Slice
Business Plan 2010
By:
Christopher Ryan Stearne
Jameel Vaghela
Lejla Pekaric
Victor Zhou
July 11, 2010
Dear Investor,
The following document outlines an exciting opportunity to become involved with Slice. If you have any questions, please do not hesitate to contact us directly.
Regards,
Lejla Pekaric, Ryan Stearne, Jameel Vaghela, Victor Zhao
Table of Contents
Table of Contents
The Pitch
Executive Summary
Business and Industry Overview
Mission Statement and Goals
Competitor Analysis
The Marketing Plan
Target Market
Demographic
Geographic
Behavioral and Psychographic
Product
Pricing
Place
Promotion
Grand Opening
Contests
Festivals
Social Media Marketing and Online Presence
The Operations Plan
Organizational Structure
Ongoing Operations
Hours of Operation
Daily Operations
Weekly, Monthly and Annual Operations
Business Location
Floor Plan
Suppliers
Service providers
Capital budget
Working capital planning and management
Operating Expenses
Cost of Foods Sold
Ancillary revenues and merchandise
Timeline to Opening
The Human Resources Plan
Shareholders / Board of Directors
Operations
Management
Training
Staff Retention
Food Quality and Customer Service
Staff Management
Shareholder Agreement
The Financial Plan
Overview
Income Statement
Sales and Net Income
Costing
Contribution Margins
Tax
Balance Sheet
Cash & Receivable
Inventory
Capital Assets
Accounts Payable
Owner’s Equity
Cash Flow & Investment Analysis
Terminal Value
Sensitivity Analysis (SA)
Conclusion
Exhibit 1: Slice Location
Exhibit 2: Slice Floor Plan
Exhibit 3: Competitor Map
The Pitch
Slice is a unique environment that offers exceptionally tasting wood-fired pizza, a selection of alcoholic and non-alcoholic drinks, as well as an atmosphere that supports local artists. We are dedicated to serving customers during the week as well as extended late hours on Thursday, Friday and Saturday nights by offering a selection of three custom pizzas per day.
With a 55% internal rate of return, payback period of less than 3 years, and an experienced and committed team, in exchange for debt financing of $60,000 at a 15% interest rate, this investment will make your friends will call you the next Warren Buffett.
Executive Summary
The Broadway area in Saskatoon is arguably the most vibrant part of the city, and even with all of the quirky shops, café’s, and restaurants, there is a notable void. That is where Slice comes in.
Slice’s goal is to provide great tasting wood-fired pizza, a wide assortment of refreshments including soft drinks and beer, while fostering community by promoting local artists, musicians, and products. The trendy atmosphere caters to a variety of individuals: people can stop by quickly to grab a bite during their lunch break, they can meet up with friends to have a casual dinner and a drink during the week, they can use it as a cluster point before going out to the club and can definitely come back for a slice to help their aching head after a big night out.
Slice’s target market consists of males and females under 30 who are single, without children and have occupations as full-time students with part time service industry positions (relying on assistance for income) or those students who have newly entered the job market and are still under the $30,000 income threshold.
We have the utmost confidence that Slice will be the perfect addition to the Broadway community, by contributing great tasting wood-fired pizza at a great price, a cluster point for young trendsters, as well as vehicle for local artists to promote their work. To bring Slice into the Broadway community we require $60,000 in debt financing at a 15% interest rate.
We would like to invite you to be part of this exciting opportunity with us.
Business and Industry Overview
Mission Statement and Goals
Slice’s mission is: “To provide the best taste, value, and atmosphere while being an active contributor to the local community.” Slice’s goal is to provide great tasting pizza, a wide assortment of refreshments, while fostering community by promoting local artists, musicians, and products.
Competitor Analysis
Defining the competitive landscape in which Slice will operate is difficult, as Slice will be offering unique pizza by the slice in a licensed establishment. The ability to adhere to high quality while keeping costs low puts its price point well below that of the competition, allowing Slice to offer both price and uniqueness propositions. Thus, Slice does not compete directly with either the bars or the restaurants of the neighbourhood due to its value proposition, but fills a niche. This is best illustrated by Exhibit 3: Competitor Map. As the map displays, there are two predominant clusters, those that offer unique food at a premium price and those that offer lower priced fare at an economy price. Slice will populate the quadrant of uniqueness and lower price. The most direct competitors would be The Yard and Flagon Pub and Lydia’s, offering lower priced food and alcohol, though both have focused their marketing efforts to patrons looking for a drinking establishment.
As there are other pizza restaurants in the city of Saskatoon such as Vern’s as well as the larger chains, but they are considered to be indirect competitors as they are not within the Broadway area, are not licensed, or do not offer pizza by the slice.
The Marketing Plan
At the heart of Saskatoon is the University of Saskatchewan. The students emerge to find themselves entering the job market of not only Saskatchewan, but until then they are experiencing the stressors of rigorous academia, increasing tuition costs, and limited time. The nearly 20,000 students are not alone in a city of over 250,000 in which the costs of living have risen to reflect a province teeming with opportunities. Unfortunately, as the costs associated with ensuring a maintenance or betterment of the lots of the youth of the province, there is an increasing need to find food and entertainment that provides quality for a relatively low price.
Specifically, in Broadway, arguably the trendiest neighbourhood for the younger generation in the city, there is no restaurant that can provide good food for fewer than five dollars. Additionally, the area is a centre for pubs and bars including Lydia’s, Amigo’s Cantina, Hose and Hydrant Brewing Company, The Roxy on Broadway, Bud’s on Broadway, The Yard and Flagon Pub, and Vangelis Tavern. Each of these establishments closes its kitchen and focuses on alcohol sales and eventually turns off the taps and away the, now hungry, customers with no option for food. There is a clear need to provide low cost, high quality pizza by the slice in the area of Broadway during the days and late into night to cater to discerning young guests.
Target Market
In filling the niche market of low cost food in the Broadway neighbourhood in both the day and night times, there are multiple target markets that Slice will reach. The predominant market that will be sought after through marketing efforts is that of low-income young individuals. The segmentation of the key market follows.
Demographic
Slice will appeal to both males and females with income under $30,000, aged 30 and younger. The individuals will be single without children and have occupations as full-time students with part time service industry positions (relying on assistance for income) or those students who have newly entered the job market and are still under the $30,000 threshold.
Geographic
The segment live in the census metropolitan area of Saskatoon either on campus in the dormitories or the surrounding neighbourhoods.
Behavioral and Psychographic
The needs of the target market are dictated by economic as well as social drivers. In terms of economics, as low-income individuals, they seek a lower price meal. However, as students or newly graduated individuals, they are part of a greater social network that value social interaction out of the school atmosphere. Hence, they tend to go out on the weekends and enjoy alcoholic beverages. The ability to cater to the social aspect as well as the economic aspect will create medium users of Slice, meaning that they will frequent the establishment on a weekly basis as either a meeting spot before going to another establishment or once the Broadway bars have closed.
The non-key markets that will be reached are all individuals who work in the neighbourhood of Broadway. As the neighbourhood’s business community is entirely retail, entertainment, or service, it can be assumed that the individuals also fall into the low-income category, meaning there exists a need to purchase an inexpensive meal for lunch or after a shift.
Product
The physical product offered by Slice is pizza by the slice that is sold with complementary products, beverages. In designing the menu for the restaurant, there were key factors in each inclusion or omission, uniqueness and approachability. The menu is a set weekly menu that offers three different sets of toppings on “universal dough” each day. By limiting the selection to only three types of pizza (one of which is always vegetarian) on a standard dough, the product is able to accomplish a few important tasks. First, the control of inventory will be greatly heightened as the knowledge of which flavours will sell on which days is known. The question of quantity of each flavour type will require time in order to determine past sales and prospective growth figures in order to more finely tune the amount of product delivered. Second, a set menu that is available to customers in flyer form allows the customer to explore options and plan future visits to Slice. Lastly, by always including a vegetarian option, it is easy to cater to the growing number of vegetarians who are stressed for options at other locations. As well as pizza by the slice, Slice will sell whole pizzas upon request of the three flavours available.
Augmenting the physical product is the experiential component of Slice. Slice will offer only counter service and serve entirely on disposable plates. By doing so, there will be no need to hire servers and the costs of operating will be reduced. In order to ensure that it does not take on a cafeteria atmosphere, focus will be placed on the atmospherics of the restaurant. Specifically, the brick façade of the wood-burning oven will create an urban atmosphere. Careful not to be perceived as a contrived space, as has been noted of the Broadway Café, local live music show and other cultural event posters will be on the wall. As opposed to encouraging the clientele to go elsewhere for entertainment purposes, it will assist in cementing the reputation of Slice as a part of the community. The music played will follow the trends of both the University students and the Broadway neighbourhood, once again focusing on bands that will be playing in Lydia’s or Amigo’s Cantina in the coming months. Additionally, a projector will project onto the brick wall in order to create passive entertainment and a dynamic atmosphere. Patrons will find the atmosphere welcoming casual enough to perceive it as a place to hang out, but not as a simple hole-in-the wall establishment.
The branding of Slice will follow the same principles as the atmospherics, simple yet elegant, embodying what the food is about: a non-classic take on a staple food, familiar and new. The name Slice will assist in developing brand familiarity with the community as it immediately recalls imagery of slices of pizza. In creating an immediately recognizable moniker and establishing itself as a part of the community, it will assist in becoming a preferential brand for those in search of low-cost good food in Broadway.
As previously mentioned, the slices of pizza will be offered on disposable plates. There is an inherent risk in being perceived by the public as a non-environmentally friendly company. However, using paper plates from recycled sources and offering bins in order to recycle the refuse can mitigate this risk.
Pricing
The strategy in pricing the product is a penetration policy. By selling each slice of pizza for $3.75 per slice, the product is inexpensive to the point of broad appeal, resulting in the entire market being able to purchase it. Being sales oriented, the target price was set and the menu designed with maintaining the average contribution margin per customer of $4.00.
Place
The location is a key competitive advantage for Slice. The property to lease is Bay A in the unit at address 802 Broadway Avenue, Saskatoon. The location faces the vibrant Broadway Avenue, offering many opportunities for walk-by customers, as the windows are quite large. Strategically, this places Slice in the centre of the location of all the aforementioned establishments, whose clientele we expect to share.
Promotion
The promotion of Slice is dependant on word of mouth. The early adopters of Slice (the first patrons) are the individuals who work in the neighbourhood or are patrons of the neighbourhood’s alcohol serving establishments. The former group of early adopters will most likely procure a slice during a short break necessitating bringing it back to where they work. The pizza will then act as a visual cue and encourage more of the locally employed individuals to try Slice.
Beyond the visual cues and passive marketing inherent to food, Slice will pursue promotional activities that enhance its image in the community of Broadway and continually enhance the perception of the restaurant as the place to meet before and after going out. There are multiple ways to enhance the amount of exposure to the key segments.
Grand Opening
The grand opening of Slice would require drawing a large group in order to encourage repeat visitors and word-of-mouth advertising. In order to draw a large crowd, postcard style invitations will be printed and distributed to key locations that our target market frequents. Specifically, the Broadway Roastery, Amigo’s Cantina, The Vinyl Diner, Clothes Café, and Divine will be targeted as they service the same market and allow for businesses to leave promotional material. Additionally, invitations to a sneak preview of the location and menu will be extended to newspapers that cater to our target market: The Star Phoenix, On Campus News, Planet S, and Verb. The night of the opening will use a live local DJ who plays the music that aligns with our target market.
Contests
There will be two contests that will be constant at Slice. The first is a “Flavour of the Month” contest, whereby patrons can submit their own recipes for pizza with the award of a $20 gift certificate and a place on the weekly menu for their creation with recognition. The Flavour of the Month contest is an effective contest for a multitude of reasons. First, it provides a sense of ownership over the establishment for the general public. Secondly, it provides a constant stream of feedback to management, which can help indicate consumers’ eating trends. Lastly, by providing the pizza of the month on a slower day (ie. a Monday or Tuesday), the creator will help in bringing his or her friends to try the pizza of the month.
The second contest is a regular event to take place one evening a week, Punk Rock Bingo. The event encourages patrons to stay and take part in a game of bingo whereby daubers and cards consisting of artist names and song titles are provided. An emcee will control the games and provide gift certificates for food, branded t-shirts, and CDs to the winners. The contest is contingent on partnering with a local music store in order to obtain prizes for reduced costs. The initial target for the strategic partnership is the Vinyl Diner, also located on Broadway. The evening would allow Slice to draw larger crowds on a historically less busy evening. SOCAN and AVLA licensing would apply in being able to lay music as a form of entertainment, but it is not a separate license than that required for playing recorded music as atmospherics.
Festivals
There are several festivals that provide exposure for restaurants in Saskatoon, which would be ideal avenues for exposing Slice to the broader public.
First, Tastes of Saskatchewan is an annual festival held in late July on the South Saskatchewan River. This festival is a 5-day event that allows patrons to purchase tickets and take them to booths to try different offerings from local restaurants. This is an ideal festival for Slice’s 3-flavour business model, as the offerings can be standardized and mimic the restaurant experience. As opposed to using the wood-burning oven in store and transporting, which would significantly increase costs per slice, an alternative would be using barbeques and hot stones to closely replicate the experience of eating pizza at the store.
The second festival to target is the Fringe Festival held the week following the Tastes of Saskatchewan festival. The Fringe Festival is located on Broadway Avenue, which means that there is no requirement for space rental, as it would simply result in a greater amount of walking traffic during the 9 days it is being run.