Executive Summary
Vortex will be the premier, high-energy, themed dance and nightclub in Northern Tasmania. Our goal is to remain a step ahead of our competition through excellent service provision. We expect our guests to have more fun while they are at Vortex than any other time of the day. We will provide more video and electronic technology per square metre than anyone else in the region. A simple, yet unique, themed menu and atmosphere will create a sense of ‘belonging’ for locals and tourists alike. Our operating philosophy is “happy enthusiastic employees create happy enthusiastic guests.” This is reflected in everything that we do at Vortex.
The main objectives of the development of this new venue are as follows. We want to launch the venue with a highly publicized grand opening event in the summer of 2008. We believe that this will make the business much more successful, as many more people will know of its existence. We feel it is important to maintain tight control of costs, operations, and cash flow through careful management. We also believe that we need to maintain a 33% profit on food and to maintain a 25% profit on beverages. This means that we will make good profits on both our food and beverage sales, as these will be two of our major revenue producers. We feel that our over all goal is to exceed $3 million in annual sales by the third year of plan implementation.
The keys to success in achieving our goals are as follows. We need to provide exceptional service that leaves an impression on each an every customer. We believe that this will be one of the defining factors in our success. People will want to come to our nightclub over others because we have the best and friendliest staff. We need to deliver consistent entertainment atmosphere and quality product every time. We must manage our internal finances and cash flow to enable upward capital growth and maintain strict control of all costs, at all times, without exception. This will enable us to make money, and utilize it in the best possible ways, so that our business will be successful.
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Company Summary
The key elements of Vortex’s concept are as follows:
1.Entertainment and dance based themes — The Company will focus on themes that have mass appeal.
2.Distinctive design features — Vortex will be characterized by the elaborate dance club situated in a spectator setting which comfortably accommodates 775 guests. The area will also offer three private skyboxes that can be combined for use in a conference or private party setting. This room is intended for special events and daily use. The adjoining dining room and bar would present an inviting and relaxing atmosphere, which displays a collection of musical and dance memorabilia. A live DJ will coordinate the events and entertain the patrons with music and games during music breaks and off-times.
3.Gaming — Vortex will provide several interactive style video games and pool tables to provide for both additional entertainment and revenue.
4.quality food — All would be lost without special attention being paid to the level of food quality. A simple menu offering foods similar to those found at a premier venue. Traditional ‘bar’ appetizers will be on hand for people craving nachos, wings, or a traditional kebab while they drink and enjoy themselves.
5.Exceptional service — In order to reach and maintain a unique image of quality, Vortex will provide attentive and friendly service through a high ratio of service personnel to customers, and will invest in the training and supervision of its employees.
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The type of dance I attended was a mix of ballet and modern. This involved group performances as well as individual performances. For the purpose of this paper I will narrow my observations to an individual performance of both ballet and modern and a group performance of both. Dance has the ability to draw it’s viewer in, by captivating the audience with the amount of grace, coordination and ...
Services
The emergence of the Brisbane Street area of Launceston represents a unique opportunity for a high-energy, dance-themed venue. The development’s central location, demographics, and lack of direct competition are major advantages to this project. The proposed venue will provide a local solution to the lack of social atmosphere and live sports venues geared primarily toward the 21-35 age groups in the Launceston area and will help keep late night entertainment expenditures within the localized region.
The new venue will specialize in high-energy themes, a quality video and gaming area, and will offer beer, wine and an array of liquors and mixed drinks. In addition, the venue will sell non-alcoholic beverages such as soft drinks, juices and bottled water. A “casual” food menu consisting mostly of appetizers and small entrees ranging in cost from six to nine dollars will also be available. The initial hours of operation will be 11:00 P.M. to 2:00 A.M., four nights a week. The establishment will draw primarily from the Launceston market while attracting guests from the area is other surrounding towns.
Market Analysis Summary
Vortex will be a 10,000 square foot unit, which will also house the company’s corporate business office. The dance club and bar will accommodate 775 people. With Launceston’s rapidly growing population, the variety of Vortex from across the State would create mass appeal for all of Vortex’s customers. The club will be equipped with state-of-the-art audio and video systems like none other found in Launceston. It will serve the need for a true nightclub in Launceston. The general appearance will be clean, open, and pleasing to the customer. The demographics are favorable, with minimal competition from other dance-themed venues and bars.
Market Segmentation
We see Vortex as appealing to three major market segments. Fortunately, the long, late night hours of operation help Vortex lend itself to multiple segment appeal. Our market segmentation scheme allows some room for estimates and nonspecific definitions.
1.Childless Young Professionals–Due to our proximity to the Cinemax theatres, we must appeal to single adults and young couples. Whether it is a group of friends or a couple out to see a movie together, these people need a place to eat/drink either before and/or after their movie. These customers will range in age from 27 to 40. Vortex will appeal to this category by switching the tempo and entertainment to be more appealing to adults as it gets later into the evening. We also anticipate a 15% annual growth rate in tandem with the growth rate of Launceston and through increased popularity.
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2.University Students–By creating an environment that is appealing to University students, we secure a natural progression between the high school student and the young professional. Through word of mouth, Vortex expects realize an increase of five percent annually from this segment.
3.Tourists and Business Travellers–More and more business and travellers and tourists are finding themselves in Launceston every year. We plan to reach these people through direct marketing to local hotel patrons. We anticipate a 20% annual growth rate in this segment. As our relationships grow with the local hotels, so too will the word of mouth recommendations from the hotel staff. Our plan is to publish a simple website in order to create awareness to any traveller who wants to take an advanced look at the club before their visit.
Target Market Segment Strategy
Our strategy is based on serving our niche markets exceptionally well. Vortex enthusiast, the tourist and business traveller, the local nightclub crowd, the local service industry as well as groups going out together, can all enjoy the Nightclub experience.
The marketing strategy is essential to the main strategy:
•Emphasize exceptional service.
•Create awareness of Vortex’s unique features.
•Focus on our target markets.
We must charge appropriately for the high-end, high-quality service and food that we offer. Our revenue structure has to match our cost structure, so the wages we pay and the training we provide to assure superior quality and service must be balanced by the fees we charge.
Part of the superior experience we offer is the simplicity o the menu items. While being unique, they are relatively inexpensive and easy to prepare. While a premium is appropriate for the experience, the pricing has to be balanced in accordance with what we are serving.
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All menu items will be moderately priced. We expect an average guest expenditure of $12.50 for beverages and $7.50 for the percentage of our guests who choose to take advantage of our food menu. Our target customer spends more than the industry average for moderately priced establishments. This is due to our creating an atmosphere that encourages longer stays and more spending, while still allowing adequate table turns due to extended hours of appeal.
Service Business Analysis
The typical venue of our style is open from 8:00 P.M. to 2:00 A.M., and within this time frame, the venue can achieve gross revenues anywhere from $3,500 to $25,000, nightly. The primary sources of revenue in a venue of this type are high volume traffic, coupled with comparably nominal spending. In addition to alcohol revenues, we will also generate substantial revenues from food sales that can typically range from seven to ten dollars per person, and admission fees that range between five and ten dollars per admit.
Entertainment venues in the late 1980’s and 1990’s focused on high-energy light and sound, multiple source video screens, and participative events. This relatively simple concept is still quite popular today. However, these concepts have greatly evolved with society. In recent years, this industry has become more sophisticated with the availability of new technology. Larger metropolitan areas have taken this technology to new heights with sound, lighting, video and interactive designs that create an exciting and memorable experience. Fortunately, no one in Tasmania area has been a pioneer in this specific segment of the industry as of the date of this report.
Additionally, the nightclub and bar industry is shifting towards a more entertainment-oriented concept. Guests of these venues are not only offered a dynamic place to gather and mingle, but a place to participate in the entertainment through interactive contests, theme nights, and other events. We intend to heavily utilize entertainment-oriented marketing in an effort to withstand the perpetual shift in trends and cater to as large a client base as possible.
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A foodservice director has many options for food production and service. Most food service directors inherit a foodservice system, but may make modifications to that System or select and build a new system. For example, in today’s environment it is very difficult to find adequate labour, which is forcing school foodservice directors to consider alternatives in food production. Also, there is a ...
Nightclubs and other drinking establishments rely heavily on their primary suppliers. The primary suppliers are the various beverage distributors that provide the establishment with both alcoholic and non-alcoholic beverages. The alcoholic beverages (beer, wine, and liquor) are the primary sources of income in this industry. Other beverage suppliers also play a crucial role by providing non-alcoholic beverages. These are either served alone or mixed with alcohol.
Daily Revenue Breakdown ** MonTueWedThuFriSatSunWeekly
Total Guests Charged Admission0032547567577502,250
Average Admission Fee$7$7$7$10$10$10$7$9.57
Total Admission Sales$0$0$2,275$4,750$6,750$7,750$0$21,525
Total Bar Guests003505507751,10002,775
Average Drinks per Person03333333.25
Average Beverage Sales per Guest$12.50$12.50$10.00$12.50$12.50$12.50$12.50$12.18
Average Price per Drink$0$3.75$3.75$3.75$3.75$3.75$3.75$3.75
Total Beverage Sales$0$0$3,500$6,875$9,688$13,750$0$33,812
Total Admission and Beverage Sales$0$0$5,775$11,625$16,438$21,500$0$55,337
Total Food Guests003050701000250
Average Food Sales per Guest$5.00$5.00$7.50$7.50$7.50$7.50$5.00$45.00
Total Food Sales$0$0$225$375$525$750$0$1,875
Misc. Sales (10% of Gross Sales)$0$0$578$1,163$1,644$2,150$0$5,533
Total Revenue$0$0$6,578$13,163$18,606$24,400$0$62,746
In the area, all major brands of alcoholic beverages are available, in addition to several regional brands of beer. Initial research shows that the major distributors in the market have a high rating in both product availability and delivery.
Business Participants
Vortex will be part of the restaurant and bar industry, which includes several kinds of businesses:
•Locally Operated Bars and Nightclubs – This genre usually appeals to the local neighbourhood clientele. This same client base dictates that the average price structure be drastically scaled down in order to create “regulars.”
•Nightclub Entertainment Complexes – This type of complex represents the concept we will most closely compete with. They are typically placed in high traffic locations and are normally treated as destination entertainment. An admission charge is usually in place and the associated price structure is most like our proposed structure. Thankfully there is not an abundance if this type of entertainment within our region.
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•Conventional Dining – Primarily owned by large national chains, usually less than 10,000 square feet, focused on serving good quality food in a reasonable amount of time in a dining room setting. The service and food quality are superior to that of a fast food establishment. People go there to eat and leave when they are done eating since there is rarely a reason to stay.
•Formal Dining – Similar to conventional dining yet offering a higher quality of food and service for the added expense. As with the conventional dining facilities, there is little interaction and when people are done eating, they leave.
•Casual Dining – Commonly building upon conventional dining with the addition of a bar, playing of music and sporting events on numerous televisions. Some establishments offer their own brand of beer made on the premises. The food quality and service are at best, similar to that found in a conventional dining experience.
•Chain Entertainment – Typically manifested in each market through the Hard Rock Cafes, The Planet Hollywoods, etc. We expect to create an atmosphere that thrives on its trendy feel. These chain entertainment venues cannot hope to draw the same “hip” clientele.
4.3.2 Main Competitors
Vortex competition lies mainly with other casual facilities and less with conventional and chain entertainment establishments. We need to effectively compete with the widely held idea that you cannot get good service anymore, while maintaining the idea that being out can be a lot of fun. Our polling has indicated that consumers think of atmosphere, price, and quality respectively. Additionally, price was frequently mentioned by pointing out that if the former concerns are present then they are willing to pay more for the experience.
Our review of the market concludes that there are four entertainment venues that can be considered direct competition to the proposed new venue. We do realize that the proposed venue will also compete indirectly for every entertainment dollar spent in the Launceston area.
The main competitors of Vortex will be:
Lonnies Nightclub
Hours of Operation: 5:00 P.M.-2:00 A.M.
Wednesday through Saturday
Capacity: 300
-This nightclub plays solely dance music, catering for 20-28 year olds.
-The club is known for being its expensive food and drinks.
Saloon Bar
Hours of Operation: 10:00 A.M.- 2:00 A.M.
Monday through Sunday
Capacity: 400
-This Club is known for its size, with multiple bars and a dance floor
-Known for cheap drinks and food, appeals to young age group.
Royal Oak
Hours of Operation: 6:00 P.M.-2:00 A.M.
Wednesday through Saturday
Capacity: 250
-This club’s target customer is 25 to 45 years old / middle class or above.
-This club is known for its older, dressed up crowd and cramped space.
Lloyds Bar
Hours of Operation: 11:00 A.M.-2:00 A.M.
Monday through Sunday
Capacity: 350
– Pool and video games are central focus.
-Dancing is pushed to the back of the club.
Strategy and Implementation Summary
In order to place emphasis on exceptional service, our main tactics are bi-monthly service training, employee recognition, and higher service employee to customer ratios. Our specific programs for training include employee for life training for management, customer for life training for employees, and the sharing of success stories among employees and management. Our specific employee recognition programs include employee of the month with a personal parking space, service excellence recognition awards of specific employees attached to advertising. To achieve higher service employee to customer ratios, we include separate beverage servers and bussing personnel, as well as maintaining a comfortable table count for the wait staff.
Our second strategy is emphasizing entertainment. The tactics are interactive entertainment, constant sensory appeal, and unique event viewing. Our specific programs for interactive entertainment and constant sensory appeal are frequent contests, games, music, and karaoke all hosted by an in-house DJ who is also in charge of event programming for the main room and lounge. A billiard room will overlook the main area. Billiards was selected due to its widespread popularity (fifth most popular sport in the world, according to CNN).
A limited number of video and pinball games, as well as computer dartboards, will compliment the billiard tables in order to offer a less interactive entertainment option. With an adjoining bar and plenty of seating, yet another unique experience could be carved out of a visit to Vortex.
Our promise fulfilment strategy may be our most important. The necessary tactics are ongoing value-based training, maintenance, and attention to detail, especially after popularity has been established. Through empowerment of service employees to solve problems without making, a customer wait for management consultation we create a win-win situation for the customer and the restaurant. Continuous and never-ending improvement is the order of the day through our regular training sessions and meetings. Since value is equal to service rendered minus the price charged, it is crucial to go beyond the mere serving of food in a room full of lights and sound, you have to create a long-lasting impression.
•Emphasize exceptional service — We MUST prove to guests that exceptional service is still available and should be expected as part of a dining experience. We need to differentiate ourselves from the mediocre service venues.
•Emphasize an entertaining experience — By assuring that all guests will enjoy themselves, we would be securing market share through repeat business.
•Focus on target markets — Our marketing and themes of mass appeal and music-based entertainment will attract our target market segments.
We cannot just market and sell another dance club, we must actually deliver on our promise of quality, service and a unique guest experience. We need to make sure we have the fun and service intensive staff that we claim to have.
Marketing Strategy
A high growth area, such as Launceston, has an annual influx of new residents from many other parts of the country. This trend is true of Tasmania in general.
Many new residents, as well as many existing ones, are members of clubs in other markets. Vortex is a place for all. The enabling technology will be an inherent part of Vortex’s image.
Advertising budgets and event promotion are ongoing processes of management geared to promote the brand name and keep Vortex at the forefront of the dance theme establishments in Launceston’s marketing area.
We depend on radio advertising as our main way to reach new customers. Our strategies and practices will remain constant, as will the way we promote ourselves:
•Advertising — We will be developing a core-positioning message.
•Grand Opening — We will concentrate a substantial portion of our early advertising budget towards the ‘Grand Opening Event.’
•Direct Marketing — We will directly market to local hotels surrounding the powers and the local airport.
Vortex will create an identity-oriented marketing strategy with executions particularly in radio media, alongside print ads, and in-store promotions.
A grand opening event will be held to launch Vortex in the summer of 2008. A radio-advertising blitz will precede the event for three weeks, with ambiguous teasers about an “event like no other” in the city’s history and the forthcoming opening date. Contests will be held on the target radio stations giving away V.I.P. passes (coupons) to the event while at the same time, creating excitement about the opening. The opening date is tentative at this point and dependent upon construction completion. The budget for the event will be $10,000, and the milestone date will parallel the available opening date, currently January of 2008.
Achievement of the following campaigns will be measured by the polling of customers as to how they heard of Vortex for the first ninety days of operation. Budget adjustments will be made as the results dictate.
We will be running regular local radio and newspaper ads to create brand awareness. Our radio ads will be concentrated strongly on 7LA, the city’s top radio station among our target market segments. Through commercial repetition, a teaser campaign, and the use of catchy phrases, we hope to obtain intellectual ownership of our target market segments: when they think dance club and bar, they will have to think Vortex. Drink specials will also be staples of our radio advertising in order to bring people in. Matt Bowring will be responsible for ongoing radio ads with a monthly budget of $12,000 per month for the first ninety days, followed by an ongoing budget of $6500 per month.
We will advertise directly to local hotel guests in the local airport and surrounding the Boulevard areas to attract business travelers and tourists with no knowledge of where to go in the evening. With fliers and table tents to place in hotel rooms, we hope to create visitor awareness of our location and event promotion. Promos such as ‘show your room key and get a free drink’ in conjunction with the room ads would be relatively inexpensive from an advertising standpoint and requires limited ongoing maintenance and expense. Richard Black will be responsible for direct advertising with a start-up budget of $3,000 and a maintenance budget of $1,000 per month. The milestone date will be thirty days after the grand opening event.
Ads will also go into the college newspapers for the local campuses of Tasmania College and the University of Tasmania. Richard Black will be responsible for this program. The monthly budget for these ads will be $300. The event date will be in tandem with the grand opening.
Shirts, ball caps, and bumper stickers bearing Vortex’s logo will be marketed, as well as given away as prizes, in order to further spread brand awareness. Artistic design will be Richard Black’s responsibility and merchandising will be headed by Matt Bowring. A start-up budget of $1800 will be in place and a monthly promotional (giveaway) budget will exist.
Sales Strategy
This table illustrates our daily revenue forecast for 10,000 total square feet.
We are assuming a capacity for 775 guests. We expect just less than one complete rotation of this space for food and beverage guests alike.
Daily Revenue Breakdown ** MonTueWedThuFriSatSunWeekly
Total Guests Charged Admission0032547567577502,250
Average Admission Fee$7$7$7$10$10$10$7$9.57
Total Admission Sales$0$0$2,275$4,750$6,750$7,750$0$21,525
Total Bar Guests003505507751,10002,775
Average Drinks per Person03333333.25
Average Beverage Sales per Guest$12.50$12.50$10.00$12.50$12.50$12.50$12.50$12.18
Average Price per Drink$0$3.75$3.75$3.75$3.75$3.75$3.75$3.75
Total Beverage Sales$0$0$3,500$6,875$9,688$13,750$0$33,812
Total Admission and Beverage Sales$0$0$5,775$11,625$16,438$21,500$0$55,337
Total Food Guests003050701000250
Average Food Sales per Guest$5.00$5.00$7.50$7.50$7.50$7.50$5.00$45.00
Total Food Sales$0$0$225$375$525$750$0$1,875
Misc. Sales (10% of Gross Sales)$0$0$578$1,163$1,644$2,150$0$5,533
Total Revenue$0$0$6,578$13,163$18,606$24,400$0$62,746
Management Summary
Matt Bowring, Co- President. Matt Bowring has a bachelor’s degree in business management, five years management in the restaurant/bar business, consultative experience opening other bars, six subsequent year’s management in the car industry ending currently with his current position as department manager. Matt’s specific responsibilities will lie primarily with the coordination of events and oversight of the operations and evening activities of the restaurant and bar.
Richard Black, Co-President. Richard Black is pursuing a life-long ambition of restaurant/nightclub ownership. Three years of restaurant kitchen experience and nearly eight years of experience managing people ending with three and a half years of finance management. Richard is committed to not only creating a successful business but also successfully running it. Even though his hands-on experience in business management is extensive through the finance business, he has spent the last year and a half researching business and business ownership in his spare time. Richard’s specific responsibilities will be administrative management to include inventory management, accounts payable, purchasing, payroll, and public relations with limited marketing involvement (mostly direct) to other companies.
Financial Plan
The financial projections for this plan are presented in the tables and charts of the following subtopics.
Important Assumptions
The financial plan depends on important assumptions, most of which are illustrated in the following table.
The key underlying assumptions are:
•We assume a slow-growth economy of five percent the first year, and three percent thereafter, without major recession.
•We assume that we will grow as managers during the process, this growth will manifest itself as flat line expense growth over the five-year period, leading to increased annual cash flow.
•We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
•We assume continued popularity of nightclubs in America and the growing demand for high-energy themed and casual dining venues.
General Assumptions
200820092010
Plan Month123
Current Interest Rate10.00%10.00%10.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate25.42%25.00%25.42%
Sales on Credit %10.00%10.00%10.00%
Other000
Break-even Analysis
Break Even Point = $139,924
Average Nightly Break Even Revenues – approximately $ 7,775
Minimum Nightly Required Spending per Person – $8.75 + $9.75 = $18.50
Minimum Nightly Required Incoming Traffic – 420
Start-up Expenses
Air Cond. Upgrade$25,000
Audio/Lighting Lease Payment$2,750
Bar Equipment$9,500
Bar Supply$5,500
Cash Reserves$125,000
Exterior Signage$15,000
Fees and Permits$35,000
FFE$75,000
Impact Fees$7,500
Initial Marketing$22,500
Interior Refit$45,000
Kitchen Upgrade$12,500
Legal$7,500
Opening Salaries Deposits$25,000
Paper Products$2,500
Point of Sales Systems$35,000
Restroom Upgrade$35,000
Total Start-up Expenses$485,250
Start-up Assets Needed
Cash Balance on Starting Date$75,000
Start-up Inventory$7,500
Other Current Assets$0
Total Current Assets$82,500
Long-term Assets$0
Total Assets$82,500
Total Requirements$567,750
Funding
Investment
Investor 1$250,000
Investor 2$250,000
Other$67,750
Total Investment$567,750
Loss at Start-up($485,250)
Total Capital$82,500
Projected Profit and Loss
Projected profit and loss statement for Vortex follows. Three years’ annual totals are shown below. Monthly breakdown for year one appears in the appendix.
Pro Forma Profit and Loss
200820092010
Sales
Beverage Sales$1,346,100$1,480,710$1,628,781
Food Sales$93,500$102,850$113,135
Total Sales$2,276,340$2,503,974$2,754,371
Expenses:
Payroll$391,936$411,528$432,104
Sales and Marketing and Other Expenses$411,576$430,574$451,284
Depreciation$0$0$0
Fees–Credit Card$10,764$10,982$11,202
Fees–Professional$7,500$7,650$7,803
Taxes–Admission$0$0$0
Taxes–Excise$391,536$399,368$407,355
Taxes–Property$0$0$0
Leased Equipment$2,496$2,550$2,601
Utilities$36,000$36,720$37,454
Insurance$22,500$22,950$23,409
Rent$75,000$75,000$76,500
Payroll Taxes$66,629$69,960$73,458
Other$0$0$0
————————————
Total Operating Expenses$1,415,937$1,467,282$1,523,170
Profit Before Interest and Taxes$493,023$632,573$786,670
Interest Expense$0$0$0
Taxes Incurred$121,122$158,143$199,945
Net Profit$371,901$474,430$586,725
Net Profit/Sales16.34%18.95%21.30%
