Organic Food Restaurant Business Plan - Assignment Example

ORGANIC FOOD RESTAURANT BUSINESS PLAN Student’s Name Course Tutor Date Executive Summary Organic food restaurant is a small start up business that will retail in ready made food upholding quality and unrivaled standards of hygiene. This restaurant will cater for the populations that are conscious about the kind of food they consume. Given that most of the food is sourced from genetically modified food (GMOs), some people have decided to go for organically grown food products. Owing to the wide belief that the long-term effects of GMOs are not known and is a subject of controversy and speculation, the company has decided to venture into the field of offering first class provision of natural food devoid of chemicals. Since provision of organically grown food products has not yet picked up very well in the United Kingdom, the company decided to seize the opportunity. The restaurant will be located north of Manchester City to serve both main town and suburban dwellers mainly middle and high income earners working in both established production and service industries (Siegel, Brian & Bornstein 1993, pp 10-17). Core business of the restaurant Organic Food Restaurant (OFR) will be a family owned restaurant business to venture in preparation and selling of organically grown foods. The company will source its products from selected and certified organic farms for vegetables and animal products. The company will present an extensive range of foods to cater for vegetarians and non-vegetarians who would wish to eat naturally produced foods. The company will sell healthy snacks to various schools in the region as a strategy of promoting healthy living amongst primary school going children (Pinson 2004, pp 7-9). Vision: To be a distinguished organic food restaurant with a national image as a well-known healthy and affordable quality food hence promoting healthy trends and lifestyles. Goals of the business The firm will strive to be the market leader in serving organic food to diverse customers in the United Kingdom. The firm expects to position itself as a brand with unrivalled competitive edge as it will offer food products with value addition to a wide range of customers. In order to realize its goals, OFR will set a benchmark in the hotel industry as a cost efficient company by minimizing waste as well as improving performance (Laermer & Simmons 2007, pp 67-79). Sources of Finance The Restaurant will be largely financed from personal savings. This will constitute 70 percent of the cost of starting the business. The remaining 30 percent will be split between shareholding and loans. Three individuals will be given the mandate to provide a capital equivalent to 20 percent and the remainder will be sourced from a microfinance institution that lends to small scale businesses. Sourcing of Equipment Given that restaurant operation equipments are very expensive in the UK, Organic Food Restaurant will import most of what it needs in running the restaurants. Importing is relatively cheaper especially if such equipment is sourced from the Far East nations such as China. Suppliers of the Restaurant In order to win the hearts of the customers, Organic Food Restaurant will source its raw materials from certified organic farmers in the UK. The Restaurant will take the initiative of collecting the raw materials from the farms of contracted farmers so as to avoid any mischievous deals and to uphold the integrity of the business. The Organic Food Restaurant will sign a binding contract with the farmers so that there is undisturbed supply of produce. What makes the business unique? Since GMOs were ratified and allowed in the American consumer market, a lot of junk food with plain taste has flooded every market and food store. Out of the protest concerning health issues of these foods, another market has sprung up thus the need to eat food products that are not genetically modified. This market is defined by the need to spend on the costly organic food products as organic farmers are very few hence the demand pushes up the prices of the products. Middle income and well to do Americans are becoming conscious of their health thus shun away ordinary restaurants that sell GMO foods. According to Iannelli (2008, pp 16-24), restaurant services are now shifting from provision of food to the type of food on offer. Organic Food Restaurant will be different from the traditional restaurants because it will only specialise in selling organic food to meet the lifestyle changes that advocates for cutting down on calories as a preventive measure to many lifestyle diseases such as obesity. There is a lot of potential for the industry growth provided that a restaurateur adheres to the modern trends of healthy living hence making sure that food served to customers does no fill them up with a lot of calories. Market Research The total UK market for food industry is very vast. Food industry stretches from well established to small scale restaurants that are struggling to get clients. Over the recent past, hotel industry is picking up as clients are diversifying their eating habits hence the need to serve the dynamic preferences and choices (Iannelli, V 2008).From the late 1990s to date, restaurants that serve specific clients have been on the rise in the UK. Due to the lucrative nature of the food industry in the recent times, the industry has witnessed a wave of many entrants both small and large-scale players. Competition in the market is based on how a company is well placed to make its image outstanding. Shifting demographics has made the American hotel business look very attractive to new entrants thus making the market to be extremely competitive. Big and small hotel owners have initiated steps of penetrating the market. Sales have been growing for many of the industry players. What has been fueling this growth relates to a climb in population and vibrant economy that has amplified the demand for hotel eating as many Britons get lazy of home cooking. Industry sales are known to reach the peak between early July and December (Iannelli, V 2008).Throughout this phase, hotels and restaurants usually compete for such valuable customers as generation of sales becomes high during such period. Since the business of the company is food vending, and due to the fact that in this industry trends changes very fast, so potential customers will always be available with product diversification and innovation. The UK hotel industry is at maturity stage although it is still open for more business start ups for many years to come. The high rate of movement of populations to urban centers has made the food industry to boom hence increased demands for eating places. This has made the UK food industry to be in a continuous process of growth. Although the hotel industry is season-driven, small ventures are not mostly affected. This start up restaurant will to a small scale not escape the high peak and off peak seasons of sales (Iannelli, V 2008). As is the case in developed nations such as the UK, most people spend money outdoors during summers thus it provides the best time for making a kill. In regard to (2009).Shifting trends in health and lifestyles have made most Britons consider healthy eating hence food industry is witnessing conventional diversification and new opportunities of growth. This new trend calls for innovation so as to capture the already saturated food industry. It is the projection of the Organic Food Restaurant that sales will increasingly grow for the first three years of operation. For the next three years, the company intends to be one of the formidable forces in the market. The projections are based on a market survey carried out among the major competitors in consideration of the suitability. It shows that there vast and profitable market for organically grown food products in Manchester City (Shimizu, 2009).Growth potential for Greening restaurant is very wide. It clearly demonstrates that if the restaurant can be a discounter, then it can penetrate easily and win a huge market share of the city. Even if a restaurant is a small outlet, the owner(s) can be in the league of earning big just as a starter, which in essence is a very good option. This is an indication of a great potential for small scale businesses and other start ups. Organic food market is growing at an alarming rate as many people are embracing organic eating thus it s a great opportunity to enter an infant market where demand is drastically increasing. As mentioned by Don, Tannenbaum and Lauterborn (1993, pp 34-41) it is very important for a business to comprehensively identify the existing opportunities. The following are some of the market opportunities. Increase in population that calls for more eateries to serve the people The UK is going through a period of recession hence most people are on tight budget. This is a great opportunity for the Organic Food Restaurant to offer low pricing and discounts packages to attract those who would consider it cheaper to eat healthily in restaurants Restaurant business just like other businesses is highly seasonal, hence Organic Food Restaurant has to make sure that it maximizes sales during the peak periods such as summer and school holidays when collegiate and high school students are at home. Holding low prices for students on vacation. Home delivery is an underutilized system in the Manchester region. Organic Food Restaurant would package foods and make home delivery upon request. For bona fide customers the restaurant will incur the cost of delivery as a customer retention scheme hence free delivery of meals except breakfast. Customer Profiling Since the core business of the company is organic foods, so the primary target customers will be subdivided as demonstrated by the demographics, thus primary target are working middle class and the secondary target being school going children and health clubs. Competition in the market Organic Food Restaurant is not alone in this game of serving organically grown food. There are so many established restaurants that are adopting a very new strategy of blending the ordinary foods with organic foods. The advantage of this system is that if a person has the ability to consume natural food then well and good but in case of lack of it then he/she can go for the usual cheaper meals. As a start up, Organic Food Restaurant will not have the ability to do the mix so as to cater for all sorts of customers and based on the fact that it wants a unique identity and branding as a purely organic food restaurant ( Hamel & Prahalad 1994, pp 17-23). Organic foods is still a preserve of the relatively well to do families hence stiff competition for the limited clientele. The market is very open hence no barriers are in existence for either start ups or expansionists. There are no major regulations except operating license and a certificate of compliance from the public health department for the safety of customers. Workers have to comply with strict medical requirements of which any violation may result in closure of the business (Iannelli, V 2008). The market niche for Organic Food Restaurant is the vast adult health conscious population in the larger Manchester City as well as parents who would like their children not to consume genetically modified foods. Marketing Strategy The basic strategy of Organic Food Restaurant is to launch the organic foods in the next three months. Initially the company will launch normal lunch to cater for all people, that is grown ups or children and before the year ends, there will be a launch of customized products to specifically cater foe the needs of every individual customer. Later on, consideration will be made to supply homes with fresh organic produce either cooked or uncooked depending on the requests by the customers. The core value addition proposition is that the restaurant will provide matchless organic food with wide range of unique recipes that retails at comparatively accommodative prices (Kerin & Rudelius 2001, pp 72-7). Organic Food Restaurant will position itself as a unique brand, which offers quality and healthy organic foods at relatively low prices with a variety of tastes to choose from which is part of value addition not forgetting innovative cooking and serving (Solis 2011, pp 201-202). The company expects to meet the market demands and consequently supply demanded products without delay. The company will also offer high quality products and services and accommodative prices. As mentioned by Menon et al. (1999, pp 18-19), the company will put the customer first thus all the products and accompanying services will highly consider the needs and demands of customers. This will be in addition to offering commotion free ambience for enjoying meals that will give a competitive advantage in relation to other business rivals. The restaurant will develop a children-friendly environment complete with play materials and necessary decoration, which will serve as an attraction for parents to bring their children to eat and play in a comfortable place (Needham 1996, pp 23-46). Startup Costs Startup Expenses Amount(£) Investment Requirement £ 622100 Restaurant Development £ 214659 Staff £180351 Capital Expenditure £ 93285 Consulting Services £ 31090 Promotion £ 3109 Total Costs £114466.4 Cash Flow forecast for the first three years of operations: 2012 2013 2014 Sales Projections £ 2799450 £ 373200 £ 528700 Managing Financial Risks Organic Food Restaurant require sound business practices to enable it control as well as profitably manage the wider risks associated with any business startup. Among the outstanding issues that the firm has to consider in its management measures include; Modeling of financial probabilities Adopting good mechanisms for measurements of risk-adjusted performance measurement Adequate parameters for measuring market estimates of asset risk Creation of more value in the products and services Ethics and integrity amongst the management and staff For effective management of business risks it is important for the Organic Food Restaurant to fully understand its internal and external environment of operations, thus a comprehensive analysis of strengths, weaknesses, opportunities and threats is very vital. The SWOT analysis is as follows; Strength: Wide range of product line with unique variations. Business will benefit from longer hours of operations coupled with better prices in comparison to competition. Range of discounts available for customers. Expertise in bringing innovation to capture the market very quickly Expertise in customer service provision Initiation of online selling could offer unrivalled competitive edge over other players Availability of customization for individual clients will boost customer confidence and liking for the restaurant (Armstrong & Kesten 2007, pp 116-134). Weakness: Greening Restaurant is a new player in the field compared to well-established competitors Huge capital base needed to start restaurant business given that credit facilities are not easy to get for start up businesses There will be huge marketing expenses in order to establish a brand name and image. This calls for huge spending on advertising Opportunity: Seasonality of the business ensures that during summer demand for food is very high as it marks the beginning of new academic years as well as the need for outdoor adventure amongst many families. Such activities enable restaurants to make good sales. Organic food demand is on the rise hence adding value in this category of food will be a an added advantage High income and health conscious population is a ready market for exploitation by the Organic Food Restaurant Food promotions may act as a good form of advertising as well as increasing the demand of organic foods Threat: Competition is very stiff and established restaurants have the financial ability to lock out small players by reducing their prices and opening cheap and affordable branches in every corner of the City Many Britons are very conscious when it comes to pricing as a result of the ongoing recession hence going for discounted products is a choice of many (Jyothi, Babu & Krishna 2008, pp 706-712). What makes the business different? Organic Food Restaurant will be unique in the market considered in the perspective of the market mix, thus product, pricing, placing and promotion. Product Organic Food Restaurant offers a wide variety of organic food products that are prepared with professionally trained staff to ensure that Americans are not pumped with junk and uncertain food. Organic food will be available in a variety of recipes depending on the taste and preferences of the customers. Care will be taken to accommodate clients of all ages, thus young generation will be served trendy meals while the older generation will be served what they consider good for them with the food range on offer. The main dishes to be offered by the restaurant include offering an exceptional range of fresh organic fruits and vegetables, organic meat products which is a healthy choice for lovers of meat as they do not have traces of chemicals (Menon et al. 1999, pp 18-19), This is so because organically reared livestock are fed on natural food that has no chemicals. Organic provisions require such livestock to be reared without being administered with growth hormones and antibiotics. Most of the milk and eggs being consumed by most Americans have very high levels of residues derived from growth hormones and antibiotics. Organic milk and eggs are free of such chemicals hence Organic Food Restaurant will be instrumental in providing clients with such healthy products. Price: As illustrated by Banting and Randolph (2010, pp 56-59), Organic Food Restaurant will implement penetration pricing as a strategy to fruitfully enter the market. This is very crucial given that the business is very new in Manchester City where competition in the hotel industry is very stiff. The company will try to offer food at discounted prices to capture the market and thereafter upon realizing high volumes of sales embark on discount programs. Once this objective is achieved then the company will charge higher price for customized products in line with customer satisfaction and value addition. Place: The restaurant will open the first branch in one of the high street of Manchester City Promotion: Organic Food Restaurant will adopt two ways of reaching the customers thus the first one will be advertising. Advertising will be both print and audio. Radio will be used to air the company’s adverts especially in the evening. As mentioned by Shimizu (2009, pp 102-116), print media will come in handy thus parents magazines and weekend newspapers will feature Organic Food Restaurant’s advertisements. Internet will be used to reach the young and corporate clients. Another approach will be distribution of fliers through hawkers (The Marketing Mix 2012, pp 1-3). Key personnel and other staff Organic Food Restaurant will ensure that people recruited to head the company have been successful in managing organisations of the same nature. They must have sound credentials as well as management expertise. The management team will comprise of a general manager, quality assurance manager and production manager. Recruitment of staff will follow the strict guidelines in the hotel and food industry hence priority will be given to experienced individuals who have good academic background and work experience, thus the firm will employ 10 staff on permanent basis and the number may rise depending on business growth (Marketing Strategy 2012, pp 1-4; Armstrong 2006, pp 61-69). Legal Requirements In the UK, each region has its own legislations regarding starting a small business. With the help of State Tax Agency (STA), the company will complete all the legal processes involved. One of the main requirements is obtaining what is known as a sales tax license. This type of license is very important for it allows one to collect sales tax and is also required by many wholesalers to necessitate buying of goods. Compliance with the City health provisions is mandatory. Business operating license is also a must (Business Plans 2012, pp 1-3; Wolfe 2012, pp 1). Conclusion In conclusion, The Organic Food Restaurant (OFR) management will be expected to meet the market demands and consequently supply demanded products without delay. The company will also offer high quality products and services and accommodative prices. The company will also be encouraged to put the customer first thus all the products and accompanying services will highly consider the needs and demands of customers. This will be in addition to offering commotion free ambience for enjoying meals that will give a competitive advantage in relation to other business rivals. 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