Organic Food Restaurant Market in Dublin - Research Proposal Example

Organic Food Restaurant Market in Dublin Executive Summary Nora and Brandon are couples interested in organic food and green living. They are involved with the food industry directly as Nora manages a farm and Brandon is a certified Chef. Years of experimenting with food have made Brandon a master in creating organic desserts. The couple have decided to open up an Organic food Restaurant in the Southern part of Dublin. They have decided to sell Brandon's trademark items like flavoured whipped cream toppings in the restaurant. The restaurant will feature several organic food items prepared freshly every day. They hope to develop their restaurant chain similar to Pret-A-Manger some day. They will serve freshly roasted coffee, traditional British breakfast made up of organic products grown in their farm, packed vegetarian and non-vegetarian snacks as well as a fully fledged lunch. They will serve special weight loss and weight gain lunch packages which will show enormous health benefits if consumed constantly for a particular period of time. The restaurant will take up outdoor catering for parties and weddings featuring more than 18 varieties of their signature recipes all made up of organic food items grown without any fertilizers or chemical enhancers. Financial analysis guarantees that the company can expect a 10.88% return on equity from the first year of their inception. Background and History The organic food industry is growing at a rate of 8% per year globally transacting over £ 44.5 Billion in UK alone. People in Europe are more concerned about consuming safe food. Nora and Brandon have ample experience in growing organic food and using it to prepare tasty and healthy recipes. They have perfected their skills over years and have decided to start their own firm instead of working for others. Their aim is to earn good profit by providing quality organic food products to the customers through their restaurant. Goals of the Business The main objective behind setting up the Yummy Green Restaurant is to create an interest about the organic food products among the public. There is a general notion that organic food will be costly and not very tasty. The restaurant aims to break that myth by serving affordable and tasty yet healthy food to their customers. They also aim in selling a plethora of organic food assortments to the public through their restaurant stores. Objectives of the Business plan Starting a business is quite easy. Any person can do the same with good inspiration. A good idea is the base of any successful business. The idea can be prompted either by inspirational factors (Ashton, 2007, p 7). Several people have gathered ideas and inspirations from very simple things. For example, Mark, who runs a successful business supplying plastic crates to home movers, got the idea inspired by his wives comments in a supermarket. The couple had broken some of their precious wedding gifts while moving and they felt using customised plastic crates while moving would have avoided the loss. This simple idea made Mark and entrepreneur. But, it is a good business plan which made their business a success. Business plan is defined as the yardstick with which any successful businessmen measure the value of their work (McDonald, S. and Hawkins, D, 2012). A good business plan sets target for every quarter and the business people compare their achievements with the target set to determine whether the business is profitable or not. The target set in the business plan can be revised if necessary. It can be set up with the help of trained executives or a business consultancy company. A business plan is defined as the "road map" of any business as it is a blueprint upon which the business will be built step by step. Yummy Green Restaurant’s Business plan will focus on the financial projections of the project including the income statement, the cash flow analysis and the various financial ratios. It will clearly state how the capital for the project will be gained, what is the estimated sale and the contingency plans in hand to overcome any unexpected losses. The plan will also carry out a detailed marketing analysis and the list out the various marketing strategies it will follow to obtain the sales target. Description of the Products and Services The Yummy Green Restaurant will sell nearly 18 products including flavoured whipped creams, tasty salads with a shelf life of two to three days, organic snacks like peanut bars which will help increase weight, diabetic special sweets using natural fruit extracts instead of artificial sweeteners and a plethora of fresh non-veg items. The non-veg items are usually served fresh and the remaining are given out each day to the homeless in the area. Parcelled breakfast, lunches and dinners are also available. All the products can be purchased at the stores which are present inside the Yummy Green restaurant. The restaurant will make eating organic food a fun experience rather than a tasteless one. On stage cooking shows will conducted every evening in certain halls. Experienced chefs will cook various recipes in front of the customers. They will do it like skilful showmen sculpting the food items into humorous and artistic shapes and figures. For example, a garlic chilli tea cup will accompany the green tea served to the customers. Booklets regarding natural cooking will be supplied to all the customers. The organic food sold in the restaurant store will be easy to cook, colourful and much tastier than the fast food items. They are made into the form of bars and packet items for the sake of easy transport. Yummy Green restaurant’s fine dining experience will convert fast food lovers into organic food lovers in no time. Market Assessment for Organic Food Restaurant UK is one of the largest organic food markets in Europe. According to soil association, organic food sales through caterers and restaurants has increased by 2.4 % in 2011 and the value of organic restaurant in catering sector in estimated to be around £ 15.7 million. Though the market is relatively new, it has enormous potential to grow into a major industry in the next few years in spite of several odds. Product Segment and Consumer Demographics The major target customers for the restaurant are senior citizens with problems like diabetes; families with children, young executives aged 25 to 45 who are quite health conscious and travellers who visit the area for business and pleasure. They want something which do not affect their stomach and pleasant to eat during their stay and Yummy Green offers exactly the same. The restaurant aims in serving the general population of the locals. But they also depend on the tourists highly as they are situated in the main highway of the Dublin City frequented by several travellers. Competition Assessment of the Organic Food Restaurant Market SWOT Analysis Strength: The main strength of these food items is that they are well marketed as something special and healthy. Disrupting Chemicals which are found in vegetables and fruits send wrong messages to the hormonal system on consumption which eventually disturbs the function of the body causing several hormonal imbalances, diseases like diabetes, breast cancer, obesity, infertility and mental problems commonly prevalent in the society today. The increasing health frenzy and awareness about the natural food is a great opportunity for them to earn good profits. Weakness: There is several organic food serving restaurants in UK. But, most of them are concentrated around major cities like London. Cities like Dublin have either one or two major organic food stores like Pret-A-Manger catering the massive needs of all its habitants. The main weakness of the organic food products is that they taste nearly the same and are virtually unattractive. They lack variety and most of them are not portable to eat in offices or while commuting like grabbing a burger or a coke. Opportunity: These products can be found virtually in all retail stores. But, not all of them have good quality or claim to deliver what they promise. The whipped cream toppings in various flavours are usually priced at $1.29-1.89 per 8-ounce per tub or can. The organic salads, peanut snacks and natural drinks are also priced similarly. Any person providing quality organic food with extra shelf life and good taste has an opportunity to make it big in the market provided they are consistent in quality and are ready to spend a lot for marketing. Threats: The ever growing fast food and pastry market is the greatest threat to the industry. Marketing Strategies to be implemented 1. Creating an attractive logo and amazing label for all their labels is the first step in marketing. 2. Yummy Green promotes itself in several clubs and health organizations in addition to mainstream media through their logo and adds. 3. They showcase themselves as the tastiest organic food producers in the area. 4. They offer up to 30% discount for outdoor catering orders which requires food serving for more than 15 people. They advertise their snacks in the schools and universities of the area as healthy and tasty organic food products. They give sample packets to the students and offer them discounts if they buy snacks from them for more than 5 times in a row. Product Pricing Strategy The restaurant will provide fine dining experience to most of its customers. Family dining experience with ample entertainment is their motto. However, they have specially designed rooms in the garden for a romantic evening and wild rooms where groups of friends can party wild. Each setting has a different cost, priced competitively with the other restaurants in the area. Facility Requirement The Yummy Green restaurant is located on the main highway of the city, as it serves as a lifeline connecting most of the city’s major areas. The restaurant will contain 30 seats for family dining, 30 seats in the garden for romantic evenings and 6 parlours for group activities. The parlours can be combined together to form a large hall for parties. The restaurant can easily hold 200 to 250 people at a time. Operations Description It will operate every day from morning 6.00 AM till 12.00 AM at night. The restaurant will have a city business licence. 30% of the staff is Brandon's friends who have agreed to work under him. The rest will be hired from catering colleges. Brandon insists on having a group of young people whom he wishes to train and promote to other branches he plans to set up soon. Management Policies All employees will be given very good training regarding high customer service and the most efficient means to produce great food in quick way. Spreadsheets regarding day to day sales will be maintained by the manager. Money to the suppliers will be settled every weekend. An inventory of around $8000 is expected to be transacted every day. Plans to Set Up the Restaurant Nora and Brandon have selected the best available place in the market for their restaurant. They have leased the area for three years at a time from the owners paying their life time savings. They have planned to approach a bank to lend them a loan for the operating cost of the restaurant. They have also thought about raising venture capital and talked to various financiers regarding the same. The whole restaurant will use only green products from its packages to tables and cleaning products. They have decided to use the recycled products from their farm to create artistic products to place as centrepieces and decorative items. They have talked to a creative company regarding the same. Making the products unique from other competitors will increase its price value (Wickham, 2006). Controlling the main resource of the business like the farmland is viewed upon as a great strategy to gain a competitive edge over others in the market (Harford, 2006). Yummy Green restaurant has that competitive edge over others in the market. Nora controls a huge farm which manufactures most of the requisites necessary for preparing the organic food in the restaurant. So, the restaurant can price its goods much lower than others. Nora and Brandon have approached a business consultancy to help them prepare a detailed Pro Forma financial analysis. Organizational Structure A strong management team will be created with venture capital providers as the main stakeholders. Nora will serve as the Chairman of the company wile Brandon will be its official CEO and head chef. A general manager who will take care of all the operations will be appointed. A restaurant supervisor will act as his assistant. Three more chefs will work with Brandon with ten more assistants. The hotel will have nearly 20 waiters, 10 hosts to seat the customers, manage bookings etc, 10 cleaners, an accountant, a receptionist and three people working in the food items selling store. The Chefs will be paid around $1800 a month while all others will e paid around $5 to $8 per hour. All the employees working in the Yummy Green will be selected after careful screening. They will work as permanent employees for the company full time. The company guarantees a rise every six months based on their performance. They are entitled to all the benefits a permanent worker generally receives. The manager and his assistant will take care of the marketing and promotional policies with Brandon's approval. They occasionally use third party companies to design and implement these campaigns. Pro Forma Financial Analysis It is said that economies have flourished from time immemorial only by turning unprized work into priced work which can actually be counted (Handy, 1995). We have to turn activity into jobs to create a financial value for the work we do. The work can be done either by the owner of the store or the employees. The amount set aside for the work done creates as value for the labour or work we do (Deakins and Freel, 2005). The projected annual sales for the first year are estimated to be $15,085.00. $35, 686.00 net incomes with a 10% increase in sales is expected for the second year and $46,821.60 for the third year. This the net income calculated after paying the tax and deducting all the operational cost of the restaurant. 50% of the estimated cost of the project will be invested by the couple Nora and Brandon. A bank loan covering nearly 30% of the project will and the remaining 20% finance will be raised through venture capital. A simple requirement for any venture capital deal is that it should be less risky (Bloomfield, 2008). Since, there is very high demand for organic food, several venture capitalists will come forward to lend their help in setting up the restaurant. Procuring employees at a reasonable salary is the next major step which will consume most of the finances (Timmons and Spinelli, 2008). The lead manager is expected to act like partner sharing the profits in this project. They cannot draw their salary if there is a major loss in the company. Income Statement for Three Years Balance Sheet Pro Forma Balance Sheet Pro Forma Financial Rations December 31, 2013 Contingency Plans A 10% negative deviation can occur in the profit and sales of the products at any given year. However, proper contingency plans should be implemented if the deviation in more and the ROI or return on investment in less than 90% of the estimated projection (Carter & Jones-Evans, 2006). Here is a brief description of the contingency plans for Yummy Green Restaurant. Low sales during the first year: Increased in-store promotions will target youngsters as well as regular visitors with more discounts. If the sales do on increase in the next quarter, the advertising strategy will be reformed and cost cutting operations will be launched. Promotions will be made during peak shopping hours and target customers will be surveyed regarding their opinion on what is lacking in the restaurant. The managers and the owner will cease to take any profit or salary until the business starts running on a profitable note. Low sales in the second year: The business will analyze the market for new competitors. They will introduce new flavours in the food. A wider audience group will be targeted. If the sales do not increase, new marketing and pricing strategies will be devised to tackle the increasing competition. Business liquidity: If there have been unnecessary expenses like sudden price hike of food products, strikes or accidents in the restaurant, suitable insurance claims will be used to overcome the sudden expenses. Any issue with the promise cash flow from financiers will be dealt more efficiently. If necessary, loan will be obtained on the personal assets of the owners to manage the loss. Low returns on equity: If ROI is very low the price of the products will be increased slightly. The amount spent for ad campaigns and promotional activities will be controlled and more efficient means of operations with minimum staff will be encouraged. Alternate means of promotions like free online ads, free social media campaign will be launched. The suppliers will be requested to provide discount on certain items. New innovative dishes with less production cost will be served. However precise the business plan is, there are some unavoidable risks encountered in the business. For example bad debt can occur at one time or another in the three estimated years. The projected bad debt amount is expected to be somewhere around 900. The advertising and marketing costs might go up at any time depending on the industry trend. Managing a close balance between the ROI and the cost incurred for advertising is a tedious task. Sales are expected to increase 10% by every year. The operational costs also will increase by nearly 4% every year as the employee’s salary should be raised regularly. The estimated tax amount might vary depending upon the various new laws. The company might be required to purchase new licenses in addition to the existing city business license. There might be a 3% increase in the license costs, insurance costs and the other miscellaneous expenses costs by the end of the third year. Key Features of the Business Plan John Kay (2010) said "actions are associated with momentary feelings". This business plan is set up based on the momentary assumptions. Care is taken to ensure it covers all high level objectives, long term and short term goals as well as all the basic actions which are necessary to start a business. If followed properly, the plan will earn massive profits even if the depreciation value differs slightly. References 1. McDonald, S. and Hawkins, D. (eds). 2012. Enterprise and Entrepreneurial Management. Harlow: Pearsons. 2. Bloomfield, S (2008); Venture Capital Funding; Kogan Page; 3. Ashton, R. (2007) The Entrepreneur’s Book of Checklists, Prentice Hall 4. Carter, S and Jones-Evans, D. (2006) Enterprise and Small Business: Principles, Policy and Practice, 3rd ed Financial Times, Prentice Hall. 5. Deakins, D. and Freel, M. (2005) Entrepreneurship and Small Firms 4th ed McGraw-Hill 6. Handy C (1995) The Empty Raincoat Random House 7. Harford T (2006) The Undercover Economist Abacus 8. Kay J (2010) Obliquity Profile Books 9. Timmons, J. and Spinelli, S. (2008) New Venture Creation: Entrepreneurship for the 21st Century, McGraw-Hill 10. Wickham, A. (2006) Strategic Entrepreneurship, 3rd ed. Pearson. Read More