Transcript Australia US

Let’s Make a Deal!
“Modesty, casualness, and an air
of nonchalance are characteristic
attitudes in Australian business
culture.”
Nukarn Suwatikul
Amit Shah
Brought to you by:
Don Ta
Lloyd Wellington
Hazem Yassin
Outline
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Mission & Overview of the Wrap
Core Competencies
Country Profile
Economic Summary
Australia-US Comparison
Investment Incentives
Business Set-Up Checklist
Australian Food Industry Characteristics
Marketing Strategy
Financial Strategy
Mission
The company's goal is that of financial success through a multifaceted
approach. We will meet this goal while trying to consider:
1) the effect of our products on the health and well being of our
customers (and our staff),
2) the impact that our business practices and choices will have on the
environment, and
3) the high quality of attitude, fairness, understanding, and
generosity between management, staff, customers, and vendors.
Awareness of all these factors and the responsible actions that result
will give our efforts a sense of purpose and meaning beyond our basic
financial goals.
Overview
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In 1996, fast, fresh, healthy food was difficult to find
in Boston.
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These wildly popular food concepts existed en masse
in California, but were far and few between in
Massachusetts and other parts of the country.
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The Wrap was launched as a restaurant that featured
wraps, burritos, smoothies … in a friendly, casual
environment.
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Building and running the first location helped the
management team identify the competencies that are
now at the core of The Wrap.
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Success required three key ingredients: always being
fresh, friendly, and fast.
Core Competencies
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A unique recipe for success in hand …
Bringing the healthy concept to more Bostonians.
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Penetrating the markets of and eventually
acquiring competing businesses.
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Fast menu that focused on simplicity,
mouth-watering recipes, and custom-ordering.
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Keeping the focus on our customers - as long as our customers continue
to give thumbs up, The Wrap will slowly expand to communities that
value its food and its services, as well as its desire to give back to its
neighbors.
Famous
"Top 40 Bangs
for the Buck"
--Zagat 2003
Burritos Nutritional Fact Sheet
New Location
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P. Sherman 42 Wallaby Way Sydney
Country Profile
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Prime Minister: John Howard.
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Independence: January 1, 1901
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Population: 19,731,984
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Total area : 7,687 Sq. Km
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Major Cities: Sydney, Melbourne, Canberra (Capital), Brisbane, Perth, Adelaide
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Languages: English, native languages
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Ethnic Groups: Caucasian (92%), Asian (7%), aboriginal and other (1%)
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Religions: Anglican (26%), Catholic (26%), other Christian (24%), non-Christian (11%)
Economic Summary
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Currency: Australian Dollar ($A)
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Market Exchange Rate: US $1=$A1.34
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GDP per Capita US$: 30, 695
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GDP Growth Rate: 3.7%
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Inflation Rate (Consumer prices): 3.1%
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Unemployment Rate: 5.7%
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Major Trading Partners: Japan, other Far East, European Union, United States
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Major Exports: crude materials, food & live animals, mineral fuels & lubricants
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Major Imports: machinery & transport equipment, manufactured goods, & chemicals
Economic/Industrial Trends
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Traditional strength of manufacturing employment is declining, however it
remains strong.
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Key employment areas - wholesale trade, finance, business services, health
insurance, property and community services.
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Growth areas – retail trade, construction, restaurants, transport, storage,
cultural and recreational services
Employment Trends
Australia-US Comparison
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Total area:
Population in millions:
GDP per Capita US$:
GDP Growth:
Unemployment Rate:
Corporate Income tax:
Highest Personal Income tax:
Quality of Life:
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Primary Industries
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Australia
7687 Sq. Km
20.1
30,695
3.7 %
5.7%
30%
47%
9.35
US
9629 Sq. Km
293
39,862
3.2 %
5.4 %
40%
35%
8.11
Agricultur
e
Food
Forest
Sea food
Wine
Industry
F
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n
c
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a
Age Groups
Population
Density
Investment Incentives
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Australia gives investors a competitive and
quality choice in the Asia-Pacific region
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Average business costs in Australia. is
around 8 to 9 per cent below those in the US.
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Australia is ranked the second most cost competitive
country for business operations in the industrialized
world.
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Cheap real estate: Sydney is approx. 66% less than
in London, 46% less than in Tokyo, & 11% less than in
New York.
More Incentives
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Australia's transport and logistics systems provide a mature,
efficient and cost effective means of delivering products and
services.
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Cost competitiveness coupled with a superior workforce and a
low overall cost of living implies that the commercial
advantages of doing business in Australia are excellent.
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Australia's overall tax burden as a share of GDP is significantly
lower than its western competitors.
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Level of corruption is among the lowest of OECD
(Organization for Economic Cooperation and Development)
member nations.
Business Set-Up Checklist
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Feasibility Study
Location & Premises
Licenses and Permits
Business Planning
Finance/Funding
Business Structure
Taxes
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Human Resource
Business Documentation
Budgeting & Finance Control
Marketing & Advertising
Target Industry Characteristics
Legal aspects
Registration & Insurance
Australian Cuisine At a Glance
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Traditionally-based on English cuisine e.g., roasts, grilled
chops, other forms of meat, accompanied with
vegetables (mashed potatoes, beans, peas, and carrots)
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Currently– very diverse, reflective of its multi-cultural
influences. South East Asian, Greek, Lebanese, and
Italian foods are very common.
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Australian Government, through health initiatives and
cultural marketing efforts, is promoting a push towards
healthy food choices.
Australia’s Fast-Food Industry
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Australian fast-food market was US$6.2billion in 2003
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Market is an Oligopoly, with independent outlets e.g.,
McDonald’s, Burgers Burritos Nachos and Tacos
(BBNT), Subway, KFC, Pizza Hut, Burger King
(a.k.a. Hungry Jack’s) accounting for 70.5% of total
number of fast food outlets
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McDonald’s is the market leader in Australia, with a
market share of 34.7%. This figure is a decrease from
its 2002 market share.
Australia’s Fast-Food Industry – Cont.
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Fast food market in Australia is predicted to
grow about 17% to $7.25 billion by 2008.
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Takeaway foods favorites in Australia are:
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meat pie
fish & chips
sausage rolls
Marketing Strategy
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“Fresh-Friendly-Fast”
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Fresh – fresh ingredients make a tasty product.
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Friendly- friendly atmosphere suits our customer base and our work culture.
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Fast- fast service to maximize our clients’ lunch and relaxation time.
But Also “Healthy-Reasonable”
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Healthy- we serve fast, healthy food to fit the lifestyles of our customers.
Price- quality offerings at reasonable prices has and will enable us to increase our
market share.
Marketing Strategy
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Our Customers…
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Professionals and young adults –
our stores are typically found
close to business districts and
universities.
Everyone that shares our
ideology of a tasty, healthy meal
at an affordable price.
Marketing Strategy
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Promotions and Advertising Strategy
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Our theme is : “Fresh-Friendly-Fast”
Primary medium for advertisement will be the radio.
Radio spot and jingle will create brand recognition.
Special promotions will be advertised in
newspapers. We will also do flyers and coupons
periodically.
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Frequent customer reward card.
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We will also sponsor health events.
Setup Costs of a Typical Deli Franchise
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Investment required: $100,000-$200,000
 Includes $60,000-$80,000 towards furniture/fixtures
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Initial Franchise Fee: $10,000-$25,000
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Royalty Fees: 6-8%
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Advertising Fund: 3.5%-4.5%
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6-8 employees
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2-4 weeks of management training
Franchise Costs in Australia
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Investment Required: $125,000
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$80,000 in Equipment, Furniture & Fixtures
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Initial Franchise Fee: $15,000
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Royalty Fees: 6%
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Advertising Fund: 4%
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4 weeks of management training
Breakdown of Initial Investment
Franchise Fee
$15,000
Equipment, Plumbing & Smallwares
$30,000
Millwork, Fixtures/ Signage & Graphics
$30,000
Leasehold Improvements
$20,000
Start-up Supplies & Inventory
$10,000
Training
$1,000
Opening Advertising
$2,000
Other Prepaid Expenses
$2,500
Legal & Accounting Costs
$500
Insurance & Permits
$1,500
Miscellaneous Expenses
$1,400
Additional Funds - 3 months
$20,000
First Month Rent & Deposit
$6,100
Total Investment Cost
$140,000
Industry Derived Values
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Broken down from annual sales
 25% target profit
 Ranges from 20-30%
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75% expenses
 25% dedicated to food and paper costs
 Range from 70-80%
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The value of the business is typically sold 3-4 times the annual profit
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Expect positive return on investment after 4-5 years
Australia Investment Strategy
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Use current retained earnings of $400,000 to penetrate the growing
health conscious Australian fast food market
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Establish one store in each of the largest two cities:
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Sydney and Melbourne
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Aggressively develop the business and create franchising opportunities
Australia Investment Strategy
4.
Franchise at a pace of two locations annually
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Sell the Melbourne store after the 5th year
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Maintain the Sydney operation as a franchisor-owned location where
management training and franchisee consulting takes place
7.
By the end of the 10th year, comprise of at least 20 franchisee-run
stores while achieving a positive present value return and to further
expose
as an expanding international franchise opportunity
1) Melbourne Acquisition Target
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Asking Price: $52,238 US
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Annual Sales of $111,940 US
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Low start-up capital required as the
majority of the furniture/fixtures can
be carried over
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Situated in the heart of the city’s business and residential population –
considered one of the best locations in the Melbourne Central Business
District
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New local university opening soon
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High visibility in an upscale shopping plaza
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Annual lease is US$25,224 for 1,200 sq ft
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Total acquisition and transition start-up costs is less than US$100,000
2) Establish
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in the Prime Darling Harbor area in Sydney
Darling Harbor
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Houses Sydney's convention and exhibition
centers, as well as several major tourist
attractions, shops, restaurants and cafes
One of the world’s leading waterfront leisure
and entertainment destinations.
Attractions include the Imax Theatre, Sydney Aquarium, Chinese Garden
of Friendship, Australian National Maritime Museum, Powerhouse
Museum, Harbourside Shopping Centre and Cockle Bay Wharf.
2) Establish
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in the Prime Darling Harbor area in Sydney
King Street Wharf
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The most recent prestigious waterfront
office location overlooks the Harbor
The location will be larger than normal to accommodate itself as the
management training and corporate store
Annual lease is $100,000 for 2,980 sq ft
 1,635 for restaurant and 1,345 for office
Total investment costs at $250,000
Tax methods
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Companies are taxed at a straight 30% rather than at a
marginal tax rate
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Depreciation
 For each capital cost worth under $1,000,
depreciation is calculated at 37.5% of the annual
value until it is fully depreciated
 Items over $1,000 use 15% the first year and 30%
annually thereafter
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Capital gains tax is not a separate tax, but a component
of income tax
10 year Business Plan - Assumptions
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Tax rate at 30%
Depreciation at 37.5%
No capital gains tax (rolled into income)
Annual Escalators
 Sales Revenue and Royalty Income:
 3% yrs. 2-3
 4% yrs. 4-5
 5% yrs. 6-10
 Expenses:
 4% yrs 2-5
 2.8% yrs. 6-10 (inflation rate and max operation
efficiency)
Discount rate at 11%, with 10% and 12% as alternatives
10 year Business Plan - Financials
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$400,000 initial investment
 $350,000 actual investment cost
 $50,000 in reserves for unexpected costs
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Achieve a positive return at the end of the 5th year when the Melbourne
restaurant is sold for approximately $150,000.
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Projected annual royalty income of $0.5 million by the 10th year, assuming
two franchises are established annually.
Present Value and Rate of Return
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10 year Net Present Values range
from $800,000-$1,300,000,
using 10-12% discount rates.
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Internal Rates of Return range from
33%-34% after taxes.
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As evidenced by the projected return with a conservative 10 year forecast, this
project is guaranteed to be a market success for the expanding health
conscious sector in Australia and
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Project will open the doors for future development in Asia and Europe.