Table of Contents. 3. [Team and Organization] 3.1. Owners/Roles 3.2. Employees 3.3. Traditional versus Innovative organization 3.4.

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2 Table of Contents 1. [Company Summary] 1.1. Owners/ownership 1.2. Business Description 1.3. Product/Service Description 1.4. Company History 1.5. Current Position and Business Objectives 1.6. Mission Statement 2. [Executive Summary] 2.1. Team/Ownership structure 2.2. Products/Services 2.3. Company Facility 2.4. Marketing Strategy 2.5. Major Goals 2.6. Health Repercussions 2.7. Financial Potential Investments 3. [Team and Organization] 3.1. Owners/Roles 3.2. Employees 3.3. Traditional versus Innovative organization 3.4. Corporate Culture 4. [Products and Services] 4.1. Product Description 4.2. Type of Service 4.3. Figure/Table 5. [Operating Plan] 5.1. Location, Estimates, Costs 5.2. Facility, Equipment, Energy Source, Costs 5.3. Staff Shifts Chart 6. [Health Repercussions and Analysis] 6.1. Customer health/healthy options 6.2. Environmental/Global impact 6.3. Going Green Plan 7. [Market Size, Trends, and Competitive Analysis] 7.1. Market size 7.2. Competitive Advantage 7.3. Competitive Analysis

3 8. [Marketing Strategy and Emerging Technology] 8.1. Strategy and Social media 8.2. Emerging Technology 9. [Goals, Barriers, and Risk Mitigation] 9.1. Short term 9.2. Long term 10. [Financial Assumptions and Analysis ] Start up expenses/costs Summary Financial plan

4 1. Company Summary Chemistea is a one of a kind beverage retailer located in San Diego, California. This company took the simple idea of concocting a variety of teas and complementing them with fresh seasonal fruits to encourage consumers to be more health conscious and choosy about what is in their beverage. This business caters to their customers by providing them the tools and the choice to experiment and blend multiple ingredients in a cup. Each customized cup is personalized; tailored to not only quench their taste buds, but to meet the boost of nourishment an individual needs for the day Owners/ownership The business started out as a health conscious idea between six friends who shared a passion for foods and nutrition. All six owners graduated from San Diego State University and received their bachelor s degree in Foods and Nutrition. The owners are a mix of dietitians, chefs, and entrepreneurs who are well established in their careers. With the six combined, their knowledge of the health benefits of the food items served in the business will greatly help the marketing and sales efforts of ChemisTea Business Description All fruits will be purchased in bulk and delivered in shipments by Specialty Produce twice a week. Most fruits provided will be California grown and will be processed and prepared by all the employees. All teas will be purchased in bulk from In Pursuit of Tea in accordance to consumer demand. In addition, all teas and fruits will be offered based on the current season in order to keep up with the refreshing trends Product/Service Description ChemisTea s products will have a pre-set menu for consumers who do not desire to make their own refreshments; however, they will still receive a nutrient dense beverage. The business will also provide a set menu for the snacks to be accompanied with the tea. The purpose of the product is to have customers create their own beverage through self-service. Individuals may choose from different types of teas, hot or cold including: black, oolong, green/matcha, chai, lavendar/lavendar mint, earl grey, herbal fruit, and rose tea. In season fruits will accompany the teas for natural flavor if the customer desires. ChemisTea is aware that not everyone is familiar with different tea flavors so the company will provide one-ounce samples when necessary. The company has also partnered with Bread and Cie, a local bakery in downtown San Diego, who will provide ready-made snacks to sell at the tea shop. This way, contamination is reduced Company History The six owners of ChemisTea (Jasmine Adamos, Danielle Ballesta, Joana Miraflor, Norman Santos, Ilyn Mendoza and Krysta Landingin) became associated after taking nutrition courses at San Diego State University. After careful collaboration and

5 elaborate research, the owners decided it was time to become business partners and form an organization to participate in the evolving health movement Current Position and Business Objectives The partnership based business is equally divided between the six owners. ChemisTea is currently in the process of becoming a full-fledged establishment. The owners of ChemisTea have selected an outstanding corner café location with a large outdoor patio located directly across the street from the new Waterfront Park. Numerous residential units surrounding this area include Breeza, Ariel, and Bayside. This location is of walking distance to the heart of Little Italy. ChemisTea will be the first tea room of its kind in Little Italy, San Diego Mission Statement The mission of ChemisTea is to assist in building a health conscious community. We not only want to make a healthier you, but we want each consumer to express their creativity into a nutritious refreshment and give that extra boost they need for the day. We will do this by increasing nutritional value without compromising taste. 2. Executive Summary 2.1. Team and Ownership Structure All six owners have complete equal partnership within the business, yet each will have a different role in the business ranging from dietitians, chefs, and entrepreneurs Products/Services To keep up with the current health trend, ChemisTea s unique products and services shine using the traditional idea of drinking tea, accompanied with the innovative idea of mixing tea with fresh fruits. Customers who are particular about what they eat or drink now have the healthy option of choosing what they want in their beverage. ChemisTea aims to be the first tea shop to provide individuals a healthier dose of caffeine instead of the typical coffee, energy drink, and other sugary drinks. Instead of consuming processed foods and artificial beverages, ChemisTea desires to promote healthier food and beverage choices in their customer s diets Company Facility ChemisTea s 979 square foot facility is located across the popular Waterfront Park where customers have the option of dining inside or outside on the patio from 9 A.M. - 9 P.M. The café features granite countertops and stainless steel equipment throughout its facility and implements plentiful shelving in order to save space. Hot water heaters will be installed along with a three compartment sink. ChemisTea will also utilize automatic tea brewers to brew tea at rapid rates.

6 2.4. Marketing Strategy The main strategies ChemisTea will utilize are social media, discounts, and the favorable business location. Social media trends will not only attract online users, but give the café an edge to spread the word about the business. Discounts will be aimed towards military personnel, college students, and those who use the online check-ins of social media. In addition, at the start of a new season, ChemisTea will provide a weekend day devoted to a set amount of lucky customers Major Goals ChemisTea s first major short term business goal is to repay start-up bank loans and equipment expenses within the first year of company existence in order to eliminate any financial barriers that may block the company from a profitable future. In addition, ChemisTea aims to have at least 50 positive Yelp reviews within the first year to help increase customer numbers and to remain a competitive business in the market. ChemisTea s long term business goals include expanding to a second location North of Downtown San Diego, and expanding ChemisTea's name in the foodservice industry by opening up a bakery. The company hopes to achieve these two goals within five years in order to maintain and expand ChemisTea as a successful company Health Repercussions ChemisTea prides itself on the high standards they have set in regards to providing customers with a nutrient dense beverage with natural flavors and being able to accommodate all kinds of dietary preferences all while being organic. The café has also joined the going green movement by using eco-friendly cups for their beverages and partnering with Specialty Produce in participating in composting. Due to the potentially hazardous materials involved while composting, all employees will be educated and trained thoroughly to follow the Hazard Communication Standard Financial Potential Sales for ChemisTea s Year 1 of production were totaled to a gross profit of $563, For Year 2, sales were calculated using a projected 75% increase in revenue compared to Year 1. For year 3, there was a projected increase of revenue of 17%. Based on these projections, there will be a considerable amount of income available for potential expansion or other projects. Year 1 (2013) Year 2 (2014) Year 3 (2015) Gross Profit $563, $986, $1,153, Operating Expenses $431, $454, $487, Net Income $132, $531, $696,440.80

7 3. Team and Organization 3.1. Owners/Roles Jasmine Adamos and Danielle Ballesta are well known registered dietitians who work part time at Sharp Memorial Hospital. Joana Miraflor and Norman Santos are business entrepreneurs who formerly worked with illustrious businesses in Las Vegas, Nevada such as The Bellagio and The Wynn. Ilyn Mendoza and Krysta Landingin are both co-directors of Point Loma Nazarene University s Exercise and Nutritional Sciences department and have partnered up with local restaurants in downtown as nutrition counselors and recipe developers. All six owners of ChemisTea will be distributed into a sub-unit of two. There will be a pair of each of the following: registered dietitians, recipe developers, and entrepreneurs who will divide all the responsibilities of ChemisTea. With Danielle Ballesta and Jasmine Adamos being the registered dietitians on the core team, ChemisTea will be credited as a healthy organic tea business. The two owners will ensure all ChemisTea consumers are consuming a healthy dose of antioxidants and nutrients by creating nutrient analyses for all the products sold in shop. Krysta Landingin and Ilyn Mendoza are the recipe developers in charge of the different teas and fruits being served to the consumers. These two owners are also responsible for the labor, employees, and shipment orders for the business. Having Joana Miraflor and Norman Santos on the core team as entrepreneurs would benefit the business due to their networking and communication skills. This sub-unit is responsible for the investments, financial analysis, and the society s food and health trends Employees ChemisTea seeks to hire employees who are health-minded, nutrition aware, and motivated to spread wellness to the community. The business values employees who can provide the nutrition information regarding the fresh fruits and tea. ChemisTea prefers to hire undergraduates or new graduates who majored in the health and human services field; specifically those who are nutrition oriented. However, qualities of a good employee at ChemisTea would be an individual who previously worked in the foodservice industry and worked well with former coworkers and customers. Responsibilities of the average employee include washing and chopping fruits, brewing tea, and replenishing beverage dispensers. Each sub-unit of the core team will also have a student intern to work alongside them in order to learn how to either work in food-service or how to run a business Traditional versus Innovative Organization ChemisTea is organized as an innovative business. Although most of the decisions are made by the managers/owners, the interns and shift leads will be given the responsibility to sign off on invoices for shipments and discuss what items need to be ordered for the season with corresponding managers. Furthermore, shift schedules will be flexible with student workers and each employee will be given personal recognition based on work and moral ethics. ChemisTea is a people-focused company, thus employees will not only be individually recognized, but shift leads and their crew

8 will be recognized as a team based on how they open or close the store. This tea business strives to create an atmosphere where both customers and employees feel in control; hence, ChemisTea emphasizes on the vision and values of the products being sold. Employees will take customer feedback seriously, make the right decisions based on the situation, and influence changes to make the company better. Moreover, ChemisTea is technologically innovative in terms of offering their customers a touch screen tablet that allows them to input the ingredients and processes the nutrient analysis of their creation Corporate Culture ChemisTea s corporate culture is based on the employees and customer s philosophies and values. Team building will be strengthened by integrity, a bottom-up style of management, an emphasis on physical health and fitness, as well as community involvement. Employees must be able to build a trusting relationship with their managers, crew leads, and fellow coworkers. For example, employees will be given the chance to voice their opinions on how to make the business better as well as tasks to display superior performance for incentives. Student workers will be treated with leniency due to school schedules, and employees with disabilities will be accommodated in the workplace. ChemisTea encourages its employees and interns to be well-rounded individuals; therefore, employees will be hired not only based on their work ethics and how well they work with others, but also based on their past and current experiences working and being involved in their own community. In order to build a strong team relationship, there will be bonding days offered for everyone to attend. A strong team morale will build a wholesome, caring culture within the company. 4. Products and Services 4.1. Product Description The popularity of fruit smoothies with tapioca balls has spread throughout the city of San Diego and ChemisTea has taken note of such. ChemisTea aims to provide customers with an alternative beverage by having a set menu where customers make their own combinations of teas and fruits. Teas will be either hot or cold and year round fruits as well as seasonal fruits will be provided for natural flavor. Since ChemisTea acknowledges that not everyone is exposed to different types of teas, the company will offer one-ounce tea samples if the customer desires. In an effort to move forward with sustainability, ChemisTea will also have their own line of reusable tumblers (cups). To support neighboring businesses, ChemisTea has also partnered up with Bread and Cie, a local bakery in downtown San Diego, in providing pastries to compliment their teas. Having ready made pastries will reduce the risk of contamination and ensure the customer is provided a safe product Type of Service ChemisTea will be a semi self-serve food company in which the customer will choose what they want from items displayed on a counter and head to a central point, the cashier, to pay for their items (Gregoire, 2013, p. 213). A self-service method of

9 running ChemisTea is ideal for one of our target population s (college students) time crunch. The limited menu is beneficial to both the company and the consumer since local food products yield higher quality and are less expensive than produce shipped from further distances (Gregoire, 2013, p. 59). The company also aims to lessen the processing of foods since processed foods involve more energy, packaging, and travel further distances to reach the consumer. In recent times, companies have been moving toward a start from scratch approach while using locally sourced products, making companies more sustainable in menu planning and food production Table 4.3A and Figure 4.3A Product Cost Cost for 12 ounce drink Price Profit Source Oolong Tea $13.00/ 2oz $1.15 $4.00 $2.85 In Pursuit of Tea Herbal Fruit Tea Green/ Matcha Tea $8.00/ 2oz $24.82/ 2oz $0.71 $4.00 $3.29 In Pursuit of Tea $2.19 $4.00 $1.81 In Pursuit of Tea Black Tea $4.00/ 2oz Apple Danish $29.95/ 10 items $0.35 $4.00 $3.65 In Pursuit of Tea $3.00 $3.50 $0.50 Bread and Cie The table above shows the costs of a few of the different teas ChemisTea offers as well as one snack item, the apple danish. Oolong tea, herbal fruit tea, green/matcha tea, and black tea will be purchased in bulk from In Pursuit of Tea with individually packaged 2-ounce portions. 2.5 grams of tea leaves will be used for every six ounces of water. The cost for a 12-ounce drink was calculated by dividing the cost of 2 ounces of tea leaves by a factor of ChemisTea has decided to price small tea drinks at $4.00 so profit was calculated by subtracting the actual cost of the tea from the set price. Apple danishes are bought in bulks of 10 at $29.95, making the cost of each danish roughly $3.00. Danishes will be sold at $3.50 yielding a profit of $0.50 per danish.

10 Figure 4.3A * Maximum prices include 4-ounce of fruit At ChemisTea, the tea can be bought in three different sizes: small, medium, and large at 12, 16, and 20 ounce cups, respectively. The small size is priced at four dollars, medium at six dollars, and large at eight dollars. The fresh fruit will be priced at 50 cents per ounce. In addition, each cup size will potentially include a maximum of four ounces of fruit. For those who are looking to boost their nutritional needs and purchase a large drink with the maximum amount of fresh seasonal fruit, ChemisTea will offer a one dollar discount. 5. Operating Plan 5.1. Location, Estimates Costs The ChemisTea production facility is located in San Diego, California. It is a corner waterfront café in Little Italy and is rooted near the busy Pacific Coast highway. ChemisTea is also located directly across the street from the new Waterfront Park and is walking distance to numerous residential units and the heart of Little Italy Facility, Equipment, Energy Source, Costs ChemisTea is a 979 square foot facility and is a corner storefront of a 22,344 square foot building. The facility is divided into three sections: kitchen and storage, serving and checkout, and dining. Customers are able to dine both in-store and outside where a large patio is available. Rent is priced at $3/square foot/month resulting in a total rental fee of $2,937. This location is on a lease agreement for 10 years.

11 ChemisTea has a core of eight pieces of equipment that are needed for start-up and business maintenance. A total of $13, has been invested towards equipment, and a reserve amount of funds have been saved for potential emergencies, which may include equipment malfunctions and/or replacements. Equipment specs on usage were calculated using an energy cost calculator. Energy requirement factors are based on watts and are counted for total number of hours each piece of equipment will use per day. These numbers are only estimates since monthly and yearly totals do not factor in ChemisTea s six day business week rather than seven days Table 5.3A Equipment Size Quantity Cost for Equipment Kool-It KBD-CG-40S Refrigerated Bakery Display Case Kool-It KST-72-2 Salad Table True Refrigerator; Reach-in Chest freezer Bloomfield G Auto Hot Water Dispenser Bloomfield G Integrity Auto Tea Brewer 10-3/8 in x 53-3/4 in Energy Requirements 1 4, watts for 14 hours in table 1 2, watts for 14 hours cubic ft. 1 2, watts for 24 hours cubic ft watts for 24 hours gallon watts for 14 hours (for one unit) 5-gallon watts for 14 hours (for one unit) Cost per day/month/year Total Per day = $22.44 Per month = $ Per year = $8, Staff Shifts Charts The schedule for the team members for ChemisTea will be unique. Each pair of owners will be working twice a week. One time during the morning and once in the evening. This will allow team members to learn and gain strengths from two different perspectives. In addition to the team members of ChemisTea, they will be offering three spots for interns who are Foods and Nutrition majors at local universities to learn from the owners who are experts in the major and have plenty of experience in their careers. These interns will also work closely with the owners twice a week. ChemisTea is proud to present this opportunity to students in Foods and Nutrition. Please Refer to Appendix A for Figure 5.4A.

12 6. Health Repercussions and Analysis 6.1. Customer health/healthy options Since ChemisTea is a self serve tea café, customers can choose which tea to consume and what fruit to place in their drinks; therefore, this business accommodates to all dietary needs and preferences. Fruits and sweeteners will be the only additional options for customers to place in their tea. ChemisTea caters to all types of customers such as those who have strict diets, those who prefer to count calories, those who need to replenish energy, and those who prefer to consume organic grown fruits. According to the Organic Consumers Association (OCA), people prefer to consume organic products because it contains more nutritional value due to the absence of pesticides ( Why we should all eat more organic food, 2014) Environmental/Global impact In addition to the environmental and global impact of ChemisTea, San Diego s interest in organic food has increased since the beginning of the year The California Organic Products Act of 2003 was created to protect local farmers, producers, and handlers of organic foods sold in California in request of the organic food industry (San Diego County; Organic farming, 2013). Chemistea supports organic businesses by endorsing Specialty Produce and their organic tea supplier, In Pursuit of Tea, an environmentally-friendly and organic tea farm ( In Pursuit of Tea, 2014). Doing this would not only promote both suppliers, but it will spread information regarding the health benefits of organic tea and produce and their positive impact on the environment. Each cup that is sold and served to the consumer, will not only assist in the growth of organic product businesses, but it will also influence customers to consume healthy foods Going green plan ChemisTea s strategy of going green in San Diego would be their utilization of solely Eco-friendly paper cups for their beverages as well as selling a hot or cold insulated tumbler cup. Consumers who choose to use the cup will not only receive a discount, but will also be contributing to building an eco-friendly environment by using less waste. Furthermore, since ChemisTea s source of fruits will come from Specialty Produce, this supplier will also be collecting ChemisTea s compost material on every delivery day. Composting is one of the gold standard methods in building an eco-friendly environment. Compost is used as a method to improve soil texture and increase nutrient and water holding capacity ( San Diego County Environmental Service Department, 2014). Specialty Produce delivers all compost to a non-profit organization in National City, California called Olivewood Gardens, which uses compost to make rich soil for growing fruits and vegetables. As a result, ChemisTea will be able to give back to the Earth by composting all food scraps and recycling eco-friendly material. However, since ChemisTea will be collecting compost, there will be a strict policy on how the compost will be collected within the resturant in order to prevent any unsanitary incidences. The Hazard Communication Standard requires copies of all Material Safety Data Sheets for potentially harmful substances to be on file

13 in the facility ( Position of the American Dietetic Association: Food and nutrition professionals can implement practices to conserve natural resources and support ecological sustainability fortunately for ChemisTea, 2007). The registered dietitians on the core team strongly support sustainable agriculture and community food systems. They will educate their employees the bare minimum facts on agricultural basics and the production methods that help provide ecologically sustainable food choices. 7. Market Size, Trends, and Competitive Analysis 7.1. Market Size The popularity of coffee and bubble tea cafés have dramatically increased for people of all ages to enjoy. With an abundance of these specific cafés throughout San Diego, ChemisTea aims to bring forth healthier beverage alternatives to accompany the booming health movement while providing a relaxing leisure atmosphere for military families, tourists, students, and other San Diego residents. San Diego is the second largest city in California. It is well known for its mild climate, beautiful beaches, strong Naval association, and is home to roughly 3.1 million residents as of From , the median household income in San Diego was $63,373. (" American community survey, 2007). The location of ChemisTea will attract locals, tourists, and students. Being located across Waterfront Park, ChemisTea will attract tourists and families while also attracting college students due to its proximity to San Diego City College. According to the San Diego Grantmakers Organization, the military-related population in San Diego as of 2010 was 229,024; an estimated 7.6% out of the 3.1 million residents in San Diego. ( Military families in San Diego County needs assessment, 2010). In 2010, San Diego s educated population (high school graduate or higher) was about 1,717,414; an estimated 85.4% of the population. ChemisTea aims to cater to this group, specifically students at San Diego City College (which is in a close proximity with the college) (" American community survey, 2007). In 2012, more than 32 million tourists enjoyed their stay in San Diego County. Some of San Diego s popular tourist attractions are located near San Diego Bay. These attractions include beaches, a large array of restaurants, the San Diego Convention Center and Waterfront Park.

14 Because tourists are not permanent residents, they were not included in Figure 7.1A. However, according to San Diego Tourism Research, tourists spend almost $8.4 billion at thousands of San Diego businesses during their visit ( San Diego tourism industry research, 2014). The tourism industry is one of the top revenue generators and contributors to the San Diego regional economy of $184.3 billion in Gross Regional Product, making tourists an important aspect of local businesses. The tea industry in the United States has seen significant growth over the past two decades and has experienced a prolonged period of innovation, popularity, and increasing demand (Simrany & Goggi, 2013). In 1990, the total wholesale value of tea flew around less than $2 billion dollars annually. The total wholesale value of tea now soars well over $10 billion dollars annually as of Over the years, the tea industry has seen an annual growth rate of ~2.5% (Simrany & Goggi, 2013). Forecasters of the industry predict that growth will carry on this trend if not increase even more, as its popularity may correlate with the current health movement for its healthy properties.

15 7.2. Competitive Advantage ChemisTea will be the first of its kind in Little Italy. This organization will draw consumers through its uniqueness and variability within the menu. Consumers will be able to design their drinks according to their personal taste through self service. Instead of the typical tapioca pearls offered at boba tea shops, ChemisTea offers carved pieces of fruit to sweeten and complement their selection of tea naturally. By doing this, consumers will have an additional advantage of controlling the sugar content in their drinks. With an assortment of different teas and fruits per season, there exists many variations within their drinks. Research has shown that consumers are ten times more likely to purchase if they are offered a decent amount of choices rather than choosing just one choice or having too many choices (DeAngelis, 2014). ChemisTea is walking distance from Waterfront Park; an area where many families, residents, and tourists spend their leisure time. Consumers will be able to go to ChemisTea after Waterfront Park closes at 7:00 PM. Operating hours at ChemisTea last two hours after the park closes, which allows consumers to relax and unwind together. Registered dietitian practices include keeping up-to-date with the rapidly changing environment in the health world, which requires skills in finding, evaluating and sharing the most recent and accurate nutrition information ( Nutrition informatics, 2012). With a registered dietitian on site, consumers will be able to inquire about the content of their drinks and have confidence that they are getting the necessary nutrients in their drinks. Consumers will be getting a wholesome beverage as a result of the knowledge and skills of these health professionals. Though there are many strengths that puts ChemisTea at a competitive advantage, there are some weaknesses that may pose as potential barriers. This organization bases their menu off of seasonal fruit, which may limit the options on the menu and may not satisfy each consumer s preference. Consumers who may have particular favorite fruits or combinations in their teas would have to wait seasons for their prefered drink. Though ChemisTea will be the first of its kind in Little Italy, the location may also put the organization at a disadvantage considering the target market. It is in proximation with Waterfront Park, but is distant from many other restaurants in the city. It is important to note that ChemisTea will be in competition with several other popular coffee shops nearby. All of its competitors are fairly popular and have a sufficient amount of positive reviews on social media such as Yelp. Consumers may feel more comfortable opting to these more familiar and already established sites.

16 Table 7.2A Trend/Niche Location Hours Products Price How They Excel Areas to Improve The Mudbar Coffee Cart - Convenience - Cart Columbia St. 7am-3pm Mon-Fri Coffee, tea, baked goods Inexpensive Assortment of coffees, pastries to complement beverages, low prices Should open on weekends Caffe Italia - Convenience - Cozy facility India St. 9am-6pm All week Gelato, coffee, italian soda, salads, panini sandwiches Less than $10 per item Variety of drinks, foods to complement beverages, cozy atmosphere, open all week for long hours Cash only, poor customer service OH! Juice - Convenience - Cart - Natural Columbia St. 9am-6pm Mon-Fri Organic juice (super herbs, superfoods, supplements) About $12 a bottle Natural, healthy and nutritious connotation, knowledgeable consumers Should open on weekends, should decrease prices Tony s Coffee On Broadway - Convenience - Cart Broadway St. Unknown hours Coffee, baked goods Inexpensive Great and speedy customer service for a one man operation Unknown operating hours, more info needed online Table 7.2B Strengths Weaknesses Opportunities Threats ChemisTea Focus on health, nutrition, seasonal produce and supporting local businesses. Variety of drink options. Close proximity to tourist attractions. On-site RD. Possible limitation with seasonal produce and customer preference. Distant from other city attractions. Health-based business Well-established competitors nearby. Caffe Italia Wide food selection to complement array of drinks; cozy atmosphere Cash only. Poor customer service. Well-established company Various competitors nearby willing to compete OH! Juice Natural, healthy and nutritious connotation. Knowledgeable staff. Limited hours/days. Expensive. Health-based business Competitors nearby are more financially friendly

17 7.3. Competitive Analysis There are four main competitors with ChemisTea. These competitors all specialize in serving beverages and are around the area of Little Italy. The Mudbar Coffee Cart is a refreshment cart that is well-known for their unique caffeinated beverages. Caffe Italia is a local coffee shop that takes pride in their high quality coffee and espresso drinks. OH! Juice is a juice bar that consists of all organic, cold-pressed, and raw juices. Tony s Coffee Cart On Broadway is another refreshment cart that specializes in coffee and teas. ChemisTea s main competitive advantage revolves around the company s focus on consumer choice and customization. Customers have the full power to customize their beverages and unlike The Mudbar Coffee Cart, Caffe Italia, OH! Juice and Tony s Coffee On Broadway, ChemisTea s self-serve nature makes customization even more personalized for the customer. ChemisTea s health and nutrition focus puts the business at an advantage compared to its nearby competitors. Operating as a health-based business will be beneficial, especially with the booming health movement. Although OH! Juice also operates as a health-based business, the credibility of ChemisTea as an establishment focused on the health movement is heightened due to the assistance of on-site registered dietitians. With the help of these registered dietitians, consumers will be more aware of the nutritional benefits that ChemisTea beverages offer that OH! Juice beverages cannot (for example, ChemisTea beverages contain more fiber than OH! Juice beverages). 8. Marketing Strategy and Emerging Technology 8.1. Strategy and Social Media ChemisTea will be present on various social media outlets such as Yelp, FaceBook, Twitter, and Instagram. For each Yelp and FaceBook check-in, customers have the opportunity to receive discounted drinks and snacks. FaceBook and Twitter posts about the newest fruits in season will be provided to keep customers updated at any time. ChemisTea s Instagram will be dedicated to the customers and will feature the most nutritious and most creative drinks made throughout the week. ChemisTea will provide special discounts not only through Yelp and FaceBook check-ins (10% discount for each), but through online coupons (via Groupon) and printed coupons. Groupon will provide a [b]uy 2 drinks, get a pastry for free coupon while printed coupons will be provided by nearby hotels, which will offer 15% off drink orders. In the future, ChemisTea plans to advertise the company by mailing the same coupons to nearby residents. Customers will be able to receive special ChemisTea discounts by providing specific identification cards upon checkout. College students can show their school identification cards for a 10% discount off drinks. Because San Diego City College is in close proximity to ChemisTea, San Diego City College students can show their school identification cards for a greater discount (15% off drink orders). Military families may also provide a military identification card to receive a 10% discount off drink orders as well. During the first Saturday of every season, ChemisTea will provide the first 25 customers with a free drink. Through this discount, ChemisTea aims to emphasize the importance of purchasing produce in season.

18 ChemisTea will provide 16 oz insulated tumbler cups that customers can purchase for re-use. These tumblers, which can be used for either hot or cold beverage options, are provided to encourage customers to decrease waste. For every time a customer purchases a drink with their tumbler, they will get $0.50 off their beverage Emerging technology ChemisTea will have two touch-screen monitors that will provide a nutrient analysis for consumer drinks. Consumers will be able to input the different ingredients in their beverages and in turn, the program will calculate beverage s nutrient content. With this technology, consumers will be more aware of their nutrient intake, a key component in ChemisTea s concept. 9. Goals, Barriers, and Risk Mitigation ChemisTea will be the first tea café that offers the build your own concept with fresh seasonal fruits. ChemisTea will use locally grown fruits and use the highest quality of tea to bring delicious and nutritious refreshments to San Diego. By creating this innovative establishment and using the finest ingredients, it will benefit toward the partners mission to the community and also financial success Short Term ChemisTea s business goals within the first year are: -To repay the initial bank loans expenses for equipment for ChemisTea -To receive at least 50 positive Yelp reviews A few of ChemisTea s business goals includes repaying initial bank loans and startup costs. ChemisTea will acquire a small business loan from a local bank. The café will be borrowing $10,000 and will repay the amount within one year of operation. However, if ChemisTea does not receive enough capital, this barrier may hinder them from achieving their goal. One way ChemisTea will try and alleviate this barrier is through maximized advertisement. ChemisTea will be advertising to local hotels, on social media, and to City College, which is only one mile away. Through advertising, the business forecasts more foot traffic than without. Another short term goal for ChemisTea is to receive 50 positive Yelp reviews since they are trying to compete against traditional cafés. Receiving the corresponding number of positive reviews may convince customers to try a more nutritious approach to drinking tea. A barrier to this is that reviewing a café on yelp is completely optional. Customers may love the concept and enjoy the tastes of the teas and fruits that ChemisTea offers, but may not have a Yelp account or have forgotten to review the business. ChemisTea plans to mitigate this issue by reminding customers to review the café as they are leaving. In addition, customers that post a review on Yelp will receive a free pastry to accompany their next drink purchase. Ideally, this incentive will bring in more customers and gain at least 50 positive Yelp reviews.

19 9.2. Long Term ChemisTea s long term business goals within the next five years are as follows: -To open a second location north of Downtown San Diego. -To expand in the foodservice industry by opening up a bakery. ChemisTea plans to open up a second location after five years of operation in Clairemont, San Diego. Clairemont is a well-known location for native San Diegans to fulfill their tea cravings. They plan to bring their innovative idea to this location and excel. Opening a second café in this area, will bring competition to surrounding businesses. This will potentially be one their short term barriers. Competition may hinder potential customers to ChemisTea; however, with the growing popularity of ChemisTea, the café plans to attract more customers from all regions of San Diego. When opening a second location, the six owners plan to hire someone experienced to manage this store, causing a potential barrier to the owners since all six owners do not have time to be at both locations. In addition, they want to keep their business up to the same standards as the first store. The owners must hire an experienced and trustworthy leader to ensure success. There are two long term barriers to opening a second location. One long term barrier to opening this second location is whether the café will flourish in the tea industry for more than five years since many changes occur in society, popularity being one of them. If business does not play out well for the second location, one way to alleviate negative capital is to transfer to a different location that will attract customers near or inside a mall or near a high school. Another long term barrier to opening a second location is a potential high turnover of management. Since this location will be managed by someone who the owners trust, it is the manager s duty to operate the store at the highest standards according to the owners. If the manager performs poorly, they may be let go. One way to prevent this from happening is for owners to train potential managers effectively. By leading the way to manage the store, there would be a low risk of turnover. ChemisTea s second long term goal is to expand into a different type of food service. The owners plan to open up a bakery in the future. By opening up a bakery, the owners would be able to supply their store with their own baked goods. This will eliminate some costs to outside suppliers. Not only will this bakery supply goods to their own stores, but it will also become a distributor to other businesses. This would build ChemisTea s brand name in the food industry. Expanding in a direction different from beverages may be a little bit of a risk and start up costs will be expensive. It will take a few months for the ChemisTea bakery to build its name and provide and gain contracts from different businesses. Although these may be some short term barriers, the owners are willing to take the risk and do what they love. There are a few long term barriers that ChemisTea may have to face if they are going to succeed in the baking industry. Price fluctuations for product ingredients may greatly affect their new business. Prices will vary due to supply and demand but the problem can be eased by acquiring a contract with certain distributors. ChemisTea would benefit from distributors setting a fixed price, rather than the price of goods

20 inflating. Competition between other bakeries would be the main obstacle for opening a bakery. Other bakeries in the nearby area may already have contracts to different local cafés or stores similar to Trader Joes; however, ChemisTea would be able to pitch their ideas to these places when other opportunities arise. All in all, the owners of ChemisTea have a positive outlook on the success of their business.

21 10. Financial Assumptions and Analysis Start-Up Finances - Month One - January 2013 Amount per case (if applicable) # of cases/mo (if applicable) Cost Per Cost Total Section Total Rent per month 2, Insurance per quarter 4,000 Gas & Electricity per month Advertising $8, Important Product Supplies Clear PLA Cups + Lids 12 oz Clear PLA Cups + Lids 16 oz Clear PLA Cups + Lids 20 oz Qualite Flexible Drinking Straws - Ind. Wrapped Karat Earth Stock Print Eco-Friendly Paper Hot Cups 12 oz Karat Earth Stock Print Eco-Friendly Paper Hot Cups 16 oz Karat Earth Stock Print Eco-Friendly Paper Hot Cups 20 oz Eco-Friendly White Sipper Dome LIds $4, Restaurant Equipment Kool-It KBD-CG-40S Refrigerated Bakery Display Case 10-3/8 in x 53-3/4 in 1 4, ,604.69

22 Kool-It KST-72-2 Salad Table True Refrigerator; Reach-in 72 in table 1 2, , cubic ft. 1 2, , Chest freezer 19.7 cubic ft Bloomfield G Auto Hot Water Dispenser Bloomfield G Integrity Auto Tea Brewer 5-gallon gallon $13, Payable Accounts Specialty Produce per month 2, Bread & Cie per month $3, Other $12, Total First Month $41, Cash $65, Remaining Balance $23, Rent Rental costs for the ChemisTea business location is priced at $3 per square foot, per month. Total monthly rent is $2, This location is on a lease agreement of ten years. Insurance Insurance for ChemisTea is priced at $4, per quarter. Payments are made in full and at the first month of the quarter. For the first quarter running from January 2013 through April 2013, $4, was paid in full. Gas & Electricity For the first month of business, ChemisTea paid an estimated total of $ to cover gas and electric usage of equipment. Advertising ChemisTea reserved a total of $ to put towards advertisement. Some techniques include print fliers, posters, business cards, and frequent customer cards. Important Product Supplies This total cost covers the supplies needed to serve an estimated amount of drinks to cover the first month of business. More product supplies will be purchased as needed using the reserve balance discussed in the below section.

23 Restaurant equipment This total cost covers the eight pieces of large equipment needed to start ChemisTea. These pieces of equipment are vital to keeping the Chemistea operating and in business. The total of $13, was a one time payment for the initial purchase of equipment. Payable accounts ChemisTea is partnered with Specialty Produce and a local bakery to help supply the company s fresh produce and baked goods. A total of $300 is payable to Speciality Produce every Tuesday & Friday to cover inventory for the week. This amounts to a monthly total of $2,400 and an annual total of $28,800. This price is negotiable in order to adjust with the demand and availability of seasonal produce. A total of $750 per month is payable to a local bakery, Bread & Cie, to cover a daily supply of freshly baked goods to be served at ChemisTea. This amounts to a total of $9,000 a year. Altogether, ChemisTea has an annual total of $37,800 in payable accounts. Other A reserve balance of $12, has been set aside for emergencies, supply needs that were not forecasted, and/or miscellaneous needs. Cash ChemisTea s founders and company owners have invested a total of $55,000 towards the start-up and maintenance of the company. An additional $10,000 have been added from a 7(a) micro-loan which will be paid back within terms set with lending bank.

24 10.2. Profit and Loss Statement For Years Year 1 (2013) Year 2 (2014) Year 3 (2015) Sales 563, , ,153, Operating expenses: Beverages/Food Costs (37,800.00) (37,800.00) (37,800.00) Supply Costs (58,141.20) (58,141.20) (58,141.20) Energy (8,400.00) (8,400.00) (8,400.00) Salaries and Wages (188,260) (221,400) (254,540) Rent (35,244) (35,244) (35,244) Maintenance (10,000) (10,000) (10,000) Insurance (12,000) (12,000) (12,000) Utilities (68,000) (68,000) (68,000) Micro-Loan (10,000) Amortization (1,200) (1,200) (1,200) Depreciation (2,000) (2,000) (2,000) Total operating expenses (431,045.20) (454,185.20) (487,325.20) Net Income $132, $531, $696, Sales Sales figures based on actual sales for YTD 2013 and forecasted thereafter. The forecast for year two represents a 75% increase compared to the previous year. The forecast for year three represents a 17% increase from the previous year s sales. Beverages/Food Costs and food products. This cost covers ChemisTea s payable accounts for inventory Salaries and Wages This total is based on an estimated three full time employees and four part-time employees. Year two is forecasted with hiring of an additional two part-time workers. Year three is forecasted with also an additional two part-time workers. Rent This is the cost for ChemisTea s annual rent. Maintenance This is an estimated amount which is reserved to cover potential restaurant renovations or needed fixings. Insurance This is the annual cost of insurance for ChemisTea.

25 Utilities This is the estimated annual energy cost for ChemisTea s operating Equipment. Amortization Depreciation Reserved money for accounting and tax purposes. Estimated for potential decrease in value of ChemisTea s products. Total Operating Expenses Total expenses that ChemisTea is responsible for. Net Income subtracted. Remaining balance from sales after operating expenses have been

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27 Appendix A