Butcher Shop Business Plan

Parkdale Meats

Executive Summary

Opportunity

Problem

Meat is the staple of almost everyone’s diet. To keep it healthy and nutritious, people expect the animals to be “free range” and not tainted by chemicals before reaching the dinner table. There is understandably a lot of social concern to make sure the meat industry is not crueler than it needs to be. Where can people trust the meat they eat?

Solution

Parkdale Meats is a specialty butcher shop which seeks to serve the highest quality meat cut to customer specifications, as well as become the foremost specialty meats provider in the greater Parkdale area.

Market

The meat and poultry industry is the largest segment of U.S. agriculture; its total production surpassed 91 billion pounds in 2007.  U.S. meat consumption was 55% red meat (beef, veal, lamb, pork, and mutton), 36.8% poultry, and 8.2% fish that year. Meat is sold through retail establishments, including restaurants, grocery stores, and butcher shops.  Independent butcher shops have decreased in number over the last ten years as sales of meat have slightly fallen and moved to grocery stores and big box retailers. However, this creates an opportunity for specialty butcher shops in markets which only provide basic meat options from larger retailers.

Competition

Competitors for Parkdale Meats fall into the following categories:

•   Grocery Stores: seven stores in the greater Parkdale area

•   Big box retailers: Walmart and Costco

•   Butcher shops: Red’s Meats and Bay Avenue Butchers

Parkdale Meats will establish its competitive edge through the expertise of its founders, Robert Suidae and Eryka Auroch.  Robert brings with him existing relationships with the best meat suppliers, as well as an understanding of the craft of butchering.  Eryka provides understanding of food service management, sales record in business-to-business sales, and financial acumen. Together, the pair will have an edge over the town’s other butcher shops and grocery stores in its niche market.

Why Us?

Parkdale Meats is a specialty butcher shop which seeks to serve the highest quality meats cut to customer specifications, as well as become the foremost specialty meats provider in the greater Parkdale area.

Expectations

Forecast

The business will grow from its own cash flow post-startup.  There is room for significant growth in the initial target markets before the shop needs to take on additional staff or move to a larger facility.

Financial Highlights by Year

Financing Needed

Each of the two founders, Robert Suidae and Eryka Auroch, are investing $65,000 of their own money for a total of $130,000 in initial investment.

Opportunity

Problem & Solution

Problem Worth Solving

Meat is the staple of almost everyone’s diet. To keep it healthy and nutritious, people expect the animals to be “free range” and not tainted by chemicals before reaching the dinner table. There is understandably a lot of social concern to make sure the meat industry is not crueler than it needs to be. Where can people trust the meat they eat?

Our Solution

Parkdale Meats will sell aged beef, free-range poultry, fresh pork and domestic lamb.  Upon request, the store will sell wild game such as buffalo, alligator, kangaroo, quail, and other specialty meats.  The products will be purchased from suppliers within a 100-mile radius of the store to minimally impact the environment and maintain product freshness.  The shop will purchase whole animals, and trained butchers will butcher them once they arrive. To ensure all customers leave satisfied, the sales staff will help make special orders if the shop doesn’t have a specific meat in stock, as well as offer suggestions when no special order is possible.

Target Market

Market Size & Segments

The American Meat Institute provides the following analysis:

"The meat industry is unique because it relies on live animals as its raw materials.  Within livestock production, there is a classic, livestock price cycle. Prices rise and fall as producers raise more animals in response to high prices or low supply, and then cease producing when livestock inventories become high and prices fall.  At the low points in the livestock price cycle, some livestock producers have called for reviews of meat packing industry structure to determine if the structure may be causing a price decline. Each review has found that industry structure is not to blame for livestock prices.  Rather, the basic laws of supply and demand most often are the cause."

Elsewhere, researchers have found a wave of consolidation occurring in the meat industry since the 1990s, spurred by the growth of several major grocery chains like Walmart.

"Consumers are eagerly buying more conveniently prepared food products of consistent quality, despite the sluggish growth of overall food spending," write researchers Barkema, Drabenstott and Novack. "…nearly 40 percent of the consumer’s food dollar is spent in restaurants and other eating establishments."

Despite, and in fact because of, these changes, there is a growing need for sales of specialty meats to the niche market who can afford them and desire them as they are no longer satisfied by grocery stores and large retailers.

Market Segmentation

Potential customers in Parkdale are divided into the following groups in the market analysis table: 

Parkdale High-Income Households: Annual household income of over $100,000 in Parkdale (80% of which consist of two adults).

Parkdale Medium-Income Households: Annual household income of $50,000 to $100,000 in Parkdale (50% of which consist of two adults and 50% of which consist of one adult).

Neighboring Town High-Income Households: Annual household income of over $100,000 in the five towns bordering Parkdale (80% of which consist of two adults).

Caterers: Upscale catering businesses in a 15-mile radius of Parkdale.

Restaurants: Upscale restaurants in a 15-mile radius of Parkdale.

Target Market Segment Strategy

Market segmentation for Parkdale Meats is based on the specific market opportunity in the Parkdale area.  While low-income households are content with purchasing the meat options at local grocery stores and big box retailers, households with more disposable income are interested in expanding their options for home-cooked meats.  Furthermore, these customers host events in their homes more frequently than low-income households do and prefer to offer high-quality or rarer meat options to their guests.

Of the potential customers in neighboring towns, high-income households will be targeted first. They have the disposable income to comfortably handle the time and gas expense of a trip and will therefore be more likely to travel to Parkdale.

Upscale restaurants and caterers, especially those serving high-end corporate and private events, seek high-quality, specialty meats at wholesale prices.  Parkdale Meats will sell in bulk to them at a substantial discount from retail prices, but still enough to generate a profit. Restaurants and caterers will be required to order in advance to allow for specialty orders, as well as to not deplete the meat available at the retail location for immediate purchase.

 

Competition

Current Alternatives

Competitors for Parkdale Meats fall into the following categories:

•   Grocery Stores: seven stores in the greater Parkdale area

•   Big box retailers: Walmart and Costco

•   Butcher shops: Red’s Meats and Bay Avenue Butchers

 

Grocery stores provide basic meat options at relatively low prices.  They are chosen by customers interested in buying meat along with all of their other grocery needs and not traveling far from home.  These customers will sacrifice quality and available options for price and convenience.

Big box retailers serve clients who are interested in the lowest price and willing to sacrifice convenience (longer waits and longer travel times).  They offer the same quality and variety of options as grocery stores.

Red’s Meats has been in existence for 25 years and primarily serves customers who value the store’s history.  These customers have typically been buying meat at Red’s for at least five years and live within five miles of the store.  Because its meats are only slightly higher quality than grocery stores, Red’s does not serve caterers and restaurants. Instead, it sells primarily to medium-income households.

Bay Avenue Butchers was established 10 years ago and solely focuses on high-quality red meat.  They sell red meat to caterers and restaurants, but these businesses likely consider using a different vendor that can provide a wider range of options.  Bay Avenue Butchers has high prices for its retail products and mainly serves high-income households.

Some restaurants are indirect competitors as consumers interested in specialty meats may choose to eat out instead of cook the meal themselves.

Our Advantages

Parkdale Meats will establish its competitive edge through the expertise and experience of its founders. Robert Suidae has existing relationships with the best meat suppliers and an understanding of the craft of butchering.  He has trained a number of assistant butchers who went on to take head positions at grocery stores and butcher shops. Coupled with Eryka Auroch’s understanding of food service management, sales record in business-to-business sales, and financial acumen, the pair will have an edge over the town’s other butcher shops and grocery stores within its niche market.

Keys to success

Keys to success

Parkdale Meats must follow these principles in order to achieve success in its market:

1. Maintain high-quality standards for its suppliers and continuously monitor this quality.

2. Preserve meats in optimal conditions to maintain freshness while in the store.

3. Practice excellence in the skill of butchering meats through hiring, training, and supervising staff.

4. Listen carefully to customer needs and respond with custom-cut products, whether in person, over the phone, or through Internet orders.

 

Execution

Marketing & Sales

Marketing Plan

The marketing strategy of Parkdale Meats is to establish anticipation of the store’s opening in the community so that it can hit the ground running with retail sales immediately upon launch.  To that end, the following tactics will be used:

•   Facebook company page with targeted ads and a stream of posts emphasizing health, natural and organic meats, cooking, recipes, and community.

•   Twitter company account also with a stream emphasizing health, natural and organic, cooking, recipes, and community.

•   Instagram company account showing pictures of meat dishes, recipes, barbecues, and more.

•   Direct mail of flyers to a select list of 5,000 high-income households.

•   Advertisements in local newspapers and magazines.

•   Flyers in the downtown area around the site of the store.

•   Launch of the website in anticipation of opening.

•   Yellow Pages listing.

Parkdale Meats will join the local Chamber of Commerce and Food Provider organizations for networking and marketing opportunities with other businesses.

After opening, the following tactics will be used going forward:

•   Consistent social media streams on Facebook, Twitter and Instagram.

•   Direct mail to additional households with higher incomes.

•   Search engine marketing via local Google ads.

•   Email newsletter describing developments in the specialty meat industry to business customers and certain households.

 

Sales Plan

There are sales strategies for both retail and business sales.

Retail sales will be based on the marketing of the store and its location, explained in the marketing plan section.  At an operational level, orders will be taken in person by clerks working the floor of the store (two on duty at any given time), or by the office clerk over the phone or Internet.  Orders for specific cuts will be transmitted from these clerks to the butchers on duty, who will prepare the cuts. The floor clerks will package, price and prepare the cut meats for sale.

Walk-in customers will be greeted with a standard greeting and served to meet their satisfaction with quick order-turnaround as well as high quality meat cuts.  A machine will give numbers to waiting customers so they can be served in an orderly fashion. These customers will have a few seats in the store to sit in while waiting.

The business sales strategy relies on prospecting by Eryka to establish connections with caterers and restaurants.  She will research, contact, and present to these businesses using her past sales experience. As a partner of the business, she will work to maximize revenue and increase profits instead of being motivated by commissions on sales.

Operations

Locations & Facilities

Parkdale Meats will provide the following products on a regular basis:

Aged Beef:

•   Filet Mignon

•   Kebab

•   London Broil

•   Porterhouse Steak

•   Rib-Eye Steak

•   Roast Beef

•   Shell Steak

•   Sirloin Burger

•   Sirloin Steak

•   Skirt Steak

•   Strip Steak

•   T-Bone Steak

Domestic Lamb:

•   Chop

•   Flank

•   Leg

Fresh Pork:

•   Boiling Bacon

•   Chop

•   Rasher

•   Sausage

Free-Range Poultry:

•   Chicken Kiev

•   Chicken Cordon Bleu

•   Cutlet

•   Kebab

 

Upon request, the store will also sell wild game such as buffalo, alligator, kangaroo, and quail. All products can be cut to the customer’s specifications.

Meat will be purchased from suppliers within a 100-mile radius of the store to minimally impact on the environment and maintain product freshness.  Products will be purchased as whole animals and butchered in the store by trained butchers. They will be sold fresh. While products should be replenished every week, there is a possibility that certain items run out because of high demand. So that all customers leave satisfied, the sales staff will help make special orders if the meat they want is out of stock, as well as offer suggestions when no special order is possible.

Milestones & Metrics

Milestones Table

Key Metrics

Our Key Metrics are:

• Inventory turnover 
• Sales per square foot
• Spoilage
• Cost of training employees 
• # of return customers 
• # of reviews that customers write 
• Favorite meat choices 
• Average price of meat by cut etc.

 

Company

Overview

Ownership & Structure

Parkdale Meats is established as a limited liability company with 49% ownership by Robert Suidae and 51% ownership by Eryka Auroch.  They will share management responsibilities with final decisions falling to Eryka when there are conflicts of opinion. The partnership agreement allows for one partner to buy the other out in the case that the partnership must be dissolved. It sets predetermined methods to calculate the company’s valuation in that case.

Team

Management Team

The management of Parkdale Meats will consist of Eryka Auroch and Robert Suidae.

 

Eryka Auroch, CEO, will manage sales, marketing, and finances for the business.  This will include training sales staff, managing all marketing programs, and being the liaise to the website developer and accountant for the business.

 

 

Robert Suidae, COO, will design the store’s floor plan, plan, order and install all equipment purchases, establish operations procedures, train butchering and operations staff, and establish relationships with all suppliers.

 

 

 

David Redman – Full-Time Sales/Operations Clerk, will run the day-to-day operations of the Parkdale Meats storefront.

 

Kate Hoover – Full-Time Butcher, will ensure quality and timely delivery of meat for quick service to customers.

Personnel Table

Financial Plan

Forecast

Key Assumptions

Our key assumptions are: 

• Families appreciate nourishing meat
• People are willing to pay for premium meats 

Revenue by Month

Expenses by Month

Net Profit (or Loss) by Year

Financing

Use of Funds

Our uses of funds are: 

Legal ………………………………………………. $10,000

Stationery etc. ……………………………….. $1,000

Insurance ………………………………………. $2,000

Rent ……………………………………………….. $4,800

Pre-Launch Marketing …………………. $5,000

Website Development …………………… $10,000

TOTAL START-UP EXPENSES ………. $32,800

 

The following summary table shows the projected start-up costs over the three months prior to the store’s opening.

• Initial insurance premiums covering both general liability and product liability

• Business renters insurance

• Rent for one month’s security and two months to allow for build-out of the retail space

• Pre-launch marketing to cover flyers

• Direct mail campaign

• Advertisements in local papers

• Website development with E-commerce capabilities to take orders and sell meats directly

• Standard legal expenses for consultation and permits.

Inventory on-hand at any given time must be low to keep all meat extremely fresh. It will be ordered on a weekly basis or more often if necessary.  Other current assets include office and store furniture, shelving, one computer, phone systems, and other tools. Long-term assets include the refrigerator unit for the shop, refrigerated display cases, window displays, store fixtures, a refrigerated delivery van, and additional investments in improvements to the retail location.

A significant amount of cash is required to fund the first year of operations until the business reaches its break-even point.

Sources of Funds

Our funds are from: 

Robert Suidae $65,000

Eryka Auroch $65,000

Initial funds are from Robert Suidae and Eryka Auroch for $65,000 each.

Parkdale Meats will also get a credit line of $100,000 from the bank using the owner’s houses and land as collateral. If everything goes according to plan, all debt will be paid off by year three.  In year four, the shop will start giving Robert and Eryka back their $65,000 in owner’s dividends.

Statements

Projected Profit & Loss

Projected Balance Sheet

Projected Cash Flow Statement