Introducing: Qdoba Qdoba Mexican Grill
Table of Contents
Executive Summary iii
1.0 Introduction 1
1.1 Easy Eats 1
1.2 Mission Statement 1
1.2.1 Goals 2
1.3 Industry Overview 3
1.3.1 Industry Background 3
1.3.2 Opportunities 4
1.3.3 Threats 5
1.4 Financing 6
2.0 Operations Plan 7
2.1 Location 7
2.2 Floor Plan 9
2.3 Quality Control 10
2.4 Day to Day operations 10
2.5 Organization Structure 10
2.6 Capital Budget 12
2.7 Working Capital 12
3.0 Human Resources Plan 13
3.1 Job Descriptions 13
3.2 Staffing Requirements 15
3.3 Employee Training 15
4.0 Marketing Plan 17
4.1 Market Analysis 17
4.2 The Marketing Mix 19
4.2.1 Product 19
4.2.2 Pricing 19
4.2.3 Place 20
4.3.4 Promotion 22
5.0 Financial Plan 24
5.1 Financing Structure 24
5.2 Dividend Policy 24
5.3 Net Income and Cash Flow 25
5.4 Net Present Value, IRR 25
5.5 Risk and Sensitivity Analysis 25
Conclusion 26
6.0 Summary 27
7.0 References A
8.0 Appendices B
Ryan Janckila ii
Introducing: Qdoba Qdoba Mexican Grill
Executive Summary
Qdoba Mexican Grill is an American franchise model that we hope to bring to Saskatoon. Given the expansion of Saskatoon’s economy and its population there is ample room for services and restaurants in the Saskatoon Region. Qdoba will be branded in the fast casual industry which currently has few competitors in the Saskatoon Market and provides a niche market in Mexican cuisine that we wish to exploit. This business plan is a summary of our research, strategies, and pricing models that show the profitability in this endeavor and highlights the paths for action that we need to take in order to make Qdoba a profitable business venture in the Saskatoon market. Some of the highlights or our analysis includes:
1. Achieving Profitability in Year One. With a modest base case scenario we have determined that we can become immediately profitable and work to become more profitable over the next 5 years.
2. NPV of 129,410. Based on our base case we also project to realize a NPV of 129,410 over the first five years of business. We expect a much larger return on our investment but the modesty of our projections allow us to see the relative small amount of risk on our investment. Our worst case scenario still sees average positive profits.
3. $0. Given our choice to lease our property we understand that the terms of our loan will be short. This also means that our loan will be paid off after 5 years which will lead to much larger cash flows and dividends to Equity investors in year 6.
Given the positive outlook that our research has provided we feel that our business plan is economically feasible and we plan to start our business process early in 2015. We hope to attract $300,000 in Bank Financing but would be open to more Equity investments if the right opportunities and partners present themselves.
We Look forward to serving you at our future locations.
Ryan Janckila, Brad Simonson
Ryan Janckila ii
Introducing: Qdoba Qdoba Mexican Grill
1.0 Introduction
Qdoba Restaurant Corporation (Qdoba) is a fast casual dining restaurant that features Mexican based foods. Qdoba Mexican Grill was founded in 1995 in Denver, CO. Qdoba currently operates over 600 restaurants in 42 US states as well as 1 location in Brandon Manitoba. With a strong emphasis on its franchise-based business model, about half of its total operations are franchised stores (Qdoba, 2012). Qdoba’s menu features a variety of Mexican-style dishes that are of an American-influenced variety. Qdoba offers burritos, tacos, nachos, quesadillas, tortilla soups, taco salads, salads, naked burritos, as well as a variety of beverages (Qdoba, 2012). Qdoba also operates an open kitchen atmosphere where customers can see the preparation of their food which helps Qdoba have an air of transparency.
1.1 Easy Eats
Our business, Easy Eats, operates here in Saskatoon and our objective will be to own and operate one of Qdoba’s franchises with a strong possibility of growing Qdoba’s brand in Saskatchewan as well as across Western Canada. Qdoba offers a lot of support to its franchisees and will aide our marketing, site selection, and merchandising. Also a variety of store equipment and design packages are available as well as training, management software, and other tools to aide our business as we start to grow our company as well as the Qdoba brand here in Saskatchewan (Qdoba, 2012). Initially our business will start out with 2 main investors, Ryan Janckila and Brad Simonson, but we hope to attract more equity financing through more investors. As our company grows it will be important to strategically position ourselves as well as plan for growth as to be able to take on the extra strains of more locations as well as finding the right human capital to keep our business successful.
1.2 Mission Statement
Easy Eats mission is to provide a friendly, healthy, and inviting atmosphere and menu that will make our restaurants a routine dining destination. This mission statement encompasses our beliefs of providing healthy food at a fair price. We also aim to provide an atmosphere that encourages our customers to sit down and enjoy our fresh cuisine while relaxing in the ambiance of our modern dining arrangements. Our friendly and inviting staff always promise to send you away with a smile on your face and a meal in your stomach.
1.2.1 Goals
In order to achieve the lofty expectations set forth in our Mission Statement, the management of Easy Eats understands the importance of setting goals for both our organization as well as our individual employees. As part of the effort to sustain our growth and establish our brands, Easy Eats believes that the following Goals need to be engrained in our Management.
Goal # 1: Seek and provide the best dining experience for our customers
The objective of our first goal sets the emphasis of our business model on our customers. Attracting and maintaining a strong customer base is our main objective and priority and by providing the best dining experience in our atmosphere, our management is going to attract and maintain our targeted customers. Customer surveys with incentives will need to be administered to ensure our success as well as determine how many of our customers are coming back.
Goal # 2: Attain profitability over the first two years
In order to prove the success of our goals we need to experience financial results that will make sure our restaurants are successful within the first two years of operation. The two-year rule applies to all our operations and should be a key objective for our management to reach and achieve.
Goal #3: Create trust and brand recognition for our brands
Our third goal focuses on the importance of providing a positive experience to all of our diners. Focusing on creating a consistent, healthy, and tasty product will allow our brand to flourish in the Saskatoon market as well as the new markets our brands reach. Our success depends on the trust that we can instill in our customers and our recognition can be measured through our surveys as well through our online media presence.
Employee Goals - Our Goals for our Employees will be instilled in our cooks, cashiers, line servers, and Team Leaders.
Goal # 1: Seek and provide the best dining experience for our customers
Our first goal remains the same for both our management and our employees. This is more essential in our employees as they become the face of our franchise. Our employees must be focused on providing our customers with the best service and make sure that our customers never leave our place dissatisfied.
Goal #2: Focus on improving ourselves first
The focus on our second goal is to help our employees achieve the most for themselves. We want to create a working atmosphere that supports our employees and gives them the opportunity to support themselves and improve their skills. Skilled and successful employees will be given the opportunity to move up in our business which will help incentivize them to provide better service and work hard. This can be measured through bi-annual reviews as well as through customer compliments.
All of our Goals are focused improving our product and service offering and instilling our business into the communities we become a part of. This means that all of our goals will be treated as high-priority goals.
1.3 Industry Overview
1.3.1 Industry Background
Qdoba Mexican Grill operates in the fast casual industry that differs from fast food in several ways. Where fast food typically offers a drive through, Qdoba operates only to through the door customers. This makes Qdoba less convenient but distinguishes Qdoba’s position as fast-casual. Customers can come in and take their food out, or sit down and eat their food in a contemporary, relaxed atmosphere. The perceived value to customers is the quality of the food as well as a perception of healthiness. The product is also offered in transparent setting that allows customers to see the freshness and quality of the food they are buying. The Fast Casual industry has seen rapid growth over the past ten years and has really exploded across the United States (Sena, 2014). The reason for this growth is that the fast casual “concept marries the age-old need to eat on the run to the much newer consumer demand for healthier options (Sena, 2014).” Healthy living and eating has become more valuable to the average consumer and the trend of eating healthy and living a healthy lifestyle will really help give Qdoba a corner in the Saskatoon market.
The fast casual industry here in Saskatoon is currently quite limited. Direct competitors include Deli’s, Subway, Extreme Pita, Pita Pit, Five Guys Burgers, some TacoTime locations, as well as some pizzerias. Qdoba’s focus on healthy cuisine would narrow down the direct competition to Extreme Pita and Pita pit. In 2008, Qdoba earned a “Smart Meal” seal from the state of Colorado for “four of its ‘naked’ dishes (Caldwell, 2009).” The current competition for Mexican Cuisine is very limited with TacoTime, and 3-4 fine dining establishments. The contemporary Mexican food offered at Qdoba locations is not as spicy as traditional Mexican foods and is more marketable to the predominantly Caucasian demographic located in Saskatoon. What differentiates Qdoba from its competitors is the quality of the food and the flavours. “We figured out what people like about Qdoba,” says Karen Guido, Qdoba’s Vice President of Marketing, “Everybody (likes) the great food and the great flavours that we have (Bonnie, 2002).”
1.3.2 Opportunities
The Fast Casual industry is also one that remained strong during the recent 2007 economic recession. When consumers began to feel the strains of the recession, their disposable income spending changed, consumers “sought to spend them on healthier but still relatively inexpensive restaurant options (Sena, 2014).” The industry also sees several opportunities in the current market:
· Eating Out - The first opportunity is the increasing trend of eating out. Double income families and baby-boomers are focusing on health and convenience and Qdoba is positioned to attract both of these consumers.
· Expansion -The second opportunity is the expansion of Qdoba recently into Brandon Manitoba. The success of this franchise shows that Qdoba can be successful here in Canada and that there is a market for the fast casual Mexican cuisine.
· Growth in Restaurant Industry - Lastly there is also a recovering restaurant industry within the United States and Canada (Qdoba, 2012). Growth is expected over the short-term and with a new product offering here in Saskatoon there is an ample market to serve with the Qdoba brand.
1.3.3 Threats
The industry also faces a few threats as strong growth often results in more competition.
· New Restaurants - There have been many new restaurants opened in the Saskatoon market and Qdoba will have to provide a differentiated product offering in order to capture its share of the currently growing market in Saskatoon.
· Threat of Substitutes - There also is a very high threat of substitutes as consumers can fall back on competitors like McDonalds, Subway, KFC, and Tim Horton’s which many consumers are very comfortable with. Also healthy home-prepared meals are becoming more in-demand as consumers like to know what they are consuming.
· Consumer preferences - Changing Consumer preferences also provides a threat to the industry as consumers taste and diets change. Offering a variety of dishes ranging from vegetarian to gluten-free can alleviate some of the threat but continual consumer taste tests are important to maintaining a corner in the industry (Qdoba, 2012).
· Untested Market - The contemporary Mexican cuisine is an untested market in Saskatoon and there is always the chance that consumers may reject the taste as well as the atmosphere.
· Labour Costs - The last threat we identified for the fast casual industry is the rising labour prices in Saskatoon. The recent economic prosperity experienced in Saskatoon has pushed labour costs upward. The labour pool is also more limited in the Saskatoon market given the amount of jobs available throughout the entire market. This will make operating costs slightly higher but they should be offset by the ability to charge premium prices on the food Qdoba offers.
1.4 Financing
Ryan Janckila, an Edwards School of Business Student and Entrepreneur, and Brad Simonson a successful businessman from Outlook, SK will provide equity financing of $200,000. A further amount of financing will be needed and we are working to secure bank financing of $300,000. With the expectation of solid growth and financial return Ryan will run the business as a sole-proprietorship initially with a move to incorporate expected at a future date. Our conservative financial projections show a solid foundation that gives that Qdoba the opportunity to achieve profitability within the first two years. See Table 1.1 below
2.0 Operations Plan
Qdoba is a fast casual contemporary Mexican restaurant with an emphasis on high quality, healthy, and affordable food. Together with its inviting atmosphere, Qdoba will offer its product in a contemporary setting with an aesthetic taste as well as transparent focus. The restaurant will be managed by a General Manager who will supervise a group leader, 3 Line Cooks, as well as 5 FTE line servers/cashiers. The restaurant will operate from 10:30 AM to 10:00 PM daily and operate 360 days/year. The location has been chosen and is located in the Ironwood Crossing which is a new development on the corner of Preston Avenue South and Hunter Rd. near the Stonebridge residential area.