HARAMBEE UNIVERSITY

FUCLITY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS
Assignment of Development planning & project Analysis l
Title; Honey 🍯 Cafe

Name; .ID
Hana Tilahun. 216487

Adama ,Ethiopia

Submission date; may 19/5/2025

Submitted to Instructor; Tedros
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 TABLE OF CONTET
Content Page
Organizational information...………………………………………………....………...1
Executive summery ………………………………………………………………….2
Part one
1. Background of the business and justification of the business ………………….3
Part two
2. Feasibility study
2.1 Marketing demand ……………………...………………………………..4
2.1.1 Marketing survey ………………………………………………...4
2.1.2 Business demand ………………………………………………..5
2.2 Technical analyses
2.3 Industry Analysis………………………......…………………………………7
2.4 Financial analyses …………………………….....………………………….9
Part three
3. Business goal, mission and objective
3.1 objective of the business………………………………………………….12
3.2 Mission and vision ……………………………....…………………………12
3.3 Key to success …………………………………….....……………………...13
3.4 Strategies ………………………………………………........………………...14
3.4.1 Sale strategies ……………………………..………………………14
3.4.2 Pricing strategy …………………………………………………..14
3.4.3 Promotion strategy………………………………………………..15
Part four
4. Implementation, resource plan and organizational structure
4.1 Time plan…………………………………………………..........……………….16
4.2 Resource plan……………………………………….....……………………...16
4.3 Human resource plan……………………………..…………………………17
4.4 Organizational structure …………………………………………………..17
Part five
5. Financial evaluation
5.1 profitability and financial analysis…………………………………..18
5.2 business profit and loss………………………………………………….20
5.3 business cash flow……………………………………………..…………….2
5.4 Appendix
……………………………………………………………………………..22

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 Introduction
Organizational information

The applicant, Hana Tilahun

Address of Business

Region:-Adama town Oromia National Regional State

Business Name; Honey 🍯 Cafe

Emil-Address ; honey cafe @gmail.com

Types of business plan – service sector

Status of the business- new

Tele …………………..0921498545

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EXECUTIVE SUMMERY

This is a business plan proposal for the establishment of cafe having the name Honey Cafe in
Adama town. This profile envisages the establishment of a cafe for the delivery of cafeteria
services. The present demand for the proposed service delivery is estimated from different
perspective and it expected to decline after five year of its operation but through diversifying the
customer service approach we intend to handle the existing customers along with attracting new
customers. The cafe will expect to create employment opportunities for 12 persons. The total
investment requirement is estimated at about Birr 188,415 and out of which Birr 140,000 is
required for furniture and kitchen equipment. The total cost investment is to be covered by
Owens capital. The business is financially viable with an internal rate of return (IRR) of 16.65%
% and a net present value (NPV) of Birr 172,433 discounted at 10%.

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 Part one

1. Background of the business and justification for the business

Honey café is a new café sole propernership with an expected to open in July 2025 at the heart of
Adama town and expected to give a standardize café service in Adama. It is a sole proporneship
business. I will specialize in fast foods, dinners, coffee, tea, cappuccino, frozen cappuccino, and
homemade cookies and brownies, and other related activities.

In Adama city there are many cafe that give services to their customers but they cannot still
satisfy the need and want of the customer in terms of both quality and quantity. In order to
maximize customer satisfaction and to maximize my profit i decide to open a café in Adama city.
My target customers are intellectuals, artists, and writers with reserved VIP seats, and students,
couples, families and strangers. Star cafe expected to serve this area well.

This plan offers financial institutions an opportunity to review our vision and strategic focus. It
also provides a step-by-step plan for the business start- up, establishing favorable sales number,
gross margin and profitability.

Establishing this cafe has beneficiary in maximizing the welfare of the society from different
perspective. Some of them are,

 Increase the income of the owner

 It create employment opportunity
 It satisfy the need of the customer(quality and quantity) within a reasonable price
 It provide better place for younger’s in spending their time.
 It contributes for the development of the surrounding area (good sync view).
 Increasing government revenue through taxation (business profit tax and VAT).
In general these business increases the welfare of society and this business does not result any
environmental pollution, since it have very low by- product and if any (is use as food for cattle’s
especially for pig farms).

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 Part two

2. Feasibility study
2.1. Marketing and Demand
2.1.1. Marketing survey

Adama is experiencing a trend toward the creation of evening dining/entertainment venues. They
are popular and gaining more recognition. Evidence of this is found in local news and magazine
coverage. These venues are finding new homes in the areas close to and/or adjacent to
downtown.

The market opportunity for cafeterias establishments has been better in this area. The immediate
area surrounding the business venue is undergoing a building renaissance as former “Genbe” and
the currently finished multi- purpose building for business.

Target customer

One of my target customers are artists and writers who need a nice quite cozy place to think and
do their work with reserved VIP seats and for commons and strangers. The other target customer
of mine is couples that want to recreate themselves.

The Star strategy is based upon targeting and serving:

 The atypical Awash in town resident. This urban professional works long hours and has
relatively little time to cook at home. She/he has an active social life and spends a
substantial amount of disposable income maintaining it.
 The many businesses which regularly use restaurant dining as an function of conducting
business.

Market Segmentation

A restaurant/coffee house would provide one of the best food and beverage opportunities for
more than 30,000 per month and adjacent neighborhoods.

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Market Analysis
potential customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Awash Area Residents 4.00% 1,568 2,725 5,798 7,878 12,066 4.00%
Hotel/Convention/Visitors 6% 2,100 3,915 4,452 5,820 6,143 6.00%

Downtown Workers 10.6% 3,350 8,020 10,624 11,349 10,419 10.60%

Total/average 6.6% 147,018 165,660 186,874 211,047 238,628 6.6%

2.1.2. Business Demand

Estimated demand levels based on CSA household income, consumption, and expenditure
surveys as well as based on a sample survey undertaken using observation of the current demand for
existing cafés and restaurant beside the population size.

The demand for the service is directly related with the growth of the population and income of the
society. Taking this in to consideration annual average growth of 6.6% is applied to forecast the future
demand then it expected to decline after its maturity over the 5 year period. But through diversifying
the service that provided to the customers, the café will able to maintain keeping its customers.

2.2. Technical Analysis

Description of Products and Services

The Honey café will offer high quality coffee, tea, hot coca, and cappuccino, fast foods and
dinner at a very reasonable price. I will also sell homemade cookies, brownies, and doughnuts,
with fair price.

Key Features of the Products and Services

All drinks will be made with filtered water and the highest quality ingredients we can get. Frozen
drinks will have caramel or chocolate syrup drizzled in the glass and over the drink. Cappuccino
and hot coca will have whipped cream toppings as well as the option for candy sprinkles.
Cookies will have the option of a chocolate or caramel dip and sprinkles. We will offer designer

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flavored cream and five kinds of sweetener, i.e. sugar, honey, Equal, Splenda, and Sweet-n-Low.
Cream and sweetener is at no extra charge. Furthermore, the fast foods includes chips, cookies,
Burger, pizza, Mushebek, Baklaba, Halawa, Fetera, and dinner include Kitffo, Key Wott,
Minchet.

Production of Products and Services

I will use only filtered water and will brew our coffee in commercial coffeepots that will be
thoroughly cleaned between uses. I will bake and cook cookies, brownies, fast foods and dinner
in our own on-site oven from proven recipes, daily.

Future Products and Services

Within the next three to five years we expect to branch out into catering and offer homemade
pies, whole or by the slice.

Comparative Advantages in Production

My low overhead and cheaper pricing will be the key to our success.

2.3 Industry analysis

Size of the industry

Nationally, the industry is quite large, for example in Addis Ababa there are many cafeterias, we
can found cafeterias in average almost 232 meter apart in Addis but around Adama city there are
a few cafeterias.

Key Industry Trends

This industry is booming at the present time, there is a trend toward small cozy places and away
from the large generic chain.

The cafeteria business does not show signs of slowing down. With new innovations such as
flavorings and additives, it should continue for some time.

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I hope my customer will be attracted by my service in addition to this they may be attracting by
my standardize customer approach, building, chairs, tables, glasses and strategic placement.

The restaurants and cafes that make up the community of establishments in the area
surrounding. Their concepts range from typical fast food/chain venues to expensive fine dining
establishments. However, the predominating nature of the immediately surrounding restaurants
and cafteria is casual/upscale.

Description of Key Competitors

Of the few cafeterias in the area, some are large chain with a very expensive product, others are
really home style cafeterias, the last one, and competitors are an antique store with a "tea room".

Honey 🍯 cafe: Located in the heart of Adama a, while its location near many longstanding
Emanda estaurants and cafeteria would seem to offer considerable overflow, the café is not
easily seen from the street and parking is at a premium. Its concept has received very favorable
press in Adama.

Strength

Consider quality of food and service with a reasonable price, and its skilled manager together
with its bright waiter can attract customers, so it has acceptance (brand name) by the customer.

Weakness

No variation on menu or service it provides. Most of its activities like the menu are limited.

Hill side Hotel: Located on just east of Adama landmark. The location is very "out-of-the-way"
and can be perceived as a marginally safe area. Nevertheless, the café remains wildly popular
given the parking difficulties, its small size, and it's rather hidden location.

Strength

Often have interesting alternative dishes on the menu and designer décor. The evening
atmosphere is also so attractive and suitable for customers.

Weakness

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Even if there is widely varying standards of food and service, they are often expensive which
does not consider the buying capacity of the customers.

Strength

This cafeteria has relatively many customers because of its reasonable price and good location.

Weakness

The quality of the goods and service are not that much satisfactory beside the low price

Analysis of Competitive Position

None of these establishments features a traditional coffeehouse atmosphere or live or recorded

evening entertainment.

Relative to the location of these establishments, the center of twon is centrally geographically
located. Its location will easily allow for passangers from those who came others area. .

My pricing strategy and comfortable atmosphere will be the key to our success. None of the
other cafeteria in the area can offer this.

Competitive Edge

Star will position itself as unique cafeteria where its customers can not only enjoy a cup of
perfectly brewed coffee but also spend their time in an ambient environment. Comfortable sofas
and chairs, dimmed light and quiet relaxing music will help the customers to relax from the daily
stresses and will differentiate Star cafeteria from current competitors.

2.4 Financial Analysis

I want to finance growth mainly through cash flow.I recognize that this means we will have to
grow more slowly than we might like.

The most important indicator in my case is inventory turnover. I have to make sure that food
inventory turnover stays at approximately four turns per month.

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I do not want to let my average collection days get above 45 under any circumstances. This could
cause a serious problem with cash flow, because our working capital situation is tight. Most
credit sales will be via credit and debit cards. I do have plans to initiate direct billing for law
firms and other businesses conducting regular visits. I must target a net profit of 14% at the least,
and hold marketing costs to no more than one to three percent of gross sales.

The start-up expenses

Include:

 Legal expenses for obtaining licenses and permits as well as the accounting services
totaling Birr1, 300.
 Marketing promotion expenses for the grand opening of Java Culture in the amount of
Birr3,500 and as well as flyer printing (2,000 flyers at Birr0.04 per copy) for the total
amount of Birr3,580.
 Consultant’s fees of Birr3, 000 paid to ABC Espresso Services for the help with setting
up the coffee bar.
 Insurance (general liability, workers' compensation and property casualty) coverage at a
total premium of Birr2, 400.
 Pre-paid rent expenses for one month at Birr1.76 per square feet in the total amount of
Birr4, 400.
 Premises remodeling in the amount of Birr10, 000.
 Other start-up expenses including stationery (Birr500) and phone and utility deposits
(Birr2, 500).

Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following
table. The key underlying assumptions are:

 I assume a slow-growth economy, without major recession.

 I assume of course that there are no unforeseen changes in technology to make equipment
immediately obsolete.

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  I assume access to equity capital and financing sufficient to maintain our financial plan as
shown in the tables.

Year 1 Year 2 Year 3

Plan Month 1 2 3

Current Interest Rate 12.25% 12.25% 12.25%

Long-term Interest Rate 6.75% 6.75% 6.75%

Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0

Part Three
Business Goal, Mission and Objective
3.1 Objectives of the business
My primary goals over the next year are:

 Secure financing for start-up of at least Birr75000 for space and equipment
 Renovate our space in Jigjiga
 Make agreement with the supplier of our raw material and bakery vendors.
 Create a cozy, artist friendly environment (i.e. choice of colors, choice of music, decor)
 Open for business and become the most popular café in the area.
 Expand our business in different in area of the country
 Targeting and maintaining a net profit of at least 14 % by the second year.
 To generate monthly sales to reach Birr 15000 by the end of forth month of operation,
and Birr 30000 monthly by the end of the first year of operation. I use different attractive
methods to get more customers over time. For instance i provide less price compare to the
another cafeterias and we also provide some entertainment activities for the customers
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 like showing DSTV, inviting music bands for special days like Valentine ’s Day and
there will also be candle night on Sunday.
This plan includes chapters on the company, products and services, market focus, action plans
and forecasts, management team and financial plan.

3.2 Vision and Mission

Honey 🍯 cafe will become the foremost coffee shop in the area. We will serve a perfect product
at a very reasonable price. We will also be a meeting place for every individual that want to use
cafeteria service. I will create an atmosphere conducive to creative expression and promote the
creative process.

The cafe's aim is simple. It will provide a completely sophisticated, sensual, yet casual dining
and/or coffee house experience for the many Adama people and visitors who frequent the city's
casual dining spots and entertainment venues.

My aim to be able to employ several full time members of staff and build up a team so that the
partners can be clear of routine tasks and concentrate on day to day activities like meeting
customer, supervising the cafeteria, holding extensive promotion activity and so on which help
the business to develop well.

3.3Keys to Success
The keys to success in this business are:

1. Product quality: Food, coffee-based beverages, and entertainment are our products. They
must be of the high quality and value.

2. Service: My patrons are paying to have a good time. Their experience will suffer if
service is not of the highest caliber. Each member of the staff will be courteous, efficient,
and attentive.

3. Marketing: I will need to target our audience early and often. While the business is
located in a central and accessible location, many people will have to be re-introduced to
the neighborhood .

4. Management: I will need to have a firm grasp on food, beverage, and labor costs. The
dining/entertainment/coffeehouse experience must be delivered in a fashion that will not
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 only inspire repeat business, but encourage word-of-mouth recommendations to others.
Proper inventory, employee management, and quality control is key.

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

6. The finest reputation - word-of-mouth advertising, promotion of our community mission

of charitable giving.

3.4 STRATEGIES
3.4.1 Sales Strategy

My sales strategy includes:

 Sell coffee, gift baskets and glass artwork on my website

 Establish coffee service at local businesses
 Sell gift cards, frequency cards, pre-paid cards, and offer discounts to key groups
 Create an ongoing sampling program
 Conduct a consistent, aggressive marketing program
 Be an active member of the community; be visible at charitable functions
 Solicit customer feedback to constantly improve and streamline our operation
 Staff salaries that are 10% above the industry average in order to attract the best people
 Hiring for attitude so that i always have a friendly, enthusiastic staff to make customers
feel welcome and appreciated; constant staff training to assure the best quality possible
 State-of-the-art sales/inventory system to (A) reduce customer waiting time, and (B)
create efficient product ordering
 Create a mobile kiosk to take Dark Roast Java into the community at special events,
farmer's markets, art shows, etc.

3.4.2 Pricing Strategy

Our food, drinks, and entertainment options are priced to give us an attractive margin while at
the same time offering value to the consumer. I want repeat business. I also want the experience
to remain fresh. Therein lies why the food, beverages, and musical/entertainment programming
will be relatively flexible.

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Comparing with other competitive cafeterias we will provide fewer prices to our customers. I
will offer three sizes of drinks, small Birr1.00, medium Birr1.50 and large Birr2.00. Our cookies
and brownies will sell for Birr1.00 each.

3.4.3 Promotion Strategy

.The first step that we take in promoting our cafeteria is conducting an opening ceremony. On
this ceremony different well known peoples will be invited and some part of the customers will
also be invited. I also invite our neighbors to have a good public relationship.

I intend to advertise in the local newspapers and offer a "frequent drinkers club" discount to our
best customers. We will also send out advertise through direct mail, which will include cents off
coupons.

I will promote our company name and label almost more than the product itself, because to be
successful we have to stand for brand-name integrity, excellent menu offerings, and first class
entertainment and fun.

.I will have Happy Hour, price reduction for special days, like holidays, Valentine’s Day. I
provide special Torta cake for those of who celebrate their birthday parties in our cafeteria with
low price.

Two thousand flayers will be distributed in the adjacent neighborhood, on the University
campus, at the malls and in the selected office buildings within two weeks prior to the opening of
Star cafeteria. Subsequently, free postcards with Star endorsement will be printed to increase the
company visibility among the

Part four
Implementation, Resource plan and Organizational structure
4.1 Time plan
The operation of the project will start at the beginning of 2013 after certain pre-request activities
are accomplished.

The time schedule is stated as follows;

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No Activities Time schedule
1 Developing the project June 1- july25
2 Obtaining the license from concerned body July27-aug 20
3 Purchase materials and renting the building Aug 21-nov 10
4 Promotional activity Nov12-dec 16
5 Start running the business Jan1 2025

4.2resource plan

No Item Cost
1 Coffee boiler machine 20,000
2 Kitchen equipment 40,000
2 Refrigerator 8000
4 Sofas and chairs (furniture) 100,000
5 Rental for building 10000
6 Labor cost 8415
7 Miscellaneous expenses 2000
Total cost of the business 188,415

4.3Human Resource plan

The personnel plan calls for hiring 12 full-time salaried employees at start-up. Any additional
hires will be part time and devoted to the expansion of any catering function, as well as increased
capacity/operation of a private party function.

Employee salaries are as follows:

No. Sr. Manpower No. Monthly Salary (Birr) Annual Salary (Birr)
1 General manager 1 1,000 12000
2 Chief 1 950 11400
3 Line cook 2 1200 14400
4 Waiter 4 2000 24000
5 Dishwashers/Bussers 3 2,100 25200
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 6 Guards 1 400 4800
Sub total 12 7650 91,800
Benefits (10% basic salary) 765 9180
Total 8415 100,980

4.4Organizational structure

My organizational structure will be a simple pyramid style with the owners putting in as much
work as the employees. An additional manager (to be hired) will assist in maintaining and
reviewing operations of the restaurant and the entertainment venue/bar.A chef (to be hired) will
manage kitchen operations and be crucial to maintaining food inventory stability and assistance
in menu development. An assistant manager/senior server (to be hired) who will be a salaried
employee will provide regular table service as well as assistance to the manager and the general
manager. A sous-chef/line cook (to be hired) will perform secondary management functions in
the kitchen as well as provide assistance to the chef in main kitchen/cooking functions.

Part-time personnel will be hired to handle bartending, serving, and dishwashing functions. The
marketing and accounting function will be handled by independent contractors/consultants.

Part five

Financial Evaluation

5.1 Profitability and Financial Indicators

The most important indicators in our case are daily seating "counts" and weekly sales numbers.
I must also make sure that we are turning our inventory rapidly so as to avoid food spoilage.

I must target net profit/sales figures toward the 14% level with gross margins never dipping
below 38%. Marketing costs should never exceed three percent of sales.

According to the projected income statement, the project will start generating profit in the first
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing and stability trend (see the appendix) during the life-time of the project.

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 1. Break-even Analysis

The Break-even Analysis shows that Honey 🍯 café has a good balance of fixed costs and
sufficient sales strength to remain healthy. Our break-even point is Birr 320,101 on sales
averaging Birr12.54 per patron. This break-even position is achieved on a monthly fixed cost of
Birr 107,873.

The break-even point of the project including cost of finance when it starts to operate at full
capacity (year 3) is estimated by using income statement projection.

BE = Fixed Cost = 73.16%

Sales – Variable Cost

Break-even Analyses

Break-even revenue Birr 320,101

Assumptions:

Average Percent Variable Cost 20 %

Estimated Monthly Fixed Cost Birr 46,841

2. Payback Period

The investment cost and income statement projection are used to project the pay-back period.
The project’s initial investment will be fully recovered after 3 year.

3. Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 16.65% and the net present
value at10 % discount rate is birr 172,433.

4. Economic benefits

The project can create employment for 12 persons. In addition to providing services to the
customer, the project will generate tax revenue to the government.

5.2 Projected Profit and Loss

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I expect income to approach Birr 780,850 for calendar year 2016. It expected to increase to Birr
900,000 by the end of the years covered in this plan.

Year 1 Year 2 Year 3

Sale 500,000 658,900 780,850
Direct Cost of Sales 200,000 235,450 350,578
Other 50,000 40,450 55,535
Total Cost of Sales 250,000 275,900 406,112
Gross Margin 250,000 383,000 474,738
Gross Margin % 50% 40.7% 45.69%
Expenses
Payroll 70,452 100,866 100,866
Other Taxes 89,900 89,900 89,900
Sales and Marketing and 25,000 27,000 27,800
Other Expenses
Total Operating Expenses 213352 217776 218566
Profit Before Interest and
Birr276,203 511,381 Birr668,014
Taxes
EBITDA Birr283,103 518,281 Birr674,914
Interest Expense Birr48,095 43,298 Birr41,442
Taxes Incurred Birr55,675 117,021 Birr159,254
Net profit Birr172,433 351,062 467,318

5.2 Business Cash Flow

I expect to manage cash flow over the next three years with minimal new investment required
over the first two years. It is my expectation that revenue beyond business sales will be invested
in retiring long-term debt early.

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No Years
1 2 3 4 5
Cash flow from operation
1 Cash sales (CIF) 500,000 658,900 780,850 900,000 990,428
2 Operation expense(COF) 213352 217776 218566 213352 220318
3 Net cash flow 386,648 441,124 562284 686648 770110

Appendix

Business Balance Sheet

As shown in the Balance Sheet, i expect a healthy growth in net worth from approximately
Birr172,000 at the end of 2002 to almost Birr1 million by the end of the plan period.

Appendix 1

Asset Year1 Year2 Year3

Current Assets
Cash 280,231 576,483 1,052,498
Inventory 129,671 122,814 128,955
Total Current Assets 409,902 699,297 1,181,453
Long-term Assets 595,040 595,040 595,040
Total Assets 1,004,942 1,298,337 1,776,493
Liabilities and Capital
Current Liabilities 149,628 136,826 46,543
Accounts Payable 6,690 19,745 9,814
Subtotal Current
156,318 117,081 156,357
Liabilities
Total Liabilities 824,287 Birr755,721 763,658
Paid-in Capital 98,000 98,000 98,000
Retained Earnings (96,679) 75,754 426,817
Total Capital 172,433 351,062 467,318
Total Liabilities and 1,004,942 1,298,337 1,776,493
Capital

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 Appendix 2

Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 5812, Eating Places, are shown for comparison.
The ratios show a plan for balanced, healthy growth.

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