E3 Playhouse

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Nightclub, Dance Classes Business Plan

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Market Analysis Summary

Santa Cruz is located on California's Central Coast, approximately 70 miles south of San Francisco. The area's major industries include tourism, agriculture, manufacturing, and technology. Tourism represents a $513 million industry in Santa Cruz county and generates $14.5 million in local taxes. The region offers excellent transportation; recreational activities; arts and cultural entertainment; food and wine; and lodging for tourists and business travelers. Average travel expenditures per person are $287.48 per trip or $96.67 per day. The average travel group consists of 3.3 people, and the average length of stay is 3.6 nights (Santa Cruz Visitor's Bureau, 2004).

Santa Cruz is a secondary market, with an influx of visitors from the area's primary markets including San Jose and San Francisco. Santa Cruz County's primary population consists of 255,602 people with a secondary population of 135,326 people.

4.1 Market Segmentation

The venue appeals to four major market segments:

Young Professionals-- We appeal to single adults and young couples seeking to interact through the social arts and socializing. Young professional customers will range in age from 21 to 51. The venue will appeal to this category by switching the tempo and entertainment to be more appealing to adults as it gets later into the evening. A new 120-unit residential building is under construction directly across the street from the venue, expected to open in Summer 2004. Additional housing developments are undergoing construction throughout the downtown vicinity. This increased population will provide greater foot traffic in the area.

College Students--By creating an environment that is appealing to college students, we secure a natural progression between the high school student and the young professional. The venue is in close proximity to UC Santa Cruz, Cabrillo College, and CSU Monterey Bay.

Tourists and Business Travelers--More and more business travelers and tourists visit the Santa Cruz area every year. We plan to reach these people through direct marketing to local hotel patrons. Tourism generates $513 million in Santa Cruz County every year. The venue is located in the heart of downtown Santa Cruz. The Santa Cruz Boardwalk is one mile away.

Senior Citizens--10% of the Santa Cruz County population is represented by senior citizens. Music events, swing dancing, and course offerings will be scheduled during the early afternoon hours, appealing to the senior citizen population.

The following chart and table outline the target market segments for the venue, including annual growth projections, which we estimate at 2%. We conservatively estimate our target population at 200,000 people. Our sales projections are based on a percentage of this target population.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Overall Population (Santa Cruz County) 2% 200,000 204,000 208,080 212,242 216,486 2.00%
Other 0% 0 0 0 0 0 0.00%
Total 2.00% 200,000 204,000 208,080 212,242 216,486 2.00%

4.2 Targeted Population

We estimate that 4% of the targeted population in the Santa Cruz market will visit E3 Playhouse each year, with a frequency of three visits per year. This results in a targeted visitor goal of 24,000 estimated visitors per year.

Total Population Pool in 2004

200,000

Percentage Targeted as E3 Visitors

4.0%

Estimated E3 Visitors

8,000

Frequency of E3 Visits per Year

3.0

Estimated Total E3 Visitors

24,000

Daily Visitors Breakdown

24,0000 Visitors per Year = 2,000 Visitors per Month = 80 Visitors per Day

Basic Revenue Breakdown

Based on these targeted visitors, we anticipate using the following breakdown as a basic revenue estimate. A detailed revenue analysis is provided in the Sales Strategy section of the business plan:

80 Visitors/Day x $10 per Person = $800/Day x 25 Days/Month = $20,000 per Month

4.3 Competition and Buying Patterns

Competition

The venue's direct competition consists of six competitors, two of which are direct competitors:

Rosie McCann's:  Rosie McCann's offers a game room, live music, and a full bar and menu. The venue caters to the 21-51 age range.

Bruno's:  Bruno's offers seating for 200, provides a full bar and menu, dance lessons, and a DJ. The venue caters to the 21-51 age range.

Additional competitors are:

The Kuumbwa:  The Kuumbwa is a good size venue with seating for 200 guests. The venue appeals to a wide range of visitors and offers a simple one-entree menu.

The Catalyst:  The Catalyst is considered more of a large concert venue, with two stages and seating for 600 people. The venue appeals to the 16-26 age range, and offers a pub-food menu. The Catalyst has a full liquor license.

The Blue Lagoon:  The Blue Lagoon is a DJ venue with a 200-person capacity, appealing to a 21-30 age range. The Blue Lagoon has a full liquor license and does not offer a menu.

E3 provides month-long Educational Courses and Workshops for the community. Direct competitors for these types of offerings include:

  • Santa Cruz Parks & Recreation
  • Santa Cruz Adult School

Buying Patterns

The major reason for the customers to return to a specific entertainment venue is pleasant atmosphere, good food and service. E3 Playhouse will gear its programming activities, marketing, and pricing policies to establish a loyal client base.