and great

ease of access. They will be located on high traffic commuter routes and close to shopping

facilities in order to catch customers going to or from work, or while they are out for lunch, or on

a shopping expedition. The Drive-thrus are very unique and eye-catching, which will be a

branding feature of its own.

Page 25: Mocha Bplan


Mocha will be implementing a low cost advertising/promotion campaign which could involve

drive-time radio, but not much more.

Mocha Word of mouth has always proven to be the greatest advertising program a company can


5.4.1 Positioning Statements

For busy, mobile people whose time is already at a premium, but desire a refreshing,

high quality beverage or baked item while commuting to or from work.

For our most important target market who crave new coffeehouse option Mocha satisfies

that need. We will offer the customer an experience unlike anything he has currently


5.4.2 Pricing Strategy

Mocha pricing will be comparable to the competition, but with the value-added feature of

immediate, drive-thru service and convenience.

Our food and drinks options are priced to give us an attractive margin while at the same time

offering value to the consumer. We want repeat business. We also want the experience to

remain fresh

5.4.3 Promotion Strategy

We will promote our company name almost more than the product itself, because to be successful we have to stand for brand –name integrity and excellent menu offerings. therefore , our promotion strategy including focusing on

1. Local radio concentrating on drive time radio Mocha will experiment with different stations, keeping careful track of results

2. Mocha expects the facilities and signage to be a substantial portion of our advertising.

However, in the start-up phase, Mocha needs to let people know where to look for the


Page 26: Mocha Bplan


5.4.4 Distribution Strategy

Mocha will locate Drive-thru facilities in high traffic areas of the city where it knows working

commuters will be passing.

Mocha will also make arrangements for the Café units to be at as many Malls , Residential,

businesses areas and events as possible every year, so that new customers, those who come in

from areas where Mocha may not have a Drive-thru facility, can be reached and those who didn't

have the time to stop

5.4.5 Marketing Programs

Advertising and Promotion:

In the first year, Mocha plans to spend S.R.98, 000 on advertising and promotion, after the

opening of the first Drive-thru. This would not be considered a serious advertising budget for any

business, but Mocha also believes that word-of-mouth advertising and free beverage coupons

will be better ways to drive people to the first and second locations.

In the second year, Mocha is increasing the budget to S.R. 236, 000, since it will need to

promote several locations, with particular emphasis on announcing these openings and all the

other locations. .

In the third year, Mocha will increase its advertising and promotion budget to S.R.418, 000, with

the majority of the advertising budget being spent on drive time radio. As in the previous years.

5.5 Sales Strategy

There will be several sales strategies put into place, including posting specials on high-profit

items at the drive-up window. The Baristas will also hand out free drink coupons to those who

have purchased a certain number of cups or something similar. Mocha will also develop window

sales techniques such as the Baristas asking if the customer would like a fresh-baked item with

their coffee.

Page 27: Mocha Bplan


5.5.1 Sales Forecast

In the first year, Mocha anticipates having 7 Drive-thru locations, 2 Mall locations and one In –

Line location in operation. The first location will open in the first month of the year 2008 and be

fully operational beginning on the 1st day of July2008. The second Drive-thru will open 1 month

later. Mocha is building in a certain amount of ramp-up for each facility while commuters become

familiar with its presence. The Outlets will generate 365,000 Transactions in the first year of

operation, or approximately SR. 4.9 million in revenue.

In the second year, Mocha will add two more Outlets and, in the third year, Mocha will add an

additional 13 outlets with different facilities. The addition of these facilities will increase the

revenue from a total of over 858000 Transactions or SR .11.8 million in the second year and

1,469,600 Transactions or just over Sr.20 million in the third.

Mocha is also showing revenue from the commerce portion of our website, where it will sell

"Mocha" t-shirts, sweatshirts, insulated coffee mugs, pre-packaged coffee beans, and other

premium items. Mocha is not expecting this to be a significant profit center, but it is an integral

part of the marketing plan -- as a function of developing our brand and building product

awareness. Mocha expects revenues from this portion, to begin in the second fiscal year, to

reach SR. 44000 initially, and SR.82, 500 in the third fiscal year.

Total first year unit sales should reach 365,000, equating to revenues of SR.4, 905,000. The

second year will see unit sales increase to 858,000, or SR.11, 828,000. The third year, with the

addition of such a significant number of outlets, we will see unit sales increase to 1,469,600,

equating to gross sales revenue of SR.20,922,600 million

Page 28: Mocha Bplan


Sales Yearly

Sales Forecast

FY 2008 FY 2009 FY 2010


Drive-thru #1 54,000 64,800 74,520

Drive-thru #2 44,000 52,800 60,720

Drive-thru #3 40,000 48,000 55,200

Drive-thru #4 36000 43,200 49,680

Drive-thru #5 20000 24,000 27,600

Drive-thrus #6 & #7 56000 67,200 77,280

Drive-thrus #8, #9, & #10 0 132000 151,800

Drive-thrus #11, #12, & #13 0 108000 124,200

Drive-thrus #14, #15, & #16 0 96000 110,400

Drive-thrus #17, #18, & #19 0 0 132,000

Drive-thrus #20, #21, & #22 0 0 120,000

Drive-thrus #23, #24, & #25 0 0 108,000

1‏‏.س.ر ‏

5,111,111‏‏.س.ر ‏

01,111,111‏‏.س.ر ‏

05,111,111‏‏.س.ر ‏

71,111,111‏‏.س.ر ‏

75,111,111‏‏.س.ر ‏

10 outlets 12 outlets 13 outlets

FY 2008 FY 2009 FY 2010

Website Sales/Premium Items

In-Line Cafe #1,#2,#3

Mall Cafe #5 ,#6 ,#7

Mall Cafe #3 ,#4

Mall Cafe #1 ,#2

Drive-thrus #23, #24, & #25

Drive-thrus #20, #21, & #22

Drive-thrus #17, #18, & #19

Drive-thrus #14, #15, & #16

Drive-thrus #11, #12, & #13

Drive-thrus #8, #9, & #10

Drive-thrus #6 & #7

Drive-thru #5

Drive-thru #4

Drive-thru #3

Drive-thru #2

Drive-thru #1

Page 29: Mocha Bplan


Mall Cafe #1,#2 70,000 84,000 96,600

Mall Cafe #3,#4 0 60,000 69,000

Mall Cafe #5,#6,#7 0 0 90,000

In-Line Cafe #1,#2,#3 45000 74000 115,100

Website Sales/Premium Items 0 4,000 7,500

Total Transactions 365,000 858,000 1,469,600

Unit Prices

FY 2008 FY 2009 FY 2010

Drive-thru #1 .‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏03.11‏‏ر.س

Drive-thru #2 .‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏03.11‏‏ر.س

Drive-thru #3 .‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏03.11‏‏ر.س

Drive-thru #4 .‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏03.11‏‏ر.س

Drive-thru #5 .‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏03.11‏‏ر.س

Drive-thrus #6 & #7 .‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏03.11‏‏ر.س

Drive-thrus #8, #9, & #10 .‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏1.11‏‏ر.س Drive-thrus #11, #12, & ‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏1.11‏‏ر.س. #13Drive-thrus #14, #15, & ‏00.11‏‏ر.س. ‏03.51‏‏ر.س. ‏1.11‏‏ر.س. #16Drive-thrus #17, #18, & ‏00.11‏‏ر.س. ‏1.11‏‏ر.س. ‏1.11‏‏ر.س. #19Drive-thrus #20, #21, & ‏00.11‏‏ر.س. ‏1.11‏‏ر.س. ‏1.11‏‏ر.س. #22Drive-thrus #23, #24, & ‏00.11‏‏ر.س. ‏1.11‏‏ر.س. ‏1.11‏‏ر.س. #25

Mall Cafe #1,#2 .‏05.11‏‏ر.س. ‏00.51‏‏ر.س. ‏00.11‏‏ر.س

Mall Cafe #3,#4 .‏05.11‏‏ر.س. ‏00.51‏‏ر.س. ‏1.11‏‏ر.س

Mall Cafe #5,#6,#7 .‏05.11‏‏ر.س. ‏1.11‏‏ر.س. ‏1.11‏‏ر.س

In-Line Cafe #1,#2,#3 .‏05.11‏‏ر.س. ‏05.11‏‏ر.س. ‏05.11‏‏ر.س

Website Sales/Premium Items .‏00.11‏‏ر.س. ‏00.11‏‏ر.س. ‏1.11‏‏ر.س

A/C .‏80.41‏‏ر.س. ‏83.31‏‏ر.س. ‏83.31‏‏ر.س

Page 30: Mocha Bplan


Sales FY 2008 FY 2009 FY 2010

10 outlets 23 outlets 35 outlets

Drive-thru #1 .‏0,103,741‏‏ر.س. ‏4,0,411‏‏ر.س. ‏17,111,‏‏ر.س

Drive-thru #2 .‏451,141‏‏ر.س. ‏07,411,‏‏ر.س. ‏5,7,111‏‏ر.س

Drive-thru #3 .‏7,411,,‏‏ر.س. ‏004,111‏‏ر.س. ‏571,111‏‏ر.س

Drive-thru #4 .‏025,571‏‏ر.س. ‏543,711‏‏ر.س. ‏004,111‏‏ر.س

Drive-thru #5 .‏340,011‏‏ر.س. ‏370,111‏‏ر.س. ‏701,111‏‏ر.س

Drive-thrus #6 & #7 .‏0,140,271‏‏ر.س. ‏711,,21‏‏ر.س. ‏74,111,‏‏ر.س

Drive-thrus #8, #9, & #10 .‏7,075,711‏‏ر.س. ‏47,111,,0‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #11, #12, & #13 .‏34,411,,0‏‏ر.س. ‏0,054,111‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #14, #15, & #16 .‏0,505,011‏‏ر.س. ‏0,720,111‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #17, #18, & #19 .‏0,404,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #20, #21, & #22 .‏0,041,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #23, #24, & #25 .‏0,507,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Mall Cafe #1,#2 .‏0,002,111‏‏ر.س. ‏0,704,111‏‏ر.س. ‏241,111‏‏ر.س

Mall Cafe #3,#4 .‏0,135,111‏‏ر.س. ‏4,1,111‏‏ر.س. ‏1‏‏ر.س

Mall Cafe #5,#6,#7 .‏0,351,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

In-Line Cafe #1,#2,#3 .‏70,511,,0‏‏ر.س. ‏0,001,111‏‏ر.س. ‏0,5,111‏‏ر.س

Website Sales/Premium Items .‏47,511‏‏ر.س. ‏00,111‏‏ر.س. ‏1‏‏ر.س

Total Sales ‏‏ر.س.

‏71,277,011‏‏ر.س. ‏00,474,111‏‏ر.س. ‏0,215,111

Direct Unit Costs

FY 2008

FY 2009

FY 2010

Drive-thru #1 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Drive-thru #2 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Drive-thru #3 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Drive-thru #4 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Drive-thru #5 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Drive-thrus #6 & #7 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Drive-thrus #8, #9, & #10 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏1.11‏‏ر.س

Drive-thrus #11, #12, & #13 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏1.11‏‏ر.س

Drive-thrus #14, #15, & #16 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏1.11‏‏ر.س

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Drive-thrus #17, #18, & #19 .‏0.15‏‏ر.س. ‏1.11‏‏ر.س. ‏1.11‏‏ر.س

Drive-thrus #20, #21, & #22 .‏0.15‏‏ر.س. ‏1.11‏‏ر.س. ‏1.11‏‏ر.س

Drive-thrus #23, #24, & #25 .‏0.15‏‏ر.س. ‏1.11‏‏ر.س. ‏1.11‏‏ر.س

Mall Cafe #1,#2 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Mall Cafe #3,#4 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏1.11‏‏ر.س

Mall Cafe #5,#6,#7 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏1.11‏‏ر.س

In-Line Cafe #1,#2,#3 .‏0.15‏‏ر.س. ‏,5.2‏‏ر.س. ‏0.17‏‏ر.س

Website Sales/Premium Items .‏0.51‏‏ر.س. ‏0.51‏‏ر.س. ‏1.11‏‏ر.س

‏ ‏ Direct Cost of Sales‏

FY 2008

FY 2009

FY 2010

Drive-thru #1 .‏051,025‏‏ر.س. ‏015,,34‏‏ر.س. ‏375,103‏‏ر.س

Drive-thru #2 .‏350,,30‏‏ر.س. ‏305,700‏‏ر.س. ‏700,441‏‏ر.س

Drive-thru #3 .‏333,201‏‏ر.س. ‏740,501‏‏ر.س. ‏701,411‏‏ر.س

Drive-thru #4 .‏311,500‏‏ر.س. ‏210,,75‏‏ر.س. ‏71,,700‏‏ر.س

Drive-thru #5 .‏000,241‏‏ر.س. ‏003,741‏‏ر.س. ‏071,011‏‏ر.س

Drive-thrus #6 & #7 .‏500,,00‏‏ر.س. ‏010,040‏‏ر.س. ‏071,,33‏‏ر.س

Drive-thrus #8, #9, & #10 .‏204,321‏‏ر.س. ‏44,101,‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #11, #12, & #13 .‏50,001,‏‏ر.س. ‏01,,000‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #14, #15, & #16 .‏271,,00‏‏ر.س. ‏5,3,071‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #17, #18, & #19 .‏24,011,‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #20, #21, & #22 .‏70,111,‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Drive-thrus #23, #24, & #25 .‏053,011‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Mall Cafe #1,#2 .‏540,031‏‏ر.س. ‏510,041‏‏ر.س. ‏070,011‏‏ر.س

Mall Cafe #3,#4 .‏051,,00‏‏ر.س. ‏354,711‏‏ر.س. ‏1‏‏ر.س

Mall Cafe #5,#6,#7 .‏500,511‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

In-Line Cafe #1,#2,#3 .‏020,355‏‏ر.س. ‏41,,000‏‏ر.س. ‏7,1,211‏‏ر.س

Website Sales/Premium Items .‏51,,04‏‏ر.س. ‏70,111‏‏ر.س. ‏1‏‏ر.س

Subtotal Direct Cost of Sales .‏4,420,010‏‏ر.س. ‏5,070,072‏‏ر.س. ‏733,,7,02‏‏ر.س

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5.5.2 Sales Programs

Corporate Tasting Events- Mocha plans to host tasting events for customers on a quarterly

basis. Each quarter, at the introduction of each season, Mocha will be adjusting its menu to

reflect the changes in the flavors served.

Drink Coupons- We will be giving away drink coupons as awards. This encourages the person

to come in for their free beverage and bring a friend or buy a baked item or a package of our

premium coffee. The Drive Thru units will also be distributing coupons for special menu items or

new product introductions.

5.6 Strategic Alliances

Mocha will depend heavily on alliances with its core suppliers and we will always search for new

alliances with other brands, as well as our alliances with the Drive-thru facility manufacturers and

consumable products providers. However, we will always be looking for better quality products,

more favorable pricing, or more timely delivery from other potential alliances.

5.7 Milestones

The Milestone table reflects critical dates for launching the first Drive-thru and subsequent Drive-

thrus, as well as deployment of the other units. Mocha also defines our website launch, and

other key markers that will help us measure our success in time and accomplishment.

Page 33: Mocha Bplan


Milestone Start Date End Date Budget Manager

Open First Drive-thru 1/11/2007 1/1/2008 .‏055,111‏‏ر.س Ops

Open Second Drive-thru 1/12/2007 1/2/2008 .‏055,111‏‏ر.س Ops

Open Third Drive-thru 1/12/2007 1/3/2008 .‏055,111‏‏ر.س Ops

Open Fourth Drive-thru 1/3/2008 1/4/2008 .‏055,111‏‏ر.س Ops

Open Fifth Drive-thru 1/5/2008 1/6/2008 .‏055,111‏‏ر.س Ops

Open Drive-thrus 6 and 7 1/6/2008 1/8/2008 .‏301,111‏‏ر.س Ops

Open Drive-thrus 8, 9 and 10 1/10/2008 1/1/2009 .‏005,111‏‏ر.س Ops

Open Mall Cafe #1,#2 1/4/2008 1/7/2008 .‏321,111‏‏ر.س Ops

Expand to Eastern Region 1/1/2009 1/3/2009 .‏301,111‏‏ر.س Ops

Light Website 6/1/2009 8/15/2009 .‏05,111‏‏ر.س Ops

Open First Franchise 1/2/2011 1/3/2011 .‏055,111‏‏ر.س Finance

Initiate Exit Strategy 10/1/2010 1/1/2011 .‏05,111‏‏ر.س Finance



Page 34: Mocha Bplan


6.0 Management Summary

Mocha is a relatively flat organization. Overhead for management will be kept to a minimum and

all senior managers will be "hands-on" workers. There is no intention of having a top-heavy

organization that drains profits and complicates decisions.

At the zenith of this three-year plan, there will be four "Executive" positions: General Manager,

Financial Manager, Operations Manager and Marketing Manager. There will be other mid-

management positions, such as Purchasing Manager and district managers for every four Drive-

thrus, and a facilities manager to oversee the maintenance and stocking of the Cafes, as well as

overseeing the maintenance and replacement of equipment in the outlets.

6.1 Organizational Structure

The organization will be a relatively flat one, since the majority of personnel are involved in

production and there will be a relatively low headcount in management.

There are three functioning groups within the company: Operations, Sales and Marketing, and

General and Administrative. For purposes of this plan--and to show the details of adding senior

level management—Mocha has broken management down as a separate segment, but it is an

integral part of the General and Administrative function.

Operations involve the Baristas, or Customer Service Specialists, who will be manning the Drive-

thrus and Mobile Cafes and blending the beverages for the customers. Sales and Marketing will

handle the promotion and scheduling of the Mobile Cafes, as well as the promotion of the Drive-

thrus and the Community Contribution program. General and Administrative manage the

facilities, equipment, inventory, payroll, and other basic, operational processes.

6. Management Summary

Page 35: Mocha Bplan


6.3 Management Team Gaps

Mocha knows that it is going to require several quality management team members over the

next three years, beginning with a district manager for every four Drive-thrus. This person will

oversee the quality of product, the training of the Baristas, the inventory management, and

customer satisfaction. Ideally, as Mocha grows, it will be able to promote from within for this

position. This individual will be responsible for the operation of up to four drive-thrus under his

management. They will be required to visit between locations and possibly even join

administrative personnel on training or marketing travel. Clearly, as the need arises, these

individuals will ideally be selected from the operations team.

By the beginning of the third year, Mocha will hire three key senior managers. They are: an

Operations Manager, Financial Manager, Marketing Manager, The role of each of these

individuals will be discussed in subsequent sections of this plan.

6.4 Personnel Plan

Mocha expects the first year to be rather lean, since there will only be ten locations and one

mobile unit--none of which will be deployed for the entire year. The total headcount for the first

year, including management, administrative support, and customer service (production), will be

46, with a total payroll of 762,00

The second year, with the addition of 12 units, Mocha will add customer service personnel, as

well as 2 district managers and some additional support staff at headquarters, including an GM,

Inventory Clerk, Equipment Technician, and administrative support. The headcount will increase

by nearly 124% in the second year to103 with a payroll of 1,929,000.

The third year will see the most dramatic growth in headcount, due to the addition of 13 units. In

the third year, there will also be an increase of 158% over the previous year. Total payroll for the

third year will be 3,332,100. A significant increase in the senior management team, with the

addition of Financial Manager, Marketing Manager and Operations Manager. There will also be a

fourth district manager, and a corporate events sales executive. Total personnel will reach 163.

The General Manager : Achieve company s mission and strategic directions through effectively

Oversee, facilitate and coordinate departmental activities to maximize integration and synergy.

Planning, managing & directing all functions of the company. Monitor, evaluate, and coach department’s head

towards achieving objectives and leading all strategic decisions.

Page 36: Mocha Bplan


The Financial Manager: will be brought on to oversee the increase in numbers of retail outlets and to manage a dramatically more detailed P&L statement and to manage the Balance Sheet and inventory controls. This

individual will also be added in fiscal year three.

The Marketing Manager: will be charged with managing the relationships with advertising

agencies, public relations firms, the media, and our website.

The Operations Manager: Plan and implement operation strategy. Improve and coordinates

operation` s activities and staff. Ensure customer satisfaction in all operation processes and sales

Services. Conduct all activities to meet and exceed QSC standards. Improve staff satisfaction and

Moral. Maximize profitability.

Personnel Plan FY 2008 FY 2009 FY 2010

Production Personnel

Drive-thru Team .‏0,750,011‏‏ر.س. ‏40,111,‏‏ر.س. ‏327,111‏‏ر.س

Mall Cafe Team .‏074,411‏‏ر.س. ‏704,111‏‏ر.س. ‏030,111‏‏ر.س

In-Line Cafe Team .‏354,011‏‏ر.س. ‏770,111‏‏ر.س. ‏007,111‏‏ر.س

Equipment Care Specialist (Headquarters) .‏7,111,‏‏ر.س. ‏30,111‏‏ر.س. ‏1‏‏ر.س

Other .‏70,111‏‏ر.س. ‏70,111‏‏ر.س. ‏1‏‏ر.س

Subtotal .‏011,,7,03‏‏ر.س. ‏0,330,111‏‏ر.س. ‏034,111‏‏ر.س

Operations and Marketing Personnel

District Manager (Four Outlets) .‏311,111‏‏ر.س. ‏775,111‏‏ر.س. ‏5,111,‏‏ر.س

Corporate Events Sales Exec .‏30,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Marketing Manager .‏001,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Other .‏1‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Subtotal .‏000,111‏‏ر.س. ‏775,111‏‏ر.س. ‏5,111,‏‏ر.س

Page 37: Mocha Bplan


General and Administrative Personnel

Bookkeeper/Office Administrator .‏3,511,‏‏ر.س. ‏02,111‏‏ر.س. ‏70,511‏‏ر.س

Warehouse/Site Manager .‏70,511‏‏ر.س. ‏70,511‏‏ر.س. ‏70,511‏‏ر.س

Inventory Clerk .‏70,511‏‏ر.س. ‏70,511‏‏ر.س. ‏1‏‏ر.س

Other .‏07,111‏‏ر.س. ‏0,111‏‏ر.س. ‏1‏‏ر.س

Subtotal .‏030,511‏‏ر.س. ‏010,111‏‏ر.س. ‏02,111‏‏ر.س

Other Personnel

General Manager .‏700,111‏‏ر.س. ‏700,111‏‏ر.س. ‏1‏‏ر.س

Financial Manager .‏711,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Operations Manager .‏051,111‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Purchasing Manager .‏1‏‏ر.س. ‏1‏‏ر.س. ‏1‏‏ر.س

Subtotal .‏000,111‏‏ر.س. ‏700,111‏‏ر.س. ‏1‏‏ر.س

Total People 46 103 163

Total Payroll .‏0,077,,,,‏‏ر.س. ‏0,909,777‏‏ر.س. ‏000,777‏‏ر.س

Page 38: Mocha Bplan


7. Financial Plan

7.0 Financial Plan

Mocha's financial picture is quite promising. Since Mocha is operating a cash business, the initial

cost is significantly less than many start-ups these days. The process is labor intensive and Mocha

recognizes that a higher level of talent is required. The financial investment in its employees will

be one of the greatest differentiators between it and Mocha's competition. There will be a

minimum of inventory on hand so as to keep the product fresh and to take advantage of price

drops, when and if they should occur.

Mocha anticipates the initial of investments of SR 1,942,500 to carry it without the need for any

additional equity or debt investment, beyond the purchase of equipment or facilities. This will mean

growing a bit more slowly than might be otherwise possible, but it will be a solid, financially sound

growth based on customer request and product demand.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following

table. The key underlying assumptions are:

Mocha assumes a Fast-growth economy.

Mocha assumes of course that there are no unforeseen changes in public health

perceptions of its general products.

Mocha Assumes a growth rate of 28% in transactions over the next 5 years

Mocha Assumes a growth rate of 26% in sales value over the next 5 years

Forecast Units, Transactions and Value Sales in Consumer Foodservice: % Growth 2006-2011

% growth 2006-11 CAGR 2006/11 TOTAL Units 2.8 14.9 Transactions 5.1 28.0 Constant value 4.8 26.5 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International


Page 39: Mocha Bplan


7.2 Key Financial Indicators

The following chart shows changes in key financial indicators: sales, gross margin and operating

expenses The growth in sales exceeds 241% each year. Mocha expects to keep gross margin

above the 55% projected for the first year, but it doesn't anticipate anything higher than 58%.

The projections for inventory turnover that Mocha will maintain a relatively stable amount of

inventory in its headquarters warehouse so that it has no less than two weeks of inventory on

hand, but no more than three weeks, in order to keep products fresh. The only time it would

consider holding larger stores of inventory is if there was some catastrophic event that could

cause a dramatic rise in the price of its coffees or teas.








Sales Gross Margin OperatingExpensses

FY 2008

FY 2009

FY 2010

Page 40: Mocha Bplan


7.3 Break-even Analysis

Break Even Analysis Mocha International

Years 1 2 3 Income 4,905,000 11,828,000 20,922,600

Expenses 5,115,850 10,747,200 18,134,214

Profit (210,850) 1,080,800 2,788,386

Debt 1,277,700 1,488,550 407.750

Balance (1,488,550) (407,750) 2,380,636












1 2 3




Break -Even Analysis

Break even point

Page 41: Mocha Bplan


7.4 Projected Profit and Loss

Mocha is expecting some dramatic growth in the next three years, reaching SR.20,992,600 in

sales and a 57% Gross Profit Margin by the end of the third year. Expenses during the third

year will be roughly S.R. 9,346,722 leaving a Net-Profit of S.R. 3,512,136

Pro - Forma P& L Statement Mocha International 2008 -


Year 2008 2009 2010 3 Years

Number Of Outlets 10 22 35 35

Sales 4,905,000 11,828,000 20,922,600 37,655,600

Other Revenues 0.0 0.0 0.0 0

Total Revenue 4905000 11828000 20922600 37655600

Cost Of Sales

T.C. 365,000 858,000 1,469,600 2,692,600

AV/Check 13 14 14 14

Food Cost 1,716,750 4,021,520 6,904,458 12,642,728

Paper Cost 490,500 1,064,520 1,883,034 3,438,054

Cost Of Sales 2,207,250 5,086,040 8,787,492 16,080,782

% 45.0 43.0 42.0 43

Gross Profit 2,697,750 6,741,960 12,135,108 21,574,818

% 55.0 57.0 58.0 57


Salaries & Wages 490,500 1,182,800 2,092,260 3,765,560

Bonus 49,050 118,280 209,226 376,556

Staff Meals 24,525 59,140 104,613 188,278

Prevision for end of service 49,050 118,280 209,226 376,556

Maintenance 49,050 118,280 209,226 376,556

Staff Accommodations 98,100 236,560 418,452 753,112

Utilities 98,100 236,560 418,452 753,112

Operating Supplies 49,050 118,280 209,226 376,556

Marketing Expense 98,100 236,560 418,452 753,112

Misc. 49,050 118,280 209,226 376,556

Damaged goods 24,525 59,140 104,613 188,278

Area Managers 140,000 280,000 420,000 840,000

Total Operating Cost 1,219,100 2,882,160 5,022,972 9,124,232

% 24.9 24.4 24.0 24

Profit After Controllable 1,478,650 3,859,800 7,112,136 12,450,586

% 30.1 32.6 34.0 33

Page 42: Mocha Bplan


Non Controllable

Rent 600,000 1,200,000 2,100,000 3,900,000

Assets Dep.& Amortization 289,500 579,000 723,750 1,592,250

Total Non Controllable Cost 889,500 1,779,000 2,823,750 5,492,250

Operating Profit 589,150 2,080,800 4,288,386 6,958,336

% 12.0 17.6 20.5 18

Indirect Expense

Head Office Expense 800,000 1,000,000 1,500,000 3,300,000

Total Indirect Expenses 800,000 1,000,000 1,500,000 3,300,000

Total Fixed Cost 2,908,600 5,661,160 9,346,722 17,916,482

Net Profit (210,850) 1,080,800 2,788,386 3,658,336

% -4% 9% 13% 10%

7.5 Projected Cash Flow

Cash flow will have to be carefully monitored, as in any business, but Mocha is also the

beneficiary of operating a cash business. After the initial investment and start -up costs are

covered, the business will become relatively self-sustaining.

Investment Cost Estimates 2008


Drive-thru #1


Drive-thru #2


Drive-thru #3


Drive-thru #4


Drive-thru #5


Drive-thrus #6 & #7


Mall Cafe #1,#2


In-Line Cafe #1


Total 1,942,500

Page 43: Mocha Bplan


Investment Cost Estimates 2009


Drive-thrus #8, #9, & #10


Drive-thrus #11, #12, & #13


Drive-thrus #14, #15, & #16


Mall Cafe #3,#4


In-Line Cafe #2


Total 2,252,500

Investment Cost Estimates 2010


Drive-thrus #17, #18, & #19


Drive-thrus #20, #21, & #22


Drive-thrus #23, #24, & #25


Mall Cafe #5,#6,#7


In-Line Cafe #3


Total 2,447,500


Year 2008 Year 2009 Year 2010

Food 1,716,750 4,021,520 6,904,458

Packaging 490,500 1,064,520 1,883,034

Cash 100,000 100,000 100,000

Receivables Payables -141,279 -244,097 -338,302

Working Capital required 2,265,971 5,041,943 8,649,190

Change in W/C 2,265,971 2,775,972 3,607,247

Year 2008 Year 2009 Year 2010

Sales Plan 4,905,000


0 20,922,600

Food Cost 1,716,750 4,021,520 6,904,458

Packaging 490,500 1,064,520 1,883,034

Page 44: Mocha Bplan


Cash Flow

Year 2008 Year 2009 Year 2010

Cash Inflow : Net profit -210,850 1,080,800 2,788,386

Depreciation 289,500 579,000 723,750

Total Cash Inflow 78,650 1,659,800 3,512,136

Cash Outflow : Capital Expenses 1,942,500 2,012,500 2,237,500

Pre-Operating Expenses 77,700 80,500 89,500

Increase In Working Capital 2,265,971 2,775,972 3,607,247

Total Cash Outflow 4,286,171 4,868,972 5,934,247

Net Cash Flow -4,207,521 -3,209,172 -2,422,111

Cumulative Net Cash Flow -7,416,693 -9,838,804










1 2 3

Increase In Working Capital

Increase In Working Capital

Page 45: Mocha Bplan











1 2 3

Total Cash Inflow

Total Cash Inflow







1 2 3

Net Cash Flow

Net Cash Flow

Page 46: Mocha Bplan


7.6 Business Ratios

Standard business ratios are included in the following table. The ratios show a plan for

balanced, healthy growth. Mocha's position within the industry is typical for a heavy growth

startup company.

Comparing the ratios in the third year with the industry, this pro-forma plan appears to be within

an acceptable difference margin.

The Drive Thru -business model is lean thus allowing for increase return ratio.

Ratio Analysis

FY 2008 FY 2009 FY 2010

Industry Profile

Sales Growth 0.00% 320.92% 156.42% 15.00%

Inventory 9.60% 13.68% 11.12% 3.60%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 55.00% 57.00% 58.00% 55.00%

G&A 16.31% 8.45% 7.17% 15.00%

Advertising Expenses 2.00% 2.00% 2.00% 3.00%

Main Ratios

Return on Assets 26.14% 92.31% 190.24% 25.00%

Additional Ratios FY 2008 FY 2009 FY 2010

Net Profit Margin -4.30% 9.14% 13.33% 15%

Page 47: Mocha Bplan


7.7 Exit Strategy

There are two scenarios for the investors and management to recover their

investment-- with significant returns on each Riyal invested.

Scenario One:

Mocha becomes extremely successful and has requests from other communities for

Mocha operations to be opened there. This opens the door for franchising

opportunity. When one looks at the wealth that has been created by the likes of

McDonald's, Wendy's, Kentucky Fried Chicken, Burger King, and Taco Bell, the

value of franchising a great idea cannot be dismissed. However, developing a

franchise can be extremely costly, take years to develop, and be destroyed by one

or two franchisees who fail to deliver the consistency or value on which the

founding company had built its reputation.

Scenario Two:

By the third year, the growth for Mocha will have made the news in more than just

in Riyadh area. It can be assumed that competitors, such as Starbucks, Dr.Cafe or

any other competitor will have seen the press and realized the value proposition in

Mocha's business plan. This will make Mocha an attractive target for buyout. The

company could be purchased by a much larger competitive concern by the end of

the third year.