Market Analysis for Buffet Restaurant

Market Analysis for Buffet Restaurant The creation of a unique, innovative, entertaining, mid scale atmosphere that will differentiate us from the competition. The highest quality food is unbelievably low prices in a clean, fun environment. Controlling costs at all times, in all areas. Hiring the best people available, training, motivating and encouraging them, and thereby retaining the friendliest, most efficient staff possible. Section II: Business description Mission: We want our guests to have the total experience when visiting Enjoy with us. Not only will our guests receive a great meal, they will also be provided with a fun atmosphere. We will be doing unique things (such as serving all you can eat) that will set us apart from the competition. We will want the dining experience to be as pleasing to the senses as it is to the palate. Our main focus will be serving quality food at a great value. We will feature a large selection of freshly prepared food, most in full view of our guests. The purpose is service that customer satisfaction is paramount. Particularly, we want to be the restaurant of choice for everyone: families and singles, young and old, male or female. On the other hand, employee welfare will be important to our success. We want our employee to feel a part of the success of Enjoy with us. Happy employees make happy guests. Similarly, we will combine menu variety, atmosphere, ambiance, and friendly staff to create a sense of place in order to reach our goal of overall value in entertainment experience. Why do we think tourists come our shop? First of all, as we know, Singapore is a country includes 3 national (India, Chinese, and Malaysia). So, this reason is very comfortable to attract travelers come to Singapore. We think when they travel to Singapore; they want to try traditional food in this country surely. Consequently, we will decide to business Buffet restaurant. With Buffet restaurant, customer can try 3 kinds of food of 3 different national easily. Secondly, we would like to open this restaurant called Enjoy with us!!!. This means when customers come with us, they can enjoy their taste by themselves wholeheartedly. Lastly, we choose our business in Sentosa because this place is most tourists will come during their tour surely. It will take place around 1,000 square meters and totally designed to reflect and describe all kinds of food in 3 national. Our short term goal is to catch people interested and slowly gain market share from other restaurant. Our long term goal is to be well known in the world. This means when people talk about restaurant in Singapore, they will think about our restaurant immediately. Start up fund: S$5 Million investment As we know, Sentosa is an icon of Singapore, so the rental will be very expensive (around S$300,000). Moreover, our business is new, so we need to use about 10% of the budget cost to build our brand name (around S$500,000). Furthermore, this restaurant business plan is prepared to obtain financing for the initial launch of this concept. The financing is required to begin work on kitchen design, architectural plans, manuals and recipe books, site selection, equipment purchases, and to cover expenses in the first year of business (around S$2,000,000). In addition to the capital contributions, it will allow buffet restaurant to successfully open and maintain operations through year one. On the other hand, concentration will be on maintaining quality and establishing a strong identity in each local market. Similarly, we also need to pay management fees and salaries to staff (around S$900,000 for first year). Besides that, we need to require cash and long term asset (around S$1,000,000). Consequently, our business will need about S$5 million. Section III: Marketing A. Research and analysis: Target market (customer) identified: In looking at our market analysis, we have defined the following groups as targeted segments. Below are our targeted market segments: Age: Seniors, young married couples with children, teenagers, citizens. (Especially foreigners) Gender: we will equally target both sexes. Income: We will appeal to the high side of low income individuals and to all in the middle income bracket. By our definition, we will have very broad appeal for our concept. It is our goal to be the restaurant of choice for the largest dining audience in Asia and Europe. Singapore has more than 10 millions tourism arrivals in 2008. With the number of tourism arrival to Singapore like that, this condition has advantage to our business. Furthermore, with our restaurants seating almost 400 people, however, we hope it will have an average of 300 customers everyday for the first year and to grow 20% each year. It is our goal to have something for everyone everyday on our menu. Particularly, we need to maintain our loyalty as we should focus on their changing needs and menu choices. Besides that, our lunch strategy is dual purposed. As we know, some kinds people do not have lunch time, from that reason, we want to keep the price point at lunch as low as possible to keep us in competition with fast food restaurant. Not only do our guests get a sandwich, drink, and fries but also a salad, dessert and a selection of hot food items. On the other hand, we can reduce the hot food assortment from dinner; we will be able to keep our food cost in line with the reduced price. Consequently, we think this is a strategy that will broaden our customer base at lunch while still maintaining our core market segment. 2) Market needs: Our business is Buffet restaurant, so we think we need to focus on: Seeks strong value. Wants variety and flavor in its food. Looks for speed of service. Wants an entertaining dining experience. Insists upon a clean, friendly, and attractive dining environment. 3) Competitive advantages: As we know, Singapore is a country which attract tourists come and travel. Furthermore, they want to spend leisure time. This factor contributed to the large demand for good restaurant in Singapore today. From that reasons, the competition is strong. Due to intense competition, our restaurant must look for ways to differentiate their place in order to achieve and maintain a competitive advantage. a) Competitive comparison: In competing against the casual theme restaurant, we will have the following advantages: Lower price point for a complete meal. There will be no tipping at Enjoy with us, we are self service. Speed of service: no waiting for food. Everything will be readily available: hot, fresh, and cooked as requested. We will provide more entertainment than our competition. There will be something for everyone, everyday of the week. There will be no confusing menu board when guests arrive at our restaurant. We have made it simple: one price, everything included b) Technology: we will invest in a high speed computer to provide a fast and comfortable connection to link to our cash registers. We will also order online, email, and have a Web page. B. Marketing plan: 1) Market strategy sales and distribution: Our main focus in marketing will be to increase customer awareness in the surrounding community. We will direct all of our tactics and programs toward the goal of explaining who we are and what we are all about. We will price our products fairly, keep our standards high. Price strategy: All menu items are moderately priced. Sales strategy: The sales strategy is to build and open new locations on schedule in order to increase revenue. 2) Pricing and opening hours: Buffet Breakfast (6.00 am to 11.00am, Mon to Sun) : Adults $20, Child $10 Buffet Lunch (12.00 noon to 2.30pm, Mon to Sun): Adults $ 30, Child $ 15 Buffet Dinner (6.30 pm to 5.30 pm, Mon to Sat) : Adults $ 40, Child $ 25 Especially Buffet (6.30 pm to 11.00 pm) : Adults $ 50, Child $30 Note: Child = 5-12 years old. Free for accompanied child under 5 years old. All prices subject to 10% service charge and 7% GST. Prices subject to change. Our business includes: Buffet Breakfast, Lunch, and Dinner. Particularly, we have 1 special service that always serves every Sunday. This service will free flow of soft drinks juices, draft beer and selected wines and champagne. 3) Advertising and promotion: Our business is new, so we need to have a good marketing plan to compete with them. Im going to use 10% of the budget cost which is 1/2 million to build our brand name. You will see our advertising everywhere, on television, on train, on the bus and news paper and also in the magazine of Singapore airlines, Tiger airways, Jetstar airlines. Website is not very important as we dont provide online purchase but we should have a nicely designed web to let people can do a research Enjoy with us!!! Leaflets will be given at all MRTs for 1 working day from 5pm to 6 pm; this is the most crowded time when people are going home after works. Particularly, in Singapore, they trade so many restaurants. Consequently, let to our business for advantages, we will have strategy as: Does not have the widest variety of food but everything here is of great quality. Free flow of fresh fruit juice, e.g. mango, pink guava, apple juices; self serve from bottles chilled in crushed ice. To-die-for desserts and pastries youd wish you had 2 stomachs! Always give promotion and discount on weekend days or holidays. Always change and prepare different kinds of food. It will make interesting in customer. They can come again and again. Section IV: Operations Quality food: fresh food, home style care. Variety, Variety, Variety: A different menu for everyday of the week will feature. Self service: Every new guest will receive a guided tour explaining our concept and the self serve system. Friendly employees: our employees will be ringing dinner bells when fresh foods come out. Furthermore, we will dress uniform that our customers can organize us easily. Reduced dinner pricing: on Monday Thursday, the dinner price will be slightly lower than on Fri/Sat/Sun. On the other hand, our principal owner will offer outside ownership in Enjoy with us!!! on an equity, debt, or combination basis in order to facilitate the start up and growth of our restaurant. Start up: Kitchen design Architecture plans Training: this will cover training of employees and management as well as cleaning and organizing the restaurant to opening. Manuals/Handbooks/Recipes. Building/ Land/ Equipment: we can build from ground up or we can do conversions from existing or close restaurants. Number of staffs: 10 managers, 5 securities, 15 waitresses, 5 bartenders, 2 receptionists, 2 cashiers, 3 chef, 5 cook helper. Location and facilities: Sentosa is the best place to open this kind of business because traveler can discover our shop easier and they can enjoy easily. With this location, we can attract customer from oversea and also citizen. They can come our restaurant on weekend to relax. Proximity to supplies: Supply can get from Malaysia, China, India directly or intermediary in Singapore. Access to transportation: Transport of foods and materials by sea or plane. Moreover, we need to have warehouse storage to hold foods and materials. Section V: Management A. Management team: As our restaurant is small business, it requires a simple organizational structure. Implementation of this organization to make all of the major management decisions in addition to monitoring all other business activities Management Team Legal structure stock agreement, employment agreements, ownership: Carefully to partnership or corporation. Need to follow legal about business in Singapore. Need to clear about employment agreement, stock agreement. C. Board of directors, advisers, consultants: Board of director is the principal owner. They will offer outside ownership in Enjoy with us!!! to improve our restaurant. Section VI: Financial A. Financial plan: Sales: our restaurant will open on 1/1/2011. Cost of goods sold: The cost of goods sold was determined by taking actual Profit and Loss statements from various restaurant concepts and then using our pricing structure and guest counts to arrive at costs. Marketing Fees: these funds will be used for the production of various marketing materials. Advertising: these funds will be used to maintain our sales at projected levels. Management Fees: we will use these dollars for accounting and payroll services of our firm. Fixed and Variable Expensed: The various fixed and variable expenses were determined by taking actual numbers from restaurant. B. Important assumption: We assume a strong economy, without a major recession. We assume, of course, that there are no unforeseen changes in consumers tastes or interests to make our concept less competitive. C. Financial forecast: Because our budget is $5 millions. So we can calculate below: 1) Break even analysis: Variable costs: 25% Cost of goods sold : $1,250,000 17% Employee payroll : $ 850,000 0.25% Credit card charges : $ 12,500 0.33% marketing fees : $ 16,500 2% Management fees : $ 100,000 10% Advertising : $ 500,000 2% Management bonus : $100,000 3.03% Employee payroll taxes and benefits: $151,500 1.5% Paper and cleaning : $ 75.000 61.11% Total variable costs : $3,055,500 Annual fixed costs $170,000 Management salaries $37,000 Management payroll taxes and benefits $16,410 Group insurance $137,000 Controllable expenses minus credit card charges and paper/ cleaning $40,208 Other expenses minus marketing fees, advertising, and management fees $100,000 Depreciation $500,000 Rental $1,000,618 Total fixed costs Start up asset: Cash required : $ 200,000 Long term asset : $ 700,000 Total asset : $ 900,000 Total requirements = Total variable cost + Total fixed cost + Total asset = $3,055,500 + $1,000,618 + $900,000 = $4,956,118 2) Profit and Loss: With an estimate of 300 customers everyday and to grow 20% each year (1.67% per month), lets say 1 customer will spend at least $40. We can see profit and loss account below: From profit and loss table, we can see: Payback period = Y + A/B YÂÂ  = the number ofÂÂ  years before final payback year. In the example, Y = 5 years.ÂÂ   AÂÂ  = Total remaining to be paid back at the start of the payback year, to bring cumulative cash flow to 0,ÂÂ  A = $4,956,118 ($145,747 + $427,447 + $765,487 + $1,171,135 + $1,657,913) = $788,389 BÂÂ  = Total (net) paid back in the entire payback year. B = $2,242,046 So, payback period = 5 + $788,389/$2,242,046 = 5.35 years or 5 years and 4 months In conclusion, our business will take back our capital after 5 years and 4 months. Section VII: Critical risks 1) Challenges: Because our business will be opened in Singapore which attracts different countries come and enjoy. Our challenges will service many kinds people and always have to make them comfortable and enjoy themselves when they come our restaurant. Consequently, we always need to update new ideas and try to have a good service. On the other hand, our purpose wants to make earn lots of money; we need to overcome challenges to have a good business 2) Risks and Contingency: Potential risks Trigger Contingency plan Food Related Lawsuits Our restaurant can be sued after a customer becomes after eating and contracting a food borne illness. Safe handling of food is an important priority for our restaurant. Liquor Liability If we serve beer, wine or other liquor. Need to test quality before sale products. Be sure we are protected from lawsuits resulting from alcohol related incidents. Property Risks Operating a restaurant often includes considerable equipment, building improvements and food stock. We need to buy insurance Price Need to cutting by competitors With Competitors, they will do anything to survive. So we always need to control the price. Number of customer Our plan needs 300 customer/day. Maybe, number of customer will not come enough. In this case, our management team will sit back to find out the reason. It could be caused by price or our marketing program was not effective, or it may be customer-service problems. Delay to complete the business plan When we will plan, maybe time for activities will be delayed This risk is very important. It directly affects all other progresses of the business. Production manager will be aware of this to make sure the chance of this risk equals to zero. Kitchen and electrical fire Overloaded or malfunctioning electrical equipment is a particular risk for our restaurant. Prevention is our best insurance! Be sure that we have appropriate fire suppression systems in place and maintained. Insurance companies typically require that our heat producing cooking equipment, particularly grease sources (fryers, grills, ranges), have aÂÂ  wet chemical fire suppression system and vent hood overhead. Section VIII: Harvest strategy segment Marketing strategy: Advertising is still word of mouth Promotion strategy: 3 different marketing tactics: Word of mouth/ in store marketing. Local Store Marketing (LSM) Local media Positioning Statement: It will be to increase customer awareness in the surrounding community. Pricing strategy: All menu items are moderately priced. Sales Strategy: the sales strategy is to build and open new locations on schedule in order to increase revenue. Sales forecast: opening day for our store is scheduled on 1st January, 2011. Section X: References Book: Federick, Howard (2006). Entrepreneurship: theory, process, and practice. Australia: Michael Tully. p.p.269 276. Website: Anon. (2010). Is your Restaurant a safe Investment? Available: http://www.quoteaustininsurance.com/pages/home/restaurant.php. Last accessed 3th May 2010. Anon. (2010). Singapore Tourism Board. Available: https://app.stb.gov.sg/asp/index.asp. Last accessed 3th May 2010. Anon. (2010). My tax portal. Available: https://mytax.iras.gov.sg/ESVWeb/default.aspx. Last accessed 3th May 2010. Anon. (2010). Which is the Best Buffet in Singapore?. Available: http://www.etour-singapore.com/buffet-in-singapore.html. Last accessed 3th May 2010.