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10/15/19&

FINANCIAL AND
MARKETING
RECOMMENDATIONS FOR
FOODSTUFF ENTERPRISE LLP

KEY OBJECTIVES
•  Increasing market share
•  Increasing referral rate
•  Reducing overhead costs
•  Creating additional sources of revenue

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CORE PROPOSALS FOR


MARKETING TEAM
Development of key partnerships with brokers
specializing in the restaurant industry (such as B.
Kandhari group) on a commission basis

POTENTIAL BENEFIT
•  Opportunity to reach potential clients before competitors
•  Consistent supply of new clients
•  Partnerships with comparatively larger companies can help boost legitimacy
•  Partnership with a brokerage operating in other cities could allow expansion
opportunities into different cities

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POTENTIAL DRAWBACKS
•  Early negotiations indicate brokerages will demand high commission rates
(approximately 6 months of net profits from an average restraunt) – Average length
of professional relationship between Foodstuffs Co. and a resteraunt is currently only
24 months.
•  Brokers will primarily be in contact with newly opened restraunts, however these are
less reliable with payments. In general the industry works on a 45 day credit period
this may increase risk
•  Since customer relations team earns commission on acquisition and not retention,
their salaries will have to be restructured to avoid demotivation (since steady
increase in customers will increase need for retention, and reduce need for
commission)

REVISING OF INCENTIVES FOR CHEFS


AND MANAGERS FOR
RECOMMENDATIONS
•  Previous referral programme targeted at chefs and managers was
unsuccessful primarily since incentive (Rs. 500 per restaurant) was too small
•  The concept of a flat rate is also not practical, since Foodstuffs caters to
restaurants of different sizes, therefore generating very different revenues
•  Therefore, reforms are needed to attract potential partners.

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CATEGORIZATION
•  To ensure more referrals, clients have been categorised into 4 types, and the
average revenue generated per month has been noted

Café Rs. 30,000


Resto bar. Rs. 70,000
Hotels (2-3*) Rs 1,00,000
Hotels (4-5*) Rs. 2,00,000

PROPOSED REVISION OF
INCENTIVE
•  Considering that net profit margin is 5% and average customer relationship
lasts 24 months, 1 month of net profits is proposed. This translates to
- Rs 1,500 for Cafes
- Rs. 3,500 for resto bars
-  Rs. 5,000 for 2-3* hotels
-  Rs. 10,000 for 4-5* hotels

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POTENTIAL BENEFITS
•  More incentive to spread word of mouth
•  Helps build relations with managers/chefs
•  Less time and money needed to spend on customer acquisition

GENERATION OF ADDITIONAL
SOURCE OF INCOME
•  The warehouse (as shown in image) used to be a retail store. The warehouse
still has racks and payment counters
•  Since it has main road frontage, it is therefore proposed that the warehouse
be used dually – as both a warehouse and a wholesale retail outlet (similar
to Costco)

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10/15/19&

POTENTIAL BENEFITS
•  Most of the basic requirements are already present – only need to be
refurbished
•  Additional source of income
•  Location is suitable for a retail store – large number of houses and no other
retail stores in a 50 meter radius.
•  Prices offered can be lower than competitors, due to larger quantities and
stronger relationships with suppliers

POTENTIAL DRAWBACKS
•  Stock may be hard to manage
•  Only limited products can be offered – based on company partnerships
•  Employees will be needed a counters and to maintain cleanliness, adding to
costs
•  Cost of refurbishing and air conditioning is around Rs. 50,000.
•  Concept of buying household products in bulk (wholesale) is still not popular in
India – which may be hard to change, specially in the location – Andheri –
where the population is predominantly lower middle class – a section who may
struggle to buy products for multiple months at one time.

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