The cupcake business has a large target market, catering to a variety of ages and genders and therefore, the extent of the target market allows for a greater expectance of revenue.
The cupcake business will be located in Scarborough along the popular café strip located on Stanley Street. Scarborough is the ideal location for the cupcake business as the location attracts a high percentage of local and non-local customers, allowing for greater exposure.
The cupcake business will also be a multi-purpose business, selling cupcakes and operating a front of house cafe. This broadens the target market even more, allowing for everyday dine-in and catering. Our patrons will have a wide choice of cupcake varieties such as chocolate, different types of nuts, fruits, oatmeal and many more. The cupcakes will also be custom made with any type of design our consumer will desire, which will be made according to their demand, thus satisfying our client’s ideal treat.
Our pricing structure will be on a high-end conventional goods range as we think that we will be providing better quality products compare to competitors. This price will be set to identify to customers that our products are of a high quality. With the provision of the business’ custom order service, consumers will realise that they are receiving a better product.
Operating the cupcake business will not be labour intensive, which allows the business to hire a minimum number of staff. The method of diversifying job tasks, such as this, is an industry wide practice. Overheads will be significantly reduced by utilizing this method, therefore allowing the staff to develop specific skills to the business operations.
There are ‘standard operations’ and peak times for the cupcake business. During the standard operations for cupcakes, the multi-purpose coffee shop and daily sales of cupcakes can be maintained, with the expectation to cover the business’ overheads comfortably. Peak times such as Easter, Christmas, Australia Day, Father’s Day and Mother’s Day can increase the expected number of customers dramatically, especially for cupcake catering.
Although Scarborough will generate a higher customer base, commercial rent is relatively expensive. The high rent cost should be covered by the larger expectance of revenue, due to higher average income in this area, compared to a less populous area or a higher rent area, such as Fremantle. Locating the business on the café strip in Scarborough will mean that there are limited parking bays, so our customers will face parking problems. To overcome this problem, the business can rent a small number of bays directly in front of the shop to ensure that customers can access the business easier.
The business should expect a high inventory turnover rate due to raw materials having a short expiry date. The business will use First In First Out (FIFO) method for sale and stock replenishment. Also an effective restocking and reordering procedure needs to be developed to maintain and supply the right amount of materials for daily operation. Quality control is very difficult to achieve as the cupcakes and coffee will be made differently each time. To ensure quality control, procedures will need to be established, ensuring the taste and decorations can remain as similar as possible.
The business idea is based on an increasing social trend, meaning that if the trend does not receive well with Perth’s population the business could suffer a loss. However because the business will also be a café, this will hopefully allow the business to avoid too much turmoil due to a trend downturn.
There is definitely an increasing social trend that ‘up-market’ parties are now opting for cupcake towers instead of the traditional cakes. For example, The Cheesecake Shop franchises have now included cupcakes on their menu, recognising this trend. The increasing trend will work to the advantage of the business for event catering, such as birthdays and special occasions, and also a cupcake is a good serving size to accompany a cup of coffee.
There are no immediate cupcake specific businesses in the area that are able to offer take-away orders and catering, with the closest business located in Osborne Park further down the road. This will offer a great advantage to local residents by locating the business in an area that no existing cupcake competition operates.
The cupcake business has the opportunity of expansion in the near future, with numerous prospects. Offering our products to home parties or conducting in-office demonstrations would most probably increase our customer base and attract new customers. This will also help us through word of mouth advertising and maintaining customer loyalty.
Though there are no cupcake specific businesses that threaten the Cupcake Cafe, there are an extensive number of coffee shops in the selected location. This will be a major threat to our walk-in customer base; however, by providing an eye catching front of house and ‘sandwich boards’ on the sidewalk, the business should be able to attract customers.
Not only is there a high number of legislations needed for setting up a business that sells foodstuff, for example FoodSafe and Quality Control procedures, there are also workplace legislations. These legislations will contribute largely to the upfront costs of the business and to ongoing renewal costs; however these expenses must be covered as the consequences for not doing so, greatly outweigh the compliance costs.
Climate may also affect the businesses operations. Generally if bad weather is expected, customers are more reluctant to visit coffee shops who are not regular customers. This may cause problems for the business in having “off days” during seasons of “bad” weather. The business should expect customers each day, regardless of bad weather, however in winter the beach area may not be as populated as the summer seasons.