REGISTRATION of cinema lovers that are yearning for

REGISTRATION
NUMBER: 16110773

MODULE TITLE: ENTREPRENEURIAL START-UP

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MODULE LEADER: PAUL PEACHEY

ASSIGNMENT TITLE: BUSINESS
PLAN ON XTREME CINEMA AND CAFÉ

                       

Executive Summary

There
has been a major decline in the number of typical movie theaters establishment,
what is being created nowadays are more of less megaplexes that pile more
customers into tiny spaces. This has continuously made watching film more
discomforting.  This viable business has
abandoned the once known downtown theaters creating a gap.  Xtreme cinema
‘n’ cafe is a theater/restaurant business that is strongly influenced that
there is a considerable number of cinema lovers that are yearning for a more
satisfying and pleasant way to watch a film and get to eat at the same time. The
company will also provide a unique and comfortable seating tables for its
client where affordable meals can be served. This will provide a platform for
repeated visits and referrals.

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENT

1.0 Introduction……………………………………………………………………………….3

1.1 Aim and Objectives……………………………………….………………………………………..4

1.2 Keys to success…………………………………………………….…………..…………..6

2.0 company summary…………………………………………………………………………9

2.1 Start-up summary….………………………………………………………………………10

2.2 SWOT analysis…….……………………………………………………………………11

3.0 Marketing……………………………………………………………………………

3.1 Market analysis………………………………………………………………………….

3.2 Marketing mix……………………………………………………………………………..

3.3 Unique selling point……………………………………………………………………

4.0 Financial Plan…………………………………………………………………………

4.1 break-even point and month……………………………………………………………….

4.2 Cash flow and profit/loss
forecast………………………………………………………..

4.3 SWOT Analysis…………………………………………………………………………….

5.0 Conclusion……………………………………………………………………………………..

 

 

 

 

 

 

 

 

 

 

 

 

1.0   INTRODUCTION

 

This report is about a company willing to set up a cinema and café outlet
within the environment of pontypridd by creating a unique atmosphere that will
yield repeated visits and referrals.

1.1 Aim

•        
Xtreme cinema
‘n’ café operation is to set up a new cinema experience for its customers.

•        
Provide its
customer with outstanding customer service by way of creating a suitable
environment, serve meal of high quality that will leave a long-lasting
experience.

1.2 Objectives

The
company projects to make sales of about £600K minimum within the
first year and by year 3, a minimum of a million.
It
projects a work-forces costs less than £300K in the first year.
To
break even by end of 3rd quarter of the year.

·        
The
company is interested in sustaining its market share hence it’s not just about
launching;

 

 

1.3 Keys to Success

Below are the key elements required to achieve success; that is to create
value.

Access
to popular second run movies that covers all viewing age group i.e. from cartoon
series to fantasy movies.
Extraordinary
service delivery that creates referrals and repeated visits
Constantly
maintaining an entertainment atmosphere and product quality.
Proper
Management of internal finances and cash flow which will go a long way in
determining upward capital growth.
Putting
in place proper cost control measures to avoid income leakage.

2.0 COMPANY SUMMARY

Xtreme
cinema ‘n’ Café is a single-unit, medium-sized cinema and Café. The focus would
be showing motion pictures at reduced prices after the films
leave first-run playhouses. The company will also provide sales of light
meals and drinks like, pizza, chips, hotdog, grills and burgers and a few other
creative meals. The outlet will be located along Broadway downtown within proximity
to the University of south wales (Glyntaff and Treforest campus), train
station, major shopping centers (pontypridd).

 

 

2.1 Start-up Summary

The
founders of the company are Michael Steve, Mark Jones and myself (Philip
spencer). Mark will focus on the financial aspect of the business, Michael is
the restaurant chef while the personnel (HR) aspect will be handled by myself.

Mark
has a vast experience in accounting and finance having worked with top MNCs for
over 10years.

Michael
has been a chef for over 8 years specializing in grills, burger and other
international delicacies.

The
company was able secure an agreement with a Premiere Film Distributor that will
provide the second run films for Xtreme Second Run’s café at a cost. A lease
for the café location has been secured for £2,500 per month. The theater
will have to be equipped as a restaurant. The founders are
investing £30,000 each to start up the company.

Apart
from the top key management personnel. the following roles will be occupied by
qualified staff with a proven record and experience.

Finance
manager, Operation manager, marketing manager, supply manager, legal advisor,
chartered accountant, inventory manager rum receptionist, café manager, cinema
manager, waiters and waitresses.

 

2.2 SWOT
Analysis

Strength

•        
Each
of the founders has vast management experience in their respective areas with
proven record.

•        
The
company was able secure an agreement with a Premiere Film Distributor that will
provide the second run films for Xtreme Café.

•        
Sales
of varieties of quality meals and drinks to the customers in an hygiene
environment

•        
Excellent
customer service delivery being the focal point of the business.

Opportunities

•        
Employment
opportunities

•        
Leveraging
on the appropriate positioning of the business to create concentration.

3.0  
MARKETING

This gives an overview of the product,
market research, marketing strategies. These are broken down as follows:

 

3.1 Market Analysis

•        
This
sector is at a rapidly growing stage.

•        
The
competitor is showcase cinema in the industrial estate (megaplexes)

•        
Population
of over 40,000 in pontypridd (inclusive of Treforest), exclusive of the valleys

•        
Target
market: Young adults between ages 18-26 (which also include students) and
families

After
careful analysis of the market, we realized that there is no cinema within the
vicinity of the two university campuses and environment. The closes one is
located at Nantgarw, Treforest Industrial estate (Showcase Cinema). We believe
the location of this cinema is at a disadvantage as its situated in an
industrial area with limited patronage in the evening. The area is only lively
during the working hours and as such not a suitable time to watch cinema
especially for student and working class.

The
company intend leveraging of this disadvantage by locating the café cinema
within the Treforest/pontypridd vicinity to capture the market. The location of
Xtreme Second Run cinema ‘n’ café (Broadway) to the downtown shopping and busy
motor way area makes the restaurant easily accessible. The idea is to provide
classy and comfortable seating tables for customers while watching movies and
enjoying great food at a higher cost.

3.2 Marketing Mix

Products
and services being offered by the company are broken down below

The Menu:

The
menu is quite simple.  Pizza, burger, fries and battered chicken are the
perfect finger food for watching movies.  We will also include selected
international meals that fit will in the viewing setting.

Movies:

The
films will be chosen with two target audiences in mind; the families who
usually prefer to watch movies like Despicable me, Shrek and Spy Kids.  These
movies will be shown at different times session in the afternoon. The
second group is young adults between ages 18-26 who at evening time enjoy
watching movies like Jeepers Peepers, the Fast and the Furious, and Blade
runner. These movies would also be shown at different times in evening. 
In addition, there will be midnight movies for the student crowd on Friday and
Saturday who due to their school work schedule prefer to watch movies at
midnight.

Price: the second run movies will be
at the prevailing price while the meals served will be at slightly higher cost.
The price of the movie will range between £2.0 and £2.75 depending on
the of film.

Many
researchers have discovered that client pleasure and allegiance are the main
products of supposed client value (McDougall, et. Al 2000; Yang et al. 2004).
Most especially, price premium is a basic gauge of allegiance (Aaker, 1996).
Clients may be willing to purchase by paying more money when clients perceive
higher value (Day, 1990).

Place: the proposed location of Xtreme
cinema ‘n’ Café is along Broadway road

Promotion: the company’s plan is to promote or market
its products and services through making available free movie tickets for the
first three month. The ticket charge will be waived to serve as a penetration
strategy into the market. These free tickets will be in daily papers, students’
magazines, student union stores, school libraries of the university of south
wales (Glyntaff and Treforest campus), while others will be distributed door to
door within the Pontypridd environment. During these
period, the 70% of revenue is expected to majorly come from sales of meals.

After the third month, the company will also continue to
offer limited discount ticket on certain days of the week as this will continue
to attract customers.

The
company will invest in very unique website which will enable customer purchase
movie tickets and make reservation for seats especially during the peak hours.
This website will be quite user friendly. According to Ellis and Pecotich
(2001), the online activities give the firm a platform to focus of client’s
retention as well as acquisition. they detected that social networks are
significant to the identification of new market prospects.

The
website will also be used to keep customers up to date on movie selection which
will be alternated twice in a month.

3.3 Unique selling Point

•        
Location: Within the Treforest/pontypridd vicinity to capture the
market. The location of Xtreme cinema ‘n’ Café (Broadway) to the downtown
shopping and busy motor way area makes the restaurant easily accessible.

•        
Atmosphere: The idea is to provide classy and comfortable seating
tables for customers while watching movies and enjoying great food at a
slightly higher cost.

4.0 Financial Plan

The
following sections outline the financial analysis for Xtreme cinema.

The three
founders of the business are each investing £30,000 making a total of £90,000
which will serve as the start-up financing capital.

4.1 Break even sales and
month

From
the table, we can calculate the break-even sales as follows

Monthly sales:   692,100/12=
57,675

Variable Expenses: payroll +tax= 27,600

Fixed Expenses: overhead+utilities+insurance+rent=
29,100

Contribution margin= 57,675-27,600/57,675=0.52

Break even sales= 29,100/0.52= £55,805.24

From the above calculation, the break-even sales
which determines the minimum requirements of sales per month
is £55,805.24.

The
break-even month is the month when its gross sales start equating the total
expense. At this period, the company is deemed to start making profit. From the
cashflow table below, the break-even month will be the eighth month.

4.2 cash-flow and profit/loss forecast

The
diagram below shows the projected cash for the company over the next 12 months

(1year projected cashflow
for the company)

 

Projected
Profit and Loss £

 

 

 

Sales

 

     692,100

Cost
of Sales

 

     255,119

 

 

 

Gross
profit

 

     436,981

other
income

 

 

Total
income

 

 

 

 

 

Expenses

 

 

Payroll

 

288,000

Sales
and Marketing and Other Expenses

 

22,600

Depreciation

 

0

Leased
Equipment

 

0

Utilities

 

30,000

Insurance

 

18,000

Rent

 

30,000

Payroll
Taxes(15%)

15%

43,200

Other

 

0

 

 

 

Total
Operating Expenses

 

431,800

 

 

 

Profit
Before Interest and Taxes

 

5,181

EBITDA

 

5,181

Interest
Expense

 

0

Taxes
Incurred

 

1,554

 

 

 

Net
Profit

 

3,627

 

 

 

(1-year profit and loss forecast for the
company)

 

 

4.3 PEST Analysis

This essentially contains four key elements
which are Political, Economic, Social and Technological which basically analyze
the macroeconomic environment, by way of identifying the factors that might
affect certain variables which in turn are likely to influence the firm’s decision-making
process (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993).

In setting up this business, it’s important to
analysis the factors that might impact on the business performance and
continuity. These are listed below.

 

 

 

 

Political

Proactive
government for business start-ups
Politically
stable
 

Economic

Low
interest rate
Viable
business environment

Social

Densely
populated
High
cost/standard of living
Access
to free public services
High
labour cost

Technology

Growth
in science and IT
Plenty
of internal competition to stimulate growth
 

 

5.0  
Conclusion

After a
detailed analysis of the market as well as the investment plan, we can conclude
that the implementation of this project is achievable, and that the investment
can be compensated.

The
company strongly believe that there are two key factors that they believe
assures the success of the business.

1.      
Mark
has a vast experience in accounting and finance having worked with top MNCs for
over 10years.

2.      
Michael
has been a chef for over 8 years specializing in grills, burger and other
international delicacies.

 

 

                                                        

 

 

 

 

 

 

 

 

 

 

 

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