Marketing Three months Ended March 31 $ thousands20112010Change Net sales revenue8,80210,545(1,743)...
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Transcript of Marketing Three months Ended March 31 $ thousands20112010Change Net sales revenue8,80210,545(1,743)...
Three months EndedMarch 31
$ thousands 2011 2010 Change
Net sales revenue 8,802 10,545 (1,743)
Big Rock is losing money – Why?
• Decline in sales
• Value brands
Distillers competitor analysisBeer Units/
CaseSize (ml)
Base Price
Warsteiner Premium (Germany) 12 341 26.80
Big Rock – Grasshopper - Craft 12 341 24.13
Big Rock – Honey Brown Lager - Craft 12 341 24.13
Big Rock – Alberta Genuine Draft – “Value”
15 341 24.19
Lucky Lager – Labatt 12 341 19.38
Labatt Blue 12 341 22.98
Kokanee - Labatt 12 341 22.98
Great Western Lager, Pilsner, etc. 12 341 22.49
Coors Light 12 341 22.59
Budweiser – Labatt 12 341 22.98
Sleemen Clear 12 341 22.00
Belgo Metropolitan Grill Unicorn Pub Dakota Bar and Grill
Flames CentralChicago Chophouse Zen 8 Earl’s
General Manager
Manager Kitchen Manager – Lounge
Chef
Cook
Prep Cook
Dishwasher
Bartender
Server
Hostess
General Manager
– Kitchen Manager – Lounge
Chef
Cook
Prep Cook
Dishwasher
Bartender
Server
Organizational chart
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Sales
Beverage 459,900 492,093 526,540 568,663 614,156 669,430
Food 3,942,000 4,217,940 4,513,196 4,874,251 5,264,192 5,737,969
TOTAL 4,401,900 4,710,033 5,039,735 5,442,914 5,878,347 6,407,399
COGS
Beverage 65,700 69,971 74,519 80,107 85,915 93,003
Food 1,971,000 2,099,115 2,235,557 2,403,224 2,577,458 2,790,098
TOTAL 2,036,700 2,169,086 2,310,076 2,483,332 2,663,373 2,883,102
Gross margin 2,365,200 2,540,948 2,729,659 2,959,582 3,214,974 3,524,297
Gross Margin % 53.7% 53.9% 54.2% 54.4% 54.7% 55.0%
GM % - Food 50.0% 50.2% 50.5% 50.7% 51.0% 51.4%
Gm % - Beverages 85.7% 85.8% 85.8% 85.9% 86.0% 86.1%
Operating Expenses
TOTAL 1,839,512 1,952,294 2,072,238 2,205,687 2,347,911 2,506,763
Net Profit/(Loss) 525,688 588,653 657,421 753,895 867,063 1,017,534
Five year divisional analysis
Net Profit/(Loss)
525,688
588,653
657,421
753,895
867,063
1,017,534
DCFs 498,678
529,718
561,204
610,493
666,060
741,487
TOTAL DCFs 3,607,641
Start-up costs (2,500,000)
NPV 1,107,641
WACC 5.416%Dividend Yield 5.53%
Weighted-Average Interest Cost 4.23%
IRR 16.78%
Payback Period 3.97years
Does it make financial sense?
Financial assumptionsASSUMPTIONS
Sales Growth COGS Efficiency Factor Spoilage 5%Year 1 5% Year 1 0.50% (annual, % of COGS)Year 2 5% Year 2 0.50%
Year 3 6% Year 3 0.50% Discount RateYear 4 6% Year 4 0.75% 5.416%Year 5 7% Year 5 0.75%
(per year) Salary Growth
Inflation 2% (real, annually) 4%(annual)
Rental Commission dividend yield is 5.53% (per google finance) 5.53%
% of sales 2% Weighted-Average Effective Interest Rate (2011'Q1 report, page 6 of 19)4.23%
Sales per day
Food $ 10,800.00 (based on 180 tables sold per day, @ 3 customers per table) Debt/Capitalization(per same report) Q1 8.60%
Beverages $ 1,260.00 (based on 180 beverages sold per day) page 8of19 Q4'10 9.20%
Average 8.90%COGS per day
Food $ 5,400.00 Debt 3208 8.75%
Beverages $ 180.00 Equity 33452 91.25%
Total Capitalization 36660
Average Selling Price Average Daily Sales WACC 5.416%
Food $20/customer Food 540 customers
Beverages $7/beverage Beverages 180 customers