London Pizza Inc Start-Up Development Plan - Essay Example

?London Pizza Inc. Start-up Business Plan Executive Summary London Pizza Inc. is a family co-owned start-up business in corporate with the aim of providing excellent quality New London-style pizza to the people of London city at fair prices. The company will also specialize in offering a variety of pizza as well as providing other products such as deserts, fruit juices, sodas, and saucers. The business will be located along Cambridge Street in London. The business location has been found to favor the business since the place is visited by many people who travel to London, as well as tourists. London city has been chosen due to its growth and opportunities that it offers. Currently London has a population exceeding 8 million people and continues to growth. This certainly offers better opportunities for food industries in the city. Presently, the closest competitor to the place we intend to establish our business is almost a kilometer away. Furthermore, we intend to offer high quality products and services at reasonable prices to our customers in order to build and maintain customer loyalty. Objectives To provide our esteemed customers with excellent pizza services at affordable prices and excellent customer experience. To attract at least 200 regular customers on a daily basis for pizza within our first year of operation To generate a net profit of not less than 15 percent of total sales turnover. Mission London Pizza Inc. intends to provide the residents of London with best pizza services in the city. To realize this goal, the company intends to adhere to quality and value as observing heath standards that our customers need. London Pizza Inc. has developed strategies coupled with the professionally trained staff to offer our customers the best customer experience in the city that will see our customers keep coming. The customer experience will cover the environment, service delivery and serving our customers with the London-style pizza. Vision Our vision is to become the most respected and number one preferred pizza in London, by attracting as many customers as possible. We will also endeavor to maintain a highly satisfied and motivated staff and other stakeholders within of the company. Values We believe that the values we stand for differentiate us from our competitors. Further, we hold the belief that our values will enable us our missions and visions. Below are the company’s core values: Strive to excellence: we are very responsible entrepreneurs and always committed to meeting or exceeding expectations. We are very much committed to teamwork are bound by loyalty, respect and trust for one another as we deliver excellent services to our customers. We observe high level of integrity in our management by treating one another, as well as our stakeholders with a lot of respect and dignity. In addition, we intend to observe good ethics and handle our stakeholders with a lot of professionalism in our day today operation of the business. Key to Success The key to our success include: Offering quality services and products to our customers to build and maintain their loyalty. Our business is strategically placed in a busy street in the city that is easily accessible to customers who visit London. Our organization has a team of professionals who appreciate the business setting and what should be done to make the organization successful irrespective of competition from other companies. Control the costs at all levels by adopting a conservative strategy to growth. Despite the fact that the company intends to open more brunches once in operation, we have decided to take precautionary measures to ensure that the business is put on the safe side. Offer 100% satisfaction to our esteemed customers and ensuring that our services are far above our competitors in terms of quality. Sell at a reasonable price to counter the competitors. Our commitment to improving product and service quality that factor in the market trends and consumer taste and preferences. Promote the company’s corporate image and business culture. Ensure that our services and products are unique and innovating to differentiate us from our competitors. Start-up costs and funding It was a bit challenging getting a convenient place where we could locate our business. As a result, it took us close to a year searching for the place in which we as owners finally resolved to lease one of commercial building found along the busy streets of Cambridge. Our start-up capital we be spend to meet certain cost and expenses such as legal fees, kitchen stock and equipment, rental expenses, insurance, packing fees, business sign, promotion and stock at hand as highlighted in the summary section of the business plan (Smith 2006, p.9). The company’s projected start up cost stands at ?140,000. The capital, on the other hand, is estimated at ?100,000. The two partners of the company will finance the bulk of the start-up financing needed up to the tune of ?80,000. This implies that the company will remain in short of ?60,000 to meet its target. Therefore, this plan is intended to secure funding for the shortage required to enable us start the business. The company’s investor has been called in to contribute additional ?30,000 in the form of capital to enable the company meet part of its start-up expenses. However, in order to raise the remaining ?30,000, which is intended to be used to cover the start-up costs, the company’s management has resolved to secure a bank loan. The amount abstained from the loan is intended for use exclusively in purchasing kitchen inventory. At the same time, the company intends to service this loan within four-year monthly equal installments. Our financial statement clearly demonstrates our ability to service the loan within the stipulated duration. This is especially evident from our cash-flow statement. In addition, the company’s financial position shows a high level of liquidity, which indicates that the company will operate on a going concern (Rogoff and Bezos 2007, p.13-15). We therefore believe that the banks will be able to lend us the amount without any doubt as to our ability to repay the loan plus that interest that shall have accrued from the loan. Ownership of the Company London Pizza Inc. is intended to be a privately owned company with the majority state being held by the company’s co-owners Blair and his wife Elizabeth. Other stakes will be held by shareholders through the issue of shares. Products and Services London Pizza Inc. intends to provide a variety of New London-style Pizza and other snacks such as sauces, fruit juices, sodas, and desserts (Bowman 2005, p.8-11). Market Analysis It is acknowledged that restaurants industry is very competitive since they are almost everywhere (Franchise Direct 2012). However, the changes in lifestyle have made the industry experience a steady growth. For instance, many people today find it cooking for themselves because of lack of enough time and other commitments, as such, they find it prudent and simpler and cheaper buying already prepared food from the restaurants rather than going home when they are tired after had work to cook for themselves (Pradesh 2012). London Pizza inc. is, therefore, positioned to take advantage of this market trend to bank on the London residents who are not finding it easy to cook for themselves at home by offering healthier pizza and other products at pocket friendly prices. Pizza service industry is among the top food industries producing significantly to the development of the U.K. Schaefer (2012) notes that the Pizza industry realized over ?2 billion in annual sale during the previous financial year, which was a high growth compared to the previous years. This certainly offers an opportunity for firms that operate Pizza. Furthermore, it signifies that the future of the industry is bright as far as the demand for pizza is concerned as noted by Fullen (2005, p.33). Future Trends and Opportunities The growth of food restaurants in the country is very positive as Schaefer (2012) found out. Bamford and West (2010, p.6) argue that globalization is increasing demand with more people being compelled to eat away from their homes or buy foods from restaurants that do not need additional cooking. The figures are projected at close to 35 % through to 2017. The highlights also show that consumers will spend more of their earnings in foods prepared in the restaurants according to Rainsford and Bangs (2000, p.23). Target Market The market for London Pizza Inc. products is diverse and is focused on densely populated groups. For instance, the Cambridge Street in London city where the business is located is strategically located in a place frequented by people who travel to eat out (Mullaney 2012). In addition, many tourists visit the street on a daily basis, which gives the business a good opportunity to thrive. Furthermore, the street is famous for fast food restaurants, which is good for our business. Market Location and Customers London is one the world’s most beautiful and developed cities, with a population in excess of 8 million residents making it the most populous city in the entire Europe (Hankel and Brown (2006, p.6). London is also a major tourist destinations in the world due to its beauty, security, and heath standards (Peterson, Jaret, and Schenck 2010, p.65). The Cambridge street has over 500 businesses and witnesses one of the highest sales turn over from the sale of foods. The company’s customers are divided into three major segments: Local population: the London city with a population of over 8 million people will provide the bulk of our customers, who work or travels to the city. Tourists: We are also targeting tourists who visit the city by putting up state of the art rooms, beds and other facilities that offer conducive environment for the enjoyment. In fact, London is among top cities in Europe that witness high number of tourists. The good thing is that Cambridge Street where the business is located is among the areas frequented by the tourists in the city. College and University students: Research indicates that college and University students are the major consumers of pizza in the country according to Peng (2008, p.76). Therefore, our skilled team of sales professionals will target this important segment in the city. In fact, we believe that our business will be able to attract the many college and university students located along the street. This is because they will certainly find it easy coming to our restaurant that offers quality products and services than our competitors in the area. Our food concept and products will attract will attract the following customers: Open-minded and curious customers: These customers believe on trying before making a choice as to the quality of the product according to Glenn (2009, p.28). To ensure that these customers are attracted to the company, we intend to engage in vigorous promotion to enlighten these people of our products and services. Health conscious customers of any age: These are individuals who are committed to buying only healthy foods (Longenecker, Moore, and Palich 2006, p.7). Our business will capitalize on this group because our products are very healthy and have very low level of calories. Students: A majority of youths has developed healthy eating culture in the country, with some undergoing healthy eating lessons while in schools. Therefore, since our products are healthy, we are certain that will enable us attract many customers to our restaurant. Competition Competition is one of the major challenges to any business venture (Tyson and Schell 2008, p.26). However, despite there being several pizza restaurants within the city of London, there are only two pizza restaurants closer to the location where we intend to establish the business. However, the distance two, pizza restaurant is located close to a mile away from our intended location. The restaurants include Gondola Holding Pizza Empire, the leading pizza restaurant in the UK, and PizzaExpress (Fiore 2005, p.92). However, to remain competitive, London Pizza Inc. will provide better products, and fair prices to lure customers to our restaurant. In addition, our restaurant will ensure that the pizza is served hot, and on time to our customers at their convenience. This includes delivering the products to their doorsteps something that our competitors to be have not been doing. Apart from the two pizza restaurants close to our intended business location, our business will also face competition from fast-food restaurants in the area. McDonalds is one of the fast food restaurants located in this area (Campion 2003, p.449). Despite the fact that some of these restaurants also offer pizza on top of their products, the quality of pizza they offer cannot out-compete ours. Nevertheless, we have considered them as competitors because they offer better prices, which make them receive some of our potential customers. In addition, we have identified the following competitors in the market that command significant share of the market for Pizza in London city. They include the YUM! Brands, Zizzi brands, ASK (Douglas-Home, Kessler, and Corsello 2010, p. 16-17). After conducting a thorough analysis on these restaurants, we have realized that our products differs from theirs because ours are of better quality at fair prices and the fact that we deliver our products hot and in time at the customers convenience, which extends to their doorsteps. SWOT Analysis London Pizza Inc. uses SWOT analysis as a useful tool for examining its strengths, weaknesses, opportunities and any threat that the business may face in the environment where it operates (Pritchard and Burch 2003, p.68). Below are some of the London Pizza Inc’s strengths, weaknesses, opportunities, and threats that London Pizza Inc. must be aware of. Strengths London Pizza Inc. has considerable strengths that will enable it operate effectively and compete effectively in the industry. These include: Excellent quality of New London pizza, which is still very scarce in London despite growing demand. The environment and the location of the business are very conducive for the business. Experienced management capable of driving the business to greater heights. The state-of-the-art technology applied in pizza preparation that ensures efficiency and quality. Products and services are offered in accordance with the needs of the customers. Weaknesses Despite the strengths of the company, there are potential weaknesses that London Pizza Inc. needs to be aware of. These include: The business is new in the city Lack of enough funds needed to acquire the equipment needed and cover the costs. Lack of enough employees to keep up with the operating capacity during peak periods. Challenges of start-up. Opportunities In addition to the strengths and weaknesses, there are also opportunities that London Pizza Inc. must take into consideration and capitalize on. The opportunities include: The ever-increasing population in London city. Few competitors offer the New London-style pizza in the city. There is a growing trend towards pizza consumption in the country, as well as in London. London Pizza Inc. is the only restaurant offering hot pizza, which is delivered to the customer’s doorsteps in case of need. Threats The following is some of the threats that London Pizza Inc. should be cautious of: The slow pace of economic recovery after the recent financial meltdown. Changes in tastes and preferences and health issues associated with pizza consumption Changes in business taxation The business premise is leased and not owned by the company. Unforeseen changes in the business setting. Projected Cash flow statement Pro forma cash flow 2011 (?) 2012 (?) 2013 (?) Cash received Cash from operating activities Cash sales Cash from receivables 450,100 90,000 510,120 97,841 602,100 113,125 Total cash from operating activities 540,100 607,961 715225 Additional cash received VAT & Sales tax Long-term liabilities 45,222 40,000 52,231 61,000 Subtotal cash received 85,222 52,231 61,000 Expenditures Operating expenditures Bill payments Cash spending 420,245 104,514 500,000 121,000 521,126 126,100 Subtotal spent on operations 524,759 621,000 647,226 Additional cash spent VAT & Sales tax 40,000 42,000 43,120 Loan term principal payment 7,000 7,000 7,000 Purchase of assets 25,000 Dividends 20,000 25,120 30,000 Subtotal cash spent 92,000 74,120 80,120 Net cash flow 54,123 91,425 101,123 Cash balance 62,124 152,231 235,255 Break even analysis In order to carry out break-even analysis, the company has assumed a running cost of about ?20,000 every month, which covers insurance, salaries, rent, electricity, and utilities. We project to sell approximately 2,000 pieces of pizza for at least ?30,000 per month in order to break even. However, the company’s normal operating capacity is projected at 400 pieces daily and projected sales estimate of about ?60,000 per month. The company also projects to begin making profits immediately after breaking even. In this regard, London Pizza Inc. expects to break even in the second month of its operations. Disclaimer This business plan is prepared to enable investors to have a better understanding of what the company intends to do, its strengths, weakness and opportunities as regards the project. Nevertheless, it should not be relied on entirely since it is based on projects and not the actual figures. Conclusion We believe that the strategies enumerated in the business plan will enable London Pizza Inc. gain competitive advantage over its competitors by attracting more customers to the company. This will increase the company’s sales and profit in the long run. 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