International Marketing Febo Report.docx

Projection revenues from royalty for advertisement 54

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appendix XII. Projection revenues from royalty for advertisement) 5.4 Customer acquisition costs Our revenue generated in the year 2018 would be approximatively 5 million dollars. 4.5 % of the gross sales that is $225,000 annually, $18,750 monthly towards advertising. We also need to invest $14,000 for the purpose of the launch in order to have successful PR campaign and English version of the website and App. We estimate to have a EBIT of $757,000 even after incorporating the $239,000 to acquire customers. 5.5 Break even sales volume 4 The 2017 QSR 500, 2018 . . 11
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Our primary customers being the franchisees, we would be generating revenue from day 1 as we would be charging the franchisee a one-time franchise fee of $10,000 and the annual franchise fee of $20,000. In this case we would generate a positive cash flow of $150,000 from five stores, hence enabling us to operate with a positive cash flow within the first weeks of operation. From franchisee point of view, the break-even point is 13.79 consumers visit the store per hour per store with each customer purchasing an amount of $7.61 (see appendix IX. Menu items pricing). 6 RISK ASSESSMENT 6.1 Financial risk factors 6.1.1 Market risk Not knowing your niche market and insufficient market research can be detrimental to Febo. If this risk is not addressed, there is a high probability that Febo runs the risk of being inflexible in adapting and changing to new food trends as well as its competitors. Febo can mitigate this risk by being agile to any changes in customer demand. 6.1.2 Credit risk Febo must ensure that it has sufficient cash flow to pay its accounts payable bills from suppliers or it runs the risk of suppliers not extending future credit or even not doing business with them. With no consideration there is a high probability of this happening with negative effects on the business, but while this risk can be mitigated by ensuring there are processes in place to collect all franchisee fees upfront and having very good business relationships with suppliers. 6.1.3 Liquidity risk Febo may not have enough cash on hand to pay for everyday expenses if demand for its product offering is affected in a major way. The likelihood of this happening may be small, but the impact will be catastrophic and Febo can mitigate this risk by setting aside cash in a backup account. 6.1.4 Operational risk Inefficient operations can expose Febo to a number of risks, one such risk is that of lawsuits which could be the result of food illness due to using tainted produce or unsanitary food preparation. This risk can be dealt with by having proper business processes in place to monitor for any bottlenecks or elements outside of the normal business process. 12
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6.2 Non financial risk factors 6.2.1 Customer perception of menu items risk Fast or quick food has a reputation and perception of being unhealthy which goes against the current trend in the United States of having healthier meal options. This is a risk we need to stay on top of as there is a high likelihood that this risk may arise with catastrophic impact on sales and demand of our product offering. To mitigate this risk, we will ensure that all of our food is
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  • Fall '12
  • Buss
  • Marketing, Fast food restaurant

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