The Concept Salad Station - Essay Example

Business Plan of the Company of the Mission ment: “To Offer Healthy, Tasty and Quick Serve Salad to s at Reasonable Price.” EXECUTIVE SUMMARY CONCEPT: The concept of the salad bar, “Salad Station” was planned by the owner of the business seeing the saturation of restaurants, fast food joints, or cafes in London Ontario, whereas the demand for salad bars was still high as the purchasing power of the people has decreased; thus, reasonable, healthy and tasty dinning through salads would be the obvious option. For this the target customer groups were the individuals, families, professionals who have less time to cook at home. The menu would be containing simple and healthy salads with a variety of dressings, hot and cold beverages and toast. Based on the NACS classification the salad bar comes under limited-service eating industry. FEASIBILITY: The location for the Salad Station has been chosen in London, Ontario, in Canada. A shop would be rented in the Masonville for the salad bar, as this place attracts maximum footfalls and the supplier of raw materials, Costco, would be able to supply raw materials for the bar without any problem. The expense for the site would be including the shop rent which is estimated to be around $1,000 and the maintenance cost to be $500. It is assumed that Salad Station could penetrate in 70 percent of the market and build a customer base of around 105,000 people in the city. Based on the competitive advantage of Salad Station, such as secret dressing and ingredient assortments, it can be forecasted that the sales for the first year would be around $30,000, which is expected to increase by 10 percent in the next year and 15 percent in the third year. MARKETING: The Salad Station would be positioned as an eco-friendly place for dinners which would offer healthy and tasty salad and other veggie items to suit every age group. The salad bar would be named Salad Station as it would be positioned as the ultimate location for salad. The technique of competitive pricing would be used to set the prices of the items on the menu. Promotion would be done through pamphlets, leaflets, hoardings, newspapers, internet ads, social media marketing, television advertisement and through radio. OPERATIONS: The salad bar would be having a sitting space of 24 people which would be accompanies by 6 tables. The counter would have one employee to take the orders and do the billing, while two other employees would be in the kitchen. The owner would also be also working with the employees and handling the counter for six hours. Costco would be supplying the raw materials and charge supply fees of $150. In order to manage inventory, do billing and accounting functions, company would be installing software. Apart from these CRM would be done through the installation of software to maintain customer information for enhanced services. FINANCES: The owner would be investing a total fund of $30,000, among which $17,000 would be brought by the owner and about $13,000 would be borrowed from the family members. A CYBF loan of $10,000 would be taken from the bank at an interest rate of 4.25 percent, to meet the initial cash requirements. The income statement indicates an increasing operating expense, but the sales has increased, so net profit in the first year is $12,283, while in the second year it has reduced considerably to $7,934, while again it had picked up the pace and earned a net profit of $12,246. The balance sheet of the company reveals that current asset is more than current liabilities, so the liquidity position of the company is very high. The break even analysis sheet shows that the company would be able to achieve its break even for the variable cost and fixed cost both in the tenth month of the first year. Table of Contents EXECUTIVE SUMMARY 2 CONCEPTS 7 Introduction 7 Products and Services 7 Customers 7 Opportunity 8 Owners 8 Legal Organization 8 FEASIBILITY 9 Location/ Site 9 Site Expenses 9 Market Potential 9 Competitive Advantage 10 Sales Forecast 10 Business Protection Strategies 11 MARKETING 11 Brand 11 Business Name 11 Product Mix 12 OPERATIONS 13 Space and Equipments 13 Logistics 13 Methods and Procedures 14 System 14 Organization 15 Regulation 15 FINANCES 15 Owner’s Investment 15 Borrowed Money 15 Assets and Initial Worksheet 16 Gross Margin or Mark-up 16 Costs and Expenses 16 Sales and Income 16 Cash Budget 17 Income Statement 17 Balance Sheet 17 Ratio Analysis 17 Break Even Analysis 17 References 19 Appendices 20 Appendix 1 20 CONCEPTS Introduction The concept of opening a salad bar is to offer comfortable, convenient and healthy dining experience to the people. The motto is to create healthy food like salad, toast, or beverages and deliver it with friendly service to the customers. The salad bar would be offering a huge variety of ingredients and dressings for the customers. The menu has been designed carefully keeping in mind the taste, health and preferences of the people. The salad bar would be launched in London, Ontario area, Canada. Products and Services Salad would be the core item and healthy items such as Quinoa, Couscous and lentil salad would be on the menu. A loaf of bread or toast would be also included with every salad bowl. Apart from this both hot and cold beverages would be served in the salad bar. Further, soups, Veggie Wraps, Fruit and Vegetable Juices would also be offered. The salad bar would be having a self service system, where the customer would choose their salad ingredient on the menu and collect the order themselves. Customers The target customers would be the individuals and families in London, Ontario and other neighboring areas. Professionals, who have less time to prepare meals at home and are health conscious too, would be an important target group. Salads are healthy and if served with taste, would even be preferred by kids and teenagers, who often avoid vegetables and fruits, regrettably opting for junk foods. Opportunity In the present scenario, when high-quality restaurants, cafes and fast food joints can be found at every corner of the city, salad bars are very few, so the concept is still fresh in the market. Moreover, seeing the economic condition of the country, when the purchasing power of the people has reduced, dinning in a restaurant has become costly for customers, but a bowl of tasty and health salad for a meal and at a reasonable price, too, would be readily accepted by customers. Owners The salad bar would be owned and managed by а single owner as this would be the sole proprietorship form of business. The owner of the business thought of opening a salad bar because firstly he/ she has got a knack for restaurant business which would serve simple, tasty and easy to cook meals, secondly, he/ she also has managerial qualities and entrepreneurial skills to set up own business. Thirdly, he/ she can afford to survive on own funds without withdrawing any money from the business for a few months, so it can be said that the owner is capable enough of floating and managing a salad bar (Aldrich, & Wiedenmayer, 1993, p. 1-5) Legal Organization The salad bar would be named “Salad Station” and it would be of the sole proprietorship form of business. Based on the North American Classification System (NAICS) of Canada, it would be considered under limited-service eating places and its NAICS no. would be 722512 accordingly. The framework and strategies of this venture would be designed on the basis of the industrial norms stated by NAICS (Statistics Canada, 2012). FEASIBILITY Location/ Site The Salad Station will be opened in London, Ontario; for that a shop would be rented in the plaza building of Masonville Place, which is situated in the north of London, Ontario, Canada. Since Masonville Place is one of the most popular shopping centers, the footfall in this area is also high and this would benefit Salad Station too. The parking areas are also available courtesy of the Masonville shopping mall, so Salad Station does not have to take care of parking and the traffic. Moreover, raw materials would be supplied by Costco, who would find it convenient to deliver the goods at Masonville, as it is a well connected area. Site Expenses The site expenses that the owner of Salad Station would have to bear are mainly the cost of renting the shop and the expenses related to its maintenance which would include electricity bills, water supply bills, etc. Since Masonville is a very popular area, the rent of a shop in a plaza building in Masonville would be around $1000. Apart from this, the maintenance expenses would be around $500. Market Potential In order to estimate the market potential of the salad bar, an estimation of the market volume has to be done. In order to do that the assessment of the target market size and penetration rate (assumed to be 70%), of the salad bar is necessary. Based on the demographics of London, Ontario it can be found that the population of the place was around 366,151 in 2011. Among this around 13.7 percent are above 65 years and the rest are young and middle-aged. Among these the salad bar can target around 40 to 50 percent customers, which can be assumed to be around 145,000 to 150,000. So the market volume would be around (150,000*70 %) 105,000, which indicates the potential customers for Salad Station. Similarly the market value for Salad Station can be estimated by multiplying the market volume by the average value or sales figures (Baum, & Locke, 2004, p. 10-15). Competitive Advantage Salad Station would be facing competition from a few other healthy eateries such as Subway, which has its restaurant chain in around 30 places in London, Ontario. Apart from this, there are a few other restaurants too, which offer healthy and tasty salads such as Huron House Restaurant, Knotty Pine Family Restaurant, Earls Kitchen and Bar and many others offering salads along with other menu items. However, Salad Station would be specifically offering salads and related items, so the variety and quality would be far better than the competitors’. Taste would be absolutely superior because of the variety of dressings which would be the secret recipe of Salad Station. Sales Forecast The sales projections would be done for a period of 3 years. As can be seen in Sales Projection Spreadsheet, the initial sales have be estimated to be $45,000, which is expected to increase at a rate of 10 percent in the second year and at a rate of 15 percent in the third year. This indicates that in the second year the sales would be around $50,400 and in the third year, the sales can b estimated to be to around $57,960. Further, an increasing trend of salad consumption in the summers has been indicated, so the sales percent would increase to 10 percent from 8 percent. Business Protection Strategies Protecting the business signifies protecting the shop or salad bar from theft, or calamities like fire. For this fire extinguishers would be purchased, the electronic and electrical equipments would be maintained and oiled, so that they run in good condition. Apart from this special security cameras and door locks would be installed to protect the assets of the Salad Station from theft. MARKETING Brand The target customer segment has been estimated for Salad Station, but branding the company would depend on the method of positioning Salad Station in the minds of the customers, so the salad bar would be positioned as an eco-friendly dining place, which encourages the usage of natural products and sells salads specifically and few other healthy and tasty items which would be helpful to increase the stamina of kids, control weight and support good health of young people, healthy and affordable for middle-aged and check the growth of diseases through fast food for aged customers. The ambience would be exciting, colorful yet eco-friendly and service has to be excellent to draw customer attention. The salads have to be exceptionally tasty and different from the competitors, which would be a unique selling proposition for Salad Station. Business Name As mentioned above, the salad bar has been named Salad Station because salad is the core product offered by the bar and station signifies the location, so Salad Station signifies the ultimate place or location for salads in London, Ontario. The customers would also not mistake the bar with any normal restaurant and specifically come with the intention of having various types of salads, soups, or juices. Product Mix Salad Station would be offering simple salads, customized salads for customer based on their choice of ingredients and 15-20 different dressings. Apart from these the salad bar would also offer healthy and delicious soups and juices. The salads would be accompanied by a toast or a slice of bread. Veggie Wraps and beverages would be also available in Salad Station. The other ingredients of the product mix are explained below. Price. The salad would be priced according to the weight of salad, which means a small bowl of salad, containing 10 Oz of salad, would be available for $5, while a medium bowl would have 15 Oz of salad, priced at $7.5 and a large bowl would have 20 Oz of $10. The soups would be available at $5, Veggie Wraps at $6 and beverages, which would include coffee at $3.50, tea at $2.5 dollar and cold drinks at $1.50, as stated in Appendix 1. All the prices have been assigned after analyzing the prices of the competitors. The ingredients in the salad, soup or Veggie Wrap would not affect the price - only the quantity would make the difference (Capon, & Hulbert, 2007, p. 25-29) Distribution. The suppliers would be supplying the raw material such as veggies, fruits, meat and other ingredients at the Salad Station shop. The customers would have to visit the shop for salad and other items because no home delivery facility would be available. The shop would be consisting of cane chairs and tables with soothing décor and enchanting music for a relaxing atmosphere. Promotion and Evaluation. The initial promotion would be done through print advertisements in local and national newspapers, pamphlets and leaflets, hoardings, television advertisement, internet ads, social media network and also advertisement through radio. In order to attract customers, special discount coupons can be offered to customers for the whole month from its inception. Customers would prefer to try different menu and when they will like it, they will visit again (Ferrell, & Hartline, 2010, p. 150-155) OPERATIONS Space and Equipments According to Asset Worksheet, the equipments that would be required to set up the salad bar would be mainly salad bar, which would keep the ingredients of the salad and dressing fresh for the whole day, which would cost around $1500, two air conditioners which would be costing around $1398, Juicer machine for $699 and an installation cost of $100. As far as the furniture and fixture is concerned, the requirement for the salad bar would be mainly for around 6 tables and 24 chairs, which would cost around $3780, with an additional installation cost of $25. Logistics The raw materials would be supplied by Costco at the shop and it would be charging an amount of $100 for delivering raw materials in the shop. Apart from this, no other supplies would be required for the salad bar. The legal expenditure to set up the store would be around $1500. Methods and Procedures The method and procedure for handling customers are stated below: 1. Self-service stations or counters would be there and 1 person would attend the customers in the counter. 2. Orders would be taken and money would be collected simultaneously. 3. Each table would have a complaint drop box with pen and paper for customers to enter their phone numbers, e-mail ID, name and comments (complaints or appreciation) 4. Complaints would be redressed and an intimation of such would be sent on customers email or phone, so as to value them. 5. Instant complaints would be handled immediately by the staffs of Salad Station System Salad Station would be using customized accounting and inventory management software which would cost around $200. This would not only assist in billing, inventory management, but also planning out work schedules. Another software for customer relationship management would be required if Salad Station chooses to build up a customer database for further enhanced services. A CRM software would further cost around $150, which would be utilized to store the customers information like address, phone number, email ID, date of last visit, birthday, etc. This would assist Salad Station to conduct e-mail marketing, send notification on launching new menu, or offering discount to customers on birthdays to increase customer footfall (Daft, R. L., Murphy, & Willmott, 2010, p. 21-27). Organization The owner would be the sole boss and three individual would be hired to assist the owner. One of them would be handling the counter and two employees would be taking care of the kitchen and serving the item over the counter. The employee would be hired on hourly basis. The employees would be paid $11 per hour and the salad bar would be open for 12 hours. The owner handles the counter every day for six hours. Regulation The licenses have been acquired for opening up a salad bar in the specified area and the agreement for the shop with the shop-owner has also been done. A lawyer was hired to perform all the legal activities required to open and run the business, which cost around $1500. FINANCES Owner’s Investment The owner would be investing a total fund of $30,000, among which $17,000 would be brought by the owner and about $13,000 would be borrowed from the family members. Borrowed Money Borrowed money comprises the fund borrowed by the owner from the family members and the CYBF loan taken from the bank at an interest rate of 4.25 percent. The loan amount is $10,000, which would be required to meet the initial cash requirements. Assets and Initial Worksheet The total start-up cost of the business would be $38,527, so an additional loan of $10,000 would be taken to support the daily expenses. According to the Initial cash worksheet, fixed assets amount to $6,493, current assets amount to $28,800 and prepaid assets amount to $3,234. The assets would be mainly the equipments and machinery required for the salad bar and the furniture and fixtures for the shop. The equipments consisted of a salad bar for $1500, two air conditioners for $1398, a refrigerator for keeping the raw materials fresh was purchased for $699 and tables for $900 and about 24 chairs for $2880. Other costs are related to installation, website development, signs, etc, as stated in Assets worksheet. Gross Margin or Mark-up The mark-up has been assumed to be 50 percent of the purchase price of the owner. Costs and Expenses Based on the income statement sheet, it can be assumed that the operating expenses of the business for the first year would be around $50,164, while in the next year the expenses have increased to $54,308 because of increasing wage of the owner, increasing expense of marketing activity, as can be seen in marketing activity sheet, increasing building rent and other expenses like utilities and amortization. In the third year it is further expected to increase to $58,806. Sales and Income The sales projection sheet depicts three years sales projection on a monthly basis. In the first year the sales are estimated to be $180,000 because 1500 customers with an average of $15000 sales have been assumed for 30 days every month. Further an increase in sales of 15 percent in the next two years has been assumed. Cash Budget The cash budget for the first year depicts a balance of $10,586 at the end of the first year, in the second year an increasing balance of $15,699 and in the third year a cash balance of $19,044 reveals the cash inflow is increasing due to an increase in sales. Income Statement The income statement indicates an increasing operating expense, but the sales have increased, so net profit in the first year is $12,283, while in the second year it has reduced considerably to $7,934, while again it has picked up the pace and earned a net profit of $12,246. Balance Sheet The balance sheet of the company reveals that current assets are more than current liabilities, so the liquidity position of the company is very high. Ratio Analysis All the ratios as stated in the ratio analysis sheet reveals a positive result, which means the current ratio is high, debt equity ratio is diminishing which means an increase of equity to debt, return on equity and return on assets ratios are high which reveals high return on assets and equity. Break Even Analysis The break even analysis sheet shows that the company would be able to achieve its break even for the variable cost and fixed cost both in the tenth month of the first year. CONCLUSION This study aimed at developing a business plan of a salad bar called Salad Station. A detail analysis of the concepts behind the establishment of the shop, its feasibility, marketing, operations and financial planning has been done in order to establish the project in London, Ontario, Canada. A three year projection of the finances has been done to estimate the cost and capital requirement. The salad bar would be recruiting three employees and would be serving salads and other related items. References Aldrich, H. E., & Wiedenmayer, G. (1993). From traits to rates: An ecological perspective on organizational founding. Greenwich, CT: JAI Press. Baum, J. R. & Locke, E. A. (2004). The relationship of entrepreneurial traits, skill and motivation to subsequent venture growth. Journal of applied psychology, 89(4), pp. 587-598. Capon, N., & Hulbert, J. (2007). Managing marketing in the 21st century: developing and implementing the market strategy. Uckfield, Sussex: Wessex Publishing. Daft, R. L., Murphy, J., & Willmott, H. (2010). Organization: Theory and Design. 10th ed. Connecticut: Cengage Learning EMEA. Ferrell, O. C., & Hartline, M. D. (2010). Marketing strategy. (5th ed). Connecticut: Cengage Learning. Statistics Canada. (2012). North American industry classification system (NAICS) Canada 2012. Retrieved from: http://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVDDetail&db=imdb&dis=2&adm=8&TVD=118464&CVD=118471&CPV=722512&CST=01012012&MLV=5&CLV=5&CHVD=. Appendices Appendix 1 Price List Menu Price Salad (Quinoa, Couscous and lentil salad, customized) Small Bowl (10 Oz) $5 Medium Bowl (15 Oz) $7.5 Large Bowl (20 Oz) $10 Soups (special soups everyday) $5 Veggie Wraps $6 Beverages Coffee $3.50 Tea $2.50 Cold Drink $1.50 Read More