VIETNAM NATIONAL UNIVERSITY, HO CHI MINH CITY

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

FACULTY OF MECHANICAL ENGINEERING

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TERM PROJECT
PRACTICE PROJECT MANAGEMENT

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Lecturer: PhD. Nguyễn Đức Duy

Class: CC02

Group: 03

Ho Chi Minh city, 28th 2024

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TEAM MEMBER

No. Full name Student ID

1 Đàm Vĩnh Phát 2153675

2 Lê Hoàng Lâm 2153515

3 Lê Ngọc Thuận 2153851

4 Nguyễn Bình Khang 2152636

5 Lê Đăng Khôi 2153478

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Group Evaluation

No. Name ID Absent Contribution

1 Đàm Vĩnh Phát 2153675 1 100%

2 Nguyễn Bình Khang 2152636 0 100%

3 Lê Đăng Khôi 2153478 1 100%

4 Lê Ngọc Thuận 2153851 0 100%

5 Lê Hoàng Lâm 2153515 0 100%

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SPECIAL THANKS

Dear Mr. Duy,

As our Project Management Lab course comes to an end, we wanted to take a

moment to express our deep gratitude for your exceptional guidance and dedication
throughout this journey. Your unwavering commitment to imparting invaluable
knowledge has truly made a significant impact on our understanding and approach to
project management.

Your emphasis on professionalism has been particularly influential. Through

your example and guidance, you've instilled in us the importance of professionalism in
all our interactions, be it with educators, peers, or future colleagues. Your insistence
on punctuality, though sometimes strict, has underscored the significance of this trait
in our academic and professional lives. We truly appreciate your efforts in shaping us
into more responsible and disciplined individuals.

Furthermore, your continual support and insightful advice have been invaluable
in helping us navigate the challenges of this semester. Your guidance has played a
pivotal role in the completion of our report, and we are sincerely grateful for your
mentorship and leadership.

While we have put forth our best efforts, we acknowledge that there may still
be areas where our knowledge and practical experience fall short of your expectations.
We recognize that our report may not fully meet the high standards you have set, and
we humbly ask for your understanding in this regard.

Once again, thank you for your dedication and commitment to our academic
growth. Your influence will continue to guide us as we embark on our future
endeavors within the field of project management.

Warm regards,

Ho Chi Minh city, 26/04/2024

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Table of contents
1.1 Introducing to Vietnamese coffee industry...........................................................1
1.2. Preliminary description.........................................................................................1
1.3. Project scale..........................................................................................................1
1.4. Legal basis............................................................................................................2
1.5. Five forces analysis..............................................................................................4
1.6. SWOT analysis.....................................................................................................6
1.6.1. Strength..........................................................................................................6
1.6.2. Weakness........................................................................................................7
1.6.3. Opportunity....................................................................................................7
1.6.4. Threat.............................................................................................................7
CHAPTER 2: PROJECT OBJECTIVES & NECESSITIES..........................................8
2.1. Project objectives..................................................................................................8
2.2. Project necessities.................................................................................................8
CHAPTER 3: MARKET RESEARCH & FORECAST.................................................9
3.1. Market research....................................................................................................9
3.1.1. Population density........................................................................................10
3.2 Competitors.........................................................................................................12
3.3 Requirements of the premises..............................................................................13
3.3.2 Orienting the design of the premises to attract customers................................14
CHAPTER 4: CONCEPTUAL DESIGN.....................................................................15
4.1. Operational analysis...........................................................................................15
4.1.1. Working model.............................................................................................15
4.1.2. System requirements....................................................................................15
4.2. Feasibility analysis.............................................................................................16
4.3. Operating scenarios............................................................................................18
3.5 Risk management................................................................................................19
CHAPTER 5: SCHEDULING......................................................................................20
5.1. Opening date.......................................................................................................20
5.2. Market research and learning about the coffee industry.....................................20
5.2.1. Learn about franchised coffee brands..........................................................20

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5.3. Preparing for opening day..................................................................................22

CHAPTER 6: COST ANALYSIS................................................................................24
6.1 Inflation rate........................................................................................................24
6.2 Project construction cost......................................................................................24
6.2.1 Equipment and installation cost....................................................................24
6.3. Variable cost.......................................................................................................26
6.3.1 Labor cost......................................................................................................26
6.3.2 Operation cost...............................................................................................26
6.3.3 Marketing cost...............................................................................................27
6.3.4 Raw material cost..........................................................................................27
6.3.5 Rental cost.....................................................................................................28
6.4 Aggregate costs according to regulated processes...............................................28
CHAPTER 7: CASH FLOW ANALYSIS...................................................................29
7. Revenue and cash flow..........................................................................................29
7.1 Annual revenue................................................................................................29
7.2 Cash flow and evaluate....................................................................................29

Table of tables
Table 1: Competitor Assessment Matrix 12
Table 2: Competitive Comparison Matrix 13
Table 3: Feasibility analysis table 18
Table 4: Trade-off studies 18
Table 5: Risk analysis table 20
Table 6: Pre-input data in Microsoft Project 23
Table 7: Average Vietnam’s inflation rate from 2016-2021 26
Table 8: Total equipment & installation cost 27
Table 9: Total installation cost in year 0 and year 5 27
Table 10: Labor cost (VND) 28
Table 11: Operational cost (VND) 28
Table 12: Marketing cost 29
Table 13: Raw material cost 29

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Table 14: Expected annual revenue after 5 years (VND) 31

Table of figures
Figure 1: Statistics table of Ho Chi Minh City population in 2022 11
Figure 2: Statistics table of Ho Chi Minh City population in 2022 11
Figure 3: Competitive Positioning Matrix 13
Figure 4: Operational working model 16
Figure 5: Operational order 17
Figure 6: Schedule work in Microsoft Project 24
Figure 7: Allocating resources in Microsoft Project 25
Figure 8: Project cost calculation 30
Figure 9: MARR calculation 32
Figure 10: NPV after tax calculation 32
Figure 11: IRR after tax calculation 33

Table of equations
Equation 1: Cash flow before tax calculation 31
Equation 2: Taxable income 31
Equation 3: Annual tax 31
Equation 4: Cash flow after tax 32

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CHAPTER 1: INTRODUCTION TO STAKEHOLDERS AND PROJECT

1.1 Introducing to Vietnamese coffee industry

Over the past 15 to 20 years, Vietnam's coffee market has experienced

significant growth. We are now the second-largest coffee exporter to the global market
after hundreds of increases in the country's coffee output, not just verified growth in
market share. Coffee has become more and more well-favored both domestically and
internationally. It is practical, easy to use, and appropriate for modern living. The
volume of coffee consumed in the nation has increased significantly in recent years
due to the growth of coffee shops, the supply chain for coffee, and rising consumer
demand. Vietnamese coffee may be able to take advantage of this to strengthen its
position and support the free market economy.

Data from the Ministry of Agricultural Development shows that Vietnamese

people's coffee consumption is much lower than that of Southeast Asian countries.
Meanwhile, Vietnam is the second largest coffee exporter in the world after Brazil.
Through this we can see that the development potential of the Vietnamese coffee
industry is extremely large because of the coffee reserves available in the country,
thereby the price will be greatly reduced compared to other drinks. .

For the above reasons, our group decided to develop a clean coffee chain
system to bring Vietnamese coffee closer to the young generation of Vietnam and
thereby further promote Vietnamese coffee to the world

1.2. Preliminary description

● Name of project: The Coffee House

● Location: Ly Thuong Kiet Street, District 10, Ho Chi Minh City

● Form of investment: new investment in machinery and equipment systems

● Business license: application for a coffee business license in the form of

business registration. Moreover, to open a coffee shop, we will need a food
hygiene and safety license and fire prevention license.

● Date range: 22/10/2023

● Issued by: Provincial Department of Planning and Investment.

1.3. Project scale

The Coffee House was built to address the need for a place to study and work
outside of school hours for students as well as office workers. In addition, it is also a

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place for entertainment after school and providing entertainment for students. Quality
coffee to Vietnamese consumers

● Redecorate the house

● Install the industrial air conditioning systems

● Install electrical wiring system

1.4. Legal basis

Enterprise Law 2014:

“This Law regulates the establishment, management organization,

reorganization, dissolution and related activities of enterprises, including limited
liability companies, joint stock companies, partnerships and enterprises. private
industry; regulations on groups of companies.”

Decree No. 78/2015/NĐ-CP:

“Business registration is the process by which a business founder registers

information about the business expected to be established, and the business registers
changes or expected changes in business registration information with the business
registration agency. and is stored in the National Business Registration Database.
Business registration includes registration of business establishment, registration of
changes in business registration content and other registration and notification
obligations according to the provisions of this Decree.”

Decree No. 108/2018/NĐ-CP:

“Registration of establishing an enterprise on the basis of conversion from a

business household is carried out at the Business Registration Office where the
enterprise intends to have its headquarters.”

Food Safety Law 2010:

“This Law regulates the rights and obligations of organizations and individuals
in ensuring food safety; Conditions to ensure food safety, food production and trading,
and food import and export; advertising and food labeling; food testing; analyzing
risks to food safety; prevent, stop and fix food safety incidents; information, education
and communication on food safety; State management responsibility for food safety”

Decree No. 155/2018/NĐ-CP

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"Ensure that no insects and harmful animals enter the production area and
storage of food and food ingredients; do not use chemicals to kill rats, insects and
harmful animals in the production area." and storage of food and food ingredients."

Circular 02/2022/TT-BTNMT guiding the Environmental Protection Law:

“This includes the contents, implementation order, forms, document samples,

decision samples, and report samples related to water environmental protection, land
environmental protection, and natural heritage environmental protection. course;
environmental protection content in provincial planning, strategic environmental
assessment, environmental impact assessment, environmental permits and
environmental registration; household solid waste management.”

Clause 5 Article 15 Decree No. 139/2017/NĐ-CP:

“This Decree regulates administrative violations, forms and levels of fines,

remedial measures, authority to make records and sanction administrative violations in
construction investment activities; exploiting, processing and trading minerals as
construction materials, producing and trading construction materials; management of
technical infrastructure works (in urban areas, new urban areas, housing development
projects, industrial parks, economic zones and high-tech zones); Real estate business,
housing development, home and office use management.”

Labor Code 2012:

“The Labor Code regulates labor standards; rights, obligations and

responsibilities of employees, employers, organizations representing labor collectives,
organizations representing employers in labor relations and other directly related
relationships to labor relations; State management of labor.”

Decree No. 79/2014/NĐ-CP:

“This Decree regulates fire prevention and fighting activities, organization of

fire prevention and fighting forces and means, investment in fire prevention and
fighting activities, responsibilities of ministries, ministerial-level agencies, and
agencies. Government agencies and People's Committees at all levels in fire
prevention and fighting activities.”

Tax Management Law No. 38/2019/QH14:

“This Law regulates the management of taxes and other revenues belonging to
the state budget.”

Types of legal documents:

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● Construction permit

● Business license

● Food safety license

● Health certificate for employees

● Certificate of participation in food hygiene and safety training course

● Contract for renting sidewalks and premises

● Food hygiene and safety certification of raw materials

● Initial tax declaration dossier

Franchise

Conditions for operating franchise:

This condition has been affirmed in Article 8 of Decree No. 08/2018/ND-CP

issued on January 15, 2018 amending some decrees related to investment conditions
for business activities under the state management scope of the Ministry of Industry
and Trade stipulating that traders are allowed to grant commercial rights when meeting
the following conditions: "Traders are allowed to grant commercial rights when the
business system intended for franchising has been operating for at least 01 year".

Regulations on registration of franchise activities:

Before carrying out franchise activities, the franchisor must register this activity
with the competent state authority. Through the registration information, the
competent state authority will decide whether the enterprise has the capacity to engage
in franchise activities or not. Decree No. 120/2011/ND-CP issued by the Government
on December 16, 2011 amending and supplementing administrative procedures in
some Decrees of the Government detailing the Commercial Law, Decree No.
35/2006/ND-CP and Circular No. 09/2006/TT-BTM specifically regulate the
registration dossier, procedures for receiving dossiers, response time of the registration
authority, procedures for registering in the Register of franchise activities, re-
registration procedures when traders change their main office address to another

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province, procedures for changing registration information in franchise activities,

procedures for deleting the registration of franchise activities.

1.5. Five forces analysis

Competitors force:

Group of direct competitors: Highlands Coffee, Cong Cafe, Trung Nguyen

Legend, Phuc Long... These are all large chain models nationwide, with prices
competitive with The Coffee House. The common feature is that the above models are
all well-invested with diverse menus, quality service with friendly and enthusiastic
staff. What makes them different lies in how they qualify their brand. Each brand has a
different color and different ways of building brand value.

Not only that, the current coffee market also witnesses fierce competition from
a series of newly opened models, capturing customers' consumer tastes, with
increasingly more refined and perfect designs. Especially in the post-epidemic period,
when the market has more and more competitors, the challenge of developing,
renewing and replicating is increasing, the pressure to maintain its position is not easy.

New competitors force:

The Coffee House is constantly making efforts to increase brand awareness and
expand market share in the coffee chain race. Therefore, the appearance of new
"players" is somewhat threatening the development and acceleration of this "giant".
List of new names that are silently threatening the position of The Coffee House:

First, the newest brain from China is named Mixue. With a scale of up to 1,000
stores operating over the past 5 years, this project has created a strong impression on
the retail market. Its influence has spread to 43 provinces/cities across the country,
bringing products and services closer to millions of people. With the target segment
being affordable families, this project has contributed to improving the quality of life
and daily amenities for a large part of society. The combination of scale, operating
time, and large market scope has created an undeniable strength in the retail industry.

Next is katinat. Katinat was founded in 2016 by Café Katinat Joint Stock
Company and is "sponsored" by D1-Concept, which is the F&B business behind many
other restaurant systems such as San Fu Lou, Di Mai, Sorae, Sens restaurant.
However, it will not be until the end of 2021 that this brand will truly become a
prominent name in the Vietnamese beverage chain market.

Katinat's business turning point has come since Vietnam lifted the social
distancing order and entered a new normal period. Taking the opportunity of
Vietnam's F&B market to restructure and many businesses to close, Katinat has

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quietly "collected" many premises in prime locations. By the end of July 2022, Katinat
Saigon Kafe continuously expanded to 23 more branches, bringing the total number to
33 stores in major provinces and cities such as Ho Chi Minh City. HCM, Dong Nai,
Binh Duong and Tien Giang.

Supplier force:

The bargaining power of suppliers is low as the companies are strong and they
have a large number of suppliers to buy from. The company has the option to buy
from different suppliers which puts the companies in the dominant position. The sales
level of the companies is the strength during bargaining with the suppliers because the
suppliers are willing to get the contract from such massive companies to generate
economies of scale.

Customer force:

The bargaining power of buyers in the coffee industry is high due to the
presence of a large number of coffee providers without having any radical
differentiation. Customers do have loyalty with the brands, but the loyalty is not strong
enough and the switching behavior of the customers in the coffee industry is high with
low or no switching cost (Geereddy, 2013). The buyers have options to choose from
multiple international and local brands that keep the power of the buyers high, and the
companies provide offers keeping in view the strength of the buyers for bargaining.

Substitutes forces:

The threat of substitute products for the coffee industry in general and the
coffee industry is very high due to the availability of many substitute products. The
increasing number of substitute products for the coffee industry is a threat to the coffee
industry. Tea is one of the main substitutes for the coffee industry, which is hurting the
coffee situation. In many countries, tea is preferred over coffee and coffee is
consumed as an occasional drink. Although The Coffee house has other products
besides coffee, it is generally not comparable to other brands. Other local hot drinks
also pose a threat in terms of substitutes in the coffee industry due to the acceptance of
local hot drinks.

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1.6. SWOT analysis

1.6.1. Strength

Brand recognition: As a franchise cafe, the store can leverage the parent
company's reputation and brand recognition, which can help attract customers and
build trust.

Established business model: Franchise cafes often come with a proven business
model and operating instructions, which can minimize the risks associated with
starting a business new.

Support and training: Franchise companies often provide support and training
to franchisees, including assistance with location selection, marketing and operations.

Bulk purchasing power: Joining a franchise cafe can help access the bulk
purchasing power of the parent company, which can help save costs on raw materials
and ingredients.

1.6.2. Weakness

Little flexibility: Franchise operations often have to follow specific guidelines

and standards set by the parent company, which can limit your ability to make
independent decisions.

Franchise fees and taxes: Franchise contracts often involve the payment of
franchise fees and taxes to the parent company, which can affect the company's bottom
line.

Dependence on parent company: Your success can be affected by the

reputation and overall performance of your parent company. Any bad jobs or financial
problems can affect your business.

1.6.3. Opportunity

Strengthened brand recognition: Joining a cafe franchise with a recognized

brand, can benefit from an existing customer base and the potential to attract more
customers to your cafe.

Market demand: If there is a high demand for cafes in your target location,
opening a franchise cafe could be a viable opportunity to tap into that market and
capture a portion of the customers.

Growth potential: Successful franchised cafes often have the potential to grow
and open additional locations, allowing the business to expand and increase revenue.

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1.6.4. Threat

Competition: The coffee industry can be highly competitive, with many

independent cafes and other franchise chains competing with each other. It is
important to evaluate the level of competition in the target market.

Changing consumer preferences: Consumer preferences and trends can change

over time, so it's important to update and adapt your products and services
accordingly.

Economic factors: Price drops or economic fluctuations can affect consumer

spending habits and affect cafe profits. Coffee shops today always put a competitive
advantage on price. top priority, so it is necessary to have a pricing strategy suitable to
the market.

CHAPTER 2: PROJECT OBJECTIVES & NECESSITIES

2.1. Project objectives

To explore and cultivate passion within the coffee industry, we have

innovatively inherited a coffee brand named The Coffee House. Our mission extends
beyond merely providing an ideal space for young individuals to study and work; it
also aims to be a sanctuary and gathering place for middle-aged guests. We are
committed to delivering the highest quality coffee products to our customers by
focusing on the quality of each coffee bean and the infrastructure. Our goal is not only
to increase revenue and profit but also to transform our coffee shop into an enticing
destination for international travelers, where they can indulge in coffee within a warm
and distinctive environment. To sustain and expand, we will implement customer care
policies and targeted marketing strategies.

2.2. Project necessities

Invest in location: In the coffee shop industry, site selection is crucial as it has a
big impact on growing the clientele and market share.

Invest in the Menu: A coffee shop's menu needs to be extensive, varied, and
above all, tasty. In addition to the coffee shop's location, the main draw for repeat
business will be the beverages. They will be closed down, just like any other business,
if the goods or services are of poor quality. Provide a menu with a variety of delicious
choices that will satisfy customers' palates, minimize ingredient prices, and guarantee
excellent service.

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Invest in design and decoration: Investing in a coffee shop is one of the main
criteria in doing business. Capture ideas consistent with modern trends to make the
shop more attractive to customers.

Invest in shipping: Free shipping within a 3km radius, if outside of the above
range, customers will have to pay for shipping themselves.

Invest in benefits for customers: Apply promotions for customers such as buy 1
get 1 free on store opening occasions, or vouchers to accumulate points when
purchasing drinks. This is essential to attract customers to come back and further
expand the brand reputation.

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CHAPTER 3: MARKET RESEARCH & FORECAST

3.1. Market research

The President of the Vietnam Coffee Cocoa Association (VICOFA) has

indicated a significant surge in domestic coffee consumption over recent years.
Between 2015 and 2020, there was an average annual growth rate of nearly 4%, with
total domestic coffee consumption rising from 158,000 tons in 2015 to 220,000 tons in
2022.

Individual coffee consumption increased from 1.7 kg per person in 2015 to 2.2
kg in 2022. Projections suggest that domestic consumption will continue to rise at an
average rate of around 6.6% per year during the 2025-2030 period, reaching between
270,000 and 300,000 tons by 2025.

Noted findings from a report on the Vietnamese Food & Beverage market by
iPOS, indicating that by the end of 2022, there were 338,600 restaurants and coffee
establishments in Vietnam. Over the period from 2016 to 2022, these establishments
experienced an approximate annual growth rate of 2%.

Ho Chi Minh City is the province with the most restaurants and coffee shops,
accounting for nearly 40% of the number nationwide, nearly 3 times more than Hanoi.
The revenue scale of Vietnam's F&B industry in 2022 is estimated to reach nearly
610,000 billion VND.

The position of coffee in our country's agriculture sector:

Coffee cultivation contributes to the structural transformation of crops in our

agriculture sector. While Vietnam was previously known for rice production, it has
now gained recognition for coffee as well. This diversification not only broadens the
agricultural landscape but also diversifies Vietnam's agricultural exports.

Diversification of business services in agriculture:

Coffee production is closely linked with processing activities. This leads to the
development of various services in agriculture, such as crop research, pesticide and
fertilizer supply, machinery supply for coffee processing, packaging services, and
export consultancy.

Redistribution of labor in agriculture:

Previously, the agricultural workforce mainly served the rice cultivation sector,
which was seasonal in nature, leading to a surplus labor force during idle periods. The
development of the coffee industry has created a significant amount of employment,

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particularly in regions with expanding coffee cultivation. This provides regular

employment opportunities for people in mountainous and lowland areas, thereby
increasing their income and reducing social issues.

Limiting land abandonment:

Coffee plants thrive in highland areas and uncultivated hillsides. Therefore,

coffee cultivation has helped prevent land abandonment and greened previously
unused areas.

The role of the coffee industry in the national economy:

The coffee industry plays a pivotal role in driving economic restructuring,

particularly in regions where coffee cultivation thrives. By fostering a closed-loop
process from production to consumption, it stimulates various economic sectors,
including research, irrigation, transportation, and machinery manufacturing. This, in
turn, accelerates industrialization and modernization in rural agriculture, thereby
reshaping the economic landscape.

Furthermore, the significance of coffee exports in contributing to the state

budget cannot be overstated. Annually, coffee exports generate approximately 1-1.2
billion USD, constituting a notable 10% of the country's total export revenue. This
infusion of revenue not only bolsters the state coffers but also fuels further
development initiatives.

Moreover, the impact of the coffee industry extends beyond fiscal

contributions. It serves as a cornerstone for addressing employment needs and
enhancing livelihoods within the community. The employment opportunities created
span various sectors, from farming and processing to logistics and distribution, thereby
fostering economic inclusivity and prosperity.

Given its status as one of the leading export commodities, the continued
development of coffee production for export holds immense potential for bolstering
the national economy. By capitalizing on this opportunity, the Vietnamese economy
stands to reap substantial benefits, further solidifying its position in the global market.
Thus, the role of coffee exports in driving economic growth and prosperity cannot be
understated.

3.1.1. Population density

As of January 2023, according to the GENERAL STATISTICS OFFICE, Ho

Chi Minh City's population reached 9,389,720 people.

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Figure 1: Statistics table of Ho Chi Minh City population in 2022

Figure 2: Statistics table of Ho Chi Minh City population in 2022

According to this table, we have the number of total number of man and
woman from the age of 15 to 40 so that we can calculate the percentage of Ho Chi
Minh City population with an age range from 15-40 in 2022:

(656,093 + 837,965 + 952,694 + 914,990 + 830,842)/(8,993,082) x 100 = 46.62%

By having the percentage of Ho Chi Minh City resident of the age 15-40 and
we also have the population of Ho Chi Minh City is 9,320,866 we can calculate the
number of people :

So the population of the age 15-40 is 9,389,720 x 46.62% = 4,377,587

Indeed, coffee consumption in this bustling metropolis is not merely a routine,

but a cherished ritual for many. Approximately 40% of the youthful and vibrant
population in the 15-40 age bracket indulge in the aromatic brew on a daily basis,

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highlighting the immense potential for coffee-related ventures to thrive in the city's
landscape.Therefore, we can calculate our market size is about 1.750.994 people.

With such a significant market size in mind, the vision emerges for a bustling
coffee enterprise that caters to the discerning palates of Ho Chi Minh City's denizens.
Envision a cafe bustling with activity, serving up to 4-600 cups of coffee per day on
weekdays, as the urbanites fuel their mornings and midday breaks with a dose of
caffeine-induced inspiration. Come the weekend, the numbers surge even higher, with
expectations of delighting 700-1000 patrons with the comforting aroma and rich
flavors of freshly brewed coffee.

3.2 Competitors
Table 1: Competitor Assessment Matrix

Competitor/ Weight Katinat Cheese Highland Phuc Long

Criteria Coffee

Quality of 0,3 9 8 8 9
drink

Price 0,2 8 8 8 8

Service 0,1 8 7 8 8

Space 0,1 7 7 7 8

Facility 0,2 8 7 7 7

Customers per 0,1 8 (about 250 7 (about 200 8 (about 250 8 (about 250
day customers customers customers customers
per day) per day) per day) per day)

Total 1 8.2 7.5 7.7 8.1

Table 2: Competitive Comparison Matrix

Quality of Space and

Service Price
products design

The Coffee
X X X
House

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Katinat X X X

Cheese Coffee X X

Highland X X

Phuc Long X X

Figure 3: Competitive Positioning Matrix

Competitor Katinat is known for its extensive menu, innovative seasonal
product lines and unique decoration. This helps Katinat achieve high rankings in both
quality and customer satisfaction, especially the younger generation. Phuc Long and
Highland are both famous brands for a long time in the Vietnamese coffee market,
along with high quality drinks, bringing a unique taste to the brand so they hold the
majority of trust from customers. Competitor Cheese coffee has average price, average
quality and airy, spacious space, suitable for student ages.

Each brand has its own strengths to develop further in the market. Therefore, to
maintain its position in the market, our TCH coffee shop will maximize its potential
and build a strategy to attract more customers in the future.

3.3 Requirements of the premises

3.3.1 Ground requirements

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Location and Accessibility:

The Coffee House is situated in District 10, Ho Chi Minh City, our ideal coffee
shop location is near to Ho Chi Minh City University of Technology and popular
locations for students. A nearby parking area or private parking on-site ensures easy
access for customers, especially students, enhancing convenience and attracting a
steady stream of customers.

Spacious Premises with Flexible Layout:

Our needed ground is an optimal area ranging from 100 to 200 square meters,
The preferred point to choose is having multiple floors to maximize service efficiency.
The ability to modify the building structure as needed ensures adaptability to our
operational requirements while maintaining a minimalist yet functional design.

Ground condition:

We prioritize premises that are relatively new and allow for structural
modifications, reducing the need for immediate repairs or renovations. Securing a
long-term lease agreement is essential for investment recovery and operational
stability, providing a solid foundation for sustained business growth.

Safety and Compliance:

Safe electricity and water systems, along with fire prevention certificates are
mandatory requirements. Ensuring the safety of our customers and employees is of
utmost importance and compliance with regulatory standards is critical for a smooth
and safe operating environment.

3.3.2 Orienting the design of the premises to attract customers

The coffee shop's design style has been carefully developed to represent a
modern, artistic, minimalist look. It has been purposefully adapted to draw in and keep
a wide range of customers. This strategic strategy enables multimodal appeal, meeting
the diverse demands and preferences of potential customers. Among the coffee shop's
potential customer base, university and college students stand out as key participants,
especially those studying at schools near the location.

University and College Students: Mainly students studying at universities or

colleges near the restaurant's area such as Ho Chi Minh City University of
Technology. Students often need quiet space to study or work in groups. Providing
this space can be a deciding factor.

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Secondary and High School students: are also similar to University and College
students but will be less attracted because students will often have lunch breaks and
have nowhere to go, so they will pay more attention to coffee shops.

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CHAPTER 4: CONCEPTUAL DESIGN

4.1. Operational analysis

4.1.1. Working model

We define a basic working model of a coffee shop system, which includes 5 functions:
1. Picking up customers: Customers arrive at the shop and will be guided by staff
to park their vehicles
2. Placing an order: Customers enter the shop and place their orders through a
staff
3. Receiving payment: Staff will receive payment from customers according to
their orders and customers will receive a receipt
4. Dispensing: Staff will dispense drinks based on the customers’ order
information
5. Serving: Staff will take the finished drinks and deliver them to customers

F
F
4.1.2. System requirements
In order to increase customer satisfaction, we will pay more attention to 3
primary activities, which have the most impact on the system and then analyze the
requirements of these activities.

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Figure 5: Operational order

4.2. Feasibility analysis

In order to build an efficient system, we need to select between alternatives to
come up with the most optimal and feasible solution (This is also called trade-off
studies). Therefore, we can make the right decisions for the system.
Our group proposed 4 criteria including premises, brand, location, and staff.
Besides, each criterion will have 2 different options.

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Table 3: Feasibility analysis table

Criteria Options Sign

Buying a house 1a
Premises
Renting a house 1b

Creating a new brand 2a

Brand
Franchise 2b

Crowded street 3a
Location
Deserted street 3b

Only full-time staff 4a

Staff
Full-time and part-time staff 4b

Table 4: Trade-off studies

Premis
Brand Location Staff
Criteria Weight es

1a 1b 2a 2b 3a 3b 4a 4b

Cost 0.2 6 9 8 6 8 6 6 8

Efficiency 0.3 8 7 7 9 8 6 7 8

Feasibility 0.5 6 8 6 7 6 7 6 9

Sum 1 6.4 7.9 6.7 7.4 7 6.5 6.3 8.5

After performing trade-off studies, our team came to the conclusion:

● Premises: We decided to rent a house because it will reduce more cost.
Besides, renting a house measures up to buying a house in efficiency
● Brand: Our team decided to build a franchise coffee shop. The brand we
choose is “The Coffee House”
● Location: With a score of 7 for a crowded street compared to a score of 6.5 for
a deserted street. We decided to locate our coffee shop on a crowded street in

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District 10. The street we choose is Ly Thuong Kiet Street, which is near
many universities like the University of Economics Ho Chi Minh City, Bach
Khoa university, Pham Ngoc Thach medical university, ... and high schools
like Nguyen Du, Nguyen Khuyen, ...
● Staff: Our team decided to hire both full-time and part-time staff. This not
only lowers the salary but also helps to satisfy the specifics of different
positions

4.3. Operating scenarios

During the operation, the system can always have unexpected situations, not
following a fixed operating procedure, hence our team listed out some possible
scenarios that could occur:
1. System operates normally
● The system will follow 5 basic functions like in “Figure 3” and focus on
3 main activities: Taking orders, dispensing and serving
2. The system operates during holidays and weekends
● Because of higher demand compared to normal days, we will consider
hiring more part-time staff.
● Especially for holidays, we also need to forecast the demand 1 week
before the holidays to ensure we have enough ingredients to serve
customers.
3. The drink customer orders are not available
● Apologize to customers and explain the reasons why that drink is not
available at that moment (broken machines, shortage of needed
ingredients, ...).
● Suggest other beverages for customers.
4. Facilities are damaged
● If customers unintentionally damage facilities, we will consider the
value as well as the damage of the facility to make a decision if the
customers have to compensate. If customers deliberately damage the
facilities, they must compensate the money equivalent to the price of the
damaged facilities.
● If staff damage facilities, their salary will be reduced according to the
cost of the damaged facilities.
5. System cannot operate directly due to unbiased conditions (Epidemic diseases,
natural disasters, ...)
● Reduce the number of ingredients, labors, and provide safety precautions
if there are customers who want to use the service of our system.
● Our system will focus more on online business.

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4.4. Risk management

Table 5: Risk analysis table
Problems Consequences Solutions Probability
Few or
Non-profit Marketing, organize events, Most important
empty of
Lost sales discount, deliver to domicile risk
customers
Customers’ bad
Food Staff keep the inventory and Not likely, but
experiences
sanitation coffee maker clean catastrophic
Negative effect to
and hygiene Wearing gloves and mask risk
reputation
Customers’ bad Choose and train staff
Unfriendly Middle of road
experiences carefully
staff risk
Bad feedbacks Check camera frequently
Not likely, but
Lost major customers Play background music
catastrophic
Noises (students, office Suggest customer lower their
risk
workers) voices if it’s too loud

Machine and other

electricity device can’t
Lower concern
Power cut work (light, air- Prepare 1-2 electric generator
risk
condition, fans, coffee
makers)
Not likely, but
Jeopardize customer, Exit door catastrophic
Fire
staff, facility, machines Fire alarm, fire extinguisher risk

CHAPTER 5: SCHEDULING

5.1. Opening date

17th March is the date we open the shop. Since we will have time to get ready
for operation at that point, after Tet. A recently opened coffee shop with special deals
will be a perfect spot for students who have just returned from vacation and need
somewhere to gather together to finish their schoolwork. Additionally, March is a very

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hot month, so a cafe will be a great spot for people to unwind and escape the heat.
After that, exam season will draw a lot of pupils during the subsequent times. From
there, we will ensure a stable customer base for the shop and create loyal customers.
We create a work schedule for activities before and after opening day based on
objective and subjective factors.

5.2. Market research and learning about the coffee industry

Research on consumer trends, customer preferences, competition and other

factors in the coffee industry.

Find out about the area where the shop is located, including its population,
cultural and economic characteristics, and determine if there is a demand for coffee
there.

5.2.1. Learn about franchised coffee brands

Explore the diverse landscape of franchised cafe brands offered in the market,
delving into aspects like reputation, developmental trajectory, operational protocols,
and the level of support extended by these brands. Reach out directly to the franchise
cafe brand proprietors to gain deeper insights into the prerequisites and terms
governing franchise acquisition.

Business planning

● Determine business goals.

● Financial planning, including estimating start-up costs, investment capital, and
revenue forecasts.
● Set specific business goals and targets to measure future performance.

Find a location and rent and buy furniture

● Find a suitable location for a cafe. This includes considering location, area,
population density and customer potential.
● Rent or purchase furniture and equipment, including tables, chairs, dispensers,
refrigerators, coffee makers and other necessary equipment.

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Contact franchise partners

After deciding to open a cafe with a franchise model, you need to contact the
owner of the franchise cafe brand to begin the process of negotiating and agreeing on
franchising to use the brand and support from the brand. there.

Coffee shop layout design

Design the cafe layout to be reasonable and attractive to customers. This

includes defining serving areas, mixing areas, seating spaces and other decorative
elements.

Prepare documents and business procedures

● Business registration and related legal documents to ensure legal operations.

● Handle tax issues and regulations related to opening a cafe.
● Licenses include: business license, franchise license, food safety certificate.

Recruitment and training of employees

● Determine the number of employees needed for your cafe, including waiters,
baristas, marketing staff, and managers.
● Conduct recruitment advertising and conduct the interview and selection
process for suitable employees.
● Train staff on working procedures, service quality and internal policies and
regulations of the cafe.

Search and work with suppliers

● Find suppliers of high-quality coffee and other ingredients such as milk, sugar,
flavorings, and other side drinks.
● Negotiate prices, place orders and establish relationships with suppliers to
ensure stable supply and product quality.

Menu design

● Build a menu for your cafe. Consider the types of coffee, side drinks, snacks,
and other products you want to offer.

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● Consider factors such as potential customer preferences, brand fit, and

ingredient availability.

5.3. Preparing for opening day

Select a fitting opening date and strategize a captivating event or promotion

aimed at drawing in customers to your franchise cafe. Craft meticulous operating
procedures for the inaugural day, encompassing service protocols, beverage
preparation guidelines, and payment procedures to ensure a seamless launch
experience.

Table 6: Pre-input data in Microsoft Project

Number Activities Duration Order

Market research and learning

1 2 weeks
about the coffee industry

Learn about franchised cafe

2 1 Week After 1
brands

3 Business planning 3 Weeks After 2

Find a location and rent and
4 5 Weeks After 3
buy furniture
Contacting with a franchise
5 2 Weeks After 2, 4
partner
6 Layout design 2 weeks After 4

Prepare business and franchise

7 3 Weeks After 5
documents and procedures

Recruitment and training of

8 4 Weeks After 7
employees

9 Find and work with suppliers 2 weeks After 7

10 Menu design 2 weeks After 8

11 Prepare opening day 1 week After 8,9,10

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Based on the determined opening date and the table above, we can use
Microsoft projects to schedule work for a specific period of time.

Figure 6: Schedule work in Microsoft Project

Based on the project's resources, we can allocate resources as follows:

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Figure 7: Allocating resources in Microsoft Project

Working schedule

● Total working time = 23:00 – 7:00 + 1:00(total break time) = 15:00 hours.
● 1 full-time staff works for 2 shifts and 1 part-time staff works for 1 shift.
● In “Shift Transfer and Break“, The shop will be closed for 30 minutes for part-time
staff to change the next shift and for full-time staff to have a rest. This break time is
also counted as the staff’s working time.

Time Activities
6:00 Preparation for Opening
7:00 Opening Shop
7:00-12:00 Shift 1
12:30-17:30 Shift 2
18:00-23:00 Shift 3
23:00-23:30 Cleaning and Closing the Shop
For the guard, we have 2 options:
1. Full-time staff
2. Part-time staff
⇒ A guard isn’t required with high technical skills, so we will hire part-time
staff. In addition, hiring part-time staff will also reduce salaries compared to hiring
full-time staff.

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With cashier, the staff work full time from 7 a.m to 23 p.m
For the bartenders, we have 2 options:
1. Full-time staff
2. Part-time staffs
⇒ Bartenders is a job that requires high specialist skills , so we decided to hire
2 full-time staff and they will separate their work-time with each other. In addition,
we also hire 2 part-time bartenders to cover peak hours such as from 11am to 1pm and
from 4pm to 7pm.
With the rest room and storage, we will hire 1 full time staff for doing both of
their work.
For the waiters, we have 2 options:
1. Full-time staff
2. Part-time staff
⇒ We can hire 3 part-time staff to minimize salary.
Table: Working schedule for full-time staff

Shift 1 (6h-12h) Shift 2 (12h30- Shift 3(18h-23h)

17h30)

Monday 1 cashier 1 cashier 1 waiter

1 waiter 2 waiters 1 bartender
1 bartender 2 bartenders

Tuesday 1 cashier 1 cashier 1 waiter

1 waiter 2 waiters 1 bartender
1 bartender 2 bartenders

Wednesday 1 cashier 1 cashier 1 waiter

1 waiter 2 waiters 1 bartender
1 bartender 2 bartenders

Thursday 1 cashier 1 cashier 1 waiter

1 waiter 2 waiters 1 bartender
1 bartender 2 bartenders

Friday 1 cashier 1 cashier 1 waiter

1 waiter 2 waiters 1 bartender
1 bartender 2 bartenders

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Saturday 1 cashier 1 cashier 1 waiter

1 waiter 2 waiters 1 bartender
1 bartender 2 bartenders

Sunday 1 cashier 1 cashier 1 waiter

2 waiters 2 waiters 1 bartender
1 bartender 2 bartenders

Table: Working schedule for part-time staff

Shift 1 (6h-12h) Shift 3(18h-23h)

Monday 1 waiter 1 cashier

1 bartender 1 waiter
1 bartender

Tuesday 1 waiter 1 cashier

1 bartender 1 waiter
1 bartender

Wednesday 1 waiter 1 cashier

1 bartender 1 waiter
1 bartender

Thursday 1 waiter 1 cashier

1 bartender 1 waiter
1 bartender

Friday 1 waiter 1 cashier

1 bartender 1 waiter
1 bartender

Saturday 1 waiter 1 cashier

1 bartender 1 waiter
1 bartender

Sunday 1 waiter 1 cashier

1 bartender 1 waiter
1 bartender

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CHAPTER 6: COST ANALYSIS

6.1 Inflation rate

Our team researched Vietnam's inflation rate from 2018 to 2023 and thereby
came up with an average number to calculate for the project as follows:
Table 7: Average Vietnam’s inflation rate from 2016-2021
Inflation rate over the years
Year 2018 2019 2020 2021 2022 2023
Inflation rate 2.66 3.53 3.54 2.73 2.31 2.35
Average inflation rate 2.86

6.2 Bank loan amount and annual interest and capital payments
The group plans a debt repayment roadmap for the following loans:

● Project investment capital: 1.1 billion VND

● Expected loan capital: 3 billion VND (used for daily operating costs and possible

risks)

● According to the interest rate when borrowing from other banks, we choose

Vietcombank to borrow for investment. The group plans to divide the loans into 2
with 40% (1.2 billion VND) short-term and 60% (1.8 billion VND) long-term.

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Figure 1: Vietnamese bank interest rate

In there:

● Short-term loan of 1.2 billion VND with interest rate of 11%/year within 6 months:

Interest0.5 = 1,200,000,000 * 11% / 2 = 66,000,000 VND

● Long-term loan of 1.8 billion VND with interest rate of 11%/year for 3 years:

Interest3= 1,800,000,000 * 11% * 3 = 594,000,000 VND

● The total money we must pay for the interest of the loan:

Interest = Interest0.5 + Interest3 =66,000,000 + 594,000,000 = 660,000,000 VND

● The average money must pay to interest each month:

660,000,000 / 36 = 18,333,333

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6.2 Project construction cost

The monthly rental cost for the space amounts to 60 million VND, covering an
area of 170 square meters spread across two floors.

6.2.1 Equipment and installation cost

Equipment cost
Equipment Quantity Price Total
Customer service area
Air-conditioner 5 5.000 25.000
Spoon and straw holder 20 50 1.000
Curtain 5 500 2.500
Foot mat 10 50 500
Table and chair 40 1.000 40.000
Designed lantern 10 80 800
Bonsai pot 20 200 4.000
Paint 20 100 2.000
Cashier counter and barista area
Freezer 1 30.000 30.000
Fridge 3 20.000 60.000
Cupboard 2 500 1.000
Deodorizing cooling system 1 20.000 20.000
Kitchen utensil set 3 300 900
Plate 100 36 3.600
Spoon 200 15 3.000
Cup 200 40 8.000
Microwave oven 1 18.135 18.135
Drinks preparation tools 1 12.500 12.500
management software and cash register 1 1 5.000
Other
Powder fire extinguisher 4 199 796
CO2 fire extinguisher 4 399 1.596
Fire extinguisher shelf 2 115 230
Uniform 10 130 1.300
Total 249.857

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Table 8: Total equipment & installation cost

Thus, the equipment cost is 249,857,000 VND. In addition to equipment costs,
the contractor also requires an installation cost of 3%, after 5 years, the coffee house
will replace the equipment with a remaining value of 0.
Table 9: Total installation cost in year 0 and year 5
Cost Equipment Installation
The total installation cost is 3% Year 0 249.857.000 12.441.660
so the cost will be Year 5 289.652.742 14.318.575

6.3. Variable cost

6.3.1 Labor cost

Table 10: Labor cost (VND)

Number of Salary/ person/

Role Total
employees month
Guard 2 4,200,000 8,400,000

Cashier 2 5,000,000 10,000,000

Bartender 4 6,000,000 24,000,000

Service staff 5 5,500,000 27,500,000

Manager 3 7,000,000 21,000,000

Total cost for one month 90,900,000

Total cost for one year 1,090,800,000

6.3.2 Operation cost

Table 11: Operational cost (VND)

Equipment Supplier Cost

Electricity Government 4,000,000 VND/ 1 month

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Water Government 2,000,000 VND/ 1 month

Wi-Fi Viettel 500,000 VND/ 1 month

Other (Customer or staff’s mistake) Owner 2,000,000 VND/ 1 month

Total cost for one month 8,500,000 VND

Total cost for one year 102,000,000 VND

6.3.3 Marketing cost

Table 12: Marketing cost

Marketing Method Cost

Advertisement on 20,000,000 VND/ month

Social media
Facebook, Tiktok,
platform 240,000,000 VND/ year
Youtube

Total marketing cost for 1 year is 240,000,000 VND

6.3.4 Raw material cost

The number of raw materials required for one month may be used to determine
the coffee shop's capacity to serve 250 customers per day. Next, determine the raw
material cost for a full year.
Table 13: Raw material cost

Raw material Unit price Requirement

Quantity: 200 kg/month

Coffee bean 150000 VND-1kg
Price: 30,000,000 VND/month

Quantity: 120 kg/month

Tea 200000 VND-1kg
Price: 24,000,000 VND/month

Condensed milk 25000 VND-1 can Quantity: 200 cans/ month

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Price: 5,000,000 VND/month

Quantity: 8 packages/day
Ice 10000 VND-1 package Price: 80,000 VND/day
2,480,000 VND/month

Quantity: 1 bucket/ day

Water 67000 VND-1 bucket
Price: 2,077,000 VND/month

Tissue Price: 360,000 VND/month

Other drinking
Price: 26,000,000 VND/month
ingredients

Total cost 89,917,000 VND/ month

⇨ So, the total raw material cost for a year is 1,079,004,000 VND.

6.3.5 Rental cost

To calculate the cost of renting land, our group decided to place the coffee shop
in District 10 on Lý Thường Kiệt Street because it's a central place, there's a lot of
traffic, and ground rental interest rate is given as follows:
• Floor area: 170m2 with 2 floors.
• Annual inflation rate: 2.86%.
• Hiring within 5 years.
With the rental fee of 50 million VND per month, we have the rental fee for a
year is 600 million VND.
We put the above costs into the Microsoft Project file we have adjusted and
produce costs for different stages as well as a chart of necessary costs over
time.

6.4 Aggregate costs according to regulated processes.

We put the above costs into the Microsoft Project file we have adjusted and
produce costs for different stages as well as a chart of necessary costs over time.

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Figure 8: Project cost calculation

total cost within 5 years

Year 2024 2025 2026 2027 2028

Total 3,111,804,000 3,200,802,000 3,292,345,000 3,386,506,000 3,483,360,000

cost

Total 16,474,817,000

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CHAPTER 7: CASH FLOW ANALYSIS

7. Revenue and cash flow

7.1 Annual revenue
In the first year of operation, it is estimated that the project received 250
customers per day, market expansion 5% per year. And we estimated that on average,
each customer who comes to the coffee shop will ask for a drink. Therefore, after
evaluating and referencing prices from similar models, we get the expected revenue
table:
Table 14: Expected annual revenue after 5 years (VND)
Year 2024 2025 2026 2027 2028
Sale 91,250 95,813 100,604 105,634 110,916
product
Price 40,000 41,144 42,321 43,531 44,776
(average)
(VND)
Total 3,650,000,00 3,942,130,07 4,257,661,88 4,598,353,65 4,966,374,816
0 2 4 4

7.2 Cash flow and evaluate

After calculating the required costs, calculating the loan to be able to pay for
business activities and then calculating the revenue achieved, the team conducts
further analysis of cash flow before and after taxes to balance. Consider whether this is
a profitable project or not:
Cash flow before tax:
Cas h flow before tax=Revenue−Expenses=CFBT
Equation 1: Cash flow before tax calculation
Taxable income:

Taxable income= pre tax cas h flow−depreciation−Interest payments

Equation 2: Taxable income
With tax rate TR = 20%, annual tax:
Annual tax=Taxable income∗0.2
Equation 3: Annual tax

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Cash flow after tax (CFAT):

CFAT =CFBT −Taxes−Capital payments−Interest payments
Equation 4: Cash flow after tax
Calculate MARR

Figure 9: MARR calculation

⇨ After calculation, our group assumes that the result is 48%.

Calculate after-tax NPV

Figure 10: NPV after tax calculation

⇨ So, after calculation, our groups calculated the after-tax NPV is 2,187,655,492
VND.

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Calculate IRR after tax:

Figure 11: IRR after tax calculation

⇨ So, after calculation, our groups calculated the IRR equals to 102%.

Conclusion
Because we can see that NPV after tax is > 0, the project is more feasible than
that. IRR (102%) > MARR (48%), this business is more profitable than putting money
in the bank, so it is worth starting the project.

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References
1. Thị trường cà phê ở HN và TPHCM. (n.d.). Retrieved December 1, 2022, from

http://caphenhatrang.com.vn/
2. Tổng Quan thị trường CÀ Phê Việt Nam. Babuki JSC. (2021, July 13).

Retrieved December 1, 2022, from https://babuki.vn/tong-quan-thi-truong-ca-

phe-viet-nam/?
fbclid=IwAR29sjfEU7k3GW6heCUaH4qfl_nTJkGTM9VGxo1GswtZEk9sfYs
oighnkJI
3. Group 01. (2022). System Engineering Term Project.
4. Group 02. (2022). System Engineering Term Project.
5. Công ty CP Tư vấn Đầu tư Thảo Nguyên Xanh. (2012). Dự án khu dân cư Én
Vàng tại Linh Xuân Thủ Đức

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