Restaurant and Marketing - Business Plan Example

Business Plan Contents Contents 2 Business idea 4 Market 4 Market size 4 Market segment 5 Main competitors 5 Strengths 5 Weaknesses 6 Differentiation from the competitors 7 Research 7 Primary research 7 Secondary research 7 Legal structure 8 Location 8 Human resource 8 Number of employees 8 Job title and daily responsibilities 8 Finance 9 List of start-up costs 9 Fixed and variable costs 9 Budget 10 Financial forecast 10 Break even chart 10 Cash flow forecast 11 SWOT analysis 11 Appendix 14 Figure 1 14 Table 2 14 Research 15 Questionnaire 15 Business idea Restaurant business is a lucrative business for many entrepreneurs. Opening up a restaurant business is a dream comes true for entrepreneurs, but at the same time it is one of the most capital intensive enterprises. Nowadays more number of consumers now wants to go out and have food outside. The name of the company whose business plan is to be made is Foodies. Foodies started its operation recently in 2014 and has since then been successful. The company has strong shared cultural values. The founders of the company recognized the importance of serving good quality meal to people across the country. After starting its operation in Thames UK, Foodies started expanding its business across rest of UK. The company is a family-style restaurant where the customers come, order and eat food. Foodies will serve fast food and drinks. These will include cheeseburgers, fries, hamburgers, sodas, chicken nuggets, fires and shakes. It will serve children meals and breakfast items. Previously Foodies didn’t have the system of home delivery. Foodies is now aiming at introducing delivery service for the customers so that the revenue for the company can be increased. This report will discuss about the business plan of Foodies so that the company can launch the delivery service. Market Market size The fast food industry of UK is increasing at an astonishing rate. The fast food chains have grown better than the independents with the former having achieved revenue growth by almost 2% in 2012 resulting in value of £ 6.9 billion. The similar growth was achieved in the volume of transactions and number of outlets opened which also increased by around 1%. McDonald’s is the market leader in UK fast food market which accounts for around one-third of the revenue size in 2012, while it ranked third in terms of the number of outlets. The revenue of McDonald’s has risen by 2% in 2012. With the economic downturn the fast food market in UK is expected to remain challenging with decline of disposable incomes of the general public. The revenue earned by the fast food industry in 2013 is £ 5 billion with an annual growth rate of 1.7% from 2009-2014. Market segment The market segment of Foodies is basically Teenagers, Children, a Parent with two children and business customers. The Teenagers will be attracted by the Saver Menu which is affordable to them where they can do internet surfing, Parents who are looking for giving children treat, Children who want to visit Foodies for a fun place to eat. Foodies can tailor their communication so as to meet the needs of the specific groups. Taking into consideration the needs of the customers, Foodies will determine the type of product and services which is to be offered to them along with other key features like promotions to be created, prices to be charged and the location of the restaurants. Thus it will lead to creation of the marketing strategy so as to meet the needs of the market (Abrams and Abrams 71). Main competitors The main competitors of Foodies are McDonald’s, Doctor’s Associates, Inc., Yum! Brands, Inc., Wendy’s International, Inc., Burger King Corporation and Domino’s Inc. The market leader is McDonald’s Corporation and hence Foodies should look to build brand so as to gain market share (Pinson 96). Strengths The product for Foodies is the menu items which are to be offered to the customers. There is a variety of choice available to the customers with respect to how the customers are willing to spend their money. Foodies place more emphasis on developing their menu for their customers as per their needs. Foodies have to change the menu according to the customer requirements because what is attractive as fashionable today may be discarded tomorrow. Hence Foodies will continuously monitor the customers’ preferences (Doole and Lowe 211). Promotions are another strong point of Foodies. Foodies will use advertising to promote their brand. They will use radio, TV, online, in cinema, press, magazines, newspaper and other mediums to promote their brand. The main distinguishing point is that here the media owners are to be paid before the advertiser can use the media space. Foodies also have other promotional strategies like direct mail, merchandising, seminars, exhibitions, telemarketing, door drops, loyalty schemes, demonstrations and sale display (Schlosser 91). Weaknesses Price is one of the major weak points for Foodies. Instead of the actual cost, the customer’s perception of the value of the item is more important for the price to be charge. Thus customers need to draw their own mental picture of the worth of the product. Such kinds of products are more than the physical item which the customers consume. The Products include psychological connotations for the customers. Being a start-up business, Foodies has to use penetration marketing strategy so as to capture market share. But using low price as the marketing strategy may make the customers feel that the low price means that the quality is being compromised. Thus Foodies need to be fully aware of their integrity and their brand before deciding on the price (Tull, 183). Place is not just about distribution points or physical location for the products. It also includes managing the rage of processes which is involved in bringing the products to the customers. Foodie being a start-up company has to spend huge amount of money on distribution points for the product which is used by its competitors. Differentiation from the competitors Foodie will have to make their store efficient and keep their daily operational costs low. By doing this, their stores will be superior to other competitors so that they can serve people food at lower costs. Another advantage is to make speedy deliver of their orders both within store and in the home. So that they must make the processes of cooking their food as simple as possible to the employees, so that it is easy for them to learn and thus the failure rate is kept low. Research Primary research Primary research includes list of questionnaire which were asked to consumers in a restaurant of Foodies. There were five questions asked about the buying behavior of the consumers. Responses were collected from around 100 customers who included persons of all ages. After doing the research it was seen that the customers knew about Foodies as being new restaurant business which is to offer them fast food similar to MacDonald’s. Nowadays most of the consumers like to have soft drinks, kid’s meal and other new kinds of menus. Along with quality food the ambience of the store is also important (Curtis 5). Secondary research Secondary research includes taking data from annual report, their official page, magazines etc. (McDonald’s 7). Legal structure The legal structure of Foodies is Sole Trader. A sole trader is one who has full control over the business and how it will be run. Being a start-up company Foodies has to formulate strategies and change it according to the changing environment. Hence it must be quick to response and implement it companywide. Initially any profit which it earned by the company will be retained by it. Also being in a specialist business where it needs to develop products to satisfy the customer, the company has to take decisions after being thorough over the product. Also being a sole trader there will be no need to listen to other decision makers and thus take decisions quickly (Dealtry 152). Location Location of the first restaurant of Foodies is in Thames. Thames is ideal since it is a famous place and it is connected by major rail and road. It makes it an ideal for the company to increase its sales and make it known to new customers (Armstrong 142). Human resource Number of employees Foodies need to employ around 10 employees while opening up their first store. These include restaurant manager, business manager, crew member, HR department, and Marketing department. Job title and daily responsibilities Fast food manager will be responsible for maintain the profitability and operations for the outlet. He will be managing the day to day responsibilities of the store and making sure that all aspects of customer service are maintained. For this role the manger must have experience of previously working in a fast food chain with experience of latest 2 years so as to handle such kind of pressure daily. He will employed full time in the store. The Wage of the Fast food manager is £ 30,000 per annum. The Business manager will be responsible for providing the motivational leadership to the entire restaurant team and making sure that the business is kept financially strong. Generally they will manage a team of around 20 employees and will have 4 stores under his command. He will be employed full time by the company. They need to have a job experience in similar field of at least 4 years. The Wage of business manager is £ 20,000 per annum. The role of crew member is to deliver good customers experience every time they visit. They will be on a contractual basis so that the cost of wage can be reduced. The Wage is £ 61 per hour. The contract is renewed every year. Finance Foodies have used long term debt mostly to finance its operation since the company is in expansion mode and hence it needs term loan to run its expansion. List of start-up costs List of start-up costs are separated into variable and fixed costs. Fixed and variable costs The Fixed costs include Wages, Stock, Insurance, Printing & Stationary, Electricity Bills, Advertising and Promotions, Council Tax. The variable Cost includes Raw Materials, Wages and Salaries and Other Operating Costs. Budget In Year 1 the number of customer arrivals per day is 12 which go to 13 in year 2 and decreased to 12 in year 3. The Average Price per order is 25 in Year 1, 28 in Year 2 and 26 and Year 212. From that the annual sales is calculated and the average units sold per day comes out to be 300 in Year 1, 373 in Year 2 and 323 in Year 3. Financial forecast Break even chart Break Even Point Total Fixed Cost (A) 77975 Sales (C) 109500 Gross Profit (B) 87,475 Contribution Margin 80% Break Even Sales(pound) 97608 Break Even Time (year) 0.7 Breakeven Unit 3904 Form the above table it is seen that Breakeven for Foodies is achieved at 3904 units. The company is able to achieve breakeven in the first year within 7 months itself and the total amount of breakeven revenue earned by the company is £97608. Cash flow forecast The Net cash from Operations is increasing from year1 to year 2 and then it fell in the third year. This shows that the company is earned healthy amount of cash from its operations which is decreasing in the third year. Thus Foodies needs to improve on their operations so as to improve the cash from it. Net cash from investment is in the negative zone for all the three years. This shows that the company is losing money by making investment and hence needs to invest it in profitable ventures. The Net cash from financing activities is decreasing for three consecutive years and in the third year it is negative. This shows that more cash is flowing out than it is flowing into of the company in the third year (Plewa and George 151). SWOT analysis Strengths of Foodies will be the variety of products which will be delivered to the customers. The range of products offered will create a brand name itself. They will adapt their food menus as per the change in customer preference. They will mainly target children and families which is easier to persuade. The weakness which Foodies face is that being a new brand they will have to spend huge amount on the advertising part. Hence they need to make their brand known across UK. Initially they will not be able to go for large differentiation, together with high employee turnover. Also unhealthy foods are another weakness of them. Opportunities include that the fast food industry is growing with strong demand for such foods with fast pace lifestyle. The teenagers are the main target who is looking to have a quick grab and chill out. Home meal delivery is another opportunities which they can use to expand their reach in the market. Ability to change their food menus according to the changing consumer preferences will increase their brand presence. Threats include the decline in the Eurozone which have affected the developed economies. Hence the disposable incomes are declining. Trend of individuals towards healthy food can affect their revenue. Works Cited Curtis, Kynda. Conducting Market Research Using Primary Data. Aug. 2006. Web. 10 Feb 2014. Pinson, Linda. Anatomy of a Business Plan: The Step-by-step Guide to Building Your Business and Securing Your Companys Future . New York: aka associates, 2008. Print. Abrams, Rhonda and Rhonda, Abrams. The Successful Business Plan: Secrets & Strategies. New York: The Planning Shop, 2003. Print. Doole, Isobel and Robin, Lowe. International Marketing Strategy: Analysis, Development and Implementation. Mason: Cengage Learning, 2008. Print. Schlosser, Eric. Fast Food Nation: The Dark Side of the All-American Meal. London: Houghton Mifflin Harcourt, 2012. Print. Tull, Anita. Food and Nutrition. London: Oxford University Press, 1996. Print. Dealtry, Richard. Dynamic SWOT Analysis: Developers Guide. London: Dynamic SWOT Associates, 1992. Print. Armstrong, Michael. A Handbook of Human Resource Management Practice. New Delhi: Kogan Page Publishers, 2006. Print. Plewa, Franklin, and Friedlob, George. Understanding Cash Flow. New Jersey: John Wiley & Sons, 2001. Print. McDonald’s. Marketing at McDonald’s. Sep 2012. Web. 10 Feb 2014. Appendix Figure 1 Particulars Year 1 Year 2 Year 3 Total Revenues 109500 132495 117764.969 Cost of Sales 22025 24227.5 23016.125 Gross Profit 87475 108267.5 94748.8438         Salaries & Wages 25300 27830 26439 Depreciation 5000 5500 5225 Business Insurance 17000 18700 17765 Employee Health Insurance 12675 13943 13245 EMI on Bank Loan 18000 19800 18810 Total Operating Costs/ Fixed Cost 77975 85773 81484         Operating Profit 9500 22495 13265         Taxes @ 9% 855 2025 1194 Net Profit 8,645 20,470 12,071 Table 2 CASH FLOW Particulars Year 1 Year 2 Year 3 Cash Flow from Operating Activities:       Net Income 8,645 20,470 12,071 Add: Depreciation 5000 5500 5225 Net Cash from Operations (1) 13645 25970 17296         Cash Flow from Investing Activities:       Capital Expenditure 12000 9000 12400 Net Cash from Investments (2) -12000 -9000 -12400         Cash Flow from Financing Activities:       Borrowings 20000 9000 3000 Repayments 2000 4000 4000 Net Cash from Financing (3) 18000 5000 -1000         Net Cash Flow (1)+(2)+(3) 19645 21970 3896 Research Questionnaire What do you know about Foodies? What kind of menu do you like in Foodies? How often do you go to eat out? What kind of menus should be there for Kids? How do you feel while arriving at any store of Foodies? Read More