Gourmet Meats

Business Plan for

Balboa Burgers

Agribusiness Venture Management

Ray Lei
Biancia Rolle
Kyle Templeton
Dean Serdachny
 Client Info

Currently producing lean hamburgers on a

small scale (6 animals slaughtered)
Hamburgers are incorporated with special
family recipes developed in the summer of
2004
Sales are driven by word of mouth and
family
 Industry Info

Beef Consumption In Canada:

After bovine spongiform

encephalopathy (BSE) was discovered
per capita consumption in Canada
actually increased

Before (BSE) 13.5kg/annum per person

 Industry Info

After (BSE) 14.2kg/annum per person

A significant portion of the per capita

increase was geared to organic and
natural beef products

Few competitors in his market currently

 Operations Plan

Incorporation of:

Gourmet Meats
Work Plan and Flow of Work

Farms

Gourmet Meats

Processing
Facility

Seasoning and
Freezer Filler Ingredients
Storage

Local Bar/Pubs
Grocers
 Working Capital Planning and Management

2006 Production 3100

Direct Materials Cost/box
boxes
Beef Trim $ 10.30 $ 31,942.00
Ingredients $ 4.59 $ 14,229.00
Processing $ 5.64 $ 17,483.00

- Created Labels $ 0.01 $ 310.00

Trucking - Transport (Saskatoon, SK) $ 0.24 $ 750.00

Cold Storage Warehouse (Saskatoon,

$ 0.38 $ 1,200.00
SK)
Trucking - Delivery To Retailers
$ 3.60 $ 11,165.00
(Saskatoon, SK)
Total Materials $ 24.85 $ 77,033.00
 Working Capital Planning and Management

Cost of Goods Sold

Overhead Cost Cost Source
Utilities- SaskPower
Pwr/Heat $ 400.00
Phone/Fax/Cell $ 1500.00 SaskTel
Incorporation $ 1000.00 Gov Sk website
Fees
Office Supplies $ 600.00 Staples
Total Overhead $3,500.00
Working Capital Planning and Management

Total Cost of Goods Sold

Cost of Goods Produced in 2006

Direct Labour $0.00
Direct Materials $77,033.00
Processing
Overhead $3,900.00

Total Cost of Goods $80,93

Produced 3.00
Working Capital Planning and Management

Cash Management
Minimal requirement necessary
- Initial investment of $15,000
- No large inventories
- No large capital costs
 Inventories

Flexible production

More in winter, Less in summer

30 days in average

Inventories replenished in 4 days

 Accounts Receivable

Policy
15 days credit
Reason
Incurring customers
Small company
 Accounts Payable

Larger purchasing options only

- Processing fees
- Trim cost from Natural Valley Farms
 Cash Conversion Cycle

Calculated to be 18 days

Variable with seasonal demand

- Low turn around due to production capabilities
 Marketing Plan

PUSH STRATEGY

PULL STRATEGY
 Product Overview
The Product
Hamburgers combined with ingredients for flavour

Four different flavours:

- Teriyaki
- Spice
- Honey Mustard
- Original
-Cajun Maple

Size - 5 oz

Natural - follows current industry regulation standards

 Market Objective
Focus on pub and grill market

Target 19-45 year old males

Promote a differentiated product

Push strategy

First step of market penetration

GOAL = Product awareness

Pull strategy for summer retail market
ie) BBQ season
 Market Analysis
Market Size
36 733 000 lbs of beef consumed in Saskatchewan
14 693 200 lbs of ground beef consumed in Saskatchewan
3 367 330 lbs of hamburger eaten in Saskatchewan
 Market Analysis
Market Size
3 367 330 lbs of hamburger eaten in Saskatchewan
14 693 000, 4 oz hamburger consumed in Saskatchewan
637 500 burgers/ year sold in non-franchised pubs and grills
throughout Saskatchewan
 Market Analysis
Market Needs
Flavour

Consistent taste

Cooking characteristics:
no shrinkage
 Customer Analysis
Target Market
Primarily male demographic
Aged 19-45
Blue collar workers
Interested in new experiences and new tastes
 Competitor Analysis
Companies Supplying Pubs & Grills
Prairie Meats Centennial Meats
Price: $0.50 for 4 oz $0.96 for 6 oz
Market Share: 40% Market Share: 10%
Low price Focus primarily on fast food chains

Chef Redi Mitchells Gourmet Foods

Market Share: 10% Price: $0.70 for 4 oz
Local market only Market Share: 10%
Poor promotion Packaging: 4.54 kg case
Beef line poorly developed compared
Harvest Meats to pork products
Market Share: 5%
Concentrated in rural areas and grocery
 SWOT
Strengths
1. Flavours and recipes
2. Unique idea
3. Business flexibility
Opportunities
1. No other flavoured burgers
2. Joint promotion with
establishments through
burger nights
3. Homegrown image
4. Natural beef
Weaknesses
1. Possible crumbling problems
2. Flat grill incompatibility
3. Low initial capital
Threats
1. Market is very price sensitive
2. Homemade burgers in
establishment
3. Loyalty to existing competition
4. Lack of product diversity
 Key Planning Assumptions
1. Beef consumption will not decline dramatically

2. Consumers are looking for a consistent and flavourful product

3. Steady and dependable supply of materials

4. Reliability of manufacturing and distribution channels

Business Proposition
 Price

Target wholesale price:

$1.17/ burger
final production/logistic costs

Average wholesale cost:

4 oz $0.50-$0.70/ burger
5 oz $0.60-$0.70/ burger
6 oz $0.90-$1.15/ burger
 Place

Non Franchised bar and grill establishments

Immediate access to their entire customer base

Increased demand for flavour

Ribs, wings

Reduced advertising costs

High traffic

Diverse Crowd
 Place

Local Grocery Stores and Gourmet Shops

Sask Made Store

Internet sales
 Promotion
To Consumers
Table talkers and posters in establishment

Table talker website promotion

Sponsor beer and burger nights

Taste testing
 Financials
Unit Cost Analysis ($ per unit
produced/case) 2006 2007 2008 2009 2010
Natural Beef Burger 5oz.
24.85 24.85 24.85 24.85 24.85
Unit Cost of Direct Labour
Natural Beef Burger 5oz.
0.00 0.00 0.00 0.00 0.00
Unit Cost of Overhead
Natural Beef Burger 5oz.
1.26 0.87 0.75 0.66 0.58
Total Unit Cost of Production for
Natural Beef Burger 5oz.
26.11 25.72 25.60 25.51 25.43
Unit Administration & Marketing
Cost
Natural Beef Burger 5oz.
9.16 7.90 5.81 5.13 4.67
Total Unit Cost
Natural Beef Burger 5oz.
 Financial Performance
For the year ended Dec. 31 2006 2007 2014 2015
Sales Revenue:
Total Revenue 108, 500 121,141 366,673 372,173
Cost of Goods Sold 74,189 87,131 231,873 235,163
Gross Margin 34,311 34,311 134,800 137,011
Expenses:
Total Expenses 28,402 26,930 27,448 27,997
Income Before Taxes 5,909 7,079 107,352 109,014
Net Income (Loss) 5,318 6,371 96,617 98,112
Beg Retained Earnings - 5,318 145,650 184,167
Dividends - - - -
End Retained Earnings 5,318 11,690 184,167 195,013

Year-end Cash 160 5,781 142,654 153,490

NPV 104,647
IRR 70.7%
ERR 48.9%
 Risk Analysis

Results in 0
Original
Revenue/Cost Factor Ending Difference % Change
value
Cash

Selling Price $35 34.94 $0.06 -0.17%

Aero Trucking-delivery to retailers $11,165 11,333 -$168.00 1.50%

Cajun Maple Sale(unit) 1240 1235 5 -0.40%

Natural Valley Trim $31,942 32,109 -$167.00 0.52%

TML Processing $17,438 17,605 -$167.00 0.96%

Co-Promotions Nights $8,000 8,178 -$178.00 2.23%

Demo Product $6,000 6,178 -$178.00 2.97%

 Financials

Razor thin margins

High risk
Good profit potential
IRR= 70.7%
ERR= 48.9%
No Dividends early on
 QUESTIONS?

CAN YOUR BUNS

HANDLE OUR
BURGERS?