US food industry has been facing challenges of food sustainability and to develop consumer’s awareness to the fresh, natural and health curious foods and to meet increasing market demand, “Do-Do Online Fresh Food Supply LLC” would like to penetrate here at Greenvale, Garden City, and Hempstead region as a small entry with Indian breakfast, lunch and Tiffin items. It would use a simple e-commerce model of B2C with 1000 sq ft kitchen, and storeroom with nine employees including Chef, Cleanup Crew, and Delivery Drivers. The Owners are the business graduates from Long Island University and both of them have working experience in the Indian restaurant.
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The restaurant industry in the USA projected sales of sales US$ 783 billion along with 14.4 million employees while there is a small contribution of Indian restaurants with a limited resource and scarcity of dining space and the company would offer the most competitive price for its product without compromising the quality. The company would be financed by the owners at 50:50 ratios and would practice manufacturer and supplier both categories of operational management to generate better value for the stakeholders of the company. Maintaining all regulatory requirements, it would pay all associated taxes and duties obligatory for the online food suppliers in New York State. Three Universality areas including LIU Post is the selected primary market for the company and the marketing and advertising programs would be aimed to attract the local inhabitants.
According to the Pro-forma income statement, this company will earn $2.07 million sales revenue within the first year of its business operation; also, the direct cost of sales will be $654000 and net profit will be $949750; thus, Indian food delivery service in a selected area will be profitable.
Global food industry trends in 2017 demonstrated a steady growth with most customers’ awareness of the healthy, tasty as well as dependable foods free from excess preservative and chemical use, thus the manufacturers are under pressure to ensure the quality with attractive flavors and innovative preparations linking with traditionalism and affordability. According to the report of Mintel (5), the food supply companies in the US and western markets pointed to the escalating interest and dramatically shifting lifestyle among the consumers connecting towards vegetarian claims and it was almost a raise of 25% in 2016. Especially the US food suppliers are facing challenges, such as, the customers are reluctant to the stored food and adamant to eat fresh, natural and health-conscious foods; this trend results lost of huge market share and the giants in this sector drive to direct firming to offer natural and organic foods at their outlets (Mintel 5).
The proposed “Do-Do Online Fresh Food Supply LLC” is an initiative aimed to serve fresh breakfast lunch and school Tiffin recipes to the working people and students of LIU Post, Hofstra University, and Adelphi University along with the surrounding other academic institutes, and private and public offices covering Greenvale, Garden City, and Hempstead region of New York. The economic indicators of New York in the recent years illustrated positive growth with rising wages and reducing the unemployment rate, but spoiled the progress with the continuous growth of homelessness people and the alarming number of that homeless reached at 59,929 people included man, woman and children and sleeping each night in the street. Keeping in mind such a reality, the company identified that the demography of the selected areas is almost half at night in the context of the day; thus, the “Do-Do Online Fresh Food Supply LLC” will not offer diner, it’s just supply breakfast and lunch and aimed to prove its market potentials by delivering fresh and delicious foods with affordable price.
The business model of the “Do-Do Online Fresh Food Supply LLC” is just a simple e-commerce model of B2C, where the company would take order for lunch and breakfast supply from its web portal including online payment and deliver the order ordered foods to the customer’s door. Instead of a traditional restaurant, the digital automation of the company would save its outlet’s decoration and rent as well as waiters and managers cost and the while the customers would be connected 24/7 days and the customers would be capable exchange views, lodge complains, make comments and suggestion for service improvement through the web portal.
The employees’ turnover rate in the food industry is very high and it seriously hampers operation and organizational structure to attain the goals and objectives of the startups. Thus for successful business entry, it is essential to have a functional organizational structure for an online food delivery business to ensure provides customized food delivery for each customer. Consequently, the “Do-Do Online Fresh Food Supply LLC” would design its organizational structure a strong hierarchy in the workplace environment and look for retaining honest, dedicated, and hard-working individuals to ensure the effective operation of the company to deliver fresh and tasty.
The “Do-Do Online Fresh Food Supply LLC” is taking its market entry with a very small investment and limited resources while the most giants in the food supply business are planning to use robot delivery service. The entrepreneur is a business graduate and doing his Masters degree at LIU post and he is lining in this region for the last four years with better understanding degrading the demography of his chosen area were at least around 25000 students and faculty members in the three universities such a ‘Long Island University’, Hofstra University, and Adelphi University. Furthermore, there are fewer academic institutions are the target customer of the company. As the company would not open any outlet and the website is the platform manages and administers the customers and stakeholders it could be said that the web portal is the virtual office of the company. The company’s product line consists of Indian breakfast dishes such as Dhokla, Dosa, Upma, Omelets stuffed Paratha, and Tandoor Roti with Seekh Kebab, while the lunch items consist with Biryani, Plain Rice, Poncho-Benjon, Daal Makhani, Chicken Masala, Butter Chicken, and Chicken Korma. At the same time, Tiffin as part of Indian culture the light midday meal included Purri, Samosas, and Paanipuri.
The “Do-Do Online Fresh Food Supply LLC” would be registered as a limited liability company with two owners who are the student of Long Island University at post-graduation level in the same discipline and they are agreed to open a small to be self-employed at their own business. The Executive Management would consist of two owners as well as they would act as Chief Executive Officer and Chief Operating Officer to avoid the extra burden of employees at the startup. The kitchen and storeroom of the company would be rented premises of one thousand square feet at Greenvale area with two Indian chefs – one is Executive Chef and another is Assistant Chef with Cleanup Crew and three Takeaway Delivery Drivers. The owners themselves would perform the overall supervision of the company, they should keep their keen eyes all through the kitchen until any paid manager, and supervisors are hired. The marketing, accounts, HRM would be managed online with integrated e-commerce software and need not have any extra HR in this regard and to some extends online advertising, which is the lifeline of such business would be performed by freelancers through website optimization.
The owners already started its registration process and necessary paper works such as license, incorporation certificate, tax identification number; and membership of the Local Restaurant Owners Association keeping in mind a milestone to coming into operation by September 2017 at the end of their final examination.
Background of the Owners
The owners of “Do-Do Online Fresh Food Supply LLC” are business graduates from Long Island University and both of them have working experience in the Indian restaurant during their vacation. The owner-1 has worked in the frontline service of the ‘Darbar’.- the famous Indian restaurant in New York City during the last vacation During this worked hard and learned that Indian foods are going to be most favorites in the US market and Indian restaurants have long-term prospects here. The owner-2 worked as a kitchen crew at another Indian restaurant named ‘Taj Mahal’ in New York City and learned the secret of Indian dishes. Before deciding to open an online Indian food supply store at Greenvale region, the entrepreneurs jointly conducted a market survey and find that the popularity of Indian foods is growing dramatically and to address such market demand there are a large number of non-Indian restaurants are offering Indian-inspired items and dishes. It was also indicated from the study of the owners that the restaurant industry is under increasing pressure to ensure fresh, healthy, quality foods with delicious flavor along with ethnic values and taste; thus, it is the right time for Indian food to penetrate in the US marketplace.
On the other hand, both owners are most familiar with Information and Communication Technology (ICT) and for the last four (4) years, they are using it at academic and their private communication purpose and learn the facilities and opportunities for business reasons. The owner-1 has some proficiency with the use of e-commerce software, search engine optimization, and the use of social media for online marketing while the owner-1 has expertise in database design and administration; thus, their joint efforts would explore new business opportunities.
As an online food supplying company it is almost similar to the restaurant business, due to scarcity of resources and capabilities it is difficult for the owners to invest in dining facilities due to the investment limit is only US$ 10,000. However, the owners considered that if they have kitchen and storeroom with cooking facilities, it is possible to overcome the dining hall requirement by taking orders through the website of the company and delivering foods to the customer’s doorstep where the web portal would work as a virtual office. The product line of the company has around 15 items in three categories of food i.e. breakfast, lunch, and midday light meal or Tiffin. Being a small business with a diverse product line with high pressure of maintaining the schedule of the customers to deliver the orders, the organizational structure, and strategy needed to be designed dynamically coordinating with every step of the operation. The leadership of the company has its long-term and short-term goals and objectives and to attain the objectives the organizational chart has developed as follows-
|Working Group, Benefits & Qualification / |
|Owner-1 works as CEO – Owns 50% shares |
Graduate in Business Administration
Managing people at every level;
|Owner -2, works as COO |
Graduate in Business Administration
|Executive Chef |
– US$ 7.50/ Hourly
|Assistant Chef |
– US$ 6.00/ Hourly; Estimated workload 100 hours per month
|Cleanup Crew — US$ 600/ month || |
|Takeaway Delivery Drivers – US$ 600/ month || |
Table 1: Organizational Chart of “Do-Do Online Fresh Food Supply LLC”. Source: Self-generated.
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The vision of the “Do-Do Online Fresh Food Supply LLC” is to provide a unique Indian dining experience to the inhabitants of Greenvale, Garden City, and Hempstead by delivering prepared dishes to their doorstep in an intimate and family. The company would establish its web portal with rich web contents and blogs and would be optimized through search engine optimizing software along with Google AdSense by the freelancers and all these efforts would result redirect the customers to the company’s order page where customers could select preferred items and place an order by paying through credit card or PayPal. The company also uses social media marketing along with the e-mail marketing that would be very effective to send personalized mail offer to the student, teachers, and staff of the educational institutions with promotional prices.
Macro environmental analysis of the ‘Do-Do Online Fresh Food Supply’ for marketing purpose identifies that both the social and economic factors associated with the customer would also keep impact over the company as the economically week and socially backward people avoid to eat restaurant rather they like to cook at home. The competitive analysis for marketing identified that healthy, tasty, and reliable food free from all preservative and chemicals use, and high-quality food with attractive flavors as well as innovative preparations linking with traditionalism and affordability is the most competitive advantage for the company. The marketing strength is that of the company is its health-conscious fresh Indian menu, strong accord with Indian culture, timely delivery services, devoted management, and well-trained working forces, strong ICT integration at the operational level and less overhead while the weakness of the company is its small appearance with a single location company without any branches. The company considers that among the Indian food suppliers ‘Darbar’ and ‘Taj Mahal’ are the major giants in the US market and their presence at Greenvale region would be a major ‘Do-Do Online Fresh Food Supply’, but its competitive advantages would assist to convert the threats into opportunities.
Market Research Analysis
The owners of “Do-do Online Fresh Food Supply LLC” have already designed a questionnaire and distributed 300 questionnaires to the students of Long Island University, Hofstra University, and Adelphi University. At the same time, the entrepreneurs have contacted several employees of different organizations situated in Greenvale, Garden City, and Hempstead region of New York. As the owners would like to produce Indian foods, this questionnaire has incorporated a few questions about Indian dishes to know the perception of the students and workers towards Indian recipes. Two hundred students and workers gave their valuable opinion and sent back the completed questionnaire to the owner of this company; however, most of the students and employees have already tasted Indian foods.
- Do you agree that the Indian food delivery service would be helpful for local people?
According to the survey report, 39.5% of students and employees strongly agreed with the statement and 30% of students just agreed that the food delivery service would be helpful. 5% of students selected the third option, 15% of students think food delivery service would not be helpful for them and 10.5% of respondents strongly disagree, as they prefer homemade food.
From the answer to the survey question, it is identified that jointly 69.5% of students seem food delivery service would be helpful, which indicates that there is a market for a new entrant of the food delivery sector.
- Do you agree that this food delivery service is useful for students and workers?
Among 200 students and workers, 35% of students and workers strongly agreed with the statement and 33% of students just agreed that food delivery service is useful for them. On the other hand, 4.5% of students picked the third alternative, 16% of students think that this food delivery service would not be helpful for them and 11.5% of respondents strongly disagreed with the question.
The food delivery service is very useful to the students and workers, which indicates that there is a potential food market for a new food supplier.
- Do you select an area that you would most favor to have food delivered from the Kitchen Counter at (a) Greenvale, (b) Garden City, (C) Hempstead (D) University Cafeteria, (E) No preference
According to the result, 74 respondents (37%) replied that they would like to be delivered the Indian foods from Greenvale; 64 respondents (32%) preferred Garden City as a delivery point, about 30 respondents (15%) said that they would like to have the Kitchen Counter at Hempstead. However, 22 respondents (11%) suggested that it would be better to make the Indian foods available at every university cafeteria; and 10 respondents are reluctant to comment in this regard or prefer not to say.
With due respect to the answer from this question, the owners of the “Do-Do Online Fresh Food Supply LLC” decided that the first opening Kitchen of the company would be situated at Greenvale, the second one would be at Garden City and the next is at Hempstead; furthermore, the company would contact with university cafeteria to make its product available.
- When the Indian Dishes would available, how often you would eat them (A) every day two times (B) One a Day (C) More than Twice a Week (D) Once a Week (E) Prefer Not to Say
In response to this question, 24 of the respondents (12 %) said that they would eat the Indian food every day twice both in breakfast and lunch. 40 respondents (20%) would prefer to eat Indian food one a day. On the other hand, 68 of the respondents (34 %) said that they would eat more than two times a week, 58 of the respondents accounted 29 % replied that they would eat Indian food at least once a week and 10 of the respondents are not ready to comments in this regards.
Although 20% of respondents preferred that they would eat Indian food every day two times, this data has gathered from 200 respondents where the target inhabitants are around 25000, so, the validity may be questioned. However, the gathered data illustrates that the market is very vulnerable and the entrepreneurs have to account for them at least 50% less for their projection.
- To what extent you think the home delivery service without dining facilities of “Do-Do Online Fresh Food Supply LLC” is convenient for you.
Out of 200 students, 24 students that is 12% said that home delivery service without dining facilities would be convenient, 40 respondents (20 %) argued that home delivery service without dining facilities would strongly convenient. On the other hand, 68 respondents (34 %) disagreed and said it would not be convenient and 58 respondents (29%) opposed that it would be very inconvenient and 10 respondents (5 %) preferred not to say anything at this point.
This data illustrates that the majority of the respondents prefer to have dining facilities at a food supply outlet; thus, the entrepreneurs have to consider adding dining facilities at its soonest convenience.
- Do you agree that you use this service because it is economical and convenient
It is optimistic to the owners of “Do-Do Online Food Delivery Service” that 35% of students and employees strongly agreed, and 24% of students just agreed that they use this service because it is economical and convenient to them. On the other hand, 6% of students selected the third option, 14% of students disagreed with the question, and 21% of respondents strongly disagreed, as there are many other factors to them to decide about breakfast and lunch.
The answer to this survey question demonstrates, most of the customers will seek economical service, but health-conscious students seem cheap food may unhealthy; thus, the owners would concentrate on public health and ensure hygiene beside offer food at a reasonable price.
- Do you agree that this food delivery company is better than existing ones
In response to this question, 30% of students and employees strongly agreed, and 24% of students just agreed that “Do-Do Online Food Delivery Service” is better than existing ones. 16% of students were unsure about this matter, 20% of students disagreed with the statement, and 09% of respondents strongly disagreed that this food delivery is better than existing ones because they have already tasted the food of other companies.
From the result of this question, it is identified that the food market is highly competitive and it has to focus on marketing policy, such as, pricing strategy, and advertising policy to create demand and gain competitive advantages.
- When the service would available, which method you prefer most to process your order – (a) Company Website, (b) Mobile Apps (c) Telephone, (d) Kitchen Counter (e) Others
It is interesting to the owners that 60% of students and employees would prefer to place an order through the company website, 10% prefer to use mobile apps to 15% of the mid-age people prefer to place orders through telephone. At the same time, 8% of the respondents have preferred to collect Indian food from the kitchen counter directly and 12% of respondents prefer to make Indian food available at the University cafeteria and by other means.
This data indicates that the entrepreneurs have to consider adding delivery facilities at every possible point at its soonest convenience.
- To what extent you think the price is the main consideration to decide to use this food delivery service.
Among the 53% of the respondents strongly agreed that price is the main consideration to eating Indian food for their regular life, 23% of the respondents agreed that price is the major factor in eating Indian food occasionally. However, 14% of the respondents added that affordable prices could influence substituting their food habit with Indian food while 4% of the respondents argued that they could not change their food habit with Indian food but like it and 6% of the respondents do not give any response to this question.
The ultimate goal to raise this question is to assess the effectiveness of the pricing strategy of the company and the result shows the price is one of the prime factors to attract the customers at “Do-Do Online Food Delivery Service” and also influence and substituting their food habit.
- To what extent you think the good taste and delicious flavor of the Indian Food is the vital factor to attract local people.
Among 200 respondents, 48% of them strongly agreed that they think the good taste and delicious flavor of the Indian Food is the vital factor to attract local inhabitants, 32% of the respondents think the good taste and delicious flavor of the Indian Food could not only the factor to attract local people. On the other hand, 14% of the respondents added that cultural heritage also an attraction of Indian food while 4% of the respondents emphasized keeping health awareness issues in this regard and 3% of the respondents could not understand the question or preferred not to say.
The objectives to raise this question is to identify the customer’s outlook to the offered items to introduce a further new product for this market and the result indicated that the taste and delicious flavor of the Indian Food is not the only attraction for customers and they need more some think.
- For a healthy and tasty breakfast packet, you would willing to pay the following rate – a) $5 – $7 b) $7.5 – $9 c) $8.5 -$10 e) More
The highest 45% of students and employees stated they would like to spend $5 to $7 for breakfast, 30% of them selected the second option, 15% of students thought they would spend $8.5 to $10 while 10% of students ready to spend more for this purpose.
From the result of this question, the marketers identified that “Do-Do Online Fresh Food Supply LLC” should offer a breakfast menu at $5 to $8.
- For a healthy and tasty lunch packet, you would willing to pay the following rate- a) $less than 15 b) $15 -17 c) $17- $19 d) $19- $21 e) More
$10 students said they spend less than $10, highest 55% students and employees stated they would like to spend $15 to $17 for standard lunch packet, 22% students would spend $17 to $19, 7% students believe they would spend $19 to $21 while only 3% students would spend lunch.
From the answer to this question, the marketers decided that “Do-Do Online Fresh Food Supply LLC” would sell each lunch packet at $15 to $18.
- To what extent you think product quality along with the service quality of the company plays a vital role to retain customers
Out of 200 respondents, 66% of them strongly agreed that both the product quality along with service quality of the company plays a vital role to retain customers, 24% of the respondents think along with product and service quality, the taste of Indian Food has to keep uncompromising. At the same time, 4% of the respondents pointed to the timely delivery of hot dishes of Indian food while 3% of the respondents emphasized new product development and 3% of the respondents preferred not to say.
The main reason to raise this question is to understand the customer’s viewpoint to design retention strategy, and the result indicated that product and service quality of the company plays a vital role to retain customers, but tasty flavor, new product development is the influencing factor.
- To what extent you think inhabitants of Greenvale, Garden City, and Hempstead needed to have a promotional campaign.
Among the 200 respondents, 70% of them strongly agreed that the promotional campaign at Greenvale, Garden City, and Hempstead would enhance the inhabitants and loyal customers’ base. On the other hand, 23% of the respondents moderately agreed that promotional campaign would increase more customers, 3% the respondents pointed to the promotional campaign may increase the price of Indian food while 2% of the respondents emphasized to not to conduct the promotional campaign and 2% of the respondents preferred not to say.
Comment: The gathered data from this question indicated that a promotional campaign for the inhabitants of Greenvale, Garden City, and Hempstead would generate a strong customer base in this region and the entrepreneur would take necessary action in this regard.
- Do you agree that you switch to this service when it would available
In response to this question, 23% of students strongly agreed that they would switch to this company, the highest 37% of students, and employees agreed with the statement. On the other hand, 15% of students have no idea what they will do, but 25% of students have already loyal customers of the competitors and they will not switch to this company.
“Do-Do Online Fresh Food Supply LLC” will need to develop goodwill by providing healthy and tasty Indian dishes at a reasonable price; also, it has to use many promotional tools to attract students.
- Do you agree that you would recommend its service to your friends
By the survey report, 50% students and employees strongly agreed with the statement and 32% students just agreed that they would recommend this service to their friends while 1% students failed to decide, 7% students believe they would never suggest their friends take its service and 10% student strongly disagreed with this question.
The owners of “Do-Do Online Fresh Food Supply LLC” will offer gift coupons for loyal customers and give special services to the students who recommend this company to their friends.
From the result of the market survey, the owners believe they would be able to sell 300 packets breakfast and 300 boxes lunch each day; therefore, it would sell a total of 180000 packets approximately. Also, the survey report shows the students spend $5-$8 for breakfast and $14 – $21 for lunch. The calculation is –
|Products||Units||Per unit cost||Sales revenue|
|Breakfast packet||90000||$5 to $8 + Vat||$550000|
|Lunch box||90000||$14 to $21||$1520000|
|Total sales revenue||180000||$2070000|
Table 2: Sales Forecast. Source: Self-generated.
Without previous order, “Do-Do Online Fresh Food Supply LLC” would be always ready to serve the Tiffin as Indian midday light meals that included Purri, Samosas, and Paanipuri, which are already gained popularity in the New York City as a most delicious snack food. By attracting the students with cheaply priced Tiffin items, the customers would be interested in the Indian breakfast and lunch dishes and would hit at least, 4% of the people and gradually it would be a major attraction to the local inhabitants.
|Universities/ Educational Institutes||LIU Post||Hofstra University||Adelphi University||Other Officials at Greenvale, Garden City, and Hempstead|
|Number of Students/staff||6,224||10,870||7,859||5400|
|Percentage of People uses Services||4% on average||4% on average||4% on average||3% on average|
|Total Target Customers||311||544||393||162|
Table 3: Potential Customers. Source: Self-generated.
The US food trend illustrated that the New Yorkers do not bother to know the food process, preparation or sustainability, the health department continuously keeping its efforts to develop public awareness regarding food production, preparation, distribution, public health, and environmental issues concerned with food security (Pattison 9). Improvement of such public awareness regarding food safety would increase the market share of “Do-Do Online Fresh Food Supply LLC” in this region.
The company would keep its primary efforts for marketing through online digital advertising and the secondary media is that the local newspaper, University Magazines, poster, festoon along with door-to-door marketing at the key points. The company owners would contact the University cafeterias, Independent intermediaries, ordinary supermarket chains, distributors, and wholesalers of the selected region to supply its Tiffin items at their outlets. Due to small advertising funds, the company would emphasize Internet advertising rather than print media while brochure and leaflet with the promotional offer would be distributed to the target audience through different channels.
As a new entrant in the food industry, the owners of “Do-do Online Fresh Food Supply LLC” will design a competitive and reasonable pricing strategy. The result of the market survey report shows that most of the students of these three institutes and employees like to purchase breakfast at $5 to $8 and lunch packet at $15 to $18.
The National Restaurant Association (p 1-190) pointed out that in 2016 the restaurant industry in the USA projected sales of sales US$ 783 billion through more than 1 million outlets and by engaging 14.4 million employees while their purchase was US$ 279 billion for food ingredients and beverage. This data makes it clear that the restaurant industry is one of the giant private-sector job opportunity creators in the US marketplace and it would be the right choice for the entrepreneurs to starting a small business. The “Do-Do Online Fresh Food Supply LLC” would be categorized under the restaurant industry without dining facilities while the feeding service business has turned into the largest industry in the USA and has been demonstrating a remarkable growth indicator in recent years.
The market competition in the US restaurant marketplace has been characterized as wide-ranging as well as particularly among the large scale and expensive players in the restaurant industry which may seriously distress the customers and the customers shift to the new entries leaving behind the competing gigantic restaurants. It is also noted that the US restaurant industry is extremely competitive in the context of local product variety and their price, value proportion, promotional programs, service quality, location of outlets while there is no scarcity of substantial restaurant and those players would compete with the “Do-Do Online Fresh Food Supply LLC” by customer trafficking. Local restaurants and food courts at Greenvale may significantly hamper the easy entry with larger resources and take aggressive marketing strategy to attract the consumers’ and such imitative would result negatively and may downsize market share.
For Do-Do Online Fresh Food Supply LLC, the bargaining power of the suppliers is not very strong due to availability of wholesale food ingredients and raw materials and there is no such rear item, which is not available in the local market for which the suppliers could enjoy better bargaining power. At the same time, the company would offer the most competitive price for its product without compromising the quality, thus, there would not be any strong bargaining power handled by the customers come to dine Indian food of the company. Although the weakness of the company is that for a limited resource and scarcity of dining space, but its strength is that health-conscious fresh Indian menu, strong alignment with Indian culture, timely delivery of orders, dedicated management and well-trained working forces, strong ICT integration at the operational level and less overhead.
The owners will select a proper location to rent a standard kitchen to start food delivery service to employees of three areas and the students of LIU Post, Hofstra University, and Adelphi University. However, the owner will require only $10000 to establish a business, but it has to expend more capital after starting food production and delivery, which will generate from sales revenue. The direct cost for production will be high because the owners have to purchase fresh food ingredients and recruit a two-fixed Indian chef to prepare breakfast and lunch for the students, employees, and other customers. All other workers of this food delivery company will be Indian and they will get paid hourly basis; at the same time, the owners will recruit employees from foreign students who need a part-time job at a minimal rate. The owners of “Do-do Online Fresh Food Supply LLC” will allocate funds to develop a dynamic website since the students, workers and other customers will process orders through telephone and website.
|Pro Forma Profit and Loss Statement|
|The direct cost of sales||$654000|
|Total Cost of Sales||$0|
|Gross Margin %||68.40579%|
|Salary of delivery men||$72000||3.47826%|
|Salary of other staff||$105000||5.07246%|
|Salary of driver||$36000||1.73913%|
|Sales and marketing promotions||$100000||4.83091%|
|Rent of a standard kitchen||$42000||2.02898%|
|Maintenance and repairs||$2500||0.12077%|
|Packaging and other related costs||$37500||1.81159%|
|Cleaning and dishwashing||$6000||0.28985%|
|Equipment (bins, rack, shelves, food case)||$20000||0.96618%|
|Small pick-up van||$6000||0.28985%|
|Net Profit Before the Interest and Taxes||$974750||47.08937%|
|Net Profit/ Sales margin||45.88164%|
Table 4: Pro Forma profit and loss statement. Source: Self-generated.
Notes to the Financial Statements (A):-
Here the assumptions, calculations, along with an explanation for income statement has been demonstrated as follows-
Income Statement Clarifications
There are about 25000 students in Long Island University, Hofstra University, and Adelphi University; at the same time, there are more than 783400 people live in Greenvale, Garden City, and Hempstead region of New York. According to the market survey report, Indian foods are popular with both national and international students for flavor, spicy, and taste; however, the students like fast food to save their time and money though they agreed that fast food is harmful to health. It is assumed that at least 4% of students will purchase taste its breakfast or lunch packet; besides, a significant number of workers in these three areas will take its food. The result of the market survey report shows that students and employees will take their food repeatedly if this company will serve handmade healthy and tasty Indian food at a reasonable price; so, it will perform accordingly. Furthermore, the marketers of “Do-do Online Fresh Food Supply LLC” believe that they would be able to sell at least 300 packet breakfasts at and 300-lunch box per day; it will not produce food on holidays. As a result, this company will generate approximately $2070000 in sales revenue while the price of the food packet varies from $5 to $20 considering the menu.
- The direct cost of sales: The owners of “Do-do Online Fresh Food Supply LLC” will require at least two chefs for production of Indian food items and each chef will seek minimum $10000 per month; thus, the calculation of direct labor cost will be $10000* 2* 12 months = $240000. At the same time, the owners will need about $414000 to purchase fresh food ingredients to start production;
- Salary of staff: The entrepreneurs of this company will hire five people and will provide $7 per hour to the assistant of chef and other employees. The company will not produce any food on holidays and employees will serve 10 hours each day; therefore, cost calculation for the salary of staff will be $7*10 *25 *12 months *5 = $105000;
- Salary of deliverymen: this company will select three part-time employees who would be responsible to deliver breakfast and lunch to the customers. The owners will pay $8 per hour; therefore, cost calculation for the salary of delivery men will be $8*10 *25 *12 months *3 = $72000;
- Salary of the driver: It will hire a driver and pay $3000 per month; thus, it should require $36000 each year for this purpose;
- Sales and marketing promotions: The marketers of this company will spend $100000 to purchase gift items and other promotional materials, develop social media campaign, and advertise in the different local newspaper;
- Website design: As students, employees and other customers would like to process the order through the website, the marketers will use $5000 to develop a dynamic website;
- Telephone: The telephone will play a vital role to monitor overall business activities and process orders. Thus, it will require about $5000 for this purpose;
- Rent of a standard kitchen: The owners will use $42000 per year as the rent of a kitchen with 1500 square feet space;
- Maintenance and repairs: It is estimated $2500 to repair equipment;
- Packaging and other related costs: As the company will provide healthy foods to students, it needs to ensure hygiene and proper packaging; however, it should require $37500 to purchase packaging materials;
- Cleaning and dishwashing: Though the owners will hire 05 employees to assist chef and perform other related activities, it will require an additional $6000 for cleaning and dishwashing;
- Registration fee: The owners of “Do-do Online Fresh Food Supply LLC” have to expend $750 to establish a business, get a federal tax number, process the organizational minutes and bylaws; however, this cost could increase, which needs to adjust from miscellaneous costs;
- Equipment: it should require $20000 to purchase standard kitchen, such as bins, rack, ovens, grill, shelves, food case, and so on;
- Small pick-up van: The owners will purchase a secondhand pick-up van to deliver foods and it is estimated $6000; however, this price of a pick-up van could increase or decrease;
- Tax: the estimated tax cost is $25000 and this expense could increase or decrease;
|Small pick-up van||$6000|
|Accrued payroll and withholding||$453000|
Table 5: Pro Forma Balance Sheet. Source: Self-generated.
Notes to the Financial Statements (B):-
Here the assumptions, calculations, along with an explanation for Balance Sheet has been demonstrated as follows-
Balance Sheet Clarifications
- Cash: The entrepreneurs of “Do-do Online Fresh Food Supply LLC” will not provide any credit facilities to the customers; therefore, they have to pay in cash and this company will earn $207000 from the first year of its business operation;
- Equipment: This figure represents machines used to the company to produce Indian foods. Equipment includes deep fryer, microwave oven, barbecue grill, cheese-meter, electric cooker, hot box (appliance), food case, pressure cooker, sandwich toaster, rice cooker, mixers and blender, food processors, toasters, roti maker, stove, bins, rack, shelves, wood-fired oven and so on;
- Small pick-up van:
- Website: Since students, workers and other customers will use its website to process orders, the website will be one of the most significant assets to this company;
- Accounts Payable: This figure represents all short-term obligations, such as supplies and food ingredients;
- Accrued payroll and withholding: This is comprised remuneration of the chef, staff, and driver;
- Owner’s equity: This includes initial investment amount $10000
- Taxes: By the projected profit and loss account of “Do-do Online Fresh Food Supply LLC”, the owners need to pay tax for each packet of food;
The break-even point indicates when it has no loss or profit (Stevenson 42); “Do-do Online Fresh Food Supply LLC” will start making a profit from this stage.
Break-even = Fixed Costs / (Selling Price – Variable Costs)
= $10000/ ($15 -$7)
The owners of “Do-do Online Fresh Food Supply LLC” will provide initial start-up cost and the fixed cost comprises rent of standard kitchen, and equipment cost; however, direct labor costs will be arranged from the sales revenue. On the other hand, the owners have decided to sale lunch packet at $15 to $21 and the breakfast box at $5 to $8; thus, it is presumed $15 will be the average selling price of this company and the variable cost will be about $7. The owners of “Do-do Online Fresh Food Supply LLC” will reach in break-even point when 1250 students will purchase its product and it is assumed that it should require a month to achieve this goal.
Source of Capital
The entrepreneurs of the company visited several financing companies along with the Small Business Administration of the county and get a depressing experience of inadequate access to capital for the startups although there is huge propaganda of funding. Many financing companies and venture capitals offer to fund startups of small businesses, but to meet their desired qualification it is very difficult to recognize the long-term growth potentials of the business aim to assess risk while funding. Furthermore, there are several hidden charges, which would be a serious burden for a small startup; on the other hand, it is also difficult for startups to generate funding from the capital market. With such shocking experience the entrepreneurs considered that wasting further time for any kind of institutional financing would be a wrong engagement rather it would be wise to start the business with owner financing and after a year of successful running, it would be easy to get financing from any financial institutions. Thus, the entrepreneurs decided that the preliminary investment of the “Do-Do Online Fresh Food Supply LLC” would be US$ 10,000 and both owners would supply the capital at a ratio of fifty-fifty from their resources and they consider that there is not enough risk associated with this investment.
|Name of the Investors||Equity Investment||Amount (US)|
|Owner- 1 The Chief Executive Officer||50%||$5000|
|owner- 2 Director, CFO, and Shareholder||50%||$5000|
Table 6: Source of capital. Source: Self-generated.
|Current ratio||Current Assets / Current Liabilities||$2101000 / $902000 = 2.329%|
|Gross profit||(Sales revenue – the cost of goods sold) / sales revenue||($2070000 – $654000) / $2070000 = 68.406%|
|The profit margin on sales||(Net profit/sales revenue) x 100||$949750 / $2070000= 45.881%|
Table 7: Ratio analysis for “Do-do Online Fresh Food Supply LLC”. Source: Self-generated.
The analysis of the above-mentioned liquidity ratio indicates that “Do-do Online Fresh Food Supply LLC” will make high profit and it will have the ability to pay debt obligations. The result of the current ratio indicates that it would be able to pay short-term liabilities and “Do-do Online Fresh Food Supply LLC” would have $68.4 left after paying direct costs associated with food production; besides, net profit margin demonstrates that it will be a highly profitable and effective company.
Stevenson pointed out that operation management is a very wide-ranging phrase that indicates to manage and administer a business to its ultimate goals and objectives of generating better revenue and maximizing profit by coordinating with supply chain, logistic, technology, and workforce ensuring customers utility with the excellence of product and service quality (135). Operational management also looks to the vital tools, momentous techniques, and key factors associated with the supply chain management along with the mobilization of logistics of the organization at right time with apposite quality as well as the best price to guarantee standard measures. The engagement of operations management for manufacturing units and service industries are quite different from each other, as a manufacturer the “Do-Do Online Fresh Food Supply LLC” would produce Indian food dishes for the customers by taking orders through its web portal and as a service provider, it delivers the ordered food to the customer’s doorsteps. As a result, the company developing new processes that generate better value-added operational management for the stakeholders of the company would practice both categories of operational management.
There are 8.875% sales taxes on the prepared food in New York State, which applies to the “Do-Do Online Fresh Food Supply LLC” and the company would fulfill the federal income tax regulations along with self-employment tax structured for limited liability companies that suggest the income of wage above US$108.28 would pay social security and Medicare taxes. From the starting of its operation, the company could not appoint a tax attorney, thus it assesses and produces its tax return from the first year of operation at the self-assessment category complying with the income tax prerequisite for the small business.
The entrepreneurs of “Do-do Online Fresh Food Supply LLC” will recruit two chefs, three deliverymen, and a driver to operate a business in New York City; here, owners will perform administrative jobs. The monthly salary of the chef is estimated at $10000, but it has to pay after completing the job of the first month; thus, the owner will pay a salary from the sales revenue.
Under the Health Service Department of the New York State, there are some particular standards those are obligatory requirements to establish any restaurant or prepared food-supplying company; being an Indian food supplier, the company needed to take permit and license maintaining the entire regulatory requirement to ensure public health safety. The company has aimed to supply Indian foods at Greenvale, Garden City, and Hempstead region of New York and don’t entertain the customers with dining facilities. The company would take orders for breakfast, lunch, and Tiffin through its web portal and over phone or e-mail, and after having the orders the chefs would prepare the breakfast and lunch dishes and package them with high-quality food-grade paper-backed aluminum foiled boxes. The Takeaway Delivery Drivers would run to the customer’s doorstep for immediate delivery maintaining all the standards and procedures and these delivery drivers would be smart, good looking and very loyal to the customers with a better understanding of potential vulnerabilities of food delivery services and the competitors.
After analyzing the food market, it is assumed that the perception of the students and employees towards Indian food is very positive, which indicates there is a potential market. The owners of “Do-do Online Fresh Food Supply LLC” will offer a wide range of Indian food dishes to meet market demand; also, it will seek competitive prices to the students. The online food delivery business will be profitable because it should require a small budget to start a business while there is no major risk to operate a business or gain confidence in the customers. LIU Post, Hofstra University, and Adelphi University jointly have more than 25000 students and about 4% of students will be its regular customer; so, this company will make a profit if it can serve fresh and tasty Indian food at a minimal price.
Barron, Matt, and Brian Goldblatt. “Understanding New York City’s Food Supply.” 2014. Web.
Mintel. “Food & Drink Trends 2017”. 2017, Web.
Pattison, Steve. “National Restaurant Association 2016 Fall Summit”. 2016, Web.
Stevenson, William. Operations Management: Theory and Practice. McGraw-Hill, 2012.