Executive Summary
This report outlines a business plan to
establish a restaurant ‘Nutri Break’ which will focus on serving, healthy
breakfast, light lunch and snacks, to office goers, working mothers and
tourists. The area of operation of Nutri Break will be a business centre in the
city of London and outlet will cater to an area of approximately 20 square
miles.
The report studies the various trends and
statistics (such as growing health concerns and less time to cook at home) that
support the business opportunity; and also underlines the various threats (such
as low disposable income and rising costs) to prepare a sound exit plan. Both
the pointers contributing to the creation of a well structured business
proposal.
Service Details
The proposed service in this business plan
is that of a restaurant/eatery. The proposed name of the outlet is ‘Nutri
Break’ and it is positioned to be launched within 1-2 years. The restaurant
will be catering to the ‘city of London’ a major city centre in London.
Although it is noted that a number of restaurants is already catering to the
populace, but only very few focus on healthy breakfast, light lunch and
nutritious snacks as alternative food options on their menu. As an ever
increasing number of Londoners are working class having little time or skills
for cooking, a proposition as Nutri Break is well suited to the requirements of
the city. This is further evidenced by the fact that an average London
household spends 8-9% of income on eating out or drinking and the proportion of
eating out has grown from 36%-60% in the last four decades.
Nutri
Break aims to win over a clientele by operating on a quick service restaurant
format to make it lucrative to young professionals who are tired of eating from
fast food outlets and are moving towards healthier choices. The format will
enable the customer to pay while ordering (thus cutting the need to wait for
the bill and easing the customer to move out at will) thus, combining the
benefits of both a full service restaurant as well as a fast food outlet.
Further, the restaurant will be based at a convenient location and will focus
on serving delicious meals (comparable to home cooked ones), and selling frozen
food and food mixes (to enable clients to enjoy partially home cooked food
without the labour that goes into it).
Close to 74 restaurants went out of
business in 2010; this is strong evidence to the fact that restaurant business
is not all that rosy a picture it seems to be. High material costs, labour
problems, changing consumer tastes, competition and an industry with inherent
low margins it is difficult to sustain such a business and it can only be done
with strong business prudence.
In this report we undertake a structured
approach to prepare a sound business plan for Nutri Break, This will be done by
means of the following sections, market and competitor analysis, marketing
plan, organisational plan, operational plan, financial plan and, future
planning and risk assessment .
Market and Key Competitor Analysis
Given the statistics that, an average adult
in the UK goes out to eat over 201 times a year, the restaurant/eatery industry
employs over 1.13 million people in the UK and the quick service restaurant
(QSR) industry has a 3.0% share in the £4.92 billion which makes it
extremely lucrative to step in to the business. Examined below are mentioned
some of the trends that may influence the business in the QSR market especially
one like Nutri Break:
1.
Busy lifestyle
Increasing number of Londoners is now
becoming a part of the working class lifestyles. Employed by various
corporations, business holdings and government establishments, increasing
number of people are taking to the streets early morning to commute to work and
back in the evenings. Such a pace has left little time with households (and
especially working women) to cook meals also, a lot of young people lack the skills
to cook. This only amplifies the need for Nutri Break to cater nutritious
meals.
2.
Health conscious
A lot of people around the world
(especially in the developed world) are becoming conscious of the need to
maintain good health to prevent diseases such as diabetes, obesity, cancers,
etc. This has lead to a surge in demand for healthier food options and a lack
of preference for junk diet.
3.
Dine in as well as take away
With decreasing time for self, food on the
go is the preferred choice of restaurant goers; with over 65% of restaurant
meal occasions happening at quick service outlets. This has only increased the
relevance of including a take away option in dine in format of Nutri Break
restaurant.
Competition
There are over 250,000 eating outlets
across the UK. In a sector that is growing at the rate of over 3% annually and
has seen 134 new opening in 2011-12 competition cannot be ignored or avoided. A
lucrative sector as this is bound to attract new players and Nutri Break will
have to tackle the ones in its immediate locality.
The probable competitors of Nutri Break can
be listed in 2 distinct groups:
1.
Direct
Competition- these will be eateries serving a
similar offering as Nutri Break. Restaurants such as Chipotle, Vapiano, The
Delaunay, Bill’s and the like will be the kind of competition the restaurant is
likely to face. The good news is that there aren’t much like these and the bad
news is that these have a loyal clientele and a positive brand value; competing
with such restaurants will be a tough nut.
2.
Indirect
competition- this group comprises of every other
eatery alternative available to the target consumer. These could be fast food
outlets such as McDonald’s, street food, or simple homemade meals. Consumer’s
preference (or lack of any) among these alternatives will determine whether
such a consumer will be willing to try a restaurant serving nutritious meals.
Marketing Plan
Target Market
The target market of Nutri Break is the
young office goer of age 21-45. Such a population is the one which is always on
the go, has least time for household chores and handles maximum stress at the
workplace. Nutri Break aims to cater to such a clientele and fill in the need
gap presented by the opportunity.
Pricing
While pricing meals at Nutri Break a
benchmarking process has been established to arrive at probable prices of the
services and food at the outlet.
Since the closest competitors of the
restaurant price a meal for two (with drinks) between £25-£30 (and these are full service restaurants), Nutri Break
should price a meal for two between £15-£20 given Nutri Break will follow a QSR format which
is more efficient and less involving than a full service establishment.
Marketing Plan details
The marketing of Nutri Break restaurant is
to be done over three phases, pre opening, post opening, and point of sales. A
total of £10000 will be allocated annually as marketing budget and £14000 as pre launch
expenditure. Promoters propose to employ a Public Relations firm for the pre
opening effort however, post launch (and point of sales) marketing will be done
by restaurant owners and managers. Discussed below are key marketing strategies
to be employed:
1.
Local press and media
It will be the duty of the hired Public
Relations agency to use its influence and contacts to promote the restaurant in
the local media. Mediums such as bill boards, news paper inserts and flyer
distribution will be utilised.
2.
Social Media and Email campaign
The target population of the restaurant is
a tech savvy won. Using media such as facebook and twitter to gather audience
for relation building endeavours is a must as a lot of young and middle aged
population utilise such platforms for social interaction. The use of emails for
various buzz marketing efforts as well as other promotion, can also be made.
3.
Coupon
Coupons are one of the most effective tools
available to small businesses for attracting customers. The PR agency hired,
can help to distribute trial and discount coupons among the target population
of Nutri Break. This will encourage first purchases, giving a chance for the
restaurant to build clientele. Also restaurant managers can give discount
coupons or free meal vouchers to loyal clientele (to ensure repeat purchase
behaviour) or, a coupon when they bring along someone new (to help build
referral purchases)
4.
Cards in Fish Bowl
This is one of the most basic database
gathering methods employed by small businesses. A fish bowl will be placed on
the reception. Visitors will be encouraged to drop their business card in the
owl. Contact information thus collected will be utilised in various email, text
message (SMS) and social media programs.
Organisational Plan
1.
Structure
As briefed already the restaurant will
follow a Quick Service Restaurant Format (having a seating capacity of 40
people at a time) which incorporates speed of operations as in a fast food
outlet (or take away restaurant) and provides the services as in a full service
restaurant.
This will be especially attractive to young
working people who are forever on the go and require speed in service as well
as a little creature comfort in designates leisure intervals.
2.
Team
The team promoting the restaurant will
consist of three members:
1.
A Management graduate-
providing for the requisite skills in starting up, promotion, marketing,
finance, accounting and human resources.
2.
A Hospitality management
graduate- who will take specific care of day to day operations of the
restaurant. She will be the authority on matters such as restaurant format,
design, menu, customer service programs and the like.
3.
A chef- This member will lend
his culinary skills in preparing the delicacies and the ‘special flavour’ which
will be the USP of the outlet.
3. Human
Resources
The staff will be organised under the following heads:
1.
Kitchen staff- concerned with
kitchen maintenance and preparing of orders.
2.
Waiting staff- will serve the
customers
3.
Billing desk- Will take orders
and collect cash
This
staff will be closely supervised by the owners (the team).
*employee training is mentioned as a part
of Operational Plan.
Operational Plan
The operational plan details how the
business will come into action. The plan basically focuses on three main
problems, how the products/services offered will be produced, who will be the
various suppliers of the business and how the service will reach the customer.
Since it is a restaurant business, the production and distribution of the
service will be a function of facility management. The major points under
operational plan are briefed below:
1. Facility
For a restaurant to attract any audience it
is of prime importance to be based at a convenient location. Especially in the
case of Nutri Break, where a customer (who wants to save time by not cooking at
home) will not go out of the way just
for having a snack or breakfast. Thus finding a convenient location at
reasonable prices will be imperative for restaurant’s success. Also, old/used
furniture which can be easily refurbished will be sourced to save on costs.
This furniture will be teamed with new decors and accessories, specific to the
desired aesthetics of Nutri Break.
2. Hours of operation
The restaurant focuses on providing
breakfast and light snacks hence opening up at 6 a.m. and closing at 6 p.m.
should meet the purpose of the outlet. The demands of the customer will be met
in this time keeping in line with the usual eating habits/time. All items on
the menu will be served in the operational hours of the restaurant.
3. Employee Training
The chef will regularly preside over
sessions to brief concerned employees about the offerings of the restaurant.
Also, all employees will be cross trained in all business functions, should the
need arise for filling in varying organisational roles.
4. Systems control
Weekly inventory count and daily food count
will be a necessary check to minimise wastage and monitor finances and stores.
5. Suppliers
Food production will be mostly in house
excepting for a few items like bakery which can be purchased from reliable
local vendors to minimise on cost and save time. Other raw materials will be
purchased from the local vegetables and grocery vendors. Since volumes of purchase
won’t be as huge as that of a chain restaurant it will suit to establish
relations with local vendors thus cutting on time and cost involved in
procuring directly from farms or national vendors for a commodity.
Financial Plan
Nutri Break will require two types of
funding. These are, seed funds which will be needed to start the business and
maintain daily operations until a time the business becomes self sustaining;
and the other are growth funds that will be needed to grow and expand, once the
business is successful. The finance needs, methods of sourcing and break even
forecast are briefed below:
1.
Start up cost
This cost comprises of all the expenditure
that goes in to bringing the business to life that is, to get the operations of
the business started. Thus all expenses diverted in hiring the PR agency,
acquiring a place, furniture, décor, initial promotional expenses, daily
operational expenses until break even and regular marketing efforts, are part
of start up costs. The promoters intend to reserve £20000 for all initial facility establishment and agency hire
costs. An additional £14000 will be reserved for pre launch promotion.
2.
Marketing
The restaurant will undertake a marketing
program both at the time of launch and as an ongoing activity throughout the
year as it is imperative in keeping the target audience engaged to the
business. An initial launch budget of £14000
has been allocated for hiring the PR firm and marketing efforts; annually £10000
will be set aside for marketing budget.
3.
Operational
Daily operational expenses concern with all
the costs incurred in running the day to day operations of the business. Such
expenses are of the nature of electricity bills, employees’ wages, material
costs and the like. All of such expenditure will be met from revenue however,
deficit if any will be provided from the start up capital (for the first 6-10
months, until the business breaks even).
Fund sourcing
Seed capital will be sourced from the
owners’ contribution from their savings as well as angel investors such as
friends and relatives of the promoters will be sought to provide for the
initial funding needs of the business. All investors will keep an agreed upon
share of the business and will be periodically briefed about the affairs of the
business. Once the business grabs a foothold in the market (assumed period for
establishing clientele being six-ten months from start) all daily/operational expenditure
will be met from revenue.
Growth funds needed for expanding may be
met through bank loans or venture capitalists; choice being made according to
circumstances at such time.
Break Even Forecast
Given an initial start up cost of £20000, pre launch marketing cost of £14000,
annual marketing budget of £10000
and daily operational costs, the restaurant can expect to break even in the
first 6-10 months (after building a stable clientele). This can be said
assuming the price of a meal around £5-£10 it will take 9000 meals sold to
recover start up cost. If the restaurant can sell approximately 300 meals a day
this cost will be recovered within a month. However, some time will be needed
to build such regular customer base and to earn extra revenue to meet
operational costs.
Future
The future of
Nutri Break rests on four pillars, risk assessment, exit strategy, short term
and long term goals. These points are briefed below:
Risk Assessment
In the restaurant industry the usual profit
return before taxes is 5%; with such marginal profit percentage the industry is
prone to a high failure rate thus, making it crucial to assess risk and prepare
a clear exit plan.
1.
Competition
Once Nutri Break has some reasonable
success, it is quite possible that existing as well as new players may try to
adapt to the same model hence, posing direct threat to the profitability of
Nutri Break. In such a dynamic market it is of crucial importance to innovate
continually and stay ahead of competition in order to ensure customer loyalty.
1.
Model failure
It is quite probable that Nutri Breaks
business model may fail altogether since a lot of people may not be willing to
eat breakfast outside and also the current economic downturn and recessionary
trends have left little disposable income with households. To counter such a
scenario thorough understanding of trends backed by adequate research is
needed.
2.
Costs
With a business with very high revenues and
marginal profits, costs play a pivotal role in determining the success or
failure of the enterprise. It is of importance to do real time costing,
budgeting and setting up contingency or back up funds to sustain in times of
adverse costs.
Exit Strategy
An exit strategy is imperative to mitigate
the risks in the business. In case of Nutri Break the exit strategy will be
quite simple, as there are a few tangible assets and mostly privately owned.
Two strategies can be followed:
1.
Take Over- The restaurant can
be sold to any party, business or hotel/restaurant group that shows interest.
The value of the business will be calculated on going concern rates and
goodwill added, and should recover sufficient funds to cover investments and
returns of all investors.
2.
Sell out- The business can be
closed (if no buyers are found) by, selling all kitchen equipment (which can
sell at 60%-80% of original cost) and furniture and décor (since we employed
used furniture it can be sold at almost the same rate), vacating the space and
letting go the employees. Coupled with the cash in hand and bank, this method
should recover the initial capital invested (although yield on sum invested may
not be guaranteed).
Short/Medium Term Goals
Simply stated the short and medium term
goals of the restaurant will be to:
1.
Break even within 6-10 months
2.
Build a loyal clientele
3.
Ensure a stable turnover
4.
Ensure a decent profitability
to justify the capital and efforts invested
Long Term Goals
The long terms goals of Nutri Break are
ambitious and cover the following points:
1.
To establish another facility
within 2 years of starting up
2.
To start up a chain of
nutritious meal serving restaurants within 5-7 years of first establishment
3.
To integrate back end and front
end operations such as privately owned/monitored supply chain and an internal
marketing/PR agency
4.
To diversify into various other
concepts, models and businesses such as juice bars, budget hotels and take away
restaurants.
Conclusion
It can be safely summed up that, although
opening a restaurant in the booming food service industry is a lucrative
proposal, the path must be treaded with utmost caution especially in the case
of a format as Nutri Break which is quite novel in its approach and hence
untested.
Steps to launch must only be taken when a
thorough analysis of all statistics pertaining to the industry is done and a
clear understanding of the trends in market and consumer behaviour is
established.
References
1.
SunShine Café: A Breakfast Restaurant
Business Plan By Lillian I Burrow; A professional paper in partial fulfilment
of the requirements for the Master of Hospitality Administration Department of
Hotel Administration
6.
www.bestlondonrestaurants.co.uk
7.
uk.businessesforsale.com
8.
www.gayot
.com/restaurants/best-london-englang-top-10-restaurants
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