School Cafeteria Business Plan

Executive Summary

In this paper, the enterprise suggested is that of a lunch programme mainly targeted at elementary schools, and likely at high schools and related establishments. In the Australian industry, the cafeteria and canteen sector shows mediocre results, largely because the commodity accessible via the current facilities is pricey, generic and thus unattractive to many end-users, nutritionally inadequate and deemed inadequate by the customers in limited portions.

In the other side, the proposed business would accept orders from an online page that connects to the e-commerce site of the organisation. Parents are the main clients when they issue the instructions, remit the fees, and have the requirements that the organisation is expected to follow, while the children to be supported in their schools are the goal for the services provided.

The target demographic is projected to rise at an average pace of 1.7 per cent and is made up of 18.2 per cent of the overall age-stratified population. The social advantage offered by the organisation is the incentive it offers parents and schools to escape the growth in youth obesity by creating healthy food decisions for their children. Technological advancements encourage the organisation to buy orders and requirements are a fast and systematic way to help the company prepare ahead and reduce duplication while improving consumer loyalty.

Owing to the need to prevent spoilage and ensuring that the consumer receives his or her order on time and in top shape, delivery and logistics are essential to the company. The financial projections of the business prove it to be extremely tenable, and equity funding and bank loans will collect the capital required.

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The Product or Service Concept

The company model proposes to provide schoolchildren with safe cafeteria and canteen foods inside their school. The principle of offering a balanced cafeteria meal service for larger schools and canteen facilities for smaller schools emerged from a ‘Extreme Eats’ insight from a frequently updated website tracking school lunches in Australia (Serious Eats, 2013). In Australia, lunch cafeterias are few, according to the report, and there are areas where none remain. There are canteens where kids can buy what they want every day from the menu choices. However, where these services operate, the expense is costly (AUD 6 for small containers of the hot foods).

2.1  Product concept:  The goods that are ultimately offered to the end consumer are healthy lunches and snacks, newly prepared and according to their preferences.

2.2  Service concept:  The service extends to the parents who have contact with the lunch provider through online channels; the parents specify the choice of food for their children, the instructions are communicated to the canteen service in school, where the food is prepared to specification.

The Unique Selling Proposition

          The product differs from present school canteen offerings in that they are freshly prepared and nutritionally balanced, ethically and socially sensitive to the students’ faith or belief systems, and that parents retain control of what their children eat in school. This allows parents to monitor their children’s nutrition and prevent the likelihood of overweight and obesity problems on the one hand, and undernourishment on the other. Furthermore, children with specialized dietary needs due to medical or health conditions could be better served by specific instructions directly from the parents to the food preparation staff, which this company could assure.

          The company could also establish a business-to-business linkage by affording its services to canteen services which have already set up exclusive operations in schools which this company would otherwise have serviced.  The company could charge a price for this service against the canteen concessionaire, affording them a marketing link which would enhance their orders and therefore their sales.

The Target Market

          There are essentially two target markets for this business: the children for whom the business prepares its lunch products, and the parents whom the business markets to and whose need to be assured of fresh, healthy, and socially acceptable nutrition for their children. The children are either in the elementary of the secondary level although the business feels that this service will be more appropriate for the younger children and shall concentrate a major portion of their resources in that area.  The challenge for the firm in so far as the children are concerned is to make foods that are tasty and nutritious, with a wholesome variety to afford choices to the end consumer.

          In catering to the parents as customers, the company expects to be dealing with individuals anywhere from their early twenties to their mid-forties.  Most likely the parents are working individuals employed outside their home and who are unable, due to time and opportunity constraints, to prepare take-to-school lunches for their children.  A number of these parents may belong to religious denominations (e.g. Jews or Muslims) or advocate lifestyles (i.e., vegetarianism) which follow specific restrictions on foods that the customer may consume, and the manner by which such food may be prepared.

The Size of the Target Market now and in the Next Three-Five Years

          As of 22 May 2013, the population of Australia was 23,029,674, according to the Australian Bureau of Statistics.  The same source cites the age structure; it shows that 18.2% of the Australian population as being comprised of 0-14 year-old children, who are the targets of the school health food service.  Australia’s population growth rate is calculated by bureau statistics as 1.7%.as of September 2012.  This means the following five years, the number of children which comprised the market of the proposed business is as follows:

The population of Nationwide age Demographic, Children 0-14 years old

Source data from Australian Bureau of Statistics

          The specific market is certainly going to be much smaller than the four million identified in the table above; as an entrepreneurial venture, the number of students in nearby schools may be within a few thousand at best. The foregoing data provides an idea about how the size of the target demographic continues to grow.  Furthermore, within the five year period the enterprise may grow to expand into other areas and other schools.

Trends Affecting the Market

Political

• Australia’s political regime is a liberal democracy that is built around the British constitutional monarchy; however, it its organizational structure is patterned after that of the American federal government.
• As a federal system, Australia’s constitution divides power between the federal (national) government, and the States. Due to the sharing of resources, particularly tax revenues, the political and financial relationship between States and Federal Government can sometimes be strained, and are often complex.
• Two major groups dominate Australia’s party syste, namely the Australian Labor Party on the one side, and on the other side the coalition parties comprised of the Liberal Party of Australia and the Nationals. These groups have alternatively held power in the Australian Federal Government since 1922.

Economic

• Australia exports 65% of its agricultural production; agriculture constitutes about 3% to GDP, accounts for 65% of water use and occupies 60% of the land area of Australia.
• As many as 10 million Australians are employed in industry, the largest of which is in retail wherein 1.5 million are employed, followed by property and business, and manufacturing.
• Australia continues to show strong growth on the back of its abundant and diverse natural resources. There were a series of foreign investments which infused new prospects for sustainable growth such as the US$ 40 billion Gordon Liquid Natural Gas project (Index Mundi, 2013).  As foreign tourists account for the purchase of $ 21 billion in products and services in Australia, tourism plays an important position in the economy.

Social

• Australia has a multicultural society comprised of Aborigines and descendants of British and Irish nationals. Citizens see their society as multicultural, multiracial and multifaith.
• There have been an influx of migrants from Europe, particularly the Netherlands, Yugoslavia, Lebanon and Turkey, as part of government initiative to actively attract immigrants to boost the population and work force. It has opened its borders more freely to Southeast Asian immigrants.
• Child obesity has become a concern in Australia, mindful of the trends currently prevailing in the United States as well as other developed countries. The available data in the Australian Bureau of Statistics is shown in the following graph.  Evident from the graph is the downtrend in normal and underweight children, and the rise in overweight and obese children.  Admittedly, there is still a lower proportion of overweight and obese children compared to the normal and underweight, but the growing trend is apparent.

Children’s Body Mass Index – 1995, 2007-08(a)

(a) Based on measured height and weight of children aged 5–17 years.

(b) Differences between the numbers in 1995 and 2007-08 are not statistically significant.

Source: National Health Survey: Summary of Results, 2007-2008 (ABS cat. no. 4364.0)

Technology

• The most significant technological development has been the development of digital information and communication systems. Internet usage has reached nearly 6 million households from barely 1 million households at the end of the 20^th  It is estimated that almost 80% of the population are able to gain access to the Internet on a regular basis (Australian Bureau of Statistics, 2012).

The competition

          My Kids Lunch Box, the leading online canteen service provider in Australia, is the main competitor. The strength of this company is that it obtains the online orders from the parents, making their services easily accessible to them, and communicating this to the canteen service of the school their child attends.  The major weakness is that the company is not the entity that prepares the lunches or snacks themselves.  The competitor is principally an ordering system that facilitates the gathering of information about specific orders from parents to their children’s school canteen services.

Business Model

          Money is made in this business by obtaining per-order payments from clients by establishing an e-commerce registration system.  This company will be able to reduce its costs by not needing to maintain an upfront store and the overhead expenses that it entails.  Only a comparatively few personnel will be needed to operate the kitchen and process the deliveries, rather than having to hire front service personnel in the case of a regular restaurant.  Kitchen personnel should include chefs fully familiar with the culinary requirements of specific faith groups and lifestyles.

          In another level of operations, the firm could maintain linkages among a number of in-school canteen services and afford them the service of extending their marketing capabilities, for which reason they could expect to improve their services and enhance their sales.  These linkages may be charged a reasonable linkage fee for each of the canteens in each of the schools the firm shall be providing information to.  The early orders that can be conveyed to the canteens can assist them not only in providing better service, but in streamlining their materials purchases, in making sure that they produce for sure sales, and overruns or excess production could be reduced.

Distribution and Marketing

          The target market may be reached firstly by informing parents that the schools they have enrolled their children in offer this service to them.  This could be undertaken using flyers and posters mounted around the school and near the cafeteria or canteen area.  The flyers, brochures and posters could direct the parents to the website address which they can contact and inquire information from. 

          Additional marketing and distribution may be conducted in the following years by setting up a social network or online community where parents and children could better coordinate and exchange stories with the firm and among themselves.  The parents should be impressed with the fact that they could expect better customization of their children’s nutritional needs, for cultural or health reasons.

Execution

          The key people in the planning team include:

10.1  Operations officer – In charge of food preparation and coordinates with an in-house nutritionist, one who is particularly familiar with the special needs of children as required by their culture and health conditions. 

10.2   External coordinator – The principal external links coordinator is the person in charge of getting in touch with schools and setting up arrangements with canteen services already established in other schools.

10.3    Procurement officer – This person takes charge of purchasing the ingredients and necessary supplies for the food preparation.

10.4    Financial manager – This individual ensures that the needed funds, credit lines among suppliers, and credit facilities in the banks are available to meet the working capital needs of the company.

10.5    Logistics officer – This individual monitors deliveries, ensures on-time arrival or orders and makes sure that the right orders are delivered to the right destinations.

10.6    Information technology officer – This individual takes charge of the management of the information system that obtains orders from the online facility and transmits them efficiently to operations.

Financials

          The forecasted income statements are provided in the table below:

          Due to the lack of canteen services in some areas, it is expected that eventually, the firm shall be able to grow its business through reasonable pricing, excellent service, and tasty food that is nutritious and at the same time is compliant with the cultural and health specifications of the customer.  The revenues are estimated at AUD 20,000 per month.  Part of this comes from the pay per order system of the online e-commerce, and part from the special customized service for clients who subscribe to a more long-term account with the firm.  Part of the revenues also comes from marketing order arrangements with canteens already operating in schools, and also from existing food establishments which link up with students in schools. 

Capital

          The company expects to start off with an initial capital of approximately AUD 267,000.  These are itemized as follows:

          The items are roughly estimated to be the needed financing for the first two months of the business, after which time the firm should be making sufficient cash flow to support the working capital of the firm.  The company expects to raise this capital according to the ratio 65% equity and 35% borrowings. 

Scalability (Referring to the Upside for the Business and How it Could Grow)

          The business has a potentially tremendous upside, because whatever the economic situation, parents will still provide for their children’s sustenance particularly in those situations where they are not usually present in.  There is a growing number of one-parent households because of evolving family lifestyles, and that parent is likely working outside the home.  Even many for two-parent households, it is likely that both parents are employed and would find it highly advantageous to avail of this company’s services.  The current practice is for parents to prepare lunches early in the morning, or send their children off with money; it is likely, therefore, that more parents will elect to have a reliable lunch service bring nutritiously prepared meals to their children.

          The business may likely extend in the future to other segments of the market.  For instance, a similar service may be extended for office workers who are unable to leave their place of work during mealtimes.  The firm may also service individuals who are confined to their homes or hospices who require specially prepared food. These prospects are well into the future, but show that the firm has possibilities for growth.

Sustainability and Competitive Advantage

          The firm’s competitive advantage is its understanding and expertise in the preparation of nutritious, culturally compliant or medically prescribed meals that are delicious and cater to the taste of the children for whom they are prepared.  The business rests its competitive strategy on the ability to meet the specific nutritional needs of its consumers, by establishing direct contact with the parents and a long-term relationship that enables the company to keep track of the specific preferences and needs of individual children.

Key Risks

          There are key risks that attend any food service business, the most important of which is the integrity of its food offerings as far as sanitation, freshness, and compliance with OSHA standards is concerned.  The worst possible occurrence in this type of service is a food poisoning event which the firm must absolutely guard against.  Therefore, the business must ascertain that its suppliers are all safety and health standards compliant, and should be careful to observe the utmost in food preparation procedures.  The company must ensure the best food preservation facilities, observe cleanliness and sanitation in operations, to observe prompt delivery scheduling, and to pretest all food offerings before issuing guarantees on its products.

Exit Strategy – Who Might Buy your Business and Why

          The business has the potential of strong growth and expansion into other services.  It may therefore serve as a target acquisition by larger food retailing and preparation businesses, or highly capitalized and largely successful food companies which would want to vertically or horizontally expand into the market catered to by this company.  There is also a possibility that companies with successful brands in so far as manufacturing is concerned would adopt a strategy of entering into retailing so enhance its brand portfolio in the perception of consumers.

References

• Australian Bureau of Statistics  2013 ‘Population clock’ Available at http://www.abs.gov.au/ausstats/abs@.nsf/94713ad445ff1425ca25682000192af2/1647509ef7e25faaca2568a900154b63?opendocument
• Index Mundi  2013  ‘Australia Economy Profile 2013’ Index Mundi.  Available at http://www.indexmundi.com/australia/economy_profile.html
• Serious Eats  2013  ‘School Lunch in Australia.’ Serious Eats.  Available at http://www.seriouseats.com/2010/09/school-lunch-in-australia.html[/sociallocker]