Revenue and Cost Items
Expected Revenue
The Cupcake Cafe will be owned by five members, each contributing to the starting capital of the business. The major source of revenue during the first year will be service revenue, which includes cupcakes and drink sales. This shop, including walk-in service, has two delivery channels to order; via online ordering and phone orders.
This business will aim to achieve a high profit in the first year, by distinguishing from competitors through a structured promotional campaign. The Scarborough area, in addition, has many hotels and visitors which can stimulate the revenue. This shop will also sell corresponding products, such as cupcake cookbooks, cooking utensils and party decorations.
This business will aim to achieve a high profit in the first year, by distinguishing from competitors through a structured promotional campaign. The Scarborough area, in addition, has many hotels and visitors which can stimulate the revenue. This shop will also sell corresponding products, such as cupcake cookbooks, cooking utensils and party decorations.
Upfront Costs
As this is a new business, there will be different starting costs involved before the official opening. Upfront costs will include the acquisition of furniture and fittings (for example, coffee machines, table, chairs, cutlery, installation of computers, EFTPOS and front of house decoration).
Advertising expenses will include the advertising campaign in the first six months, and shop decoration materials to attract new customers, including the employment of an interior designer.
The bond for the rent will also need to be considered as this expense will need to be paid prior to the business opening. Other upfront costs will include the legislations and certificates required for the opening of the business.
Advertising expenses will include the advertising campaign in the first six months, and shop decoration materials to attract new customers, including the employment of an interior designer.
The bond for the rent will also need to be considered as this expense will need to be paid prior to the business opening. Other upfront costs will include the legislations and certificates required for the opening of the business.
Fixed Costs
Due to the scenic area of Scarborough the high rent cost must be taken into consideration. Utilities, such as heating, lighting, air conditioning, telephone lines and internet router, must be considered prior to the official opening. Rates are set by the City of Stirling with a minimum fee for quarterly payment.
In order to design an attractive display in the shop, an experienced interior designer will be employed once a year, which will be recorded as ‘design expenses’.
The rental of parking bays will also be an annual fixed cost paid to the City of Stirling. The provision of parking bays is expected to increase revenue. Legislations will also need to be taken into consideration, as set annual fees will need to be paid to respecting bodies to ensure the continuation of the business.
In order to design an attractive display in the shop, an experienced interior designer will be employed once a year, which will be recorded as ‘design expenses’.
The rental of parking bays will also be an annual fixed cost paid to the City of Stirling. The provision of parking bays is expected to increase revenue. Legislations will also need to be taken into consideration, as set annual fees will need to be paid to respecting bodies to ensure the continuation of the business.
Variable Costs
Variable costs are those expenses that will vary with the business output. The major variable cost in the shop includes raw materials which will be used in the production of cakes and coffee such as fruits, vegetables, milk, flour, chocolate, coffee beans and lollies. The cost of fruits and vegetables will vary depending on weather and seasonal changes.
Other variable costs are package expenses such as bags, boxes, utilities and staff wages. The employees in the shop will include one baker, one decorator and junior casual staff, which will result in wages paid fortnightly. The business will also provide training opportunities and staff uniforms.
Discount expenses will be allowed for due to the high-inventory turnover and the requirement to sell fresh products. Special occasions may give rise to offers or deals that will decrease the unit profit. Other expenses, such as maintenance of machinery, insurance and fittings will be expected as the business progresses.
Other variable costs are package expenses such as bags, boxes, utilities and staff wages. The employees in the shop will include one baker, one decorator and junior casual staff, which will result in wages paid fortnightly. The business will also provide training opportunities and staff uniforms.
Discount expenses will be allowed for due to the high-inventory turnover and the requirement to sell fresh products. Special occasions may give rise to offers or deals that will decrease the unit profit. Other expenses, such as maintenance of machinery, insurance and fittings will be expected as the business progresses.