“Hugamug” is a café designed to provide food and drink at a good price in a cosy and relaxing

environment. It aims to create a unique atmosphere through its décor and provide an experience
providing board games and books for customers to use. An acoustic performer will also play at
the café on Mondays. The café will be situated in Cardiff city centre and will be open 6 days a
week Monday 10:00-18:00, Wednesday- Saturday 10:00-18:00, Sunday 10:00-17:00. Research
has shown that the café industry has continued to grow by 6% even in the most economically
challenged parts of the UK (Thomas, 2014). After this research combined with the opinions
found in the focus groups and questionnaire results, it has been confirmed the business is a
feasible one. However, measures will have to be taken to keep a competitive advantage in the
growing market.

The project is all about establishing a coffee shop in Batac City.

Coffee shops largely serve as centers of social interaction wherein they provide a good venue
to conduct office meetings and friends hang about. In other words, coffee shops provide social
members with a place to congregate, talk, write, read, entertain one another, or pass the time,
whether individually or in a small group

“Hugamug’s” target market primarily will be those who love cafes. However, research has
showed that this is often woman and families aged 18-34. “Hugamug” will advertise itself to
these customers through social media; Twitter, Instagram, and Facebook prior to the café
opening. Flyers and posters will be placed around the city centre and surrounding areas, to create
awareness and word of mouth. There will also be a website set up and the business will be
registered with Trip Advisor to monitor and respond to any positive or negative feedback. The
author decided to do a launch event on a Saturday because the weekends are the busiest days, as
found from the competitor interview. There will be an acoustic musician at the cafe and free
samples of cakes and drinks will be handed out around the city centre with a flyer and voucher.
Staff in the café will also offer free tasters to customers and give them a discount for their next
visit with a loyalty card.

Place

An empty shop has been found in Morgan Arcade in Cardiff city centre available for lease from
January 2017. The shop will be opened a month after this to give time for fittings and
renovations and to ensure the lease is not wasted.. The shop premises is surrounded by shops
such as Urban Outfitters, Joules and has three floors. The basement which is 257 square foot will
be used for kitchen, cooking and storage. The ground floor which is 268 square foot will be for
café seating and the till. The upstairs, which is 241 square foot, will be more seating and a toilet,
which is already installed, saving the owner money. Fire alarms and burglar alarms are also
already installed saving the owner more money. There is also a covered area outside to provide a
small amount of seating. The premises is wheelchair accessible. Pictures given by the owner of
the shop as it currently stands can be found in appendix E.

There will need to be a renovation of the shop to make it suitable for café use and also
compliment the themes the owner wants in the café. Such themes include décor which creates a
relaxing atmosphere, providing a different experience through the use of board games, serving
drinks in different mugs and glasses. (The items purchased to fit the shop such as coffee
machines, fridges, cooking and serving supplies, lights, mugs, cleaning supplies and so on are
attached as appendix F).

In order to minimise misinterpretations, vague assumptions and make the objectives most
effective they will meet the following criteria of SMART objectives:

S- Specific -
M- Measurable A- Achievable R- Realistic
T- Time specific

This will help the author create specific, realistic objectives that can be easily measured through
completion. The objectives will be further evaluated once completed in order to see if there are
any improvements that can be made to future objectives.

Currently until April 2017

Short
Term
To complete feasibility study for the opening of Café in
Aim
Cardiff and open the café

Mid
Term Assuming in year 1 the company has met its trading
Year 2&3
Aim expectations the owner will look to expand its menu
and source Fairtrade products
 The long term aim of the business will be to look into
Long
hiring out the top floor of the café for craft days,
Term 3 Years+
expand its opening days to 7 days a week and
Aim
eventually open a second café in Bristol.

p/s

5. Products and Services

5.1. Product Description

5.1.1. Food and Beverages

“Hugamug” will be selling a large variety of food, drink and cakes because as found in the
literature review, food menu expansion has been a key trend in terms of innovation in the coffee
shop market (Childe, 2014). (A menu can be found in appendix G). Research also found
breakfast and lunch breaks are good opportunities for freshly made healthy bites, made in-house
or supplied from local bakeries (Theodore, 2015). “Hugamug” will be making homemade cakes,
fresh drinks and homemade sandwiches using locally sourced bread, fitting this theme. All
ingredients that “Hugamug” will use to make food sold at the café will be free range. This is
because the primary research showed the author that this was important to people.

Drinks provided at the café will also not just be hot drinks because those aged 16-18 are the most
likely not to drink hot drinks at all (Childe, 2014). Although this is not the cafés target audience
it is important to offer a wide variety and therefore, drinks such as cans of coke, milkshakes and
fruit juice will be available.

5.1.2. Service

“Hugamug” will function as an eat in and take away café. Customers will be able to take out hot
drinks, cold drinks and sandwiches when requested at the till, however, not hot food. There will
be a counter service; customers will order at the counter, giving their table number and then a
member of staff will bring the food and drink to their table.

The atmosphere of the café will be cosy, relaxed and friendly. Customers should feel welcomed
by staff and feel comfortable to ask any questions and stay in the café for

as long as they want. Employees will be trained to ensure customers feel this way within the
café. This will include aspects such as good eye contact with customers, being polite at all times
and aware of customers around them. They will also be trained to deal with complaints in order
to reduce any negative experiences for customers. Employees will listen to the complaint, show
compassion and try resolve the issue and if that’s not possible offer a discount or free drink
within reason.

5.2. Unique Features

“Hugamug” is different to its competitors in the area, such as Pettigrew Tea rooms, because of its
homemade sandwiches and cakes, décor and entertainment in the café. The décor aims to be cosy
and homely and, therefore, the author has decided to buy fairy lights, blankets, an electric
fireplace and use low lighting in the café to get this effect. The café also aims to be different to
other cafes using charity shops, independent stores and EBay to source mugs, teapots, tables and
pillows and providing cold drinks in the authors recycled jars. (Photos shown on the next page).
It will also provide board games such as frustration, monopoly, articulate and books for
entertainment which no other café in the area does. On Mondays an acoustic guitar singer will
come to the café from 12-5pm playing songs in the background to bring a relaxed atmosphere.
“Hugamug” will also pride itself on providing free range food and locally sourced bread and
baguettes. This is apparent in the café’s marketing materials and will be advertised through
social media.

5.3. Production Methods

All food will be freshly made in the shop. The manager will bake the cakes in the two hours
before the café opens each morning and the chef will make the sandwich fillings from scratch in
the hour before the café opens each morning, to ensure all fillings and cakes are fresh. The
amount of stock used will vary each day and, therefore, the fillings and cakes will be stored in air
tight containers in fridges to keep till the next day. How much the chef and manager make each
morning will depend on the stock left over from the night before. All of the breakfasts will be
made as ordered by the chef and the drinks will also be made as ordered by one of the café
assistants. All ingredients needed for making the products on the menu are found in the stock list
in appendix H and all recipes/ cost of production can be found in appendix Z.A.

5.4. Health and Safety Issues

Within the food and drink industry there are many different health and safety issues. “Hugamug”
will ensure that is adheres to the Health and Safety work act 1974. The manager already has a
certificate in Food Safety and Hygiene gained at university. However, all employees working
within the business will also need to be trained in this area as well and follow the health and
safety policy (found in appendix I.a). The chef will be hired on the basis that they have the
relevant health and safety qualifications.

Health and Safety regulations will also be followed in relation to food. Raw meat will be used in
the café and, therefore, cleaning and storage procedures must be followed to ensure there is no
cross contamination. Coloured chopping boards have been bought for the café to help with this.
Raw meat must also be kept at the correct temperature and stored below dairy products, cooked
meats and salad in a refrigerator with a temperature of 40oF or below (Food Standards Agency,
2016). Dates of

opening will be written on all products alongside the use by date. (A fridge layout to reduce the
chance of cross contamination can be found in appendix L).

Some of the meats sold at the café will be frozen in order to preserve it longer and will be kept
frozen for no longer than 3 months. Meat that is going to be defrosted will be thawed in the
refrigerator, cold water or microwaved and cooked immediately (Food Standards Agency, 2016).

5.5. Cost of Production

Most of the supplies used to produce the meals and drinks on sale in “Hugamug” are of a low
price. “Hugamug” will need to pay VAT on products sold which will later be claimed back.

The cost of producing each drink and meal has been calculated based on the package cost and
number of portions it provides. For example one tea bag out of a packet of 2400 tea bags costs
£0.01 (The cost of production of each meal and drink can be found in appendix Z.A). With each
meal and drink being cheap to produce the owner has a chance to pick competitive prices.
However, it is important that the profit also covers all costs including cost of labour. A good
amount of gross profit has been made shown in the table in appendix Z.F which should therefore,
also cover running costs.
5.6. Suppliers

“Hugamug’s” main stock supplier will be Bidvest which the owner will have to register with
(Bidvest, 2016). However, some items not available at Bidvest will be bought from the café’s
local Tesco. As “Hugamug” also prides itself on providing free range products and fresh locally
sourced bread it will supply its meat from Welsh Food box and its bread from Brutons the
Bakers, a bakery local to the café in Cardiff (A list of suppliers can be found in appendix J).

Stock will be bought as and when needed, aiming to stock the café with fresh food weekly and
dry store products every two months, keeping in mind meat can be frozen. As found out from the
interview conducted this is the most cost efficient way to stock a café and reduces waste. The
shop owner will keep up to date with this by doing weekly stock checks to ensure the café
purchases the stock it needs in time. Bidvest and Welsh Food box will deliver its products to the
café and therefore the owner will keep in mind that the stock will arrive in two days when doing
stock checks. Bidvest do not charge for delivery, however, Welsh Food box charge £2.50 which
will be considered in the stock in the financial forecasts. For the other suppliers the owner will
travel to the shops to pick up the stock. Brutons the Bakers is open Monday- Friday 8:30-15:45,
Saturdays 8:30-12:00 and Sundays 12:00-2.45pm (Brutons the Bakers, 2016). The Tesco local to
the café is open Monday-Sunday 6:00- 23:00.

The owner has decided to choose these suppliers for “Hugamug” through familiarity and trust.
The suppliers also fit “Hugamug’s” policies with Welsh Food box providing the café with local
free range products and Brutons the Bakers providing the café with locally sourced bread.
Therefore, the owner feels choosing these suppliers will benefit the café and its unique features.

5.7. Capacity

The premises “Hugamug” is a fair size being 268 square foot on the ground floor, 241square foot
on the first floor and 257square foot in the basement. This is approximately 16ft in width and
16ft in length. From this measurement the author has decided 4 tables, 2 small sofas, 2 small
benches, 8 single chairs, will be in the same layout on the ground and first floor (Floor plans can
be found in appendix K). The till will be on the ground floor and the toilet will be immediately
above on the first floor. There will also be two x two seater tables outside the café. Overall this
will seat a maximum 40 people in the café, giving it space and ensuring it isn’t cramped, as this
was found to be a weakness in “Hugamug’s” competitors. The author feels this will be a
sufficient amount of space for “Hugamug” as the primary research showed that people like cosy
cafes and therefore the size of the café can be used to its advantage.

5.9. Quality

It is key “Hugamug” to provide high quality products to its customers. This will be ensured
firstly by making all cakes and sandwich fillings freshly. The chef will then take note of when
the products where first opened to ensure they stay fresh. The chef has permission from the
owner to throw any products away which they feel is not a high enough quality. Cakes will also
not be kept any longer that 4 days to ensure quality. Free range meat and locally sourced bread
will also ensure this quality. The meals and drinks at the café will also be made as ordered at the
café to ensure quality.

Quality appearance is also essential for “Hugamug” and, therefore, employees’ will be trained to
make drinks appealing to customers and each drink to a high standard. They will also be guided
as how to deal with complaints from customers and the café will be kept clean.
Because the strengths of cafés and bars include store appearance, ambiance
and the variety of services and products being offered, these outlets quickly
adapt to changing consumer tastes and practices. The foodservice industry
recognizes millennials as an emerging consumer group and cafés and bars
have been addressing their needs for some time.
Millennials remain the core consumer group

To further serve the needs of millennials, cafés and bars are addressing their
increasingly on-the-go lifestyles. Around eight Starbucks branches offered
drive-through facilities as at the end of the review period.

Cafés/bars to record slow growth at constant 2017 prices over the forecast
period due to aggressive competition targeting the same consumers

With increasing discretionary spending, consumers have become more

discerning and adventurous when it comes to food choices. This is an
opportunity that cafés and bars will continue to take advantage of over the
forecast period.

COMPETITIVE LANDSCAPE

Bars/pubs are dominated by independent brands

Bars/pubs continued to be dominated by independent brands in 2017. Such

outlets range from affordable “hole-in-the-wall” types of bars to high-end
pubs.

Bubble tea brands help sustain growth of chained cafés

Similar to bars/pubs, cafés are also predominantly independent brands, but

chained cafés continued to be sustained by bubble tea brands in 2017. What
was thought to be a fad eventually became a trend, as bubble tea continues to
appeal within the Philippines and such premises have soon evolved from
simple bubble tea outlets into full cafés.

Specialist coffee shops records the fastest current value growth within
café/bars

Although specialist coffee shops have the fewest brands and outlets within the
category of café/bars, these brands collectively recorded the strongest growth
in 2017, driven by the aggressive expansion of chained specialist coffee shops.

http://www.euromonitor.com/cafes-bars-in-the-philippines/report
 1. 1. STATUS OF THE PHILIPPINE COFFEE INDUSTRY Presented by: ROMEO P. AYOS Supervising
Agriculturist Crop Research and Production Support Division Bureau of Plant Industry Malate,
Manila
2. 2. Did you know? • That coffee is the second most traded commodity in the whole world, second to
crude oil. • It is produced in Latin America, South East Asia and Africa and the main consumers are
US and Europe. • “ It is estimated that 1.6 billion cups of coffee are consumed worldwide “ PER
DAY” http:/bit.ly/1695k8n
3. 3. WHY invest in coffee?  Love for coffee as a beverage  Livelihood- production/processing 
Environmental protection  Suitability of Philippines for growing quality coffee.
4. 4.  In 1880, the Philippines was the fourth largest exporter of coffee beans, supplying America and
Europe, until coffee rust hit the country `s coffee crop in 1889, reducing coffee production to only
one-sixth of the peak in just two years.
5. 5. WHERE ARE WE? THE PHILIPPINE COFFEE INDUSTRY
6. 6. Occupies an important place in the world economy, being widely consumed as the most
prestigious beverage Instant coffee is still more accessible, the ground and brew sector is still
growing Coffee farmers generally dry their coffee beans and have them milled through local millers
In the Philippines, coffee farming is dominated by small farmers with an average farm size of 1-2
hectares The most common variety is Robusta which accounted to over 75% production followed by
Arabica, Liberica and Excelsa THE PHILIPPINE COFFEE INDUSTRYTHE PHILIPPINE COFFEE
INDUSTRY
7. 7. The coffee supply of the country is not enough. In 2015, coffee production was only 72,342 mt
(dried berries) or 36,171 MT of green coffee beans (gcb). This was attributed to the cutting and
pruning of old trees and the effects of heavy rains and strong winds during fruit development in
Sultan Kudarat. There was crop shifting to banana in Davao City and to pineapple in Cavite. Lower
production in Batangas was explained by the long dry season during the flowering stage as some
coffee trees were also affected by scale insects. Area planted accounted to 113,738 hectares with
SOCCSKSARGEN as the highest with 26,731 hectares. THE PHILIPPINE COFFEE INDUSTRYTHE
PHILIPPINE COFFEE INDUSTRY Source: Philippine Statistics Authority-Bureau of Agricultural
Statistics
https://www.slideshare.net/bardotgov/status-of-the-philippine-coffee-industry

Café establishments primarily sell refreshment drinks, snacks and light meals, with
coffee being their flagship product. These businesses must employ innovative
strategies, such as diversification of menu offerings, to increase sales and remain
competitive. The industry’s growth prospects are dictated by issues such as availability
of disposable income in households and changes in customers’ preferences for meals
and drinks.

arket Trends
Cafés generate much of their revenues from coffee, a product that accounted for more
than 83 percent of hot beverage sales in 2012, according to the Small Business
Development Center Network. Tea and other nonalcoholic drinks are also favorites
among café customers. However, snacks and light meals contribute significantly toward
the overall revenues of cafes.

Industry Performance
The coffee and snack shops industry is a $30 billion market that grew at average annual
rates of 2.7 percent between 2009 and 2013, according to a report the IBISWorld
website in 2014. This shows the industry grew at steady rates through those years,
despite the negative impact of the recession that rocked the economy from 2008 to
2010.

The Competitive Landscape

Independently owned cafes can thrive, provided the owners correctly identify their
niches and avoid direct competition with the big brand name stores. According to
Business Valuation Marketing, the top 50 coffee shop companies--think Starbucks--
have captured around 70% of the U.S. market. Small companies can compete by
offering products the larger competitors don't provide. For example, cafes offering
individually brewed coffee in exotic flavors can generate a large following among coffee
enthusiasts.

https://bizfluent.com/facts-7388927-cafe-industry-analysis.html
Revenue in the Coffee segment amounts to US$3,199m in 2018. The market is expected to
grow annually by 10.1% (CAGR 2018-2021). The market's largest segment is the segment
Instant Coffee with a market volume of US$3,059m in 2018. From an international
perspective it is shown that most revenue is generated in the United States (US$12,935m in
2018). In relation to total population figures, per person revenues of US$30.37 are
generated in 2018. The average per capita consumption stands at 1.6kg in 2018.

https://www.statista.com/outlook/30010000/123/coffee/philippines