1. 1 Quick Order Pass Presented By: Andrej Ciric, Chris Roberts, and Carlton Northern Representing: Quick Order Systems, Inc. CS410 - Professional Workforce Development I

2. 2 Team Members Andrej Ciric Project Manager Christian Crisostomo Demographics Kevin Jones Risk Assessment Christopher Roberts Technical Feasibility Software Development Michael Schaefer Website Documentation Carlton Northern Marketing Systems Development

3. 3 Overview Societal Problem Proposed Solution Project Schedule

4. 4 Societal Problem The process coffee houses use to provide specialty orders is inefficient, inconvenient and error prone.

5. 5 Inherent Complexity of Specialty Orders Starbucks menu: 73 Regular Menu Items 10 Flavors of Syrup 13 Modifiers 9490 possible combinations assuming only (1) of each is selected. http://www.starbucks.com

6. 6 Traditional Transactions Inefficient Inconvenient Error prone “ I’d like a double tall, non-fat, decaf, vanilla latte, one-pump walnut, with room, please” Consider a typical order by a daily customer: Order Cash/Credit Change/Credit & Receipt Order Amount Owed Cash/ Credit Change/ Credit & Receipt Amount Owed

7. 7 Proposed Solution Develop a system that can digitally: Retrieve an order Provide payment Without verbal communication.

8. 8 Typical Transaction with Our System Quick Order is accurate Payment is precise Easy to use Order & Payment Receipt

9. 9 Typical System Use: Customer # Receipt Customer # Waves Pass 1010010111101010101 Customer #, 30bits Central Database Customer # Order & Account Balance New Account Balance

10. 10 Software Diagram Reader Input Module Central Database Order & Account Balance New Account Balance Database Com ModuleAPI Com ModuleCustomer # Order & Account Balance Order & Account Balance API Pre-existing POS Program New Account Balance API opens check, Orders, pays and closes check New Account Balance New Account Balance

11. 11 Solution Will Not Eliminate preparation errors Preclude current ordering systems Can always order and pay Prohibit order changes Eliminate the casual customer

12. 12 Project Organization Management Plan Team Formation Evaluation Plan Testing Marketing Plan Industry Consultation Funding Plan Scheduling and Accounts

13. 13 Management Organization Weekly team meetings Take minutes Progress performance assessment Schedule deadlines WBS Team status checks Technical Progress and Reporting Evaluation plan Software development protocols CVS – (Concurrent Versions System ) Design Documentation

14. 14 Evaluation Plan Design Reviews All design documents evaluated before implementation Industry consultation as necessary Documentation generated Quality Reviews Deliverables evaluated at each phase by team Post mortem evaluation of group process and effectiveness Documentation generated Testing Testing at each stage of Research and Development Software team evaluation of product Documentation of testing process and integration

15. 15 Evaluation Plan, Cont. Beta-site testing Product in real world environment Customer feedback Consumer feedback Seamless integration

16. 16 Funding Plan SBIR Grant Funding National Science Foundation The NSF support’s high quality projects on important scientific, engineering, or science/engineering education problems and opportunities that lead to significant commercial and public benefit. Phase 1 Maximum 100k December 8 th Phase 2 January 29 th Maximum 750k Old Dominion University Provides Facilities Ethernet

17. 17 Marketing Plan Major coffee shop retailer criteria: Extensive market share Strong future growth and revenue potential Compatible market strategies in regards to our product High repeat order frequency

18. 18 Market Identified Net Revenue 2003: $4.1 billion Net Earnings 2003: $268.3 million 77% of Net Revenue from beverage sales http://www.fool.com/news/commentary/2004/commentary040130ram.htmhttp://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/http://www.starbucks.com/

19. 19 Starbucks U.S. Market by Stores Source: http://www.organicconsumers.org/starbucks/indie-coffee.cfm AND http://www.starbucks.com/aboutus/pressdesc.asp?id=454http://www.organicconsumers.org/starbucks/indie-coffee.cfm http://www.starbucks.com/aboutus/pressdesc.asp?id=454

20. 20 Market: Customer Use A: Are you a repeat customer here? B: Do you order the same thing most of the time? C: If you had small device that could store your order would you use it? D: If you could pay with this device also, would you use it?

21. 21 Faster Service Generates Revenue Statistics indicate that each six-second improvement in speed of service generates an extra 1 percent of sales. Wireless payment methods have shaved 15 to 20 seconds off transaction times. McDonald’s CEO Jack Greenberg http://pittsburgh.bizjournals.com/pittsburgh/stories/2004/05/31/story6.html?t=printable%208sep04 http://www.chainleader.com/archive/0702/0702tech.html

22. 22 Starbucks Card Consumer use Stored value card Starbucks Card: 35 million cards activated to date. Customer “buys” card at store, over the phone, or on the Starbucks website Customer registers on Website or over the phone Ties registered user to unique number on card

23. 23 Competition Table: Quick Pass vs. Starbucks Card Quick Order Pass (RFID) Starbucks Card (Magnetic Stripe) Transaction time15-20 seconds fasterNormal Duration100,000 cycles1,000 cycles DurabilityHigh DurabilityLow Durability Storage Capacity1000+ Bytes210 bytes SecurityEncryption possibleNo Encryption Cost$0.20 +$0.01-$0.40

24. 24 Quick Order System Will follow exact same registration process as current system Transponder can be in card or keychain format Requires addition of customer order number field in the central database

25. 25 Functional Flow

26. 26 Quick Pass: First Use

27. 27 Functional Flow

28. 28 Quick Order Pass Full Use Register Person: Hi, how may I help you? Customer: (Uses Quick Order Pass) Register Person: Thank you and have a nice day. Order Display: Double café latte Total: $1.03 Change: $0.00 Save Order Pass

29. 29 Required Components RFID Reader Model p_1023 Transponder POS Terminal IBM 4695-322 Software Package

30. 30 Phase 0: Deliverables Feasibility presentation Milestone presentation WBS Final Approval presentation SBIR Project Website

31. 31 Phase 0: Conception Schedule

32. 32 Phase 0: Project Conception

33. 33 Phase 0: Budget None

34. 34 Phase 1: Deliverables Documentation Technical Description Paper Budget White Paper Draft Sub-contractual Paper User’s Manual Market Research Prototype Design Lab Prototype Project Website SBIR Phase 2

35. 35 Phase 1: Proof of Concept Schedule

36. 36 Phase 1: Organization

37. 37 Phase 1: Budget

38. 38 Phase 2: Deliverables Production Specifications Beta-test contracts Management plan Personnel plan Test/Evaluation plan Marketing plan

39. 39 Phase 2: Prototype Development

40. 40 Phase 2: Prototype Development Organization Chart

41. 41 Phase 2: Budget

42. 42 Phase 3: Deliverables Sales Contracts Product Manuals Customer Support Location Product Roll-out Out Year Strategy

43. 43 Phase 3: Production Schedule

44. 44 Phase 3: Production Organization Chart

45. 45 Phase 3: Production 1 st Year Budget

46. 46 Phase 3: Out Year Budget

47. 47 Transition Security Starbucks Not Interested Component Cost Consumer Acceptance Risk Analysis/Mitigation

48. 48 35 2 41 Risk Matrix RiskMitigationLikelihoodConsequence Consumer AcceptanceSlight difference from current use 35 High component costCost Benefit Analysis 43 Starbucks not interestedAdditional market research - modify product 25 SecurityDevice Proximity23 TransitionTraining51 Likelihood Consequence 5 15 Legend LowHigh Rank 1 2 3 4 5

49. 49 Starbucks Profit by Tag Use Refer to Appendix for details

50. 50 Starbucks Break Even Analysis Refer to Appendix for details

51. 51 QOS, Inc. Profit by Transponder Refer to Appendix for details

52. 52 QOS, Inc. Profit by Hardware Refer to Appendix for details Starbucks SEC filing: Long term goal of 30,000 stores

53. 53 QOS, Inc. Break Even Analysis of Product Roll Out Refer to Appendix for details

54. 54 QOS, Inc. Profit and Cost Analysis of Years after Product Roll Out Refer to Appendix for details

55. 55 Summary Efficient and convenient Based on developed technology Highly accurate Easy to integrate Strong market potential

56. 56 Questions ?

57. 57 Appendix A. Hardware Cost 47 - 48 B. Projected Cost and Profit 49 - 54 C. Determining Cost 55 D. Survey Raw Data 56 -57 E. Starbucks Information 58 – 62

58. 58 Hardware Cost Hardware cost: RFID Readers: Base cost is 45.00, Cost to Starbucks 90.00 Cables: Base cost is 3.00, Cost to Starbucks 6.00 Installation: Base Cost is 110.00, Cost to Starbucks 220.00 Figures from Hardware Installation Table assume 3 registers. Transponder: Base Cost is 0.20, Cost to Starbucks is 0.30 5500 stores are capable of accepting the Starbucks Card currently http://www.phidgetsusa.com/viewcategory.asp?category=USB+Sensorshttp://www.phidgetsusa.com/viewcategory.asp?category=USB+Sensors http://www.starbucks.comhttp://www.starbucks.com

59. 59 Hardware Installation Profit Table ItemNumber of units Base CostCost to Retailer Profit RFID Reader 3 @ 45.00135.00 270.00135.00 Cables 3 @ 3.009.0018.009.00 Mounting and Installation 3 @ 110.00330.00660.00330.00 Total 948.00474.00

60. 60 Hardware Costs to Starbucks Refer to Appendix for details

61. 61 Transponder Cost to Starbucks Refer to Appendix for details

62. 62 Determining Profit / Cost Estimates based off Starbucks Net Revenue, 2003. 77% beverage sales 4.1 billion X 0.77 = 3.157 billion Time: 15-20 second range from statistics, we use 18 second average Sales increase 1% for each 6 seconds saved, therefore 18 / 6 = 3% increase in sales 3.157 billion x 0.03 = 94,710,000 million 94,710,000 assumes 100% customer use Scaled Values based on current Starbucks Card Customer use 1. Starbucks Card represented 10% of all transactions in 2003 2. Starbucks Card, 35 million total activated to date Profit potential (assuming 10% customer use): 94,710,000 x 0.10 = 9,471,000 million Potential Cost: 35 million x 0.30 = 10.5 million http://www.fool.com/news/commentary/2004/commentary040130ram.htmhttp://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/aboutus/pressdesc.asp?id=451http://www.starbucks.com/aboutus/pressdesc.asp?id=451 http://www.entrepreneur.com/article/0,4621,315202,00.htmlhttp://www.entrepreneur.com/article/0,4621,315202,00.html http://www.mindfully.org/Technology/2004/HyperActive-Bob8sep04.htmhttp://www.mindfully.org/Technology/2004/HyperActive-Bob8sep04.htm

63. 63 Estimates based off current Starbucks trends and data. 6,000 Starbucks, 3 new stores open daily 35 million Starbucks Cards sold to date assume complete replacement in 3 years 12 million Starbucks Cards sold per year, assume sales of 12 million tags per year $.10 profit per sale of transponder, $474 profit per store installation 1 st year QOS, Inc. production cost is 1,368,600 (estimated in budget) 25 installation technicians, assume retrofit average of 25 stores per working day 240 working days per year Profit for Product Roll Out: 35,000,000 / 3 years = 11,666,000 + 12,000,000 = 23,666,000 6,000 stores x $474 = $2,844,000 profit to retrofit existing Starbucks 25 / 6,000 = 240 working days to retrofit (240 working days = 1 year) 23,666,000 * $.10 = 2,367,000 profit from transponder sales $2,367,000 + $2,844,000 = $5,211,000 total Profit for years after product roll out: 3 new stores daily * 365 days = 1,095 stores 1,095 stores x $474 = $519,000 profit to retrofit new Starbucks stores 12,000,000 x $.10 = 1,200,000 profit from transponders $519,000 + $1,200,000 = $1,719,000 Determining Profit / Cost for QOS, Inc. http://biz.yahoo.com/bw/041014/145258_1.htmlhttp://biz.yahoo.com/bw/041014/145258_1.html http://www.glscs.com/archives/1.02.norton.htm?addcode=30http://www.glscs.com/archives/1.02.norton.htm?addcode=30 http://www.thebatt.com/news/2002/08/12/FrontPage/Starbucks.Store.Comes.To.College.Station.Scene-518368.shtml

64. 64 Survey Raw Data Total 50 people surveyed Starbucks, Ghent Location 3-5pm Questions Asked: 1. Are you a repeat customer here Yes: 49 No: 1 2. Do you order the same thing most of the time? Yes: 35 No: 15 3. If you had a small device that could store your order, would you use it? Yes: 27 No: 23 4. If you could pay with this device also, would you use it? Yes: 26 No: 24 5. Of the people who answered Yes to 3 would they also pay with it? Yes: 26 No: 1

65. 65 Survey Raw Data Location: Starbucks (Greenbrier location) Time: Times below recorded from Employee greeting, to receipt generation (in seconds) 81, 38, 32, 51, 46, 33, 72, 117, 76, 19, 24, 18, 23, 33, 77, 65, 32, 66, 16, 23, 31, 28, 14, 33, 40, 29, 25, 40, 130, 60, 31, 52, 20, 43, 41, 21, 37, 52, 24, 14, 18, 66, 24, 22, 35, 50, 20, 80, 34, 45 Average is 42 seconds

66. 66 Starbucks Growth

67. 67 Starbucks Projected Growth www.starbucks.com

68. 68 Commitment to Innovation “These strong trends can be attributed to an all-time high level of innovation, continued speed-of-service improvements, and successful new store concepts” Jim Donald, Starbucks CEO designate

69. 69 Starbucks Vision Starbucks continues to refine the Starbucks Experience: “Starbucks has become an enduring, global brand by continually raising the bar and finding ways to innovate throughout all areas of the business” CEO Designate, Jim Donald

70. 70 Starbucks Order Modifiers Americano: A coffee made w/ two shots of espresso and hot water. Breve: A latte made w/ half-and-half. Cappuccino: A drink made w/ espresso and foamed milk. Con Panna: Italian for whipped cream Creme: A coffee-free beverage Demitasse: Half-cup Doppio: Italian for double Double: Two shots of espresso Dry: More foam, less milk Espresso: Coffee's purest, sweetest and most intense form. Frappucino: Icy and smooth drink Grande: 2nd to the largest size drink Half-Caf: One shot of regular and one shot of decaf Latte: A drink made w/ espresso and steamed milk Light: Less of something in a drink Macchiato: Italian for marked or stained Misto: Italian for mixed, combination of drip coffee and steamed milk Mocha: A drink made w/ espresso, chocolate and steamed milk Quad: Four shots of espresso in a drink Ristretto: A short pull of espresso, capturing only the sweetest part Shaken: Iced tea or coffee mixed w/ ice in a shaker Short: Small drink size Single: One shot of espresso in a drink Skinny: Made w/ nonfat milk Solo: One shot of espresso by itself Tall: Regular size drink Triple: Three shots of espresso in a drink Unleaded: Decaffeinated Valencia: Orange syrup Venti: Large size drink Wet: More milk, less foam Whip: Whipped cream With Legs: To Go With Room: Space to add milk in a drink

71. 71 Order Times Average Order Time (from greeting to receipt): 42 seconds

72. 72 Software GUI Register Person: Hi, How may I take your order? Customer: I would like a double café latte please. Register Person: Double café latte, that will be $1.03 please. Customer: Here is $2.00. Register Person: Okay $2.00 Register Person: here is your change and receipt. Thank you and have a nice day. Order Display: Double café latte Total: $1.03 Payment: $2.00 Change: $0.73

73. 73 Software Translation Order #, 100 bits 1010010111101010101….