The Green Platter - Salad Bar Restaurant at Mill Road, London - Essay Example

? The Green Platter: Salad Bar Restaurant at Mill road, London A Business Plan and a New Perspective ID: Word Count: 3,268 Table of Contents Introduction The Green Platter is a hypothetical salad bar restaurant that is planned to be established at Mill road, London. Mill road, currently has no restaurants that focuses on serving exclusive salads, or light snacks, and TGP is expected to create a welcoming ambience that is not only comfortable, but also ensures a perfect blend of hospitality and mouth watering food .It is often seen that new restaurants are open but they fail to generate popularity and hence are shut down even more quickly then they open. To minimize any such risk, a careful planning and proper use of funds will be the key to get success. Business plans are needed to secure finances and a set of goals and strategies will definitely confirm the business operations to move smoothly (Burke, Fraser, & Greene, 2010).Although a business plan may not guarantee a successful formula but it does highlights a very important relationship between a planned business and its financial performance (Bracker, Keats, & Pearson, 1988). In addition to it, a business plan is very essential for an investor to sense the profitability and invest money in to it or a business plan may be considered as the first major step to reach the ultimate goal of any businessman and that is earn profit from his business and establish a brand. The proposed paper will examine the restaurant market and the need to create a business plan for a restaurant. Mill road will be the right choice for its location, as this will be the first restaurant in the area to be focusing on choicest salads and light lunch for its customers. The paper will include the most important topics covered in any business plan; they are executive summary, firm’s description, target market, competition, sales and marketing plan, operations, future goals, and finally the financial statements (Barrow, Barrow, & Brown, 2009). Principle Idea The purpose of this methodology is to develop a business plan for The Green Platter restaurant at Mill road, London. According to a report 9 out 10 restaurants fail in their first year of operations (“Sydney”) The peculiar problem with any restaurant owner is to determine the methods to minimize risks of failure. The two main causes for any business to fail is lack of good planning and inadequate funding (Parsa et al., 2005). Review Many new restaurants are started in the United Kingdome and United States every year and it is estimated that 50% of them shut down (Small Business Association, 2011) while some mentioning that 90% of restaurants closed (Riesco, 2011). It happens mainly due to poor planning and inadequacy of funds (Castrogiovanni, Justis, &Julian, 1993). What is the use of a Business Plan Bracker, Keats, and Pearson (1988) examined that almost 400,000 firms fall short every year. Almost 96,000 small companies were closed in the year 2010 (Small Business Association, 2011).This might be because of the recession that followed and affected the food and hospitality industry. According to Bracker & Pearson 65 percent companies fail during their first five years of operations. (Bracker & Pearson, 1986). Business plans are written documents that deals with the current as well as the future strategic goals and plans of the business (Honig & Karlsson, 2004). In some of the books a strong connection is projected between business plans and the performance of the business (Ackelsberg & Arlow, 1985); (Schwenk & Shrader, 1993). On the other hand some studies have concluded that there is no benefit to companies even if they have a business plan (Robinson & Pearce, 1983. How ever even if investing a in a small business; a smart business plan is always required by the investor. Advantages of a Business Plan Although there are many benefits that come along with a written business plan, but to examine the traditional benefits, one may consider three categories to determine its advantages. They are – 1. Symbolism: It is the skill by which the needs of the business are conveyed to its financiers. For some stakeholders and financiers only a business plan is able to fulfill this task of letting them know the feasibility of the successful venture (Castrogiovanni, 1996). 2. Learning: Through a well written business plan, the process of learning enables to develop a survival plan for a long term which means the company will be able to cope with any environmental and financial changes effectively (Castrogiovanni, 1996). 3. Efficiency: A business plan can greatly improve the efficiency of a business by managing the start up cost before the business starts ,hence it ensures that the resources are saved and not wastage occurs which eventually means that though the planned start up ; the every single need in the business have already been determined ( Castrogiovanni, 1996). What factors to consider before writing a Business Pan One should consider not only the mission of the business but also environmental condition when writing a business plan, the environmental condition may consist of uncertainty ; which requires the proprietor to study more about the environment before planning the business (Grinyer et al., 1985). The expertise of an entrepreneur in the industry is also a factor for consideration, since an experienced person will be able to deal with similar situations and similar nature of business better than the person who had no experience (Mintzberg, 1994). A person can take help from various available books to write a good business plan, how ever the most respected and widely acclaimed book for writing good business plan is by Barrow published in 2009. The Restaurants It is interesting to note that not much information is available in books or literature on business plans for restaurants. However, some literature and manuals are available to write a business set up plan for hotel industry. One such book is by Brush (1993) which includes a step by step traditional knowledge attributed to opening a hotel. There are some websites like http://www.allfoodbusiness.com/starting_your_own_business.php or online documents like http://restaurants.about.com/od/openingarestaurant/bb/opening_hub.htm that includes information for setting up restaurant but none of them offers a rigorous planned out details in form of a business plan. Marketing strategy The most important aspect of starting a restaurant business is to consider the 4 P’s in terms of Marketing your business, and these are - Product, Price, Place and Promotion. It is followed by considering the right product for the restaurant, deciding the right price which promises profit too and the hunt for the right location is also very important, finally the promotion of the product will eventually make things go smooth and it will be a good medium for an entrepreneur to study the responses while planning the future operations of the business. It is however interesting to study what Yesawich and Lewis wrote in their book in 2006; they added some more P’s for marketing the business. These were - Processes, People, and Physical environment, particularly to those businesses which are providing services. Ryu (2011) mentions in his book that environment of a restaurant influences the customers to an extend that it promises a long term relationship with the customer, and this is considered as one of the best marketing strategy, Business Operations Operations of the restaurant are the most important area for a new restaurant to study and determine before starting a restaurant. This may include site or location, management, and minimizing the costs. Many decisions refer back to the 4 P’s of like location, hours of work, price. More over few important operational resolutions like inventory, price deductions, menu planning, and management of employee and satisfaction of the customer are not at all connected. Susskind; in 2010, published an article which mentions about what hospitality industry has learned by satisfying the guests. This article encourages the development of guest satisfaction and efforts to make operational management better. This can be done by avoiding the table wait by the customers (Hwang, 2008). Physical environment should be improved (Han & Ryu, 2009) and constant training to improve employee behavior is also very important (Kattara, Weheba, & El-Said, 2008). These factors must be considered before the development of a business plan. Business Plan Executive summary The Green Platter is the only restaurant at Mill road to be serving fresh salads which are custom-made and also promises a beautiful experience of dinning in an exquisite environment. It will offer a bistro feeling to each customer, and will also offer customer with diet plan and calorie concerns. The target customers would be those individuals who are health conscious and who encourage healthy eating habits of fresh vegetables and fruits. According to a study the salad industry offering pre-packaged salads is estimated to be around ?800 million, having grown 12% since 2005 while some reports claim that the bagged salads have grown to be ? 256 million and continue to increase ("Salad"). Since there is no expert leader in salad serving restaurant, The Green Platter can emerge as one the leader in delicious and healthy salads serving restaurant at Mill road London. The start-up funds have been estimated to be ?62,400. A strong analysis has been conducted to determine further cash flows and sales generated within one year of operation. Objectives 1) Create a sustainable graph of TGP’s (The green platter) performance and ensure a 40% of ROI within the 1st year of its operation. 2) To develop a known brand in the market of salad serving restaurant. 3) To encourage the customers to participate in experimenting with flavors and herbs by the custom made option of salad. Mission TGP is aiming to provide enjoyable experience to its customers; this experience will come along with the joy of eating healthy food and keep a check on their calorie system too. Description of company Company Ownership Private Limited Company Start-up Plan Launch in March 2013 Company Location Mill road, London Area: 200.00 sq meters (2,153 sq. ft) Ground Floor: 993 sq ft Basement: 931 sq ft Lease expiry –May ‘2019 Rental: ?46,000 annually PRODUCTS AND SERVICES TGP’s innovative design allows each customer to enjoy our product at their own pace. The restaurant is planned with three areas namely a) “Much ON!” which offers salads that is pre-packaged. It will be ideal for business professionals who do not have time to sit down and eat and those who have fixed and tight time schedules; it is also suitable for college going students who do not want to miss their calluses while munching on something delicious. b) “Yes! To your choice” provides choices to customer to order according to their taste. This is suitable for those who are watching their intake or those who prefer to use their creativity in terms of ingredients and herbs to be added in the salad. c) “Smile bar” offers regular salads at a sit down bar with constant change in its menu covering global taste of each continent. It is a bar and it will also encourage the customers to try some of the best wines to go along with the salad. Industry Analysis Industry Standard TGP A loyalty card is offered by Milano Market New York to a customer who purchases 10 salads and gets the eleventh for free. TGP will offer a similar scheme for its customers. . At just $7.50; it offers variety of ingredients and innumerable choices to its customer at this fixed price. TGP will offer its customer to enjoy munching at a fixed price of only ?6.00 Other restaurants in London offer free delivery to customers who order more than ?20 TGP has its future plan of offering free delivery for customers who are bulk buyers. Through online order; Tossed and Pax Wholesome Foods offers customers to order at the comfort of their home and pick up fine ingredients. In the future TGP will develop an interactive website with online customer care to take care of every online purchase. Market Analysis Market Strategy The most important strategy for marketing would be to prove the expertise in pre packaged salads , just like subway is known for its subs ; in a similar fashion , TGP aims at becoming a leader in providing pre packaged salads which will be its specialty and this shall be associated with its branding too. Pre packaged salad will be considers as the USP of TGP i.e. unique selling point. Market Segmentation maximum users Medium sized Light users Age- 25 to 44 Age- 55 and above Age- 15 to 24 Family with kids Family Full time working or part time Full time working Students or non- working Strengths 1. Customization: Various options to choose from and favoring different choices of customers. 2. Service: Customers can enjoy the salad intake as per their time schedule, fast delivery as pre packed, medium speed delivery for custom made to order and slow speed for enjoyable experience at salad bar. 3. Adaptation: Analysis done daily for the amount of food wastage determines the action for the next day and study the profit or loss on a daily basis. 4. The USP: TGP’s packaged salad and unique concept of fast-medium and slow food serves is not only unique but a promising factor to determine its successful venture in the near future. 5. Vast customer range: The versatility that TGP will offer to its customer will be able to cater the need of every customer 6. Site Location: TGP will be situated at Mill road, London which will be an ideal place for this unique restaurant. 7. Higher investment for start up: With a higher start up cost, it is likely to discourage other entrants in the market and TGP will be able create its monopoly in the salad bar restaurants at Mill road, London. Weaknesses 1. Competition: Other snack bars or sandwiches stores can provide stiff competition. 2. Higher establishment costs: initial investment on interiors, equipments and renovations 3. Fresh ingredient: Frequent inspection of fresh ingredients is an arduous job. 4. Waste initially: During its initial months, there is a possibility of high wastage of vegetables and fruits as it will take time for customers to try out the delicacies. 5. Absence of direct competition: Since there is no salad bar at Mill road, there is no surety of people accepting this new trend. 6. Rising competition: This industry is worth ?4 billion, and it is showing a feasible growth of 8% since 2006. 7. Demands not being fulfilled: Demands of customers are not fulfilled as groceries stores who offer pre packaged salad have limited stock and the ingredients are not that fresh. 8. Rising Popularity: Since people have become more health conscious, the demand is increasing day by day. 9. The weight management Issue: Customers demand for fresh ingredients every time and are continuously watching over their weight management. Threats 1. Other restaurants are adding salad options to their menu 2. Sandwiches shops like pret a manager offer pre packed salad options. 3. Groceries: Tesco, Marks & Spencer, Sainsbury’s, and other groceries provide pre-packed salads for snacks or small meals. 4. The weather issue: changing weather condition can also affect the mood and appetite of customers and that will eventually effect the demand 5. Economy factor: Economic trends that keep on changing, recession can effect the business operation. Marketing Strategy Positioning Statements TGP can prove to be the best choice for working individuals or full time working professionals who are health conscious and strive hard to be in shape and eat healthy food. Promotion Strategy For promoting our services and products, strong medium of print media will be used like newspapers, hoardings and hand bills to be circulated to offices, business hubs and colleges. Social media is also the new platform to provide discount coupons to customers. A flash website would also be a part of strong promotional activities to attract customers. Strategy for Pricing For ‘Munch on!’ And ‘Yes! To your choice’ sections; customers will pay directly to the cashier, after receiving their food. Salad bar section will cater to the needs of customers though waiter service for salads, drinks, and payments. It will also ensure TGP to get the license of liquor and adhering to the laws of the country. ‘Munch On!’ Offers small snacks options for customers who cease to wait Small quantity : ?2.50 - ?3.50 Large quantity : ?3.50 - ?4.50 Salad with fruits : ?2.00 - ?2.50 Coffees and teas continental : ?1.50 – 2.50 To choose from variety of fresh fruits, snacks and breads : 50p - ?2.00 Yes! To your choice Green leaf base : ?2.00 for small, and ?2.50 for large Pricing system as Tiered: Cheap ingredients: 25p / serving Expensive: ?1.00 /serving In addition to it, customers can enjoy a delightful intake of all at just ?6.00 per serving. The Smile Bar The concept of conveyor belt is introduced to the customers where the dishes of ‘artisanal’ salad will revolve in a belt, allowing the customers to pick the salad or ingredient of their choice. The color code system will be allied in pricing the dishes on the conveyor belt. A light shaded dish will be priced at ?2, while ?3 will be employed for a medium toned salad and darker shaded salad will be determined to be for ?4. Sales Strategy The potential customers will be attracted to the salad bar by discount vouchers, special offers or coupons distribution system. For repeat customers , we shall introduce loyalty card system where by the purchase of each salad will be marked in that card and once the list hits the number of purchases to be ten in number, the following eleventh dish will be considered as free for the loyal customer. Sales Forecast The forecast annual sale is estimated to be of ?205,300 in the first year of operation. This estimation is derived from the sales review of competitors like Marks & Spencer’s Simply Foods, and also from the interview of people in the targeted market, and the size of the targeted market. The forecast is generated while determining the daily averages of every item on a month-to-month basis. Operating Hours Day Operating Hours Monday- Friday: 7:30 am – 7:30 pm Saturday : Closed Sunday : Closed The conveyor belt will revolve from 11:30 am to 2:00pm, and will again restart from 5:30pm to 7:30 pm respectively. Staffing Staff will arrive half an hour before the restaurant opens in the morning while it will leave after half an hour of its closing time, allowing time for cleaning and other miscellaneous work concerning the restaurant operations. Strategic Alliances In order to attract desired clientele, we will try for an Alliance with the city centre corporations and other health clubs Financial Planning Start up Estimate ?31,400 Registration of property ,legal formalities 1600 Renovation or construction 6750 Interior Design 2550 Restaurant’s Decor 500 Furnishings and other equipments 20,000 Assets (start up) ?31,400 Reserved Cash 5,000 Inventory (opening day) 500 Assets ( fixed) 25,500 Requirement start up ( TOTAL) ?62,400 We have decided to keep the cost of construction, decor, equipments and design to be as low as possible. Initial cost March 2013 April 2013 May 2013 Jun 2013 July 2013 Aug 2013 Sep 2013 Oct 2013 Nov 2014 Dec 2014 Jan 2014 Feb 2014 Cash Receipts 60,000 7,047 10,772 13,986 17,656 19,730 21,465 22,525 22,000 18,221 15,897 18,076 17,897 Cash Available 142,000 92,622 60,654 58,850 59,066 60,406 63,081 65,566 37,776 36,708 34,564 35,851 35,857 Cash Paid-out 56,425 42,740 15,790 17,440 18,390 18,790 20,040 49,790 19,290 18,040 16,790 17,890 18,490 Cash Position @month end 56,425 49,882 44,864 41,410 40,676 41,616 43,041 15,776 18,486 18,668 17,774 17,961 17,367 Break –Even Analysis The breakeven point is estimated to be of ?126,300, and this might occur by mid of August 2013, within the 6th month of the business operation. By conducting a sensitivity analysis and using 10% of over projection while 10% of under projection pertaining to sales provides breakeven points as precisely being ?2,300 under while ?2,900 above the conceived breakeven point. Structure of capital TGP needs a total amount of ?143,250 as loans, grants and equity. The start up cost will be covered by this while leaving ?18,400 as a buffer. The founder along with his six team mates will contribute ?2000 each to make a total of ?12,000. Family and friends will contribute ?3,000. The founder will raise about ?7,000 by selling off 140 shares of private stock which is about ?50. A fixed Rate of loan of amount ?60,000 will be acquired from the Bank by the founder. The Project needs ?60,000 as venture capital. In addition to it, the team will also try to apply for grants from other sources. Acquired Loans ?60,000 42% Proprietor’s Investment ?12,000 8% Investment by friends and family ?3,000 2% Contributed amount by team members ?7,000 5% Venture Capital ?60,000 42% Amount from Trusts ?17,750 1% Grand TOTAL ?159,750 Conclusion: By conducting strategic and financial analysis in this methodology, it seems that the business of Salad bar restaurant will prosper in the future. We studied about the business plans and its importance and what are the factors which determine a well coordinated plan. The study was about a hypothetical restaurant at Mill road, London. This restaurant aims to provide healthy salads to its targeted customers who are health conscious and the unique concept of conveyor belt carrying dishes is going to be an attraction for its customers. After doing the SOWT analysis, it has been confirmed that the main problem that the restaurant can face is to constantly work on promotional activities and ensure to have fresh ingredients always. By discussing its products and unique services; a possibility of its successful venture does not seems impossible. References Ackelsberg, R., & Arlow, P. (1985). Small business do plan and it plays off. Long Range Planning, 18 [3], 7-61. Burke, A., Fraser, S., & Greene, F. J. (2010). The multiple effects of the business planning on new venture’s performance. The Journal of Management, 47 [3], 391,415. Bracker, J. S., Keats, B. W., & Pearson, J. N. [1988]. Planning and financial performance among the small firms in a growth industry. The Strategic Management Journal, 9, 591, 603. Barrow, C., Barrow, P., & Brown, R. [2009]. The Business Plan Workbook [6th ed.]. London, Kogan Page. Bracker, J. S., & Pearson, J. N. [1986]. Planning and financial performance. The Strategic Management Journal, 7, 503, 22. Bracker, J. S., Keats, et al. [1988]. Planning and financial performance among small firms in the growth industry. The Strategic Management Journal, 9, 591, 603. Brush, S. W. (1993). Developing a hotel business plan: how-to manual. The Cornell Hotel and Restaurant Quarterly, 34 [3], 72, 82. Castrogiovanni, G. J. [1996]. Pre-startup planning and the survival of small businesses: Theoretical linkages. Journal of Managment, 22 [6], 801,822. Castrogiovanni, G., Justis, R., & Julian, S. [1993]. Franchise failure rates: An assessment of magnitude and influencing factors. Journal of the Small Business Management, 31 (2), 105, 14. Parsa, H. G., Self, J. T., Njite, D., & King, T. [2005]. Why do restaurants fail? The Cornell Hospitality Quarterly, 46 [3], 304, 22. Riesco, J. L. [2010]. The Restaurant Marketing Strategies. San Francisco: Riesco Consulting Inc. Riesco, J. [2011]. Your restaurant's success depends on many factors. Derived from the website http://restaurant-owner.com/restuarant-marketing/ Small Business Association. [2011]. Business planning: Starting a Business. Derived from website http://www.sba.gov/category/navigation-structure/starting-managingbusiness/ starting-business/writing-business-plan/essential-elements-good-busines Honig, B., & Karlsson, T. [2004]. The Institutional forces and the written business plan. The Journal of Management, 30 [1], 29, 48. Schwenk, C., & Shrader, C. B. [1993]. Effects of the formal planning on financial performance: A meta analysis. The Entrepreneurship Theory and the Practice, 17 [3], 53, 64. Robinson, R., & Pearce, J. [1983]. The impact of formalized strategic planning on financial performance in small organizations. Strategic Management Journal, 4, 197 & 207. Grinyer, P., Al-Bazzaz, S., & Yasai-Ardekani, M. [1985]. Toward a contingency theory of corporate planning: Findings in 48 U.K. companies. Strategic Management Journal, 7, 3, 28. Mintzberg, H. [1994]. The Rise and Fall of Strageic Planning. New York, NY: Free Press. Ryu, K., & Han, H. [2011]. New or repeat customers: How does the physical environment influence their restaurant experience. The International Journal of Hospitality Management, 30 [3], 599 & 611. Shoemaker, S., Lewis, R., & Yesawich, P. [2006]. Marketing leadership in hospitality and tourism (4th ed.). Upper Saddle River, NJ, The Prentice Hall Susskind, A. M. [2010]. The Guest service management and the processes in restaurants- What we have learned in fifty (50) years. The Cornell Hospitality Quarterly, 51 [4], 479,82. G, Sidney. "Restaurant Failure Rates Recounted: Where Do They Get Those Numbers?" restaurant owners. restaurant owners, n.d. Web. 4 Dec 2012. . . "Salad: What's in the bag?”. The Independent, 5 2005. Web. 3Dec 2012. . Read More