Background
Discuss about the Retail Business In Fast Food Line Of Business.
The plan of the owners is to open a retail business in fast food line of business and the business will be providing fast food items such as Burgers, Fries, Wraps and a variety of beverages. The Australian fast food market is known to be very much competitive as a lot of such food chains are established. The owners are hoping to take advantage of the suitable market conditions which is present in the Australian retail market (McKeever, 2016). The owners have also selected a potential location which will allow the shop to attract the kids and teenagers as well offices workers who are looking for a snack or beverage.
The owners plan to have a variety of burgers which will provide the potential customers of the business with appropriate choices for purchasing a product. The strategy of the business is to follow cost reduction strategy so that the business is able to offer burgers at a reduced price (Burns & Dewhurst, 2016). This will thus provide an edge to the business over the other competitors in the industry. As per the plan of the owners, the shop will be established by the business following partnership form of business and the owners will be equal partners of the business. The owners of the business will be responsible for overall management of the shop and also for taking important decisions which are regarding the business.
The marketing plan of the shop will be playing a vital role in promoting and overall development of the business. The main products which will be offered by the business are hamburgers, fries, wraps and noodles and also wide range beverages which includes tea, coffee, cold drinks. The owners plan to make the hamburgers as the main attraction for the customers for which the owners plan to recruit the best chefs who can bring about a different flavor and taste in the different varieties of burgers which will be offered by the business (Scarborough, 2016).
The target market for the business will be the high school kids and college teens who are mostly attracted by such kinds of foods. The selected location for the business will allow the shop to provide a cool place to hang out for such college teens. The level of competitiveness in the market is intense, however the owners feel that with the cost reduction strategy the business will be able to survive and even compete with potentials competitors of the business (Holliman & Rowley, 2014). The industry consists of big businesses such as Subway, McDonald’s and even other retail fast food businesses which is the main reason surviving in such a market is tough.
Marketing Plan
The owners will be using both televisions and printed media for advertising the food products which are offered by the shop (Lovelock & Patterson, 2015). The shop will also be distributing free menus cards as a scheme for advertising and promoting the food products which are offered by the business.
The operations of the retail business will be handled by the shop managers who will be appointed by the owners of the business. The operational structure of the business will comprise of top level management who are the owners or partners in the business. There are four partners who will be sharing profits on an equal basis (Ward, 2016). The middle level management will comprise of shop managers, who will be looking after the quality of services which is provided by the business and the lower level management will be constituting of chefs, delivery boys, counter service personnel. The shop will be requiring a number of personnel for managing all the activities of the business (Lacity & Willcocks, 2013). The owners need to adhere to the regulations which are established for restaurants such as licensing requirement, registration of premises, testing of quality of food. The business will be requiring furniture, computers and equipment such as coffee machines, ovens, systematic chimney sets. The owners want to promote sustainability practices so that the business processes can be improved.
The retail process of the business will consist of both dine in order and will also offer delivery services to customer within the range of locality. The delivery services can be opted by calling in the number of the shop and ordering for the foods products which are offered by the business (Blackburn, Hart & Wainwright, 2013). The business will be purchasing goods from local retailers for vegetables, meat, bread and the business plans to buy such products in bulk so that the management can get raw materials for the business.
The financial Plan of the business will be analyzing key financial aspects which the owners needs to consider while establishing a business. The primary requirement which the business needs to consider is the sources of funds from which the business will be acquiring assets and also maintaining a certain level of working capital for day to day business management (Korn & Levitz, 2013). As per the plan of the management, the initial requirement of the business for funds will be met by the contributions made by each partner which is of the amount of $ 20,000. The initial contribution which is made by the partners will be used for securing the location of the shop and also taking care of the preliminary expense which is related to setting up of the business. These types of expenses include registration expenses, legal costs and other similar expenses which the business needs to incur for setting up of the business.
Operations
The estimated revenue which the business anticipates is shown to be $ 5,00,000 during the year 2019. An analysis of month by month sales in given in the appendix section of the assessment. The sale revenue of the business is expected to rise by 10% from the month of January and the sales which is anticipated for the month of January is shown to be $ 30,000. The sales of the business will stabilize from the month of April and more or less constant sales revenue is anticipated by the owners of the business. Following the month of April, sales is anticipated to grow at the rate of 5% for each month and in this phase, the owners anticipate the overall competition in the market will be at its peak and therefore only survival will be on the agenda of the business at that time. The growth in overall sales which is anticipated by the management is based on the market conditions and other factors which affects sales revenue of business is considered to be constant. The total sales revenue which the owners anticipate for the year 2019 is shown to be $ 5,00,000. As per the cost of sales Budget which is formulated by the owners show that the cost of sales is anticipated to be $ 18,000 for the month of January and the cost of sales is also anticipated to increase as the overall sales of the business increases which is clearly shown for the month of April, May and June. The owners of the shop have also forecasted that a situation might come when the sales revenue of the business is growing at a lower rate but the cost of sales is still growing at usual or higher rate. This situation reflects the survival strategies which the business formulates during the intense competition in the market.
The above statement shows the expected profit and loss statement of the shop which the owners are planning to establish. The management of Friends and Fries anticipates that the total sales which can be generated by the business during the year of 2019 will be $ 5,00,000 while the cost of sales of the business is anticipated to be $ 4,50,000. The gross profit at initial stages of the business is anticipated to be low due to the high costs which the business will likely incur (Nielsen & Roslender, 2015). The overall profit after tax which is anticipated by the business is shown to be $ 4,000 during the year.
Financial Projections
The budgeted Balance sheet of the business shows the value of the assets which the business requires for starting of the business such as computers, equipment and furniture. The management in order to further stabilize and develop the business, will be taking a loan of $ 6,00,000 which is shown in the budgeted balance sheet of the business.
The above statement shows the various start up expenses which the business needs to undertake for establishing the business of Friends and Fries. Initial funds for the business will be acquired from the partner’s contribution and also from the personal loan which the business has taken for financing different resources which are required by the owners. The interest on loan is expected to be 10% annually and it would be preferred by the management if the repayment of loan can be on an yearly installment. The start-up cost statement also shows the preliminary costs which the business has to incur such expenses. The CVP analysis which is conducted considering the contribution level is 50% and the total expenses of the business is considered to be the fixed costs which the business incurs. The breakeven analysis which is shown in the appendix below, the management anticipates that it needs to get at $ 45,000 to reach break even point which is no profit, no loss situation.
The management will be starting implementing the plans for the retail business in a three-month period. In the mean-time, the management needs to get the business registered and also get an appropriate license for opening and running of a fast food retail business. In addition to this, the owners also need to finalize the location of the premises which is considered to be possible location for establishing the shop. These processes will be taking a minimum of 6 months period. Then there is the recruiting process for chefs and other sales personnel of the shop and also appoint efficient managers for the shop. This will again be taking a one-month period to complete. The expected date for opening and starting the operations of the business is set to be 1 January 2019 considering which the budget has been prepared. Therefore, there is a six or eight months interval before the shop can become fully operational.
Conclusion
The conclusion which can be drawn from the analysis of business plan formulated by the business is that the owners should implement the same as soon as possible so that the expected date for starting the business is not delayed. The business plan formulated by the owners is a sound one with an effective marketing plan and financial plan. The financial forecast are also appropriate and the owners have a clear idea as to from where funds are to be procured in order to finance the activities of the shop which is to be established.
Reference
Blackburn, R. A., Hart, M., & Wainwright, T. (2013). Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development, 20(1), 8-27.
Burns, P., & Dewhurst, J. (Eds.). (2016). Small business and entrepreneurship. Macmillan International Higher Education.
Holliman, G., & Rowley, J. (2014). Business to business digital content marketing: marketers’ perceptions of best practice. Journal of research in interactive marketing, 8(4), 269-293.
Korn, M., & Levitz, J. (2013). Online courses look for a business model. The Wall Street Journal, B8.
Lacity, M. C., & Willcocks, L. P. (2013). Outsourcing business processes for innovation. MIT Sloan Management Review.
Lovelock, C., & Patterson, P. (2015). Services marketing. Pearson Australia.
McKeever, M. (2016). How to write a business plan. Nolo.
Nielsen, C., & Roslender, R. (2015). Enhancing financial reporting: The contribution of business models. The British accounting Review, 47(3), 262-274.
Scarborough, N. M. (2016). Essentials of entrepreneurship and small business management. Pearson.
Ward, J. (2016). Keeping the family business healthy: How to plan for continuing growth accounting, profitability, and family leadership. Springer.
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