University of California Los Angeles

UCLA Extension

Doing Business in the US

David E. French

Written by: Luiz Guilherme Osorio

Los Angeles

2015
1 Executive Summary

The main idea in this business plan is to make cheese bread (pão de queijo) a

widespread product. We want to associate a brand to it that could be able to translate

quality; trust and warmth in one ambiance that makes costumers feel comfortable and

embraced. The sales outlets have to transmit hospitality and kindness to consumers in

one simple but sophisticated way.

To do so, we intend to start in a small cart, equipped with an oven that shall be

localized in different neighborhood’s farmer’s markets. These markets are usually a

place for organic and artisanal products sales, which brings the idea of healthy and

ecological consumption. Those concepts are the general idea we want to associate to the

product.

The marketing is going to be done through social media and direct marketing in

the sales points. We want to create a brand community that could spread and advocate

about the product. It will be produced here by a supplier and sold in our cart baked or

frozen to be consumed at home.

With a local production, imports will not be needed, and transportation will get

cheaper. In the beginning we’ve opted to make things in small scale to test the product

and the adherence in the American market place. As it already exists here, the central

idea is to transform what is consumed as an ethnic product in a global pastry, associated

to family values and quality production.

Whether the product gets popular and start bringing steady revenue, we will start

changing the brand to regular stores, in formats similar to French Cafés. This will be our

growth strategy. The charts will be kept in order to consumers have time to adapt to the

new sales format. This operation is conditional, only taking place if the product and the
sales from the initial process show stability and perspectives of growth. If so,

manufacturing will cease to be outsourced and will be taken by the company.

1.1 Brand positioning:

The Business Dictionary defines brand as:

Unique design, sign, symbol, words, or a combination of these, employed in creating

an image that identifies a product and differentiates it from its competitors. Over time,

this image becomes associated with a level of credibility, quality, and satisfaction in

the consumer's mind (see positioning). Thus brands help harried consumers in crowded

and complex marketplace, by standing for certain benefits and value. Legal name for a

brand is trademark and, when it identifies or represents a firm, it is called a brand name.

(BusinessDictionary.com, available in Nov. 11, 2015)

It means that brand is the abstract construction used to identify one certain

product produced by a particular company, using all sorts of communication in order to

build this image. The image is the association costumers make and the feelings they

have when thinking about one specific good or a category of them. These concepts are

used mostly when costumers have to make decisions about which product should they

buy, according to their own purchasing criteria, and the image they have about the

product’s characteristics. Building this image is the exact point we want to work on our

cheese bread company.

First of all, we want to dissociate the cheese bread image to Brazilian culture.

Most of places that sell it in the US are Brazilian restaurants that serve it as an appetizer.

Although it has a good penetration, it remains as an ethnic product, and these kinds of

products usually keep constrained to their niches. It might be appreciated by consumers,

but its consumption is always restricted to the niche where it comes from, and to the

clients that are already familiar with it.

 Our brand will be developed over one idea that addresses to family. We want to

make cheese bread as something that any grandmother could have baked for tea or

snacks in the afternoon and bring up happy family memories in our consumer’s mind.

The brand’s name must be addressed to it and transmit an idea that it came from

“Granny’s Oven”. The brand colors should be around pastels and red/orange shades to

create a comfortable atmosphere of a “homemade” product.

We also want to associate the brand to social and environmental responsibility,

and we could do it by two paths. The social responsibility can be done right away by

donating 5% of our revenue to the project “Biblioteca Comunitária de Ipiabas” that

works with literacy and book access in the rural area of Rio de Janeiro. This project is a

serious initiative that is making a big improvement in a poor and lacking community.

We have digital inclusion classes, for the ones who didn’t know how to deal with

internet; Mathematics extra classes for the students with bigger difficulties; lectures

about how simple changes in behavior can contribute to environment preservation; rural

workers association meetings; theatre and readings for the population, among other

activities. With this money lots of other subsidiary projects could be implemented and

the ones that already exist can be improved.

The environmental responsibility will be a little harder to achieve at first,

because we do not intend to start producing the cheese bread. The main environmental

idea will be buying the raw materials from cooperatives of small producers in poor

family agricultural areas, instead of big producers that use chemicals in the plantations,

and are focus in single crops. It might be hard to achieve at first, because in the

beginning of the operations, we will buy the cheese bread from suppliers in the US and

only sell them through our branding to the costumers. Control their suppliers would be

difficult due to the fact we are in the beginning and our purchasing power won’t be big
enough to allow us making exigencies. As sales increase, and the growth strategy start

to be implemented, we might be able to start our own production and supply our

commercial needs.

1.2 Product development

As mentioned in the previous point, we won’t start by producing our own cheese

bread. It will be acquired by one supplier and sold through our business model. We

don’t have enough capital to start and control a production of this sort that would need a

proper space, sanitary authorizations, specialized workers and a bunch of other

requirements regulating the food industry. So in order to make the business viable,

we’ve decided to outsource the production in the beginning and gradually reassuming it

after the business shows steady enough to bear an investment like that.

The cheese bread will be sold three different sizes (small, medium, large),

dressed by three different sauces: cream cheese, garlic and butter with herbs. The small

size can be sold in groups of 4 or 6, to be eaten like popcorn. The medium can be just an

individual snack and the big one can be used as a regular bread, even to make any sort

of sandwich. Water, soft drinks, coffee and tea can be sold as well in a kind of

“promotional meal” sales strategy used by fast food chains. The cheese bread MUST be

baked right before being consumed in order to keep its quality and stay crunchy and hot

while eaten.

Size Costs Price

Small $0.6 $1

Medium $0.8 $2

Large $1 $3
 These prices and costs are calculated according to the market price in the city of

LA, and in the kind of branding we want to achieve. The supplier will be a Korean-

Brazilian cook that has a small restaurant in Westwood Village, and we plan to sell an

amount of 400 cheese bread per day of sales.

1.3 Product recognition

Cheese bread is still a new product for North American market. Although it is

commercialized by different commercial outlets (restaurants, supermarkets, individual

production), it is still an ethnic product restrain to Brazilian places. It is not wide known

by consumers, what could be a big entry barrier in the market.

However, there are big companies that already foresee the potential it has and is

investing in partnerships to make it a well-known and popular product. Forno de Minas,

a big Brazilian food company, started a partnership with Cinemark in order to put

cheese bread in 36 different places in Florida, Mid-Atlantic, New England, Houston,

Dallas, Los Angeles e San Francisco. Their intention is to make it notorious in the

market to boost sales of their frozen package. (Morato, Jun. 24, 2015)

In fact, this partnership can be a blessing for our business. Forno de Minas is

going take the onus of investing with Cinemark, making promotion, advertising and

marketing the product, in the area where we are going to sell it. It can definitely help

creating buzz about this new product and drive consumers to try it in different selling

points. The investment they are doing can be used by us as it creates recognition to our

product and opens a bigger market share for everyone. This partnership started in June

2015, what means that this is a good moment to enter as second movers.

1.4 Sales Strategy

 We want to define two separate moments of the business: the first one, which

will be the entry on the market and the second, when it will be focused on growth

strategy for the long term. In the first moment the sales will be done in small and

charming carts, decorated and equipped with a oven, located in farmers markets in good

neighborhoods. Our target is to begin in Santa Monica, Westwood and Brentwood,

maybe extending to Beverly Hills. These kinds of market have specific rules to get in,

and a restricted number of vendors. The product must also be approved by the

commission according to the following steps:

TIPS TO GET YOUR NON -AGRICULTURAL FOODS INTO THE

FARM ERS' M ARKET

Step 1: Develop a line of food.

All prepared foods must be juried before sales at the Market. Make sure your foods and

their packaging are something you are proud to present!

Step 2: Have a Commercial Kitchen, or locate one you can rent.

All Non-Agricultural products are required by law to be manufactured in a certified

commercial kitchen.

Step 3: Visit Markets you are interested in

Do your research to find which markets have the crowd and demographics that fit your

product. Crowd count information is not available. It is best to go to the market as a

customer for a few weeks to determine potential demand for your product.

Step 4: Develop Food Safety Handling Plan

You and all of your employees must be trained and follow your food safety plan.
Step 5: Submit a complete application to CFMA

Step 6: Acceptance into a Market

CFMA does not guarantee placement into specific markets. If you are accepted into a

market which is not your first choice, CFMA looks forward to becoming acquainted

with you at our other market locations. By establishing a relationship with California

Farmers’ Markets Association, and providing a pleasant, responsible, and professional

work experience your chance of being selected for a market of higher demand will

increase. Then when there is an opening for your kind of product, your chance of being

selected increases.

Step 7: Buy Health Permits, and Supplies

Please do not obtain a health permit prior to this point. Health permits cannot be

refunded. When you’ve been accepted into a market, you can safely make the

investment into the necessary health permits and market equipment such as canopies,

tables, safety devices, etc.

Step 8: Come to Market

Sell your product and have fun!

There is also a fee correspondent to the number of days and places we intend to

sell the product. Only one employee will be needed, and among its responsibilities, he

will have to bake the breads, attend the costumers and receive the money. By doing this

we can have lower costs in order to make the business profitable as fast as we can. The

sales will be on the markets day, but costumers will be able to buy it only and receive it
raw to bake it in their own house. Social media will be the way to inform consumers

where the cart is located in any specific day.

The second moment will be the expansion. When the business is steady and

profitable, it will be located in one rented store and obey to the concept of a French

Café. We intend to make it also like a Cultural Center where we can have art

exhibitions, music concerts and one open microphone for texts and poetry. All this

effort will be addressed to associate an idea of comfort and sophistication to the

product.

2 Mission, Vision and Objectives

Our mission will be: “Deliver a delicious, sophisticated and delicate product,

gluten free that makes eating a pleasant and easy experience to most people as

possible”. This mission is in accordance to our brand position and reinforces what we

want to achieve in the market scenario.

Our vision concerns the fact that we want to make pão de queijo present around

the word. The product has good potential and other companies have started to take it

through borders. Starbucks in Latin America is one example. They are selling pan de

queso in four different countries: Argentina, Chile, México and Peru. According to the

marketing manager from the brand in Brazil, Renato Grego, cheese bread was inserted

in the country in the beginning of Starbucks operations (2006) due to the policy they

have to introduce local products in the stores. (Franco, May 29, 2015) Being a success,

they started trying it in different markets in which the product adapted pretty well.

It shows that there is a big potential yet unexplored for this product. Big

companies like Starbucks and Forno de Minas are investing a considerable amount of

money on it, which might tell us that they also see a good perspective for the future. For
our small business, it might be a good moment to get a better slice of this market share

if we get positioned on the right product at the right time.

The objectives of these mission and vision are, in short term, establishing the

cheese bread as a popular and well-known product, associated to tasteful and healthy

concepts and environmental and social responsibility. In midterm the goals to start a

chain of stores (maybe named ‘Granny’s Oven’) that represents the brand and build as

well this idea, and in long term make a social and environmental responsible operations,

with a ‘fair trade’ supply chain that buys its raw material from cooperatives that produce

it based in the higher political and social standards and with strict respect to labor laws

and workers. The idea is making workers and suppliers feel valued and comfortable, to

work integrated like a “family”.

3 Model Outline and Strategy

Our model will be based in old crêpe sellers in the Parisian Boulevards. The cart

shall be decorated with these motives, to create an atmosphere of sophistication. This is

a way to associate the idea to something casual but chic. The model of street selling is

to reach the consumer. As the product is still ‘unknown’ in the market, there is a need to

present it to the public. So we want to go where the consumer is, reach them in their

routine activity, like going to the farmer’s market. The goal is to create empathy with

the product and this particular brand. It is almost like a guerrilla marketing.

The cart model and cost are shown on the picture bellow. It has space for the

baked bread and cheese, for a small oven and a small fridge for the soft drinks and the

cashier. We can also add a hot chocolate and a coffee machine.

 The strategy is to make the consumers familiar with the product first, and then

make them go to the store to buy it. We first want to present it, see the real adherence

that we can get, how consumers are going to behave facing something new, before

investing in a regular store where they might go by themselves to acquire the product.

This cart model can be made with a relatively small investment, but is able to deliver a

more direct approach to the consumer. Although companies like Forno de Minas are

investing a lot to make the product known, there is still a long way to go before it gets

really popular.

After this “experience period” the goal is to open small Café stores with a warm

ambiance, to sell the product. This model will be based in restrict systems and processes

that shall be able to guarantee the quality of the product and service. We also want to

make it like a Literary Café with music presentation, poetry reading and discussions.

We can also wide the product line with other “salgadinhos” (Brazilian snacks) like

“coxinha”, “risole” and a crêpe called tapioca made with similar mandioca flour to pão

de queijo. The concept should be “informal chic” to attract the trend hunters and

hipsters. They are going to be the real advertisement media from the space.
 Whether these steps are materialized, we can start an expansion with the

franchising model to spread it to other market places. The stores shall be on the streets,

and located in “fashion”, “new”, “modern” neighborhoods that are considered “cool”

places.

4. Market Research

4.1 Economic Data

The US food retail market is the biggest in the world and movements an amount

around $5.27 trillion dollars.

(Source: http://www.statista.com/statistics/197569/annual-retail-and- food-services-

sales-in-the-us-since-1992/)

According to Statista, an institution specialized in market research, this industry

tends to grow in the next three years. Food industry is one of the biggest service sectors
in the country, and also represents a big share in other parts of the world. The

Department of Commerce Industry’s Report also says that it is the biggest

manufacturing sector in the US, and “represents more 10% of all manufacturing

shipments”.

The chart below shows that American households spend approximately 13% of

their revenue in food in 2013. This percentage has fallen if we compare to 1984, when it

was of 15%, but is still a considerable amount on the family budget. It might also imply

that families tend to spend less money and buy cheaper food, what can be good to our

business since we are in a lower pricing layer.

California is the leader in food production due to its fertile land, suitable climate

and good infrastructure. It is also the largest food exporter in the country, representing

15% of the nation’s total food manufacturing exports, as said in the report prepared by

the Northern California Center of Excellence and the Office of Economic Development

at Cerritos College.

In Los Angeles County, for example, the food industry employs around 13% of

the working population, and 58% of that works in restaurants, catering, bars and other
food services, according to the US Department of Labor, Bureau of Labor Statistics.

(Hingorani, Chau; Oct. 2013)

We can also see an interesting fact attributed in the same study about the food

system is that farmer’s markets are seen as an important source of quality and healthy

food and as a key in food security as well. They are located around the entire city and

guarantee accessibility to fresh and artisanal goods for all social layers in Los Angeles.
 4.1 Market Data – Competition analysis

Considering our product as an ethnic one, most our concurrence is in places that

commercialize Brazilian goods. Making a research around touristic guides, sites

specialized in Brazilian cuisine and in Google; we could find two different kinds of

place that usually sell cheese bread in Los Angeles: Brazilian restaurants and

Supermarkets. Forno de Minas is also in a partnership with Cinemark to sell it in the

Cinema snack bar in a promotional tactic, as we’ve mentioned before, and it can also be

purchased frozen on internet.

Restaurants:

 Café Brasil – Culver City

 Mesa Brazilian Eatery – Westwood

 Bossa Nova – small chain around the City

 Tropicália Brazilan Grill – Los Feliz

 Ubatuba Acai – Korean Town

 Pampas Grill – Culver City and Fairfax

 M Grill – Korean Town

 Wood Spoon – Downtown

 Fogo de Chão, Churrascaria – Downtown and Beverly Hills

 Samba Grill – Redondo Beach

Supermarkets:

 Cantinho Brasileiro – Culver City

 Brasil Mania – Torrance

 Supermercado Brasil-Brazilian Supermarket – Culver City

 These are our main competition for our pão de queijo sales. Their business

model is totally different from the one we have developed. They are not focused on the

product and have a much wider variety of goods in their menus. Cheese bread is sold as

an appetizer or part of the meal, e.g. Fogo de Chão. In the supermarkets, it is sold frozen

in packages with 12, to be cooked at home. There are also some retailers websites (fee

picture below) that commercialize the packages imported from Brazil.

It shows that our way of selling and branding is unique so far. The thing that

approaches the most to our proposition is the model adopt by Forno de Minas to present

the product to the American consumer. But even though, as we’ve discussed before, it

can be more an asset than a liability to our business.

4.3 Demographic Data

The first steps in our business plan are going to be given in the Los Angeles

urban area. Los Angeles County is one of the biggest people’s concentrations in the

world. With a population of 10,116,705, according to the US Census Bureau, and a per

capita income $27,749, it is one of the biggest and most developed markets in the US. It
population density is considered high (2,000.0 to 69,468.4 per square mile), especially

when compared to other parts of the country like shown in the map below.

57.6% are in the ages between 18 and 65 years old, and 50.7 of the entire

population are composed by woman. Those characteristics can be in our favor, because

we are going to focus on this specific age sector. Women are usually also the biggest

consumers of pastries and dairy products, and most of this market and advertising is

addressed to them. This demographic reality in Los Angeles County can be very helpful

in our marketing and branding.

It is also interesting to highlight some other characteristics that might influence

our business like scholar degree and foreign born people. People with higher scholar

degrees are usually more critical consumers, but also are the ones who start fashion

waves. Our idea is to target this segment of consumers, as well as the ones which, for

some reason, already has a familiar approach to cheese bread.

 As we’ve seen before, Starbucks and other companies took cheese bread to

several Latin American countries. A strong presence of these groups in our target

market can implicate in a better recognition of our product, brought from the country of

origin.

4.4 Market Study

Cheese bread is one product of its kind and has some particular characteristics. It

is new in the American market, but even though, due to the presence of Brazilian

cuisine in Los Angeles’ market place, it has gained a little prominence. It is usually sold

for prices between $5 and $12 dollars a portion with six, and has gained a considerable

numbers of fans.

Some reports in yelp and in blogs specialized in gastronomy, shows how big is

the potential of bread and cheese in the LA’s market. One in particular have called our

attention due to the passion the writer uses to describe her first taste in one of those

small balls, and her reaction over it. Because of such a particular content, we are going

to reproduce it integrally to illustrate how good can be the acceptance over it.

The first time I ever took a bite of a Pão de Queijo (pronounced “Pon de Kay-joe”) was

at a Brazilian steak house/Churrascaria in Los Angeles called Fogo de Chao. They

present them hot in a little basket and wrapped in a white napkin. They are very simply

little baked cheese balls made with tapioca flour.

Fogo de Chao is a churrasqueria aka, meat lovers paradise. You pay a set fee and eat

unlimited amounts of grilled meats. I will tell you more on that on another post. Back to

my cheese balls. I am not sure if they do this intentionally, but I don’t know any warm

blooded human being who would be able to each just one piping hot and gooey on the
inside pao de queijo and save room for meat. I ate and ate and they brought me more

and more. So the rub is that I had very little room for juicy perfectly medium rare meat

served on skewers by friendly Brazilian people. I made a grand effort and powered

down some meat, but I couldn’t get the light, warm and cheesy balls off the brain. This

would probably mark one of the only times in my life that I stole something and felt no

remorse. Churrasquerias are all you can eat, so they don’t let you take food home and

this restaurant would not sell me any cheese balls, so they left me no other option but to

order more and sneakily stuff the balls, napkin and all straight into my purse. I seriously

considered courting one of the bus boys in order to maintain a s teady supply of cheese

balls. (I will not confirm or deny whether this actually happened)

Recently, while cruising the fancy food show, I got a big waft of cheese ball goodness. I

followed the scent to the Forno de Minas booth and found a little warming box with

cute little pao de queijo’s yearning for me to eat them. This company was selling packs

of frozen pao de queijo, but they had not yet found distribution in the USA. When I got

home, I went straight to my computer to find them and their web site was completely in

Portuguese. Boo hoo. I pouted and realized that it was probably for the best since I had

a wedding dress to fit into in the near future.

A little while ago I was meeting a florist and the guy happened to be from Brazil, so the

first thing I said was, I LOVE pao de queijo! And he said, in the cutest accent ever, you

can get them frozen in the Mission area of San Francisco at a Brazilian grocery store. I

almost began to cry as if I had been reunited with a long lost relative. If you are

Colombian and reading this, you are probably mad at me because we have pan de queso

in Colombia, but perdoname sweetie, they just aren’t as good. As I write this, I have my

oven at 375 on the hottest day in San Francisco in many many months. I don’t care. I

will also include a link to a recipe from SimplyRecipes that is supposed to be easy and

yummy. I have not made this recipe. The lovely Brazilian woman at the Mercado

Brazil suggested I set my oven to 375, instead of 350, which the package indicates and

if making them from scratch, she suggested using Cotija cheese that can be found in the

Mexican grocery stores. I don’t normally eat a lot of bread because I end up looking like

a loaf of bread, but I ate 6 of these hot puppies and would have eaten more if I hadn’t
 shared the rest with others. I really want to try making them from scratch. The photo

on SimplyRecipes looks more like little popovers, but I think they are pretty similar in

texture and taste similar to the pre-made Forno de Minas balls that I made today. If you

want to find the frozen kind, I recommend you Google Brazilian grocery stores in your

area. Obrigada!

Note: These cheese balls are gluten free because they are made with Tapioca flour. You

should be able to find Tapioca flour at Whole Foods or most natural food stores.

And this is not one lonely report. In Yelp there are several others of “affectionate

fans” that had tried and strongly recommend it. The report we’ve just reproduced is also

interesting because all the narrative happened in California. She tried the cheese bread

in Fogo de Chão in Los Angeles, and when she came back home in San Francisco she

was still looking for it.

Hey, just found a really good frozen Pao de Queijo at Draeger's market in San Mateo,

and it is made with the polvilho Azedo! They are called Mani gourmet Brazilian snack -

Pao de queijo, I baked some last night and they were really good! They had a jalapeño

flavor as well which I might try next, I wonder just how spicy they are though.....

This second report, as well as the first, has an interesting characteristic, which is

they not only describe the product, but also offer tips of how to find and cook it. It is

similar to the creation of a brand community, but directed to a specific product. The

difference is that no restaurant or brand is using it as an advantage. We can “subsidize”

this kind of report with our product and our brand, encouraging the consumer to share

the experience they had in our cart with others that have the same interests. This is not a

complicated work to be done, and can create a huge consumer market to our cheese

bread.
 Another advantage we have here in California is the presence of a big number of

Latinos. According to the US Census Bureau, 48.4% of Los Angeles county population

is from Hispanic origins. As we’ve mentioned before, these individuals have a bigger a

proximity to the product, and this can be a possibility of widen our target public.

Interviewing business owners and costumers in some stores, we could see that in

fact most of the costumers have tried it at least once, and are up to do it again, at the

same time the owners say this is one of their best selling products.

5. Operations

5.1 General Description

Our operations are going to be the as simple as possible in order to make costs as

little as possible. We will receive the product frozen, as well as the sauces that will be

made at the same place, in a small warehouse equipped with a big industrial freezer to

keep all the products “fresh”. Every time we go to one of the farmer’s markets we will

operate in, we take the amount calculated (around 400) for one day of sales and store it

in the chart freezer.

During the sales period only one person is needed to bake the cheese bread and

work in the cashier. This same person will be responsible to take the product from the

warehouse and transport it until the sales spot. The working hours will be the same as

the farmer’s market.

The marketing will be done online, informing the consumers through social

networks (like food trucks do) in which farmer’s market we will be each day. Our
supplier is going to be a Korean-Brazilian lady, who has a cottage kitchen certification,

and will produce both the cheese bread and the sauces.

5.2 Location Selection

There are several Famers’ Markets in the LA County, spread for almost every

neighborhood. When we choose our sale’s spots, we have to take in consideration our

branding and marketing plan, in order to be coherent with the objects we want to

achieve.

Our primary goal is to make cheese bread a well-known product. To do so, we

have to locate our business in places with bigger visibility. This way, the best choices

are the Framers’ Markets that happens in Santa Monica, Beverly Hills and Westwood.

These places are the generators of new styles and fashion.

 Whether we want to make our cheese bread in association with a brand, these

would be the places where we would have more attention from the public. Echo Park

could be another really good starting point for this activity. It is a region with

considerable growth, and with tendency to become a “nice” spot in the future. The

people that usually lives there fits in our consumer profile and could be a big help in

making the product famous.

5.3 Logistics

As our good is going to be produced in Los Angeles and commercialized at the

same place, our distribution is going to be quite simple. To take the cart and make all

the logistics work, we will need a small truck that will be used to take the products in

the supplier, take it to the warehouse, and them from the warehouse to the commercial

spots.

The production volume is not something so big that demands more than a car to

take and deliver the product. In market days, this same car can be used to transport the

cart until the spot, and take all the other amenities needed to provide service to the

costumer.

As the products will be stored in the warehouse, the transportation can be done

easily and in a small period of time. The supplier’s kitchen is also in LA County, so

there is no need to hire a outsource company to do this service, since it would increase

our costs monthly and make things more complicated.

 5.4 Internal Structure

The operational system we’ve developed is quite simple and don’t demand big

human capital to operate it. Basically we need one manager to deal with paperwork,

payments, banking and bureaucracy; one accouter to deal with the company’s finances

and taxes; and one seller that is going to make the transportation, distribution and sales.

We want to reduce the costs as low as possible, and there is in fact no need for

more than three people to put this business to work. Human resources are also one of

the most expensive assets a company has to have. In order to have better paid and

efficient employees, we’ve decided to keep the operations as simple as possible, and

increase the number of co-workers when the business starts to grow.

6. Management

The management position is simple and can be performed by only one person.

The manager will be responsible for dealing with the supplier, the seller and the

outsourced accouter. The structure should be as horizontal as possible in order to the

manager be able to quickly identify the problems, and solve them as soon as possible.

7. Marketing

7.1 Marketing Plan

7.1.1 Product

Our product is originally from the country side of Minas Gerais state in Brazil,

and was developed during the 18 th Century approximately. Its origins are controversial,

but one certain thing is that it is extremely popular all over the country. Historians say

that the recipe was developed due to the lack of wheat in the region during that period.

As Brazil was under the colonial pact, buy wheat was expensive, and there was no
domestic production to supply the demand of the European decedents that had the habit

to eat bread. To deal with those problems, the slave cooks had to improvise and started

using mandioca flour as raw material to their pastries.

Pão de queijo is only one of thousands of different products that emerged from

this scarcity. These days, pão de queijo has yet an artisanal production in many farms

and small factories in the country side, but most of the country’s consumption comes

from big and well established companies like Forno de Minas, Casa do Pão de Queijo

and Rei do Mate.

Our product, in other hand, will be closer to an artisanal production (cottage

kitchen) and will be sold as a brand, directly to the consumer. Most of these companies

mentioned before, work with wholesales for big retailers and two of them (Casa do Pão

de Queijo and Rei do Mate) have their own sales spots. But differently from us, those

spots are not specialized in cheese bread, although they also have a brand. However,

their brands are related to their snack bar, not exclusively to the product as ours is going

to be.

7.1.2 Place

The place we’ve chosen to commercialize our product is basically three different

farmer’s markets in Westside LA, which are Westwood, Santa Monica and Beverly

Hills, and Echo Park in Downtown. The reason for choosing those places concerns

about their demography and income profile. We want to make our product popular, so

the idea is to convince people that create tendencies that cheese bread is a good product.

And usually these people are in those places.

Echo Park was chosen due to the market it’s being created there. Real State is

increasing and “cool” stores and cafés started to surround the neighborhood. This public
usually is connected to arts, and has a bigger curiosity to try new things. Another

interesting data concerns the fact that 64% of the population are from Latinos, according

to the LA Times, what might make our product have a bigger acceptance.

7.1.3 Price

As mentioned before, our price is being calculated according to the market. Most

of markets that sell frozen cheese bread sell the package with 400g between 3.99 and

6.99. There are around 8 cheese breads in each package produced by Forno de Minas.

Supermarket Price

Cantinho Brasileiro $3.99

Brasil Mania $4.99

Supermercado Brasil-Brazilian $6.99

Supermarket

In restaurants, they are usually sold in portions of six or 12, varying from $4.80

to $7.50 dollars.

Restaurant Price

Mesa Brazilian Eatery $5.00

Café Brasil $4.80

Bossa Nova $4.50 for 6 and $7.50 for 12

Pricing is also a way to position the product in the market. Depending on the

price, a product can be considered good or not. So, in order to keep the coherence with
our branding, we want to make the prices a little higher than our concurrence, to

reinforce that our product is different, better than the ones sold as appetizers.

Size Costs Price

Small $0.6 $1

Medium $0.8 $2

Large $1 $3

Those prices are not high, are affordable for most consumers, and also are able

to differentiate from the others.

7.1.4 Promotion

The promotion is going to be simple, but the most effective and customized as

we can. The idea is to explore the social media and talk to the consumers through them.

We want to have a direct communication with our clients, and inform them as fast as we

can about our location, spots, answer questions and even sell frozen cheese bread to be

baked at home. This is also a way to transmit the idea of an artisanal product, that is

cool and low profile. Just whoever is aware of the new fashion would know about it. We

want to create this “treasure hunt” strategy for a product that is not advertised in mass

media.

As this first move of our strategy is to make people know about cheese bread,

we want to reserve also around 50 small units for free samples distributed in the market,

to boost mouth to mouth communication. People should try it, buy and recommend for

friends.
 7.2 SWOT Analysis

Strengths: Our biggest strength is the product itself and the effect it causes on

consumers. As we’ve seen on the statements we’ve mentioned before, there is a good

acceptance from the public. Another advantage is the fact that cheese bread has a low

production cost, although it is labor intensive. Our model is also simple to manage and

operate, the supplier is on the same town, and the transportation and distribution can be

made by only one person with a car.

We also have Forno de Minas working together with Cinemark to introduce the

product on the American market, what can be an asset for us. Our marketing is going to

be simple and focused on social media, what lower considerably the costs with

publicity.

Weaknesses: Our product is not popular yet and it is restricted to Brazilian

restaurants which sell it as an ethnic product. We don’t have our own production what

makes it difficult to try new recipes and sizes. We also have to face a “trial” and have

our product chosen by the farmer’s market committee, what might make it harder for us

to reach those public. We also have few financing options, even those costs are low. We

will have to rent a warehouse to stock the products and have also a car to take care of

the logistics.

Opportunities: As we’ve mentioned before, Forno de Minas is investing on the

product publicity, and this might create a bigger demand for this kind of product. We

have a good acceptance from the public who tried the product; we are in a moment of

expansion of the food industry, with the demand growing bigger. Los Angeles is also a

place with a big Latino population as we’ve seen on the demographic characteristics and
this people has already been in touch with our product, through Starbucks presence in

Latin America and can recognize and consume it.

Threats: Bigger companies can try taking us off the market because of our

concurrence. People may not like our product or make bad statements about it in sites

like Yelp. Our supplier might not be able to produce all we need if the demand increases

or we might not be accepted for any farmer’s market, what would ruin the model. We

also have the threat of established restaurants that could appeal for their cheaper price in

order to take costumers from us.

8 Human Resources

We have opted for a small operation that could be simply done by two people.

Our model is a “startup” that is expected to grow and become a business chain.

However, as an entry strategy, we’ve chosen to text the product in a smaller scale. For

this reason, and also to lower the costs, the cheese bread company will have basically

two positions: management and operations.

Management: the manager will be responsible for the paperwork; banking and

financing issues; contacts with suppliers; planning and organization of the operations;

payments; marketing and communication; negotiate with the farmer’s markets direction

and other issues concerning the administrative activity. The employment contract will

be verbal with written staff manual, and in this manual their benefits will be: health

insurance and sick personal days. The working period will be of 40 hours per week, and

in some weekends the worker might be required due to the farmer’s markets days. The

manager will be paid $10/hour.

Operations: the operations worker has as duties: make all the logistics in the company

(driver’s license required); organize and clean the warehouse; take the products to the
farmer’s market; install the cart; bake the cheese bread; sell it; receive the feedback

from the costumers; clean the space; and other operation issues that might appear during

the business work. The employment contract will be verbal with written staff manual,

and in this manual their benefits will be: health insurance and sick personal days. The

working period will be of 40 hours per week, and in some weekends the worker might

be required due to the farmer’s markets days. The operations worker will be paid

$8/hour.

Accountant: This activity will be performed by an outsourced professional hired to

take care of the books and taxes we shall pay. The counter will be manage by the

manager and will answer in the hierarchy to him. His payment will be done by service

provided.

9 Financials

9.1 CapX

The capital required to implement the business will provide funding for the

acquisition of the cart, the truck to do the transportation, the deposit for the rent of the

warehouse, the acquisition of freezers and the first cheese breads, payment of the visual

communication and graphic designer to make our visual identity, and payment of the

farmer’s markets fees for applications.

Material Investment (US$)

Cart $3,069.00

Truck $16,998.00

Rent Deposit $4,000.00

Freezer $4,699.99
Product for the first month (cheese bread, $10,400.00

sodas, coffee and sauces)

Marketing $10,000.00

Fees (concerning all kinds of fees to open $2,000.00

and register the business and to apply for

health certifications and licenses)

Total $51,166.99

Examples:

Cart:

Truck:
Rent:
Freezer:

9.2 OpX

The operation cost refers to the costs we will have to make the business work.

These costs are employee wages and benefits; warehouse rent; energy bill; car

maintenance and gasoline; materials such as napkins, cups, plastic knives; and general

expenses.

Material Costs

Wages $2,880.00

Bennefits (Anthem Premier PPO Plan $500.00

Copay $10 for two employees per month)

Rent $4,000.00

Energy Bill (Nonrefrigerated warehouses $1,073.66

in US spend 6.1 kilowatt/hour per square

foot. We have 1,269 sf and kilowatt

industrial price in CA is average 13.87

cents, according to US-EIA.

Car Maintenance and Gas (take in $500.00

consideration $2.50 per gallon)

Napkins and cups ($0.26/cup 100 $680.00

cups/work day - 0.08/napkin 1,000

napkins/work day)

Farmer’s Markets fees $750.00

General expenses (anything unexpected) $250.00

Total $10,633.66

Examples:

Benefits:
 Energy Bill:

Nonrefrigerated warehouses in the U.S. use an average of 6.1 kilowatt-hours (kWh) of

electricity and 13,400 Btu of natural gas per square foot annually. Lighting and space heating

account for approximately 76 percent of total use making these systems the best targets for

energy savings. Refrigerated warehouses are more energy -intensive than their nonrefrigerated

counterparts because of the large amount of energy consumed by refrigeration equipment.

They consume an average of 24.9 kWh of electricity and 9,200 Btu of natural gas per square

foot per year.

Source: https://bizenergyadvisor.com/warehouses

Car maintenance and gas:

 We’ve chosen an average price of $2.5 dollar/gallon which means around 200

gallons if the money is entirely to the gas in months with no maintenance. The part not

used will constitute a fund for future maintenance.

Source: http://www.losangelesgasprices.com/

Napkins and cups:

Source:http://www.totallypromotional.com/drinkware/soft-sided-plastic-

cups.html
 9.3 Investment/Leverage

Our initial investment to start the business is around $51,166.99. There are few

different funding scenarios that we could take advantage of, although it is not quite easy

to find an investor that could believe in our product. First option would be an affiliation

to the SBA (Small Business Administration) and try any lines or loans. This would

probably require the presence of a partner in the deal, to provide collateral and personal

guarantee, since I personally don’t have a credit history in the US.

The second possible alternative would be a loan from friends and family. This is

a quite delicate matter, because those people represents are relationship circle, and not

paying the money back in case of a frustrated investment could bring some personal

issues with those social groups.

Another alternative might be finding an investor that had any contact with the

product before and is able and confident to invest in the business. It is not a pretty

realistic alternative, but can be considered among the others.

If we are able to find the necessary funding to start the first operations, we will

be able to take back the investment in about twelve to fourteen months. We are taking in

consideration three months until the business reach our moderate projection. Whether

we are able to sell 400 cheese breads per day in an average of price of $2, we will have

monthly revenue of $16,000.00. Taking the operations expenses of $10,633.66 for this

revenue we will have $5,366.34 per month. We might start being profitable after the

first year of operations and save this profit to make another investment on other cart to

reach more places in the city.

If we have a conservative projection in which we wouldn’t be able to sell 400

cheese breads a day or do not have licenses from farmer’s market in one of those days
we expect to, we have to have at least enough revenue to cover the operations costs. It

means we have to sell around 266 cheese breads for $2 dollars in average in order to

continue operating. If sales exceed our expectations, and we sell 500 or more cheese

breads, we will be able to cover the initial investment faster, and start saving for the

amplifications on the model.

10 Measurements

10.1 Quantitative goals and measures

Our first and obvious goal is to get in the market and make cheese bread a

popular product. To do so, we intend to use digital marketing to have a customized

approach to the costumer. Most of our marketing will be done through Social Media. It

means that we can reach our potential clients directly. On the other hand, this strategy is

going to be a measure of our operations as a whole. The numbers of likes, the data

provided through Facebook Inc. on commercial pages, comments and interactions can

be an interesting benchmark to measure our appeal to the public. We can also rely on

the revenues to see if we are reaching the number of sales we expect to.

Another way of measuring what our costumer things about our products is

through direct approach in the farmer’s market sales spots. We intend to offer free

samples as a way to show the product’s quality, and ask those people to answer 4 simple

questions for our marketing research: “Grade how you did like cheese bread – 0 to 5”;

“Would you recommend to another friend? Yes or No”; “Would you buy frozen cheese

bread to bake by yourself? Yes or No”; “How did you discover about us? (name the

way)”.

Those questions are meant to answer some of our main concerns about the

business. First, how the consumer reacts/thinks about the product; second is the
consumer going to advocate for the product and recommend to others; third we want to

know if is it worthy to invest in frozen sales; and forth in what channels and media shall

we focus when we communicate about our product.

There is no better way of measuring costumer’s opinion than asking them.

That’s the intention of this research. As soon as we start operating the business, we shall

have constant inquiries to our consumers to understand what they want and what we

should change in our way of commercializing this good. When the business grows

bigger, our intentions is to hire professional anthropologists and sociologists to

understand how can we improve our products and sales systems to make it as close to

the consumer’s wishes as possible.

11 Special Issues

11.1 Farmer’s Markets fees

According to Southland Farmers' Market Association to be a vendor of pre-

packed food, some requirements have to be filled. The most important are:

 Department of Health Services:

— You must make your product in a Health Department approved facility. No food

prepared or stored in a private home may be used, stored, served, offered for sale, sold,

or given away at a farmers’ market.

— If you are selected to sell at a farmers’ market, you must obtain a permit from the

County’s Dept. of Health Services for each market you are going to sell at. The Dept. of

Health Services will provide you with information on the additional requirements

needed to comply with the California Uniform Retail Food Facilities Law (CURFFL)

 SFMA’s “The Directory”: Fill out a vendor application and submit it to Southland so

we can notify you of new or existing market opportunities.

  Contact individual market managers by telephone or by visiting the market to see if t hey

have an interest adding you to their market.

 Note: Each market may have additional permits and or licenses that may be required

depending on local ordinances, i.e., resellers license.

This additional permits and licenses from each particular farmer’s market are

fees directed to the maintenance of the structure. Those fees are around $150.00

according to the Fresh from the Market Association, responsible for 20 markets in the

bay area. This fee would be correspondent to $750.00 dollars monthly in our

Operational expenses.

We also have fees to open the business and to apply for certifications and

licenses that are predicted as “Fees” generally in the Capital expenses taking in

consideration that unpredicted costs to implement the activity.

12. Implementation

12.1 Timeline

As soon as we have access to the starting capital, we will start making contact to

become vendors in the farmer’s market and apply for all licenses and certificates

required. Step two will be settle the warehouse making a leasing contract, and hire the

workers. After that we will start buying the freezers, amenities and components for the

business. Then comes the contact with the supplier for the products, after everything is

organized in the warehouse. These first operations should take no more than a week.

On week two we will buy the cart and the vehicle for logistics and

transportation, hire the graphic designer to do our layout that has to be inside our
marketing budget of 10,000.00 dollars for all the visual identity. After that we intend to

be taking the first authorizations and certificates, which can take a little while. The

operations shall start only when all licenses and authorizations are ok.

During weeks three and four we will deal with the preparation of the systems

and operations for the sales and take care of all paper work and bureaucratic issues to

make the business work. Weeks five and six will be time to make the orders for the

suppliers, and organize accounting and finances. We intend start the operations on week

eight if everything goes like planned. After the first two months we hope to be operating

in the rates of our moderate projections.

12.2 Obstacles

The first obstacle for the implementation of any new business is the lack of

funding. This is the first and most important issue in this field. If we have no money, it

is almost impossible to take a business plan into to reality.

However we have other important obstacles concerning the licenses and

authorizations, and mainly the farmer’s markets policies. There are limited numbers of

vendors in each farmer’s market, and a commission has to approve the product in order

to begin the sales in a particular spot. This waiting list or even the non-acceptance of the

cheese bread for any of the farmer’s market can be a really big obstacle.

Another obstacle could be the rejection of the product from the public. As we are

dealing with something new in the US market, we have to think about the possibility of

not being successful in the objective of making cheese bread popular. Although there

are other companies investing on its branding, we have to take in consideration that
maybe our target public is not interested in our product, our simply didn’t understand

our concept. This might be a realistic risk for this investment.

We also could face difficulties to make a successful marketing in the social

media, or having small empathy with our communication. This can be changed, and

more investment can be direct to this particular activity, but is also something that the

manager has to be constant aware.

13. Conclusion

Although all the difficulties and obstacles, we believe this business has a real

chance to succeed and become a big international chain. The product is considerably

new in the market, and other companies are already in their first entry steps. This is a

good moment to start the commercialization and make it considerably known and

desired. We could identify a considerable demand for it and the demographic and

market data shows an interesting moment for the food industry.

The systems and operations are quite simple and the investment is reasonable for

a good return period. The biggest challenges so far concern the funding and the

operational authorization from the public institutions and the farmer’s markets. The

supply chain and the distribution were designed to reduce the costs and maximize the

efficiency and the marketing wants to target costumer’s as close as it can to make them

feel comfortable and work as brand advocates.

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