Karak O Paratha, Business Plan Example

Executive Summary

Karak o Paratha’s mission is to provide the best karak teas, coffees, and Indian sandwiches to customers in Dubai. Dubai-based Karak o Paratha will initiate operations with a single shop and eventually plans to expand by opening more shops in Dubai and other parts of the UAE. The retail outlet will operate 24 hours a day, seven days a week with the exception of religious holidays. Karak o Paratha expects a net loss of three hundred and fifty thousand (350,000) dirham in its first year of operations but hopes to be profitable by the end of the second year.

Karak o Paratha’s introductory menu will include five options each in karak tea, coffee, and sandwich categories. The management expects word-of-mouth marketing to be the primary promotional tool but will also utilize print and digital media to increase brand awareness. The founding investors, Mr. Ahmed Abbasi, Mr. Zahid Kalim, and Mr. Rohit Sharma will assume the titles of Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Operating Officer (COO), respectively. Mr. Ahuj Aurora is expected to join the company as Chief Marketing Officer (CMO).

Business Description

Dubai, UAE based Karak o Paratha will open its doors to the public in January, 2013. Karak o Paratha aims to revolutionize the Indian fast food sector by providing tasty and healthy fast food at affordable prices. The company will initiate operations with a single fast food outlet in Dubai and later plans to add more stores in Dubai as well as other parts of UAE. The management intends to keep the company private in order to avoid distraction that comes from being a publicly-listed company.

The management’s long term goals include opening at least fifty stores by 2022, half of which will be company-owned while the rest franchise locations. The management doesn’t intend to open second fast food outlet at least before 2016, in order to focus upon developing a strong brand as well as a loyal customer base.

The company’s fast food outlet will operate 24 hours a day, 7 days a week. The only exceptions are religious holidays such as two Eids. Each business day will include three 8-hour shifts, with morning and evening shifts employing twelve workers while overnight shift employing eight workers.

Products

The management’s philosophy is that everyone should have access to delicious and affordable healthy food. This is why the management has decided to price all varieties of karak tea and coffee at 4 dirham each while sandwiches will cost 8 dirham each. After analyzing the results of consumer research surveys as well as the company’s business model, the management believes that a menu of fifteen items will offer the optimal balance between choices for consumers and operating efficiency. The following table lists the company’s introductory menu:

Market & Competitive Strategies

UAE and particularly Dubai is increasingly becoming one of the major global financial centers. The region’s growing economic prowess has made it a major attraction for skilled labor force from around the world. As a result, the region has witnessed the popularity of several cultural artifacts from other countries including food. Food items from the Indian subcontinent, particularly, karak tea and Indian snacks have become everyday favorites of the locals which is why Karak o Paratha has decided to enter the market.

The company’s leadership believes that the popularity of Indian fast food and healthy lifestyle choices provide the company an ideal opportunity to differentiate itself in the crowded fast food sector. UAE’s fast food sector is expected to be worth $780 million by 2015 (McGinley). Despite the huge size of UAE’s fast food sector, consumers still lack enough healthy options which is why fast food has become synonymous with junk food. Karak o Paratha aims to convince the customers that fast food can both be tasty and healthy without being expensive.

The company will provide nutritional information on product packaging so that our customers know exactly what they are consuming. The company will advertise in print and digital media including social networking websites and emphasize the obesity trend in UAE in its marketing campaign in order to attract health conscious consumers. According to WHO, 30 percent of men and 43 percent of women are considered obese in UAE (Jones).

Karak o Paratha will also offer customer loyalty rewards to its consumers in order to encourage repeat visits. The primary marketing tool will be word-of-mouth marketing that’s why the company is particularly focused on quality food and exemplary customer service. The social media will be the next most-important marketing tool because the company is particularly focused on consumers in the age group of 18-35, many of whom are technologically savvy. This is the rationale behind the company’s interest in Mr. Aurora’s services since he is a ten-year veteran of the advertising media industry with at least five years experience in digital media.

The company has opted for controlled expansion in order to differentiate itself from numerous competitors through quality food and exemplary customer service. The company’s competitors include both roadside vendors and standalone shops that sell karak tea and Indian sandwiches. The company intends to use only the very best ingredients and will develop long-term partnerships with leading suppliers some of whom also serve McDonald’s such as Al-Rashed Bakery and Del Monte (McDonald’s Arabia).

Management

Karak o Paratha’s management is comprised of individuals with a combined over 50 years of experience. Three of the management team members are also founding investors and long-time acquaintances of each other. The following is a brief introduction to the management team:

Mr. Ahmed Abbasi (CEO): Mr. Ahmed Abbasi did his MBA from University of Texas, Austin in the U.S. and has spent 18 years in the UAE banking sector with leading organizations such as Citibank and Barclays. Mr. Abbasi’s expertise include corporate strategy and asset management.

Mr. Zahid Kalim (CFO): Mr. Zahid Kalim obtained his undergraduate degree in Accounting from University of Leeds, U.K. and is also a certified Chartered Accountant. Mr. Kalim has worked with leading accounting firms including Deloitte and KPMG in both the U.K. and UAE. Mr. Kalim joins the company with 12 years experience in financial management and auditing.

Mr. Rohit Sharma (COO): Mr. Rohit Sharma obtained his graduate degree in Supply Chain Management from the University of Oklahoma in the U.S. and worked with the world’s largest retailer Wal-Mart for five years before moving to Dubai in 2006 where he had been with Deloitte as a consultant until now. Mr. Sharma has advised a number of companies with operations in UAE including McDonald’s and Wendy’s.

Mr. Ahuj Aurora (CMO): Mr. Ahuj Aurora obtained his undergraduate degree in Marketing from University of Melbourne, Australia and immediately moved to Dubai upon graduation. He holds ten years experience in the advertising media. Mr. Aurora’s expertise in digital media makes him a valuable member of the management as he will be primarily responsible for the company’s marketing strategy as well as building a loyal consumer base.

Financials

The company is privately owned, with management owning 60 percent of the company.  Mr. Abbasi, Mr. Kalim, and Mr. Sharma together own 54 percent of the company while Mr. Aurora will qualify for 6 percent stake upon five years of service and successfully meeting certain marketing benchmarks. The company’s leadership plans to raise 600,000 dirham from non-management investors in exchange for a 40 percent equity stake, putting the initial overall value of the company at 1.5 million dirham. The management believes that the company will be profitable by 2014 in which it is expected to earn a little less than one million dirham in profit. The projected income statement for the next three years is as follows:

The projected income statement assumes that the company’s net sales will grow by five percent each year through 2015. The cost of sales will account for 40 percent of gross revenue and labor will account for another 20 percent. The company will depreciate its assets using a fixed-amount depreciation method, hence, no change in depreciation figure over the period. The company’s net loss during first year is primarily due to huge marketing expenditure as the company increase brand awareness and builds a loyal customer base. The management has allocated 40 percent of gross revenue to marketing campaign during the first year. The marketing expenditure will fall to 15 percent thereafter as the company would have significantly increased its brand awareness by then and most of its marketing strategy will move to digital media that is both cheaper and reliable in terms of directly engaging customers with the brand.

References

Jones, Rory. Fast food bill soars past Dh10bn as chains grow. 23 March 2012. 28 September 2012 <http://www.thenational.ae/business/retail/fast-food-bill-soars-past-dh10bn-as-chains-grow>.

McDonald’s Arabia. Meet Our Suppliers. 28 September 2012 <http://www.mcdonaldsarabia.com/uae/en/the_truth/see_what_we_are_made_of/meet_our_suppliers.html>.

McGinley, Shane. US fast food brands to dominate UAE market. 29 November 2011. 28 September 2012 <http://www.arabianbusiness.com/us-fast-food-brands-dominate-uae-market-432532.html>.