Praxis Business School

Retail Business Plan

On Snacks Bar

A report

Submitted to

Prof. K. Dashrathraman

In partial fulfilment of the requirements of the course

Retail Management

On 11th September 2011

By

Ashwin Agarwal (B10004)

Deepika Agrawal (B10007)

Nishant Khattwani (B10013)

Sushmita Agrawal (B10035)

LETTER OF TRANSMITTAL

ADDA

11/09/2011

To, Prof. K. Dashrathraman

Subject:

We are enclosing our report on ADDA in partial fulfilment of the requirements of the course.

Ashwin Agarwal (B10004)

Deepika Agrawal (B10007)

Nishant Khattwani (B10013)

Sushmita Agrawal (B10035)

Positioning Map of Competitors

Chosen Positioning for your Retail business

Key aspects that get derived from the positioning• 4 P’s• Pentagon and triangle elements

Model store EBITDA - based on the above chosen positioning

Capex assumptions and Inventory Policy

ADDA (Our brand)

Domino’s

KFC

Mc Donald’s

Westernised Indianised

Low Price

High Price

Flurry’s

Super Snack Bar

Local Hawkers

Description of the positioning map:-

The above map consists of Indianised/Westernised on the horizontal axis and high price/low price on the vertical axis. We are trying to position our snack bar on the above matrix keeping in mind the axis titles.The above matrix consists of global as well as Indian players who are positioned as follows:-

• The global players such as McDonalds, Dominos, and KFC are place on the quadrant which depicts that they are high on price and are westernised.

• The Indian players such as Haldiram and Super snack bar are placed on the quadrant which depicts that they are slightly lower on price as compared to the global players but are Indianised.

• Flurry’s is the only Indian player which is placed high on price and is highly westernised.

• We also have our local vendors who are our biggest competitor in the unorganised sector who are placed on the quadrant which depicts that they are low on price and are highly indianised.

• We also have Pizza corner as one of our indirect competitor which is lyingon the quadrant which depicts that it is westernised but low on price.

“ADDA” will be positioned as an Indian fastfood joint catering to all kinds of age groups located at the heart of Park Street. The unique selling proposition forwarded by our joint is that it is providing all kinds of indianised fastfood under one roof. As we operate in the fastfood sector, our immediate competitor would be Haldiram and Super Snack Bar while the other generic competitors would be McDonalds, Dominos & KFC. In order to differentiate ourselves from our competitors we will be providing the following:-

• Providing an entire different array of Indian products under one roof at Affordable prices

• An environment which would resemble more of an informal college canteen

• Considering the changing lifestyles of individuals, we would emphasize more on

o Hygiene o Qualityo Customization on products

a. 4 P’s

Product Merchandise Strategy

Our fast food items are broadly divided into three categories:

Pricing Strategy

“ADDA” will have a competitive parity pricing strategy, where the price of items on the menu will be at par with our prime competitor Haldiram while some of the items will be priced slightly lower than Haldiram. To customers, we would also serve attractive combo meals.

Place: Location Strategy

• We have chosen our location as Park Street in Kolkata for our Indian fastfood joint named “ADDA”

Reasons:-

• The area consists of corporate offices which is one of our prime targets.

Indian Fastfood

•Varieties of chats•Pani-Puri•Churmur•Pav Bhaji•Jhaal Muri•Wada pav•Chilla

Western Fastfood

•Sandwiches•Salads•Maggi•Pasta

Juices/mineral water

•Orange(Seasonal)•Mousami•Apple•Watermelon(Seasonal)•Banana Shake•Fresh lime Soda

• Since the area is considered as a hub for restaurants so it is implied that there will be crowd who will be coming over there to eat

• The choice for location is arrived at after:

o Carefully examining the location and then arriving to a conclusion that there is no other fast food joint offering our line of products in the location.

o The requirements of the working class.o The current and future catchment areas. o The intensity of competition for our product lines in this area.

The above mentioned factors would help our restaurant in gaining more visibility. The convenient location, quality, soothing ambience and affordable prices will help us to get people to step in and experience our products in the initial stage. We want to position ourselves as a brand. This is backed up by our selection of the location, quality and assortment of food at convenient pricing. Our catchment area will include working professionals & families who work or stay in the nearby areas and teenagers who frequent this area.

Promotion: Marketing & Promotion strategy

PromotionPrint

Social Media

Instore marketing

SMS/Emails

Movie Halls

Word of mouth

Print

o Fliers can be put into dailies to promote the joint.o Vernacular newspapers can be used for small ads and fliers as it reaches

a larger mass.o Combos and deals provided by us can be put into the ads to attract more

customers.

Social Media

o Social Media like Facebook is the cheapest and fastest way to promote among the teenagers.

In store Marketing

o Kiosks can be put in some stores with the menu and special offers provided, to attract the customers visiting the store.

SMS/Emails

o SMS or Emails about the combos can be circulated randomly.

Movie Halls

o Ads of few seconds can be during the intervals of movies.o Kiosks or banner can be put outside the movie hall.

Word of mouth

We will try and make the experience of our every customer at ADDA a pleasurable one. This would help us gain word of mouth promotions.

The Pentagon and Triangle elements of retail represent the parameters which are responsible for the success or failure of any retail business. The Pentagon elements of our business are as follows:-

Place

o Size: we have a carpet area of 500sq.ft and it has been designed to accommodate approximately 30 customers.

o Location: we have chosen our fastfood joint to be located in Park

Street (in Kolkata) for the reason being that there is no other fastfood

PLACE

SYSTEMSCOMMUNICATION

PEOPLE VALUE

PRODUCT

Personal

Promotional

Knowledge

Price

Quality

Intensity

Assortment

Location

joint in Park Street which is providing the line of products which we will be offering.

o Layout & Design: The setup would be such that out of the 500sq.ft, we have assigned 150sq.ft to the working area and 350sq.ft to the trading area. The plot is rectangular in shape and would contain a few tables and chairs and along the walls there will be a platform attached along with chairs so that individuals can sit and have their food as per their convenience. There would also be a T.V which would be placed high at such a location so that it is viewable from every angle of the joint. There will also be provision for a take away counter located outside “”ADDA” in order to avoid unnecessary traffic on the trading area.

Product

o Style and fashion: The only joint which is offering an entirely different

range of products as compared to the other competitors in the location. Attractive combos would also be served to the customers. Changing light and music themes would give the joint a new look whenever a customer enters.

o Intensity: We will be high on intensity as there is no other joint

providing the assortment of products which we are offering in that location. Also we are bringing in different types of chats which are famous in different cities, so as to satisfy the palate of individuals who originate from the respective cities.

o Assortment: We are high on assortment of Indian fast food and low on the Western fast food for the simple reason being absence of any fastfood joint serving such an assortment of products.

Value

o Price: Food which we would serve in our joint is scattered all over Kolkata. Loads of local vendors are involved in serving these foods at a competitive price. So pricing the products would be crucial job to do. We will price our products marginally higher than traditional vendors as our service would involve higher level of quality with decent ambience.

o Quality: Quality is somewhere we are trying to position ourselves. We will differentiate ourselves in the quality, ambience, service and presentation of snack fronts. Quality of our product would depend on the raw materials we use and how we serve/present to our customers.

People

o Service: The format of service will be self-service where the customers will have to firstly buy a coupon by paying at the cash counter and then forward that coupon to the serving counter. The coupon will contain an order number which will be flashed on a small screen, which would indicate that the coupon with the respective number is ready to be served.

o Knowledge: Skilled cooks and security will be employed to ensure

quality services to our customers. o Climate: Highly organised with prompt services even in the highest

traffic condition would ensure a smile on the customer’s face along with changing lights to suit the environment

Communication

o Positional: The position which we would like to acquire in the minds of

our customer is a “perfect evening hangout with all kinds of tasty and tangy roadside snacks served in a hygienic environment”.

o Promotional: We will screen live sporting events and will also be using

social media to create awareness about our store, menu and activities going in the store. We will also tie-up with corporates and accept sodexo cards.

o Systems: All the accounts and records will be maintained on a Netbook. A group would be created on all the social networking sites which would display the pictures of our snack bar. The group will also contain a menu of the food and kind of drinks offered by us and through this group we would also be informing all our members about the latest and upcoming offers.

o Logistics: We will be ordering the perishable goods every 2-3 days and would keep a stock of the non-perishable goods.

o Suppliers: We would not stick to one supplier for stocking of raw

material. This is to avoid shortage due to any unforeseen circumstances.

Model store EBITDA

"ADDA"

Capital Expenditure Outlay ADDA HaldiramBombay Shiv

SagarSize (sq ft) 300 2000 1800

Number of Bills/ Day 120 290 260Average Bill Value 90 400 375

Sales/ Day 10800 116000 97500Sales/ Month 324000 3480000 2925000

Sales/ Month/ sq ft 1080 1740 1625Gross Margin 50% 60% 60%

Rupee Gross Margin/ Month/ sq ft 540 1044 975

Operating ExpenditureRent/ sq ft/ Month 190 140 170

Others 261.00 270 260TOTAL 451.00 410 430

EBITDA/ sq ft 89 634 545

8.24% 36.44% 33.54%Working Capital tie-up/ sq ft 88.77 143.01 133.56

Store/ sq ft 500 3200 3000Return on Investment 15% 19% 17%

Logic for EBITDA:-

• We had visited Bombay shiv sagar in Camac Street Kolkata, Average number of bills per day is 260 and for Haldirams fast food it is 290. as we are a start-up so we have decided to take 120 as bills per day.

• Visiting outlets of café coffee day , Bombay shiv sagar and other restaurants in park street we decided to take up store size of 500 sq. ft. Rent

we will be paying is Rs.190 per sq. ft. (there is an empty property available in 113 park street for rent and we consulted a broker for the rent).

• Our store will be in operation from 09:00 A.M till 09:00 P.M.

• Employee break-up.

o Manager - he will be managing the entire store including procurement of raw materials, sitting in the cash counter, building relationships with vendors.

o Head cook - there will be one head cook , who will be looking after the entire cooking operations.

o Catering staff – the catering staff will be helper to the head cook and will also involve in setting up stores and at times bringing stock from the vendors.

o Housekeeping – as we have a 500 sq. ft. store so 2 housekeeping staff is sufficient in order to maintenance of the store and cleaning of utensils.

• For the benchmarking with the Industry average: - We have calculated other operating expenses (excluding Rent) by benchmarking with the Industry average. We have calculated the Opex of Jubiliant Foodworks ltd from the annual report. And we have enquired the data of Opex of Haldiram and Bombay Shiv Sagar and then we have taken their average which was a benchmarking for us. And finally after assuming our various operating expenses we have arrived at a figure i.e. Rs.261 per sq ft.

• We have taken salary as below according to our findings

o Manager 1 *15000 = Rs. 15000

o Head cook 1*10000 = Rs. 10000

o Catering staff 3*5000 = Rs. 15000

o Housekeeping 2*2000= Rs. 4000

• The pricing for all above is taken as market price for calculation

• We will be providing them uniform and shoes making uniformcompulsory.

• Advertisement spent will be Rs. 10000.

• Wastage and pilferage: the raw material in our QSR is perishable. In our format we will store our raw material in such a way that least wastage happens. Still we have considered 10% of total raw material as our wastage.

• Miscellaneous expenses: it would include petty expenses , stationary , transportation if any ,buffer cash required(if any ) etc. , we have taken a figure of Rs. 10000.

Capital Expenditure Outlay CapEx

License AmountTrade License 500

Firm Establishment/ Registration 30000PPL License (Music & Amusement)

50000

KMC ApprovalKolkata Police Approval

Fire LicenseFood & Beverage License

Health ClearanceMiscellaneousProcessing Fee 10000

TOTAL 90,500

Real EstateOutright Purchase

Area (sq ft) 600Rate/ sq ft 25000

Cost 15000000Transaction Charges @ 2% 300000

Cost of Ownership 1,53,00,000

Rental (per month)Area (sq ft) 500Rate/ sq ft 190

Rental Cost 95,000Security 11,40,000

TOTAL CapEx (Ownership of Premises) 1,57,62,300

TOTAL CapEx (Premises on rent) 16,02,300

InteriorsFurniture & Fittings

Area (sq ft) 500Cost/ sq ft 400

TOTAL Cost of Establishment 200000juicer 1800

Refrigerator 50000Grill sandwich machine 10000

Stove and LPG 8000Music system,TV 20000

AC 40000

Wi-fi 2000Netbook,Billing machine, Equipment 30000

Miscellaneous 10000TOTAL 371800

The capital expenditure will be incurred in such a way where we can utilize our resources with maximum. Our property would be rented ones, so expenditure on construction will not be borne by us.

We would be spending on interior designing /ambience that will be approx. RS. 2 Lakhs which will include includes fancy tables, table’s accessories, lights,shelves and racks to keep add-on items and all of these needs to be in the same theme.

Total initial investment comes to a total of 16,02,300.Equipment includes: Juicer, Refrigerator, grill sandwich machine, stove and Lpg, music system, TV, AC, pc billing machine which would cost around RS. 1,75,300.We will also provide free wifi to our customers. Modem would cost around RS. 2000.Miscellaneous expenditure includes disposable utensils and other utensils to store ready food which is approx. Rs.10000.

Inventory Decisions: The inventory decision will be taken mostly during operation of the store. Depending on the sales of the current month, inventory would tie up for the next month .Inventory required by us in perishable, so we need to take inventory decision which would lead to minimum wastage.

Inventory will be valued at cost.Average Cost of inventory as a part of COGS will be around 35-40% of revenue.Inventory include fruits (Indian and foreign), vegetables, papri, bread,pav, kachori, curd, flour, Maggi, penne, puffed rice, sev and others.Puchka, churmur and Puchka chaat will be completely outsourced. So we don’t have to stock inventory for that. We would hire a local Puchka vendor for selling of these items.Samosa will be bought from a local vendor. It will be procured for making samosa chaat only.Wastage of inventory is taken @10% of net inventory purchased.Inventory to be bought every alternate day (as our inventory is perishable and can be changed according to demand estimation.Credit period would be 7 days; it is standard to the food industry.

Working capital tied up will be:-

Inventory turnover ratio

Inventory turnover ratio will be 2-3 days, as our inventory is perishable we have to make sure that we keep turning our inventory. 2 days can be kept for fruits, curds and vegetables .For others major items like bread, papri, puffed rice can be 3 days.

THANK YOU