Popcorn Shop in Manchester - Term Paper Example

In Manchester

Abdulaziz Felemban

April 2016

This Business plan is about starting new business, a unique popcorn shop that will sell different sweet and salty popcorn flavours in addition to hot beverages. The data collected for this business plan is completely private and confidential and only few and limited people who will have full access to it, and only the authority to reproduce further copies.

• • Abstract:

KukuRoZa is a shop that serves lovely mixed popcorn flavours. The menu consists of:

• Sweet unique popcorn flavours such as, apple, strawberry and watermelon flavours.
• Salty unique popcorn flavors such as PeriPeri Chicken and curry flavors.
• Hot beverages.

The store will be opened in Manchester city nearby Manchester library. The pricing mechanism that has been considered is a fair pricing system so that people can afford it specially students. The business looks to target everyone in the society, which includes girls and boys, old and young, families and singles, and all nationalities. The entire process with regard to legal formalities, pricing strategies, cash flows, backup plan and other important areas are being addressed. This would help the business to be carried out efficiently and would provide an opportunity through which overall growth of the business would improve.

Table of Contents

Abstract:2

Executive summary:4

Mission and vision5

Objectives:5

Company summary & Location :7

Mall shopping centre7

Company ownership:7

Start Up Summary:7

MARKETING PLAN8

Market Research:8

Economics:8

Target Market:9

Competition:9

Marketing Mix:9

Pricing:10

Distribution Channel:11

Operational Plan11

Production:11

Legal Environment:11

Personnel:12

Inventory:12

Suppliers:12

Credit Policies:12

Management & Organisation12

Financial plan13

Expected Future Sales13

Profit & Loss Analysis13

Break Even Analysis15

Back Up Plan15

• • Executive summary:

Kukuroza home of lovely popcorn is a new business located in Manchester city outside Manchester library and is a sole proprietorship owned by Abdul-Aziz Felemban. It will deal with production and serving of a mix of lovely popcorn flavors.

The mission of Kukuroza will be that of providing fresh, quality popcorn to Manchester library users at fair prices considering the fact that they are students with few means of finances. The business also targets to provide its products to the public including both young and old whether male or female.

Kukuroza popcorns will be unique given its lovely unique flavours as will be described below as well as the fair pricing of our products. The popcorn will be freshly prepared for each customer given the limited time of popping the popcorn of about three minutes per batch of popcorn.

The business is properly positioned outside Manchester library where the target customers who are mainly students are readily available. As such, minimal marketing costs will be incurred with exception of initial marketing costs.

It is projected that the business will attain a gross profit of £120,000 in 2016, £150,000 in 2017, £175,000 in 2018 and £200,000 in 2019. Starting up of Kukuroza home of Popcorn will mainly will require a total of £70,000 as will be detailed below. To achieve the business target however, the owner is contribute £20,000 and is hence seeking £50,000 small business loan. The loan requested is to be used to cater for part of the start-up cost and will be repaid from the business cashflow over a period of five years. The graph below shows various highlights for the first four years of operation.

• • Mission and vision

The mission of Kukuroza will be that of providing fresh, quality popcorn to Manchester library users at fair prices. Thus, Kukuroza Shop’s will become the leading spot for popcorn fans in metropolitan area. The business intends to produce cost effective and fun place for all customers with meeting their needs. This will be achieved through offering high quality popcorns at fair prices.

• • Objectives:

Kukuroza has the following aims and objectives

• To obtain the required funding including £20,000 personal contribution from the owner and £50,000 small business loans.
• To create a business that will exceed the expectations of the customers while doubling customer numbers each year by offering superior quality products thus ensuring referrals from existing customers.
• Kukuroza aims at having customer satisfaction rates of more than 80% at the end of the first year of its operation.
• To have sufficient cashflow by the end of the first year of its operation.
• To achieve sales revenues of £210,000 within the first year of operation this should increase to £260,000 in the second year and £298,000 by the end of third year of operation.
• Providing income for the owner by the end of the first year of operation while ensuring income growth in subsequent years.
• Repaying the small business loan borrowed within a five years period

Key to success:

Kukuroza shop’s success will be driven by a number of factors including;

• Repute- through offering high quality prices, good customer services and fair prices, it is expected that Kukuroza will have a very good reputation thus ensuring that the customers market Kukuroza through the word of mouth.
• Best customer service – Staff will be trained on good customer service aspects assuring superior services for the customers.
• Location – Kukuroza is located outside Manchester library where the target customers can easily access it.
• Product quality-Kukuroza will offer the best quality popcorns at fair prices in a conducive environment.
• Convenience-this will result from the location of the business as well as the online platform where customers can order.

Product and services:

Our vision for “KuKuRoZa” shop is to operate as a small sized business that will provide customers with a wide selections of popcorns and hot beverages. KuKuRoZa will be the name of our prime market target food, fresh and chilly taste. The customer will have the choice with different fillings with all these eastern and western flavours.

“We are only simply selling a wide flavoured popcorn and hot beverages”

The business to priority is to sell to quality popcorn products that comply with all state and local laws regarding the sale of foods and beverages to the general public in the Manchester. Furthermore, the company will also handle and deal with the entire fresh liquid flavour product, which are recorded higher incidences of spoilage. Therefore, the business will also make sure the facilities at restaurants are fully compliance with all health and food safety laws.

The organization further looks to ensure that the products supplied are of the best quality standards that are being prescribed by the governing bodies would be followed. This would be matched by the fact that the business would look to work on a model where every product is freshly made so that people who consume them are able to garnet better taste, which will make their taste buds happy.

• • Company summary & Location :
  • Mall shopping centre

Kukuroza shop will be operating as small business, which mainly will serve popcorn and hot beverages. It is a new shop and will be located in Manchester. Location of the business plays a key role in the success of any business. I have chosen to establish the business in the “Rusholme Area” in the food street called “Wilmslow Road”. These roads have a high number of residential students live in the campus and passes through Oxford road to the university, we aim to attract many customers and it will enable the customers to try and taste different popcorn flavours. Also this Area includes several hospitals such as Manchester Royal infirmary. Moreover this road is major part of bus corridor with the movement of each one minute at peak time and also considered a key centre for business. I am aiming to achieve the maximum benefits of the location. I am considering this location as it is between university and the city centre of Manchester, within easy way to reach.

• • Company ownership:

KuKuRoZa Shop will envision as a sole proprietorship by owner Abdul Felemban. The owner family has experience in Food business; therefore, the business family owner has understanding the needs of small business.

• • Start Up Summary:

The business start-up costs as well as its initial financing are displayed below. In a bid to fully fund the start-up, the owner is seeking a loan of £50,000 to supplement the personal investment of £20,000 to cover the entire£70,000 requirement (Cook and Dave, 2004).

Requirement

Cost

Business licence

£1,500

Refrigerator / Freezer

£5,000

Coffee machine

£2,000

Popcorn Machine

£4,000

Popcorn

£3,500

Insurance

£4,500

Equipment cost such as Paper cup

£ 3,000

Rent

£4,500

Salaries

£9,000

Utilities

£4,500

Initial loan repayment

£3,000

Kitchen equipment

£8,000

Advertising cost

£2,000

Shop set up cost

£8,000

Cash on hand

£6,500

Total start-up cost

£70,000

• • MARKETING PLAN

The section provides complete details pertaining to the marketing plan, which the organization would look to adopt so that the long-term success of the business can be ensured.

• • Market Research:

The business will undertake a research that includes both primary and secondary research. The primary research will be carried out through a questionnaire where people will be asked questions regarding the idea of setting a popcorn store, their preference towards popcorn, their preference towards different type of popcorn and so on. This will also include details about the place where the business should be set (Drummond and Ensor, 2001). On the secondary front past business examples and mechanism of working will be looked at so that a process which looks at different business opportunities and working style is properly adopted. The overall research would thereby set the tone for setting up a store and would help to determine the manner in which the business should move ahead.

• • Economics:

On an overall basis the demand for normal popcorns have decreased due to the fact that different gourmet stores and snacks are available which has multiplied the options for consumers. The fact that the price of popcorn is low and having different varieties of popcorn would tempt people to consume it, which would thereby help to increase the business. It is estimated that the industry would grow around 4% and with innovation and different varieties of popcorn the overall business proposal strengthens (Ismailpour & Ghafarieashtiyani, 2002). The eating healthy index shows that people health index is reducing but rising awareness towards having healthy product would help the popcorn industry as it is considered as a healthy food with no oil. In addition to it the disposable income of people is increasing in Manchester as the economy is towards a high growth rate which would thereby foster an environment where the demand for products are likely to increase in the near future.

• • Target Market:

The business venture looks to attract all type of people, which includes girls and boys, old and young, families and singles, and all nationalities. The business primarily focuses towards younger generation as they are more likely to consume popcorn especially students. Since, students can consume popcorn along with some hot beverages it would help students to carry out their work and consume at the store itself. The business will focus primarily on customers from the age group of 12 to 30 as they are the most likely to become loyal towards the brand and would have a desire to purchase the product again and again.

• • Competition:

The degree of competition which KuKuRoZa shop will face is high. There are other players who also provide popcorn to a similar base of customer. There are different variants of popcorn available like microwaveable popcorn, Crunch ‘N Munch, and Cracker Jacks which would have an impact on business. Further, the loyalty of customers is low and they switch easily from one fast food products to other thereby increasing the cost of retaining and finding new customers (Chrisan, 2001). In addition to it pre-packed products and other substitutes of popcorn are easily available at every nook and corner which would thereby require a different value proposition to be able to attract customers. Apart from the local players the degree of competition is high from international players which look to specialize in popcorn selling thereby increasing the degree of competition (Kotler, 2004).

• • Marketing Mix:

The primary focus would be promote popcorn of different flavours. The advertisement would feature the different type of popcorn which is sold and other beverages which are provided will not be advertised aggressively (Cable & Judge, 2006). This is primarily due to the fact that it is believed that beverages are impulse buy and they add on with the popcorn so stressing more on popcorn promotion would help. One of the promotional design would be like

The different marketing mechanism which will be adopted are as

E-Marketing: Using internet as a medium of adverting would help to keep the cost low and would be attributable to the correct section of the society where the business looks to address. Having Facebook pages can help to attract customers, where they can post comments, views and opinions so that a chain which looks to attract more people can be achieved (Coughlan, Stern & Adl Ansary, 2006).

Advertisements: People will be given flyers which will be copy of Facebook advertisements so that people are able to associate with it. In addition to it 3.5”x3” ad would be given in newspaper so that the reach can be increased. The mechanism will also look to have a banner in front of the mall so that people can be attracted (Duncan, 2008).

Sales Promotion: Different sales promotional techniques would be adopted like loyalty programs, additional discounts, having additional discounts for students between certain time, free samples would be distributed, popcorns bags especially printed would be provided with take away and similar strategies would be used to promote the business (Alvarez & Casielles, 2005).

• • Pricing:

The pricing mechanism which has been considered is a low pricing mechanism so that all people can afford it. Since, the degree of competition is very high and a high degree of substitute products are available so the business has looked to keep prices low. The pricing mechanism has looked to ensure that the cost for the business is covered (Kotler, 2003). The pricing of beverages has been set in a similar fashion so those customers also look to consume beverages along with popcorn so that business is able to garner additional sale.

• • Distribution Channel:

The organization looks to sell the products directly to the customers through their store. The business will have their own sales personnel who will look towards selling the products directly to the customers visiting the stores (Firoziyan, Hasangoli & Stiri, 2009). The purchase of different raw materials would be carried out through suppliers based on quality standards which they undertake. Reducing the role of middle man will help to keep prices low and would help them to be effective in carrying out their operations.

• • Operational Plan

The complete details regarding the manner in which the business will be executed is as follows

• • Production:

The business will look to procure raw materials from suppliers who ensure consistency in the products. The materials would undergo a test to ensure that it meets the required standards (Klemperer, 2007). Quality will be given stress on so that experience of customers is maximized and they are able to ensure safety while consuming it. The business would also ensure that very high inventory is not maintained. This is on the premise that fresh products and beverages can be procured and served to customers which would ensure freshness in taste (Clemons, 2008). The entire mechanism will be such that it would look towards maximum customer service and ensure better service standards.

• • Legal Environment:

The business looks to abide with the legal requirements and have got the required licence which is needed to carry out business. Some of the license which has been procured are trade license, food license, fire license and other government registration in relation to taxes (Daniel, Charls & Joseph 2003). The business has also got the required permits from the concerned agencies so that business can be carried out without any objection. To ensure safety of employees, employer, customer and society at large required measures in relation to health and safety is being followed. The business has installed fire extinguishers; look to provide regular training to employees and overall development of the system so that better use of resources and safety can be ensured (Czinkota & Ronkainen, 2004). Along with it the business looks to ensure insurance for buildings and other personnel so that in case of a mishap the person can be fairly compensated. The mechanism has thereby ensured that all the legal aspect are abided with.

• • Personnel:

The business would have around 10 employees which include a cook, waiter, cashier, store cleaner, store keeper and other person who will assist in carrying out the business. The skills which the employees require will be both skilled and unskilled. Based on the different business needs both type of people will be employed (Doole and Lowe, 2001). The employees will be hired from agencies so that employees are genuine and their authentication can be verified. The organization would also undertake training programs so that employees understand the manner in which they have to deal with customers, understands the product and other details which would help to improve business prospect (Brassington and Pettitt, 2001). The pay structure for the employees will be based on industry standards and would look at ensuring that the government requirements with regard to government agencies are followed.

• • Inventory:

The business will look to maintain minimum inventory and will procure fresh products from time to time. The process will help to ensure that minimum inventory is maintained and overall cost of products will be reduced (Cook & Dave, 2004). In addition to it the business would look to increase inventory during season time so that cost of procurement is low which would help to garner more profits in the future.

• • Suppliers:

The product will be procured from reputed suppliers who are into this trade for many years. Based on reputation and quality standards the business would look to choose the suppliers. Further, the business would look to pay the suppliers after fixed period of time which is presently applicable in the industry so that business is carried out based on industry standards (Awni, 2008). The overall process would thereby ensure better policies with the suppliers through which better relations with the suppliers is established.

• • Credit Policies:

The business would look to sell the its goods on both cash and credit basis. However, the credit basis will mainly be allowed for customers who buy in bulk and who have credit agreements with the business. For credit customers however, it will be expected that all monies owed at any given time are cleared within three months (Clegg & Walsh, 2004).

• • Management & Organisation

The entire business will be controlled by the proprietor and the funding for the business will be done by the proprietor itself. To ensure effective functioning the business would look to define roles and responsibilities to the different employees (Berkman & Gilson, 2001). Based on the business needs changes will be made from time to time to ensure better business functioning. The business would also look towards required support from different professional bodies if the need arises in the future (Chawla, 2003). The functioning mechanism will thereby look at ensuring maximum customer satisfaction and effective business functioning.

• • Financial plan

This section would look to provide details of the business and would help to explain whether the business would be profitable or not in the future. The details are as

• • Expected Future Sales

The business is expected to make the following sales in the first year

Popcorn

Mix In

Beverages

Total

Year 1

24,000

24,000

24,000

Price Per Unit

£4

£1.75

£3

Sales

£96,000

£42,000

£72000

£210,000

Variable Cost per Unit

£1.15

£0.6

£2

Contribution Margin per unit

£2.85

£1.15

£1

Contribution Margin

£68400

£27600

£24000

£120,000

The business is expected to grow at a rate of 20%. Keeping the cost the same the future expected sales would be as follows (Chen, 2003).

Popcorn

Mix In

Beverages

Year 1

24000

24000

24000

Year 2

28800

28800

28800

Year 3

34560

34560

34560

Year 4

41472

41472

41472

• • Profit & Loss Analysis

The following is the projected income statement for the first four years of operation

Year 1

£

Year 2

£

Year 3

£

Year 4

£

Sales Revenue

Cost of sales

Gross profit

Less expenses:

Rent

Insurance

Salaries

advertising

other expenses

Total expenses

Net profit

210000

90000

120000

15,000

12,000

21,000

6,000

18,000

72,000

48,000

260000

110000

150000

20,000

15,000

27,000

7,000

21,000

90,000

60,000

298000

123000

175000

24,000

18,000

30,000

8,000

25,000

105,000

70,000

335000

135,000

200,000

27,000

21,000

33,000

9,000

30,000

120,000

80,000

Owing to aggressive marketing as well as the high quality of our products and the fact that they will be sold at very fair prices, the business will be able to realise profit in the first year of operation. This shows that the business is feasible and would ensure high profitability over a longer period of time. The following graphs show the projected income for the company in £(Clemons, 2008)

c

• • Break Even Analysis

The business due to high fixed cost in the first year which includes setting up cost is able to ensure break even in the fourth year as seen below

Total Profit

£

Fixed Cost

£

Annual Profits

£

Break Even

£

120,000

50,000

48,000

72,000

150,000

60,000

60,000

90,000

175,000

60,000

70,000

120,000

200,000

60,000

80,000

135,000

The business is thereby able to ensure high profits from the first year and makes the business feasible if the business continues for 1year as the business will be able to cover all its cost (Shapiro, 2013). This will ensure that the business will be able to ensure steady growth and better revenues and profits in the future.

• • Back Up Plan

The business has also identified a backup plan where they would look to deal with contingencies if the need arises. The business has ensured that in case the business doesn’t goes as plan then the business would look towards additional offers and discounts so that more and more customers can be attracted. In addition to it the business would also look to market aggressively so that more and more customers can be attracted and better business can be ensured.

Just in case the above plan fails to succeed, the owner will implement the necessary business exit strategy that causes minimal damage to all stakeholders including the debtors and investors. This includes selling all equipment and merchandise in a bid to cover any outstanding debt. The owner will repay any remaining debts by way of monthly instalments to be agreed upon by the parties concerned.

The owner plans to monitor the success of the business on a monthly basis in the first year of its establishment and quarterly in the subsequent years. Thus, in case the business has not yet realized any profits by the end of the third year and if its cashflows are not yet positive at this time, the exit strategy will be implemented. Furthermore, if the business exceeds the acceptable levels of loss while not being able to pay any obligations, the process of winding up the business will start.