Stella

Dine safe with the best standalone restaurants in town

Debajyoti Kar
18CS10011
 1. Executive Summary
Stella is a private-limited startup whose mission is to revolutionise the dining
experience of consumers. It has a two-fold target - to enable consumers to locate
and dine in restaurants near to their location as well as enable restaurants,
especially the standalone ones to gather more and more customers.

1.1 The Team

Stella will be a private-limited company with headquarters centered at Kolkata. Its
founder and CEO is Mr. Debajyoti Kar, a Computer Science & Engineering
Graduate from IIT Kharagpur with huge experience in building softwares for
service. Besides, Stella will have Vice Presidents and Software Engineers as part of
the core team with the shared vision to make Stella the best dining app in the
country.

1.2 The Proposal

Stella proposes to eliminate the pain of consumers not being able to find good
dining restaurants near to their location. For example, it is quite common for
corporate people to work till late hours when most restaurants near their office
would be closed. They might not have the energy to cook food on returning home
and might desire to have a good refreshing meal in an ambient place. Stella would
enable them to find restaurants nearby and also order instantly through the app. On
arriving at the restaurant, they would furthermore be served a welcome drink as a
benefit for ordering through Stella. This would also enable restaurants to gather
more customers.

Post pandemic, the health concerns of people have also risen. Restaurant menu
cards are touched by hundreds of different people on a daily basis and may not be
sanitised regularly. This increases the chance of COVID infection. Stella provides
contactless order placement and also allows customers to reserve seats in the
restaurant of their choice by paying a nominal fee. It also allows the underserved
and newly built standalone restaurants to have better dominance in the market.

1.3 Why Now?

We believe our service would be a great product-market-fit due to the increased
hygiene concerns of people post pandemic. In fact, some reports say that the
pandemic is not yet over and the country might expect a more dangerous 4th wave
in the coming months (see here). Menu cards in restaurants are touched by
hundreds of people, some of whom might be carriers of the virus. Through our app,
customers would be able to place orders by a click on their phones. Hence we
expect our service to be quickly adopted especially among the health-conscious
population.

1.4 Rewards
From the projected profit/loss statement, we find that the net profit after one year
of operation would be around 4.26 lakhs, which would rise to 11.168 lakhs at the
end of the second year. Thus we believe there is huge scope of expansion.
 2. Company Overview
The company’s official name will be Stella Pvt. Ltd. It will be registered as a
Private Limited Company with its main office in Kolkata, West Bengal. Hence, it
will be registered in the state of West Bengal for tax purposes. Apart from the main
office, the company will have its regional offices in Delhi, Mumbai, Chennai and
Hyderabad initially. After we have successfully established ourselves in India we
might look to expand worldwide.

2.1 The Team

The primary team consists of 1 CEO, 2-3 Vice Presidents as well as 5-8 Product
Engineers and Research Engineers for the R&D team.

2.2 Mission
The primary mission of Stella is to leave no hungry customer waiting. It will
provide hygienic contactless order placing to the customers. It will also facilitate
restaurants to gather and retain loyal customers.

2.3 Value Proposition

Customers will be served free welcome drinks of their choice when they arrive at
the restaurant. Stella would also enable them to reserve tables in the restaurant so
that they do not have to wait in long queues at the restaurant. They would be
provided guaranteed cashbacks on each order booked through the app.

2.4 Customer acquisition

We plan to acquire customers mainly through digital and content marketing. Newly
set up restaurants would have great incentive to subscribe to the app with a
nominal amount of ₹ 2500 per month. Also we believe customers have a great
reason to adopt our service. By paying a minimal charge of ₹ 9 per order, they
would be able to place orders without physically touching the menu cards of the
restaurants. Also they would receive a free welcome drink and cashbacks for
booking through the app. Overall we believe our service would be a great
product-market-fit in the current post-pandemic market.
2.5 Tractions gained so far
We have received heartfelt support from our friends and family for the promotion
of our idea. Hence we believe our service to be a great success very soon!

3. Industry Analysis
Some statistics on online food ordering are as follows:
● 70% of consumers say they’d rather order directly from a restaurant,
preferring that their money goes straight to the restaurant and not a third
party. Our service ensures that the money on orders goes directly to the
restaurant and no other third party is involved. [Source:
https://www.preoday.com/]
● 45% of consumers say that offering mobile ordering or loyalty programs
would encourage them to use online ordering services more often. [Source:
Mintel, 2016]
● Customers who place an online order with a restaurant will visit that
restaurant 67% more frequently than those who don’t. [Source: The 2016
Pizza Power Report]
● Visits to restaurants where guests paid by mobile app increased by 50% from
2017-18.
Thus we see that the online food-ordering industry is on the rise. Hence we believe
it is the right time for our startup to begin operations.

3.1 Entry barriers

The online food delivery industry has been on the rise at a steep rate, especially
post pandemic. More and more customers are looking to order food online and
enjoy it at the comfort of their homes watching movies. The unwillingness of
customers to reorient back to conventional dining in restaurants poses a barrier to
our growth of our business.
Some strategies to overcome the same are:
● Creating awareness among people about new hygienic solutions to order
placing and dining in restaurants.
● Providing guaranteed cashbacks to customers who place orders through our
app.
● Providing free welcome drinks to customers who place orders through our
app.

3.2 Market Segmentation

Stella is going to target people of all age groups and sections of society who prefer
eating out in restaurants. Also all standalone restaurants come under the targeted
market.

3.3 Marketing
We intend to capture and retain our SOM by marketing in the following ways:
● Branding: Acquiring the loyalty of consumers and restaurants through
stories revolving around the ideas that no customer should remain hungry
and waiting and no restaurant should be underserved due to competition
from other big, popular restaurants.
● Advertising: Mainly online, for example through ads in YouTube and other
channels, and offline through billboards and posters.
 ● Social media marketing: Through opening Facebook and Instagram
accounts and posting information on offers and discounts.
● Public Relations: Posting the feedbacks and reviews collected from
customers, to build a sense of loyalty and connection.
● Various other digital marketing strategies like search engine optimization,
pay-per-click, e-mail and affiliate marketing etc.

3.4 Product Development

We intend to adopt the Lean Startup Idea for our development with constant
validation from our customers regarding our service and ways to improve. We plan
to collect reviews also from partner restaurants in order to constantly keep
improving.
 4. Customer Analysis
Customers are the lifeline of our company. We intend to acquire customer
validation at every stage of our startup process so that we can keep up with
changing customer needs and demands.

4.1 Market Segment

As shown in the industry analysis, we intend to capture and retain around 10% of
the Indian F&B industry. Our targeted consumers are people from all walks of
society who prefer eating out in restaurants often.

Statistics show that 90% of guests research a restaurant online before dining - more
than any other business type. Stella provides the perfect platform for such
customers to research and decide on restaurants nearby their location.

4.2 Customer Requirements

The pain of consumers that we intend to alleviate are as follows:
● Stressed office goers who work till late hours might wish to relax and enjoy
a good refreshing dinner in the ambience of a restaurant. But they may not
be aware of some good restaurants near to their office. Stella is the perfect
solution for such people since it would allow them not only to order online
but also reserve seats at the restaurant. This would minimise the time spent
waiting for food at the restaurant since the food would already be under
preparation when they arrive. They would also receive a free welcome drink
to refreshen them up.
● Post pandemic, many customers might not prefer physically touching
restaurant menu cards since they are touched by hundreds of other
customers. Stella provides the hygienic alternative of placing orders online.
● Newly created standalone restaurants might not be very popular among
regular customers. Through subscribing on Stella, their public visibility and
thus turnover would rapidly increase.
4.3 Market Competition

4.4 Customer Acquisition and Retention

Customer retention is one of the major goals of our business. The following
research shows an unanimous agreement to the fact that customer retention is
easier than customer acquisition.

Nevertheless, customer retention is fundamental to the success of our business. We

plan to follow a combination of monetary and non-monetary strategies for
retaining customers.
Monetary benefits include discounts, offers and gift vouchers for regular customers
while some non-monetary benefits might include loyalty cards, happy hours and
birthday cards. 45% of consumers in the US say that offering mobile ordering or
loyalty programs would encourage them to use online ordering services more
often.
 5. Competitive Analysis
We need to constantly keep evolving and improving to satisfy customer demands
and ensure customer retention; else customers will go to other competitors.

5.1 Unique Value Propositions

Standalone restaurants in the Indian F&B industry form a major share of the
market (29%) but are currently facing stiff competition from big F&B chains (e.g.
McDonald’s, KFC etc.). One of the primary contributing factors for this is the
unpopularity of newly founded standalone restaurants fuelled by insufficient
implementation of technology.

We aim at bridging this technology gap between the standalone restaurants and the
consumers, for a better dominance in the market.

● Stella is an app based platform for exploring the best nearby standalone
casual dining restaurants & cafes.
● Contactless order placements for better customer hygiene.
● Collaborative digital marketing for effective youth penetration and better
dominance in market.
● Incentive based loyalty programs for higher customer retention.

5.2 Porter’s Five Forces Analysis

● Competition: Stella is expected to face competition especially from the
popular and well-established online food-delivery services like Zomato and
Swiggy. The percentage of people who prefer to order and enjoy meals at the
comfort of their homes has risen drastically due to the pandemic. Therefore
unless customers again revert back to conventional dining in restaurants,
Stella might have a hard time acquiring a growing number of customers.
● Potential of new entrants: There is quite a large potential for entry of
similar startups into the market because of very less initial investment
requirement.
● Power of suppliers: There is very limited supply costs, therefore very
 limited power of suppliers in the market.
● Power of buyers: As more and more restaurants subscribe to the app,
restaurant subscription charges might potentially rise. Similar is the case for
consumers. As we gradually acquire more and more consumers, we might
need to decrease the convenience fee in order to retain loyal customers.
● Threat of substitute products: Services like Zomato and Swiggy that allow
consumers to enjoy meals at the comfort of their homes might delude
consumers from using our service. So, improvements in online food-delivery
services is a threat to the sustainance of our business.

5.3 Business Model Canvas

 6. Marketing Plan
We believe that there is a great scope for acquiring new customers. This requires
efficient strategies for marketing and spreading awareness about the distinctiveness
of our service.

6.1 Marketing Strategy

● Search Engine Optimization: We intend to capture customers’ intended
searching keywords for restaurants in town and display results for Stella on
top in suggestions of query results such as in Google.
● Influencer Marketing: We may hire some popular figures to promote and
popularise our value proposition.
● Branding: We intend to make Stella the word-of-mouth through and create
brand equity through strong brand presence and advertisements.

6.2 Pricing Strategy

From our projected profit/loss statement, we intend to make a net profit of 4.26
lakhs in the first year of operation, that would rise to around 11.168 lakhs in the
second year. Within five years, we project to make a profit of 172.12 lakhs
annually.

6.3 Creating Awareness

We plan to create awareness by highlighting the importance of maintaining hygiene
even in the current scenario where the virus seems to be apparently “gone”. In
order to avoid a fourth wave in the country, we all need to keep sanitisation
standards at par with levels during the pandemic. Therefore we will spread
awareness among consumers by highlighting the benefits of contactless order
placing over conventional order placing, in our website.

6.4 Channels and Logistics

We shall maintain a dedicated website for our business. Also our service would be
available through means of an android app.
6.5 Payment Method
All payments shall be through online mode, either through netbanking, or
credit/debit card or UPI payments. We would have a dedicated and secure payment
channel to serve this purpose. We might also support cryptocurrency is it in vogue
now.

6.6 Promotional Activities

● We would give customers guaranteed cashbacks on each order placed
through our app.
● Regular customers would receive various offers, discounts and vouchers.
● We might also provide offers to long-term loyal restaurants by reducing the
subscription charges or other incentives.
 7. Operations Plan
We plan to follow the lean and agile startup process. If things turn out as projected,
we expect to make a net profit of around ₹ 65 lakhs in four years.

7.1 Key operational processes

We plan to begin our operations from Kolkata. Then we would expand to other
metro cities like Delhi, Mumbai and Chennai. If our business turns out to be a
success, we might consider expanding worldwide. Our plan is to acquire and retain
loyal customers through various incentive programmes and offering cashbacks and
rewards.

7.2 Milestones and metrics

To measure the success of Stella, we would use the following metrics.
● Number of customers placing orders through the app per day
● Number of restaurants subscribing
● Reviews on our website
● Social media follows and likes
We have set the following milestones in the next 5 years.
● Obtain 10% of the market share of standalone restaurants in the country.
● Capture a customer base of 10 lakhs with at least 70% retention.
● Capture 1 lakh restaurants in the country
● Obtain a net profit of 172.12 lakhs with a net profit margin of 17.27%.
● Cover all major cities in the country and make Stella a household name.

7.3 Product Development

We intend to adopt the lean startup idea for our business with customer validation
at each step of the business. We plan to gather feedbacks from customers and
restaurants and utilise those to keep improving our value proposition. Instead of
focusing on vanity metrics such as website footfall, we would be more focused on
the reviews which our users provide as those would be authentic validation of our
service.
 8. Management Team
Our management team is a perfect combination of people with exceptional and
complementary skills. We possess all kinds of qualified people that are required to
make our startup a great success!

8.1 Management Team members

Following are the details of the management team.
● CEO: Mr. Debajyoti Kar, a Computer Science and Engineering graduate
from IIT Kharagpur with huge work experience in software technologies
● Vice Presidents: Mr Sagnik Roy and Mr. Rounak Patra, both fellow
classmates of Debajyoti Kar at IIT Kharagpur.
● Marketing Head: Ms. Sohini Gupta, another fellow classmate of Debajyoti
Kar.

8.2 Management Team gaps

We believe that we have assimilated a strong management team with
complementary leadership qualities and ample technical knowledge, who can carry
forward Stella to achieve our set milestones.
8.3 Board Members
In addition to the management team members, we have two more board members:
● Mr Arpan Saha, an Industrial Management graduate from IIT Kharagpur
with exceptional leadership qualities.
● Mr Utsab Pal, a Mechanical Engineering graduate from IIT Kharagpur with
exceptional problem solving skills and knowledge of financials.

9. Financial Plan
We expect our company to make profits quite early in its operation. This is mainly
due to the comparatively small initial investment cost and operating expenses. We
are a servicing company, so very less money is spent in acquiring goods.

9.2 Revenue Model

We have a two-fold source of revenue - one from restaurants and the other from
customers. We plan to charge partner restaurants a subscription charge of ₹ 2500
per month for availing our facilities. Customers will be charged a convenience fee
of ₹ 9 per transaction through our app.
As shown above, we project to generate a total revenue of 199.275 lakhs in the first
year of operation which would rise to 258.84 lakhs in the second year.

9.1 Financial Highlights

Following is the expected growth in the operating profit margin in the first five
years.

Following is the expected growth in the EBITDA margin in the first five years.

Following is the expected growth in the net profit margin in the first five years.
The above three plots project a steady rise in all profit margins through the next
five years.

9.2 Funding Requirements

We plan to ask for a funding of ₹ 8 lakhs for a 10% holding in our company. We
value our company at ₹ 80 lakhs and thus an investor would invest ₹ 8 lakh for a
10% holding.

9.3 Use of Funds

The funds would be used to pay for the construction of our office buildings and the
initial salary of our employees. They would also be used for advertisements,
research and development, branding and marketing purposes.

9.4 Exit Strategies

The exit strategy for Stella, in case it fails or runs out of cash is Merger and
Acquisition. Companies such as Meta, Google would most likely keep an eye on
Stella as it gradually starts growing and acquiring an increasing number of
customers. Hence the best exit strategy would be to sell the company to one of
these giants.
10. Appendix
● https://timesofindia.indiatimes.com/city/hyderabad/iit-k-experts-predict-4th-
wave-around-june-22/articleshow/89859495.cms
● https://www.preoday.com/
● https://aissmschmct.in/wp-content/uploads/2017/08/61.pdf
● Mintel, 2016
● The 2016 Pizza Power Report
● NRAI Technopak India food services report 2021