An

Opportunity Brief By Charles Truong 11139575

Presented to Gib DE MEDEIROS New Venture Crea3on 53-473-11

June 8th, 2012

Lunch-Club is a fusion between fast-food delivery service and e-commerce. Think about mixing Amazon.com and Le Commencal. Our mission is To provide a healthy, aordable, delicious and convenient alterna3ve to fast-food lunches to oce workers in the Montreal downtown area with an easy to use, easy to get e- commerce plaDorm to facilitate purchase and delivery. The Montreal Fast-Food Market is es3mated to be close to 1.3B$, though the scene is crowded and fragmented, there is an opportunity to capture an underserved market who puts forth their health and are leading busy lifestyle, the young urban professional. Leverage new technology for our opera3ons and marke3ng, Lunch-Club is bringing to the conven3onal fast-food market a whole new approach to the customer experience which will dieren3ate our company and generate tremendous amount of aMenLon which we plan to capture and leverage in our marke3ng strategy. The mastery of social media, Web 2.0 and e-commerce plaDorms will provide Lunch-Club a clear compeLLve advantage over its tradi3onal compe33on. Scalability and its opera3ons capacity to stay lean and predictable makes Lunch- Club a solid project with impressive nancial outlook from the get-go. Led by an ambi3ous young entrepreneur with experience in the food service industry, technology and management, Lunch-Club has the right founda3on to go from dream to reality.

The ExecuLve Summary

The CONCEPT

E-Commerce

Lunch

Our MISSION
To provide a healthy, aordable, d e l i c i o u s a n d c o n v e n i e n t alterna3ve to fast-food lunches to oce workers in the Montreal downtown area with an easy to use, easy to get e-commerce plaDorm to facilitate purchase and delivery.

Our GOAL
In the long-term, we want our brand and concept to develop into a franchise that can roll-out in dense urban areas across Canada, and then North America

2 Major Trends & Needs

HEALTH
Health issues related to unhealthy eaLng habits has been plaguing Canada and Quebec. Obesity rates have almost tripled in the past 25 years amongst Canadian children aged 2 to 17*. It is a fact that consumers are now beWer informed and aware of the issue, so the Canadian consumer is geXng more health-conscious sta3ng health and nutri3on as a top of mind concern (31%) when purchasing food vs. 24% in 2 years earlier**
*Childhood Obesity Founda3on, hWp://www.childhoodobesityfounda3on.ca/, Fall 2011. **Canadian Consumer Spending on Food and Beverage, Agiculture and Agri-Food Canada, 2006

2 Major Trends & Needs

CONVENIENCE
Young Professionals are busier than ever, so convenience has become a big driver in their ea3ng habits. A Canadian Consumer behaviour report states that consumers are looking for ways to do more, more easily, quickly and enjoyably, and their approach to food and beverage choices generally reects this aHtude*. Convenience is considered to be the main reason consumers chose their dining op3on**
*The Canadian Consumer: Behaviour, AHtudes and PercepNons Toward Food Products, Interna3onal Market Bureau, May 2010 **Fast Food NaNon 2008: A Consumer PerspecNve on the Fast Food Industry, Research Interna3onal USA, 2008

The Market: Downtown Montreal

* Fast-Food Market in Montreal: More than 150,000 Oce Workers** downtown thats over 50% of all Montreals oce workers Informa3on and Culture: 23 295 Finance: 43 815 Engineering and Scien3c: 51 895 Government: 25 520

1.3B$

*P.M.Parker, The 2009 Report on Fast Food: World Market SegmentaNon by City, ICON Group, 2009 **Le Centre-ville cest, Ville de Montral, hWp://ville.montreal.qc.ca/pls/portal/docs/page/mtl_stats_fr/media/ documents/CENTRE-VILLE_SURVOL.PDF

The Target: Young Urban Professionnals*

58% men / 42% women Aged 25-34 +65% are married or living with someone Have children under 3 Bachelors or post-graduate degree HHI over $90,000 Busy lifestyle & at the crunch-3me of their career Restaurant & Fitness are their 2 rst lifestyle choices
*Young Urban Professionnals, Zoom Business Canada, hWp://canada.zoommedia.com/en-ca/Targets/
YoungUrbanProfessionals.aspx

The Compe33on: Fragmented and ConvenLonal*

LocaLon is the name of the game. All compe3tors are gh3ng over loca3on for convenience, the sector is seeing low innovaLon in terms of convenience and user experience. The Fast-Food Sector in Montreal is highly fragmented and like most ci3es, lead by junk-food na3onal brands. Some emerging trends are found in ethnic food, but the health trend is mainly served by extended menus at usual junk-food loca3ons. Healthy lunch opLons are underserved in terms of brands, franchises & meal op3ons.
*C.Truong, Fast Food Sector in Montreal, HEC Montreal, April 2012

Our CompeLLve Advantage

Were a lifestyle brand that is combining what leverages the needs and purchase behavior of a new generaLon of professionals. Our oering is the needed alternaLve to the same old and unhealthy fast-food brands. Plus our model is scalable and give us cost advantage over locaLon dependent and space constraint limited service restaurants.

EaNng Healthy even if Im Busy at Work

The MECHANICS

How do I join the Lunch-Club?

Just

Easy Steps

1 Visit Lunch-Club.ca

Website
A strong e-commerce and a ergonomic and well-designed website is crucial to the success of the Lunch-Club. Our target market is used to well-designed and secure sites, so based on recommendaNons of an advisor, a leading online retail entrepreneur, well use open-source Magentos e-commerce pla;orm and invest in a web developer to implement, maintain and improve the pla^orm.

Sign-up to the Lunch-Club using:

E-Mail Phone Number Oce Address Credit Card InformaLon

Being part of a club is an exclusive experience, and for 10$ per month including a free lunch (10$ in credit), the barrier to entry is minimal. Credit card informaNon is not only for membership, but also to facilitate the payment process when ordering lunch from any device. Ease of payment limits hesitaNon when it comes to pay and has shown tremendous success with e-commerce. In order to join the club, the oce address needs to be on an exclusive list, candidates can rally people from their oce to add their oce to the list.

Share with friends and colleagues

Facebook TwiMer LinkedIn Blogs & Other Channels

Social Media (Online and Oine) is the corner stone of our markeNng strategy. Word of Mouth, and online buzz are key success factors for us to limit the cost of customer acquisiNons. On site guerilla markeEng strategies are investments for locaEon-based customer acquisiEons, but by fostering our community and incenEvizing our club members to promote our club and add members, we can acquire a client-base for a fracNon of the usual cost. Social media will also be our nurturing pla^orm to enforce loyalty, user engagement and repeat business.

Order, share & par3cipate and give feedback to earn points!

+ pts

GamicaEon is a technique online brand can use to foster user engagement by incenNvizing user parNcipaNon. We will develop a point system to earn points for ordering (based on nutriNonal values), sharing and parNcipaNng on our Facebook page and site, and for providing feedback on our menu which will not only encourage repeat business, but also ensure customer-oriented product development.

The PROCESS

How do I use the Lunch-Club?

Just

Easy Steps

When do you think about lunch?

7:36 PM

11:47 PM

9:52 AM

People think about their lunch opNons at dierent Eme of the day or week, some are last minutes, some prepare in advance. The goal is to capture our members lunch ordering habit and oer an easy lunch ordering experience

Ordering is easy and accessible at all 3me

Mobile App

Website

GeneraNon Y and Millennials are connected at all Nme and are used to easy and convenient purchasing experience through e-commerce. Through a mobile app and our website, convenience makes it easy for our members to decide on lunch and carry-on with their lives.

Choose what & when you want your lunch

3
Meal Date Time
Choosing one of 3 meals (of our rolling menu), a date and Nme makes lunch planning easy for our busy members, plus the planning process allows us to have predictable quanEty and plan our quanNNes and capaciNes accordingly, therefore we benet in limited waste and economies of scale.

Speedy drop-o delivery to your oce on Lunch Day

OpLmal Scheduled Delivery

Targeted Oce Towers

Fast Drop-O at RecepLon

By Lunch Day, lunch are ordered and paid for, so we can easily opEmize the delivery schedule and iEnerary. LimiNng to targeted oce towers based on size and density of the workforce, we ensure speedy drop-o at the recepNon areas. Extra capacity on delivery route can also be lled with targeted promoNons and adverNsement.

5 Enjoy your lunch!

In the end, its also about the lunch itself, which is why in the rst phases and beta tesNng, well work with a chef and focus groups in order to come up with a rolling menu of healthy and delicious meal. The quality and taste of our meals are a key success factor of this concept, so well invest upfront to come up with a great oering, and involve our club members in order to constantly improve it.

Provide feedback and sugges3ons

SaEsfying our customers is a key success factor to ensure repeat business. The advantage with our e-commerce online strategy is that our target customers are used to get engaged with online brands. Our nurturing and engagement strategy is to involve our members in the product oering with their feedbacks and suggesNons through our channel of communicaNons: website, Facebook & twijer.

The MARKETING PLAN

3 Keystones of our Marke3ng Strategy

The Brand & Inden3ty Aggressive Customer Acquisi3on Loyalty: Nurturing & Engagement

Instead of having the typical ethnic product dieren3a3on, Lunch- Club targets lifestyle to the niche segment of 25-34 busy professionals working in Montreals Downtown. We oer healthy meals op3ons that ts our target segments busy lifestyle and Product Niche quest for convenience and health when it comes lunch op3ons. Distribu3on is key for us, since were an oce delivery service, well set ourselves apart from the delivery compe33on with a fast and Lmely delivery service. Part of what denes the Lunch-Club is an easy and fast way to lunch DistribuLon, at the oce, just one-click away. Convenience & Speed Leveraging the benets of e-commerce and applying to the food service industry is one of the secret sauce for Lunch-Club. By facilita3ng the payment through one-click on the website or mobile app, were shortening the payment process and facilitaLng repeat business by keeping club members payment informa3on and oering perks like credits upon recurring usage of the service.

InnovaLve Ordering

The Brand & Inden3ty

Word of Mouth

Social media is key in our customer acquisiLon strategy. Especially since were targeLng millennials that are heavy users of social media technologies such as Facebook and TwiWer. Mechanism like referrals and grouping in order to sign up as a club member are great tac3cs to ensure as much social media exposures as possible. IncenLves for members to share their feedback on the services are also in the plans in order not only to improve product quality and alignment with our members taste proles, but for customer acquisi3on also since theyll witness the level of engagement of our members.

Aggressive Customer Acquisi3on

The fusion of E-Commerce and the food service industry is an innova3on that deserves the launching PR well be able to leverage for our star3ng phases. GeXng aWen3on from the media with our innova3on is key for our customer acquisi3on strategy, even if they are not yet served in our service territory. The goal is get as much free exposure as possible from the get-go for people Public RelaLons to join and request the service to be available for their oce. Before new oce towers are added to our service territory, ad- hoc booths will be setup during lunch hours in mall close to the new towers to test demand. These point of sales, will allow us to make some extra revenues, but mainly the goal will be to make the Lunch-Club known to these new poten3al loca3ons. Using social media to aMract potenLal members to the booths area, well use similar tac3cs used by food trucks in the US to hype our ad-hoc booths locaLon.

Booth to test locaLons

Aggressive Customer Acquisi3on

Sa3sfying our customers is a key success factor to ensure repeat business. The advantage with our e-commerce online strategy is that our target customers are used to get engaged with online brands. Our nurturing and engagement strategy is to involve our members in the product oering with their feedbacks and sugges3ons through our channel of communica3ons: website, Facebook & twiWer. SaLsed customer = repeat business and awesome word of mouth for referrals.

SaLsed Customer

Community

The concept of club is important in Lunch-Club, since it creates a sense of belonging and community for our members. This dierenLate our service versus usual fast-food joints and restaurants since theyll feel part of something. The healthiness of our product and the u3liza3on of local food will strengthen aMachment from our members to the Lunch-Club, because theyll be involved in a good cause, for their own health and their communi3ty.

Loyalty: Nurturing & Engagement

The STARTUP BUDGET

4 Major Cost Components

Headquarters

Kitchen

DistribuLon

E-Commerce

Headquarters

The Lunch-Club HQ is conveniently located at 1892 rue PayeMe in Grintown, Montreal. The advantage of that loca3on is denitely lower rent cost (3410$/months @ 18$/sq.m)* than the Old Montreal and Downtown area. Another advantage is the proximity to suppliers of fresh and local food at the Atwater market. Healthy ingredient will be close at hand, and well be developing good rela3onships with local farmers through direct contact at the market. Locally grown ingredients is denitely a trend that we want to build on, and even market it in our oering, since its the top consumer trend in the foodservice industry**.

6 Months of Headquarters Opera3ons (Rent + Insurance + Salaries + Expenses + Marke3ng Plan) =

160 000$
* Montreal Real Estate Page, hWp://www.rstcorp.ca/oces/1890_2payeWe.html **Chef Survey : Whats hot in 2012, Na3onal Restaurant Associa3on, 2012

Kitchen

The kitchen is key to the Lunch-Club and also a big piece of the investment. The plan is to purchase new equipment and renova3ng the kitchen area to be scalable for future expansion. Considering the cost associated in seXng up a new kitchen*, our kitchen opera3ons setup budget is set at 50 000$.

The distribu3on opera3ons has two major costs investment involved, the delivery van, which we can rent to smooth the costs (expenses), and the delivery racks to load the lunches and to unload and deliver when were on loca3on. The upfront investment would be star3ng with a good o-the-shelf base, and work with an industrial designer in order to op3mize rack storage into the van so it remains t and stable. (~20 000$) Kitchen Equipment + Renova3on + Distribu3on =

DistribuLon

70 000$
* How To Run A Restaurant: Start-Up Costs, Forbes.com, February 2007

E-Commerce

Azer interviewing a successful entrepreneur that had his own e-commerce business in clothing retail, he advised me to use an open-source plaDorm called Magento. In order to reduce investment cost, I wouldnt own the hardware it runs on, and use a hosLng service to pay per use, which will reduce the upfront cost. (expenses) But in order to run the pla{orm Ill need to have a web developer internally and an experienced consultant (professional services) for the rst setup months. (~20 000$)

3 Months of E-Commerce Professional Services =

20 000$

STARTUP BUDGET
ITEM Headquarters Opera3ons Kitchen Distribu3on E-Commerce Personal Bursary and Contest IN

OUT - 160,000$ - 50,000$ - 20,000$ - 20,000$

25,000$ 50,000$

TOTAL

- 175,000$*
* Bank and Government Program Loans

The FINANCIALS

The Cash-Flow Statement Year 1 (0-6M)

Opening Jan Feb Mar Apr May Jun Cash Sales $10,000 $25,000 $25,000 $40,000 $40,000 $40,000 Personal Contribu3on (75k Salary) $25,000 $6,250 $6,250 $6,250 $6,250 $6,250 $6,250 Contest & Bursaries $50,000 Bank Loan $175,000 CASH IN $250,000 $16,250 $31,250 $31,250 $46,250 $46,250 $46,250 Inventory (COGS 50%) $5,000 $12,500 $12,500 $20,000 $20,000 $20,000 Expenses $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 Assets $60,000 Interest Payment (7.5%) $1,094 $1,094 $1,094 $1,094 $1,094 $1,094 Income Tax (30%) CASH OUT $60,000 $31,094 $38,594 $38,594 $46,094 $46,094 $46,094 NET CASH FLOW $190,000 $(14,844) $(7,344) $(7,344) $156 $156 $156

The Cash-Flow Statement Year 1 (7-12M)

Jul Aug Sep Oct Nov Cash Sales $60,000 $60,000 $60,000 $80,000 $80,000 Personal Contribu3on (75k Salary) $6,250 $6,250 $6,250 $6,250 $6,250 Contest & Bursaries Bank Loan CASH IN $66,250 $66,250 $66,250 $86,250 $86,250 Inventory (COGS 50%) $30,000 $30,000 $30,000 $40,000 $40,000 Expenses $30,000 $30,000 $30,000 $30,000 $30,000 Assets Interest Payment (7.5%) $1,094 $1,094 $1,094 $1,094 $1,094 Income Tax (30%) CASH OUT $61,094 $61,094 $71,094 $71,094 $71,094 NET CASH FLOW $5,156 $5,156 $15,156 $15,156 $15,156

Dec TOTAL $80,000 $600,000 $6,250 $100,000 $175,000 $86,250 $925,000 $40,000 $300,000 $30,000 $330,000 $60,000 $1,094 $13,125 $- $- $61,094 $703,125 $5,156 $221,875

The Cash-Flow Statements Year 2-3

2014
$- $- $-

2015

Cash Sales Personal Contribu3on (75k Salary) Contest & Bursaries Bank Loan CASH IN Inventory (COGS 50%) Expenses Assets Interest Payment (7.5%) Income Tax (40%) CASH OUT NET CASH FLOW

$1,200,000 $2,000,000

$1,200,000 $2,000,000 $600,000 $1,000,000 $362,697 $- $13,125 $425,597 $13,125 $1,047,013 $1,611,043 $152,987 $388,957

$71,191 $172,320.90

The Income Statements Year 1-3

INCOME STATEMENT YEARLY SALES: COGS (50%) GROSS PROFIT: ANNUAL EXPENSES: RENT PERMITS HYDRO GAS INSURANCE TRUCK RENTAL GASOLINE TLPHONE INTERNET SALARIES PROFESSIONAL FEES MARKETING BANK FEES MAINTENANCE SERVER HOSTING DIVERS / MISCELLANEOUS TOTAL EXPENSES: EBIT: INTEREST (7.5%) TAXES (30%) NET INCOME:

2013 $600,000 $300,000 $300,000

2014 $1,200,000 $600,000 $600,000

2015 $2,000,000 $1,000,000 $1,000,000

$50,000 $412 $7,500 $7,500 $4,000 $7,800 $2,400 $600 $1,200 $150,000 $50,000 $20,000 $1,500 $1,200 $2,400 $2,000 $308,512 $(8,512) $13,125 $- $(21,637)

$50,000 $297 $10,000 $10,000 $5,000 $11,700 $3,600 $600 $1,200 $155,000 $75,000 $30,000 $2,000 $1,500 $4,800 $2,000 $362,697 $237,303 $13,125 $71,191 $152,987

$50,000 $297 $12,000 $12,000 $6,000 $23,400 $4,800 $600 $1,200 $200,000 $75,000 $30,000 $2,000 $1,500 $4,800 $2,000 $425,597 $574,403 $13,125 $172,321 $388,957

The Balance Sheets Year 1-3

2013 ASSETS Cash PP&E Deprecia3on Inventory TOTAL ASSETS LIABILITIES Account Payables Bank Loan TOTAL LIABILITIES EQUITY Shareholder's Equity Retained Earnings TOTAL EQUITY LIABILITIES + EQUITY $221,000 $60,000 $(6,000) $3,000 $278,000 $3,000 $175,000 $178,000 $100,000 $- $100,000 $278,000

2014 $379,987 $60,000 $(12,000) $3,000 $430,987 $3,000 $175,000 $178,000 $100,000 $152,987 $252,987 $430,987

2015 $621,957 $60,000 $(18,000) $3,000 $666,957

$3,000 $175,000 $178,000

$100,000 $388,957 $488,957 $666,957

The RISKS

Novelty is not always a good thing, and coming up with such an innovaLve purchasing experience is risky if we come in too naively. In order to mi3gate the risk of a slow adop3on period, well introduce the services through mulLple phases with an Too InnovaLve important beta tesLng periods with lots of focus groups. Thought the e-commerce technology is proven, s3ll going with that op3on only might stop the viability of our business in case the central payment system goes down for any period of 3me. In order to mi3gate the risk, itll be important to have mulLple electronic payment suppliers to spread the risks.

Technology Dependency

The Fast-Food sector is highly compeLLve and there are major incumbents that can also start a similar service. In order to mi3gate that risk, itll be important to sLck to the markeLng plan and ensure our brand not only survives retalia3on but gains notoriety from the compe33ons reac3on. RelaLonship with our club members will set CompeLLon us apart and give us a compeLLve advantage as the rst mover. RetaliaLon

The Risks

The ENTREPRENEUR

5 years in Sales & MarkeLng Somware Engineer + MBA 10 Years + experience in Food Service Passionate about Food, Business & Technology
Lunch-Club is THE idea I was looking for, its the trifecta of what I am passionate about. The MBA is for me a Nme of reecNon and trial, and the result of it is the Lunch-Club. Since the idea came up to me, Ive been challenging it, researching it and sharing it with whomever and the overall results is a strong, protable and exciEng project. But the most important argument is that my gut feeling concurs, so now is the Eme to make it real.