Business Plan for Meals on Wheels - Essay Example

?Meals on Wheels A Business Plan Executive Summary The proposed business shall carry the brand Meals on Wheels®. It was aimed at providing nutritious, safe, delicious, and affordable lunches to elementary students in their schools. There are many schools in Australia’s cities that do not have their own canteen or cafeteria, and those families where both parents work, or single parent families, may not have sufficient time to prepare the lunch meals of children, forcing them to eat nutritionally deficient foods that are available near the school, or making do with cold lunches that are left overs from the previous night’s supper and may no longer be appealing to the child The Meals on Wheels® meals shall be ordered one day ahead by parents through the online website which the company shall equip with an e-commerce capability for transaction. The meal choices shall include specialty meals for children of families with particular constraints based on health conditions, religious affiliation, culture and social or moral convictions (e.g. the case of vegetarians). In the future, the company hopes to expand to other geographical areas where it could set up business. It also aims to extend their services to other segments of the population such as high school students, office workers, and the ill or aged individuals who have mobility problems and therefore could not prepare their own meals. Presently, the firm must first establish operations with focus on quality, reliability, and value for money. This business plan lays out the details of the proposed company’s operations, its marketing, operational, financial, and strategic management of the business, in an effort to determine its feasibility or non-feasibility. Table of Contents 1.0Mission Statement 6 1.1Goals 6 1.2Business Vision 6 2.0Core Business Concept 6 2.1Secondary Business Concept 7 2.2Future Business Concept 7 3.0Key Success Factors 7 4.0Key Business Objectives and Associated Strategies 7 5.0SWOT Analysis 9 6.0Marketing Plan 10 6.1Marketing Plan Goal 10 6.2Industry Information 10 6.3Customer Profile 11 6.4Customer Buying Motives 12 6.5Market Size 12 6.6Growth Potential 12 6.7Competition 14 6.8Marketing Strategies 15 6.8.1Product 15 6.8.2Pricing 16 6.8.3Placement 17 6.9Advertising and Promotional Plan 17 6.9.1Promotional Objective 17 6.9.2Promotional Strategy 17 6.9.3Total Promotional Budget 18 7.0Service Plan 18 7.1Service Plan Objectives 18 7.2Current Service Plan 19 7.2.1Identifying customer needs 19 7.2.2Quality control 19 7.2.3Customer feedback loop system 19 7.3Industry Benchmarks 19 7.4Future Service Plan 19 7.5Service Costings and Gross Margins 20 8.0Operational Plan 20 8.1Operational Plan Objective 20 8.2Immediate Operational Plan 20 8.3Future Operational Plan 20 9.0Legal Structure 21 10.0 Business Premises 21 11.0 Insurances 21 12.0 Staffing Arrangements 21 12.1 Projected Cash Flow 22 12.2 Profit and Loss Statement 22 12.3 Balance Sheet 22 13.0 Timelines 23 References 24 Meals on Wheels® Business Plan 1.0 Mission Statement The proposed enterprise, which shall be called Meals on Wheels®, aims to provide nutritious, safe, delicious and affordable lunches to elementary and high school students in their schools. 1.1 Goals To accomplish its mission statement, Meals on Wheels® will seek to achieve the following goals: To deliver safe and nutritious lunches that children will want to eat, at affordable prices To earn a fair and reasonable return on investment for the business To set the standard for food providers specifically for children in terms of safety, nutrition, appeal, and reliability. To provide avenues for gainful employment of individuals, particularly women, who shall work in Meals on Wheels kitchens, and income for accredit suppliers working from the home To serve society by extending assistance to parents in assuring the proper care and health of their children 1.2 Business Vision 2 year vision: Serve lunch to elementary and high school children in at least one major city and nearby suburbs 5 year vision: Extend lunch service to workers at offices within the same city and/or extend lunch service for elementary and high school as well as offices to three major cities. Extend services also to individuals shut in their homes because of lack of mobility due to illness or age. 2.0 Core Business Concept Lunch Buddies® core business concept is to deliver healthy and tasty meals to children in their schools, in the elementary and high school levels, in a timely manner and at affordable prices. 2.1 Secondary Business Concept To provide meals on time and delivered to the child at his/her school. To give the children’s parents easy access to the service by online order placements. 2.2 Future Business Concept To extend the lunch delivery service to office workers and other likely markets To allow specialized menu choices to cater to specific needs due to health conditions, culture or religious beliefs. 3.0 Key Success Factors The key success factors that are expected to impact on Lunch Buddies® are as follows: Reputation for food safety and sanitation in preparatory processes and facilities Menu of lunch offerings nutritionally designed for and appealing to children Punctual delivery of hot and freshly prepared lunches Dedication and commitment to the welfare of children-customers E-commerce capability to conduct transactions and accept payments over the internet Close coordination with schools particularly those without cafeterias or canteens Delivery transport and network of suppliers 4.0 Key Business Objectives and Associated Strategies The key business objectives of Meals on Wheels® and the strategies to achieve them are: Objective Strategies (1) To build up customer base sufficient to ensure good cash flow and enhance profitability (a) To advertise online and through conservative channels about the firm’s services (b) To develop an e-community based on social networking where customers can come together and spread word-of-mouth in person and online. (c) To establish a Meals on Wheels ® Club where customers, food and culinary enthusiasts, parents, school representatives, and nutritionists interact with company customer relations employees concerning recipes, food ideas, feedback, children’s request, etc. (2) To earn acceptable return on investment to meet investors’ expectations (a) To reduce cost of sales to 55% of revenues or less, by building strong relationships with suppliers to arrive at favourable trade credit terms and discounts (b) To enhance revenues by defensive pricing and offering value for money rather than engage in price competition (c) To grow the customer volume through word-of-mouth and advertising, thus creating economies of scale (d) To minimize operating costs by adopting energy-saving, sustainable work methods and rationalizing deliveries (3) To design a variety of balanced meals that are nutritionally beneficial for children (a) To create and rigidly kitchen test nutritionally balanced meals that children will most probably like (b) To market test meals that pass the kitchen test, to verify acceptance by the target market (c) To continuously improve and add to the menu recipes and pass these through the kitchen and market test routine (d) To assemble a roster of culinary authorities as consultants (4) To develop a network of reliable, certified suppliers in a logistically balanced supply chain (a) To compare bids by suppliers to supply materials for production, or services crucial to the business (b) To conduct a thorough background check on suppliers for safety and sanitation, reliability, ethical practices, etc. (c) To ensure documentation and compliance among suppliers and stipulate in their contracts the compliance with standards of cleanliness and sanitation (5) To enhance IT capabilities to enable the efficient acceptance of orders, processing of transactions and confirmation of payments through the e-commerce facility (a) To design an maintain an IT system with the proper hardware and software to sustain 24 hours a day, 7 days a week online presence to accept orders and transactions and communicate with clients (b) To conduct training for personnel and integration of IT procedures with other units in the organization 5.0 SWOT Analysis INTERNAL: Strengths Strategies (1) Culinary competence & creativity (a) Explore new recipes and ideas for meal preparations (b) Conduct roadshow in schools for market tests as well as taste tests for students as a promotional program (c) Inform parents via brochures sent through students of the various menu offerings, their descriptions, pictures, and prices (d) Keep the exact formulation of special recipes and methods of preparations, although description of ingredients should be publicized (2) Nutritional expertise (a) Maintain in-house nutritionists as members of the team of menu planners and recipe creators (b) Conduct research and development into new (3) Logistical networking & planning (a) Developing contacts with suppliers and local entrepreneurs who provide logistical support in the delivery of school lunches (b) Vetting the sanitation, cleanliness and freshness of sources of raw ingredients for meals (c) Expanding network of vetted food providers (fruits, pastries, specialty dishes) to supplement the meal preparations done in the company kitchen (4) Market familiarity (a) Databasing regular customers’ preferences and special conditions and creating a profile for the schools most served by the company (b) Developing specific, longer-term arrangements with parents and schools (c) Research on current and future trends and findings on nutrition INTERNAL: Weaknesses Strategies (1) Financial liquidity (a) Enhance cashflow by speeding up collections and extending credit terms with suppliers, rationalizing current assets and current liabilities (b) Develop long-term plans where customers get special discounts if they pay in advance for a fixed future period or number of deliveries (2) Technical capability (a) Enhance manpower capability with IT training, not only for the IT but also for marketing and food prep personnel (b) Collaborate with IT consultant on upgrading and streamlining information system and e-commerce portal EXTERNAL: Opportunities Strategies (1) Strong demand by parents (a) Target parents who both work outside of the home and are unable to prepare lunches for their school children (b) Convince parents that freshly prepared and delivered hot lunches are better than packed lunches brought from the home (2) Lack of cafeteria facilities in schools (a) Target students in schools that have no cafeteria or canteen. (b) Where appropriate, collaborate with schools that have no canteens or cafeterias for them to formally endorse the company with the parents (3) Public interest in healthy lifestyle (a) Develop brochures and fliers listing the meal offerings and describing their preparation. (b) Affiliate with providers with reputedly healthy brands EXTERNAL: Threats Strategies (1) New healthier fastfood offerings (a) Strengthen brand image of the company to distinguish it from rivals. (b) Develop products that complete directly with the menu offerings of the competitor firms (2) Narrow price margins (a) Offer value for money, rather than compete on price. (b) Work to enhance revenue generation while reducing costs (3) Likelihood of food shortages (a) Develop dedicated supply lines with suppliers (b) Develop multiple supply lines with suppliers in different locations. 6.0 Marketing Plan 6.1 Marketing Plan Goal The marketing plan objective is to increase the firm’s customer portfolio to optimal levels. The company can achieve this goal by aiming for the following objectives: Gain insight into the school children’s tastes and preferences; Build the brand name of Meals on Wheels ® as associated with quality, and a brand image associated with wholesome nutrition; Develop sustainable competitive advantage as a combination of product quality and service reliability; Develop promotional strategies by offering discounts for term arrangements; Communicate the firm’s mission, vision and values as well as its product and service offerings. 6.2 Industry Information Commercial food preparations targeted at children are loaded with sugars and fats, so parents have become increasingly aware of the need to ensure their children eat healthy lunches even when the parents cannot be present to ensure this. 6.3 Customer Profile One of the most important health issues in Australia is the emerging trend towards overweight and obesity; these same issues are regarded by the World Health Organisation as a worldwide epidemic. CHILDREN'S BODY MASS INDEX - 1995, 2007-08(a) (a) Based on measured height and weight of children aged 5–17 years. (b) Differences between the numbers in 1995 and 2007-08 are not statistically significant. Source: National Health Survey: Summary of Results, 2007-2008 (ABS cat. no. 4364.0) In Australia, the prevalence of overweight and obesity among children and adolescents has increased in the past two decades. Overweight among boys ages 4 years has risen from 7% to 13.2%, and for girls the same statistic rose from 9.3% to 15.6%, from 1995 to 2002. This increases the risk of type 2 diabetes, hypertension, respiratory ailments, sleep problems, and depression (Oommen & Anderson, 2008). While overweight and obese children are certainly a primary target market, they are not the only prospective customers. All children in the elementary school and, eventually, the high school levels are intended to be served, regardless of income group. 6.4 Customer Buying Motives Customer motivation to avail of Meals on Wheels’s services will be due to: The company’s service area in urban areas where the both parents go to work; The healthy alternative which cater to children’s tastes Word-of-mouth recommendation among parents and by the schools Brand image and reputation for reliability and quality Affordable prices Flexibility in accommodating customers’ preferences 6.5 Market Size The size of the population that constitutes the initial target market of the business is growing at a consistent rate. The target market consists of children of elementary school age, who are included among the population ages 0-14 years. Forecasted numbers by the Australian Bureau of Statistics shows this segment of the population growing at 1.7% per year, comprising 18.2% of the total population by proportion. Population of nationwide age demographic, children 0-14 years old Year Total population Ages 0-14 years Description 2013 23,031,860 4,191,799 ABS Population Clock, 24 May 2013 2014 23,423,402 4,263,059 1.7% growth rate, 18.2% age proportion 2015 23,821,599 4,335,531 2016 24,226,567 4,409,235 2017 24,638,418 4,484,192 2018 25,057,271 4,560,423 Source data from Australian Bureau of Statistics 6.6 Growth Potential The growth potential of the demand for the service offered by Meals on Wheels® is high. The graph of the Australian Bureau of Statistics shown below indicates that the number of families with children is significant compared with couple families without children. The trend into the future shows that couple families with children are decreasing as a proportion of the total population, and the number of families comprised of couples without children is rising and may exceed the number of couple families with children. Nevertheless the rise in the number of one parent families more than compensates for the slowdown in couple families with children. Families, By selected family type As shown in Australian Bureau of Statistics, 2009-10 Year Book Australia, p. 218 The total number of families with children, including couple families with children and one parent families, shall still continue to exceed the number of couple families without children. In any case, the birth rate shall continue to grow, and therefore elementary school children who shall need lunches will continue to increase. Projected Families, By selected family type As shown in Australian Bureau of Statistics, 2009-10 Year Book Australia, p. 218 6.7 Competition There is still no established industry of enterprises specifically undertaking lunch deliveries in elementary schools as their principal business activity. They are food delivery services, primarily attached to branded restaurants and eateries that deliver their standard products to called-in or online orders. MacDonald’s, KFC, and other similar fast foods all deliver upon order. In their case, the delivery service is only an adjunct to the principal business of running a restaurant, canteen or eatery, and the delivery service does not distinguish among market segments or the time of day but caters to any order at any time during store hours. Meals on Wheels®, on the other hand, specifically caters to elementary school children, delivers only at lunchtime, and tailors its menu offerings to customers’ orders instead of customers ordering from a short list of commercial products. There are some new enterprises that undertake food delivery as their principal activity, but they deliver food from any number of restaurants specified by the order giver. One of these is Delivery Hero which launched in September 2011, and now operates in Sydney, Melbourne, Brisbane, Perth, Adelaide, Gold Coast, Sunshine Coast, Newcastle, Canberra and Hobart. Delivery Hero does not deliver its own food products, but undertakes the delivery of the products of other branded establishments including popular Chinese, Thai, Indian and Italian Restaurants, the top restaurants, pizza services, and best takeaways (Delivery Hero website, 2013). Although the main business of Delivery Hero is principally directed at food delivery like Meals on Wheels®, it is not seen as a direct competitor because there are delivering standard commercial preparations from popular and branded establishments. Unlike Meals on Wheels®, Delivery Hero did not have anything to do with the quality of the product, and it delivers to all types of customers at any time of the day. There may be small canteen operators that distribute within their localities the in-house food they prepared, but they cater to very small markets geographically, and they may serve school children but not exclusively. One may therefore say that the competition, if any, is fragmented and does not pose any major challenge to Meals on Wheels®. 6.8 Marketing Strategies Marketing strategies are circumscribed by the four P’s of marketing, that is, product, pricing, placement and promotions (Gummesson, 2012). 6.8.1 Product The product offered by this company is a combination of goods and service, the good being the lunch prepared and delivered according to specification appropriate for children, and the service being the delivery to elementary schools at the appropriate time. Included in the service is the accessibility of the online channel by which orders are transacted. The good is differentiated by the quality of the food delivered which is guaranteed to be appropriate for children. 6.8.2 Pricing According to the W. K. Kellogg Foundation, the average cost of school lunch in the United States is about one US dollar, but labour and other costs brings the final price to about US$ 2 to US$ 3 per school meal (School Food Focus, 2010). There is no similar study for the Australian market, and it is reasonable to assume that there may be differences in the diet of the Australian children and that of the U.S. children. For the purpose of this business plan, however, the U.S data shall be used as proxy data for the rough estimation of cost; furthermore, a US dollar is about AU$ 1.10, making the estimation easier. Meals on Wheels® should penetrate the market by matching the average lunch prices at about AU$ 2.50. However, Meals on Wheels® aims to offer value for money, which may not necessarily mean offering the lowest-priced products, but offering products at a price that well justifies the value derived by the customers from the service. The Kellogg Foundation research costed lunch according to the following menu items: Food: Chicken nuggets $0.30 Bread roll $0.12 Corn $0.10 Salad $0.12 Fruit $0.13 Milk $0.20 Total $0.97 Certainly, the fare to be offered by Meals on Wheels® will be more consistent with food offerings in Australia, but the cost of food should not be far. The final price, however, is determined by the proportions shown below, justifying a higher price than the mere cost of food. School Food Focus, 2010 The proportion of costs for labour, supplies and food may not be the same for Australia, but such considerations should nevertheless be allocated for in the final costing. 6.8.3 Placement The business should be located in major urban centres close to schools, and eventually it may cover as many cities as were shown for Lunch Hero earlier described. At the beginning, however, between one to three centres should first be targeted in order to establish a brand following, and extensions should be thereafter made. 6.9 Advertising and Promotional Plan 6.9.1 Promotional Objective The objective of the company’s promotional efforts is to build a brand name and following for Meals on Wheels®, and to build market awareness for quality of the product. 6.9.2 Promotional Strategy The promotional strategy involves identifying with parents and their concern to provide delicious and nutritious meals for their children who go to school. Many parents will appreciate the service particularly in schools which do not have their own cafeteria and canteen services. The promotional effort must reinforce among parents that MoW® is their neighbour and partner in raising healthy and happy children. The promotional activities will include: Distribution of flyers and brochures to draw attention to the brand and to give a quick reference to the website address and telephone number where orders can be transacted, as well as give a visual display of the company’s products. Preparing an information kit for school administrators to know more about the MoW’s services, and to develop a closer working relationship with the school to eventually obtain their endorsement. Sponsoring school events and activities such as the sports intramurals or spelling bee contest, in order to develop closer ties with the school community and at the same time provide samples of their meal offerings by putting up refreshment stands in the vicinity during the sponsored events. Using electronic word of mouth (eWOM) by setting up cyber communities that would communicate with the company and receive communication and responses in return. 6.9.3 Total Promotional Budget The promotional budget shall be set at no more than 5% of the revenues of the firm. In order not to overspend on advertising and promotion, broadcast TV and radio and expensive print media should be avoided, and instead rely on personal presence, word-of-mouth, and internet presence should be maximized. 7.0 Service Plan 7.1 Service Plan Objectives To deliver quality service to the children and their parents by delivering food that children find nutritious and delicious during lunchtime at their schools To build a reputation for top quality food delivery service as well as healthy and delicious food which eventually high school students, office workers and the ailing or aged in their homes, may wish to avail of. 7.2 Current Service Plan 7.2.1 Identifying customer needs Customer needs will be determined with certainty when the customers enter their order online. However, for the purpose of planning, the potential needs of customers may be determined by market research conducted by: Online survey that is profiled according to schools, age of child, geographical area, etc. Personal consultation with parents and their children Market test of food preparations 7.2.2 Quality control Quality control is conducted by a designated quality control team among the kitchen staff. Standards shall be established by which quality may be assessed. 7.2.3 Customer feedback loop system Customer feedback will be solicited online in the official website. Telephone interviews on random customers will also be conducted to solicit verbal feedback. 7.3 Industry Benchmarks There are no industry benchmarks because this is just an emerging industry, and this is the first attempt at establishing a major business out of children’s lunch delivery in Australia. 7.4 Future Service Plan In the future the additional major service planned is the extension of lunch delivery to high school, even university students in certain circumstances, and to those who remain in their homes because of lack of mobility due to illness or age. 7.5 Service Costings and Gross Margins As a proportion of total revenue, cost of sales, including direct labour, supplies and materials, is not expected to exceed 60% of revenues, leaving 40% as the gross profit margin. The 60% estimate is a conservative one and it is expected that prices of supplies and materials may fall in response to market conditions, and that MoW® will be able to raise prices while maintaining demand at optimal levels. 8.0 Operational Plan 8.1 Operational Plan Objective The objective of operational plans is to enhance efficiency in its operations through better supply chain management, engage in product development through research into and creation of nutritious meals, and improve product delivery by logistical management and support. 8.2 Immediate Operational Plan The immediate objective is to start up operations and develop regular routines in supply chain and logistics management. These involve the following activities: Successfully run start-up operations at Brisbane Expand operations in at least one more city before the year is over Establish accredited list of suppliers Establish an efficient and quality standard-compliant supply chain Establish an IT department for e-commerce and online advertising Recruit and train culinary and office staff Develop clientele profiles and list of order preferences through school contacts Establish control standards and measures Establish logistics system for transport of materials and goods 8.3 Future Operational Plan To enhance the efficiency of operations particularly in the supply chain management and the design of new recipes and menu offerings. To expand operations into other cities to be closer to schools there, and to build broader networks of suppliers and outsourcers without losing reputation for quality. 9.0 Legal Structure The Meals on Wheels® brand is produced by Lunch Experts Company, a privately-held closed corporation registered and compliant under the requirements of the Australian Securities and Investment Commission. 10.0 Business Premises The business premises are located in Brisbane, but it is expected that operations shall move quickly to other cities in locations close to the schools in the area. 11.0 Insurances Insurance is a necessity in business to provide sufficient coverage on the occasion that risks materialize that result to damage or loss of property. The business will require: Fire and theft, of real property, goods and chattels Professional indemnity Loss of income due to accident or calamity Public liability including in transit Work cover 12.0 Staffing Arrangements The management team shall be comprised of the members of this group. The culinary staff shall be comprised of the chef and the nutritionist, with at least two kitchen staff The IT staff including technical support officer and e-commerce leader with 2 support staff Office support staff consisting of one secretary 12.0 Financial Plan 12.1 Projected Cash Flow Cashflow Year 1-2 Year 2-3 Sources of cash     Increase in short-term loans 3,400 1,600 Net income 64,500 72,200 Net sources of cash 67,900 73,800 Uses of cash     Increase in inventory 4,500 5,000 Improvements in physical facilities 23,000 25,300 Purchase of kitchen equipment 11,000 12,100 Purchase of kitchen utensils 4,000 4,400 Retirement of long-term borrowing 19,400 20,400 Net uses of cash 61,900 67,200 Net cash inflow 6,000 6,600 12.2 Profit and Loss Statement Income statement Year 1 Year 2 Year 3 Sales 360,000 403,200 451,600 Cost of sales 216,000 241,920 271,000 Gross profit 144,000 161,300 180,600 Operating expenses 108,000 96,800 108,400 Net profit 36,000 64,500 72,200 12.3 Balance Sheet Balance Sheet Year 1 Year 2 Year 3 Assets       Current Assets       Cash and near cash 60,000 66,000 72,600 Inventory & supplies 45,000 49,500 54,500 Non-Current Assets       Physical facilities 230,000 253,000 278,300 Kitchen equipment 110,000 121,000 133,100 Utensils and kitchenware 40,000 44,000 48,400 Total Assets 485,000 533,500 586,900 Liabilities       Current liabilities 32,000 35,400 37,000 Long-term liabilities 97,000 77,600 57,200 Total Liabilities 129,000 113,000 94,200 Net Worth       Paid-in capital 320,000 320,000 320,000 Retained earnings 36,000 100,500 172,700 Total Net Worth 356,000 420,500 492,700 Total Liabilities and Net Worth 485,000 533,500 586,900 13.0 Timelines Gantt Chart over the Business Development period References Australian Bureau of Statistics. 2013 . Available at http://www.abs.gov.au/. Delivery Hero website 2013 Available at: http://www.deliveryhero.com.au/ Gummesson, E 2012 Total Relationship Marketing, 2nd edition. Jordan Hill, Oxford: Butterworth-Heinemann Oommen, V.G.,& Anderson, P.J. 2008 “Policies on Restriction of Food Advertising During Children’s Television Viewing Times: An International Perspective.” In: Proceedings Australian College of Health Service Executives 2008 Conference, Going for Gold in Health – Motivation, Effort, Performance. Gold Coast, Australia. School Food Focus 2010 The Cost of School Lunch. Available at: http://www.schoolfoodfocus.org/site/wp-content/uploads/2010/05/School-Food-101-Cost-of-School-Lunch1.pdf Read More