Theresa Gould Product Manager TRG Productions 2008

Table of Contents

1. Generally Speaking

2. Hello, My Name Is

3. The World We Live In

4. In My Sights

5. This is Not a Plastic Pie Tin

6. Friendly Neighborhood Competition

7. I’ve Got an Image to Uphold

8. It’ll Cost Ya

9. And That’ll Be $___, Please.

10. Financially Sound

11. Graceful Exit

12. Credit is Due

2 Generally Speaking

Product Name

The product is called Sweet and Saucy. It is derived from a connection to the dessert- theme of the restaurant (Sweet) and the alcohol-tinged theme of the bar (Saucy). It alludes the to the dual nature of the bar, just as Naughty and Nice might allude to the dual nature of a person.

Product Background

The idea for this restaurant stems from personal experience. It seems all too common an occurrence: You and a group of friends have decided to meet up for dinner. You choose a place, probably close by, with a wide range of menu options and a casual atmosphere. After you finish your meals, you cluster by the door trying to decide what to do next. Dessert would be nice. Maybe we can find somewhere to just hang out. I’d like to get a drink.

Sweet and Saucy is a hybrid restaurant that effortlessly blends the decadence and glamour of handmade pastries and desserts with the exuberant atmosphere of a local hang out appropriate for many customers.

During the day, Sweet and Saucy overflows with the hustle and bustle of women, young children, birthday parties… It’s family-friendly mood is inviting for even the youngest and most delicate of patrons.

The afternoon air fills with telephones ringing in the orders of the next day: businesses looking for something different, something startling. No more boring bagels and boxed lunches for our weekly meetings…let’s show the boss we’re really stepping outside the box. Whole cakes, pies, tarts, and mini object of desire platters will please even the most hard-balling coworkers.

Firmly rooted in the breezy atmosphere of the east coast, Sweet and Saucy makes its debut in Melbourne, Florida in late 2009. The designers began with a blank slate: an old chain restaurant located on a half-acre lot along US 1 at the crossroad of Pineda Crossing. Abandoned, but full of promise, the building featured commercial ovens and an open- floor layout just perfect for Sweet and Saucy’s chic stylings and gourmet creations.

3 Hello, My Name Is

Statements

Provide location for after-dinner soirees with friends.

Provide a quick stop at the end of errand running for the kids to get an exotic tasty treat.

Provide a different option for local businesses in need of catering for corporate or professional events.

Scenarios

Jill and her three friends went out to dinner tonight for a girl’s night out. After wrapping up dinner and an hour of nonstop conversation and laughter, everyone clusters just inside the doorway. What now? It is only 8 pm and none of them feel like going home. I could use a drink. I wish there was somewhere cool we could go. They wish they could find a place that served a good cocktail and maybe some interesting sweets to close out a great night.

Kathy is exhausted. She’s been running around all afternoon, grocery shopping, hitting the bank, picking the kids up from school, and taking them to dance class…and now that class is over they’re all wired and restless. Kathy desperately tries to think of a place she can take them for a treat to keep them occupied and hopefully cause them to experience a “sugar crash” just in time for her to make dinner and relax. Kathy almost turns into the local ColdStone, but is swiftly interrupted. But Mommm, I don’t want ice cream again…

Jake is the new guy. He sort of fumbles around the office, trying to help out where he can, but mostly gets in the way. Then one day he gets the chance of a lifetime: plan the company party. This is big. This is his chance to really show them what he’s got. But he’s got his work cut out for him…after all, they are picky old people. He can’t just get those lame box lunches from the local deli. He needs something different, something unique…and decadent.

Components

The core market for this product is wide-ranging, encompassing almost every age group. The majority of customer will be women, although men will salivate at the sight of homemade heaven. Prime customer base will range from men to women, families to singles. Average age will be in the 21-45 range, although under 21 admitted during the daytime.

4 Research should focus on business plan of a Friday’s-type establishment mixed with the employee-rotation nature of SuperCuts, Great Clips, etc. employee. Want to provide an outlet for up and coming chefs to experiment and build their repertoire, thereby allowing us to feature new menu items on a regular, continual basis. Further research should focus on trends within the popular drink market, as well as pastry/sweets market. Goal is to have a constant influx of new menu items to encourage repeat patronage and provide outlet for professional and creative growth of staff.

Need to address atmosphere appropriate for market, as location suggests casual. However, want to distinguish the brand by evolving based on current trends in design. Biggest hurdle will be to keep casual, comfortable atmosphere devoid of rowdy customers, but still represent hip, ever-changing establishment.

5 The World We Live In

The pilot location for Sweet & Saucy will be the city of Melbourne in the center of Brevard County, Florida…at the heart of the Indian River and a thriving tourist and local economy. In the past, Melbourne has been a stop-through for professionals in the space and technology industries, as companies like NASA, Harris, and Lockheed Martin were always looking for temporary new talent in one of their local divisions. This constant rotation of inhabitants prevented any consistent growth and kept families out of the area.

However, in recent years many other industries have begun to flourish in Brevard County, causing an influx of new residents. Banks, media, and real estate ventures offered job security previously unheard of in this area, and families answered the call. Soon schools were popping up, housing developments expanding, and retail space going like hotcakes.

Brevard County today is a melting pot, with a population of over half a million.1 From 2000 to 2006, Brevard County experienced almost a 13% growth in population and even landed itself on MSN.com’s list of Top Ten Places to Live in the US in early 2008 (results were based on many employment-related factors).

In addition to families, Brevard County is also home to two major educational venues: Florida Tech and Brevard Community College (multiple campuses). This creates a constant influx of 20-28 year-old students looking for something else to do on a Friday night when school is just too much.

In October 2008, nearly 5,000 food and beverage stores called Brevard County home, making distinguishing oneself a crucial task.2 Nearly every major chain store can be found within the meager 1,012 square feet that Sweet & Saucy wishes to call home.

The pilot store will be located on the corner of Pineda Crossing and US 1. Currently, the city is constructing a connector from the causeway in Satellite Beach all the way to I-95. This will make it a major intersection for all traffic between the beach communities and tourists coming in from the interstate. Location is critical for this brand. Currently, there is only one other restaurant in the area…a local seafood restaurant that is more traditional, formal, and expensive than the Sweet & Saucy customer is looking for.

1 http://quickfacts.census.gov/qfd/states/12/12009.html 2 http://www.labormarketinfo.com/library/CES.htm

6 In My Sights

The Big Picture (Market)

The overall market for Sweet and Saucy is quite large. The current population of Brevard County is around 534, 359.3 According to several studies, the average American eats out about 4.2 times per week. This amounts to 218 meals per person per year, or an astounding total of 116,490,262 meals that are purchased eaten at some location outside of the house. Although there is no way to acquire every purchase or every customer in a market this large, by breaking it down into manageable segments, we can begin to tailor our efforts.

Closer Now (Segments)

Segmenting the market in Brevard County is a complex beast. In the past, nomadic businessmen employed by the dominant space and technology industries have largely inhabited this area. However, in recent years there has been a growth of a more stable demographic group. Families became more rooted and population has boomed. Indeed one website listed the Palm Bay/Melbourne area as one of the top 10 places to live in the US based on several factors including availability of employment and overall satisfaction. This opens the market up to several key target segments:

Women with Young Children

The first consumer group of interest to Sweet and Saucy is comprised of families with young kids. Headed by women who are typified as regular readers of O and Martha Stewart Living magazines, have middle- to upper middle-class incomes, and are extremely family-oriented. They are the new age soccer moms…independent, creative, and progressive. They are women who bake themselves as stress relief, but who are seeking time out of the kitchen. With their schedules bursting with career commitments, after school activities, and self-maintenance, they really just want somewhere to stop after a day of nonstop errands. They need somewhere to take their kids for a treat (other than same old ice cream shop). Finally, despite their commitments to exercise and a modest diet, they are secretly seeking a place to spend their “cheat” day.

Young Professionals

The most easily accessible target segment includes young adults in their early 20’s. They are fun loving, single, and strongly female. Seeking a place to feed their relationships, as well as their bellies. The typical customer is one who enjoys music, fashion, Grey’s

3 http://quickfacts.census.gov/qfd/states/12/12009.html

7 anatomy and Sex and the City. They are social drinkers…seeking something different, something daring, and something with an edge. They live to gossip and cherish their friendships with a passion. Professionally employed, but in early stages of responsibility cycle. Primarily seeking a new place to hang out and get a drink. Want an out from the everyday bar scene. These customers are generally drawn to different, interesting drinks (martinis, mojitos, etc…). Want a place to eat and still maintain appearances (the local bowling alley is so uncool). They despise the old rundown dives with creepy old men at the end of the bar that fill the corners of every major intersection. They are subconsciously drawn to the vivid colors and fancy-schmancy, fun décor of Sweet and Saucy.

Businesses and Corporations

This segment includes all companies seeking catering for special events, corporations, local non-profits. They may also be looking for feed shows, exhibits, etc… Or just seeking refreshments for guests or employees on random occasions.

Focus will be on small-to-medium sized companies within local area (Brevard County). Special emphasis will be paid to local broadcast/advertising outlets (Radio stations, newspapers, festivals). This will foster the long-term investment for word-of-mouth marketing and free promotions (trade basis). Many companies offer incentives for free or discounted catering, and radio, cable, and news outlets offer instant feedback to a wider customer base.

8 This is Not a Plastic Pie Tin

Political

The current political environment seems to be rather steady at that moment. As the United States prepares for a change of command (election results would argue a very welcome change), the political world seems to be experiencing a leveling out. There seems to be a very low rate of political unrest or need for extreme regulation.

Due to the negative economic situation, current taxation and regulation are relatively minimal. In addition, wages remain low, which will keep our costs at or below our expected estimates. Finally, President-Elect Barack Obama has stated that his primary concern is the economy, so we can expect some relief in the near future.

Economic

As the biggest environmental factor, the current economic condition will play a key role in the formation and success of Sweet and Saucy. Although the average person is said to eat out 4.2 meals per week, we are seeing a decline in those numbers. People are in conservation mode…they are seeking to maintain what wealth they have and keep unnecessary spending to a bare minimum. This means fewer customers, and even those customers we do manage to get will be less willing to spend money on pricey desserts.

In addition to just eating at home, we believe there to be a change in the choices eat- outers do make. When choosing to eat away from home, we believe people are more apt to choose a low-cost, fast food-type establishment over one that may be sit down and require a payment for service. This will affect the number of customers we have that are willing to sit in the dine-in section of the restaurant.

Further, the economy will continue to affect costs. As the tightening of the monetary belt squeezes more and more industries, our costs for materials and special ingredients will continue to rise. We will need to pay close attention to our pricing and our SG&A to ensure we are controlling costs wherever we can.

Sociocultural

The sociocultural status of the local market plays a key role in the marketing strategies and success of the brand as well. Right now the market is keenly focused on cutting back and reducing unnecessary spending. As such, our marketing efforts need to be

9 aggressive, yet accommodating, in order to appeal to those not looking to eat out as often or at all.

In addition, we must be very conscientious of the current trend towards health. It is becoming more widely accepted to be a healthy eater and avoid alcohol or other “toxic” libations. For this reason, we must avoid using words that scream “fatty” or “bad for you” and focus on taste, quality, and value.

Finally, the current trend is focused on going green. We must make a concerted effort to use recycled products and offer local choices. Our products should be grown locally and minimally processed. We must be sure to use all natural ingredients, and mention such on menus, window signs, etc… This will ensure our acceptance in today’s Green society.

Technological

Technology will play a key role in the marketing strategies for all the target segments. An aggressive online campaign will include coupons, discounts, VIP memberships, and forums for menu suggestions. Customers will be able to receive coupons via their email and register online for special discounts.

We will feature a VIP membership club that will allow for the accrual of points, with each point adding up to a free menu item (based on total points). The members will be able to track their points online, as well as cash them in for certificates for the free items to bring to the store.

Finally, our website will feature an interactive forum that will allow customers to send in their own menu suggestions. This two-way dialogue will keep customers coming back to the site to chat and back to the store to check for their product idea.

In addition, new technology in baking/ovenry will allow us ensure a perfect bake every time. Our restaurant will receive an oven upgrade, as well as full-service checkout stations with touch screen features. Today’s customers do not have the time to wait while the cashier fumbles to ring up the order. Fast service means repeat customers.

10 Friendly Neighborhood Competition

With its distinct design and fresh business plan, Sweet & Saucy faces some exciting opportunities, as well as some stiff competition. A thorough analysis of these juxtaposed conditions will ensure a solid execution and assured success in the market.

Sweet & Saucy

11 STRENGTHS WEAKNESSES

 New, innovative menu; menu  Menu does not include basic items, updated on a regular basis like entrees; very specific

 Atmosphere fits both families and  Cost to produce menu items much young, hip crowds higher that competition (experience curve and lack of supply relationships)  Small company with local feel

OPPORTUNITIES THREATS

 Consumers looking for a fresh, new  Lots of big companies/conglomerates dining establishment; bored with in area; restaurant heavy mainstream  Atmosphere may discourage males

TGI Fridays

TGI Fridays is the closest to a direct competitor.

12 STRENGTHS WEAKNESSES

 Big-name brand that is well-known  Crowd can be rowdy; younger and reliable  Food and drinks can be predictable  Diverse menu items and reasonable prices

 Recently overhauled and remodeled all stores nationwide

OPPORTUNITIES THREATS

 Ability to create wide-ranging or  Today’s consumers favor local specific advertising campaigns to companies target any competitor  As local area becomes more family- rich, consumers are seeking a less bar-like place to bring kids on days off

Staying at Home

Due to the current downturn of the economy, many people are choosing to stay at home.

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STRENGTHS WEAKNESSES

 Comfortable; don’t even have to get  Must cook/prepare meals dressed  Lack of options; limited by skill,  No travel required ingredients available, and time

 Kids/friends can just kick back and be themselves

OPPORTUNITIES THREATS

 Economy is making it more  Consumers seeking something new; acceptable to be frugal and not go escapism; refuge out as much

Mitigation Strategies

Our mitigation strategies focus on building the brand as we go along. Many of our threats and weaknesses stem from our freshman nature and will likely be mitigated with simple time. For example, our cost of goods sold is higher than our competitors because of the experience curve. As we gain experience and our recipes become committed to memory, our production will increase, so costs will go down.

Further, as we grow we want to ensure we are planning our expansion project. This will allow us to branch out and meet the needs of the other markets, or more precisely meet

14 the needs of our current customers. Our brand is open to a “brother-store” concept that would appeal to the males in the market. This brother-store would likely offer more substantial menu items, thus increasing our product offerings.

I’ve Got an Image to Uphold

Logo and Slogan

The logo is as displayed below. The overall design presents the fun, dual nature of the restaurant. One on hand, the colors are lively and fun, and perhaps slightly adolescent. However, the presence of the shot glass fill the brim with a decadent dessert does more than appeal to the older crowd. It says laughter, excitement, friendship, and quality. It’s ageless.

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Head designer, TRG, designed the logos shown above in house, so no additional costs were incurred. The image consists of a fun shot glass filled to the brim with vibrant cherries and sweet whipped cream. This image helps to bring together the two main elements of the restaurant, alcohol and desserts. The text of the logo is fun, a little edgy, and vibrantly-colored in the signature hot pink and green hues that will surround the branding and marketing campaigns. The logo was also designed in grayscale for effect and to use in subtle print marketing. Having our own black and white logo will eliminate the fear of local media outlets attempting to make our logo grayscale for their print ads (and thus possibly distorting the brand).

Marketing Strategy

The key element of Sweet & Saucy’s successful market plan will be its differentiated approach. It will be crucial to pinpoint the particular needs of each target segment and market towards those needs. Each of our segments is very unique and shares few similar characteristics with the others. Because of this, an undifferentiated marketing approach would not be able to effectively target all the segments and we would fail to procure or maintain customers. Each target segment must feel like Sweet & Saucy is exactly what they were looking for.

Our marketing approach will focus on one main concept: escapism. Each target segment has been beat to death with the same ol’ same ol’ and is looking for something new and exciting. Sweet & Saucy offers that something at a low price. Media campaigns will be centered on radio advertisements, as well as mailers and partnerships with local events. Several pro bono catering deals will be allotted for each quarter to ensure all pockets of the market have a chance to try our menu out for free.

Branding

According to the Quantified Marketing Group, “Very simply put, a brand carries with it in an instant our expectations of what we think our money will buy.”4 They also point

4 http://www.quantifiedmarketing.com/learning_center/restaurant_branding.php

16 out that customers’ emotional reactions to a restaurants design are growing ever more important.

Values

Community

Our brand would be firmly rooted in community. It is vital to present our local approach and customer focus in order to gain that local trust and loyalty. People are sick of the big names – the fragile economy has made them unreliable. In addition, their manufactured natures are a turn-off for today’s eco-friendly, organically-minded consumer.

Innovation

In addition to a community focus, our brand must be the pinnacle of innovation. With a modern design and constantly updated menu, our brand will be seen as being on the cutting edge. The overall concept is unique and new…never been done before. Our unique menu items will include the hot new product of the year (like pomegranates last year or acai berries this year). A community of innovation is the foundation for Sweet & Saucy.

Personality

Our brand would fit snugly between the archetypes of the Magician and the Jester. We offer a sense of belonging and a sense of ownership, so customers feel like they are a part of our brand. In addition, we are constantly changing, updating, and growing, so we offer innovation and exploration. We bend the rules of creativity and allow the community to be a part of that experience.

It’ll Cost Ya

Costs of Goods Sold

The Cost of Goods Sold analysis is based on an average sale. The unit of measure is one dessert and two drinks (whether alcoholic or non-alcoholic). Actual costs will vary slightly based upon specific details, but the below outline represents an accurate average purchase:

Flour $0.04

17 sugar $0.03 Eggs $0.06 baking soda $0.01 baking powder $0.01 salt $0.01 brown sugar $0.06 chocolate $0.21 vanilla $0.02 butter $1.73 powdered sugar $0.11 milk $0.01 special ingred $2.00 soda $0.15 alcohol $0.32 baker $1.17 wait staff $0.80 goods $4.77 labor $1.97 Total Cost $6.74

All of our goods will be bought in bulk from local producers/distributors to ensure the lowest possible prices.

The primary employee in the cost chain will be the baker. His/her salary will be equivalent to $14 an hour in order to ensure the highest quality for the best value. Total labor costs are based on a bake-rate of 3 cakes every two hours.

Additional salaried employees are covered in the Sales – General and Administration fees.

Sales, General and Administrative

The SG& A are the administrative costs to run Sweet and Saucy. The amounts shown are listed on a per year basis, in order to show actual expense for year one.

 Salaries: o CEO/Manager : $150,000 o Assistant Manager: $80,000 o 5 Cashiers: . 1 Part-time: $8,000

18 . 4 Full-time: $80,000 o 2 Janitors: $20,000

 Insurance/Fees: $12,000

 Marketing: $100,000

 Operating Expenses: $50,000

 Total SG&A: $500,000

And That’ll Be $___, Please

Summary

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Initial Invest $120,000 Unit Cost $6.74 $6.77 $6.80 $6.83 $6.86 Total Units 253,206 300,204 379,762 444,351 507,771 Total Cost $1,706,605 $2,032,379 $2,582,381 $3,034,918 $3,483,307

Initial Investment

The initial investment of $120,000 will primarily be used for refurbishing the building and applying the new design theme. The breakdown is as follows:

 New appliances: $40,000

 Sign: $18,000

19  Counters/tables/chairs: $10,000

 Computers: $6,000

 Décor misc: $10,000

 Parking lot repair: $14,000

 Menus/magnets: $1,000

 Bathroom upgrades: $8,000

 Misc supplies: $3,000

 Initial Marketing: $8,000

 Legal Fees: $2,000

Financially Sound

The key point to consider when evaluating the financial elements of launching this brand is that the cost/price per unit is an average. The unit is calculated as an “average purchase” or one dessert and two drinks per person. This will change depending on the target segment doing the purchasing or the purpose of the visit. The most significant difference will lay in whether or not an alcoholic beverage is part of the purchase. Thus, the price per unit will fluctuate for the customer based on his/her specific needs.

In addition, the cost to produce this unit will fluctuate based on the elements of the actual unit purchased. Alcohol will cost more than a non-alcoholic beverage. Also, each dessert will be different and will include different premium ingredients. These costs will fluctuate with the season, local availability, and popularity.

The SG&A costs will remain stable at approximately 17%. This is an average amount based on various competitors with similar business plans and operating costs.

We are assuming a tax rate of 25%, which will cover us during times of potentially aggressive tax regulation.

Overall, we can expect to begin seeing a positive cash flow within the first year, with an expected net profit of nearly $500,000. With the expected growth rates for the first five

20 years, we can reasonably calculate a net present value of $2,230,495. With the cost of capital at an expected 15%, our internal rate of return is a comforting 428%, making this investment sound.

Sensitivity Analysis

Sweet & Saucy is more likely to be sensitive to an extreme growth than a deficit. With the current pricing scheme, a cushion has been built in to allow for fewer sales than expected. With our costs at barely more than 50% of the price per unit, we can adjust the price or offer special deals in order to encourage sales during extreme down times.

In addition, an raise in cost for any of our required materials would not represent a significant issue because we have that cushion built into the price. The price remains well within the reasonable zone for a meal of this nature, so a small increase in price will likely be tolerated well.

However, an extreme growth beyond our means would drastically affect the business. With only three commercial ovens and less than a dozen employees, we would not be able to handle many more customers than anticipated. We also do not have the storage space for additional materials, nor do we have the floor space or hours in the day to serve additional customers.

Graceful Exits

Exit strategies are crucial for two reasons: (1) investors need to see an opportunity to make money off their investment in the future and (2) it’s always good to have a contingency plan as sometimes things don’t go as expected.5

Acquisition/Merger

If business is growing at an overwhelming rate or is not meeting expectations for several years in a row, then a planned acquisition by a larger company may be the most viable option. With several large-scale conglomerates out there that would be able to support our brand, acquisition offers a chance to maintain our brand integrity while being protected by the umbrella of a larger retail veteran.

Spin Off

If our brand seems to be flourishing in the local and we are unable to meet all of the demand, a spin-off or growth strategy may offer relief. This may be the best option if the web response for new menu items reaches unsatisfiable numbers. In addition, the opportunity for a sister store in another location will allow our brand to grow, name

5 http://www.gaebler.com/Entrepreneurial-Exit-Strategies.htm

21 recognition to take hold, and our business to continue unrestricted. Initial research into possible locations prior to launch is crucial. Sister store could be an exact replica or offer different menu items to capture the rest of the market.

My Ideas

The most viable option for this brand is to extend the product life cycle by increasing marketing efforts and offering new choices. This will be firmly in place from the beginning with the operation of the website and it’s forum function, which allows customers to offer suggestions for new menu ideas. This will keep the menu fresh and updated. The customers will feel like it’s partially theirs as well…giving them a feeling of ownership. This will be similar to the image/menu upgrades being pushed by competitors like TGI Fridays right now.

Credit is Due

Branding: Retrieved from the World Wide Web from http://www.quantifiedmarketing.com/learning_center/restaurant_branding.php.

Brevard Quick Facts. Retrieved from the World Wide Web from http://quickfacts.census.gov/qfd/states/12/12009.html.

Class Notes. Product Development, Georgetown University. Fall 2008.

Employment Data. Retrieved from the World Wide Web from http://www.labormarketinfo.com/library/CES.htm.

Exit Strategies. Retrieved from the World Wide Web from http://www.gaebler.com/Entrepreneurial-Exit-Strategies.htm.

Logos. Retrieved from the World Wide Web from http://www.logodesignguru.com/A/Restaurant_Logos.asp

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