A business plan for NatCha, a specialty contemporary tea shop, to enter Malaysia’s F&B industry

This report explains how NatCha is seeking to enter Malaysia’s Food & Beverages industry (F&B) as a specialty contemporary tea shop, whereby its unique selling points are the use of natural sweetener alternative – Stevia – and the application of cutting-edge technology in the production of its tea drinks. NatCha aims to enter the market as it sees an unfulfilled gap for drinks demanded by consumers who are concerned about (i) their level of sugar intake which can lead to diabetes and (ii) the relatively low availability of specialty contemporary tea drinks, in relation to the prevalence of shops that sell coffee. The company plans to do this by also offering customers a high degree of consistency in the drinks via the use of innovative technology while also keeping the prices at an acceptable level for price-sensitive customers. To carry this out, NatCha will adopt a business model that focuses on digital service retail. It will use a machine and mobile application to synchronise the ordering, preparation and delivery of drinks; the same technology also allows customers to record their drinks’ nutritional information. Simultaneously, the machine will provide an entertainment value to customers, in that it allows them to view the entire process of the drink’s preparation from start to finish. For its revenue, NatCha will obtain via a transactional revenue model based on one-time customer purchases, which then may be expanded to a recurring revenue scheme involving subscriptions. The transactional revenue model will be supplemented with advertising fees, in which the company’s drinks preparation machine will provide an advertising space for companies that share similar business goals as NatCha. By successfully following its business and revenue models, NatCha should be able to pay back the high initial cost within the first three quarters of the first year and start to be profitable in the first quarter of year two; with a view to expand within the second year. As being a cash-heavy business, NatCha is able to anticipate the generation of positive cash flows through these models, which will then enable the company to obtain financial flexibility and reduce liquidity risks