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The Peoples Supermarket Oxford Business Plan

The Peoples Supermarket Oxford Business Plan


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The Peoples Supermarket Oxford Business Plan

CONTENTS
Executive summary............................................................................................................3 Background.........................................................................................................................4 Putting Oxford first.........................................................................................................5 Working with The Peoples Supermarket London........................................................6 Our mission, vision and values.......................................................................................6 Company summary.............................................................................................................7 Company ownership.......................................................................................................7 Start-up summary...........................................................................................................7 Products..........................................................................................................................9 External research...............................................................................................................10 The UK grocery market................................................................................................10 Researching if there is a demand in Oxford for TPS...................................................10 SWOT analysis.............................................................................................................13 Learning from the market research..............................................................................14 Strategy and implementation............................................................................................14 Competitive edge..........................................................................................................15 Sales strategy................................................................................................................15 Sales forecast................................................................................................................15 Management Summary.................................................................................................17 Personnel plan...............................................................................................................17 Financial Plan...................................................................................................................18 Break even analysis......................................................................................................18 Projected profit and loss...............................................................................................19 Pro forma profit and loss..............................................................................................21 Projected cash flow.......................................................................................................21 Appendices........................................................................................................................23

The Peoples Supermarket Oxford Business Plan

Executive summary
The Peoples Supermarket Oxford is about providing a real alternative to chain supermarkets that currently dominate food retail in Oxford. Its a supermarket run by the community, for the benefit of the community. Closely modelled on the original Peoples Supermarket in Lambs Conduit Street, London, we aim to create a vibrant and sustainable co-operative social enterprise that brings the best quality, ethically sourced and affordable food to Oxford. We will offer a one stop shop, with convenient opening hours for those working long hours. We aim to act as a connection to local farmers so consumers can discover more about the provenance of their food. We want to act as a community hub, providing training and life skills to our members and the Oxford at large. Our aim is to take control of our food supply out of the hands of the few, and give people real ownership and pride in their supermarket.

The Peoples Supermarket Oxford Ltd.


Registered in England and Wales 8021626 Registered office: Laurel Cottage, High Street, Long Wittenham, OX14 4QQ Planned shop: 124, Cowley Road, Oxford, OX4 1JE T: 01865 407721 E: chris@tpsoxford.org W: www.tpsoxford.org Members of: Co-operatives UK Supported by: Co-operative Futures Price & Myers Consulting Engineers

The Peoples Supermarket Oxford Business Plan

Background
At the end of 2011 the four largest supermarkets (Tesco, Asda, Sainsburys and Morrisons) controlled over three quarters of the global grocery market1. Never before in history has control over what we eat been decided by so few people. Although such large supermarkets have some benefits, they also have many drawbacks: Quality of the food Supermarket food is produced to maximise profit rather than nutrition or taste. o We eat mechanically recovered meat which is has been injected with proteins from old animals or parts of animals which are no use for food, such as skin, feathers, hide, bone and ligaments, to make it swell up and retain more cheap water (as much as 43% in some Trading Standards testing)2. o We drink fresh orange juice thats lost its flavour whilst being stored for up to a year so has to have the taste of orange juice added Chicken being mechanically recovered back before packing3. o We eat food thats been bulked out with indigestible, cheap wood or, as the food industry prefers, cellulose, because using flour with nutritional value is too expensive4. Environmental damage In the quest to bring us a global summer products are now shipped or more commonly, air freighted from all over the world, even when we can grow then in the UK. During British apple season, only 28% of the apples that Tesco sell are from the UK5. Supermarket supply chains are inherently reliant on massive amounts of oil-sourced energy and thus carbon emissions to function. Supermarket decisions whether its to reject any fruit and vegetables that arent cosmetically perfect; stock huge ranges of perishable products resulting in massive in-store wastage; or offering buy one, get one free on products to consumers contribute greatly to the 26,000,000,000 lbs of food thrown away in the UK every year6.
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Edible food recovered from Tescos bins

TNS Global, November 2011 You wont feel like chicken tonight, Evening Standard, 10th July 2002 3 Squeezed: What You Dont Know About Orange Juice, Alissa Hamilton, Yale Agarian Studies series 4 Weiner, Myra L.; Lois A. Kotkoskie (2000). Excipient Toxicity and Safety. New York; Dekker 5 Not on the label, Felicity Lawrence 6 UK Government WRAP figures

The Peoples Supermarket Oxford Business Plan Health Adult obesity rates in the UK have quadrupled in the past 25 years 7, with chronic heart disease and obesity costing us 12.5bn to treat annually with the poor disproportionally affected. This is at a time when a basket of healthy, non-processed food in the supermarket is estimated to cost 51% more than an equivalent basket of processed food. This is perhaps no surprise when two thirds of supermarket promotions are for foods high in fat and sugar, with Britains biggest retailer, Tesco, having just 14% of promotions focussed on fruit and vegetables8. Food provenance and security Currently, the UK produces less than 60% of the food it consumes, a figure which continues to decline as capital costs increase and agriculture profits decline. This decline has been accelerated by the massive buying power supermarkets have the proportion of the retail spend farmers receive has been cut over five-fold to just 9p for every pound that goes through the supermarket tills9. The average age of a farmer in the UK is now 59, with most UK farmers relying on volatile contracts with supermarkets, often receiving orders with less than 24 hours notice to prepare. Its perhaps unsurprising that at least 31% of farmers earn the equivalent of less than minimum wage10. Ensuring we are able to access affordable, good quality, locally sourced and sustainable food requires a new model of retail one where everyone, from farmer to consumer, gets a fair deal, and no-one makes a killing.

Putting Oxford first


Oxford is at an exciting point in changing its food network. From producers, like Cultivate Oxford and Sandy Lane Farm; retail, such as East Oxford Farmers & Community Market and West Oxford Farmers Market; right through to consumers, like Turl Street Kitchen and Oxfork the desire for good quality, locally sourced and ethical food has never been greater. Yet, speaking to customers of all these businesses and social enterprises, the result was overwhelming although they had increased spending with local businesses and producers, almost everyone still carried out a big shop at a supermarket, which accounted for the bulk of their spending. East Oxford Farmers Market The feedback we received from producers was that, although they loved meeting consumers, selling direct to the public or restaurants was very time consuming and in the case of very small restaurants and businesses economically unviable. It was
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BBC (February 1, 2006). BBC "UK's fattest cities are revealed" Healthy Competition: How Supermarkets Can Affect Your Chances of a Healthy Diet, National Consumer Council 9 Not on the label, Felicity Lawrence 10 2012 DEFRA government figures

The Peoples Supermarket Oxford Business Plan almost impossible for small producers to get shelf space in large retailers. There was no provision for a collective of small producers to deliver or have a distribution hub for their produce in the city. In the words of one jam producer a lot of our customers just want a dozen items, and we simply cant deliver those sorts of orders without making a loss.

Working with The Peoples Supermarket London


One of the key aims of starting TPS Oxford was that it was the supermarkets share of the market that we wanted to target not farmers markets or small producers. Luckily for us, a relatively newly formed social enterprise, The Peoples Supermarket in Lambs Conduit Street, London had the same idea. In keeping with the co-operative aim of helping similar businesses, they provide a free social franchise model, enabling people to open Peoples Supermarkets in other towns and cities across the UK. Oxford will be the second Peoples Supermarket to open, and so will be at the forefront of a real revolution in grocery retail.

Our mission, vision and values


We share the same aims of The Peoples Supermarket London. Our vision is to create a commercially sustainable, social enterprise that achieves its growth and profitability targets whilst operating within values based on community development and cohesion. Our intent is to offer an alternative food buying network, by connecting an urban community with the local farming community. We want to work with other Peoples Supermarkets and similar co-operative ventures to develop, promote and achieve these aims.
The Peoples Supermarket London Vision and Values We aim to create a sustainable food co-operative that responds to the needs of the local community and provides healthy, local food at reasonable prices. To this end, we believe in a series of key values, which guide our philosophy and management approach. We seek: -

o To create a supermarket that meets the needs of its members and the local community by offering high quality, healthy food at reasonable prices. o To buy from trusted suppliers with whom we develop mutually sustaining relationships. o To buy British produce where possible, and produce local to Oxford. o Provide choice and information to our members to help them make healthy decisions. o To create a community supermarket that highlights the possibilities of consumer power and challenges the status quo. o To minimise wastage, by creating prepared dishes from food coming up to its sell-by date, and by composting all other waste material.

The Peoples Supermarket Oxford Business Plan o To provide inspirational training and life skill opportunities to the local community. o To create a working environment that values every ones contribution, is welcoming, safe and non-judgmental. o To be a training and development resource for our community. o To buy sustainable energy and other inputs, and to promote alternative, forwardthinking ideas and solutions.

Company summary
Company ownership
TPS Oxford is a limited company registered in England and Wales number 8021626. This limited company is registered as a co-operative with Co-operatives UK, the trade body for co-operative business in the UK. As part of our registration, we have agreed articles which mean that any profits made by the business can only either be reinvested into the business itself, or into projects that help our community. A key part of any co-operative is the principle that every member has one vote, and thus an equal voice in how the business is run. For TPS Oxford, anyone can become a member provided they commit to volunteering four hours of their time every four weeks to help the business. Members who complete their four hours of voluntary work are given a 20% discount on shopping in-store, as well as other discounts negotiated with local businesses.

Start-up summary
The primary costs of starting the business will be purchasing stock for the shop, some equipment and materials for the shop (although we aim to minimise this by sourcing as much equipment as possible via donations or the second hand market), and legal and rent deposit costs. We expect to spend 50,000 on start-up costs, which will primarily be spent on assets for the business. It is anticipated that approximately 10,000 of the required start up capital will come from small loans from the community. The rest is anticipated to be sourced via commercial loans.

The Peoples Supermarket Oxford Business Plan Start-up funding Start-up expenses to fund Start-up assets to fund Total funding required Assets Non-cash assets from start-up Cash requirements from start-up Additional cash raised Total assets Liabilities Current borrowing Long-term liabilities Accounts payable Other current liabilities Total liabilities Capital Planned investment Small investors Other Additional investment required Total planned investment Loss at start-up (start-up expenses) Total capital Total capital and liabilities Total funding Start-up requirements Legal Insurance Rent Stock Shopfitting costs Reserve for staffing costs Advertising Other Total start up expenses Start-up assets Cash required Other current assets Long-term assets (rent deposit) Total assets Total requirements

33,958 16,042 50,000 7,500 8,000 0 15,500 0 40,000 0 0 40,000 10,000 0 0 10,000 (33,958) (23,958) 16,042 50,000 870 588 2,500 20,000 5,000 5,000 0 0 33,958 8,542 0 7,500 16,042 50,000

The Peoples Supermarket Oxford Business Plan

Products
The Peoples Supermarket Oxford aims to provide a comparable product range to a convenience-sized supermarket (e.g. a Tesco Express). This means stocking everything from fresh fruit and vegetables to canned food and cleaning products. For each product line we stock we aim to provide three alternatives: -

Value quality products at a Branded a best-selling comparable or cheaper price brand for the product type. than a supermarket ownbrand item. e.g. Heinz Ketchup e.g. Happy Shopper Ketchup PG Tips tea Euroshopper tea Ariel washing powder Daz washing powder

Ethical produced locally where possible, or produced to high ethical standards. e.g. BVP Oxford Sauce Just Change fair-trade tea Ecover washing powder

This range is, of course flexible where possible we will aim to get a product that is both ethical AND a comparable price to the supermarket own brand. It is expected, for example, that almost all our fresh fruit and vegetables will fall into this category. By providing a sufficient range but still less than a standard supermarket we can provide the convenience of a normal supermarket whilst minimising food wastage. Our buying preferences will be: 1. 2. 3. 4. 5. 6. Oxfordshire sourced British sourced small producer British sourced large producer European sourced non-air freighted Worldwide sourced non-air freighted Air freighted items

The Peoples Supermarket Oxford Business Plan

External research
The UK grocery market
In 2011 the UK grocery market was worth 143billion, and is expected to have a compound annual growth rate of 3.2% per year, reaching 162bn by 2015 becoming the eighth largest grocery market in the world11. The convenience supermarket share of this is forecast to increase from 29.1bn in 2009 to 39.7bn by 2014 providing far greater growth than larger supermarket and hypermarket-sized stores. In the UK, we expect the online sector to perform well, with Internet sales boosted by the increasing use of smart phones and tablet computers, Institute of Grocery Distribution Chief Executive Officer Joanne Denney-Finch said. Convenience stores, with their increased focus on fresh food and tailoring of outlets to local demand, will also be a key performer. The convenience supermarket share of the market held by chain supermarkets like Tesco Express and Sainsburys Local stores is growing, but independent and symbol groups such as Premier and Spar still hold 79.7% of the market12. Growth is expected to be greater than in Italy, France and Germany although the current financial situation means there is some uncertainty over the exact figures, depending on migration during the Eurozone crisis. However, most grocery spending is not discretionary, and so demand tends to hold up well even in uncertain economic times. Supermarket price competition is fierce, especially around Known Value Items (KVI) (items that consumers compare prices on, e.g. the cost of a pint of milk). Its estimated that in a normal supermarket 200 lines are sold as loss leaders, at below the cost of production. A further 600 lines are sold at around 5% margin or effective break even for the retailer. Outside of these KVI lines margins can be high estimated at an average of 150%, as consumers dont readily compare prices on non-KVI lines.

Researching if there is a demand in Oxford for TPS


Oxfood survey At the end of 2011 Oxford City Council carried out a survey called Oxfood, investigating local food provision in Oxford.

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Institute of Grocery Distribution figures 2011 Institute of Grocery Distribution figures 2009

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The Peoples Supermarket Oxford Business Plan

Visual representation of the common words associated with local food in the Oxfood survey

Some of the key findings representing demand for a Peoples Supermarket in Oxford were: o 96% of respondents said they would buy more local food if they could. o 41% of respondents said that improved knowledge of where their food came from would encourage them to buy more local food. o 38% of respondents went as far as to say that they would be prepared to invest money in community local food projects. o 22% of people said that the major factor when buying food was price. o 86% of people agreed that local food production is an important part of our local economy. o 82% of people thought that local was at least or more important than other factors such as organic and fairtrade. Despite this enthusiasm for local food, the survey highlighted that at the moment access to local food is lacking. Two responses to the survey included: "[Local food] is also seen as being very middle class as a Blackbird Leys resident I have to go really out of my way to get local food and it should be normalised in each area." "I think it's a shame there isn't more of it available in and around Oxford, particularly in the City Centre." Further research This enthusiasm, however, could have been due to the fact that those most enthusiastic about local food are also more likely to be completing a survey about local food. To check this we carried out informal interviews with three groups of people. Farmers market organisers Farmers markets are a really important link between local food producers especially niche producers and the community at large. The feedback we got from farmers market organisers was split. On the one hand, many were worried that a TPS would end up competing with a farmers market.

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The Peoples Supermarket Oxford Business Plan However, there was also recognition that farmers markets barely scratch the surface of demand for locally produced food. There was also recognition that, due to the perishable nature of a lot of the food sold, there was an inevitable need for most of their customers to top up on items such as bread, fruit, vegetables and milk during the week. There is also little to no provision at farmers markets for staples, such as cornflakes or tinned tomatoes. Overall, the feedback was positive but clearly we need to be careful to support and promote, rather than directly compete, with those already doing excellent work running farmers markets. Farmers market users Speaking to those who are using farmers markets at the moment, there was a lot of enthusiasm for the idea of a Peoples Supermarket. Most customers at farmers markets said that the majority of their food spending was at the large supermarkets, although many were trying to reduce their supermarket spending and a small number had deliberately cut supermarket spending from their shop altogether. Many pointed out that there is alternative grocery provision on the Cowley Road, mainly provided by grocery stores with a strong emphasis on Asian, Oriental and other ethnic products. However, there was definite enthusiasm for a new model for running a supermarket, away from the current choices dominated by big chains. We also spoke to some producers at the farmers market. The overwhelming impression was that, although they supported the idea of selling direct to the public at farmers markets, it was very time consuming for them. Many also mentioned the difficulty in selling to independent local businesses and restaurants as it was uneconomical to deliver small orders. Current supermarket users To ensure we had a complete picture we also spoke to customers who had completed their shopping at both the existing Tesco Metro and Sainsburys Local supermarket nearby the proposed TPS site. Both supermarkets were very busy when we conducted our research (early Saturday evening). We asked how much and why they used chain supermarkets, and why they didnt use the alternative food provision on the Cowley Road. The overwhelming majority of people chose the supermarkets because it was convenient to be able to do all their shopping in one go, and supermarkets offered a superior range of goods to other grocery provision on the Cowley Road. Many people also thought that the supermarkets offered good value for money on most items, although there were also contrary opinions that the supermarkets were expensive on some items especially fruit and vegetables. The primary complaint was that the quality of the food was often poor, and that especially with fruit and vegetables a lot of the produce didnt taste fresh or exciting. Some people also commented that they disliked the power the supermarkets had. A few people commented that the supermarket experience was very homogenised, with little locally sourced food available.

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The Peoples Supermarket Oxford Business Plan

Finally, many people disliked the lack of human contact especially the self service tills, which in Tesco outnumber the manned checkouts by some number. There was a mix between praise that a weekly shop took a short time, along with complaints about the stores being too busy and the queues too long.

SWOT analysis
Strengths o Strong branding, well known due to Channel 4 documentary. o Direct relationship with suppliers allows competitive purchasing. o Store format is expected to have strong growth in next few years. o Strong customer loyalty many customers will own shares in store. o Low wage costs due to most staff volunteering their time. o Excellent, low cost PR due to innovative, appealing vision. o Strong retail position on high footfall Cowley Road. o USP of fresh local food cannot be matched by large supermarkets. o Excellent corporate social responsibility & community good will. Weaknesses Impossible to compete with supermarket loss leaders. TPS model mean potentially the most loyal customers (members) are lowmargin sales. Large number of small suppliers means more work, and less volumerelated discounts. Volunteer workforce less productive than paid staff. Possible higher level of insubordination, theft and other employee-related trouble. With large student population, possible problems covering shifts in holidays & large volunteer turnover.

o o o o o o

Opportunities Threats o Expand into online delivery (in-house o Supermarket chains already form an experience of web development & oligopoly and have used predatory running vehicles on vegetable oil). tactics in the past (e.g. Tesco vs. o Interest from local restaurants for Proudfoot supermarkets). o Local suppliers may not be able to wholesale delivery. o Act as a wholesale hub to connect meet demand if store grows quickly we would lose our USP. local producers and retailers. o Reliance on social franchising for our o Possibility to use strong branding for branding no contract so could be other businesses (The Peoples), withdrawn in future. subject to agreement with London.

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The Peoples Supermarket Oxford Business Plan

Learning from the market research


To be a successful supermarket TPS Oxford needs to: o Support local independent farmers markets and retailers by providing information and look to help small producers distribute their goods by acting as a community hub. o Capitalise on enthusiasm for independent food provision on the Cowley Road, where many consumers are actively trying to switch spending away from chain supermarkets. o Offer an acceptable range at an affordable price, so that people can easily complete their shop, which will allow us to compete with Tesco and Sainsburys. We need to have convenient opening hours for those working long days. o Offer fresh, local produce especially fruit and vegetables which can be a lucrative unique selling point for us, and which the supermarkets with centralised distribution hubs will be unable to compete with. o Balance the desire and need for people to be at the heart of food shopping, rather than self-scan tills, with the fact that the service needs to be quick as well as friendly. Growth in the UK market is focused on small stores like TPS, and retailers offering high-quality, affordable food. TPS should be ideally placed to capitalise on the faster growth expected in grocery retail compared to other sectors over the coming years .

Strategy and implementation


To date TPS Oxford has already enjoyed significant, free media coverage in local newspapers and radio and TV broadcasts, as well as utilising email and social media to reach Oxfords tech-savvy consumers. As one of the most high-profile social enterprises in the UK, we expect this media coverage to extend to national newspapers at the launch of the supermarket. Because of the unique structure of TPS, with members owning a share in the company, word of mouth has spread virally at an exceptional rate. Open rates for our emails are over double the normal figures for email marketing. Because of this, we do not anticipate having to spend money on advertising our launch. However, we do intend to promote media interest by: o Having a local celebrity possibly either the Lord Mayor of Oxford or a local band attend the launch. o Extending our internet presence using free sites such as Daily Info to publicise the launch.

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The Peoples Supermarket Oxford Business Plan

Competitive edge
o Community ownership the main edge we have over chain supermarkets is that, as a democratically owned co-operative, the community has a stake in the supermarket, and benefits from our profits, which will be redistributed back into community projects. At a time when concern over the power of the supermarkets is growing, we believe our unique business model puts us in a strong position to compete with the economies of scale that chain supermarkets enjoy. o Price by dealing directly with local producers where possible, and by keeping distribution costs low by sourcing products close to the store where possible, we aim to have comparable prices on the core Known Value Item (KVI) ranges with the supermarkets, and even beat them on price on non-KVI items. o Location our high-visibility position on the Cowley Road provides an excellent balance between footfall and rental cost. Excellent transport links and close proximity to the city centre would make fulfilling online orders easier in future. As one of the most densely populated parts of Oxford, we have approximately 40,000 potential customers within a 15 minute walk of the supermarket. o Strong branding TPS London is a high profile social enterprise which has had significant media coverage. By using the TPS branding under a social franchise agreement we benefit from their expertise and well-known name at no financial cost to ourselves.

Sales strategy
Key to The Peoples Supermarket is creating a community hub a desirable, aspirational supermarket which builds stronger links between people. As well as providing an attractive store, we believe that by using primarily a workforce that owns shares in the supermarket, we will be able to provide unparalleled customer service. We plan to hold events, such as cookery demonstrations and meet the producer events, to build excitement around the supermarket, as well as educating members and the wider community. We also want to provide community facilities such as a noticeboard and resource sharing to help and assist local artists and independent businesses to thrive. It is our firm belief that by having the best interests of the community at the heart of everything we do, we can foster goodwill towards the supermarket, and help counter the considerable power and competition wielded by the chain supermarkets.

Sales forecast
The following is The Peoples Supermarket Oxfords expected sales for the first three years. We have primarily based this on the experience of TPS London, as well as similar sized branded convenience stores.

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The Peoples Supermarket Oxford Business Plan

Sales forecast year 1


90000 80000 70000 60000 Sales () 50000 40000 30000 20000 10000 0
Se t pt em be r O ct ob er No ve m be r De ce m be r Ja nu ar y Fe bu ar y Ju ne
Year 3

ar ch

Ap ril

Au gu s

Month

Sales forecast
1400 1200 1000 Sales (,000) 800 600 400 200 0 Year 1 Year 2

Sales forecast Sales Others Total sales Direct cost of sales Sales Year 1 720,000 0 720,000 525,600 16 Year 2 1,020,000 0 1,020,000 749,700 Year 3 1,200,000 0 1,200,000 882,000

Ju ly

ay

The Peoples Supermarket Oxford Business Plan

Management Summary
Founder member Chris Waites is responsible for setting up the Community Grocer, a social enterprise that runs mobile shops delivering groceries to rural communities and housebound people in Oxfordshire. In addition to paid shop management to be appointed, we have a volunteer steering committee comprised of: Pete Stimpson Ex Head of Finance at Plunkett Foundation, now Financial Controller of Earthwatch Institute. Colm Massey Head of Oxford Co-ops Network, has set up two digital co-operatives. Marie Cacace Senior Internal Communications Adviser at Oxfam. Daniel ODriscoll Head of Volunteering at Oxfam. Katherine Darling Works within the co-operative and community enterprise world with particular expertise in PR and communications. Jasminder Love Organisational Consultant, experience dealing with national media. Chris Mason Over twenty years experience on F&B and hospitality. Local business manager.

Personnel plan
Although most staffing will be covered by volunteers, experience at TPS London has taught us that there is a strong advantage to having a core, paid management team who are responsible for the cash, stock and assets of the supermarket as well as paid, expert kitchen staff to run the kitchen. As such, we plan to hire the following staff: o One full time General Manager, responsible for daily operations and product ordering. o Two full time Assistant Managers, or equivalent part time positions. These will be responsible for staffing and HR; and stocking and bookkeeping respectively. o One full time chef to lead the kitchen. o One part time sous chef (24 hours per week) to cover the chef on days off, and to assist on busy days. Year 1 17 Year 2 Year 3

The Peoples Supermarket Oxford Business Plan General Manager Assistant Managers Chef Sous chef Total staff Total payroll 35,000 34,000 22,000 10,200 5 101,200 35,875 34,850 22,550 10,455 5 103,730 36,770 35,720 23,115 10,715 5 106,320

Financial Plan
Break even analysis
The monthly break even point is 46,500
B re a k e v e n a n a ly s is
120000 100000 80000 Revenue () R evenue 60000 40000 20000 0
94 5 3,6 45 6,3 45 9,0 45 11 ,74 5 (7 ,15 5) (4 ,45 5) (1 2,5 55 ) (9 ,85 5) (1 ,75 5) 14 ,44 5

F ix ed c os ts Total c os ts

P rofit ()

Assumptions: Average percentage variable cost: 73% Estimated monthly fixed cost: 12,555

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The Peoples Supermarket Oxford Business Plan

Projected profit and loss


The following tables show the projected profits and losses for the first three years.
Net Profit Monthly Year 1
10,000 8,000 6,000 4,000 2,000 0 (2,000)
Ju ne Au gu st Se pt em be r O ct ob er No ve m be D r ec em be r Ja nu ar y Fe br ua ry M ar ch Ap ril M Ju ly ay

Net profit

140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Year 1 Year 2 Year 3

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The Peoples Supermarket Oxford Business Plan

Gross Profit Monthly Year 1


25,000

20,000

15,000

10,000

5,000

0
ne Ju be r O ct ob er No ve m be De r ce m be r Ja nu ar y Fe br ua ry M ar ch Ap ril Au gu s em M Ju ly ay t Se pt

Gross profit

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Year 1 Year 2 Year 3

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The Peoples Supermarket Oxford Business Plan

Pro forma profit and loss


Sales Direct cost of sales Other production expenses Gross margin Gross margin % Total payroll Sales, marketing and other expenses Depreciation Leased equipment Utilities Insurance Rent Rates Employers NI contribution Profit before interest and taxes EBITDA Interest expense Taxes incurred Net profit Net profit % Year 1 720,000 525,600 0 194,400 27.00% 101,200 5,000 400 0 3,600 587 30,000 1,102 8,779 46,732 47,132 2,750 8,796 35,186 4.89% Year 2 1,020,000 749,700 0 270,300 26.50% 103,730 6,000 400 0 3,780 601 30,000 1,129 8,999 121,061 121,461 2,145 23,783 95,533 9.37% Year 3 1,200,000 882,000 0 318,000 26.5% 106,320 7,000 400 0 3,970 616 30,000 1,158 9,223 159,313 159,713 1,275 31,607 126,431 10.54%

Projected cash flow


The following table and chart highlight the projected cash flow for the first three years.
60,000 50,000 40,000 30,000 20,000 10,000 0 (10,000)
A ug ep us t te m be r O ct ob N o v er em be D ec r em be r Ja nu ar Fe y br ua ry M ar ch A pr il M ay Ju ne Ju ly

Net cash flow Cash balance

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The Peoples Supermarket Oxford Business Plan Year 1 Year 2 Year 3 1,200,000 0 1,200,000 0 0 0 0 0 0 6,000 1,206,000 Year 3 882,000 158,687 1,040,687 0 0 0 16,000 0 0 1,056,687 221,964 224,921

Cash Received Cash sales 720,000 1,020,000 Cash from receivables 0 0 Subtotal cash from operations 720,000 1,020,000 Additional Cash Received VAT received 0 0 New current borrowing 0 0 New other liabilities (interest free) 0 0 New long-term liabilities 0 0 Sales of other current assets 0 0 Sales of long-term assets 0 0 New investment received (membership 6,000 6,000 fees) Subtotal cash received 726,000 1,026,000 Expenditures Year 1 Year 2 Cash spending 525,600 749,700 Bill payments 150,668 154,639 Subtotal spend on operations 676,268 904,339 VAT paid out 0 0 Principal repayment - current borrowing 0 0 Other liabilities principal repayments 0 0 Long term liabilities principal repayment 17,000 17,000 Purchase other current assets 0 0 Dividends 0 0 Subtotal cash spend 693,268 921,339 Net cash flow (14,814) 80,719 Cash balance 35,957 114,490

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The Peoples Supermarket Oxford Business Plan

Appendices
Sales forecast year 1 Aug Sales 40,000 Others 0 Total sales 40,000 Sales Others Total sales Direct cost of sales Others Subtotal direct cost of sales Direct cost of sales Others Subtotal direct cost of sales Personnel Plan Gen Mgr Asst Mgrs Chef Sous chef Total staff Total payroll Gen Mgr Asst Mgrs Chef Sous chef Total staff Total payroll Aug 2,973 2,888 1,868 1,444 5 9,173 Feb 2,685 2,608 1,687 1,444 5 8,424 Sept 2,877 2,795 1,808 1,398 5 8,878 Mar 2,973 2,888 1,868 1,444 5 9,173 Oct 2,973 2,888 1,868 1,444 5 9,173 Apr 2,877 2,795 1,808 1,398 5 8,878 Nov 2,877 2,795 1,808 1,398 5 8,878 May 2,973 2,888 1,868 1,444 5 9,173 Dec 2,973 2,888 1,868 1,444 5 9,173 Jun 2,877 2,795 1,808 1,398 5 8,878 Jan 2,973 2,888 1,868 1,444 5 9,173 Jul 2,973 2,888 1,868 1,444 5 9,173 Feb 55,000 0 55,000 Aug 29,200 0 29,200 Feb 40,150 0 40,150 Sept 45,000 0 45,000 Mar 60,000 0 60,000 Sept 32,850 0 32,850 Mar 43,800 0 43,800 Oct 50,000 0 50,000 Apr 65,000 0 65,000 Oct 36,500 0 36,500 Apr 47,450 0 47,450 Nov 55,000 0 55,000 May 70,000 0 70,000 Nov 40,150 0 40,150 May 51,100 0 51,100 Dec 77,500 0 80,000 Jun 75,000 0 75,000 Dec 56,575 0 56,575 Jun 54,750 0 54,750 Jan 50,000 0 50,000 Jul 77,500 0 77,500 Jan 36,500 0 36,500 Jul 56,575 0 56,575

Pay rises are estimated to be 2.5% annually, added at the end of each year.

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The Peoples Supermarket Oxford Business Plan General assumptions Current interest rate Long term interest rate Corporation tax rate Year 1 5.5% 5.5% 20% Year 2 6.5% 6.5% 20% Year 3 7.5% 7.5% 20%

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