Gourmet Meats Gourmet Meats

Business Plan for Business Plan for

Balboa BurgersBalboa Burgers

Agribusiness Venture ManagementAgribusiness Venture Management

Ray LeiRay LeiBiancia RolleBiancia RolleKyle TempletonKyle TempletonDean SerdachnyDean Serdachny

Client InfoClient Info

• Currently producing lean hamburgers on a small scale (6 animals slaughtered)

• Hamburgers are incorporated with special family recipes developed in the summer of 2004

• Sales are driven by word of mouth and family

Industry InfoIndustry Info

• Beef Consumption In Canada:

• After bovine spongiform encephalopathy (BSE) was discovered per capita consumption in Canada actually increased

• Before (BSE) 13.5kg/annum per person

Industry InfoIndustry Info

• After (BSE) 14.2kg/annum per person

• A significant portion of the per capita increase was geared to organic and natural beef products

• Few competitors in his market currently

Operations PlanOperations Plan

Incorporation of:

Gourmet Meats

Work Plan and Flow of WorkWork Plan and Flow of Work

Gourmet Meats

Processing Facility

Freezer Storage

Bar/PubsLocal Grocers

Farms

Seasoning and Filler Ingredients

Working Capital Planning and ManagementWorking Capital Planning and Management

Direct Materials Cost/box 2006 Production 3100

boxes

Beef Trim $ 10.30 $ 31,942.00

Ingredients $ 4.59 $ 14,229.00

Processing $ 5.64 $ 17,483.00

- Created Labels $ 0.01 $ 310.00

Trucking - Transport (Saskatoon, SK) $ 0.24 $ 750.00

Cold Storage Warehouse (Saskatoon, SK)

$ 0.38 $ 1,200.00

Trucking - Delivery To Retailers (Saskatoon, SK)

$ 3.60 $ 11,165.00

Total Materials $ 24.85 $ 77,033.00

Working Capital Planning and ManagementWorking Capital Planning and Management

• Cost of Goods Sold

Overhead Cost Cost Source

Utilities- Pwr/Heat $ 400.00

SaskPower

Phone/Fax/Cell $ 1500.00 SaskTel

Incorporation Fees

$ 1000.00 Gov Sk website

Office Supplies $ 600.00 Staples

Total Overhead $3,500.00  

Working Capital Planning and ManagementWorking Capital Planning and Management

• Total Cost of Goods Sold

Cost of Goods Produced in 2006

Direct Labour $0.00

Direct Materials $77,033.00

Processing Overhead $3,900.00

Total Cost of Goods Produced

$80,933.00

Working Capital Planning and ManagementWorking Capital Planning and Management

Cash Management

• Minimal requirement necessary- Initial investment of $15,000- No large inventories- No large capital costs

InventoriesInventories

• Flexible production

– More in winter, Less in summer

30 days in average

• Inventories replenished in 4 days

Accounts ReceivableAccounts Receivable

• Policy

15 days credit

• Reason Incurring customers

Small company

• Larger purchasing options only

- Processing fees- Trim cost from Natural Valley Farms

Accounts PayableAccounts Payable

• Calculated to be 18 days

• Variable with seasonal demand- Low turn around due to production capabilities

Cash Conversion CycleCash Conversion Cycle

PUSH STRATEGY

PULL STRATEGY

Marketing PlanMarketing Plan

Product Overview Product Overview

The ProductThe Product

• Hamburgers combined with ingredients for flavourHamburgers combined with ingredients for flavour

• Four different flavours: Four different flavours: - TeriyakiTeriyaki- SpiceSpice- Honey Mustard Honey Mustard - OriginalOriginal-Cajun Maple Cajun Maple

• Size - 5 ozSize - 5 oz

• Natural - follows current industry regulation standards Natural - follows current industry regulation standards

• Focus on pub and grill marketFocus on pub and grill market

• Target 19-45 year old malesTarget 19-45 year old males

• Promote a differentiated productPromote a differentiated product

• Push strategyPush strategy

• First step of market penetrationFirst step of market penetration

GOAL =GOAL = Product awareness Product awareness Pull strategy for summer retail marketPull strategy for summer retail market

ie) BBQ seasonie) BBQ season

Market Objective Market Objective

Market SizeMarket Size

• 36 733 000 lbs of beef consumed in Saskatchewan36 733 000 lbs of beef consumed in Saskatchewan

• 14 693 200 lbs of ground beef consumed in Saskatchewan14 693 200 lbs of ground beef consumed in Saskatchewan

• 3 367 330 lbs of hamburger eaten in Saskatchewan3 367 330 lbs of hamburger eaten in Saskatchewan

Market Analysis Market Analysis

Market SizeMarket Size

• 3 367 330 lbs of hamburger eaten in Saskatchewan3 367 330 lbs of hamburger eaten in Saskatchewan• 14 693 000, 4 oz hamburger consumed in Saskatchewan14 693 000, 4 oz hamburger consumed in Saskatchewan

• 637 500 burgers/ year sold in non-franchised pubs and grills 637 500 burgers/ year sold in non-franchised pubs and grills throughout Saskatchewanthroughout Saskatchewan

Market Analysis Market Analysis

Market NeedsMarket Needs

• FlavourFlavour

• Consistent taste Consistent taste

• Cooking characteristics: Cooking characteristics: –no shrinkageno shrinkage

Market Analysis Market Analysis

Target MarketTarget Market

• Primarily male demographicPrimarily male demographic

– Aged 19-45Aged 19-45

– Blue collar workersBlue collar workers

– Interested in new experiences and new tastesInterested in new experiences and new tastes

Customer Analysis Customer Analysis

Companies Supplying Pubs & GrillsCompanies Supplying Pubs & Grills

Prairie MeatsPrairie Meats• Price: $0.50 for 4 ozPrice: $0.50 for 4 oz• Market Share: 40%Market Share: 40%• Low priceLow price

Centennial MeatsCentennial Meats• $0.96 for 6 oz$0.96 for 6 oz• Market Share: 10%Market Share: 10%• Focus primarily on fast food chainsFocus primarily on fast food chains

Chef RediChef Redi• Market Share: 10%Market Share: 10%• Local market only Local market only • Poor promotionPoor promotion

Harvest MeatsHarvest Meats• Market Share: 5%Market Share: 5%• Concentrated in rural areas and grocery Concentrated in rural areas and grocery

Mitchell’s Gourmet Foods Mitchell’s Gourmet Foods • Price: $0.70 for 4 ozPrice: $0.70 for 4 oz• Market Share: 10%Market Share: 10%• Packaging: 4.54 kg casePackaging: 4.54 kg case• Beef line poorly developed compared Beef line poorly developed compared to pork products to pork products

Competitor Analysis Competitor Analysis

SWOT SWOT

StrengthsStrengths1.1. Flavours and recipes Flavours and recipes 2.2. Unique ideaUnique idea3.3. Business flexibilityBusiness flexibility

WeaknessesWeaknesses1.1. Possible crumbling problemsPossible crumbling problems2.2. Flat grill incompatibilityFlat grill incompatibility3.3. Low initial capitalLow initial capital

OpportunitiesOpportunities1. No other flavoured burgers1. No other flavoured burgers2. Joint promotion with 2. Joint promotion with

establishments through establishments through burger nightsburger nights

3. Homegrown image3. Homegrown image4. Natural beef4. Natural beef

ThreatsThreats1. Market is very price sensitive1. Market is very price sensitive2. Homemade burgers in 2. Homemade burgers in

establishmentestablishment3. Loyalty to existing competition3. Loyalty to existing competition4. Lack of product diversity4. Lack of product diversity

Key Planning Assumptions Key Planning Assumptions

1.1. Beef consumption will not decline dramaticallyBeef consumption will not decline dramatically

2.2. Consumers are looking for a consistent and flavourful productConsumers are looking for a consistent and flavourful product

3.3. Steady and dependable supply of materialsSteady and dependable supply of materials

4.4. Reliability of manufacturing and distribution channelsReliability of manufacturing and distribution channels

3100

9300

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Ma

rke

t sh

are

(%

)

Year 1 Year 5 Year 10

Market Share

5400

Business PropositionBusiness Proposition

• Target wholesale price:Target wholesale price: • $1.17/ burger$1.17/ burger

–final production/logistic costsfinal production/logistic costs

• Average wholesale cost:Average wholesale cost:• 4 oz $0.50-$0.70/ burger4 oz $0.50-$0.70/ burger

• 5 oz $0.60-$0.70/ burger5 oz $0.60-$0.70/ burger

• 6 oz $0.90-$1.15/ burger6 oz $0.90-$1.15/ burger

Price Price

PlacePlace

Non Franchised bar and grill establishmentsNon Franchised bar and grill establishments

• Immediate access to their entire customer baseImmediate access to their entire customer base

• Increased demand for flavour Increased demand for flavour – Ribs, wingsRibs, wings

• Reduced advertising costsReduced advertising costs

• High trafficHigh traffic

• Diverse Crowd Diverse Crowd

PlacePlace

Local Grocery Stores and Gourmet ShopsLocal Grocery Stores and Gourmet Shops

• Sask Made StoreSask Made Store

Internet salesInternet sales

PromotionPromotion

To ConsumersTo Consumers

• Table talkers and posters in establishmentTable talkers and posters in establishment

• Table talker website promotionTable talker website promotion

• Sponsor beer and burger nightsSponsor beer and burger nights

• Taste testingTaste testing

FinancialsFinancialsUnit Cost Analysis ($ per unit

produced/case) 2006 2007 2008 2009 2010

Natural Beef Burger 5oz. 24.85 24.85 24.85 24.85 24.85

Unit Cost of Direct Labour

Natural Beef Burger 5oz. 0.00 0.00 0.00 0.00 0.00

Unit Cost of Overhead

Natural Beef Burger 5oz. 1.26 0.87 0.75 0.66 0.58

Total Unit Cost of Production for

Natural Beef Burger 5oz. 26.11 25.72 25.60 25.51 25.43

Unit Administration & Marketing Cost

Natural Beef Burger 5oz. 9.16 7.90 5.81 5.13 4.67

Total Unit Cost

Natural Beef Burger 5oz. 35.27 33.61 31.41 30.64 30.10

Unit Selling Price 35.00 35.53 36.06 36.60 37.15

Financial PerformanceFinancial PerformanceFor the year ended Dec. 31 2006 2007 2014 2015

Sales Revenue:

Total Revenue 108, 500 121,141 366,673 372,173

Cost of Goods Sold 74,189 87,131 231,873 235,163

Gross Margin 34,311 34,311 134,800 137,011

Expenses:

Total Expenses 28,402 26,930 27,448 27,997

Income Before Taxes 5,909 7,079 107,352 109,014

Net Income (Loss) 5,318 6,371 96,617 98,112

Beg Retained Earnings - 5,318 145,650 184,167

Dividends - - - -

End Retained Earnings 5,318 11,690 184,167 195,013

Year-end Cash 160 5,781 142,654 153,490

NPV 104,647

IRR 70.7%

ERR 48.9%

Risk AnalysisRisk Analysis

Revenue/Cost FactorOriginal

value

Results in 0 Ending Cash

Difference % Change

Selling Price $35 34.94 $0.06 -0.17%

Aero Trucking-delivery to retailers $11,165 11,333 -$168.00 1.50%

Cajun Maple Sale(unit) 1240 1235 5 -0.40%

Natural Valley Trim $31,942 32,109 -$167.00 0.52%

TML Processing $17,438 17,605 -$167.00 0.96%

Co-Promotions Nights $8,000 8,178 -$178.00 2.23%

Demo Product $6,000 6,178 -$178.00 2.97%

• Razor thin marginsRazor thin margins

• High riskHigh risk

• Good profit potential Good profit potential

• IRR= 70.7%IRR= 70.7%

• ERR= 48.9%ERR= 48.9%

• No Dividends early on

FinancialsFinancials

CAN YOUR BUNS CAN YOUR BUNS HANDLE OUR HANDLE OUR BURGERS?BURGERS?

QUESTIONS?QUESTIONS?