Pizzeria in Melbourne - Market Feasibility - Example

Pizzeria Business Plan By: Professor: Class: University: City: State: Date of submission: Table of Contents Table of Contents 2 Executive Summary 3 Introduction 3 Market Feasibility 4 Technical Feasibility 6 Financial Feasibility 8 Human Resource Feasibility 10 References 12 Appendix A 13 Pizzeria Business Plan Executive Summary Pizzeria is a new player within the Australian pizza industry. The company aims to offer comfortable and familiar products to the customers within Melbourne town. Motivated with the strong desire of establishing family-oriented dining experience and ensuring provision of home delivery services, Pizzeria would be positioned to ensure that it takes advantage of the needs of the market and serving Melbourne and neighbouring countries. Melbourne population has been on the rise with the demand for pizza increasing leading to creation of market gap within the industry. The strategy of the company is to exploit the first-mover opportunity and establishing itself as the most preferred provider of pizza in Australia. Moreover, the company believes that locally owned pizza company is the best option for serving the rapidly growing population. This business plan encourages exciting, profitable start-up year while focusing on future growth as it meets the demand of the company. In all, the business plan described a healthy company that ensure the achievement of good prospects. Introduction With increasing level of demand in the Pizza industry, Pizzeria aims to invest within the industry with an objective filing various gaps including deliverance of customer value proposition, ensuring consistency in quality production, and efficiently pricing the products in regards to quality and customer value proposition. The new player within the industry is within comfortable, familiar, and in a popular Melbourne city. The business creates a friendly and pleasant environment for its potential customers in a properly designed and productive setup to ensure motivation of its human resources. Pizzeria will provide the best value, good taste pizza and use high quality ingredients. Therefore, customers desiring great tasting pizza will experience great satisfaction. Moreover, the company is to be among the home-delivers of pizza, which makes the services provided convenient, and customer focused (Bhattacharyya, 2009, 214). Most of the customers are within Melbourne forming the market base. The company aims at creating and nurturing healthy, creative, fun working and respectful setup for its workers through ensuring fair compensation, encouraging respect for the customers, and offering quality products. Moreover, Pizzeria seeks fair and responsible profit enough for keeping the institution financially healthy to ensure long term and fair competition for the investors. Market Feasibility The Pizza industry has been changing considerably over the past five years. While the traditional pizzas remain popular within the Australian market, the preferences of consumers are shifting as they embrace gourmet and healthier options over the past five years despite the increasing price points. Through 2016-2017, the industrial revenue is expected to increase by a compound annual 2.8%. Such strong growth includes forecast increment of 0.9% within similar financial years within the revenue hitting $3.7 billion. Considering the diversification of consumer demand, innovation of the product has been the major driver of industrial growth (Išoraitė, 2013, 119). The primary target market is the people desiring comfortable and family-oriented setup for the dine-in pizza. However, the secondary target market also desire the delivery service for pizza or the take-out approach which offers convenient and reliable services to the potential customers although there is an overlap in the segments. Melbourne and the surrounding environment are the growing middle-class, which offers the required market target. The majority of these segments are families (Potter, 2009, 77). According to the survey undertaken by the Australian government, the population of Melbourne is expected to increase. Convenience is the major factor that contributes the growth of company. The products are available in popular Australian food stores and outlets, which are easily accessible to the customers. However, to ensure integration of technology in supply chain, the company aims at developing an application that would enable the customers to make orders and track the process of the orders (Vrontis & Pavlou, 2008, 289). With the industrial growth and increasing competition, Pizzeria not only aims to explore Melbourne market but also other neighbouring cities with an aim of increasing its market scope. The company creates a friendly and pleasant environment for the customers in a properly designed facility (Lencioni, 2007, 157). Besides, the company is sensitive to the look and taste of its pizza and high quality ingredients. With the tough economic times in Australia, the company offers the best possible value to the customers in need of great taste at affordable prices. Several external factors are likely to influence the operations of the company. Political and legal factors involve evaluation of various dimensions including the attitude of the government, stability, and financial policies of the country including the bureaucracy of the government (Liff, 2011, 101). Political and legal forces are vital within the industry as they influence various regulatory bodies. Therefore, it is important that the company understands the country’s political and legal background. Restrictions and regulations by the government regulate promotion content, restricts the freedom of the advertisers, and visual presentation. Price regulation is another factor that requires consideration since the government ensures there is no exploitation of the customers. Shifting in the sociological demographic trends tend to shift the spending powers. Moreover, the structure of the Australian market allows competition (He, Zha, & Li, 2013, 467). Through gathering information on the competitors including the strategic strengths and weaknesses, objective, tactics, and reaction patterns, the company will have the opportunity of defining its market position and be prepared for the challenges it is likely to face during high competition. The barriers to new entrants within the Australian pizza industry is high considering the well established companies such as McDonalds, Pizza Inn, and Pizza Hut which have been able to achieve the economies of scale and preferential access to the raw materials and distribution channels. The new entrants might find that the industry requires high cost for investment and securing plant and machinery. Technical Feasibility In the advent technology, businesses are integrating various components of technology with an aim of improving their effectiveness, efficiency, and reliability. As a result, the company also has an objective of ensuring integration of technology as means of attracting and retaining the customers. The developed technology will focus on reducing the gap between the customers and the company. However, to reduce the cost of technological integration, Pizzeria would employee programme developer. Outsourced contract production is increasingly becoming popular within the pizza industry with an aim of maintaining their assets (Hynum, 2014). However, since the company has the ability of producing the product, it would focus on in-house method of production. Through in-house production, the company would have control on its processes, scaling-up production, and formulation of the patents. Since the company has several outlets, it would focus on both in-house and partnership sales and distribution with different fast food stores in Australia. The combination of these activities would ensure exploration of different market segments and penetration of the sales and distribution market gap. Partnership and in-house sales and distribution would ensure there is flexibility and quick reaction to the market. Through in-house, instead of contacting the other businesses to change something in the product or contribute an idea, the company would be flexible enough and make the decisions fast. Such a pace and flexible manner of contact would allow the business to move through various production designs, production development, and easy and quick production phases (IBISWorld, 2016). If needs be to change any mechanism of sales and distribution, the company would have the opportunity of reacting quickly. For production, the company requires different resources. Pizza places often require relaxed environments and gourmet, which the company has adequate resources of achieving. With such, the company is sure of capturing the customers while offering quality pizza at reasonable costs. Pizzeria has various facilities for its fresh pizza and plenty room for the waiting customers. Pizza locations require adequate space for the storage of various baking equipment, coolers, and refrigerators. To keep up with the needs of the customers and ensure continuous provision of quality pizza, the company has been able to establish contracts with quality vendors and suppliers. Moreover, such partnership would also assist in market penetration. With rising concern on the health challenges associated with consumption of pizza, the Australian government has been enacting laws to regulation the fast food as a whole. Food safety regulations are applicable to every stage of production. The Food Standards Australia New Zealand outlines food and safety standards and applicable to every business that handles food for sale. Australia has more than 4,000 pizza restaurants and takeaways outlets most of which are owned independently. Besides, before purchasing the pizza from the stores, the law requires the consumers to inspect the safety records and ensure that the business has clean record in maintaining and preparing food. Besides food regulations, Australian pizza industry is subject to other regulations including Competition and Consumer Act (2010) including the Australian Consumer Law. The law does not require businesses to make marketing claims that they cannot substantiate. With the plan of investing in technology, the company would be subject to provision of links to Privacy Policy and Website Terms of Use to the website visitors. Moreover, market dominants are integrating technology in their production chain and developing applications compatible with both computers and phones (Legal Vision Pty Limited, 2015). Pizzeria also has similar objective; therefore, it would enjoy the desired competitive advantage. Financial Feasibility The company’s verified profit margin is 20 per cent. With the sales of $286,000 carryout pizza, the company would make more 20 per cent profit. It is important that the company states its sales forecast based on the data acquired during market survey and some assumptions readily available in the market. Additionally, sales projection is done based on what the company considers obtainable within the industry and assumption that the country would not experience economic meltdown and irrelevant competitive strategies. Start-up Requirements Start-up Expenses Professional Fees (Consultation, Accounting, and Legal) $1,800 Stationery and placemats $1,100 Rent $2,000 Insurance $350 Website Development $1,000 Marketing $2,500 Miscellaneous $3,800 Expensed Equipment $5,000 Renovation $8,300 Total $25,850 Start-up Assets Required cash $23,100 Inventory $6,000 Long-term Assets $20,300 Other current Assets $5,250 Total $54,650 Total Requirement $80,500 Although the business at making profit, there are several risks it is likely to experience. Since the available cash is limited, the Pizzeria would have to use some of its fixed assets as security for acquisition of the loan. Considering the unpredictability of the business, if the business experience losses, then the owner would experience personal financial risks against the assets used as a security for the loan. With increasing rate of competition within Australian market, the company might be forced to use unsustainable marketing strategies to acquire the desired competitive advantage. As a result, there would be emergence of trust issues between the company and customers, which in turn leads to reduction of sales and profitability of the company. Pizza industry requires skilled and experienced personnel. In some cases, upcoming companies lose potential employees due to less reward offered considering their profit base. These factors form the base of the company’s overall risk risks. With the well-established plan, the company stands the chance of acquiring the funds from the bank through loans and payable within the agreed period. Human Resource Feasibility Pizzeria focuses on hiring the new employees driven by the urge of satisfying the needs of the company. Moreover, the company would focus on provision of the required training to ensure they perform to the required expectation and striving to increase the knowledge and skills of the employees. Giving the workers annual appraisal based on their performance would assist in motivating the employees and making them work harder to acquire the appraisals. Communication is vital among the employees; as a result, the company would establish both internal and external communication system. With the increasing competition in the market, the company is seeking foe employees with adequate communication skills and experienced in dealing with diversified customers. Employees with outstanding communication skills would have the ability of driving company’s objectives while ensuring compliance with the outlined codes of ethic within the industry. The company would require a manager. Essentially, the manager would have to be a commercial manager with the major objective of safeguarding the financial success outlet of the company and ensuring maintenance of the reputation of the company. However, such position has diversified roles with strong connection to the hospitality element; therefore, it is vital to ensure that the company delivers high-quality pizza and good customer relations. Within the pizza industry, formal qualifications in most cases are considered less important compared to the evidence of relevant work experience. More important, personal qualities are vital for any successful manager. Hence, it the company would focus on the employees with qualifications such as excellent customer skills, energy, and stamina, ability of leading and motivating the team members and influencing the people, proper organizational skills, ability to making decisions effectively, problem-solving, communication, and tactful skills. One the methods that the company would use in motivating the employees are incentive plan to expend the efforts of the employees. However, the incentive method the company is likely to use is the pay-for-performance arrangement, which involves rewarding the achievement of the specific objectives. The company would also use side agreement compensation which is a variable pay plan involving the negotiation of the employee and the employer in a closed ended exchange with the assistance of a Professional Employer Organization (PEO). The role of PEO is to ensure facilitation of the side agreement compensation with an objective of establishing fair exchange for both the parties. However, it is vital to establish and formalize the terms and condition of the agreement to ensure the workers have concrete understanding of the expectations and rewards. As a result, there would continued motivation and increment in organizational productivity benefiting both the parties over time. References Bhattacharyya, D. K. (2009). Human resource development. Mumbai: Himalaya Pub. House. He, W., Zha, S., & Li, L. (2013). Social media competitive analysis and text mining: A case study in the pizza industry. International Journal of Information Management, 33(3), 464-472. doi:10.1016/j.ijinfomgt.2013.01.001 Hynum, R. (2014, December). 2015 Pizza Power Report | PMQ Pizza Magazine. Retrieved September 26, 2016, from http://www.pmq.com/December-2014/Pizza-PowerThe-2015-Pizza-Power-Report/ IBISWorld. (2016, July). Pizza Restaurants and Takeaway in Australia Market Research | IBISWorld. Retrieved September 26, 2016, from http://www.ibisworld.com.au/industry/pizza-restaurants-and-takeaway.html Išoraitė, M. (2013). Motivation tools though lenses of prospective employees. JSSI, 1(2), 116-123. doi:10.9770/jesi.2013.1.2(6) Legal Vision Pty Limited. (2015, July 15). Opening up a Pizza Restaurant - Legal Considerations - LegalVision. Retrieved September 26, 2016, from https://legalvision.com.au/opening-up-a-pizza-restaurant-legal-considerations/ Lencioni, P. (2007). The three signs of a miserable job: A fable for managers (and their employees). San Francisco, CA: Jossey-Bass. Liff, S. (2011). Improving the performance of government employees: A manager's guide. New York: American Management Association. Potter, T. (2009). The Eagle Boys Pizza story: How Tom Potter built Eagle Boys across Australia and New Zealand from a single store. South Brisbane, Qld: Tom Potter. Vrontis, D., & Pavlou, P. (2008). The external environment and its effect on strategic marketing planning: a case study for McDonald's. J. for International Business and Entrepreneurship Development, 3(3/4), 289. doi:10.1504/jibed.2008.019163 Appendix A Start-up Expenditures and Expenses Worksheet Item Total Cost Cash Required Land __________ $8,300 Capital Equipment __________ $23,100 Computer __________ $9,000 Beginning Inventory __________ $6,000 Start up Supplies __________ $8,000 Licenses and Permits __________ $1,800 Leasehold Improvements __________ $2,700 Utility hookups& Installation __________ $5,000 Advertising (Preopening) __________ $2,500 Insurance __________ $350 Other __________ $1,000 Total Estimated One-Time Cash Requirements __________ $67,750 Start-up Operating Expenses Estimate No. of Months Total Cash Item Monthly Expense X Before Break even = Required Owners Salary $23,000 Employee’s salary, wages, benefits $15,000 Rent $2,000 Promotion expenses $2,500 Supplies and postage $350 Vehicle Expenses $5,000 Telephone $1,000 Travel $5,000 Interest $550 Maintenance $14,000 Other $10,000 Total Cash Required to Cover Operating Expenses $78,400 Plus: Total One-Time Cash Requirements (Previous Table) $158,900 Add 10% Safety Factor $15,890 Total Cash Required for Start-up $174,790 Read More