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Slide 2 Slide 3 Slide 4 Slide 5 Slide 6 Slide 7 Alym Amlani Jennifer Chung Ayaz Jessa Celia Li Chris Pawluk David Rusnacik Slide 8 Executive Summary Introduction Marketing Plan Human Resources Plan Operations Plan Financial Plan Conclusion Slide 9 Slide 10 Slide 11 Goal: to establish the first super premium ice cream franchise in Saskatoon We have secured $100,000 in debt financing We will be providing $50,000 in equity and are seeking an additional $150,000 in equity financing today Anticipated IRR of 33% Anticipated ERR of 9.3% Preliminary discussions in place for location in downtown Saskatoon Slide 12 Proven business model Predictable growth Strong brand recognition in Alberta Supplier contracts already in place Recipes and branding have already been developed Training provided Franchisee social network and national assistance Online advertising provided Slide 13 Marble Slab Creamery is the ultimate gustatory experience. We cater to each customers unique tastes providing the perfect ice cream, just how they want it. Our ice creams are fresh, delicious, and of the highest quality. We dont just make desserts, we create experiences. Slide 14 Our mission is to be the pre-eminent distributor of quality ice creams in Saskatchewan. We will provide prompt service, a great experience, and the finest ice cream appealing to ice cream lovers of all ages. Slide 15 557 stores in total located in 35 states, Puerto Rico, Canada, and in Dubai and Kuwait 35 locations in Canada No franchises currently located in Saskatchewan Slide 16 According to University of Guelph, annual consumption of ice cream is as follows: Country liters per capita New Zealand: 26.3 liters United States: 18.7 liters Australia: 17.8 liters Canada: 9.5 liters Italy: 9.2 liters United Kingdom: 7.7 liters Finland: 3.9 liters China: 1.9 liters Japan: 0.01 liters Slide 17 50 flavors of ice cream in a freshly baked waffle cone made on site using proprietary recipes Bread and Butter for Marble Slab Select Mixins such as berries, nuts, chocolate chips, Smarties, Gummy Bears etc. Marble Slab sells an experience Whole process involved. You get more than just a ball of ice cream. All the ice cream is mixed, flavored and frozen at each outlet. Slide 18 Product: Ice cream with Mixins Specialty dipped cones Frozen yogurt Sundae Ice cream cakes and pies Price: From $4.95 for a regular ice cream cone $30.95 for an ice cream cake Slide 19 Promotion: Printed ads Local radio stations Facebook In-store discount Coupons Place: 1,500 sq ft. store located on 20 th Street E and 2 nd Avenue S. Slide 20 Slide 21 Slide 22 Segmentation Age Gender Household characteristics Income level Target group Families with children High income individuals and families Positioning High-end segment Slide 23 Major high-end ice cream chains Cold Stone Creamery, Marble Slab Creamery and MaggieMoos International Good news None of these chains are operating in Saskatoon Bad news Intense competition from Dairy Queen, Jerrys and Homestead Slide 24 Slide 25 Slide 26 Manager Background Bachelor of Commerce 2 Years Management Experience DQ Training Management & Employees In-House Corporate Roles Generic Duties Slide 27 Motivational Incentives Work-Life Balance Employee of the Month Discounts Flexible Hours Work Environment Compensation 1 Full Time Manager = ~ $55,000 + Std Benefits Equivalent of 4 Part Time Associates = ~$20,000/annum + Std Benefits Slide 28 Daily hours of operation Winter hours (January May, September- December) Daily 11:00am 7:00pm Summer hours (June August) Sunday Thursday 11:00am 10:00pm Friday Saturday 11:00am 11:00pm Slide 29 Manufacture ice cream and cones Serve customers Restock goods Clean machines, floors and tables Make ice cream cakes Observe inventory levels Review sales reports and other financial data Slide 30 Designated, reputable suppliers Base mix Flavourings Other Ingredients Menu board Equipment Fixtures Pricing negotiated by franchise Slide 31 Legal and Accounting Local Law firm and Accounting firm Bookkeeping Accounting Legal services Computer Hardware and Software Support Restaurant Computer Solutions, Inc. (RCI) POS Computer System Slide 32 Computer Hardware and Software POS System Granite Slab Ice cream making machine Ice cream cone baking oven Display case Ice cream freezer Slide 33 Training program provided by the franchise Training program Houston, Texas 10 days In-depth review of Marble Slabs Operations Manual On the job training in procedures Store operations Ice cream manufacturing Slide 34 Slide 35 Slide 36 ItemAmount% Franchise Fee 25,0008% Equipment 95,00032% Working Capital 10,0003% Furniture 4,0001% Uniforms 4,0001% Leasehold Improvements 120,00040% Small Equipment & Supplies 6,0002% Signage 10,0003% Inventory - Food 10,0003% Licenses 3,0001% Legal & Accounting Costs 7,0002% Grand Opening Marketing 6,0002% Total 300,000 Slide 37 $300,000 in funds required to commence operations Financed via Combination of Debt & Equity Corporate franchisor does not offer direct or indirect financing $100,000 in debt financing @7% over 10 year period Translates to annual payments of $14,238 $200,000 in equity financing required Raised $50,000 personally and are seeking $150,000 Required return on equity = 20% Slide 38 First year sales revenue expected Ice Cream & Cake Sales Year 1 ~ $430,000 growing to ~ $545,000 in year 5 Growth Ice Cream ~10% in year 1, ~5% thereafter Cakes ~6% per year Slide 39 Gross Profit Margin = Average 50% Net Profit Margin = Average 13.7% Operating costs/Gross Sales = Average 34% Composition of Cost of Goods Sold Direct Materials = 41% Average Direct Labor Used = 41% Average Variable Manufacturing Overhead = 18% Average Slide 40 Initial Working Capital - $10,000 Net Cash Flow from Operations ~$57,000 in year 1 rising to $116,000 in year 5 Net Cash Flow from Financing ~$293,000 (net of year 1 interest) in year from initial equity offering and proceeds from long term debt Net Cash Flow from Investing ~($264,000) in year 1 and ($30,000) resulting from capital expenditures Slide 41 Net Present Value of Investment = ~60,895 Using required rate of return on equity of 20% IRR on equity = 33% Total Net Cash Flow to Equity ~86K in Y1, 86K in Y2, 91K in Y3, 70K in Y4, 107K in Y5 External Rate of Return on Equity Investment 9.3% Estimated dividend payment schedule 40K in Y2, 65K in Y3, 80K in Y4, 95K in Y5 Undiscounted Pay Back Period 5.1 Years (Dividends Received) Slide 42 Slide 43 Slide 44 Saskatoon loves ice cream Established market exists Knowledge and expertise exists Established business model, brand, and training Asking for $150,000 in equity, IRR of 33% Slide 45 Marble Slab has quickly expanded beyond its original Southeastern presence and become a fast-growing franchise. It is ranked in Entrepreneur Magazine's Franchise 500 (#93), Fastest-Growing Franchises (#72) and America's Top Global Franchises (#75) Dont miss out on this excellent investment opportunity Slide 46 Slide 47 Health issues both negative (obesity, diabetes) and positive (natural, organic) have continued to generate new products Consumers crave indulging in richness and luxury Carry super-premium image to healthier segments Slide 48 Market Challenges Trade-offs exist where popularity of new product detracts from sales of older one Ice cream and frozen novelty market has nearly completely penetrated among kids Ice cream and frozen novelty market has near penetration amongst kids Mature ice cream segment Continuously develop products that consumers seek and react to call for healthier choice. Slide 49 In preparing estimates, we obtained actual sales figures for similar establishments located in Canada and the United States. In a sample of 68 stores, the range of actual sales was between a low of $258,711 to a high of $867,770. Corporate profit and loss statements obtained from similar establishments to assess whether our estimates were reasonable Slide 50 Marble slab is easily imitable Marble slab does not yet have traction in Saskatoon; brand goodwill is trivial Flexibility to run the business how you choose Ability to change store layout Can offer products not offered by Marble Slab Works in other cities Why go Independent? Business model of franchise is easily imitable Marble slab does not yet have traction in Saskatoon so the value of goodwill associated with the name is not known Flexibility to run the business how you choose Ability to change store layout to improve customer flow Can set prices Can offer products not offered by Marble Slab but competitive with local market (eg Sundays, Floats, etc) Successful model as seen in Vancouver namely Dolce Amore and Casa de Gelato, two local stores that are incredibly successful. Ditto for Mondo gelato. May be worth looking into how much startup and design costs would actually be as these could be commensurate with initial franchise fee Potential for franchising the brand if it becomes popular! (Taco del Mar) Could just buy dairyland ice cream and sell Slide 51 The royalty fee as franchisee is equal to 6% of gross sales Payable weekly An advertising fee is also assessed that is equal to 2% of gross sales Initial price for the standard seven ounce serving of ice cream will be $4.95 Initial price for ice cream cake will be $30.95 Expected real growth Ice Cream Sales 5% in yr 1 and 3% subsequently Ice Cream Cake Sales 5% in yr 1 and subsequently Expected rate of inflation = 3%