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Monthly Sales: Price

The document outlines the pricing, inventory, sales projections, financial projections, and break even analysis for a new tea house business over the first three years of operation. Key points include: - Bubble tea and Hong Kong milk tea will be the top sellers and priced competitively at $2.99-3.25 per cup. - Starting inventory includes flavors, teas, and milk that will last over 1 month without replenishment. - Sales are projected to grow 5% annually, reaching over 70,000 potential customers by year 5. - Financial projections show positive net income, equity, and cash flow each year as the business scales up. - The break even point is 38,735 cups per

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Chicken Noodles
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61 views5 pages

Monthly Sales: Price

The document outlines the pricing, inventory, sales projections, financial projections, and break even analysis for a new tea house business over the first three years of operation. Key points include: - Bubble tea and Hong Kong milk tea will be the top sellers and priced competitively at $2.99-3.25 per cup. - Starting inventory includes flavors, teas, and milk that will last over 1 month without replenishment. - Sales are projected to grow 5% annually, reaching over 70,000 potential customers by year 5. - Financial projections show positive net income, equity, and cash flow each year as the business scales up. - The break even point is 38,735 cups per

Uploaded by

Chicken Noodles
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Price

The following chart is the price strategy for Tea House products. Consider the top sale

product will be bubble tea and Hong-Kong milk tea; we make their price attractive.

Material cost per cup ($) Price


12oz 16oz
Bubble Tea 0.73 $2.99 $3.25
Hong Kong Milk Tea 0.55 $2.99 $3.25
Thai Tea 0.22 $3.50
Black Tea 0.31 $3.00
Green Tea 0.28 $3.50
Fruit Tea 0.42 $4.00

Start-up Inventory
The table below shows that inventory situation of the company, that inventory will support the

Tea House to work more than 1 month even without the refill of raw materials.

Starting Inventory 　
　 Price Unit Total
Flavor Powder $10/lb 80lbs $800
Black Tea $48/lb 20lbs $960
Green Tea $44/lb 10lbs $440
Thai Tea $34/lb 10lbs $340
300
Milk $3.5/gallon $1,050
gallon
Total 　 　 $3,590

Monthly Sales

700; 14%
Bubble Tea
1300; 26%
Hong Kong Milk Tea
800; 16% Thai Tea
Black Tea
Green Tea
500; 10% 1100; 22%
Fruit Tea

600; 12%
The table below show the growth predict in five years.
Growth Predict

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Growth CAGR


Customers

Students 5% 31,800 33,390 35,059 36,813 38,653 5%

Teenagers 5% 5,400 5,670 5,954 6,251 6,563 5%

Office 5% 13,800 14,490 15,215 15,975 16,774 5%


workers

Other 5% 9,000 9,450 9,922 10,419 10,940 5%

Total 5% 60,000 63,000 66,150 69,458 72,930 5%

Cash Flow

As the chart and table below present, the company will maintain a healthy cash flow

position, which will allow for timely debt servicing and funds available for future development.

The chart below shows the first year cash flow of the company.

100,000
90,000
80,000
70,000
60,000
50,000
Net Cash Flow
40,000
Cash Balance
30,000
20,000
10,000
0
1 2 3 4 5 6 7 8 9 0 1 2
n th nth nth nth nth nth nth nth nth th 1 th 1 th 1
o o o o o o o o o n n n
M M M M M M M M M Mo Mo Mo

Income Statement Analysis


As the chart and table below present, the company will maintain a growth sale that will

allow for funds available for further Implement.

Year 1 Year 2 Year 3


Sales $200,256 $210,269 $220,782
Cost of goods $28,308 $29,723 $31,210
Gross Profit $171,948 $180,545 $189,573
Gross Margin 85.86% 85.86% 85.86%
Expenses
Payroll $72,000 $72,000 $72,000
Marketing/Promotion $5,000 $5,000 $5,000
Depreciation $1,225 $1,225 $1,225
Rent $16,200 $17,200 $18,200
Utilities $9,000 $9,360 $9,641
Disposable supplies $4,000 $4,200 $4,410
Insurance $5,000 $5,000 $5,000
Total Operating Expenses $112,425 $113,985 $115,476
Profit Before Interest and Taxes $59,523 $66,560 $74,097
Intersts expense $19,080 $19,080 $19,080
Taxes(30%) $12,133 $14,244 $16,505
Net income $28,310 $33,236 $38,512
Net Profit Margin 14.14% 15.81% 17.44%

Balance Sheet Analysis

As the chart and table below present, the company will maintain a healthy balance sheet

position, which will indicate that the company can gain profit and have an excellent growth in

the industry.

Projected Balance Sheet


Year 1 Year 2 Year 3
Current Assets
Cash $95,875 $130,137 $169,574
Inventory $3,000 $3,200 $3,500
Total Current Assets $98,875 $133,337 $173,074
Long-term Assets
Long-term Assets $12,250 $12,250 $12,250
Accumulated Depreciation $1,225 $2,450 $3,675
Total Long-term Assets $11,025 $9,800 $8,575
Total Assets $109,900 $143,137 $181,649

Current Liabilities
Accounts Payable $52,947 $69,569 $87,750
Current Borrowing $- $- $-
Total Current Liabilities $52,947 $69,569 $87,750
Long-term Liabilities $34,803 $18,181 $-
Total Liabilities $87,750 $87,750 $87,750
Equity
Paid-in Capital $8,640 $8,640 $8,640
Retained Earnings $(14,800) $13,510 $46,747
Earnings $28,310 $33,236 $38,512
Total Equity $22,150 $55,387 $93,899
Total Liabilities and Equity $109,900 $143,137 $181,649

Cash Flow Statement

As the chart and table below present, the company will maintain a healthy cash flow

position, which will allow for timely debt servicing and funds available for future development.

Year 1 Year 2 Year 3


Cash flows from operating activities
Cash Sales $200,256 $210,269 $220,782
Cost of goods $(28,308) $(29,723) $(31,210)
Operating Expenses $(112,425) $(113,985) $(115,476)
Interest paid $(19,080) $(19,080) $(19,080)
Taxes $(12,133) $(14,244) $(16,505)
Purchase of long-term assets $(12,250) $- $-
Chages in inventory $590 $(200) $(300)
Depreciation $1,225 $1,225 $1,225
Net cash flows from operating activities $17,875 $34,261 $39,437
Cash flows from financing activities
Long-term debts $50,000 $- $-
Net cash flows from financing activities $50,000 $- $-
Net cash flows $67,875 $34,261 $39,437
Cash Balance $95,875 $130,137 $169,574
Break Even Analysis

The break even sales for Tea House is 38,735 cups per/year, our first year sales

estimation is 60,000 cups, and we can gain profit above beyond the break-even point.

Fixed costs Variable Costs


Payroll $72,000 Cost of goods $28,308
Marketing/Promotion $5,000 Disposable supplies $4,000
Depreciation $1,225 Total Variable Costs $32,308
Rent $16,200 Sales $200,256
Insurance $5,000 Unit Sales 60,000
Utilities $9,000 Variable Costs per unit $0.54
Total Fixed Costs $108,425 Sales per unit $3.34
38,735cups/yea
Break even units
r

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