Create basic pro forma financial statements for 2025

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Reference no: EM133944642

Java Junction Cafe - Brewing Up a Challenge

Background
Java Junction Café is a locally owned coffee shop in the heart of a mid-sized college town. Opened in 2018, the café quickly gained a loyal customer base of students, faculty, and local residents. The café offers specialty coffee drinks, teas, smoothies, pastries, and light lunch items. Get expert assignment help online from PhD writers.

The shop has 12 employees (8 part-time baristas, 3 full-time staff including a manager, and the owner, Samantha Lee). Employees receive competitive wages, flexible schedules, and free drinks during shifts, which helps reduce turnover.
The café seats 40 customers indoors and has an outdoor patio that seats an additional 15 customers during warm months. Average transaction value is $7.50. Peak hours are 7:00-9:30 AM on weekdays and 10:00 AM-2:00 PM on weekends.
Customer Base
60% students and faculty from the nearby college
25% local professionals who stop by before or after work
15% neighborhood residents who enjoy the atmosphere for casual meetups or reading
Many customers praise Java Junction for:
Freshly roasted beans sourced from a local supplier
Comfortable, cozy atmosphere with free Wi-Fi
Friendly staff who know regulars by name
However, customer surveys reveal two recurring suggestions:
More seasonal drink offerings like pumpkin spice in fall or peppermint mocha in winter.
A mobile ordering option to save time during busy mornings.

Competitive Landscape
Over the last year, two national coffee chains opened within a 2-mile radius:
Brew Nation Coffee - Offers mobile ordering, a popular rewards program, and a drive-thru.
Bean & Go - Known for seasonal drink rotations, heavy social media promotions, and lower prices on basic coffee drinks.
While Java Junction retains loyal customers, the chains' convenience and promotions are drawing away some morning traffic. Average daily transactions dropped from 220 to 190 in the last six months.

Operational Challenges
Marketing: Java Junction spends just $500 per month on marketing, mainly for social media posts and occasional flyers. They do not currently run paid social ads or influencer collaborations.
Technology: All orders are taken in person; no mobile app or online ordering system is available.
Menu: Core menu items remain unchanged since opening, apart from adding oat milk and almond milk options. Seasonal drinks are rare and often promoted informally.
Cost Pressures: Coffee bean prices rose 10% in 2024 due to supply issues. Wage increases have also affected labor costs.

Owner's Current Options
Samantha is weighing four possible strategies to address the issue:
Mobile Ordering & Loyalty Rewards Program
Upfront investment: $12,000
Ongoing monthly cost: $300 software fee
Potential to increase convenience and repeat visits.
Menu Expansion - Seasonal Drinks & Lunch Combos
Equipment investment: $6,000
Higher monthly COGS: +$1,000
Could attract new customers and encourage upselling.
Aggressive Marketing Campaign
Double current marketing budget from $6,000/year to $12,000/year.
Includes targeted social media ads, influencer partnerships, and student discount promotions.
Reduce Labor Costs
Adjust staffing schedules to match slow periods.
Estimated annual savings: $8,000-$10,000.
Risk: Reduced service speed during occasional rushes.

Create basic pro forma financial statements for 2025 based on one or more proposed solutions:
Income Statement
Balance Sheet
Statement of Cash Flows
Prepare a revised budget reflecting your recommendations.

Reference no: EM133944642

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