Cover Letter
Huntington Beach’s Overall
Huntington Beach is a famous city located along the Southern California coast in Orange County, in the Los Angeles metropolitan area. This city is surrounded by the Pacific Ocean and also by the Seal Beach. Costa Mesa city is to the West of the Huntington Beach, Newport Beach city borders Huntington to the Southeast while Westminster city and the Fountain Valley border it to the North (Huntington Beach, Location). The original inhabitants of this city were the Tongva people. As early as 1920, the town started expanding and proliferating due to the oil boom experienced in the village since it was the largest oilfield in California by then (Huntington Beach, History). The city is currently known for harbouring diverse ethnicities, where different ethnic groups live. According to the Orange County Register website, the city is well known as “Surf City” or “Surfing Capital of the World, “because every Summer, the world surfing contest is held there and attracts lots of tourists (OC Register, 2019). Therefore, the city has experienced an expeditious growth in population and economy, owing to the identified factors. As a result of this swift growth, different business activities have been set up to cater to the growing human population’s needs in this city. One key trend in the demographics of this city is the increased population density.
Huntington Beach’s Census Data
Based on the United States Census Report 2017, Huntington Beach has a population of 200,415, and the ratio of men compared to women in the city is equal. The town comprises different ethnic groups, including the Whites, Hispanics, Asians, and other minority groups. The percentage proportion of these majority groups’ total population is 72.78%, 21.01%, and 18.56%, respectively. These diverse ethnic backgrounds present a suitable environment for establishing different kinds of business activities. The population data revealed that the median population age is 41.9 years, whereby those aged 62 and above are 16.8% of the total population while those aged 16 and below constitute 82%of the total population. This means that most of the people here are the youth and implies that business activities targeting youth’s lifestyle will do well. According to the U.S Census Occupancy Characteristics (2017), Huntington Beach’s city was reported to have 78% of households with children under 21 years. Most 1-person household size under the age of 35 is still single. Lifestyle trends about the people below 40 years of age, including teenagers, indicate that they are very much engaged with social media. They are quickly catching up with popular trends in eating foods from different cultures in the city. According to the United States Census Bureau (2017), the. The drink spread expeditiously, and by the year 2004, the glass was being sold and used almost all over the country (The Oxford Encyclopedia of Food and Drink in America, 2004). Bubble tea is prepared by mixing milk, tea, and other flavours with chewy pearls. The different kinds of flavours added to the tea enable it to meet different people’s taste, hence becoming a popular and favourite rink for many. In Westminster and Fountain Valley’s neighbouring cities, the drink has gained a lot of popularity among the Asians who are the dominant ethnic group in these cities. Bubble tea comes from Asia, so most Asians people love this drink, just like the Americans love Starbucks.
With an approximated Asian population of 20% of the total population in Huntington Beach, there is a big market for this commodity. This is so because Asians love this drink and prefer it since it’s like a tradition for them. Moreover, based on the survey, there are just a few small bubble tea shops within the city. With these advantages, creating a bubble tea shop in the city will have the potential of becoming a successful business.
Executive Summary
This business plan comprises the company description, company goals and objectives, marketing plan, operational plan, management and organisation, and the financial plan of a new bubble shop. Best T is a hotel-service enterprise that will offer bubble tea as its core product and sell accompaniments such as burgers and sandwiches. The business will be located at Huntington Beach City. The company will be opening in January 2019 and will be operating throughout the year, and opening and closing hours will be six are to 10 pm on weekdays. However, closing hours during weekends will be extended to late night, depending on customer flow. The company’s mission is to provide quality babble tea at the lowest cost possible. Best T will be an LLC equally owned by three proprietors.
The short-term business objective is to establish a customer touchpoint within the first four months of operation. The touchpoint will facilitate to handle customer complaints and obtaining feedback on the quality of services—long-term goals, including opening a new branch elsewhere in the second year of operation.
The target customers for this business will be Asians who live around the city. Demographic data on this city indicate that Asians are a significant portion of the population. Asians are addicts of this beverage and hence, a suitable target market—youthful population like social media and having fun, which includes taking tea. Huntington’s people have disposable income that they can spend on tea and snacks, so the market is viable.
The business is focusing on sales of $413 000 at the end of the first year. The total operating expense at the end of the first year will be $16 100, and the cost of goods $244 500; hence, net profit will be $152 400. The capacity utilisation at the end of the first year is approximated to be 100%, where there should be an average of 100 customers a day. Operating expenses to be incurred in running the business are payroll, supplies, and utilities. The total estimated start-up capital is $30 000, and each proprietor will contribute $10 000 and own the same proportion of shares.
General Company Description
The purpose of this project is to develop a business plan for a Bubble tea Boba shop. The name of the bubble tea shop will be Sweet T Company Ltd. Our mission will be quality service at the lowest value. We want our customers to have the total experience when visiting our premises. Our company philosophy is to be the most successful Bubble tea outlet offering the best to our customers. The business will be located in Huntington Beach, a famous city located along the Southern California coast in Orange County, in the Los Angeles metropolitan area. This is a service industry company that will offer hospitality services. This is a new business that will provide bubble tea as the core product. The company will launch its operation on January 1, 2020. The primary target market for this product will be the Asian population. Asians are about 20% of the total population in Huntington Beach, and they are well known as Boba addicts. The youth market in this city is high, so certain types of business trends that attract the youths can grow. Teenagers and people under the age of 40 are more engaged with social media, and they are quickly catching up with popular trends in eating foods from different cultures in the city.
There are other direct and indirect competitors of this business. However, based on the survey, there are just a few small bubble tea shops within the city which offer direct competition (Lovegren, 2004). Kung Fu Tea, Coco Fresh Tea and Market, Station Market, Chun Yang Tea, FAN Chinese Cuisine, and BAMBU Tea. These firms are around Huntington City, but given the large target population and residents’ ability to afford the drink, it is a viable idea.
The restaurant will be a dinner-house operating all day from 6 am to 10 pm. This would allow maximum time for customers to visit our premises. This is a competitive advantage since most of our rivals’ open lunchtime hours (Dupre and Gruen, 2004). Besides the bubble tea, we will be offering huge burgers and grilled sandwiches as an accompaniment. Again, this will offer an advantage over our competitors, most of who don’t have other foods to accompany tea. The company will be a partnership of three who will also serve in management positions to save the company’s cost. Capital contribution will and ownership will be 33.3% for each member.
Products and Services
In line with the reviewed census data and statistics revealing the demographic characteristics of Huntington Beach City, a Bubble Tea Shop was the most lucrative business opportunity. The business will offer a core product, Bubble Tea, and other products to augment the core product, which will be burger and sandwiches.
Core Product
The core product for this business will be Bubble Tea. The drink originated from Taiwan and has been spread throughout the U.S. the glass can be added to different flavours, a factor that has contributed to its popularity. This product will be prepared by mixing brewed tea, milk, sugar, and pearls such as boba, tapioca, fruit, and grass jelly. A cup of tea will go for $5 only.
Other Products
These will be sold as accompaniments to those taking tea. These will include hamburgers and chicken burgers. There will also be sandwiches such as direct, mosaic, and free bread sandwiches. The burger will be sold at a unit price from $3 to$4, depending on the variety. These burgers will not be prepared in the shop but will be bought at approximate $2. There will be late-night jazz music on weekends to entertain customers, and this is an exceptional service that would give the business advantage
Why Customers Will Like our Products
The product will be of excellent quality. This will be ensured by ordering from the best quality suppliers of the ingredients to be used (Davis, 2012). The business shall also hire experts in catering services.
Additionally, the business will offer sandwiches and burgers to support the core product. This is a way of taking care of different needs of customers and will work to ensure satisfaction.
Goals and Objectives
The company seeks to achieve both long-term and short-term goals. The short-term goals include establishing customer service touchpoints, through which the customers will be able to file their feedback. Ideas, suggestions, and complaints on service satisfaction, the quality of tea and food served will be gathered. This information will be used to attain customer satisfaction and will enable the company to attract more customers.
Long-term goals and objectives include opening another branch on a different location in the second year of running the business. Sales have to average $ 1 million per year to facilitate the expansion. Also, the daily customers who visit the outlet must be 200 hundred before opening another branch.
Business Philosophy
The company will operate under strong business values and a concrete mission and vision statement. The business’s vision is to be the most successful Bubble tea outlet offering the best to our customers. Customer satisfaction is the core value of this company, and both complaints and complement will be a valued input into the customer satisfaction system. The number one priority will be to give quality tea at the lowest cost possible, which will provide the business with a competitive edge.
Marketing Plan
Market Situation Analysis
The beverage industry is famous, especially in Huntington Beach, given that it is on the coastline (Marc, 2004). The occupant of this city is of diverse races, ethnicities, cultural backgrounds, and age brackets. For that reason, tea selling is a hot business opportunity where most people in this area (especially the Asian population) are bubble tea addicts (Lovegren, 2004). The business targets the Asians, who are 20% of the total residents and the young folk who enjoy a lifestyle of drinks and fun.
The industry is infested with a few competitors who have different strategies for operating. Among the industry players, companies that will offer direct competition in bubble tea business include Kung Fu Tea, Coco Fresh Tea and Market, Station Market, Chun Yang Tea, FAN Chinese Cuisine, and BAMBU Tea. However, these competitors are not enough to serve the whole population, and they are not distributed all over.
Marketing Strategy
This is a new business, and therefore right marketing strategies need to be adopted. To gain public attention and awareness, intensive advertisement campaigns will be done through social media to reach all the targeted population (Dupre and Guen, 2004). Other avenues to create awareness to Huntington’s people about the new business will include billboards and brochures that will be circulated on bus-tops and pavements. To keep the costs down, the three partners will do the campaigns.
The new business is developed to address a market niche where existing companies do not fully serve customers’ bubble tea needs (Lovegren, 2004). The firms in the area are few and not conveniently located to serve the customers. The company shall also offer accompaniments such as large burgers and grilled sandwiches, a strategy that will increase sales. Over the weekends, there will be late-night jazz music to entertain customers, and this is an exceptional service that would give the business advantage. The core product, Boba tea, has boomed up very popular among young people of nearby cities like Westminster and Fountain Valley, where most of the population are Asians. This makes the opportunity feasible.
Operational Plan
Location. The new venture will be located in Huntington Beach city, along the Southern California coast in Orange County, in the Los Angeles metropolitan area. This is a large city with a high proportion of immigrants, suitable for different types of businesses that can develop in the city. The youth market in this city is high, so certain types of business trends that attract the youths can grow. According to the U.S Census Occupancy Characteristics (2017), Huntington Beach’s city was reported to have 78% of households with children under 21 years, and most 1-person household size under the age of 35 are still single. Lifestyle trends about the people below 40 years of age, including teenagers, indicate that they are very much engaged with social media. They are quickly catching up with popular trends in eating foods from different cultures in the city. According to the United States Census Bureau (2017), the median household income reported for families living in Huntington Beach is $88,079 and $102,369. Given the average household income, it can be concluded that residents of this city have disposable income for shopping for different varieties of goods, including food and drinks.
Capacity and facility. The business will need a 50 by 50 square feet of floor area. It will, therefore, operate on rented floor space at Huntington Beach City mall. The renting charge per annum is budgeted at $ 36, 000. This place is convenient as many people clog around the site for various reasons. The capacity of the room is approximated to carry around 50 customers in a sitting. It will also provide enough flow area for movement and circulation of air. Cleaners will also have humble time moping the floor and wiping the tables to maintain cleanliness.
Inventory. Inventory items required for the business operations will include ingredients for making the bubble tea and sandwiches. Specific inventory items will consist of milk, tea leaves, chewy pearls, and flavours. Burgers will be bought and sandwiches made in the restaurant. These inventory items are a fast-moving consumer use, and therefore would not need a large warehouse for storage (Saura, Pedro and Grilo, 2019). They will be stored in refrigerators inside the restaurant.
Daily operations. The business will be open all day from 6 am to 10 pm. During the weekends, closing hours will be extended to late night, to give room for more customers to enjoy their weekend nights at the restaurant. Jazz music will be played during these hours to entertain the customers. Workers will not operate in shifts since they will be paid for overtime. This will help to cut down the cost of labour.
Regulatory framework. Several regulations apply to this business. First is a trading license that will be obtained from the county government office. The company will also comply with tax, labour, and health regulations as required.
Management and Organisation
The organisation structure will be flat, with only one level of management. This management will form a management committee where consultative decisions will be made. The managers will be the three partners, A, B, and C. the duties, roles, and responsibilities of each partner and the organisation’s position are outlined below.
Office Administrator
A will serve as the office administrator. He will take charge of the day-day operations of the company and perform administrative duties. He will be tasked with human resource activities, executing customer service roles, scheduling work, and allocating capacity. As an additional role, A will take care of the marketing and promotional needs of the business. The office administrator will also assign duties to workers and see that they are well done. A is well suited for the role since he has served in different levels of leadership.
Accountant
B will be the finance officer/account of Best T company ltd. As the accountant, he will take charge of financial transactions of the firm, including payrolls, sales, and accounts payable. He will record financial transactions and prepare payrolls for the workers. A is suited for this role as he has adequate knowledge and skills from his college and experience from similar tasks.
Quality Manager
Quality is the number one priority in this business. As such, C will play a key role in controlling and ensuring the quality of the product. As the quality manager, C will see that all purchases and supplies are of the right quality and price. He will carry out quality control procedures, such as supervising and inspecting the tea production process. C will best suit this role as he has experience in this area from various grounds where he has served in the role.
Financial Plan
The partnership will be a Limited Liability Company to protect the proprietors. Start-up capital will come from the owners’ contribution at 33.33 % and own the same business percentage. Since the total cost for starting the business will be $30 000, each proprietor will contribute $10 000. The financial plan will set out the pre-operational price and the cost of operating the business and profit and loss projections for the next year.
The pre-operational costs include creating awareness of the new business, the cost of renting the premises, purchasing inventory, purchasing equipment, and furniture, setting up and improving the premises, payroll, and supplies. The rent is $ 3 000 per month and includes a first-month deposit totalling $ 6 000. Total inventory items will cost $ 5, 000 and cooking equipment, tables, and chairs will cost $ 6 000 and insurance $1 000. The premises will require improvement to look appealing, and interior design will cost $2 000. The payroll expenses will be $ 9 000, while the office and cleaning supplies will cost $1 000. Therefore, the total cost for starting and running the business will be $30 000, and each proprietor will, thus, contribute $10 000 to fund the project.
The financial goal of Best T is to attract and retain customers at the forecast sales level. The average sales price for a standard-size mug is $ 5. The estimated customers per day are 100, each expected to take at least a cup. The year’s forecast sales are $413 000 (See appendix I for the revenue forecast on profit/loss statement). Operating expenses will be necessary to efficiently run the business, including supplies, payrolls, and utilities. Fixed payments will be rent and insurance premiums. The total cost of goods will be $244 500, total operating expenses are set at $16 100, and therefore, the net profit is expected to be $152 400.
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- Laylan Connelly. (June 6, 2019) Orange County Register: It’s called Surf city for a reason Huntington Beach.
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- U.S. Census Bureau. (2017). Occupancy Characteristics. Retrieved from https://factfinder.census.gov/bkmk/table/1.0/en/ACS/17_5YR/S1901/1600000US063600S