On-Campus Cyber-Café: A Solution to No-Food-No-Drink Computing 73-359 Benefit-Cost Analysis Nov 25...
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Transcript of On-Campus Cyber-Café: A Solution to No-Food-No-Drink Computing 73-359 Benefit-Cost Analysis Nov 25...
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On-Campus Cyber-Café:A Solution to No-Food-No-Drink
Computing
73-359 Benefit-Cost AnalysisNov 25th, 2002Hsiang HuangVibha Kagzi
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Overview
Proposal for a change
Initiative for project
Project description
Benefit and cost analysis
Demand projection
Conclusion
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What is our proposal?
Open a cyber-café at the right hand side of current Highlander café in Resnik
Close down the West Wing Cluster
“Eat while you work” concept
24 hour operation providing high tech computing and serving coffee and dry foods
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Why a cyber-café?
Initiative 1: Very stringent policies by Cluster Services: “Eating, drinking, and smoking are
expressly forbidden in the clusters. This includes both open and closed containers.” (http://www.cmu.edu/computing/clusters/guidelines)
Gaming is usually limited and not supported technically
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Why a cyber-café? Cont’d
Initiative 2: Lack of food options at graveyard hours All nighters’ demand for food Most café close before 6pm Most eateries close before
midnight or latest until 1am
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Why a cyber-café? Cont’d
Locations Hours Effective
Barista Café (UC) Daily 8 a.m. - 6 p.m.
LaPrima (Baker) Mon-Thu 8:30 a.m. - 4 p.m., Fri 8 a.m. - 3 p.m.
LaPrima (Purnell) Mon-Thu 8:30 a.m. - 4 p.m., Fri 8 a.m. - 3 p.m.
LaPrima (Wean) Mon-Thu 8 a.m. - 6 p.m., Fri 8 a.m. - 4 p.m.
Skibo Coffeehouse
Mon - Fri 8 a.m. - 1 a. m., Sat - Sun 5 p.m. - 1 a.m.
The Underground Daily 11 a. m. - 11 p.m.
• Current available café options:
•Skibo Coffeehouse is the only competitor in the hill area
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Why a cyber-café? Cont’d
Initiative 3: Slow and outdated computers in West Wing 16 PowerMac G3/350 10 Sun Ultra 1 Currently only 9% of students use WW
clusters
Initiative 4: High concentration of students in hill area MM Cluster closed down
Initiative 5: Highlander café is not fully utilized
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Waste of large and centrally located space!!!
Highlander dining hall: floor plan
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Where are we located?
•Most direct competitors are UC and CFA in the hill area.
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What will we offer?Introduce an “eat while you work” conceptNew updated computers:
30 IBM NetVista computers
Serve coffee house menu: gourmet bakery, sandwiches, coffee variaties, etc.
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How will we operate ?
24 hour service only during fall and spring semesters (max. demand)Hire 12 students and 1 managerPurchase furniture, computers and renovate the dining hallCharge a minimum of $3 for cluster users (redeemable for food)Purchase food and drink from Kiva Han
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What are the benefits?Students:
•New, cool, fancy place
•Convenient location
•Stay up and work with food supply to last
•24 hrs service with help staff
•Job opportunity for students with high pay
School Management:
•Full utilization of space (WW space ???)
• Showing concern for need of students
•Provide new and innovative concept for students
• Create job opportunity for students
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What are the risks & costs?
Very high fixed set up costsHit or miss: student’s reaction to a cyber café may varyConsiderable maintenance costs: computers might be damagedMay hurt other eateries on campusDeclining demand will require regular innovation and updating of facility
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Cost breakdown: computers
30 computer systems @ $800 = $24,000
30 Monitors @ $300 = $9,00015 Headphones @ $40 = $600
1 printer @ $2,000 = $2,000Total = $35,600
* Figures from student manager of Cluster Services and Modern Language Resource Center
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Cost breakdown: refurnishing
Computer Desks @ $60 = $1,800Side tables @ $40 = $1,200
Chairs @ $60 = $1,800 Renovate/Remodel facilities = $5,000
Total = $9,800
Silverware and cafeteria counter are already available
All figures are from www.amazon.com and www.ikea.com
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Cost breakdown: Food, staff & mantenance
Food costs roughly $4,500 per month (suggestive figure from LaPrima) = $29,250/year
Staff: Operational 200 days/year (2 semesters) 12 students @ $8/hr = $416/day1 manager @ $15/hr = $120/day
Total= $107,200/yearMaintenance:
Surrounding = $300/yearComputers = $1,000/year
Total= $1,300/year
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Overall cost projections
Total fixed set-up costs:Computers = $35,600
Refurnishing = $9,800Total = $152,600
Total operational costs/year: Food = $29,250
Staff = $107,200 Maintenance = $1,300
Total = $137,750Total costs for year 1: $290,350
year 2 - 5: $137,750/year
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How do we estimate demand?
Survey Approach Request students to fill out surveys and
project demand based on answers
Additional Research and Assumptions Based on information available and logical
reasoning we can project demand
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Other issues to consider
Students might not be willing to pay $3 minimum chargeAt meal hours the WTP might increaseLarge number of students (92% as per survey by cluster services) own computers – LOW DEMAND?Should we just run a cafeteria?
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Actions & conclusion
Based on the feedback collected from surveys, we will assess:Whether the no-food-no-drink policy is a concern for studentsWTP of students for food voucherOverall demand projectionIf yes, we will generate a cash flow analysis and determine a break-even point