__ March 2014
- Executive Summary
Aware of the challenges in the industry and competition scenario in the back drop of economic uncertainty, this business plan provides crucial competition and marketing strategies that will enable the company achieve its objectives.
With these business strategies, the company is projecting to grow revenues by an average of 36% per year based on its existing portfolio of clientele and potentially new ones within the business and government sectors. The average return on equity is about 29% while debt-to equity ratio is maintained at an average of 0.47, and current ratio at an average of 2.6. This is achieved as efficiency is maintained by ensuring ratio of direct cost to sales within 30% and administrative expenses at about 50%. The result is growth in income from £23K on the first year to £85K on Year 5, and the company’s net worth building up from £98K to £344K in the same period.
- Business Overview
- Products and Services
The company offers highly customized cuisine to suit the clients’ needs and occasions. Given the partner-chef’s versatility and past wealth of culinary experience, its innovative dishes can vary anywhere from Asian, Mediterranean, or African menusname it and they will make it.
Its competitive edge is the add-on impeccable event planning services to clients to ensure total convenience and worry-free celebration of any type of occasions:
- Private parties: birthdays, weddings, anniversaries
- Government meetings and conferences
- Corporate functions: including simple meetings, company anniversary, product or sales launch
Whenever the opportunity permits it, its food and drinks are locally sourced and from farms promoting sustainable production methods. This is the company’s own way of contributing to global sustainability.
- Vision and Mission
“We love what we do and this shows in our commitment to provide the best quality of food and event-planning services suited to our client’s needs. We guarantee to go that extra mile to make our client’s celebration of a milestone a very memorable one.”
- Industry and Competition Environment
In the summary of IBIS World industry study, it reports that the Catering Services faced severe challenges in past five years. In the period of 2008-09, the economic downturn led businesses and households to spend less on catered events. It further notes that the “businesses experiencing declining profitability cut back sharply on catered events such as office parties, corporate seminars and product launches, and reduced average spend per head for events that did go ahead. The deteriorating consumer climate led consumers to put off discretionary events and choose to cater events themselves or spend less at a restaurant rather than use the industry's services. As a result, industry revenue contracted in both 2008-09 and 2009-10. Since 2010-11, the industry has returned to weak growth but the uncertain economy continued to weigh on demand for caterers” (PRWeb, 2013).
- Porter’s Five Forces Analysis
Bargaining power of buyers is high. Clients have the ability to strongly influence price and the quality of services in the catering industry. For instance, the uncertain economy since 2008 has forced menu prices to come down and for caterers to think of innovative dishes to entice clients. This contributed to profit squeeze and some players in the industry to be pushed out of the market.
Their influence is strong because as a substitute, buyers can resort to “do-it-yourself” parties or holding events directly through hotels and restaurants, which offer the both the food and venue in a pricing rolled into one package. On extreme cases, potential clients gravely affected by economic downturn can opt to put off any celebration altogether to cope with their financial situation.
Meanwhile, threat of rivalry is medium to high. The industry is typically composed of large number of small companies and often family-run. Due to low or perhaps absence of barriers to entry in the industry, anyone can come in and out of the business as the condition suits them. The more permanent services are the ones provided by hotels and restaurants. However, these businesses normally do not customize their services, and the clients are the ones who have to make adjustments to the packages they offer.
On other hand, bargaining power of supplier is weak. The industry player is known to be flexible in sourcing its inputs to reduce their costs. In some cases, they can eliminate middlemen and go straight to producers to secure their needs cheaply. Even for hiring employees, the trend in catering business is getting casual and part-time employees. This provides the convenience of being able to adjust payroll-related expenses quickly given the business’ susceptibility to demand fluctuations.
- Competition Strategy
In the short term, the scenario reflects a challenging competition and business environment while the economy is still in the slow growth. From 2013 to 2014, it is estimated that the industry revenue will only grow by 1.0% to 2.0% up to about £704.0 million. It will improve through 2018-19, as overall business environment rises and employment improves. This will help spur private demand with the improved consumer’s disposable income that will put back spending on catering for weddings, parties and other events. The industry demand will be further boosted given the expected legislation of gay marriages, as well as the trend towards remarrying among older people (PRWeb, 2013).
- Flexible and competitive prices and services
- Innovative menus with a wide assortment of local and international dishes
- Highly trained employees to ensure quality service
- Food Products that are locally sourced and from ethical and sustainable production, which has become popular trend brought about by the Queen's Jubilee and London Olympics events.
These strategies are aimed to tackle the challenges in the industry and at the same time, capture the growth opportunities in the long term.
- SWOT Analysis
On the other hand, while the industry long-term outlook poses positive opportunities for growth, uncertainty in economic development will continue to be a major threat as the business’ demand is susceptible to fluctuations in the economy. This can impact greatly the company’s profitability.
- Marketing Strategy
- Products and Services
As a significant part of its marketing strategy, ABC Catering Company offers dishes to suit different tastes and demand. It can even customize to vegetarian or vegan meals for clients who are non-meat eaters. It distinguishes itself from existing players in the market by being innovative in its menus and offering a variety of local and international food and drink, while using sustainable, British produce. Unlike hotel and restaurant caterers, the company’s edge is in being able to design events that meet the client’s specific need for their special occasion.
Over the next five years, the company may diversify its products and services into other profitable engagements such as supplier of flowers, party or themes paraphernalia, or rental outfit for party events, including tables, chairs or even sound systems.
- Price
Since the food and services offered are customized, the pricing is also designed to be flexible and yet competitive in the market. For the following categories, the price range is:
- £1,000-5000 – for corporate government meetings
- £5000-10000 – for private small events
- £10000-20000+ – for special occasions and events
- Place: Target Market Segment
Strategically located in Westminster, the catering business aims to target corporate and government offices surrounding the London area. The middle class city and suburban dwellers will also be the source of demand for small and major event catering.
Despite the severe economic impact in the city, London generates a fifth of the UK’s total economic output. With 8.3 million residents, it accounts for 13% of UK’s entire population. In terms of Gross disposable household income (GDHI) per head, UK Statistics (2012) reports that London residents remains the highest of all regions and countries of the UK. At £20,500, in 2011, it was 28% higher than the UK average.
As a hub for business growth and government services, it remains a solid source of clientele (Appendix 1).
- Promotion
The best promotional tool for ABC Catering is the word of mouth from the existing satisfied clientele of the business owners. It provides steady flow of clients through referrals. While food is an important component in its catering, the co-owner’s reputation in event planning will also be a key in its marketing. The successful events organized in the past assure corporate executives or individual party planners of the business’ capability to provide a memorable celebration, on-time delivery, and in the best quality of service.
During major city and local community events, partnerships will be sought with local businesses for promotion. Part of the partnership scheme could be service-swap with major local newspaper or magazine for its advertisement. Once a year, the company also hosts a Christmas party with other event planner partners to showcase its food and services to existing and potential clients.
The company’s website also serves as a key marketing tool that features its products and services. It includes a photo gallery of past organized events to give an experiential feeling to potential clients when visiting the site. The space for testimonies serves a proof of the memorable celebrations that the company delivered.
In all its marketing mediums, and during the delivery of its services, branding will be employed by displaying its logo i.e., in the company website, utility vans or servers’ uniform.
- Operations Plan
- Legal Requirements
- Production Plan
Recognizing that the key to delivering quality service is to employ highly trained staff to provide the specific services offered to clients, the business partners are also hands-on managers. They occupy the key role in the company as a chef and as head of event-planning, respectively. Initially, the business will employ:
- Two permanent staff, who are multi-skilled to provide catering services, act as drivers, and trainers to temp staff.
- Part-time employees will be hired depending on demand.
- A reliable accountant is sub-contracted to perform book keeping, business and tax reporting.
During the initial phase, some critical equipment and a vehicle will be purchased (Appendix 2). The vehicle will also serve as the brand carrier of the company as it moves around the city while delivering its food and service requirements. As demand starts to grow, space and equipment rental will be sought to ensure smooth production. Once a steady demand is established, additional capital investment may be required.
- Financial Plan
- Capital Investment
The initial investment cost of ABC Catering Company is £75,000. This covers renovation of leased property into a professional kitchen, as well as all the cooking equipment listed in Appendix 2. The business partners shelled out an equal share to meet this investment requirement.
- Profit and Loss Projection
This projection will bring in net income from £23K on the first year to £85K on Year 5, given net profit margin ranging from 17-20% (Appendix 3).
- Net Worth
Appendix 4 shows the company’s balance sheet with net worth expected to build from £98K in Year 1 to £344K by Year 5. Aside from this, the following business indicators show the healthy liquidity, profitability, and leverage position that the business is projecting over the next five years.
- Potential Risks
Like any start-up business there are certain risks involved in ABC Catering Company’s venture, such as:
- In operational management- in terms of juggling priorities and resources to deliver the best quality of food and service consistently
- Securing competent employees that will ensure delivery of quality service
- 100% collection of payment from clients
- Profitability risks due to price fluctuation of food stuffs
- Compliance to food safety at all times to avoid any customer complaints
- Risks in reputation due to mishandling of a Client’s complaint
- Loss and damage to equipment and utensils
While starting the business with existing portfolio of clientele will be an easy entry point for the company, maintaining its brand reputation will be threatened if above risks are not managed properly. To overcome this challenge, the company plans to continuously maintain contact with its suppliers, service providers, and clients for feedback to improve its operation.
------------------
Total number of words=2,395
(excluding Cover, Appendices and Reference pages)
APPENDIX 1
APPENDIX 2
List of Equipment / Tools to Start a Catering Business
- Knives
- Utensils
- Blender
- Chopping boards
- Food storage containers
- Mixers
- Pans spoons
- Refrigerators
- Freezer
- Coolers
- Cooling van
- Dispensers
- Oven
- Micro waves
- Table top
- rolling carts
- Van
- Uniforms
- Gloves
- Garbage bags for dirty linen
- Extra bus tubs for dirty dishes
- Tin foil
Source: http://www.mytopbusinessideas.com/starting-a-catering-business-plan/
APPENDIX 3
APPENDIX 4
References
Bplans.com (2014). Catering Company Business Plan. Retrieved from.
http://www.bplans.com/catering_company_business_plan/company_summary_fc.php#.Ux7_z9GPKt8
Food Services Warehouse (2006-2014). How to Start Your Own Catering Business. Retrieved
Jones, J. and Media, D (2014). How to Write a Business Plan for Catering. Hearst Newspapers,
LLC. Retrieved from http://smallbusiness.chron.com/write-business-plan-catering-701.html
Martins, A.T. (2013). How to Start a Catering Business from Home. Top Business Ideas.
Retrieved from http://www.mytopbusinessideas.com/starting-a-catering-business-plan/
Fabjob.com (1999-2014). Become a Caterer; Start a Catering Business. Retrieved from
https://www.fabjob.com/caterer.asp
Timeout.com (nd). 20 London Caterers. Retrieved from
http://www.timeout.com/london/restaurants/20-local-london-caterers
Catering Mentor (nd). Restaurant Start Up Quick Guide. Retrieved from
http://www.empleo.gob.es/es/mundo/consejerias/reinoUnido/portalempleo/es/PDF/Autonomo/start-up-quick-guide-restaurant.pdf
Startups Team (Dec 2013). How to Start a Catering Business. Retrieved from
http://startups.co.uk/how-to-start-a-catering-business/1/
The Olive Grows (2009) Start a Catering or Food Business. Retrieved from
http://www.theolivegrows.org/start-a-catering-business.html
PRWEb (Jul 2013). Catering Services in the UK Industry Market Research Report Now Updated
Caterer and HotelKeeper.co.uk (Jun 2010) Structure of the UK Contract Catering Market.
Retrieved from http://www.catererandhotelkeeper.co.uk/articles/11/6/2010/305463/structure-of-the-uk-contract-catering-market.htm
Demonstrating Value (nd). Financial Ratio Analysis. Retrieved from
http://www.demonstratingvalue.org/resources/financial-ratio-analysis\
Londoncouncils (nd). London Key Facts. Retrieved from
http://www.londoncouncils.gov.uk/londonfacts/
QuickMBA (1999-2010). Porter’s Five Forces: A model for Industry Analysis. Retrieved from
http://www.quickmba.com/strategy/porter.shtml
