-[The Blind Tiger]-
Project Proposal
Entrepreneurial Recreation
Instructor, Kelly Bricker
Nicholas Barton
April 27, 2012
Executive Summary for “The Blind Tiger”
It is our recommendation to go ahead with this project as it appears to be not only viable but potentially very profitable. The potential to operate in the black and realize net profits of over $300,000 per year could be possible within the first 30 months of operation. The sustainable business concept and sound fundamentals of entrepreneurship on which this plan is built suggests that economic and ecological sustainability will be possible for the foreseeable future.
Our business strategy reflects an exciting concept for which our focus groups have demonstrated interest. Through differentiation we hope to establish our business as a unique offering to the current market place. By establishing ourselves as a company that focuses on customer service we hope to offer a unique experience for bar patrons in the Salt Lake area.
Along with our business concept we have established an extensive and unique marketing plan that incorporates use of branding, internet and social media, word of mouth advertising and partnership marketing. This plan is a low-cost multi-faceted approach that uses the owner’s involvement and recognition in the community to expand our product’s potential market. The projected first year cost will be around $31,500. We have established customer and market profiles that are realistic for our area, and our pricing and demand projections are competitive with those businesses with who we will be in direct competition. Our product is insulated against saturation as the product life cycle for alcohol purveyance is unlikely to decline in the foreseeable future. Our advertising plan will reach a vast number of readers through print advertising as well as individuals through word of mouth advertising and internet presence.
Our operations have been built on solid fundamentals of business as well as a combined 20 years of experience in the hospitality industry from the two owner/operators. This experience has allowed the formation of extensive training programs that will enable the rest of our staff to uphold our unique service standard. Our facility will be constrained by local zoning and ordinances; however there is a great deal of properties available for rent in our proposed area. Our green initiatives and evolution toward ecological sustainability will help our public image in the future as well as fulfilling our personal responsibility to the environment. By establishing and promoting a culture of sustainability early on we hope to educate our staff and our guests about sustainability issues in our society; we will subsequently use this publicity to further our brand name and revive interest in our product and our brand.
Our company’s financials represent the potential for profits very early on. We enjoy an extremely high profit margin as do most bar businesses; product costs as low as 10-15%, with operating expenses around 30%. We have conservatively over-estimated our start-up costs as well as our initial operating expenses. When compared to our revenue potential we could potentially realize a net cash flow within the first month. As mentioned, our projections have allowed for early re-payment of bank and investor loans. While these figures represent a significant percentage of our monthly costs we have overestimated them as well in the event we are unable to re-pay said loans before their maturity date. If our demand is accurately projected along with our expenses we will be operating free of debt after the first 30-36 months of operation. Our Net annual income projections are around $300,000 a year depending on the year. As we will use these monies to pay off debt and re-invest in the business to begin with; after our three year period when investors will be re-paid the owners could potentially realize six figure returns after that point.
I would be remiss to not acknowledge Ian Campbell, Partial Owner and General Manager of Log Haven Restaurant as well as David Jones, Executive Chef of Log Haven Restaurant. Without their help and invaluable entrepreneurial advice this plan would not be possible. I would also like to acknowledge the authors of our text, “Recreation, Event and Tourism Businesses – Start Up and Sustainable Operations” Robert Pfister and Patrick Tiereny. Their text proved to be an invaluable resource during the process of compiling the necessary information for this project. (Pfister & Tierney, 2009)
Business Strategy
The Blind Tiger LLC, while doing business under the name The Blind Tiger, is an establishment that fulfills a Hosting Function, or rather a provider of Accommodations or Food and Beverage. Food and beverage is an area of hospitality that is crucial to the Recreation and Tourism Industry. We also consider ourselves to fall into the local recreation category of businesses as a significant cross section of our market will include the local Salt Lake City Population.
The Blind Tiger will be Utah’s only Speak-Easy. Speak Easies were clandestine social clubs during prohibition in the 1920’s. Blind Tigers were code names for low-end speak easies where patrons would be charged admission for a show and were served “complimentary” drinks. The Blind Tiger in Salt Lake City would be a modern spin on a classic idea. We intend to build a speak easy, where inside the front door is a non-descript reception desk, through our marketing team and social media we will distribute passwords that will be required for entrance. For those that know the password, the receptionist will activate a switch that will open a door into a Jazz and Social Club that you never knew was there.
Our Mission
To offer a unique and exceptional experience to patrons in our market, to further educate our Team Members and our Guests, and to offer the highest level of service of any bar in Salt Lake City.
Our Vision
To offer an unmatched level of service to our patrons through a culture that emphasizes Integrity, Responsibility, Sustainability and a Commitment to exceptional customer service.
Services
At the Blind Tiger we are offering more than just drinks and live music, we are offering an experience. With the cyclical nature of trends we are trying to capitalize on the novelty of Speak-Easies and their growing popularity in the U.S. As cultural fascinations shift toward periods in the past where we as American citizens enjoyed the height of our decadence; we feel that the novelty of our idea alone is in fact an intangible asset. We will earn the business of some of our patrons simply due to the novel nature of our establishment. We consider providing this novelty accompanied by an exceptional level of service is in itself a service to our customers.
The more tangible services we will provide are more consistent with those offered by a drinking establishment. Our primary focus will be providing alcoholic beverages in a comfortable environment. We will offer non-alcoholic beverages as well but not food services at this time. We will offer live entertainment, primarily acoustic music, with an emphasis on Jazz and Jazz Piano. Partnering with local musicians will enable us to do this every weekend and some nights during the week. We will also offer VIP membership services; this will enable VIP members to gain access to the Speak-Easy without a password while enjoying exceptional personalized service. VIPs will also enjoy booth and table priority as well as a personal resident bottle at the bar. Banquet services will also be available for groups or individuals who wish to rent the entire space for a private function. Organizing and bar services will be provided but we will not offer food services, decorations or linens outside of the normal linens we would require.
While our concept differentiates us from other bars and clubs in the Salt Lake area, the real factor will be the level of service we intend to provide. Through an extensive hiring and training program we will strive to offer a caliber of service un-common to the area. Along these lines we will also offer high quality spirits, wine and champagne, these types of selections are also un-common to local competitors. There are currently very few regular live Jazz performances in the area, and by partnering with a local Jazz pianist, Wayne Egan, we will be able to offer Jazz and other live music on a consistent basis. Our furniture and fixtures will also be a highlight of our establishment. Comfortable chairs and tables covered in linens are all but unique at bars in the area, combined with private booths we hope that our fixtures will help differentiate us along with our concept.
Legal
We have decided to establish the business as a Limited Liability Company in order to operate flexibly and with minimal risk to the owners. There is considerable liability involved with operating a bar business so we thought it would be important to take steps to minimize that risk from the beginning. Organizing in this way will also offer owners some tax incentive while allowing us as the company to take on partners and investors in the event we need them.
Risk Management
As part of our process we have developed an extensive risk management plan in order to anticipate and mitigate our risk in this industry. Increased liability is a major concern for bar businesses and Risk must be managed appropriately. I have included our Risk Management plan as an appendix for the purposes of space.
Marketing
Competitive Advantage
Our major competitive advantage is our unique idea. There are certainly other bars in Salt Lake, but we feel that none will offer our unique mix of services. By not appealing to everyone we hope to focus on those demographics with higher interest and slightly higher disposable income; for example targeting business persons and patrons of the arts rather than college students. Our CEO Nicholas Barton has used his extensive experience in fine dining bars to create our employee training program. By holding employees to a standard common for dining establishments but not for area bars we will differentiate ourselves from other bars.
As mentioned before our novelty will be among our greatest advantages, simply because there has not been anything like it attempted in over 40 years. The owners will also be managing partners of the business, having nearly 20 years of hospitality experience between them it will be helpful to have their knowledge and experience to draw from as operations are conducted. Other competitive advantages will include location, in the middle of the downtown cultural district near hotels and all forms of public transportation; and design, as mentioned before this will incorporate fixtures and furniture that will encourage patrons to relax and thus increase the average time spent in the establishment.
Market
Our target market will be individuals between the ages of 25-64 who are residents of Salt Lake City and Salt Lake County. We are looking for those with higher education and higher annual income as our pricing strategy will command higher expendable income, and statistically our resident Jazz Musician will be more popular among those with higher levels of education. According to the U.S. Census Bureau, Salt Lake City has around 127,000 citizens between the ages of 18-64, of these 39.9% have received a bachelor’s degree or higher and the annual median household income is between $44,250 and $56,000 (U.S. Census Bureau, 2012). The nature of Salt Lake City is such that catchment area is increased to include the surrounding area of Salt Lake County as well. Bar patrons will travel further than those in many cities due to the concentrated cultural center that is downtown Salt Lake City. By expanding our data to include the rest of Salt Lake County and not just the city proper, our potential population increases to 640,445 individuals between the ages of 18-64, the percentage of bachelor’s degrees or higher drops to around 31% and the median household income increases to as high as $58,000. Based on this demographic we feel that the market is sufficiently capable of sustaining a business of our size and projected revenues.
Customer Profile
This information helps us to construct a customer profile or rather the type of customer we expect might be interested in our establishment. While we have accounted for people between the ages of 18-64 purely for the ease of statistical evaluation, our patrons will be required by law to be 21 years of age in order to patronize our club. Our target market extends past this age group into individuals over 25; we focus more on this late 20’s early 30’s market because of their higher propensity to frequent drinking establishments as well as their higher potential for disposable income. Many of these individuals are part of the business community who we will focus much of our market on. In developing a customer profile we must consider the social ramifications of the local populous; according to the census as much as 51% of the populations of Salt Lake County are of religious faiths that do not condone the consumption of alcohol. While this does not necessarily preclude their patronage of our establishment it will decrease the likelihood that it will. Due to this fact we must also look outside of our local population for guests. In conjunction with local business professionals we also hope to draw from Utah’s extensive tourism revenues, according to a 2011 report prepared for the Governor of the State of Utah tourism accounted for over $6.25 Billion in 2011. Many of these individuals attend meetings and conventions in Salt Lake City making convention visitors a prime target market (travel.utah.gov).