U-Knighted BBQ

U-Knighted BBQ

Business Plan

Darius Mitchell, Eamon Fry, Ashley Hyche, Coltan Stephenson, Anthony Jones

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U-Knighted BBQ

Table of Contents

Executive Summary.……………………………………………………………3

Business Description……………………………………………………………4

Mission Statement………………………………………………………………5

Macroeconomic Climate

Unemployment….………………………………………………………5

GDP………………..…………………………………………………...6

CPI………..…………………………………………………………….7

Competitive Analysis…………………………………………………………..7

Product Demand……………………………………………………………….9

Location………………………………………………………………………..12

Advertising.…………………………………………………………………….13

Product Pricing…………………………………………………………………15

Scenario Analysis………………………………………………………………16

Form of Organization…………………………………………………………..18

Job Description…………………………………………………………………20

Fixed and Variable Cost………………………………………………………..21

Loan…………………………………………………………………………….22

Financial Statements……………………………………………………………22

Opportunity Cost……………………………………………………………….25

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U-Knighted BBQ

Executive Summary

We at U-knighted BBQ will be buying product wholesale from Payton’s

BBQ in Veedersburg, Indiana and selling it out of University Hall (U-Hall) on Marian

University’s campus. We will be purchasing the barbeque for $3.00 per pound and

selling sandwiches and meals for $4-$6. There are roughly 820 full time on campus

students that we plan on targeting. Through surveys we have discovered that there is a

void that needs to be filled in the food department. We will be filling this void 4 times a

week from 6:00pm to 9:00pm Monday through Thursday. Our product is an elastic good

with little wiggle room for a price change. There are many substitutes around campus but

they lack the price and convenience that we offer at U-Knighted BBQ. We are expecting

to sell 840 units with average revenue per customer of $4.67. We are expecting to make

$3,923 in total revenue with $2,130.80 in net income for the total 14 weeks we will be

open from January to May 2014. We will be generating awareness of our company long

before its debut. We will be putting up flyers around campus to create a buzz along with

communicating with our member’s respective sports team to help spread the word around

campus to plant in our consumer’s mind the upcoming food delicacy. Once the next

semester has started we will send out emails and put up more flyers to generate

awareness. U-knighted BBQ will be up and running on January 27, 2014 and closing on

May 1, 2014.

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Business Description

U-Knighted BBQ is a business designed to make profit off of buying BBQ pulled

pork at wholesale prices from Payton’s BBQ, a previously developed restaurant located

in Veedersburg, IN. After purchasing the meat, our business will progress into cooking

the pork in crockpots and making quality sandwiches that will be sold to a target market

of residents as well as commuters, parents, fans, and faculty members on Marian

University’s campus. These products will be cooked while abiding by Serve Safe and

Health Department regulations.

Our business will sell the product (pulled pork sandwiches) as well as

refreshments, out of the University Hall Kitchen. U Hall is located in central proximity

in relation to the two primary dorm buildings. To accompany the clear convenience of

our primary location, we will also be supplying our customers with delivery orders which

can be picked up in the lobby of any of the three other residence halls (Clare, Doyle,

New). Our easily accessible and delicious product will be perfect for any Marian student

desiring to satisfy their nighttime munchies.

Mission statement

The mission of our company is to provide high quality, satisfying pulled pork

sandwiches to the Marian population, while also making a profit in the meantime. We

intend to keep the quality of our product at consistently high standards in order to

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stimulate profit by increasing demand as well as customer loyalty. The overall social and

athletic relevance of our group members will be used to contribute to our business’s name

recognition. We desire to provide a much-needed good to the people of Marian, as a

result of our belief that the food options on campus are not currently adequate to

accommodate the ever-existing presence of the munchies.

Macroeconomic Climate

The unemployment rate is the percentage of the total labor force that is

unemployed but actively seeking employment and willing to work. During the most

recent recession; The Great Recession, Indiana’s unemployment rate peaked at 10.8

percent during this time. Indiana’s unemployment rate is higher than The United States

unemployment rate which is 7.3 percent. The unemployment rate was 8.3 percent in July

and the current unemployment rate is 8.1 percent, which is the largest one-month drop in

over two years.

The

economy

as a whole is

continuing

to repair

itself.

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Unemployment is forecast to continue to decline in Indiana as the state’s economy

continues to grow. Indiana’s work force grew little in the 2000s and dropped by 6 percent

in the latest recession. Indiana’s businesses have recovered and replaced 71 percent of the

jobs it lost in the recession. The Unemployment rate is estimated to be 6 percent by 2018.

Gross Domestic Product (GDP) is the monetary value of all the finished goods

and services produced within a country's borders in a specific time period, though GDP is

usually calculated on an annual basis. It includes all of private and public consumption,

government outlays, investments and exports less imports that occur within a defined

territory. Indiana’s economy has fared pretty well compared to the national economy.

Indiana’s GDP was hit harder than the nation’s during the most recent recession, but rose

more quickly as the recovery began, led by a manufacturing rebound. Indiana’s real GDP

in 2012 was $249 billion, which is the 16th largest (USA Today).

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Indiana’s GDP is estimated to be $257 billion in 2013 and increase to $268 billion

in 2014. The percent change over the four quarters in 2013 will be 3.2% and the percent

change over the quarters in 2014 will be 4.2%.

Customer Price Index measures weighted average of prices of a basket of

consumer goods and services, such as transportation, food and medical care. The CPI is

calculated by taking price changes for each item in the predetermined basket of goods

and averaging them. CPI is one of the most frequently used statistics for identifying

periods of inflation or deflation. This is because large rises in CPI during a short period

of time typically denote periods of inflation and large drops in CPI during a short period

of time usually mark periods of deflation. The Consumer Price index for (CPI-U)

increased .2 percent in September.

Competitive Analysis

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As an alternate food establishment on campus we are taking business away from

other barbeque businesses nearby. Some of these competitors include BBQ Heaven,

which is 2.6 miles away from Marian University’s campus. We called BBQ and asked

them how much do they charge for a pulled pork sandwich and they told us, for an

individual sandwich it would be $5.22. They also told us that they offered a meal option

with this item and would be $8.08 for the pulled pork sandwich along with two sides.

Next we contacted King Ribs, which is a mere 0.3 miles away from campus. King Ribs

charges $4.50 per sandwich. Lastly we gave Judges’ BBQ & Juice Garden a call to

complete our contacting of nearby BBQ competitors. Judges is 2.2 miles away and

charges $5.15 for their barbeque pulled pork sandwich. We took this information into

account when we came up with our prices in order to stay competitive with the

competition.

Our research didn’t end with contacting the local barbeque businesses. We decided

we wanted to go deeper and figure out what the consumers think of their restaurants. We

researched our competitors using the online food review site Yelp.com. BBQ Heaven

was listed as a cash only business with reviews speaking highly of ribs but nothing on

their sandwiches. We figure if all of the reviews posted are about an alternate product and

not their sandwiches then that must speak wonders about its quality. Next we have King

Ribs with a solid review on barbeque pulled chicken and pork but complaints about

location. We figure that King Ribs has a solid product but what they lack in location we

make up for tremendously. U-Knighted Barbeque’s location in University Hall is in the

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center of all dorm buildings making business and convenience our specialty. Lastly we

have Judges’ BBQ. Judges’ received mixed reviews on food quality. Based on these

reviews we feel we can capitalize where our competitors cannot.

Considering the weaknesses of our competitors which we have discovered, we

feel very confident that our product is bound for success. Not only is our proximity an

immediate advantage, but after analyzing the consumer responses to these substitutes, we

feel as if we offer a higher quality product. As well as the quality which we present, our

low prices we also be much more appealing to the typical budget of a college student.

Product Demand

The market we are targeting has roughly 820 people. These 820 people we are

targeting are the full-time on campus students here at Marian University. We are trying to

get the business of the individuals on campus like Joe Sosa. Joe is the average college

student. He is about 19 years old and has a part time job working 15 hours a week for

minimum wage ($7.25 per hour). Joe makes $217.50 every two weeks but disposable

income is low because he is helping his parents pay for college along with saving his own

money for later or emergencies. Mr. Sosa also carries ten to twenty dollars in cash on

him at all times. Now what if Joe is working hard on a research paper, he looks at the

clock and it is 7:30 the Café is closed but he still wants dinner. He wants to eat but

doesn’t feel like traveling across campus to Subway or drive for miles to find a meal. We

at U-Knighted BBQ want to supply Joe with a cheap, quality meal after the Café closes to

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his convenience. No matter the situation, if it’s cold, rainy, or you are just too lazy to

leave your dorm room in the evening we will deliver with a meal at the utmost

convenience. The numbers we got for consumer preference were received via survey

through the following questions:

12%

60%

28%

Are you satisfied with the food selection at

Marian?YesNoImpartial

85%

5%10%

Do you enjoy BBQ? (pulled pork)

YesNoImpartial

12%8%

40%

40%

How much money do you spend on average on fast food

restaurants?$1 $3 $5 $6 or more 30%

40%

25%

5%

How many nights per week do you eat dinner outside of us-

ing your meal card?

1 to 23 to 45 to 67

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The survey was conducted a couple hundred feet away from U-Hall (our selling location)

at the library. The survey was conducted around 7:30pm so we directly contacted our

consumer during the middle of our hours of operation (7pm-11pm). Our data shows that

there is a market at Marian University for an alternate food source on campus. Many

people eat outside the café multiple times a week and spend the exact amount of money

our sandwiches and meals cost ($4-$6). We also discovered pulled pork sandwiches are a

popular food choice among students on campus.

Our product is an elastic good because price controls our demand. With so many

substitutes for our product the wiggle room for a price increase is very small. We are

pretty locked into a couple dollar variation range. Some of the close substitutes nearby

include BBQ Heaven (2.6 miles away), King Ribs (.3 miles away), Judges’ BBQ (2.2

miles away), and of course the café and Subway on campus. Our competitor’s prices vary

anywhere being $4.50 to $7 for just the sandwich! We think our low price and

convenience will be able to draw in many customers. We asked the Subway on campus

how many customers they average a night after the café closes and we got the answer

120. We feel like we can get about 10% of these customers to come try our product,

which equivalents to 12 customers a night.

Location

Clare Hall

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The yellow dots listed on the graph above marks the residency areas on campus

along with the library. These locations were highlighted to show relativity of our business

to our potential customers on campus. The blue dot is the area we will be operating out

of. Our survey was conducted in what is listed as the library. We chose our location of

the University Hall kitchen to operate our business because of its prime location in the

middle of three out of the four dorm buildings. University Hall is our ideal location to

sustain business because of the high foot traffic that comes through this area making sales

and delivery easy.

Advertising

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It is our intention to launch our marketing campaign will begin prior to our first

month of operation. Initially, we will engage in the most basic forms of marketing, such

as word-of-mouth advertisement. The group believes that creating a buzz about our

product and service of delivery before we begin to operate will stimulate anticipation, and

ultimately sales as well. Assuming that excitement is present before we open, we believe

that our first month’s sales will allow us to easily repay the entirety of our loan.

Once we have attained and passed all the necessary prerequisites, we then intend

to launch a more advanced campaign in order to increase awareness and sales. As our

primary source of promotion, we will use the low-cost approach of printing off flyers and

posting them all over campus, especially in the most highly trafficked areas, such as

Marian and Clare Halls. In addition, if sufficient funds are present, we could expand our

campaign to hold campus wide competitions and events where we would serve our

product. Finally, we also intend to send emails to all Marian students and staff to

promote awareness, as well as sending text alerts to our most loyal customers.

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U-Knighted BBQ

Here are two examples of what our flyers might look like:

Product Pricing

We will be purchasing our product wholesale from Payton’s BBQ in

Veedersburg, Indiana. We will be receiving the barbeque for $3.00 per pound. We can

then make five sandwiches per pound. Our estimated number of sales is around 840

units. This is from averaging around 15 customers a night for four nights a week for 14

weeks. Fixed costs add up to be $700. This covers crock-pots, tables, cash box etc. for all

one-time costs. Our variable costs will equal about 1,092.00 for the whole semester for

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the projected 840 units. This includes buns, napkins, drinks etc. Our fixed cost per unit is

$.83, variable cost per unit is $1.30, and accounting cost per unit is $2.54.

Scenario Analysis

At U-Knighted BBQ we offer four different products at your convenience. We

offer our single sandwich for $4, a sandwich and drink for $5, a two sandwich for $6

special and drinks by themselves. In the figure below you can see our scenario analysis

for the average revenue per person for a low, medium, and high price for our products

across the top of the chart. Along the left, reading down, is our expected number of

customers for the entire 14 week time period. We arrived at our estimated demand by

multiplying how many customers we believe to generate per night (10,15,20 reading

down). We are expecting to generate 15 customers a night during our four-hour period of

being open. 15 customers a night breaks down to only about four customers every hour

and based on our surveys we believe this a very reasonable number. Listed in each box

(in order) is the break-even point for the given price, total revenue for the given scenario,

total profit, and the percentage of our $1,200 loan paid off at the end of the 14-week

period.

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U-Knighted BBQ

Lo 3.75 Mid 4.67 Hi 5.60

Lo 560

302/

$2,100/

$612.06/

51%

208

$2,615

$1,187.20

100%

163

$3,136

$1,708

100%

Mid 840

302/

$3,150/

$1,274.82/

100%

208

$3,923

$2,130.80

100%

163

$4,704

$2,912

100%

Hi 1120

302/

$4,200/

$1,937.58/

100%

208

$5,230

$3,074.40

100%

163

$6,272

$4,116

100%

Input costs for our different products are low and ideal for a starting business. The

amount it costs us to produce a single sandwich is $1.02. Production for a meal is also

low at $1.35, two for 6 costs $1.93, and a drink would be $.25. Our product demand

listed in the scenario analysis is based on the average expected daily in come 10, 15, or

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20 people a night. Multiply this by the number of days worked a week (4) then multiply

the that number by the total number of weeks open (14) and you get our numbers listed

above.

Form of Organization

  Dec Jan Feb Mar Apr

           

> Purchase a ServeSafe textbook          

> Apply for site license          

> Begin word-of-mouth advertisement          

> Begin to organize and purchase assets          

> Take ServeSafe tests          

> Begin advertising/marketing campaign          

> Purchase variable assets          

> Open business          

> Save investment money          

> Divide profit according to hours worked          

Our first order of business of upon winning the business competition is to take

care of the big-ticket issues first. We wish to apply for our business location license

within a week of being crowned. We will also be purchasing our Serve Safe study book

immediately in order to get at least one member ready for the test upon returning to

school on January 13, 2014. Next during the weeks winding down into Christmas break

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we will be putting up our flyers and begin to create a buzz amongst our respective sports

teams and friends in order to get initial awareness of the future BBQ business that will be

coming to campus upon their return to school.

Dependent upon when we receive the loan from the board of investors, we would

like to begin to purchase fixed costs a week before returning to school in January. We

will store these items at the group member’s house closest to the school (10min away) or

the group member’s room inside U-Hall. Upon returning to school, the first week back

we are going to open a business bank account with Old National Bank. The first week

back we will continue advertise the opening of hot new food delivery business around

campus.

We plan to open up business officially on January 27, 2014 so we have two weeks

to take our Serve Safe test and pass the study book onto the next group member to begin

studying. Once one group member is cleared to handle food we will begin to purchase

our variable costs estimated to operate for the first month of business. Group member,

Coltan, will get the barbeque from Veedersburg, Indiana. We will store the barbeque and

other food related items in our reserved area in Aramark’s kitchen on campus in the café.

At this point it is January 27th and we are ready to open for business. We will

arrive to U-Hall kitchen roughly 45 minutes early (5:15pm) to set up business

paraphernalia and begin to heat the barbeque in the crock-pots. The drinks will be placed

in the freezer to cool faster before moving them over to the refrigerator portion before

sale. We will close up shop at 9:00pm and deposit money to an undisclosed location. The

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loan will begin to be paid off monthly or however the investors see fit. During the course

of the semester we will mark down who works each night with a wage of $5 per person

per night, at end of semester divide money necessary towards investing and the rest is

split according to the list of members who worked.

Job Description

We will be open Monday-Thursday from 7-11pm. U-Knighted will typically have 3

employees working per night. Master Chef, Cashier, Delivery Correspondent/Delivery

Man, Coltan will be delivery specialist. The nightly demand of our product is liable to

vary to a large extent, which could mean that the number of employees on the clock per

night may not be consistent. The three workers that were previously mentioned would be

featured on nights which we expect to see large sales. On nights which we learn tend to

see fewer sales, we will have the leeway to function with only two employees.

For this reason, we intend to conduct an ongoing evaluation of the nightly demand for

our product. After doing this, we will more easily be able to predict nights of high and

low sales. We anticipate that basic trends in sales will vary in accordance with what

nights we are open. In other words, we may see much lower sales on Mondays than we

will on Thursdays. By acquiring an understanding of these trends, we will have the

ability to better anticipate the amount of inventory necessary to hold at certain times. In

addition, tallying our nightly demand will enable us to determine how many staff

members will be needed per night.

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Fixed and Variable Costs

Fixed costs

Location Expense (Health Dept.): $460

Servesafe certification (2): $115

Crockpots (2): $70

Change box: $8

2 Coolers (Free)

Table covers: $22

Utensils: $15

Flyers(50): $10

Total Fixed Costs: $700.00

Variable Costs

Buns (12): $2.12

Tin Foil (75 ft.): $5.38

Paper Bags (100): $6.90

Pepsi Drinks (36): $8.89

Napkins (1000): $8.52

Water (32): $6.00

Bags of Ice: $3.00

Gloves (1000): $5.86

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Logo Stickers (120): $15.00

Meat (1 lb): $3.00

Loan

We are asking for a loan in the amount of $1,200. This loan was calculated by adding our

variable and fixed costs for the opening month, while leaving room to accommodate for

unexpected issues with crockpots, spillage, as well as transportation money to obtain

more barbeque at the end of the month.

Financial Statements

U-Knighted BBQ Income Statement      Revenue from sales 3923     3,923    Licensing Expense 575       Supplies Expense 115       Advertising Expense 10       Interest Expense 24       Cost of Sales 1,092.00      1,816.00     Net Income   2,107.00

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U-Knighted BBQ Retained Earnings   Retained Earnings as of January 13, 2014 0   Net Income 2,107.00   Less Dividends 0   Increase in Retained Earnings 2,107.00   Retained Earnings as of May 10, 2914 2,107.00

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U-Knighted BBQStatement of Cash Flows

Cash received from sales 3923Sales expense 1,792.00Interest expense 24Net Cash Flow from Operating Activities 2,107.00     Cash flows from financing activities    

Cash received from loan 1200  Cash received from purchase of stock 5  Net cash flow from financing activities   1205     

Net increase in cash in 2014   3,312.00

Cash as of January 13, 2014   0

Cash as of May 10, 2014   3,312.00

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U-Knighted BBQ Balance Sheet        Assets    Cash 3,312.00    Total assets   3,312.00        3,312.00Liabilities      Short term loan 1,200    Total liabilities   1,200         Stockholders Equity      Capital stock 5    Retained earnings 2,107.00    Total stockholder's equity   2,112.00         Liabilities and Stockholder's Equity     3,312.00

Opportunity Cost

We came across a couple different ideas while brainstorming the right business

plan to win it all. The first idea was a student lottery. The student lottery was designed to

be a small-scale lottery service offered strictly to Marian University students. Tickets

would be sold cheap and there would be weekly drawings for small cash prizes. The idea

was designed to put a little more money in student’s pockets at a low price. Because the

lottery would be strictly to Marian Students you would be more likely to win thus more

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entries. We decided to not to go with this service because it is considered gambling by

the state of Indiana.

The next idea generated was themed parties held on campus a couple weekends a

month. Themed Parties organized weekly or monthly in the PE Center auxiliary gym.

The party would have concessions and a professional DJ. There would be a cover charge

upon entry. We decided not to go with this idea because of an estimated demand

problem. The revenue produced wouldn’t cover costs quick enough or at all possibly.

Our final idea was a tailgating service offered before Marian football games. We

would be selling/renting tailgating paraphernalia including hot dogs, burgers, tables,

chairs etc. This service would be to supply items for fall sporting events. We decided to

not go with this service due to high competition (people having their own tailgating

equipment) equaling lack of probable business.

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