Campus Gelato Pushcart Feasibility Analysis Report Proposed Research Paper

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Campus Gelato Pushcart

FEASIBILITY ANALYSIS REPORT

Proposed on-Campus Gelato Pushcart Plan

Background and Purpose of Feasibility Analysis

Marketing Analysis

Key Conclusions

Technology

Marketing

Economics

Finances

Technical Appendices

Primary Research -- On-Campus Survey

Primary Research -- Management Interview

Break-Even Analysis

Primary Research - Profit Analysis

Cost of Goods Sold

Fixed Costs

Break-Even Computations

Preferred Gelato Pushcart Locations

Preferred Season for Gelato Consumption

Students' Prediction of Per Week Gelato Purchasing

Student Price Preference for Single Scoop

Summary Report - Entrepreneurship

Background and Purpose of Feasibility Analysis

Background. Bond University main campus is located in a region with warm spring, summer, and fall weather. This consistently favorable climate fosters student interest in cool refreshments. Because the campus is relatively isolated, students must drive a considerable distance to the nearest town in order to have access to a range of services and entertainment sites beyond what is immediately located on-campus. Students currently can buy refreshments from two restaurants, two coffee shops, and a number of vending machines located in buildings across the campus. Although gelato has increased in popularity over the past several years, gelato is currently not sold on campus. The establishment of an on-campus gelato pushcart, hereafter known as Bond U. Gelato, is proposed to supply refreshments to students, staff, faculty, and visitors.

Marketing Analysis.

Target market. Students are the primary target market for the gelato pushcart. Students tend to be "place bound" on campus as most do not have personal vehicles they can use to go into town. Staff and faculty are included in the target market as a separate market segment. Visitors are incidental to the marketing plan as their interest is considered opportunistic. In an a brief survey given to students and faculty, when asked if they liked gelato as refreshment, 88% of the survey respondents answered "yes," while only 12% said "no." For those customers who do not like gelato, Bond U. Gelato will also offer beverages. Responses to a random sample of students and faculty indicate that a majority of students would buy gelato once, twice, or three times per week.

Value proposition. "On the go gelato!" Bond U's Gelato pushcart brings refreshment to busy campus-bound students so they can stay focused on their studies and not on the heat, or their flagging energy levels. Bond University students must use their energies for their studies. Traveling off-campus is not something Bond University students can do for frivolous reasons. Students need to find refreshment when they need it and where they are. In any one of four convenient campus locations, Bond U. Gelato pushcart can help students feel refreshed and get them on their way.

Route to market. Bond U. Gelato will market directly to its customers. Input from potential customers indicates that four campus locations are optimal for locating the gelato pushcart. As the two most favored locations are in close proximity (Appendix A, Figure 1) optimally, the gelato pushcart could set up in these spots on alternate days or different times of the day.

Product and service. In the frozen treat category, gelato is the healthier choice. Gelato contains only 2 to 4% butterfat versus 14% butterfat in ice cream. In addition, the best gelato -- like that offered by Bond U. Gelato -- uses fresh ingredients and is often made daily, and is made by-hand. Artisanal gelato is a niche product in the U.S., and though the number of gelaterias[footnoteRef:1] is rapidly increasing, many people have only eaten poor quality gelato (Rifkin, 2008). As Jon Snyder, founder of Ciao Bella and Il Laboratorio del Gelato, says, "You can't get more artisanal than a pushcart."[footnoteRef:2] [1: There were an estimated 800 stand-along gelato shops in the U.S. In 2008, compared with 37,000 such shops in Italy. In Rifkin, G. (2008, September 4). Move aside, frozen custard, and make room for gelato, The New York Times. Retrieved http://www.nytimes.com/2008/09/04/business/smallbusiness/04sbiz.html] [2: Jon Snyder has located his gelato "lab" in the Lower East Side on Orchard Street, an area known to have many pushcart food operations. In Witchel, A. For this guy, gelato is the answer. The New York Times. Retrieved http://www.nytimes.com/2002/09/11/dining/for-this-guy-gelato-is-the-answer.html?src=pm]

When Bond University students and staff were asked (Appendix A, Figure 2) if they consumed gelato regardless of the season, 55% said that they ate gelato in the summer, but 46% said that they consumed gelato in the summer and in the winter.

An interview was conducted with the manager of the University's restaurant in order to learn more about their experience serving ice cream to students. The store manager confirmed that the students purchased and consumed ice cream regardless of the weather -- the only caveat is that consumption of frozen treats may differ when the purchase occurs out-of-doors. Based on the restaurant manager's report, the reactions of students and staff to a year-round on-campus pushcart service could easily be tested.

Competitors. Bond U. Gelato would compete with on-campus facilities and sources of refreshment; of the two restaurants on campus, only one sells ice cream. As discussed in section II. Key Conclusions, the status of this facility as the gelato pushcart's primary competitor changed considerably during the time this analysis was carried out. Other potential competitors include a second on-campus restaurant, two coffee shops, and various vending machines strategically located in campus buildings. The niche that Bond U. Gelato will fill is to provide up-scale beverages and the finest gelato for purchase while students are on the go. There is no need for students to use up precious time with the inevitable delays that entering and exiting a restaurant or coffee shop entail. No waiting to be seated, no shortage of seats or tables to be negotiated, no waiting for table or counter service, and no waiting for charge authorization. Bond U. Gelato will be served in cups -- for those who have the time to briefly stand around the pushcart while eating their gelato -- or in cones, for those who absolutely must push on.

Partnership Agreement. A planned partnership with the Bond University's restaurant will enable Bond U. Gelato to take advantage of established capacity. The restaurant is equipped to make and store fresh gelato. All ingredients can be delivered to the restaurant kitchen, where preparation can be carried out by existing restaurant staff. In addition, should additional gelato be needed to refresh the pushcart's supply, the restaurant's on-campus location makes for quick resolution. Experts say that establishing a stand-alone gelato shop can be risky and that the initial investment can be quite high. Restaurant equipment suppliers recommend selling gelato as part of an established operation, like a coffee shop or a pizzeria, rather than setting up a business dedicated to the sale of gelato.[footnoteRef:3] These same suppliers estimate that start-up costs for a new gelato shop can run hundreds of thousands of dollars, while embedding a gelato service in an existing establishment may cost only about $50,000 (Rifkin, 2008). [3: Dominic Seminara of the Arlington, Texas, Specialty Restaurant Equipment Corporation, may not be thinking of artisanal gelato when he makes this recommendation. In Rifkin, G. (2008, September 4). Move aside, frozen custard, and make room for gelato, The New York Times. Retrieved http://www.nytimes.com/2008/09/04/business/smallbusiness/04sbiz.html]

Not all artisanal gelato is made in the shop where it is consumed. Some gelato aficionados manufacture specialty gelato for wholesale to local gelaterias. One such example is Il Laboratorio del Gelato in New York City's Lower East Side. What began as Ciao Bella gelato shop became an official laboratory for concocting customized gelato in collaboration with elite chefs and caterers. "The Lab" supplies about 200 local gelato establishments, and remains focused on using fresh, local products with delivery to higher-end restaurants and shops, like Dean & DeLuca and Balducci's.[footnoteRef:4] [4: Jon F. Snyder, who created Ciao Bella and Il Laboratorio del Gelato, attributes his success to localization and small-scale hand-crafted gelato. In Witchel, A. For this guy, gelato is the answer. The New York Times. Retrieved http://www.nytimes.com/2002/09/11/dining/for-this-guy-gelato-is-the-answer.html?src=pm]

II. Key Conclusions.

Technology.

1. An "embedded" gelato operation is preferable unless the location is optimal (international residents, slow-food culture). Partnering with the university's restaurant ensures adequate facilities and service at comparatively low cost.

2. An emphasis on artisanal gelato is essential if the product is to be competitive against ice cream. The University's location in the suburb of Robina, with its local rail access and cosmopolitan surroundings, makes a slow-food, gourmet approach to gelato production possible and practical.

Marketing.

1. Gelato was described as a "hot trend" in a 2007 survey of 1,200 chefs who belong to the National Restaurant Association.[footnoteRef:5] Gelato is no longer a novelty, but artisanal gelato is highly sought after by a discriminating market. Students at Bond University are likely to have sophisticated palettes and an interest in consuming quality treats. [5: The survey was conducted by What's Hot. In Rifkin, G. (2008, September 4). Move aside, frozen custard, and make room for gelato, The New York Times. Retrieved http://www.nytimes.com/2008/09/04/business/smallbusiness/04sbiz.html]

2. In 2008, the Chicago-based market research firm Mintel found that 14% of the participants in…[continue]

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