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Goldilock’s Marketing Plan and Strategy:

New Product Development Plan

Group 3

Clifford W. Erhart

Vince H.Y. Hu

Melanie Taylor

Dr. Donald Chang

DMBA 603 Section 9042

University of Maryland University College

10 August, 2008

Table of Contents

1. Executive Summary 3

2. Situation Analysis

1. Mission 4

2. Product or Service Description 4

3. Value Proposition 4

4. SWOT 5

5. Critical Issues 6

2. Market Analysis

1. Macro Environment 7

2. Market Size and Growth 7

3. Market Trends 8

4. Target Market Segments 10

5. Customer Analysis 11

6. Need Analysis 12

7. Competitive Analysis 13

1. Direct Competition 13

2. Indirect Competition 13

3. Strategy

1. Marketing Objectives 14

2. Financial Objectives 14

3. Positioning Strategy 15

4. Product Strategy

4.4.1 Product Strategy 16

4.4.2 Support Services 16

5. Price Strategy 18

6. Distribution Strategy (Direct and Indirect) 18

7. Integrated Marketing Communications Strategy 18

8. Branding 19

9. Marketing Research 21

4. Financial Analysis

1. Break-Even Analysis 23

2. Sales Forecast 24

3. Expense Forecast 25

5. Implementation and Control

1. Implementation 27

2. Controls 29

3. Marketing Organization 30

4. Contingency Planning 30

7.0 References 32

1. Executive Summary

This paper is an in-depth marketing analysis of a New Product Development (NPD) idea. The proposed product is a restaurant with the moniker “Goldilock’s,” which specializes in local, organic, and seasonal food offerings that can be thoroughly customized by the patron from portion sizes of small, medium, or large, to ala carte or menu eating, to themed meals covering an array of ethnic and regional influences, to the exact cooking methods utilized to prepare the food.

The target market for this restaurant is the 20-40 year old business professional, which Goldilock’s attracts through its downtown location in a major city, the ambiance of the décor, the upscale and specialty food offerings, the prestige of the cooking staff, the quality of the food, and the newest trend of “localvore” eating in the green movement. Despite the target audience being young, single, and affluent, the atmosphere and menu accommodate children and families as well with some peripheral offerings to span a greater faction.

Though the food service industry is currently battling a poor economy and increased food and transportation costs, the proposed restaurant actually caters to the trend. By utilizing local vendors for all perishable and non-perishable goods, transportation costs are minimal. The community plays a role in providing for their population and the patrons acquire the added value of aiding in the self-sustainment cause by supporting through supporting this NPD.

Overall, this NPD appears to be a quality venture despite the current economic trends, the depletion of the restaurant business during this monetary struggle, and notwithstanding the usual battle of standing out in a sea of competition by offering a unique core value that keeps the customers coming back.

2.1 Mission Statement

Goldilock’s is dedicated to giving our customers exactly what they want, exactly how they want it. We cater to individual portion sizes, varying tastes, and unique preferences as we are highly customer focused and know that every person has distinctive tastes that should be celebrated as a means for maximum value when dining at our establishment. High quality first, customers always.

2.2 Product/Service Description

Our product/service is restaurant meals whose composition is tailored by each individual customer. The meal caters to the customer’s specific wants and needs based on his or her diet, health, age, capabilities, palate, preferences, and cravings. The entire menu is ala carte, allowing for flexibility in the number of items ordered as well as customization of meal prices.

As part of our product/service, these meals are prepared and served in a trendy mid-to-upper scale restaurant that offers seasonal, local, organic, and international cuisine and drink. The main focus of this product/service is customer choice and customization of all products.

The core benefit is sustenance; the basic product includes a meal with drinks and service; the expected product is a customized meal, drinks, and friendly service for a reasonable price; the augmented product includes customization that exceeds competition with great variety, specialty foods, and locally grown, organic, and seasonal foods; potentially our product might include further customization such as choosing and cooking one’s own food, adding themes for special occasions, or adding pet valet and other pet friendly services.

Our product classification is non-durable goods and falls under three of the consumer-classification categories: convenience, shopping, and specialty.

2.3 Value Proposition

Goldilock’s offers its customers the benefit of product customization which enables the end item to better meet individual buyer needs while simultaneously increasing shopper fulfillment before, during, and after the transaction. With the current trend towards environmental awareness, we offer the patron a sense of satisfaction by serving only locally grown, organic, seasonal foods, which supports the community through the promotion of local farms, while simultaneously benefiting the consumer through improved food quality and health.

2.4 SWOT Analysis

Strengths:

• Customer-focused

• Distinctive competence in the specialized & unique market

• Attractive customer base

• Promotes healthy lifestyles

• Fully customizable

• Specialty foods

• Local, organic, seasonal food

• Ability to add themes for all occasions

• Pet friendly services

• Convenient

• Children-friendly

• International taste (Asian, Mexican, American, India)

• A la carte (plus for big & small eaters)

• Transportation costs that affect rivals do not affect Goldilock’s local supplier base

Weaknesses:

• Huge variety may be intimidating & confusing to some customers

• Only focused on 20-40s age group, middle to upper class, younger professional crowd

• High overhead costs for operations

• Small footprint in the market

• Lack of “core competence”

Opportunities:

• High level of investment opportunities

• Attractive idea for joint ventures to increase market coverage

• No rival competition will yield rapid expansion opportunities

Threats:

• High costs of food & supplies may squeeze profit margins

• Current economy (recession)

• Large chains may seek acquisition or adopt our M/V/O

2.5 Critical Issues

Goldilock’s Restaurant will be unique. Although we will be targeting a certain demographic that is more inclined as a group to desire our type of restaurant, Goldilock’s will appeal to a broad cross section of potential patrons. The format of its cuisine will center on fresh organic foods, which are locally grown, and are offered ala carte in personalized serving sizes. Our services will concentrate on personalized attention to the desires and needs of each customer and will be consistent with the uniqueness of our cuisine and the ambiance. Eating out at Goldilock’s is intended to be an experience that is memorable and cherished.

Critical Issues:

• In order to continually provide fresh food items, it will be necessary to maintain a largely varied inventory of food on hand at any given time; however, it will not be necessary to have large amounts of individual food items. Organic food has a much shorter shelf life than standard foods and accuracy in food turn over and ordering will be vital to prevent excess waste from depleting revenue. Having food that is optimally fresh – not at the stage of over-ripeness or early spoiling and not at the stage where it is not ripe enough, is of critical importance to developing the reputation that Goldilock’s will need in order to attract and sustain its customers.

• Selecting the optimal location for the restaurant in order to cater to the target 20-40, business professional, will be critical to success. While some will travel to the restaurant despite location, there are not very many prize locations in which a specialty restaurant can garner enough business to thrive, without being a convenience for the target base.

• Maintaining quality, timely, highly varied, and reliable supply channels for local, organic, seasonal foods will be critical to creating and maintaining brand equity and reliability as our main product and service offered.

3.1 Macro Environment

Americans as a group eat out for the majority of their meals, yet due to a seemingly endless supply of restaurant choices, it is vital that Goldilock’s distinguish its brand from the competition and offer a unique and valuable product. Everything from fast food chains to upscale, trendy hot spots are targeted at our 20-40, business professional crowd. These factors lead to a crucial need for in depth and continual reevaluation of Goldilock’s macro environment.

Goldilock’s’ theme has always been targeted to the health conscious, middle to upper-middle class, business, family-oriented and internationally savvy patrons. In order to capitalize on opportunities, Goldilock’s would like to attract business professionals from downtown hot spots, and up and coming communities with a town center feel. The more exposure that the restaurant can gain, the more investment opportunity interests Goldilock’s will be receive. The best advertisement is through word of mouth and Goldilock’s wants all of its patrons to spread their positive experiences with friends, colleagues and family to build brand awareness.

With opportunities, there will be threats in any successful venture. Recently, the nation has been declining into an economic shortfall, which has caused many to believe that America is in a recession. As gas and food prices increase and people begin losing their homes, one of the key threats to Goldilock’s business will be the tightening of consumer purse strings. Eating out, eating healthy, and eating local, organic, and seasonal is a luxury to most due to the high cost.

Goldilock’s opportunities still outweigh any external threats. The marketing plan focuses on more affluent areas, as opposed to low income regions and our customers will still find our products attractive despite the economic status. Goldilock’s offers superior customer service, healthy meals with vast customization possibilities, and the opportunity to support the local community while eating green. Despite the economic situation we are facing, the macro environment of the restaurant industry still appears to be in our favor.

3.2 Market Size and Growth

“The U.S. Restaurant industry has produced 16 consecutive years of real sales growth. Key factors behind this extended growth in restaurant sales include rising population, increasing real disposable income per capita, trend towards busier lifestyles, rise in spending on entertainment, and improved availability of good-quality dining options.” () The majority of the growth has been in quick turn, casual establishments; however, the full-service venue continues to garner a lucrative long-term forecast due to the recent demographic changes, new consumer eating habits, and the superior quality of offerings now becoming available.

The restaurant markets experiencing the most growth include those with reinvention and creativity as their primary focuses. According to a recent Technomic survey, 82% of consumers said that they were interested in authentic ethnic flavors, which is a change from the recent industry surge to create fusions of several ethnicities. The front runners for specific consumer ethnic interests are Indian and Asian inspired foods.

Some other market trends for 2008 include the new consumer interest in exotic and unusual fruits used in all types of dishes, the integration of gourmet toppings and premium ingredients as the premier menu offerings, and redesigning the familiar, (such as making Southern food gourmet by using new techniques or adding high end ingredients.)

The U.S. restaurant market is expected to grow in all segments in 2008, with demand for ethnic, locally grown, organic, and health conscious venues leading the industry. Innovation, creativity, and high quality offerings are the key to success for restaurants in the current marketplace as consumers trend towards a new habit of “polished casual,” which includes more refined tastes and a demand for chef-driven establishments.

3.3 Market Trends

According to the March 2008 report by Mintel, restaurant visits and revenues are declining. Consumers are still eating out but not as often. Also, restaurant diners are tending to spend less per visit, preferring to sometimes skip dessert or appetizers, or to order less expensive dishes. This phenomenon is largely driven by economic concern. Same store sales are flat. Sales would have decreased except that higher prices have offset the drop off in customer visits and smaller meals.

An increasing number of restaurants are using sampling as the new medium of advertizing. Even giants such as McDonalds, Starbucks, Coca-Cola, and Dunkin Donuts are trying sampling on a large scale basis, and sometimes turning it into a media event. One reason for this trend is the changing economy. Restaurants know that money conscious consumers appreciate the word “free,” and since restaurants are trying to find more inexpensive ways to advertize, they are resorting to freebies in order to increase impulse purchases. Typically, giving away 50,000 samples requires approximately 250 man hours, at a cost of $15,000 to $20,000 in labor. When compared to $335,000 to produce a 30-second spot with an additional $100,000 to $250,000 to run the spot on a prime-time TV, the freebie method is highly appealing when cutting costs. Proponents of sampling say that it is effective and that it has a greater impact because they are able to communicate with the consumer one-on-one with the product. As an example, this spring on May 15 McDonalds gave away 2 million Southern Style chicken biscuits and 6 million Southern Style chicken sandwiches. On the same day Dunkin’ Donuts gave away 4 million cups of coffee on its second annual Iced Coffee Day.

There is also a trend towards healthier offerings at restaurants as America comes to grips with its weight issues. Even fast-food restaurants are selling healthier menu items, in between their burgers and fried tidbits. In the past, restaurants competed on how large their beef patties were. McDonalds used its recent Shrek the Third ad schedule “to promote healthy eating among children.” The effort was the company’s “biggest promotion of fruits, vegetables, and milk around the world.” (Kenneth, p.42)

Transfats used to be standard at most restaurants, particularly fast food establishments, but transfats were outlawed in New York City by policy changes that are expected to be adapted by the rest of the U.S. if effective. McDonalds, Burger King, KFC, Pizza Hut, Taco Bell, Wendy’s, and Starbucks have all done away with transfats as a result of the demand for healthier foods and along with the FTC issued subpoenas to 44 food and beverage companies demanding details of their child centered marketing campaigns.

According to the May 26, 2008 issue of Restaurant News, a survey by Restaurant Marketing Group has proven that food quality is seen as a significant factor in building customer loyalty. “Despite abundant advertizing based on the excellence and freshness of mealtime specialties, diners are defecting from many restaurant brands out of frustration with poor food quality.” (Gregg, p.1)

3.4   Target Market Analysis

      As part of the analysis, we are segmenting the market based on demographics and psychographics.  Demographic segmentation is based on financial and educational parameters.  Psychographic segmentation is based on lifestyle and values:

• The tastes and habits of prospective customers.  That is, are the potential customers oriented toward a healthy lifestyle and healthy eating in particular?

• The financial and educational demographics of prospective customers

• The concentration of these prospective customers in large enough numbers in a given geographic area so that they could provide a critical mass of prospective customers for Goldilock’s’ unique cuisine

            Although the owners of Goldilock’s do not believe that education, in and of itself, should be a requirement for the target market, statistical studies have established that there is a positive correlation between educational levels and income.  Furthermore, there is a positive correlation between average education levels and a greater interest in more healthful, natural, and/or organic foods.

We anticipate that there will be a demand for our cuisine from many who are educated and have a great interest in healthy eating, but who do not fit into the higher income category.  This demographic may come to Goldilock’s once in a while but because they lack the means and the same level of discretionary income as those with higher incomes, they will not become our core customers but will become part of our secondary target market.  The primary factor that comes into play here is that those with both education and higher incomes not only are more knowledgeable and more motivated with regard to healthy lifestyles, but also have the financial means.  This demographic would become our core of patrons, our primary target market.

Management has determined three excellent potential sites in Maryland and Virginia.  In Maryland, the ideal general location would be within the triangle that comes to a point in downtown Bethesda, Montgomery County, Maryland (a Washington, D.C. suburb).  This area is bordered by National Institutes of Health on the north, Wisconsin Avenue on the east, and Old Georgetown Road on the west.  It is surrounded by a high income residential area, near a very upscale commercial area, and there are many other restaurants nearby.

In Virginia, the first choice would be the Tysons Two section in Tysons Corner, which is an upscale shopping area.  This location is near the crossroads of Virginia Routes 123 and 7 near the I-495 beltway.  Another possibility for the restaurant is the exclusive suburb of McLean, about three miles from Tysons Corner, which would provide excellent access to the downtown area as well as the suburban populace of Washington D.C.

Table 1:  Market Analysis

                   Montgomery County, Maryland            Fairfax County, Virginia

                                                  Bethesda                     Tysons Two                 McLean

Population Base (2006):          932,131                      1,010,443                    1,010,443

Median Household Income:    $76,957 (2004)           $83,890 (2004)            $83,890 (2004) (for the county)

Bachelor’s degree or higher:    54.6%                           54.8%                          54.8% 

Federal Spending per capita: $16,594. (2004)         $17,399 (2004)            $17,399 (2004) (for the county: age 25+, 2000)

3.5 Customer/Consumer Analysis

A growing number of consumers, particularly those who are health conscious, are dealing with chronic illness, have an increased risk of cancer, or are simply going green, are switching to local, organic, and seasonal foods. A key motivation for consumers is a simple belief that these foods are better for their health. Regardless whether or not there are significant health benefits garnered from eating organic, the populace has generated a demand that cannot be ignored..

Official food agencies around the world are unanimous in claiming there is no evidence of a nutritional difference. Yet a more careful and thorough review of the science comparing organic and non-organic food reveals that, collectively, the available evidence does indeed support the consumer belief and claims by the organic industry that their food is safer, more nutritious, and better for you than non-organic food.

Goldilock’s target customers believe in a wide variety of benefits gained from eating healthier and that fresh, organic ingredients, which are the base of all of Goldilock’s dishes, provide the key health benefits that the consumers are seeking, such as increased nutrient levels, decreased pesticide residues, fewer additives, improved health, and child safe.

Can people afford it? We are certain of it. Official household spending statistics in Australia and the UK reveal that the average family spends five times more on junk food, take-away (carry-out food), alcohol, and tobacco than on fruits and vegetables, and five times more on recreation than on fruits and vegetables. To make healthier choices they need encouragement and education.

It is a false assumption that advocating organic food will reduce fruit and vegetable consumption due to the higher price. Perhaps customers will instead cut down on junk food, take-away, alcohol, and cigarettes. Some even report anecdotally that the better taste of organics facilitates an increase in fruit and vegetable consumption that was hitherto unachievable.

Chris Ashton, of the UK-based Nutritional Cancer Therapy Trust, asserts that "those concerned with the fight against disease know that our bodies are designed to overcome disease processes before they become established. Our systems are readily disrupted by toxins and an absence of sufficient quantities of nutrients."

Goldilock’s will be initially targeting our restaurant openings in metropolitan, upper middle class suburban areas where there are a high number of professionals, educated and affluent people. We believe these demographics will be the majority of our consumer base.

We will also strategically target areas for openings where there are successful Whole Food stores, Trader Joe’s and other organically based grocery chains. The research has already been done by their executives in an area which will save Goldilock’s time and money.

3.6 Need Analysis

Goldilock’s targets the middle class patrons who are 20 – 40 years old and enjoy a downtown scene, lead a healthy lifestyle, have special dietary needs, and/or highly value portion size. The needs of the 20 – 40 year old city dweller tend to fluctuate around trends and around customization. This is a demanding group that wants to spend extra money on image, comfort, convenience, quality, and anything considered mainstream. They will gladly pay twice the market price if the product offers grandeur, prestige, popularity, or presence. If Goldilock’s can establish itself as a hip locale, this group will gravitate for the scene and for the quality food. Goldilock’s is attempting to target this customer need by covering several of the current market trends that have boomed in the restaurant industry lately…local, seasonal, organic, and patron customization.

The green movement is causing this group to be more community concerned and environmentally aware. Goldilock’s caters to this need by supporting the local farms, serving only what is in season so as to cut down on shipping costs and pollution, and the menu is mostly organic which also benefits the health of the environment and the consumer.

This genre is typically concerned with their personal image and they strive to remain physically fit. Goldilock’s offers plenty of healthy choices through its organic, seasonal, local offerings, but also offers the added customer value of portion customization. Patrons who are dieting can order small sized meals.

The 20 – 40 trendy crowd tends to consist of a melting pot of personalities as most are still attempting to decipher what they like and dislike in life. Goldilock’s caters to this need by presenting a venue in which a broad mix of people can come together and each person’s individual preferences can be met. Specifically, those who like larger or smaller portions can all be happy in this one establishment, or those who care deeply about the environment accompanied by those who are indifferent. Picky eaters and non-discriminate eaters alike will all find exactly what they want at Goldilock’s.

3.7 Competitive Analysis

Goldilock’s’ business idea although isn’t completely unique, has no real mainstream competition. Eating out and healthy is also not a new thing. Many times when Americans go out to eat; we look for the atmosphere, food aesthetics, price and location. How many times do menus offer nutritional content? If we knew exactly how many calories, sodium, preservatives and origin of our ingredients in our favorite dish at our favorite restaurant, most of us would think twice. The fact is, Goldilock’s is unique with the big corporate restaurant chain support with a “mom & pop” feel.

3.7.1 Direct Competition

• Small “mom & pop” restaurants

3.7.2 Indirect Competition

o Local Farmer’s markets

o Organic grocery stores (Whole Foods, Trader Joe’s, Safeway, Harris Teeter, Publix, Vons, Ralph’s

o Specialty grocery stores (non-chain stores)

o Specialty restaurants (vegetarian, raw, whole grain, low carb)

4.1 Marketing Objectives

In the first year, establish a regular clientele base that is sufficient to support daily operations by offering special wine dinner nights or cooking demonstrations, coupons for a next visit offered with the check, and by having the friendliest, most welcoming and hospitable staff in down town

Consistently increase revenue through word of mouth recommendations, which is accomplished through catering to our patrons by consistently going above and beyond what is expected and always offering superior quality and value

Market to every local business, especially within one mile for the lunch crowd, because the bulk of our 20 – 40, business professional, target group will work in this area

Initially inundate the local area with marketing campaigns at 20% of revenue and gradually taper the ads to a sustained level of 5%

4.2 Financial Objectives

Our restaurant will have a seating capacity of about 65. Restaurant startup costs will be approximately $450,000. Under worst case scenario, we will need an operating reserve of approximately $250,000 to cover the time it takes for our establishment to begin making sufficient profit to cover all expenses, and to cover unexpected contingencies.

Therefore we anticipate a need for a total of $600,000 in financial assets to start up and run the restaurant until it generates sufficient net profit to cover expenses, including debt service. Thereafter, our plan is that the restaurant will generate additional growth and profit. These profits will first be placed in a reserve fund. When we achieve a reserve of $100,000 for the replacement, repair, and modernization of restaurant equipment and furniture, we will begin paying down debt faster than required.

We have not determined whether or not we will attempt to borrow some portion of the funds needed to start the business from banks or whether the owners will lend money to the restaurant corporation. The three equal owners, who will all be active in the business, are contemplating loaning their personal assets to the restaurant business since these assets, as well as business assets, would be required as security for any bank loans the business would take.

Due to our location and the long term property lease we have arranged, we anticipate that our restaurant will generate a net profit within six months. Worst case: twelve months.

Our restaurant, when it opens, will be near a commercial district, yet also near upscale residential areas. As we become known we anticipate lunchtime crowds and substantial evening business. On weekends we expect substantial family business as well as several large parties. As the public becomes more aware, we expect and set as our objective to generate monthly sales revenue of $200,000 in the sixth full month of business. Our revenue objective for the first twelve months is $2,500,000. In the thirteenth month of business our revenue objective is $300,000. For the second full year of business our objective is revenues of $3,500,000. Our year three revenue growth objective is 13%. Year four and thereafter revenue growth objectives are 10% per year. (From the opening of the business, owners’ salaries will be paid from restaurant revenues, just as other employees.)

We set as an objective to show in the first full year, as a percent of sales, earnings before interest, taxes, depreciation and amortization (EBITDA) in the positive range of approximately 4%. In the second year our objective is 12%. Thereafter, as we refine our processes and achieve efficiencies in operations, we will strive to gradually increase this to 15 to 18%.

In the first year, since we are not sure at what month we will become profitable, a yearly profit objective in EBITDA was difficult to determine. Nonetheless we determined it to be 4%. When applying the 4% to a first year revenue objective of $2,500,000, our profit objective as a dollar amount of EBITDA is $100,000. Our second full year profit expressed as a dollar amount is 12% of our revenue objective of $3,500,000, or $420,000.

4.3 Positioning Strategy

Goldilock’s’ positioning strategy is to target three niche markets within the restaurant industry through its specialized product offerings. Less than 1% of restaurants nationwide use strictly organic, local, and seasonal produce and meats, meaning that Goldilock’s’ competition consists of businesses that provide a few items in these categories but fail to specialize in any. The current restaurant trend towards all three venues gives Goldilock’s a competitive edge to gain a respectable market share with proper marketing.

Goldilock’s caters to customers with special needs and wants by providing very detailed customization per item ordered. The patron is able to choose the size of their dish as well as the style, doneness, and ingredients. Targeting each buyer’s individual tastes creates an atmosphere in which the patron gets exactly what is wanted and leads to a greater purchase satisfaction. If the customer is happy, they will continue to be your customer.

Goldilock’s caters to the 20-40 age range, business professional who has a willingness to pay top dollar for atmosphere and image. By targeting this group, higher product mark ups are actually preferred by the patron as a means of elitism and segregation from less preferred company such as children. By offering perfection in a trendy setting, Goldilock’s will attract the affluent, discerning crowd that will perpetuate the restaurant’s trendy, up scale image and perpetuate the marketing through this scene.

4.4.1 Product Strategy

Goldilock’s’ products must be enticing to new and existing customers. Customer feedback, demand and popularity of ingredients and entrees will help hone our products. Goldilock’s will continuously introduce new products from seasonal entrees developed by the executive chef to popular ingredients. The popularity of ingredients may be fueled by new research with specific or general health benefits.

Individual products will be targeted to the general population tailored to the local customers. Menus will offer a variety for children, adults, seniors, vegetarians, health conscious (diabetics, etc.), to those who simply want to eat better, healthier and a entirely different eating out experience.

Goldilock’s will also continue to build brand awareness of the unique nature of our restaurants. Majority of our products will be the end results of loyal customer feedbacks.

4.4.2 Support Services

Financial accounting – One CFO, one accountant, and one administrative assistant to handle income statements, balance sheets, cash flow statements, company performance analysis, Sarbanes-Oxley compliance, taxes, futures, forwards, and stock value.

HR – One HR director, one payroll manager, and one administrative assistant catering to payroll, employee benefits, travel, hiring, employee termination, and employee initial and continuation training.

Legal services – One outsourced legal service firm that handles all property, business, and personnel legal coverage, both recurring and unpredictable.

Management – One restaurant lead manager, five assistant/shift managers who lead the staff, manipulate the schedule, ensure compliance with all policies, regulations, practices and CEO wishes, and who cater to our customer wants and needs.

Supply Chain – One food supply chain lead manager, and one equipment supply chain manager, both assisted by the restaurant shift managers for handling all aspects of the restaurant’s logistics.

Food supply chain – Three local, organic farms that provide our array of produce and meat, one local fishery, one international food distributor for seafood and non-indigenous produce, one major food supplier for oil, grains, canned goods, frozen goods, dried goods, etc.

Equipment supply chain – One professional kitchen supplier for appliances, tools, pans, utensils, dishes, glasses, etc, one furnishing supply resource for tables, chairs, lighting, etc, one business supply distributor for office paraphernalia

Marketing and PR – One marketing director who focuses on creating new business, fund raising, PR events, advertisement, brand image, competition, and long term restaurant persona.

Communications and IT – One outsourced firm that handles the purchasing, maintenance, upgrades, and continuous operation of all phone, computer, fax, cable, and back up file operations for a set contract price.

Maintenance – One outsourced maintenance company that is capable of fixing building flaws, electrical issues, and safety compliancy issues, and one outsourced grounds keeping and pest control firm for regularly scheduled preventative visits as well as non-predictable occurrences.

Safety – One safety director to ensure EPA, OSHA, NFPA, and business code compliance to include scheduling and conducting quarterly and annual inspection requirements.

Insurance – One outsourced insurance company that underwrites flood, fire, accidental, life, health, key leader loss, workman’s comp, long and short term disability, and bankruptcy insurance.

4.5 Pricing Strategy

Goldilock’s item pricing will be extremely competitive despite the premium nature of the fresh, local, organic, and seasonal variety of ingredients. The initial pricing will be launched and marketed aggressively to entice new customers and those who are skeptics of our business concept. Customers must see the benefits of our pricing in order for any strategy to be successful.

The majority of the meals will start at $2.99, with a la carte items starting at only $1.00. Families with children under the age of 12 will also benefit from the selection of children’s meals priced at $3.99 and up. Daily specials will include fixed pricing and will be developed by the executive chef with seasonal ingredients.

As an organization, we will strive to achieve:

• Operation profitably

• Positive cash flow

• Strong return on investment

• Success as measured by normal accounting conventions

4.6 Distribution Strategy

Perishables - Goldilock’s deals directly with local farmers in order to deliver our local/organic/seasonal menu and which is accomplished directly through a CSA program agreement with the farms to deliver to the restaurant bi-weekly. We have two ranches for our meats, two locations for our dairy products, three farms for our fruits, veggies, and grains, and two sellers for our eggs in order to ensure that menu items are not disrupted if any one vendor has a bad crop or simply cannot provide the volume necessary for the restaurant at any given time. Goldilock’s also purchases from several individual retailers for specialty items such as local honey, local jams, and local flowers.

Non-perishables – Our maintenance is contracted locally through several specialized vendors which are covered in our lease agreement to be paid by the owner and includes grounds maintenance, plumbing, heating/cooling, pest control, and appliance maintenance for leased equipment. Goldilock’s specialized equipment is maintained through several local vendors based on current market availability and price to include items such as replacement furniture, dishware, glassware, bake ware, and uniforms. [pic]

4.7 Integrated Marketing Communications Strategy

Public Relations – Goldilock’s management will interview on radio stations that target the same 20-40 professional market as the restaurant, local commercials will be run on channels that have a similar consumer base, printed ads will run in publications that reach our audience, and high traffic locations, (such as public transportation terminals, busy intersections, and grid locked freeways), will all have billboards and banners sighting the grand opening, offering promotions, and explaining the core values of the restaurant to increase brand awareness.

Sales promotions – Throughout the first quarter of business, a free drink or appetizer will be standard with a mass marketed coupon, children will eat for free, and ladies will get their first beverage free. Goldilock’s will offer a special runners/athlete/dieters daily, set-price menu that focuses on cutting carbs, carb loading, or low fat goals in order to encourage repeat customer as a program and not just a onetime healthy meal.

4.8   Branding

            The main elements of the Goldilock’s brand include the quality and nature of the food we serve, the methods and sizes by which the food is prepared, the total experience of eating at Goldilock’s, the knowledge, training, professionalism, and pride of our staff, the recognition of our high standing within the restaurant industry, and Goldilock’s participation in the Healthy Dining Program. Accompanied by extensive advertizing, promotions, and events we promote and sponsor, Goldilock’s brand equity will be enhanced through:

• Food and drink elements

o Locally grown, organic, and seasonal

o Specialty, fusion, and uncommon foods and drinks

o A variety of international cuisine

• Food preparation choices

o Prepared and seasoned according to unique customer preferences

o Customized portion sizes

o Customized meal composition (i.e. ala carte or themed)

• The Goldilock’s experience

o Décor, lighting, and overall ambiance of restaurant is enticing and memorable

o Restaurant space is highly nature-oriented and environmentally friendly

o Staff is highly attentive, welcoming, and endeavors to bring out each customer’s unique preferences

o Restaurant is designed to provide as much food preparation visibility as possible to the patrons

o When the dishes are brought to the table, it is an “event”

o In addition to the waitperson, a management person visits each table once during the meal

• Knowledge, training, professionalism and pride of Goldilock’s employees

o Goldilock’s prefers to hire staff with training and experience.  All staff undergo in-house training to learn “The Goldilock’s Way.”  New staff serve as apprentices to someone more experienced.

o All staff will become ServSafe Food Safety certified. 

o Goldilock’s hires chefs and assistant chefs who have graduated from culinary school.  Owners and management staff hold the Foodservice Management Professional (FMP) certification through the National Restaurant Association Educational Foundation (NRAEF). 

o Goldilock’s employees take pride in the restaurant, enjoy serving impeccable cuisine, and revel in the satisfaction of their customers. Employees know that they have a unique product to offer the public and they labor intently to ensure that the reputation of Goldilock’s is above reproach. 

• Goldilock’s’ standing in the restaurant industry

o A member of the National Restaurant Association and the Restaurant Association of Maryland

o A reputation for innovation, quality, training and professionalism

o Is part of the National Restaurant Association’s Conserve Initiative – an environmental program designed to help restaurants leave a smaller carbon footprint and save money at the same time.

• Participation in the Healthy Dining Program

o Dieticians and Masters level health educators who evaluate the nutritional content of Goldilock’s meals for use on Goldilock’s printed materials and on .

o Website,

▪ Provides consumers a resource for finding restaurants with healthy meal choices

▪ Provides nutritional information for items on Goldilock’s’ menu

▪ Website is promoted through newsletters and the websites of organizations interested in helping people to manage weight, reduce the risk of disease, and control health care costs

▪ Generates greater customer loyalty and word-of-mouth referrals

            The Goldilock’s logo will be a rendition of the namesake character holding one of the most popular menu items, and the trademark will be on all of the menus and any promotional materials or advertisements.  Her image will be life-sized at the entrance of the restaurants and over time it is expected that this logo will become an integral part of Goldilock’s’ brand equity, similar to Wendy’s or Bob’s Big Boy.

4.9 Marketing Research

Goldilock’s intends to target a few segments of customers from the health conscious to those who want a totally different way to eat out. We understand utilizing information technology to align our marketing research will be a key to our success. Database marketing is the planned implementation, recording, analysis and tracking of consumers' direct response behavior over time to derive future marketing strategies, for developing long-term consumer loyalty and ensuring continued business growth, (Stone, et al. 2004), we will use database research in these categories to help us gain competitive advantage.

• Planning marketing activity. All database marketing should form part of a controlled marketing strategy, which has been produced as a result of market and competitor analysis and in relation to achievable objectives.

• Targeting consumers. Consumer information should be stored and capable of manipulation and retrieval from the consumer database, to contact existing consumers. Analysis of this also helps the organization to identify characteristics of future consumers.

• Look at current health trends

• Impact on organic foods

• What is trendy internationally that may catch on here in the states

• Measuring your marketing activity. The results of database marketing should be measured, to tell you what works and what does not.

• Tracking. This involves monitoring consumers' responses over time, for as long as the relationship with them lasts. This allows the organization to measure their value, and understand how much of it results from how it marketed to them.

• Consumer behavior. Tracking the spending patterns and general behavior of consumers can help the organization establish which products are popular and which are not. This can help it determine future products and strategy.

• See what people are eating

• What kind of food people are buying

• What people are asking for in similar restaurants

• International trends

• Future strategies. One aim of marketing is to maximize the value of the organization's consumers to it. The previous steps will ensure it has the information to plan effective and efficient marketing to achieve this aim.

• Expansion opportunities

• Introduction of new ingredients

• Developing long-term loyalty. By targeting the right consumers, offering them what they want, and encouraging them to take more of your products, an organization can protect its consumer base. Its consumers will be more likely to stay with it for longer.

• Feedback and questionnaires to current customers

• Encouraging profitable growth. This is achieved by increasing the number of loyal and valuable consumers the organization has, and limiting the number of consumers with low value and/or high risk. This increases turnover and profit, which can be re-invested to ensure service and product standards are maintained and that consumers stay happy.

Furthermore, the use of database marketing will give Goldilock’s numerous advantages from a management’s point of view:

• It is measurable. Responses to campaigns are measured, allowing effectiveness of different approaches to be checked.

• It is testable. The effectiveness of different elements of the approach - the product, the communications medium, the offer (how the product is packaged to appeal to the consumer), the target market, and so on - can be tested. Tests can be carried out quickly, so rapid action can be taken on the results. Test results can be used to forecast sales more precisely, helping manage inventory more effectively.

• It is selective. Campaigns can be focused accurately, because communication is with specific consumers, and can be attuned to their expected value (for instance, more expensive and frequent communications to higher-value consumers).

• Communications to each consumer can be personalized, using details relevant only to them, drawn from the database.

• It is flexible - campaigns can be timed to have their effect exactly when required.

5.1 Break Even Analysis

Annual Fixed and Variable Costs:

• Part Time Employees no benefits – (wait staff $22,000 x 10, bus boys/washers $19,000 x 6, line cooks $28,000 x 8, sommelier $40,000 x 1) total $598,000

• Full Time Employees with benefits – (manager $55,000 x 1 plus $20,000 benefits, asst manager $45,000 x 1 plus $19,000 benefits, chef $55,000 plus $20,000 benefits x 2) total $289,000

• Rent & Utilities (rent $72,000, water $2,400, electric $9,000, cable $1,200, internet $500, IT support $1,200, trash $1,200, phone $1,200) – $88,700

• Maintenance (equipment $15,000, facilities $15,000, preventative $12,000) – $42,000

• Advertising – 15% of net profit

• Food Ordered – $350,000 per year

Revenue Per Unit:

• Average number of patrons per business day (based on 13 open hours, max capacity 65, average meal length 1.3 hours, at 650 max customers per day) - 475

• Average ticket price per person - $50

• Average revenue per ticket - $22.50

• 475 customers x $22.50 revenue = $10,687.50 per average day x 360 open days per year = $3,847,500 expected annual revenue less $1,367,700 operating costs = $2,479,800 profit less 15% advertising ($371,970) = $2,107,830 net profit

Break Even analysis:

• Operating costs $1,367,700 divided by average revenue per ticket ($22.50) = minimum 60,787 patrons per year, or 169 patrons per day (minimum $3,802 revenue per day)

5.2 Sales Forecast

Sales forecast figures are for in-store sales only.  An enlargement of the scope of Goldilocks’ operation into catering and/or carryout will generate sales in excess of those shown.

We set as our objective and expect to generate monthly sales revenue of $200,000 by the sixth or seventh full month of business.  Our forecast of sales:

First full year of business:     $2,500,000

Second full year of business: $3,500,000

Third full year of business:    $3,955,000 (growth factor of 13%)

After year three, we project that in-store sales will begin to level off.  We are projecting that we will have a consistently high level of occupancy of tables by the end of year three.  Therefore our sales will only increase nominally (3 to 5% plus price increases) for two or three more years.  Thereafter, at this location, we expect increased sales due to price increases only.

We anticipate that when Goldilocks opens it will require the full attention of all the owners until the restaurant’s operations are well established.  When restaurant operations are established, we will begin working on setting up the capacity to cater our food, and then market our catered meals to local businesses and the community for special occasions.

Goldilocks has not determined whether or not it will market its cuisine by carry-out.  At the present time we do not foresee our type of food being appropriate for carryout.  That could change if we see that we can develop “package combinations” especially for carryout.  In addition, at present we are skeptical about the wisdom of carryout for Goldilocks.  We think that carryout could hurt the image of the restaurant that we are trying to develop.

Price sensitivity and target market:  In general, restaurant menu pricing is subject to high price elasticity of demand.  Goldilocks is also subject to that, but, because of the overall nature of its business, we think Goldilocks’ uniqueness and cuisine, its target market, its location, and lack of competition in its category of restaurant, will provide a partial buffer from the full effect of high price elasticity of demand.

We project our sales based on the fact that the target market (which is in abundance in the area of Goldilocks’ location – see Target Market Analysis) is ripe for a full-scale restaurant that utilizes all of the cutting-edge features of healthful and delicious dining, plus abundant choices, in an environmentally friendly setting.

5.3 Expense Forecast

Goldilock’s’ marketing budget is a key integrative device in our business marketing plan. It relates our restaurant’s strategy to operating plans for various functions. It is a means with which to deal with a mass of external and internal data. It should link a number of subsystems for controlling elements of marketing expense and for evaluating the strategy for our products and services over its life cycle. Therefore, developing and maintaining a sales and marketing budget system requires a broad understanding of our overall business and strategy and needs. Our marketing budget process links to product, channels of distribution, and profit a group of largely discretionary expenses that focus on customers' acceptance; on the downstream components of the value chain. Most restaurants try to sell profitably what customers want, that is, what the market will bear. As a result, the marketing forecast is a means of integrating the functional plans as well as the process capabilities of an organization. It is important that the budget be controlled because marketing expenses, which are not only largely discretionary but also can be changed dramatically as to priorities and mix, can be misdirected quite easily.

As a result, a budget process will be in place that can be integrated with other plans and that can provide useful analyses to support the judgments of our marketing executive.

Goldilock’s’ will look at a 5 year forecast depending on our sales in addition to utilizing the Integrated Marketing Communication (IMC) concept.

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6.1 Implementation

Goldilocks’ owners plan to open the restaurant by March 1, 2009.  The implementation schedule follows.

• August 11, 2009 – Submit complete business plan to four banks for consideration of financing for one-half of the total needed for start-up costs, reserves for operations while Goldilocks builds business to a point of cash-flow break-even, and a contingency reserve. (Balance of funds will come from owners’ personal assets.)

• August 12-15.  Contact and consult with three commercial real estate firms who are prominent in the area of where we want to establish Goldilocks.  Inform them of the size of property we need and the boundaries within which we prefer it to be located.  Realtor is to consider purchase as well as lease.  This will give them time to scout the market, put out the word in the commercial real estate community for the space we want, and be on the lookout for property that might become available in the near future due to expiring leases or someone going out of business.

• August 18.  Contact and consult with business brokers who might know of restaurant type establishments wishing to sell.  It is unlikely that this avenue would provide a place that would be satisfactory to Goldilocks but it is an avenue we should investigate.  Put the word in their ears that we are also interested in equipment that might be for sale from restaurants going out of business.

• August 19.  Contact houses that auction off various types of business equipment, primarily from enterprises that are going out of business or because banks have repossessed the equipment.  It is quite common to find restaurant equipment that is in very good condition for a fraction of the cost of new equipment.

• August 25.  Contact banks for response to loan applications if we have not heard from yet.  Provide any additional materials/documentation they need if a decision has not been made.

• Late September 2008 (at the latest).  Banks will provide a Yes or No answer.  If the answer is “Yes”, we chose the loan offer with the best terms.  If the answer is “No”, we use our own funds for the restaurant.

• By October 1, 2008.  The three owners meet with attorneys to establish Goldilocks, LLC.

• By October 1.  We investigate construction contractors who would be appropriate for remodeling and preparing a property for our restaurant. 

• Early October.  We go to appropriate state and county offices to register our company and obtain necessary permits and licenses.

• Early October.  Goldilocks to establish bank accounts.  If banks approved the loan they will give us an advance from our line-of-credit for Goldilocks’ account.  Otherwise we will use our own funds for the account.

• By October 15.  Realtors to notify us of properties that they have for us to look at that will be available by December 1.  We visit the properties and ask many questions.

• By October 20.  We sign favorable lease for property to lease in Bethesda, Maryland for occupancy on December 1.

• By October 21.  We give three general contractors information regarding what we need to have done to the new property space to prepare it for occupancy.

• By October 28.  Contractors give us their bids.

• By October 30.  We select the general contractor and sign an agreement for them to prepare the premises of the property for the opening of Goldilocks.

• Early November.  We begin a search for a highly qualified chef and two assistant chefs.

• Early November.  We contact insurance broker to obtain property and liability insurance coverage from December 1 until restaurant opens.

• Early November.  We begin shopping for and purchasing through auctions, if possible, food service equipment for Goldilocks.  If we cannot find it through auctions, we shop for equipment but delay purchase until the premises is ready for it.

• December 1.  Contractors begin preparing the new property for Goldilocks.

• By December 31.  We have hired our main chef to begin on March 1.

• January 2, 2009.  Goldilocks’ media person contacts Washington Post to inform them of the opening of Goldilocks.  They agree to interview her for an article about the new and unique restaurant that will open March 1 in Bethesda.

• By January 10.  Have restaurant equipment installed.

• By January 15.  We have hired two assistant chefs to start March 1.

• By January 20.  Advertise for the wait staff and other staff for start-up on March 1.

• By January 25.  Contractor is finished.  Ask county inspectors to inspect plumbing, electrical and gas and to perform any other required inspections so we can have an occupancy permit.  Ask Health Department for inspection for permit to open the restaurant.

• By February 15.  Receive occupancy permit and permit to open the restaurant.

• By February 15.  Have all wait staff and managers/staff hired for March 1.

• By February 20.  Washington Post runs an article about Goldilocks in the section that deals with restaurants.

• February 22.  Goldilocks runs radio advertisements on certain stations.

• March 1.  Goldilocks opens.

6.2 Controls

In order to get Goldilocks up and running as a viable business, and to assure it functions profitably, we will perform the following checks and benchmarks:

• August 25.  We will follow-up on bank financing applications.

• December 1.  Make sure arrangements have been made for purchase of all restaurant equipment and delivery when premises are ready for installation.

• January 1.  Emergency to hire main chef if not yet arranged by this time.

• February 1.  Check with insurance brokers to make sure they are on track for new insurance coverage as an operating restaurant to take effect March 1.

• February 16.  Check to see if all permits are in place for opening March 1.

• February 16.  Check to see if all staff are hired.

• February 16.  Make sure radio advertising is in place to begin February 22.

• February 16.  Two weeks before opening.  Make sure all food vendors have us lined up as customers to deliver to on the 27th and 28th so we are supplied with food on March 1.

• February 27.  Make sure all staff know who is starting on March 1 and what their schedule is for the first few days.

• March 15.  Check sales:  Are we ordering the right food supplies in the right amounts for timely delivery and minimal waste?

• March 15.  Are number of customers and sales per check in line with projections?

• March 15.  Are we getting surveys completed by customers and is the feedback good?

• April 1.  Analyze sales figures.  If not as good as projected, check to see if we are doing our jobs as we should.  Make corrections as noted by customers on surveys.

• June 1.  Analyze all aspects of the business.  Are employees happy?  Ask for suggestions from them.

6.3 Marketing Organization

Director of Marketing – Melanie Taylor

Charged with maintaining the restaurant web page as well as links to sister sites that contain ads, references, or links to Goldilock’s page, such as . Coordinates and manages all public relations and media events.

Assistant Marketing Director – Vince H.Y. Hu

Charged with customer relations, printed media interfacing, packaging, menus, newspaper coverage, brochure distribution, public transportation terminal ads, and event planning and management.

Marketing Manager - Clifford W. Erhart

Charged with industry relations, surveys, promotions, business development (local and regional), and catering.

6.4 Contingency Planning

In any business, there is no guarantee a particular type of business will sustain its competitive advantage forever. These days of global competition and the dynamic nature of business, a contingency plan must be in place. In a restaurant business, Goldilock’s must be aware of three main areas: Price, Health & Cleanliness, and Trends.

Price: Goldilock’s will be able to compete with fair prices while eating healthy in a new, trendy restaurant concept. As food prices goes up, we will continue to strive to be competitive. In order to do so, Goldilock’s will establish new resources for our fresh ingredients from local farms to large distributors. Periodic specials, promotions to coupons will help Goldilock’s stay competitive in terms of price.

Health & Cleanliness: The biggest threat to any restaurant is passing local health codes. Goldilock’s will train staff to keep the entire establishment clean utilizing the latest environmentally friendly cleaning chemicals. A clean restaurant following all local health codes will incorporate into our best practices.

Trends: The last worry for us is a downward trend in the popularity of organic ingredients. To help prevent this, Goldilock’s will invest heavily in more organic research, local farms, our vendors, public relations and even lobbying on Capitol Hill. If the organic trend becomes just a fad, Goldilock’s will focus on the next popular concept of eating out.

The bottom line for us is prevention. Goldilock’s will keep a close eye on trends in the health and food business while doing everything as part of our best practices to keeping our establishments clean.

References

Daly, John L. (2002). Pricing for Profitability: Activity-Based Pricing for Competitive Advantage. New York, NY:

John Wiley & Sons

“Exquisite and Innovative Go Mainstream: Ideas for 2008,” (Dec 2007), Prepared Foods, 176(12), 13-18

Hacker, Diana. (2007). A Writer’s Reference: 6th Ed. Boston, MA: Bedford/St. Martin’s.

Heaton, Shane. Spreading the Organic Word. Organic Food News Quarterly. Retrieved on June 11, 2008 from:



Kotler, Philip & Keller, Kevin L. (2007). A Framework for Marketing Management: 3rd Ed. Upper Saddle River,

NJ: Pearson Prentice Hall.

Stone, Merlin. Bond, Allison & Foss, Bryan. (2004). Consumer Insight: How to Use

Data and Market Research to Get Closer to Your Customer. Philadelphia, PA: Kogan Page.

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