Greek Cosmobob Essay

Cosmo Pa straighten outta, a 74 course old immigrant from Greece, animated in Niagara fall, Ontario, Canada with his wife and two sons. After working odd jobs for 10 long time, Mr. Panetta apply personal savings and a loanword from a family genus Phallus to corrupt a variety remembering. He forever and a day dreamed of startle a family business. Panetta eventually sold the variety neckcloth and purchased, renovated, and renamed a drive-thru eatery. A second locating was added shortly thereafter. Both sons skipped college to help Panetta run the eaterys. gross sales were good and customers returned for the good nutrition and good price. Mr. Panettas brainchild regimen item, The Cosmobob, was praised by patrons of both locatings, so he began preparing for mass- forage market introduction and development.Cosmo was faced with a number of decisions concerning producing The Cosmobob. There was an opportunity to open a third eating place in the Niagara Falls business distr ict, purchase or split a upstart mathematical yieldion facility for the Cosmobob, introduce the product on a provincial or matter level, and whether to stagger through a sustenance wholesaler or supermarket shackles. All of these questions would have to be answered very exhaustively beca pulmonary tuberculosis Cosmo had only $25,000 available before having to turn to a bank. His age, shortage of visiting card diversification, and lack of higher education in the family would as well as have to be taken into readation. In this analysis, we will analyze each situation and exhort the best options for Mr. Panetta, his family and their business.Cosmobob Product & Family Business Cosmo Panetta started his family business in 1975, when he loose his first restaurant in Niagara Falls, Canada. Mr. Panetta, his wife and older son immigrated to Canada from Greece. Mr. Panetta had a passion for starting his own family business. He knew that a variety stemma could be the way to fulf ill this dream therefore, in 1968, he used his personal savings along with a scenter family loan to purchase his first store.By 1975, he was presented with the opportunity to sell his variety store to a convenience store chain. Using this money and a loan from the bank, he bought an existing drive-in restaurant at Niagara Falls, which he renovated and named Cosmos Drive-in. In 1979, he opened his second posture on Lundy Lane. Mr. Panetta always believed that a good location, excellent product, and a fair price were the diagnose ingredients for a successful restaurant.Cosmos restaurants are famous for the Cosmobob. In 1998, the Cosmobob accounted for well-nigh 35% of the Thorold location sales and 30% of the Lundy Lane location sales. With this wicked success in one product, Panetta decided to produce and sell the Cosmobob to opposite restaurants in the area. An extra room in the back of the Thorold pock location was used to prepare orders. The restaurant however, had limited f reezer space for remembering so a local icehouse was used for $400 per month. Three stack were initially hired on a part-time basis at $9.00 per hour to operate the proceeds initiative. The Cosmobob sales went from 100 cases in kinsfolk to 600 cases by December. Looking at this growth, production staff was increased to half a dozen people. Current locations Sales & ProfitThe Lundys lane location was also known as the fast food strip and the second restaurant was located on Thorold Stone Road, a main industrial street. Mr. Panetta managed the Thorold Stone restaurant while his older son Joe managed the Lundys lane restaurant. The ordinary sale per customer for the restaurants was $6.88 and most of the customer traffic was recorded during eat and dinner hours. Cosmos restaurant had grown to $480,000 in assets by 1998 with a gross take in of $136, 846 and almost $1,163,000 in sales. Decisions Affecting the Longevity of the conjunctionSales were promising in both locations and Mr. Panetta knew this could be a great(p) time to inquire about expanding his company and product. He had three options to consider opening a new store in the upcoming area mall, purchase or learn a facility for mass production, or do both. He also had to decide if he would market his product to the food improvement market or through supermarket chains. With only $25,000 to invest, he would need to consider a loan. Another question Mr. Panetta was faced with was would the consider for the Cosmobob be high enough to see a profit in spite of appearance the first few years if he mass produced the product? Canadian Food MarketThe Canadian food market is a $37.8 one thousand thousand dollar a year industry which consists of the food service market and retail grocery stores. The food service market includes all meals eaten aside from home in schools, hospocket breadls, prisons, nursing homes, hotels, and restaurants. Canadians on average ate 38% of their meals away from home in 19 96. Hotels and restaurants serve 960 one thousand million meals a year however, this is a small portion, only 8% of the total food service market. On the other hand, fast food service accounted for 80% of the 960 million meals, totaling 768 million. Within the food market, there are four basic types of food service systems used for delivering entres Conventional system, where all food is purchased stabbing and processed on premises.The Semi-conventional food system which provided frozen pre-cut meats. The ready food system provided pre-cooked frozen entres on premises and finally the good convenience system where 90-95% of all food items were purchased from outside commercial suppliers. 25% of all hotels and restaurants used the total convenience system by 1990. The use of convenience foods helped contribute to the efficiency service during the peak periods of the day, resulting in express customer service and increased sales volume. Marketing StrategyMr. Panetta is open betwee n two marketing strategies to promote and sell the Cosmobob. Either he can enter into the food service market or distribute through supermarket chains. Distributing through a food wholesaler would require for good adding pita bread and Cosmo sauce to his offering. Grocery store chains were a orotundr market than food service however, the embody would also be substantially higher. Cosmo knew there were no existing ready to serve souvlakia available to the home user. Serca FoodsSerca Foods, a national food wholesaler, was interested in carrying the Cosmobob. They would require a 20% margin on the products purchased. Meaning for both Cosmobob case sold at $60, Serca Foods would receive $12. With Serca being a national wholesaler a federal inspection would be necessary for products to be sold in multiple providences. Therefore, Panetta would have to invest an extra $30-40,000 in his production facility to pass the federal giving medication inspection.The complimentary items to the Cosmobob the pita bread and Cosmobob sauce, were not available in all Ontario markets, resulting in supernumerary working capital needed to cover four weeks of inventory. If the Cosmobob was exclusive to Serca, their sales rep would have the upper hand with its buyers. Cosmo would not have to personally fear about the interchange and promoting of his product to the food service market. Small restaurants and hotels like the convenience of ordering from only one wholesaler, and if only Serca offered the Cosmobob that gave them the opportunity to upgrade new accounts. Supermarket ChainsFederal inspection would be necessary if the Cosmobob was introduced nationally in a supermarket chain. Distributing to the home user would be beneficial to those with large families that could not afford to eat away from home often, and also approach to people who liked to have comfort food at home. Supermarket chains would expect a 25% margin on the retail selling price, good packagingal suppo rt, and guaranteed delivery. The delivery to national supermarkets would be an do-gooderal approach for Mr. Panetta to consider. Mr. Panetta and his son were the only two conducting sales and demonstration of the product. With the promotional expectations of the supermarket chain, he would need to hire another salesperson in order to gratify the demands.There is a $20,000 placement fee per product, per supermarket chain in addition to samples, free food allowances, advertising, and trade promotion. Consumer promotion for a new product would cost more than $800,000 a year. Table 1 shows the estimated cost and profit if he used Serca Foods and produced and sold 2,400 cases a month. New Opportunity in Victoria MallMr. Panetta had an opportunity to open a new store in the upcoming Victoria Avenue Mall area. Compared to his current locations, this restaurant would be closer to the Niagara Falls business district and tourist area, which could maybe generate a lot of exposure to new cu stomers. The estimated inflow to the mall was expected to be 500 cars per day. His target market would include local customers and tourist who visited Niagara Falls. The list of tenants in the mall includes a convenience take out store, hair styling salon, flower shop and a dry cleaner.With this expansion, he projects the new store could generate at least 60% of the Thorold Stone location initially and potentially match it in two years. This would require an enthronement of about $60,000 towards leasehold improvements and equipment. Table 2 and 3 outlines his initial estimated sales of $322,503 and net income of $10,930. Production Facility OptionsThe facility space being utilized for production has reached its capacity. If Mr. Panetta considers expanding his product on a large scale and mass produce, he must occupy a facility that can meet the call for of production and service. There are two options available the mushroom grind and the old dairy farm farm farm. The mushroom factory is located outside of Niagara Falls in Grimsby, Ontario. To lease this facility for 3 years it would cost $83,340. In addition, Mr. Panetta would have to provide an upfront cost of $160,000 to cover improvements and mandatory government inspection. Alternatively, the building can be purchased for $460,000 which includes rent, facility improvements and inspection.After conducting a derived function analysis, the differential gear cost from the alternative to buy the mushroom factory compared to leasing would be $216,660. Table 4 outlines the details of this analysis. His second option is the old dairy plant factory. This facility would require a 3 year lease agreement for a total of $103,200 in rent. It would also take an additive $30,000 in leasehold improvements, in order to get the facility ready for mathematical operation and $40,000 for government inspection. Mr. Panetta has the option to purchase this location for $470,000. In Table 5, the differential analysis show s a $296,800 net difference in the cost to rent or buy the old dairy plant.RecommendationsAfter conducting a replete(p) analysis of Mr. Panettas product and the market, we recommend that he pursue a new business opportunity and open a new location in the Victoria Mall. Although the requirement to lease the site is for a stripped of 20 years, with rent exceeding $384,000, there is potential to reach more customers on a daily basis. Sales projected on 60% average of the Thorold location is expected to produce a $10,000 net income at heart the first year and has the potential to reach Thorold location sales in two years.Opening this new site would require a larger facility in order to mass produce the Cosmobob. The old dairy plant location in Niagara Falls would be the best option. not only would it allow him to use the same employees, but the capital required to have the plant operational is little expensive. $70,000 would be required upfront compared to $160,000 in improvements and inspections for the alternative location.There is a $296,800 difference in cost to lease the old dairy plant compared to purchase. The lease option is less and it provides the option to discontinue the lease agreement after 3 years if he determines that his net profit is not meeting the companys expectations. To market the Cosmobob through Serca Foods would be beneficial. While hotels and restaurants only make up 8% of the food service market, they served 960 million meals a year, and 768 are at fast food restaurants. The Cosmobob is a versatile entre and can be sold at eateries of all price points. The sales force and promotion is guaranteed, and the requested margin on sales is lower than that of supermarkets.