New retail store Concept, tea store chain By Manpreet singh Digital


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Retail and most importantly food retail is the future of india. Are you planning to open a retail chain of tea shops?
this documents contain all the concepts of retail management which are applicable in food retailling. this is a complete business plan for opening mordern tea store chain By manpreet singh digital

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New retail store Concept, tea store chain By Manpreet singh Digital

  1. 1. m U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Heena Jain MBA3/1325 Shiveen Jindal MBA3/13xx Chayya Singh MBA3/13xx Manpreet MBA3/1329 2014 Retail Management New Low-Budget retail store Group 9 T-PoG
  2. 2. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 1 Table of Contents Sr No. Content Page No. 1 Executive Summary 2 2 Store Concept 2 3 Retail strategy statement 4 4 Why this Business? 4 5 Industry Dynamics 5 6 Store Design & Layout 8 7 Operational Plan 10 7a Sourcing 11 7b Stocking 12 7c Order Preparation 14 7d Maintenance 15 8 Human Resource Planning 17 9 Business model Canvas 19 10 Marketing Strategy – (Segmentation, Targeting, Positioning) 21,22,23 11 Retail Mix 24 11a Merchandise Mix 24 11b Pricing & profitability 26 11c Location planning, trading area 26-27 11d Promotion Mix 29 12 Finances 30-33
  3. 3. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 2 Executive Summary T-PoG is the first of its kind, innovative Tea shop which targets the youth & tea lovers with over 100 kinds of tea, Classical Indian ambience, safe and cool place to hang out, a cool book store & everything what Indian youth can think off. It will offer different kinds of teas & various tea time snacks. It will provide a new kind of experience of having tea. Indian youth love tea and leaving those road side small tea shops, there is no place to enjoy tea. T-PoG will fill that gap & will provide an overall experience of having Tea with its differentiated offerings. Karaoke, Books, games to name a few. Most importantly it will be a 24*7 open, low budget shop. The report contains the business plan for starting and operating the shop. It’s Segmentation, Target market, positioning, Marketing & retail mix. The report also explains the store layout, Consumer journey, and various promotional events for the retail shop. It finally concludes with an estimated 6 months Finances for the operation of the store. The store with an average order of Rs.50/person, is estimated to achieve its breakeven in …. Years, after which it is profitable with a 50% Gross profit margin on a minimum of the above order size. Store Concept India is the second largest producer of tea and one of the largest consumers too. Indians, Particularly Indian youth love tea. Tea is one thing that refreshes them. There are more than 5 million small tea shops across India. There are high end coffee shops like café coffee day, Star bucks on one hand and the local tea shops on the other. But no shops to serve the middle class. Middle class form a majority of Indian population. Our T-PoG is a 24*7 Tea shop which will serve the Indian middle class. College students don’t feel good to have tea at local stalls, also they offer low variety. They even cannot afford to visit high end cafes. At T-PoG menu ranges from Rs. 5 to Rs.50. Store will provide an Indian ambience, on demand karaoke, book store and table games like snake & ladders, ludo etc. the core product of our shop is the experience of having tea. It will have a self-service mode of serving. Each table will be equipped with ordering kiosk from which customer can place the order. Order will be received by the counter person who then forwards it to the kitchen. Before 5 minutes of the completion of order, customer will receive notification on the table kiosk that their order is
  4. 4. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 3 Ready and they can collect the order from counter and pay the bill. Table games and books to read will be available free of cost, while customers have to pay if they want to buy the books. In case the book demanded by customer is unavailable, we will make it available within 4 days. Some of the critical success factor for this kind of food tea store is the Inner environment of store and behavior of staff with the customer. All the necessary training will be given to staff time to time to take care of the same. To increase the pocket size of the customer in this type of low budget tea shop, it is required that customer spend more and more time at the shop, That is the reason to provide Books , table games and on demand karaoke. Also there will be special state wise tables (more explained in store layout) to enhance the experience of the customers and engage them more and more. Customer walls etc. will add value too. How it Works Customers enters the Shop & occupies their Table Order Placed through on Table I-Pads with in built Menu Order Received at counter Forwarded to kitchen 1 Order Received Order ready!! Notification received On table While the order is processed, Customers can read books From the large library, enjoy Free WiFi at iPads on table, & Can also request songs to play Collect Order & Pay the Bill Order ready!! Notification received On table
  5. 5. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 4 Retail Strategy Why T-PoG? India is one of the largest consumers of tea. Annual consumption of tea in 2013 in India was close to 900 million Kgs. On an average every Indian has tea 2 cups a day. When we talk of population between 15 to 40 years, average consumption is 4 cups a day. India has 190.7 million households which fall under Medium Income group. 46% of Indian population falls between 15 to 45 years. There are high end coffee bars like Café coffee day, Starbucks etc. on one hand, while low end local Tea stalls on the other hand. There are no Tea/Coffee stores which are targeted to especially to middle class, which in fact is the biggest by population. Indians love tea. Professionals during office breaks, Students while doing the college works, late night works often search for this kind of places. Girls don’t feel good having Tea on local tea stalls. They cannot afford to go to high end coffee shops daily. So there is a huge gap which T-PoG has aimed to fill. Anand Nagar, Khandwa, The place where T-PoG is expect open has more than 30 colleges (with hostels) and offices with an average population of 200. There are no Good Tea/coffee shops or restaurants in the 10 km radius except some local tea stalls. People have high disposable income and consumption capability in the area. So T-PoG will be the ideal shop for the people of that area. T-PoG aims to provide all the facilities provided by high end coffee shops, at low prices to serve the masses. Below is the explanation of how T-PoG will provide value to its target Market. The Main aim of T-PoGis to serve the tea lovers with lots of different varieties of tea at a place which is safe and comfortable yet has the classic Indian ambience. A place where they can pass their free time, do there official work out of the office and at the same time enjoy their favorite songs. Where they can have real Darjeeling/Assam tea very near to them
  6. 6. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 5 Industry Dynamics With the increasing disposable income and growing middle class across India, People now are more outgoing when compare to anytime in the history. Indians love to eat and drink out. With the largest demographic in the world, among the total population of 1.25 billion in Indian, 46% falls in the age group 18-44. And the result of this, the restaurant industry in India, which is mainly driven by the young population aged 15 to 44 years has registered revenues of INR 75,000 crores in FY'2013. The industry has witnessed a sound growth which has been fueled by the advent of large number of national as well as international chains in the organized market. Many international chains such as the Mc Donald's, KFC, Dominos and Pizza Hut largely have dominated the organized restaurant market in the country over the years. Free WiFi Books Table Games KaraokeRich Menu IPads Value Proposition
  7. 7. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 6 The overall restaurant market has grown at a CAGR of 6.6% from FY'2008 to FY'2013 and has witnessed an increase in revenues to INR 75,000 crores in FY'2013 from INR 50,000 crores in FY'2007. The changing lifestyles with the increasing nuclear families and a rise in the urbanization in India over the past years have also supported the growth of the restaurant market in India. Additionally, the change in customer taste has also played a major role. Due to the growing exposure to the international cultures and lifestyles, the Indian population has started developing their tastes and is reaching out to restaurants trying new dishes. This change in the taste preference of the people in India has motivated many international and Indian players to expand their reach in the Indian restaurant market. The Indian organized restaurant chain market has witnessed an upward trend and has grown at a CAGR of 19.1% from FY'2008 to FY'2013 where it has witnessed revenues of INR 20,000 crores in FY'2013 growing from INR 7,000 crores in FY'2007. The organized chain market in India includes a large number of players in the QSR, full service, PBCL and the food court segments. The market has significantly expanded primarily owing to the high demand among the large Indian population over the years. The Quick Service Restaurants (QSR) and the casual dining restaurants account for a major share of the revenues of the organized chain market in India. The QSR's and the casual dining restaurants together contributed a market share of 80.6% in FY'2013 to the organized restaurant chain market. 20 55 Restaurant Industry Organised Unorganised Amounts in '000 Crores 81% 19% Organised Restaurants QSR & CD Others Trends Of the year 2013
  8. 8. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 7 Growth of Restaurant industry in India The key drivers for Tea shop can therefore be summarized as follows:  Increased spending ability and rising aspirations  Upward trends in Tea consumption  More % of young population among the total population  Changing taste preferences leading to restaurants  Ease of Availability/Reach 0 10 20 30 40 50 60 70 80 2007 2010 2013 43 48.75 55 7 11.81 20 Overall Organised Cagr 6.6% CAGR 19.1%
  9. 9. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 8 The key challenges for the Tea shop are:  Constantly changing laws  Bringing fresh tea leaves from Darjeeling on regular intervals  Threat of the entrance of competitor in the same area  Availability of labor As many of the challenges can be controlled, Tea Shop in the particular area provides a great opportunity. There is a huge untapped market and most importantly people are in immediate need of such kind of shop. Also our business provides an opportunity to develop a private label tea to be introduced in the later phase once the brand is established. The availability of farm in Darjeeling presents great backend support for the forward integration. T-pog is a two floor Tea shop. Ground floor will be with air conditioner and First floor will be open to air, so that customer can enjoy sunrise and sunset while having their tea. Store Design Layout
  10. 10. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 9 On Ground floor A. Entrance B. Normal serving tables C. Special tables dedicated to states. I. These will be separate compartments, with the interiors representing the culture of the particular state. It is so, that the customer can have an experience of the particular state. D. There will be a book shelf besides counter. I. This book shelf will contain all latest love, Fantasy, and related novels. NEWS papers and other books II. From the counter customer can either issue a book or can purchase it. III. If the customer issues the book he is allowed to read the book in store only. IV. This activity is for engaging customer for long time. E. Kitchen will be on the ground floor to prepare all the orders. F. The stairs will be on the left side of the entrance, so the customers willing to go on the first floor can co directly On the first floor- A. First floor is with the view of sunrise , sunset and with the moonlight as it is open floor. (Open to air , will still have a shade, but no side walls) B. Tables for groups C. Smoking zone D. And a karaoke where people can enjoy their tea with guitar and music. This is an another activity for engaging customer. E. And most importantly a customer wall- where they can show their talent, views and anything what they want to share.
  11. 11. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 10 Operational Plan Our Operations Primarily is divided in 4 major Parts  Daily procurement of Milk and dairy products and vegetables  Twice a week procurement of spices and other general food items  Special Darjeeling tea will be sourced from Darjeeling via railways in the second phase Sourcing  Most the dairy products & needs to be stored in Refrigerator and Deep Freezer  A wooden wardrobe will be required for proper Placement of Crockery items Stocking Order Preparation  Orders received at counter will be forwarded to kitchen by Counter person  Orders are made by using IPads on all tables  Modern cooking equipment for efficient cooking Maintenance  This includes all types of normal operations of Restaurant apart from specific operations mentioned above. Regular Crockery updating, IT systems, Library, Kitchen Maintenance
  12. 12. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 11 Sourcing Sourcing of Milk Milk will be delivered directly to the restaurant twice a day by the milkman of the local area. Usually Sanchi milk is the best quality of milk available in the region. It is supplied by Sanchi distributors having their outlets at all the major areas. Milk will be available a wholesale rates through these Sanchi distributors which will deliver milk directly to the restaurant. Sourcing of Bakery products & Vegetables All the bakery products like cheese, butter, eggs etc. which have low shelf life and needs to be served fresh will be procured daily from the local wholesale vendor. Fresh green vegetables too need to be procured daily in the morning from the local vendors. So the an estimated quantity of these things will be procured every morning on daily basis Sourcing of Kirana items Sugar, salt, Spices etc. kirana items have a long shelf life. So these things will be bought weekly or fort nightly from the local wholesalers in bulk quantity. So as to facilitate the operations of next 7-15 days. Also for Gas cylinders, we initially will buy 3 cylinders although we need only two for daily operations. 3rd cylinder will act as a backup in case of any emergency. Cylinders are delivered directly to restaurants by the local gas agencies, within 7 days of the order. We will procure it in the same manner. As gas pipeline connection is not available presently in the area, we have to buy cylinders.
  13. 13. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 12 As we are a low budget restaurant, procuring the entire items at least possible price will be the key for long term Profitability. But at the same time we have to ensure that the best quality of all these things are bought. For the examination of this, regular quality checks needs to be run (explained in detail, in the maintenance part) Sourcing of crockery and Utensils As the main aim of T-PoG is to provide an overall experience of having tea, crockery plays an important role. Crockery needs to be updated every 6 to 8 months. Similarly Kitchen utensils too will be updated as & when needed. There is no fix place for the procurement of these things, as they are impulse buying items. Books & Games Books, A very important part of T-PoG, will be updated when required. Books will be sourced mainly from , Also some of the will be procured from local book dealers. Stocking Stocking the inventory in a efficient manner is one of the most important part for any type of business. It directly affects the overall profitability of the business. We have a special attention for the storage of our inventory. Deep Freezer & Refrigerator All the Dairy products like butter, milk, Paneer, Cheese etc. and the fresh green vegetables will be stored in deep freezer for continued freshness. A full size refrigerator too will be available the store for the same purpose. As the dairy products and vegetables get spoiled quickly, deep freezer is essential to avoid the spoilage probabilities. Both the refrigerator & the deep freezer are to be kept inside the kitchen only so as to have quick access an reduce the overall delivery time.
  14. 14. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 13 Storeroom Besides the kitchen, there will be a 225sq ft storeroom which will act as a warehouse for all the other items. As we are not keeping large stock, so this room will be enough to house our entire inventory safely and also will give us a quick access for the same. It will have shelves for storage of Kirana items, two wardrobes for crockeries. So that entire inventory is kept safely and is quickly accessible. The entire storage place needs to have proper ventilation. All the stocks need to be updated constantly. For this our IT team has developed software which will keep us updated about the quantity of each item present in the store room. All the incoming stock needs to feed in the software. It will calculate the consumption on the basis of orders received.
  15. 15. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 14 Order preparation One of the key factors behind the success of any restaurant is the time between point of receiving order and the point of delivering the food. This time needs to be minimized. Chunk of this time depend on your ability to prepare the ordered food. Cooking the food Our kitchen will be equipped with one Microwave oven, 2 No.s Toasters, 1 No. 4-Burner Gas stoves, 1 No. Mixer grinder and 2 No.s Induction plates. All the basic ingredients will present in kitchen in limited quantity required for daily operations. Also the ingredients stored, are very near to the kitchen. Basic Sauces, Chutneys etc. ingredients which are required for most of the dishes will be prepared at the start of the day. Now, once the order is received at the counter, it will be transferred to the chef. Chef then will prepare the order. Just when the food is cooked (not served), chef will inform the counter person, who will transmit the signal to the IPad on the table of the respective customer. Serving the Food Just when the food is cooked completely, customer will receive notification on the IPad screen of their table (Image showing the notification). So while the food is being served, customer can go to the counter. While he reaches the counter, his order will be served to him by then. Customer then, can pay for the order and collect his order.
  16. 16. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 15 Cleaning of the dishes Once the customer leaves the table, serviceman of the particular table will collect all the dishes from the table, clean the table and take the dishes to the washing area near the kitchen and handover the dishes to the serviceman of the washing area. Cleaned dishes then will be transferred again to the kitchen. Maintenance This part basically talks about our backend processes. Besides the normal operations mentioned above, all other miscellaneous operational activities forms the part of maintenance. Periodical maintenance of each and every thing is very important to make the business more efficient & thus more profitable. This is the only reason to include maintenance part as a separate head. Further, maintenance is subdivided into following heads: Software Connectivity
  17. 17. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 16 IT Systems & Accounts This will insure the proper working of Computer systems, Our software for ordering from the table directly, Wifi system, Karaoke which is one of our differentiated offerings. Maintenance of the books of accounts and other financials is one of the very important aspects for any business to work efficiently. Proper reporting of revenue, Profitability, Developing strategies based on the financials. Kitchen Maintenance For restaurant business, proper maintenance of kitchen is must. The quality of food you serve to the customer directly depends on the degree of hygiene you maintain in the kitchen. Head chef will be trained to achieve the best hygiene standard in and around the kitchen. Training For any business to run efficiently it is very important that all the employees are expert in their respective domains. For T-Pog, as we want provide an overall experience to our customers, it is necessary that not only the waiters but all the members of the staff present in the restaurant thrive to do this. Regular training sessions will be conducted for all, initially with the help of training institutes & then staff to staff training in the future.
  18. 18. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 17 Human Resource Planning Human resources are the most expensive and most important of all the resources. Proper planning is to extract most out & make the business profitable. Below are the different departments and their responsibilities and the number of person required in each department. Responsibilities & size of Departments Housekeeping: Housekeeping personnel will be responsible for the cleanliness in all areas of the restaurant. Cleaning tables once the customer left the restaurant, cleaning of toilets, smoking area, cleaning of dishes, utensils etc. They will also assist logistics person for daily logistics. And other functions like serving & assisting customers. Housekeeping Department will be led by Restaurant manager and will consist of 7 helpers. 2 helpers for each floor 1 for kitchen for the Day shift and 1 helper on ground floor and 1 in the kitchen for the Night shift. Most (3) of the helpers of housekeeping department will serve also assist other departments as all of them will be required only during peak hours & for the rest of the time they can assist other departments. Restaurant Manager Tech. Dept. KitchenLogisticsHouse keeping
  19. 19. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 18 Technical Department: Technical department is further divided into two sub departments Marketing & IT department. IT department will consist of only 1 IT person who will be responsible for the proper working of IPads on the tables, Computer systems, Karaoke, Wi-Fi and other IT systems in the store. Marketing will consist of One marketing manager who will be responsible for designing different campaigns, publishing ads in the NEWS papers & on radio, Organizing time to time events for engaging audiences, Managing instore customer wall, and most importantly he will be responsible for Customer relationship Management. IT and Marketing together will also be responsible for managing online presence of T-PoG. i.e. managing all the social media pages of T-PoG, writing blogs and managing Website of T-PoG! Logistics There will be 1 person in this department who will be responsible for bringing stock for all the departments. He will be assisted by one of the helpers of housekeeping dept. he will be responsible for the shopping of fruits, vegetables, bakery, grocery and other needs of the restaurant. He will be responsible for all the work outside the restaurant & report directly to the Restaurant Manager. Kitchen Kitchen will consist of a Head chef, two assistant chefs & 2 assistant helpers specific to kitchen only. Head chef, One assistant chef & One assistant helper will work in day shift & the other assistant chef & Helper will work at night sift. Head Chefs will be responsible for training of all helpers and assistant chefs. Processing orders, preparing dishes, keeping the manager updated above the requirements of all the raw materials (bakery, Milk, Vegetables, spices etc.) Assistant chefs will be responsible for preparing all the dishes and assisting the head chef. They will be responsible for maintaining the inventory of raw materials in the kitchen and store room. They will report to Head chef. Assistant helpers as the name suggests will assist chefs in their work. Cutting vegetables, preparing dishes etc. In all there will be 15 employees including the manager in the restaurant.
  20. 20. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 19 Business Model Canvas
  21. 21. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 20
  22. 22. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 21 Marketing Strategy T-PoG is a youthful brand, and so all marketing should be focused on our target markets. Below is the explanation of all the marketing tactics & strategies to be followed for T-PoG! We should have clearly defined segments and the targeted audiences Segmentation ALL TEA LOVERS Students Working professionals Teens Youth Cools Matures Age 15-18 18-24 24-40 40+ Sex M/F M/F M/F M/F Income Low Low/Med Med/High High Education Low Low/Med Low/Med/high Low/Med/high Lifestyle Study Oriented/ Highly outgoing Study Oriented/ Highly outgoing Heavy Work loaded, Medium outgoing Medium workload, Less Outgoing Urban Tier ii Tier ii Tier ii Tier ii Avg no. of TEA cups/DAY 2-3 3-4 3-4 4+ Segment Attractiveness Med High High Low Segment Awareness High High Med Med Price sensitivity High High Low Med TARGET MARKET
  23. 23. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 22 Students a. Teens : These are young school going students. There lifestyle is oriented highly towards studies, have low income and they like to go out and enjoy with friends. Highly price sensitive. They actually look for the places which costs them less and can serve most to them. b. Youth : These are young college going students. A major part of this segment stays in hostels. Higlhly studies oriented. Like to party & hangout as couples and groups. Have low to medium income. They are active 24*7. So they are ideal targes for T- PoG. Their sensitivity towards price is Not very high But also not very low. Working Professionals a. Cools : They are heavily work oriented individuals. Have a high disposable income. Like to enjoy most and are readily outgoing. Very less sensitive towards price. As T- Pog is located in area with more than 20 offices in a 3 K.M. radius, T-PoG is highly accessible to them. They can come to T-PoG before the office hours, During breaks and after office hours. They are one of the major target market for t-Pog. b. Matures: They are working professionals of more than 40yrs of age. Mostly married and have many responsibilities. Are less out going and like to enjoy time with family. Targeting: As clearly indicated in our segmentation table, Working professionals cools & Young college students will be our major target segments. Also young students will be targeted. Positioning: T-PoG is a low budget highly involving, restaurant. It is positioned as a cool and safe place to hangout which have a lots of varieties. We provide not just Tea but an overall experience for enjoying tea.
  24. 24. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 23 Positioning on Map High price Low price Low Indulgence 3 star Hotels Local Tea Gumthis Restaurants Sweet Shops High Indulgence
  25. 25. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 24 Retail Mix Merchandise mix T-PoG will have more than 50 different varieties of Tea divided broadly into two catagories. Besides tea, we will also have Sandwiches, toasts, Rolls and the traditional indian dry snacks like Mathri, Pinni, Laddus, Biscuits, Sev, Chakli, Naan khatai, khakra, thepla & other regional tea time snacks. Tea Desi Tea Videsi tea  Plain tea  Clove Tea  Cardomom Tea  Ginger tea  Masala tea  Tulsi tea  Pepper tea  Customized tea  Coal special tea  Strong/Light tea  Etc  Chinese tea  American tea  British tea  Malaysian tea  Scientific tea  Green Tea  Black tea  Lemon tea  Ice tea  Tea Latte  Etc. Toasts, S/Ws  Butter Toasts  Cheese Toasts  Veg cheese Sandwich  Egg sandwich  Oregano sandwich  Masala rolls  Egg rolls  Paneer tadka roll  Chinese roll  Malai Roll  Kachori/Samosa  Mathri/Pinni  Khakra/thepla  Nan khattai  Bhel/ Garlic buns Rolls Desi snacks
  26. 26. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 25 Total Product Concept Potential Product: Female drivers and Speed Control Alerts Augmented Product: Safety, Comfort, karaoke and free reading novels Expected product: On Time Service, Quality ,ambience and Trust Actual Product: Tea and snacks Core Service: Experience
  27. 27. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 26 Pricing & Profitability Pricing the merchandise is a very critical factor. It cannot be priced high as we are a low budget segment player. We cannot price it low as we are providing so many facilities which bears high cost. When we see our competitors, their price ranges From INR 10/cup (200ml) at local gumtees to INR 150 in nearby 3 star hotels. Similar price range for other categories, ranging for INR 25 to INR 500. We will provide a mix of both, but slightly towards the lower side. Our tea prices will range from INR 10/ Cup to INR 50/ Cup (220ml) . Below is the broad pricing for different categories & also the gross profit from each category (Gross Profit = Selling price – Cost of sales, this includes all raw materials but no other expenses) Category Price range Gross profit Margin Tea 10 to 50 50-70% Toasts & Sandwiches 15 to 50 40-65% Rolls 15 to 40 30-50% Dry Indian Snacks 10 to 30 50% Other Snacks Upto 50 Variable Wi-Fi Free upto 1hr, 5/mb beyond. 100% Books Demand Based 15-20% Location Planning Location planned for Our first Restaurant is Anand Nagar Khandwa, Madhya Pradesh. It is a big commercial area with almost 35 colleges & offices with an average strength of 200 persons, within the radius of 3 K.M. Apart from local tea shops (gumtees) there are hardly any good shop for having snacks. In the area. Though there are some bakeries but no restaurants around. T-PoG is planned to be located on the main street with two main roads passing near by. Prices in INR/serving
  28. 28. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 27 Traffic Signal Parking Parking Entrance To St. Pius To Alliance College ToG.D.C ToRajUniv. 3 K.M. 5.5 K.M. 8 K.M. Trading Area
  29. 29. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 28 Primary Trading Area Our primary trading area extends from Alliance college in the west to St. Pius school in the east, and from G.D.C. in the north to Raj Univ. in the south. The area surrounds almost 30 colleges, Offices & schools with an average of 200 individuals working or studying. Primary trading area has a population of more than 10,000. From any location in our primary trading area, T-PoG can be reached within 25 Mins. Geographic Boundaries St.pius (E), Alliance college(W), G.D.C (N), Raj Univ. (S) Population 10000(Residential) + 5000(Daily Commuters) Radius 3 K.M. Max time to reach T-PoG from any point 25 Mins Trading Areas on Map
  30. 30. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 29 Secondary Trading Area Geographic Boundaries Kishore nagar (E), Clock Tower(W), Padam Nagar(N), Civil Lines(S) Population 1,50,000(Residential) + 20000(Daily Commuters) Radius 5.5 K.M. Max time to reach T-PoG from any point 45-60 Mins Tertiary Trading Area Geographic Boundaries Hotel Aangan(E), Doodh talai(W), Hotel Zayka(N), Indira Square (S) Population 4,50,000(Residential) + 30000(Daily Commuters) Radius 8 K.M. Max time to reach T-PoG from any point 70-80 Mins Promotion Mix As we have a specific target audiences, all our promotional activities should be targed to them. Sales promotion: During the initial few days a lot of sales promotion would be done to attract the customers. Combo offers, 50% off , Buy 1 get 1 free etc. offers will be given for initial few days. Direct Marketing: Direct marketing by going in different colleges and offices in the near by area. Sponsoring events of colleges & schools etc would be done. As colleges and offices are our specific TG, direct marketing in the colleges would be done on a large scale. Media Advertising: Advertisements in the local News Papers & radio channels would give a reach to huge number of audiences as these are two most common channels among the youth
  31. 31. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 30 Internet Advertising: This is an era of internet. Each and every individual have smartphone now a days. Advertising through is fast and extremely targetable. A lot of SEO would be done for our restaurant. We will offer free discount coupons through websites like freecharge, Mobikwik etc. Publish ads on all the websites our target audiences visit through Google Adwords. Social media marketing: Social media is expanding at a very high rate; specially young population is attracted towards it. We will have our company’s page on all the major websites like Facebook, twitter etc. We have a dedicated marketing manager to manage social media. We will organize contests for best new style tea on Facebook & twitter. Where people will submit their styles of making & having tea. Best idea would be awarded with a free meal at T-PoG. InStore Promotions: Our store will be decorated regularly on different festivals and occasions. Theme of all the promotion activities goingon on different channels will be in contrast of the decorations in the store. Time to time we will organize different events to engage audiences. Loyalty program: Customers can signup for special T-PoG Chai card. They will get extra benefits through these cards. Extra 10% off for card holders. Also they will get express service where they will be preferred over customers for processing of orders. They will get free tickets for events organized by T-PoG. Finances Private label Tea Revenue Streams Food sales Advertising income Cost Centers Salaries Maintenance Promotions Fixed Variable Raw Materials Logistics
  32. 32. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 31 Fix Costs a. Salaries b. S,G and A expenses S.G and A expenses Particulars Monthly Cost Yearly Cost Electricity, Water , Petrol 15000 180000 Internet 2000 24000 Housekeeping 1500 18000 Miscellaneous 5000 60000 Marketing 5000 60000 Total 28500 342000 S,G & A Salaries Total Fixed monthly Expense 28500 148000 176500 Payroll Department Role No. of personnel required Salary per person Total/ year Total / month Kitchen Head chef 1 300000 300000 25000 Assistant chef 2 180000 360000 30000 Helper 2 60000 120000 10000 Housekeeping Helper 7 48000 336000 28000 Marketing Jnr. Manager 1 120000 120000 10000 IT Manager 1 120000 120000 10000 Logistics Jnr. Manager 1 120000 120000 10000 Admin Manager 1 300000 300000 25000 Total 16 1776000 148000 All amounts in INR
  33. 33. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 32 c. Setup cost Setup Cost (one time) Fixed Category Particulars Units Cost/unit Total Furniture Table set 20 8000 160000 Decoration Various Various 500000 Kitchen Equips Gas burners 2 8000 16000 Microwave 1 15000 15000 Deep freezer 1 90000 90000 Refrigerator 1 50000 50000 Induction cooker 2 3000 6000 Utensils Various Various 10000 Crockery Various Various 20000 It system IPADs 20 10000 200000 Computer 1 15000 15000 Software Various Various 15000 Miscellaneous 200000 Total 1297000 Market Sizing & Opportunity Market sizing and Contribution margin Calculation Population of Khandwa 1390000 Population in the age group 15-40 yrs 667200 Target segment size in Primary trade area 6000 Estimated Numbers of orders per day 100 Estimated avg. Order size 185 Revenue / month 555000 Gross profit / Month (40%) 277500 Operating cost (In the above table) Fixed/ Month 176500 Contribution Margin/ month 101000
  34. 34. Retail Management 2014 U n i v e r s a l B u s i n e s s S c h o o l , K a r j a t Page 33 Breakeven Analysis Breakeven analysis Breakeven period(Months) is (Total Fixed cost)/Contribution towards Fixed cost each month (1297000)/45500 13 Total months for Breakeven is 13 Months Profit & Loss Statement Profit & Loss Statement For next 3 Years Assumption: Annual growth rate= 10% Tax 30% Particulars Year 1 Year 2 Year 3 Revenue 6660000 7326000 8058600 COGS 3330000 3663000 4029300 S,G & A Expenses 2118000 2329800 2562780 Operating Profit 1212000 1333200 1466520 Tax @ 30% 363600 399960 439956 PAT 848400 933240 1026564 The End!