Business Plan for Cafeteria in the Food Industry - Assignment Example

? Business Plan for Cafeteria in the Food Industry Introduction This paper will present a business plan for start-up enterprise selling fast foods within the food industry by means of food processing and retail. According to Gilbert (1999), business with no plans experience slow growth with minimal annual profits. However, other authors such as Robinson (2008) have argued that very small business enterprises do not necessarily need a business plan because of lack of complexity and size of the business. The food industry is a global collective of diverse and complex business supplying food energy consumed by large populations all over the world. Food industry captures almost everyone except subsistence farmers who rely on the yield of their farms. I am venturing into the food industry because of its wide scope, which will ensure maximum sales. Recent studies document that food industry is wide and consist of variety of services including regulation of food quality, lobbying activities in the industry, and food safety; nutritional education, food technology research and development, agriculture, financial services, food processing, distribution through wholesale or retail and marketing. The food enterprise will sell fast food by means of retail and food processing (Dodds, 2009). This enterprise will use many methods of food production. Some of the methods will be; one off production in which customer makes specification with every order before preparation for delivery, batch production to take care of the large market size with a variety of food products. Mass production method will also be used due to the mass market for the identical food products, and just in time production, where the customer chooses what they need to be incorporated in their foodstuffs and then the chefs freshly make the food according to the specifications (Gilbert, 1999). This is the kind of enterprise I need to develop a business plan for and this paper will capture all the content necessary ranging from the executive summary, product description, market and competitors analysis, marketing plan, organizational plan, operational plan, financial plan, and a critical evaluation of the industry. Hence, this paper seeks to develop a business plan for a fast food cafeteria, sole proprietorship. The name of the fast food enterprise is Rooda Cafeteria. The cafeteria will serve a wide range of people ranging from Italians, British people and tourists from Italy and other places who wish to taste authentic Italian food in London. Rooda Cafeteria will be located at Marylebone Lane, London. This is because of the presence of various financial firms’ and brokerages and means many potential people with refined taste who visit this location over lunch and dinner hours. Business Plan Executive Summary Rooda Cafeteria is a sole proprietorship that falls within food industry in London. The cafe will develop a unique business operational model that will minimize overhead costs. The provided fast food products by Rooda Cafeteria will be fast served high quality Italian meals. The meals will cater for multiples and variety and will be freshly delivered faster than any other competitor in the industry. The domestic market, in the food industry, for fast foods is large and segmented with Italian foods representing the top most choices within the market. Rooda Cafeteria will target the central business district that gets crowded during lunch hours with high income individuals (Haschak, 1998). There are also financial firms, brokerages, shopping malls, local businesses, weekend markets and university compasses all over the place, which will be the targets to provide potential market to Rooda Cafeteria. The owner of Rooda Cafeteria has significant qualification and experience in fields of advertising, hospitality industry, and business management. This will ensure that the management of Rooda Cafeteria is well and productive. Rooda Cafeteria has good financials and this will grow with large positive cash flow. Revenues will as well grow annually as will be stated in the financial plan section. This string financial plan will ensure that Rooda Cafeteria remains attractive. Rooda Cafeteria will operate in a sector where individuals with refined tastes spend approximately 500 GBP on a full course dinner items with beverages. The sector however has experienced a slow and sluggish growth majorly due to the rich tourists and business people, coming to the town majorly for business reasons (Nomis, 9 July 2009). According to Mintel (2011), the recession has grossly affected the industry and sales have declined by 30%. There has been a reduction in business travel and dining out has also witnessed a decline due to the high costs. The smoking ban in public places has also prevented people from the fine dining sector. In spite of this, reports have forecasted a resurgence of 5% until 2015 of the sector as businesses start to grow and the economy recovers. Although few people visit restaurants over the weekdays, weekends and night will experience a lot of activity. The Rooda Cafeteria will in this case take measures of innovation such as dance floor and other spirits in order to attract more customers. The purpose of this business plan is to maximize profits through a fast food enterprise. Rooda Cafeteria is committed to its fast food business. Rooda Cafeteria is likely to succeed due to the experience that the owner has as mentioned earlier. Through this experience, the owner will be able to raise good funds, attract customers, and increase the confidence of both the interested investors and customers. The Rooda Cafeteria has a mission to provide the customers with wonderful and fresh dining experience with authentic Italian beverages and cuisines with the taste and fragrance of mainland Italy. Details of the product The primary food product of Rooda Cafeteria is high quality fast-served Italian style individual meals. The meals have a flexible degree of customization that suit the taste of the customers. Rooda Cafeteria is specifically designed to produce meals within the shortest time possible to meet the demands of the customers usually on a hurry. The cooks will be able to cook the meals within the shortest time possible in front of the customers using fresh ingredients. Every meal in Rooda Cafeteria is freshly cooked, taste sensation, and served hot in a cardboard pail convenient for the customers. Customers are mostly invited to create their own orders and specifications of the meal (Lashley, 2007). In comparison with the meals that the competitors offer, Rooda Cafeteria provides tasty, fresh, and nutritious alternative meals. Because this is a start up, Rooda Cafeteria may be slow at the point of order yes, but we guarantee more nutritious and fresher meals. One secret that Rooda Cafeteria will use is the hygienically sealed pre-blanches vegetables and meats in a common pail to be received by the customer eventually. With this, the operator cooks will simply remove them from fridge and combine with sauce within the wok, and the meal is set (Kurtz, 2010). Analysis of market and key competitors The competitors in this market span the dominants of the market such as vendor foods like kebabs, sandwich and sushi bars. However, if a customer needs the best, then Rooda Cafeteria is the place to be, although other competitors may be broader than Rooda Cafeteria, we emphasize on the speed of preparing meals which will be achieved through the use of standard pre-cooked, bland and oily Italian fast food that satisfies our time poor clients. Other competitors such as Hot work takes considerably long to prepare their meals and hence we expect to attract the customers who need fast food to get back to work. Rooda Cafeteria looks to exploit all clients ranging from the busy business people and largish tourists who need high quality fast foods freshly served. Rooda Cafeteria will use variety of market entry barriers against competitors who would wish to join in the market. Some of those barriers will be the distinctive fast food modality available, with preparation times that cannot be matched, healthy, fast, fresh, price, and quality competitive alternatives, lower capital and overhead costs, targeted large segment market that is not exploited currently by the competitors, and the new identifiable brand, solid management and a professional approach (Licensing Act, 2003). The consumers of Rooda Cafeteria fast food products are those of medium to high income people who have fresh and healthy orientation of lifestyle. The initial phase of the business plan will be to improve the awareness of the product brand within the clients matching this profile. After which the other customers and business people will be targeted with the marketing strategies and techniques. As mentioned earlier, university campuses and local businesses will also be targeted for potential clients. The products will finally be extended to the customers who are interested in low cost, but value adding fast food for corporate and private events. The size of the market is considerably broad and is fast growing with exciting product brands. Italian foods represent a good part of the market revenue (Siegel, 2003). Although this market has a high saturation of potential sellers and buyers, it is greatly segmented on style, quality, price, and modality which present the opportunity for the niche products in the market such as Rooda Cafeteria fast food products. In a SWOT analysis of the Rooda Cafeteria in the food industry, we will be able to identify the strengths, weaknesses, opportunities, and threats of the industry as already summarized in the above paragraph (Porter, 1996; Square Meal, 2010; Quinn, 2007). The strengths of the Rooda Cafeteria include the fact that the owner has good hospitality and managerial qualifications as mentioned earlier. The owner has also worked in other five star hotels practicing good cooking techniques. The location of the Rooda Cafeteria as mentioned earlier is within the central business district and attracts many customers. The weakness of the Rooda Cafeteria may be attributed to the fact that it is just starting and may be impacted negatively with market forces and the effects of the unknown. The reduction in sales in the sector due to high costs and recession may also be a weakening factor. Other competing restaurants also pose a weakness on the part of Rooda Cafeteria (Worsfold, 2006). The opportunities of Rooda Cafeteria are however much, this is due to the gap of fast food restaurants within the central business district offering high quality Italian foods served fresh. Younger people will also be attracted to the cafeteria. Home deliveries and takeaways will also encourage customers to visit Rooda Cafeteria. On the other hand, Rooda Cafeteria will face threats such as stiff competition from the nearby restaurants that have been in business for long and have built loyalty to their customers. Some of the competitors here include: Galvin Bistrot de Luxe, Bar Trattoria Semplice, L'Autre Pied, Le Relais de Venise l'entrecote, Locanda Locatelli, Il Baretto, de Ville, among others. In an industry analysis using PESTEL, we will be able to identify the macro forces in the external environment of Rooda Cafeteria (Robinson, 2008; Worsfold, 2006; Kurtz, 2010). The political factors here include the large number of sub categories such as Indian Italian, Chinese, Thai, Continental, and Mexican. These result into political issues among restaurants based on patriotism in order to woo customers of their own nationality. Economic factors include the recession effect which the market is still recovering from. This means that people spend less on food and entertainment. Social factors include the exotic nature of Rooda Cafeteria that people will regard as a privilege to be served at; on the other hand, young people prefer disco places with dance floors (Timmons and Spinelli 2008). Technology factors will include the advanced use of technology via internet to market, promote and advertise products. The environmental factors will include the energy saving methods and waste disposal challenges as well as the use of organic products within the industry. Finally the legal aspects in the food industry such as regulations by the government on food quality and safety may deter the Rooda Cafeteria from producing certain fast foods. Based on market research (Dodds, 2009; Horton, 2008; Massey; 2009; Sadler, 2009; Bellis (2010) says that the size of UK market size is placed at 2.6 billion GBP. approximately 1700 different categories nightclubs and bars are included in this sector. The high street pubs and bars market is worth almost ?3 billion, a modest increase of 1.7% since May 2006 (Bellis, 2010). The UK market is worth ?58.3 billion in 2009. This accounts for 6% of consumers total spending (Horton, 2008). Marketing Plan The marketing objective of the Roode Cafeteria is to position itself in such a way that its consumers remain confident when purchasing and consuming their healthy and fresh fast food product. The Roode Cafeteria enhances this through the overall experience in delivery. Therefore its marketing objectives will be to: establish rapidly an identifiable brand, to position itself as a tasty, fresh and healthy traditional fast food alternative, to maintain gross margins at high levels on the fast food products, and to capitalize on its recognized brand via expansion through the use of diversification of products that will include supermarket placement and catering. The marketing strategy of Roode Cafeteria will be focused on its location and is expected to expand within 10 months (Parker, 2011). The promotion is through a public campaign via publications and media before the launch of the product. The owner will use contacts in the media industry for this reason (Mintel, 2011). The Organisational Plan Rooda Cafeteria will be led by Rooda Moran Al-qebaisi, who will remain the sole owner of the business and report to the family members who also help in the running of the cafeteria. Rooda Moran Al-qebaisi will be responsible for overseeing the CIO, CFO, Human Resources, and Food departments. Rooda Moran Al-qebaisi is qualified with operational and strategic experience to handle the business well and management of the enterprise. The Rooda Cafeteria will in future need a highly qualified staff which will grow steadily as needed. In future when the sole trade turns into a limited company, Rooda Moran Al-qebaisi will need more staff in the Rooda Cafeteria including: the CEO or director, marketing and food technology director, operations manager, and finance director. The rest of the staff will consist of waiters and waitresses, cooks and guards (Siegel, 2003). The unique creative idea is that all the beverages and dishes will be that of Italian cuisine from mainland Italy Montedro (1927). The Operational Plan Some food processing and production will be outsourced to competitive manufacturers. Raw materials will be sources from the same manufacturers. This is because of the competitive nature of the market. This will form the secret of Rooda Cafeteria to fast delivery of fast food products to their customers after order (Sadler, 2009). The preparation and the blanching process of raw food products make a better part of this secret. This service is scheduled to be overseen by the master chef team who adhere to the strict regulations of health (Williams, 2006; MCPS, 2010). All stocking, ordering and quality controls will be managed through a computers based system which will enable the patterns to be monitored and evaluated in order to keep the efficiency of ordering and reducing wastage. Financial Plan The basis of break-even analysis and the cash flows is the assumption that the bank will lend ?3000 to this start-up. Keasey and Watson (1993) define this as asymmetric information, where there is a difficulty in gaining sufficient information by the lender in order to make a good decision. A solution is to develop a working relationship with the borrower (Berger and Udell, 1993). Gumpert (1996) asserts that there are many expenses in the initial stages of the business operation. The start-up costs of Roode Cafeteria will be as follows: Accounting Head GBP Expenses for preliminary research 2000 Expenses for conveyance and site visits 1000 Expenses for presentations 500 Contingency fund 1000 Self Investment 5000 Although total expenses approximated to be at 4500 GBP, arrangements must be made for 5000 GBP, the extra 500 GBP can be used as contingency funds. The projections of the first year profit and loss are very critical. The projections will ensure that there is an understanding if the hotel will make loss or indicate a marginal profit (DeThomas, 2007). The following is the projected cash flow statement: Cash flows from (used in) operating activities 1st Year Value in GBP Cash receipts from customers 728,000 Rent 24000 Cash paid to suppliers and employees (400000) Cash paid for advertisements, promotion (90,000) Contingency Fund (50,000) Interest paid (30,000) Income taxes paid (50,000) Training Costs (50,000) Net cash flows from operating activities 63,360 The annual marketing and advertisement costs will be as follows: Expenses for celebrities 40000 GBP Other promotion activities 40000 GBP Ads in high quality magazines = 4 issues 40000 GBP Ads in Face book 4200 GBP Total projected Ad and marketing costs 90000 GBP In a break-even analysis, it is assumed that the total returns on investment for the first five years is 204,000 GBP which is made up of interests, instalments (De Thomas, 2008) Conclusion In a critical evaluation, the above chapters have given a description of the Rooda Cafeteria business plan and the significant parts of the plan including executive summary, product description, marketing plan; organizational plan, operational plan, and financial plan. The success however depends on a critical success factors that help the projects to be prosperous. This paper illustrated a business plan for a fast food cafeteria in London. A depressed market does not support restaurants, in most cases the expensive cafeterias. The sector has also experienced a decline in growth because majority of people tend to spend less on food. The sector is still suffering from the effects of economic recession, which has not disappeared yet (Ashton, 2007). The economy is gradually growing and if Roode Cafeteria is set up now, it will attract customers and obtain a good reputation in the coming months. This business plan has presented an executive summary, product description, marketing plan, organizational plan, operational plan, and financial plan for the Roode Cafeteria. List of References Ashton, R. 2007. The Entrepreneur’s Book of Checklists. London: Prentice Hall Bellis, M, A., December 2010. 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