Great American Cookies
in China
Juyi Li (Jerry)-Louis Morris-Jessica Rogers-Alena Tatum
Group 2
Background
 Founded by Michael Coles and partner Arthur Karp
 First store opened in Atlanta, Georgia’s Perimeter Mall in 1977.
 Founded on the strength of a generations-old family chocolate chip
cookie recipe
 Great American Cookies expanded in malls across the country
 Developed a complete line of cookies and brownies, including our
signature Cookie Cake product
 Operates 300 stores in over 40 US states, Bahrain, Chile, Guam,
Mexico, Puerto Rico, Saudi Arabia and the United Arab Emirates.
Strategy-Brief
Flagship Store on Nanjing Road, Shanghai
• High Foot Traffic
• Great visibility
• Marketing and promotional advantages
Food and Drinks Offered
• Chocolate Chip Cookie as signature cookie
• Regionalized favors
• Red Bean
• Green Tea
• Sesame Seed
• Drinks
• Coffee
• Tea
Strategy-Brief
 Hands on baking experience
 An opportunity for kids to participate in making and baking cookies
 Couples and young adults to enjoy a baking experience
 Distribution Hub for Micro Stores
 Advertisement for Micro Stores
 Extended Nighttime Hours
 Company Owned
 New Product Testing
Strategy-Hub Store Design
 Interior view
of flagship
store.
 Aiming to
provide a classic
baking experience
as if the cookies
are baked in the
kitchen of an
American family.
Strategy- Micro Stores
Micro Stores (x6)(Spokes)
 Supplied through Distribution Hub
 No Ovens
 High Traffic Areas
 Normal Hours of Operation
 Franchise/Partnerships
 Limited Menu (products that tailor to local tastes)
Strategy-Industry Facts
 Cookie consumption market size in Shanghai alone is
$98.71 million dollars.
 Total market size
in China is $3.8B
 Growth rate
projected to be
11% annually
50
45
40
35
30
25
20
15
10
5
0
Growth Projection of Frozen Cookie and
Cracker Products Shanghai
15.647 17.41
19.371
21.554
23.962
26.515
29.32
32.423
35.853
39.646
43.841
Strategy-Competition
 Major competition:
 Mrs. Field’s Cookies (American)
 Mr. Donut (Japanese)
 Minor (supermarket based) competition:
 Kraft foods
 Specific Brand, Oreo and Chips Ahoy!
 Venerability of the Business Model
 If Great American Cookie is successful in providing both
a dining and baking experience for its customers, GAC
does foresee our business model being copied
Strategy- Growth
 Focusing in the 1st tier cities in China, i.e. Shanghai and
Beijing
 Providing franchising and licensing rights to Chinese
partners who wish to open Great American Cookie to
their locations in 2nd and 3rd tier cities.
 All locations will retain the chocolate chip cookie as its
signature cookie.
 If the market allows, the 2nd and 3rd tier cities will also
provide a baking experience for customers. However, if
not, we will focus on just selling finished products
Strategy-CFDA
 Great American Cookies will follow China Food and
Drug Administration’s rules and regulations.
 Furthermore, GAC will also never compromise the
quality of our food by importing frozen dough and dry
goods from the United States.
 GAC will employ Jun He Law Firm to ensure that all
food related regulations are met under Chinese Law.
Strategy- Changing Trends
 Growing number of kids eating cookies and deserts
 Growing number of families having disposable income
 Growing number of adults willing to experiment with
western cooking
 GAC will still have to educate the consumer on a dessert
eating culture, however, with the one child policy, young
adults today are much more willing to eat sweeter tasting
treats compared to their counterparts 20 years ago.
Marketing- TM
 Target Market:
 20-35 year old women
 Students
 Financially well-off
 Children between 10-18 years old
 Expats and general tourist trade
 Market taste tests on a semi annual to annual basis
 Surveys of the experience
Marketing- Branding
 Giving the experience of a real American home
 Branding Strategy
 Recognizable logo: American Brown Bear, GAC apron,
Blonde American Sales Girls
 Establish an impression on children
 Product Placement
 TV advertisements

Yao Ming

Zhang Ziyi
Marketing
 Market Entry Strategy
 Increase brand awareness
 Television- cartoon adverts
 Nanjing Road Fridays

Mainly foot traffic
 Intensive Distribution- while still keeping quality
 Importing goods from US, Japan and Australia
Management
 Partners
 Intellectual property
 Employees
 Lack of loyalty
 Handling cultural differences
 Government
 Auntie Anne’s Example
 Doesn’t help enforce litigation claims
 Guanxi
Location
A. Nanjing Road
(Flagship/Distribution Hub)
B. Sichuan North Road (Spoke)
(8 min)
C. Super Brand Mall (Spoke) (14
min)
D. Zhangyang (Spoke) (24 min)
E. Yuyuan Commercial City
(Spoke) (9 min)
F. Hunihai Zhong Lu (Spoke) (10
min)
G. Xujiahui (Spoke) (18 min)
Location
Locations Represent Major
High Traffic Areas
(Shopping, Dinning, Etc…)
Total Route Supply Time (A-G): 1 hour 12 min
Location
Flagship Store
Strengths





High Traffic Area
Located in Key Shopping Area
High Visibility
Takes Advantage of Surrounding Attractions
Provides an Experience and Lasting Impression
Weaknesses




High Real Estate Costs
Large Square Footage Requirement
High Staffing Costs
Business Success Relies in Larger Part on Flagship Customer
Impressions
Location
Micro Stores (x6)
Strengths

High Traffic Areas

Low Overhead Costs

Low Staffing Costs

Takes Advantage of Surrounding Attractions

Distance from Hub

Under Direction of Franchise Partners
Weaknesses

Not as Visible as Flagship Stores

Limited Menu Items

Under Direction of Franchise Partners
Execution
Set Realistic Goals
 6 stores at the end of 3 years
 Expand Beyond Initial Market Within 5 Years
Petition for Government Approval to Enter the Market
 Continue to Dialogue to Stay Aware of Changes
 Secure Proper Licensing/Meet any Regulatory Requirements
Establish Budget
Secure Adequate Funding
Execution
Begin Market Analysis
 Assess Target Market
 Develop Products Based on Local Tastes
Begin to Establish and Develop Strategic Partners
 Local Partners
 Established Businesses
Determine Store Location Availability and Cost
Execution
Secure Distribution Lines
 Frozen Shipment of Goods (Basic Dough)
 Machinery Shipments
 Non Perishable Goods Shipments or In Country Purchase
Assess Workforce Requirements and Availability
Secure Material Sourcing As Required
 Adequate Power & Water
 Food Items
 Potential Manufacture of Some Products in Country
Execution
 Develop Store Design as Required
 Set Date for Grand Flagship Store Opening
 Establish Marketing Campaign
Execution
MONTHS UNTIL FLAGSHIP STORE OPENING
24
Goal Setting
Government Approval
Establish Budget
Secure Funding
Begin Market Analyis
Assess Target Market
Develop Tailored Product Offerings
Establish Pricing Standards
Develop Strategic Partners
Determine Store Locations
Establish Distribution Channels
Assess Workforce Requirements & Availability
Secure Material Sourcing As Required
Real Estate
Power
Water
Food Items
In Country Product Support
Finalize Store Desgin and Layout
Flagship
Mirco Stores
Set Date for Grand Opening
Begin Grand Opening Marketing Campaign
23
22
21
20
19
18
17
16
15
14
13
12
Execution
MONTHS UNTIL FLAGSHIP STORE OPENING
11
Goal Setting
Government Approval
Establish Budget
Secure Funding
Begin Market Analyis
Assess Target Market
Develop Tailored Product Offerings
Establish Pricing Standards
Develop Strategic Partners
Determine Store Locations
Establish Distribution Channels
Assess Workforce Requirements & Availability
Secure Material Sourcing As Required
Real Estate
Power
Water
Food Items
In Country Product Support
Finalize Store Desgin and Layout
Flagship
Mirco Stores
Set Date for Grand Opening
Begin Grand Opening Marketing Campaign
10
9
8
7
6
5
4
3
2
1
0
Supply Chain
 Initial Cookie Dough and Frozen Products Sent From the United
States to Storage Warehouse for Immediate Distribution to Flagship
Store
 Non Perishables Purchased in House or Sent With Frozen ProductsCost Dependent
 Local Adaptations Added to Dough and Desert Products as Needed
 Product Decoration and Design Conducted at Flagship Store
Supply Chain
 Daily Distribution from Hub Store of Finished Cookie/Dessert
Products and other Perishable Items (Soft drinks) to Micro Stores via
Ground Transportation (Conducts Resupply as Needed)
 Bi-weekly Distribution of Non- Perishable Items (Napkins, Straws,
Bags, etc…)
 Cookie Cake Orders Distributed from Hub Store Only. Picked up at
Hub or at Micro Store
 Solicit Customer Feedback
 Place Additional Orders for Products
Supply Chain
GAC Sourcing
Local Sourcing
Local Distributor
Local Taste
Adaptations
Finish
Design
Flagship
Store
Micro
Store
Micro
Store
Micro
Store
Micro
Store
Feedback
Micro
Store
Micro
Store
Start-Up Funding
Table 1
Grand Opening Marketing
5000.00
Travel and Living Expenses While in Training 20000.00
Cookie Ingredients
10000.00
Other Opening Inventory
15150.00
Architectural Fees
6750.00
Furniture, fixtures Equipment & Décor
96750.00
Signs
6000.00
Prepaid rent & Security Deposit (3 months)
8010.00
Leasehold improvements
68200.00
Utility Deposits
3000.00
Professional Fees
6000.00
Computer System
5500.00
Business Licenses, permits, etc
2500.00
Insurance (3 months)
3500.00
Additional Funds (3 months)
12000.00
Total Startup Capital
268360.00
GAC Financial Position
 Revenues in excess of $6million for the past 3 years.
 Multi-million dollar net income and cash flows for the
past 3 years
 Ratios
 Recent acquisition of NexGen
Projections
Great American Cookies-China
Proforma Income Statement
Year 1
Revenue from Franchise Fees
Revenue from Royalty Fee
Sales
COGS
Net Sales
Total Revenue
Advertising
Labor
Rent
Insurance Expense
Utilities
Depreciation Expense
TOTAL OPERATING EXPENSES
Operating Income
Other Start-up Expenses (Prior to Opening)
Interest
Earnings Before Taxes
Taxes
NET INCOME
393750.00
111037.50
282712.50
282712.50
5654.25
107493.75
32040.00
14000.00
12000.00
19350.00
190538.00
92174.50
134460.00
10734.40
(53019.90)
(18556.97)
(34462.94)
Year 2
45000.00
20355.30
413437.50
116589.38
296848.13
362203.43
5936.96
112868.44
33642.00
14700.00
12600.00
19350.00
199097.40
163106.03
Year 3
45000.00
42746.13
434109.38
122418.84
311690.53
399436.66
6233.81
118511.86
35324.10
15435.00
13230.00
19350.00
208084.77
191351.89
10734.40
152371.63
53330.07
99041.56
6734.40
184617.49
64616.12
103993.63
Projections Cont.
Great American Cookies- China
Projected Statement of Cash Flows
Great American Cookies-China
Proforma Balance Sheet
Year 1
Assets
Cash
Inventory
Total Current Assets
Furniture/Fixtures
Accumulated Depr
Net Furn Fixtures
Total Long Term Assets
Total Asets
131347.07
25150.00
156497.07
96750.00
(19350.00)
77400.00
77400.00
233897.07
Year 2
Year 1
Year 3
Operating Activities
Net Income
Change In Inventory
Depreciation Expense
Cash Flows from Operating Activities
148481.12
26407.50
174888.62
96750.00
(38700.00)
58050.00
58050.00
232938.62
102144.38
27727.88
129872.26
96750.00
(58050.00)
38700.00 Investing Activities
Purchase of equipment
38700.00
Cash Flows from Investing Activities
168572.26
Financing Activities
Change in Notes Payable
0.00 Cash Flows From Financing Activities
Liabilities
Note Payable
268360.00
168360.00
Members Equity
Total Liabilities & Members Equity
-34462.94
233897.07
64578.62
232938.62
Change in Cash
168572.26 Beginning Balance
168572.26 Ending Balance
Year2
Year3
-34462.94
-25150.00
19350.00
-40262.94
99041.56
-1257.50
19350.00
117134.06
103993.63
-1320.38
19350.00
122023.26
-96750.00
-96750.00
0.00
0.00
0.00
0.00
268360.00
268360.00
-100000.00
-100000.00
-168360.00
-168360.00
131347.07
0.00
131347.07
17134.06
131347.07
148481.12
-46336.74
148481.12
102144.38
Conclusion
 Location Selection
 Tailored Local Flavors
 Dinning Experience and Memories
 Partnerships
 Supply Chain
 Proper Execution
Questions