guys these based on for pizza, can do for me for coffee shop by using this content. need help

5.0 Strategy and Implementation Summary Our strategy is based on delivering a strong customer value proposition in a niche market. We are looking to offer the Local Bay city and its surrounding areas a new choice in pizza options. We are building our marketing infrastructure so that we can eventually reach more customers with the same pizza offering. We focus on satisfying the needs of low-to- middle class residents and companies located inside or outside the Loca Bay Industrial Park We intend to use various forms of marketing communication as an efficient way to reach our target market and raise their awareness of Take-Out Pizza, Inc., and their pizza service offerings. In addition, Take-Out Pizza, Inc. will use effective advertising tools to promote the business. The Local Bay flyer is a common way to advertise in the area. We will also hire people to hold signs near Local Bay Industrial Park. Door handle flyer promotion can be helpful throughout the Local Bay neighborhoods. Adequate funding has been accounted for when projecting the promotion expenses. We intend to spend the marketing dollars in the most cost-effective way. Therefore, many other advertising options will be evaluated during the project implementation, to make sure that we achieve best results. 5.1 SWOT Analysis The SWOT analysis provides us with an excellent opportunity to examine and evaluate the internal strengths and weaknesses of Take-Out Pizza, Inc. It also allow us to focus on the external opportunities presented by the business environment as well as potential threats. Next sections explain major strengths, weaknesses, opportunities, and threats that Take-Out Pizza, Inc. should be aware of. 5.1.1 Strengths Take-Out Pizza, Inc. has a valuable inventory of strengths that would help it to be successful. These strengths include: a) location b) excellent quality of New York-style pizza that is currently not available in the Local Bay area c) management's proven experience in successfully running a similar business in San Francisco, CA d) state-of-the-art, energy-efficient pizza preparation equipment and technology e) clear vision of the market needs: we know the customers' needs, we are familiar with the latest technology, and we can offer the pizza services that would bring the two together 5.1.2 Weaknesses Strengths are valuable, but it is useful to realize the weaknesses. We have identified some of our weaknesses: a) cost factor associated with keeping state-of-the-art equipment and technology b) we are new in town c) start-up challenges d) limited operating capacity during peak sales periods 5.1.3 Opportunities Take-Out Pizza, Inc.'s strengths and the awareness of its weaknesses will help it capitalize on emerging opportunities. These opportunities include, but are not limited to: a) fast growing population in Local Bay area b) no other specialized pizza take-out and delivery restaurant within a five-mile radius from our chosen location c) a large segment of low-to-middle class population, and more than five hundred businesses in the area d) no competitors offer New York-style pizza in the surrounding area Start-up Sample Business Plan e) consumer behavior changes due to the economic downturn, respectively an increased preference to buy affordable pizza instead of expensive meals 5.1.4 Threats Threats the Take-Out Pizza, Inc. should be aware of include: a) slow recovery process of the economy from the current crisis b) changes in the business environment that might reduce our sales c) higher taxes in the future d) the commercial property is leased, not owned by our company e) tight credit times, higher interest rate and higher inflation rate than predicted. 5.2 Competitive Edge QT Pizza Delivery's competitive edge is: Location: Take-Out Pizza, Inc. is located in the heart of the Local Bay area. near the Local Bay Industrial Center. This is the busiest area in town. The closest pizza restaurant is a thirty minute drive. There are more than five hundred businesses in the neighborhood. Lower operating cost and reasonable prices: Since Take-Out Pizza, Inc.'s policy is to purchase latest equipment and technology, and will be operating with a team of five multi-skilled employees, it will be able to offer reasonable prices for a high quality New York-style pizza, but it will be impossible to compete on price only Excellent products and services, timely delivery, and convenience. 5.3 Sales Strategy Because Take-Out Pizza, Inc. is a new entity, we recognize that we will need to prove our company's worth to Local Bay customers, in order to eam respect and business. Most important, we need to sell our company, not necessarily our products and services, and create positive word-of-mouth. We will have to push our service and delivery capacities. Our sales strategy is based on the belief that there will be a regular flow of first-time customers, due to our convenient location. The real sales effort will be to focus on the conversion of each first-time customer into a long-term customer relationship, where these customers come regularly to our pizzeria, and also bring or recommend new Start-up Sample Business Plan friends to share the experience of a great pizza This focus recognizes that it would cost our company less money to convert a new customer into a long-term relationship, than it does to attract a new customer. With this in mind, our sales activities will concentrate on keeping existing customers happy, and always meet or exceed their expectations. Consistent, customer-centric service is the absolute requirement in the hospitality industry, and so it is for all our employees. Every member of our team will be empowered to deal with our customers' requests in such a way that no customer should leave dissatisfied. Problem solving will be encouraged throughout the organization, and it would also be fair to say that each employee is part of the sales staff, not only the first- line servers. 5.3.1 Sales Forecast The following table and charts illustrate the sales forecast for five years. The first few months will be be slower, a consequence of being a start-up business, struggling to become more visible within the community, going from nothing to achieving a regular clientele. A steady growth cycle will occur as the months pass. Profitability is projected to occur during the first half of the first year. The increasing sales forecast suggest an important potential growth. Our projected sales are actually net sales, which consist of the gross proceeds from sales of merchandise -- gross sales -- less retums and allowances. The projected average monthly sales are approximately $72,000. Considering an average price of $17 per pie, Take-Out Pizza, Inc. would need to sell on average 176 pies each day ($72,000 average monthly sales / $17 per pie / 24 business days per month). Two weeks are reserved each year for pay vacation, when the restaurant will be closed. but important maintenance works are scheduled for the equipment and facilities during this break period. This is the reason why the sales in August are projected at 50 percent of normal sales. Using our equipment and technology we will be able to produce maximum 400 pies per day (theoretical operating capacity). However the normal operating capacity, which takes into account the usual breaks and the idle periods, is only 300 pies per day, or 75 percent (usually 10 working hours per day). That means that the average projected 176 pies per day would be reached at only 58 percent of normal operating capacity (178 pies / 300 pies = .58), which is a reasonable target. In periods of peak sales, the normal operating capacity could be extended by working more than 10 hours per day. Therefore we believe that, from the operating point of view, our sales forecast is feasible. The question remains, will we be able to attract and maintain at least the minimum Start-up Sample Business Plan number of customers required to order 176 pies per day? If each customer would order one pie it would mean a total of 4,224 customers per month. This figure is disputable because the companies typically order a larger number of pizza, and the individuals usually buy by slices, or order full pies for home delivery. However, it is a good starting point for our analysis. According to a recent study, pizza sales account for 18 percent of all food service sales and, despite the economic crisis, continues to outpace overall restaurant growth. Our own market survey shows that one in five persons interviewed use to order pizza at least once a month. The population in the Local Bay area exceeds one million, which means that, theoretically, the maximum number of pizza (1/2 pie portions) ordered per month at different restaurants in the area (total market) would be 100,000 pies (1 million residents /5 residents / 2 half pies). To this number we would need add the orders that will be made by many of the five hundred businesses in the area, which we estimate at 5 percent of the retail market, respectively 5,000 pies (100,000 pies x.05). The estimated total market in Local Bay area is 105,000 pies per month, and our target market share would be 4 percent (4,224 pies / 105,000 pies = 04). We believe this target market share to be reasonable and achievable. Table: Sales Forecast Sales Forecast FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Unit Sales NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other Total Unit Sales 19,230 8.936 4,504 3,050 1.480 37,200 21.153 9.830 4,954 3.355 1,628 40.920 23.268 10.813 5.450 3.691 1,791 45.012 25,130 11,678 5,886 3,988 1.934 48,613 25,884 12,028 8,062 4,105 1.092 50.071 Unit Prices NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other FY 2010 $16.00 $18.00 $19.00 $21.00 $25.00 FY 2011 $16.80 $18.90 $19.95 $22.05 $26.25 FY 2012 $17.64 $19.85 $20.95 $23.15 $27.58 FY 2013 $18.52 $20.84 $21.99 $24.31 $28.94 FY 2014 $19.45 $21.88 $23.09 $25.53 $30.39 Sales NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other Total Sales $307,680 $160.848 $85.576 $64.050 $37.000 $855,154 $410,453 $214,575 $114,181 $85,444 $49,350 $873,992 $465,453 $503,388 $243,328 $263.160 $129,458 $140.000 $96,894 $104,791 $55.073 $60.535 $991.107 $1.071,882 $365,370 $185,779 $98,840 $73,978 $42.735 $756,703 FY 2011 $8.57 $9.84 $10.17 $11.25 $13.39 Direct Unit Costs NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other FY 2010 $8.32 $9.36 $9.88 $10.92 $13.00 FY 2012 $8.82 $10.12 $10.68 $11.81 $14.06 FY 2013 $0.08 $10.42 $11.00 $12.16 $14.47 FY 2014 $9.34 $10.72 $11.32 $12.51 $14.89 Direct Cost of Sales NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other Subtotal Direct Cost of Sales $159.994 $83.641 $44,500 $33.306 $19.240 $340,680 $181,239 $94.748 $50.400 $37,729 $21,795 $385.18 $205,220 $100,433 $58,222 $43,577 $25,173 $441,631 $228,072 $121,664 $84,729 $48,447 $27,987 $490,899 $241.628 $128.948 $68,604 $51.347 $29.882 $520.188 Sales Monthly 590,000 380,000 $70,000 550,000 950,000 NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other $40,000 IT $30,000 $20,000 $10.000 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sales by Year $1,200,000 51,000,000 1800,000 $600,000 NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other $400,000 $200,000 8 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 5.4 Milestones The following table lists important start-up program milestones, with dates, managers in charge, and budgets for each. The schedule indicates Take-Out Pizza, Inc.'s emphasis on planning for implementation. Table: Milestones Milestones Milestone Market Research Business Plan Legal Documents Insurace Start Date 4/1/2009 5/5/2009 5/25/2009 5/25/2008 End Date 55/2009 5/25/2009 8/1/2009 8/31/2009 Budget $800 $875 $1,200 $1,500 Find Location, Rent 5/25/2008 Purchase Equipment Purchase Inventory & Materials Loan, Purchase Equipment Promotion & Business Sign Other Start-up Activities Totals Manager Department John Walker Manager John Walker Manager John Walker Manager Lisa Walker Manager Assist. Lisa Walker Manager Assist. John Walker Manager Lisa Walker Manger Assist John Walker Manager Lisa Walker Manager Assist. John Walker Manager 8/15/2009 8/25/2009 8/31/2009 8/31/2009 8/31/2009 8/31/2009 8/15/2009 8/15/2008 8/15/2008 8/1/2009 7/15/2009 $2,000 $20,000 $28,500 $50,000 $4,800 $22.025 $131,500 Milestones Market Research Business Plan Legal Documents Insurace Find Location, Rent Purchase Equipment Purchase Inventory & Materials Loan, Purchase Equipment Promotion & Business Sign Other Start-up Activities Apr May Jun Jul Aug Start-up Sample Business Plan 5.5 Marketing Strategy The marketing strategy of Take-out Pizza, Inc. centers on creating and developing a corporate identity that clearly defines our market niche in terms that benefit our retail and corporate customers. Market needs and trends. Since our target market includes two major segments -- low- to-middle class residents in the Local Bay area, and local businesses that are located inside or outside the Local Bay Industrial Park -- their most important needs are service, price, and delivery, in that order. One of the key points of Take-Out Plzza, Inc.' strategy is to focus on these target segments that know and understand these needs, and are willing to pay a reasonable price to have them fulfilled. Factors such as current local trends and historical sales data of similar businesses in the area, ensure that the high demand for pizza will continue over the next five years. Trends are in our favor the last study we saw published in the Local Bay area has fast- food and limited-service restaurant sales growing at 10 percent per year, while fine- dining restaurants, for example, experienced and will probably continue to see more than 20 percent decrease in sales. Our previous experience in running a similar business shows that advertising costs can easily overwhelm a start-up company, so keeping marketing simple, creative and cost-efficient will be challenging. Cost-effective use of marketing dollars is one of our keys to success. To reach our potential customers, a combination of marketing techniques will be utilized: Local media (radio is most effective in the Local Bay area, followed by print media). Radio and newspaper advertising will include our core positioning message, and the New York-style pizza that we offer, in order to differentiate our service from the competition. Sales literature. To drive sales initially. Take-Out Pizza. Inc. will utilize a four- color catalog with a different cover including the company logo and contact address. We have developed a price sheet to be enclosed with each catalog. In addition, we will produce in-house flyers on an as-needed basis that will also serve to advertise special events and sales promotions. The flyers and catalogs will be distributed using traditional methods: a) give-away in store. b) enclose in order shipments, c) hire distributors or personally hand out in the Local Bay Industrial Park area. e) distribute at local trade shows and other business events organized by the local Chamber of Commerce, and f) attach business card and coupons Upon release of a new catalog, we will need to check into the financial feasibility of utilizing direct mail for bulk distribution. Certainly, the main task will be to clearly define the message of our sales literature to make certain that we are Start-up Sample Business Plan selling the company, rather than the products and services Direct mail Grand opening Industry specific trade shows and other local business events Internet marketing Word of mouth All marketing decisions with regard to specific media choices, frequency, size and costs will be conducted on an ongoing basis with careful consideration of results (generated returns). 5.6 Pricing Strategy Our retail and corporate customers are especially sensitive to service value. Take-Out Pizza, Inc. must ensure that price and service are perceived to be a good value to our customers. High-quality New York-style pizza will be offered at a reasonable price, but the price will certainly not be the lowest in the area. In the limited-service restaurants industry, one message rings true other competitor can always beat you on price. Therefore, our pricing strategy will be competitive within the various product range, but will not rely on the selling price to overshadow other advantages of doing business with our company, such as a diverse line of high-quality pizza products, that are readily available, reasonably priced, and backed by service excellence and on-time delivery. In addition, we recognize that price flexibility is critical to our success. We are prepared to offer discounts and allowances, sales promotion prices, and to reduce the price over limited periods of time during the slow-sales hours, in order to increase our operating capacity usage, and reduce or eliminate idle capacity and subsequent losses. Freight-out costs will be accounted for in such a manner that delivery prices will not differ from the prices offered at the counter. One example of pizza delivery prices is presented below: 18-inch New York-style pizza, vegetarian, plain pies (shipping cost is included in the price) One pie, $19.95 Four pies, $64.95 Eight pies, $123.95 Twelve pies, S 178.95 Start-up Sample Business Plan 5.7 Sourcing Strategy There are several U.S.-based manufacturers and suppliers of pizzeria equipment food supplies, ingredients, packing, and accessories for for pizza preparation. The specific restaurant equipment vendors will be chosen soon, based on competitive bidding process. All the selected manufacturers produce and supply high-quality, energy-efficient kitchen and restaurant equipment, or materials for pizza preparation and delivery, and they compete primarily on price. Maintaining low levels of inventory will help to reduce the cost of financing, handling and storage. However, too low inventory levels may also result in lost sales and unhappy customers. Therefore, we will strive to implement the just-in-time operating environment. This will be achieved by working closely with with our suppliers to coordinate and schedule shipments so that goods and materials arrive just at the time they are needed. Many of the selected suppliers have already committed to special deals for us, such us waiving their buy-in requirements, sales referrals, and discounts for early payment offering terms like 2/10 n/30 for example). Other discounts can be negotiated gradually, depending on the increasing quantity purchased, and customer loyalty. We need to focus on making sure our volume gives us negotiating strengths. We will purchase our inventory both from local wholesalers and direct from manufacturers. Because of our past work experience in purchasing materials and ingredients for pizza preparation, we have a vast number of supplier contacts within the industry. Ultimately, these suppliers will help us to achieve lower cost-of-goods and reach our financial performance objectives. 5.8 Location and Facilities The company's location is very favorable, providing high visibility, high traffic, and a high flow of customers (travelers) wishing to stop at our restaurant. Accordingly, the rent that was accounted for in this plan is higher than in other areas of the city The restaurant will be located just minutes from downtown, which provides shopping. dining, and entertainment. The restaurant is also conveniently located just three blocks from Local Bay shopping mall. Other advantages of the chosen location include: Plenty of parking garages, and additional storage area available Excellent central location with easy access to major destinations, freeways and other transportation means Short commute to major employers in Local Bay High flow of pedestrians A recent new commercial complex opening.just across the street, that will attract many potential customers to our immediate vicinity . 5.8 Location and Facilities The company's location is very favorable, providing high visibility, high traffic, and a high flow of customers (travelers) wishing to stop at our restaurant. Accordingly, the rent that was accounted for in this plan is higher than in other areas of the city The restaurant will be located just minutes from downtown, which provides shopping, dining, and entertainment. The restaurant is also conveniently located just three blocks from Local Bay shopping mall. Other advantages of the chosen location include: Plenty of parking, garages, and additional storage area available . Excellent central location with easy access to major destinations, freeways and other transportation means Short commute to major employers in Local Bay High flow of pedestrians A recent new commercial complex opening.just across the street, that will attract many potential customers to our immediate vicinity Page 25 Start-up Sample Business Plan Strategically located on one of the busiest streets in downtown High profile area with easy access from all parts of town Proximity to the business community and the Local Bay Industrial Park, there are more than five hundred businesses in the area Proximity to trendy, upscale restaurants and recreational facilities All utilities required for operating a restaurant are available All these characteristics of the location are consistent with Take-Out Pizza's goal of providing excellent New York-style pizza and delivery services for the Local Bay community. The restaurant will utilize 1250 square feet. The market rent in this high profile area is between $1.45 and $1.90 per square foot per month. We have estimated $2,000 monthly rent expense (1,250 square feet x $1.00 per square foot per month). As the company gains community recognition, and our Local Bay market is developed. further expansion to one or both of the neighboring shopping malls will be considered as a possible second stage capital investment option. 5.0 Strategy and Implementation Summary Our strategy is based on delivering a strong customer value proposition in a niche market. We are looking to offer the Local Bay city and its surrounding areas a new choice in pizza options. We are building our marketing infrastructure so that we can eventually reach more customers with the same pizza offering. We focus on satisfying the needs of low-to- middle class residents and companies located inside or outside the Loca Bay Industrial Park We intend to use various forms of marketing communication as an efficient way to reach our target market and raise their awareness of Take-Out Pizza, Inc., and their pizza service offerings. In addition, Take-Out Pizza, Inc. will use effective advertising tools to promote the business. The Local Bay flyer is a common way to advertise in the area. We will also hire people to hold signs near Local Bay Industrial Park. Door handle flyer promotion can be helpful throughout the Local Bay neighborhoods. Adequate funding has been accounted for when projecting the promotion expenses. We intend to spend the marketing dollars in the most cost-effective way. Therefore, many other advertising options will be evaluated during the project implementation, to make sure that we achieve best results. 5.1 SWOT Analysis The SWOT analysis provides us with an excellent opportunity to examine and evaluate the internal strengths and weaknesses of Take-Out Pizza, Inc. It also allow us to focus on the external opportunities presented by the business environment as well as potential threats. Next sections explain major strengths, weaknesses, opportunities, and threats that Take-Out Pizza, Inc. should be aware of. 5.1.1 Strengths Take-Out Pizza, Inc. has a valuable inventory of strengths that would help it to be successful. These strengths include: a) location b) excellent quality of New York-style pizza that is currently not available in the Local Bay area c) management's proven experience in successfully running a similar business in San Francisco, CA d) state-of-the-art, energy-efficient pizza preparation equipment and technology e) clear vision of the market needs: we know the customers' needs, we are familiar with the latest technology, and we can offer the pizza services that would bring the two together 5.1.2 Weaknesses Strengths are valuable, but it is useful to realize the weaknesses. We have identified some of our weaknesses: a) cost factor associated with keeping state-of-the-art equipment and technology b) we are new in town c) start-up challenges d) limited operating capacity during peak sales periods 5.1.3 Opportunities Take-Out Pizza, Inc.'s strengths and the awareness of its weaknesses will help it capitalize on emerging opportunities. These opportunities include, but are not limited to: a) fast growing population in Local Bay area b) no other specialized pizza take-out and delivery restaurant within a five-mile radius from our chosen location c) a large segment of low-to-middle class population, and more than five hundred businesses in the area d) no competitors offer New York-style pizza in the surrounding area Start-up Sample Business Plan e) consumer behavior changes due to the economic downturn, respectively an increased preference to buy affordable pizza instead of expensive meals 5.1.4 Threats Threats the Take-Out Pizza, Inc. should be aware of include: a) slow recovery process of the economy from the current crisis b) changes in the business environment that might reduce our sales c) higher taxes in the future d) the commercial property is leased, not owned by our company e) tight credit times, higher interest rate and higher inflation rate than predicted. 5.2 Competitive Edge QT Pizza Delivery's competitive edge is: Location: Take-Out Pizza, Inc. is located in the heart of the Local Bay area. near the Local Bay Industrial Center. This is the busiest area in town. The closest pizza restaurant is a thirty minute drive. There are more than five hundred businesses in the neighborhood. Lower operating cost and reasonable prices: Since Take-Out Pizza, Inc.'s policy is to purchase latest equipment and technology, and will be operating with a team of five multi-skilled employees, it will be able to offer reasonable prices for a high quality New York-style pizza, but it will be impossible to compete on price only Excellent products and services, timely delivery, and convenience. 5.3 Sales Strategy Because Take-Out Pizza, Inc. is a new entity, we recognize that we will need to prove our company's worth to Local Bay customers, in order to eam respect and business. Most important, we need to sell our company, not necessarily our products and services, and create positive word-of-mouth. We will have to push our service and delivery capacities. Our sales strategy is based on the belief that there will be a regular flow of first-time customers, due to our convenient location. The real sales effort will be to focus on the conversion of each first-time customer into a long-term customer relationship, where these customers come regularly to our pizzeria, and also bring or recommend new Start-up Sample Business Plan friends to share the experience of a great pizza This focus recognizes that it would cost our company less money to convert a new customer into a long-term relationship, than it does to attract a new customer. With this in mind, our sales activities will concentrate on keeping existing customers happy, and always meet or exceed their expectations. Consistent, customer-centric service is the absolute requirement in the hospitality industry, and so it is for all our employees. Every member of our team will be empowered to deal with our customers' requests in such a way that no customer should leave dissatisfied. Problem solving will be encouraged throughout the organization, and it would also be fair to say that each employee is part of the sales staff, not only the first- line servers. 5.3.1 Sales Forecast The following table and charts illustrate the sales forecast for five years. The first few months will be be slower, a consequence of being a start-up business, struggling to become more visible within the community, going from nothing to achieving a regular clientele. A steady growth cycle will occur as the months pass. Profitability is projected to occur during the first half of the first year. The increasing sales forecast suggest an important potential growth. Our projected sales are actually net sales, which consist of the gross proceeds from sales of merchandise -- gross sales -- less retums and allowances. The projected average monthly sales are approximately $72,000. Considering an average price of $17 per pie, Take-Out Pizza, Inc. would need to sell on average 176 pies each day ($72,000 average monthly sales / $17 per pie / 24 business days per month). Two weeks are reserved each year for pay vacation, when the restaurant will be closed. but important maintenance works are scheduled for the equipment and facilities during this break period. This is the reason why the sales in August are projected at 50 percent of normal sales. Using our equipment and technology we will be able to produce maximum 400 pies per day (theoretical operating capacity). However the normal operating capacity, which takes into account the usual breaks and the idle periods, is only 300 pies per day, or 75 percent (usually 10 working hours per day). That means that the average projected 176 pies per day would be reached at only 58 percent of normal operating capacity (178 pies / 300 pies = .58), which is a reasonable target. In periods of peak sales, the normal operating capacity could be extended by working more than 10 hours per day. Therefore we believe that, from the operating point of view, our sales forecast is feasible. The question remains, will we be able to attract and maintain at least the minimum Start-up Sample Business Plan number of customers required to order 176 pies per day? If each customer would order one pie it would mean a total of 4,224 customers per month. This figure is disputable because the companies typically order a larger number of pizza, and the individuals usually buy by slices, or order full pies for home delivery. However, it is a good starting point for our analysis. According to a recent study, pizza sales account for 18 percent of all food service sales and, despite the economic crisis, continues to outpace overall restaurant growth. Our own market survey shows that one in five persons interviewed use to order pizza at least once a month. The population in the Local Bay area exceeds one million, which means that, theoretically, the maximum number of pizza (1/2 pie portions) ordered per month at different restaurants in the area (total market) would be 100,000 pies (1 million residents /5 residents / 2 half pies). To this number we would need add the orders that will be made by many of the five hundred businesses in the area, which we estimate at 5 percent of the retail market, respectively 5,000 pies (100,000 pies x.05). The estimated total market in Local Bay area is 105,000 pies per month, and our target market share would be 4 percent (4,224 pies / 105,000 pies = 04). We believe this target market share to be reasonable and achievable. Table: Sales Forecast Sales Forecast FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Unit Sales NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other Total Unit Sales 19,230 8.936 4,504 3,050 1.480 37,200 21.153 9.830 4,954 3.355 1,628 40.920 23.268 10.813 5.450 3.691 1,791 45.012 25,130 11,678 5,886 3,988 1.934 48,613 25,884 12,028 8,062 4,105 1.092 50.071 Unit Prices NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other FY 2010 $16.00 $18.00 $19.00 $21.00 $25.00 FY 2011 $16.80 $18.90 $19.95 $22.05 $26.25 FY 2012 $17.64 $19.85 $20.95 $23.15 $27.58 FY 2013 $18.52 $20.84 $21.99 $24.31 $28.94 FY 2014 $19.45 $21.88 $23.09 $25.53 $30.39 Sales NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other Total Sales $307,680 $160.848 $85.576 $64.050 $37.000 $855,154 $410,453 $214,575 $114,181 $85,444 $49,350 $873,992 $465,453 $503,388 $243,328 $263.160 $129,458 $140.000 $96,894 $104,791 $55.073 $60.535 $991.107 $1.071,882 $365,370 $185,779 $98,840 $73,978 $42.735 $756,703 FY 2011 $8.57 $9.84 $10.17 $11.25 $13.39 Direct Unit Costs NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other FY 2010 $8.32 $9.36 $9.88 $10.92 $13.00 FY 2012 $8.82 $10.12 $10.68 $11.81 $14.06 FY 2013 $0.08 $10.42 $11.00 $12.16 $14.47 FY 2014 $9.34 $10.72 $11.32 $12.51 $14.89 Direct Cost of Sales NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other Subtotal Direct Cost of Sales $159.994 $83.641 $44,500 $33.306 $19.240 $340,680 $181,239 $94.748 $50.400 $37,729 $21,795 $385.18 $205,220 $100,433 $58,222 $43,577 $25,173 $441,631 $228,072 $121,664 $84,729 $48,447 $27,987 $490,899 $241.628 $128.948 $68,604 $51.347 $29.882 $520.188 Sales Monthly 590,000 380,000 $70,000 550,000 950,000 NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other $40,000 IT $30,000 $20,000 $10.000 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sales by Year $1,200,000 51,000,000 1800,000 $600,000 NYS Pizza for All NYS Pizza Healthy Style NYS Pizza Vegetarian NYS Pizza Special Other $400,000 $200,000 8 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 5.4 Milestones The following table lists important start-up program milestones, with dates, managers in charge, and budgets for each. The schedule indicates Take-Out Pizza, Inc.'s emphasis on planning for implementation. Table: Milestones Milestones Milestone Market Research Business Plan Legal Documents Insurace Start Date 4/1/2009 5/5/2009 5/25/2009 5/25/2008 End Date 55/2009 5/25/2009 8/1/2009 8/31/2009 Budget $800 $875 $1,200 $1,500 Find Location, Rent 5/25/2008 Purchase Equipment Purchase Inventory & Materials Loan, Purchase Equipment Promotion & Business Sign Other Start-up Activities Totals Manager Department John Walker Manager John Walker Manager John Walker Manager Lisa Walker Manager Assist. Lisa Walker Manager Assist. John Walker Manager Lisa Walker Manger Assist John Walker Manager Lisa Walker Manager Assist. John Walker Manager 8/15/2009 8/25/2009 8/31/2009 8/31/2009 8/31/2009 8/31/2009 8/15/2009 8/15/2008 8/15/2008 8/1/2009 7/15/2009 $2,000 $20,000 $28,500 $50,000 $4,800 $22.025 $131,500 Milestones Market Research Business Plan Legal Documents Insurace Find Location, Rent Purchase Equipment Purchase Inventory & Materials Loan, Purchase Equipment Promotion & Business Sign Other Start-up Activities Apr May Jun Jul Aug Start-up Sample Business Plan 5.5 Marketing Strategy The marketing strategy of Take-out Pizza, Inc. centers on creating and developing a corporate identity that clearly defines our market niche in terms that benefit our retail and corporate customers. Market needs and trends. Since our target market includes two major segments -- low- to-middle class residents in the Local Bay area, and local businesses that are located inside or outside the Local Bay Industrial Park -- their most important needs are service, price, and delivery, in that order. One of the key points of Take-Out Plzza, Inc.' strategy is to focus on these target segments that know and understand these needs, and are willing to pay a reasonable price to have them fulfilled. Factors such as current local trends and historical sales data of similar businesses in the area, ensure that the high demand for pizza will continue over the next five years. Trends are in our favor the last study we saw published in the Local Bay area has fast- food and limited-service restaurant sales growing at 10 percent per year, while fine- dining restaurants, for example, experienced and will probably continue to see more than 20 percent decrease in sales. Our previous experience in running a similar business shows that advertising costs can easily overwhelm a start-up company, so keeping marketing simple, creative and cost-efficient will be challenging. Cost-effective use of marketing dollars is one of our keys to success. To reach our potential customers, a combination of marketing techniques will be utilized: Local media (radio is most effective in the Local Bay area, followed by print media). Radio and newspaper advertising will include our core positioning message, and the New York-style pizza that we offer, in order to differentiate our service from the competition. Sales literature. To drive sales initially. Take-Out Pizza. Inc. will utilize a four- color catalog with a different cover including the company logo and contact address. We have developed a price sheet to be enclosed with each catalog. In addition, we will produce in-house flyers on an as-needed basis that will also serve to advertise special events and sales promotions. The flyers and catalogs will be distributed using traditional methods: a) give-away in store. b) enclose in order shipments, c) hire distributors or personally hand out in the Local Bay Industrial Park area. e) distribute at local trade shows and other business events organized by the local Chamber of Commerce, and f) attach business card and coupons Upon release of a new catalog, we will need to check into the financial feasibility of utilizing direct mail for bulk distribution. Certainly, the main task will be to clearly define the message of our sales literature to make certain that we are Start-up Sample Business Plan selling the company, rather than the products and services Direct mail Grand opening Industry specific trade shows and other local business events Internet marketing Word of mouth All marketing decisions with regard to specific media choices, frequency, size and costs will be conducted on an ongoing basis with careful consideration of results (generated returns). 5.6 Pricing Strategy Our retail and corporate customers are especially sensitive to service value. Take-Out Pizza, Inc. must ensure that price and service are perceived to be a good value to our customers. High-quality New York-style pizza will be offered at a reasonable price, but the price will certainly not be the lowest in the area. In the limited-service restaurants industry, one message rings true other competitor can always beat you on price. Therefore, our pricing strategy will be competitive within the various product range, but will not rely on the selling price to overshadow other advantages of doing business with our company, such as a diverse line of high-quality pizza products, that are readily available, reasonably priced, and backed by service excellence and on-time delivery. In addition, we recognize that price flexibility is critical to our success. We are prepared to offer discounts and allowances, sales promotion prices, and to reduce the price over limited periods of time during the slow-sales hours, in order to increase our operating capacity usage, and reduce or eliminate idle capacity and subsequent losses. Freight-out costs will be accounted for in such a manner that delivery prices will not differ from the prices offered at the counter. One example of pizza delivery prices is presented below: 18-inch New York-style pizza, vegetarian, plain pies (shipping cost is included in the price) One pie, $19.95 Four pies, $64.95 Eight pies, $123.95 Twelve pies, S 178.95 Start-up Sample Business Plan 5.7 Sourcing Strategy There are several U.S.-based manufacturers and suppliers of pizzeria equipment food supplies, ingredients, packing, and accessories for for pizza preparation. The specific restaurant equipment vendors will be chosen soon, based on competitive bidding process. All the selected manufacturers produce and supply high-quality, energy-efficient kitchen and restaurant equipment, or materials for pizza preparation and delivery, and they compete primarily on price. Maintaining low levels of inventory will help to reduce the cost of financing, handling and storage. However, too low inventory levels may also result in lost sales and unhappy customers. Therefore, we will strive to implement the just-in-time operating environment. This will be achieved by working closely with with our suppliers to coordinate and schedule shipments so that goods and materials arrive just at the time they are needed. Many of the selected suppliers have already committed to special deals for us, such us waiving their buy-in requirements, sales referrals, and discounts for early payment offering terms like 2/10 n/30 for example). Other discounts can be negotiated gradually, depending on the increasing quantity purchased, and customer loyalty. We need to focus on making sure our volume gives us negotiating strengths. We will purchase our inventory both from local wholesalers and direct from manufacturers. Because of our past work experience in purchasing materials and ingredients for pizza preparation, we have a vast number of supplier contacts within the industry. Ultimately, these suppliers will help us to achieve lower cost-of-goods and reach our financial performance objectives. 5.8 Location and Facilities The company's location is very favorable, providing high visibility, high traffic, and a high flow of customers (travelers) wishing to stop at our restaurant. Accordingly, the rent that was accounted for in this plan is higher than in other areas of the city The restaurant will be located just minutes from downtown, which provides shopping. dining, and entertainment. The restaurant is also conveniently located just three blocks from Local Bay shopping mall. Other advantages of the chosen location include: Plenty of parking garages, and additional storage area available Excellent central location with easy access to major destinations, freeways and other transportation means Short commute to major employers in Local Bay High flow of pedestrians A recent new commercial complex opening.just across the street, that will attract many potential customers to our immediate vicinity . 5.8 Location and Facilities The company's location is very favorable, providing high visibility, high traffic, and a high flow of customers (travelers) wishing to stop at our restaurant. Accordingly, the rent that was accounted for in this plan is higher than in other areas of the city The restaurant will be located just minutes from downtown, which provides shopping, dining, and entertainment. The restaurant is also conveniently located just three blocks from Local Bay shopping mall. Other advantages of the chosen location include: Plenty of parking, garages, and additional storage area available . Excellent central location with easy access to major destinations, freeways and other transportation means Short commute to major employers in Local Bay High flow of pedestrians A recent new commercial complex opening.just across the street, that will attract many potential customers to our immediate vicinity Page 25 Start-up Sample Business Plan Strategically located on one of the busiest streets in downtown High profile area with easy access from all parts of town Proximity to the business community and the Local Bay Industrial Park, there are more than five hundred businesses in the area Proximity to trendy, upscale restaurants and recreational facilities All utilities required for operating a restaurant are available All these characteristics of the location are consistent with Take-Out Pizza's goal of providing excellent New York-style pizza and delivery services for the Local Bay community. The restaurant will utilize 1250 square feet. The market rent in this high profile area is between $1.45 and $1.90 per square foot per month. We have estimated $2,000 monthly rent expense (1,250 square feet x $1.00 per square foot per month). As the company gains community recognition, and our Local Bay market is developed. further expansion to one or both of the neighboring shopping malls will be considered as a possible second stage capital investment option