Executive Summary:
Food valley is a locally owned fast food outlet that will be positioned as an international franchise through our creative approach to the company's image and detail presentation. Food valley will provide a combination of excellent food at value pricing, with fun packaging and atmosphere. Food valley is the answer to an increasing demand for fast food, to be consumed while window shopping and walking around inside a shopping mall. Food valley is a fast food restaurant that sells a wide range of fast food items to customers, which includes burgers, fries, salads, pastas, soups, desserts and drinks. Our goal is to make the quality fast food available to all those people who liked the fast food but couldn't dare to afford. Our aim is to provide happiness and joy through, food, music and art. A Passion to Serve. Our start funding will be Rs 4700000.
Our geographic plan is Community size: minimum of 800,000 people within a radius of 8 kilometers, Tourist destination, and Easy access and Large percentage of teenagers in the community. Food valley will use some technologies just to enter in market and to make the competitive advantage of being first quick service organization and to satisfy our customers desires. These technologies are hospitality point of sale systems, Wireless systems, and Modern point of sale systems. Our market analysis will comprise of Market size (current and future) Market growth rate, Market profitability, Industry cost structure, Distribution channels, Market trends and Key success factors. Our segment market is younger’s, tourist and working people.
we have several advantages over other such as: We expect a high degree of enthusiasm and offer a fun store with friendly staff that reflects the company's youthful and energetic culture, Clean and comfort environment, location,
We provide good customer service and hygienic food comparatively at low prices, Our fried potato is made 100% fresh, compared to most fast food outlets that use frozen fries and Our innovative packaging will be more entertaining than our competitors. Our main competitors in this segment are any food outlets within the 300 meter radius along the fortress stadium. In our location, there is pizza hut, KFC, McDonalds and AFC.
We will deploy three different marketing tactics to increase customer awareness of food valley. Our most important tactic will be "word-of-mouth" and in-store marketing. The second tactic will be local store marketing. The last marketing effort will be utilizing local media. Our website will be updated on daily basis for the convenience of our customers. As the company is small in nature, it only requires a simple organizational structure. Our Current plan is to have our accounting and payroll functions done by an in-house bookkeeping. Possible positions might be added at a later date include marketing manager, purchasing manager, controller, human resources, R&D and administrative support team and programmer.
Our marketing objectives are: Increase repeat customers by 7% per quarter. Decrease customer acquisition costs by 8% per year. Build an effective pull campaign, bringing in new customers at an increased rate of 9% per quarter. And financial objectives are: Experience a double digit growth rate for the first three years. Reduce store overhead by 5% each year. Reach profitability by the end of year two.
Our financial plan will comprise two year financial projection including: balance sheet, income statement and cash flow statement. Our company will bear loss in first year and generate profits in second year.
Fast Food Restaurant:
“Fast foods are convenience foods that can be prepared and served very quickly.”
A fast food restaurant, sometimes known as a quick service restaurant or QSR, is a specific type of restaurant characterized both by its fast food cuisine and by minimal table service. Food served in fast food restaurants typically caters to a "meat-sweet diet" and is offered from a limited menu; is cooked in bulk in advance and kept hot; is finished and packaged to order; and is usually available ready to take away, though seating may be provided.
Fast food restaurants are usually part of a restaurant chain or franchise operation, which provisions standardized ingredients and/or partially prepared foods and supplies to each restaurant through controlled supply channels. The term "fast food" was recognized in a dictionary by Merriam-Webster in 1951. Arguably the first fast food restaurants originated in the United States with White Castle in 1916. Today, American-founded fast food chains such as McDonald's and Pizza Hut are multinational corporations with outlets across the globe. Variations on the fast food restaurant concept include fast casual restaurants and catering trucks. Fast casual restaurants have higher sit-in ratios, and customers can sit and have their orders brought to them.
Origin: 1954
The pace of modern life is fast, and nowhere is it faster than in America. We want fast transportation, fast communication, fast computers, fast photos, fast music, fast repairs, and fast service from the businesses we patronize. It is from the last of these that we got fast food.
At first, it was a matter of fast service. Fountain and Fast Food Service was the title of a trade magazine, which published statements like this from 1951: "The partners have become old hands at spotting the type of conventioneer that will patronize their fast food service." Gradually service disappeared, and in 1954 we find fast food by itself in the title "Fountain and Fast Food." Incidentally, the trade magazine renamed itself Fast Food by 1960. In February of that year, the magazine noted, "Delicate scallops are really fast food...because they come ready to cook." And in July it remarked, "Fast food type restaurants do the lion's share of business for breakfast and noon meals eaten out."
The fast food revolution was a quick success throughout the land, and two decades later it was conquering the world. "The U.S. outcry against infiltration from the south is matched in vehemence by our neighbors' outcry against fast-food imperialism and the gradual Americanization of their own societies." noted the Christian Science Monitor in 1982.Thanks to fast food, families that formerly ate home cooking now eat out or bring back take-home fast food in record numbers. Its virtue is speed, not quality. Its less than ideal nutritional value may have influenced the coining of another term twenty years later, one that also puts a four-letter epithet in front of food: junk food (1973).
McDonald's:
McDonald's Corporation (NYSE: MCD) is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily. McDonald's primarily sells hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milkshakes, and desserts. More recently, it has begun to offer salads, wraps and fruit. Many McDonald's restaurants have included a playground for children and advertising geared toward children, and some have been redesigned in a more 'natural' style, with a particular emphasis on comfort: introducing lounge areas and fireplaces, and eliminating hard plastic chairs and tables.
In addition to its signature restaurant chain, McDonald’s Corporation held a minority interest in Pret A Manger (a UK-based sandwich retailer) until 2008, and owned the Chipotle Mexican Grill until 2006 and the restaurant chain Boston Market until 2007.The company has also expanded the McDonald's menu in recent decades to include alternative meal options, such as salads and snack wraps, in order to capitalize on growing consumer interest in health and wellness.
Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The corporations' revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.
KFC:
KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken is a chain of fast food restaurants based in Louisville, Kentucky. KFC is a brand and operating segment, called a "concept", of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon Global Restaurants Inc. The restaurants are known as Poulet Frit Kentucky or PFK in the province of Quebec in Canada In France, however, the chain is known as KFC.
KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of roasted chicken products, side dishes and desserts. Outside North America, KFC offers beef based products such as hamburgers or kebabs, pork based products such as ribs and other regional fare.
The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952, though the idea of KFC's fried chicken actually goes back to 1930. The company adopted the abbreviated form of its name in 1991. Starting in April 2007, the company began using its original name, Kentucky Fried Chicken, for its signage, packaging and advertisements in the United States as part of a new corporate re-branding program; newer and remodeled restaurants will have the new logo and name while older stores will continue to use the 1980s signage. Additionally, Yum! Continues to use the abbreviated name freely in its advertising.
Company Information:
What is food valley?
Food valley is a fast food restaurant that sells a wide range of fast food items to customers, which includes burgers, fries, salads, pastas, soups, desserts and drinks. We use the concept of KFC and McDonalds that deal in the same business as we are and provide the same services to their customers. Our outlet also provides excellent and friendly customer service to support the ambience of fun, energetic and youthful lifestyle. Our culture reflects our values, the essence of what we believe in as a people and as a system. It includes a shared vision of who we are and where we're headed. And it encompasses everything from the way we treat our customers to how we deal with our competitors. One of the most important values within our culture is integrity. Our people are committed to providing uncompromising product quality, to offering consumers the highest quality for their money, and to providing service that is personal and concerned. In fact, our people strive each day to provide what we call "customer mania," the kind of service that will make customers tell stories to their family and friends about their experience with food valley.
We invest heavily in our people through skills training and management development to help them reach their full potential. We encourage them to think unconventionally, to take prudent risks to achieve results. And we provide an informal environment with open communications to give them the freedom to make contributions on their own initiative. This is a part of our culture we value highly. We call it "ownership", the feeling that comes from knowing you can affect the company's direction through your expertise, innovative ideas and hard work. We provide clean and comfort environment to our customers. Good location always attracts customers. We not only provide the hygienic food but also clean and comfort environment to our customers that is the first priority. Every establishment should go beyond the norm to ensure that the environment is just according to customers demand. We really take care of our customers.
Youthful and fresh surroundings:
We will imitate successful establishments, such as KFC and McDonalds, which represent the majority of our core target market, between 18 to 35 years of age. Our store will feature display cooking of our featured KFC and McDonalds from cutting to frying. Our store will be decorated with fast food setting, such as a bright counter and display menu on the wall.
Quality food:
Our people are committed to providing uncompromising product quality, to offering consumers the highest quality for their money, and to providing service that is personal and concerned. Each store will offer nothing but freshly fried products all served with old-fashioned home-style care.
Open every day:
Our store is open every day from 12pm to 01:00 am.
Variety, variety, variety:
A different selection of menu will be featured every month to attract our customers.
Vision and mission statements:
Your strategy team will need to develop a compelling vision of the future. A vision which your employees will enthusiastically embrace - because the vision is worthy, and because it challenges them to grow. In order for you to get your employees passionate about your vision, it has to be compelling. It has to matter… not just to your management team, but also to your employees. Your vision should project a compelling story about the future.
“To implement new technology of fast food vending machine for quick service to
anyone who wants to save time and money while still enjoying a quality meal.”
Our plan is to implement new technology of fast food vending machine in next 5 years. It provides following features.
l Provide customers with quick service at a reasonable price
l Provide good quality meals.
l Allow the customer to choose their own ingredients.
l Provide many convenient locations.
Initial financing of the business will start with Rs9000, 000. This will cover the costs of designing and developing prototypes of the Fast Food Vending Machine. If marketing analysis shows potential for profits within one year the company hopes to have at least five machines.
Mission statements:
Your Mission Statement describes what business you’re in and who your customer is. As such, it captures the very essence of your enterprise - its relationship with its customer. Developing your mission statement is the step which moves your strategic planning process from the present to the future. Your mission statement must “work” not only today but for the intended life of your strategic plan of which your mission statement is a part.
Mission:
“Our aim is to provide happiness and joy through,
“Our aim is to provide happiness and joy through,
food, music and art. A Passion to Serve”
Goal:
“To make the quality fast food available to all those people
who liked the fast food but couldn't dare to afford.”
Start-up Summary:
The retail outlet will be rented at one of the target location shopping malls. Our preference is fortress, for the main reason of reaching larger traffic and our main competitors.
Our business type is partnership. Ahmad, Ali, umar
are partners. Startup requirements will be financed through owner’s investments.
Total capital invested by the partners:
Ahmad = Rs1000000
Ali =Rs1000000
Umar =Rs1700000
Ratio of profit and loss is 1:1:1.7 for Ahmad, Ali and Umar.
Start-up Funding:
Start-up expenses to fund: | |
Start-up expenses | Rs500000 |
Total start-up expenses to fund | Rs500000 |
Start-up assets to fund: | |
cash | Rs2000000 |
Furniture & interior | Rs1200000 |
Kitchen & fixtures | Rs1000000 |
Total Start-up assets to fund | Rs4200000 |
Total requirement | Rs4700000 |
Company Locations and Facilities:
The restaurant's image begins with its location. The character of nearby buildings, streets, and businesses affects people's perception of a restaurant. The locality will attract a certain type of clientele and determine the price range, type of service, and menu selection. The restaurant's theme reflects the needs of the people around it, and not be in conflict with its locale. The location indicates the type of service and quality of food people will find there. Location sets the mood for the total dining experience.
The most desirable location for an urban restaurant is on the corner of a block. Here the restaurant enjoys greater visibility and greater flexibility in exterior design. Locating a restaurant in an area with other restaurants has merit. The existence of competition is not necessarily bad. Potential diners are attracted to an area that features good restaurants. People often have no specific restaurant destination in mind and are usually willing to try anything new and interesting. An entrance off each street is best.
Food valley locations will range in size from 80-100 meter square and will seat from 40-50 customers. Our first location will be on the larger end of this range. The location will feature its own originality in merchandise display and other brand building attributes. We will equip the outlet with modern furniture and aim for cleanliness and an open feeling. We are currently looking at several possible sites in crowded areas such as markets.
The space selection will be chosen based upon the following criteria:
Geographic:
· Community size: minimum of 800,000 people within a radius of 8 kilometers.
· Tourist destination.
· Easy access.
· Large percentage of teenagers in the community.
All of these qualities are consistent with food valley' goal of providing a top quality fast food experience. We want "word-of-mouth" to be our best form of marketing, where our customers value our brand as something exciting and cannot wait to tell their friends and neighbors.
Food valley will directly compete with several fast food joints inside the chosen area, including KFC, McDonalds, AFC and pizza Hut.
Equipment and Machinery:
In order to open a restaurant we need equipment and machinery which is our first step to enter. Good quality of machines is required.
Here is a small list of the items we require:
kitchen ware, ranges, ovens, freezer, refrigerator, commercial kitchen hood, restaurant equipment, baking ovens, convection oven, range, char broilers, grills, broiler, pan, fryer, scales, slicers ice, mixers, kitchen equipment, food warmers, toasters, kiosk, merchandiser, food processor, espresso machine, food service equipment, deli case, dishwashing machines, burners, baking equipment, air curtain, commercial sinks, kitchen equipment small wares, cookers, chairs, tables, restaurant bars, bar equipment, commercial microwave oven, mixer, drink mixers, stoves, etc.
Vendor:
Our vendor to whom we buy our equipment and machinery is ARROW RESTAURANT EQUIPMENT. And website is www.arrowre.com
Restaurant Customer Service:
“Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation."
Customer service is the provision of service to customers before, during and after a purchase. Its importance varies by product, industry and customer; defective or broken merchandise can be exchanged, often only with a receipt and within a specified time frame. Retail stores will often have a desk or counter devoted to dealing with returns, exchanges and complaints, or will perform related functions at the point of sale.
Five steps to enhance customer service are:
1. The customer service experience starts with a clean establishment, inside and out.
2. Smile when you see us.
3. Empower your staff to be flexible enough to be able to fix things when they go wrong.
4. Offer a quality product or service.
5. make sure your staff keeps your rest rooms clean.
Seven steps to remarkable customer service:
1. Fix everything two ways
2. Suggest blowing out the dust
3. Make customers into fans
4. Take the blame
5. Memorize awkward phrases
6. Practice puppetry
7. Greed will get you nowhere
Policies for customer service used by food valley:
The client will be impressed with the degree of care that they receive. We can vary depending on if our customers are going through drive-thru or coming inside. If you do go inside, the main policies are to always greet the customer in a timely manner. Take the order, repeat it back to them, suggestive sells if possible, and have the order packed or pack it yourself. Always thank them and wish them a great day. If going through drive-thru the process is a little more complicated. we greet the customer within 5 seconds of the customer reaching the intercom, take the order, repeat it back, suggestive sell, thank them ask them to pull forward. we answer the window with a Hi, tell them the total due, cash it out, give the change due with food and thank them again, wishing them a great night. All products must be within acceptable guidelines and a drive thru order should take no longer then 3 minutes to execute for maximum efficiency.
Restaurant Atmosphere:
“Value and Atmosphere Are More Important Than Price at Fast Food Restaurants to Obtain New and Repeat Customers.”
People are attracted to a restaurant by more than just good food. Though important, good food is only a part of the total dining experience. Equally important is the way people feel while in the restaurant. This physical and emotional response is a result of the atmosphere--- the total environment to which customers are exposed. Atmosphere is made up of everything that makes an impression on people. The building design, decor, interior color scheme, texture of the walls, service, and the food create the atmosphere. The right atmosphere can relax guests and generate good feeling and repeat customers. The proper atmosphere can make the food, service and whole dining experience seem better. Not everyone wants the same emotional response from a restaurant's atmosphere. After working all day, most people would prefer to eat in a quiet, relaxed, intimate atmosphere. However, for those who have worked alone in a quiet environment, a noisy cafeteria might provide needed contrast. It is, therefore, very important to be thoroughly familiar with the characteristics of the type of people you wish to serve.
Food valley provides all these comforts to our customers.
Technology:
Food valley will use some technologies just to enter in market and to make the competitive advantage of being first quick service organization and to satisfy our customers desires.
· In order to make speedy service possible and to ensure accuracy and security, food valley restaurants have incorporated hospitality point of sale systems. This makes it possible for kitchen crew people to view orders placed at the front counter or drive through in real time.
· Wireless systems allow orders placed at drive through speakers to be taken by cashiers and cooks. Drive through and walk through configurations will allow orders to be taken at one register and paid at another.
· Modern point of sale systems can operate on computer networks using a variety of software programs.
· Sales records can be generated and remote access to computer reports can be given to corporate offices, managers, troubleshooters, and other authorized personnel.
Communications Tools and other Equipments:
Good stock management by a firm will lower costs, improve efficiency and ensure production can meet fluctuations in customer demand. It will give the firm a competitive advantage as more efficient production can feed through to lower prices and also customers should always be satisfied as products will be available on demand.
The aim of stock control is to minimize the cost of holding these stocks whilst ensuring that there are enough materials for production to continue and be able to meet customer demand. Our aim is to provide good customer service. Which can be possible only if we fulfill their order in time and provide a good service to them, for this purpose we have to maintain a level of stock? Good communication channel between managers and stock keepers develops strong relationship and increases proper know how about the stock. For this know how some kind of equipments or communication channels are required by the organization such as internet and telephone.
Food valley equipment requirements consist primarily of computer and communications tools. Here is the list of equipment that is required.
· Telephones
· Computers
· Internet
· Inventory software
These tools are required by the store keepers for:
· just in time inventory
· receiving orders
· delivering orders in time
· customer feed back
Other equipments required by food valley are:
· printers
· pagers
· scanners
Products:
Food valley menu is specially designed to meet the tastes and budgets of customers, with over 100 items on the menu list on any one day and are regularly rotated to maintain variety of choices. New products and seasonal products for each time segment will be introduced regularly
Food valley sells fast food items to our customers. Main products sold are:
· burgers
· pastas
· salads
· sandwiches
· drinks
· pizzas
These all products are available in different deals such as:
· 1Zee burger with regular fries and regular drink
· 1 chicken burger with salad and regular drink
· Lunch time deal
· Chicken tikka with one serving of Pepsi
· 1 chicken piece with reg. fries and reg. drink
Restaurant Menu
· Hot and crispy chicken/fish
· Deals
· salads
· pastas
· Pizzas
· Chicken
· Flavor and snacks
· Big box meals
· Plated meals
· Food valley famous bowls
· Kiddy meal
Inventory:
“The word inventory simply means the goods and services that businesses hold in stock.”
There are three types of stock that a business can hold:
Stocks of raw materials (inputs brought from suppliers waiting to be used in the production process) .This usually consists of the essential items needed to create or make a finished product.
Work in progress (incomplete products still in the process of being made)
Stocks of finished products (finished goods of acceptable quality waiting to be sold to customers)
Food valley raw material comes from our head office in jail road.
Restaurant Inventory Management:
Restaurant Inventory Management:
Inventory management is an integral part of a successful business. Inventories typically consist of goods, raw materials and finished products. Good stock management by a firm will lower costs, improve efficiency and ensure production can meet fluctuations in customer demand. It will give the firm a competitive advantage as more efficient production can feed through to lower prices and also customers should always be satisfied as products will be available on demand.
However, poor stock control can lead to problems associated with overstocking or stock-outs.
If a business holds too much buffer stock (stock held in reserve) or overestimates the level of demand for its products, then it will overstock. Overstocking increase costs for businesses as holding stocks are an expense for firms for several reasons.
· Increases warehouse space needed
· Higher insurance costs needed
· Higher security costs needed to prevent theft
· Stocks may be damaged, become obsolete or perish (go out of date)
· Money spent buying the stocks could have been better spent elsewhere
The opposite of an overstock is a stock-out. This occurs when a businesses runs out of stocks.
This can have severe consequences for the business:
· Loss of production (with workers still having to be paid but no products being produced)
· Potential loss of sales or missed orders, this can harm the reputation of the business.
In these circumstances a business may choose to increase the amount of stock they hold in reserve (buffer stock).
To avoid this food valley management always remain in contact with its inventory management department and has good communication because Good communication channel between stock managers and store keepers develops strong relationship and increases proper know how about the stock.
Sales Literature:
Food valley will use advertising and sales programs to get the word out to customers.
2,000 color brochures to be distributed throughout destination shopping mall and facilities: in-store, cinemas, area eateries, information during the grand opening in November 15.
Half page magazine reviews in magazines that advertise the presence of the outlet.
Sourcing:
Fresh raw material will be delivered daily by our distributor directly from the head office.
Sales Programs
Each opening of food valley will have, more or less, the same marketing mix as the others. Below are the programs that we will develop to open each location.
Grand Opening
Each new outlet will have outdoor signage as soon as possible. We want the signage to be supported by banners before the opening.
Point of Purchase
We will use "tray toppers" to explain the concept and philosophy of food valley. We will also sell gift certificates, announce future job openings, and possibly mention franchise opportunities.
Direct Mail Piece
A stand-alone piece, folded, will be produced in full color on heavy weight paper. Inside will be all the important details of food valley, explanation of our menu, prices, house of operation and a locator map.
Value Meal
“A value meal is a group of menu items offered together at a lower price than they would cost individually.”
They are common at fast food restaurants. Value meals are a common merchandising tactic to facilitate bundling, up-selling, and price discrimination. Most of the time they can be upgraded to a larger size of fries and drink for a small fee.
The perceived creation of a "discount" on individual menu items in exchange for the purchase of a "meal" is also consistent with the loyalty marketing school of thought.Sales of food valley will not only generated from the selling of its above mention deals and menu, but also will be generated by the conception of an innovative package menu called the "value meal."
It primarily consists of:
· Lunch time deals with low prices
· Mid night deals with discount
· Dinner time deals
· Pizzas deals comparatively at low prices
· Lunches mega meal
Market Analysis:
The goal of a market analysis is to determine the attractiveness of a market and to understand its evolving opportunities and threats as they relate to the strengths and weaknesses of the firm.
Following dimensions of a market analysis:
- Market size (current and future)
- Market growth rate
- Market profitability
- Industry cost structure
- Distribution channels
- Market trends
- Key success factors
Consumer expenditures for fast food in Lahore rose during the end of the year 2000. The increasing number of new establishments such as fast food franchises, fancy restaurants and gourmet bakeries around Lahore has shown a significant growth in this sector. Food spending is around 56% of total consumer expenditures in Lahore, and consumer spending on leisure and recreation made up of 13% of total consumer spending.
A much broader appeal exists for weekend slots because those are the days when most of our core target market enjoys the mall going activities.
Demographics:
Age - Youngsters, single, currently enrolled in college and high school.
Family unit - We will also appeal to families (young families) with children.
Gender - We will target both sexes, with a slight skew for males due to their lower attention to dietary concerns.
Income - We will appeal to the medium income individuals and to all in the lower medium income bracket.
Our concept will have very broad appeal. It is our goal to be the hip destination for fast food cravings.
According to a recent public survey of people 15 - 45 years old, 80% of those interviewed like fast food. 90% of them like fast food on a regular basis, and 10% of them claimed that they like fast food "very much," or "love" fast food.
The survey also provided the following particular reasons for the increasing popularity of fast food:
· People have 52 weekends and three long holidays a year. Most of Lahorean love to window shop, and when they do strolling around the shopping district, they need a quick bite to accommodate their activities.
· White-collar workers in offices have stopped bring lunch, and enjoy chicken, hamburger, pizza or other fast food joints in the vicinity.
· Parents give more money to kids and students to buy lunch. Fast food is naturally their first choice, because of the brand building effort that heavily targets their age group.
Eating out still remains as Lahoreans common habit of life. They do not perceive fast food is a luxury, and they enjoy it by bringing their family, especially if they have smaller kids, in the environment of the eastern-style fast food outlets.
Market Segmentation:
The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are "most likely" to purchase you’re offering. If done properly this will help to insure the highest return for your marketing/sales expenditures.
Firstly we are targeting young Lahoreans as our primary market. Fortress is the place to meet and hang out during shopping. It is common for people to have lunch inside shopping malls, and not at home. They tend to flock to fast food joints inside shopping malls.
Our secondary market segment is the "Working people." With so many shopping malls in the vicinity, Fortress is the haven for shoppers and job seekers alike. In the new Hyperstar Mall, there are more than 150 workers currently working as sales persons.
Lastly, Fortress is also the destination for tourists. Tourists will stroll fortress, hunting for the latest trend in fashion and have no time to stop for a full meal during shopping. Food valley is the alternative for a quick bite while shopping the fancy boutiques in the area.
Market analysis for potential customers is:
Potential Customers | Growth | 2006 | 2007 | 2008 | 2009 | 2010 | CAGR |
Residential Customers | 1.90% | 5,500 | 5,605 | 5,711 | 5,820 | 5,931 | 1.90% |
Business Customers | 2.30% | 7,500 | 7,673 | 7,849 | 8,030 | 8,215 | 2.30% |
Total | 2.06% | 13,000 | 13,278 | 13,560 | 13,850 | 14,146 | 2.06% |
Target Market Segment Strategy:
The first place to start is by defining exactly who would be interested in buying your product or service. This is your target market, defined as the group of the population sharing a common set of traits, which distinguish them from everyone else.
So why focus on your target customer?
First, if you don't understand who they are, how can you tailor your product or service to best meet their needs? One key to business success is the ability to provide products and services that meet the needs and wants of your customers. If your customer believes that the speed of your service is more important than its quality, isn't that information you need to know?
Second, when you understand who your customer is, you can determine with more accuracy which marketing mediums and channels will be most effective in reaching them. If your potential customer only listens to FM stations, and you advertise on an AM station, your marketing efforts will be unsuccessful. The more narrowly you can define your customer, the more focused your marketing efforts become, and the more your marketing expenses will work for you. Our target market is large enough to support our sales objectives. In order to reach our target customers, we've got to know who they are.
Are they companies or individuals?
The customers targeted by our company are the individuals. They are from young men and women of society.
Food valley intends to cater to the bulk of teenagers and youngsters in Lahore. We have chosen this group for several important reasons. It is our goal to be "the extraordinary fast food place" and we believe that the age group from 15 to 25 is the primary age where brand building efforts could take place. They are on limited or fixed incomes and seek a value/price relationship that will not stretch their budgets.
Our secondary target is between the ages of 25 and 37, which are a heavy lounge/restaurant user group. They are more flexible in budgets and seek more than a value/price relationship.
· Our lunch strategy is dual purposed. First, we are featuring fresh items to fill Lahore's craving for fast food as most ideas of lunch is a quick bite not a heavy meal.
· Second, we want to keep the price point at lunch as fair as possible to keep us in competition with other fast food outlets.
Market Needs:
A recent Consumer Trend and Analysis identified the following needs among our target markets. Our core group:
· Wants variety and flavor in its food, preferably something fried
· Looks for speed of service
· Wants an entertaining and fun experience
· Insists upon a clean, friendly, and attractive environment
· Adopts a global lifestyle
· Is computer literate
· Enjoys eating out
· Has an active lifestyle
· Comes from various ethnic backgrounds
Keys to Success in Market:
The keys to success in market are to meet the demand of our customer are:
· Customer taste.
· Quick service.
· Well-trained employees selection.
· Comfort environment
· Atmosphere
· Product quality
Entry/ Exit Barriers:
Entry barriers are high however exit barriers are low. High investments and capital is required to enter this industry .On the other hand technical knowledge, expertise and availability of skilled work force makes entry barriers high. National and international level competitors are competing at the same platform with minor variations.
Competitive Comparison:
Food valley has several advantages over its leading competitors:
· We expect a high degree of enthusiasm and offer a fun store with friendly staff that reflects the company's youthful and energetic culture.
· Clean and comfort environment
· location
· We provide good customer service and hygienic food comparatively at low prices
· Our fried potato is made 100% fresh, compared to most fast food outlets that use frozen fries.
· Our innovative packaging will be more entertaining than our competitors
Company | Clean | Value | Merchandising | Hang Out | Simple | Fresh | Cool | Pop Culture |
Food valley | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
McDonald's | Yes | Yes | Yes | Yes | Yes | No | Yes | Yes |
KFC | Yes | Yes | No | Yes | No | No | Yes | No |
AFC | Yes | Yes | No | No | Yes | Yes | No | No |
Qualitative Survey (October 2005 ) | |||||||||||
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | Total Score | Importance Rating | |
Food Quality | 1 | 1 | 1 | 1 | 2 | 1 | 2 | 1 | 1 | 11 | 1 |
Service | 2 | 3 | 3 | 2 | 4 | 4 | 3 | 2 | 4 | 27 | 2 |
Menu/Variety | 5 | 4 | 2 | 4 | 1 | 5 | 5 | 3 | 3 | 32 | 3 |
Price | 4 | 5 | 5 | 3 | 3 | 2 | 1 | 4 | 5 | 32 | 4 |
Environment | 3 | 2 | 4 | 5 | 5 | 3 | 4 | 5 | 2 | 33 | 5 |
Disadvantages:
Name recognition
As a fast food outlet, food valley! Does not have the name recognition of other national chains.
Rental costs
Prime rental locations are extremely costly.
Advantages:
Healthy food
Food valley! Fills that void by allowing customers to obtain fast food which is healthy for them and their children.
Price
Food valley! Will offer food at lower prices than typical sit-down fast food restaurants.
Service
Food valley! Will operate with the motto "the customer is always right." In today's busy world, the customer service aspect of the restaurant business is often overlooked.
Location
Our location where our outlet is open will attract our customers
Industry Analysis:
Despite the prolonged effects of the Asian Economic Crisis followed by political turmoil up to mid 2001, Lahore food service industry witnessed growth over 2000/2001 at 4 - 5% in terms of units and transaction .Much of this growth was contributed by the cafes/bars, fast food, and food retail sectors, whose wide appeal amongst a young population, for whom time is of a premium, led to high levels of growth. This growth is underpinned by market demand and lifestyle changes, such as seeing eating out as part of trendy lifestyle.
Entry of major multi-national food service operators into major shopping destination in the late 1990s until the 2000 led to growth in competition in the marketplace, mainly from fast food chains. This stimulated the rise in the number of fast food units, both of international and local chains. Although there was a slowdown during the economic crisis in 1998, the food service industry recovered faster than others, particularly during 2000 and 2001. Recent bombing tragedies have also proven that negative effects on this sector are moderately short-term.
Franchising became popular in the food service industry through the introduction and entry of multi-national food service brands, primarily U.S.-owned enterprises, such as KFC, Pizza Hut and McDonald's. Currently, there are many local chains that have also experienced growth by applying this system to their operations.
Industry analysis on fast food restaurant worldwide:
• Sales increase of 4.9%
• Daily Sales of $1.3 Billion
• Annual Sales (projected): $476 Billion
Trends in Food Service Retail:
According to government surveys, lahorean’s spending on "eating out" is continuing to increase. Spending on cooked food as a percentage of total average food-spend reached 65% in 2005. The growth in spending in the food service sector arises from a number of factors:
· Increased affluence amongst Lahoreans, especially those under the age of 40 years.
· Increased convenience-seeking amongst younger Lahoreans who live in a hectic city today compared to the much slower pace of life that existed 20 years ago.
When they want convenient cooked food, Lahoreans have long turned to the local hawker stalls, rather than prepared ready-to-cook or ready-to-eat processed convenience foods. As the numbers and variety of food service outlets has increased in Lahore, locals have adopted the convenient products of other food service outlets, especially the fast food outlets, as alternative sources of convenient cooked food. Younger middle and upper income group families and individuals are also frequent users of the full service restaurants, modern-style coffee shops and cafés that now exist all across Lahore.
Over the past 5 years, there has been a general upgrading in the food service sector which has seen the establishment of more air conditioned food centers (food courts) that are considerably cleaner than the traditional hawker markets. At the same time, increased investment from foreign and local businesses in the sector has also produced an increase in the numbers of fast food chain
Main Competitors:
Our main competitors in this segment are any food outlets within the 300 meter radius along the fortress stadium. In our location, there is pizza hut, KFC, McDonalds and AFC.
Pizza Hut:
Pizza hut is international fast food restaurant franchise in Pakistan which provides variety of pizzas with different deals and menu and having a competitive edge of providing delicious food to customers and generates revenue.
KFC:
KFC has a very long history and has the most recognizable brand in chicken. With over 50% of the market share it becomes very difficult for new companies who may want to enter the market. KFC has name recognition around the world and has been globally positioned for many years.
McDonald’s:
McDonald’s international franchise operates more than 23,500 restaurants in 109 countries. Since its founding in 1955, McDonald’s has sold well over 100 billion hamburgers. ……
McDonald’s prepares more than 6.8 million pounds of French fries every day. Approximately 85% of McDonald’s restaurant businesses world-wide are owned and operated by franchisees. All franchisees are independent, full-time operators.
AFC:
Pakistan first fast food restaurant having more than 13 branches in Pakistan provide the same services as KFC and McDonalds.
Foreign Vs. Local Franchising:
Around 40% of the franchises operating in Lahore are foreign. Home grown franchises are still in their maturing stages as they start to expand globally. Franchises from the U.S. account for 65% of foreign brands, with big players such as KFC, Pizza Hut, etc. Due to high capital investment, Lahore conglomerates tend to dominate the industry.
Home grown franchises are more often sought more by young entrepreneurs than are their Western counterparts, as they offer greater flexibility and lower franchise fees to operate. Unlike Western license holders, home grown franchises are more efficient in the overall supply chain management as the basic raw ingredients are commonly found anywhere in the region.
Growth Trend:
The restaurant industry is in a rapidly growing phase. Although this growth trend means opportunities for increased sales volume and higher profit margins, overhead must be closely monitored. The importance of quality control, purchasing, low overhead, advertising and marketing cannot be overstated.
At the entire food valley! Franchise locations, customer loyalty have been developed through its excellent service and popular menu. Attention must be paid to trends, however, and changes should be made early in both the menu and the decor before customers become bored and move on to a newer experience.
Price Structure:
Food valley! Is structured to present good food and reasonable prices. Food valley! Strives to maintain affordable prices. Food valley! Will keep menu prices at reasonable levels to attract the largest share possible from its demographic base.
Strategy and Implementation:
At first, we will open one outlet inside the chosen area. This will become our "market testing area," and as we go further, food valley is planning to open another in nearby shopping malls. In attracting customers to try our products, we will provide a see-through kitchen, so that people will see how we are committed to freshness in our products.
The kitchen will also let out an aroma of our freshly fried products into the surroundings area, so that people will come and try our products.
Competitive Edge:
· Our outlet environments will one of our competitive edges.
· Enthusiastic and friendly staff
· Our customer service policies
· Supporting merchandise items that support company's brand building.
· Our fries are made of 100% fresh potatoes, unlike the frozen fries used by competitors.
· Innovative packaging will position us at the same level with foreign fast food franchises.
· Technology
Marketing Strategy:
Food valley is entering their first year of operation. A comprehensive marketing plan is required to reach profitability and ensure future success. Our strategy is based on serving our markets well. We will start our first outlet as a "market tester" that could become a model of the expanding number of outlets in the future. Concentration will be on maintaining quality and establishing a strong identity in the local market. A combination of local media and local store marketing programs will be utilized at each location. Local store marketing is most effective, followed by print add. As soon as a concentration of stores is established in a market, then broader media will be explored. We believe, however, that the best form of advertising is still "buzz." By providing a fun and energetic environment, with unbeatable quality at an acceptable price in a clean and friendly outlet, we will be the talk of the town. Therefore, the execution of our concept is the most critical element of our plan. We will actively build our brand, through the selling of supporting materials, such as merchandise, promotional items and other marketing gimmicks similar to those of other fast food franchises.
Our marketing strategy will seek to create customer awareness regarding the products that they offer, develop the customer base, and work toward building customer loyalty and referrals.
· The first method that food valley will use to communicate this is location. Food valley has chosen an upscale, trendy mall that receives a lot of walk through traffic. This generates large amounts of visibility for food valley.
· Second method of communication is advertisements through media
In Lahore's daily newspaper. The advertisements will be placed in the weekly
Instead of playing a proper 30 or 60 seconds TV commercial over national channels its preferred to play the add on local cables only to target those areas where they have opened the outlets.
Avoiding the national TV channels commercials has saved cost. The fast food companies that showing TV commercial in the cities where there is no stores launched can hurt the brand image thus the decision for local cable channels is better to save the image and to communicate effectively.
Avoiding the national TV channels commercials has saved cost. The fast food companies that showing TV commercial in the cities where there is no stores launched can hurt the brand image thus the decision for local cable channels is better to save the image and to communicate effectively.
Marketing Programs:
We will deploy three different marketing tactics to increase customer awareness of food valley. Our most important tactic will be "word-of-mouth" and in-store marketing. This will be by far the cheapest and most effective of our marketing programs because of the high traffic in targeted shopping locations.
The second tactic will be local store marketing. These will be low-budget plans that will provide community support and awareness of our facility. The last marketing effort will be utilizing local media. Although, this will be the most costly, this tactic will be used sparingly as a supplement where necessary.
· In-Store Marketing
· In-store brochures containing our concept and philosophy.
· Wall posters.
· Design concept.
· Grand opening promotion.
· Party catering.
· Local Store Marketing
· Brochures.
· Free occasional t-shirts at local stores events.
· Local Media
· Direct mail piece – containing brochures sent to surrounding addresses.
· Web page – containing company philosophy, history and news.
· Local magazines that target our core customers, such as Free! Magazine.
· Newspaper campaign – placing several large ads throughout the month to explain our concept to the local area.
Positioning Statement:
Our main focus in marketing will be to increase customer awareness in the surrounding community. We will direct all of our tactics and programs toward the goal of explaining who we are and what we are all about. We will price our products fairly, keep our standards high, and execute the concept so that “word-of-mouth” will be our main marketing force.
Food valley will position itself as the premier outlet for fast food, providing food with different taste according to the demand of our Youngers and good environment to our customers. Food valley will leverage their competitive edge to achieve this desired positioning. Fast food competitive edge is an unmatched environment in the fast food.
Marketing Mix:
Food valley marketing mix is comprised of the following approaches to pricing, advertising and promotion, and customer service.
· Pricing: food valley pricing is designed to be competitive to the other fast food franchises.
· Advertising and Promotion: Location, targeted advertising in the newspaper, on the localized cable network, magazines and Hoardings and strategic alliances will serve as the foundation of fast food advertising and promotion effort.
· Customer Service: Exceeding customer's expectations is the company's mission.
Strategic Alliances:
Our business requires a long relationship with raw suppliers as well as partner vendors. In Chinese, this relationship is called "guanxi," meaning business bonding. We already have a long and good standing relationship with our vendors. We hope to strengthen further our business relationship with him and the company.
Design & Development Plans:
Goals:
Goal 1:
Opening of first restaurant in Lahore 15 November 2009.
Goal 2:
Sell 5 additional franchises within the first 7 years of operation.
Risk Analysis:
The following risks are inherent in the pursuit of the stated goals:
· The lack of name recognition in our area will impede sales potential.
· Attracting potential franchise owners will be difficult.
· Opening of our first store will be dependent on receiving financial assistance through loans.
Evaluation Methods:
· Food valley! will evaluate the achievement of its stated goals by measuring financial factors.
· Food valley! will monitor monthly sales volume as compared to monthly operating costs. Monthly increases will be expected in the gross sales category.
· Sales of additional franchises will be measured by the actual opening of new locations. Contacts with potential franchisees will be measured in terms of the number of inquiries obtained on a monthly basis.
Web Plan:
The website will, of course, show visitors everything about fast food history, including the history of food valley over time. Our website will be updated on daily basis just to know about our upcoming products, deals and menu to our regular customers. For this we will hire a programmer. To make the website interactive, food valley will offer gift cards and promotions via the Internet, so our visitors can print the promotional coupon in PDF format and bring it when they visit food valley.
Visitors can also download food valley theme song as ring tones. Besides the traditional formats of customer service hotline and in-store form, customers can now write their comments and suggestions on our website, which will be directed to one of our staff.
So, the website itself will act as the medium between our company and our audience.
In the future, our website will show information on franchising/licensing our brand name.
Website Marketing Strategy:
We will leverage the visibility of our shopping mall's website by getting them to include a link to ours.
Management:
The initial management team depends on the founders themselves, with little back-up. As we grow, we will take on additional help in certain key areas. Part of our basic philosophy will be able to run our executive management as a "knowledge sharing" fellowship. We will not add additional overhead until absolutely necessary. This will mean that the initial staff support team will have to work extra. By doing this, we will keep our overhead as low as possible, allowing us to adequately staff our outlets. This will also allow us and future business partners to recoup investments as quickly as possible and enjoy a higher return.
Management Team:
As the company is small in nature, it only requires a simple organizational structure. Implementation of this organization form calls for all three individuals to make all major management decisions in addition to monitoring all other business activities.
As we expand into multiple locations, each location will have a primary site manager.
Organizational Structure:
Future organizational structure will include a director of store operations when the store locations exceed four units. We hope that this individual will come out of the ranks of our stores’ management. This will provide a supervisory level between the executive level and the store management level.
Current plan is to have our accounting and payroll functions done by an in-house bookkeeping. Possible positions might be added at a later date include marketing manager, purchasing manager, controller, human resources, R&D and administrative support team and programmer.
Personnel Plan:
Our initial employees will include two cashiers, two cooks and two bus boys per location, with one of each on the premises during open hours. This is considered an ideal personnel number for a food outlet the size of our own. Each employee will work for 38-40 hours per week.
In the long run, as we expand our product category and retail outlets, we will employ more people in the middle management to ensure the focus of our work, including site managers.
Personnel plan | Year 1 | Year 2 |
Site manager | Rs55000 | Rs70000 |
Cashier | Rs70000 | RS80000 |
Cook | Rs50000 | Rs60000 |
busboys | Rs25000 | Rs40000 |
Total salaries | Rs200000 | Rs250000 |
Objective & Issues:
Marketing Objectives
· Increase repeat customers by 7% per quarter.
· Decrease customer acquisition costs by 8% per year.
· Build an effective pull campaign, bringing in new customers at an increased rate of 9% per quarter.
Financial Objectives
· Experience a double digit growth rate for the first three years.
· Reduce store overhead by 5% each year.
· Reach profitability by the end of year two.
Financial Plan:
In general usage, a financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business, or real estate. In business, a financial plan can refer to the three primary financial statements (balance sheet, income statement, and cash flow statement) created within a business plan. Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company. While a financial plan refers to estimating future income, expenses and assets, a financing plan or finance plan usually refers to the means by which cash will be acquired to cover future expenses, for instance through earning, borrowing or using saved cash. food valley restaurant will bear loss in 1st year and profit in 2nd year.
Projected Profit and Loss:
“An income statement is a type of summary flow report that lists and categorizes the various revenues and expenses that result from operations during a given period - a year, a quarter or a month.”
The difference between revenues and expenses represents a company's net income or net loss. The amounts shown in the income statement are the amounts recorded for the given period - a year, a quarter or a month. The next period’s income statement will start over with all amounts reset to zero. While the balance sheet shows accumulated balances since inception, the income statement only shows the amounts earned or expensed during the period in question.
As the Profit and Loss shows, food valley will run at a loss for the first two years, using up some of the cash reserves initially invested by the founders. As sales increase, we will expand into new locations to aggressively spread brand recognition. This increase in visibility will allow us to take up less expensive locations, while maintaining our flagship operation, the first store, in a prime spot. Income statement of first 2 years is shown below.
FOOD VALLEY
Statement of Income and Retained Earnings
For the year ended
December 31, 2010 and 2011
Year 1 | Year 2 | |||
Sales | Rs100000 | Rs2000000 | ||
Direct expenses | Rs600000 | Rs800000 | ||
Gross profit | Rs400000 | Rs1200000 | ||
Operating expenses: | ||||
salaries | Rs200000 | Rs250000 | ||
Bills paid | Rs300000 | Rs300000 | ||
Depreciation | Rs504000 | Rs357120 | ||
rent | Rs0 | Rs120000 | ||
Rs1004000 | ||||
Profit before taxes | (Rs604000) | Rs172880 | ||
Less tax 0% | Rs0 | Rs0 | Rs172880 | |
Profit after taxes | (Rs604000) | Rs172880 | ||
Projected Cash Flow:
“The statement of cash flow shows all sources and uses of a company's cash during the accounting period. Sources of cash listed on the statement include revenues, long-term financing, sales of noncurrent assets, an increase in any current liability account or a decrease in any current asset account.”
Uses of cash include operating losses, debt repayment, equipment purchases and increases in current asset accounts.
The following table shows the Projected Cash Flow for food valley.
FOOD VALLEY
Statement of Cash Flow
For The Year Ended
December 31, 2010 & 2011
Cash received | Year 1 | Year 2 | ||
Cash received from sales | Rs1000000 | Rs2000000 | ||
Inc in inventory | Rs20000 | |||
Sub-total | Rs1000000 | Rs2200000 | ||
Cash payments: | ||||
Cash spending on raw material | Rs600000 | Rs800000 | ||
Dec in a/p | Rs240000 | Rs240000 | ||
Salaries paid | Rs200000 | Rs300000 | ||
Bills paid | Rs300000 | Rs400000 | ||
Rent | Rs0 | Rs120000 | ||
Total cash payments | Rs1340000 | Rs1740000 | ||
Net cash flow | (Rs340000) | Rs260000 | ||
Cash balance | Rs2000000 | Rs1660000 | ||
Cash at the end of 1st year & 2nd year | Rs1660000 | Rs1920000 | ||
Projected Balance Sheet:
“The balance sheet is based on the equation: assets = liabilities + owners' equity. It indicates everything the company owns (assets), everything the company owes to creditors (liabilities) and the value of the ownership stake in the company (shareholders' equity, or capital).”
The balance sheet date is the ending date of the period or year, and is a continuation of the amounts recorded since the inception of the company or organization. The balance sheet is a "snapshot" of the financial position of the company at the balance sheet date and shows the accumulated balance of the accounts. Assets and liabilities are separated between current and long-term, where current items are those items, which will be realized or paid, within one year of the balance sheet date. Typical current assets are cash, prepaid expenses, accounts receivable and inventory.
FOOD VALLEY
Balance Sheet
as on date
December 31, 2010
Assets: | amount | Liabilities: | amount | ||
Current assets: | Current liabilities: | ||||
Cash at bank | Rs1660000 | Accounts payable | Rs460000 | ||
Other current assets | Rs199999 | ||||
Total Current assets | Rs1859999 | Total current liabilities | Rs460000 | ||
Fixed assets: | Long term liabilities | Rs 0 | |||
Furniture & interior | Rs1200000 | Capital | |||
Depreciation | (Rs144000) | Rs1056000 | Ahmad’s capital | Rs836756 | |
Kitchen & fixtures | Rs1000000 | Ali’s capital | Rs836756 | ||
Less depreciation | (Rs360000) | Rs640000 | Farooq’s capital | Rs1422487 | Rs3095999 |
Total assets | Rs3555999 | Rs3555999 |
FOOD VALLEY
Balance Sheet
as on date
December 31, 2011
Assets: | amount | Liabilities: | amount | ||
Current assets: | Current liabilities: | ||||
Cash at bank | Rs1920000 | Accounts payable | Rs220000 | ||
Other current assets | Rs230055 | ||||
Total Current assets | Rs2150055 | Total current liabilities | Rs220000 | ||
Fixed assets: | Long term liabilities | Rs 0 | |||
Furniture & interior | Rs1056000 | Capital | |||
Depreciation | (Rs126720) | Rs929280 | Ahmad’s capital | Rs883508 | |
Kitchen & fixtures | Rs640000 | Ali’s capital | Rs883508 | ||
Less depreciation | (Rs230400) | Rs409600 | Farooq’s capital | Rs1501919 | Rs3268935 |
Total assets | Rs3488935 | Rs3488935 |
