Cosmo Panetta, a 74 year old immigrant via Greece, residing in Niagara Falls, Ontario, Canada with his wife and two sons.
After working strange jobs for ten years, Mr. Panetta applied personal savings and a loan from a member of family to purchase a number store. This individual always desired starting a family group business.
Panetta eventually offered the variety store and bought, renovated, and renamed a drive-thru cafe. A second position was added shortly thereafter. Both kids skipped school to help Panetta run the restaurants. Product sales were very good and buyers returned intended for the good foodstuff and very good price. Mr.
Panetta’s brainchild food item, The Cosmobob, was praised by patrons of both locations, so started preparing for mass-market introduction and development. Cosmo was faced with a number of decisions concerning creating The Cosmobob. There was a chance to open another restaurant in the Niagara Declines business area, purchase or rent a fresh production facility for the Cosmobob, introduce the product on the provincial or national level, and whether to deliver through a meals wholesaler or supermarket chains. All of these concerns would have to become answered extremely thoroughly because Cosmo experienced only $25, 000 readily available before having to turn to a traditional bank.
His grow older, shortage of menu diversification, and lack of degree in the family would also need to be taken into account. In this examination, we can analyze every situation and recommend the best options to get Mr. Panetta, his along with their organization. Cosmobob Merchandise & Relatives Business Cosmo Panetta started his family members business in 1975, if he opened his first cafe in Niagara Falls, Canada. Mr.
Panetta, his wife and elderly son immigrated to Canada from Greece. Mr. Panetta a new passion pertaining to starting his own family business. He knew that a selection store may be the way to satisfy this fantasy; therefore , in 1968, this individual used his personal savings along with a small relatives loan to get his initially store.
By simply 1975, he was presented with the opportunity to sell his variety retail outlet to a convenience store string. Using this money and that loan from the lender, he bought an existing drive-in restaurant at Niagara Falls, which this individual renovated and named Cosmo’s Drive-in. In 1979, he opened up his second location upon Lundy Side of the road. Mr. Panetta always believed that a great location, superb product, and a fair price were the key ingredients for any successful restaurant.
Cosmo’s eating places are known for the Cosmobob. In 1998, the Cosmobob made up almost 35% of the Thorold location product sales and 30% of the Lundy Lane site sales. With this huge success in a single product, Panetta decided to produce and sell the Cosmobob to other eating places in the region. An extra room in the back of the Thorold Rock location utilized to prepare requests. The cafe; however , had limited fridge space for storage and so a local icehouse was used for $400 a month.
Three individuals were initially hired on a part-time basis at $9. 00 per hour to control the production project. The Cosmobob sales proceeded to go from 100 cases in September to 600 instances by January.
Looking at this kind of growth, creation staff was increased to six persons. Current places Sales & Profit The Lundy’s isle location was also known as the fast food strip and the second restaurant was located on Thorold Stone Highway, a main professional street. Mister.
Panetta been able the Thorold Stone restaurant while his older child Joe handled the Lundy’s lane cafe. The average deal per buyer for the restaurants was $6. 88 and most with the customer traffic was recorded during lunch and dinner hours.
Cosmo’s restaurant had cultivated to $480, 000 in assets simply by 1998 having a gross profit of $136, 846 many $1, 163, 000 in sales. Decisions Affecting the Longevity from the Company Revenue were promising in the two locations and Mr. Panetta knew this can be a great time to ask about expanding his company and product. He had three choices to consider; opening a new store inside the upcoming place mall, obtain or rental a center for mass production, or perhaps do both. He also had to assess if he would market his merchandise to the foodstuff service industry or through supermarket restaurants.
With only $25, 500 to invest, he would need to consider a loan. One more question Mister. Panetta was faced with was; would the necessity for the Cosmobob always be high enough to see a profit within the first few years if this individual mass produced the merchandise? Canadian Food Market The Canadian food market is a $37. almost eight billion dollar a year industry which consists of the food assistance market and retail supermarkets.
The food support market involves all dishes eaten away from home in educational institutions, hospitals, prisons, nursing homes, hotels, and restaurants. Canadians normally ate 38% of their dishes away from home in 1996. Hotels and eating places serve 960 million dishes a year; however , this is some, only 8% of the total food assistance market. On the other hand, fast food service accounted for 80 percent of the 960 million foods, totaling 768 million. Inside the food market, you will discover four fundamental types of food service systems utilized for delivering entrГ©es: Conventional program, where every food is definitely purchased uncooked and prepared on building.
The Semi-conventional food program; which offered frozen pre-cut meats. The ready food system presented pre-cooked iced entrГ©es upon premises and ultimately the Total convenience system wherever 90-95% of food items had been purchased coming from outside commercial suppliers. 25% of all accommodations and restaurants used the entire convenience program by 1990. The use of comfort foods helped contribute to the efficiency service throughout the peak times of the day, leading to faster customer service and increased sales volume.
Online strategy Mr. Panetta is unsure between two marketing strategies to promote and sell the Cosmobob. Possibly he can access the food service market or perhaps distribute through supermarket chains. Distributing through a food wholesaler would require permanently adding pita breads and Cosmo sauce to his giving.
Grocery store stores were a more substantial market than food support; however , the fee would also be substantially higher. Cosmo understood there were no existing ready to serve souvlaki open to the home end user. Serca Foods Serca Food, a national food wholesaler, was enthusiastic about carrying the Cosmobob. They would require a 20% margin around the products acquired.
Meaning for each Cosmobob circumstance sold at $60, Serca Food would obtain $12. With Serca as being a national flower nurseries a federal inspection would be essential for products to get sold in multiple providences. Consequently , Panetta would need to invest extra $30-40, 000 in his creation facility to the federal government inspection.
The complimentary items to the Cosmobob; the pita breads and Cosmobob sauce, are not available in all Ontario market segments, resulting in added working capital needed to cover four weeks of inventory. If the Cosmobob was exclusive to Serca, their sales rep would have an advantage. with its potential buyers. Cosmo probably would not have to personally worry about the selling and promoting of his merchandise to the food service industry.
Small restaurants and resorts liked the convenience of buying from only 1 wholesaler, and if only Serca offered the Cosmobob that gave all of them the opportunity to gain new accounts. Supermarket Chains Federal inspection would be necessary if the Cosmobob was launched nationally within a supermarket string. Distributing towards the home customer would be good for those with significant families that may not afford to eat abroad often , and in addition appeal in people who liked to have comfort food at your home.
Supermarket stores would expect a 25% perimeter on the retail selling price, very good promotional support, and guaranteed delivery. The delivery to national grocery stores would be an additional cost to get Mr. Panetta to consider. Mr. Panetta and his boy were the only two conducting sales and demonstration with the product.
With the promotional objectives of the supermarket chain, he’d need to retain the services of another salesperson in order to fulfill the demands. There is also a $20, 500 placement payment per item, per superstore chain; furthermore to selections, free meals allowances, promoting, and transact promotion. Consumer promotion to get a new product would cost more than $800, 500 a year. Table 1 shows the predicted cost and profit if perhaps he utilized Serca Food and produced and sold 2, four hundred cases a month.
New Prospect in Victoria Mall Mister. Panetta had an opportunity to wide open a new retail outlet in the upcoming Victoria Method Mall location. Compared to his current spots, this restaurant would be nearer to the Niagara Falls organization district and tourist region, which could probably generate a lot of contact with new customers. The estimated inflow to the mall was anticipated to be 500 cars per day. His marketplace would incorporate local customers and traveler who visited Niagara Is catagorized.
The list of tenants inside the mall has a convenience dairy store, hair-styling salon, blossom shop and a dried cleaner. With this growth, he tasks the new store could create at least 60% from the Thorold Stone location at first and probably match this in 2 years. This would need an investment of approximately $60, 1000 towards leasehold improvements and equipment. Desk 2 and 3 traces his primary estimated revenue of $322, 503 and net income of $10, 930. Production Facility Options The facility space being utilized for production has reached the capacity.
If Mr. Panetta considers broadening his product on a bigger scale and mass generate, he must take up a facility that can focus on production and service. You will find two options available; the mushroom factory plus the old milk farm. The mushroom factory is located away from Niagara Falls in Grimsby, Ontario.
To rental this facility for 3 years it would expense $83, 340. In addition , Mr. Panetta would need to provide an upfront cost of $160, 000 to cover improvements and mandatory authorities inspection. Otherwise, the building can be bought for $460, 000 which includes rent, facility improvements and inspection. Following conducting a differential research, the gear cost from the alternative to purchase the mushroom stock compared to rental would be $216, 660.
Stand 4 describes the details of the analysis. His second option may be the old dairy plant manufacturer. This service would need a 3 year lease agreement for a total of $103, 200 in rent. It will also consider an additional $30, 000 in leasehold advancements, in order to get the facility looking forward to operation and $40, 500 for authorities inspection.
Mister. Panetta provides the option to purchase this location for $470, 000. In Stand 5, the differential evaluation shows a $296, 800 net difference in the expense to lease or buy the old milk plant. Beginning this new internet site would require a larger center in order to mass produce the Cosmobob.
The dairy plant location in Niagara Is catagorized would be the most suitable choice. Not only would it allow him to utilize same workers, but the capital required to have plant operational is less expensive. $70, 000 can be required in advance compared to $160, 000 in improvements and inspections to get the alternative position. There is a $296, 800 big difference in cost to lease contract the old dairy products plant when compared with purchase. The lease option is less and it provides the choice to stop the lease agreement after 3 years in the event that he can determine that his net profit is not meeting the company’s expectations.
To promote the Cosmobob through Serca Foods will be beneficial. While hotels and restaurants only make up 8% of the food service market, they served 960 mil meals a year, and 768 are at junk food restaurants. The Cosmobob can be described as versatile entrГ©e and can be sold at eateries of most price details.
The salesforce and promo is guaranteed, and the requested margin about sales is lower than that of supermarkets.