Business Plan For Opening A Fast Food And Bakery Restaurant In The UK

Value Proposition, Mission and Vision Statement

The main purpose of this assignment is to analyze and formulate a proper business plan for opening a fast food and bakery restaurant in United Kingdom (Lang and Heasman 2015). The business that will be opened will be named Delight Cream which will be providing its customers with both sandwiches and bakery products like cakes and pastries and beverages. The business plan will contain a detailed analysis of the market and its value proposition. The report6 will also be containing what the business has to offer and what are the mission and visions of the business. The business plan will also be containing the marketing strategy, Operational plan and financial plan which the business will follow.

This segment will be containing a Value proposition, what the business has to offer, the mission and vision statement of the business and the various legal formalities which the business need to adhere.

The value proposition of the Delight Cream will be to provide its customers with the best of services and provide better quality of food products in comparison to its competitors at a lower price. The company core policy will be to provide the customers with good quality food products and services at a low price (Osterwalder et al. 2014). This policy of the business is expected to bring in customers as the prices of the food products like sandwiches, cakes will be comparatively lower as compared to its competitors. The company plans to maintain its quality as well by establishing kitchens in every store it opens so that the store can provide fresh food to its customers and ensure that the customers are satisfied with the services provided by the store. The fast food chain markets are doing quite well nowadays as theses are main centres for younger generations be it for hangouts, casual snacks. The fast food market is also favourable for the working class as well as they can buy a sandwich and maybe some beverage and be off to work again. In other words theses stores are capable of providing the customers with instant food. The market for fast food stores are doing quite well in the market. This proves that the market is favourable for such types of restaurant chains and Delight Cream intends to take advantage of the situation (Valadez 2012). Delight Cream will be providing both restaurant services where people can come in and sit for a quick bite and drive in services where the customers can drive in and take out the foods. The latter will be done to focus on the customers who are in a hurry who can have food while travelling.  The food on offer will be donuts, burgers, sandwiches, cakes and different options of beverages. 

Marketing Strategy

This is a tool used by marketing team to determine the marketing strategies and growth of product as well as market. This analysis is conducted considering new and existing product and markets (Hussain et al. 2013). The matrix analyses different strategies like market penetration, product development, market development and diversification.

1. Market penetration: The first quadrant in the Ansoff matrix shows market penetration. This strategy is often adopted when the company has an existing product and also an existing market and needs a growth strategy within that market. The business of Delight Cream is still in its planning phase, therefore this is not the strategy which the business must adopt. This is a strategy for an existing business which wants to increase its market shares.
2. Product Development:  Product development refers to firms which have a good market share in an existing market and want to introduce new product in the market. Product development is needed when the company is aware that it has a good customer base and knows that the market for its existing product has reached saturation (Hassanien and Dale 2012). In such a case market penetration strategy is not applicable any longer. Delight Cream will be opening in next year and does not have an existing market, hence this strategy does not apply to the business.
3. Market Development: This is the strategy employed by firms when they want to introduce an existing product in a new market (Basu 2014).  Delight Cream does not have an established product for which the company is known for in the market as the business is still not established yet and in its planning stage.  Therefore this strategy is not applicable for the business.
4. Diversification:  The diversification strategy in the Ansoff matrix is applicable when the product is completely new and is being introduced into a new market. In such a case the company has to work from the scratch in promotion and product development activities of the business (Chau 2013). Delight Cream will be applying this strategy as the restaurant will be entering a new market of fast food Industry and the business will try to make its product as different as possible from what is already available in the market, hence this will be a new product. The plan will be to establish a shop so that the business can check how the market responds to the products of the business.

Delight Cream plans to provide its customers with best quality foods at the lowest price possible.  The business plans to provide products like sandwiches, donuts, burgers, pastries and variety of beverages and milkshakes options (Finch 2016). Delight Cream will be establishing stores with attached kitchens so that every store can independently make its own fresh food products. The company will be following the policy of Pret A manger which is to donate the food left at the end of the day as charity so that the freshness of the food products are not compromised and the business also follows corporate social responsibility with the same. The company will be offering a variety of sandwiches at a lower price which will be possible as the business will be striking a deal with the local farmers and follow the policy of buying in bulk. This will bring down the prices and will be attracting the customers as per the plan of the company.

This can be further analysed by product anatomy analysis. Product anatomy analysis show the key benefit for which a product is purchased (Van Oorschot et al. 2013).

• Core Product: This refers to the products which are on offer by the restaurant and the primary factors such as tastes, quality.
• Tangible Products: This generally refers to physical factors which includes the food items on offer.
• Augmented Product: Theses products include both physical and non physical attributes.
• Potential Products: These products are just ideas which can be converted in actual products. In case of Delight Cream the products which the business plans to add to the menu are all potential products.

The mission of the restaurant will be to provide best services to its customers and also provide best quality of food to its customers at the lowest price possible (Dermol 2012). The vision of the company is to acquire maximum market share and become the leading brand of fast food chain industry in the company leaving behind its competitors. 

Delight Cream have to obtain license from the government of United Kingdom and also with a food quality agency which can check the quality level of the food which will be provided by the company.

The marketing strategy of the business will analyse the customer’s perceptions, taste and preference pattern of the consumers.  The company will be formulating their marketing strategies after the analysing the market structure, demographic structure of the area and target customers of the company. Delight Cream plans to target the younger generation of the demography and also the working class of people. The younger generations prefer fast foods and can be a reliable group of customers for the restaurant. Then there is the working class people such as businessman, clerks who are in a bit of hurry and want a quick bite preferably sandwiches for their lunch which the restaurant will be able to satisfy. However the restaurant will be facing tough competitions from competitors like Mcdonalds, Pret A Manger, Subway. The restaurant will be providing quality services to its customers. Delight Cream will be free lunch for the opening day in order to attract customers and the company also plans to organize a lucky draw in every six months interval the winner of which will get coupons and price discounts or free meals of the restaurant. These activities will help business to built strong customer relationships. The marketing activities of the restaurants will be advertising the products and creating an online buzz. The restaurant will be providing home delivery services and online food ordering services after two months of establishing the restaurant.

SWOT Analysis

Marketing mix are the p’s which affect the marketing activities of business. Initially there were 4 p’s but later on 3 new extended p’s were introduced (Yasanallah and Bidram 2012). The seven p’s are discussed below:

1. Product: The product should be such that it satisfies the desires of the consumers. The product is the main constituent of marketing mix as this is served to the customers (Jain 2013). In case of Delight Cream the main products on offer will be sandwiches, burgers, cakes and beverages and milkshakes. The restaurant plans to have variety of food products on offer.
2. Place: The product which is produced by the company needs to have a place where the product can be sold. This place can be market, shopping mall, main front Restaurants. Delight Cream also plans to open a restaurant in a business area of London which will ensure that the business men are drawn to it for a quick bite or lunch.
3. Price: The price of the product should be such that the value of the product matches its price. Delight Cream have a core policy of keeping the prices of its products as low as possible. The price will be an important determining factor for the business as this is intended to attract customers.
4. Promotion: These activities mainly include advertisement and promotion activities. Activities of such nature includes door to door sales, retail sales and sale promotion activities (Wirtz 2012).  Delight Cream will include lucky draws, free meals and advertisement activities.
5. People: This is newly added element are people. Every organisation is managed by different groups of people whether it is production, marketing r sales department. A success of a business largely depends on the workforce of the business.
6. Processes: These includes the services which are provided during the delivery of the product or after sales services. Delight Cream plans to introduce a feedback and compliant redressal system.
7. Physical Evidence: The last introduced element in marketing mix is physical evidence. Every services include some physical factor which also needs to be considered. 

The operations of the restaurant will be managed by the manager who will be placed in restaurant who will be also known as store managers. There will be a supervisor who will look into the day to day business management of the business like stock of food items used for cooking like vegetables, meat, appearance of the shop, hygiene conditions in the shop. The management of the entire business will be handled by the owners who are partners. One of the partners will be responsible for the operation activity of the business and another will manage the funds of the business and look for expansion of the business.

The key resources which are used by the business mainly consists of regular food items like bread, flour, meat, creams, chocolates which are bought from the local farmers or providers and the purchases are made in bulk therefore there is always discounts available.

The restaurant will be hiring local people to handle the stores as they will be able to handle the local customers better. The supervisors will be hired personally by the owners as they hold an important position in the restaurant.

The financial plan as prepared by the management of Delight Cream shows that a major portion of the funds will be contributed by the partners of the company or owners of the company. Another half of the funding will be done by business by application of loan from banks (Arrondel, Debbich and Savignac 2013). The plan of the management is to contribute around 60% of the capital by the owners and the rest 40% will be taken as a loan from a bank. This will be done so that the company can maintain a proper debt equity ratio and the burden of the loan does not exceed much. The funding will be accumulated for purchasing a shop big enough to suit the requirements of the business (Brigham and Ehrhardt 2013). The business also have prepared a start up cost which is needed to get the restaurant up and running.

The sales of the business will be measured on a quarterly basis and the forecasted figure is kept same for each quarter. The different cost areas which will probably arises are identified such as rent, interest, raw material cost and the same has been forecasted accordingly. The business expects to earn low cash flow initially and predicts that the outflows will be more for the first three quarters or so. The balance sheet will be including all the assets and liabilities which the restaurant will be needing like furniture, equipments and other assets as well.

Michael Porter’s Five Forces

The restaurant is expected to start up in 6 months time and till then the initial preparations like acquiring the loan and site selection will be done within this period as per the plan of the management.

Section 2

This is a tool used by marketing professionals which is used to analyse a county’s political, economic, socio-cultural, technological, legal and ethical environments (Kolios and Read 2013). These are discussed on the basis of analysis of Delight Cream as given below:

1. Political: These factors include areas such governmental intervention, tax policies and rules and regulation of the country in which the company is operating. The restaurant will have to get license from the local government where the restaurant is going to be set up (Yüksel 2012). Delight Cream needs also reviews of critics about the quality of food provided by the restaurant.
2. Economic: The economic factors include economic concerns of the firms which are like economic growth, interest on loans, credit availability and more factors. Delight Cream as planned will be financed by taking a long term loan from the bank. The loan amount will be a long term, hence the business will not have consider the burden o0f interest of the loan.
3. Socio-cultural: These factors include areas like health of the consumers, taste and preference of the consumers, demography of the country, general demand of the consumers. Delight Cream will be considering the demography of the state and also analyze the taste and preference pattern of the consumers.
4. Technological: These factors include technological changes and changes in knowhow of the company. Delight fresh will be introducing a mobile app which allows the customers to directly order from the restaurant which will be introduced if the business proves successful. The app is planned to be introduced after an interval of 6 months period.
5. Legal: These factors deal with different kinds of laws which may be business laws, employment laws, tax laws and any other law which affect the business of the company either directly or indirectly. Delight Cream business will be affected by the tax laws and business laws which are in force in United Kingdom.
6. Environmental: These factors are concerned with environmental and ecological maintenance by the business. These factors are concerned whether any activity of business is affecting environment or not. The activities of Delight Cream will not be affecting the environment therefore th8is factor is not relevant for the business.

It was first described by Michael Porter in his article in 1979. According to Porter, a business is influenced by five factors which determine the competitive structure of an organisation (Dobbs 2014). The five forces which were mentioned by Porter are discussed below:

1. Bargaining Power of Customers: As per Porter, customers can use their bargaining power and demand more to raise the supply or bring down the price of a product. The power of buyer will be at its highest if there is choice of an alternative of the same product or if the product is undifferentiated or if the switching cost is low to move from one product to another (Dälken 2014). In the case Delight Cream the consumers have a lot of options in hand in case of fast food chains such as Mcdonalds, Subway, Pret A Manger, Starbucks and many others. Hence the bargaining power of the consumers will naturally be more.
2. Bargaining Power of Suppliers: The bargaining power of the supplier also affected the competitiveness of a business. Every organisation requires inputs which are supplied by the suppliers.  If the supplier increases the prices of inputs the price of the ultimate product will also increase and vice versa will happen if they reduce the price of inputs. The suppliers are most powerful when there is no substitute of the input or the switching cost is high or the requirement of the input is specific. The suppliers of the Delight Cream will be local farmers and most of the ingredients will be obtained from shops around the shop.
3. Threat of New Entrants: The threat of new entrants in the market will increase the competition which will then force the existing companies to keep their prices low in order to adapt with the new entrants policies. There are always threats of new entrants in the fast food market and Delight Cream can avoid this threat.
4. Threat of Substitute Products: Existing business will suffer if any substitute products are introduced which is similar to the products of their company. This will allow buyers to substitute the products if prices are high as per the buyers. There are a lot of substitute products available in the market from competitors like Mcdonalds, Subway and Pret A Manger.
5. Rivalry among Competitors: The competitive forces are also influenced by the level of rivalry which exists in the market. A bitter rivalry will compel the companies involved in the rivalry to reduce their prices in order to capture more of market shares. Delight Cream will have lot of competitors in the market like Mcdonalds, Subway, Burger King.

Delight Cream plans to interact with the customers on a regular basis by the use of social media, websites, and blogs (Wang et al. 2015). The restaurant plans to use these blogs, websites and social media to get the opinion of the people. These feedbacks from customers will help the business to establish itself as a restaurant which cares about the opinion of the customers and moreover will allow the restaurant to identify the mistakes of the restaurant and rectify the same (West and Bogers 2014).

SWOT analysis is a management tool which is used by business to identify its strength, weakness, opportunities and threats. The word SWOT is a short form of strength, weakness, opportunity and threat (Hollensen 2015). These techniques are used for internal and external analysis of the business. This technique is useful to business in order to recognize what are the strength of the business and what are its weaknesses (Rothaermel 2015). External analysis includes recognizing opportunities which can benefit the business and also the threats which the company needs to avoid. SWOT Analysis of Delight Cream is shown below:

1. Strength: The major strength of Delight Cream will be its low prices of food products as compared to other competitors The restaurant will be initially focusing on proper quality of food and efficient customer service. The company will slowly earn customers loyalty as the prices of the food items are low and the quality is also very good. Another strength of the restaurant will be that the company will be known for its sandwiches as there are a variety of offers for sandwiches as per the plan of the management (Machmud and Sidharta 2014).
2. Weakness: One of the weakness of Delight Cream will be that the company’s products are not much unique as compared to the products of the competitors. Delight Cream will be offering to the people sandwiches, burgers and beverages which are also provided by the competitors of the company. The prices of the sandwiches can be made more competitive in order to gain more revenue by selling its products. Another weakness of Delight Cream will be the availability of good locations for opening a shop. The company plans to open around 5 stores in the opening year to check how the market responds to the product of the restaurant.
3. Opportunity: As per the estimates the business engaged in fast food services is on a rise. Due to rapid expansion not just in London but other countries as well. There is an opportunity for the restaurant to take full advantage of the situation and penetrate the new market (Bohari, Hin and Fuad 2017). If the restaurant is met with positive response then the business can further expand and conquer as much market share as possible. This way the company can make a brand name for itself as well as create a brand loyalty among its consumers.
4. Threats: The threat which Delight Cream will face is by its competitors. Though the business has an impressive business model and core strategy. However there are already established players in the market such as Subway, Pret A Manger, Burger King and Mcdonalds. These businesses already have earned a reputation and brand loyalty among its customers and also have their products established in the market. Therefore it is certain that Delight Cream will face tough competition when the company enters the fast food market.

The financial plan of the Delight Cream and the financial estimates are predicted as per the judgement of the management. The sales of the business will be measured on a quarterly basis and the forecasted figure is kept same for each quarter. The different cost areas which will probably arises are identified such as rent, interest, raw material cost and the same has been forecasted accordingly. The business expects to earn low cash flow initially and predicts that the outflows will be more for the first three quarters or so. The balance sheet will be including all the assets and liabilities which the restaurant will be needing like furniture, equipments and other assets as well. The projected sales forecast show that the projected sales of the Delight Cream is £ 350000 and the cost of goods is £180000. The projected cash inflows show that the company has a figure of £500000 in year 1 of the company’s operation. The projected statement also shows that the restaurant is estimating figures of rent and rates, depreciation which will be charged as per the relevant depreciation rates. The projected figures of cash flows aim to have a positive cash inflow of the company.

Social Media

The figures of cost and sales are based on the judgement of the business based on the performances of the similar restaurants in the market. Break even sales is calculated on the by dividing the projected contribution of the company by the projected fixed cost of the company. The restaurant expects to earn more than its breakeven point due to the low prices that the company will be charging. The company also plans further ahead and projected sales figures of three years and the company expects percentage growth in sales over the years. The start up cost consists of loan of £40000 and various assets are also required for the start up of the business.  The projected balance sheet of the company shows all the assets which will be bought or required in the business and all the expected liabilities which will arise in the business. Moreover predicted ratios are forecasted which shows a favourable current ratio of 1.07. However the debt equity ratio is forecasted to be a little more than favourable as the business is just starting up and debts may accumulate. Quarter sales of the restaurant are predicted to be same for all quarters which is £87500. All the figures are on assumption basis and thus variation might occur when actual business starts up. 

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