Café Xaragua

1. Café Xaragua Robert Curtis Rachelle Hinchey Amanda Tindyebwa Emma Zaorski

2. How can Café Xaraguadifferentiate itself in the competitive Canadian coffee industry?

3. Strategic priorities • Social Responsibility • Quality • Brand image • Differentiation • Gather necessary funding

4. Coffee industry of Canada Need to differentiate product from competition and substitutes

5. Internal analysis Strengths Weaknesses Limited store front experience Limited startup capital Limited product portfolio Relying on others for baked goods • Rare product sourcing • Strong relationships with contacts • Committed to social responsibility • High quality product Leverage core competencies

6. Customer Profile • -Young knowledgeable consumers • -Appreciate affiliation with social good • -Low uncertainty avoidance • -Individualistic • -Affluent aging population • -Price insensitive • -Appreciation for cultural diversity • 18-35yrs and 45-60yrs+

7. Premium coffee industry Xaragua GMCR Social Impact Bridge Head Starbucks Brand affiliation

8. Strategic alternatives

9. 1- License and open store • Larger market exposure • Creates synergies • Limited service differentiation • Potential degrading of brand image • Open a store as well as license your product to local cafés with strong brand recognition that have similar ideals on social responsibility • Differentiate through outlets

10. 2- Store on wheels • Attract attention and excitement • Create high levels of brand awareness • Time to acquire permits • Cost to modify food truck • Have a temporary store in a mobile food service truck to increase reach and brand recognition • Open a store after 4 months • Differentiate through reach

11. 3- Focus on online sales • Lower cost to implement • Already familiar with online sales • Difficult to make partnership with grocery stores • Less reach • Increase online sales and begin selling in grocery stores. • Differentiate on price

12. Key decision criteria

13. Key decision matrix

14. Recommendation

16. Marketing • Market research • Large use of social media • Store on wheels • Free mini samples in store • Emphasize Haitian culture and social impact

17. Logistics & Operations • Lease mobile food trucks • Establish supply contracts • Measure success in trees planted/ year • Train in house roasting to Crave roasting and BemardCallebaut

18. Operations • Rent out food trucks on contractual basis • Locate and negotiate rent prices for brick and mortar • Establish baked and specialty goods supplier • Locate licensees with similar value proposition

19. Human Resources • Communicate vision to focus on Haitian reforestation with quality coffee • Hire and train coffee baristas & license partners • Engage customers' in Haiti reforestation programs • Celebrate and reward social impact

20. Projection analysis Estimated 200-300 sales per day

21. Breakeven analysis Sell 30.3 cups a day to breakeven

22. Finance • Request bank loan from local Canadian banks such as Scotiabank or RBC • Commit to interest coverage ratio (ICR) debentures • Current ICR = 26.1 • ICR collar = 15 • Give bank option to call loan if ICR falls • below collar

23. Short term timeline Establish supply contracts Locate licenses Operations Lease trucks Truck campaign Marketing Social tourism Launch Store design Communicate HRR Engage customers Hire and train Finance Bank Loan Monday 1 year + Q1 Q2 Q3

24. Store excess in case of storm Shortage of Arabica grain Begin product expansion Cannibalization Severity Lack of suitable businesses to license with Begin due diligence early Likelihood

25. Financial outcomes & assumptions Licensing agreement will increase operating profit by 5% for the next 5 years Marketing expense will increase 1% per year for 5 years $730 thousand Net income in 2017

26. Thank you! Questions?

27. Constants