Table of Contents
Overview of the Industry
Environmental Analysis (PESTEL)
Financial Analysis and Projection
Appendix 1: Detailed Projections
Appendix 2: Management Resume
proposal tends to draw on an original idea and create a practical
business plan drawing on various aspects such as business environment,
financial sustainability, legal requirements, marketing and operational
this context, very first step has been taken by conducting a
comprehensive industry review. While doing this, various sub aspects
such as target market, industry growth, industry trends, opportunity in
the industry have been described in detail.
environment has been scanned with the help of established tools such as
PORTER’s Five Force Model of Competition and PESTEL Analysis.
sustainability of the business has been verified by evaluating
available startup capital against various expenses such as purchasing a
food cart, stationary, getting legal licenses etc. Breakeven point and
profit calculations have been made on a per month basis.
Finally, a plan to market the service and its operability has been drawn by deploying the marketing mix of the service.
carts more closely resemble mobile kitchens that are capable of being
set up on the street and facilitating street food for pedestrian
traffic (Baumol 2012).
These food carts are extremely common among all major cities and towns
and make ample profit as they offer a great variety of food at an
affordable price (Baumol 2012).
In earlier days, the concept of food carts brought ugly images of
standard grey trucks that sold extremely unhealthy food full of
calories. This concept however has completely taken a back seat with
popular restaurants and chefs adding these carts to their service menu
for added revenue (Baumol 2012).
inspiration from this concept, we got motivated to provide this service
within our school premises and facilitate food products such as chicken
burgers, beef burgers, fish burgers, fries, hotdogs and fresh salads.
We acknowledged the fact that our biggest competitor is the school
cafeteria which already has these varieties on board. However, the
school cafeteria is operational only during certain hours and makes
these food items available only during its lunch hours. Also, since the
cafeteria serves a large population, we have often heard negative
reviews regarding quality if food served.
this context, mission of our organization would be to comply with
highest professionalism standards by promoting high customer
satisfaction. This would be fuelled by our urge for constant innovation,
providing top quality products and excellent service.
mission would be complimented by our vision to be soon widely
recognized as a food cart that offers quality food and excellent service
at an affordable price. We also see ourselves as upholding a constant
profit margin and being known for our performance.
organization would seek to foster a performance based culture. Since,
the organization would only have three employees (me along with two
other friends) we would comprehensively read up on norms of
professionalism and customer service. We would also rely on our existing
knowledge about dealing with individuals.
this is a start-up venture, our first step would be to get licensed. We
would need certificates from the health department in order to prove
that the food we provide is hygienic and compliant with health
standards. We would also have to overcome parking restrictions and avail
permissions from our school authorities. Other legal requirements would
include getting the cart registered with the state department and
filling out tax regulations.
database for the number of mobile food handlers was accessed with the
help of school authorities in order to map the total number of active
carts serving customers in the San Fernando Valley. Drive through coffee
carts and other inactive carts were not considered for the purpose of
mapping. We were unable to determine the precise location for a number
of carts due to incomplete address information. Mapping with the help of
Google Maps revealed a total number of 195 stationary and mobile food
carts in neighboring areas.
data was collected regarding perceptions of people about these mobile
food carts with the help of school databases. Data analysis revealed
that food carts were considered as an economically and commercially
viable alternative by pedestrians. Data also revealed that these carts
promoted livability and economic development in their neighborhoods and
thus were profitable to the community as a whole.
two years collectively have witnessed huge amounts of growth in the
Food Cart Industry. According to the ‘Intuit Research Report’ 2020, the
industry is expected to generate combined revenue of $2.7 billion by the
year 2017 (NRA 2004). Reports also suggest that this is a four times increase from the current estimated figure of $650 million in the year 2012 (NRA 2004).
Estimates for the current year have been provided by National
Restaurant Association. Emergent Research in collaboration with National
Restaurant Association interviewed 272 regular food cart customers in
order to reach the estimated figure (NRA 2004).
Food cart owners were interviewed with the help of phone or email.
These interviews were conducted in the San Francisco area and nearing
Many powerful trends are reflected in ongoing growth and success of the industry. Following is a representation of these trends (NRA 2004):
· Value, Speed and Quality- According
to research data, these three are the most sought after attributes by
any customer seeking service at a fast food or quick serve restaurant.
Survey results of the year 2012 as published by the National Restaurant
Association suggests that food carts often succeed in outperforming
traditional food restaurants when it comes to delivering these
attributes. Food offered by these carts is fresh as most carts cannot
afford to store food products over a period. Also, since their
operational procedure is standard (with a fixed menu), their speed of
delivery is great.
· Local and Fresh Food- A
research conducted by the Hartman Group suggested that these food carts
have caused a national shift towards the usage of fresh food materials.
Unlike traditional fast food restaurants which have an inventory of
their own, these food carts bank on fresh everyday purchases of raw
materials. Also, menu provided by these food carts is highly localized
and flexible unlike chain fast food restaurants.
· Local Affinity- Research
reports also suggest that these food carts foster economic developments
in their neighborhood thereby increasing livability of the area as a
whole. Part of this is facilitated by customers who extend their full
support to local businesses in their area. This according to customers
increases their sense of belonging to a local neighborhood. Customers
also believe that their interactions with local food cart owners on
everyday basis foster fruitful and long term relationships thus making
the entire community a more livable place.
· Sustainable and small- Food
carts present a considerable challenge to a popular belief that quality
depends on size of restaurant. Modern food carts have outperformed
chain fast food restaurants in providing quality despite their compact
size. These food carts also stress their sustainability as their USP.
Taking inspiration from the food cart business model, chain restaurants
have acknowledged the fact that being small in size provides flexibility
without having to compromise with quality.
· Speed- Quick
service segments (for example Chipotle) have registered the maximum
amount of growth in past few years. The quick service segment in the
restaurant industry has also established its reputation for providing a
better atmosphere and food quality than traditional restaurants. Food
carts which form an important part of this segment provide an extremely
viable alternative for customers who are time challenged and need easy
accessibility. Speed of service provided by these food carts also
enables them to serve wider customer segments than traditional
consumers of the industry are students and lower and middle level
corporate employees. These consumers are commonly characterized by being
short of time to go to an established restaurant and having leisure
time to spend on a meal. Since these consumers are short of time, they
are not willing to travel to great distances in order to grab a meal and
hence are looking for options that are easily accessible. In addition,
these consumers are not willing to spend a great amount on their meal.
Average spending of these consumers per meal is believed to be between
$5-10.Lastly, most of these consumers are single or living away from
their families. As a result, they do not have the time to cook and bring
their meals from home.
Markets segments are groups of individuals who can be characterized on
the basis of common factors such as age, demographics, sex etc (Sandberg
target market comprises of on campus students of our school as well as
faculty members and administration staff. Our service would also be
available to perspective students who come for a campus visit and
visiting faculty members. At this point in time, our services would
exclude local pedestrians from outside the school and neighboring areas.
Following are the characteristics of our target market:
· Age groups: 17-30, 45-60
On campus students, faculty members and administration staff members
i.e. individuals with access to the San Fernando Campus
· Spending ability: $ 20-$30 per meal
Following are the major direct and indirect competitors of our food cart:
· School Cafeteria
· Hot and Tasty Food (sells food products right outside school)
tough competition from within and outside the school, our service would
be able to sustain itself and generate profits due to the following
· Competitive Pricing- Our
food offerings are priced lower than the school cafeteria (For example a
chicken burger at the school cafeteria is available for $25 while we
price it at $20). This is possible because of our streamlines supply
· Ease of Access- We
would like to locate our food cart so that it is located closer to
classes and the administrative block. This would encourage students and
staff members to quickly grab food supplies in between classes.
· Timing- Unlike
the school cafeteria and our outside school competition, our service
would be operational from 9am until 9pm and all items on the menu would
be made available at all times.
· Quality and Service- We would strive to comply with highest quality and professional standards.
· Local contacts- since we are a part of the school, we have local contacts that we would deploy in order to gain a competitive advantage.
These can be explained with the help of PORTER’s five force model of competition that was originally drawn by Michael Porter (Baumol 2012). According to this model, competitive threats to any business can be placed in five major categories (Baumol 2012):
· Threat of Substitutes
· New Entrants
· Rivalry among existing players
· Supplier Power
· Buyer Power
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