FEASIBILITY STUDY

NOVELTEA HOUSE

IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS IN
TECHNICAL WRITING COURSE

SUBMITTED BY:

ARTIBEL, JONNA MAE

BARRIOS, TEMPLE ZANE
RAFINIAN, SWEET MARVELOUS

SUBMITTED TO:

PROFESSOR
NOEMI SAISON

MARCH 26, 2018

PHILIPPINE CHRISTIAN UNIVERSITY - MANILA

1
TABLE OF CONTENTS

1.Executive Summary................................................................................................3

2.Description of Products and Services.....................................................................3

3.Technology Considerations....................................................................................3

4.Product/Service Marketplace..................................................................................5

5.Marketing Strategy...............................................................................................12

6.Organization and Staffing.....................................................................................12

7.Schedule................................................................................................................15

8.Financial Projections............................................................................................16

9.Findings and Recommendations...........................................................................17

10.Appendix............................................................................................................19

2
EXECUTIVE SUMMARY

JST & Co. has been thriving in the food cart business for over 5 years as a supplier. While it
is best know for it's franchise services, it has also made a name for itself in the snack carts,
business. JST & Co would like to shift to a new venture that will bring a fresh trend in a new
market. This feasibility study was done in order to research if a venture into the milk tea
market is viable for business. The following information contains details of the business
concept, overall costs, and projected sales.

DESCRIPTION OF PRODUCTS AND SERVICES

JST & Co. is considering a move to create a concept cafe that will cater to the generation of
millenials and post-millennials. From the play on the words, “Novelty”, NovelTea House is a
milk-tea cafe which also offers books for borrowing similar to a library. Customers can
borrow books and read in the cafe while enjoying a refreshing cup of milk-tea.

Goals
JST & Co. aims to raise the reading interest of the younger generation by creating a space
where students and young adults can borrow a wide variety of titles without worrying about
the cost of collecting books.

TECHNOLOGY CONSIDERATIONS

NovelTea House will provide a free Wi-Fi service to its customers when they purchase
products. The Wi-Fi zone will be limited within the parameters of the cafe and shall be
password protected to avoid being taken advantage of by non-customers. The internet service
provider shall be UniFi Telecomminications. The cost of service is quoted as
P1,500.00/month with the download speed of up to 8mbps.

3
Equipments

The following in-house kitchen equipment are needed to operate the cafe and produce the milk
tea.

1. Automatic sealing machine = 90,000 (1pc)

2. Customized sealing film = 399 (1 roll/ 10m.)

3. Tea Containers = 459.00 (1pc)

4. Water Boiler = 900.00 (1pc)

5. Electric Stove = 1,200.00 (1pc)

6. Blender = 500.00 (1pc)

7. Shaking Cup = 70.00 (1pc)

8. Measuring Scoop = 90.00 (1set)

9. Containers for bubble = 80.00 (1pc)

tea flavor powders

10. Container for cooked tapioca = 100.00 (1pc)

11. Pot to cook tapioca = 150.00 (1pc)

12. Strainer = 50.00 (1pc)

13. Pumps for syrups = 50.00 (1pc)

14. Ice cooler = 300.00 (1pc)

15. Cash Register = 5,000 (1pc)

Total cost: = 101,848

All equipment listed are available for sale through PNHI Philippines and can be purchased via
cash on delivery.

4
PRODUCT/SERVICE MARKETPLACE

The marketplace for milk tea cafes has been thriving in recent years. While milk tea are
available in almost every shopping mall, our primary marketplace is where it is closer for
students and young adults to visit. All of NovelTea House's current major competitors
already have an established market presence of at least 3-5 years. The top 3 competitors are
currently: Cha Time, Gong Cha, and Serenitea. By providing a unique experience of having a
wide selection of books and a relaxing ambiance, NovelTea will set itself apart from the
competition and set a new trend in the market.

The location for NovelTea House is planned to be at 2425 Jose Syquia St. Ana Manila,1009
Metro Manila. This location is ideal because it is near schools and other businesses.
However, there is currently no other milk tea shops on the area, thus, making NovelTea
House the first milk tea shop convenient for students and young adults to visit.

List of proposed products

Novel Tea will offer milk tea in five different flavors such as, chocolate, matcha or green tea,
coffee, wintermelon, and strawberry.

There are three sizes available: small, medium or large (6oz, 80z, and 12oz).

Price varies on cup sizes: Small 80php, Medium 95php, and Large 110php.

An additional tapioca pearl topping is also available for only 10php. Brownies, cupcakes,
Cakes or sliced cakes will also be made available. For every purchase of milk tea, customers
can borrow available books for free, but may only be read within the store.

5
 Bread and Pastries of Shilah’s Cake House is one of the leading suppliers of cakes,
cupcakes and brownies in Manila Area. And it is a great privilege to partner with them for
some of the menu products.

Supplier Price
Cupcakes (1dozen) = 300
25/pc
Brownies (1 dozen) = 300
25/pc
Cake (specify size) = 648
Sliced Cake (1 whole / 24) = 648
27/slice

Selling Price
Cupcakes (1dozen) = 540
45/pc
Brownies (1 dozen) = 540
45/pc
Cake (9cmx12cm) = 1200
Sliced Cake (1 whole / 24) = 1200
50/slice

Expected Income
Cupcakes (1dozen) = 240
20/pc
Brownies (1 dozen) = 240
20/pc
Cake (9cmx12cm) = 552
Sliced Cake (1 whole / 24) = 552
23/slice

6
List of ingredients

Milk tea flavored powder and sugar syrup will be supplied by PNHI Philippines, one of the
leading milk tea powder suppliers in the country. Then the crushed tube ice will be from MRS
Ice Supplies and Delivery. The milk tea cup together with the straw will be ordered from Crate
and Barrel Company wherein the design can be customized and all sizes are equal in price.

General Cost
Milk Tea Flavored Powder – 1kl. = 3599.00
Sugar Syrup – 1.mg = 4699.00
Cup designs and Straw – =15000.00
Pearl (optional) =899.00 (black 1kl.)
Crushed Ice – 1kl. = 299.00
TOTAL =24197.00

Division of Ingredient (small)

Milk Tea Flavored Powder – 1kl. = 1000
Sugar Syrup – 1.mg = 1000
Cup designs and Straw = 1000
Pearl (optional) – 1kl. =1000
Crushed Ice - 1kl. =1000

7
Amount of Investment
Milk Tea Flavored Powder = 3599.00 (1kl.)
=3.599/1cup
Sugar Syrup = 4699.00 (1mg.)
=4.699/1cup
Cup designs and Straw – = 15000.00 (1000pcs.)
=15/1cup
Pearl (optional) =899.00 (black 1kl.)
=0.899/1cup)
Crushed Ice = 299 (1kg.)
=0.299/1cup

Selling Price in Ingredients /1cup

Milk Tea Flavored Powder – 1kl. =3.599/1cup
Sugar Syrup – 1.mg =4.699/1cup
Cup designs and Straw – =15/1cup
Pearl (optional) =0.899/1cup
Crushed Ice =0.299/1cup
TOTAL =24.496/1cup

Expected Income for 1000pcs (small)

Investment Total Amount =24496.00
Total Sales Amount = 80000.00
TOTAL Expected Income =55,504.00

Division of Ingredient (medium)

Milk Tea Flavored Powder – 1kl. = 833
Sugar Syrup – 1.mg = 833
Cup designs and Straw = 1000
Pearl (optional) – 1kl. =1000
Crushed Ice -1kl. = 833

8
Amount of Investment
Milk Tea Flavored Powder = 3599.00 (1kl.)
=4.32/1cup
Sugar Syrup – 1.mg = 4699.00
=5.64/1cup
Cup designs and Straw – = 15000.00 (1000pcs.)
=15/1cup
Pearl (optional) =899.00 (black 1kl.)
=0.899/1cup
Crushed Ice =299(1kl)
=0.359/1cup

Selling Price in Ingredients /1cup

Milk Tea Flavored Powder – 1kl. =4.32/1cup
Sugar Syrup – 1.mg =5.64/1cup
Cup designs and Straw – =15/1cup
Pearl (optional) =0.899/1cup
Crushed Ice =0.359/1cup
TOTAL =26.218/1cup

Expected Income for 1000pcs (medium)

Investment Total Amount =26218.00
Total Sales Amount = 95000.00
TOTAL Expected Income =68782.00

Division of Ingredient (large)

Milk Tea Flavored Powder – 1kl. = 667
Sugar Syrup – 1.mg = 667
Cup designs and Straw = 1000
Pearl (optional) – 1kl. =1000
Crushed Ice -1kl. =667

9
Amount of Investment
Milk Tea Flavored Powder – 1kl. = 3599.00
=5.396/1cup
Sugar Syrup – 1.mg = 4699.00
=7.044/1cup
Cup designs and Straw – = 15000.00 (1000pcs.)
=15/1cup
Pearl (optional) =899.00 (black 1kl.)
=0.899/1cup
Crushed Ice/1cup =299.00(1kl.)
=0.448

Selling Price in Ingredients /1cup

Milk Tea Flavored Powder – 1kl. =5.396/1cup
Sugar Syrup – 1.mg =7.044/1cup
Cup designs and Straw – =15/1cup
Pearl (optional) =0.899/1cup
Crushed Ice – 1kl. 0.448/1cup
TOTAL =28.847/1cup

Expected Income for 1000pcs (large)

Investment Total Amount =28847.00
Total Sales Amount = 110000.00
TOTAL Expected Income =81153.00/

10
Books

NovelTea will not achieve its unique concept without the feature, which are the books.
The variety of titles will be composed of the following genres:

1. Classic Literature
2. Mystery/Thriller
3. Young Adult Fiction
4. Romance
5. Children's books
6. Science Fiction
7. Fantasy
8. Biography
9. Best-sellers
10. General Fiction

Estimated Cost:
PHP 3,000.00

The books will be sourced from book fairs and used bookstores as an effort to keep costs low
in the initial phase of operations. Books will be chosen from a list of popular and lesser
known titles based on recommendations from online book communities or articles.
Stocking up used books will also encourage customers and readers to give used books a
chance by not judging their condition and try reading them for their content. This is in-line
with NovelTea's vision to encourage reading habits among its customers.

11
MARKETING STRATEGY

In order to be successful, NovelTea House must differentiate itself from competitors in order
to appeal to customers in the marketplace. To do this, ABC will utilize its practice of
personalizing its product packaging which it currently offers in-store customers. Current
competitors do not currently provide a library service. Customers can enjoy the company of
friends and fellowship with milk-tea lovers and readers alike. Customers can be introduced
and familiarized with a selection of classic literature which talk about issues that may be
timely to the present society.

JST & Co. marketing team will make a social media page for NovelTea House on Facebook,
Instagram, and Twitter. Another important consideration this online marketing strategy is
that social media adverstising is much lower in cost in comparison to TV and radio
advertisement.

Social media engagement is a significant part of our target demographic's daily life and
making our presence known through the use of social platforms is expected to boost our sales
and branding image.

12
ORGANIZATION AND STAFFING

Staffing

The NovelTea House is not anticipated to significantly affect the organizational structure of
the company. There are, however, several staffing additions required to successfully operate
the cafe. All of these positions will work within existing departments and report to
department managers.

Staffing Position #1:

Cafe Supervisor – this full time position will lead staff in operating the cafe and will make
monthly inventor and sales reports. This person will report to JST's Operations Manager and
will work in the NovelTea House cafe itself.

Staffing Position #2:

Kitchen Staff – this full time or part time position will be in charge of making and serving the
menu products to customers. This position is also expected to clean kitchen equipments
regularly and will work in the NovelTea House cafe itself.

Staffing Position #3:

Cashier – this full time or part time position will be in charge of the cash register and
monitoring daily sales to report to the Cafe Supervisor. This staff will work in the NovelTea
House cafe itself.

13
 Store Design

The store size is 30 square meters, not so big and not so small. Store interior furniture will be
supplied by Philux Furniture. Air-conditioning and light-up sign board will be supplied
from 2VV Company. Comfort Room equipment and necessities will be supplied by SM
Home World. Interior and Exterior painting will be done by Ben's Paint Supply.

Overview of estimated cost :

35,000 – Monthly space rental

105,000 – Deposit for rental ( 1 month deposit and 2 months advance)

10,000 – Flooring

3,000 – Glass Door

8,000 – Lighting

5,000 – Paint Job

15,000 – Air-conditioning

1,500 – Bookshelf

2,000 – SIGN BOARDS

20,000 – 20 chairs

10,000 – 5 Tables

50,000 – Insurance

Total = 264,500

14
SCHEDULE

The NovelTea House business project is expected to take seven months from project
approval to the opening ceremony. Many of the equipment needed, such as kitchen supplies
and internet service are already available. The following is the expected schedule of some
significant milestones for this initiative:

May 1, 2018: Initiate Project

June 1, 2018: Project kickoff meeting

July 10, 2018: Complete shop design and concept

August 15, 2018: Complete menu and book list

November 29, 2018: Complete shop renovations

December 2, 2018: Cafe grand opening ceremony

Upon approval of this project a detailed schedule will be created by the assigned project team
to include all tasks and renovations.

15
FINANCIAL PROJECTIONS

The financial projections for the addition of an online sales platform for ABC are highlighted
in the table below. These figures account for projected online sales, additional staffing
requirements, shipping, material, and insurance costs, contract support for IT and training
needs, and web server and hosting costs.

The assumptions for these projections are as follows:

 In store sales projections remain unchanged

 All milestones are performed in accordance with the schedule

 All transactions are closed yearly with no carry-over to subsequent years

Measure Year 1 Year 2 Year 3 3 Year Total

Sales Projections Php2,080,000.00 Php2,080,000.00 Php2,600,625.00 Php6,760,625.00

Staffing Costs Php700,800.00 Php700,800.00 Php700,800.00 Php2,102,400.00

Projected material Php543,000.00 Php475,000.00 Php475,000.00 Php1,493,000.00

and insurance
costs

Product costs Php580,795.00 Php580,795.00 Php725,994.125 Php1,451.988.25

16
Cash Inflow Php255,405.00 Php323,405.00 Php698,830.88 Php1,713,236.75

Table 1. Projection of costs and sales

17
FINDINGS AND RECOMMENDATIONS

Based on the information presented in this feasibility study, it is recommended that JST &
Co. approves the NovelTea House project and begins project initiation. The findings of this
feasibility study show that this initiative will be highly beneficial to the organization and has
a high probability of success. Key findings are as follows:

Technology:

 Will utilize existing social media platforms for marketing startegies which will
effectively lower adverstising costs.

 Some products will be outsourced from suppliers instead of producing them in-store
which will lower risk of buying more equipment.

 Once in place, kitchen equipment is simple to operate and easy to maintain for a
relatively low cost.

Marketing:

 This initiative will allow NovelTea House to reach large number of target groups
electronically at a low cost.

 NovelTea House can expand customer base beyond geographic areas where stores are
currently located.

 The marketplace for milk tea and trendy cafes is in a steady state of growth.

 NovelTea House is able to differentiate itself from its competitors and will utilize its
unique concept to target new consumers.

18
Organizational:

 Minimal increases to staffing are required with no changes to organizational structure.

 A new store branch will be opened and a capital investment is required.

Financial:

 Break even point occurs towards the end of first year of operations.

 Three year projections show sale are profitable.

 NovelTea will be in position to capture greater market share by maintaining its

unique concept and continually improving its product line in the future.

19
APPENDIX

EQUIPMENT

DESKTOP AUTOMATIC SEALING MACHINE

THERMAL CONTAINERS

ICE CHEST

ELECTRIC STOVE

20
BLENDER

WATER BOILER

AIRTIGHT POWDER CONTAINERS

SHAKER CUP

21
STAINLESS POT

STRAINER

TAPIOCA PEARL CONTAINER

MEASURING SPOONS

22
SYRUP DISPENSER

STRAWS

PLASTIC CUP MILK TEA CONTAINERS

MILK TEA POWDER

23
STORE FURNITURES

CASH REGISTER

TABLES SET AND BOOKSHELF

LIGHTING FIXTURES

24