Business Plan

Café Organo
1.0 Business Plan Pitch

1.1 Written pitch

Food is an important part of our lives. The 3rd fundamental element after Air and
Water, we eat 3 meals a day. Barbara Cartland has rightly said “You become what
you think, you are what you eat”. We love to enjoy good times over food and prefer
to sit at a nice place. Three types of restaurants are common: fine dining, fast food
restaurant and café. Most of the food served at a fast food restaurant and cafe are not
healthy. It's innutritious and sometimes stale too. We intend to open a restaurant that
will be named “Organo”. It will be based on the idea of serving food prepared with
100% pure organic raw materials. Vegetables will be procured directly from organic
farms in a sufficient quantity so that daily fresh items are stocked up. These farms
would be producing vegetables without the use of any preservative. Milk and Meat
will also be sourced from poultry farms where animals are nurtured in a natural way
without being injected with asteroids.

Mission: “Eat pure, live pure”. Our mission is to serve food that is fresh,
ingredients coming from the farm every day where such are grown without the use
of any artificial pesticides. Today, the food we eat is grown fast and in abundance
through chemical fertilizers. In the past, fear of food security has led our forefathers
to use excessive fertilizers to yield more & more form the same land. Later it became
a profit-making practice and society gradually accepted the consumption of food that
is adulterated with harmful fertilizers and is one of the causes of cancer (The Daily
Star, 2012). We want to change the practice of food industry by bringing in the idea
of organic farming, where vegetables are grown using biodegradable fertilizers,
cattle are nurtured without oxytocin and no preservatives are used for storing.

Vision: Everyone eating preservative-free food that comes from synthetic fertilizer
less farming

Strategy: We want to open a chain of restaurant that will be serving conventional

food like parmigiana, lamingtons, pavlova, meat pies, barramundi, different varieties
of soups, burgers and pizzas. First, a restaurant in downtown will be opened with our
own funds. After getting the feedback and refining our process we will try to
generate much of cash flows and use them along with a small business loan from the
public bank to open another restaurant.

For funding requirements, we will put our money of $100,000 and collect the same
amount from the crowdsourcing campaign. The subsequent round of funding would
or would not be done again in the 2nd and 3rd year.
 1.2 Visual pitch

Three years performance

10,000,000.00

8,000,000.00

6,000,000.00

4,000,000.00

2,000,000.00

-
Year 1 Year 2 Year 3

Sales Expenses Profit

 1.3 Backer rewards
Four pledges with the amount of $5, $25, $50, $100 will be issued to backers. The
volume would be as follows:
Pledge
25.00 50.00 100.00
5.00
Number 6,750
5,000.00 1,000.00 500.00 250.00
Total 25,000.00 25,000.00 25,000.00 25,000.00 , 100,000

Reward Thank you Greeting T-Shirt and

email card T-Shirt a Memento
The funding will be done each year as the expansion would be a top priority.

2.0 Business Opportunity

2.1 Customer need and target market
Jun, Kang and Arendt (2014) revealed that 35% of US population is obese, people
are getting health conscious, the study reveals that change in preference is being
witnessed where the majority of the respondents choose healthy food over tasty. The
shift in trend is witnessed among generation Y (millennials) and Z the most. A
WHO (2012) report highlighted that diabetes is the 9th deadly disease in the world.
The new generation demands healthy food, the need has not been understood well by
big players like McDonald's, Big Mac or KFC. The target audience for our café will
be health conscious young generation Y and Z. Since most of the food served will be
Australian food prepared with organic ingredients, we will also target old age
citizens who enjoy ethnic nutritious food.
2.2 Social impact
There are not many immediate effects socially, but as the business will expand and
popularity will grow, it will spread health awareness among society. People would
come to know the benefits of eating healthy organic food. The untapped growth of
fast food restaurants will be challenged. The business model engages farmers and
farm owners directly without any intermediaries. The sourcing of basic ingredients
such as floor, meat, and milk is generally done from the local market. The prices are
set through market equilibrium which is very low. Our direct sourcing from farmers
will ensure good pay to them and flawless supply. Organic farming eliminates all the
uses of artificial fertilizers; it is good for the land in the long run. The environment
will be less polluted and major chronic diseases would be avoided. The animals
would also be treated in a better manner; they will not be injected or supplemented
to grow fast.
2.3 Relevant megatrends
A detailed study of Jason (2019) reviled that the restaurant business model has
changed over the past few years, retail chain based expansion is now replaced by a
frencisie model. This model is cost effective in term of long term commitments and
lowers the risk but at the same time compromise with the profits margins. The labor
cost is increasing rapidly, more innovtive products required skilled labor which
demands more pay. The positive factors are emerging more, new markets in suburb
areas are being tapped, where the conventional meal times are not being followed.
Sales counter is active throughout the opening of the restaurant. The consumer
loyalty is playng an important role, and Google’s instant rating app put hidden
restaurants on the map. Consumers are also developing a preference for healthy food
and they are very vocal in giving micro feedback. Further, a few of the poitive trends
observed by Tetreault (2018) include that order for deliveries have incresed rapidly,
the food wastage is low, restaurants are taking initiative to purchase locally. Further,
transparency is being adopted and sustainable growth is targetted by most of the
restairants.
2.4 Similar successful campaign
The closest example of a similar business is Chipotle. The US-based chain opened
the first restaurant in 1993 through own and family funds, their idea “food with
integrity” was appreciated by the customers and soon they expanded the chain, first
with the help of government loan and then later in 1998 McDonalds became a major
investor (Walker & Merkley, 2017) . The company later expanded into Canada and
Europe and later withdrew partnership with McDonald's, the restaurant giant has
more than 2,000 branches across the world. The restaurant has emerged as a big
player, initially, Steve Ells father provided major funding for initial restaurants. The
restaurant claims that the food ingredients are natural and organic. The fan base of
the giant is so strong that it does not have to do much on advertising its rather the
fans that take on the social media on the storm. Chipotle has gained huge earned
media.
2.5 Opportunity testing plan
The restaurant industry is worth $745bn in 2015 in the US, 14M employees are
employed and this figure will touch 16M by 2026 (Statista, 2018). McDonald's is the
market leader. A large share of the workforce is engaged in the restaurant industry,
10% of all workforce is engaged in this sector (Restaurant.org, 2018). Further, there
are one million restaurants in the USA. One of the main concern with the industry is
increasing cost, this is the riskiest factor. Apart from this, the market for organic
food is increasing, Gen-Y and Z are well informed and aware of health benefit. The
generation is increasing every year; organic restaurants have great potential to grow
in the future.
3.0 Sales and Marketing strategy
3.1 Fundamentals
The food items that will be served at café Organo include traditional and
contemporary Australian dished, beverages and some healthy snacks. These
products will be distinct from other products available in the market. The price
strategy, in the beginning, will be to keep the prices low and increase later. Initially,
the first restaurant will be opened at downtown Victoria. The location is important,
traffic movement is very high, it is expected that the location will bring in many
customers.
3.2 Social media and free publicity
The three main types of media are paid media, owned media and earned media
(Kotler, et al., 2016). Paid media is when a company pays for promoting its stuff,
under-owned media, own channels such as websites and space are used for the
promotion. The earned media is the ultimate; it is build up by strong business
practices that have societal impact. The marketing strategy will be a never-ending
process of continuous identification of new products in the Australian market. The
café will emphasis on making a strong connection with its customers. Our idea is
very noble, we are not behind profit only but we are to develop a chain of the
restaurant where nutritious organic food is provided which is good for the consumer
and good for the suppliers and animals too as no unnatural way is used while
growing them. The strategy of earned media can be used. Our idea has to first reach
to a few active customers who can then forward it based upon their likeness. Once
the chain is started, it will grow more and more.
3.3 Measurement and information
The market success can be measured through various factors like sales progress,
customer feedback, market share, and relative market share. The most important
aspect is to benchmark from the targets set initially. The sales forecasts and desired
profits need to be matched in order to be called as a success. Further, social
engagement is also an important factor in guiding success and failure.

4.0 Operational strategy

4.1 Operational structure
The plan is to open a café at one location in year one and then to open 3 more in next
year followed by the same trend, 3 for every 1. It is very important that a restaurant
is left to be administered by one person as it will allow faster decision making, better
control, and transparency. The in-charge of a restaurant will be called as Manager
(Café). He will be assisted by one head chef, junior chef, one waiter, and one office
boy. Total 5 people staff would be sufficient for a café operating at a normal level. It
any café would take more business in a particular are temporary staff will be hired
for that location. The supplies will be required for raw materials and machinery and
 equipment. RM will be procured directly from farms, major machinery like oven,
kitchen setup, furniture will be purchased through financing options and the store
will be taken on rent.
Manager
(Cafe)

Head Chef

Junior Chef Waiter Office Boy

The organizational structure for a café

When the chain of the cafe will be established, a central office will be set up where
persons will be held in charge of HR, Marketing and Finance functions.

4.2 Outsourcing
The activities that are not full time in nature will be outsourced. These include
transportation, accounting and bookkeeping, legal compliances, technical matters,
and other small activities. Outsourcing will help save cost on unnecessary tasks. Any
activity that will be identified as not in routine nature will be outsourced. It is also
important that key tasks shall never be outsourced for example the banking
transaction part or tasks having strategic importance.
4.3 Operational risks
For quadrant 2 and 3 insurance can be obtained for definable activities, quad 1 is no
major risk at all and for quad 4 the company must be prepared all-time so that, the
matrix elaborated. Apart from these few other but important risks include: risk of
bad food, short supply, excess supply, sudden resigns and many more. Variables
shall be given to the employees so as to keep him motivated for the work. Further,
time to time training, counseling sessions and holidays will be given to employees.

Risk Matrix

Minor Employees getting sick during Employee coming late

consequences vulnerable weather Misappropriation of petty
Power out assets

Major The sudden absence of the Compounding risk:

Consequences employee
Death
The legal suite is filed against
 System failure
Low Likelihood High Likelihood

5.0 Financial plans

5.1 Capital requirements and funding plan

Profit and loss account - 3 years

Perticulars 1 year 2 year 3 year
Revenue 2,000,000.00 4,000,000.00 8,000,000.00
Expenditure:

Cost of conversion 800,000.00 1,600,000.00 3,200,000.00

Salary 400,000.00 800,000.00 1,600,000.00

Other Expenditures 400,000.00 800,000.00 1,600,000.00

1,600,000.00 3,200,000.00 6,400,000.00

Profit 400,000.00 800,000.00 1,600,000.00

Organo Café
Balance Sheet - 3 years
1 year 2 year 3 year
Assets

Fixed 200,000.00 600,000.00 1,800,000.00

Working Capita 450,000.00 950,000.00 1,650,000.00

Total 650,000.00 1,550,000.00 3,450,000.00

Equity and
Liabilities
Owner's Equity
 100,000.00 100,000.00 100,000.00

Backer's Equity 100,000.00 100,000.00 100,000.00

Retained earnings 400,000.00 1,200,000.00 2,800,000.00

Other Liabilities 50,000.00 150,000.00 450,000.00

Total 650,000.00 1,550,000.00 3,450,000.00

5.2 Capital requirements and funding plan

Organo Café
Capital Requirements - 3 years
Particulars 1 year 2 year 3 year
Office Setup 25,000.00 75,000.00 225,000.00
Computer 25,000.00 75,000.00 225,000.00
Furniture 100,000.00 300,000.00 900,000.00
Kitchen 50,000.00 150,000.00 450,000.00
Total 200,000.00 600,000.00 1,800,000.00

The capital requirement is increasing because in the year 2, two more cafes will be
opened and in the next year 6 will be opened. However, there are can be made plans
for borrower of extra funds if required.

5.3 Valuation and justification

Organo Café
Valuation report - 3 years
1 year 2 year 3 year
Current Assets

Cash 50,000.00 50,000.00 50,000.00

Debtor 200,000.00 400,000.00 800,000.00

Stock 200,000.00 400,000.00 800,000.00

450,000.00 950,000.00 1,650,000.00

Non-current Assets

P&M 100,000.00 300,000.00 900,000.00

Building 100,000.00 300,000.00 900,000.00

200,000.00 600,000.00 1,800,000.00

Total Assets 650,000.00 1,550,000.00 3,450,000.00

Less: Other Liabilities 50,000.00 150,000.00 450,000.00

Net worth/Value of
firm 600,000.00 1,400,000.00 3,000,000.00
6.0 References

Cartland, B. (2019). You become what you think. You are what you eat. Retrieved from
AZquotes: https://www.azquotes.com/quote/960610
Jason, C. (2019, January 16). The Megatrends Defining Restaurants in 2019. Retrieved from
Skift: https://table.skift.com/2019/01/16/the-megatrends-defining-restaurants-in-2019/
Jun, J., Kang, J., & Arendt, S. W. (2014). The Effects of Health Value on Healthful
FoodSelection Intention at Restaurants: Considering theRole of Attitudes Toward Taste
and Healthfulnessof Healthful Foods. Apparel, Events and Hospitality Management
Publications, 1-30.
Kotler, P., Keller, L., K., Brady, M., Goodman, M., & Hansen, T. (2016). Marketing
Management. London: Pearson Education Ltd.
Restaurant.org. (2018). Restaurant Industry Facts at a Glance. Retrieved from Restaurant.org:
https://www.restaurant.org/research/restaurant-statistics/restaurant-industry-facts-at-a-
glance
Statista. (2018). Restaurant industry in the U.S. - Statistics & Facts. Retrieved from Statista:
https://www.statista.com/topics/1135/us-restaurants/
Tetreault, a. (2018, November 6). The Top 10 Restaurant Trends Spotted in 2018 So Far.
Retrieved from toasttab: https://pos.toasttab.com/blog/2018-restaurant-trends
The Daily Star. (2012). Adulterated food and its health hazards. Retrieved March 8, 2019, from
https://www.thedailystar.net/news-detail-234722
Walker, R., & Merkley, G. (2017, January 5). Chipotle Mexican Grill: Food with integrity.
Retrieved from Cambridge: https://www.reachcambridge.com/wp-
content/uploads/2017/06/Mexican-Grill-Case-study.pdf
WHO. (2012, May 16). What is the deadliest disease in the world? Retrieved from WHO:
https://www.who.int/features/qa/18/en/