Starbucks Project                              Business 91L                         Fall 2013

 

The goal of this project is to come up with an estimate of how much profit a local Starbucks store, on the corner of McKee and Capitol, will make in an average month. The coffee shop at McKee and Capitol is open 18.5 hours a week M-F, 18 hours on Saturdays and 17.5 hours on Sundays. The minimum wage is $10 per hour.

 

To solve this problem, you will need to come up with several estimates. I’ve given you some pointers on how to find the key numbers.

 

·         An estimate of the total sales revenue (Gross Revenue) per month

Multiply the number of customers times average amount purchases using data in this Excel file. These are actual numbers, not estimates. http://bus91L.altervista.org/Data/Copy%20of%20coffeecustomers.xlsx

 

 

·         An estimate of the Ingredient costs per month (cost of goods sold.)

a.      http://www.coffeeforums.com/forum/coffee-industry-forum/10854-average-cogs-standalone-coffee-shop.html

 

·         An estimate of the Net Revenue (gross revenue minus ingredient costs.) per month. This is a simple Excel calculation. No research is necessary,

 

·         An estimate of the payroll cost per month.

a.      You could use the number of hours open per day times Staffing levels per hour times Pay rates plus Benefit costs.

b.      Then multiply the total by 30 to get a monthly cost.

For staffing levels you could stop at the coffee shop at different times during the day and count how many employees are working. Or you could assume that the number of employees working would be based on the average number of customers they would expect to serve. For example every hour with 16 or more customers would need four employees, from 10-15 customers would require three employees, under 10 customers would need two employees. Any reasonable idea is ok.

http://www.glassdoor.com/Salary/Starbucks-California-Salaries-EI_IE2202.0,9_IL.10,20_IS2280.htm

 

·         An estimate of the operating expenses per month.

a.      You can use ratios from a 10K report. Here’s the Starbucks website

b.      http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsannual

c.       You’re looking for the Consolidated Statement of Earnings. You’ll find it on page 50 of the 2012 report, on page 43 of the 20111 report, and page 39 of the 2010 report. I gave you two older sets of numbers. You might want to find some more recent numbers and take an average over 3 or 4 years.

 

·         An estimate of the monthly profit (Earnings Before Interest and Taxes.)

a.      Net revenue minus payroll costs and minus operating expenses. This is an Excel calculation. No research is necessary.

 

http://bus91L.altervista.org/Data/Copy%20of%20coffeecustomers.xlsx

 

Deliverables

1. One-page project report, in Word, describing the methods or resources your team will use to come up with the estimates. Due date: The seventh week of class. This piece of the project is worth 5 points. Include the names of all team members on the report.

 

What I'm looking for is an explanation of how your team will estimate the numbers. You will have to do some research on your own.

 

2. Excel Workbook showing your estimates, calculations, and conclusions. Due date: The ninth week of the class. This piece of the project is worth 5 points. Include the names of all team members on the report.

 

Team members

Member 1

 

Member 2

 

Member 3

 

Member 4

Customers per hour

 

Hours open per day

18.57

Customers per day

 

Days open per month

30

Customers per month

 

Average purchase

$

Monthly revenue

$

Cost of Goods Sold as a percent of revenue

%

Cost of Goods sold in dollars

$

Net Profit on sales

$

Payroll Cost in dollars. (Include  a table in the worksheet showing the calculation,)

$

Benefits costs as a percent of payroll

%

Total benefit costs in dollars

$

Total Payroll + benefits in dollars

$

Other Expenses as a percent of revenue

%

Other Expenses in dollars

$

Net Profit

$