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Executive summary
We intend to form a new company called the Saudi East Burger Company. The company will be the largest burger producer in the Eastern Province of Saudi Arabia. With just an initial investment of $15,000, we intend to build the company until it realizes a profit of at least $20,500 within the first year of operations. We intend to build a big customer base that will be loyal to our brand. Our burgers will be distributed and sold in van burger trucks in the wider market segment of the Eastern Province. We intend to source our ingredients from the local farmers based in the region. Our burgers will be manufactured with natural ingredients and the best bread. We hope to establish a dependable big following by providing tasty and fresh burgers produced from local ingredients available.
Current market situation
Saudi East Burger Company is a newly formed business that deals with the production of the finest burgers manufactured with natural ingredients and the best bread. I hope to establish a dependable big following by providing tasty and fresh burgers produced from local ingredients available. The ingredients will be supplied by the local providers. The ingredients will be prepared on-site to give the customers a fresh natural taste. The reason for using local suppliers is to personalize them, thereby making our burger experience more exciting and unique. We also plan to carry out a contest for customers to showcase their talents by making their burgers in our outlet so that we can evaluate them and check on what we can add.
By the end of the first year of business, our profit target is set to be $20,500. The projections for the expected profits of the second and the third year are $71,100 and $159,700 respectively. All of this will be realized from a starting investment of $15,000. Our current investment is $5,000, against the total required investment of $15,000; this means that there is a deficit of $10,000 that we still need.
Market description
Our business idea and business plan have been validated through market research that we carried out. The burger market in the Eastern Province of Saudi Arabia is growing rapidly and it is highly valued. Very many people will have a burger for lunch. Our location is very strategic to capture the attention of the surrounding residents and businesses. We offer the best burger prices than our competitors, which enables us to earn good revenue. The basis of the market research is to make us stand out among the other burger outlets. Our market research focused on the competitors, whereby we looked at their pricing, products, customer service, and the general business. Also, we developed a short questionnaire to interview the surrounding residents and the businesses to give us a clear picture of their expectations.
Product or service review
The Saudi burger market is among the fastest-growing in the world. The market is valued at more than 1.2 billion pounds (Mortimer, 2011, p. 20). At least half of the Saudi population consumes a burger every year, considering that more than one and a half billion burgers were sold in the previous year (2015) with an optimum price of $1.66 (Cushing, 2005, p. 62). Of the many burgers that are bought, 55% is takeaway and the customers consume them over lunch. 7% is considered to be snacks (Gallaugher & Ransbotham, 2010, p. 200). Men are the leading consumers of the burger as they account for 58% of the burgers sold. The optimum price of a burger is $1.67. The age bracket of the majority of the burger consumers is between 25 years to 44 years and they account for 51 percent of the burgers sold.
The price of our burgers is set in line with the local forces of demand and supply because the ingredients are available from the surrounding suppliers within the town. In addition to the burgers, we will provide drinks. The breakfast burgers are intended to offer a wonderful dining experience to the intended customers. The price will be set at just $2.00 which is cheaper than what the competitors offer. We have local suppliers who will provide good quality bread to us.
The fillings used for the lunch burgers are chicken, beef, bacon, cheese, and ham. Some of our specials for lunch burgers are smoked ham with garlic mayonnaise and smoked bacon with garlic mayonnaise. The price of our lunch burgers is valued at $2.50 each.
Competitive review
There exist three other burger outlets along the street on which we want to establish our outlet. They have been in the business for quite some time with Tramezzino being the oldest. ‘The burger deli’ was established before ‘Just burgers’. The three outlets are considered to be our healthiest competitors. They have an advantage over us because we are just a new outlet and they have all the customers who we wish to have. Also, they offer good burgers, which we intend to improve on. The competitors also have weaknesses, including poor choice of bread portions, ‘The burger deli’ is not always opened in the morning, and also, their primary focus is not just the production of burgers. Our main focus is to take advantage of their weaknesses and convert them to our strengths and also improve on their key strengths, thus, making us unique in the process.
Channels and logistics
We did a market survey to understand the surrounding local farmers who will be our potential suppliers. We were interested to know their terms in terms of prices, supply standards and their terms of credit. We met with each potential supplier one at a time. We intended to understand more about their offers and conditions for payment, and of course, we would choose what works best for us for the interest of our business. We aimed to identify our sources for bread, meat, burger fillings, and vegetable. Also, we interviewed some of the customers of the suppliers to confirm and double-check the quality of the suppliers’ produce. All our suppliers will be from the surrounding residents and they have fresh produce. They produce high-quality bacon and corn-fed chicken.
Our fresh fruits and vegetables will be sourced from Daves Veg, which produces high-quality vegetables. The supplier is also based on the locality. All our bread will be sourced from Bread Fresco, who has agreed for a payment period of 1 month. They boast of being the number one supplier of bread in the town, which everyone enjoys.
Financial overview
Our target is to expand the business by at least 5% every month. To achieve this, we have strongly emphasized on robust sales for the first year and we intend to improve on that in the second and third years respectively. Our sales projections for the first year are $85,348. For us to achieve this, we have a plan to aggressively increase our sales month by month. This target is in line with the tendency of the customers within the area to buy burgers. By the end of the third year, we expect that the sales will have tripled. The business intends to draw down a minimum amount for it to have enough working capital to sustain it during its first year of operation. The figures below indicate the projected cash flows and profit and loss.
Mission statement
We intend to give our customers good quality and a good price. This will be attained by providing first-class burgers and competitive pricing of the burgers. Our ingredients will be sourced locally; this implies that our customers will get the finest locally produced burgers. We will take advantage of the fact that the consumers from the area normally want to support their local enterprises. Eventually, we want to be branded as the best burger outlet in the Eastern Province, in addition to being recognized for supporting local suppliers and farmers.
SWOT Analysis
Strengths
We expect our business to be the best in the region and rise above the competitors. We are determined to be exclusive in the market due to the following reasons:
- We intend to provide high-quality burgers at affordable prices.
- Our ingredients will be locally sourced, hence, reducing the high costs of production.
- We intend to utilize a part of our profits for social responsibility in the society to promote good livelihoods.
- Our special recipe for the burgers will be very hard to be replicated by our competitors, making our burgers have a distinct taste and identity.
- We have adequate capital to start and operate the business until it breaks even.
Weaknesses
In as much as we would like to be an exclusive burger producer and distributor, some shortfalls still hamper our business plans and operations. Moving on, we will position the business in a way that we can mitigate these weaknesses. The weaknesses include:
- The business requires hiring many salespeople to help with the distribution of the burgers.
- The business also needs to acquire more van burger trucks to traverse the wide market segment.
- The business needs to obtain a patent right for our burger brands to protect the identity and avert duplication of our brand by the local competitors.
Opportunities
The main reason why we are setting up the burger outlet is to be exclusive in regards to the quality of our burgers, for instance:
- Our customers will be highly entertained by our high profile burgers.
- Our location is in a highly-populated business environment; hence, we will have many customers.
- We will offer a packed breakfast or packed lunch to our customers.
- There are new office blocks under construction within the area, which translates to additional customers.
Threats
Even though we expect our business to be successful, there are threats that it is likely to face, for instance:
- Stiff competition from other burger outlets which are located within the same area.
- We will be constantly on our toes to maintain our unique identity to stay ahead of our competitors. Our focus will entirely be on quality as we make use of the locally available ingredients.
- Maintaining a competitive price for a new business is tricky; pricing still will remain to be our main focus.
Business objectives
Short term objectives
Our short term objective is to expand the business by at least 5% every month to realize a total sales target of $85,348. This means that we intend to sell twenty breakfast burgers and ninety lunchtime-burgers daily for 365 days of the year.
Mid-term goals
Our main aim is to continue growing the business by bringing on board additional customers month by month; this translates to the fact that the business will grow exponentially. Also, we intend to excel in our services until we become recognized as the best burger outlet of the year. Consequently, we plan to expand by bringing in more van burger trucks in the region.
Long-range goals
Expansion is our key strategy. We need to expand within and without and continue spreading to other parts of the province. The expansion does not just end there; we intend to expand beyond our borders to reach the other new markets.
Exit strategy
Best case
Just as it has been stated in our business objectives, our main motive is to make the burger outlet successful and consequently expand to a level where we open up other additional outlets within the region and beyond the region. Therefore, if everything works out as planned, we will appoint a professional manager and establish a professional team to run the business.
Worst case
If we fall short of our first year’s targets, it will mean that our business model is not viable; therefore, we will have to track and monitor the business activity and operations daily. We intend to do a monthly examination of our sales and revenue so that we know our exact position. Also, the progress of the business will be checked at half a year. If we still fall short of the targets we should re-assess our marketing and publicity. When our efforts do not pay off, then we will adopt the next option, which is to liquidate the business and pay off the debts which will have accrued by then. These debts will be negligible.
Marketing strategy
Positioning
The price of our burgers is set in line with the local forces of demand and supply because the ingredients are available from the surrounding suppliers within the town. In addition to the burgers, we will provide drinks. The breakfast burgers are intended to offer a wonderful dining experience to the intended customers. The price will be set at just $2.00 which is cheaper than what the competitors offer. We have local suppliers who will provide good quality bread to us. The fillings used for the lunch burgers are chicken, beef, bacon, cheese, and ham. Some of our specials for lunch burgers are smoked ham with garlic mayonnaise, smoked bacon with garlic mayonnaise. The price of our lunch burgers is valued at $2.50 each.
The company must have a reasonable picture of what the client anticipates from them. The consumers’ decision on the nature of a brand is altogether different from their decisions concerning buying the merchandise or items. This is on account of the brands are considerably more not quite the same as products (Abu & Roslin, 2008, p. 62). Products are unmistakable and can be touched while brands are not substantial; products are perishable, the brand is not, and so. In this way, these difficulties are faced by the clients when looking at brands and items.
Brands cannot be felt, or touched, or tasted, or seen, unlike products or items. Clients are known to settle on decisions, taking into account both unmistakable and impalpable components. Measurements like the quality of the burger or service and the cost of the burger in connection with the service are a few cases of elusive variables that impact the decision-making process of the consumers. The company ordinarily selects to focus on substantial components that impact the clients’ decision-making. The substantial measurements that they embrace are the quality of service, enhanced products, and so forth.
A brand differs from one supplier to another, furthermore from a client to another. Because of this variability, consumers have a tough undertaking to settle on a decision to pick one service provider over another. We, likewise, have a tough errand of keeping up an unfaltering level of operation regarding the quality of the burger or the service. We will gauge the efficiency of the brand only after we have sold the service. On the other hand, a customer will gauge the efficiency of the brand only after he/she has bought it. Our level of professionalism will give the customers an insight in regards to the brand quality. In the same context, the feedback or responses received from customers will give us a perception of the customers’ satisfaction regarding the company’s brand.
Distribution strategy
The promotional campaign of the company revolves around the marketing mix. The marketing mix is a combination of various aspects of marketing that are geared to drive the company into achieving its objective of popularizing the burger to the consumers. The marketing mix, therefore, lays a benchmark for the implementation of the company’s marketing strategies.
Product strategy
The product is the good that is produced by the company, which is the burger, in this case. The burger will be sold in van burger trucks a marketing strategy. The brand name is also unique in its way as it differentiates the burger from the competitors’ burgers. The quality of the burger will be in line with the standard requirements for burger production.
Place
Place refers to the locality where the burgers can be purchased. It describes how the product will follow the distribution channel before reaching the final customer. The company will initiate direct marketing and personal selling as a form of distribution technique for the burger. The distributors and wholesalers will buy the burger direct from the company before selling to the retailers, who in turn sell the beer to the final customers.
Pricing strategy
Price refers to the amount of money that the consumers will be willing to pay for the burger in the market. Before deciding on the price to impose on the product, the company will compare the prices of the competitors to make sure that their prices are on par. After the company breaks even, it will be upon it to review the price of the burger with the changing environment.
Market research
The profile of the local area where the business will be set up is as per the government records. The area has a total population of 259,536 people, of which 125,473 are males and the rest (134,063) are females. 48,697 individuals are aged between 0 to 15 years. 191,158 individuals are aged between 16 to 75 years (Kumar, 2005, p. 12). There are 111,243 households with residents with an average size of 2.33 family members. There are many big business complexes; therefore, many organizations are accommodated. The various organizations that are accommodated in the business complex include shops, restaurants, banks, shopping malls, and many offices. Besides, the area has a local university. The transport system in the area is also effective as there are both a bus station and a railway station.
The findings of our market research pointed out to the fact that the area is a prime location for our van burger truck because of the following reasons: there is a large population of the residents, our burger outlet will be located on a busy street, the location is our local area and we have a better understanding of the residents, and the residents in the location are considered to be high net worth people who have a higher propensity to consume the burgers.
The other burger shops are also located along the busy street; this will enable us to compete on the same level. An analysis of the street was also carried out to monitor the human traffic in the morning hours and the afternoon hours. The morning traffic was monitored between 7:30 and 11:00 in the morning and the afternoon traffic was monitored between 12:00 and 3:00 pm. The research findings revealed that on average at least 1,000 people use the street in the morning while around 2,000 people use the street in the afternoon.
The market research also involved taking a closer scrutiny of the competitors. Along the street, there are other burger shops. ‘The Burger Deli’ does not open in the morning; it only opens in the afternoon and it serves an average of 150 customers daily. ‘Just Burgers’ trade from the morning and it serves an average of 275 customers daily. ‘Tramezzino’ also opens from the morning, though they start selling burgers in the afternoon; on average, it serves 200 customers daily.
In line with the survey conducted on the potential customers, our burger outlet has narrowed down to the following attributes that fit our customer profile: we will target the age group of between 20 years and 40 years. Many of our customers come from within the surrounding residents and their delight is to buy from the locality to enrich the local suppliers who are mostly farmers. Most of the customers live and work within the locality.
Marketing and promotion
Before the launch of our burger outlet, we intend to carry out a marketing campaign whereby we will officially announce the launch of the burger outlet and we will emphasize how different it is from other outlets in the locality. We will also inform the potential customers on our unique identity that makes us differ from the other burger outlets. We will work aggressively in the first three months to maintain our profile. We will also use posters to advertise the official opening date and also carry out a tasting session on the due date. Our marketing and sales campaigns will be aimed at capturing the attention of the competitors’ customers so that we can bring them on board.
Consumers can buy physical items at any given time because of the way that they can be put away and sold whenever a consumer gets some information about their accessibility. Then again, it is impractical to store a brand. At the point when a brand is not sold, it means that the brand does not exist in any case. One way of illustrating this is to take, for instance, a customer who has made a reservation and fails to show up (Codrington, 2002, p. 40). The restaurant will fail to serve other customers when the restaurant becomes full because they are anticipating the arrival of the customer who reserved the table. Because the nature of the customers is uncertain, the restaurant proprietors find it challenging to find the balance between the supply and demand for their services.
Financial Projections
Sales prediction
Our sales target every month is to sell ten burgers for breakfast daily and also fifty lunch burgers daily. Our business is expected to grow by at least 5% every month; meaning that by the third year, our sales target will change to sixty burgers for breakfast and two hundred and eighty burgers for lunch. In line with the sale of burgers, we will ensure that at least 75% of the customers buy coffee or a soft drink.
Direct costs
These are the continuing costs that we are likely to incur in the daily production of our products. The direct costs include the amount of money we will spend daily to source or our ingredients for the production of our burgers and coffee.
Overheads
These are the costs we intend to incur in the daily business operations. These costs cannot be avoided, and the business can come to a stop if we cease to pay them.
Fixed assets
Our fixed assets will just be the items needed for production and display, for instance: coffee makers, fridges and cookers.
Investments
Out of the $15,000 required to start up the business, I have personally raised $5,000. The total monthly expenses will be $1,500. Every month I will pull $1,800 for my upkeep so the business also moves on. I am searching for an additional investment of $10,000. I am talking to banks and other potential bodies. The projected cash flow, balance sheet, and profit and loss account are attached in the appendices.
Conclusion
Saudi East Burger Company is a newly formed business that deals with the production of the finest burgers manufactured with natural ingredients and the best bread. I hope to establish a dependable big following by providing tasty and fresh burgers produced from local ingredients available. The ingredients will be supplied by the local providers. By the end of the first year of business, our profit target is set to be $20,500. The projections for the expected profits of the second and the third year are $71,100 and $159,700 respectively. All of this will be realized from a starting investment of $15,000. Our current investment is $5,000, against the total required investment of $15,000; this means that there is a deficit of $10,000 that we still need to accomplish our mission.
Profit maximization is the best gift a business can give to its shareholders. The business achieves this by keeping the marginal cost at the same level as the marginal revenue. The arrangement of the market in which the business operates will influence the decision of the firm to maintain its output to a certain level. The concepts of managerial economics can be narrowed down to the theory of the firm which recognizes the fact that profit maximization is the main objective of a business.
The owner of the firm is recognized to be the key decision-maker in the firm, and the most important thing for the owner is value – to create wealth. This can only be achieved by making profits. Economics necessitates the use of limited factors of production to produce goods and services while keeping the costs at a minimum. The organization of the market in which the business functions will affect the decision of the firm to maintain its output to a certain level. Non-profit institutions like schools, colleges, community museums, and cooperatives also use the theoretical concepts of economics and strategy to make decisions.
These decisions help the business to achieve the economic goals efficiently. The concepts of economics are very influential in making relevant optimal business decisions. These economic decisions can be used to predict the outcomes of the business. For instance, an economic decision to use an optimal amount of resources in the production of a certain goodwill makes it possible to predict the economic consequences of the decision in relation to the competition from other businesses in the same line of production.
References
Abu, K & Roslin, R. (2008). Indentifying Service Quality Dimensions by Understanding Consumer Preferences in the Malaysian Grocery Retail Sector. Unitar E-Journal, 4(2), 57-67.
Codrington, G. (2002). Welcome to the Future World. Future Business. Marketing, Media and Business in S.A., 1(1), 38-40.
Cushing, K. (2005). Nero’s welcome. Hotels And Restaurants, 1(1), 62-63.
Gallaugher, J., & Ransbotham, S. (2010). Social media and customer dialogue management at Starbucks. MIS Quarterly Executive, 9(4), 197-212.
Kumar, S. (2005). Branded coffee shops are filtering out the independent operators. Hotels And Restaurants, 194( 4365), 12-13.
Mortimer, R. (2011). Costa coffee comes with shot of customer insight. Marketing Week, 34(40), 18-23.
Appendices
Appendix 1: Projected cash flow
Appendix 2: Projected profit and loss
Appendix 3: Projected balance sheet
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