Gluten-Free Shops in Malta (Maltese Islands) - Case Study Example

GLUTEN FREE SHOP IN MALTA (MALTESE ISLANDS) Student’s Name Course Professor’s Name University City (State) Date Gluten-Free Foods Shop in Malta (Maltese Islands) The Gluten Free Shop in Malta will provide all food types that do not have any gluten. Feasibility Study Considering that a substantial number of people face food allergies and intolerance, the business venture will obviously pick. Additionally, the business is started in a niche market where people are still coming up with healthy eating habits that protect them from avoidable diseases such as allergies. Gluten in particular cause issues such as the Celiac disease and therefore people who avoid eating it are in better hands (Cristofori et al. 2013, p. 3840). With time, the business can expand and diversify to provide other products such as lactose and sugar free products. In future, the shop can also provide fresh healthy snacks such as sugar-free cakes, baguettes, and sandwiches among others where the consumers can choose what to buy. Product/Service Feasibility Desirability Today majority of the people are diagnosed by the celiac disease. Most importantly, this disease is common in European countries and the others that host European immigrants as well as developing countries. The celiac disease, a rare disorder, causes small intestine damages which, in turn, inhibit absorption of nutrients. As a result, these patients are diagnosed for malnutrition (Cristofori et al. 2013, p. 3841). Gluten-free food seems to inhibit this disease and that is why there is a steady growth of their demand. While in the past it was about a balanced, healthy diet with a limit in fat, sodium, and sugar, the interest is now focused on complete reduction of gluten intake. Countries such as the USA have issued standards that guarantee gluten free products (Nejad et al. 2012, p.2). Demand The feasibility study conducted showed that there was a high demand of gluten-free products in European countries and especially in Maltese Islands. The survey on buyer intention showed that the majority of the community prefers to eat gluten-free foods such as vegetables, legumes, among others to avoid complications such as Celiac (Nejad et al. 2012, p.2). Additionally, the internet, case studies, among other academic journals showed that the Europeans are more susceptible to celiac disease than any other community in the world. As a result, they have a high demand for these foods to avoid the complications in their digestive systems. Industry/Target Market Feasibility The shop targets all residents in Maltese Islands since it is a niche market. Most of the people in these islands will opt to eat the gluten-free foods and even those that lack lactose and sugar for the benefit of their health. The parents will feed their children with these foods to avoid stomach complications. So, despite the large amount of promotions and advertising in the area by other shops such Margo Brothers and Bistro Ten-O-One there will be consumers to buy. The gluten-free food shop will offer a unique experience by offering cozy and sophisticated food types that are otherwise rare in the hectic world. Target Market Attractiveness There are four markets to focus on which are People who work downtown area during the day will seek good food in shops that can conveniently offer late lunch and breakfast. Corporations that seek for phone-in lunch during business meetings Families and workers looking for take-out food while travelling or take home dinner. Every other person who just wants to eat gluten-free food. Each of the market segments consist of diverse people who work in the city or just visit for some official business and sometimes leisure. In short, it is impossible to fully determine the percentage of people that are likely to visit the shop in a week of even a month for a service, food, or just to watch the art gallery. Furthermore, Valletta has experienced the growth of middle-class professionals who prefer to buy food rather cook so that they can finish their job assignments. Organizational Feasibility The business has managerial experience that is required to start since the owner underwent the necessary investigation and decision-making process. The owners sourced advice from family, friends, and board of director’s members, entrepreneur projects, business owner, and professionals. Figure 1 CANVAS Business Model- Source Hong and Fauvel 2013, p. 28 The Figure 1 (Hong and Fauvel 2013, p. 28) shows that an organization has nine elements. In case of this shop, the key partners are the suppliers who bring in raw materials for legumes, maize flour, among others. The key activities are preparing the food products, selling, delivering, and any other form of consumer relations. In value proposition, the shop offers gluten-free foods which help consumers to maintain a healthy lifestyle that, in turn, enable them to avoid diseases such as allergies. The consumer’s relationship expects high-quality products and delivery system that are fair to the pricing strategies. When it comes to consumer segment, the business serves all the people, and therefore, all of them are critical to the firm. The business requires different key resources such as labor. The founder cannot do all the work alone without being inefficient, thus, needs people to help him to serve the customers. The distribution channels required for this business are many, but the main one is a vehicle to deliver products to where the client needs them. The cost structure of the shop mostly lies in the food production due to ingredients, labor, and equipment. Finally, the revenue stream shows that the consumers are willing to pay for high quality through all avenues of payment such as debit cards, cash, and even cheques. For instance, cash contributes to the greatest revenue source, followed by debit cards and finally the cheques. Financial Feasibility The business requires a high start-up capital due to the cost of location, labor, and equipment. Companies in this industry have high returns on capital, and therefore, there is the potential for high profits. Since there are foods products, the financial risks are small so long as the founder does not overproduce. The cost of failure is also low. Recommendations I. In spite of risks and other obstacles, the founder should go ahead and start the business. II. Come up with a business plan that will attract investors. III. Come up with the plans and implementation procedures. IV. The draft action should be by the end of 2018. V. Come up with a target date for each activity in the business plan. VI. Reach out, potential buyers. VII. Choose the best suppliers. VIII. Follow all the legal requirements. Business Plan Executive Summary The Gluten-Free Food Shop is an eating establishment that seeks to provide people with healthy, gluten, lactose, and sugar-free products in Maltese Islands. The shop will offer for products such as sandwiches, sugar-free cakes, among others. The store will follow the differentiation strategy while making and selling its products. The key success of this business is to ensure that the consumers come back, that is repeat business. It is a sole proprietorship from Mr. James Radar who has raised a capital of 140,000 euros. Entry to the market is not easy due to competition, a large number of substitutes, and overcapacity. The business will be located in the Capital City, Valletta, near the industrial firms. The company has developed comprehensive promotion campaigns. The prices are slightly higher so as to attract consumers who prefer quality. It is estimated that the business will maintain a healthy cash flow and revenue. Industry Analysis Sector Description The shop belongs to the fast food industry because of they quick pick-up products such as sandwiches and also the service sector because they deliver human wants and needs. There is the potential of high growth rate because of the current sensitivity of health matters. Healthier food products act as a guarantee to a better market share. SWOT Analysis Strength Opportunities Catering for the busy target market such as middle-class professionals Offering gluten-free food products creates a good reputation for the business. Maltese Islands is the home of Europeans who prefer these kinds of food. Provision of healthy foodstuffs and options to people in Maltese Islands Weakness Threats Getting the right investors and partnerships Acceptance of the business by consumers over their long known ones such as Margo Brothers. Rising fuel prices Competition Company imitation Company Description History The shop is a realization of the owner’s dream of one day owning his business. Since childhood, James has always wished to have a big restaurant that he could passionately cook his meals and sell to the people. After high school, James sought to work in hotels and later went to college to upgrade his catering skills. Since his first salary, James continuously saved so that he could raise startup capital for his future business. Mission The Gluten-Free Foods Shop seeks to provide a broad range of gluten-free foods and other specialized diets such as lactose and sugar-free in the Maltese Islands. Based on their distinct menu, the shop will differentiate so as to provide a unique experience that is hard for the people to find anywhere. The food will save the Maltese Islands population from lifestyle and dietary diseases such as Celiac and at the same time give the company significant profits. Products & Services The shop offers menus for lunch and breakfast, drinks, and take-out dishes such as sandwiches, sugar-free cakes, and baguettes. Additionally, there is the art gallery in the shop that attracts and entertains the customers as they wait to be served. Ownership At initial stages, the Gluten-Free Foods Shop is a sole proprietorship by James Radar, founder and also the president of the company. It is registered, incorporated as required by the attorney, based on its growth and other relevant business conditions as they occur. Market Analysis Maltese Islands have a majority of the population with a British origin. The population is estimated to be around 409, 300 people. The business will be situated at Valletta, the Capital City of Maltese Islands which has a population of around 6,700 people. Just like all the other Europeans, the inhabitants of this region have issues with gluten meals and mostly suffer from the celiac disease. As a result, these people have been seeking places where they can buy gluten-free products for adults and also kids. In Valletta, there are few companies which provide these meals and that are why it is a niche market. Some of the competitors will be Adesso, Browns Kitchen, Aaron’s Kitchen, and Soul Food The Economics of the Business Start- up costs Startup Item Estimated cost (£) Shop space 100,000 Salaries and wages 10,000 Supplies: technological, furniture, equipment, others (desks, chairs, a computer 50,000 Advertising 1,025 Utilities: Internet, phone 1,400 Insurance 1,500 Total Start-up costs 163, 570 Total capital 200,000 Difference 36, 340 Table 1 Start-Up Costs Break-Even Analysis Break-even analysis Number of sales per month (£) 1 400 500 800 900 1,200 1,300 Fixed cost assumption (£) 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Variable cost assumption per sale (£) 5 2,000 3,000 6,000 3,558 4,000 5,000 Total cost per sale (£) 20,005 22,000 23,000 24,000 23,558 24,000 24,000 Projected sales revenue (£) 30 15,000 20,000 24,000 23,600 24,800 25,634 Revenue (£) -19,970 -7,000 -3,000 0 2 800 1,634 Table 2 Break-Even Analysis Break-Even Points= 800 Break-Even Point = 24,000 Figure 2 Break-Even Chart Total fixed costs (TFC) = 20,000 Variable cost per unit (VCU) = 5 Sales price per unit (SPU) = 30 Formulas: BEP (units) =TFC/ (SPU-VCU) BEP (Euros) = BEP units*SPU Marketing Plan The overall market strategy is to ensure that the business existence is well known and situated near the people. The business will use flyers, a grand opening party, and the signage to attract the consumers. Promotion The owner plans to use the local radio to announce about the shop's existence. Additionally, he will use personal selling, flyers, direct mailers, and reference. Fortunately, since it is food, people will step in to see what has been established and the products that are offered. The art gallery will attract artists and individuals who love art, and in the process, they will buy from the shop. Positioning The business will be situated in Valletta where the customer has limited time to take lunch or breakfast, and therefore just eat a quick pick-up snack. The firm will also accept various payment methods such as the cash, cheques, and debit cards. Additionally, the gluten-free foods shop will deliver its consumers’ needs in the nearby local offices and homes. Pricing The prices are tied to high-quality, where the healthy food will have a unique flair. As a result, the food products will be more costly than the other stores, as long as the consumers accept. Sales Strategy The company will offer services at fast rates during the peak hours to balance the crowd so that that it never looks empty or full. The waiting lines must move quickly and have available foods. Most importantly, the business seeks repeat business, that is, each customer who willingly comes to the store must return because of the excellent service. As a result, there will be offers such as special menu days, discount cards, and a regular change of the menu. The owner will follow up by keeping track of the food products eaten and also allow consumer feedback surveys mostly. In the end, James will be able to streamline the business to meet the customers’ needs. Design and Development Plan The company with acquiring and register its trademark with the Maltese Government so as to avoid any business imitation. The shop has a five-year development plan which includes being the best gluten-free food provider, increasing the number of employees to twelve, delivery cars to four, earns a profit of 500,000 euros yearly, and also to open service to a larger place. Some of the risks involved in the lack of investors, competitions, and rising prices of the ingredients. Operations Plan The shop will be opened for six days a week in the business hours from 7.00AM to 6.00PM. Each day, the employees will prepare fresh products for their consumers, for instance, by estimating the possible number of sandwiches is likely to be eaten about the previous day consumption. The Business will be located in Valletta in the 7th Avenue near most of the industrial firms so that to capture a large consumer base. The shop facilities are an eating area with a capacity of thirty people, the counter front area, and the backside where the kitchen will be set. The business owns equipment such as the refrigerators, commercial ovens, and stoves that will place in the kitchen. Management Team And Company Structure The company is small with the employee categories including, kitchen help, busboys, and counter clerks. The total number of staff including the founder is seven, two in the kitchen, two others in the counter, and finally the other two in deliveries. The owner attends the job in regular business hours every day of operation. In his absence, James will appoint one of the employees to supervise the others. Management Team For now, the administration lies only on Mr. James Radar. James is passionate about cooking and has been doing it for fifteen years now. As a result, he has acquired a reputation for having the most inventive and tasty foods in Malta. James has a degree in catering and business. Currently, the company lacks an accountant and a marketing manager; therefore, James will outsource the parts that surpass his knowledge. Organization Structure The Figure 3 shows that the company is headed by the board of advisors that help the founder while making any important decision such as investing. The manager in turns communicates about his decisions to the employees who implement them. Figure 3 the Gluten-Free Foods Shop Organization Structure. Financial Projections Sources of Funds Source of Capital Investment Amount Owner’s Investment £140,000 Bank Loan £60,000 Total Capital £200,000 The pages below contain the next year projections for the income, balance sheet, cash flows, as well as the estimated financial ratios. Since the company is new, the owners used historical data from similar shops in the region and the data is available upon any request. Gluten-Free Foods Shop Pro Forma Income Statement January 2018- December 2018 Net Sales £ 240, 000 Less: Cost of Goods Sold £182,000 Gross Income £58,000 Operating Expenses Labor £10,000 Utilities £3,500 Promotions £2,500 Delivery £13,000 Miscellaneous £1,500 Total Expenses £30,500 Net Income before taxes £27,500 Less: income taxes £7,000 Net income after taxes £20,500 Assumptions Net sales were based on the price of every product sold. Sales estimated is a probability of 5% market share in the Malta market awaiting much penetration. The costs of goods sold take into consideration all the packaging, labels, ingredients, and any packing expenses. The owners did not receive any salary since it was the first year of operation. Additionally, all the profits ate re-invested in the market for increased production. Gluten-Free Foods Shop Pro Forma Balance Sheet December 31, 2018 £ £ £ Current Assets Cash 6,500 Accounts Receivable 50,050 Inventory 70,000 Pre-Paid Expenses 1,025 Total Current Assets 127,575 Fixed Assets Building 90,000 Equipment 30,450 Gross Fixed Assets 120,450 Less Accumulated Depreciation 14,000 Net Fixed Assets 106,450 Total Assets 234,025 LIABILITIES AND OWNERS EQUITY Liabilities Current Liabilities Accounts Payable 45,657 Accrued Payables 2,400 Total Current Liabilities 48,057 Long Term Liabilities Mortgage Payable 15,543 Total Liabilities 63,600 Owner's Equity 170,425 Total Liabilities and Owner's Equity 234,025 Gluten-Free Foods Shop Pro Forma Cash Flow For the year ended 2018 January £ February £ March £ April £ May £ June £ July £ August £ September £ October £ November £ December £ TOTAL £ Revenues 10,000 10,000 10,000 10,000 10,000 10,000 10,000 28,000 28,000 28,000 28,000 28,000 210,000 Expenses Cost of goods sold 6,000 6,000 6,000 6,000 6,000 6,000 6,000 18,000 18,000 18,000 18,000 18,000 132,000 Labor 0 0 0 0 0 0 0 2,000 2,000 2,000 2,000 2,000 10,000 Utilities 100 100 100 100 100 100 100 400 400 400 400 400 2,700 Insurance 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Sales promotion 450 450 450 450 450 450 450 1,000 1,000 1,000 1,000 1,000 8,150 Delivery & Transportation 150 150 150 150 150 150 150 800 800 800 800 800 5,050 Miscellaneous 50 50 50 50 50 50 50 200 200 200 200 200 1,350 Total Cash Flow 3,100 3,100 3,100 3,100 3,100 3,100 3,100 5,450 5,450 5,450 5,450 5,450 48,950 Gluten-Free Foods Shop Financial Ratios December 31, 2018 £ Return on Equity = Net Profit before Taxes = 27,500 = 16.13% Net Equity 170,425 Current Ratio = Current Assets = 127, 575 = 2.65 Current Liabilities 48,057 Quick Ratio = Current. Assets – Inventory = 57,575 = 1.20 Current Liabilities 48,057 Debt to Equity = Total Liabilities = 63,600 = 0.37 Net Equity 170,475 References Catassi, C., Bai, J.C., Bonaz, B., Bouma, G., Calabrò, A., Carroccio, A., Castillejo, G., Ciacci, C., Cristofori, F., Dolinsek, J. and Francavilla, R., 2013. Non-celiac gluten sensitivity: the new frontier of gluten related disorders. Nutrients, 5(10), pp.3839-3853. Hong, Y.C. and Fauvel, C., 2013. Criticisms, variations and experiences with business model canvas. European Journal of Agriculture and Forestry Research, 1(2), pp. 26-37. Nejad, M.R., Karkhane, M., Marzban, A., Mojarad, E.N. and Rostami, K., 2012. Gluten related disorders. Gastroenterology and Hepatology from bed to bench, 5(1). Appendix Employees’ salaries Employee Hourly Salary (£) Estimated Monthly Salary (£) Estimated Yearly Salary (£) Founder 17 2,957 35, 354 Clerk 1 9 1,557 18,531 Clerk 2 9 1,557 18,531 Kitchen 1 8.7 1,505 17,913.3 Kitchen 2 8.7 1,505 17, 91.3 Delivery 1 8 1,384 16,472 Delivery 2 8 1,384 16, 472 Total Compensation 68.4 11,849 141,186,6 Read More