Business Plan of Student Fast Food - Essay Example

xxxx Business    Topic: Business Plan Fast Food Restaurant 28 April, FAST FOOD I. EXECUTIVE SUMMARY This business plan has been made after making a comprehensive research and evaluating a variety of issues concerning fast food restaurant industry in UK. The main purpose and scope of this plan is to provide particular information about the industry and to highlight the critical areas for successful launching of a new fast food restaurant in Cambridge. The data discussed in this business plan is based on some certain facts and has been collected through number of sources. A careful attempt has been made to present real time data, however, this information may change at any time due to occurrence of any changes in the target market, and thus the actual outcomes may differ from the projected results. II. INTRODUCTION Student Fast Food (SFF) is a small fast food outlet, working in Cambridge for five years, and now intends to transform itself into a proper pizza hut by means of innovative and resourceful strategies. Presently the point, registered with Department of Food and Live Stock, is offering few local fast food items to the students and general public. III. MISSION STATEMENT Generation of revenue and profit is the main purpose of SFF. Since it’s a service provider unit, therefore, customer service is the base of its existence. Our aim is to become the first choice of the customers and make them staying with us again and again. P.E.A.R.L.S Passion for excellence in doing everything Execute with positive energy and urgency Accountable for growth in customer satisfaction and profitability Recognize the achievement of others and have fun doing it Listen and more importantly respond to the voice of customer IV. UK FAST FOOD INDUSTRY ANALYSIS UK fast food is the largest fast food industry in Europe which is double and triple in size than Germany and French markets respectively. The expenditures have been increased since the start of 21st century in UK. "The UK fast food market grew by 5.2% and reached a value of $2.2 billion in 2008" (Datamonitor, August, 2009). The diversified cultures of UK along with various cultural tastes have put a significant impact on pizza industry. The main contributory items of fast food industry are sandwiches (Greggs, Subway, and Thurstens), burgers (McDonalds and Burger King), chicken (KFC), and pizza (Pizza Hut and Domino). In terms of catering and hospitality, the burger sector is leading that had revenue of £9.33 billion in 2008. This revenue was 4.2% greater than the previous year and it was 22.2% of the total fast food market. By including the business of coffee shops, the revenue would reach £11.22 billion, greater than 4.4% of the year 2007. The global turndown of 2008 has benefited the UK fast food industry as it has increased its presence by 8% in 2009 as compared to the last year (http://www.whatmattersweblog.com). Similarly fast food restaurant has also increased by 8.2% in ten major cities of UK within one year. According to Food for Thought review, Domino and Eat were the most popular and successful while Burger King was the least successful brand in 2009. Burger King has to close its 11.8% of outlets in ten major cities of UK which include London, Edinburgh, Manchester and Cardiff. During 2009, pizza chain of Domino, healthy fast food group Eat, and sandwich chain Prêt A Manger have increased their growth by 50%, 36.4% and 29.7% respectively (www.caterersearch.com). Pizza Hut, Domino, Papa John’s, and Little Caesars are the leading pizza companies of the world. Till 2008, domino had 732 stores in UK; Ireland and Germany and over 175 stores are located in London and South East England (Domino’s Annual Report, 2008). Pizza Hut is also a leading pizza company having a share of 6000 Pizza Hut restaurants only in United States and more than 5600 stores in more than 90 countries across the world (http://www.pizzahut.com/aboutus.html). McDonalds entered in the fast food industry in 1974 and today it is the mot dominating fast food chain in the world. According to BHA’s Trends and Statistics 2007, it has more than 1300 outlets in UK. The company deals about 47 million people daily on its 31,000 worldwide fast food restaurant chain (www.mcdonalds.ca/en/aboutus/faq.aspx). KFC is the second largest fast food company operating more than 700 outlets in UK. V. TARGET MARKET In terms of target market, SFF stands for anyone who wants to eat healthy and tasty food especially the young guys of Cambridge interested in body building and sports. UK public has more appeal toward fast food on weekends because most of the leisure and mall activities are planned on these days. The target market of SFF will consist of customers of different categories. More than 18,000 students of Cambridge University and Anglia Ruskin University are the main target market for SFF. Residential population and working class of Cambridge in particular along with its neighboring areas would be the second target market. Cambridge is full of shopping malls and super-markets and about 35,000 people work in these markets and malls. Majority of these people take their lunch from local restaurants. Lastly, the old City of Cambridge is a special attraction for tourists throughout the world. Almost 4.58 million tourists from all over the world are some sort of special target market for SFF (http://www.cambridge.gov.uk). According to statistical data of 2011, Cambridge total population is 105, 162 composed of diversified cultures as 73.8% white british, 1.3% Irish, 2.3% black british, 5.5% Asians, and5.1% are Chinese while rest of the population belongs to mixed race. Young generation is dominated in population as 69% are below 18 years, 13.9% between 19 to 60 years while 16.4% are over 60. Population increasing rate is 12.5% while per capita income is ₤67,297 (Statistical Profile, 2011). VI. COMPETITIVE ANALYSIS SFF will face great challenges from well established companies dealing in the industry over the years. These competitors include independent restaurants and a chain of franchise pizza restaurants. Domino Pizza UK & IRL, PizzaExpress, and fast food restaurant leaders McDonald and Burger King are the leading competitors to any new entry. Domino had revenue of ₤209 million in 2011. PizzaExpress has a wide network of more than 400 pizza restaurants in UK while 40 are operating in many other parts of the world. The presence and well running of all these companies has resulted in a tough competition in the fast food industry. In Cambridge, the branch of McDonalds at Peterborough and Burger King at Wisbech has created a really competitive atmosphere. Beside these companies, other comparatively small chains of fast food are Ask, easyPizza, Prezzo, Zizzi, and Strada that will also come as the competitors of SFF. The more specialized the restaurant, the less the threat of competition, will be the policy of SFF to achieve excellence in this area. VII. MARKETING STRATEGY Student Fast Food will face a strong competition with globally dominated companies. The focal point of its marketing strategy will be the introduction of innovative foods because with limited resources, this will be the point from where it may stand one step ahead of its competitors. 1. PRODUCTS Student Fast Food has a well sorted plan to launch exclusive brands to be prominent from the style of other competitors of UK fast food industry. The menu of SFF will be centered on a variety of dishes. The menu will include a variety of burgers and pizzas, a line of Italian sandwiches, French fries, chips, snacks, and a variety of sauces and salads. The most attractive items of the menu will be grilled chicken breasts, salmon, and a unique pizza, named xPizza. This pizza will be larger than the competitors at twenty inches and in order to attract the customers, it will have twice the toppings that the competitors have. One of the main objectives behind the introduction of grilled food and xPizza is to create recognition for new products. Student Fast Food has the target to gain 85% recognition of this product in the primary market. This recognition will lead the restaurant to achieve its strategic objectives i.e. to increase the revenue and profit. The new restaurant has made the assumption that the marketing of xPizza and grilled chicken breasts will support it to increase the overall sales by 20% in next two to three years. SFF Restaurant will offer excellent services. The leading service and goal of each staff member will be customer satisfaction. The newly established restaurant will believe on old slogan i.e. “customer is always right”. Both eat-in and take-out options will be available to the customers in a friendly and smooth environment. Further the grassy lawn and dinning hall will be available on advance booking for any huge party, wedding ceremony or any social gathering. Similarly advance seat booking or advance order of food will be offered on discount rates. SFF will provide special discount to the students and staff of Cambridge University. It will have a distinct and eye catching slogan as “fresh and full of life fast food”. Since the restaurant will also operate on take-away strategy, therefore, the packing of food will have attractive slogan especially to the primary target market i.e. young generation. 2. PRICING SFF intends to apply high/low pricing strategy for most of its products but high prices for its grilled chicken items and xPizza. The company will get several benefits through this strategy. The strategy will allow the company to set the price above competition level but also to promote frequent sales to lower the price below them. By setting of higher prices, the strategy will also create excitement and customers will purchase the new products just for curiosity. It will also improve the product and service standards of the company. If the other competitors are not in this position to reduce their food cost, Student Fast Food Restaurant will get a competitive advantage on the base of cost leadership. The Barbecue, salmon, grilled chicken breasts, and xPizza will have a significant impact on the general deliciousness of the distinguished products. Extra sauces will be individually available with price of 50% of food cost. Students and university employees will enjoy a discount of 15% of all food items except the soft drinks and wines. Similarly restaurant will provide a special 10% discount rate for foreign tourists and for advance orders. 3. DISTRIBUTION SFF will use the traditional direct channel distribution strategy for drilled chicken breasts and xPizza i.e. either home delivery, or dining in at SFF restaurant, or ordering online. The main aim of SFF is to facilitate the customers up to the maximum level. Like other competitive firms, it will virtually have limited area of operations and mainly will emphasize the local sportsmen and students of Cambridge. SFF Restaurant will establish certain outlets along the grounds and parks to offer the sportsmen and body builders with high quality of healthy food. It also has the plan to provide home delivery service at reasonable rates. 4. PROMOTION Student Fast Food will put its best efforts to enhance the customers’ awareness about its grilled food items and xPizza especially the youth associated with body building and sports activity. In order to gain its initial short terms goals, SFF will highly depend on its communication strategy to its target markets. Advertising policy will be a key factor. During the initial phase, SFF will emphasize to keep itself present on regional basis i.e. within Cambridge. An electronic campaign will be launched that will include newspapers, radio, television, and online contacts to know the trends of local customers. To make the communication more effective and productive, an advertising consultant will be arranged to carry out this important campaign. Promotional plan of SFF Restaurant is diversified and will incorporate a variety of marketing connections. Therefore, in order to monitor and observe the services, products, and market position, SFF will arrange a program to receive the feedback from the customers. Different techniques will be applied to do this such as telephonic conversation, direct mail, opinion through public surveys and online comments. Since internet is the most ready and widely used medium to communicate, therefore Student Fast Food would launch its website which will be one of the main communication channels. Hierarchy-of-Effect Model (HEM) is a supporting tool as it is the predominant model of advertising and presents six steps of customers’ trends i.e. awareness, knowledge, liking, preference, conviction, and purchase (Clow & Baack, 2007). VIII. OPERATIONAL ISSUES SFF Restaurant will probably receive at least 500 users daily, that entails an excellent seating format avoiding any sort of frustration and complications at the time of rush. An area required for SSF is around 22,500 sq. ft. which will be distributed in different rooms like office, dinning hall and kitchen, stores, and kids play room. A comprehensive seating plan will be required to facilitate about 200 customers at a time. For this, the restaurant will purchase utilities with the potential to meet up the requirements thoroughly e.g. tables (dinning hall & offices), chairs (dinning hall, offices, and counter), kitchen items (cutlery, dining cutlery, ovens, cooking ranges, grills, particular equipment to prepare burger, pizza, and grilled food items), ACs for dinning hall and offices, hot water geyser, lights (wall, halogen & portable emergency lights), generator, and some miscellaneous items. The restaurant will also purchase freezers and refrigerators to preserve the food items in stores. Fire appliances will be installed to handle any emergency situations. IX. HUMAN RESOURCE PLAN Student Fast Food is located near the Cambridge University where numbers of foreign students are studying in different disciplines. SFF will manage its full time vacancies through online and newspapers advertising while part-time jobs will be offered to the foreign students. In such situation, SFF will apply polycentric staffing policy for the first year of the marketing. In this approach parent-country nationals hold key positions at company headquarters while foreign citizens are employed as subsidiaries (Hamblin, 1974). The man who is highly responsible for the success or failure of a restaurant is the manager. SFF restaurant will appoint 02 managers not only having professional knowledge and qualification but also the leadership skills, supervision proficiency, and creativity minded approach must be the salient features of their profile. The role of SSF manager will be diversified as ranging from operational involvement to administration of internal and external issues. They will remain concerned with food consumption, arranging orders with suppliers, and ensuring in time delivery of food and beverages to customers. They will not only ensure the quality and quantity of food with respect to customers’ satisfaction but will also resolve their complaints. Managers will also responsible for human resource development in terms of detailing, payment issues, and training of the personnel. Besides the mangers, the human resource of SFF will consist of 03 account officers, 02 receptionists, 09 cooks, 16 waiters, and 02 parking boys. X. FINANCIAL FORECAST The financial concerns include working capital like salaries of staff, utilities, and some miscellaneous expenditure. The budget experts of SFF believe that preliminary financial support of ₤125,000 will be adequate to achieve the short term profitability plans. It is estimated that by the end of first fiscal year, SFF will make a minimum gross margin of 17%. The restaurant is going to come in operations by 1st May i.e. on Labour Day. The stakeholders expect that the grilled chicken products and xPizza will observe the highest peak season in November and December, especially close to Christmas. Climatology of UK is also a main factor to determine the initial sales projections. It reveals that the season from September to November is the best time for tourists and for local families as well to go outside for dinner or social gatherings. Cash flow forecast for first twelve months is shown below. The expected cash flow may be changed with respect to any change in the target market. Variables Month Wise Forecast (₤) 2012 May Jun Jul Aug Sep Oct Beginning Cash Balance 125000 8352 8379 11256 17513 26177 Sales 79445 95000 97000 102000 104000 108900 Total Cash Available 204445 103352 105379 113256 121513 135077 Cash Disbursements Manufacturing 5000 4800 4770 4800 4890 5100 Expenses 27550 22220 21850 22555 22000 23550 Depreciation 778 778 778 778 778 778 Principal 1020 1020 1015 1035 1048 1070 General And Admin 2200 1780 1410 2075 1970 2070 Staff Salaries 46500 46500 46500 46500 46500 46500 Total Cash Disbursements 83048 77098 76323 77743 77186 79068 Net Cash From Operations 121397 26254 29056 35513 44327 56009 Loans and Capital Infusion National Bank Fixtures 0 0 0 0 0 0 Capital Infusion 0 0 0 0 0 0 Other Disbursements Proprietors Draw 12000 12000 12000 12000 12000 12000 Debt Service 1100 1100 1100 1100 1100 1100 Capital Disbursements Furniture & Fixtures 66645 0 0 0 0 0 Equipment 33300 0 0 0 0 0 Net Cash Balance 8352 8379 11256 17513 26177 37409 Variables Month Wise Forecast (₤) 2012 2013 Nov Dec Jan Feb Mar Apr Beginning Cash Balance 37409 49601 50073 44830 35357 19709 Sales 111000 102000 98000 94000 88000 94000 Total Cash Available 148409 151601 148073 138830 123357 113709 Cash Disbursements Manufacturing 5325 5500 5610 5800 6100 6100 Expenses 24250 25500 26855 27125 27200 27000 Depreciation 778 778 778 778 778 778 Principal 1055 1040 1050 1055 1055 1055 General And Admin 2100 2710 2650 2615 2515 2420 Staff Salaries 46500 46500 46500 46500 46500 46500 Total Cash Disbursement 80008 82028 83443 83873 84148 83853 Net Cash From Operation 68401 69573 64630 54957 39209 29856 Loans and Capital Infusion National Bank Fixtures 0 0 0 0 0 0 Capital Infusion 0 0 0 0 0 0 Other Disbursements Proprietors Draw 12000 12000 12000 12000 12000 12000 Debt Service 1100 1100 1100 1100 1100 1100 Capital Disbursements Furniture & Fixtures 0 0 0 0 0 0 Equipment 0 0 0 0 0 0 Net Cash Balance 49601 50073 44830 35357 19709 10256 XI. FINANCIAL PROJECTIONS Item Capital Required (₤) Construction Cost (all inclusive) 376,707 Equipment & Machinery 33,300 Dining & Office Furniture 66,645 Working Capital (Utilities, salaries, bills etc) 10,23,325 Total 14,99,777 WORKS CITED CIA, The World Factbook: United Kingdom, (2010) . Retrieved 21 May, 2010. Clow, K. E. & Baack, D. (2007). Integrated Advertising, Promotion, and Marketing Communications 3rd Edition, Pearson Education. pp. 165-171 Datamonitor, August, 2009 Dominos Pizza UK & IRL, Annual Report (2008). http://ww7.investorrelations.co.uk/dominos/uploads/reports/2008AnnualReport.pdf. Retrieved 2009-11-28 Johnson, G., Scholes, K., and Whittington R. (2008) Exploring Corporate Strategy Text Cases, 8th Ed, Prentice Hall, London. Kotler, P. (1999). Kotler on Marketing: How to Create, Win, and Dominate Markets, Simon and schuster Statistical Profile, Demographic, Socioeconomic, Land Use, Education, Cambridge Community Development Department: 2011 Read More