Small businesses play a crucial role in improving the economy of any given country. Regressively, the success rates of such enterprises are usually quite low. Entrepreneurs can improve their chances of succeeding by conducting a thorough feasibility analysis to ascertain their strengths and weaknesses before starting a business. The term feasibility analysis (also called feasibility study) in this respect refers to a preliminary evaluation of a business idea to establish whether it is worth pursuing (Ionut, 2015 p. 518). It often takes into consideration various factors ranging from management to financial analysis. In that respect, this report presents a feasibility study Food Mate Company, a proposed food truck business.
Industry and Market Feasibility
In recent times, food truck business has become common in the United States. According to the IBISWorld (2017), this business showed an upward trajectory in 2017. The article attributes this surge to changing consumer preferences and needs. In particular, the report shows that customers tend to prefer unique, convenient, and affordable products. Food truck business, operate in the food and beverage industry with other established brick-and-motor enterprises such as McDonalds and Starbucks among others. These companies present significant challenges to food trucks in the United States.
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Nevertheless, the emerging trends among consumers of fast foods in the U.S. show that people prefer mobile restaurants (Food Trucks) since they help them to cover shorter distances in search for food (IBISWorld, 2017). The report also shows that Food trucks generate about 5.0% of the total revenue generated in the food and beverage industry and that the top four players in the food truck industry, such as Kogi, control less than 5.0% of the market share. It is also apparent that this industry has little barriers to entry. IBISWorld (2017) indicates that over the past one year, new food truck enterprises have emerged at a faster rate thereby making the industry too fragmented. The report suggests that the food truck industry would become popular even in the less populated region if the current trend persists.
Food Mate Company would take advantage of the current market situation to increase its market shares. The proponents of this enterprise would submit proposals to various companies, managers of public facilities, and hosts of relevant events to become their mobile food vendor. One of the benefits of food truck enterprises is that there are no restrictions to a particular marker (IBISWorld, 2017). The most crucial aspect is to ensure that all the activities are executed within the legal framework. In that regard, Food Mate would explore many options that are available including tourism locations, stadiums, and sports centers, university campuses, and construction sites among others to ensure that its products reach an unlimited number of customers.
Product Feasibility
One of the factors that motivate the proponents of Food Mate Company to invest in the food truck business is the fact that they want to offer a unique experience to consumers. To achieve that motive, they offer products that differ significantly from the traditional burgers and hot dogs that are usually sold in mobile restaurants in the country. Food Mate Company, notably, would specialize in preparing and selling Japanese waffles taiyaki to its potential consumers. Taiyaki is a Japanese word for baked sea bream. The waffles would have different filings, and it will be prepared using fresh ingredients every day. The traditional filling would be a red bean paste prepared using sweetened azuki beans. Potential customers would be offered two shapes. The first shape would take the shape of a prawn while the second one will take the form of a cone. The open end of the cone will be filled with ice cream. Americans, notably, tend to prefer purchasing products that offer them a new experience. Our products give them that opportunity since it is a hybrid of the American and Japanese cultures.
Financial Feasibility
In order to start Food Mate business, the proponents of this enterprise need to have a food truck for facilitating the operation. The food truck would cost an estimated $50,000. The cost of the food truck, however, varies from one place to another in the United States. The figure provided above is on the lower end. The company would have a kitchen in the truck where the food is cooked and served. The cook will be paid $10 per hour. Truck commissary would also be vital. It comprises equipping the truck with fresh water, propane, and powerhouse to keep food overnight. The estimated cost for truck commissaries is $500 per month.
Another thing that as would be vital is a health permit. The permit costs $800. The license would indicate where the business would operate legally. That, in turn, would determine location, hours of operation, audience, and the food vendors the company is likely to collaborate with in the market. About staffing, the company would require two staffs working inside the truck to help in handling high volume orders. The company approximates this would cost $8 per hour for each staff. Successful food trucks have a variety of menu to meet the different tastes and preferences of customers. Food Mate Company would offer different menu items for it to operate effectively. The cost for this is estimated to be about 25% of the total food cost. Finally, the company would invest in social networking tools to promote its products. The company would use social media since it can reach a large audience. The company projects that it would spend $100 to develop a website and other social media marketing platforms.
Projected Capital Investment
| Item | Cost |
| Food truck | $50,000 |
| Equipments | $40,000 |
| Health permit | $800 |
| Social media marketing | $100 |
| Total | $90, 000 |
Expected Expenses
| Item | Cost (Daily expense) | Cost (monthly expense) | Cost (Annual expenses) |
| Fuel | $80 | $2,400 | $28,800 |
| Food supplies | $150 | $4,500 | $54,000 |
| Beverages | $100 | $3,000 | $36,000 |
| Personal Salaries | $208 | $6,240 | $74,880 |
| Truck commissaries | $500 | $6,000 | |
| Commercial kitchen | $240 | $7,200 | $86,400 |
| Total | $23,840 | $286,080 |
Projected Sales
| Daily Sales | Monthly Sales | Annual Sales | |||
| Customers × Amount paid by each customer | Daily sales × 1 month (30 days) | Monthly revenue × 1 year (12 months) | |||
| 40 × 50 | = $2,000 | $2,000×30 | =$60,000 | $135,000×12 | =$720,000 |
Estimated annual profit = Annual revenue – Estimated annual Expenses
= $720,000 - $286,080
= $433,920
The estimates above projections coincide with Caminiti’s (2017) suggestion that food trucks could generate about $400,000 annual revenue quickly because they run on volume
Entrepreneurial Readiness
Olugbola (2017, p. 158) defined entrepreneurial readiness as an umbrella of personal traits that shows a person’s competence in operating a business. It encompasses an individual’s ability to analyze the environment and channel their creative thinking to achieve high productivity. Individuals characterized with entrepreneurial readiness also have the expertise that could help them navigate them through the challenges in a business environment. On this aspect, the proponents of this project have sufficient skills and plan to acquire finance. To begin with, the owner of the proposed business has sufficient experience when to restaurant management and customer service. These two aspects imply that the company has competent leadership that would drive it towards the coveted goals.
In conclusion, this feasibility study report indicates that the idea to start Food Nate Company is viable. In that respect, the proponents of this project can go ahead and launch the mobile restaurant. As indicated herein, the United States provides a good market for this business. Specifically, customers in the various states in the U.S. have realized the unique experiences mobile restaurants brings to them and are more willing than before to purchase fast foods from them. The company also delivers a unique product that merges two cultures hence making it appealing to consumers. Furthermore, Food Mate can generate an estimated $433,920 annually and would be headed by a competent leader. Thus, this business is designated for success if it would be executed and managed professionally.
References
Caminiti Susan. 2017. The 10 most popular food trucks in America. https://www.cnbc.com/2017/04/07/10-most-popular-food-trucks-in-america-.html#slide=1
IBISWorld. 2017. U.S. Industry market research report. https://www.ibisworld.com/industry-trends/specialized-market-research-reports/consumer-goods-services/food-service-drinking-places/food-trucks.html
Ionut, Ceausescu. 2015. The importance of the feasibility study for the business plan. Annals-Economy Series , 6 , 515-519.
Olugbola, Seun A. 2017. Exploring entrepreneurial readiness of youth and startup success components: entrepreneurship training as a moderator. Journal of Innovation & Knowledge , 2 (3), 155-171
