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Minnesota Fast Food Restaurant Analysis - Assignment Example

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This assignment "Minnesota Fast Food Restaurant Analysis" presents a small fast food outlet in Minnesota and has been in operations for the last five years. The small unit is intending to transform itself into a proper fast food restaurant by means of innovative and resourceful strategies…
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Minnesota Fast Food Restaurant Analysis
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? xxxxxx No. 123456 MARKETING (MINI BUSINESS PLAN) ABC of XYZ Department of Business Administration 15 May, 2012 Contents Contents Page No Introduction 03 1. Mission Statement 03 2. Market Analysis 04 3. Marketing Mix 05 3.1 Products 05 3.2 Pricing 06 3.3 Distribution 06 3.4 Promotion 07 4. Human Resource Plan 08 5. Controls 09 6. Financial Forecast 09 Appendices 12 Appendix-I: US Market Behavior 12 Appendix-II: Human Resource Plan (Amount in $) 13 Appendix-III: Sales Projections (Amount in $) 14 Appendix-IV: Resources Used (Amount in $) 15 Appendix-V: Projected Profit and Loss Statements (Amount in $) 17 Appendix-VI: Site Map of MFFR Close to 18 Blue Mountain County Park Appendix-VII: Projected Facilities 19 Appendix-VIII: Promotional Material 20 Appendix-IX: Organizational Chart 21 References 22 Introduction Minnesota Fast Food Restaurant (MFFR) is a small fast food outlet at Minnesota and has been in operations for last five years. The small unit is intending to transform itself into a proper fast food restaurant by means of innovative and resourceful strategies. Presently the point is offering few local fast food items to the general public of Cottage Grave. This business plan has been made after making a comprehensive research and evaluating a variety of issues concerning fast food restaurant industry in Minnesota in the city of Cottage Grove. 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 Minnesota. 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. 1. Mission Statement Generation of revenue and profit is the main purpose of any organization and same will be for Minnesota Fast Food Restaurant. 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. We believe in PEARL as our core value i.e. 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 2. Market Analysis MFFR will operate its business by keeping a target market of very general nature in front of it because Cottage Grove is a small area having a population of only 34,589 in 2010 census According to the census conducted in 2000, there were 9,932 households and 8,462 families living in the Cottage Grove. Our restaurant will address the youth population, between ages 18 to 44 years, as its target market because it is 41.8% of the total population. Population under 18 is almost 32.7% of the total population (Census Redistricting Data, 2010). In Cottage Grove, the per capita income for the city was $28,348 in 2009 (http://www.city-data.com/city/Cottage-Grove-Minnesota.html). The market behavior of US fast food industry is interesting and it has been observed that generally three types of orders are placed in fast food restaurant. These orders are placed with respect to nature of group and family. The figure shown as Appendix-I indicates that lunch and dinner items are having a larger share of the market as 29% of the US fast food industry consists of it. Snack items and related beverages contribute 22 and 21% respectively while hot coffees, breakfast items, and side dishes have a combine share of 28% (Menu Composition Analysis, 2010). Since fast food industry is dominated by several global companies, therefore, MFFR will face a strong competition in Minnesota. Presently McDonald, Domino, Yum, Papa John’s, KFC, and Little Caesars are the fast food chains of the world. McDonald entered in the fast food industry in 1955 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 5200 units in United States (http://www.kfc.com/about). 3. Marketing Mix Minnesota Fast Food Restaurant 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. 3.1 Products MFFR has a well sorted plan to launch exclusive brands to be prominent from the style of other competitors of US fast food industry especially in Cottage Grave. The menu of MFFR 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. Minnesota Fast Food Restaurant 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. Minnesota Fast Food Restaurant will offer excellent services as well. 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. MFFR will provide special discount to the students and foreign tourists. 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. 3.2 Pricing We intend to apply high/low pricing strategy for most of our products but high prices for the grilled chicken items and xPizza. The company will get several benefits through this strategy. The strategy will allow us to set the price above competition level but also to promote frequent sales to lower the price below the competitors. 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, MFFR 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 will enjoy a discount of 15% of all food items except the soft drinks and wines. Similarly our restaurant will provide a special 10% discount rate for foreign tourists and advance orders. 3.3 Distribution Minnesota Fast Food Restaurant will use the traditional direct channel distribution strategy for drilled chicken breasts and xPizza i.e. either home delivery, or dining in at MFFR or ordering online. The main aim of MFFR 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 youth, sportsmen, and student community. Minnesota Fast Food 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. The main restaurant will offer breakfast early in the morning and will remain open till 2400 hours at night. However, its temporary outlets will operate according to nature of environment they will work. 3.4 Promotion MFFR 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 the initial short terms goals, we will highly depend on our communication strategy toward the target markets. Advertising policy will be a key factor. During the initial phase, MFFR will emphasize to keep itself present on regional basis i.e. within Minnesota. 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 the newly established restaurant is diversified and therefore it will incorporate a variety of marketing connections. Therefore, in order to monitor and observe the services, products, and market position, Minnesota Fast Food Restaurant will arrange a program to receive the feedback from the customers. Different techniques will be applied to do this such as telephonic conversation, direct mailing system, opinion through public surveys, and online comments. Since internet is the most ready and widely used medium to communicate, therefore we would launch a 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). 4. Human Resource Plan Minnesota Fast Food Restaurant will be located near the Blue Mountain County Park as shown in Appendix-V. The area is one of the very attractive points for tourists. A lot of people belong to India, China, and other Asian countries live there. MFFR will manage its full time vacancies through online and newspapers advertising while part-time jobs will be offered to the foreigners. In such situation, we 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. Our restaurant will recruit 02 managers not only having professional knowledge and related qualification from some renowned university but also the leadership skills, supervision proficiency, and creativity minded approach must be the salient features of their profile. The role of managers will be diversified as ranging from operational involvement to administration of internal and external issues. They will remain concerned with food consumption, store operations, arranging the 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, we will recruit 03 account officers, 02 receptionists, 09 cooks, 16 waiters, and 02 parking boys. The selected workforce will undertake respective training and some refresher courses will be arranged cyclically for the staff. For this, MFFR will hire the services of highly qualified experts to train its staff accordingly. The HRM plan of initial phase is attached as Appendix-II at the end. 5. Controls We expect that our 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 restaurant 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 keep a valuable inventory 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. In order to preserve the food items, the store will be equipped with several freezers and refrigerators. Fire appliances will be installed to handle any emergency situations while to cater the security issues, close circuit cameras will be installed at various places. 6. Financial Forecast The financial concerns include working capital like salaries of staff, utilities, and some miscellaneous expenditure. The budget experts of MFFR believe that preliminary financial support of $125,000 will be adequate to achieve the short term profitability plans. It is estimated that by the end of first fiscal year, MFFR will make a minimum gross margin of 17%. The restaurant is going to come in operations by 1st May i.e. on Labor Day. The stakeholders expect that the grilled chicken products and xPizza will observe the highest peak season in November and December, especially close to Christmas. Climatology of Minnesota is also a main factor to determine the initial sales projections. It reveals that the season from July to October is the best time for tourists and for local families as well to go outside for dinner or social gatherings. Cash flow forecast for first twelve months is shown below. The expected sales projections of first twelve months are shown as Appendix-III while the expected cash flow may be changed with respect to any change in the target market. Variables Month Wise Forecast ($) 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 Proprietor's 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 Proprietor's 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 Appendices Appendix-I: US Market Behavior Appendix-II: Human Resource Plan (Amount in $) Position Strength in 1st Shift Strength in 2nd Shift Total Strength Payroll/Head /Month Total Payroll/Month Total Annual Payroll Managing Director 01 - 01 3800 3800 45600 General Manager - 01 01 3500 3500 42000 Shift Manager 01 01 02 2200 4400 52800 Accountants 01 02 03 1500 4500 54000 Receptionist 02 02 04 1200 4800 57600 Facilities Management 02 03 05 1200 6000 72000 Kitchen Staff 03 06 09 1000 9000 108000 Waiters 08 08 16 700 11200 134400 Parking Boys 01 01 02 700 1400 16800 Sanitary Workers 01 02 03 700 2100 25200 Grand Total 46 50700 608,400 Appendix-III: Sales Projections (Amount in $) Appendix-IV: Resources Used (Amount in $) Land and Building Requirement Details % (Sq. Feet) Size (Sq. Feet) Civil Works Total Construction Cost Dining 63 14017.5 21 294357 Waiting 4 112.5 21 2362 Kids Play 3 667.5 26 17355 Kitchen & Preparation 25 5562 10 55620 Office 1.5 33.75 10 338 Stores 3 667.5 10 6675 Total 100 22,250 - 376,707 Machinery and Equipment (Amount in $) Item Details Quantity Unit Price Total Price New Broast Machine (15 Pound Capacity) 2 11500 23000 Hot Plate for Burgers, Kebab, Sandwiches (30” x 22”) 2 630 1260 Potato Cutter (8mm) 2 70 140 Microwave 2 80 160 Keg Racks & Shelves 3 210 630 Freezers (12 cf) 6 520 3120 Deep Well Frier (Single Valve With 2 Baskets) 2 800 1600 Bin Marry Soup Container (2 Valve With Steel Cabinet) 2 615 1230 Pillar (4.5 Kg Potato Peeling Capacity) 2 120 240 Working Tables 3 640 1920 Total 26 - 33300 Dining Furniture, General Fixtures and Land Requirements (Amount in $) Item Details Quantity Unit Price Total Price Dining Table – Square (2X2) 50 120 6000 Chairs (Standard 14”) 300 80 24000 Kitchen Cutlery Set 3 450 1350 Dining Cutlery* (Plate, Fork, Knife, Spoon, Glass) 300 50 15000 Air Conditioner Split Units (6 Ton) 3 2200 6600 Hot Water Geyser Large 2 500 1000 Halogen Lights 40 40 1600 Wall Lights (Large) 10 125 1250 Portable Emergency Light 5 125 625 Generator (1.5 KVA) 2 2100 4200 Counter Chairs 2 110 220 Office Table & Chair Set 1 3000 3000 Waiting Chairs for Take Away Customers 10 180 1800 Total 728 - 66645 Total Cost 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 Appendix-V: Projected Profit and Loss Statements (Amount in $) Cost 2012-13 Sales 11,71,900 Direct Cost of Sales 297,655 Other 125,000 Total Cost of Sales 422,655 Gross Margin 949225 Gross Margin % 63.9% Expenses Payroll 608400 Sales and Marketing and Other Expenses 191,525 Depreciation 81633 Utilities 26000 Insurance 40,000 Miscellaneous 5000 Total Operating Expenses 952,558 Profit Before Interest and Taxes 201,374 EBITDA 284,912 Interest Expense 25,360 Taxes Incurred 85,585 Net Profit 355,327 Net Profit/Sales 37.3% Appendix-VI: Site Map of MFFR Close to Blue Mountain County Park (Source: http://maps.google.com/maps?blue_mountain_county_park) Appendix-VII: Projected Facilities Food Item Brand Broast Chicken Broast (Qtr.) Chicken Broast (Half) Chicken Broast (Full) Sandwiches Chicken Sandwich Egg Sandwich Beef Sandwich Club Sandwich Hot & Sour Soup (2 Servings) Hot & Sour Soup (4 Servings) Chicken Corn Soup (2 Servings) Chicken Corn Soup (4 Servings) Plain Rice Chicken Fried Rice Vegetable Fried Rice Egg Fried Rice Beef Fried Rice Beef Chilli (without rice) Chicken Chilli (without rice) Burgers Chicken Burger Chicken Cheese Burger Beef Burger Beef Cheese Burger Zinger Burger Miscellaneous French Fries (per plate) Soft Drinks (Large) Soft Drinks (Regular) xPizza (a special one) Food Item Brand Combos Combo Deal 1 Zinger Burger / French Fries / Regular Drink Combo Deal 2 Chicken Broast (Qtr.) / French Fries / Regular Drink Combo Deal 3 Chicken Burger, Broast (Qtr.), French Fries, Regular Drink Combo Deal 4 Club Sandwich / French Fries / Regular Drink 105 Family Deal 1 Full Broast / Zinger Burger / Club Sandwich / French Fries (4) / Large Drink Family Deal 2 Zinger Burger (2) / Club Sandwich (2) / Broast (Half) / Large Drink / Fries (2 Jumbo Deal 5% discount on purchase above 20? Appendix-VIII: Promotional Material Online campaign through website Advertising campaign through newspapers, TV channels, and radio as well Feedback system Pamphlets and broachers Online and offline surveys Seminars Arranging special functions Appendix-IX: Organizational Chart References Census Redistricting Data (Public Law 94-171) Summary File (2010). American FactFinder. U.S. Census Bureau, 2010 Census. ttp://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=DEC_10_PL_GCTPL2.ST13&prodType=table. Retrieved 23 April 2011 Clow, K. E. & Baack, D. (2007). Integrated Advertising, Promotion, and Marketing Communications 3rd Edition, Pearson Education. pp. 165-171 Hrebiniak, L.G. (2006). Obstacles to Effective Strategy Implementation, Organizational Dynamics, 35, PP. 12-31. KFC (2007). "About Us". KFC. http://www.kfc.com/about. Retrieved July 7, 2011. Menu Composition Analysis, 2010 Read More
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