On-Campus Cyber-Café: A Solution to No-Food-No-Drink Computing 73-359 Benefit-Cost Analysis Nov 25 th, 2002 Hsiang Huang Vibha Kagzi.

On-Campus Cyber-Café:A Solution to No-Food-No-Drink

Computing

73-359 Benefit-Cost AnalysisNov 25th, 2002Hsiang HuangVibha Kagzi

Overview

Proposal for a change

Initiative for project

Project description

Benefit and cost analysis

Demand projection

Conclusion

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

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

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

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

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Initiative 3: Slow and outdated computers in West Wing 16 PowerMac G3/350 10 Sun Ultra 1 Currently only 9% of students use WW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

Waste of large and centrally located space!!!

Highlander dining hall: floor plan

Where are we located?

•Most direct competitors are UC and CFA in the hill area.

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.

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

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

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

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

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

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

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

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

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?

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