Business Plan: The Princeton Organic Assessment Answer

Answer:

Executive Summary

The organic restaurants business is one of the booming businesses globally. The current project deals with the restaurants business plan and its feasibility study in the Australian market. As the business of organic restaurants business plan which will be known as the Princeton Organic Restaurants. The restaurants will be large scale and located at high street market of the Australia. It will be based on organic food and beverages.   With help of ownership structure of business, it has been found that, business will be suing LLC form of ownership style. Apart from that, the restaurant chain business will be needed more than $500000 in order to open the business. With the help of menu and tropical changing season, company will be changing its frequently in order attract the customer base.  With the help of pricing strategies model, company will be able to generate   large customer base and targeting the middle income group.  Porter’s generic model considers that, the POR chain will be using product differentiation in order to create niche market in long run. Lastly, with the help of budgeted financial statements like profit and loss statement and the balance sheet would help to analyses the potential net return on investment of the ownership along with total expenditure.

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Company Overview

Business Description

The report summoned by one of the international health magazines called Australia Natural Health has been reportedly found in their survey that around 40.19% of the population of Australia is willing to go for the organic food rather than general verse of food items while visiting to the restaurants (Bingham & Eisenhardt, 2011). The restaurants business plan will given enough scope to the researcher about the entrepreneurial venture and the feasibility study before starting any fork of business. Apart from that study will also give an insight of the knowledge and endurance about the market and different marketing strategies as used by the different competitors like McDonalds and subway to stay in the hunt (Bingham & Eisenhardt, 2011).
The business will be of partnership form with equal part of sharing. As the owners will be the major shareholder who will be hiring the general manager for hiring nest level of personnel (Marcer, 2012). The LLC ownership structure is combination of the sole proprietorship and partnership as feasibility which will give enough scope to manage the personal asset protection of corporations.


Figure 1: Princeton organic Restaurant chain ownership structure

(Source: Schnaars, 2010, pp-125)

The Product or Service

The menu for the Princeton Organic Restaurants would be more of simple and will be tropical changing with every month. Some of the items like Chinese, French snacks items and burgers will be permanent feature in menu in order to maintain the customer’s general likings (Seshadri, 2009). The menu will have enough scope will be 100% of the menu ordering in order to keep the demand of the consumer in mind. Organic ingredients and feature will add the local flavour which would make the food moiré delicious and healthy. Apart from that, company will also serves the salads and fruit in order to keep the reprise the menu extremely hale and hearty (Shaw, 2008). 

Company History

The company is a Limited Liability Company with 2 major owners holding the equal shares which are 50% of each in the franchisee. The ownership structure is very based on the partnership between the parties. The company will have funding from the both the banks and the own capital.

The Industry

Currently, there has been no fully organic restaurants chain in Australia. This project has huge opportunity to reach the global audiences the increasing demand of the organic food in restaurants is one of the major evidence which has been provided by the Australia organic food association (Jansson, 2011).

Countries with large domestic market for organic restaurants opportunities

2013 (million,$)

USA

12

Germany

7.20

France

6

UK

5.12

Australia

6.26

Japan

1.85

Italy

0.93


(Source: Jeannet & Hennessey, 2013, pp-136)

From the above, it has been found that, a country whose population is obsessed with organic food is USA in top followed by the UK, Germany and Australia with 6.26 billion industries (Luffman & Kenny, 2009). Organic food awareness in Australia is been rising due to the number of rising disease like kidney damage, skin diseases and the arthritic syndrome. It also reduces the fertility within the women which will affects the company by large (Lymbersky, 2009).

Competitor Analysis

As per the Organic Trade Associations, organic food is combined of the natural food and the embrace the between quality along with ingredients which support the thought of Healthy Living. The word organic is generally associated with the fruits and vegetables but organic term is also presence in the meat, wheat, bread and the milk. In the current state of the restaurants chain industry companies like KFC and McDonalds are using the Fresh in order to create high brand value for their products which they are serving (Drummond, Ensor & Ashford, 2012). The restaurants business of Princeton will have those meats and other grocery items organically and free from the antibiotics or genetically modified feed or any other form of drugs. There has been huge demand of the organic food which is well served, freshly made and the as per the taste and preference of the general consumers (Holliday, 2009).  The success of an organic restaurants chain is being dependent upon these factors that will help the Princeton to create large chances of achieving their objectives.

 

Industry Trends

The organic food industry has been able to generate the nearly more than annual growth of 205 per year which is tremendous growth. The rapid growth of the business has increase the confidence in organic food sector which has been one of the major steps that has lowered the possible health risk and maintain the sustainability with the business (Dobson, 2009). The organic form of food is much more conventional method of producing the food items which includes free of pesticides or any kind of chemical used on the vegetables, fruit, meats or any other grocery products (Doyle & Stern, 2006).

Competitive Advantage

Solid waste generation’s composition around the Australia, in 2013

Composition

Municipal (%)

Commercial and industrial

Food waste

47%

13%

Paper

23%

22%

Plastics

4%

6%

Glass

7 %

2%

Metals

5%

22%

Concrete

3%

3%

Timber

1%

9%

Other

12%

24%


(Source: Dentchev, 2009, pp-428)

Now from the above, it has been found that, solid waste management of Australia is been reformed recently because of 1.82 trillion of waste is been throwing as sewerage by the restaurants chain business in all over the Australia (Dentchev, 2009). The restaurants chain business is being doing since 2000, the law of sewerage for the organic food sector sis been lower than other restaurant chain because of it is quickly observed in the landfill.

Along with that, POR will be get certified by the USDA, IFOAM and OF (Organic farming) will helps the company to create goodwill and high brand value in the Australian market (Ghoshal, 2009). This organic standard will help the company to prove their point of addressing the environment friendly food and sustainability management for the agriculture.

Market Plan

An introductory paragraph here.

Pricing Strategy

Price 


Figure 2: Pricings strategies used by Princeton Organic Restaurant chain

(Source: Mouncey & Baker, 2009, pp-419)

Princeton Organic Restaurant will be using the penetration pricings which will be focusing on the lower pricing and high quality of food. Although, price of the organic food is been decreasing since the demand of the products is been ridings (Patel, 2011). The organic food farmers have been avoiding pesticides in order to understand the demand of restaurants chain business clients. As the demand of the for the products is been rising by the 23% , this shows that most of restaurants chain opting for the organic food items rather than high pricing on fertilized or hybrid form of food items (Payne & Holt, 2008). 

Some of the other restaurants competitors like Bottega  , Quay and  Attica organic Restaurants are using high pricing or rather price skimming activities w in order to carter  the large customer base of the Australia (Organic Consumers Association, 2015). As per the Health magazines of Australia, it has been found that,  organic restaurants chain are using hike in the price of the food items in order to cater only small customer base. 

 Another major competitors like   KFC and Subway are also been using the price skimming method to cater the large customer of the Australia.  With the rise in the competition in the market, POR will be using penetration pricing in order to large customer base (Ulaga & Chacour, 2007). 

SOUP

POR price $

Quay

Price $

Main course

POR price $

Quay

Price $

Wonton Soup

4

4.59

Thai fried rice. Chicken Hakka noodles, rice

18

25

Egg drop Soup

3.54

5

Pill up rice

20

28

Spicy  lemon Soup

3.50

4.55

Fish valuate

15

21

Chicken soup

5

5.75

Mexican beans

10

16

Hot and Sour soup

4.75

3

Buffalo burger

9

11

Lemon grass soup

3.29

4.55

Arugula and pear

23

25

Fruits

8.4

Not available

Grilled chicken Anini

32

38

Salads

12.90

Not available

Pan organic roasted duck

21

28

 

 

 

Crispy duck

(straight from the Organic farm)

34

38

 

 

 

Cassoulet

(garlic chicken  with herb and beans)

22

19

 

 

 

Curry RENDANG

Made with coconut milk)

12

Not available


The above pricing mentioned but the POR has been offering the same products in different price in compare to the Quay organic restaurants. Apart from that, major items like smoothies and the fruit and salads are missing from menu of the Quay.  The low pricing offering and high quality helps bushiness to boom in the Australian soil (Sirdeshmukh Singh & Sabol, 2008). As the Australia economy is bee suffering from the rise in inflation with 2.87% in 2014 is one of the evident that helps to proves that customers are not willing to pay high amount to dine out or purchase the products.

Market Research

The marketing strategies for the Princeton Organic Restaurants chain is been

Products

Company will have standard formant of menu which  will attract the customers and the creates different approach form the other major restaurants chain  like Bottega Restaurants , Quay, Attica and Marquee along with other junk food retail chain like Subway, McDonalds and the KFC  in order create niche market (Glowik & Smyczek, 2011).

POR menu platter  consist  of various tropical food and vegetables items along with multi cuisine  items that would consist of the delicacies from the across the globe which would made out of organic food ingredients and more than 69.01% healthier than other  contemporary in the market (Greene, 2015). 

SOUP

Appetizers

Main course

Wonton Soup

Egg roll

(with organic egg and flour)

Thai fried rice . Chicken Hakka noodles, rice

Egg drop Soup

Vegetarian spring roll

Pill up rice

Spicy  lemon Soup

French fries

Fish valute

Chicken soup

Italian heart bread with Filled organic tofu

Mexican beans

Hot and Sour soup

Shrimp

Buffalo burger

Lemon grass soup

Chicken streak

Arugula and pear

 

Burgers (veg and non veg)

Grilled chicken Anini

 

Crispy pork flautas

Pan organic roasted duck

 

Burrito Tijuana

Crispy duck

(straight from the Organic farm)

 

Sushi

Cassoulet

(garlic chicken  with herb and beans)

 

American chopsey

Curry RENDANG

Made with coconut milk)

 

Dessert

Drinks

Orange Sherbet

Soft drinks

Mango and sticky rice

Margarita

Crispy bananas

Fresh lime soda

(homemade limeade)

Coconut pudding

Juice

 Chocó lava

Mock tail

Lychee Ice cream with hot chocolate

Tropic fizz

(Smoothies)


These are some of the major items which will include in the menu of the POR. The products will have be varied from as per the tropical changing if Australia (Hart & Ellis-Chadwick, 2000). As the organic food restaurants, the company will be looking to invent new form of organic food and desert items to attract the general audience of the Australia.

Ethnic ingredients and recipes:

 In order to maintain the enthusiasm of the Australian , local food items like  hot dog and burger with pizzas are being also been kept for daily features.  Apart from that, Aussie creamy fish is one of the most prominent dishes in Australia which is feature in the menu everyday menu. Besides that the menu also is looking to go with local delicacies like Australian coleslaw, Australian meat pie and Pavlov (Jones & Hayes, 2008).

Figure 2: PLC curve for the products and services sold by the POR

(Source: Marinova & Singh, 2008, pp-29)

From the above , it has been  found that, PLC curve restaurants business is totally dependent upon the changing frequency in the recipes. The recopies of the restaurants shows that company is very much associated with those business which will boom the industry.  One of the items known as the fish Valuate is needed to change as per the changing times (Matsuda & Hirano, 2007).   The fish valuate will have various phases. Lastly, would be declines phase when the chef will be innovate the items with fish valuate with cheese.

The Australian are very much foodie in nature. Aussie are being known for boiled and the backed food more than the fried or the oily (Mohammed & Rashid, 2012). Most of the food items in Australia are made in the olive oil or soya oil which will be one of the major findings during the show master chef Australia.  The Australian ethnic items like Spicy hassle back potato, yummy back potato with cheese and Zucchini bites.

 The changing food and menu will one of the top priorities while catering the locales and international audience of Australia.  

Category

2011 ($, m)

2012 ($, m)

2013 ($, m)

Organic food

23,902

26,801

31,891

Growth

15.7%

5.1%

7.7%

Total food

659,012

721,556

724,321

Growth

4.9%

1.6%

0.6%

Total

3.6%

3.7%

4%

 
Operations Plan

Business plan is guide to reach the business objectives for the entrepreneur. Business plan gives opportunities to reach the new age entrepreneur to take step to grow and lead the path of the prosperity. The chosen business here is restaurant chain which will be known as the Princeton organic restaurants (Analoui & Karami, 2009). Organic restaurants business chain is one of the booming industries and is very much attracting the general population of Australia.  The organic restaurants chain business is been currently having more than 1.80 billion industry. As the general population of austral are very much wanted to be associates themselves with habit of healthy eating (Biggadike, 2010).

 

Production

Facilities

In order to operate in the Australia environment, POR should have to obtain the license. The licenses will give the POR too permit to work on the Australian solid with all the laws and the regulations of the city, country and state (Bingham & Eisenhardt, 2011).  One of the major licensing would be obtain by the POR is certificate of occupancy. The certificate of occupancy will issue certificate that will allow opening the doors for the business. The certification of will only issued after the POR have passed the final inspections.
Apart from that, other license would be employee identifications number (EIN), this is tax ID registered for all business in Australia. It can be register online too. Besides that, Flammable materials permits, since the business is of restaurants, the POR will be using flammable materials like gas and fire for which permit is needed to be taken from the fire departments (Chesbrough, 2009).  The permit will be helpful to get rid of any of the further complication for the restaurants chain business.
Another major licensing are give below:

License

Registrations

Legal name

At the local business and state bureaus of registrations . The registration comprise of articles of association and memorandum of associations.

Retail sales

National business license information office  which present in all over the state of the Australia

Sign permit

Australian business license and information service would give the permits to sign (Cool  & Schendel, 2010) 

Music license

 Environment protection authority permission is needed for the granted for the music in restaurants which is will based on the place and the location along with  guidelines

Sewerage permits

ABLIS based on the environment and heritage, 2006 reformed law will be followed to get the permissions (Collis, 2010).


Geographic Location

Segmentation bases

 

Target customers segment of Fast food industry  

Geographic

Region

includes  NSW, Northern territory, western Australia and Queens land

 

Density

Rural and Urban (24 million)

 

Age

All age category

 

Gender

Male, females and others

 

Income

High ,Low and middle income groups

 

Occupation

Employees and professionals

Demographic

Social status

Working class, middle class and higher class

 

Family size

Single, nuclear, joint family

Psychographic

Lifestyle

Traditional and moderns

 

Occasions

Regular  and other Festive seasons

Behavioural

Benefits

Price advantages and diversify products under one roof.

 

Occasions

Parties, Birthdays, anniversary and festive season along with normal days


Control Systems

Porter’s generic model

Figure 3: Porters generic model for the POR
 
(Source: Shoming, 2007, pp-20)
Porters generic model will help analyze that, POR is looking for the product differentiation focus rather than achieving cost leadership (Reid & Hinkley, 2006). Product differentiation needs change in innovation in recopies in order to attract the customers. Most of the multi cuisine restaurants is being looking to achieve the cost leadership in the market in order to increase their brand value. However, POR   are looking to product differentiation by innovating the recipes like Potato grilled with stiffed cheese and onion filler when its sales is been decreasing (Rangaswamy Burke and Oliva, 2008). With the help of given  PLC curve , it has been found that, every recipes will have and  ending , chef need to invent and change recipes pattern to keep attracting the customer base.   In order to product differentiation focus, POR will have to  spend more in the R&D in order to achieve  the large customer base of the Australia (Preble & Hoffman, 2009).
Princeton Organic restaurants chain would be opened all over the Australia that includes NSW, Northern territory, Western Australia and Queens land. In order to do so, company will have to choose the technology called Sap which helps the business to manage centralized (Payne & Holt, 2008). The centralization needs the technology to keep the track and monitoring of the restaurants along with consumer taste and preference.
POR will be locating its business in various high street market of Australian region in order to maintain the high brand value. The one restaurants in each territory will be enough to capture the large market base initially (Patel, 2011).


Promotions

Australia organic restaurants supplies  by farmers

2010

Fruits and vegetables

39.7%

Dairy products

14.6%

Beverages

13.9%

Breads and grains

12.4%

Spices

4.6%

Non hybrid egg and meat

11.1%

  

 
Graph 3: Australia organic restaurants supplies by farmers

(Source: Mouncey & Baker, 2009, pp-419)  

Promotional strategies

Expenditure (%)

Social media (Face book, Twitter, and YouTube)

58.01%

TV

32.02%

Websites

28%

Mobile app

21.03%

Magazines and Newspapers

14.11%

Offers, free discounts coupons

9.07%

 

Graph 4:  Promotional strategies

(Source: Mohammed & Rashid, 2012, pp-222)

Social media :  With the of  sharp rise in the internet users , most of the companies are looking to promote their products in the in social media platform like FCE book and Twitter fan page in order to gain the popularity  and high brand value (Matsuda & Hirano, 2007). POR will be showing various diseases cause by eating the fertilized food and benefits of eating organic food which will attract the customers. Social media plat form will be one of the major place for the advertising the products and services by the companies.

Online selling: Since 2005, intent users are being rise from 26% to 57% in Australia ahs been one of the reason for the online restaurants chain opening. POR will be also using be creating websites to sell online table reservation and the online selling of the delicacies (Marinova & Singh, 2008).

Mobile app: With rise in the technology, POR chain will also be inventing the mobile aaps in order to easily citation for the venue and table reservation for the customers in the restaurants. This will helps the customer take the liberty of using the mobile apps in order to reach the larger audience via using the mobile apps (Joshi, 2009).  Mobile app will enhance the company to build their brand and creates niche market for themselves when it comes to reaching the larger audience.

 The rest promotional strategies are being general which is been used since inceptions by the companies. Television is being strong media to attract the customer base or influence the customers (Hart & Ellis-Chadwick, 2000). Since TV watcher is Australian has been rise from the 2.01 billion as per the TVR rating, this proves it is one of the strong medium of managing the large customer base.

Other major promoting actives are offers and discounts. With the offer and discounts company will attract the customers. Offers and discount coupons on festive season and other tropical season would attract the customers to visits the restaurants. There has been ample evidence which shows that, customers are being attracted by the promotional coupon which given them satisfaction of low price. 

Age group for POR

Targeting (%)

Year 1

Year 2

Year 3

13-25

10.11%

30426

31643

35594

25-40

41.1%

61,583

64046

72043

Above 40

48.1%

26775

27685

30605

Total

99.31%

118784

123, 374

138,242

  

Income group per month of Snacks food customers (Europe , UK and USA)

Market shares (%)

$5000-$10,000

34.01%

$10,000-$20,000

28.09%

$20,000-$35000

31.03%

$35000-$40,0000

19.1%

$40,000-$50,000

11.08%

Above 50,000

 


Financial Plan

It has been found that, both the partners will be investing 80000 each in order to on the business . The rest of $345000 is been arranged by the debt financing. Debt financing is one of the prominent ways of financing the business (Erevelles, 2008). However, with large interest rates make it more riskier and dangerous. Apart from that, next options will be equity financing which has been which will not be easily available for the business because of new entrepreneur. It is less risky than the debt but company has to share with profit with the general share holders (Darke Ashworth & Ritchie, 2008).
Figure 6: Source of fund for the implementation of TQM
 
(Source: Gruca & Rego, 2009, pp-115)

Start-up Costs

Start up funding

Amount $

Start up expenditure

266,207

Start up asset to fund

238, 793

Total funding required

505000

Asset

 

Fixed asset

 

Non cash asset

151,507

Cash required

87,286

Cash balance

87286

Total asset

238286

Liabilities

 

Debt

345000

Total liabilities

345000

Capital

 

Partners

(Two partners 80, 000  each)

160, 000

Loss on start up expenses

266,207

Total capital

(106,207)

Total funding

505,000


Profitability

Particulars

2014

2015

2016

Sales

677297

717,935

761011

Direct cost

135,461

143590

152,206

Total cost of sales

135461

143590

152,206

Gross profit

541836

574345

608,805


Cash Reserves

Particulars

2014

2015

2016

Current asset

 

 

 

Cash

338,332

575,990

831,592

 Inventory

6044

6407

6791

Bank

41,775

41775

41775

Total

386,201

624,171

880,159

Long term asset

99732

99732

99372

Depreciations

30000

30000

30000

Total asset

455933

663,903

889,891

Liabilities

 

 

 

Current liabilities

 

 

 

Accounts payables

26,338

26725

28071

Total current liabilities

26338

26725

28071

Debt

322424

296092

267855

Total liabilities

348762

322817

295926

Paid in capital

160000

160000

160000

Retained earnings

(266,207)

(52,829)

(181,086)

Earnings

213,378

233,915

252,878

Total capital

107,171

341,086

593,964

Total liabilities and capital

455,933

663903

889,891

Net worth

107,171

341,086

593,964


Projected Income

Particulars

2014

2015

2016

Sales

677297

717,935

761011

Direct cost

135,461

143590

152,206

Total cost of sales

135461

143590

152,206

Gross profit

541836

574345

608,805

Expenditure

 

 

 

Marketing

3000

4000

5000

Depreciations

30000

30000

30000

Rent

50904

50904

52431

Equipment

 

 

 

Total operating expenses

213,642

218,532

227,813

PBT

328194

355,813

380,992

EBIT

358194

385813

410,092

interest

23376

21648

19738

Tax

91448

100,249

108376

Net profit

213,378

233,195

252878

 
Critical Risks and Assumptions

  • Profitability worth of double the investment which is more than half million after second year.
  • Presence of high quality with top notch menu service along with standard menu.
  • Value pricing for the food or the service served by the restaurants (Hoskisson, 2009).
  • Enhance the goodwill as being the best healthy food server within the Australian market.
  • Promote the organic food to create niche market in the restaurants industry.

 

Conclusion

From the above study, it has been found that entering in to the restaurants chain marketing Australia is very tough because of the huge competitions among the companies. However, one of the major areas which is still had not been tapped is organic food section which has been rapidly since 2005. The demand of the organic food is been increasing. The business plan for the new restaurants is been known as the Princeton Organic restaurants. There has been ample evidence show that, before opening of business market feasibility, financial feasibility and the personnel feasibility must be done. Australia is one of the growing market of organic food with demand is being risen up by 41%. Apart from that, POR will be using the penetration pricing sin order to stay in the competition in the market. Apart from that company has chosen the target customer base worth of $5000. Lastly, financial planning budget has been helpful to understand the restaurants business been able to gain the profitability.

Appendices

Appendix A: Key Personnel Details

Particulars

2014

2015

2016

Wages

126738

129,228

136,982

Total people

7

9

14

Total payroll

126738

129,228

136,982

 

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