Sandwich Restaurant Business Plan

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Market Analysis Summary

Pita Pal will be serving the Washington, PA lunch time and early evening crowd. Two distinct market segments will be targeted: students of Washington and Jefferson College and "towners." The students will be attracted to Pita Pal as a better alternative to their on-campus meal plan. The towners will appreciate the selection and change from the more traditional offerings currently available on Main Street. Main Street has been chosen in Washington because of the recent renaissance of the downtown area. Currently, there are lots of different businesses that have hungry lunch time workers.

The competitive environment that Pita Pal faces is not too stiff. Most of the lunch time fare in downtown can be categorized as traditional offerings, diner food.  While this might appeal to older residents of the town, this does not appeal to many college students and to a growing population of people who are in search of more healthy food, Pita Pal should be a big hit.

4.1 Market Segmentation

Pita Pal has segmented the market into two distinct segments:

Students
This group is primarily from Washington and Jefferson College, a liberal arts school, a tenth of a mile from downtown. The students are looking for food vendors for two main reasons, the first is the desire to get off campus, the second is to have an alternative to the on-campus food service. Demographic data and behavioral traits for the students is as follows:

  • 75% of the students are on some sort of financial aid;
  • 67% have a part-time job;
  • Ages 17-22;
  • 42% of the students were in the top 15% of their high school class;
  • 36% of the students were in the 85th percentile for the SAT;
  • 89% of the students eat out at least twice per week;
  • 75% of the students are on the school food program.

This information pertains to the Washington and Jefferson students. There will be a few community college students who will trickle in, but since their campus is six miles away, there will not be a significant number of community college students.

Towners
This group is the people that live and work in Washington, primarily in the downtown area.

  • Ages 24-55;
  • The average individual income is $38,000;
  • 55% of the people have at least some undergraduate schooling;
  • 44% of the people work within a seven minute walk from the downtown area;
  • 76% of the group go out for lunch one to two times a week.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Students 8% 2,285 2,468 2,665 2,878 3,108 7.99%
Towners 8% 45,989 49,668 53,641 57,932 62,567 8.00%
Total 8.00% 48,274 52,136 56,306 60,810 65,675 8.00%

4.2 Target Market Segment Strategy

The two different market segments that Pita Pal will be going after are distinct enough that there will be two different marketing campaigns, one for each group. This is necessary because the two groups respond to different forms of communication. Students spend the majority of their day on campus, but typically venture off campus during the day for lunch. The marketing effort to reach the students will be based on their forms of written media, The General, student newspaper.

The towners can be reached through different sources of communication. These are people who work downtown and tend to patronize the other downtown businesses. These people are more in tune with the different business organizations that exist downtown. Pita Pal will attempt to communicate with this group via the local newspaper.

4.3 Service Business Analysis

Pita Pal exists within the general restaurant industry. There are many different categories within the restaurant industry. Pita Pal fits within two different niches within the industry, fast food and fast casual. Their offerings are similar to fast food in that orders are placed at the counter and served within a few minutes, and the menu is somewhat limited in selection. It is also similar to fast casual where the clientele tends to spend more time at a table relative to a fast food restaurant. The food is more expensive than a normal fast food restaurant and there is a larger product offering.

For the restaurant industry, it is normal for a venture to reach profitability by year two. If they reach it any earlier it is likely that they are cutting corners and that profit is unlikely to be sustainable. If it takes more than two years than it is quite questionable whether they will ever reach profitability.

4.3.1 Competition and Buying Patterns

Pita Pal's competition exists in many forms:

  • Fast food: This takes the form of the traditional restaurants such as McDonald's, Burger King, and Wendy's, as well as healthier alternatives such as Subway.
  • Pizza: The predominant pizza place for sit down food is Brothers pizza, owned by two brothers who are professors at the college. This place is more popular with locals than with college students based primarily on the fact that the professor owners are not very well liked as professors so many students avoid the place.
  • Deli: There are two different delis located downtown that serve deli style sandwiches. These delis serve very basic, standard deli fare, generally sliced deli meats.
  • Diners: Based on the aging demographic of Washington, a function of its steel industry roots, there are several diners located in Washington, one of them downtown. These are very traditional diners, the menus are right out of the 1950's.
  • On-campus food service: At least for the students, this is an alternative in terms of food offerings. Most of the students have a food plan. Because of the poor food offerings and the need for variety, many of the students are looking for other alternatives regardless of the fact that their food is already paid for via the plan.