Convenience Store Business Plan

MillenniumMart

Executive Summary

Advisory

Sample Plan Information

[This sample business plan is based on one from several years ago, valid then, and still useful as an illustration of what a business plan contains and what issues it covers. It is not valid for information purposes today.]

Opportunity

Problem

Grocery shopping has become commonplace, as simple and expected as getting gas or needing to feed yourself and your family members. People want to come in, grab things, and get out and move on with their day. Having to be polite or ask for things will only hinder their progress

Solution

MillenniumMart is the convenience store of the 21st Century future, fulfilling a need that will continue to exist into the future – the need for speed. MillenniumMart will be the first fully automated, 24 hour convenience store that is more like an enormous dispensing machine than the traditional store.

Market

Convenience store industry sales rose 8.6% to $86.3 billion. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing.

Pre-tax profit margin in the convenience store industry was the highest in 15 years (1.8%). The  results confirm that a new, upward trend is emerging. This upward trend is based on several factors, and occurred along with a slow rebound in the general economy.

Merchandise sales per customer increased 7.4% in last year suggesting that convenience stores are placing higher priority in filling the customers’ needs. Companies that align themselves properly to fill those needs will be successful in the future.

Competition

7-11 holds approximately 30% of the industry market, and in 20xx their net income was $160 million. Other competitors include Circle K, Fastrip, and any of the 85 chain grocery establishments on the east coast.

Why Us?

MillenniumMart’s primary objective is to create a new and revolutionary distribution outlet that will significantly reduce prices for its customers and provide greater services with an equal level of quality. The company seeks to be first to market with this daring new idea so as to capture market share and create greater than average profits.

Expectations

Forecast

We are an automated market which lowers our cost of operations. We will be able to sustain our cost after yr 1. We can pay back our investors as well as own our equipment in year 2. Starting in year 3 employees and owners will get dividends

Financial Highlights by Year

Financing Needed

We will be getting $260000:

Private Investors $150,000

Martin-Bower management $110,000

 

 

Opportunity

Advisory

Sample Plan Information

[This sample business plan is based on one from several years ago, valid then, and still useful as an illustration of what a business plan contains and what issues it covers. It is not valid for information purposes today.]

Problem & Solution

Problem Worth Solving

Grocery shopping has become common place, as simple and expected as getting gas or needing to feed yourself and your family members. People want to come in, grab things, and get out and move on with their day. Having to be polite or ask for things will only hinder their progress

Our Solution

MillenniumMart’s primary objective is to create a new and revolutionary distribution outlet that will significantly reduce prices for its customers and provide greater services with an equal level of quality. The company seeks to be first to market with this daring new idea so as to capture market share and create greater than average profits.

Target Market

Market Size & Segments

Market Analysis Summary

Our market is booming. Convenience store industry sales rose 8.6% for 20xx. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing.

Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. Therefore we have segmented our market into night shoppers, quick shoppers, and others. Growth rates for these three segments match the population growth for the surrounding area.

Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.

Market Segmentation

Our target market for our test store encompasses a five mile radius in which the approximate population is 150,000 (based on census information).

The majority of the residents in this area are Caucasian (58.8%) Black (23.6%) and Hispanic (19%) with occupations classified as professional/technical, homemaker, or retired. The majority of household incomes range from $20,000 – $30,000 (50.3%), yet there are also affluent household incomes ranging from $50,000 – $100,000 (15.4%).

The median income in this area is $48,096, compared to the whole New York area which is $34,248. The typical "head of household" age is 25 – 34 (22.4%) or age 34 – 44 (23.1%) with a median age of 44.4 years old and an average age of 32 years old.

Target market segments

Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items.

Competition

Current Alternatives

Convenience store industry sales rose 8.6% to $86.3 billion for 20xx. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing.

Pre-tax profit margin in the convenience store industry was the highest since 1988 (1.8%). The 20xx results confirm that a new, upward trend is emerging. This upward trend is based on several factors, and occurred along with a slow rebound in the general economy.

Merchandise sales per customer increased 7.4% in 20xx suggesting that convenience stores are placing higher priority in filling the customers’ needs. Companies that align themselves properly to fill those needs will be successful in the future.

4.2.1 Competition and Buying Patterns

7-11 holds approximately 30% of the industry market, and in 20xx their net income was $160 million. Other competitors include Circle K, Fastrip, and any of the 85 chain grocery establishments on the east coast.

Our Advantages

MillenniumMart’s competitive edge will be the lower prices we will charge our customers and the novel purchasing experience that will draw shoppers.

The most critical element of MillenniumMart’s success will be its marketing and advertising. In order to capture attention and sales MillenniumMart will use prominent signs at the store locations, billboards, media bites on local news, and radio advertisements to capture customers.

Many of the initial customers will be drawn to the unique nature of the store and will then have the opportunity to realize the cost savings of MillenniumMart. We expect an average 27% increase in sales from year to year. This may seem very high, but considering the level of initial sales and the growth possibilities, management actually considers this to be conservative.

MillenniumMart’s competitive edge will be the lower prices we will charge our customers and the novel purchasing experience that will draw shoppers. In the convenience store industry, low cost and availability are the two success criteria. We plan to create these advantages in a new, high-tech environment that will retain customers.

Keys To Success

Keys to Success

In order to survive and expand, MillenniumMart must keep the following issues in mind:

• We must attain a high level of visibility through the media, billboards, and other advertising.
• We must establish rigid procedures for cost control and incentives for maintaining tight control.
• We must expend a significant amount on R&D in order to constantly be able to offer better and greater products and services.

Execution

Marketing & Sales

Marketing Plan

The most critical element of MillenniumMart’s success will be its marketing and advertising. Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. In order to capture attention and sales MillenniumMart will use prominent signs at the store locations, billboards, media bites on local news, and radio advertisements to capture customers. Many of the initial customers will be drawn to the unique nature of the store and will then have the opportunity to realize the cost savings of MillenniumMart. Since automated shopping is still in its infancy, the firm expects to invest a great deal of its available cash and revenues in marketing efforts.

Sales Plan

Since our store will be a stand-alone, remote facility, there is little in the way being able to directly influence how we close the sales other than to have an attractive storefront with our low prices and easy-to-use system. We believe that this in itself is its own seller. One critical procedure to ensure top customer service and reliability will be establishing a method for keeping enough inventory of all our products. We will be using industry data on inventory for other convenience store chains to assist us.

Operations

Locations & Facilities

MillenniumMart is the convenience store of the 21st Century future, fulfilling a need that will continue to exist into the future – the need for speed. MillenniumMart will be the first fully automated, 24 hour convenience store that is more like an enormous dispensing machine than the traditional store.

The company expects to capture market share by becoming the low cost leader in the convenience store industry by significantly reducing one of the primary expenses, which is labor. Through our completely automated shopping experience, customers will have the chance to shop for everyday items at reduced prices, thus undercutting competition such as 7-11, AmPm, Circle K, and other local convenience store chains. The possibilities for expansion are excellent not only in the local area, but in neighboring communities as well.

Technology

The Products/Services
MillenniumMart will sell the same products as other convenience stores in the same packaging sizes, quality, and quantity as other stores. This includes newspapers, magazines, soft drinks, fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items such as canned soups, microwaveable meals, condiments, bread, auto products such as fuel additives and cleaning supplies, pet supplies, paper products, toothpaste, etc.

All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant, Charmin, Stouffer’s, etc. In addition each computerized transaction machine can dispense cash, stamps, Lotto and phone cards and other coupons and will have the ability to create personal accounts that can display preferred items, retain shopping lists and other services. An automated, interactive "customer service rep" will be able to answer questions and pass on comments to the company’s management.

In addition, the company is looking into ways to sell restricted items such as beer, wine and cigarettes and to set up a separate Internet area for remote access to the Web and email for its customers.

Milestones & Metrics

Key Metrics

Our Key Metrics are: 

• inventory turnover
• sales per square foot
• Sales per square foot by major category
• cost of operations 
• customer reorders/favorites 
• # of new vs returning customers 
• costumer requests 

 

 

Company

Overview

Ownership & Structure

The company is a joint venture start-up company between the principals, Mr. Bean and his associates, and the management of Martin-Bower, one of the country’s largest and most successful food distributors. The company will be incorporated as a class C corporation in the state of Delaware with all shares held by private investors.

Martin-Bower will own 29% of MillenniumMart’s initial private shares with an option to acquire a further 11% shares based on growth and profitability after the first five years. MillenniumMart is expected to open its first store in downtown Manhattan in March of Year 1.

The company will be set up with a board of directors. Mr. James Bean, a former senior manager of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of CFO.

Team

Management Team

As stated earlier, MillenniumMart will be a joint venture between Mr. Wallace Bean and his associates and the management of Martin-Bower, a large food distribution company. The company officers will include Mr. Bean as CEO, Mrs. Linda Tuck as CFO, plus Mr. Minoru Takeda, who will be operations manager. Since the firm is a start-up, there will be little in the way of formal structure at first. The company also plans to hire three technicians who will service the automated store and a office manager. Additional personnel will be added once more stores are set up.

Mr. Wallace Bean is a graduate of the University of Texas, Austin’s school of business. He has worked for more than twelve years in the food distribution and grocery store industry, including positions as vice president of marketing for Fry’s Food and Drug, director of special projects for Giant Foods and more recently, senior vice president for Martin-Bower.

Mrs. Linda Tuck has a graduate degree in finance from Kansas State University and has eight years experience working for various companies. Her last job was as a financial analyst for Circle K corporation.

Mr Minoru Takeda is an MBA graduate from the University of Osaka. He has been operational manager for Kiyama Inc. for the past six years which operates approximately six hundred automated convenience stores throughout Japan. Mr. Takeda has moved to the United States for the express purpose of bringing this new type of store to this country.

Personnel Table

Financial Plan

Forecast

Key Assumptions

Our early projections show more profit than is realistic.  We expect to revise regularly to manage cash flow based on realistic expectations for the short term, not the long term projections. 

The advantage of handling projections this way is that it allows a cushion for the real expenses as they occur. We will be less profitable, but with enough resources to grow and prosper. 

Revenue by Month

Expenses by Month

Net Profit (or Loss) by Year

Financing

Use of Funds

Start-up Expenses

Legal $2,400

Pre-sale advertising/marketing $8,000

Land location and finders fee $8,000

Consultants $4,000

Insurance $1,780

Rent $12,000

Marketing / Promotion – 10000

Expensed equipment $50,0000

Research and Development $10,000

Other: $2000

TOTAL START-UP EXPENSES $96,180

 

 

 

Sources of Funds

We will be getting $268,000 from: 

Family and Friends: $158000

Martin-Bower management: $110,000

Statements

Projected Profit & Loss

Projected Balance Sheet

Projected Cash Flow Statement