Great American Cookies in China Juyi Li (Jerry)-Louis Morris-Jessica Rogers-Alena Tatum Group 2.
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Transcript of Great American Cookies in China Juyi Li (Jerry)-Louis Morris-Jessica Rogers-Alena Tatum Group 2.
Great American Cookies in China
Juyi Li (Jerry)-Louis Morris-Jessica Rogers-Alena Tatum
Group 2
Background
Founded by Michael Coles and partner Arthur Karp
First store opened in Atlanta, Georgia’s Perimeter Mall in 1977.
Founded on the strength of a generations-old family chocolate chip cookie recipe
Great American Cookies expanded in malls across the country
Developed a complete line of cookies and brownies, including our signature Cookie Cake product
Operates 300 stores in over 40 US states, Bahrain, Chile, Guam, Mexico, Puerto Rico, Saudi Arabia and the United Arab Emirates.
Strategy-Brief Flagship Store on Nanjing Road, Shanghai
• High Foot Traffic• Great visibility • Marketing and promotional
advantages
Food and Drinks Offered
• Chocolate Chip Cookie as signature cookie
• Regionalized favors• Red Bean• Green Tea• Sesame Seed
• Drinks• Coffee• Tea
Strategy-Brief Hands on baking experience
An opportunity for kids to participate in making and baking cookies
Couples and young adults to enjoy a baking experience
Distribution Hub for Micro Stores
Advertisement for Micro Stores
Extended Nighttime Hours
Company Owned
New Product Testing
Strategy-Hub Store Design
Interior view of flagship store.
Aiming to provide a classic baking experience as if the cookies are baked in the kitchen of an American family.
Micro Stores (x6)(Spokes)
Supplied through Distribution Hub
No Ovens
High Traffic Areas
Normal Hours of Operation
Franchise/Partnerships
Limited Menu (products that tailor to local tastes)
Strategy- Micro Stores
Strategy-Industry Facts
Cookie consumption market size in Shanghai alone is $98.71 million dollars.
Total market size
in China is $3.8B
Growth rate
projected to be
11% annually 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Avera
ge G
rowth
05
101520253035404550
15.647 17.41 19.37121.55423.96226.515
29.3232.423
35.85339.646
43.841
Growth Projection of Frozen Cookie and Cracker Products Shanghai
Strategy-Competition Major competition:
Mrs. Field’s Cookies (American)
Mr. Donut (Japanese)
Minor (supermarket based) competition:
Kraft foods Specific Brand, Oreo and Chips Ahoy!
Venerability of the Business Model
If Great American Cookie is successful in providing both a dining and baking experience for its customers, GAC does foresee our business model being copied
Strategy- Growth
Focusing in the 1st tier cities in China, i.e. Shanghai and Beijing
Providing franchising and licensing rights to Chinese partners who wish to open Great American Cookie to their locations in 2nd and 3rd tier cities.
All locations will retain the chocolate chip cookie as its signature cookie.
If the market allows, the 2nd and 3rd tier cities will also provide a baking experience for customers. However, if not, we will focus on just selling finished products
Strategy-CFDA
Great American Cookies will follow China Food and Drug Administration’s rules and regulations.
Furthermore, GAC will also never compromise the quality of our food by importing frozen dough and dry goods from the United States.
GAC will employ Jun He Law Firm to ensure that all food related regulations are met under Chinese Law.
Strategy- Changing Trends
Growing number of kids eating cookies and deserts
Growing number of families having disposable income
Growing number of adults willing to experiment with western cooking
GAC will still have to educate the consumer on a dessert eating culture, however, with the one child policy, young adults today are much more willing to eat sweeter tasting treats compared to their counterparts 20 years ago.
Marketing- TM
Target Market:
20-35 year old women
Students
Financially well-off
Children between 10-18 years old
Expats and general tourist trade
Market taste tests on a semi annual to annual basis
Surveys of the experience
Marketing- Branding
Giving the experience of a real American home
Branding Strategy
Recognizable logo: American Brown Bear, GAC apron, Blonde American Sales Girls
Establish an impression on children
Product Placement TV advertisements
Yao Ming
Zhang Ziyi
Marketing
Market Entry Strategy
Increase brand awareness Television- cartoon adverts
Nanjing Road Fridays Mainly foot traffic
Intensive Distribution- while still keeping quality
Importing goods from US, Japan and Australia
Management
Partners
Intellectual property
Employees
Lack of loyalty
Handling cultural differences
Government
Auntie Anne’s Example
Doesn’t help enforce litigation claims
Guanxi
A. Nanjing Road (Flagship/Distribution Hub)
B. Sichuan North Road (Spoke) (8 min)
C. Super Brand Mall (Spoke) (14 min) D. Zhangyang (Spoke) (24
min)
E. Yuyuan Commercial City (Spoke) (9 min)
F. Hunihai Zhong Lu (Spoke) (10 min)
G. Xujiahui (Spoke) (18 min)
Location
Total Route Supply Time (A-G): 1 hour 12 min
Locations Represent Major High Traffic Areas
(Shopping, Dinning, Etc…)
Location
Flagship Store
Strengths High Traffic Area
Located in Key Shopping Area
High Visibility
Takes Advantage of Surrounding Attractions
Provides an Experience and Lasting Impression
Weaknesses High Real Estate Costs
Large Square Footage Requirement
High Staffing Costs
Business Success Relies in Larger Part on Flagship Customer Impressions
Location
Micro Stores (x6)
Strengths High Traffic Areas
Low Overhead Costs
Low Staffing Costs
Takes Advantage of Surrounding Attractions
Distance from Hub
Under Direction of Franchise Partners
Weaknesses Not as Visible as Flagship Stores
Limited Menu Items
Under Direction of Franchise Partners
Location
Set Realistic Goals
6 stores at the end of 3 years
Expand Beyond Initial Market Within 5 Years
Petition for Government Approval to Enter the Market
Continue to Dialogue to Stay Aware of Changes
Secure Proper Licensing/Meet any Regulatory Requirements
Establish Budget
Secure Adequate Funding
Execution
Begin Market Analysis
Assess Target Market
Develop Products Based on Local Tastes
Begin to Establish and Develop Strategic Partners
Local Partners
Established Businesses
Determine Store Location Availability and Cost
Execution
Secure Distribution Lines
Frozen Shipment of Goods (Basic Dough)
Machinery Shipments
Non Perishable Goods Shipments or In Country Purchase
Assess Workforce Requirements and Availability
Secure Material Sourcing As Required
Adequate Power & Water
Food Items
Potential Manufacture of Some Products in Country
Execution
Develop Store Design as Required
Set Date for Grand Flagship Store Opening
Establish Marketing Campaign
Execution
24 23 22 21 20 19 18 17 16 15 14 13 12Goal SettingGovernment ApprovalEstablish BudgetSecure FundingBegin Market Analyis
Assess Target MarketDevelop Tailored Product Offerings
Establish Pricing StandardsDevelop Strategic PartnersDetermine Store LocationsEstablish Distribution ChannelsAssess Workforce Requirements & AvailabilitySecure Material Sourcing As Required
Real EstatePowerWater
Food ItemsIn Country Product Support
Finalize Store Desgin and LayoutFlagship
Mirco StoresSet Date for Grand OpeningBegin Grand Opening Marketing Campaign
MONTHS UNTIL FLAGSHIP STORE OPENING
Execution
11 10 9 8 7 6 5 4 3 2 1 0Goal SettingGovernment ApprovalEstablish BudgetSecure FundingBegin Market Analyis
Assess Target MarketDevelop Tailored Product Offerings
Establish Pricing StandardsDevelop Strategic PartnersDetermine Store LocationsEstablish Distribution ChannelsAssess Workforce Requirements & AvailabilitySecure Material Sourcing As Required
Real EstatePowerWater
Food ItemsIn Country Product Support
Finalize Store Desgin and LayoutFlagship
Mirco StoresSet Date for Grand OpeningBegin Grand Opening Marketing Campaign
MONTHS UNTIL FLAGSHIP STORE OPENING
Execution
Initial Cookie Dough and Frozen Products Sent From the United States to Storage Warehouse for Immediate Distribution to Flagship Store
Non Perishables Purchased in House or Sent With Frozen Products- Cost Dependent
Local Adaptations Added to Dough and Desert Products as Needed
Product Decoration and Design Conducted at Flagship Store
Supply Chain
Daily Distribution from Hub Store of Finished Cookie/Dessert Products and other Perishable Items (Soft drinks) to Micro Stores via Ground Transportation (Conducts Resupply as Needed)
Bi-weekly Distribution of Non- Perishable Items (Napkins, Straws, Bags, etc…)
Cookie Cake Orders Distributed from Hub Store Only. Picked up at Hub or at Micro Store
Solicit Customer Feedback
Place Additional Orders for Products
Supply Chain
Feedback
GAC Sourcing Local Sourcing
Flagship Store
Micro Store
Micro Store
Micro Store
Micro Store
Micro Store
Micro Store
Local Distributor
Local Taste AdaptationsDesig
nFinish
Supply Chain
Start-Up FundingGrand Opening Marketing 5000.00Travel and Living Expenses While in Training 20000.00Cookie Ingredients 10000.00Other Opening Inventory 15150.00Architectural Fees 6750.00Furniture, fixtures Equipment & Décor 96750.00Signs 6000.00Prepaid rent & Security Deposit (3 months) 8010.00Leasehold improvements 68200.00Utility Deposits 3000.00Professional Fees 6000.00Computer System 5500.00Business Licenses, permits, etc 2500.00Insurance (3 months) 3500.00Additional Funds (3 months) 12000.00Total Startup Capital 268360.00
Table 1
GAC Financial Position
Revenues in excess of $6million for the past 3 years.
Multi-million dollar net income and cash flows for the past 3 years
Ratios
Recent acquisition of NexGen
Projections
Year 1 Year 2 Year 3Revenue from Franchise Fees 45000.00 45000.00Revenue from Royalty Fee 20355.30 42746.13Sales 393750.00 413437.50 434109.38 COGS 111037.50 116589.38 122418.84Net Sales 282712.50 296848.13 311690.53 Total Revenue 282712.50 362203.43 399436.66Advertising 5654.25 5936.96 6233.81Labor 107493.75 112868.44 118511.86Rent 32040.00 33642.00 35324.10Insurance Expense 14000.00 14700.00 15435.00Utilities 12000.00 12600.00 13230.00Depreciation Expense 19350.00 19350.00 19350.00TOTAL OPERATING EXPENSES 190538.00 199097.40 208084.77Operating Income 92174.50 163106.03 191351.89Other Start-up Expenses (Prior to Opening) 134460.00Interest 10734.40 10734.40 6734.40Earnings Before Taxes (53019.90) 152371.63 184617.49Taxes (18556.97) 53330.07 64616.12NET INCOME (34462.94) 99041.56 103993.63
Great American Cookies-ChinaProforma Income Statement
Projections Cont.
Year 1 Year 2 Year 3Assets Cash 131347.07 148481.12 102144.38 Inventory 25150.00 26407.50 27727.88Total Current Assets 156497.07 174888.62 129872.26 Furniture/Fixtures 96750.00 96750.00 96750.00 Accumulated Depr (19350.00) (38700.00) (58050.00) Net Furn Fixtures 77400.00 58050.00 38700.00Total Long Term Assets 77400.00 58050.00 38700.00Total Asets 233897.07 232938.62 168572.26
Liabilities Note Payable 268360.00 168360.00 0.00
Members Equity -34462.94 64578.62 168572.26Total Liabilities & Members Equity 233897.07 232938.62 168572.26
Great American Cookies-ChinaProforma Balance Sheet
Year 1 Year2 Year3Operating Activities Net Income -34462.94 99041.56 103993.63 Change In Inventory -25150.00 -1257.50 -1320.38 Depreciation Expense 19350.00 19350.00 19350.00Cash Flows from Operating Activities -40262.94 117134.06 122023.26
Investing Activities Purchase of equipment -96750.00 0.00 0.00Cash Flows from Investing Activities -96750.00 0.00 0.00
Financing Activities Change in Notes Payable 268360.00 -100000.00 -168360.00Cash Flows From Financing Activities 268360.00 -100000.00 -168360.00
Change in Cash 131347.07 17134.06 -46336.74Beginning Balance 0.00 131347.07 148481.12Ending Balance 131347.07 148481.12 102144.38
Great American Cookies- ChinaProjected Statement of Cash Flows
Conclusion
Location Selection
Tailored Local Flavors
Dinning Experience and Memories
Partnerships
Supply Chain
Proper Execution
Questions