Chicken 2 You Entrepreneurial Management - Example

Chicken 2 you A Business Plan BY YOU YOUR SCHOOL INFO HERE HERE EXECUTIVE SUMMARY Chicken 2 You will be the only chicken mobile food truck in the London region. There is ample evidence that growth continues to improve the position of mobile food providers which provides opportunities for long-run sustainability as consumers become more accepting of this alternative food model. Chicken 2 You will be competing in a market where start-up costs are relatively low, posing threats of new market entrants that can be combated with effective promotion and marketing. Chicken 2 You will experience a projected monthly cash flow of £13,000 which is supported with a low-cost pricing structure and the ability to service approximately 120 customers daily at an average sales ticket of £8. The business only needs to service 16.67 customers daily at a rate of £8 per ticket in order to break-even, making this a highly profitable business model. Effective promotion and brand recognition as part of brand-building will be the cornerstone of competitive success for this new start-up venture. Chicken 2 You: A Business Plan 1. Introduction Chicken 2 You is a revolutionary new start-up concept designed to bring top quality, fast and fresh chicken products to the metropolitan London area and surrounding regions. Chicken 2 You is a mobile food concept, providing a limited menu of chicken-only products served in a mobile food truck. Chicken 2 You is designed to capture some of the market share of major chicken-centric restaurants in the United Kingdom, such as KFC and Church’s, by injecting a new type of fresh-to-you services that inject convenience into the business model for desired target markets. Chicken 2 You will be competitively priced, a major selling point for the business among higher-priced competition, which is achievable with the lower overheads that mobile food trucks provide. The business will be offering several varieties of battered fried chicken, buffalo and naked chicken wings, and breaded chicken strips with supplementary available sides including cole slaw, French fries, and mashed potatoes; including a variety of fountain soft drinks and bottled beverages. Chicken 2 You will be established as a sole trader organisation as there are no special regulations involved with the start-up of the business and it will give the sole proprietor absolute control over taxation and debt management practices. To ensure executive control remains with the owner, the sole trader structure is most appropriate for the financial longevity of this small business concept. Funding will occur through loans from a local bank, supplemented with the credit availability of the independent ownership. This business plan will cover the external market characteristics (risks and opportunities) that will either hinder or enhance business success; with supplementary explanations as to how Chicken 2 You will respond to identified external threats. A comprehensive industry analysis is provided. The plan draws on trusted market analysis tools (SWOT and Porter’s Five Forces) to identify what market characteristics will impact Chicken 2 You upon launch. Chicken 2 You, in order to successfully compete, must understand the consumer characteristics of likely purchasers and understand the distinct barriers that are created by external market conditions. The business plan further identifies the specific operational needs that are required, creating a two-period cash flow forecast to illustrate the anticipated profitability of Chicken 2 You which will be supplemented with a break-even analysis and start-up table illustrating the expenses and financing required for all operational supplies and equipment. The plan further describes the short- and long-term marketing needs and opportunities that are critical to establishing a brand presence in the London region as sales and marketing will be vital to capturing market attention and gaining their loyalty over higher-priced competitive chicken-centric bricks-and-mortar fast food restaurants 2. External market analysis Many quick service restaurants in the United Kingdom have been offering discounts and value menu pricing as a means of driving foot traffic during a period of difficult economic conditions. However, these short-term incentives have changed how consumers perceive the pricing structure of fast food restaurants. QSR Web (2013) indicates that consumers now perceive value menu pricing as being a stable pricing methodology. This has led to a three percent decrease in consumer traffic to the fast food industry during a period where price sensitivity is significant (QSR Web 2013). Since value pricing is no longer meeting consumer expectations, it justifies how Chicken 2 You must establish competitive pricing with much less emphasis on discounting and special pricing promotions. Small pubs in the UK are closing at a very rapid pace (Wilson 2012). Pubs, holistically, have captured much market share for providing chicken wings and other appetizer products. Due to the lingering problems with the 2008 and 2009 recession and recent austerity packages passed through legislation, small pub owners can no longer sustain the high overhead of facilities and other operational management activities. This provides significant opportunities for Chicken 2 You to capture some of the lost markets that once trusted local pubs to provide similar products as those provided by this new business. There is a growing consumer acceptance of mobile food trucks in the UK as the industry is quickly getting positioned on the market for having comparable quality foods. Offers one gourmet food truck operator, “sometimes you want a well-cooked gourmet meal at your desk, but you can’t walk into a nice restaurant and tell them you want a take-away” (Yong 2013, p.1). The mobile food industry has witnessed an approximate growth rate of five percent since 2008, supporting the anticipated longevity of this industry that Chicken 2 You will compete. 2.1 Porter’s Five Forces Analysis Thompson, Gamble and Strickland (2005) identify five externally-driven market conditions that pose risks or opportunities to the business model. These include threats of substitutes, competitive rivalry, buyer and supplier power in the market, and threat of new entrants. Chicken 2 You recognises the risks of substitutes, as there are many major fast food restaurants with well-established brands that offer chicken products. Consumers have very little switching costs in relation to defecting to other quick service restaurants as substitute products are widely available. It will be critical for Chicken 2 You to reduce these competitive risks by establishing a quality positioning methodology and reinforcing total brand value through pricing to turn consumers away from other fast food restaurant chicken products and sandwiches. Fortunately for Chicken 2 You, there is little risk in terms of competitive rivalry. It was previously established that the value pricing structures and value menus of many well-known fast food restaurants are not meeting with the consumer traffic expected. Furthermore, other UK-based food truck companies service only a niche (e.g. noodle trucks, gourmet trucks, Asian cuisine trucks) and do not maintain the budgets required for aggressive and widespread advertising. Chicken 2 You will be servicing only a limited region within London, therefore concentrated promotional materials targeting a limited service region intently will provide the brand value required to compete and gain market loyalty. Threat of new entrants, however, is a significant concern for Chicken 2 You. The start-up costs for this venture, along with the necessary licenses and approvals, are not difficult to procure. Chicken 2 You does not maintain the capital to create barriers to new market entry, therefore the business sole trader must be consistently aware of new entrants, their products, pricing and service dimensions to ensure a competitive pricing and menu offering structure in the business model. Buyers maintain considerable buying power in this market as they can easily select other competitors to Chicken 2 You. Porter (2011) indicates that when buyer markets are concentrated, they maintain control in the market. Chicken 2 You will be servicing a larger niche market of diverse buyers, therefore the business must be able to create the perception of total price and quality value to consumers to provide significant word-of-mouth that will benefit this niche targeting approach. Tam (2004) indicates that consumers have a propensity to believe that a business has higher value when the service quality supersedes the costs expended to obtain the service. Service quality in the niche market in London will be one of the most significant competitive advantages to prevent consumers from defecting to other food brands or mobile food product providers. Supplier power is largely irrelevant to Chicken 2 You, as the business will consistently seek out the many diverse food suppliers available throughout the UK to identify the best prices aligned with quality expectations. This will be an ongoing business management function to ensure the supply chain is adequate for the business’ expense and quality needs. 2.2 SWOT Analysis of Chicken 2 You Strengths Low overhead for facilities management Service-centric philosophy Strong proprietor knowledge of the marketing and branding function Capability to conduct recurring market research to understand niche buyer needs Weaknesses No brand recognition in the London market Inability to establish alliances in the supply market which improves competitive cost and knowledge management advantages (Ragatz and HeldGeld 1997). Limited knowledge of the regulatory environment Opportunities Expand into two trucks servicing both ends of London Establish alliances with chicken farm producers to further enhance brand quality Social media to expand brand presence Threats Low cost for new market entrants Promotional campaigns from quick service restaurants attempting to undercut pricing structure of Chicken 2 You 3. Operational needs and start-up costs Chicken 2 You must align operations to ensure rapid service as well as service excellence for the hurried consumer looking for top quality quick service food products. Figure 1 illustrates the start-up needs required for the new venture. Figure 1: Start-Up Table Food Truck £40,000 (Lesonsky 2011) Equipment (fryers, ovens, microwaves and other associated appliances £10,000 Legal £1500 Mobile and online technologies £500 P.O.S. sales system (used) £1500 Vehicle modifications to meet regulatory compliance £2000 Cash needed at start-up £1500 Initial inventory £2000 Total Start-Up Costs £59,000 The business will be purchasing a refurbished food truck which is widely available in a variety of online sales mediums and through local commercial vehicle vendors. Costs of new trucks can exceed £100,000 which is not feasible for this start-up business. The start-up table in Figure 1 illustrates costs associated with legal fees that will be necessary for licensing approvals and interventions with local city councils for various parking permits and other compliance measures. The P.O.S. system, a software program facilitating electronic and rapid compilation of sales and orders, will facilitate budget and expense management and improve service delivery quality. 4. Cash flow projections Before projecting cash flow, the pricing structure of Chicken 2 You’s menu must be identified. Fried Chicken (2pc) £3.79 Fried Chicken (4pc) £4.99 Fried Chicken (8pc) £7.50 Wings (6pc) £3.00 Wings (20 pc) £8.50 Breaded Fingers (4pc) £2.79 Breaded Fingers (8pc) £4.39 Sides (one size) £2.00 Drinks £2.00 Market research has indicated that Chicken 2 You can likely expect to service approximately 120 customers daily. Cash receipts per month are based on projections with a market volume of 120 purchasing an average ticket of £8. According to the cash flow forecast in Appendix A, after two six month periods, the business will sustain £294,300 cash availability. This is justified with low labour payments of only $1550 per month with a single 45 hour weekly employee and the non-paid activities of the sole trader. Chicken 2 You believes that an average monthly cash flow of £13,000 is feasible and measurable with an average ticket of £8 and a total market volume of 120 daily operating on a 6-day per week operating schedule. 5. Break even analysis Fixed costs per month include petrol costs at £300, £2,000 monthly inventory procurement Telephone and supplies at £200 monthly. Break even: Fixed costs / (Average price per unit – average cost per unit) £2500 / (£8 - £3) = The business must sell 500 average tickets at £8 per month to breakeven. A minimum of 16.67 customers at the average ticket price must be serviced daily. This is highly feasible for the Chicken 2 You business model. 6. Marketing plan The most vital methodology of gaining competitive advantage and building a sense of brand recognition with desired markets is the marketing function. Currently, as illustrated in the Cash Flow forecast, Chicken 2 You will be allocating between £300 and £500 monthly for promotion. This includes local newspaper advertising, costs of utilising social media and other online sources, periodic low-paid guerrilla marketing, and direct mailing delivered to local London businesses and other commercial centres. 6.1 Product Chicken 2 You is all about quality. The business will be emphasising the quality dimensions of all procured products, making comparisons to existing UK chicken quick service restaurants where appropriate in promotional materials. In marketing theory, consumers often maintain cognitive dissonance, which is where two beliefs are in conflict with one another internally (Bose and Sarker 2012). Often occurring post-purchase, buyers will be exposed to a variety of promotions and price incentives (or promises of quality) by quick service marketers and then receive inferior product that causes this cognitive dissonance. Chicken 2 You will capitalise on these dissonances that often occur when promises of quality and freshness meet with negative end results post-purchase. Product is at the heart of the business’ competitive advantage which will always be fresh and made-to-order in a quick service environment. 6.2 Place Place is one of the most significant market tools available for a company. Chicken 2 You will be locating an appropriate location with a great deal of urban, commercial activity to ensure a high demand during lunch periods by busy professionals wanting a quality meal at a fair price. With assistance from planning councils and other regulatory authorities, Chicken 2 You will locate a street venue that will provide more opportunities for higher volume traffic, including an adequately-sized shopping district. 6.3 Price and promotion Price will make or break Chicken 2 You. The business will maintain much lower prices than main competitors such as KFC in the region, further offering unique, customised food packages that cater toward the business professional or regional shopper. These prices were highlighted in the cash flow section. Promotion will be the deciding factor as to whether Chicken 2 You is able to achieve the objective of establishing brand recognition. In the London region, there are approximately 55 different mobile food service businesses each having their own promotional strategies. The food truck will be painted with a website in which customers can learn about the Chicken 2 You service values with a printable takeaway menu. The business will be establishing, in conjunction with assistance with a low-cost IT support rep, a metrics system that measures the volume of traffic and various demographics inputted into the site. This will allow the company to develop a customer relationship management system, using email reminders about impending product developments or offerings, to gain market loyalty. Guerilla marketing will also facilitate getting a brand reputation established in the region, offering a variety of low-cost promotional merchandise with the Chicken 2 You logo. These items include but are not limited to tumblers, mugs, keychains, or business stationary. Periodic coupon promotions will be offered at a limited time on the company’s informational and promotional website to spark more consumer interest, though these will be limited due to the intention to position the business on quality. 7. Plan implementation Bamford (2004) offers that small business start-ups such as Chicken 2 You are better able to adjust to changing market conditions than larger companies because they have more flexibility in operations, processes and procedures. Chicken 2 You realises this as spontaneous changes to menu offerings can be adjusted, thereby adjusting internal operations on-board the food truck, simply to satisfy changing market preferences. The business, despite its flexibility, will still be developing contingency plans to ensure that responsiveness can be built into product and service in a market environment that is ever-changing and impacted by rising volumes of new entrants. In the event of lost sales, Chicken 2 You will be prepared with a flexible operational structure that can be implemented in short order. 8. Conclusion Farris et al. (2010) indicate that customer service is one of the most important dimensions for gaining brand loyalty. A recent survey of 200 executives indicated that the majority (71 percent) found a customer satisfaction metric to be an excellent tool for managing and controlling the business model. Chicken 2 You will be developing an online and printed customer satisfaction survey highlighting a variety of quantitative ranking scales that will assist in identifying potential service failures or product failures (or successes) to enhance the business. The research from these surveys will be correlated to make periodic adjustments, where required, to better service customers and achieve the objective of brand loyalty previously identified. Kalyanaram and Gurumurthy (2008) indicate that pioneers in a market often have long-run advantages due to consumer characteristics. Consumers will often create unfavourable assessments against later entrants and judge the pioneer as being more quality. Since this will be the only mobile food truck offering specifically chicken products with customised size options, Chicken 2 You maintains opportunities to build instant loyalty with certain niche customer markets and retain this with excellence in service delivery. Promotion will support brand-building exercises as well as interpersonal interactions with a variety of customers both during work and when approaching commercial centres with direct marketing literature. If Chicken 2 You is able to develop perceptions of consumer self-expansion, attachments are likely to occur (Greenwald et al 2002). Indicating how Chicken 2 You can enhance professionalism or even the social environment can be accomplished with effective promotions and interactivity.     References Bamford, C.E., Dean, T.J. and Douglas, T.J. (2004). The temporal nature of growth determinants in new bank foundings: implications for new venture research design, Journal of Business Venturing, 19(2), pp.899-918. Bose, T.K. and Sarker, S. (2012). Cognitive dissonance affecting consumer buying decision-making: a study based in Khulna Metropolitan area, Journal of Management Research, 4(3), p.191. Farris, P.W., Bendle, N.T., Pfeifer, P.E. and Reibstein, D.J. (2010). Marketing Metrics: The definitive guide to measuring marketing performance. Upper Saddle River: Pearson Education Inc. Greenwald, A.G., Banaji, M.R., Rudman, L.A. et al. (2002). A unified theory of implicit attitudes, stereotypes, self-esteem and self-concept, Psychological Review, 109(1), pp.3-25. Kalyanaram, G. and Gurumurthy, R. (2008). Market entry strategies: pioneers versus late arrivals, Wright University. [online] Available at: http://www.wright.edu/~tdung/entry.pdf (accessed 16 March 2013). Lesonsky, R. (2011). Starting a mobile restaurant, Score. [online] Available at: http://www.score.org/system/files/u209922/Spike%20%20Starting%20Mobile%20Restaurant.pdf (accessed 14 March 2013). Porter, M. (2011). Porter’s Five Forces: A model for industry analysis. [online] Available at: http://www.quickmba.com/strategy/porter.shtml (accessed 15 March 2013). QSR Web. (2013). Report: Restaurant deals no longer driving traffic. [online] Available at: http://www.qsrweb.com/article/210305/Report-Restaurant-deals-no-longer-driving-traffic?rc_id=312 (accessed 21 March 2013). Ragatz, G.L. and HandGeld, R.B. (1997). Success factors for integrating suppliers into new product development, Journal of Production Innovation Management, 14(2), pp.190-202. Tam, J.M. (2004). Customer satisfaction, service quality and perceived value: an integrative model, Journal of Marketing Management, 20(3), pp.897-916. Thompson, A., Gamble, J. and Strickland, A. (2005). Strategy: Winning in the Marketplace, 2nd ed. New York: McGraw Hill. Wilson, E. (2012). UK: the representatives of trade unions and employer associations in the Horeca sector, European Industrial Relations Observatory Online. [online] Available at: http://www.eurofound.europa.eu/eiro/studies/tn1109028s/uk1109029q.htm (accessed 17 March 2013). Yong, D. (2013). Gourmet meals on wheels – recent entrants are giving the mobile food service concept an upscale boost, The Business Times Lifestyle. [online] Available at: http://www.businesstimes.com.sg/archive/monday/lifestyle/wine-dine/gourmet-meals-wheels-20130302 (accessed 14 March 2013). Two Six Month Period Cash Flow Chicken 2 You Fiscal Year Begins: Apr-13 Pre-Startup EST Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Total Item EST Cash on Hand (beginning of month) 59,000 13,300 37,350 61,400 84,750 108,600 129,950 153,500 177,550 201,100 222,650 246,700 270,250 270,250                               CASH RECEIPTS                             Cash Sales 0 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800   TOTAL CASH RECEIPTS 0 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 0 Total Cash Available (before cash out) 59,000 42,100 66,150 90,200 113,550 137,400 158,750 182,300 206,350 229,900 251,450 275,500 299,050 270,250                               CASH PAID OUT                             Purchases (merchandise) 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000   Supplies (office & oper.) 2,000 100 100 100 100 100 100 100 100 100 100 100 100   Advertising 0 300 300 500 500 500 300 300 300 300 300 300 300   Car, delivery & travel 40,000 300 300 300 300 300 300 300 300 300 300 300 300   Accounting & legal 1,500 0 0 500 0 0 500 0 500 0 0 500 0   Rent 0 0 0 0 0 0 0 0 0 0 0 0 0   Telephone 200 100 100 100 100 100 100 100 100 100 100 100 100   Utilities 0 0 0 0 0 0 0 0 0 0 0 0 0   Labour Payments 0 1,550 1,550 1,550 1,550 1,550 1,550 1,550 1,550 1,550 1,550 1,550 1,550   SUBTOTAL 45,700 4,350 4,350 5,050 4,550 4,550 4,850 4,350 4,850 4,350 4,350 4,850 4,350 0 Loan principal payment 0 400 400 400 400 400 400 400 400 400 400 400 400   Capital purchase (specify) 0 0 0 0 0 2,500 0 0 0 2,500 0 0 0   TOTAL CASH PAID OUT 45,700 4,750 4,750 5,450 4,950 7,450 5,250 4,750 5,250 7,250 4,750 5,250 4,750 0 Cash Position (end of month) 13,300 37,350 61,400 84,750 108,600 129,950 153,500 177,550 201,100 222,650 246,700 270,250 294,300 270,250 Read More