The business’s name is Sauce food kitchen located at Bristol. It is a fast-food business that addresses fast food lovers’ needs, people who are too busy, and those who like great taste in their snacks. The need to have a fast-food restaurant came from finding out that most residents of Bristol are working-class and most of them are usually too busy to cook. Additionally, they need some snacks while going to work. The target market will be people of all ages, mainly the students, workers at different organizations, and children. Besides, the business will also sell the products to small restaurants.
Therefore, the business will address their needs by providing a variety of fast foods at affordable prices. The restaurant will offer products such as; baked products, chocolate and confectionaries, dairy products, drinks, condiments and sauces, fish, meat and meat products, and cheese. However, the business will mainly major on burgers and fries. The business will work on a demand and supply framework where customers demand online or offline products, and their products are delivered. The products will benefit the target market in that they can have some foods to eat and will no longer struggle to have quality foods at affordable prices.
The nature and structure of the economy in the UK, particularly Bristol is favourable. According to GOV.UK, Pensions (2019, n.p), in 2018, only a third of the UK households had a weekly income below $400 and over a third had a weekly income of $800. This means that most of the households can afford to cater to their basic needs including food. Hence, the target market is likely to afford to buy the restaurant’s food, considering the prices will be standard. Also, there are available resources to enable the restaurant to produce enough products. For instance, there are several dairy firms around Bristol for dairy products such as Medina Dairy, Wessex Dairy ltd, and Platinum Contract Herdcare. Making dairy products will thus not be challenging.
Also, other manufacturers deal with other raw materials such as baking flour, and meat raw materials. Having a wide range of firms that can provide raw materials means that the economy is suitable and suits the fast-food business. It also means that the more the suppliers are, the more the prices of raw materials go down, hence, making it an advantage for the business. About the factors of production, the business’s land is suitable for the business because Bristol climate is not so harsh, there is also plenty of water to help in the production area. Additionally, there is available labour for the business. Most of the UK colleges offer hospitality and hotel courses, meaning many graduates are seeking jobs. Generally, the economic environment of the business is favourable.
Market and Industry Analysis
The target market is students, workers, children, and small restaurants. The approximate size of the market will depend on factors such as the total population of Bristol. According to Population UK (2021, n.p), the city is the 10th largest in the UK with over a total of 450,000 people. The city also has 2 universities and several companies in which most people are working. Hence, the approximate size of the target market is over half of the total population. The business will target people in the medium class bracket of income because they can afford the products. Also, it will target both females and males, and people of all professionals. Furthermore, since the business deals with food, the target market is of all ages and races.
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The market is expected to grow in the coming years because also the population is expected to grow. The more the population grows, the more the target market increases. Population UK (2021, n.p) states that Bristol’s total population is expected to increase to 458, 046 by July 2021. Also, according to Mintel.com (n.p), growing a business market requires one to diversify into new markets, capture new clients, and understand the characteristics of the market. Due to this, the business as it progresses will study the characteristics of the market to capture new clients. The fast-food industry in the UK is growing at a faster rate. In 2018, fast food restaurants generated the largest revenue value in the UK’s food market (Lock, 2020, 1). The fast-food industry competes with pubs and bars, and traditional service restaurants. It is a competitive industry with many restaurants dealing with the same products across Bristol. However, the advantage is that it is a fragmented industry where there are limited barriers to entry.
Many fast-food restaurants in Bristol offer the same products to the same population I am targeting. Some of them are Desi Dera, Triangle Grill kebab House, Wok Boxstix, Bugger King, and Pizza Palace among others. About Desi Dera, it is one of the highly-rated fast-food restaurants in Bristol. One of its strengths is that it offers a range of fast foods, including chicken, burgers, lamb, and others. The advantage lies in its chicken and lamb, where it has a variety such as chicken kharahi, lamb ginger, Manchurian chicken, fried lamb, or chicken, depending on the taste of the customer. For this uniqueness, it has been able to thrive in the market and capture a significant portion of the market. Its main weakness is the customer service area. I discovered the weakness during my visit to the premises. The service is not as standard as would be expected.
The Triangle Grill Kebab House is also a stiff competitor. It is also one of the best fast-food restaurants. It is best known for very tasty and fresh kebabs and burgers which forms one of its strengths. Another strength is its location. It is located around the Bristol museum and art gallery, and a few kilometres from the University of Bristol (Yell.com, 2021, n.d). Its strategic location makes it capture a significantly large market, a population that is also a target for fast foods. Its main weakness is its prices. Due to its reputation for making the best kebabs and burgers, its prices are slightly higher than the normal market prices. This limits some potential customers from purchasing the products.
Marketing and Pricing Strategies
Being a new business will require the employment of different strategies to achieve more sales within the shortest time possible. Business experts say that applying more than one marketing strategy is more advantageous than applying only one strategy (Hooley, Lynch and Jobber, 1992, p.75-89). Therefore, the business will use business to customer, internet marketing, earned media, and business to business strategies. For the business to customer strategy, marketing will be done directly to the customers. This method will apply only to the customers known to the business. Secondly, the business will also use business to business strategy. As stated earlier, one of the target markets is small restaurants; therefore, the company will also market the products to various restaurants.
We are living in an era where the internet has become the most basic and cheap type of marketing. Many businesses are now advertising their products on social media platforms to gain more sales (Schibrowsky, Peltier, and Nill, 2007, p.722-733). The business will not be an exception and it will use popular social platforms such as Facebook, Instagram, emails, blogs, and vlogs. Internet marketing has recently gained popularity because of the growth in technology. This is also where the business will interact with its customers. However, the business will be keen enough to have a strategy that will make internet marketing successful. The strategy will involve understanding what social sites the customers follow, what to post, what to post, and how to track their feedback. Besides internet marketing, the business will also use various fourth estate forms such as newspapers, magazines, radio, and television. Lastly, the business will use a referral program to market its products. This strategy will pay an incentive to existing customers to refer other customers to buy the products.
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The pricing strategy will depend on a number of factors; competitors’ pricing, production cost, and customer segment. Therefore, the business will consider cost-plus pricing, competitive pricing, and penetration pricing. For the cost-plus pricing, it will calculate the cost of production to avoid getting huge losses. The selling price should be higher than the cost of production. For the competitive pricing, the price will be determined by how the competitors’ are charging. In this case, the prices should be lower than the competitors’ since it is a new business. The business will consider setting low prices and hiking it later because it is a new business for penetration pricing. This will act as a method of attracting customers to get to know about the products. Based on the three strategies, the business will finally come up with standard pricing.
The food items will be produced at the business premises, which will be located in Bristol City. Before the business starts operating, it will need to have a license from the government. There will be different equipment types such as making the burger or the fries, or fridges for storing fresh raw materials. The machines will be available to reduce handwork and limit the number of employees. Also, the products will be produced from fresh raw materials supplied by the local industries. Medina Dairy and Wessex dairy ltd will supply dairy products. Melba Paradeis Company’s Wheat materials, meat products by Partisan produce, a butcher that deals with all kinds of meat. Bristol Veg Coop will supply other raw materials like greens and vegetables. Once the products are ready, customers will get them through either visiting the restaurant or online before setting up various picking centres. The mode of transportation will be the company’s bikes and pick-ups.
The strengths are; low prices, fresh products, and friendly customer service because of hiring professional customer carers. The business will offer low prices as a way of attracting customers to market the products. The weaknesses are; Low production because the business will be still new, new establishments hence, weak brand, and limited operation equipment due to lack of enough capital. One opportunity is new residential development near the restaurant that will serve as a new market. Also, the possibility of expansion due to the growing population and the restaurant’s strategic location is suitable; along a major highway. The threats are; the threat of the big brands monopolizing the market, and competitors reducing their prices. The big brands may monopolize the market and leave small brands collapsing. If the competitors reduce their prices, the business may also be forced to reduce, and considering it is a new business, it may make losses.
The start-up fee will be $137 arrived at from assuming the following elements.
Legal fee $2,000
Rent fee $20,000
Interior equipment $17,000
Kitchen equipment $23,000
Start-up asset $60,000
An average burger costs approximately $10-$17 depending on the quality, so the assumed price is $16
Cost of sales per unit – $8.00
Selling price per unit- $16.00
The fixed costs will cover employees’ wages, rent, and depreciating machines. The costs are not as huge as for other fast-food companies because it has a new business, with few employees, and the machines still new.
Fixed Costs- $100,000
Running costs per unit- $5
Profitability per unit
$100,000/ $(8-5) = $300,000
Hooley, G., Lynch, J. and Jobber, D., 1992. Generic marketing strategies. International Journal of Research in Marketing, 9(1), pp.75-89.
Lock, S., 2020. UK: fast food industry | Statista. [online] Statista. Available at: <https://www.statista.com/statistics/711976/fast-food-market-value-united-kingdom-uk-by-type/> [Accessed 28 January 2021].
Mintel.com, n.d. [online] Available at: <https://www.mintel.com/mintel-market-sizes> [Accessed 28 January 2021].
Pensions, D., 2019. Household income. [online] Ethnicity-facts-figures.service.gov.uk. Available at: <https://www.ethnicity-facts-figures.service.gov.uk/work-pay-and-benefits/pay-and-income/household-income/latest> [Accessed 28 January 2021].
Population UK, 2021. [online] Available at: <https://www.ukpopulation.org/bristol-population/> [Accessed 28 January 2021].
Priceonomics, 2017. How Much Do the Ingredients Cost in Your Favorite Foods?. [online] Forbes. Available at: <https://www.forbes.com/sites/priceonomics/2017/04/07/how-much-do-the-ingredients-cost-in-your-favorite-foods/?sh=609aed4711ed> [Accessed 28 January 2021].
Schibrowsky, J., Peltier, J. and Nill, A., 2007. The state of internet marketing research. European Journal of Marketing, 41(7/8), pp.722-733.
Yell.com, 2021. [online] Available at: <https://www.yell.com/biz/triangle-grill-kebab-house-bristol-7914282/> [Accessed 28 January 2021].