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New World Deli

Executive Summary

Opportunity

Problem

In this fast paced world where lunch is only 40 minutes everyone needs a quick nutritious meal. They will walk to their local Sandwich shop and get a meal that will stay with them all day long. 

Solution

The New World Delicatessen will be an upscale deli specializing in a combination of fast hot or cold sandwiches and salads plus specific recipes focusing on the Pacific Northwest cuisine.

Based on this distinct menu, New World Deli will follow a differentiation strategy that will provide unique or hard to find choices to deli patrons. This will provide Ms. Ericson with the ability to charge slightly more for its food services than most competitors and return a significant profit.

Market

We have three main markets:

  • People who work in the downtown area during the day, who will be looking for walk-in good food and convenience for late breakfast and lunch.

     

  • Surrounding businesses looking for phone-in lunch for business meetings.

     

  • Workers with families looking for take-out food to take home for family dinner at the end of the workday.  

Each of these market segments consists of people who either work in the downtown area or flow through this area during the normal work week.  As such, there will be a undetermined percentage of each market that will be seeking an eating establishment that will meet the requirements of  healthy food, fast service, and pleasant atmosphere. Furthermore, New World Deli will cater to the growing trend of middle-class professionals who seek a differing cuisine than that of the established food chains.

Why Us?

The New World Deli will be an upscale deli specializing in a combination of fast hot or cold sandwiches and salads plus specific recipes focusing on the Pacific Northwest cuisine.

Expectations

Forecast

It is estimated that the company will have sales over $700,000 by year three, and maintain a healthy cash flow.

Financial Highlights by Year

Chart visualizing the data for Financial Highlights by Year.

Financing Needed

The company will get $60,000 to startup. Jane Ericson will be investing $20,000 of savings and guaranteeing a loan for another $30,000 with personal assets.  In addition, the business will receive an interest-free loan from a family member of $10,000, to be repaid within the first year.

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Opportunity

Problem & Solution

Problem Worth Solving

In this fast paced world where lunch is only 40 minutes everyone needs a quick nutritious meal. They will walk to their local Sandwich shop and get a meal that will stay with them all day long. 

Our Solution

The New World Delicatessen will be an upscale deli specializing in a combination of fast hot or cold sandwiches and salads plus specific recipes focusing on the Pacific Northwest cuisine.

Target Market

Market Size & Segments

 

4.2 Target Market Segment Strategy

For the business market we need to focus on specific companies with specific opportunities. For individuals we need to lever off word-of-mouth recommendations, probably depending on business customers.

The business market has the potential of providing large volume sales to the company during the peak hours of 11 a.m. to 2 p.m., both through small groups of business people visiting NWD and delivery orders. Satisfaction of this group will provide a vital long-term revenue stream. For the business market, the company plans to do specific target marketing through flyers, business discounts, billboards, and creating a record of fast delivery.

For the individual groups seeking breakfast or lunch downtown, or take-home meals, it is necessary for the company to build an effective word-of-mouth marketing strategy. The company will do this slowly, realizing that much of this will grow from its business market. The company is also planning on doing a number of joint marketing efforts with other local companies such as the production and distribution of a referral book to be given to various individuals. This in turn would help to drive our word-of-mouth marketing efforts.

 

Competition

Current Alternatives

In the immediate, downtown area, there are five main competitors. This includes Subway Sandwiches, Cleo’s Sandwich shop, McDonalds, Taco Del Mar, and Famous American Deli.

The established chains, Subway and McDonalds have much more of a national focus and the individual managers have little or no ability to adapt to local desires. In addition, these outlets are franchised to individual owners. This method of franchising often leads to friction between the corporate office and the local owners that inhibits efficiency, cleanliness and other aspects. However, these chains also have the ability to cut prices at will, and have established and secure relations with their suppliers.

The more local stores such as Cleo’s sandwich shop and Taco Del Mar are much more locally oriented. However neither company has particularly deep pockets that provide for growth.

Our Advantages

Our most important competitive edge is the location closer to our potential customers than any other. In addition, we have our Pacific Rim theme that will attract customers looking for local cuisines.

Keys to Success

Keys to Success

Our keys to success are: 

  • Repeat business. Every customer who comes in once should want to return, and recommend us.  Word-of-mouth marketing is a powerful ally.
  • Location. Convenience is essential to us, we need to be close to our market because we are not trying to get people to travel to reach us.
  • The right food, variety with a Pacific Rim theme, with a price high enough to establish credibility, but not so high as to limit customers. 
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Execution

Marketing & Sales

Marketing Plan

Most of our marketing efforts have already been mentioned. Our marketing strategy focuses mainly on making our existence known to the people working close to our location.  It also depends on making our Northwest Pacific theme known to those same people.

We can focus on local marketing: our signage, a grand opening party, and flyers to local offices.

Sales Plan

We need to offer fast service at peak times.  The key is a good crowd balance, so that we never look empty but we are never so full that we turn people away.  Lines have to move fast.

We need a good selection of convenient foods.

Our most important sales strategy is develop repeat business.  Every customer who comes in has to want to return. To that end, we will offer some of the more established sales strategies such as discount cards, special menu days, and a regularly changing menu. NWD intends to keep accurate track of what types of sandwiches and other foods sell well and to create a program of customer feedback through surveys. With this information we will be able to streamline our food line to match the local tastes and encourage more people to eat at New World Deli.

Finally we will design a home/business delivery system that will allow for the dropping off of food within 1/2 hour after the order is made to insure the best possible eating experience and customer churn rate.

Operations

Locations & Facilities

New World Deli will be located in Eugene, Oregon on the corner of 7th and Main. The facilities will include a 25 person capacity eating area, counter/front area, and backroom area where refrigerators, commercial stoves and ovens are located.

Milestones & Metrics

Milestones Table

Milestone Due Date
Website Plan
June 06, 2020
Website Implementation
June 21, 2020
Recruitment Marketing Person
July 11, 2020
Sales Contacts and News Marketing
July 25, 2020

Key Metrics

Our Key metrics are: 

  • # of customers that return in a month 
  • our best selling products 
  • inventory turn over 
  • customer reviews 
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Company

Overview

Ownership & Structure

New World Deli will be located in Eugene, Oregon on the corner of 7th and Main. The facilities will include a 25 person capacity eating area, counter/front area, and backroom area where refrigerators, commercial stoves and ovens are located.

Team

Management Team

The management will consist of Ms. Jane Ericson. Ms Ericson has been involved in the cooking profession all her life and has acquired a local reputation for creating inventive and tasty recipes focusing on Northwest cuisine. For the past seven years she has run a cooking class business out of her home and will have her first cookbook published next year. Desiring to have an independent business that would provide more income, Ms. Ericson attended Columbia River Community College where she obtained a BS in business in preparation for starting her own deli.

This is a small company with our employee categories including counter clerks, kitchen help, and busboys.  We assume nine employees total, the owner-founder plus four counter clerks, two in the kitchen, and two busboys.

The owner-founder will be in attendance during normal business hours, 7 a.m. to 6 p.m. five days per week.  In addition, specific other employees will have supervisory roles for times when owner-founder is not able to be present.

Personnel Table

2020 2021 2022
Owner/Founder $48,000 $80,000 $100,000
Counter Clerks (1.78) $51,200 $78,336 $79,902
Kitchen (1.78) $56,000 $85,680 $87,394
Busboys (1.78) $46,400 $70,992 $72,412
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Financial Plan

Forecast

Key Assumptions

We assume a slightly higher gross margin than industry standards for eating places, because we don’t have the full slate of meals or servers.  Also, kitchen and busboy employees are not included in cost of sales, for simplicity. 

Because we’re new to this business, we’ve adjusted the profitability into normal range by adding a relatively large amount of additional unitemized expenses.  That gives us a buffer for the additional unforeseen expenses that we expect will come up.  If they don’t, then we’ll be more profitable than normal for the deli business

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of Funds

Startup expenses (as listed in retained earnings Dec 16) are: 

    
Legal    $500
Stationery etc.    $300
Rent    $1,000
Expensed Equipment    $3,000
Other    $1,000
TOTAL START-UP EXPENSES    $5,800

Sources of Funds

  Jane Ericson will be investing $20,000 of savings and guaranteeing a loan for another $30,000 with personal assets.  In addition, the business will receive an interest-free loan from a family member of $10,000, to be repaid within the first year.

Statements

Projected Profit & Loss

2020 2021 2022
Gross Margin $346,340 $511,643 $682,268
Operating Expenses
Salaries & Wages $201,600 $315,008 $339,708
Employee Related Expenses $40,320 $63,002 $67,941
sales $14,400 $14,400 $14,400
marketing $7,200 $7,200 $7,200
Utilities $6,000 $6,000 $6,000
Rent $24,000 $24,000 $24,000
Amortization of Other Current Assets $0 $0 $0
Interest Incurred $1,150
Depreciation and Amortization $2,400 $2,400 $2,400
Gain or Loss from Sale of Assets
Income Taxes $7,391 $11,945 $33,092
Total Expenses $637,219 $935,533 $1,150,254
Net Profit $41,879 $67,689 $187,526

Projected Balance Sheet

Starting Balances 2020 2021 2022
Cash $28,200 $62,819 $139,503 $244,960
Accounts Receivable $0 $0 $0
Inventory
Other Current Assets $2,000 $2,000 $2,000 $2,000
Total Current Assets $30,200 $64,819 $141,503 $246,960
Long-Term Assets $24,000 $24,000 $24,000 $24,000
Accumulated Depreciation ($2,400) ($4,800) ($7,200)
Total Long-Term Assets $24,000 $21,600 $19,200 $16,800
Accounts Payable $28,869 $33,948 $44,195
Income Taxes Payable $1,470 $2,987 $8,271
Sales Taxes Payable
Short-Term Debt $40,000
Prepaid Revenue
Total Current Liabilities $40,000 $30,339 $36,935 $52,466
Long-Term Debt $0 $0 $0 $0
Long-Term Liabilities $0 $0 $0 $0
Paid-In Capital $20,000 $20,000 $20,000 $20,000
Retained Earnings ($5,800) ($5,800) $36,079 $3,768
Earnings $41,879 $67,689 $187,526

Projected Cash Flow Statement

2020 2021 2022
Net Cash Flow from Operations
Net Profit $41,879 $67,689 $187,526
Depreciation & Amortization $2,400 $2,400 $2,400
Change in Accounts Receivable $0 $0 $0
Change in Inventory
Change in Accounts Payable $28,869 $5,079 $10,246
Change in Income Tax Payable $1,470 $1,517 $5,284
Change in Sales Tax Payable
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received
Dividends & Distributions ($100,000)
Change in Short-Term Debt ($40,000)
Change in Long-Term Debt $0 $0 $0
Cash at Beginning of Period $28,200 $62,819 $139,503
Net Change in Cash $34,619 $76,685 $105,456
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