Feasibility Study of Mobile Pizza Trucks - Research Paper Example

? A Study into the Feasibility of Buck’s Mobile Pizza Truck This document is developed to provide the entrepreneur with potential investmentopportunities in setting up and operating a mobile vending restaurant offering variety of pizzas to the general public. This pre-feasibility gives an insight into various aspects of planning, setting up and operating a mobile vending restaurant for the general populace. The document is designed to provide relevant details (including technical) to facilitate the entrepreneur in making the decision by providing various technological as well as business alternatives. The document also allows flexibility to change various project parameters to suit the needs of the entrepreneur. Feasibility study is very important for a business. It makes an analysis of all the aspects of a business- the external factors influencing it and also the internal factors. It also analyzes all the costs associated with the project and how the material would be sourced. On the other hand, it will also make an estimate of how much sales are to be expected and what profits would the project make. If the results of the feasibility study are favorable, it is logical to proceed with it. On the other hand, if the results are not favorable no businessman will take a risk on it. Executive Summary 1.1 Background It has always been the researcher’s dream to open his own business-but what type of business he wasn’t sure about. At the end of his years long study in Business Management and Innovations he finally made up his mind-he wanted to run a pizza parlor that would give Papa John’s and Dominos Pizza a run for their money. The pizza industry is a very competitive market. However, in 2010 he decided to go forward with an idea that was brought forward to him by a very close friend-mobile pizza trucks. At first, it sounded like a typical and stupid idea, but when he actually thought about it; it might be just what New York needs-its favorite fast food on wheels. New York has vast amount pizzeria outlets to choose from with 75% of the market being privately owned and the remaining 25% of the market remaining to the franchising pizza making moguls such as Pizza Hut, Papa John’s and Domino’s. The researcher then decided to go into a partnership with someone else who has had extensive amount of experience in the pizza making industry-Jacob Miller. Both researchers decided to call the enterprise Buck’s Mobile Pizzas and their main aim was to bring a twist to the pizza industry. There will be a definite market for a mobile pizza restaurant as there is none in New York and there is a definite demand for pizzas in New York. 1.2 Product and Service Buck’s Mobile Pizzas is a newly established company scheduled to start operations on the 23rd of September 2011 out of the Bronx, New York. As the name suggests ‘Buck’s Mobile Pizzas has no set physical location or space to conduct business and it requires no land. Instead Buck’s Mobile is a customized truck known as the ‘Buck’s Mobile’ that is making America’s favorite deliciously tasting pizzas daily with the most succulent toppings such as; pepperoni pizza, triple meat pizza, Greek style pizza, caramelized onion, Hawaiian pizza, Chicago style pizza, Californian and Mexican style pizzas. Buck’s Pizzas understand and believe in the habits of eating healthy as such our pizzas are being made fresh with wholesome products including; imported cheeses, organic vegetables, and top-shelf meats. The product will also be developed to enhance presentation. Customer service will be Buck’s Pizzas primary priority because considering its current competition it is important to attract new but keep repeat customers. Buck’s Pizzas is appealing to a wide clientele through the use of its mobility, customer service and affordable pizzas. Buck’s mobility will sure give it an edge over its competitors. Buck’s mobility will make the possibilities endless when gaining market share. The Buck’s mobile will be there to take care of the burning hunger of the people at a local basket ball game, at the park, the beach and everywhere else in and around New York. As a customer you don’t have to worry about coming to Buck-Buck’s is coming to you! 1.3 Technology Buck’s mobile pizzas depend heavily on technology. First up, the company operates from a ford truck which was extensively customized to look like a professional kitchen with ‘hot food truck outfitting’. It was also customized with state of the art ovens and freezers. Earlier trends made and prevailing marketing trends shows a huge market potential. There is a lack in outstanding quality in the niche market where the business will operate. Buck’s target market is set to cover all pizza lovers; by-standers and passer-bys and people utilizing recreational places such as parks and basket ball courts. Through the major cities of New York, no mobile pizza trucks are known. Being the first will certainly generate publicity. It is then our responsibility to generate that publicity into sales. The pizza industry is a very competitive industry with Papa John’s, Domino’s Pizzas and Pizza Hut accounting for majority of the market share across the US. Buck’s mobile pizzas will position itself as a reasonably priced upscale pizza platter. Buck’s mobile pizzas positioning will leverage competitive edge. Table of Contents Title Page Executive Summary Background Information………………………………………………………1.1 Product and Service……………………………………………………. .……1.2 Technology………………………………………………………………..…..1.3 Marketing and Industry Analysis………………………………………………7 -Objectives -Origin of Pizzas -Pizza size and market value -Target Market -Competition -Marketing Strategies (i) Product sampling as a marketing strategy (ii) Print and Media Advertising -Financial Feasibility………………………………………………………… 11 -Cost Analysis -Sourcing startup capital -Potential for returns for investors -Conclusion Marketing and Industry Analysis Objectives Buck’s Mobile Pizzas marketing objectives include generating 75% of sales in the first quarter of the fiscal year, attracting a wide clientele base, capitalizing on our competitor’s strengths and making their weaknesses our strengths and gaining at least 5% of the market share at the end of the fiscal year. Origin of Pizza Pizza arrived to the inner cities of the United States, New York and Chicago most notably, in the early 1900s, thanks to the large population of Italian immigrants.  The popularity of pizza then grew with the returning of GI’s to the US after being stationed in Italy during World War II. They brought home a demand for the pizza they had enjoyed in Italy and thus began the mainstreaming of pizza into American society. Between 1945 and 1960, pizzerias began opening all over the country. Demographics At that time, pizza restaurants were individually-owned stores, but the proliferation of chains changed this. Pizza Hut started in Wichita, Kansas, in 1958 and now has over 7,500 units in the US; Domino's started in 1960, also in Michigan and now has over 5,000 units in the US and Papa John's opened in 1989 in Indiana. Little Caesars emerged in 1959 in Michigan and now has over 2,500 units. It now has nearly 3,000 units in the US. Pizza is enjoyed by people from all walks of life and eating out at restaurants is an essential part of the American lifestyle. Pizza size and market value The pizza segment of the food industry represents 11.7% of all restaurants and accounts for more than 10% of all foodservice sales. Between June 2008 and June 2009 the US pizza industry recorded nearly $37 billion in sales. According to “Pizza Power”, PMQ magazine’s (Pizza Marketing Quarterly) Annual Industry Analysis, of the 67,554 pizza stores in the US, 59% are independently-owned and control 51% of total pizza sales. Franchises and chains account for 41% of the market and for nearly half the sales. Target Market According to a survey completed by Mintel, 93% of New Yorkers eat at least one pizza per month and 21% of 18 – 24 year olds purchase pizza more than three times per month. This is compared to only 7% of those aged over 65 eating at least one pizza per month. Pizza also proved popular with parents. About 20% of the parents surveyed said that they purchase pizza more than three times per month, compared to 12% of adults with no children. However, Buck’s main target market aims at places where numbers of people usually congregate such as; beaches, recreational parks or even a local basketball game. Competition Buck’s main competitors include; independently owned pizzerias around New York, Pizza Hut, Domino’s Pizza, Papa John’s and Little Caesar. Pizza Hut, the biggest competitor in the industry accounts for 14% of the market share. With 53 years in the industry they manage to operate over 12 000 outlets in over 84 countries. The main components of Pizza Hut include its products and the range of the products; different pizzas with diverse toppings, pasta salads and sandwiches. Presently Pizza Hut has partnered with various companies one of which is Pepsi co. Its main competitive edge is its various partnerships and franchising opportunities. Its main strengths may be described as its product and its brand. Another strength that may give it competitive advantage is its full service restaurant as well as their delivery services. Therefore, they can market to segments Buck’s Mobile Pizzas cannot. For example, Pizza Hut can market better to families than Buck’s Mobile Pizzas because they offer a conversational type restaurant where families can take their families for even a birthday party. However, this can also act as a weakness for Pizza Hut, because they have higher overhead costs, which Buck’s will not have to charge; as such Pizza Hut have to charge higher for their pizzas. Therefore, Pizza Hut is not a low cost producer. Pizza Hut’s advertising mediums include; print, media and online and advertising strategies include; drafting more innovative recipes for pizza, re-branding and some amount of sponsoring. Comparative to Pizza Hut, Domino’s accounts for 8% of the industry behind Pizza Hut and holds its place as the second largest in the industry. Like Pizza Hut, Domino’s Pizza just over five decades in the industry. Domino’s business model focused mainly on delivery service which worked well for their premier demographical area. Today Domino’s is offering franchising opportunities with over 8, 000 store locations worldwide. Marketing Strategy Prior to opening Buck’s Mobile Pizzas, the end products will be extensively advertised. For a product of this nature, the most effective marketing strategies include; product sampling, print and media advertising. Product Sampling as a marketing strategy Product sampling may be defined as the process where the customers get to sample /test new products free of cost. It’s a strategy used by companies to attract new customers and influence buying habits. Product sampling reaches 70 million consumers every quarter, and one-third of customers who try a sample will buy the sampled product in the same shopping trip (Product Sampling Study by Arbitron and Edison Media Research Reports). Sampling is seen as an effective way of promoting a product and increasing its sales. Results are seen very fast in this way of promotion. Either the user would like the product or would dislike it. But company can know the reaction, at least, in no time. In other forms of advertising, there is long period of wait, after which, results appear. Print and Media Advertising Another effective way of advertising the product is through print and media advertising. This form of advertising is guaranteed to reach a larger audience. This type of media has a very loyal populace and can be very advantageous for a new company compared to other methods. In this since we are targeting a particular demographical area; one of the most suitable print media to use is the New York Times Financial Feasibility Cost Analysis The main cost components of Buck’s Mobile Pizzas include; a mobile vending truck, ingredients, fuel and appropriate tools such as cookware. Purchasing of a customized mobile vending truck starts at 97 000 USD. This truck is customized with the latest technology, state of the art ovens, mini freezers and marble surfaces. This mobile vending machine was designed with presentation in mind. The Buck Mobile in the first quarter will start operations in Queens, New York. Judging from its population make-up, this company will certainly get a kick start. Fuel is another essential part of the business’s normal operation for which price is constantly fluctuative. Then there is ingredients needed to make the product. Ingredients include; dough, cheese, organic vegetables, seasoning and top shelf meats. All these necessities can be roughly estimated to cost $2000 USD for quality products for the first quarter. Probably one of the most important requirements for the business has to be advertising. For starters, we will approach advertising through print, media and sampling of the product. Progressing into the second quarter we will consider possible expansions. In total the startup capital required can be estimated at $104,000. For the first month, the researchers will volunteer their time into getting this business of the ground. Sourcing Startup Capital Sourcing start-up capital for a small business is among the most daunting tasks for a new entrepreneur. In this case, the researcher has already sourced half the required startup capital and is relying on potential investors or a pending bank loan to cover the remaining 50% of the startup capital upon the completion of this research. Potential for returns for investors The required startup capital was 106, 000. For the first quarter of the fiscal year; it is our main objective to generate this amount with a profit. Keeping in mind that the business will begin operations in Queens with its target audience being people utilizing recreational facilities such as parks, beaches etc we should be able to do just that. Our main competitors charge an average 5.99 for their pizzas. In order to create competitive advantage all of Buck’s Pizza is just $4.99. We will be making a minimum of 300 pizzas per day. The quantity of the pizzas made per month multiplied by the cost per pizza should yield the starting the capital at the end of the first quarter with a return on the investment being 21%. Conclusion Buck’s Mobile Pizzas is set to begin corporations in Queens, New York after the completion of its feasibility study. The demand for fast food in New York especially pizzas is overwhelming. Travelling along the streets of Manhattan and Queens you can see scores of people lined up outside local pizza outlets. There is definitely a market niche present; therefore the idea of serving New York’s delicacy was born. A feasibility study was conducted description, technology needed, marketing and industry analysis and cost analysis. The startup capital was estimated and the results proved that the investment can be generated by the end of the first quarter. References How to do a feasibility study (Feb. 10, 2011) retrieved from http://www.ehow.com/how_2002414_conduct-feasibility-study.html Nair, Tulika, (Feb 25, 2010) Executive Summary Template, buzzle.com, retrieved from http://www.buzzle.com/articles/executive-summary-template.html Pizza Franchise Report (2010) retrieved from http://www.franchisedirect.com/foodfranchises/pizzafranchises/pizzafranchiseindustryreport20101/80/275 Writing s feasibility study (n.d.) retrieved from: http://nfsmi.org/documentlibraryfiles/PDF/20080212032917.pdf Read More