BUSINESS PLAN Of an ice cream shopSubmitted to: Sir Sajjad Mohsin Submitted by: Igra Bano (MS13MBA038) MS in (Banking) 24 Semester Topic: Business PlanBusiness plan Organizational plan Milko's Frozen Custard and Ice-cream will be a scoop shop located on link road in Model Town. ‘Milko's is a start-up shop and has long-term presence plans in the Model Town. Along with an 1,000,000 PKR investment by Iqra Bano, Milko's ice-cream hopes to initially make a successful effort to secure start up financing through investment to establish the location. The company's initial offerings will be a mixture of rich, creamy Frozen Custard and bright, sweet Ice-cream in a selection of Sizes. The Company will be owned by Igra Bano. Igra will contribute 800,000 PKR. Vision To create the finest quality all natural frozen custard and ice-cream with a commitment to incorporating the freshest, richest, and creamiest ingredients into a world class product. To actively seek out and respond to the needs of our customers. ‘To meet the highest standards of excellence with superb service and product offerings in a friendly, sparkling, and soothing atmosphere. Mission ‘The objectives of Milko’s Frozen Custard and Ice-cream are to: > Achieve more than 50,000 PKR in sales during the first year of operations, > Increase annual sales in the second year by 30% or more over the initial year. > Establish the business as the premier Frozen Custard store in model town. Keys to Success Milko's keys to success will include: > Presenting a high level of quality in its product line. > Maintaining and growing relationships with customers to generate new and repeat sales. % Innovating new product offerings that will differentiate us from our competition. Operational planMilko's Frozen Custard and Ice-cream will purchase frozen custard mix and Ice-cream base from a distributor Prime Dairies Limited in Lahore. We will use a frozen custard freezer to quickly freeze the custard product into a premium, dense and creamy frozen dessert. We will feature vanilla and chocolate flavors each day plus one or two additional flavors of the day. ‘The ice-cream base mix will be made into approximately 10 various flavors using flavor concentrate from a distributor in Lahore, Ambitious Ice cream. The Ice-cream will then be frozen in a specialty machine known as a batch freezer. It will then be stored in a display case at a high ‘enough temperature to keep the product in a “liquid frozen” state. Then, the finished products will be sold, Marketing plan Products Milko's will sell premium fresh-made Frozen Custard and Ice-cream. Ice cream is a frozen desert made from dairy products (milk, cream) combined with flavoring and sweeteners. Any ice cream sold must comply with the following standards: 1. It must contain: a) not less than 5% milk fat b) not less than 2.5% milk proteins Frozen Custard is a natural, wholesome, frozen dairy product. It differs from ice cream in both taste and texture. Generally, it is made with eggs in addition to cream and sugar. Frozen custard was invented in Coney Island, New York in 1919, when ice cream vendors Archie and Eon Kohr found that adding egg yolks to ice cream created a smoother texture and helped the ice cream stay cold longer. The difference between ice-cream and frozen custard is that frozen custard contain at least 10 percent milkfat and 1.4 percent egg yolk solids. If it has a smaller percentage of egg yolk solids, it is considered ice cream, True frozen custard is a very dense dessert. Soft serve ice creams may have sn overrun as large as 100%, meaning half of the final product is composed of air. Frozen custard, when made in a proper continuous freezer will have an averrun of 15-30% depending on the machine manufacturer. Another difference between commercially produced frozen custard and commercial ive cream is the way the custard is frozen. The mix enters a refrigerated tube and, as it freezes, blades scrape the product cream off the barrel walls. The now frozen custard is discharged directly into containers from which it can be served. The speed with which the product leaves the barrel minimizes the amount of air in the product but more importantly ensures that the ice crystals formed are very small. ‘Customers can choose their flavor of frozen custard (vanilla, chocolate, and one or two additional daily flavors) and then choose to have it mixed with their choice of ice-cream flavors (over 10 flavors offered daily). Then they can enjoy their desserts in a warm, relaxing atmosphere similar to an upscale coffee house.Frozen Custard has... > Rich Flavor because it is made with an Egg Base ® Less Pat and Sugar than Most Premium lee Creams > Smoother and Creamier Texture (no ice crystals as in ice cream or ice milk.) > Old-Fashioned Homemade Taste (made fresh every day.) cream is... > A Fruit flavored ice mix with a smooth texture (very small ice crystals) ® A Sweet frozen product > Made without Dairy or Egg products > Made with Real Fruit Concentrate > ‘The Consistency of a Slushie Both Frozen Custard and Iceream- are lower in fat and sugar contents than other premium ice creams available on the market. Our product is creamier and smoother in texture than ice cream, and itis the only product available as hard serve from a soft serve machine. This is because Frozen Custard is made using a unique machine called batch freezer. This freezer pumps less air into the mix as it is rapidly being frozen, The final product is dense, smooth and creamy. Our product bases will be purchased from a company Prime Dairies Limited. We have contacted them about supplying us with products. They offer premade frozen custard base, to which Milko's Frozen Custard and Ice-cream will then add flavorings and freeze in our specialty equipment. The ice-cream base mix arrives as a flavorless mix. We will add flavor concentrate from a company in Lahore that specializes in manufacturing fruit flavor concentrates from fresh seasonal fruit, We will offer at least 10 unique Ice-cream flavors each day. They will be frozen in a batch freezer and then stored in a display case at a temperature between 15-26 degrees Farenheit. This allows the Ice-cream to remain in a “liquid frozen" state similar to a slushie. Placement We have selected a building on the comer of Link road Chowk near Pace. This is a new building and we will get it on rent. The building will be of 1.5 Marla at arent of 100,000 PKR/month.12 to 13 feet will be the front of the building. Building will be in a square area and the sitting of the ‘customers will be on the upper floor and in the front lawn. We have chosen this location because it is a shopping hub and it is a very crowded area especially in evening time and there is no ice- cream shop to fulfill want of customers. Because this building is available on rent so this will significantly help us reduce costs associated with starting this business. This building provides Milko's Frozen Custard and Ice-cream with a prime location in Link road. ‘The advantage to this place is that it is located in the middle of model town, faisal town andtownship kot lakhpat. Our location is on opposite of metro stop. We will be located near Gourmet, Dominoz, OPTP, Lahore Chatkhara, Mcdonald and Kayseria and many other brands. On a recent Friday evening between the hours of 8:30-9:30am, we observed many ears, cyclists, buses, and pedestrians on link road. This number is half of the estimated traffic flow in the evening, in on link road chowk. This is a prime location. The building, then, would have an estimated count exceeding 22,000 vehicles per day. This provides Milko’s Frozen Custard and Ice- cream with a prime, highly visible location in Lahore. Market Analysis Our customers are primarily young people ages 18-25, and families who have pre-teen children. ‘These individuals seek out flavorful sweet treats. ‘The market we will engage in is Link road model town market. Model Town is one of residential suburbs of Lahore, Punjab, Pakistan. It is located next to Faisal Town, Gulberg. Garden Town and ‘Township suburbs of Lahore. Model Town Society is spread over an area of 1463 acres (5.9 km?) This area is further divided into ten blocks (A, B, C, D, E, F, G, H, J, and K). Blocks L, M,N, P, Q, R and § are in the outskirts of Model Town and are administered by Lahore Development Authority (LDA). The specific market we will serve consists of a 25 square block radius around our scoop shop and includes the youngsters and families and those primarily within walking distance of the shop on link road, ‘The overall age demographics of the population break down as follows 4.3% over 65 5.1% between 55 and 64 35.7% between 25 and 54 21.5% between 15 and 24 33.3% of the population is under 14 ‘The total population of Model Town is about 150,000. Model Town Society is a unique housing area in its design and is considered a posh locality of the town, Each block has its own market, playground, mosque, triangular parks, etc., which is a rare phenomenon as compared to other housing schemes. Our local market has a mixed educational background - about half have a college degree or higher While most people (40%) drive to work. Median annual household income (including single people) is roughly 360,000, PKR and 25% of the population lives in single unit structures (houses). ‘These numbers tell us that we are situated in a relatively educated, affluent area of the state, in a destination area of Model town.Within this population, we are focusing on two separate groups with different needs: 18-25 year olds, including students from Grand Charter School, Anerican Lycetuff , Quaid-e-Azam Law College Divisional Public School, Beacon house School System, Lahore Grammar School and from other local schools and academies and “first families" - young adults (25-35) with children under 13,There are also many offices located on link road. 18.25 year olds have disposable incomes which they tend to spend on immediate gratification items, especially when those products have a prestige or individuality value. The population around the link road chowk area is highly populated by the 18-25 age demographic. We will also target "first families" (see above). They have limited entertainment rupees to spend each year, and ‘our company can offer them some family bonding time. In both of these groups, we will aggressively target young women, who tend to brand loyalty in food choices, and often tum to indulgence foods in times of stress or celebration, Market Segmentation ‘The potential customer groups for Milko’s Frozen Custard and Ice-cream are: 18-25 Year Olds Our market research indicates about 50,000 potential customers in the Model town area who are within this age range. The target customer is going to be a part of the "town and gown’ niche: half college and schoo! students and half local residents. They have a tendency to spend more than they can afford on prestige products, First Families ‘These are the grown children of the population having children of their own, Most of their children are not yet teens. By targeting this group, we can not only generate a large volume of immediate business, but also create long term customers in the children. We also have found that families are eating out at ice cream and frozen yogurt shops more, because such places are often cheaper than other restaurants. We are conservatively estimating the population size as half of the local household population with children under 14, Because the average family size is 5 people per household, we estimate that population of all potential people in the household population to be 49,852. We do expect some averlap between 18-25 year olds and the first families’ population Other Our Link road market location and increasing customer base will probably draw in customers outside of our targeted groups, including those attending the Saturday market, coming for window shopping and shopping, or attending plays or musical events. We conservatively estimate this third market segment at about 90,000 people.Market Analysis(Pie) 18-25 Years Old mFirstFarifes m Other m Industry Analysis Here are small, medium and large manufacturers of ice cream in Pakistan. It has been estimated that total installed capacity for Punjab including recognized manufacturers, hotels, restaurant and unrecognized sector is about 25 million liters annually. The provinces of NWEP and Baluchistan installed capacity has been estimated about 6 million liters per annum (1995). ‘The frozen dessert market is expected to grow by seven percent each year through 2008, ‘There are several existing competitors in the community, including: Tuttil Frutti Frozen Yogurt, Gelato Affair, YO! Frozen Yogurt, Khan Jee Dry Fruit & Homemade Ice Cream, Sweet Affairs, Marble Stones Ice Creamery and The Hot Spot. The competitors consist of both national franchises and locally owned stores. Each store has a unique product that allows it to differentiate itself from others within the marketplace. Milko's Frozen Custard and Ice-cream will also feature severalunique products that wil allow us to differentiate our product from those currently available in the market. Trends In recent years, the ice cream and frozen dessert industry has seen significant growth. Many ice cream manufacturers have opened specialty scoop shops in recent years as @ Way to inctease profits. These shops allow businesses to charge more for their product then selling wholesale to grocery stores. Manufacturers have developed lines of premium and super-premitum products that have significantly higher profit margins than standard ice cream products. In recent years, there has been a significant move towards allowing customers to create their own product combinations. Customization allows customers to make the product more personal, and tailored to their specific desires. Competition and Buying Patterns In the frozen dessert industry, consumers make purchasing choices for a number of reasons, Perceived quality of product is essential for consumers going out to cat, because of the price premium they must pay. Most of our competitors have emphasized the high quality of their products to justify their prices. Pakistan is a nation with a tendency to get influenced by others and especially by western communities. We can categorize ice cream as fast food, which is a symbol of western community, so we can very well imagine ice cream gaining its popularity. Price ‘The price for one scope of ice cream of any flavor is 60 PKR.and the price for one cup of frozen custard is 120 PKR. Promotion The 18-25 year olds go out for ice cream more than any other age group. Within the 18-25 year ‘old group, the “town and gown" niche is very important, because they heavily populate the area surrounding the store's location. ‘The “first families” were chosen because they are a growing population, both numerically and in their choice to go out for ice cream more often. ‘They are an easy group to market to because their lifestyle is very specific. They all have young children, so tactics that are geared towards marketsthat relate to children or to the children themselves may prove highly effective in generating trial and sales. We plan to reach the first families through their children, Milko's Frozen Custard and Ice-cream will sponsor a litle league cricket team and offer the players a free Frozen Custard on days they win a game, This will draw them and their families into the store. We will invite local elementary schools to come and tour our facilities. We will teach the children how we make frozen custard and ice-cream. We will let each child make their own creation and hope they enjoy their time at our scoop shop so much, that they convince their parents to bring them back. We will also publish different brouchers and distribute them in different sectors of model town Financial plan ‘The Company will be owned by Iqra Bano. Iqra will contribute 10, 00,000 PKR. With sales increasing from 3,00,000 PKR the first’ year to over 340,000 PKR by year two. We also assumed initial investment in equipment and fixtures at 300,000 PKR. PRO FORMA PROFIT AND LOSS Direct Cost of Sales Total Cost of Sales .000 Gross Margin Payroll Sales and! Marketing and Other Expenses 0000 400000100000 100000 Utilities, Total Operating Expenses 210000 Net Profit 25000