Are you about starting a funnel cake business? If YES, here is a complete sample funnel cake business plan template & feasibility report you can use for FREE.
Okay, so we have considered all the requirements for starting a funnel cake business. We also took it further by analyzing and drafting a sample funnel cake marketing plan template backed up by actionable guerrilla marketing ideas for funnel cake companies. So let’s proceed to the business planning section.
Why Start a Funnel Cake Business?
Funnel cakes are becoming very popular these days and people find them quite delicious. Starting this business is not as easy as it sounds, as it will take a lot of careful research and deliberation to succeed in the business. You can choose to start up a retail location or focus solely on custom orders.
You can also choose to start a mobile funnel cake business and choose whether to sell in schools or the business districts of your city. You can start small and once you must have established a name in the industry, you can share your secrets with other aspiring bakers, opening additional locations in your area, or on a national scale.
One challenge you will face when starting this business is the issue of licenses. Agreeably, applying for license means undergoing a full background check; hence, your record should be clean. You will also have to prove that you’re an outstanding citizen with a clean family history.
Questions asked can be about your top investors, loans, and even personal questions. You will also be asked of your security plan in case of any potential hazards like theft and fire, among others. Writing a good business plan will be essential to the success of your business. Never underestimate the importance of a detailed research to the success of this business.
On a brighter note, you might know the equipment needed to start this business but it will help you more if you know where to buy high quality equipment in an affordable rate. This principle also goes for all the ingredients of the funnel cake. If you can save up on your expenses, you will have more incomes going to your pocket. While researching you will have to identify and know your target market.
Take your time to identify community needs that aren’t being met and you should also consider talking to bakers in your city. Anyone who enjoys using their hand and baking can start this business, but it will need a business head to ensure success. If you are one of the blessed few who are skilled at baking or you enjoy anything concerning the art of cake making, then you can start a Funnel Cake Business in the United States.
A Sample Funnel Cake Business Plan Template
- Industry Overview
Industry experts expect the global cake market to experience a substantial growth at a CAGR slighter higher than 3% over the forecast period. They also expect the growing urbanization rate and the growth in disposable income to favour industry growth. Note that with over 40% of the world population living in urban areas, the industry is most likely to exhibit a substantial growth over the next seven years.
This industry has always been a growing sector due to the world growing population, but the recent trend of the western-styled bakery in the Asia Pacific region may further grow demand. Report had it that Asia Pacific account for more than 50% world industry revenue as the growing population provides a stable nesting ground for bakers.
Small bakers may not be able to capitalize on this growing population and bigger businesses in the industry may have the competitive advantage to reap benefits from India and Turkey. Online product delivery services offering a lot of customization options are believed will further grow the industry. Have it in mind that this industry is mostly localized with regional suppliers commanding market share.
Competitive pricing and product offerings play the differentiating factor for successful bakers enabling them to extract high profit. Statistics have shown that rising health consciousness, changing consumer tastes and competition from fresh bakery items has affected industry demand.
But as a response to these trends, businesses in this industry have focused on reformulating their existing selections with healthier, higher quality ingredients. Most industry vendors are beginning to experiment with new flavour combinations while offering single-serving varieties that appeal to a wider range of health-conscious consumers.
Funnel Cake Business Plan – Executive Summary
DBS is a dessert bar and bakery incorporated in Philadelphia, Pennsylvania. This unique business will be offering funnel cakes and other gourmet desserts. It is equally owned by two partners – Jonathan Davies and Simon Daniel. DBS can be said to be a quick-service restaurant where customers sit around a bar and watch their funnel cakes or desserts being made.
We strongly believe that this show, as well as our products, will be our main selling point. We plan to achieve our goal of bringing an entirely new concept with an old fashioned feel to the people of Philadelphia. Philadelphia is also the economic and cultural anchor of the greater Delaware Valley, with over 6 million residents as of 2017. It is a unique place to start up this business.
We at DBS plan to make use of our business to our utmost advantage. Both tax incentives and high traffic due to Philadelphia being a constant tourist location and its many universities give us an edge as a new business. As the city of Philly keeps booming in growth, we at DBS will receive an added boost of increased traffic. Therefore, we are aggressively planning for a 50% increase in sales in our second year of business.
We believe that by creating a new niche in the restaurant industry, we at DBS can increase sales by more than $145,000 over three years while maintaining a gross margin of 80%. Through a philosophy of “nothing but the best” regarding both product and service, we plan to make sure our bar and bakery remains exceptional.
We also will gain a competitive advantage in take out and catered desserts. Our business plan is to be profitable within the first year of operation. One of our business goals is to reinvest in the company and expand to three stores by the third year.
- Our Products and Services
We at DBS will offer the people of Philadelphia different flavours of funnel cakes and gourmet desserts. We believe that our products coupled with exceptional customer service in a comforting atmosphere will set us apart in our business location.
Our plan is to create a bar where customers can dine-in and watch the chef make their cakes and desserts. We also plan to create an avenue where every month customers can join in the fun and take a cooking class taught by a well trained chef.
We will also offer special promotions such as After School funnel cake Club. We believe that moms in the city will be encouraged to bring in their children for milk and cakes. These moms can also come in with friends for some relaxing time away during our Tea Time. Our tables are big enough to be used for parties and we hope to make our shops open under reasonable agreement with a customer.
Our Vision Statement
Our Vision at DBS is to build a massive gourmet bar that will provide the people of Philadelphia with funnel cakes and well prepared gourmet desserts.
- Our Mission Statement
Our mission at DBS is to provide our customers with high-quality desserts in a comfortable atmosphere. We plan to make enough profit to generate a fair return for our investors and to finance continued growth and development in quality products. We have put plans in place to ensure a friendly, fair, and creative work environment, which respects diversity, new ideas, and hard work.
- Our Business Structure
Our Business Structure at DBS will be a relatively flat one, since most of our personnel will be involved in production and there will be a relatively low headcount in management. DBS will be managed by our two founding partners. These partners, Jonathan Davies and Simon Daniels represent sales/management and finance/administration areas, respectively.
These two gentlemen will provide funding from their own savings, which will cover start-up expenses and provide a financial cushion for the first months of operation. A ten-year Small Business Administration (SBA) loan will cover the rest of the required financing.
We at DBS plan to build a strong market position in the city of Philadelphia, due to our founding partners’ industry experience and mild competitive climate in the area. We have taken our time to map out the various roles of our employees, and they include;
- Chief Executive Officer
- Chief operating officer
- Information manager
- Marketing manager
- Customer Service Specialists
Roles and Responsibilities
Chief Executive Officer
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counselling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results and developing incentives
- Tasked with fixing prices and signing business deals
- Tasked with providing direction for the business
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Tasked with signing checks and documents on behalf of the DBS
- Evaluates the success of the organization
Chief Operating officer
- Tasked with overseeing the smooth running of the business
- Leads the producing of all business products
- Determines the quantity of products that are to be produced daily
- Make lists and budget for all supplies
- Oversee the entire business process
- Tasked with training new staff
- Makes sure that quality in maintained at all times
- Tasked with training, evaluation and assessment of the workforce
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Ensures that the bakery meets the expected safety and health standard at all times.
- Tasked with preparing financial reports, budgets, and financial statements for the organization
- Provides managements with financial analyses, development budgets, and accounting reports
- Tasked with financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting
- Tasked with developing and managing financial systems and policies
- Tasked with administering payrolls
- Ensures compliance with taxation legislation
- Handles all financial transactions for the organization
- Serves as internal auditor for the organization
- Provides technological guidance within an organization.
- Supervises information system and communications network.
- Develops and implements a customer service platform to serve the organization in every aspect.
- Oversees Internet and computer operations.
- Proposes hardware/software solutions to accomplish the DBS’s business objectives.
- Identify user needs and resolve problems.
- Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
- Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
- Develops, executes and evaluates new plans for increasing sales
- Documents all customer contact and information
- Represents the DBS in strategic meetings
Customer Service Specialist
- Ensures that all contacts with customer (e-mail, walk-In centre, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with customers on the phone, uses every opportunity to build client’s interest in the DBS ’s products and services
- Manages administrative duties assigned by the store manager in an effective and timely manner
- Consistently stays abreast of any new information on DBS, promotional campaigns etc. to makes sure accurate and helpful information is supplied to customers when they make enquiries
- Tasked with cleaning the store at all times
- Makes sure that toiletries and supplies don’t run out of stock
- Any other duty as assigned by the manager.
Funnel Cake Business Plan – SWOT Analysis
We at DBS hope to establish a gourmet bar that will offer our clients unique funnel cakes and assorted desserts. We believe our choice of city is ideal for this business. The growing economy and the unique history the city of Philadelphia possesses make it a lucrative market for DBS.
Although DBS will be bringing a new concept into the food service industry, we do share similarities, and therefore compete with several kinds of quick-service dessert businesses. In view of that, we were able to take stock of our strengths, our weakness, our opportunities and also the threats that we are likely going to be exposed to in the industry. Scarcely summarized below is the result of our SWOT Analysis;
According to our SWOT Analysis, the strength of DBS rests on our sincere dedication to use the finest quality ingredients and “make it happen no matter what” customer service. Also our ongoing employee education and recognition programs, coupled with our quest to give back to the community will go a long way to draw us nearer to our target audience.
We believe that our threat at DBS will be the duration it will take for our prospective clients to know where we are and what we offer. It’s important to note that people go about their daily activities and most times tend not to discover the new business next to them except the venture comes with a direct marketing Plan. We at DBS plan to start advertising even before we open up our shops, at least to make sure that our brand is known.
According to our SWOT Analysis, the general food industry is a recession-proof industry that will always keep growing as long as the world’s population keeps growing. Food is a life necessity and people may not always have the time to cook.
Also funnel cakes are well known delicacies not just for kids but for adults as well. Philadelphia, our business location, is the centre of economic activity in Pennsylvania and is home to five Fortune 1000 companies. Reports have it that the Philadelphia skyline is expanding, with a market of almost 81,900 commercial properties in 2016, including several nationally prominent skyscrapers.
The threat we will be facing at DBS is the issue of industry competition and adequate funding needed to achieve our business goals. Indeed we will be competing with already established bakers in Philadelphia and there are other entrepreneurs who are likely going to launch similar businesses within the location of our business. We have taken every possible threat and challenge into consideration and have come up with plan to ameliorate them.
Funnel Cake Business Plan – Market Analysis
- Market Trend
According to industry reports, the growing trend for healthy eating is expected to add focus on bread quality and product innovation. We believe that a good number of bakers in the industry offer healthy alternatives to high-calorie products and this will serve as a positive factor for the industry.
Reports also stated that the introduction of new flavour will impact industry growth positively. But, the market is highly fragmented in nature with numerous players operating in a region leading to fierce competition on the basis of product offerings, pricing, brand recognition and technology.
We at DBS have been able to note that the barriers to entry for this industry are moderate. Businesses new in the industry may find it hard competing with established operators that have achieved a reputation for quality and brand-name recognition. These companies experience high brand and customer loyalty and have considerable resources to invest in advertising.
Most times, customers want to have a taste-testing session before placing an order. We at DBS believe this is an opportunity to build a relationship with the client, showing them how our products and services stand out above the competition.
We also believe that it will give them the opportunity to choose their desired flavours. We understand that cleanliness is what sets the professional apart from the hobbyist. A baker’s kitchen is like a sanctuary and must be treated as such. It should be thoroughly cleaned after each order is filled, and at the end of the day.
We at DBS have employed hard working cleaners to help with keeping our bars clean. We have also made sure that every employee has a hand in keeping the facility clean. Also since each creation requires a different set of ingredients, replenishing baking supplies is typically done on a weekly or bi-weekly basis. We have also put plans in place to make sure we perfect new recipes/sharpen the skills of our chefs.
- Our Target Market
Our target market at DBS is divided into four different psychographics: Comfort population, Celebrators, Happy Moms, and Gourmet lovers. Note that they represent groups of people sharing similar behaviour patterns and reasons for patronizing DBS.
- Comfort Population
These groups of customers are majorly white collar workers who are driven by success and prestige but without doubt miss homemade comfort foods of their childhood. These people may stop at DBS or bring clients in for a gourmet dessert experience.
We classify celebrators as individuals celebrating special occasions. Birthday, anniversary, graduation, valentine’s day, etc., families and loved ones will gather at DBS over sumptuous desserts and a funnel cake.
- Happy Moms
We plan to make DBS a gathering place where families are welcome and feel comfortable. “Moms” can come in for after school milk and funnel cakes with their children and relax while we pamper the little ones. Or they can meet up with friends for our Tea Time – a little civilized time stolen in the midst of a busy day.
- Gourmet lovers
These are group of people that watch the Food Network and can easily spend $50 for the latest cookbook. We at DBS plan to create adventuresome diners, as well as the first to sign up for our cooking classes.
- Our Competitive Advantage
We at DBS will be leveraging a new niche in the restaurant industry, but we acknowledge that we will be competing with a variety of similar businesses. We understand that dessert is something that only follows a special dinner and needn’t be any better than a Funnel cake. We plan to make every day different and unique for our customers as they watch their gourmet dessert be prepared by a chef.
Although price may be a factor when competing against cake and Coffee Shops, these same consumers who are willing to pay five dollars for a latte or a scoop of ice cream are already conscious of a better quality product. We strongly believe they will be equally as willing to spend a little extra for an extraordinary dessert in a warm and friendly setting.
We also believe that the comfort factor which we will be offering plays an important role in consumer decisions about our business. Our goal is to ensure that the atmosphere and staff of DBS excel at being warm & friendly.
Our menu at DBS will reflect “comfort food” desserts as opposed to intimidating desserts that resemble architectural colossi. We will use the highest quality products; sometimes paring the ordinary with the exotic, but we will always present our desserts in an unintimidating manner.
Funnel Cake Business Plan – Sales and Marketing Plan
Our marketing plan at DBS will centre on educating our target audience and subsequent word-of-mouth. We plan to make our location known as a unique dining experience as well as a superior funnel cake shop. We plan to reach our clients through fliers, newspaper advertisements and special holiday promotions. Our business location will also play a very important role in marketing and promotion. DBS will be located in high-traffic retail area in Philadelphia.
We plan to target progressive and generally well-educated and affluent consumers who are interested in trying new products and experiences and are dissatisfied with the limited selection and lack of personal service found in grocery store bakeries, neighbourhood cafes and ice cream shops and area restaurants.
Our major marketing objective is to sell the company as well as the product. Just like Starbucks is known for its great coffee drinks, DBS will come to be known as a gathering place with spectacular funnel cakes and desserts. We have to sell not only an amazing “show” as the desserts are created, but also an above and beyond service team who are knowledgeable and friendly. People will always feel welcome and at home at DBS.
Funnel Cake Business Plan – Publicity and Advertising strategies
Our publicity and advertising strategies will help us gain corporate identity in the industry. We plan to leverage the product line into other regions and gain inquiries from potential inventors. To achieve this goal to expand and grow, we plan to do the following;
- We will spend $1,000 per month concentrating on drive time Radio advertising. We plan to experiment with different stations, keeping careful track of results. As with the school fundraising program, we expect the stand and signage to be a substantial portion of our advertising.
- List our business on yellow pages ads (local directories)
- Leverage on the internet to promote our business
- Engage direct marketing approach
- We will also spend $1,000 per month on Public relations services for the next year to build awareness of editors and product information insertions, reviews, etc. We believe that the school fundraising program or our other charity programs will generate a fair amount of publicity on its own and will, perhaps, minimize–or even eliminate–the need for a publicist.
- Encourage word of mouth marketing from loyal and satisfied clients
Sources of Income
We at DBS hope to earn income and profits by offering the people of Philadelphia different flavours of funnel cakes and gourmet desserts. We have made sure our products will remain unique and rich for our clients and we believe our exceptional customer service in a comforting atmosphere will set us apart in our business location. DBS will also gain income by establishing a bar where customers can dine-in and watch the chef make their cakes and desserts.
We also plan to create an avenue where every month customers can join in our cooking class taught by a well trained chef. We will also offer special promotions such as After School funnel cake Club. Our tables are big enough to be used for parties and we hope to make money by letting customers celebrate their birthdays and other festivals in our facility.
- Sales Forecast
Our Sales Forecast at DBS reflects modest estimates for the first year of operation beginning in January 2019. After we must have established DBS as the number one bar for funnel cakes and desserts, we plan to project aggressive sales for the following years. For our second year of operation we estimate sales increase of 30% and of 50% in the third year for desserts, POP and carry-out.
We at DBS are planning a 15% increase in Weekly Lesson fees each of the two following years while keeping costs constant. Note that our cost of sales is based on an average food cost of 30% for dine in desserts and 20% for point of purchase items, carry-out and weekly lessons.
We also project a consistent food cost percentage of these amounts for the following two years. Keeping food costs low while sales increase is very crucial to the success and profitability of DBS. We estimate that our total first year sales should reach $671,087. Our second year will see sales increase to $1,562,521. The third year, with the addition of such a significant number of outlets, we will see sales increase to $3,881,752.
- Our Pricing Strategy
Our businesses goal is to increase profits while also offering our clients the best products and services there is in our line of business. We have put plans in place to boost our income, which may include posting specials on high-profit items at the drive-up window. We also plan to make sure that we give out free coupons to those who have purchased a certain number of cakes and desserts or something similar.
We at DBS also hope to develop window sales techniques such as our chefs asking if the customer would like a drink with their cakes or desserts. We have made plans to ensure our pricing will be comparable to the competition in the market, but with the value-added feature of immediate, Drive-through service and convenience.
- Payment Options
Our plan at DBS is to create payment policy that will favour our clients. Our clients are the baseline of our business and we plan to make every process easy and accessible to them. We understand greatly that different people prefer different payment options as it suits them. Here are the payment options that we will make available to our clients;
- Payment by cash
- Payment via Point of Sale (POS) Machine
- Payment via online bank transfer (online payment portal)
- Payment via Mobile money
We have taken our time to align with numerous banking and payment platforms that will help us achieve our plans with little or no hitches. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our service charge.
Funnel Cake Business Plan – Financial Projections and Costing
Our business goal is to grow DBS not just as a dessert bar, but as a company. We have plans of eventually selling an established chain of dessert bars or establishing our company as a gourmet franchise. This means we must always be reinvesting in the future of DBS.
Our start up costs depends on important assumptions. For instance, we assume a slow-growth economy, without major recession. We hope there are no unforeseen changes in technology to make products immediately obsolete. We have done our research and have decided on the various places we want to spend our start up capital, and they include;
- The Fee for registering the business in the United States – $750
- The budget for legal fees, insurance, permits and license – $30,000
- The amount needed to build a standard shop and renovation of the facility inclusive – $100,000
- The Cost for the purchase of kitchen / production equipment and gadgets (industrial ovens, fridges, smoke detector, TVs, microwave oven, mugs, Foils, Sound System, tables and chairs et al) – $60,000
- The Cost for supply inventories for a month – $120,000
- The Cost of Launching a Website – $600
- The cost opening party – $5,000
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $100,000
Going by the report from our research and feasibility studies, we will need an average of $400,000 to start DBS.
Generating Start up Capital for DBS
We at DBS will hold true to our vision of bringing a new concept with an old fashioned feel in order to become a favourite spot for Philadelphia natives. Our founding partners are experts in the food industry and we trust in their abilities to lead DBS to its desired spot. We hope to raise our start up fund through the following ways;
- Generate part of the startup capital from personal savings and sell of stocks
- Source for soft loans from family members and friends
- Generate fund from Angel Investors
Note: We have been able to raise $300,000 from the personal savings of our founders Jonathan Davies and Simon Daniels. We have put plans in place to get the remaining $100,000 from a reliable Angel investor.
FUNNEL CAKE BUSINESS GROWTH: Sustainability and Expansion Strategy
We at DBS do not project any real trouble meeting our debt obligations – as long as we can achieve our specific objectives. Although we’ve projected aggressively, we remain confident the location we’ve chosen for DBS, as well as the dessert bar concept itself will be bringing success to our business. Note that we haven’t included any assets or depreciation in our calculations.
Whether we purchase new or used kitchen equipment will determine those numbers at a later date. We at DBS also intend to promote from within and reward the best employees with leadership roles. At DBS, our opening employment goal is 5 with a goal to increase to 8 by the end of the first year, 12 the second year and 15 the third year.
We agree this is very aggressive staffing, but we have put plans in place to hire culinary professionals who are used to the demands of the restaurant business.
Note that by this hiring philosophy, we will be able to run our business with fewer, but more productive employees and reward them accordingly. From that very moment we plan to increase the responsibilities of each employee as opposed to hiring more people, therefore rewarding those who have worked hard to establish DBS as a superior dessert shop.
We at DBS also plan to be profitable within the first year of operation. One of our business goals is to reinvest in the company and expand to three stores by the third year. Then we will start establishing partnerships with each store’s chef, where they will each invest in their store and be directly rewarded for its profitability.
Note that we have specifically targeted segments of people with an appreciation for well flavoured funnel cakes, delicious desserts and a need for comfort and relaxation. We plan to make DBS a haven for the busy & successful who want to treat themselves to something soothing and a little out of the norms experience. We believe that these people will value the high quality product.
- Business Name Availability Check: Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts various banks in the United States: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Conducting Feasibility Studies: Completed
- Leasing, renovating and equipping our facility: Completed
- Generating part of the startup capital from the founder: Completed
- Applications for Loan from our Bankers: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Packaging, Marketing and Promotional Materials: Completed
- Recruitment of employees: In Progress
- Purchase of the Needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business (Business PR): In Progress
- Health and Safety and Fire Safety Arrangement: In Progress