Table of Contents

Bulk Local Executive Summary........................................................................................... 4A Brief Introduction.......................................................................................................................... 4Company Status & Structure..........................................................................................................4Our Service........................................................................................................................................... 4Market & Competitors..................................................................................................................... 5Financial Summary........................................................................................................................... 5

II. Our Company....................................................................................................................... 5Our Story.............................................................................................................................................. 5Our Mission.......................................................................................................................................... 6Our Vision............................................................................................................................................ 6How We Plan to Get There..............................................................................................................6Leadership and Organizational Structure.................................................................................7

III. Our Service.......................................................................................................................... 8Farm-to-Table Movement............................................................................................................... 8How BulkLocal Works......................................................................................................................9Bulk Local Benefits Buyers and Producers............................................................................10Building a Bulk Local Community.............................................................................................10

IV. The Market........................................................................................................................ 11Description........................................................................................................................................ 11Size and Growth............................................................................................................................... 11Purchasing Characteristics..........................................................................................................12Trends................................................................................................................................................. 12Why BulkLocal................................................................................................................................. 13

V. Competition....................................................................................................................... 14Farmplicity........................................................................................................................................ 14Veritable Vegetable........................................................................................................................ 15BulkLocal........................................................................................................................................... 16

VI. Sales and Marketing....................................................................................................... 16Identification of Target Customers...........................................................................................16Sales Practices.................................................................................................................................. 17Building Awareness....................................................................................................................... 18Promotions........................................................................................................................................ 19Volunteering..................................................................................................................................... 21Social Media...................................................................................................................................... 21Blog...................................................................................................................................................... 21Nonprofit Partnerships................................................................................................................. 21Information Booth.......................................................................................................................... 22Distribution Channel..................................................................................................................... 22Price..................................................................................................................................................... 23Position.............................................................................................................................................. 23Market Penetration........................................................................................................................ 23Demand Forecast............................................................................................................................ 23Key Financial Assumptions..........................................................................................................23

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VII. Operations....................................................................................................................... 24Inputting Producer Supply.......................................................................................................... 24Placing Customer Orders..............................................................................................................25Delivering Products....................................................................................................................... 25

VIII. Implementation........................................................................................................... 26Initial Launch in Portland............................................................................................................ 26

IX. Financials.......................................................................................................................... 28Balance Sheet & Sources of Funding.........................................................................................29Breakeven Analysis........................................................................................................................ 29Exit Opportunities for Investors................................................................................................30

IX. Risks.................................................................................................................................... 30

X. Opportunities for Growth.............................................................................................. 31

XI. Summary............................................................................................................................ 32

Appendices.............................................................................................................................. 33Appendix A: Organizational Chart.........................................................................................................33Appendix B: Producer’s Input Page.......................................................................................................33Appendix C: Buyer’s Selection Page......................................................................................................34Appendix D: Chef Spotlight of the Month............................................................................................34Appendix E: Farm Spotlight of the Month..........................................................................................35Appendix F: BulkLocal Blog......................................................................................................................35Appendix G: Increasing Economic Driver...........................................................................................36Appendix H: Restaurant Profit/Cost Structure................................................................................36Appendix I: Legislation Promoting Local Food................................................................................37Appendix J: Farmers’ Market Growth...................................................................................................37Appendix K: Competitive Analysis.........................................................................................................38Appendix L: Veritable Vegetable’s Distribution Route.................................................................39Appendix M: Print Advertising................................................................................................................40Appendix N: Window Decals....................................................................................................................40Appendix O.......................................................................................................................................................41Appendix P: Direct Mail..............................................................................................................................41Appendix Q: Informational Booth..........................................................................................................42Appendix R: BulkLocal’s Perceptual Map...........................................................................................43Appendix S: How BulkLocal is Positioned..........................................................................................43Appendix T: Headquarters of BulkLocal.............................................................................................44Appendix U: Implementation Timeline...............................................................................................44Appendix V: Pro Forma Income Statement........................................................................................45Appendix W: Most-Likely Case Scenario Break-even Analysis.................................................46Appendix X: Pro Forma Balance Sheet.................................................................................................46Appendix Y: Pro Forma Cash Statement.............................................................................................47Appendix Z: Best Case Breakeven Scenario.......................................................................................48Appendix AA: Worst Case Breakeven Scenario..............................................................................48Appendix AB: SWOT Analysis..................................................................................................................49

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Bulk Local Executive SummaryTeam Nine

Ian Johnson, Ali King, Ashley Martinez, Robert Papetti, Kate Rolli, Aly Rumel

A Brief IntroductionAs consumers become more mindful of where their food is coming from, local produce sales have grown from $4.8 billion in 2007 to nearly $7 billion last year1. Restaurant owners have taken note of this consumer trend, as locally sourced meats, locally grown produce, and environmental sustainability are now the top three trends for restaurant menus in 20142.

Restaurant owners and chefs looking to purchase local produce, however, face several challenges. Our company seeks to address these challenges by providing superior ordering and delivery service of local produce and dairy products to restaurant owners in Portland, Oregon. BulkLocal is built around a simple mission: improve the health and wellbeing of our communities by supporting local and sustainable agriculture to benefit our customers, producers, and investors. We have included a brief outline of our full report below, introducing the general structure and status of our company; the service we offer; market and competitors; a financial summary; and our funding initiative.

Company Status & Structure

Our six founding members — Ian Johnson, Ali King, Ashley Martinez, Robert Papetti, Kate Rolli, and Aly Rumel — decided to form an equal partnership and plan to file BulkLocal as an S corporation. All corporate income will be passed through directly to our shareholders to avoid double taxation and to simplify accounting procedures for our new business venture.

Our Service

BulkLocal serves two markets: buyers and producers. Our buyers consist of local restaurant owners and chefs, while our producers include local farmers. From a buyer perspective, restaurants benefit from our vast network of farmers and our easy-to-use website for online orders. Our website offers a simplistic and customized online ordering process. After orders have been processed and fulfilled, we deliver orders directly to our buyers’ doorstep.

1 "USDA Confirms Farmers Markets' Growth, Sustainability." – AgriNews. 25 Aug. 2013. Web. 01 Dec. 2014.

2 Shoenfeld, Bruce. "How the Farm-to-Table Movement is Helping Grow the Economy." Entrepreneur 21 Sept. 2011: Entrepreneur. Web. 29 Nov. 2014.

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As for our producers, we introduce a new customer segment: restaurant owners seeking local produce. We take care of processing all buyer orders ourselves and pick up produce and dairy orders onsite from our producers. By forming sustainable relationships with local farmers, we intend to continuously build our producer network. In the future, we will leverage these relationships to expand into other buyer landscapes, such as large corporate cafeterias and university cafes nationwide.

Market & Competitors

With over 770 restaurants and 600 food trucks, Portland, Oregon presents a market that could benefit from the simplicity and convenience of the BulkLocal system. Initially, we will target single location, full-service restaurants that emphasize food quality and freshness. Our service will allow these restaurants to cater to a market that craves healthier food options and transparency in sourcing. The farm-to-table trend is still gaining momentum, which presents an opportunity for BulkLocal to be a first mover in the industry amongst competitors such as Farmplicity and Veritable Vegetable. Neither of these competitors currently have a presence in Oregon.

Financial Summary

To best estimate BulkLocal’s financial future, our report offers best and worst case break-even analysis scenarios for the years 2015 to 2025. In our best-case scenario, our company will break even between 2019 and 2020. In our worst-case, we will turn a profit between 2021 and 2022. Our analyses are based on the assumption of a 13 percent sales premium we collect above the sales revenue our producers earn. These scenarios also factor in estimated growth of our yearly costs and yearly service revenue. To support our operations, we will require $850,000 in funding. The funding will cover our first year expenses, including rent, trucks, and advertising in our best-case scenario.

II. Our CompanyOur StoryOur company's founding members all share one thing in common: we enjoy good food. As our team began to brainstorm possible ventures in the restaurant industry, we decided the best course of exploration lay beyond research papers and online statistics. Instead, we decided to go out and explore one of the top ten-foodie cities in the United States: Bloomington, Indiana3. After visiting critically acclaimed restaurants and bustling weekend farmers markets, a trend began to emerge in our research. Consumers are becoming more mindful of where their food is coming from and are purchasing more locally sourced food. We also discovered restaurant had joined the local food movement as well. It was from this second discovery that the idea for BulkLocal was formed.

3 "Bloomington - Best Food Cities." Best Food Cities January, 2013. Web. 01 Dec. 2014.

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BulkLocal is an online ordering and delivery service for restaurant owners interested in purchasing produce and dairy products from local farmers in their community.

Our MissionBulk Local is built around a simple mission: improve the health and wellbeing of our communities by supporting local and sustainable agriculture. As consumers become more mindful of where their food comes from, local produce sales have grown from $4.8 billion in 2007 to nearly $7 billion last year4. Our company is dedicated to providing superior ordering and delivery of local produce and dairy products to restaurant owners in Portland, Oregon.

Our Vision

At BulkLocal, we have a vision to create an ordering and delivery service for multiple clientele in the food industry, including restaurants, large corporate cafeterias, and public and private university cafes nationwide. While we are initially launching our service in Portland, Oregon, we are confident in Bulk Local’s potential for national expansion. When it comes to food, we envision a world where consumers are empowered to make well-informed, health-conscious decisions about where and who they purchase their ingredients from.

How We Plan to Get There

While plans for national expansion by our third year of operations are ambitious, we will reach our goal by offering superior service to our customers and producers and providing strong financial returns to our shareholders. From a buyer perspective, restaurants benefit from our vast network of farmers and our easy-to-use website for online orders. Our website offers a simplistic and customized online ordering process. After orders have been processed and filled, we deliver produce and dairy orders directly to our customers’ doorstep.

As for our suppliers — the local farmer and dairy producer — we introduce a new customer segment: restaurant owners seeking local produce. We take care of processing all customer orders ourselves, and pick up produce and dairy orders from our producers onsite. By forming sustainable relationships with our local farmers, we intend to continuously build our supplier network. Developing producer relationships will help our company gain access to more local farmers. We intend to leverage these relationships to expand into other customer landscapes, such as large corporate cafeterias and university cafes nationwide.

4 "USDA Confirms Farmers Markets' Growth, Sustainability."

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We are also devoted to providing strong economic returns to our shareholders while promoting social responsibility for our people and planet. Our socially responsible investors possess a unique appreciation for the health and wellbeing of our communities, and we are committed to upholding their beliefs through our company mission and vision at BulkLocal.

Leadership and Organizational Structure

As a startup, our company will follow a very simple organizational structure. BulkLocal is equally owned by our six founding members: Ali King, Ashley Martinez, Aly Rumel, Kate Rolli, Robert Papetti, and Ian Johnson. As co-partners in this venture, we will be responsible for the majority of BulkLocal’s day-to-day operations (Appendix A).

We will require additional labor from eight truck drivers trained in quality control logistics and delivery procedures. Drivers will report directly to our Chief Operating Officer (COO), Ali King. As COO, Ms. King will be responsible for handling supply chain logistics, distribution networks, and route planning activities for our delivery system. She will also oversee daily communications with our suppliers to map out optimal pickup routes for our drivers.

Our Chief Marketing Officer (CMO), Ashley Martinez, will head our marketing division to build customer awareness for BulkLocal. During our initial launch, Ms. Martinez will act as Creative Director for our “Buy Local” campaign geared toward local restaurant owners in the Portland area. As CMO, she will also manage the BulkLocal brand by directing promotions and sales; governing PR and internal communication efforts; and building our brand image amongst employees, business clients, and potential partners.

We will hire two customer service representatives to work under Aly Rumel, our Chief Community Outreach Officer (CCOO). Ms. Rumel will manage farmer relationships to ensure the satisfaction of our suppliers. Ms. Rumel will also hold creative control of weekly newsletters; monthly spotlights on new farmers joining BulkLocal; and community dinners, donations, partnerships, and special events.

As an online ordering and delivery service, our success relies on our ability to provide an efficient and reliable online platform for our buyers and producers. Our Chief Information Officer (CIO), Kate Rolli, will manage our integrated system technologies by improving the flow-through of buyer-producer ordering information in our internal systems. Ms. Rolli’s role as CIO will allow for effective order processing, consumer information, up-to-date feedback on orders, and pick up statuses.

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The success of our company also depends on our ability to raise capital to fund our new venture. Our Chief Financial Officer (CFO), Robert Papetti, will retain responsibility for securing new investment opportunities and managing outreach to prospective socially responsible investors interested in BulkLocal. Mr. Papetti will also oversee all company financials, ensuring growth and profitability for our company.

Our company’s ability to remain profitable and ensure customer and supplier satisfaction through day-to-day operations is fully contingent upon a well-developed corporate strategy. Our Chief Executive Officer (CEO), Ian Johnson, will be in charge of evolving company initiatives to create new opportunities for growth and national expansion. Mr. Johnson will work closely with each of our chief officers to gain a holistic perspective of our company’s current competitive advantages to develop new initiatives for continuous improvement.

III. Our Service

Farm-to-Table MovementAcross the United States, consumers are seeking healthier lifestyles. People want to know where their food comes from and how it affects their bodies. Recently, many restaurants have begun catering to these market changes by sourcing local food. This trend is catching on throughout the nation: Entrepreneur magazine calls the farm-to-table trend “big business everywhere,” not just in traditionally “foodie” regions5. A January 2014 culinary survey from the National Restaurant Association (NRA) ranked locally sourced meats and seafood, locally grown produce, and environmental sustainability as the top three trends for restaurant menus in 20146. Restaurant owners and chefs hoping to join this farm-to-table movement, however, face several challenges.

For restaurant owners, small farm-to-chef producers are less efficient than traditional wholesale distributors. Restaurant kitchens sourcing locally often rely on many different growers to supply the ingredients that fill their menus. For example, at Taste, the dining center inside the Seattle Art Museum, executive chef Craig Hetherington generally buys from between 50 to 70 local farms at the height of the summer. In Entrepreneur magazine, Hetherington jokes that the dozens of individual transactions “drive the woman who does our accounting crazy7.” As explained by Tim Clougher, President of Bloomingfoods Co-op in Bloomington, Indiana, a distribution network such as BulkLocal eliminates the buyer’s need to piecemeal suppliers. Through BulkLocal, restaurant

5 Shoenfeld, Bruce.

6 Environmental Leader. Business Sector Media, 2 Jan. 2014. Web. 29 Nov. 2014.

7 Shoenfeld, Bruce.

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owners can buy a variety of products from dozens of local farms with the added benefit of a single transaction and single delivery date.

Restaurants seeking to source locally also face the obstacle of reliability. According to Mike Kokas, founder of Upstate Farms in Tivoli, New York, it’s difficult to source consistently and in volume from local farms. Smaller, local farms are threatened by inclement weather, mechanical breakdown, and pest infestation8. At BulkLocal, we believe our buyers have a priority to make the best possible food for their customers. We want restaurants to worry about cooking, not sourcing – that’s our job. If a natural disaster or other unexpected emergency destroys a crop a buyer depends on, we will find another family-owned farm that meets all of our quality standards to fill the order. If we cannot find exactly what a buyer needs, their next order is on us. BulkLocal provides the crucial link between local producers and restaurant buyers. The market is ripe for a system that simplifies the farm-to-table connection; creates sustainable relationships; and provides fresh, quality products to consumers.

How BulkLocal Works

The BulkLocal online marketplace represents a simple relationship between producers and buyers. Our ordering system is easy to understand and convenient for all users. Upon visiting BulkLocal.com, a guest has the choice to sign in as a producer, buyer, or a visitor who simply wants to peruse the marketplace or explore the website.

As a producer, the guest will input product descriptions, images, and quantities for the products they have readily available (Appendix B). These items will be placed in the online marketplace and sorted according to the characteristics described by the producer in their product summary. As orders are placed and items are sold, BulkLocal will send notifications to producers so they know when to have products ready for pickup.

Once all products have been inputted into the marketplace, our buyers can log on to shop the market. Buyers have the opportunity to create unique orders based on their individual business values and needs. Buyers who choose this option of “building their own bundle” can filter their orders based on product certifications, farming practices, proximity, and type of produce, quantity, and peer ratings. Alternatively, buyers who prefer guidance when shopping in the market can rely on BulkLocal to create their order based on pre-specified priorities, such as freshness, budget, or quality (Appendix C). After placing and paying for an order online, buyers simply wait for BulkLocal to deliver their products.

8 Feldmar, Jamie. “Fresh: Supplying Farm-to-Table Restaurants.” The Financialist. 11 Oct. 2012. Web. Dec. 2014.

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Bulk Local Benefits Buyers and Producers

BulkLocal serves two markets: buyers and producers. Our buyers consist of local restaurant owners and chefs, while producers include local farmers. We believe that each of these contributors should spend their time and effort fulfilling their passions: producers should focus on growing and harvesting, and restaurants should focus on cooking. That’s why we make sourcing the freshest, highest-quality ingredients simple for both sides of the farm-to-table spectrum.

Buyers benefit from the simplicity of the BulkLocal ordering and delivery system. Our customer-friendly website lets buyers view hundreds of products from dozens of different suppliers, all in one place. The system eliminates the need to connect with multiple suppliers and organize different orders, payments, and delivery schedules. Accountants only deal with one transaction, and chefs only deal with one delivery. Through one single platform, customers can view merchandise, place an order, and make a payment – then, they simply wait for the delivery.

For producers, BulkLocal provides marketing benefits by introducing them to a new customer segment. As more restaurants log on to the BulkLocal website, local producers increase their potential customer base without any additional advertising cost. Weekly farmer spotlights on the BulkLocal website and individual order summaries including “Farmer’s Notes” will build farmer rapport with customers and advertise their products. Additionally, BulkLocal provides security and simplicity to producers because they receive immediate payment via our online ordering system and complementary product pickup.

Building a Bulk Local Community

At BulkLocal, we believe that our online system should offer simplicity and convenience without compromising the relationships that make farm-to-table sourcing so meaningful. To help foster these relationships (without having to travel to dozens of different farms or restaurants), we have included a number of community-building features in the BulkLocal business model. Each week, the Bulk Local website will highlight a “Farmer of the Month” or “Chef of the Month” (Appendix D&E). Through pictures and a brief article, BulkLocal website guests become familiar with a different member of the BulkLocal community each week — including their individual values, farming heritage, and growing methods. Also on the website, the BulkLocal blog builds a sense of unity and kinship among BulkLocal users by sharing recipes, chef testimonials, and unique experiences and updates (Appendix F). Our marketing and community outreach departments will work together to create blog posts that educate and inspire our buyers and producers.

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In continued efforts to personalize each BulkLocal user’s experience, every order delivery will come with a summary that outlines the origin of each product in the order. For example, an order delivered to a restaurant of 20 pounds of apples from Upstate Farm, 30 pounds of potatoes from Twelve Oaks Farm, and four types of cheeses from Oakland Dairy Farm will come with a summary that includes pictures of the individuals who work at each farm, a small blurb about their values and heritage, and any “Farmer’s Notes” regarding the products that the producer has chosen to include in the summary for the buyer. Through a highly personalized system, we hope to deepen the connection between the producer and buyer to build a network of food-lovers who are rooted in their local community.

IV. The Market

DescriptionOur initial target market for BulkLocal is the single-location, full-service restaurant market. A single-location, full-service restaurant is defined as an independent or family operated restaurant that provides food service for customers who order while seated and pay after eating. This kind of restaurant typically has higher-priced menu items than others. Single-location, full-service restaurants will have the greatest use of our service, as they emphasize the quality of their food in order to attract consumers. Since high food quality differentiates these restaurants from other restaurants, food freshness and origin is highly important.

Size and GrowthSingle-location, full-service restaurants generate $159.4 billion per year with a profit of $9.9 billion. Over the next five years, the market is expected to grow at a rate of 2.5 percent9. The industry has almost 250,000 businesses, which means significant competition is present and restaurant owners must make continuous improvements to remain competitive. The greatest drivers for this industry are consumer spending, consumer confidence index, healthy eating index, and households earning more than $100,000 — all of which are currently increasing (Appendix G). Such an increase in consumer spending means people are willing to spend more, creating an opportunity for restaurants to increase their profit margins.

9 "Single Location Full-Service Restaurants." Industry Market Research. IBIS World, Web. 01 Dec. 2014.

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Purchasing CharacteristicsOrdering costs make up the majority of restaurant costs, totaling 39.4 percent of all costs10 (Appendix H). Most orders come from wholesalers, as they guarantee timely delivery and food quality through short-term and long-term contracts with set pricing agreements. Restaurants have come into problems with using wholesalers due to an inability to change orders on short-notice, since a drop in demand could lead to excess food that will spoil. Some restaurants address this problem by ordering directly from local farmers. When a restaurant orders directly from the farmer, food arrives fresher and faster.

Unfortunately, most single-location, full-service restaurants do not have the purchasing power to source directly from independent farmers. Instead, they must utilize wholesale distribution services and pay wholesale prices. This past year, wholesale prices rose eight percent, showing the highest annual gain in almost 30 years11.

TrendsThe US food industry has changed dramatically throughout our history. In colonial times, the majority of Americans worked in agriculture to support their local communities. After the Industrial Revolution, food began to be mass-produced. Costs decreased significantly and there was great consolidation of the agricultural industry. Today, the agricultural industry is taking small steps to return to smaller scale food production. Requests for transparency, health initiatives, and governmental support have ignited America’s movement to return to local production.

Since 2002, there have been at least 30 documentaries on the production and consumption of food12. Some of the most popular are Food Inc., King Corn, and Supersize Me. The last time such focus was on the food industry was with the publication of The Jungle in 1906. The increased interest in how our food is made and the negative health effects of certain additives show a change in how Americans think about food and growing concerns regarding nutrition. From 2009 to 2014, only 0.8 percent of Americans maintained healthy diets, according to the healthy eating index. This number is projected to rise to 2.6 percent from 2014 to 201913. Today, Americans rank their top menu choices based on freshness and locality, according to 86 percent of survey respondents and 73 percent of respondents, respectively14.

10 "Single Location Full-Service Restaurants."

11 Kelso, Alicia. "NRA: Consumers Want Local Sourcing and Healthy Menu Choices." Www.qsrweb.com. 1 Feb. 2012. Web. 01 Dec. 2014.

12 Truman, Ande. "28 Food Documentaries + Ratings, Trailers & Links to Watch." Broke Healthy RSS. Web. 01 Dec. 2014.

13 "Single Location Full-Service Restaurants."

14 "Study: Restaurant Customers Want Conscious, Convenient Brands." Www.fastcasual.com. Fast Casual, 12 Nov. 2014. Web. 01 Dec. 2014.

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Recently, governmental support for health movements in the United States has increased. Higher rates of obesity and diabetes led the Obama administration to launch a health campaign. The goal of the administration is to provide healthy food and nutritional information to all Americans. The United States Department of Agriculture (USDA) has set initiatives for healthy foods and beverages to be offered in public schools (Appendix I). Another USDA program called, Know Your Farmer, Know Your Food increased the number of farmers markets in the US by 67 percent and increased the number of regional food hubs to 22015 (Appendix J).

An increased awareness of health effects of food from media and governmental agencies has led consumers to expect more from restaurants. When dining out, 72 percent of consumers are trying to eat healthier than they did in 201216. Restaurants have responsively added healthier options to their menus and started including nutritional data. A large portion of restaurant menus today has healthy choice highlights and calorie counts for menu options. Restaurants have also sourced more ingredients from local providers. Local sourcing at restaurants will stay in high demand over the next ten years17.

Why BulkLocal

A perceived price increase, the hassle of obtaining all ingredients, and the seasonality of local food limit a restaurant ability to source locally. BulkLocal addresses each of these needs through an innovative online ordering and delivery service.

BulkLocal’s pricing options are not much higher than competing wholesale prices, and possess the added value of higher product quality and freshness. According to The Financialist magazine, “ingredients sourced at local farms are higher quality, fresher and tastier, and likely to be priced accordingly18”. Independent restaurants are willing to pay the incremental price increase of 20 percent for superior products19.

15 "American Adults Are Choosing Healthier Foods, Consuming Healthier Diets." News Release. USDA, Aug. 2014. Web. 30 Nov. 2014.

16 Kelso, Alicia

17 Nania, Rachel. "Farm-to-table-to-phone: App Helps D.C., Md., Va. Choose Restaurants That Source Locally." WTOP.com. WTOP, 12 Aug. 2014.

Web. 02 Dec. 2014.

18 Feldmar, Jamie

19 Feldmar, Jamie

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When compared to wholesalers, local food sourcing is also known to be less reliable. The BulkLocal online marketplace challenges this customer notion by showing only products that are currently available and guaranteed to be delivered. Further, BulkLocal is able to consistently fill large orders by consolidating produce from surrounding farms. Consolidation provides a larger produce selection and greater quantity restaurants can order. A restaurant does not have to travel to receive the produce from multiple places because BulkLocal delivers it directly to their doorstep.

We understand it may be difficult for a restaurant to make the transition from sourcing all of its food from a wholesaler to using BulkLocal. Instead, the restaurant may want to gradually remove products it sources from a wholesaler. Our short-term contracts will allow restaurants to change their sourcing structure gradually and give BulkLocal a trial run. BulkLocal is also able to work in accordance with other suppliers if we are unable to meet all the restaurant’s needs.

V. CompetitionA growing emphasis on local food sourcing has created a new market for food ordering and delivery. Many startup businesses have launched in the last two years to create connections between farmers and consumers for meat, dairy, and produce. Since many of these businesses were not founded until recently, it is still a developing market. BulkLocal has an opportunity to enter this growing market as a major competitor. Nevertheless, it is important to understand the competitive landscape we are entering. We have included an in-depth analysis below of two major competitors: Farmplicity and Veritable Vegetable. We have also detailed how BulkLocal will differentiate itself in the market (Appendix K).

FarmplicityFarmplicity, a local startup based in St. Louis, is an online marketplace offering a connection between restaurants and farmers and an experience “similar to browsing eBay”20. Farmplicity allows farmers to set their own prices and requires farmers to arrange delivery of the products to the buyers. Farmers list their entire product offering on the website, set a minimum order quantity, and then update the available product amount for sale as purchases are made and the available quantity decreases.

20 "About Us." Farmplicity. Farmplicity, 2013. Web. 03 Dec. 2014.

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Farmplicity offers fruits, vegetables, meats, dairy products, and other value added goods, such as honey or maple syrup. Farmplicity charges a five percent commission for farmers and a 3.5 percent transaction fee for restaurants on each order. All of Farmplicity’s customers are restaurants. Farmers set up their profile on Farmplicity’s website where they can edit their bio, farm location, and product offering. The farmers post their available products and provide a description of the offering, including the price and amount available for delivery at a certain date21. Over 80 Farmers use Farmplicity along with more than 70 restaurants, and the website lists over 100 products available for purchase22.

BulkLocal offers a similar online marketplace to connect farmers and customers, and also allows farmers to set prices on their products. Instead of charging a commission to farmers, we charge a premium to our customers. Additionally, BulkLocal differentiates itself as a more attractive platform than Farmplicity with our delivery service. We are more than an online marketplace; we are the full farm-to-kitchen connection that allows our customers to focus on growing food or preparing it. We go the extra mile by taking care of the transportation and delivery.

Veritable Vegetable Veritable Vegetable (VV), founded in 1974, is as an organic produce warehousing and distribution business with operations on the west coast. VV operates most heavily in California with offices and a warehouse in San Francisco, and distributes to parts of New Mexico, Arizona and Colorado23 (Appendix L). VV picks up local produce, stores it in their warehouse, and then sells to their customers. Customers purchase the produce through the website or over the phone. VV’s trucks then deliver the produce to the customer after purchase. Their fleet of trucks includes five bobtails and nine semi-trucks, and VV employs 20 full-time drivers.

VV’s business model differs from BulkLocal and Farmplicity because they play a ‘middle-man’ role by connecting the farm to the customer. Instead of offering a marketplace where the buyer pays the farmer, VV pays the farmer for the produce and then sells it to the buyer hoping to turn a profit. Because VV doesn’t require a commission on sales or a transaction fee, they are susceptible to a higher risk if they

21 Farmplicity - Order Fresh, Locally-Grown Ingredients for Your Restaurant. Farmplicity, n.d. Web. 03 Dec. 2014.

22 Farmplicity - Order Fresh, Locally-Grown Ingredients for Your Restaurant.

23 "Description." Veritable Vegetable. OrganicGuide, n.d. Web. 03 Dec. 2014.

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cannot turn their inventory. At BulkLocal, we want to get fresh food to our customers as quickly as possible. Instead of storing products in a warehouse, we deliver products to the restaurant straight from the farm.

VV’s system lacks transparency because of the isolated steps in their supply chain. BulkLocal brings produce straight from the farm to the kitchen, allowing the buyer to directly connect with the farmer. Once VV buys the food, they store it, then sell it to a typical grocery store. The grocer will finally sell it to the customer. The customer has no idea where the product has originated and no way to trace the product. We believe that this connection must be maintained throughout the supply chain in order to truly claim a local aspect to the business.

BulkLocal At BulkLocal, we combined the best practices from Farmplicity and VV to create a superior, unique service that meets customer needs. Like Farmplicity and VV, BulkLocal offers an online marketplace to connect producers and customers and allows producers to set prices on their products. However, instead of charging a commission to producers, we charge a premium to our customers and allow farmers to join our program for free. Additionally in our system, like Farmplicity, the buyer makes a direct payment to the producer, eliminating the need for a “middleman” and facilitating farmer practices.  

Like Farmplicity, we cater to restaurants, because we believe the products we deliver should never sit on a grocery store shelf. This also eliminates the need for a warehouse through our just-in-time operational model. We are more than an online marketplace; we are the full farm-to-kitchen connection that allows our customers to focus on growing food or preparing it. We go the extra mile by taking care of the transportation and delivery.

VI. Sales and Marketing

Identification of Target CustomersProducers

Initial producers will be identified using City of Portland records and Portland Farmers Market participants. The population will be narrowed to produce and dairy farmers. Eligible farms are those within 400 miles of the BulkLocal office, but we will focus marketing and sales efforts to those within 200 miles during our first year of operations. To improve our chances of success, we will focus on converting producers who already supply to local dining establishments.

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Buyers

Buyers will be identified using the City of Portland directory, and we will focus on restaurants within 50 miles of the BulkLocal office currently sourcing produce and dairy locally. Six months after our initial launch, we will begin marketing to restaurants not currently sourcing ingredients locally. A minimum of ten farmers must be registered with published inventory listings on BulkLocal before dining establishments will be permitted to use our service.

Sales PracticesWebsite

Produce and dairy products will be sold through an online platform: www.bulklocal.com. Producers list available goods such as quantity, type, and price on bulklocal.com. Buyers add desired items and/or bundles to their cart and pay through PayPal. Purchasers have the option to save their payment information to a PayPal account for future orders. Confirmation of payment finalizes the purchasing agreement.

Upon receipt of payment, producers will receive a direct deposit for the goods purchased at full price value, excluding a premium fee owed to BulkLocal. BulkLocal’s trucking fleet, according to the delivery schedule set by the buyer, delivers goods. A signature is required at time of delivery in order for goods to be rendered.

Managing sales online incurs a total annual cost of $600. This number is based on a website management cost of $20 per month24 (domain $10/mo, web hosting $10/mo, Content Management System Software $0) and PayPal licensing fee of $30 per month25.

Direct Sales Force

The sales team will conduct in-person meetings with potential users (buyers and producers) during the first year to increase interest in our company. After which, meetings will occur by request only.

Webpage Advertising Sales

Twenty-one side box advertising spaces are available for purchase on seven pages (three per page) of the BulkLocal website. Side box ads on the home page cost $12,000 per year

24 Heng, Christopher. "How Much Does It Cost to Set Up a Website?" Thesitewizardcom RSS. Web. 02 Dec. 2014.

25 "Merchant Services & Account Payment Solutions for Your Business â PayPal." Merchant Services & Account Payment Solutions for Your Business

PayPal. PayPal, Web. 02 Dec. 2014.

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while all other ad spots are priced at $3,800 per year26. Total expected revenue generated from advertising sales equals $104,400 per year.

Building AwarenessPrint Advertising

Print ads featuring a five percent discount on first order (minimum order amount is $300) and free usage for producers will be placed in the Portland Yellowbook (“Farms and Ranches” and “Restaurants” sections), Portland Monthly Magazine, The Oregonian newspaper, and The Portland Mercury newspaper. Total cost for print advertising on these four mediums equals $35,524 for one year (Portland Yellowbook $4000/yr27, Portland Monthly $1580/mo28, Oregonian $180/mo29, and Portland Mercury $867/mo30) (Appendix M).

Digital Advertising

Five percent discount on first order and free usage for producers will be advertised on website versions of the Portland Yellowbook, Portland Monthly Magazine, The Oregonian, The Portland Mercury, KATU.com, and the Portland Farmers Market e-newsletter (free with season sponsorship). Additionally, BulkLocal will purchase ad spots on Google’s browser for ‘BulkLocal’, ‘local produce’, ‘Portland produce’, ‘Oregon farms’, ‘restaurant food sourcing’, and ‘local food distribution’. Total cost of budgeted digital advertising campaigns is $11,760 for one year (Yellowbook $900/yr31, Portland Monthly $900/yr32, Oregonian $180/mo33, Portland Mercury $900/yr34, KATU.com

26 "Online Advertising Placement and Pricing." Quirks Marketing Research Media. Quirk Enterprises Inc., Web. 30 Nov. 2014.

27 Lewis, Kern. "Should Small Businesses Still Book Yellow Page Ads?" Forbes. Forbes Magazine, 28 Mar. 2011. Web. 02 Dec. 2014.

28 "Magazine Advertising Rates." Quirks Marketing Research Media. Web. 01 Dec. 2014.

29 "The Best Local Marketplace." The Best Local Marketplace. The Oregonian: OregonLive, Web. 02 Dec. 2014.

30 Kobliski, Kathy. "Newspaper Ads." Entrepreneur. Entrepreneur Media, Inc., 17 Jan. 2006. Web. 01 Dec. 2014.

31 "Online Advertising Placement and Pricing."

32 "Online Advertising Placement and Pricing."

33 "The Best Local Marketplace."

34 "Online Advertising Placement and Pricing."

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$75/mo35, Portland Farmers Market e-newsletter $036, and Google Adwords $500/mo37) (Appendix M).

Window Decals

All participating dining establishments will be given an 8 inch by 6 inch window decal upon delivery of their first order. Promoting their usage of BulkLocal’s services by displaying the decal on a window in their facility is optional. We ask that decals be placed in a window on the entrance side of the building. Assuming 30 percent of all restaurants utilize BulkLocal’s services within the first year, window decals will cost BulkLocal $2,210.6738 in the first year (Appendix N).

Delivery Truck Banners

BulkLocal delivery trucks will advertise BulkLocal’s services on advertising banners. These banners will be placed on both sides of each vehicle. Placement of advertising banners on both sides of all six trucks will cost $10,50039 (Appendix O).

PromotionsFive Percent Discount on First Order

During our initial launch, BulkLocal will offer a five percent discount to all customers on their first order. Orders must meet a minimum of $300 to qualify. This discount will automatically be added to a member’s account upon registering for the service. BulkLocal, not our producers, will cover the cost incurred by offering a five percent discount. Producers will still receive full value for their products.

Farmer of the Month

Each month, one producer will be declared “Farmer of the Month”. Our Farmer of the Month will be featured on the BulkLocal website and in our e-newsletter. The winner’s products will be listed first on our products listing page and he or she will receive a gift certificate to a partnering restaurant. The value of this gift certificate will be equivalent to $250, allowing the producer to treat his or her entire staff to a nice meal. Our Farmer of

35 Harrison, Suzanne. "Why Web?" KATU.com. KATU, 2 Dec. 2014. Web. 02 Dec. 2014.

36 "PFM Newsletter." Portland Farmers Market. Portland Farmers Market, Nov. 2011. Web. 02 Dec. 2014.

37 "AdWords." Google Costs. Google, Web. 02 Dec. 2014.

38 "Vinyl Window Decals." , Business Window Decals That Last. Signazon, Web. 02 Dec. 2014.

39 "TRUCK ADS® FRAME KIT CHANGEABLE TRUCK SIGNAGE BANNER & FRAME SYSTEM." TRUCK ADS®. Web. 02 Dec. 2014.

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the Month will be selected based on quality of products, environmentally friendly farming practices, ratings, and reviews.

Chef of the Month

Once a month, a chef from one dining establishment will be declared “Chef of the Month”. In addition to being featured on our website and e-newsletter, the winner will receive a $500 gift certificate to BulkLocal. Our Chef of the Month will be selected based on cooking practices, percentage of ingredients locally sourced, dedication to the local food sourcing movement, and use of BulkLocal services.

Refer a Neighbor

BulkLocal users can also invite other producers and buyers to join BulkLocal. Dining establishments will be credited $50 to their account for registering. The individual who referred them will also be credited $50. The $50 credit can only be used on orders of $500 or more in value. No incentive will be associated with producer referrals since the service is free to producers. The referral page will only be visible to members who are logged into their account and will display the appropriate referral system (producers will never see the $50 incentive associated with buyer referrals). This system is called ‘Refer a Neighbor’ to emphasize community involvement.

Direct Mail

Direct mail pieces featuring free membership for producers will be sent to all produce and dairy farms within a 400-mile radius of the BulkLocal office. Restaurants within a 100-mile radius of the office will receive direct mail pieces highlighting a five percent discount on first order. Minimum order requirement to apply discount is $300. The cost associated with mailing these marketing pieces twice in the first year is $24,292.56 (3500040 marketing pieces sent to farms at $0.045 per piece41, 77042 mailers sent to dining

40 Leah, Dave. "Oregon Agriculture: Facts & Figures." National Agricultural Statistics Service: 2. Oregon Department of Agriculture, July 2014. Web. 2

Dec. 2014.

41 "Printing Quote - DirectMail.com." Printing Quote - DirectMail.com. DirectMail.com, Web. 02 Dec. 2014.

42 "Standard Post." Price List UPDATED (2014): 16-17. Postal Explorer. United States Postal Office, Sept. 2014. Web. 2 Dec. 2014.

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establishments at $0.045 per piece43, and postage price of $0.295 per piece) (Appendix P).

Sponsorships

BulkLocal will sponsor Chef in the Market and Kid’s Cook at the Market events through the Portland Farmers Market seasonal sponsorship program. Chef in the Market brings local and world-renowned chefs to the farmers market to create recipes using farmers market products. Kid’s Cook at the Market is led by The International Culinary School at the Art Institute in Portland. BulkLocal will fund the purchase of ingredients, which the Art Institute will use in cooking instruction with approximately 15 children. These events create recognition for BulkLocal amongst the Art Institute and 179 dining establishments and farms. Direct contact with The International Culinary School at the Art Institute in Portland creates future growth opportunity in local food sourcing for university and college campuses. Seasonal sponsorship costs $10,000 for one-year (Chef in the Market $2000 per season, Kids Cook at the Market $500 per season).

VolunteeringBulkLocal staff members will demonstrate a commitment to the community by volunteering at the information booth of the Portland Farmers Market. This position will generate awareness of BulkLocal while also providing an opportunity for staff members to learn about the different product offerings and farming practices in the Portland area.

Social MediaA five percent discount on first order and free service for producers will be advertised on Facebook, Instagram, and Twitter. BulkLocal will post weekly updates related to Farmer of the Month, Restaurant of the Month, new services, events, and recipes. Recipes will be posted to BulkLocal’s Pinterest board.

43 "Printing Quote - DirectMail.com."

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BlogBulkLocal will match its competitors by managing a blog that documents all of BulkLocal's efforts to increase local food sourcing. This will keep the community involved in the mission to reach 100 percent local and regional sourcing for local dining establishments. Readers can access the blog from bulklocal.com.

Nonprofit PartnershipsBulkLocal will partner with Farmers Market Fund. Farmers Market Fund is the chosen charity for the Portland Farmers Market, providing locally sourced food to those in need. BulkLocal will agree to deliver any food donated by producers to the Farmers Market Fund free of charge.

Information BoothConventions

BulkLocal will have an information booth at the Northwest Agricultural Show from January 27 through January 29; the Oregon Dairy Farmers Annual Convention in February; and the Northwest Foodservice Show April 26 through April 27. Attendees will be able to sign-up for BulkLocal’s services at the booth and staff members will be present to answer any questions. The sales team will network with participating producers and dining establishments to increase interest. A 10’ x 10’ booth at each of these conventions costs a total of $2520 (Northwest Agricultural Show $57044, Oregon Dairy Farmers Annual Convention $35045, and Northwest Foodservice Show $160046) (Appendix Q).

Portland Farmers Markets

During the first six months, BulkLocal will have an information booth set-up at each of the six Portland Farmers Markets for every day they are open (each market is open one day a week). After six months, BulkLocal will have a booth at the weekly Saturday market. Producers and buyers may register for BulkLocal and learn more about our

44 "Exhibitor Center." Northwest Agricultural Show. Northwest Agricultural Show, 2013. Web. 02 Dec. 2014

45 "Exhibitor Registration." Milk Matters. Oregon Dairy Center, Web. 2 Dec. 2014.

46 "Welcome Exhibitors!" Northwest Foodservice Show. Washington Restaurant Association and the Oregon Restaurant & Lodging Association, 2014.

Web. 02 Dec. 2014.

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services at our booth. Vendor positions at the Portland Farmers Market will cost $4,94047 for the first six months followed by $24248 for each sequential month.

Distribution ChannelProducers will list products on the BulkLocal website. Buyers may then purchase goods through the website with payments processed by PayPal. BulkLocal’s fleet of delivery trucks will transfer purchased goods from producer to buyer utilizing TripSpark Demand Response Software. TripSpark Demand Response Software optimizes fleet capabilities at lowest cost by generating best transportation routes based on demand and resources. Licensing cost is estimated at $7000049 per year for six to eight trucks.

Price

BulkLocal will follow the cost + premium pricing model established by American food brokers. Cost is equivalent to the full price of the goods set by the producer. The premium is set at a rate of five percent and covers all service costs incurred by BulkLocal. Compared to BulkLocal competitors, our pricing strategy is unique because it is a direct transaction between the restaurant buyer and the producer (Appendix R).

PositionBulkLocal is positioned in the market as an online ordering and delivery service company. We provide the most up-to-date product offerings, a detailed inventory filtration system, and a single payment channel for bulk orders of locally sourced produce and dairy products (Appendix S).

Market PenetrationDuring the first six months, we’ve determined a conservative market penetration estimate of 13.6 percent. This number is based on acquiring ten percent of producers and restaurants currently partnered with the Portland Farmer’s Market (current participant total is 179)50 and 40 percent of Portland restaurants currently using locally sourced ingredients (current total is 28)51. After one year, we anticipate ten percent of all Portland restaurants and 250 producers to be utilizing our services. In five years, we estimate a market penetration rate of 18.7 percent.

47 Fees and Payment Procedures. Portland Farmers Market, 2014. Print.

48 Fees and Payment Procedures.

49 "Demand Response Software." Demand Response and Paratransit Scheduling Software. TripSpark Technologies, 2014. Web. 02 Dec. 2014.

50 "Complete Vendor List." Portland Farmers Market. Portland Farmers Market, 2014. Web. 02 Dec. 2014.

51 "Oregon Restaurants That Use Locally Sourced Food." Urban Farm Online.com. I-5 Publishing, Web. 02 Dec. 2014.

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Demand Forecast

Given that 2852 Portland restaurants currently source ingredients locally and the demand rate for locally sourced food by consumers is 50 percent53, we predict a conservative demand forecast of 56 restaurants for the first year with an exponential growth rate of 50 percent over the next ten years.

Key Financial AssumptionsTotal marketing budget for the first year is estimated at $117,347.23 (total cost of budgeted marketing campaign assuming 50 percent of members gained through referral system and first order average of $500) with expected website advertising revenue gain of $104,400. Revenue generated by the BulkLocal servicing model is based on the cost + premium revenue model used by most food brokers in America. To establish a base estimate of our revenues, we estimated the total sales figure our farmers would achieve through our service and factored in our service premium to calculate our portion of these revenues.

We estimated BulkLocal to have 80 customers during year 1, each placed into 1 of 3 categories based off their purchasing activity – heavy, medium, or light. Each of our heavy customers (10% of our total customer count) purchases $750,000 of produce through us on a yearly basis. Our medium customers (70% of our total customer count) purchase $16,800 each annually, and our light customers (20% of our total customer count) purchase $8,400 each annually. We calculated a service premium of 13% that gives us $899,426.3 of service revenue in our first year of operations. We predicted sales to grow at 10.5% from year 1 to year 2, and eventually tapered off our sales growth rate to 3.5% in year 6 as we expect the market to become more saturated with our business.

VII. Operations

Inputting Producer SupplyBulkLocal will begin company operations when producers first upload their produce and dairy supply to the BulkLocal webpage. Producer listings will be sorted on our site according to the quality specifications that farmers report and can then be filtered by customers according to certifications, farming practices, proximity, specific produce, quantity, and peer ratings. Multiple filter options emphasize customer convenience when using our website.

52 "Oregon Restaurants That Use Locally Sourced Food."

53 Barney & Worth, Inc. "Portland's Farmers Markets, Direct-Market Economic Analysis." Growing Portland's Farmers Markets. Bonnie Gee Yosick

LLC & Farmers' Markets America Globalwise, Inc., Nov. 2008. Web. 2 Dec. 2014.

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To incentivize producers to honestly list their current supply and correct quality specifications, we will utilize a customer rating system. Periodically, based on frequency of orders, customers will receive an email survey where they can quickly rate products from each specific producer they have ordered from in the past. The ratings will be set on a zero-to-five star scale, with five stars indicating extraordinary products. Producers who receive frequent five star ratings will be promoted on the site through filter options and side bar ads. Alternatively, producers who often receive low ratings will be contacted to improve their products. If they fail to make recognizable improvements, farmers will be asked to revoke their BulkLocal membership.

Because quality stems from both farming practices and shelf life, producers will input their supply as it becomes available and take down listings as certain crops expire. BulkLocal will monitor producer listings based on time periods specific to the produce or dairy shelf life. If the product goes unsold past the acceptable shelf life we have set for quality standards, the listing will be taken off of our webpage. For example, organic tomatoes reach peak quality for ten days after harvest. If a producer lists their supply of tomatoes on the day of harvest on our site, they then have a ten-day window to sell their supply before the listing is revoked.

The window will begin when the producer harvests his or her products and will end on the Offer Expiration Date (OED). The OED will, as previously mentioned, promote quality assurance for our customers while simultaneously benefiting producers who will use the OED as a contract end-date. After the OED for a specific listing, producers can sell unsold products through alternative channels, effectively increasing their likelihood of profit and decreasing BulkLocal’s liability to compensate for unsold, contracted produce. Additionally, the OED will be used as a price factor on the BulkLocal website. Newly listed products with longer windows before their set OED will be priced higher than identical products listed earlier on the site. By placing a price premium on freshness, we incentivize customers to purchase relatively older, yet still high quality, products first — effectively creating a first-in-first-out (FIFO) system. However, clients can choose to purchase more recently listed products based on their specific needs.

Placing Customer Orders The nature of our operations will be based on a just-in-time inventory system since customer needs vary. BulkLocal perpetually updates our inventory through producer listings of the freshest seasonal produce and dairy available. The greatest benefit of our direct farm-to-restaurant system will be for restaurants that frequently change their menus because we minimize their need to coordinate orders months in advance. Through BulkLocal, customers can be spontaneous and order directly from producers as their needs change.

When customers arrive at our website to place their order, they will have two options: choosing products based on personal preference or BulkLocal choosing for them. If customers choose to personally select their own products from our marketplace, they will have the option to filter products based on a wide variety of specifications to fit their needs and budget. We envision these customers, who choose for themselves, to be highly selective or price and quality sensitive. Alternatively, customers who prioritize

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timesaving and convenience can have BulkLocal fill their quantity orders based on preferences listed by priority of importance. For example, a frequent customer may choose to prioritize their products as organic for their top priority, within budget as their second, and have an OED of greater than five days as their third. Bulk Local will then fill the order according to the customer’s specifications54.

Delivering ProductsAfter we receive customer orders, we will send our trucks to pick up the specified produce and dairy products from our producers. Software from TripSpark will coordinate our trucking, increase efficiency, and reduce costs of pick up and delivery. According to BusinessWeek, TripSpark “focuses on helping mid-sized transit agencies and private operators to transform their operation by increasing community engagement.”55 TripSpark will allow BulkLocal to coordinate pickups and deliveries through flexible and efficient demand response software — saving gas, time, and money. Pricing for TripSpark will be approximately $70,000 per year.

Bulk Local will coordinate operations out of leased office space in downtown Portland, Oregon. The space will be used as headquarters for all aspects of our business and will be conveniently located near many of our potential customers. We have chosen to lease a 1,075 square foot space for $1,300 per month on 615 NW Gilsan Street (Appendix T).

VIII. Implementation

Initial Launch in PortlandAn abundance of fertile farmland, the desire to source locally, and a lack of existing local produce distribution services make Portland, Oregon the perfect place to debut the BulkLocal system. In Oregon, farms and ranches cover over 16.4 million acres of land. Over 98 percent of these farms and ranches are family-owned and operated, making them perfect candidates for farm-to-table sourcing56.

With so much farmland available, it’s natural that the people of Portland would want to source locally. According to Travel Portland website, Portland has long been at the forefront of the movement to eat locally and seasonally, and local chefs often build their menus around the ingredients they found at the farmers market that week57. Though there

54 "Suite 400." Portland Office Space: 618 NW Glisan St, Portland, OR 97209. Web. 02 Dec. 2014.

55"Demand Response Software." Demand Response and Paratransit Scheduling Software. Web. 02 Dec. 2014.

56 "About Oregon Agriculture." Oregon Farm Bureau. 2012. Web. 1 Dec. 2014.

57 "Farm-to-Table Dining." Travel Portland. 2014. Web. 1 Dec. 2014. 

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is a clear demand for locally sourced ingredients, the current system lacks simplicity and efficiency.

The only online ordering platform in the Portland area, www.Food-Hub.com, matches farmers with restaurants or large dining institutions that need their produce. With over 5,600 current members in the Western United States, the online food hub has been very successful, but lacks the capacity to organize online payments and delivery services. The BulkLocal system would revolutionize the way producers and restaurant buyers in the Portland area interact, allowing more restaurants to cater to the growing desire for farm-to-table food.

Launching BulkLocal (Appendix U)Similar to everything else at BulkLocal, the launch of our business revolves around fresh, high quality food. In order to offer the greatest variety of high quality and fresh products, we will launch BulkLocal in May 2015 so that our market is filled with summer’s best produce throughout our first few months of business. By the peak of summer harvest in early September, we expect that many customers will be enjoying summer’s bounty through BulkLocal services.

Since our business model is rooted in farmer and restaurant participation, the first crucial step to building our business is connecting with local farmers and restaurants to build our supplier and customer network. Starting in January 2015, our six founding members of BulkLocal will begin networking the Portland area to invite local farmers and restaurateurs to join our network.

From January to our initial launch in May, marketing materials and promotions will be distributed to potential producers and buyers within 200 miles of the BulkLocal office. BulkLocal representatives will host informational booths at events like the Northwest Agricultural Show and Oregon Dairy Farmers Annual Convention in January and February. Our founders will also spend time volunteering at the Portland Farmers Market information booth to increase familiarity with farmers that sell at the market, as well as with restaurant buyers who shop at the market. As the foundation of our business, efforts to build our customer and producer network will continue throughout the life of the business; however, the strongest efforts will occur in the four months prior to our launch.

Shortly after starting our campaign to reach out to potential BulkLocal users, we will begin the process of obtaining the necessary permits and licensing. By March of 2015, we plan to purchase our central office to serve as the hub of all business activities. At this point we will hire two marketing representatives to assist with marketing, website maintenance, and community outreach special events. The customer service associates,

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together with CIO Kate Rolli, will begin setting up the BulkLocal website. By the end of the first year, we plan to expand the marketing and community outreach departments to up to four associate employees as needed.

In April, the month before our grand BulkLocal launch, we will purchase six to eight delivery trucks and hire a minimum of eight full-time employees to serve as drivers and transportation experts. Drivers we hire will hold the same operational values as BulkLocal, and will assist in quality control during pickups. In April, we will also increase marketing efforts, including personal interactions at the Portland Farmers Market, digital promotions on magazine websites, direct mail pieces, and social media promotions. April is the ideal time to increase marketing efforts because consumers are excitedly anticipating the bountiful harvest of the summer months. By May, the operational, marketing, and financial aspects of our business will be in place and ready for our grand launch of BulkLocal.

In the eight months following the initial launch, our teams will focus their efforts on maintaining sustainable relationships with producers and buyers, as well as continually growing our network by adding new members to the BulkLocal community. These efforts include setting up informational and interactive booths at the weekly farmers market and providing sponsorships for farmers market events. In late August, to celebrate the back to school season, BulkLocal will sponsor the “Kids Cook at the Market” event at the Portland Art Institute. In September, at the height of the summer harvesting season, we will also sponsor the Chef in the Market program hosted by the Portland Farmers Market.

IX. FinancialsIncome Statement (Appendix V)To calculate revenues, we estimated the total sales our farmers would achieve through our service and then factored in our service premium to calculate our portion of the revenues. We estimated BulkLocal to have 80 customers during year 1, each placed into 1 of 3 categories based off their purchasing activity – heavy, medium, or light. Each of our heavy customers (10% of our total customer count) purchase $750,000 of produce through us on a yearly basis. Our medium customers (70% of our total customer count) purchase $16,800 each annually, and our light customers (20% of our total customer count) purchase $8,400 each annually. We calculated a service premium of 13% that gives us $899,426.3 in service revenue in our first year of operations. We predicted sales to grow at 10.5% from year 1 to year 2, and eventually tapered off our sales growth rate to 3.5% in year 6 as we expected the market to become more saturated with our business.

Because BulkLocal doesn’t purchase inventory, we have no Cost of Goods Sold expense on our income statement. We calculate our service revenue as a percentage of the total

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sales for our farmers and subtract the freight cost to pick up produce at local farms. We assumed freight costs to grow at the same rate as sales each year.

To calculate our selling expenses, we calculated our yearly advertising expenses (Newsprint, Yellow Page, Digital Advertising, etc.), delivery freight expenses, depreciation on trucks and field equipment, and our utilities expense. Again, we assumed our freight cost would grow at the same rate as sales, and our total selling expense grows at roughly 4.5% per year.

BulkLocal’s general and administrative expenses include employee salaries, depreciation of office equipment and fixtures, insurance expenses, rent expenses, and TripSpark Software costs. Salaries constitute roughly 85% of our general and administrative costs and thus our net earnings was very sensitive to this expense.

In our most-likely case projections (Appendix W), we expect BulkLocal to lose money the first and second year of operation, but to break even during our 5th year of operation (2020) and to enjoy steady profits through 2025.

Balance Sheet & Sources of FundingOur Cash and Cash Equivalents account is linked to our statement of cash flows and we also estimated our receivables to be 4.8% of sales in order to calculate our current assets. For our long-term assets, we used straight-line depreciation methods to depreciate our truck fleet over 12 years and our computer hardware over 20 years. BulkLocal has roughly $1,700,000 in assets after one year of operation.

Our liabilities include a short-term note of $75,000 at a 7.5% interest rate and a long-term note of $175,000 at a 5% interest rate. BulkLocal will pay down this debt on an annual basis and this consistent payment is reflected in our financials (Appendix X). BulkLocal’s retained earnings are the most recent year’s net earnings because no dividends will be paid.

Cash Flow Forecast (Appendix Y)To calculate a best and worst case scenario for our cash flow, we adjusted our assumptions made in our income statement. Key factors contributing to revenues were the sales growth rate and initial sales figure. We decided to keep our premium of 13% consistent throughout each scenario because this a customer facing figure that must be maintained to help establish a sense of confidence in our system.

The main factors contributing to our costs and ultimately our cash flow were the freight cost, salaries, and our advertising costs. From our base case assumptions, we assumed a worst case scenario to include all costs increasing by 1% per year, and

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Breakeven AnalysisIn our best-case scenario, we estimate BulkLocal to break even during our 3rd year of operation. We are estimating we will incur a loss of $35,463 in the first year and begin to operate profitably in our 2nd year with a gain of $15,728. In this scenario we are assuming sales to grow at an average of 8.8% over the first 5 years of operations, ultimately presenting our investor with a project estimating to generate over $450,000 in profits by 2025 (Appendix Z).

To calculate our worst case scenario, we assumed sales growth rates would slow to a more conservative average of 6.4% throughout BulkLocal’s first 5 years of operations. In addition to slow sales, we increased our freight costs on pick up and delivery, and also increased all selling costs by roughly 1% per year. In this scenario, we predict BulkLocal will begin profitable operations in year 4 and will break even in the 7th year of operations (Appendix AA).Exit Opportunities for InvestorsAn investment in BulkLocal will lead to strong financial returns for our investors by means of projected sales growth and national expansion initiatives of our company. In the future, BulkLocal will return investor profits through the future sale of our company. The food industry is a mature business and established companies plan to grow through acquisitions. An acquisition of a high-growth company, such as BulkLocal, usually includes a large premium on top of its entity value. This additional premium will lead to a greater return for our investors.

Farmplicity, one of BulkLocal’s main competitors mentioned earlier, is one example of such an acquisition. SunFarm Food Service acquired the company, a supplier of local restaurants, caterers, and hotels with premium produce and specialty grocery products58. SunFarm was a good fit for the Farmplicity acquisition because it also cares about supporting the local food movement59. Farmplicity was established in April of 2013 and entered into talks with SunFarm on October of 201460. The inception-to-sale was a fairly short process for Farmplicity, and investors were able to recognize returns quickly. The transaction value is undisclosed for this deal.

IX. RisksWhile BulkLocal provides an exciting opportunity to help lead the local food movement in the restaurant industry, there are inherent risks involved in our new business venture. 58

Feldt, Brian. "St. Louis Startup Farmplicity Acquired by Sunfarm Food Service - St. Louis Business Journal." St. Louis Business Journal. American City Business Publishers, 5 May 2014. Web. 02 Dec. 2014.

59 Schoenherr, Neil. "WUSTL Undergraduate Sells Farmplicity, Startup That Began as Class Project | Newsroom | Washington University in St. Louis."

Newsroom. Washington University in St.Louis, 8 May 2014. Web. 02 Dec. 2014.

60 Feldt, Brian.

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We have provided a brief outline of potential risks and uncertainties below that could adversely affect BulkLocal. If any one of the following were to occur, our business (including operations, cash flows, and financial prospects) could be materially affected. Consequently, we have also included appropriate measures to successfully mitigate these risks.

1. Inefficient marketing to diverse clients: Since our advertising is specifically targeted towards particular producers and customers, we risk missing connections with more diverse clients and limiting our growth potential. To mitigate this risk, we will seek to expand our advertising efforts to a more diverse base as funds become available to do so.

2. Losing consumers as they develop direct relationships with farmers: As we promote individual producers on our site and provide transparency to our consumers, we run the risk of eliminating BulkLocal’s relevance in the online marketplace. Buyers may develop close relationships with certain producers and choose to leave BulkLocal to source directly and avoid a price premium. We will address this risk by offering superior order and delivery service through convenient delivery, customer-specific service, and assorted products so that consumers are incentivized to stay with BulkLocal.

3. Quality control: Since the Food and Drug Administration (FDA) does not regulate our products, we face the threat of low quality products and subsequent litigation against us for damages related to the spoiled or contaminated produce and dairy products. To minimize this risk, we will implement a rating survey for our buyers to report their satisfaction with specific producers. Producers who are consistently rated as unsatisfactory will be put on notice or removed from our website.

4. Price premiums reducing our sales: Consumers may temporarily become “sticker shocked” by BulkLocal’s premium product pricing. We plan to mitigate the risk of consumers leaving because of high prices by explaining the value-added benefits our products compared to cheaper, more processed, and lower quality products.

5. Lack of focus toward our mission to support local and sustainable agriculture in Oregon: As we look to expand nationally, we risk losing focus of our mission to support local agriculture. We plan to hold bi-yearly meetings to assess our strategic direction and accordance with our mission and vision to ensure we do not stray away from our founding principles.

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X. Opportunities for GrowthBulkLocal is easily scalable, and we plan to expand our company nationwide. Our success stems from the connections we provide between producers and buyers, which means our online ordering and delivery platform is the important component of our business.

Our plans, for national expansion, center on the targeting of neighboring cities and farms that surround the Portland area, and catering to different customers. Each new producer we gain will be added to our website. Another option for expansion is to target new customers. Our platform is capable of serving larger customer segments, such as corporations with large cafeterias, universities, food trucks, and retirement homes. We are initially targeting restaurants to prove to larger institutions that we are a consistent and reliable ordering and delivery service. In other words, we must prove we can meet their large order demands. Expansion to restaurants nationwide and larger institutions provides numerous opportunities for company growth.

As national expansion becomes a reality, our site will continue to find producers that are local to each restaurant. Restaurants will simply enter their zip code in our search engine, along with a specific mile radius for what they determine to be locally sourced. Such a process allows the use of one website for all cities we expand to. Our main cost of expansion will stem from setting up delivery fleets in the new areas. We will require only one central office in in Portland that will handle accounting, website maintenance, and directions for our truck drivers.

XI. SummaryBulk Local exists to improve the health and sustainability of our communities on a national basis. We are a socially responsible company who supports local and sustainable agriculture throughout the United States. As a company, we are dedicated to providing a superior ordering and delivery service to our customers through a simplistic and customized online ordering process. We deliver orders directly to our customers’ doorstep by utilizing an integrated technological infrastructure to ensure consistent and reliable on-time deliveries. We establish and maintain sustainable relationships with our producers by sharing with them our customer network to create mutually beneficial partnerships that benefit the local agriculturalist and restaurant owner. (Appendix AB)

We are fully committed to upholding the social values and principles of our stakeholders through our vision for healthier food, restaurants, and consumers. We provide strong financial returns to investors through company growth and national expansion into larger customer segments, such as university cafes and corporate cafeterias. As the demand for

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local produce continues to grow, BulkLocal strives to become the leading distributor of local foods to restaurants and cafeterias nationwide.

AppendicesAppendix A: Organizational Chart

Appendix B: Producer’s Input Page

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Appendix C: Buyer’s Selection Page

Appendix D: Chef Spotlight of the Month

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Appendix E: Farm Spotlight of the Month

Appendix F: BulkLocal Blog

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Appendix G: Increasing Economic Driver

Appendix H: Restaurant Profit/Cost Structure

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Appendix I: Legislation Promoting Local Food

Appendix J: Farmers’ Market Growth

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Appendix K: Competitive AnalysisPayment Strategy

Delivery Product Offerings

Location Customer Warehouse

Charges 5% commission for farmers; 3.5% transaction fee per order for restaurants

Farmers arrange delivery

Fruits, vegetables, meats, dairy, value added goods (i.e. honey, maple syrup)

St. Louis and parts of the Midwest

Restaurants No

VV purchases products from farmers and sells to buyer for profit

VV picks up from farm stores in warehouse delivers to customer

Fruits and vegetables

West Coast: CA, NM, AZ, CO

Grocery stores

Yes

Charges 13% premium to restaurants; farmer membership is free

BulkLocal picks up from farm and delivers directly to restaurant

Fruits and vegetables, dairy

Portland, OR

Restaurants No

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Appendix L: Veritable Vegetable’s Distribution Route

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Appendix M: Print Advertising

Appendix N: Window Decals

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BulkLocal

Appendix O

Appendix P: Direct Mail

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Appendix Q: Informational Booth

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Appendix R: BulkLocal’s Perceptual Map

Appendix S: How BulkLocal is Positioned

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Appendix T: Headquarters of BulkLocal

Appendix U: Implementation Timeline

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Appendix V: Pro Forma Income Statement

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Appendix W: Most-Likely Case Scenario Break-even Analysis

Appendix X: Pro Forma Balance Sheet

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Appendix Y: Pro Forma Cash Statement

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Appendix Z: Best Case Breakeven Scenario

Appendix AA: Worst Case Breakeven Scenario

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Appendix AB: SWOT Analysis

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