Reference no: EM131465110
Mystic Monk Coffee
Identification:
Mystic Monk Coffee is a company that was developed after Father Daniel dream. Father Daniel Mary's vision for the Carmelite Monks and its congregation was to move Mount Carmel. The 13 monks living in a small house took an opportunity to expand moving to the Rocky Mountains and transformed a 500-acre to a monastery that can accommodate 30 monks, and to build a facility that would include a Gothic church, a convent for Carmelite nuns, a retreat center and more.
Coffee sales support the Brotherhood and eventually would support the expansion to the new place. Coffee is produced using high-quality Fair Trade Arabica and fair trade / organic Arabica beans. There is a broad range of traditional flavors such as Carmel's mystical songs, Cowboy Blend, Royal Rum Pecan, and Mystic Monk Blend. The regular coffee customers are Catholics coffee and support the mission of the monastery by buying the coffee online only through the website. The primary objective is to reach 8,9 million to be able to acquire a new land. It is necessary to increase the number sales and develop a financing, marketing, and production strategy for Mystic Monk Coffee.
Analysis and Evaluation:
The current situation of Mystic Monk Coffee only targets a small group of the customers. The company's average monthly sells are $56.500, a cost of sales of 30%, inbound broker fees of 3%, and shipping costs of 19%. A total cost of goods sold of 52%. The low production volume might affect some of the expenses rates but increasing the production volume will probably decrease these costs. Operating expenses account for 37% of the revenue leaving Mystic Monk Coffee with an 11% net profit. The company's net profit of 11% is not enough to raise the amount of 8.9 million to acquire the new property in time.
The distribution channel (websites) can also affect the company's earnings since 18% of the sale represents the commission rate for the site. The average monthly sales are $56,500; Mystic Monk Coffee sells bags of 12 ounces at a retail price of $9.95. The company sells a total of 4,250 pounds of coffee per month. The coffee roaster has a capacity to produce 540 pounds of coffee per day; the company is currently producing about 135- 150 pounds per day. The lower production of the coffee is due to the limited labor time. Purchasing a higher capacity roaster would increment the output ratio since the new machine can process 130 pounds per hour. Increasing production would need to increase the number of labor hours and personnel as well.
Recommendations:
The company must increase its sales; the Mystic Monk Coffee should expand its distribution channels to local markets and major retailers and expand its online business operations. The company should target not only Catholic coffee drinkers but all coffee consumers. Before acquiring a bigger machine Mystic Monk Coffee needs to work the current machine at its full capacity producing 540 pounds per day and generating sales an average of $7,200 per day. It is necessary that Mystic Monk Coffee hire enough employees to maximize profit. As the demand and sales for Mystic Monk Coffee increase the company should acquire the new high capacity machine to meet the request and increase production by 130 pounds per hour.