Free Essay

Brew and Bakery

In: Business and Management

Submitted By ds48207
Words 2104
Pages 9
1.0 Executive Summary

The Brew'n Bake Brewery and Bakery has established a successful presence in the food and beverage service industry. The flagship location in UC Irvine of campus living district will gross in excess of $2 million in sales in its first year of operation, ending July 2002. First year operations will produce a net profit of $433,000. This will be generated from an investment of $625,000 in initial capital. Since 10 months of operations have already been comp.leted the confidence level for final first year numbers is extremely high.

Expansion plans are already underway. Owner funding and internally generated cash flow will enable additional stores to open. Sales projections for the next four years are based upon current planned store openings. Site surveys have been completed and prime locations (based on UC and CSU impacted locations) have been targeted for store expansion.

This plan will result in sales revenues growing to $25 million by FY2006 and generating net income in excess of $5.6 million.

Management has recognized the rapid growth potential made possible by the quick success and fast return-on-investment from the first location. Payback of total invested capital on the first location will be realized in less than 18 months of operation. Cash flow becomes positive from operations immediately and profits are substantial in the first year.

1.1 Objectives

The Brew'n Bake has the objective of opening additional stores in Pepperdine University, Gal State Fullerton, UG San Diego, Gal State Polytechnic at Pomona.

The management of The Brew'n Bake has demonstrated its concept, execution, marketability, and cQntrols, and feels confident of its ability to successfully replicate the quick ramp-up of the UC Irvine location to additional venues.

The following objectives have been established:

Have all four stores operational by 2006 with a sequential time-line of openings.
Maintain tight control of costs and operations by hiring quality management at each location and utilizing automated computer control. Keep food cost under 32% of revenue.
Keep beverage cost under 21 % of revenue.
Select only locations that meet all the parameters of success. Grow each location to the $3 to $5 million annual sales level.

Quality food--Each Brew'n Bake store will serve freshly prepared, high quality, Baked goods that is targeted to appeal to a variety of tastes and while still focusing on the college student budgets with an emphasis on reasonably and moderately priced signature items of particular appeal to a local market Quality Brewed Items-- Each store will provide a wide variety of freshly brewed coffee as well as a large selection onsite hand crafted micro brews. Quality service--ln order to maintain its unique image the Company provides attentive and friendly service with a high ratio of service personnel to customers and also invests in the training and supervision of its employees. All lower level employees will be registered students of targeted schools. Large Incentive Programs-- based upon local needs all lower level employees will enjoy a comprehensive incentive program designed to assist them in the funding of their education.

2.1 Company Ownership

The Brew'n Bake Brewery and Bakery is a privately held company. Robert Maclin, Darlene ######, Mike ######, and Linda #######, are the principal owners. It is their intention to offer limited outside silent ownership in Brew'n Bake on an equity, debt, or combination basis in order to facilitate a more rapid expansion of the Brew'n Bake concept.

2.2 Company History

The Brew'n Bake Brewery and Bakery was product of a school project in which each owner equally contributed. The Idea of targeting such a largely untargeted demographic and increasing market impact by combining two separate products, and harnessing the experience of each owning party was too good of an idea to just remain on paper.

With Darlene #### family's experience in owning and operating a bakery, and Robert Maclin's experience in Brewing, product creativity was in abundance. Mike ####, brought experience in previous ownership, management, and grounds management which were required to operate such a large facility. Linda Luma

Brew'n Bake has promoted heavily with tie-ins to UC Irvine and its varsity teams and on campus organizations. The Brew'n Bake is the campus radio home for the live Monday Night KUCI the UCI Anteater coaches show featuring the Head coaches of every major seasonal sport the campus has. This show is broadcast during the hour preceding the telecast of "Monday Night Football". In addition, The Brew'n Bake is the official Post game party headquarters of the entire UC Irvine Athletics Department

2.3 Company locations and Facilities
The company units will range in size from 9000 to 10,000 square feet and will seat 400 persons. Each unit will be split into two operation facilities each complimenting each other in areas of taste product. The brewery on one side will house the bar and college after hours theme. The decorum will include large booths with darker colors of wood. Its tables and chairs will all be of a heaver robust attitude.

The Bakery will support a homey coffee house theme; it will house the walk up window and support all coffee sales in addition to its baked goods. In between will be a company store where patrons will have the option of purchasing specialized apparel of the surrounding school and store.

Unit locations are as follows:

UC Irvine-- This unit is located at one of the busiest intersections in-between local student off campus housing and the main inlet for foot traffic to the rest of the University. Because of its location it requires only a very small parking lot. Local Law Enforcement appreciates the fact that it is with in walking distance to most students housing.
CSU, Fullerton-- This unit will open in late summer 2002. Size will be 11,000 sq. ft. The location is 100 yards north of the new off campus housing district that will be opened on the same day as the units projected start date. Within a three mile radius there is 20 million square feet of professional office space. Also, an abundance of upscale apartment complexes adjoins the unit. Major Chain hotels are located nearby. This will give the unit not only the market of the student populist but will also have a larger off-season market. With an opportunity to expand into a mainstream market.
Pepperdine University, (New Unit) -- This site will occupy 6,500 square feet and is scheduled to open in the spring of 2003. It will be built as a freestanding building on a 2+ acre parcel at the intersection of Pepperdine Ad and PCH Hwy 1. Adjacent to the property is an 18-screen movie theater opened by AMC in March 2002. This is the largest theater AMC has built in the Malibu area. Passaio at Malibu Mall has as master anchors Nordstrom, Macy's, and hire end outlets among others. The demographics are very favorable with no competition from other bakeries or Micro Breweries in the immediate area.
UC San Diego-- This unit is still being scouted, areas with in the "Gas Lamp District" have been analyzed, however the size of any existing structures which may come acquirable are all too small.

The Brew'n Bake Brewery and Bakery L TO. also maintain a corporate business office at 8675 Lottery Winner Street #309, Munchkin Land, and OZ. 65000.

4.0 Strategy and Implementation Summary

Our strategy is based on serving our niche markets well. The sports enthusiast, the weary college student, visiting family, the local night crowd, as well as families dining out all can enjoy the Brew'n Bake experience,

What begins as a customized version of a standard product, tailored to the needs of a local clientele, can become a niche product that will fill similar needs in similar markets across the west coast.

We are building our infrastructure so that we can replicate the product, the experience, and the environment across broader geographic lines, while still catering to the local feel of the community in which we serve. Concentration will be on maintaining quality and establishing a strong identity in each local market. The identity becomes the source of "critical mass" upon which expansion efforts are based. Not only does it add marketing muscle but it also becomes the framework for further expansion using both companies owned and franchised store locations. Franchises will first be marketed in late 2008 or early 2007.

4.1 Marketing Strategy

A combination of local media and event marketing will be utilized at each location. Radio is most effective, followed by local print media. As soon as a concentration of stores is established in a market, then broader media will be employed. Foot traffic of the local new hires that live and attend classes in the target area brings the beginning of a return clientele.

The strategy of live broadcasting and collegiate sports tie-ins has been most effective in generating free publicity for the flagship location which has been more effective than any advertising that could have been purchased.

4.1.1 Pricing Strategy

All menu items are moderately priced. An average customer ticket is between $10 and $20 including food and drink in the brewery area. Tickets are considerably mlJch more inexpensive to bakery patrons. Our average customer spends more than the industry average for moderately priced establishments in the brewery area (per stay), while patrons in the Bakery spend less the standard (per purchase). We tend to believe that this is due to our creating an atmosphere that encourages longer stays and more spending but still allows adequate table turns due to extended hours of appeal.

4 4.1.2 Promotion Strategy

We promote the University, the town, and the history. A high growth area such as Irvine has an annual influx of new residents from many other parts of the country. This trend is also true in the proposed locations above. This added growth will make for in creased boosting of the local economy.

Many new residents and many existing ones are fans of teams in the local universities. Brew'n Bake is a place for air. Each patron can order from a menu (while universal threw out the units) is strategically named after specific area and school themes.

In addition, funds are budgeted to assist $tudent employees with incentive programs that will help with tuitions and the purchasing of books. These funds amount to 10% of projected franchise sales.

4.1.3 Marketing Programs

Brew'n Bake will create an "identity" oriented marketing strategy with executions particularly in local media. Radio spots, print ads, and in-store and on-campus promotions are designed for transplantation 10 other markets. A portion of the ad and promo budget is set aside to develop these programs.

4.2 Sales Strategy

The sales strategy is to build and open new locations on schedule in order to increase revenue. Each individual location will continue to build its local customer base over the first three years of operation. The goal is $3 to $5 million in annual sales per unit. A unit will be considered mature once it has passed the $3.5 million mark in annual sales.

The following sections illustrate the combined sales forecast:

5.0 Management Summary

At the present 1ime all operations for Brew'n Bake Brewery and Bakery are equally split among the ownership.

Other key personnel are the management at each location. Candidates have already been identified for the first additional Cal State Fullerton area location.

There is not expected to be any shortage of qualified and available staff and management from local labor pools in each market area.

5.1 Organizational Structure

Future organizational structure will include a director of store operations with a Head Bakery Chef and a Brew Master acting as Frontline Management.

A full time accountant has already been added to the corporate office. Also, a sales/marketing director has been added to oversee the expansion effort both to support the growth of existing business and to execute the franchise expansion strategy. Their salaries are included in the projections.

Operations of individual stores will be the responsibility of the Store Director.

6.0 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

We assume a slow-growth economy, without major recession.
We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
We assume the continued popularity of local universities with in their communities.

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