Pistachios and Pirates Ben and Jerry Plunge into Purple and Gold Prepared for Joseph Campbell COO of Ben and Jerry’s South Burlington, VT 05403-6828 Prepared by JZSA Jordan Harris Zachary Nunn Shannon Wenger Alexandra Cosimeno Greenville, NC 27858 December 2, 2013 JZSA 319 OCC Campus Drive Greenville NC 37858 December 2, 2013 Mr. Joseph Campbell, COO Ben & Jerry’s Homemade, Inc. 30 Community Drive South Burlington, VT 05403-6828 Dear Mr. Campbell: As you requested in August, we have prepared this document to outline our recommendations and any vital information regarding Ben and Jerry’s expansion into Greenville. Throughout our document several important factors are covered that will guide you through your decision for expansion into eastern North Carolina. To help us with your recommendation we looked into any background and history of Greenville as well as food health law and culture in the area but most importantly any threats to the project. Our research has led us to the conclusion to recommend the expansion of the Ben and Jerry’s family into Greenville, NC. JZSA used a wide variety of sources for our analysis but, the most notable were company policy as stated on the website and Forbes. JZSA is very appreciative for the opportunity to complete the research into the Greenville, NC area. If you have any further questions or recommendations, feel free to contact us (252-8576309, info@JZSA.com) and we will further communicate about Ben and Jerry’s exciting new opportunity in Greenville, NC. JZSA would be more than happy to conduct any further research into the project or any other opportunity through the company. We look forward to working with you again. Sincerely, Shannon Wenger JZSA Team Member i Table of Contents Letter of Transmittal .............................................................................................................................................. i Executive Summary............................................................................................................................................. iii Introduction ............................................................................................................................................................ 1 Purpose and Scope ............................................................................................................................... 1 Assumptions ........................................................................................................................................... 1 Methods.................................................................................................................................................... 1 Company Background ......................................................................................................................................... 1 Menu .......................................................................................................................................................................... 2 Marketing and Advertising ................................................................................................................................ 2 Greenville Overview ............................................................................................................................................ 3 Population ............................................................................................................................................... 3 Demographics ......................................................................................................................................... 4 Average Household .............................................................................................................................. 4 Taxes and Permits ................................................................................................................................ 4 Summary .................................................................................................................................................. 4 Competition ............................................................................................................................................................. 5 Survey ........................................................................................................................................................................ 5 Location .................................................................................................................................................................... 5 Criteria ....................................................................................................................................................................... 6 Franchising Requirements ................................................................................................................... 6 Conclusions and Recommendations ............................................................................................................. 7 List of Illustrations Figure 1 Greenville, NC population Growth ............................................................................................... 4 Figure 2 Greenville NC Images 201-205 E. 5th St. Renderings ............................................................ 6 Survey Results ........................................................................................................................................................ 9 ii Pistachios and Pirates Ben and Jerry plunge into Purple and Gold Executive Summary To continue to be a competitor in the frozen treat industry, Ben and Jerry’s needs to expand into Greenville, NC. Greenville is a steadily growing town with the need for more options than one major ice cream competitor. Many of the comparable competitors of frozen yogurt in our desired location are thriving further proving of the demand for frozen indulgence.. Greenville is on at an incline in population and average household wealth. Ben and Jerry’s could thrive in the young and active culture found in the university-centered town. The workforce in the area is large with the large number of college-aged students in as little as a mile for our proposed location. While, most young adults do not have much disposable income Ben and Jerry’s affordable prices and fun atmosphere will lure students in. To ensure a successful expansion, JZSA recommends the following: 1. Ben and Jerry’ should express interest of franchisee in Greenville area. a. Educate franchisee of corporate culture as well as Greenville. b. Assure that franchisee is equipped with necessary requirements. 2. Ben and Jerry’s should begin purchase of land in Downtown Greenville. a. Begin bids on highly sought after units across from East Carolina University’s campus. b. Apply for necessary food and work permits. c. Register for tax breaks associated with new business growth in Greenville area. 3. Opening of new branch a. Begin extensive advertising near campus b. Hire lower-class students for longevity of training c. Aim to open doors mid-August iii Introduction JZSA is interested in bringing a Ben and Jerry’s Ice Cream shop to the Greenville area. The purpose of this report is to provide information to show that Greenville, North Carolina is an ideal placement of a Ben and Jerry’s franchise. Purpose and Scope There is currently no ice cream store within a 2-mile radius to the East Carolina University campus. JZSA seeks to fix that problem and provide students with a superior product that caters to the needs of those students. This report will outline and explain in detail the steps JZSA will take to put a Ben and Jerry’s franchise location in Greenville, North Carolina. It will discuss the advertising, culture, taxes, and location choice, costs, research, surveys and implementation plans of our group. Assumptions The recommendations that we make are based on the assumption that the economy in Greenville will continue to thrive as it has it recent years. We are also assuming that East Carolina University will continue to be a large part of the way the city grows and expands. In addition, we are assuming that Ben & Jerry’s has a good name brand and will continue to be competitive with other ice cream and frozen yogurt stores. Methods The information in our report comes from online sources. We found several good sources, but the best information that we obtained came from the Ben & Jerry’s Franchise Informational Package and Forbes Magazine’s article about Greenville, NC. These resources have given us much useful information on which we have based our recommendations. Company Background Ben and Jerry’s was founded in Burlington, Vermont in 1978 by two lifelong friends Ben Cohen and Jerry Greenfield. The company’s first franchised shop opened in 1981 in Shelburne, Vermont. The company always put customer happiness in the forefront in 1979 they started the first annual Free Cone Day, a tradition that continues to this day. In 1984 Ben and Jerry’s went public allowing people to purchase shares and invest in the company. By 1985 they established the Ben and Jerry’s foundation that uses 7.5% of the company’s annual pre-tax profits to fund community-focused projects. In 1987 Ben and Jerry’s started naming their ice cream after famous people, in this instance it was the Cherry Garcia named after Grateful Dead guitarist Jerry Garcia. In 1988, President Ronald Reagan named Ben and Jerry’s “Small Business Of The Year”. By 1994 Ben and Jerry’s had gone international, beginning to sell pints in the United Kingdom. Ben and Jerry’s remains up to date and very socially conscious to this day by supporting causes like Fair Trade, Rock the Vote, and Say No to Cloning. Ben and Jerry’s have a very strict no clones’ policy only using products from cows on approved farms that have a zero tolerance policy for animal cruelty. 1 Menu Ben and Jerry’s main product is their ice cream but in the stores they offer a variety of products, which will be discussed below. Scoops and Cones: These allow customers to either choose a cup or a cone for any one of the around 30 flavors currently offered in scoop shops. The flavors are changed out seasonally or as new flavors are introduced. A new addition to the Ben and Jerry’s shops is Greek Frozen Yogurt. Along with ice cream and frozen yogurt guests can also choose no sugar added ice creams or sorbets. Sundaes: Ben and Jerry’s offers guests the opportunity to enjoy a handful of different sundae choices, which can be a scoop of their favorite ice cream with toppings, on a brownie, or even in a banana split. Smoothies: There a multitude of flavors that Ben and Jerry’s offers in their smoothies including but not limited to: Blueberry Cream, Mixed Berry, and Super Pomegranate. Shakes: Ben and Jerry’s scoop shops can make a milkshake out of any of their signature Ice Cream Flavors to cater to guest’s desires but they also have some signature flavors such as Mint Cookie, Caramel Macchiato and Addicted to Chocolate. Hot Stuff: Ben and Jerry’s offers Coffee, Espresso drinks like specialty coffees, and Hot Chocolate. Ben and Jerry’s Joe: Ben and Jerry’s offers a few frozen drinks like Iced Joe, Frozen Lattes, a Shot of Joe which is a shot of espresso in any milkshake. Marketing and Advertising To market our Ben and Jerry’s franchise we will leverage marketing strategies and techniques employed by other successful franchises. Student discounts would be an area we would love to explore. Given the proximity to campus it would be beneficial to offer students an incentive to visit such as a 20% discount on specific days of the week. Tuesdays would be the day we choose because statistically Tuesdays are the least profitable day of the week for most businesses. Along with the student discount we would offer a student loyalty card that would allow students who frequent the store a set number of times to be eligible for a discounted or free item of their choosing. Free Cone Day is a national campaign promoted each year by Ben and Jerry’s in which guests can choose a scoop of their favorite ice cream to go in a cone all for free. This event promotes traffic to the store to show off the location, introduce new consumers to the store and get guests to try new flavors they may not have wanted to pay to try before. JZSA would like for our franchise to be a pet-friendly location. Many people in Greenville are pet owners and there is a dog park half a mile down Cotanche St. So people walking or driving back to their apartments may want to stop and get a snack, we would like to have outside seating so people can bring their dogs and sit down and enjoy. Campus events are a good way to get people in the doors; we would like to maybe set up a small booth during orientation, fairs, and the schools biggest outdoor event, Barefoot on the Mall. Barefoot on the Mall is outside all day fair/gathering for East Carolina University students. There are music performances along with student events. The event takes place in April every year, when the weather is getting warm enough for people to want to get ice cream. So our franchise 2 would offer small free samples, or offer coupons for a discount if students want to walk across the street to go visit the actual location. To advertise our franchise we would like to use both print and non-print media. For print media we would like to purchase ad space in both The East Carolinian and The Daily Reflector, the two major newspapers in Greenville. Students pick up the newspaper every Tuesday and Thursday on campus so this would be a good place to advertise our before mentioned Tuesday student discount. We would like to put coupons in the numerous coupon books issued around town. The major one would be the UBE bookstore’s coupon book that has multiple small coupons for all the major businesses in Greenville; this is a flat rate investment that gets the name of our business into people’s mind. Flyers around campus are a little outdated but we would like to post some in public speech areas around the time of our grand opening. Online we would like to set up a website that will have the hours of our business, our current flavors, promotions, and job opportunities. A designated member of staff will maintain this because an up-to-date webpage is an important asset. We would like to integrate the website with both a Twitter and a Facebook page. The Twitter page would tell people about daily specials and flavors of the day. We can offer incentives to the numerous East Carolina University Twitter accounts to do some promotional tweets for us given their reputation and considerable visibility in the East Carolina University Internet community. A Facebook page would be useful for reaching both older and younger markets given that middle age adults have recently taken Facebook by storm, this will help us reach families a little bit easier. An e-mail club would be useful remind people once a month about our business and offer an incentive to get them in the doors. Greenville Overview Greenville, NC has been named as one of the best places in America to start a small business according to Forbes. In addition to being named one of the best places to start a small business, Greenville has also been named in the top 50 in other areas such as cost of doing business, job growth, and education, all by Forbes Magazine. Population Greenville, NC’s population has grown steadily every year since the 1990’s as shown by Figure 1. As of 2012, Greenville’s population was 87,242, which is an increase of over 39% since 2000, much higher than the state average of 18.46% as well as the national average of 9.71%. The population density is 2,391 people per square mile. Of the 87,242 people that currently reside in Greenville, over 27,000 people are currently enrolled in East Carolina University with 5,491 students living on campus. 3 Figure 1: Greenville, NC Population Growth Demographics Since 2000, there has been over a 54% increase in the number of persons age 0-4, a 32% increase in the number of persons age 5-17, a 40% increase in the number of persons age 18-64, and a 32% increase in the number of persons age 64-over. Over 90% of the population lives in households with 13% being married and over 20% having at least one child (Greenville Population and Demographics, 2012). The unemployment rate as of 2012 was 9% and the job growth rate is at 3.3%. Average Household The estimated median cost of a house in Greenville was listed as $156,000 (Greenville, NC, 2013). The estimated average household income in 2011 was $38,880, which is up nearly 200% from $20,00 and the average size of a household was estimated to be 2.18. Taxes and Permits There is not a definitive list of permits and taxes that will pertain to a Ben & Jerry’s that opens in Greenville, but some of the taxes and permits that’s are required are the NC Sales Tax, NC Franchise Tax, Health Permit, Privilege License, and Zoning License. The sales tax in Greenville, NC is listed at 7% while the franchise tax is listed at $1.50 for every $1,000 of sales. Summary Although the unemployment rate is higher than that of the national average, Greenville is continuing to grow every year with more and more students enrolling at East Carolina University. JZSA believes that with the growing number of students at ECU, there will be plenty of available students to not only supply Ben & Jerry’s with plenty of customers, but to also supply them with a very stable workforce if necessary. 4 Competition Greenville does not currently offer a wide variety of ice cream shops to the local residents. There are several frozen yogurt companies but only two true ice cream stores, Baskin Robbins and Cold Stone Creamery, neither of which are located within walking distance of East Carolina’s campus or Greenville’s downtown area. Greenville offers residents several varieties of frozen yogurt such as Peppermint’s Frozen Yogurt, Loreta’s Frozen Yogurt, Tutti Frutti Frozen Yogurt, and Sweet Frog Premium Frozen Yogurt. All of these frozen yogurt stores allow customers to pick a flavor of yogurt and add toppings of their choice which is then weighed and tends to be a more costly choice of dessert. Peppermint’s and Loreta’s Frozen Yogurt are both relatively small stores with not much name recognition. They are privately owned and are only offered in Greenville so the strength of their brand is relatively weak. Tutti Frutti and Sweet Frog Premium Frozen Yogurt are both chains of frozen yogurt but they still do not have the brand recognition of Ben & Jerry’s. These frozen yogurt stores will be some of the main competition of Ben & Jerry’s due to the wide variety of toppings they allow customers to add on. The only ice cream stores available in Greenville are Baskin Robbins and Cold Stone Creamery. Both of these companies are large franchises and offer customers a wide variety of flavors. Baskin Robbins is famous for their “31 Flavors” and was recognized as the top ice cream franchise in the United States, while Cold Stone Creamery, which is in their 25th year of business and has been named as one of the super premium ice cream concepts in the world, allows customers to choose a flavor of ice cream and then add toppings, which are then mixed all together. Baskin Robbins is not as big of a competitor due to their location, which is closer to Pitt Community College and not very accessible to students living on or around campus. Cold Stone Creamery will be one of our main competitors as well as the frozen yogurt companies due to the wide variety of toppings they offer. Cold Stone Creamery is relatively closer to East Carolina’s campus, but is still more than a walking distance from the downtown area and on campus living options. Survey JZSA took 30 surveys to tow opposing points in town, one to the campus side and one to the medical district. We had more positive results in the educational district. More students in the age range of 18-22 expressed interest in an environment friendly and organic household ice cream name. More students’ also expressed increased interest over middle-aged survey takers in an outside eating area and better quality ingredients in the additional comment area. Location While Greenville offers many options in location through our surveys and culture analysis we have decided the most logical location would be close to campus but still close enough to be reached from non-students. A new development is being built within a block of campus and the town of Greenville is currently offering incentives and rebates to lease or own in this upcoming building. The upper deck will be allotted to parking and apartments while the lower deck will be 5 retails stores of varying sizes. We would be interested in opening a store around 500 sq. feet ideal sizing for the population and needs. This will be located on the northeastern corner of the intersection of E. 5th St. and Cotanche St. in downtown as seen in Figure 2. Proposed rent for this location would range from $1,000-2,000. Figure 2 Greenville NC Images 201-205 E. 5th St. renderings Criteria JZSA LLC has established a thorough criterion that need to be promising before we initiate an affirmative recommendation about Ben & Jerry’s. This includes a company background, opportunities and competitors, location, survey, advertising and marketing strategies, and franchising requirements. Franchising requirements Becoming a Ben & Jerry’s franchisee comes with a lot of steps and expenses. You have to take one “scoop” at a time. People who have at least two years of management experience as a General Manager, a college degree, a strong credit history and a net worth of $350,000 (with $100,000 in liquidity), are definitely qualified to start up a franchisee with Ben & Jerry’s. They will also need to devote 100% of their time and be involved full-time in developing their business. There is a franchise fee of $37,000; half of that is paid once the franchisee signs the Preliminary Agreement, and the other half is paid when the Franchise Agreement is signed upon having an approved location. The Preliminary Agreement is signed within thirty days after the Franchisor offers the franchisee a formal approval. The Franchise Agreement has an initial tenyear term and the franchisee is able to renew the agreement with a $15,000 fee. Once you find an approved location, the franchisee must choose between what types of shop he/she wants its business to be. This can range from full-size storefronts (approximately 750 to 1200 sq. ft.), to smaller walk-up counters (450 to 650 sq. ft.), or a kiosk (100 to 200 sq. ft.). However, each type of shop comes with its own start-up costs and other expenses that vary dramatically. Full-size 6 shops range from $198,000 to $395,800. In-Line Scoop Shops range from $161,600 to $266,800. Lastly, Kiosk shops ranges from $119,800 to $233,800. As mentioned before, additional ongoing expenses such as rent, payroll, royalty, utilities, supplier payments, and other underlying costs are included as well. About six weeks prior to the owner’s Grand Opening of their store, Ben & Jerry’s Operation Training & Support Team provides an 8-day Scoop University training program to all franchisees at the headquarters in South Burlington, Vermont. This will help them gain access to exclusive information about training manuals, recipes, and operating standards. They will also learn about customer service skills, public relations, human resources, cash handling procedures and other shop operations to help them get more acquainted with their business. Conclusions and Recommendations Greenville’s young and constant growing population qualifies Ben and Jerry’s expansion into the area. With Greenville, NC offering such progressive tax benefits and incentives for business to come into the areas JZSA believe now is the time to leap into action and take advantage of the growing economy in the area. We believe Greenville is far over due for a franchise specializing in organically grown and harvested frozen treats. We recommend the following process regarding it’s opening to ensure a successful expansion: 1. Ben and Jerry’ should express interest of franchisee in Greenville area. a. Educate franchisee of corporate culture as well as Greenville. b. Assure that franchisee is equipped with necessary requirements. 2. Ben and Jerry’s should begin purchase of land in Downtown Greenville. a. Begin bids on highly sought after units across from East Carolina University’s campus. b. Apply for necessary food and work permits. c. Register for tax breaks associated with new business growth in Greenville area. 3. Opening of new branch a. Begin extensive advertising near campus b. Hire lower-class students for longevity of training c. Aim to open doors mid-August 7 References "Baskin-Robbins: About Us." Baskinrobbins.com. Web. 12 Nov. 2013. "Ben and Jerry's." Franchise Direct. N.p., 2012. Web. Nov.-Dec. 2013. "Ben & Jerry's Ice Cream." Ben & Jerry's. N.p., n.d. Web. 01 Dec. 2013. "Financial Services: Privilege Licenses." City of Greenville, NC. Web. 25 Nov. 2013. "Greenville Population and Demographics (Greenville, NC)." Greenville Population and Demographics (Greenville, NC). Web. 11 Nov. 2013. "International Opportunities." International Locations and Franchise Opportunities Cold Stone Creamery. Web. 12 Nov. 2013. "Timeline." Ben & Jerry's. N.p., n.d. Web. 02 Dec. 2013. "Sales and Use Tax Rates Effective April 1, 2012." North Carolina Department of Revenue. Web. 25 Nov. 2013. Shoneman, Bianca. "Community Smith." 201-207 E. 5th St./ 417 CotancheSt. Uptown Greenville INC, n.d. Web. 8 Survey Results: Favorite Ice Cream Shop Ben & Jerry's Cold Stone Dippin Dots Other Which Dairy Product Do You Prefer? Ice Cream 7% 17% Frozen Yogurt 14% 46% 30% 86% Favorite Flavors Gender Male Female Chocolate Vanilla Butter Pecan Cookie Dough Cookies & Cream Other 27% 17% 3% 30% 10% 73% 3% 37% 9