Company Business Plan June 2017
Table of Contents
Executive Summary 3 Market Research
4
Business Model
25
Marketing Strategy
36
Management Summary
39
Financial Plan
40
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Executive Summary Company will be a company formed by Founder, a bar industry veteran. The company will open a jazz bar named, ‘Jazz Bar’, in the heart of Manchester, UK.
£2,446,089 Net Present Value
The jazz bar will serve alcoholic and non-alcoholic beverages along with international food and music.
172%
Music bars are few and far between in Manchester, and; Tobias will capitalize on this opportunity and raise the bar in the bar industry in terms of entertainment and food by introduce ‘Jazz Bar’ to the community.
Internal Rate of Return
14%
The Company aims to give every guest a standard of drinks, service and atmosphere that some bars in London offer; but at the moment, bars in Manchester don’t. They all seem to be carbon copies of each other or just gimmicks.
Revenue Growth
21%
The company is looking to raise capital of £200,000
Particulars Revenue Gross Profit Net Profit Cash Balance
£ £ £ £
Year 1 750,000 525,000 108,414 351,625
Year 2 £ 900,000 £ 630,000 £ 170,591 £ 580,971
Profit Growth
Year 3 £ 1,035,000 £ 724,500 £ 203,044 £ 850,883
Year 4 £ 1,169,550 £ 818,685 £ 223,662 £ 1,146,567
Year 5 £ 1,286,505 £ 900,554 £ 230,361 £ 1,450,626 3
Market Research The 'night-time economy' is worth £66bn to the UK and must be treated with respect, says new report The night -time economy of restaurants, pubs, bars and clubs is worth £66bn to the UK, and is underpinning much of the UK's economic growth, a report has found. According to the Forward Into The Night report, which was produced by the Night Time Industries Association (NTIA), 6pc of the UK's gross domestic product is generated by night-time businesses, which employ around 1.3m people. There are more people awake and socializing at night-time than ever before, the study claimed, with 10pc of UK employees regularly working a night shift, 500,000 more than in 2002. Far from fueling binge-drinking and alcohol and drug-related crime, the NTIA claimed that the night-time economy is partly to thank for improving crime rates. A bar or a club was often one of the first signs that an inner-city area was regenerating and as the night-time economy picked up it created more business for taxis and other services, Miller added. The economic research consultancy TBR produced the first study of the night-time economy in 2010. It calculated that the sector employed 1.3 million people and generated £66bn in revenue.
Source: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11692161/Clubs-and-bars-are-vital-revenue-generators-for-UK-economy-not-hotbeds-ofbinge-drinking-and-drug-abuse.html https://www.theguardian.com/business/2015/may/06/uk-night-time-economy-now-has-its-own-industry-group
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Market Research Pubs and Restaurants The UK eating out market is worth over ÂŁ40 billion, and while consumers continue to engage and enjoy the food industry across several channels, and brand power continues to hold its strength at the more expensive end of the market, the casual dining sector still find their target markets to be cost conscious and savvy about pursuing the best value without compromising on quality with competition from the dining packages offered by supermarkets.
While the pound remains weak, foreign tourists, such as those from China taking advantage of “Golden Week�, have helped to boost sales, particularly in the capital. The fall of the pound has meant that a visit to the UK from China is 20% less expensive now than before the Brexit vote.
Pubs have seen escalating cost in terms of minimum wage, VAT rises, business rates and price competition on alcohol from supermarkets. A comprehensive food offering has become a must have rather than nice to have in increasing the value per customer. Changes in the consumer experience in pubs are also influenced by price and regulation, from duty on gaming machines to sports coverage licenses, all factors that put pressure on profit margins.
However, the broader context also reveals a raft of ongoing challenges for the industry. Pubs and pars face stronger competition than ever from supermarkets as well as cheaper restaurant brands, falling alcohol consumption, regulatory red tape, the introduction of the National Living Wage in April, rent rate, beer duty and operational cost challenges. The whole sector faces challenges across the P&L in terms of national living wage increases, rent increases, supplier price hikes and a softening at the top line.
However, the strength and depth of the September sales growth is highlighted by the fact that they showed a bigger increase outside of the M25, where LFL sales were up 2.2% compared to a 0.9% rise in London.
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Market Research Current Market Performance While pubs and bars have long been diversifying their product ranges, particularly with a shift to offering more food options, competition has intensified. Market share remains low with the four largest pub and bar companies having a combined market share of 26.7% in 2016-17. Whilst the sector have experienced a reduction in the volume of sales, the value of sales has risen through the introduction of craft beer and specialty drinks; particularly gin.
With food sales becoming an increasingly important income stream for the UK’s pub and bar sector, operators looking to expand their menu offering will find a host of new ideas at next month’s Casual Dining trade show.
Source: https://www.bdo.co.uk/getmedia/bb7ed449-4c87-4b44-9a9f-7088c86afd64/BDO-Restaurants-and-Bars-Report-2017.pdf.aspx
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Market Research Rise of Food Led Pubs Much has changed for the traditional pub over the last few decades. Average food sales in the UK’s 49,500 pubs now account for 25% of total sales (compared to 9% in 2001). That figure is significantly higher (well over half of total sales) for many of the UK’s 17,000 managed pub restaurants, which (according to foodservice analysts Horizons) now hold a 22% share of the UK’s eating out market (forecast to rise to 26% by 2016). Recent research by Mintel is equally upbeat, with their ‘Pub Catering Market Report’ predicting that the UK’s pub catering market will grow to £7.77 billion by 2017 (it was £6.57bn in 2012). The report also revealed that pub/bar restaurants topped the list of most visited type of restaurant in the UK.
Not least, the cocktail culture has found a vibrant international home in the UK. Cities such as London, Manchester, Glasgow, Edinburgh have thrown up a new, highly-creative generation of mixologists and cocktail bartenders. Their skill and ingenuity in blending flavours, devising intriguing serves, leading cocktail innovations, is recognized world wide. The latest twist in the tale of UK cocktail culture is the trend to mainstream acceptance by pubs and a new mass market of cocktail lovers. Girls nights out, mates having a casual drink in a pub, are now as likely to feature a Mojito, Cosmopolitan, Manhattan, or Old Fashioned as they are to feature a pint or a glass of wine (a precursor of the drinking revolution).
The so-called cocktail revolution has been going on for some time and one that has brought pleasure to millions of drinkers. In its wake the revolution brought profitability for bars, increased volume sales for spirits and liqueur brands, opportunities for restaurants, hotels and pubs to reposition themselves and enlivened dull drinks menus. Source: http://www.brakesce.co.uk/pages/multimedia/db_document.document?id=4088
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Market Research Pubs and bars – Market Research • • •
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Cellar Trends forecasts that the volume of cocktails served in the UK this year will grow between 9% and 10% (CGA forecast: 3.9%) Recent survey found that 45% of respondents purchase cocktails in pubs/bars, over 10% in clubs, while 20% now do so in supermarkets Cellar Trends believes that the cocktail culture will continue to grow at similar rates over the next five years generating volume growth of nearly 50% by 2017 Moreover Cellar Trends research among 200 younger consumers reveals that: – 88% now drink cocktails while out in a bar – 25% consume cocktails once a month, 15% twice a month and 6% once a week – 73% now drink cocktails at home with the top reason being special occasions such as birthday parties Other key reasons for consumption are social – ‘friends all like drinking cocktails’, ‘Friday / Saturday night’, and as a treat
Source: http://www.brakesce.co.uk/pages/multimedia/db_document.document?id=4088
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Market Research Pubs and bars – Market Research •
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The spread of cocktail servings into mainstream pubs, restaurants and hotels will generate an increase in the total number of cocktail outlets Pubs alone number more than 50,000 in the UK Add to that 7,500 hotels of three stars and above, as well as 23,000 licensed restaurants and the potential market size for cocktail serves is 85,000 on-trade outlets Although Cellar Trends does not operate in all cocktail sectors, based on our brand portfolio and our distribution footprint, we believe that the number of outlets serving cocktails is higher than the CGA estimate of 24,000 Based on this data Cellar Trends estimates the number of outlets serving cocktails in the UK is 30,000 and showing growth of 10% over 2012 Cellar Trends forecasts that the cocktail outlet universe will grow to number 40,000 outlets by 2017
Source: http://www.brakesce.co.uk/pages/multimedia/db_document.document?id=4088
Overall, the pub and bar market is forecast to see turnover growth rates increase to about 2% annually over the next three years to hit £22.8 billion. Closures will continue, but at a slower pace, as major companies approach their disposal targets. The number of outlets is expected to reach 45,000 by 2020.
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Market Research Major Markets People aged between 26 and 35 People aged between 26 and 35 are estimated to be the largest market for the Pubs and Bars industry, accounting for 31.4% of revenue in 2017-18. People in this age group tend to have higher disposable incomes and drink more frequently than younger consumers. People in this age group tend to drink in restaurants more frequently, but less so in nightclubs. As pubs have become more focused on serving food, the number of families going to pubs has also increased, supporting demand from this segment. People aged between 36 and 55 This market is expected to generate the second highest share of revenue in 2017-18, at an estimated 28.2%. This market encompasses some of the people with the highest levels of disposable income as well as those whose children have grown up and moved out. These consumers have frequented pubs more often in the past few years. Those aged between 45 and 54 are the second heaviest drinkers in terms of the number of units per week, according to data from the Health Survey for England. These consumers have generally yet to retire, providing them with income as well as more social opportunities to go to pubs and bars after work. Those in managerial and professional occupations are now the most frequent customers of pubs and bars. Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
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Market Research Major Markets People aged over 55 According to figures from the Opinions and Lifestyle Survey, men aged between 55 and 64 are the heaviest drinkers in terms of units of alcohol consumed in an average week. People over the age of 65 are also more likely to drink on five or more days in a week. However, this market is more likely to consume alcohol in the home and in smaller quantities than younger age groups, and is expected to account for 22.1% of industry revenue in the current year. People aged between 18 and 25 Consumers aged between 18 and 25 are expected to account for 18.3% of revenue in 2017-18. People in this age group have been attracted to alternative socialising options like coffee shops over the past decade. Pubs especially struggle to appeal to the younger cohort of alcohol drinkers. Spending power is also reasonably low for a sizeable share of this market, and establishments often offer promotions to attract students as a result. Young consumers also tend to spread their alcohol consumption across pubs, bars, restaurants and nightclubs. This market has declined over the past couple of years, with a reported rise in the number of people in this age group abstaining entirely from alcohol. Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
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Market Research Geographic Markets The South East The distribution of pubs and bars generally reflects the spread of the population around the United Kingdom. Therefore, it is unsurprising that the South East accounts for the largest proportion of industry establishments, with 13.2% located in the region.
The South East accounts for the largest share of the population, at 13.7%. The region contains some of the country’s most populous counties, such as Kent, Hampshire and Surrey, as well as cities like Oxford and Brighton, which have large student populations. The South East ranks second highest in terms of gross disposable income, which supports spending in pubs and bars.
The South West The South West is expected to account for 11.1% of industry establishments. This is largely a result of the presence of the populous city of Bristol, as well as the large student populations in Plymouth and Exeter. In other areas of the South West, such as Cornwall and Devon, the population is dispersed. These areas tend to have a relatively high number of pubs per person as each small village or hamlet tends to have at least one pub. The remaining industry establishments tend to follow the spread of the population.
12 Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
Market Research Local Market - Manchester • Manchester has highest number of pubs and bars per head in region. • From delicious dive bars and brilliant boozers to chic and swanky cocktail bars with pricey drops and panoramic views, Manchester has it all when it comes to getting a bit squiffy. There's a pretty extensive selection of bars on offer. • The city has no shortage of good pubs, from old-school boozers to boundary-pushing craft beer bars. • The area had 1,279 licences that include provisions for alcohol to be consumed on the premises at March 31, 2016, a rate of 2.4 per 1,000 people living in the area, above the England and Wales rate and the highest rate in Greater Manchester. • Manchester’s residents are renowned for their love of a night out and, although the Hacienda is now a block of flats, there is no shortage of places to drink in the city centre and nearby suburbs. • Manchester people drink less at lunchtime during the week. They are a bit dressier in Manchester as well. They tend to like making an evening of it more than people do in London. But there’s also a casualness about Hawksmoor that does really well in Manchester. It’s not somewhere that likes lots of fuss and frills when it comes to service. The other thing is that ours is the kind of food that people like, but done as well as possible, which translates well in Manchester.
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Market Research Local Market - Manchester The Late Night Economy • Consumer spending on late night leisure is up by 3% (or £3.30) to £55.56 on the last quarter • The average late night out lasted 4 hours 49 minutes, a 28 minute increase on the last quarter • Spending on pre-drinks, transport, entry fees and drinks in the venue have all increased, while expenditure on food has decreased by 12.3% (or £1.97) compared to the last quarter • Spending on drinks in late night venues has increased by 50% (or £2.70) to£17.32 • Spending on entry fees increased by 1% (or £0.96) when compared to the previous quarter • 2% of Brits go on a late night out at least once a week • Over a third of respondents believe that a late night out has a positive impact on their overall mood (35.4%), their mental wellbeing (34.8%) and their relationship with friends (34.0%) • Over half (50.8%) of respondents say they always go for a quality brand when choosing a drink, a number which increases to 8% amongst 18-21 year olds
Source: http://delticgroup.co.uk/deltic-night-index/
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Market Research Local Market - Manchester Activity Breakdown • Pubs remain the most popular late night activity, with just under a quarter (24.2%) of respondents spending the most money in pubs each month • 2% of 18-21 year olds spend the most money in clubs each month • Amongst the 18-21 age group clubbing saw an increase of 9% compared to the last quarter • The top three late night activities for men are pubs, followed by the cinema and then clubs and bars joint third • For women, clubbing is now one of the top three late night leisure activities, overtaking The top three activities are now pubs, cinema and then clubs
Source: http://delticgroup.co.uk/deltic-night-index/
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Market Research Local Market - Manchester When compared to the last quarter, the average number of times Brits go on a late night out has increased from 89 days a week to 1.26 days a week Compared to the last quarter, the number of people who go on late night out 2-3 times a week is up by 0.7%, and the number people going on a late night out 4-6 times a week is up by 0.5% On average, over two thirds (69.8%) of Brits aged 18-21 go on at least one late night out each week, up from 67.4% last quarter Nearly a quarter (24.1%) of 18-21 year olds go out on late nights 2 to 3 times a week, this is up by 2% when compared to the last quarter. The number of 18-21 year olds who go out 4-6 days a week has also increased by 4.7% for the same period On average, British men continue to go out on late nights out more often than British women (1.41 times weekly for men vs 11 per week for women). When compared to the last quarter the frequency of late night outs for both sexes has increased Over 1 in 10 (11.2%) Brits aged 18-30 go on late night out 4-6 times a week In the following cities, people are most likely to go on a late night out at least once a week • Brighton (48.7%) • London (44.1%) • Bristol (41.0%) • Glasgow (40.2%) • Manchester (39.8%)
A quarter (25.3%) of Bristol residents and almost a quarter of London (24.6%) and Manchester (24.2%) said they purchase better quality drinks / services because it looks better on social media, compared to just 9.6% of those in Newcastle, and 10.5% of respondents in Leeds
Source: http://delticgroup.co.uk/deltic-night-index/
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Market Research Major Products Beer Selling beer is the industry’s most important revenue stream and is expected to account for 33.2% of revenue in 2017-18. Historically, this segment has been much larger, but it has steadily lost share to food and competing beverages such as wine, spirits and cider. Per-capita beer consumption has decreased over the past decade, though it still remains Britain’s favourite alcoholic beverage.
Expenditure on beer has not fallen as much as total beer consumption since consumers have generally shifted up the value spectrum, drinking more craft beers and premium lagers. High beer duty has also played a role in this. During the past five years, the decision by many operators to focus on food has also led to a relative decline in beer sales. Food Food has always been an important part of a pub’s offering, but its role is becoming more vital as drinks sales have declined. For many publicans tied to pubcos or brewers, food menus are a way to respond to changing consumer tastes and gain increased revenue per head from punters. During the past five years, a number of pub owners and operators have remodelled their establishments as gastropubs, hiring skilled chefs and adopting modern menus with international dishes and flavours. Wet-led establishments in the estates of the largest companies have either been closed down or converted to food-led pubs that typically generate almost two-thirds of revenue from the sale of food. These establishments now compete for business in the larger casual dining market with full-service restaurants such as Wagamama, PizzaExpress and Nando’s. The breakfast period is currently the fasting-growing time for food revenue growth, with many of the older pub groups trying to replicate the success JD Wetherspoon has had in this area. 17 Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
Market Research Major Products Spirits and spirit-based drinks Sales of spirits and spirit-based drinks, or ready to drink beverages (RTDs), are expected to account for 15.7% of industry revenue in 2017-18. Vodka accounts for the largest share of spirit sales, followed by whisky, gin and rum. Gin has been gaining ground rapidly over the past couple of years as the range of gins produced in the United Kingdom has expanded, generating new interest in gin and gin-based drinks.
RTDs are primarily alcopops, which are ready-mixed cocktail drinks based mainly on either vodka or rum. Sales of RTDs have fallen significantly over the past five years as social attitudes have changed, with greater awareness of the sugar content of such drinks and the association with binge drinking. However, during the past five years, spirit sales have increased as a proportion of industry revenue due to the rising popularity of cocktail bars. Wine Wine consumption at pubs and bars has grown strongly over the past five years and is expected to generate 11% of industry revenue in 2017-18. There are more than 30 million wine drinkers in the United Kingdom according to the Wine and Spirit Trade Association (WSTA), which equates to 71% of the adult drinking population. Wine sales have benefited from the trend towards a more sophisticated approach to wine drinking. Pubs and bars have responded by improving their wine lists in recent years and sourcing wines from a greater variety of countries made from a wider variety of grapes. In the past couple of years, many people have traded up to prosecco and other sparkling wines as disposable incomes have risen.
18 Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
Market Research Major Products Cider The popularity of cider has boomed in the United Kingdom during the past decade. Since Magners introduced an innovative marketing campaign encouraging consumers to serve cider over ice in 2007, sales of cider have increased steadily. Cider is viewed as a refreshing alternative to beer with a generally sweet taste. The drink has soared in popularity with female drinkers during the past decade, and a range of new fruit flavours have been developed. Pubs and bars have been quick to capitalise on this trend by adding popular cider brands to their tap selections. Nevertheless, cider and perry sales are only expected to account for 4.8% of industry revenue in the current year. The share of revenue satisfied by cider is anticipated to continue to grow over the next five years. Other Other revenue is generated from sales of non-alcoholic drinks, such as coffee, tea and soft drinks, and from amusement and gambling machines. Non-alcoholic drink sales in pubs have been increasing over the past five years, predominantly as a result of increased hot drink sales. Pubs on the high street are increasingly offering an alternative to coffee shops to capitalise on rising expenditure on coffee. The share of revenue absorbed by amusement and other machines has fallen over the past five years. Keeping these machines in pubs has become less attractive as a result of increased taxes on them. 19 Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
Market Research Competitive Landscape The anticipated rise of pubs managed directly by big companies is also likely to be driven by the need for operators to take a more active approach and try to better respond to changing consumer trends, as well as fighting off competition from the off-trade sector. Competition from supermarkets will remain a key threat to the industry. The inroads that discount supermarkets like Aldi and Lidl have made into the Supermarkets industry are likely to stimulate further price discounting of alcohol. The introduction of a ban on supermarkets selling alcohol below the value of duty plus VAT in May 2014 has encouraged people to drink at pubs. However, the regulation’s impact has been limited as it only covers about 1.3% of alcohol sales. Partly as a result of rising competition, the number of industry operators is expected to fall at a compound annual rate of 0.3% over the five years through 2022-23.
The Pubs and Bars industry faces a moderate level of competition. Competition is based on the range of food and beverages offered by an establishment, as well as the quality of service, marketing, the size of operations and reputation. Operators face external competition from restaurants, cafes, nightclubs and supermarkets. Pubs and bars face a rising level of competition as industry demand has become increasingly focused on food service. Internal competition Competition between industry operators is traditionally based on the price and quality of food and drink served. Pubs and bars attract customers by serving a variety of popular beverages, such as cask ales or cocktails. Larger pub chains like JD Wetherspoon are able to take advantage of economies of scale to undercut rivals on food and drink prices. As pubs and bars have become increasingly food-led, the quality of meals and service at bars has become a key basis of competition. The reputation and atmosphere of a pub or bar will also act as a selling point to patrons. External competition In addition to facing competition from other operators within the industry, pubs and bars compete against the wider on- and off-premises alcohol consumption market. Operators face external competition from nightclubs, licensed restaurants and off-trade retailers. As industry operators have become increasingly focused on food offerings, competition has also arisen from non-licensed operators like cafes and fast-food chains. 20
Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
Market Research Local Competition A few of the local competitors in Manchester are: Cloud 23 Cloud 23 has a full bar, nightlife, city view, luxury dining as well as afternoon tea. They offer live music from local artists and innovative cocktails along with finger food. The average cost is about £ 60 for two people approximately. The Fitzgerald This is one of the most popular bars in Manchester and is known for its splendid décor and vintage vibe of the prohibition era. It serves some of the finest cocktails in the city. However, it does not serve food. The bar also has entertainment in the form of local musicians playing live jazz and blues, along with electro soul, disco and funk. The average cost is about £ 30 for two people approximately. The Whiskey Jar The Whiskey Jar is a 2 level cocktail bar specialising in whisky and whiskey from all over the world. They have the usual cocktails, spirits, full bar etc., along with open mic nights, live music nights and whisky tasting events as well. The Whiskey Jar offers its venue for hire as well. The average cost is about £ 40 for two people approximately.
Competition in the industry is medium and the trend is increasing.
Supermarkets are likely to remain a threat as they cut their alcohol prices further
Matt & Phred's Matt & Phred's is a long established live music venue, situated in Manchester's trendy Northern Quarter. Over the years the likes of Sneaky, Kit Downes, Marius Neset, Manu Delago, the Dagda Quartet, Jamie Cullum and even Adele have graced the stage in our little neighbourhood joint. Most notably known for showcasing the best in local and international Jazz, Matt & Phred's offers much more. They still have live music gigs six nights a week, encompassing the likes of Jazz, Folk, Gypsy, Electro, Salsa, Swing, World and even a little bit of Ska. As well as being able to see some amazingly talented musicians, their bar and kitchen team are also at the top of their game. They also have wonderful cocktails and a cracking wine list with featured wines of the month and of course anyone who has ever been to the club knows just how good the pizzas are and at weekends they have added specials to tantalize the customers’ taste buds. 21
Market Research Barriers to Entry The barriers to entering the Pubs and Bars industry are low. The cost of starting a pub is not prohibitive, but subsequent operational expenses can be quite high. Given that 70.3% of all pubs and bars employ fewer than 10 people, small businesses dominate the industry, suggesting that operators can quite easily enter the market.
Potential entrants can easily lease premises, equipment, furniture and fittings, thus lowering the level of initial capital investment. However, the fact that the industry is highly regulated may be a significant impediment because it can be difficult to obtain the appropriate licence.
Industry Globalization The Pubs and Bars industry exhibits a low level of globalisation. Operators service a local area for domestic patrons, though international tourists frequent pubs in some regions. Though the vast majority of establishments are owned by a single local enterprise, the UK’s largest pub chain, JD Wetherspoon, began opening pubs in the Republic of Ireland in 2014, while the second largest operator in the industry, Mitchells & Butlers, operates a chain of bars in Germany. Nevertheless, all major companies are British-owned. Further up the supply chain, much of the alcohol sold in British pubs and bars is imported by alcoholic beverage wholesalers. Some food products are also sourced from overseas. The postreferendum fall in the value of the pound has made imported products comparatively more expensive for operators, with beer manufacturers Heineken and Carlsberg having recently passed on currency related cost increases to consumers.
Entry costs vary between different areas. It is likely to be harder to obtain a licence in a populous region such as London or Manchester compared with a suburban or rural location. Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
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Market Research Key Success Factors • Ability to attract local support/patronage
• Ability to pass on cost increases
A successful pub or bar requires the support of local patrons, whether they are local residents in a small town or people who work in the vicinity of the establishment in a large town or city.
Beer duty accounts for a significant share of the price of beer. When duty rates increase, successful businesses are those that can pass on the change in the price of drinks.
• Having links with suppliers Having links with major pub companies that can negotiate collective supply deals can allow businesses to control costs better than independent enterprises negotiating separately.
• Having a wide and expanding product range Offering more than just drinks has become increasingly important and the greater availability of food alongside drinks has been a common route to higher revenue. Offering craft beer and a wider range of wines has also helped enterprises to succeed.
• Must comply with government regulations Industry operators need a licence to be able to serve alcohol. Pubs and bars must also pay a late-night levy if they want to operate with longer hours and must comply with regulations covering the responsible advertising of alcohol.
• Highly trained workforce Having friendly, polite and knowledgeable staff can be a key point of differentiation for pubs and bars. They can help to create a sociable environment and provide drinks recommendations for those that are interested. 23 Source: Ibis World Report – I56.302 Pubs & Bars in the UK Industry Report dated June 2017
Market Research SWOT Analysis Strengths
Weaknesses
• Knowledge and experience of the owner in this industry. • Location of the outlet at the heart of Manchester. • Wide variety of offerings • High quality of service through trained staff.
• Yet to create brand presence • Time and staffing constraints associated with start-up • Limited access to funding
Opportunities • Expanding to healthy food segment • High quality adult oriented dining destination
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Threats • Food and safety risks • Threat from new market entrants and established players
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Business Model The Entity Company will be a company formed by Founder, a bar industry veteran. The company will open a jazz bar named, ‘Jazz Bar’, and will be in the heart of Manchester, UK. The jazz bar will serve alcoholic and non-alcoholic beverages along with international food and music. The bar will be a a 1920s style jazz bar with a modern twist. The bar will be a speakeasy style and will have lots of Brass and Wood, deep reds and greens. The bar aims to be known as a music institution by showcasing live music like jazz, blues, modern, funk, latin nights etc. and will also host open mic nights. Music bars are few and far between in Manchester, and; Tobias will capitalize on this opportunity and raise the bar in the bar industry in terms of entertainment and food by introduce ‘Jazz Bar’ to the community. The Company aims to give every guest a standard of drinks, service and atmosphere that some bars in London offer; but at the moment, bars in Manchester don’t. They all seem to be carbon copies of each other or just gimmicks.
The Entity Entity Name: Company Outlet Name: Jazz Bar Location: Manchester, UK Geographical Focus: Manchester, UK Owner: Founder Target Customers: Couples, young professionals, students (on certain nights). Age group 21 to 50 years.
Founder
100% Owner
Company
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Business Model Products and Services ‘Jazz Bar’ will serve food and drinks along with music and a dance floor.
Beverages
Food
‘Jazz Bar’ will serve a wide variety of beverages, that will include beer, keg beer, wine, cocktails, mocktails, and spirits along with non-alcoholic drinks. The cocktail menu will be a fusion of tradition and innovation using exclusive vintages and limited edition champagnes, spirits and liqueurs. The Bar will serve top quality inventive drinks.
The bar will serve simple international food and the offering will be a healthy mix of salads with food. A cheaper lunch time menu will also be made available.
Live Music
Entertainment
‘The bar aims to be seen as a music institution in the long haul. Hence, the bar will focus on live music and provide a variety of entertainment options through live music consistently. Jazz, Blues, Modern, Funk, Latin nights etc. will be a regular occurrence at the bar to cater to the 5000+ Spanish and Latin Americans living in Manchester.
Events The bar will also spirit tasting and host networking events and private functions occasionally.
The Bar aims to be known as a music institution over the next decade. Hence, entertainment will be an important offering of the bar. It will have a separate stage and a large dance floor and will offer live music at least 2 to 3 times per week. It will also offer open mic days. The Bar will book acts in advance to entertain its customers. 26
Business Model Menu Large plates • Cheese Fondue with French baguette (For min 2 people) (V) • Bavette steak with Chimmi churri (Cooked Rare) comes with French fries • Chicken Hotpot • Seasonal Veggie Curry (With Rice) Add King prawns optional • Sharing Platter Small plates • Shrimp Dynamite (Containts fish) • Crab Croquettes (Contains Fish) • Fatoosh Salad (V) • Greek salad (V) • Pulled pork sour dough • Mini moussaka • Pork Belly dumplings 2 Side plates • Sweet potato Wedges • French fries • Spinach • Side Salad • Olives Pickles
Joe Below Cocktail Menu • Oh my Gimlet • Basil Fawlty • Indian spring • Joe Blows Classics • Mai Tai • Singapore sling • Sazerac • Old fashioned • Manhattan • Martini • French 75 • Last word • Clover club • Pina Colada • Classic Daquiri • Long Island Ice tea • Wine List
A select list of New world and Old world wine. Dependent on price and quality with supplier.
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Business Model Key Suppliers and Partners The key suppliers will be decided based on the price and the previous experience of the owner with those suppliers. Since Founder has been in this industry for many years, he has contacts with industry suppliers which will help the company get favourable prices on products and services.
Royal Northern College of Music (RNCM) The company will take advantage of Royal Northern College of Music to keep its customers entertained through live events and booked acts.
Drinkstuff Drinkstuff has some of the best bar accessories from from simple bar accessories to trendy cocktail apparatus. They have great quality products with next day delivery option. w\Whether it is a simple bottle opener or high-tech bar equipment their bar accessories are top notch.
MatthewClark Matthew Clark is a National Drinks wholesaler with over 200 years' experience supplying drink products, hospitality training, labour management and marketing support to over 16,000 OnTrade premises in the UK. They offer a wide variety of drinks from about 1300 wines, a great selection of spirits, plus a brilliant range of beers, ales and ciders.
Ice Express Ice Express provides the very highest quality ice to Manchester, with a huge stock of cubed and crushed ice making it one of the most reliable ice suppliers around. Their ice is frozen from crystal clear, purified water and held in our cleverly designed storage-friendly, recyclable bags.
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Business Model Target Market Company will target couples, young professionals and students, all in the age group of 21 to 60. The customers will be in the right age of drinking and socializing, having their own disposable income to do so.
Couples A Jazz bar appeals to couples since they are more inclined towards having a full evening of music, dancing and dinner in one place. If you have a restaurant element to the club, and an area designated for dancing, target couples and emphasize the multiple elements available under one roof.
Students Students are another set of target customers for the bar since most of them are regular visitors to a bar, they don’t have a financial commitment towards their family and most students don’t have to be at work early next morning and so are inclined to ‘stay out’ till late in the night.
Young Professionals Young professionals are another big customer base since they have a higher disposable income and are looking to socialize in a variety of ways.
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Business Model
Customer
Key Operational Flow Exteriors
Ambience
Customer Arrives
Customer Walks In
Furniture Seated by the Host
Support Process
On Stage
Greeted by Staff
Views Menu Card
Staff Places Order
Receives and Eats
Receives Order
Delivers the Order
Informs Kitchen
Receives Items
Customer Pays
Generates Bill
Line of Visibility Back Stage
Contact Person
Line of Interaction
Menu
Line of Internal Interaction
Prepares Food
Quality Checks/ Feedback
30
Business Model Organizational Structure CEO
Manager
Supervisor
Servers
Head Chef
Bartender
Sous Chef
Kitchen Help
Source: Management Information
31
Business Model Staffing Plan Particulars Designation Owner/CEO Manager Supervisor Head Chef Sous Chef Bartender (Full-Time) Bartender (Part-time) Server (Part Time) Kitchen Help Total Salary per person Owner* Manager Supervisor Head Chef Sous Chef Bartender (Full-Time) Bartender (Part-time) Server (Part Time) Kitchen Help Total Annual Salary
Year 1
Year 2
Year 3
1 1 1 1 1 2 3 4 2 16
1 1 1 1 1 2 3 5 2 17
1 1 1 1 1 3 4 5 2 19
-
£ £ £ £ £ £ £ £ £
25,000 20,000 30,000 23,000 20,000 10,000 8,000 7,500 215,000
-
£ £ £ £ £ £ £ £ £
26,250 21,000 31,500 24,150 21,000 10,500 8,400 7,875 234,150
Year 4
Year 5
1 1 1 1 2 3 4 6 3 22
1 1 1 1 2 4 5 7 3 25
-
£ £ £ £ £ £ £ £ £
27,563 22,050 33,075 25,358 22,050 11,025 8,820 8,269 278,933
-
£ £ £ £ £ £ £ £ £
28,941 23,153 34,729 26,625 23,153 11,576 9,261 8,682 337,448
-
£ £ £ £ £ £ £ £ £
30,388 24,310 36,465 27,957 24,310 12,155 9,724 9,116 400,509
Note: Owner will not take salary from the company. Instead he will take a share of profits. Source: Management Information
32
Business Model Business Strategies Strategic • • • • •
Build brand awareness Achieve synergistic effect Be socially responsible and environmentally friendly Offer high-quality, but pocket-friendly products Expand into the rest of the UK
Managerial • • • •
Build relationships with partners and suppliers Geographic development Obtain contracts for supply to events and parties, etc. Decide upon best sites for expansion
Tactical • • • •
Serve high-quality products Provide excellent service Enhance customer satisfaction Create a relaxing ambience that attracts repeat customers.
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Business Model Exit Strategies 1. Merger & Acquisition (M&A). This normally means merging with a similar company, or being bought by a larger company. This is a win-win situation when bordering companies have complementary skills, and can save resources by combining. For bigger companies, it’s a more efficient and quicker way to grow their revenue than creating new products organically. 2. Initial Public Offering (IPO). This used to be the preferred mode, and the quick way to riches. But since the Internet bubble burst in the year 2000, the IPO rate has declined every year until 2010. This approach is not recommended for startups these days. Shareholders are demanding, and liability concerns are high. 3. Sell to a friendly individual. This is not an M&A, since it is not combining two entities into one. Yet it’s a great way to “cash out” so you can pay investors, pay yourself, take some time off, and get ready to have some fun all over again. The ideal buyer is someone who has more skills and interest on the operational side of the business, and can scale it.
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Business Model Milestones First Year Milestones ▸ Establish business ▸ Recruit and train staff ▸ Spread the word about the bar in the local market (branding) ▸ Break even and achieve good profitability ▸ Create high standards of quality of product and service
Second and Third Year Milestones ▸ Achieve profitability every year ▸ Achieve at least 15% YoY growth ▸ Open an additional outlet at the end of the third year ▸ Build brand equity on both the ‘concept’ and the ‘brand’ ▸ Maintain the standard of quality
Long Term Milestones ▸ Be recognized as a music institution over the next decade. ▸ Build many more businesses under this brand/company
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Marketing Strategy Marketing Strategy Opening Event The Company will have a special opening event with live music and a famous brass band to parade the streets of Manchester. This is sure to pull crowds, create awareness about the bar and the brand.
Word-of-Mouth Marketing The Company will be active on all food and travel websites, replying to guest comments and feedback. This will show the company’s unflagging commitment to customer service. Loyalty Programs The Company will partner with online sites that encourage visitors to check out the ‘Jazz Bar’ outlet through gamification and loyalty programs, which offer visitors a free purchase or discount for visiting a certain number of times.
Email marketing The Company will collect customer mobile numbers and email IDs, and send targeted emails with special and exclusive offers to customers.
FM Radio: The company will also advertise on popular local FM radio channels to reach out to the target market and make its presence felt in the city of Manchester. 36
Marketing Strategy Marketing Strategy Google AdWords Cocktail Classics Ltd. will invest in Google AdWords and Pay-Per-Click advertising to drive local traffic from search engines based on geo-targeting. This, along with SEO on its website will boost the search-engine visibility of the restaurant. Print Media The Company will advertise about a new Jazz Bar opening in local print media, especially in newspapers, local dailies, and magazines like Manchester Magazine. This will help boost the brand image of ‘Jazz Bar’.
Social Media In today’s world, no business can survive without having a social media presence. The company will promote its brand by using social media (primarily Twitter and Facebook). The company will post new videos promoting cocktails that are being sold. This will promote the services and enhance the brand image. Signage As the saying goes, “out of sight is out of mind.” By using signage, the company will help maintain the brand image in and around the locality.
Coupons and Discounts There will be a continuous stream of promotions, including a number of enticing coupons, during the first few months of operation. 37
Marketing Strategy Marketing Mix Price The Company will adopt a medium to high pricing strategy to reflect the high quality of products and services that it will provide to its customers.
Place The company will open ‘Jazz Bar’ in the heart of Manchester. Currently, it is narrowing down on areas like Great Ancoats, Piccadilly, NOMA or Spinnngfields area.
Promotion Promotion is the key to capturing the market. The Company will market through various modes such as Google AdWords, Print Media, Social Media, Signage and discount coupons/offers.
Product The Company will focus primarily on products served at the bar like beer, keg beer, cocktails, mocktails, spirits, etc. along with food. In addition to this, the company will also host events and be a part of private functions. 38
Management Summary XXXX, Founder and Owner • XXXXX XXXXX • XXXXX XXXXX • XXXXX XXXXX
• XXXXX XXXXX • XXXXX XXXXX • XXXXX XXXXX
39
Financial Plan Sources and Uses of Funds Particulars Uses of Funds Capex Inventory Staffing Training Marketing Total Sources of Funds Equity Total
Amount (£) £ £ £ £ £ £
£ £
112,750 18,750 53,750 5,375 9,375 200,000
200,000 200,000
Uses of Funds 3% 5%
Capex
27%
Inventory 56%
9%
Staffing Training Marketing
Note: Capex includes Bar, Stage, Lighting, Sound Systems and Furnishings
Source: Management Information
40
Financial Plan Projected Income Statements Particulars Revenue Revenue
Year 1
Year 2
£
750,000 £
900,000 £
Less: COGS
£
225,000 £
270,000 £
Gross Profit
£
525,000 £
Expenses Manpower Rent & Utilities Administrative Expenses Marketing Training Repairs & Maintenance Professional & legal Depreciation
£ £ £ £ £ £ £ £
215,000 78,000 18,750 37,500 5,375 11,250 7,500 16,107
Total
£
389,482 £
416,761 £
Net Profit before tax Tax Net Profit after tax
£ £ £
135,518 £ 27,104 £ 108,414 £
213,239 £ 42,648 £ 170,591 £
Source: Management Information
£ £ £ £ £ £ £ £
Year 3 £
1,286,505
310,500 £
350,865 £
385,952
630,000 £
724,500 £
818,685 £
900,554
234,150 81,900 19,688 39,375 5,854 11,813 7,875 16,107
278,933 85,995 20,672 41,344 6,973 12,403 8,269 16,107
337,448 90,295 21,705 43,411 8,436 13,023 8,682 16,107
£ £ £ £ £ £ £ £
400,509 94,809 22,791 45,581 10,013 13,674 9,116 16,107
470,695 £
539,108 £
612,602
253,805 £ 50,761 £ 203,044 £
279,577 £ 55,915 £ 223,662 £
287,952 57,590 230,361
£ £ £ £ £ £ £ £
1,169,550
Year 5 £
£ £ £ £ £ £ £ £
1,035,000
Year 4
41
Financial Plan Projected Cash Flow Statements Particulars Inflows Revenue Equity Total
Year 1
Year 2
£ £ £
750,000 £ 200,000 950,000 £
900,000 £ 900,000 £
Outflows COGS Manpower Rent & Utilities Administrative Expenses Marketing Training Repairs & Maintenance Professional & legal Total
£ £ £ £ £ £ £ £ £
225,000 215,000 78,000 18,750 37,500 5,375 11,250 7,500 598,375
270,000 234,150 81,900 19,688 39,375 5,854 11,813 7,875 670,654
Opening Balance Surplus Closing Balance
£ £ £
- £ 351,625 £ 351,625 £
Source: Management Information
£ £ £ £ £ £ £ £ £
Year 3
£ £ £ £ £ £ £ £ £
351,625 £ 229,346 £ 580,971 £
1,035,000
Year 4 £
1,169,550
-
Year 5 £
1,286,505
-
-
1,035,000
£
1,169,550
£
1,286,505
310,500 278,933 85,995 20,672 41,344 6,973 12,403 8,269 765,088
£ £ £ £ £ £ £ £ £
350,865 337,448 90,295 21,705 43,411 8,436 13,023 8,682 873,866
£ £ £ £ £ £ £ £ £
385,952 400,509 94,809 22,791 45,581 10,013 13,674 9,116 982,446
850,883 £ 295,684 £ 1,146,567 £
1,146,567 304,059 1,450,626
580,971 £ 269,912 £ 850,883 £
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Financial Plan Financial Charts Financial Highlights
Structure of Expenses
1,600,000
3%
1,400,000
1% 6%2%
13%
38%
1,200,000
37%
1,000,000
800,000
600,000
400,000
200,000
0 Year 1
Revenue
Year 2
Gross Profit
Source: Management Information
Year 3
Net Profit
Year 4
Year 5
Cash Balance
COGS Rent & Utilities Marketing Repairs & Maintenance
Manpower Administrative Expenses Training
43