X-Inn Restaurant - Business Strategies - Example

Business Plan for X-Inn Restaurant Name Institution Course Tutor Date Table of Contents Executive Summary 3 Introduction 4 Our Mission 5 Market Feasibility 5 Market Segmentation 6 External Factors 7 Government Policy 7 Industry Dynamics 7 Barriers to Entry 8 Capital Requirement 8 Economies of Scale 8 Product Differentiation 8 Technical Feasibility 8 Developing Technology 8 Options of producing the products and providing services 9 Sales and Distribution 9 Resources Required 9 Raw Materials 9 Human resource 9 Suppliers 9 Facility and Equipment 9 Laws and Regulations 10 Personal Certifications 10 Intellectual Property 10 Environmental Liability 10 Emerging Technologies 10 Financial Feasibility 11 Pay Back Period 13 Risk V. Reward 13 Opportunity Cost 13 Sources of Finance 13 General Numbers that would indicate attractiveness of the venture 14 Gross Margin 14 Net Profit Margin 14 Return on Investment 14 Pay Back Period 14 Human Resource Feasibility 14 Technical and Management Experience 14 The Owners 14 Promoters/ Entrepreneurs/BOD 15 Management 15 Manpower Requirement 15 Growth Strategy 16 References 17 Appendix A 18 Executive Summary The fast food industry has been veiled with intense competition from all corners as businesses adopt electrifying strategies to earn competitive advantage. Whilst the rate at which this industry is growing attracts much interest to potential entrepreneurs, the dynamic challenges of the market still emerge a deterring factor. The economic growth and development of Australia is promisingly recovering from the effects of global financial crisis (Edwards, 2010, p.359). With this, the improvement in the financial and security markets and government interventions, the environment was conducive for entrepreneurs to materialise their business ideas. Introduction X-inn Restaurant is a modern locally established fast food restaurant that will operate more than one fast food outlets in Australia to meet the demand needs of the market. X-inn food will provide a variety of exceptional food products at affordable prices based on our competitive advantage. Our brands will be all over Australia in the foreseeable future and our services and branding will be customer-oriented in the sense that the health of our customers is to be the key priority in our business pursuit. Our products and services will be segmented to meet the market demand and our concern will also be drawn to sustainable business operation. Well, if you are looking for an exhilarating inn to serve your breakfast, lunch and dinner, then X-inn is the place to check-inn. Given that now the per capita income is improving and the consumers’ propensity to consume has improved overtime since 2007, we seek to exploit this opportunity to close market gaps in the fast food industry. Our main plan is to open up outlets in various shopping malls in Australia, with our first restaurant to be established in New Zealand. With our spirit of customer satisfaction and sustainable business operation, we believe our brands will be one of the legitimate tastes of our customers. The purpose of this plan is to document the informational guidance to the establishment of our first X-inn in one of the most vibrant malls in New Zealand. The plan sets out our business idea and what we will offer differently from competitors, an evaluation of our business idea, our source and amount of initial capital and other important estimates. Our Mission Our mission is to set up an innovative trend in customer-satisfaction through ICT in the fast food industry based on ‘listen-to-customers’ policy. Through this policy, our menu will incorporate customers’ input and customers will be earning points depending on what they have spent. We will also set a day for offers to our products where we will not only make sales at cheaper prices, but customers will also ‘buy-one, get-one’ free. In order to achieve this, we will always adopt strategies that sustainably reduce on costs. This will be through sustainable practices such as ‘Go-green’ projects, establishing an excellent HRM and corporate social responsibility. Market Feasibility Many Australians have experienced increased consumption owing to the improving economic conditions after the global financial crisis. According to a research on the eating habits of Australians, 83% of the New South Wales and ACT eat out of their homes each month. In addition, people make 28.9 million visits to fast food hotels to cafes each month in NSW. 51.5 million Australians make visits to a Quick Service Restaurant (EMMA, 2014). According to the Enhanced Media Metrics Australia (EMMA), 60% of people aged between 14 and 29 are found to be the most likely to eat from first food hotels. Half of visits made by 81% of Australian people eat out in fast food chains. The market is still not in full capacity given that brand loyalty changes stochastically. The growth rate of fast food in Industry was recorded at 7% in current value terms in 2010. For the period between 2012 and 2017, the annual growth rate is at 3.9% with an expected revenue growth of 3.0% by 2017. The market is still not at full capacity as growth opportunity of the industry is still available. Average frequency of visits in shopping centre accounts for 74.1% (Mathew Bailey, 2011, p.4). Australians have been getting products from existing fast food restaurants such as Mc Donald, Subway and Retail Food Group Limited among other fast foods which operate as franchise businesses. Whilst these fast food hotels impose significant pressure in this industry, there still exist certain gaps in corporate governance, production costs, salaries and wages, unhealthy menus, branding and sustainability issues. Market Segmentation The target market comprises of people who often do window-shopping and actual shopping in malls, white-collar workers, college students and potential customers along the busy highways in NSW and other parts of Australia where we will open up other branches. Therefore, we can precisely group them into working-age, students and others. Others include domestic and international tourists. This is where the market is. The working-age stands at 66.29% according to Shopping Centre Council of Australia report (2011). Young youths between 12 and 25 years account for 18.6% of the population (mccrindle research, 2013, p.1); these include college and university students who are studying while working. External Factors Government Policy Fiscal and tools of monetary policies may be used by the government to regulate the economy. In the process, the market operation may be affected significantly either positively or negatively. Expansionary fiscal policies may boost operation of fast food companies by increasing demand. Contracting fiscal policies may affect the industry by plummeting the consumers’ purchasing power, where consumers will be afraid of spending much. This will reduce the industry growth and revenue. Industry Dynamics The availability of strong supply chain in the industry will also have an impact on the fast food hotel such that raw materials are made easily available in order to produce and meet customers’ demands. The quality of raw materials from suppliers would also matter together with terms of supply. The effect of changes in industrial policies may also have significant impact on business operation. These policies may reflect issues like partnerships, environmental initiatives and wage rates among others. Changes in level of technology and the need for competitive advantage may affect internal operations which may be reflected in changes in costs and revenues. Barriers to Entry Capital Requirement The initial start-up capital required to start a fast food hotel is large given that the industry encompasses highly competitive fast food hotels already. Economies of Scale The benefits of economies of scales enjoyed by established and successful fast food hotels make it very difficult for new entrants to survive. This is because of the high costs incurred by new businesses which tend to make prices of their products very expensive. Product Differentiation As an important tool for survival in a highly competitive market, new entrants face challenges of providing services and brands which are quite unique. This makes them spend a lot in creating customer loyalty through branding. However, new entrants can easily propel the make if the developers affiliate to the brand (Enz and Peiró-Signes, 2014, p.141). Technical Feasibility Developing Technology For a period of 5 years we will be acquiring off-the-shelf technologies due to the fact that it may be costly to have an advanced IT department and required expertise in information system development. Options of producing the products and providing services All our products will be produced in-house while some services will be subcontracted for the first three years. Sales and Distribution This will be done by our sales representatives and distributors Resources Required Raw Materials We will require raw materials for producing our products in-house. Raw materials will be procured from reputable suppliers. Human resource We will need human resource to handle various job positions such as barristers, head of chef, chiefs, waiters and waitresses and those in management. Suppliers Even though some coffee will be made in-house, some materials will be procured form listed and register suppliers who have upheld reputable standards in their businesses. Facility and Equipment Our businesses will require a premise in which it will operate. The building will be leased and annual rent paid as per the lease agreement. In addition, we will require an ample parking for our customers. Equipment such as utensils and furniture will also be required and they will be purchased immediately our lease agreement is entered into. Laws and Regulations Our business will be operating under the company’s Act, employment Act, Healthy Food Acts and standards that ensure hygienic operation of fast food restaurants. Moreover, for sustainability issues, the law government environmental management together with standards which advocate sustainability reporting will also be considered. Personal Certifications A degree holder in business administration, CPA knowledge and studies sociology. Intellectual Property The intellectual property law requires companies or individuals not to use one’s idea or intellectual property in the conduct of their business or any other interest. For this reason, we are keen to ensure that our designed trademark, patent and copyright issues are observed. Environmental Liability Environment conservation is an important practice in fast food industry. For this reason, many fast foods have entered into partnerships and joint projects to conserve the environment. This is to ensure sustainability of business operation. We therefore, acknowledge the need for environment conservation so we will conduct an environmental risk analysis to manage our supply chain and other factors that may affect the environment (Maloni and Brown, 2006, p.52). Emerging Technologies Fast food restaurants are shifting to online sales and marketing and this poses a significant challenge for companies which are new entrants. Without sufficient capital, then this may not be implemented and it may be difficult to cope with the industry. The infrastructure may be costly and lack of skills within the company may severely affect the business too. Financial Feasibility Sales Revenue Forecast We forecast annual sales based on the market information and industry trend. In our first year, we anticipate high sales which through brand promotion will be able to penetrate the market the coming festive season. When we start our business in November, will be within the confines of the benefits of the festive season because students won’t be in schools and many people will be on vocational leaves. We similarly anticipate growth in our cash flows and so is revenue. This will be facilitated with our strategic implementation of our marketing strategy and cost management in the long run. Pay Back Period PBP== 2.66 Years Approximately 3 years Risk V. Reward The level of risk in this investment is quite high because of the level of business and market risk. However, for this reason, the rate of return may be promising if certain strategies are adopted to handle business risks. Opportunity Cost I cannot get the same expected return from any other investment because this kind of business is very volatile market even though affected greatly with seasonal changes. Sources of Finance Our capital will be raised through shares. We will raise the capital through inviting potential shareholders to subscribe to our shares. In addition, we will also raise finance through issuing debentures to the public. As the beginners of this business, we will have to give up our properties such as land and other fixed assets at our disposal in order to cover for secured debentures. General Numbers that would indicate attractiveness of the venture Gross Margin GP= (For three years period) Net Profit Margin NPM=* 100= 34% (3 years) Return on Investment ROI= (In the first year) NB: The cost of investment includes $1 million raised through shares in that year. Pay Back Period PBP== 3 Years Human Resource Feasibility Technical and Management Experience The overall management expertise is required with the management having marketing, accounting, human resource management, ICT and Public relations skills and experience. The Director should have analytical capabilities and the ability to make decisions in a manner consistent with the organisation’s policies. The Owners The owners of this business are the seven promoters of this business idea and those who have started it up who are also shareholders in this business expecting returns in the future. In addition, shareholders from the public who will have subscribed to our shares will also be owners of this business. Promoters/ Entrepreneurs/BOD Roles Resume Directorship Oversee management Corporate governance Enhancing public relations Approving investment decisions Authorising issue of shares Management Manage employees Preparation and summarisation of financial statements Forecasting and budgeting Information communication technology roles Cost management Marketing and brand promotion Supply chain management Decision making roles Trend analysis Financial management Operation management Procurement and allocation Manpower Requirement We will find our employees through advertising vacancies and inviting interested parties to apply for the positioned mentioned in the advert. Our advert will be carried out by an advertising agent. The responsibilities will be communicated in our website too where the job vacancies will also be advertised. Our main targets are college students working on a part-time basis, graduate, and individuals with 2 to 3 years of experience in respective managerial roles. We will find the right employees through formulating and implementing quality selection recruitment procedures. Job matching and orientation programs will also be part of our strategy to improve talents and productivity of our business. Employees will be paid on hourly basis for operational staffs depending also on positions held. This means that the hourly rate will depend on the position assigned to an individual. Employees will be motivated through annual evaluation and salary increments, training and development programs, organisational trips and seminars. They will also be given opportunities to participate in service innovation implementation because this will motivate them too (Cadwallader, et al., 2010, p.239). Promotional program will also be effected. The health and safety of our employees will also be in our concern whilst in the workplace. For instance, there is an economic impact between indoor clean air and employee performance (Klein, et al., p.285). Employees will require training in areas such as book-keeping, front-office management, customer handling, presentation and marketing, dressing, menu handling, communication and etiquette. Growth Strategy Quality will be managed by establishing and implementing quality control measures. Our employees will be educated regarding organisational quality control requirements and expectations. In addition, we will ensure that we procure raw materials from credible and reputable suppliers. Our business will also meet the hygienic requirements of the standards and principles guiding fast food companies. The structure of our organisation will change depending on our strategies to minimise cost and gain competitive advantage. The structure will also change while shifting to more advanced technologies in the provision of services. Employees will be subjected to continuous mentorship and development programs which will ensure that they heighten their skills and grow in their careers. Employees will be trained in various positions within their departments based on annual performance evaluation. References Cadwallader, S., Jarvis, C.B., Bitner, M.J. and Ostrom, A.L., 2010. Frontline employee motivation to participate in service innovation implementation. Journal of the Academy of Marketing Science, 38(2), pp.219-239. Edwards, J., 2010. Australia after the global financial crisis. Australian Journal of International Affairs, 64(3), pp.359-371. Enz, C.A. and Peiró-Signes, Á., 2014. How fast do new hotels ramp up performance?. Cornell Hospitality Quarterly, 55(2), pp.141-151. Klein, E.G., Forster, J.L., Erickson, D.J., Lytle, L.A. and Schillo, B., 2010. Economic effects of clean indoor air policies on bar and restaurant employment in Minneapolis and St Paul, Minnesota. Journal of Public Health Management and Practice, 16(4), pp.285-293. Maloni, M.J. and Brown, M.E., 2006. Corporate social responsibility in the supply chain: an application in the food industry. Journal of business ethics, 68(1), pp.35-52. Internet sources: Enhanced Media Metrics Australia. http://emma.com.au/emma-out-of-home-dining-report-2/#.V_foX48rK70 Pay Scale Human Capital. http://www.payscale.com/research/AU/Industry=Restaurant/Hourly_Rate Australia Small Business Commissioner http://www.asbc.gov.au/resources/faq/how-much-does-it-cost-register-or-renew-my-business-name-through-australian-securities Australian Online Company Registrationhttp://www.acnregister.com.au/ GET PRICE (Computers) http://www.getprice.com.au/desktops.htm Advertising Rates and Size, 2013 Australia’s…- Metro Magazinehttps://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0ahUKEwjqt4TOos3PAhWLuRQKHbDKCtwQFgg4MAQ&url=http%3A%2F%2Fwww.metromagazine.com.au%2Fmagazine%2Fpdfs%2Fmetro_rates_and_dates_2013.pdf&usg=AFQjCNFJUPr2-uIJOa_uZrcFSozWIyaF1A&sig2=vFgKKZL5PuDOGIG9O5bJHw&bvm=bv.135258522,d.d2s&cad=rja Appendix A Start-up Expenditures and Expenses Worksheet Item Total Cost Cash Required Land _____Null_____ __________ Capital Equipment __$160, 000________ __________ Computer ____$27,075______ __________ ___________ __________ __________ ___________ __________ __________ Beginning Inventory ___$21,900_______ __________ Start up Supplies ________$181,900__ __________ Licenses and Permits __$591________ __________ Leasehold Improvements _____null_____ __________ Utility hookups & Installation ___$8,420_______ __________ Advertising (Preopening) ________$2500__ __________ Insurance _________$6000_ __________ Other __________ __________ _______________ __________ __________ Total Estimated One-Time Cash Requirements ____ $408,386______ __________ Start-up Operating Expenses Estimate No. of Months Total Cash Item Monthly Expense X Before Break even = Required Owners Salary ____$4,800______ __________ __________ Employee’s salary, wages, benefits __$299,520________ __________ __________ Rent ________$120,000__ __________ __________ Promotion expenses ____$150______ __________ __________ Supplies and postage ____$250______ __________ __________ Vehicle Expenses ________$1,350__ __________ __________ Telephone __________$1,350 __________ __________ Travel __________ ___null_______ __________ Interest __________ $77,428__________ __________ Maintenance __________null __________ __________ Other __________ __________ __________ ____________ __________ __________ __________ Total Cash Required to Cover Operating Expenses __503,498_______ Plus: Total One-Time Cash Requirements (Previous Table) ___$911,884_______ Add 10% Safety Factor _____$91,188.4_____ Total Cash Required for Start-up ___$1,003,072.4______ Read More