1. 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)
2. 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)
3. 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
4. High Price
Flurry’s
Domino’s
KFC
Mc Donald’s
ADDA (Our brand)
Westernised Super Snack Bar Indianised
Local
Hawkers
Low Price
5. 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 lying
on the quadrant which depicts that it is westernised but low on price.
6. “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 Quality
o Customization on products
7. a. 4 P’s
Product Merchandise Strategy
Our fast food items are broadly divided into three categories:
Indian Fastfood Western Fastfood Juices/mineral water
•Varieties of chats •Sandwiches •Orange(Seasonal)
•Pani-Puri •Salads •Mousami
•Churmur •Maggi •Apple
•Pav Bhaji •Pasta •Watermelon(Seasonal)
•Jhaal Muri •Banana Shake
•Wada pav •Fresh lime Soda
•Chilla
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.
8. • 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
Instore SMS/Emails
marketing
Social
Movie Halls
Media
Word of
Print Promotion mouth
9. 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.
10. Location
PLACE
COMMUNICATIO SYSTEMS
N PRODUCT
Personal
Promotional
Intensity
Assortment
PEOPLE VALUE
Price
Knowledge Quality
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
11. 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.
12. 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.
13. 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.
14. Model store EBITDA
"ADDA"
Bombay Shiv
Capital Expenditure Outlay ADDA Haldiram Sagar
Size (sq ft) 300 2000 1800
Number of Bills/ Day 120 290 260
Average Bill Value 90 400 375
Sales/ Day 10800 116000 97500
Sales/ Month 324000 3480000 2925000
Sales/ Month/ sq ft 1080 1740 1625
Gross Margin 50% 60% 60%
Rupee Gross Margin/ Month/ sq
ft 540 1044 975
Operating Expenditure
Rent/ sq ft/ Month 190 140 170
Others 261.00 270 260
TOTAL 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 3000
Return 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
15. 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 uniform
compulsory.
• Advertisement spent will be Rs. 10000.
16. • 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.
17. Capital Expenditure Outlay CapEx
License Amount
Trade License 500
Firm Establishment/ Registration 30000
PPL License (Music & Amusement)
KMC Approval
Kolkata Police Approval
Fire License 50000
Food & Beverage License
Health Clearance
Miscellaneous
Processing Fee 10000
TOTAL 90,500
Real Estate
Outright Purchase
Area (sq ft) 600
Rate/ sq ft 25000
Cost 15000000
Transaction Charges @ 2% 300000
Cost of Ownership 1,53,00,000
Rental (per month)
Area (sq ft) 500
Rate/ sq ft 190
Rental Cost 95,000
Security 11,40,000
TOTAL CapEx (Ownership of Premises) 1,57,62,300
TOTAL CapEx (Premises on
rent) 16,02,300
18. Interiors
Furniture & Fittings
Area (sq ft) 500
Cost/ sq ft 400
TOTAL Cost of Establishment 200000
juicer 1800
Refrigerator 50000
Grill sandwich machine 10000
Stove and LPG 8000
Music system,TV 20000
AC 40000
Wi-fi 2000
Netbook,Billing machine, Equipment 30000
Miscellaneous 10000
TOTAL 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.
19. 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.
