DARPHANE 5 CAN EMRE ZDEMR ESEN EKER FATH EVK SAVA ITAK 2

Contents 1. EXECUTIVE SUMMARY ................................................................................................................ 3 2. GENERAL INFORMATION ............................................................................................................ 3 2.1 Business Objectives .................................................................................................................. 4 2.2 Mission Statement ..................................................................................................................... 4 2.3 Guiding Principles ...................................................................................................................... 5 2.4 Keys to Success ......................................................................................................................... 5 3. COMPANY DESCRIPTION ............................................................................................................ 5 3.1 Ownership ................................................................................................................................... 5 3.2 Start-Up Summary ..................................................................................................................... 6 3.3 Products/Services ...................................................................................................................... 6 3.3.1 Products/Services Descriptions ........................................................................................ 6 3.3.2 Product/Service Sourcing .................................................................................................. 6 3.3.3 Future Products/Services .................................................................................................. 6 4. MARKET ANALYSIS: ...................................................................................................................... 7 4.1 Potential Coffee Market Analysis in Turkey: .......................................................................... 7 4.2 Origins of Coffee Imported by Turkey: .................................................................................... 9 5. PEER GROUP ANALYSIS: .......................................................................................................... 13 6.PRODUCT RANGE TO BE OFFERED TO CUSTOMERS: ..................................................... 14 7. BUSINESS PLAN ........................................................................................................................... 16 3 1. EXECUTIVE SUMMARY Roast&Smellisacoffeecompanyhasfoundedwithperspectivetoprovideitsvisitors different tastes of coffees around the world in a relaxing and warm ambiance. Roast&Smell has two branches in stanbul at Esentepe and 4.Levent locations. Roast&SmellblendcoffeeandspecialbrewedColombia,Ethiopia,Panamacoffeesmakes its special tastes. The Roast&Smell serves gourmet coffees, espresso and drip coffee, cold brew, lattes, and smoothies. The special pastry offering is Marias Cheesecakes. Roast&Smell is a sample of third wave coffee. Third wave coffee aspires to the highest form ofculinaryappreciationofcoffee,sothatonemayappreciatesubtletiesofflavor,varietal, andgrowingregionsimilartoothercomplexconsumableplant-derivedproductssuchas wine, tea, chocolate, and cannabis. The available market to our project is defined to be all coffee consumers in Istanbul having sustainableincomeofhigherthan3.000TL.Thepeakhourswithintheworkingdayis between 08:00 10:00 am; 12:30 14:00 pm and 15:30 and 16:30 pm. Total customer size is 10.000, 5.000 in DenizBank and 5.000 in Akbank Roast&Smelliscommittedtoserveitsdistinguishedcoffees forhavingatastyandrelaxing break to its visitors. 2. GENERAL INFORMATIONCoffeewasdiscoveredaround1,000yearsagointheregionnowknownasEthiopia.The firstcoffeeshipmenttoEuropewasaround1615.From the middle of the 17th century coffee houses were opened in all major European cities and became a meeting place for people from all walks of life. This remains very true today. Coffee is an integral part of our culture and there are many social aspects to drinking coffee, fromcoffeebreaksthatofferawelcomedowntimeatwork,toprovidinganoccasionfor friends and family to connect. Coffeetodayisincreasinglytalkedaboutandappreciatedinasimilarartisanalcontextas finewine,chocolateorcheese,inlinewithincreasedconsumerawareness,ethical 4 consumerismandadesiretoknowmoreabouttheoriginsofthegoodswebuyand consume.Afterall,coffeedoeshaveover800aromacompounds,makingitevenmore complex that wine. Third Wave of Coffee Third wave coffee aspires to the highest form of culinary appreciation of coffee, so that one mayappreciatesubtletiesofflavor,varietal,andgrowingregionsimilartoothercomplex consumableplant-derivedproductssuchaswine,tea,chocolate,andcannabis.Distinctive featuresofthirdwavecoffeeincludedirecttradecoffee,high-qualitybeans,single-origin coffee(asopposedtoblends),lighterroasts,andlatteart.Italsoincludesrevivalsof alternativemethodsofcoffeepreparation,suchasvacuumcoffeeandpour-overbrewing devices such as the Chemex and Hario V60. 2.1 Business ObjectivesThe primary objectives of the business plan for Roast&Smell are below:-Roast & Smell is not selling cup of coffee to its customers but offering different tastes, providing a relaxation from stressful business environment and enjoyment of life. -Repeatsalesisimportanttouseveryday.Forthatreason,wehavetokeepour customers desire to come us alive. -Wearenotsellingstandardizedcoffeethatourcustomersareusedtodrink.We always launch new tastes for them. -Within 2 years of ramp-up period, be famous the Cafe of Choice in the Esentepe-ili area especially for the white collars worked at the plazas around this region 2.2 Mission StatementRoast&Smelliscommittedtoserveitsdistinguishedcoffees forhavingatastyandrelaxing break to our visitors. From this perspective we will provide our visitors different tastes of coffees around the world which you may have these tastes in a relaxing and warm ambiance or you may use our take awayserviceforenjoyingyourcoffeewhereeveryouwant.Wealsoprovidepackaged selected roasted and grinded coffees for sharing these tastes with your family and friends. 5 2.3 Guiding PrinciplesTheRoast&Smelliscommittedtovaluessuchaspassion,quality,integrityandleadership which allow us to navigate challenges and provide for future opportunities. These core beliefs start with our commitment to our coffees and services. TheRoast&Smellrewardsexcellenceandcherishesloyalty.Wewillworkwithour employees to build strong businesses and a secure future. 2.4 Keys to SuccessRoast&Smell stands out from the competition. Below are our keys to success:GreatProductsprovidingselectedcoffeesatmarketpriceswillmake customers/visitors want to return again and again Hire Quality Baristas Pay employees rates similar to the larger chains with opportunities forlongtermcareersandopportunitiesforadvancementwithlongtermplanstoopena second facilityConvertCustomerstoConnoisseurs-Only10%ofthecoffeedrinkersconsume premium ground and whole bean coffee this will aid in continued growth 3. COMPANY DESCRIPTIONRoast&Smell will be a. Located in the cozy area surrounded with the Plazas, several shops, Shopping Malls (Astoria, Sapphire) and on the route of subway.coffee house / caf located in the Esentepe, ili and 4.Levent The Roast&Smell will serve gourmet coffees, espresso and drip coffee, cold brew, lattes, and smoothies. Thespecial pastryofferingisMariasCheesecakes.Youmayfinddifferentand special, handmade cheesecakes prepared daily for the Roast&Smell visitors.The caf will be open for business Monday Friday 8:00 a.m- 19:00 p.m. 3.1 OwnershipTheRoast&SmellisacoffeecompanylocatedinEsentepeand4.Levent,stanbul..Can Emrezdemir,Eseneker,FatihelikandSavatakcametogetherandfounded companyinJanuary,2015.TheRoast&Smellisgoingtoprovidespecialcoffeesbesides regular ones to its visitors. 6 3.2 Start-Up SummaryTheRoast&Smellwillhaveseatingfor30visitors.Therentforeachshopis4.000TLa month,withatwoyearleaseavailable.Thesitesconsistof~80m2ofleasedspace consistingofadiningroom,acoffeebar,tworestrooms,andastorageroominback. Painting, new floors, and countertop are also needed. A custom coffee bar needs to be built. Thecosttorenovateandthefurnitures(coffeetablesandchairs)willbe15000TL.The coffeehouseequipmentwillconsistofcommercialespressomachines,acommercial blender,differentbrewingequipments,grinderandacommercialrefrigerator.Thecostfor the equipment is 55000 TL.In order to start operation in Turkey there are some fix cost that should be paid.Commerce registration and Company Establishment (3,500 TL)Licenses and trademarks (20,000 TL)Insurances and other cost (10,000 TL) 3.3 Products/Services3.3.1 Products/Services DescriptionsTheRoast&Smellprimaryofferingisgourmetroastedcoffeeswithsuchvarietiessuchas mocha, espresso, capucino made with special Roast&Smell blend coffee and special brewed Colombia, Ethiopia, Panama coffees.The cheesecake offerings may vary with seasonality but all cheesecakes prepared daily. 3.3.2 Product/Service SourcingThe Roast&Smell has negotiated supplier agreements with coffee wholesalers in the Turkey that have a reputation for quality and reliability: Kahve Fabrikas Merko A.. Marias Cheesecakes 3.3.3 Future Products/ServicesYoungfamilieswhichcomprisethethirdlargestmarket,areoftenoverlookedinthecoffee market. Coffeehouses traditionally have not been considered kid friendly. To overcome this hurdle,TheRoast&SmellpreparedsmallMr.RoesterMascotsforthechildrenandwewill sale chocolate bars. While parents get their cup or packaged coffees from The Roast&Smell, they could also want to buy from our mascots for their children. 7 4. MARKET ANALYSIS: The market will be analysed according to Market Types: Potential Market, Available Market, Target Market and Penetrated Market. 4.1 Potential Coffee Market Analysis in Turkey:Coffee is know very well by Turkish market since Ottoman Empire era, dating back to 1500s. Themarketsizeisestimatedtobe$225Mlnwithanannualconsumptionof22.000tons.The market experts predict the coffee market to double until 2019. Annual consumption per capita is 550 gr which is quite low as compared to 9 kg in Austria, 4,8 kg in EU and 4,2 kg in USA. Turkishcustomerswereintroducedwithsolublecoffeefirstin1980.Then,themarketwas introducedwithfilteredcoffeeby90s.Firstglobalcoffeechain,GloriaJeans,enteredinto Turkey in 1999.

Figure-1: Worldwide Coffee Consumption per capita Turkeyhasalargepopulationestimatedat72.6millioninhabitantsbutalowvolumeof coffeeconsumption,633,000bagsin2011.Solublecoffeeaccountsfor92%ofnational consumptioncomparedwith8,2%forroastedcoffeeon.Theshareofroastedcoffeein national consumption has fallen sharply from %32,5% in 1997 to 8,2% in 2011.Coffee is still predominantly consumed at home, accounting for 67.2% (278,000 bags) of the national total on average. No precise trend can be established for the evolution of the relative 8 shares of at-home and out-of-home consumption. However, all coffee consumed at home is purchasedfromstores,andalmostallout-of-homecoffeeconsumptiontakeplacein independent locations rather than in coffee chain. Table-1: Decomposition of Coffee Consumption (in 000 bags) Table-2: Coffee consumption at home & out of Home TheUSAisbyfarthe worldslargestcoffee-consumingcountryamongimportingcountries with annual average consumption of 20.3 million bags. Roasted coffee is the dominant form of coffee consumed and accounted for 18.5 million bags (91.5% of the total) compared with only1.7millionbags(8.5%)ofsolublecoffee.Theshareofsolublecoffeeintotal consumptionfellfrom12.8%in1997to5.5%in2011,perhapsasaresultofthe developmentofspecialtynichemarketsinwhichroastedcoffeepredominates.Theuseof coffee pods is still limited but rising rapidly, accounting for 1.6% of total consumption in 2011. 9 4.2 Origins of Coffee Imported by Turkey: Brasialian coffee dominates the country. Columbian, Mexican coffees are not present in the country yet. Big Chains in Turkey: WeseethatthepresenceofBigchainsinTurkeyincreaes.Starbuckstakesthefirstplace with 183 shops, whereas Kahve Dunyas, a Turkish brand, follows him with 104 shops. Cafe Nero and Robets Coffee are equal in size. a-AvailableMarket:isthesubclusterofPotentialMarket,underliningthesetof customers who has not only the interest to the product but also enough income and access to the product. The available market to our project is defined to be all coffee consumers in Istanbul having sustainable income of higher than 3.000 TL. 10 Besides all above, we want to identify our market due to Porters five forces; Rivalry among existing competitors Presence of big chains (Starbucks, Cafe Nero, Roberts Cafe..) increaes in Turkey. However 3rdwavecoffeeshopsenteredthemarketverysoon,CupofJoy,Kronotrop,BrewLabare some examples. Bargaining power of Suppliers Mainsupplierofthemarketareequipmentmanufacturersandcoffeeimporters.Thereare localandglobalmanufacturersforequipments,butthereisntdirectbuyingoptionforthe coffeebecauseofthehighcustomtaxandspecialcustomtests.Bargainingpowerofthe equipmentmanufacturersarelow,ontheotherhandcoffeeimportersbargainingpoweris high within Turkey. Bargaining power of Customers Customerspossesslargeamountofbargainingpowerbecausethereisnoandminimal switching cost for customers, and there is an abundance of offers available for them. Threat of New Entrants Threats of new entrants is high within the 3rd wave coffee market as there are few entrance barriers and fair trade coffee trends are very popular so it is an attractive industry. Threat of Substitutes There are various substitutes for trade coffee in the industry such as regular coffee, tea etc, but not only coffees but in the general beverages market like Coca Cola. As a result of this there is a very high threar of substitutes. b-Targeted Market: Target market for our product is defined as: a.The ones who like to drink coffee b.Tried or like to try different tastes of coffee c.Does not have too much time for his/her leasure d.Spending most of his/her time at work. 11 c-PenetratedMarket:Wehavedecidedtoopencoffeeshopsintwolocations:one veryneartoDenizBankHeadquarterandoneveryneartoAkbankHeadquarter. Thereare5.000employeesworkinginDenizBankand5.000inAkbank.Before decidingonthosetwolocations,weappliedtwosurveystoourPenetrated customers.FirstSurveyaimstounderstandthecustomersegment.Wehad78 participants to the survey. The results showed us that people are in need of different coffeeoptions,asidefromstandardisedautomatcoffeeoptionsprovidedby automads in offices. Only 4% of the survey participants seems to have net income less than 3.000 TL. However, taking into account informtion from HR departments, this figure is assumed to be %10. 0%46%46%6%Education LevelsHigh School nive!sit" #aste!s $eg!ee %h$4%14%52%25%5%&nco'e Levels ()et Sala!" in *L+,t- 1.000 . 3.000 *L ,t- 3.000 . 5.000 *L ,t- 5.000 . 10.000 *L,t- 10.000 . 15.000 *L / 15.000 *L 12 We used PESTEL analysis to cover all determinants of macro environment; Political: - Industry specific rules and regulations directly affect the coffee import -Politicalstabilityofthecountriesandextendedrelationshipswiththecoffeeimported countries are critical. Economic: - Buying power of consumers: Serving special coffee is not common and economic service, so we target higher socio-economic segments. - Local currency exchange rates directly affect the imported raw material (coffee) costs. - Custom related taxation and test requirement changes affect the coffee import. 83%17%$o "ou 0!e11e! di11e!ent tastes 2 a!o'a in "ou! co11eeselection34es )o23%61%16%5he!e do "ou thin6 co11ee sho0 -ith di11e!ent a!o'a o0tions should ,e o0ened3So'e-he!e nea! to '" ho'e So'e-he!e nea! to '" -o!6ing 0lace$oes no! 'atte! 13 Social: -Changingconsumerpreferences;coffeeconsumersischangingtheirregularcoffee preferences with special tastes. - Changes in lifestyles of population; increase of the working population differs the coffee choices, take away services mostly preffered at daily routines. Technology: -Technologicalimprovementswillaffectourbusiness.Especiallyimprovementatthe agricultural technologies affects the coffee production. Environment: - Global warming and other environmental issues affect the production. - Environmental rules and regulation would affect the production costs and also volumes. Legal: - Regulations: Introduction of tougher customs and trade regulations directly affact the coffee market. 5. PEER GROUP ANALYSIS: CUP OF JOY: We made face to face meeting with the owner of Cup of Joy, Suzan Serez in her shop. She gave in-dept information about what she sells, how much she sells and her future plans..HershopislocatedonCevdetpasaStreetinBebek.Itisinsideofapassage,open from 10:00 am to 08:00 pm. She is one of the representatives of 3rd wave of Coffee in Turkey. .40%oftheweeklysalescomesfromweekendsales,whereastherestcomesfrom weekday sales..The optimal take it home package roasted coffee package is 100 gr. The price range is from 120 TL and 250 TL. .5% of the revenue comes from backage sales, meaning that people like to consume coffee ready and out of home. 14 .She buys the coffee beans from erif Baaran, who is one of the gurus in Turkey and makeswholesaleimportingfromalloverthworld.Sherecommendedtofollowthe sameschemeduetothefactthatimportingcoffeerequiresbigcapitalandhuge beurocracy in customs duty. .The cost of a cup of coffee is around TL 1,2 TL including the cup with shop brand..25% of the total sale comes from products other than coffee. .The price of the products range from 6,75 TL to 10 TL. COFFEE SHOPS in KANYON AND ZORLU CENTER: There are Coffee NERO and Starbucks Coffees in Kanyon and Zorlu Center which has local proximitytoourshops.However,theirproductrangeisnotthesameasours. Whitecollar hasjustonehourtovisitanddrinkcoffeethereiftheycandevotetimeafterlunch.Atthe very same time, 70% of the white collars in DenizBank have their lunch inside the bank. The same is valid for Akbank as well. Morethanthis,between15:30and16:30pm,peopletendtohave10-15minutesofbreak due to several reasons like cigarette, fresh air, socialisation....Thus, proximity to customer is vital to increase the revenue. 6.PRODUCT RANGE TO BE OFFERED TO CUSTOMERS: Espresso,Latte,Americanofromdifferentcoffeebeanswillbeoffered.Iceddropcoffeeis going to be offered as well.Even tough, 5% of Cup of Joys total sales is composed from packaged coffee, We believe that,whitecollars,oncetheyaddictedtothistaste,continuetheirjourneyintheirhomeas well. In order to increase the cross sale oportunities and having repeat sales, we target the kids of the customers. We will sale chocolate bars and we prepared Mr.Roester Mascots for thechildren.Thecustomerstendtobuythosefortheirkidswhenevertheybuycoffeefor themselves. As complimentary product, we will talk to a cake producer in Atasehir, Marias Cheesecakes. The coffee lovers will find those cakes with us in the near vicinity. 15 THE NAME OF THE SHOPS: Thesecondsurveyweexecutedaimedtounderstandcustomersfeelingswhentheyhear about coffee, or a coffee shop name. The results drived us to set the shop name as: Roast & Smell 30%30%13%22%4%5h" do "ou d!in6 co11ee37ela8ing *o ,e ha00"*o ,e socialised 9o! the taste and a!o'a:the!60%26%8%4%5hat do "ou 1eel 1i!st; -hen "ou !e'e',e! d!in6ing co11ee3&ts s'ell *aste and a!o'a*he at'os0he!e and a',iance the hot va0o! on '" 1ace96%4%$o "ou ,othe! i1 the na'e o1 the sho0 "ou go in is in English3& do not ,othe! %!e1e! to have na'e in *u!6ish 16 7. BUSINESS PLAN The Assumptions: .Total customer size is 10.000, 5.000 in DenizBank and 5.000 in Akbank. .Targetedcustomersaretheoneswhoearnmorethan3.000TLpermonth,which constitutes 90% of the overall customer size. .30% of the customers assumed to be going outside at lunch time. Those are the one who have high income. Thus, subcluster falls into 63% of the total customer size. .Market penetration is predicted to be under three scenarios: oBest Case oModerate Case oWorst Case Thephysicalconstraintsoftheshopandworkingforceistakenintoconsidertion while calculating the catchment percentage. The peak hours within the working day is between 08:00 10:00 am; 12:30 14:00 pm and 15:30 and 16:30 pm. .The average coffee sale price is 7,5 TL .25% of the customers buy cakes or chocolate bars, on average. Average price on the bundle is 10 TL. COGS is 5 TL. .The shop is open between 08:00 amand 19:00 pm on weekdays. Thus we do have 22 working days in a month. .Wearerequiredtohaveshopswithminimum80m2insize,requiringamonthly rental payment of 4.000 TL each. .We need two workers in each shop. Their salaries are assumed to be 2.000 TL gross. 17 Cash Flow: Detailed Cash Flow analysis has been provided in excel file. Theexecutivesummaryunder3scenarioshasbeenprovidedbelow.Undermoderate scenario, the company generates around TL 1 Million net profit within 36 months. 36 months financials BestModerateWorst Revenues 5,614,703 2,670,49 1,19,395