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Business Plan Prepared for:

Management and Future Investors

Prepared by:Toni-lynn Beckman

Justin Bowes

Les Fleur Café | Business Plan

Table of Contents1 Executive Summary.........................................................................................................................................3

2 Business Overview..........................................................................................................................................52.1 Introduction..............................................................................................................................................52.2 Mission Statement..................................................................................................................................52.3 Vision Statement.....................................................................................................................................52.4 Goals and Objectives..............................................................................................................................52.5 Industry Overview..................................................................................................................................6

3 Operations Plan................................................................................................................................................83.1 Hours of Operation.................................................................................................................................83.2 Legal Structure.........................................................................................................................................83.3 Location......................................................................................................................................................83.4 Floor plan...................................................................................................................................................93.5 Suppliers....................................................................................................................................................93.6 Average Business Cycles....................................................................................................................103.7 Capital budget........................................................................................................................................113.8 Operating Expenses.............................................................................................................................11

4 Human Resources Plan................................................................................................................................124.1 Job Descriptions & Qualifications...................................................................................................124.2 Training Programs...............................................................................................................................134.3 Management and Labor Costs..........................................................................................................144.4 Planned New Positions.......................................................................................................................154.5 Wages and Benefits..............................................................................................................................154.6 Organizational Structure...................................................................................................................15

5 Marketing Plan...............................................................................................................................................165.1 Products & Services:............................................................................................................................165.2 Pricing Policy:........................................................................................................................................175.3 Promotions.............................................................................................................................................175.4 Marketing Strategy..............................................................................................................................195.5 Place: Market & Distribution............................................................................................................205.6 Segmentation, Targeting, Positioning...........................................................................................215.7 Competitive analysis...........................................................................................................................225.8 Marketing Expense Projections.......................................................................................................245.9 SWOT Analysis.......................................................................................................................................24

6 Financial Plan.................................................................................................................................................256.1 Debt/Equity structure........................................................................................................................256.2 Loan Amortization...............................................................................................................................256.3 Dividend Policy.....................................................................................................................................266.4 Economic Forecast...............................................................................................................................266.5 Ratio Analysis........................................................................................................................................266.6 Sensitivity Analysis..............................................................................................................................266.7 Investment Analysis............................................................................................................................276.8 Break Even..............................................................................................................................................286.9 Summary of Financial Results..........................................................................................................29

7 Conclusion........................................................................................................................................................29

8 Appendixes......................................................................................................................................................308.1 Appendix A: Financial Projections.................................................................................................308.2 Appendix B: Floral Pamphlet...........................................................................................................308.3 Appendix C: Competitors Locations...............................................................................................31

9 References.......................................................................................................................................................32

Comm 447 | December 6, 2012 2


1 Executive Summary Les Fleur Café is a proposed floral design boutique and premium coffee destination in the heart of the Financial District of Toronto Ontario. It will be a unique company as it is composed of two different segments, specialty coffee and corporate floral services. Through specialization in corporate floral services and occasion bouquets, Les Fleur Café can help corporate clients realize their goals of expressing and enhancing their corporate brand, vision, values, and esthetics. The café segment will utilize unique infrastructure and design to create an escape from the office for working individuals. Using ultra premium fresh roasted beans and having industry leading staff will ensure quality and the perfect cup of coffee.

Operations:

Les Fleur Cafe will be located at 40 King Street West, in the Scotia Plaza. 900 square feet will be renovated on the ground floor of the building to create an exceptional, unique surrounding. Les Fleur Cafe is located central to its primary suppliers, who provide fresh baking, flowers, and coffee beans. Le Matin will supply baked goods on a daily basis, Dark City will supply fresh roasted beans on a three-day cycle, and the Ontario Flower Market will be the source for fresh, beautiful bulk flowers.

Human Resources:

Les Fleur Café will be open Monday to Saturday, 6:30 a.m. to 5:30 p.m. and will employ ten individuals: Four full time staff and six part time staff. Full time staff will be comprised of two head managers (company owners), two department managers, three baristas, two floral assistants and one delivery person. Each employee will work one of the two daily shifts, having an average shift time of 6 hours, with the delivery person working approximately 4 hours each shift. Head management will receive a yearly salary, with all other employees paid a wage. Les Fleur Café will have a number of employee benefits and employees will be paid a wage that is at the high end of industry average. It will be a company that prides itself on superior quality, with premium products and highly experienced, industry educated employees.

Marketing:

Les Fleur Café will be comprised of two main products, floral bouquets and fresh roasted coffee. With these products the company will provide a number of services, as detailed below:Floral: Corporate company contracts Floral delivery

Occasion bouquets Complimentary value-ads

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Café: Fresh roasted beans Fresh baked pastries

Beverage creation Superior service Unique infrastructure and design

The floral segment of Les Fleur Café will strive to maintain competitive pricing, while a differentiated pricing strategy will be the best option for the café segment. In terms of promotions a variety of different strategies will be implemented, as follows: Grand opening Free French press day Value card Corporate card

Van wrap Referral rewards General media Word of mouth

The company will have competitors; though for the floral segment of Les Fleur Café there is currently only one direct competitor within the financial district, Ring & Associates. Other floral service companies within the region include Funeral Services Floral, Tidy’s Flowers, and EcoStems but research shows that they will not be in direct competition with Les Fleur Café. The café segment’s competitors include La Prep, Timothy’s, Tim Hortons, Starbucks and Second cup but none of these companies offer French pressed coffee or ultra premium fresh roasted beans. Starbucks and Second cup are the closest in similarity to Les Fleur café but are still lacking the quality that this company will have.

Financial:

Les Fleur Café will need $100,000 debt financing and $200,000 equity financing in order to pay for leasehold improvements, inventory, and equipment. With a low debt ratio risk is decreased. By keeping minimal debt and avoiding large long term expenses like buildings and land Les Fleur Cafe can keep the majority of its costs variable and thus is less likely to go under if hit by unexpected events. With an IRR of 77.7% and projected breakeven after the first year of sales, followed by upward trends, it is apparent that Les Fleur Café could be a very successful business. From Appendix A: Financial Projections it is shown that expected Revenue in the second year could be $82,000 increasing to $1,929,135 by year five. Finally, with a set ROI of 28% investors should be confident that they will see returns, financial projections showing expected payouts of dividends by year three.

By taking advantage of the gap in premium coffee suppliers in Toronto's financial district, Les Fleur Cafe can create a strong brand that will grow quickly and steadily over time. Coupling a floral business with a cafe allows Les Fleur Cafe to create a unique atmosphere as well as secure its prime location while maximizing profit. Les Fleur Café has the potential to be a stable and profitable staple in Toronto's financial district.



2 Business Overview2.1 Introduction

Les Fleur Café will be a floral design boutique and premium coffee destination in the heart of the Financial District in Toronto Ontario. Les Fleur Café will be a unique company in that it is composed of two different segments, specialty coffee and corporate floral services, with all products being entirely locally sourced. Through specialization in corporate floral services and occasion bouquets, Les Fleur Café can help corporate clients realize their goals of expressing and enhancing their corporate brand, vision, values, and esthetics. The café segment utilizes unique infrastructure and design to create an escape from the office for working individuals. Using ultra premium fresh roasted beans and having industry leading staff ensures quality and the perfect cup of coffee. With a focus on pressed coffee (French press) and espresso beverages the café is set apart from the average coffee shop with drip made coffee. Les Fleur Café combines its unique offerings to provide Toronto’s Financial district and beyond with something entirely different and unique to the market.

2.2 Mission Statement

“Les Fleur Café captures corporate value and enhances a brand’s vision through creation of fresh floral bouquets. With this, offering a unique coffee experience and atmosphere in providing Toronto’s Financial District with ultra premium, superior quality coffee.”

2.3 Vision Statement

“To become Toronto’s leading provider of upscale bouquets for the corporate industry and floral devoted soul. Additionally, to be a café where one can grab a coffee on the run, or stay and experience a unique escape from the workplace.

2.4 Goals and Objectives

Short-term:

Obtain a bank loan of $100,000 and equity of $200,000 to support start-up costs and expenses.

Develop Les Fleur Cafés brand and market in the Financial District Create strategic relationships with customers to ensure repeat purchases Obtain 5 large scale Corporate Floral contracts by end of year one Average 260 café customers/day in year 1 Break-even by the end of year 2 Payout Dividends to investors by end of year 3

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Be reviewed by BlogTO, one of Toronto’s most respected blogs, and listed as “The Best of Toronto” for both Café and Floral components

Medium-term:

Provide equity investors with Return on Investment of 25% or greater To expand floral operations in year 4: new production space Finance expansion internally Expand floral services from the Financial District to the GTA

Long-term:

Increase and maintain brand awareness with extended quality and excellence in both components of the company

Maximize sales to continually increase financial performance Strive to be nominated for the Business Excellence Consumer Choice Award:

Toronto Florist, to increase company recognition Win the Business Excellence Consumer Choice Award

2.5 Industry Overview

Floral:

“The best florists in Toronto are akin to your indispensable best friends” (Urback, 2012)

According to American Society of Florists (SAF) in 2012 there were approximately 19,609 florist establishments in the United States with $6.2 Billion in sales (Society of American Florists, 2012). The Ontario floral market has approximately $784.8 million in sales per year, the Toronto Yellow Pages showing that there are 160 florists located in the GTA alone (Canadian Industry Statistics, 2012). The Corporate floral sales industry makes up approximately 17-22% of average retail floral sales. As Les Fleur Café specializes in corporate floral sales this low percentage could put the company at a disadvantage. Consumer demographics find that the average floral consumer is college educated, employed full time and earning over $75,000 a year (Canadian Industry Statistics, 2012). In 2010 Canadian Florist operating revenues were approximately $750 million, a 5.5% increase from 2009 (Canadian Industry Statistics, 2012). As of 2010 the Florist industry had experienced many changes, with increases in online shopping, changing consumers and new competitors. According to Amanda Ryder from Canadian Florist Magazine, some challenges that florists face include a shrinking industry, pricing pressures, added competition, the move to online and the need for a business mindset (Ryder, 2010). Though, it is also mentioned that if a company can successfully watch costs and be aggressive in the market, they will succeed as a florist (Ryder, 2010).

As Les Fleur Café will be owned and ran by two individuals with a business background and a business education, proper management will be carried out. With the shrinking industry in mind, it is apparent that this consists largely of sales from occasion bouquets



and events like weddings. As Les Fleur Café specializes in corporate floral sales vs. events, the company has an advantage over competitors in that large-scale companies will continue to need floral services in order to maintain company esthetics and impressions. Also, the corporate industry is continually expanding, with the financial district always developing, showing that this market is actually growing.

Café:

“Toronto has become a city that runs on coffee, our downtown is thoroughly caffeine-fuelled” (Yonge Street, 2010).

2011 combined revenues for U.S. coffee shops was $10 billion, with gross margin being approximately 85%, and an operating income averaging 2.5% of net sales (SBDC Net , 2012). The Café industry is a labor-intensive field that places a premium on friendly, energetic staff (SBDC Net , 2012). It has been found that most adult coffee drinkers form their lifelong habit in their teens, which means gaining a customers loyalty could cause for repeat purchasing for many years (SBDC Net , 2012).

According to the Small Business Development Center (SBDC), “coffee consumption is expected to increase through 2015 at an average annual rate of 2.7%, with positive expectations for continued growth in coffee sales, despite its mature product position in the market” (SBDC Net , 2012). This being due to advances in premium coffee products. 2012 statistics also found that though economic uncertainty exists, consumers are still purchasing premium coffee and visiting local cafés. 60% of coffee is consumed at breakfast, with patrons being younger, more affluent and educated (City of Toronto, 2012).

Consumers are more likely to have a household income of $100,000, recent stats showing 65%. This means that consumers are able to afford the price premium that comes with high quality beans. Within the United States café industry 70% of sales are generated for the top 50 coffee shops (SBDC Net , 2012). The probability of similarity in percentage for Canadian statistics is high; with humble independently owned shops competing against reputable franchises like Starbucks and Time Horton’s. As Les Fleur Café is not a franchise it will have to compete for a portion of the other 30% of sales in the Canadian café market. The large number of cafés already in existence in Toronto presents a challenge. According to the National Post, the number of coffee shops in Toronto has been rising drastically over the past decade, with independent cafes budding and succeeding in areas throughout the city (Yonge Street, 2010; Society of American Florists, 2012). With hundreds of cafés already in existence in a largely saturated market, Les Fleur Café will have to compete for sales, though the fact that independent café’s are ever increasingly successful is positive.

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3 Operations Plan3.1 Hours of Operation

Hours of operation at Les Fleur Café will be: Monday- Saturday: 6:30 a.m. to 5:30 p.m.The store will be closed Sunday’s and statutory holidays.

3.2 Legal Structure

Les Fleur Café will incorporate in order to obtain equity investment in support of financing costs. This is strategically beneficial for this company as it decreases the need for greater debt financing and therefore decreases risk. There are also valuable tax deferrals, like the small business tax deduction.

3.3 Location

Les Fleur Cafe will be located at 40 King Street West, Toronto Ontario in the Scotia Plaza. 900 square feet will be renovated on the ground floor of the building to create an exceptional, unique surrounding. The Scotia Plaza is a prime location for this company because it is located in the very busy financial district of Toronto, where a large portion of our target market is situated. Scotia Plaza provides tenants with a secure business environment, it has food and retail services nearby to bring in coffee consumers and it is directly linked to the underground PATH system and pedestrian walkway. Also, with 68 floors of business offices the building has numerous companies for Les Fleur Café to target. The store will be located near the entrance of the PATH system and will be separate from the food court located within the mall. Les Fleur Cafe will include a seating area, two separate areas for coffee and flower preparation, a display/cooler for flower storage, a general storage room, and a washroom. Along the walls of the location will be a living green wall that will serve to both create a unique environment as well as contribute to air quality.

Figure 3.3 Green Wall



Figure 3.3.1: Scotia Plaza Location

3.4 Floor planFigure 3.4: Proposed Floor Plan

3.5 Suppliers

Les Fleur Cafe is located central to its primary suppliers, who provide fresh baking, flowers, and coffee beans. Le Matin will supply baked goods on a daily basis, Dark City will supply fresh roasted beans on a three-day cycle, and the Ontario Flower Market will be the source for fresh flowers. This will allow Les Fleur Cafe to compensate for unexpected supply shortages almost immediately, as all suppliers are very close in proximity to Les Fleur Café. In addition, it will serve to foster better relationships with suppliers via face-to-face communication and establish legitimacy in the community by

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sourcing everything locally.

Figure 3.3: Supplier Proximity

A: Les Fleur Café B: Dark City Roastery C: La Matin D: Ontario Flower Market

3.6 Average Business Cycles

Average Day:

Les Fleur Cafe will open at 6:00 a.m. and close at 5:30 p.m. Monday through Sunday, 300 days per year (everyday besides Sundays and statutory holidays). Before opening each day, the van operator will collect freshly roasted beans (every three days or as needed), flowers from market (as required), and fresh baking from the nearby suppliers. Upon bringing them into the Cafe, the beans and flowers will be stored in their respective areas and the pastries will be displayed. Minor store preparations will begin at 5:30 and by 6:00 the Cafe manager and Barista will be serving coffee to customers. The Floral Manager will begin their inspection of the flower inventory and begin designs for corporate clients. The floral assistant will continue the creation of bouquets designed by the floral manager for corporate clients and serve walk in customers with occasion bouquets. At 8:00 am the van operator will begin delivering the corporate bouquets required for the day to clients. Lunch break will be at 10:30 and the second shift will come in at 12:00. The second shift will continue work in the same fashion as the first, clearing tables as required. At 5:30 pm Les Fleur Café will close to customers, at which point cleaning and storing will happen until they are dismissed at 6:00 p.m. Throughout the day the owners may engage in sales meetings with prospective floral customers and engage in other marketing activities as needed.



Average Month:

Prospect new potential floral customers Pay rent, utilities, and debt

Average Year:

Review revenue data and plan supply orders accordingly Prepare income tax

3.7 Capital budget As seen below, furniture and fixtures will cost approximately $75,000, while Leasehold improvements will have an expense of $75,000. There are added capital expenses in the fourth year due to an expansion of the floral segment. Average days inventory will be four days, with no accounts payable as we pay all supplies upfront.

Figure 3.7 Capital Budget Schedule

3.8 Operating Expenses

Figure 3.8 Operating Expense Schedule

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4 Human Resources PlanLes Fleur Café will employ ten individuals: Four full time staff and six part time staff. Full time staff will be comprised of two head managers (company owners), two department managers, three baristas, two floral assistants and one delivery person. Each employee will work one of the two daily shifts, having an average shift time of 6 hours, with the delivery person working approximately 4 hours each shift.

Shift 1: 5:30 a.m. - 12:00 p.m. Shift 2: 12:00 p.m. - 6:00 p.m.

4.1 Job Descriptions & Qualifications

Head Managers (2):

Business Management Experience Business Education (Bachelor of Commerce Degree) Oversees operations Hiring/firing of staff Accounting/bookkeeping duties Purchasing Scheduling Pricing Marketing Attend corporate contract meetings (with Floral designer)

Floral Designer/Manager:

Canadian Accredited Floral Designer (certificate program)



5+ year pervious corporate floral design experience Attend corporate contract meeting Ensure continual goodwill with contract clients Create a floral concept to match corporate vision and values Approve bouquets created by the floral assistants Create floral orders Oversee all floral operations Prepare flowers for storage when they come into the store Create in-store display arrangements to match Les Fleur Cafés esthetics Ensure customer satisfaction

Café Manager:

2+ year pervious café management experience 4+ years barista experience Order coffee beans the day prior to pick-up Restock café supplies Train new Baristas Ensure coffee quality Answer to head management Inform head management of café issues or concerns Attend barista interviews Perform knowledge testing on new baristas

Barista (3):

At least 5 months previous barista experience Food safety accreditation Perform customer service duties (take orders, prepare beverages, serve customers) Perform general cleaning duties (clean tables, sweep, restock) Grind coffee beans Ensure customer satisfaction

Floral Assistants (2):

Create bouquets based head designers vision Assist floral designer with creating bouquets Take occasion bouquet orders (in person & over the phone) Prepare occasion bouquet orders Perform general cleaning duties (sweep, wash buckets, organize workspace) Forward contract inquiries to head floral designer & head management Serve walk-in customers Provide advice on arrangements, floral types, care and maintenance

Delivery/ Supply retrieval Personnel:

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Deliver arrangements Go to corporate locations to resupply flowers & retrieve old bouquets (weekly or bi-

weekly) Ensure delivery paper signing Pick-up supply orders (coffee beans, pastries & flowers)

4.2 Training Programs

General Training:

All employees will be expected to attend a seminar led by head management. The seminar will instill company goals, values, and strategies, along with outlining rules and guidelines that all employees are expected to follow.

Floral Assistant Training:

On the job training will consist of a requirement to shadow the floral designer for the first week of their employment. As they will be working very closely with the designer it is crucial that they understand the designers techniques and mimic these techniques. The designer and assistants must have the same design visions and a mutual understanding of goals. Shadowing will consist of:

Attending 1 corporate contract meeting Watching the designer create numerous bouquets and copying the procedure Create test bouquets to be approved by the designer

Barista Training:

On the job training will consist of the Café manager teaching new baristas how to make a perfect coffee the “Les Fleur” way, along with learning general operations and techniques. They will also shadow an existing barista staff for 3 hours. New Baristas will learn café procedures by seeing first hand how is it done, after 3 hours of shadowing they will have a practice round with “test” customers.

Delivery/Pickup Personnel:

New delivery/pickup personal will be instructed on the exact procedures and operations to follow by going with a member of head management from each department to pick up all supplies and to do numerous floral deliveries. This will ensure that all tasks are completed properly once this individual is on the job alone.

4.3 Management and Labor Costs

Average Canadian wages for required employees according to Payscale Canada:



Floral Designer: $10.67 - $18.42 (Payscale, 2012) Florist: $9.98 - 23.11 (Payscale, 2012) Café Manager: $10.47 - $22.51 (Payscale, 2012) Barista: $8.92 - $12.30 (Payscale, 2012) Delivery/Pickup Personnel: $11.12 - $22.06 (Payscale, 2012)

Les Fleur Café will pay its employees a wage at the higher end of industry average. This being because it is intended to be a company that prides itself on superior quality, with premium products and highly experienced, industry educated employees. The following outlines employees starting wages per hour:

Barista & Delivery/Pickup Personnel: $13.00 Floral Designer/Manager & Café Manager: $21.00

As head management has the largest responsibility and are also the company owners they will be paid a starting yearly salary of $40,000 each. It is estimated that total salaries and wages, for the first year of operations, are expected to be $341,856. Training will not add significant costs, as employees will receive their regular wage while taking part in on the job training.

Please refer to Appendix 1 (Schedule 4) for detailed calculations of management and labour costs.

4.4 Planned New Positions

With the planned floral expansion within Les Fleur Café’s fourth year of operations the company will need to acquire more floral staff. As the goal of the expansion is to increase floral contract capacity, another floral designer and one or two floral assistants will be needed, depending on demand.

4.5 Wages and Benefits

Head management will receive a yearly salary, with all other employees paid a wage. Les Fleur Café will have a number of employee benefits. Contributing to Unemployment Insurance, Canadian Pension Plan and Workers Compensation. Also giving vacation pay, with entitlement of minimum two weeks of vacation with pay after each 12 months of employment.

4.6 Organizational Structure

Figure 4.6 Organizational Chart

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5 Marketing Plan5.1 Products & Services:

Les Fleur Café will be comprised of two main products, floral bouquets and fresh roasted coffee. With these products the company will provide a number of services, as detailed below:

Floral Segment: Bouquets

Use fresh flowers to create exceptional bouquets with unique designs. Corporate Bouquets - express and enhance a client’s corporate brand, vision, values

and increase esthetics. Company contracts - floral accounts with a bi-weekly automatic account charge Floral delivery- going to corporate locations to resupply flowers & retrieve old

bouquets (weekly or bi-weekly) Floral Tutorial Classes – Once every 3 weeks customers will be able to come into the

store to learn how to create their own personalized professional bouquet. Occasion Bouquets- floral arrangements for any occasion (celebration, hardship, etc.) Complimentary value- ads – cards, vases and added ornaments to enhance an

occasion bouquet

Café Segment: Coffee & Pastries

Comm 447 | December 6, 2012

Owners/Head Management

Cafe Department Manager

Barista 1 Barista 2 Barista 3

Delivery/Pickup Personnel

Floral Department

Manager/Head Designer

Floral Assistant 1 Floral Assistant 2

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Fresh roasted beans - Ultra premium fresh beans appeal to coffee connoisseurs or the average consumer.

Fresh baked pastries – Delivered daily, purchased from the esteemed bakery La Matin

Beverage creation- French press, Latte, Americano, etc. Superior service - Experienced Baristas ensures the best coffee, every time Unique infrastructure and design - creates an escape from the workplace Coffee Delivery – delivering large portions of coffee (carafes) and pastries to nearby

business offices to be enjoyed at meetings or conferences. Café provides the opportunity to grab a coffee and go, or stay for a meeting and share

a French press.

5.2 Pricing Policy:

Floral:

The floral segment of Les Fleur Café will strive to maintain competitive pricing. Doing so will ensure that they are in line with competitors and prevent a loss of sales based on pricing.

Café:

The café segment will have a focus on premium coffee, being that the beans will be some of the highest in quality that are currently available. Encompassing unique features that set Les Fleur Café apart from competitors, along with ultra premium status, value is ensured. This being said, a differentiated pricing strategy is the best option for the café segment of this company.

5.3 Promotions

Grand Opening:

The Grand Opening will run during regular business hours, 6:30 a.m. to 5: 30 p.m. during witch time all management of Les Fleur Café will be present. The store will be in full production; the café and the floral creation department will be running with promotions going on. These promotions will consist of in store discounts for the day of the opening, with decorations, free snacks, and a very upbeat environment. There will also be complimentary takeaway coffee mug bouquets that include a brochure that will provide more information on the company (as seen in Appendix B). A business card and a coupon

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to be used at a regular date will also be included, which will hopefully increase return customers.

Figure 5.3 Mug Bouquet Takeaway Figure 5.3.1 Les Fleur Café Business Card

Free French Press Day:

For every year following the grand opening, Les Fleur Café will have a Free French Press day to be held on the day the store opened; all customers who come into the store will receive a free press of fresh coffee. Holding this event each year will retain and increase goodwill, celebrate the company’s years in business, and show our customers that we value their patronage.

Value Card:

The value card will be a membership that customers can obtain free of charge. The customers name is kept on file and with each purchase their card will accumulate points via a card punch system, once customers reach certain point levels they will be eligible for in store rewards that consist of floral discounts and free coffee.

Executive Card:

With a personal Executive Card customers will receive 10% off the price of all coffee purchases from Les Fleur Café. The executive card will be distributed to executives in offices within the Scotia Tower during the first week of Les Fleur Cafés operations. Having the card will increase the likelihood that these corporate individuals will come into the store.

Van Wrap:

The van wrap will increase the company’s visibility within the city and therefore increase word of mouth. It will accomplish general marketing, as our logo, address, and phone number, along with pictures, will be on display through quality graphic design.



Figure 5.3.2 Van Wrap Example

Referral rewards:

Regular customers will be given the opportunity to receive added benefits by referring a friend to visit Les Fleur Café and make purchases, whether it is with the café or the floral services. If a new customer comes into the store and advises a staff member that they were told to come into the store by a customer with a value card we will look up that persons name and add bonus points to their value card account. We will also give the new customer their own value card, recommend they do the same for their friends, and give then a 10% discount to any café purchase (one time only).

General Media Advertising:

Les Fleur Café will have a webpage created and the company will also utilize newspaper and radio advertising during the first year of operations. After the first year only the website will continue to be utilized as the expenses for newspaper and radio advertising are very large and a steady customer base should be realized at this point in time. The advertisements will consist of regular in-store promotions along with our general contact information along with a visual for the paper. The webpage will have all company information with a home page that gives general information and a company background, as well as a picture tab of past orders created, an email contact, a list of our products and services and an online order system.

Word of Mouth:

With the grand opening giveaways the company’s word of mouth will be increased, as the bouquet will become a point of discussion amoung consumers and their families and friends.

5.4 Marketing Strategy

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With the general company promotions Les Fleur Café will also utilize a specific marketing strategy for the floral segment, as it requires a specialized strategy in order to reach the target market and achieve the client base required. Les Fleur café will reach future corporate clients by using the following strategy that encompasses three main points of contact:

1st point of contact:

A full floral bouquet will be delivered to the floor manager or person in charge of décor at an office with Les Fleur Cafés business card and corporate floral flyer attached. This will give said individual time to enjoy the flowers, see first hand the quality of the product and increase their awareness that Les Fleur Café is in operations and interested in providing their company with our service.

2nd point of contact:

Once the bouquet has been at the office for 2 days Les Fleur Cafés management will send goodwill to the company via personalized letter. The value of floral décor will be highlighted and the fact that Les Fleur café is a new company offering its service will be mentioned. The letter will end with suggestion of a private consultation with our corporate team.

3rd point of contact:

After the 2nd point of contact, if Les Fleur Café is not contacted we will call the company that we had contacted and reiterate the information from the letter with hopes to book a consultation. The consultation will be used to lock in clients with a term contract.

Another approach that Les Fleur café will utilize is a Sponsored coffee break. If after the 3 points of contact we are unable to set up a contract and find that the contact strategy was ineffective the coffee break pitch will be put into action.

Sponsored Coffee Break:

This will consist of a pitch where Les Fleur Café approaches the management of an office via telephone requesting to essentially pitch the value of floral decor to them. With expression that unique corporate values, can be displayed through fresh flowers or natual landscapes companies will realize the value in fresh floral décor vs. alternative decorations. Les Fleur Cafés Management will demonstrate to corporate offices how their company can realize their goals of expressing and enhancing their corporate brand vision, values, and esthetics. With the pitch we will provide free coffee and pastries and will give them a free bouquet for the office. With utilization of visuals, presentations, a bouquet and a great pitch, Les Fleur Café will be successful in using this pitch to obtain clients.

5.5 Place: Market & Distribution



Market

Les Fleur Cafés market will consist of Toronto’s Financial District, with expansion into Toronto and the GTA as the company’s recognition within the city increases over time. The Financial district itself has approximately 100,000 people in the region on an average day, while the population of Toronto as a whole is 2,615,060, showing that the consumer market within this region is sizeable (Connor, 2012).

Distribution

Les fleur café will have a number of different distribution methods to match its promotions and services. The floral segment will distribute to its corporate clients via the delivery van, which will be free of charge within Toronto. The company will go to corporate locations to resupply flowers and retrieve old bouquets on a weekly or bi-weekly basis. In terms of occasion bouquets, customer will be required to come into the store to pick up their bouquets or walk-in and purchase a bouquet from the display cooler. For the café segment the store will be the main point of distribution, the prime location being a key component in terms of coffee sales. As mentioned previously Les Fleur café will be located on the main floor of the Scotia tower where high levels of foot traffic exist, whether it be pedestrians walking by the tower or people coming in and out of the tower. Serving these individuals with coffee to enjoy in the store or to take out on the go will be Les Fleur cafés main distribution. The store also offers a service wherein carafes of coffee are delivered to offices within the scotia center and to other close proximity buildings for no extra charge.

5.6 Segmentation, Targeting, Positioning

Value Proposition

Café: Our customers:

Receive ultra premium, high quality coffee Experience a contemporary and modern store

atmosphere Escape from the office

Floral:Customers Receive:

Same day delivery within the Toronto PATH system & GTA delivery

Unique, upscale bouquets Corporate benefit through floral accounts Bouquets designed to enhance corporate brand

vision

Target

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Café: White collar coffee aficionados, with annual incomes of approx. $70,000+ Consume coffee 1+ times a day, appreciate high quality coffee & service

Floral: Large corporate companies and office buildings: Hotels, Banks, Scotia Center, Trump

Tower, etc. Require weekly/biweekly delivery, corporate accounts & standing orders. Affluent individuals who seek floral arrangements.

Positioning Statement

At Les Fleur Café we create unique, upscale bouquets for the corporate industry and floral devoted soul. Additionally, we provide ultra premium, superior quality coffee for the white- collar connoisseur. Offering a unique coffee experience and atmosphere as an escape from the workplace.

5.7 Competitive analysis

As Toronto is very large and has many floral shops and cafés, competitive analysis was done on a basis of location within the Financial District and similar qualities.

Floral:

The Floral Segment of Les Fleur Café has only one direct competitor, Ring & Associates. This company also has floral services for corporate clients with weekly delivery of fresh flowers and other similar qualities. No other direct competitors are located nearby, though there are other flower shops in the financial district within close proximity to Les Fleur Café. These include:

Funeral Services Floral –specializes in funeral service bouquets, and do not do corporate bouquets. Les Fleur café does not provide funeral services, they are therefore not a competitor

Tidy’s Flowers –offer services of all types: funeral, wedding, anniversary, etc. As they do not specialize in anything and do not have a strong corporate focus this company is not a large threat.

Edible Arrangements –specializes in bouquets that are made with fruit and other foods. They do not use real flowers and are therefore not a competitor

EcoStems – specializes in fair trade flowers, event planning and occasion bouquets this company is not a direct competitor as we specialize in corporate bouquets and they focus more on events with a fair trade focus.

Figure 5.7 Floral Competitive Analysis Diagram: Price & Similarity



Café:

The café segment has no direct competitors within the ultra premium rage. Les Fleur café is a first mover of sorts in this segment, as research found that there are no recognized ultra premium cafés in the financial district. There are a large number of middle range coffee shops though, these include:

La Prep – focused on food, coffee is just one component of this café, but not the main focus, average quality

Timothy’s – franchise with drip coffee and baking, low quality. Tim Hortons – franchise with drip coffee, baking and lunch offerings. Tim Hortons is

a very well know company but its consumers care less about quality and more about the low price and the fact that it is reliably the same medium level quality every time.

Starbucks – franchise with higher-level coffee and espresso offerings. The company has higher priced beverages as the quality is high but still not considered ultra premium

Second Cup – franchise with higher-level coffee. This company is very similar in comparison to Starbucks, having the same product offerings.

None of these companies offer French pressed coffee or ultra premium fresh roasted beans. Many of the beans used in these companies are already pre-ground; pre packaged, and made to serve quickly without the quality focus. Starbucks and Second Cup are the closest in similarity to Les Fleur café but are still lacking the quality that this company will have.

Figure 5.7 Café Competitive Analysis Diagram: Price & Quality

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5.8 Marketing Expense Projections

Marketing expenses for each of Les Fleur Cafés promotions can be seen below. The expenses for the executive card and value card increase slightly each year with inflation. The Takeaways are a yearly expense (approximate number per year) that will be given to corporate offices in trying to increase awareness of Les Fleur Café and increase the company client base. Free French Press is an expense that happens once a year on the day that the store opened, this expense increases with inflation. Flyers will be continually posted around the financial district to increase awareness. A website will be created with a large initial expense followed by smaller maintenance expenses each year. The newspaper and radio adverting will only take place during the first year of operations. They are large expenses that will only be necessary in the first year, as word of mouth and previous customer retention will allow Les Fleur Café to be successful.



Figure 5.8 Marketing Expense Projections

5.9 SWOT Analysis

Strengths:

Superior quality Close supplier proximity Professional floral designers with at least 5 years of design experience Location- Scotia Plaza, Financial District Differentiate with French Press offerings Cater to the needs of our corporate clients

Weaknesses:

Production space is limited Café seating capacity depends largely on foot traffic Corporate clients may take time to obtain

Opportunities:

First mover advantage- only ultra premium café in Financial District Location- many clients to target Could extend bouquets to general population if needed

Threats:

Competitors- direct and indirect

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Imitability is high Completely dependent on suppliers

6 Financial Plan6.1 Debt/Equity structure

Les Fleur Cafe will require $300,000 of startup cash in order to pay for leasehold improvements, inventory, and equipment. $100,000 will be comprised of long-term debt acquired from lending institutions and equity investors will supply the remaining $200,000. Personal guarantees may be required to acquire the long-term debt.

6.2 Loan Amortization

The $100,000 long-term debt will be amortized over 5 years and is at 7% interest. Regular payments will be made monthly in the amount of $24,389.

Figure 6.2: Debt Amortization Schedule

6.3 Dividend Policy

Les Fleur Café will pay dividends to equity investors when retained earnings are over $100,000, and will maintain a level of $100,000 in retained earnings thereafter. The retained earnings account is necessary in order to fund equipment and the expansion costs of the floral business as it expands. By maintaining $100,000 retained earnings, Les Fleur café will be able to finance a large-scale expansion in year 4 internally as well as take advantage of bulk buying power and infrequent flower market opportunities.

6.4 Economic Forecast

The five-year projections use an inflation rate of 2.5% for all wages, prices, and supplies.



6.5 Ratio Analysis

Les Fleur Café will operate with a current ratio of 1.44 meaning its assists will be able to cover its debts 1.44 times over and reflects a low risk business. The debt ratio for Les Fleur is .29 and shows that there is minimal debt in relation to Les Fleur Cafes assets.

6.6 Sensitivity Analysis

The sensitivity analysis for Les Fleur Café shows how fluctuations in the critical variables for both the cafe and the floral components will affect performance. The measures used to gauge this are the Net Present Value of cash flows to equity investors, the average 5-year profit, and internal rate of return. For the Cafe side of the business a change of 55.6% in average customers only changes average profit by 15.6%. A 55.6% fluctuation in average price changes average profit by 27.5%. This shows that the cafe side of the business is inelastic with relation to price and customers and indicates a very stable business. The floral business is similar with a 42.9% and 57.9% change to yearly customers and average price respectively only changes average profit by 43.3% and 58.3% respectively. The difference of .4% for changes in floral price shows that price and floral sales is very slightly elastic, but for the most part very stable.

Figure 6.6: Floral Segment Sensitivity

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Figure 6.6.1: Café Segment Sensitivity

6.7 Investment Analysis

The worst-case uses 200 café customers and 3 floral clients in the first year. Best case uses 360 café customers and 7 floral clients. The analysis shows very positive results for Les Fleur café with a base case of 77.7% Internal rate of return.

Figure 6.7 Investment Analyses

6.8 Break Even

The average daily customers needed by both floral and coffee sides of the business calculate the break-even analysis, as seen below. With breakeven levels that are very low in comparison to base case expected sales it is apparent the Les Fleur café has a promising future. Breaking even after the first year of sales and increasing each year moving forward.

Figure 6.7 Break Even Levels



Figure 6.7.1 Floral Break Even Chart

Figure 6.7.2 Café Break Even Chart

6.9 Summary of Financial Results

Les Fleur Café will have a low debt ratio, which decreases business risk. By keeping minimal debt and avoiding large long term expenses like buildings and land Les Fleur Café can keep the majority of its costs variable and thus is less likely to go under if hit by unexpected events. With an IRR of 77.7% and projected breakeven within the second year of sales followed by upward trends, it is apparent that Les Fleur Café could be a very successful business. From Appendix A: Financial Projections it is shown that expected Revenue in the second year could be $82,000 increasing to $1,929,135 by year five.

7 Conclusion

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By taking advantage of the gap in premium coffee suppliers in Toronto's financial district, Les Fleur Café can create a strong brand that will grow quickly and steadily over time. Coupling a floral business with a cafe allows Les Fleur Café to create a unique atmosphere as well as secure its prime location while maximizing profit. The margins from the café segment (81%) create a big profit that is relatively stable and grows to capacity quickly. The floral business requires more time to become established (20% margin), but once it does customers supply a regular source of income that is extremely stable and bolsters the profit of the business. In the fourth year Les Fleur Café will add an support location to supplement the original location's floral production and allow for even more growth. This explains Les Fleur Cafe's excellent projected performance and its phenomenal lack of sensitivity to key variables. Because of the relatively low capital costs, Les Fleur Cafe will be able to start up with only $300,000 in a debt to equity ratio of 1:2 and be debt free in 5 years. Outside equity investors can expect their investment returned in dividends alone within 5 years, with a return on investment just under 30%. In conclusion, Les Fleur Café has the potential to be a stable and profitable staple in Toronto's financial district.

8 Appendixes

8.1 Appendix A: Financial Projections

Please refer to the attached Excel spreadsheet for detailed financial projections.

8.2 Appendix B: Floral Pamphlet



8.3 Appendix C: Competitors Locations

Floral: Green arrow: Les Fleur Café Red dots: Competitors locations

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Café: Green arrow: Les Fleur Café Red dots: Competitors locations

9 ReferencesCanadian Industry Statistics. (2012). Retail Revenues and Expenses Florists.

Retrieved December 1, 2012, from Industry Canada: http://www.ic.gc.ca/cis-sic/cis-sic.nsf/IDE/cis-sic4531rdpe.html



City of Toronto. (2012). Toronto: Living in Toronto. Retrieved December 1, 2012, from Toronto : http://www.toronto.ca/demographics/cns_profiles/cns76.htm

Connor, K. (2012, February 8). Toronto Population growth slows . Retrieved December 5, 2012, from Toronto Sun: http://www.torontosun.com/2012/02/08/toronto-population-growth-slows-census-shows

Payscale. (2012, November 21). Barista Hourly Wage. Retrieved December 1, 2012, from Payscale: http://www.payscale.com/research/CA/Job=Barista/Hourly_Rate

Payscale. (2012, November 24). Cafe Manager Hourly Wage. Retrieved December 1, 2012, from Payscale: http://www.payscale.com/research/CA/Job=Cafe_Manager/Hourly_Rate

Payscale. (2012, November 24). Delivery Driver Hourly Wage. Retrieved December 1, 2012, from Payscale: http://www.payscale.com/research/CA/Job=Delivery_Driver/Hourly_Rate

Payscale. (2012, November 23). Floral Designer Hously Wage. Retrieved December 1, 2012, from Payscale: http://www.payscale.com/research/CA/Job=Floral_Designer/Hourly_Rate

Payscale. (2012, November). Florist Hourly Wage. Retrieved December 1, 2012, from Payscale: http://www.payscale.com/research/CA/Job=Florist/Hourly_Rate

Ryder, A. (2010). State of Industry. Retrieved December 1, 2012, from Canadian Florist: http://www.canadianfloristmag.com/content/view/2837/38/

SBDC Net . (2012). Coffee Shop 2012. Retrieved December 1, 2012, from SBDC Net: http://www.sbdcnet.org/small-business-research-reports/coffee-shop-2012

Society of American Florists. (2012). Statistics: Floriculture Indsutry Overview. Retrieved December 1, 2012, from Society of American Florists: http://www.safnow.org/statistics-floriculture-industry-overview

Urback, R. (2012). BlogTO. Retrieved December 1, 2012, from Best Florists in Toronto: http://www.blogto.com/toronto/the_best_florists_in_toronto/

Yonge Street. (2010). In the News: Toronto Coffee Shops Booming. Retrieved December 1, 2012, from Yonge Street: http://www.yongestreetmedia.ca/inthenews/coffeeshops1.aspx

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