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The Gravy TruckPoutinerie on Wheels

445 5th Avenue NorthSaskatoon, SK, S7K 2P8

306-381-3785 [email protected]

thegravytruck.ca

Table of ContentsI. Executive Summary..............................................................3

1.1 Mission Statement.....................................................................................1.2 Management..............................................................................................1.3 Target Market............................................................................................1.4 Operations Plan.........................................................................................1.5 Marketing Plan..........................................................................................1.6 Financial Plan............................................................................................

II. Description of the Business..................................................32.1 Objectives..................................................................................................

III. Operations Plan....................................................................43.1 Organizational Structure...........................................................................Figure 1 – Organizational Chart..................................................................................................

3.2 Legal Ownership........................................................................................3.3 Location Considerations............................................................................Figure 2 – Riversdale...................................................................................................................

Figure 3 – Downtown...................................................................................................................

Figure 4 – Broadway....................................................................................................................

Figure 5 – Food Trucks on Broadway during PotashCorp Fringe Theatre and Street Festival.............................................................................................

3.4 Interior Plan..............................................................................................Figure 6 – The Gravy Truck Interior...........................................................................................

3.5 Exterior Plan..............................................................................................Figure 7 – The Gravy Truck Exterior...........................................................................................

3.6 Hours of Operation....................................................................................3.7 Business Day..............................................................................................3.8 Start-Up Costs.........................................................................................

IV. Human Resources...............................................................104.1 Job Descriptions.......................................................................................4.2 Labour and Management Costs...............................................................

V. Marketing...........................................................................105.1 Competitive Analysis...............................................................................5.1.1 Positioning Map................................................................................................................

5.2 Critical Success Measures.......................................................................

5.3 Critical Risk Factors................................................................................5.4 Target Market..........................................................................................5.5 The Marketing Mix..................................................................................5.5.1 Products/Service...............................................................................................................

5.5.2 Pricing..............................................................................................................................

5.5.3 Advertising and Promotion...............................................................................................

5.6 Sales Objectives.......................................................................................5.7 Marketing Budget....................................................................................5.7.1 Projected Revenues..........................................................................................................

VI. Financial Plan.....................................................................146.1 Financing Structure.................................................................................6.2 Dividend Policy........................................................................................6.2.1 Retained Earnings Account..............................................................................................

6.3 Financial Analysis....................................................................................6.3.1 Owners’ Compensation Schedule.....................................................................................

6.3.2 Sensitivity Analysis...........................................................................................................

Figure 8 – Customers’ per day sensitivity analysis...................................................................

Figure 9 – Average purchase sensitivity analysis......................................................................

6.3.3 Feasibility.........................................................................................................................

6.3.4 Risk Analysis.....................................................................................................................

VII. Appendix 1..........................................................................17Financial Model.............................................................................................

Executive Summary1.1 Mission StatementThe Gravy Truck will provide an amazing gourmet poutine experience to the residents and visitors of Saskatoon. The Gravy Truck uses the highest quality ingredients, with a focus on quality, speed, and an excellent customer experience. At The Gravy Truck, there’s a poutine for everyone.

1.2 ManagementThe Gravy Truck will be a private corporation with two equal owners. Romeo Nkunzimana and Eric Gignac will be the owner operators and will share equal day-to-day responsibilities.

1.3 Target MarketThe Gravy Truck will be entering the new and growing food truck industry in Saskatoon. We will cater to younger adults, ages 20-45, who are active in the lifestyle provided by the central business districts of Saskatoon. It will be competitively priced, and excellent quality will be our competitive advantage.

1.4 Operations PlanThe Gravy Truck will operate 7 days a week for 150 days a year. The hours are 11am-3pm Monday to Friday, 10am-3pm Saturday and Sunday, and additional night shifts on Fridays and Saturdays, 7pm-11pm.

1.5 Marketing PlanThe Gravy Truck will heavily rely on social media, guerilla marketing, cause marketing, and word of mouth in order to gain repeat business and new customers.

1.6 Financial PlanThe Gravy Truck will need $73,800 in starting capital, comprised of a $40,000 5 year bank loan and a $33,800 equity investment from the partners (54% vs 46%).

THE GRAVY TRUCK - APRIL 2015 3

Description of the BusinessThe Gravy Truck will be a food truck operating in the Saskatoon, SK area. It will specialize in serving French-Canadian style gourmet poutine and fresh cut fries. The Gravy Truck will use the highest and freshest quality ingredients to give the customer a great culinary experience. The menu will feature authentic Quebec cheese curds, our own secret gravy recipe, and fresh fries cut daily, never frozen. It will include options for meat lovers, vegetarians, and will also cater to those with special dietary needs. We believe that there is a poutine for everyone, and The Gravy Truck will strive to serve customers with speed, great quality, and with a smile.

2.1 Objectives To become the premier destination for poutine in Saskatoon, SK. To provide customers with excellent customer service and brighten

their day. To become a staple of the food truck industry in Saskatchewan.

Operations Plan3.1 Organizational StructureThe organizational structure of The Gravy Truck will be flat. Two partners will share all responsibilities. Part time staff will be added in year 3, when the amount of sales per partner exceeds $75,000 and the business shows clear signs of continued growth. Since both partners and staff will handle food on a daily basis, training and certification in food safety will be required.


Figure 1 – Organizational Chart

3.2 Legal OwnershipThe Gravy Truck will be a private corporation, with ownership shares split evenly between the two partners. Incorporation will make sure that the partners are protected against legal liabilities.

3.3 Location ConsiderationsThe Gravy Truck will operate mainly in the central business districts of Saskatoon, namely Downtown, Broadway and Riversdale. These areas where chosen because they will provide The Gravy Truck with access to a large amount of foot traffic as well as many corporate consumers, tourists, and Saskatoon residents who go to these areas to enjoy their entertainment options.

The City of Saskatoon’s location criteria for food trucks states that they must be at least 20m away from a food establishment and 30m away from a school. Also, food trucks cannot be parked in one spot for more than 5 hours at a time. These criteria will make location planning crucial to the success of The Gravy Truck. For the first 3 months of operation, we will find out the locations that provide us with the most pedestrian traffic and the highest visibility possible. This will allow us to establish a location schedule that we can regularly communicate to our customers.

The following maps show where The Gravy Truck will be able to park within the central business districts. The areas highlighted in black are acceptable parking zones.


Romeo Nkunzimana –Owner/Operator

Part Time Cook

Eric Gignac – Owner/Opera

tor

Part Time Cook

Figure 2 – Riversdale

Figure 3 – Downtown


Figure 4 – Broadway

Strategic locations will include: local bars and breweries, near the University of Saskatchewan campus, the Saskatoon Farmer’s Market, near construction sites, potash mines near Saskatoon. The Gravy Truck will also be present at special events such as: PotashCorp Children’s Festival of Saskatchewan, Saskatoon Pride Festival, SaskTel Saskatchewan Jazz Festival, Prairieland Junior Ag Showcase, Shakespeare on the Saskatchewan, Experience Downtown Sidewalk Sale, A Taste of Saskatchewan, Saskatoon Ribfest, PotashCorp Fringe Theatre and Street Festival, Saskatoon Exhibition, Folkfest, Rock 102 Show & Shine Weekend, Rock the River Festival, and YXE Street Food Fest.


Figure 5 – Food Trucks on Broadway during PotashCorp Fringe Theatre and Street Festival

3.4 Interior PlanThe Gravy Truck will be a Grumman Step Van, converted to our specifications by Apollo Food Trucks. The interior will allow for a maximum of 4 staff members to comfortably prepare food, store ingredients, and to serve the customers.


Figure 6 – The Gravy Truck Interior

3.5 Exterior PlanThe Gravy Truck will be 14’ long. The right side includes a 6’ flip up service window. Near the window, there will be a large chalkboard sign to display our menu, which will allow us to easily add or remove menu items.

Figure 7 – The Gravy Truck Exterior


3.6 Hours of OperationThe Gravy Truck will operate 7 days a week, from May to September. The hours or operations are the following:

Monday – Wednesday: 11am – 3pm Thursday – Friday: 11am – 3pm & 7pm – 11pm Saturday: 10am – 3pm & 7pm – 11pm Sunday: 10am – 3pm

3.7 Business DayEven though the business day starts at 10am at the earliest, business activities will start earlier. The average business day will comprise of the following activities:

7:30am:Location scouting will begin. One of the partners will find a location with their vehicles and park there to ensure The Gravy Truck may arrive at 10am.

9am (weekends) & 10am (weekdays):The Gravy Truck arrives on location. The staff will prepare the food area, make sure all ingredients are ready for production. Inventory of supplies and ingredients will be counted, as well as additional cleaning in an around The Gravy Truck.

10am (weekends) & 11am (weekdays):The Gravy Truck is open for service.

10am (weekends) & 11am(weekdays) to 3pm:Customers will be served as they approach The Gravy Truck.

3pm (Closing):The truck closes, and is parked away. Closing procedures and area cleaning are done.

Late night shifts:

6:30pm:The Gravy Truck arrives on location and is prepped for the evening service.

7pm – 11pm:The Gravy Truck is open for service.


11pm:The truck closes and is parked away. Closing procedures and area cleaning are done.

3.8 Start-Up CostsCapital costs for The Gravy Truck total $73,800. They include the purchase of the truck and its conversion from supplier Apollo Food Trucks. It also includes kitchen equipment and computer point of sale equipment.

Human ResourcesAs mentioned in section 3.1, the organizational structure of The Gravy Truck will be flat. Two partners will share duties and working hours equally. According to our projected revenues, by year 3, we will have to hire additional part time staff in order to handle a larger volume of sales.

4.1 Job DescriptionsRomeo Nkunzimana will take care of the sales and marketing aspects of The Gravy Truck. He has extensive experience in customer service and sales. As a 4th year student at Edwards School of Business, he has experience in both finance and accounting, and he will also take care of the financial management and inventory count.

Eric Gignac will serve as the operations manager. He has over 5 years experience in food preparation. He will take care of building the menu, finding new recipes, and dealing with our suppliers in order to get the best ingredients possible. He will also develop the training program for all future staff members, and attend food truck conventions throughout North America in order to gain valuable contacts and information on how to improve the business.

In addition to these roles, both managers will take on production and point of sale duties. Both managers will work as full-time employees and receive benefits at 8.19% of their salaries. All staff will be certified for food safety in order to comply with all safety regulations.


4.2 Labour and Management CostsThe partners will take on a salary of $30,000 per 5 month season. Part time staff will be paid at $11.00/hour. See Appendix I for a breakdown of all labour costs.

Marketing5.1 Competitive AnalysisThe Gravy Truck will have a few other food truck competitors that operate in the same area. Direct competitors will include Ace Burger, Scout Mex Hall, and Disco Dog. Even though these competitors do not serve poutine, they do offer other street food options and have a loyal following of customers. The food truck industry is still in infancy in Saskatoon, and the existing food trucks support each other, even though they compete in the same market. Most food truck customers look for variety of street food options, and as such The Gravy Truck will join the existing community of food trucks in order to gain and share valuable information and resources so that the industry can thrive as a whole.

Indirect competitors will include fast food outlets and other restaurants in our area of operation. The Gravy Truck plans to stand out by offering the best poutine in the city, with quality ingredients, and outstanding customer service.

5.1.1 Positioning MapThe Gravy Truck will position itself based on price and quality. We believe our quality will be amongst the best poutine in Saskatoon, and we will be competitively priced with other food trucks as well as fast food outlets. The following positioning map shows where we stand with other restaurants that sell poutine in Saskatoon.


5.2 Critical Success MeasuresThe Gravy Truck will need to be accessible to its customers with real-time location information. Location planning is crucial in order to reach our customer base, and high traffic locations are the biggest priority.

Gaining our customers’ trust by establishing a good reputation will drive word of mouth promotion and repeat business. This will be accomplished by providing excellent and friendly customer service, and by limiting the time from order to completion of the sale. The Gravy Truck’s menu will use only quality, fresh ingredients, and will be reputed for having a clean, contaminant free kitchen.

5.3 Critical Risk FactorsOperating a food truck carries the threat of performance issues with the truck, location limitations due to availability and city bylaws, weather conditions, customer wants, and the visibility of the business within the market. Promotion through social media and other outlets will be used to ensure customers are aware of The Gravy Truck.

The City of Saskatoon legalized the operation of food trucks in 2012, and since the industry is relatively new, bylaws and regulations are subject to change, as well as public opinion. We will have to stay informed on all issues regarding food truck regulation and be in contact with city hall on a regular basis.


The truck used comes with a one year parts and labor warranty through Apollo Food Truck. Mechanical failures will be manageable through them for that time, and as such finding a local mechanic to routinely check and maintain the truck will be necessary during the first year for future usage.

5.4 Target MarketThe Gravy Truck will target young adults age 20-45, that live, work, and play close to the central business districts of Saskatoon. The residents are active in city events, and enjoy spending their disposable income on dining establishments. One the weekends, we expect several families enjoying shopping and leisure around the South Saskatchewan River valley to visit our truck. We will be open for late night shifts on Friday and Saturdays to cater to the after-hours crowd.

5.5 The Marketing Mix5.5.1 Products/ServiceThe Gravy Truck specializes in gourmet, French-Canadian style poutine and fresh cut fries. The menu includes classic cheese and gravy poutine, breakfast poutine, options for meat lovers, vegetarian poutine. It will also cater to those with special dietary needs. It is the promise of The Gravy Truck that our ingredients will be of the highest quality, purchased fresh twice a week. It is our belief that there is a poutine for everyone.

The gravy will be made from scratch, and our potatoes will be cut daily, never frozen. All products will be served in 100% recyclable containers.

5.5.2 PricingThe Gravy Truck will offer competitive pricing to its customers, based on the average price of fast food items in Saskatoon’s central business districts. Poutines will range from $5.50 to $11, depending on the sizes and toppings added. Fresh cut fries will range from $3.00 to $6.00. Beverages will cost $2.00 to $3.00. It is estimated that the average customer will purchase a poutine and a drink for a total average purchase of $10. The Gravy Truck’s gross profit margin will hover around 70 percent.

5.5.3 Advertising and PromotionPromotion for The Gravy Truck will focus on the following methods: (1) Social media through Facebook, Instagram, and Twitter will allow us to update our customers on our current location, communicate menu specials,


and reward our followers with exclusive offers. We will also use the SnackMap application, which is a live food truck tracking system that uses the GPS coordinates of the truck to let customers know where we are located. (2) Guerilla marketing techniques such as social media contests and street sampling will encourage our customers to interact with us on a regular basis. (3) Cause marketing. We believe that responsible business owners must give back to the community that supports them. That is why The Gravy Truck will host a monthly food drive for the Saskatoon Food Bank and Learning Centre. Through our social media, we will encourage customers to bring in a non-perishable food item to the truck in order to be entered in a draw for a monthly prize. These food items will be taken directly from the truck to the Food Bank. (4) The Gravy Truck will attend festivals where Food Trucks are featured in order to increase our local visibility. (5) Printed media such as brochures, banners, and posters will be strategically placed throughout the City of Saskatoon.

The truck itself will be one of our biggest marketing tools. It will feature a large, attractive graphic wrap with our logo prevalent in order to make it very recognizable. We will locate in high traffic areas so that a vast number of people can have easy access to our products.

5.6 Sales ObjectivesThe Gravy Truck’s sales objectives are the following:

Average 80 customers per day in year 1 and achieve 128 customers per day by year 5.

Sell an average of $10 per customer, increasing with the inflation rate.

Achieve a 70% profit margin.

5.7 Marketing BudgetOur promotional activities will result in the following marketing budget:

Expense Cost DescriptionWebsite $192.00 $16/month via

Squarespace.comSample Brochures $374.50 1,000 small brochures

(matte)


Business Cards $233.30 10,000 business cards

Banner $551.00 2 33”x81” banners

Sidewalk Chalkboard Sign

$220 Chalkboard art provided by local artist

Custom Aprons $301.40 15 custom aprons provided by Wordans

Posters $178.50 250 matte posters

Total Marketing Budget

$2,050.20

5.7.1 Projected Revenues

Year 1 Year 2 Year 3 Year 4 Year 50

50,000

100,000

150,000

200,000

250,000

120,000147,600

166,419187,637

211,561

Financial Plan6.1 Financing StructureThe Gravy Truck’s capital cost of $73,800 will be covered by a bank loan of $40,000 and an equity investment totaling $33,800 by both partners. This results in a 54% bank debt to 46% equity ratio. The bank debt will be co-signed by Jeremie Nkunzimana, father of Romeo Nkunzimana. He owns several assets that can be used as collateral. Both partners have a good credit rating.


See Appendix 1 for the bank debt amortization schedule and other financial details.

6.2 Dividend PolicyDividends will be paid to both owners equally, once the cash balance exceeds $10,000.

6.2.1 Retained Earnings AccountRetained Earnings Account

2015 2016 2017 2018 2019

Beg RE -

(4,139)

2,405

20,030

49,096

Net Income (4,139)

6,544

17,625

29,066

40,984

Dividends -

-

-

-

15,688

End RE (4,139)

2,405

20,030

49,096

74,391

6.3 Financial AnalysisThe Gravy Truck is a small business, and as such the criteria on whether or not to pursue this venture will depend on owners’ compensation. See Appendix 1 for other criteria such as IRR and Payback.

6.3.1 Owners’ Compensation ScheduleYear 1 Year 2 Year 3 Year 4 Year 5

Owner’s Salary

60,000 61,500 63,038 64,613 66,229

Dividends 15,688Total Owners’ Compensation

60,000 61,500 63,038 64,613 81,917

6.3.2 Sensitivity AnalysisOur two most critical variables are the number of customers per day and the average purchase per customer. Our base case is 80 customers per day and $10 per purchase. Going down to 70 customers per day makes the


business unfeasible due to have a rate of return lower than 20%. The same effect is found when dropping the average purchase price to $9.

Figure 8 – Customers’ per day sensitivity analysis

Figure 9 – Average purchase sensitivity analysis

6.3.3 FeasibilityThe Gravy Truck will be profitable as long as the base case criteria is met. According to our income statement projection, the business will suffer a loss of $4,139 in the first year, but will continued growth each year, reaching $40,984 in net income by year 5. As long as the marketing and operating strategies match the financial objectives, we believe that The Gravy Truck will be feasible.

6.3.4 Risk AnalysisOther risk considerations include location planning, increase in competition, weather conditions, and ineffective marketing. We will also have to maintain our selling price so that the average purchase is at least $10. Our


promotional activities will play a key role in maintaining our base case of customers per day.


Appendix 1Financial ModelSee the Excel deliverable.


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