Nukarn Suwatikul

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Lets Make a Deal!
Modesty, casualness, and an air
of nonchalance are characteristic
attitudes in Australian business
culture.
Nukarn Suwatikul Amit Shah Don Ta Lloyd Well
ington
Hazem Yassin
Brought to you by
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Outline

• Mission Overview of the Wrap
• Core Competencies
• Country Profile
• Economic Summary
• Australia-US Comparison
• Investment Incentives
• Business Set-Up Checklist
• Australian Food Industry Characteristics
• Marketing Strategy
• Financial Strategy

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Mission

• The company's goal is that of financial success
  through a multi-faceted
  
• approach. We will meet this goal while trying to
  consider
  
• the effect of our products on the health and well
  being of our customers (and our staff),
  
• the impact that our business practices and
  choices will have on the environment, and
  
• the high quality of attitude, fairness,
  understanding, and generosity between management,
  staff, customers, and vendors.
  
• Awareness of all these factors and the
  responsible actions that result
  
• will give our efforts a sense of purpose and
  meaning beyond our basic
  
• financial goals.

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Overview

• In 1996, fast, fresh, healthy food was difficult
  to find in Boston.
  
• These wildly popular food concepts existed en
  masse in California, but were far and few between
  in Massachusetts and other parts of the country.
  
• The Wrap was launched as a restaurant that
  featured wraps, burritos, smoothies in a
  friendly, casual environment.
  
• Building and running the first location helped
  the management team identify the competencies
  that are now at the core of The Wrap.
  
• Success required three key ingredients always
  being fresh, friendly, and fast.
  

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Core Competencies

• A unique recipe for success in hand Bringing
  the healthy concept to more Bostonians.
  
• Penetrating the markets of and eventually
  acquiring competing businesses.
  
• Fast menu that focused on simplicity,
  mouth-watering recipes, and custom-ordering.
  
• Keeping the focus on our customers - as long as
  our customers continue to give thumbs up, The
  Wrap will slowly expand to communities that value
  its food and its services, as well as its desire
  to give back to its neighbors.

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Famous
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"Top 40 Bangs for the Buck" --Zagat 2003
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Burritos Nutritional Fact Sheet
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New Location

• P. Sherman 42 Wallaby Way Sydney

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Country Profile

• Prime Minister John Howard.
• Independence January 1, 1901
• Population 19,731,984
• Total area 7,687 Sq. Km
• Major Cities Sydney, Melbourne, Canberra
  (Capital), Brisbane, Perth, Adelaide
  
• Languages English, native languages
• Ethnic Groups Caucasian (92), Asian (7),
  aboriginal and other (1)
  
• Religions Anglican (26), Catholic (26), other
  Christian (24), non-Christian (11)

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Economic Summary

• Currency Australian Dollar (A)
• Market Exchange Rate US 1A1.34
• GDP per Capita US 30, 695
• GDP Growth Rate 3.7
• Inflation Rate (Consumer prices) 3.1
• Unemployment Rate 5.7
• Major Trading Partners Japan, other Far East,
  European Union, United States
  
• Major Exports crude materials, food live
  animals, mineral fuels lubricants
  
• Major Imports machinery transport equipment,
  manufactured goods, chemicals

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Economic/Industrial Trends

• Traditional strength of manufacturing employment
  is declining, however it remains strong.
  
• Key employment areas - wholesale trade, finance,
  business services, health insurance, property and
  community services.
  
• Growth areas retail trade, construction,
  restaurants, transport, storage, cultural and
  recreational services

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Employment Trends
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Australia-US Comparison

• Australia US
• Total area 7687 Sq. Km 9629 Sq. Km
• Population in millions 20.1 293
• GDP per Capita US
  30,695 39,862
  
• GDP Growth 3.7 3.2
• Unemployment Rate 5.7 5.4
• Corporate Income tax 30 40
• Highest Personal Income tax 47 35
• Quality of Life 9.35 8.11
• Primary Industries

Financial ServicesTransportationTechnologyHealt
hcareReal Estate
Agriculture Food Forest Sea food Wine Industr
y
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Age Groups
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Population Density
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Investment Incentives

• Australia gives investors a competitive and
  quality choice in the Asia-Pacific region
  
• Average business costs in Australia. is around 8
  to 9 per cent below those in the US.
  
• Australia is ranked the second most cost
  competitive country for business operations in
  the industrialized world.
  
• Cheap real estate Sydney is approx. 66 less
  thanin London, 46 less than in Tokyo, 11
  less than in New York.

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More Incentives

• Australia's transport and logistics systems
  provide a mature, efficient and cost effective
  means of delivering products and services.
  
• Cost competitiveness coupled with a superior
  workforce and a low overall cost of living
  implies that the commercial advantages of doing
  business in Australia are excellent.
• Australia's overall tax burden as a share of GDP
  is significantly lower than its western
  competitors.
  
• Level of corruption is among the lowest of OECD
  (Organization for Economic Cooperation and
  Development) member nations.
  

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Business Set-Up Checklist

• Human Resource
• Business Documentation
• Budgeting Finance Control
• Marketing Advertising
• Target Industry Characteristics
• Legal aspects
• Registration Insurance

• Feasibility Study
• Location Premises
• Licenses and Permits
• Business Planning
• Finance/Funding
• Business Structure
• Taxes

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Australian Cuisine At a Glance

• Traditionally-based on English cuisine e.g.,
  roasts, grilled chops, other forms of meat,
  accompanied with vegetables (mashed potatoes,
  beans, peas, and carrots)
• Currently very diverse, reflective of its
  multi-cultural influences. South East Asian,
  Greek, Lebanese, and Italian foods are very
  common.
• Australian Government, through health initiatives
  and cultural marketing efforts, is promoting a
  push towards healthy food choices.

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Australias Fast-Food Industry

• Australian fast-food market was US6.2billion in
  2003
  
• Market is an Oligopoly, with independent outlets
  e.g., McDonalds, Burgers Burritos Nachos and
  Tacos (BBNT), Subway, KFC, Pizza Hut, Burger King
  (a.k.a. Hungry Jacks) accounting for 70.5 of
  total number of fast food outlets
• McDonalds is the market leader in Australia,
  with a market share of 34.7. This figure is a
  decrease from its 2002 market share.
  

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Australias Fast-Food Industry Cont.

• Fast food market in Australia is predicted to
  grow about 17 to 7.25 billion by 2008.
  
• Takeaway foods favorites in Australia are
• meat pie
• fish chips
• sausage rolls

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Marketing Strategy

• Fresh-Friendly-Fast
• Fresh fresh ingredients make a tasty product.
• Friendly- friendly atmosphere suits our customer
  base and our work culture.
  
• Fast- fast service to maximize our clients lunch
  and relaxation time.
  
• But Also Healthy-Reasonable
• Healthy- we serve fast, healthy food to fit the
  lifestyles of our customers.
  
• Price- quality offerings at reasonable prices has
  and will enable us to increase our market share.
  

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Marketing Strategy

• Our Customers
• Professionals and young adults our stores are
  typically found close to business districts and
  universities.
  
• Everyone that shares our ideology of a tasty,
  healthy meal at an affordable price.
  

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Marketing Strategy

• Promotions and Advertising Strategy
• Our theme is Fresh-Friendly-Fast
• Primary medium for advertisement will be the
  radio. Radio spot and jingle will create brand
  recognition.
  
• Special promotions will be advertised in
  newspapers. We will also do flyers and coupons
  periodically.
  
• Frequent customer reward card.
• We will also sponsor health events.

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Setup Costs of a Typical Deli Franchise

• Investment required 100,000-200,000
• Includes 60,000-80,000 towards
  furniture/fixtures
  
• Initial Franchise Fee 10,000-25,000
• Royalty Fees 6-8
• Advertising Fund 3.5-4.5
• 6-8 employees
• 2-4 weeks of management training

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Franchise Costs in Australia

• Investment Required 125,000
• 80,000 in Equipment, Furniture Fixtures
• Initial Franchise Fee 15,000
• Royalty Fees 6
• Advertising Fund 4
• 4 weeks of management training

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Breakdown of Initial Investment
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Industry Derived Values

• Broken down from annual sales
• 25 target profit
• Ranges from 20-30
• 75 expenses
• 25 dedicated to food and paper costs
• Range from 70-80
• The value of the business is typically sold 3-4
  times the annual profit
  
• Expect positive return on investment after 4-5
  years

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Australia Investment Strategy

• Use current retained earnings of 400,000 to
  penetrate the growing health conscious Australian
  fast food market
  
• Establish one store in each of the largest two
  cities
  
• Sydney and Melbourne
• Aggressively develop the business and create
  franchising opportunities
  

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Australia Investment Strategy

• Franchise at a pace of two locations annually
• Sell the Melbourne store after the 5th year
• Maintain the Sydney operation as a
  franchisor-owned location where management
  training and franchisee consulting takes place
  
• By the end of the 10th year, comprise of at least
  20 franchisee-run stores while achieving a
  positive present value return and to further
  expose as an expanding
  international franchise opportunity

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1) Melbourne Acquisition Target

• Asking Price 52,238 US
• Annual Sales of 111,940 US
• Low start-up capital required as the majority of
  the furniture/fixtures can be carried over
  
• Situated in the heart of the citys business and
  residential population considered one of the
  best locations in the Melbourne Central Business
  District
• New local university opening soon
• High visibility in an upscale shopping plaza
• Annual lease is US25,224 for 1,200 sq ft
• Total acquisition and transition start-up costs
  is less than US100,000
  

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2) Establish in the Prime Darling
Harbor area in Sydney

• Darling Harbor
• Houses Sydney's convention and exhibitioncenters,
  as well as several major tourist attractions,
  shops, restaurants and cafes
  
• One of the worlds leading waterfront leisure
  and entertainment destinations.
  
• Attractions include the Imax Theatre, Sydney
  Aquarium, Chinese Garden of Friendship,
  Australian National Maritime Museum, Powerhouse
  Museum, Harbourside Shopping Centre and Cockle
  Bay Wharf.

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2) Establish in the Prime Darling
Harbor area in Sydney

• King Street Wharf
• The most recent prestigious waterfront
• office location overlooks the Harbor
• The location will be larger than normal to
  accommodate itself as the management training and
  corporate store
  
• Annual lease is 100,000 for 2,980 sq ft
• 1,635 for restaurant and 1,345 for office
• Total investment costs at 250,000

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Tax methods

• Companies are taxed at a straight 30 rather than
  at a marginal tax rate
  
• Depreciation
• For each capital cost worth under 1,000,
  depreciation is calculated at 37.5 of the annual
  value until it is fully depreciated
  
• Items over 1,000 use 15 the first year and 30
  annually thereafter
  
• Capital gains tax is not a separate tax, but a
  component of income tax

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10 year Business Plan - Assumptions

• Tax rate at 30
• Depreciation at 37.5
• No capital gains tax (rolled into income)
• Annual Escalators
• Sales Revenue and Royalty Income
• 3 yrs. 2-3
• 4 yrs. 4-5
• 5 yrs. 6-10
• Expenses
• 4 yrs 2-5
• 2.8 yrs. 6-10 (inflation rate and max operation
  efficiency)
  
• Discount rate at 11, with 10 and 12 as
  alternatives

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10 year Business Plan - Financials

• 400,000 initial investment
• 350,000 actual investment cost
• 50,000 in reserves for unexpected costs
• Achieve a positive return at the end of the 5th
  year when the Melbourne restaurant is sold for
  approximately 150,000.
  
• Projected annual royalty income of 0.5 million
  by the 10th year, assuming two franchises are
  established annually.

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Present Value and Rate of Return

• 10 year Net Present Values range from
  800,000-1,300,000,using 10-12 discount
  rates.
  
• Internal Rates of Return range from 33-34 after
  taxes.

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• As evidenced by the projected return with a
  conservative 10 year forecast, this project is
  guaranteed to be a market success for the
  expanding health conscious sector in Australia
  and
• Project will open the doors for future
  development in Asia and Europe.

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