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Modern Fare Foods Business Plan

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Modern Fare Foods Business Plan Modern Fare Foods Business Plan Executive Summary Modern Fare Foods, LLC (the “Company”) was formed to provide a unique shopping experience for the consumer that combines the desired benefits of quality and efficiency. Cleanliness, color, redesigned carts, personalized customer service, and easy-to-read POP signage will all combine to create this unique experience and set the Company apart from other local market competitors. Given the trend towards smaller family sizes, a need exists for individual packaged offerings and shelf-stable foods. Serving sizes designed to eliminate waste or spoilage and fresh / organic food offerings will appeal to health conscious consumers. This shopping experience reinforces to the consumer that they are receiving quality products and can feel good about their shopping selections. Consumers will find bright color and signage to enable them to find desired items quickly and conveniently. In addition to traditional store shelves, a butcher’s counter with freshly sliced meats and cheeses, a deli with ready-to-eat lunch and dinner selections, a produce section that includes both organic and vegan selections, and stand-alone displays of specialty items will be available. In order to offer the best specialty foods given the target market’s interests, the Company will use several suppliers on a rotating schedule to meet the target price point and product selection goals. Empire Foods, based in Cincinnati, OH, has a wide selection of natural and organic food selections that would appeal to an important segment of the Company’s target audience. They also offer marketing and merchandising services for the retail grocery industry that would provide Modern Fare Foods with a competitive edge in the marketplace. Sherwood 1 Food Distributors is one of the largest food distributors in the eastern United States. They offer a wide selection of frozen foods, packaged goods, fresh foods, and staples in nearly every product category. By combining the product selections of these two distributors, Modern Fare Foods can provide the best selection that fits the needs of the target consumers. The target market for Modern Fare Foods consists of customers that value smaller portions, and are looking for food choices that cater to unique preferences. They are in a hurry, have limited space, and are looking for a distinctive shopping experience with exceptional customer service. Industry Background The Supermarket and Grocery industry makes up the largest food retail channel in the United States. These establishments usually engage in retailing general lines of food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables, and various dairy products. The industry has had a modest growth rate from 2005-2010 of 0.6%, but experienced the most successful years during 2007 and 2008, when revenue grew 1.8% and 2.7%, respectively. Over the past 10 years, the Super Market and Grocery industry has been steadily approaching a mature stage in its lifecycle. However, stores focusing on niche products and markets are entering into a high growth period. According to new research from the National Association for the Specialty Food Trade, specialty markets offering natural food options and locally grown produce are competing effectively with the larger supermarkets. This increase has mainly stemmed from growing support of locally produced foods and concerns about food safety. The Fresh Market (Nasdaq: TFM) and Whole Foods Market (Nasdaq: WFMI) are representative of this increasing trend. The Fresh Market focuses on providing high quality food selections and gourmet cooking ingredients combined with exceptional customer service. Their company strategy has proven extremely successful. In November 2010, The Fresh Market 2 unveiled their initial public stock offering. In less than four months, the stock price increased by 51.8%. Revenue and income figures would be an ideal confirmation for their strong growth, but as the public offering was just released in November, public sales data has not yet been released on The Fresh Market. Whole Foods Market has a similar corporate strategy and is also doing remarkably well. WFMI has been publicly traded for almost three years. The company’s stock prices have steadily risen and were trading at $60.00 as of February 18, 2011, down just slightly from the 52-week high of $60.46. This represents an 82% increase over the 52-week low of $33.30. According to Food Marketing Institute, specialty grocers are less exposed to inflation compared to other grocers due to the organic and natural mix of products. The shift in consumer shopping habits toward organic, vegan, and other healthy dietary alternatives is also providing a strong basis for smaller, customer and quality focused retailers to be successful. Additional research performed by experts at the Kellogg School of Management sheds some light on the demographic and behavioral differences between consumers that prefer shopping at specialty markets over larger retailers, such as WalMart. In a twenty-month study conducted on consumer shopping behavior, Professors Hansen, Blattberg, and Singh identified that customers of local food retailers were more likely to purchase fresh produce, seafood, and meal replacements like deli sandwiches or freshly prepared salads, indicating that local markets can find a specialty niche by providing quality meat and produce. Their research also indicated that larger family sizes were also more likely to shop at WalMart, presumably in an effort to feed more people on a smaller budget. Therefore, an additional opportunity exists to cater to the needs of smaller, single family homes. These homes often battle with standard grocery portions. Typical grocery portions cater towards family sizes of four or more, making excess waste 3 unavoidable for smaller household sizes. They lean toward purchasing frozen dinners designed for individuals or shelf stable foods. With the company’s ability to provide a variety of fresh meals in smaller portions, Modern Fare Foods allows customers to choose something different for every night of the week, or shop individually for each family member. This provides the customer an option of customization that traditionally has not been offered. Value Proposition Modern Fare Foods will provide a unique shopping experience for the consumer that combines the desired benefits of quality and efficiency. Cleanliness, color, redesigned carts, personalized customer service, and easy-to-read POP signage will all combine to create this unique experience and set the Company apart from other local market competitors. Given the current grocery trends and the lack of a customer-focused retailer within a 3-4 mile radius of the University of Tennessee’s campus, an opportunity exists to create a retail location near the campus area that provides food products to consumers who value product quality, unique food selections, a friendly and customer-focused atmosphere, and convenience. The aim of the Company is not to be a low-cost leader, but food and grocery items will be offered at a price point below typical convenience stores. Traditional organic markets usually price their food offerings at premium prices due to the specialty nature of their products. By combining the efficiency of a traditional convenience store with the quality and professionalism of an organic foods market, the Company will establish its competitive edge and deliver more value for the customer’s dollar. Fresh deli and prepared food selections will also provide value to health conscious consumers and those looking for quality meals in a convenient setting at a fair price. An easily navigable store and shopping carts designed to cater to consumer shopping habits make the shopping experience much more convenient than traditional big box locations. 4 This convenience combined with a positive feeling and association with the Modern Fare brand will give customers psychological harmony between their desires to choose healthy selections on a daily basis and their lack of time in a fast paced world. Given the trend towards smaller family sizes, a need exists for individual package offerings and shelf-stable foods. Serving sizes designed to eliminate waste or spoilage and fresh / organic food offerings will appeal to health conscious consumers. This shopping experience reinforces to the consumer that they are receiving quality products and can feel good about their shopping selections. Operational Strategy Modern Fare Foods will be formed as a limited liability corporation between three partners; Jaye Phillips, Julia Taylor, and Jordan Triplett. These three partners will secure a location within 3 miles of the campus of University of Tennessee. The ideal location will provide adequate space for a 25,000 sq. ft. building, ample parking, signage, and easily accessible entrances. Preliminary target locations have been identified in the areas near 4th and Gill or behind Fort Sanders Hospital near 13th and Grand. The store will provide ample space to house a small deli/lunch counter area, fresh produce, natural foods, and approximately 10,000-15,000 SKUs. Once inside the store, shoppers can expect to see redesigned carts with ease of use in mind. These carts have removable baskets, side hooks for shopping bags, a hand-held electronic device for tracking purchases, steerable back wheels for easy handling, and foldable child seats and cup holders in 5 front. These carts will give consumers an immediate
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