Running head: GRAZERS
Alexis Pressas, Kevin Mackey, Ryan Rusca,
Sophie Puig-Malet, Steven Rios
California State University, Monterey Bay
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Table of Contents
Executive Summary……………………………………………………………………………….5
Market Analysis…………………………………………………………………………………...6
Situation Analysis…………………………………………………………………………6
Market Summary………………………………………………………...………………..6
Target Market……………………………………………………………………………………...7
Geographics……………………………………………………………………………….7
Demographics……………………………………………………………………………..8
Behavior Factors/Psychographics…………………………………………………………9
The Market……………………………………………………………………...............................9
Market Needs……………………………………………………………………………...9
Market Trends……………………………………………………………………………10
Market Growth…………………………………………………………………………...11
SWOT Analysis………………………………………………………………………………….12
Strengths…………………………………………………………………………………12
Weaknesses……………………………………………………………………………....13
Opportunities……………………………………………………………………………..13
Threats……………………………………………………………………………………13
Competition…………………………………………………………………………………...…14
The Product: Grazers…………………………………………………………………………....15
Product Offering…………………………………………………………………………15
Keys to Success…………………………………………………………………………..17
Critical Issues…………………………………………………………………………….17
Marketing Strategy……………………………………………………………………………….18
Value Proposition………………………………………………………………………...18
Mission…………………………………………………………………………………...18
Marketing Objectives………………………………………………………………….....18
Financial Objectives……………………………………………………………………...19
Target Market………………………………………………………………………….…19
Positioning………………………………………………………………………...……..19
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Strategies…………………………………………………………………………………20
Marketing Mix…………………………………………………………………….……..20
Pricing……………………………………………………………………………………20
Distribution………………………………………………………………………...…….21
Marketing Communications……………………………………………..……………….22
Marketing Research……………………………………………………………………...22
Financials………………………………………………………………...………………………23
Break-even Analysis……………………………………………………………………..23
Sales Forecast………………………………………………………………………...…..23
Expense Forecast……………………………………………………………….………..24
Controls………………………………………………………………………………..…………24
Implementation…………………………………………………………….…………………….24
Marketing Organization………………………………………………………………………….25
Contingency Planning……………………………………………………………………………26
References………………………………………………………………………………………..29
Appendix…………………………………………………………………………………………31
Appendix A………………………………………………………………………………31
Appendix B……………………………………………………………………………....32
Appendix C……………………………………………………………………………....33
Appendix D………………………………………………………………………………34
Appendix E………………………………………………………………………………35
Appendix F……………………………………………………………………….………36
Appendix G…………………………………………………………………………...….37
Appendix H…………………………………………………………...………………….38
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List of Tables
Table 1.1………………………………………………………………………………………..…8
Table 1.2…………………………………………………………………………………………10
Table 1.3……………………………………………………………………………………...….11
Table 1.4…………………………………………………………………………………………14
Table 1.5…………………………………………………………………………………………21
Table 1.6……………………………………………………………………………………...….23
Table 1.7………………………………………………………………………………………....25
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Executive Summary
This report introduces a new type of fast-food restaurant, known as Grazers. Grazers is a fastfood restaurant that offers organic vegetarian, vegan, gluten-free, and meat-free meals. Grazers
will have its first location in Monterey, California. It will operate from hours 9am–9pm,
Monday through Sunday. Grazers is conveniently located near a fitness gym, sporting goods
stores, and yoga studios. This is relevant because Grazers’ target market is part of this healthy
and athletic lifestyle.
Grazers strives to eliminate the negative connotation associated with fast-food. Grazers will do
this by offering products with no trans-fat, sodium, and added sugar. Grazers wants to
emphasize that a healthy lifestyle can be convenient. Other fast-food restaurants may offer
“healthy” choices, such as salads and wraps to mask the other mal-nutritional menu items.
Grazers fills this gap by offering an entire menu comprised of organic products guaranteed to be
fresh and healthy. Due to the rise of Celiac Disease, Grazers also fills the gap by providing a
gluten-free menu. By having a combination of vegetarian and gluten-free items, Grazer attracts
the unfulfilled market of consumers who are health conscious eaters.
Grazers plans to generate over $4 million in sales in the first year of operation. We plan to
break-even by the beginning of our second year and start generating profit. With this profit, we
have hopes to open new Grazers stores in the future.
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Marketing Analysis
Situation Analysis
In the fast-food market, there has been a shift in the health conscious minds of the public. These
establishments have been attacked by people claiming that they are unhealthy. Supersize Me, a
documentary by Morgan Spurlock, highlights a strict McDonalds diet which causes Spurlock’s
health to rapidly decline. In response to this film, fast-food restaurants have begun to introduce
healthier food options to its menus, for example, salads and wraps have been added McDonalds
and Wendys’ menus. While there have been more subtle additions to the various menus in the
food industry, there still lacks an authentic health food restaurant with a special diet menu. Most
consumers who want a convenient and healthy food option eat at restaurants, such as Subway,
Jamba Juice, Chipotle, or Togos. Grazers will introduce a fast-food menu with strictly United
States Department of Agriculture (USDA) organic ingredients as well as specific options for
vegans, vegetarians, pescatarians, and gluten free dieters. Restaurants such as Subway have
vegetarian sandwiches, but they are not marketing to vegetarians, vegans, or gluten free
diets. Grazers’ goal is to fill this gap and solve the problem of unhealthy fast-food as well as
special diet needs.
Market Summary
Grazers allows people to eat healthy, while being able to maintain their busy schedules. Our
restaurant offers a wide variety of vegetarian, vegan, as well as gluten free food products to keep
individuals healthy and productive.
On the weekend of October 12, 2013, our team conducted a survey of 57 people. This survey
consisted of questions that included: how often one eats fast-food, how healthy one thinks they
eat, which fast-food restaurants are healthy, do fast-food restaurants cater to people with food
restrictions, all while separating the demographics of age and gender.
Based on our survey, 44% of people ages 18-34 eat fast-food 1-5 times a week, making this
demographic the most frequent fast-food visitors. Of the 57 surveyed, 69%F of consumers have a
healthy diet, but often have concerns that fast-food does not offer healthy alternatives. From our
survey, sixty percent of consumers believe that there is not a healthy fast-food alternative.
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Grazers intends to change the views of these consumers while offering a variety of vegetarian,
vegan, and gluten free meals to keep people healthy and productive.
Target Market
Geographics
Throughout the world, the famous red, white, and yellow color scheme is a highly recognizable
in fast-food restaurant chains. Grazers is not your typical fast-food restaurant. Grazers is a
healthy and special dietary fast-food establishment. Many other fast-food restaurants are in
every place imaginable: upper- and lower-class neighborhoods, busy metropolitan cities, rural
farm towns, and isolated highway rest stops. A single Grazers restaurant will be introduced in
Monterey, California due to the vast variety of our targeted market. Monterey County comprises
of diverse classes, such as the upper class, who tend to be healthier with their diets, the earthfriendly crowds, who share the vegan and vegetarian diet, and the tourists, who enjoy eating at
various kinds of local restaurants.
Monterey is not just ideal for the consumer side of the market, but the supplier side as well. It is
located a short distance from the large agricultural crops in nearby towns, such as Watsonville,
Castroville, Gilroy, and Salinas. Monterey is ideal for targeting its market as well as being able
to purchase local supplies with lower shipping costs. Depending on the feedback and reaction of
our initial location, Grazers will do more geographic, demographic, and psychographic
segmentation. Grazers will be located within a quarter mile off Highway 1, making it easily
accessible for travelers, residents, local business people, and students from Monterey Peninsula
College (MPC) as well as California State University, Monterey Bay (CSUMB).
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(Table 1.1) Displays the age, gender, and frequency consumers dine at fast food restaurant over the course of one
month.
Demographics
The basic demographic criteria that are most associated with Grazers are gender, income, age,
and occupation. These four demographics are the biggest factors on determining our target
market. We conducted a survey to efficiently identify potential customers, which included the
gender and age groups of more than 50 people. This allows for direct insight on who our
customers are and how we will present our product. Based on the information, we were able to
determine that Grazers can incorporate the trends of younger females from ages 18-24 rather
than seniors 65 and older; however Grazers will not be limited to this demographic target (Table
1.1.)
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Psychographics
After narrowing the geographic and demographic segments, the psychographic segmentation
lists the lifestyles and behaviors of people in the Monterey area. As shown in the graph (Table
1.1), we were able to collect data by learning how often people dine at fast-food establishments.
Since the majority who eat at fast-food restaurants ranged from zero to two times per week on
average; we did not let that discourage our behavioral patterns, rather it encouraged our thoughts
that are generally healthy dieters. Health conscious eaters are our biggest target market and if we
are able to offer a convenient, low calorie meal, we will be attractive to a larger public who fit
this lifestyle. According to City–Data, Monterey is a community with 59% of people who have
an annual income of over $50,000, which allows them to support the high quality of nutritious
food that Grazers has to offer ("Monterey, California (CA)…").
The Market
Market Needs
Based on our research, a majority of consumers eat fast-food anywhere from 0–8 times per
month. Many of these consumers eat fast-food as little as possible because it is unhealthy—
which supports the idea of an open market for Grazers. In general, eating healthy requires much
thought, time, and preparation. Grazers’ objective is to provide healthy foods to consumers
where they can save time, while maintaining good health.
After analyzing the results of our survey, a large percentage of both males and females said that
they do not think a healthy fast-food restaurant exists (Table 1.4). We also tested to see
consumer’s food allergies and lifestyles, such as vegan, vegetarian, pescatarian, as well as
allergies including gluten or shellfish. According to our survey, many consumers who have food
allergies (Table 1.2) have a difficult time finding restaurants that support their lifestyle and
allergy restrictions.
Our research shows a gap that displays an opportunity for profit in our business. Since there are
no existing fast-food restaurants that emphasize the organic lifestyle or special diet market,
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Grazers objective is to fill this niche. Grazers differentiates itself from its competitors by
offering USDA certified organic products along with vegan, vegetarian, and gluten free options.
(Table 1.2) Displays the opinions of consumers whether or not fast–food restaurants are limited to customers
options through vegan, vegetarian, and gluten–free options.
Market Trends
Health concerns in the U.S. are growing rapidly in recent years. Many consumers are looking
for healthy alternatives to support their vegetarian, vegan, gluten free, as well as organic food
diets. Currently, 22.8 million Americans have a vegetarian inclined diet (Vegetarian Statistics,
2013) with hopes to eventually evolve into a fully vegetarian diet. While there is a high demand
for vegetarianism in America, the problem lies with Americans having easy, affordable access to
support the vegetarian health food goals.
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(Table 1.3) Displays the number of consumers with food allergies or a special diet consisting of vegan, vegetarian,
or gluten–free.
Market Growth
The health food market can only grow in the future. With the general population having the
desire to better themselves in the means of health food, our product will only increase in sales as
consumers realize how beneficial our product is. Of the 22.8 million people practicing a
vegetarian diet, 5.2 percent have the desire to switch to a fully vegetarian diet in the near future
(Vegetarian Statistics, 2013).
Ninety-seven percent of Americans do not realize that they have some form of a gluten
allergy. As the years pass, an increasing number of Americans will have to shift to a gluten free
diet, which would increase our potential market share (Gluten/Celiac Disease Statistics, 2013).
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“[Citizens] believe less than 10% of eating establishments have a ‘very good’ or ‘good’
understanding of GF diets” (Agarwal, 2005). Although there are some establishments that
recognize the needs for gluten free and vegetarian foods, Grazers hopes to be recognized for
meeting the special needs of consumers.
In recent years, obesity has been a rising problem in the U.S. and everyone hopes to change that.
“Giving consumers the best nutrition information and the best nutritional food options may
empower them to make individualized lifestyle changes” (Agarwal, 2005). A growing number of
individuals are setting out to change their lifestyle, and are only able to by creating their own
home-cooked meals. Grazers hopes to transform the many consumers that suffer from weight
problems and offer them fun and exciting ways to change their diets, without sacrificing great
tasting food.
SWOT Analysis
Strengths
Grazers offers a healthy alternative to stereotypical fast-food. The conventional fast-food
restaurants are unhealthy, for reasons dealing with food preparation, food content, and the
negative image in the public eye. Grazers’ goal is to differentiate itself by moving away from the
negative connotation of fast–food. This can be accomplished through the use of healthy organic
USDA approved ingredients that have true nutritional value. We do not deep fry or carry
products that contain trans fats or artificial ingredients and flavoring. All ingredients are freshly
prepared in the restaurant.
Grazers offers convenience by quickly preparing selected menu items from patrons whether in
the dining room or in the drive-thru. We guarantee that our food will be made to order and in a
timely manner to demonstrate our image as a fast-food restaurant.
To avoid negative, stereotypical connotations of our restaurant, we will purchase ingredients
from suppliers that are as close to the restaurant as possible. Opening our first restaurant in
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California is beneficial and convenient because agriculture is one of the most important
industries in this State. This is valuable because many consumers want to know that they are
supporting their local agriculture market.
Weaknesses
Being a new company, it will be challenging to obtain proper funding to operate Grazers
successfully. Startup costs will be a challenge because of the high real estate prices in downtown
Monterey. Not only will the real estate prices be high, but so will the prices of construction,
employees, food products, and other expenses.
As a new company, it will take some time for people to grasp Grazers’ concept. Grazers has to
face the criticism that it does not carry carnivorous products. Despite its efforts, Grazers has to
accept the fact that it cannot appeal to a certain audience, the meat-eaters.
Due to its high-quality products in organic ingredients, costs will be passed down to the consumer.
This sets the stage for a more-for-more value proposition.
While a more-for-more value
proposition is a strength in our perceived lifestyle, it is a weakness because our prices are going to
be higher than our competitors.
Opportunities
Grazers has a lot of opportunities in the fact that more and more people are becoming health
conscious of the products they eat as well as the increase of food allergies. These opportunities
allow Grazers to thrive in this unfulfilled market. Those with food restrictions, such as Celiac
disease, will make up the innovators and early adopters in the adoption process. By offering
organic foods, Grazers hopes to appeal to the early mainstream adopters. Grazers will attempt
bridge the gap in the adoption process by promoting and providing a truly healthy fast-food
restaurant to the late mainstream.
Threats
As a fast-food retailer, we rely heavily on the availability of organic ingredients. If certain organic
ingredients are not available, this poses a threat to our menu which can lead to frustrated customers.
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These frustrated customers may spread word of mouth that our restaurant is inconsistent and
unreliable.
Other fast-food restaurants may catch on to this healthy fast-food niche that Grazers has developed
and take away our percentage of the market share. The reason why this is threatening to our
business is because other fast-food restaurants have brand recognition that Grazers still needs to
establish.
Competition
We have faced the fact that there is a lot of competition within the fast-food industry; however,
there are a small number of fast-food restaurants that people consider healthy. Based on our
research, (Table 1.4) shows the restaurants that people perceive to be healthy. Of the 57
surveyed, 34 people said that they could not think of a fast-food restaurant they consider to be
healthy.
Restaurants
Number of people
Chipotle
7
Dharma’s
1
Wendy’s
2
Subway
12
Veggie Grill
1
Cannot think of any
34
Grand Total
57
(Table 1.4) Displays the opinions of consumers surveyed on which fast–food restaurants offer healthy food items.
With this information, our top fast-food chain restaurant competitor is Subway. Other types of
competitors include Whole Foods, Trader Joes, and Jamba Juice. Instead of buying a wrap or
other various items that Grazers offers, a customer can go to Whole Foods or Trader Joes to
purchase similar products. Grazers is more convenient than both of these health food stores. We
have determined that Jamba Juice and Subway are going to be our top competitors within the
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fast-food spectrum. Subway is successful at making its products appear to be
healthy. Therefore, that is what its consumers perceive it to be. In reality, many people consume
just as many sugars, carbohydrates, sodium, and overall calories per meal at Subway as they
would at McDonalds. For example, Subway’s foot–long Big Philly Cheesesteak is
approximately 1,000 calories – roughly double what is in McDonald’s Big Mac (Miller,
2013). It is safe to say that the 12 people who considered Subway to be healthy clearly do not
know the facts. Subway consumers are misled by advertisements by the use of athletes, such as
Olympic athlete Michael Phelps, NFL quarterback Robert Griffin III, and Anaheim Angels Mike
Trout.
Subway prices its foot–long sandwiches at only $5. Wraps and meals at Grazers are going to be
more than $5. Our consumers are going to be willing to pay more money for our food because
they are finally going to have access to healthy and organic food at a consumer’s convenience.
As for our other competitor, Jamba Juice, our company has the edge yet again. All of Jamba
Juice’s Classic Smoothies have either frozen yogurt or sherbet in them. A lot of people drink
their Jamba Juice as a beverage with their meal; however, drinking a Jamba Juice is a meal in
itself because it is so high in calories. Jamba Juice does have smoothies that are healthy but it is
up the consumer to make the right choice.
The Product: A Healthy Fast-Food
Restaurant Chain
Product offering:
Our meat-free fast-food restaurant chain offers vegan, vegetarian, gluten-free, and overall
healthy food items that are convenient for consumers. We have a drive-thru in our restaurant
location, which provides further convenience for the consumer. Grazers will be green and white
color schemed. Green was chosen because it is associated with nature, environment, health,
growth, and freshness. White was chosen because it represents new beginnings, cleanliness, and
simplicity (Scott-Kemmis, 2009).
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Our menu is both small and simple. Our menu comprises of two meals specifically for vegans,
four meals for vegetarians, and two meals for gluten-free consumers. There will be one vegan
burger, one gluten-free burger, and two veggie burgers. We offer other various food items such
as salads, store brand mixed nuts, wraps, soups, quiche, and seasonal fruit cups. We wanted our
menu to be separated into vegan, vegetarian, and gluten-free sections; instead, we scrambled our
menu so people do not feel categorized. Our restaurant only purchases food from producers that
are certified organic by the USDA. Not only will our food be USDA certified organic, but we
have a variety of drinks such as organic wheatgrass, tea, coffee, and seasonal fruit
smoothies. Along with these drinks, we will have 100% natural juice and store brand water.
Here at Grazers, we make an effort to be as environmentally friendly as we possibly can. For our
utensils choice, we have decided to use biodegradable and compostable utensils made from
potatoes. Our utensils will be made out of genetically modified organism (GMO) free
potatoes. Our forks, spoons, knives, and of course, sporks will be suitable for both hot and cold
foods. For our cups, we ruled out the most horrible material: Styrofoam. Styrofoam lasts for
many years in landfills; it breaks up and gets into the soil and water. Grazers does not want to be
petitioned against for using Styrofoam cups like Jamba Juice has been in the past. Some people
think that paper cups are more environmentally friendly than plastic cups; however, plastic cups
are more eco-friendly. Paper cups, in some aspects, are even worse than Styrofoam
cups. Although they seem like they are recyclable, they are not. The interior of a typical plastic
cup coated with low-density polyethylene. These cups will just end up in the landfill (Bonanos,
2013). Finally, Grazers gives the consumer the option to purchase a reusable lunch bag for their
meal. If they use their reusable bag, they get a discount off their meal. In addition to the
reusable lunch bag, we will also have a reusable plastic and stainless steel cup option consumers
may use instead of our plastic cups. Customers will also get a discount for bringing in their cup
to use at the beverage fountain.
Grazers creates a comfortable atmosphere with its colors, modern wood furniture, lighting, and
friendly employees.
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Keys to Success
Today’s fast-food menus can be lengthy and unhealthy. Most menus have seasonal specialty
items that come and go. Many menus have too many choices for their consumers. When people
eat fast-food, they typically order the same thing. At Grazers, our menu will be short and simple
for the customers. There will be roughly eight entrees and a couple healthy snacks for an
occasional sweet tooth.
Location is key in having a successful fast-food franchise. If Grazers were to expand from the
Monterey area, locations such as high income suburban areas and college towns would be ideal.
Locations that would also thrive would include strategically placing Grazers in neighborhoods
where health is a large concern such as San Francisco and Santa Cruz.
An employee with knowledge of Grazers’ food is a big part in order to retain customers.
Employees need to know how the food is prepared and where it came from in order to fulfill all
expectations that the customer expects, this will increase the knowledge of customers and
therefore causing them to return.
Critical Issues
Grazers’ unique selling proposition will separate us from any other fast-food restaurant. Grazers
will not be serving any meat, but will offer vegan, vegetarian, and gluten free items. From our
survey, 87% of people believe that they are mostly healthy, but are still eating fast-food on
average of two times a week. Our market will be limited, but the food will be healthy and the
produce will be USDA approved and more customers will see that Grazers satisfies the demand
of being healthy.
Surrounding areas, such as Watsonville, Gilroy, and Salinas will be our main suppliers for our
food. There are limited items that we can purchase locally, so other goods will be purchased
from suppliers within California. We would get our vegetables and cauliflower from the Salinas
farmers, fruits and other produce from Watsonville, and garlic from Gilroy.
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The simplicity of Grazers’ menu will make it easy for customers to choose what they want. This
will affect not only the customers but the employees as well because there will be less menu
items to cook and a less complex menu for employees to understand.
Marketing Strategy
Value Proposition
Grazers’ value proposition is considered a more-for-more due to its positioning and
differentiation. This more-for-more strategy provides the highest quality organic fast-food
ingredients and service with a price to match. We offer upscale meals to meet the lifestyle needs
and demands of this position.
Mission
Grazers’ mission is to unite nature and humanity through quick, easy access to specialized
organic menu items, while utilizing sustainable methods. Grazers: Peace, Love, Organics.
Marketing Objectives
Since Grazers is a new company, it is going to be difficult to pay high advertising costs. During
the first quarter, our establishment is going to implement the trade promotion technique of
advertising. Trade promotion can save the company money and increase brand awareness with
consumers simultaneously. Trade promotion can be used to reward customers for being loyal,
but in Grazers’ case, the technique will be used in order to invite new customers to try our brand.
Grazers will promote our grand opening by advertising before we officially open the doors for
business. We will use banners outside our building in order to build hype in an inexpensive way.
After the first quarter, if our numbers were correctly projected, Grazers will advertise in local
sport fields, gyms, and the radio. Grazers expects to advertise on television, magazines,
newspapers, local Pandora ads, and radio in the future.
As Grazers continues to grow in the market, it is important to grow equally in social media.
Social media will help with promotions and to draw in new customers into Grazers. This social
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media promotion will be especially effective when new products and Grazer restaurants are
introduced. Grazers will be able to reach out to customers in a different geographic to further
reinforce Grazers’ value. New products and stores are necessary as Grazers grows in the market.
New products will help to keep customers interested and entertained while new stores will help
customers recognize the brand in new locations.
Financial Objectives
Our financial objective is to break-even by the start of the second year. According to the breakeven analysis from (table 1.6), in order for this to happen by the start of the second year, we
would need to sell 240,525 units at $11.75.
Target Market
Based on our research, 40% of people surveyed were women ages 18-34. Of the people
surveyed, 28% were women with a food allergy or special dietary needs. This information
displays the target market for Grazers as only five percent of people surveyed that have a food
allergy were male. Women are more self-aware of the nutritional value of food as well as their
own personal health. Grazers aims to target women through the restaurant’s atmosphere and high
quality ingredients. Grazers hopes to team up with places similar to Grazers’ lifestyle, such as
gyms, yoga studios, as well as athletic clothing companies, targeted specifically for women. By
pairing with these companies it will provide promotion for Grazers as well as supporting the
healthy lifestyle that target females live.
Special dietary needs are a growing concern in the U.S. (Vegetarian Statistics, 2013). Grazers
has a specialized gluten-free menu along with vegan and vegetarian options. Our menus target to
those with both food allergies and personal lifestyle diets. These people will think of Grazers as
their own restaurant, tailored especially to their needs. Grazers wants to give vegan, vegetarian,
and gluten-free people a place to meet and build a community-like atmosphere.
Positioning
Grazers’ competitive advantage is being the sole provider in vegan, vegetarian, and gluten-free
fast-food meals. Subway’s popular “Eat Fresh,” gives the consumer a perception of fresh
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ingredients. It is known that Subway contains sandwiches on its menu that have just as many, if
not more calories than McDonalds. Customers perceive Subway to contain healthy, fresh, and
non-processed food menu items. Grazers is able to differentiate itself by its slogan: The grass is
greener on the organic side. Grazers promises to reinforce its perception by offering lowcalorie, organic food, none of which is processed.
Grazers positioning does not end at the image perception, but carries on through customer
relationships. For example, when a customer orders their meal, a Grazers employee will use the
greeting: “Welcome to Grazers, what’s going to be your healthy pick today?” This greeting
reinforces the perception of value customers will receive from any of the food items provided at
Grazers.
Strategies
Grazers targets to vegetarians, vegans, people with Gluten Sensitive Enteropathy (GSE), and
people who want to eat organic and healthy. The demographic target market comprises of
women from ages 18-24. Consumers will choose to eat at Grazers because with our more-formore value proposition, not only will Grazers have the perception of being quality, but
consumers will see and taste the quality in our food. Grazers would like to expand its target
market to young athletic families. Grazers would start at campaign that showed parents of
athletes, coaches, and sport teams going to Grazers after a long day of exercise and competition.
Grazers wants to emphasize that eating unhealthy after exercising does not give a body the
proper nourishment it needs. Grazers provides consumers with healthy food as well aS protein
alternatives that will be appreciated by this new target market.
Marketing Mix
Price
Grazers’ products consist of menu items ranging from entrees to side snacks, to beverages. By
researching prices for all the ingredients that make up our entire menu, we were able to break
down the average cost of each menu item. Our research involved looking at multiple direct store
delivery (DSD) websites, such as Melissa’s, Dole, and Ready Pac Produce. We were able to
determine the various prices of each ingredient that is involved in making up a listed menu
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item. By adding up each item we were able to generate an average prics depending on the
allowed mix of ingredients selected for certain menu items. For example the sum of average
ingredients used to create a wrap totaled approximately $5.20. Our selling price for a vegetarian
sandwich wrap is $7.99. This is a 54% markup in price. To see prices of various ingredients, see
Appendix A. We chose $7.99 as our price because while we still maintain a competitive price,
we also uphold our value proposition of offering a more-for-more healthy meal for our targeted
market.
Distribution
Below is the distribution channel that Grazers has chosen to implement for our company’s
logistics. Instead of the using the direct marketing channel method, we chose to follow the
indirect marketing channel method. By including the wholesaler in our channel, Grazers will
receive better quality products, reliable shipments, and bulk product options. It is vital that
Grazers has a reliable distribution process because it directly affects the quality of our products.
This indirect distribution channel, optimizes our quality assurance. Wholesalers are more
reliable because of the fact that the cold chain process is used to keep food products up to
consumer standards. Below on the left is the indirect distribution channel; to the right is
Grazers’ indirect distribution channel.
Producer
Farms
Wholesaler
Dole, Melissa's,
Ready Pac Produce
Retailer
Grazers
Consumer
Customer
(Table 1.5) Displays the indirect marketing distribution channel
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Marketing Communications
As a new company Grazers will have to develop a strong communication plan. Generally,
advertising can be costly. Grazers plans to save on costs by using word-of-mouth, our restaurant
website, social media, and online blogs. Online strategy is also possible because our young target
market is with the current trends in regards to social media. The internet is an easy way for
vegetarians, vegans, and gluten-free people to communicate, find information, and share food
ideas.
The social media and online strategy comprises of different steps. We will first develop a strong
relationship with bloggers from the area, such as the owner of the website Montereyfoodie.com,
Henry David Thoreau. Selected bloggers will be invited to a cold-opening dining experience, in
order to persuade them to blog about our restaurant. In addition, we will use media accounts,
such as Facebook, Twitter and Pinterest to reach out to our target market.
Marketing Research
Our secondary research comprised of internet data displaying the market trends of vegans,
vegetarians, and allergically prone people. This data allowed Grazers to develop a marketing
plan to fulfill the needs of this niche market. Our secondary data also included the text book,
Principles of Marketing, which supported the understanding of marketing concepts and how they
can be applied in real life situations.
Our primary research data, which consisted of direct surveys of 57 people in both Monterey and
San Luis Obispo communities, further reinforced the market trends. During these surveys, short
interviews were conducted asking the opinions of consumers. These interviews proved that
Grazers was fulfilling a niche market that consumers had a need for. After the survey was
conducted, short conversations took place where people would mention that Grazers would be a
successful business and restaurant. These short conversations revealed to the Grazers’ marketing
team that the idea was strong and to follow through with the business proposal.
Grazers in the Future
Grazers is looking forward to using both primary and secondary data in order to continue its
success in the future. Grazers will measure the brand recognition, reputation, and reception
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through collecting online and offline data. Grazers will use hashtag mentions from Twitter,
comments and stars from Yelp, likes and shares from Facebook, reputable blog sites, and both
online and paper articles in order to continue success. Grazers will have a look at the evolution
of trends in order to adapt to the new challenges and social evolution of food and health.
Financials
Break-even Analysis
To break-even, Grazers will have to sell 340,524 units at an average price of $11.75. This means
that Grazers will have to sell 85,131 units per quarter in order to reach the break-even point by
the beginning of year two.
Break Even Analysis
Sales
Fixed
Total Costs
BEU approx= 340524
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000
Units
(Table 1.6) Displays the break even analysis.
Sales Forecast
Grazers has six different menu categories that are offered to customers. These categories consist
of wraps, burgers, smoothies, salads, sides, and beverages. Grazers will forecasts each menu
category to increase sales from month 1 to month 12 of the first fiscal year. Grazers forecasts to
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sell 45,257 more units of each menu item category in month 12 than month 1, resulting in a
1,200% increase per category. See Appendix H.
Expense Forecast
Grazers estimates to have $1,113,940 in startup expenses. These sunk costs plan to be paid off by
the first quarter of year three. For a detail analysis of the expenses, see Appendix C.
Controls
Grazers aims to control the market through different aspects of social media, product sales, and
distribution of products. The first step is to control the market through social media. Grazers will
track the number of hits and shares of each social media website through tools of analytics.
Results of these tests will allow Grazers to understand what is affective in terms of marketing
and what brings in the most revenue.
It is important that Grazers controls the number of products sold in terms of what is effective and
what products are ineffective. Every month Grazers will take the numbers of each item sold and
at the end of each quarter, will be able to decide whether or not to keep certain products. This
will help to keep funds aligned and not spend money on advertising for unpopular food items.
Grazers will also monitor the popularity of the drive-thru versus the popularity of consumers
dining in the restaurant. This will help for Grazers to run promotional campaigns emphasizing on
the drive–thru and to see if consumers are attracted to the convenience of the product or rather
attracted to the health food in general.
Implementation
Our company has found multiple suppliers online that will be our food distributors for our
restaurant. Grazers will need a loan of approximately $1.1 million to afford the property on
Fremont Street in Monterey. Before we open our doors for business, every meal has to be tested
for quality. After Grazers is open for business, it will partner with other companies in order to
reach out to our target market. Grazers wants to be able to connect with all of its target
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customers through promotion in businesses that promote health. Grazers will post information
about our partner companies in order to maintain strong business relationships. Grazers will
announce on opening day that we will be releasing a blog for our gluten-free, vegan, vegetarian,
and health-food fans. By not releasing our blog right away, it creates hype and anticipation for
our Grazers customers.
Marketing Organization
Marketing
Organization
Advertising
PR
Web
Radio
Press
Social Media
CSUMB Radio
Newspaper
Blogs
Local Pandora
Ads
Articles
Local Sports
Sponsorships
Sales
Promotion
Coupons
Loyalty Cards
"Grazing Hour"
6pm - 8pm
Partnerships
(Table 1.7) Displays the marketing organization
In order to achieve our marketing objective, our business has made the decision to sponsor and
partner with specific organizations to promote sales. Our company sponsors local sporting
events in order to appeal to people who are part of the health and wellbeing lifestyle. We have
promotional coupons inserted in specific health organizations, such as In-Shape gym, local sport
centers, GNC, Vitamin Shoppe, and sporting goods stores.
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Contingency Planning
Foodborne Illness
The mishandling of certain foods can cause foodborne illnesses; therefore, it is vital that
restaurants are cautious in managing its ingredients. In the U.S., millions of illnesses can be
attributed to contaminated foods and approximately 5,000 deaths occur each year according to
the Centers for Disease Control and Prevention (CDC). Contamination can occur in multiple
areas, from packing and transportation to the storage and preparation of foods ("Food safety,"
2013). Grazers will be responsible for managing and educating its employees in order to keep
the public safe from these illnesses. In order to minimize the risk of negative press about our
mismanagement of food, Grazers must follow the Food and Drug Administration (FDA)
guidelines in terms of food safety. Grazers must emphasize the importance of keeping hot food
hot and cold food cold, date labeling on all food ingredients in dry and cold storage, good
hygiene and hand washing, and sanitizing the workplace.
Grazers must take appropriate action if it is responsible for causing a foodborne illness or
multiple foodborne illnesses. It is important that Grazers reports, tracks, and trains others about
foodborne disease outbreaks. Clean, separate, cook, and chill are the top four recommendations
by the CDC to keep food safe ("Tracking and reporting…" 2013).
Food Separation
Food separation is incredibly important, especially for our gluten-free customers. These
customers are putting their trust in our restaurant; therefore, Grazers can only advertise what is
undoubtedly gluten-free. Individuals with GSE would be in serious risk if Grazers’ gluten-free
meals failed to meet the FDA standard of gluten preparation. In order for Grazers to reduce or
completely eliminate risk, the menu must be reviewed, identify ingredients that can be
exchanged and eliminated, eliminate any chance of cross contamination, and train each staff
member. Cross contamination could be the most challenging part for Grazers. Grazers will
reduce risk by using utensils and cooking surfaces that are dedicated to gluten-free food
preparation. Utensils and cookware that are marked with green are going to be solely used for
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gluten-free foods. Grazers is going to go another step further by having a separate dish washing
station for gluten-free cookware and utensils.
Negative Connotations of “fast -food”
For many years now, fast-food establishments have made attempts to attract the increasingly
health-conscious consumer market. For example, 22 years ago Kentucky Fried Chicken changed
its name to “KFC,” which changed the public’s perception of its food. The company believed if
it got rid of the word “fried” in its name, it would also get rid of the negative thoughts that come
with that word, such as unhealthy and disease (Rakowski, 2013).
Fast-food not only has the reputation of being unhealthy, but it also earned it. Fast-food has a
reputation of having a high amount of calories, fat, sodium, and sugar in their products; this can
affect Grazers’ image because it has the label of “fast-food”. It does not help Grazers’ cause
when companies like McDonalds that have promoted its items as something they simply are not.
One of the menu items that McDonalds promotes as “healthy” is quite the opposite. When
comparing the McDonalds Caesar salad to the BigMac with fries, there is not much of a
difference in terms of fat, sodium, and sugar (Southward, 2009). Grazers does not give the
illusion of health as other fast-food restaurants do. Grazers is different because when the word
“healthy” is mentioned, we mean true health, fast. If Grazers faces difficulties with the negative
fast-food connotation, Grazers plans to take action. Our company will launch a campaign in
both magazines and commercials that say exactly what we are. We are a fast-food restaurant
with no blurs or illusions. We are a vegetarian, vegan, gluten-free, meat-free, completely
organic fast-food chain that happens to be highly nutritional and truthfully healthy. We will
emphasize that we are nature’s middleman and we do not need to add any artificial ingredients.
Possible Competition
Out of all of the fast-food restaurants, McDonalds is the most successful in terms of profit.
McDonalds attempted to attract different customers by offering various food items that appeal to
different types of people. Grazers plans to take action if McDonalds introduces vegetarian,
vegan, gluten-free, and organic items. Grazers will launch a campaign, attacking McDonalds,
suggesting that eating vegetarian and vegan at a restaurant that sells meat is not going to have the
variety and passion as Grazers has. Vegetarians and vegans have made their lifestyle choices
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because of restaurants like McDonalds; Grazers will re-emphasize this idea. Grazers has the
advantage over McDonalds in terms of local organic foods as well. McDonalds obtains their
food from wherever, as long as it is the cheapest option. Grazers will emphasize that quality is
what is most important in terms of food.
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References
Agarwal, Sanjiv. Verduin, Patricia. Waltman, Susan. (July 2005). Solutions to Obesity:
Perspectives from the Food Industry.Retrieved
from http://ajcn.nutrition.org/content/82/1/259S.full
Bonanos, C. (2013, February 14). Your paper cup is destroying the world. Retrieved
from http://nymag.com/daily/intelligencer/2013/02/your-paper-cup-is-destroying-the-world.html
Food safety. (2013, November 13). Retrieved from
http://www.healthypeople.gov/2020/topicsobjectives2020/overview.aspx?topicid=14
Kotler, P., & Armstrong, G. (2012) Principles of marketing (15th ed.). Upper Saddle River, NJ:
Pearson.
Miller, T. (2013, May 10). Bad news, subway fans: Your $5 footlong may be less healthy than a
mcdonald’s big mac read more. Retrieved from http://www.nydailynews.com/lifestyle/health/study-subway-healthier-mcdonald-article-1.1340434
Monterey, california (ca) income map, earnings map, and wages data read more:
http://www.city-data.com/income/income-monterey-california.html
Rakowski, J. (2013, October 16). The katrina effect: Brand names and negative connotations.
Retrieved from http://www.copypress.com/blog/the-katrina-effect-brand-names-and-negativeconnotations/
Scott-Kemmis, J. (2009, September 29). Color meanings in business. Retrieved
from http://www.empower-yourself-with-color-psychology.com/color-meanings-inbusiness.html
Southward, B. (2009, March 10). Undressing the mcdonald’s salad. Retrieved from
http://thenakedlabel.com/blog/2009/03/10/undressing-the-mcdonalds-salad/
Statistic Brain. (2013, May 07). Gluten/Celiac Disease Statistics. Retrieved
from http://www.statisticbrain.com/vegetarian-statistics/
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Statistic Brain. (2013, June 06). Vegetarian Statistics. Retrieved
from http://www.statisticbrain.com/vegetarian-statistics/
Tracking and reporting foodborne disease outbreaks. (2013, March 29). Retrieved from
http://www.cdc.gov/features/dsfoodborneoutbreaks/
Vegetarian Times. (2012, January 01). Vegetarianism in America. Retrieved
from http://www.vegetariantimes.com/article/vegetarianism-in-america/
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Appendix
Appendix A
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Appendix B
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Appendix C
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Appendix D (Year One)
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Appendix E (Year Two)
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Appendix F (Year Three)
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Appendix G
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Appendix H