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 $500000 in order to open the business. With the help of menu and tropical changing season, company will be changing its frequently in order attract the customer base. With the help of pricing strategies model, company will be able to generate large customer base and targeting the middle income group. Porter’s generic model considers that, the POR chain will be using product differentiation in order to create niche market in long run. Lastly, with the help of budgeted financial statements like profit and loss statement and the balance sheet would help to analyses the potential net return on investment of the ownership along with total expenditure.Are You Daunted by the Thought of Due Assignments?
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Company Overview
Business Description
Figure 1: Princeton organic Restaurant chain ownership structure
(Source: Schnaars, 2010, pp-125)
The Product or Service
Company History
The company is a Limited Liability Company with 2 major owners holding the equal shares which are 50% of each in the franchisee. The ownership structure is very based on the partnership between the parties. The company will have funding from the both the banks and the own capital.
The Industry
Countries with large domestic market for organic restaurants opportunities |
2013 (million,$) |
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
Industry Trends
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
Production
Facilities
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
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
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 |
Reference list
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Websites
Greene, C. (2015). USDA ERS - Organic Agriculture: Organic Market Overview. Ers.usda.gov. Retrieved 27 January 2015, from https://www.ers.usda.gov/topics/natural-resources-environment/organic-agriculture/organic-market-overview.aspx
Organic Consumers Association,. (2015). Demand for Organic Food Growing Faster than Domestic Supply. Retrieved 27 January 2015, from https://www.organicconsumers.org/news/demand-organic-food-growing-faster-domestic-supply
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