Busy Bones Butcher, LLC Nebraska State FFA Convention

Transcription

1 Busy Bones Butcher, LLC 2018 Nebraska State FFA Convention Developed by: Eustis-Farnam FFA Chapter, NE0149 Ayden Boller Colton Thompson Riley Eisenhauer Christian Timm Elizabeth Neukirch Samantha Jack

2 I. Description of Busy Bones Butcher, LLC Busy Bones Butcher, LLC is a family-owned business located in Darr, Nebraska. Owner Kent Guthard, a former cattle producer, made the decision to open a butcher shop after years of planning and due to his declining health, he started to build the plant in fall of Busy Bones is bringing back the old principle of dry aging beef to perfection, using the technology of electrical stimulation and premium packaging. II. Market Analysis A. Current Status: Busy Bones Butcher, LLC is currently butchering beef, pork, and deer. Their main focus is on custom butchering. Customers can provide their own animal to be butchered or they can purchase an animal to butcher through one of Busy Bone s stock suppliers. Busy Bones also has a storefront which sells USDA inspected meat products along with Traeger grills, pellet, spices, and seafood. B. Industry Trends: Macro-Trends: 50% increase in the price of meat over the last 10 years. 1 Total meat consumption per person has decreased in America by 4.2 pound per person per year since 1983 but has increased in Nebraska by 0.6 pounds. 2 94% of people eat snack foods every day. 3 77% prefer ready to eat snacks. 3 11% increase in meat snack sales from a year ago. 3 53% seek snack foods that are high in protein. 4 46% of consumers regularly use ready-to-eat meat products that don t involve much preparation. 5 Micro-Trends: More than 70% of surveyed people know about custom butcherers and many use them. (from survey) Many people in Busy Bones area produce their own animals and use a custom butcherer to process their own animals. (from survey) The custom meat shop industry is expected to grow by 6% over the next year. 6 C. Buyer Profile: As part of our primary research we found that the majority of people who use a custom butcher do so because you always know what you re getting, butchers offer better selection & quality, they deliver top notch service, and you keep your dollar local. Custom Butchers also provide a quick and easy way to to buy in bulk and get the variety of meats that are wanted by consumers. Even at Warehouse Club chain stores you cannot get mixed quarters or halves of carcasses like you can at a butcher shop. They provide a method for people who produce their own animals to save money by butchering their own animals. Their current buyer are farm and ranch families & families looking to save money by buying in bulk. D. Busy Bones SWOT Analysis: Strengths: Convenient way to purchase in bulk Cheaper to buy bulk than retail New facilities and equipment Specializes in aged and electrically stimulated meats Diversified meat cuts Have facilities for USDA inspection Many local sources of beef and pork Weakness: More expensive than other custom butcherers due to value adding practices Not currently USDA inspected At half of maximum production capacity Low name recognition Located five miles from Lexington & Cozad, away from heavy traffic areas where people would see it. Social media & website

3 Opportunities Become USDA inspected Selling Busy Bone products out of storefront Sell snack meats out of storefront or supermarkets Hire more employees Add capacity Grass fed/organic products Social media and website improvement Opportunity to sell whole and partial carcasses directly to customers Threats: Local custom butcher shops with lower prices Meat markets encounter competition from supermarkets, grocery stores, and big-box retailers The industry competes with nontraditional retail industries, such as big-box retailers E. Competitor SWOT Analysis: Large Competitor Strengths: Name recognition USDA Inspected Limited start up risk Highly visible website/social media Highly experienced owner/operator More capital to start up other lines of operation Weaknesses Limited flexibility Customers do not know the source of the meat High quality cuts are much more expensive than the same cuts done by a custom butcher shop Limited opportunity to buy in bulk from grocery stores Limited flexibility in pricing High transportation costs Opportunities: Starting new product lines Ability to fulfill large orders & contracts Continued expansion for online sales Development of proprietary products Development of wholesale distribution relationships Threats: Downturn in meat consumption per capita nationwide Alternative foods that cost less Nationwide panic from diseases such as Mad Cow Disease Consumer concerns with the health and safety of meat. Small Competitor Strength: Potentially closer to customer Cheaper than Busy Bones Better name recognition Established clientele Opportunities: Expand into another location More products and options such as dry aging, electrical stimulation, smoking and flavoring Development of proprietary products Development of wholesale distribution relationships Weakness: Older facilities Aged meat is not an option Some require you to provide your own animal. Threats: Meat markets encountered growing competition from supermarkets, grocery stores, and big-box retailers The industry competes with retail and wholesale stores offering a wide variety of options Products are already sold by major competitors

4 F. Primary Research: Eustis-Farnam Ag. Business and Economics Class distributed and collected 150 surveys, using esurv.org. The survey results showed that: 64% of respondents have one or more deep freezes and would be able to store large purchases of meat. 49% of the respondents prefer milder (corn-fed/non-aged) meat, 18% prefer stronger (grass-fed/aged) meat, and 34% have no preference on meat 85% of respondents would be willing to try aged meat 56% of the respondents consume processed meat products (jerky, sausage, snack sticks, deli meat) as a regular part of their diet, while 44% do not 57% of the respondents buy most of their snack meat from grocery stores 71% of the respondents eat meat at least twice a day or more 78% of the respondents want to purchase meat products and other foods from a local source 97% of the respondents are interested in buying meat directly from a butcher shop instead of a grocery store if it was cheaper 34% of the respondents would be willing to drive miles to get high quality, cheaper meats These results are overwhelmingly positive as we have determined that almost all people are willing to buy meat directly from a butcher shop instead of a store if it is cheaper. Customers are also willing to drive a long distance to get higher quality meat. We also know that 64% of responders have at least one deep freeze and would be able to store large quantities of meat. With this information we know that 97% of people are willing to go out of their way to buy at a butcher shop if they can get a good deal. We found through our research that the majority of people eat snack meat products as a part of their regular snack diet. In our survey, we found that people want to buy their snack sticks at the same place they buy their meat products. This information was further utilized in the identification of our goals, key planning assumptions, and promotional activities formed around them. III. Business Proposition A. Mission Statement: To act as a conduit between cattle producers and beef consumers, at the local level, and to produce high quality cuts of meat and snack sticks. B. Key Planning Assumptions: Meat prices will continue to rise as they have in the past Meat consumption in Nebraska will continue to stay high. Busy Bones will continue to be able to buy animals from local producers. Consumers will continue look for ways to save money on their food bill. People who produce their own animals will use a custom butcherer to obtain the majority of their meat. C. Measurable and Attainable Goals: Year 1: By the end of the first year, Busy Bones will need to double the number of employees, so they can reach their maximum processing capacity. This will increase their profit and help them continue making payments on their new facility. They will also go through the process and gain a USDA inspector. They have the facilities in place needed to get a USDA inspector, including an office and a separate locker room. USDA inspectors are government paid so it will not cost Busy Bones anything to have on on site. A USDA inspector will allow them to sell meat from animals that they purchase, to

5 IV. the public. They will be able to sell mixed halves and quarters, and whole beef carcasses to consumers on a custom basis. a) Become USDA inspected b) Increase number of processing employees to 12 c) Add a Storefront/Meat Sales Manager d) Increase production by 100% Year 2: During year two the storefront will change by replacing cuts bought from wholesalers with products that Busy Bones has harvested. Since Busy Bones will be USDA inspected, they will be able to replace the products they used to buy from other meat packers with their own products. This will save money and increase their profit margin in the storefront since they will not have to pay for another company s markup. They will also be able to start selling carcasses directly to customers instead of having customers provide them, increasing their profit per animal. a) Sell USDA Inspected Busy Bones products through the storefront b) Increase storefront sales by 20% c) Increase Busy Bones direct carcass sales to 25% of total animals butchered Year 3: During year three, they will begin producing a variety of snack meats and valueadded high quality meats to the storefront. Busy Bones will package snack sticks so they are convenient for their customers. During this time they will also work on producing seasoned prime rib, tomahawk steaks, and other high-quality specialty meats. They will also continue to increase storefront sales through advertising and offering more options. The company will promote direct carcass sales in place of custom butchering since it has a larger profit margin per animal. a) Start snack food product lines for storefront b) Start producing more specialty cuts for storefront c) Increase storefront sales by 20% from year 2 d) Increase direct carcass sales to 30% of total animals butchered D. Target Market: Custom Butcher: Women that are 40 to 60 years old, with a household income of $40,000+, and live up to 50 miles away from Busy Bones. Storefront: Women that are 40 to 60 years old, who have children &/or grandchildren, with a household income of $40,000+, and live up to 50 miles away from Busy Bones. Snack Sticks: Men and women who are between the ages of 40 to 60, who have two or more children. Strategy and Action Plan A. Product: Custom butchering for beef. Customers may provide their own animal or purchase an animal from a local source. The customer may purchase a whole, half, or quarter animal. Busy Bones provides a wide variety of options for processing these animals. Busy Bones also has a storefront where they buy USDA inspected meats and resell them. Busy Bones will be expanding into snack meats during year three. B. Price: Custom processing costs $0.66 per pound of carcass. Direct purchasing of whole or partial carcasses will be the market price of the live animal plus the regular processing cost of $0.66 per pound of carcass. Retail cuts in the storefront are priced competitively depending on type of cut and current market prices. C. Place: Currently, Busy Bones Butcher, LLC is operated in Dawson County, Nebraska East of Cozad, Nebraska in the Village of Darr. Cattle come from local families, as well as M&M Feeders, Dawson Feeders INC., Darr Feedlot, and 4 Plus Feeders.

6 D. Promotion: Bulk mailing will be the primary promotion method. Using Every Door Direct Mailing through the U.S. Postal Service, we will send a flyer to every mailbox within a 50 mile radius of the store twice a year. Start advertising on the radio twice a year on KRVN. 60 radio ads will be run before each group of flyers are released. Increase social media presence and change Busy Bones website along with their logo. Create a database of current customers. E. Position: By doubling current custom meat production Busy Bones will have to double the number of employee. The first hire should be the Storefront/Meat Sales Manager. Additional employees will work in meat processing. Busy Bones is currently able to process 16 animals per week with its current staff. If full staff is reached, they will be able to process 30 animals a week. V. Evaluation A. Benchmarks to Reach: Year 1: Increase number of production employees from 6 employees to 12 employees and start USDA inspection. With maximum employee capacity, production will increase from 15 animals per week to 30 animals per week. Year 2: Replace products purchased for resale in the storefront with products produced by Busy Bones. Year 3:Produce snack meats and other value added quality meats for the storefront B. Tools to measure Benchmarks: In year 1 they will reach 12 total employees. Busy Bones will obtain a USDA inspector. In year 2 Busy Bones products will be sold in the storefront. We will measure this by comparing the percentage of products in our storefront produced by Busy Bones compared to the products produced by other companies. In year 3 snack meats will start to be produced as well as other value added quality meats for the storefront. C. Alternative Strategies: If Busy Bones reaches a point when production is 20% less than projected, they will offer a discount incentive program with their mail out flyers. The flyer will have a discount code that customers can bring to the shop to get a 5% discount on their next purchase. This will return business to full capacity. VI. Projected Budget A. What will the strategies cost? Every Door Direct Mail-$3,200 to send a flyer to every mailbox within 50 miles of the store. Printing professional business flyers will cost $1,600 for a 5x8 flyer. The total cost of this will be $4800 each time and they will do it twice a year. This method will allow us to get in direct contact with over 18,000 households. Word of mouth - free Radio advertisements - KRVN - 30 ads for $50.60 / 75 word max. Once monthly social media interaction - Sales Manager responsibility

7 B. Pro Forma Income Statement: Year 1 Year 2 Year 3 3 Year Total Revenue: Custom Butchering $720,000 $540,000 $504,000 $2,160,000 Butchering Sales $0 $822,375 $986,850 $1,809,225 Storefront Sales $480,000 $576,000 $691,200 $1,747,200 Total Gross Sales $1,200,000 $1,938,375 $2,182,050 $5,716,425 Expenses: Employee Salaries $420,000 $420,000 $420,000 $1,260,000 Animals Purchased $0 $571,875 $686,250 $1,258,125 Storefront Expenses $360,000 $367,200 $440,640 $1,167,840 Radio Advertising $0 $ $ $ Brochures/Direct Mailing $0 $9, $9, $19, Production of Meat $120,000 $120,000 $120,000 $360,000 Utilities $3,300 $3,300 $3,300 $9,900 Building $108,000 $108,000 $108,000 $324,000 Total Expenses $1,011,300 $1,600, $1,787, $4,399,571 Net Profit: $188,700 $338, $394, $1,316,854 ROI: 15.73% 17.45% 18.06% 17.08% C. Financial Return: Financial return on investment for our 3 year plan is 17.08%. Survey Research Results

8 VII. Sources Cited: 1 Wholesale and Retail Prices for Chicken, Beef, and Pork. The National Chicken Council, 2 U.S. Per Capita Availability of Red Meat, Poultry, and Fish Lowest Since USDA ERS - U.S. Per Capita Availability of Red Meat, Poultry, and Fish Lowest Since 1983, capita-availability-of-red-meat-poultry-and-fish-lowest-since- 1983/. 3 Duncan, Eric. Topic: Meat Snacks Huber, Debbie. Bread Business Blog. 13 New Statistics About the Local Movement for Food Businesses, 30 June 2014, blog.greatharvest.com/the-bread-business-blog/13-new-statistics-about-the-local-movement-for-foodbusinesses. 5 Ready-to-Eat Food Market Segmentation By Product Type - Meat/Poultry, Cereal Based, Vegetable Based; By Packaging Canned, Frozen or Chilled, Retort; By Distribution Channel - Hypermarket/Supermarket, Convenience/Departmental Store, Specialty Store, Online Store, and Others. Future Market Insights, 6 Summary. U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 2 Mar. 2018, Make Online Surveys for Free! Free Survey Maker - ESurv.org, esurv.org/resultsoverview.php?survey_id=mhndik_a66acddf.