Cafe yumm

It is not think to serve as sources of primary selective informationrmation or illustrations of effective or ineffectual management . Lets assume that it is cur take awayly October of 2011 and you ar exploring the opportunity of becoming a Caf Yumm licensee by opening a Caf Yumm near the I-JO campus on E13th street. Alternatively, you can open a Caf Yumm in downtown (two blocks from the LDT). For the downtown view, you face the pastime uncertainty the city plans to build a huge placement and a dowryment difficult (with musical themed 100,000 material feet position aloofness and one hundred fifty flat tires). The city get out vote to profess final decision in a course of instruction from today.If the project is approved by the city, the b sack result take a year ( take time offs this cal interceptar calendar month next year and ends a year afterwards that). You consider the probability of the approval of the project by the city is 75%. To evaluate the franchise o pportunity with Caf Yumm , you start to collect info as below. For both the I-JO and the downtown locations, you leave the following estimates of the expenses to become a part of the Caf Yumm Franchise fee $35,000. This is one-time charge, paid to Caf Yumm. advertizing osts between 1% and 2% of the gain gross gross sales paid to Caf Yumm n to each one year basis before long 1. 5% of the complete(a) sales. You will invent the advertising make up by the end of each year. dish out fee 6% of the gross sales paid to Caf Yumm by the end of each year. For the I-JO location, you estimate that the sign investment funds is $350,000. That includes the remodeling address and the first-year rent which is $6,000 per month for this 1,200 squ are feet eatery office. The lease of the restaurant station will be guaranteed for the next heptad years. The rent, however, is expected to vary every year. The rent will be paid by the end of each year.From the opportunity analysis, your esti mate other expenses and sales for the I-JO location are as follows Expenses and Sales Labor monetary value Non- project Fixed Cost (Equipment lease, utility, insurance, and other discordant appeals Cost of Food help Sales per $250,000 $36,000 $185,000 For the downtown location, you collect the following choice depending on if the city approves the construction of the young office and flatcar composite plant Choice A Rent a 1,500 solid feet inst entirelying now The initial investment $500,000. That includes the remodeling cost and the first-year ent which is $15,000 per month for this 1,500 square feet restaurant topographic point.The lease of the restaurant space will be a seven-year agreement (early termination and sub-rental are not allowed). The rent, however, is expected to increase to $20,000 per month after the recent office and apartment abstruse is strengthened (if the project is approved). The rent will be paid by the end of each year. Estimated labor cost, cos t of nutriment and service, and sales the same as those of the I-JO location before the red-hot office and apartment Gordian is create two time of those of the I-JO location after the ew office and apartment complex is built (assume that if the virgin complex is not built, the estimated subroutines will remain unchanged).Estimated non-labor fixed costs $4,500 per month. The number will increase to $6,500 after the new complex is built. Choice B first rent a 1,000 square feet facility now if the new office and apartment complex is approved by the city, you dumbfound the option to expend the rental space to a total 1,500 square feet (by assure the next door rental space the only way to expand the space in downtown area). The probability of the availableness of that dditional 500 square feet space in this month next year is 80%.In addition, you estimate that the probability of the availability of that sur convinced(p) 500 square feet space after the new office and apartment complex is built is 0%. For this Choice B, you estimate The initial investment now That includes the remodeling cost and t year rent which is $10,000 per month for this 1,000 square feet restaurant space. If you get the supernumerary 500 square feet space, the remodeling cost is $200,000. The periodic rent for the total 1,500 space is $20,000.Estimated labor cost, cost of food nd service, and sales 75% of those of the I-JO location before the new office and apartment complex is built 125% of those of the I-JO location after the new office and apartment complex is built if no amplification is performed two times of those of the I-JO location after the new office and apartment complex is built if the expansion is performed. Estimated non-labor fixed costs $4,000 per month for the 1,000 square feet facility and $6,500 per month for the 1,500 square feet facility.You currently dont have any cash in to start and run the business. You need to borrow oney to pay the initial investmen t and the franchise fee. You have two alternative ways to nominate capital Bank Option The notes can be financed from a Portland-based first rudiment bank at the annual abstruse rate Wall Street journal Prime Rate + 12%. If you bestow from the ABC bank, there is no periodic payment. However, you must prepare one subdue to pay off your loan (principal plus interests) at the end of the seventh year.Early production is not allowed. Partnership Option As an alternative, a local investment loaded offers you the following financial partnership opportunity. below the partnership agreement, the firm would rovide you all the cash needed to start the business (initial investment including all remodeling costs, and the franchise fee). In substitute for this, the firm would receive 80% of all your net profit at the end of the seventh year (if there is any).