brownbag

CONFIDENTIAL

brownbag

Executive Summary
February 2011

Start-Up@Singapore

EXECUTIVE SUMMARY

brownbag

CONFIDENTIAL

Executive Summary The Problem The lunchtime crowd in Singapore is extremely frustrated by the long queues, average quality meals, and unhealthy choices. Despite the large variety of choices, working professionals and active lifestyle consumers who desire to eat healthy, balanced diets still cannot find delicious, nutritious, and yet convenient options to suit their palates, schedules and wallets. The Opportunity Sleek, quick-serve organic eatery specifically catered to the lunchtime crowd Unique variety of sandwiches and food products not found anywhere else in Singapore Business Concept brownbag is an active lifestyle, sandwich and organic eatery, providing a large variety of fresh, healthy, and delicious food products aimed at the lunchtime crowd. All food products are handmade, using natural, artisan ingredients, while avoiding additives and preservatives found in the fast food market today. Sandwiches are packaged in recyclable paperboard instead of sealed plastic to emphasize freshness and to be consumed within the same day. All sandwiches are made on the day of purchase and those left unsold at the end of the day will be donated to charity. brownbag will be situated in high traffic areas, such as City Hall and Raffles Place MRT stations and surrounding areas. There will be no seating areas in order to make room for high customer traffic. The storefront will utilize mostly glass, providing a clean, modern feel, while allowing consumers to see the food products from far away. Value Proposition Healthy: Delicious, nutritious, chemical-free, organic ingredients used in every sandwich Fresh: Created from scratch every morning as no food products are kept overnight Extremely fast service: Average customer queuing time will be kept under 60 seconds Dynamic selection: 30+ sandwich menu evolves on an ongoing basis based on new ideas, culinary experts, and real-time customer feedback Investment Overview Merits Unique: Exciting sandwiches based on traditional and fusion-style flavors Quick Return on Capital: Relatively low upfront capital investment Flexibility: Food variety can evolve quickly based on customer interest Scalable: Large customer market and standardized storefront model Targeted: Storefront and food specifically tailored to the lunchtime crowd Industry Analysis Market Potential According to the Ministry of Manpower statistics, Singapore has a labor force of more than 3 million, of which 18.4% are in the busy financial and business services sectors. The Central Considerations Unknown Brand: Unaffiliated with any major food chains Competition: Numerous quick-serve food outlets in the downtown area of Singapore Selling Price: Average sandwich price will be above hawker food prices Ingredient Costs: Fresh, high quality ingredients will cost more Operational Risk: Food made in the advance based on anticipated demand

Start-Up@Singapore

EXECUTIVE SUMMARY

brownbag

CONFIDENTIAL

Business District and business hubs island-wide have high concentrations of workers. Raffles Place, the center of the Central Business District, is at its busiest during lunch period. Assuming that half of these professionals are located in Raffles Place and that 30% of them take-away lunch every day, this would result in approximately 100,000 potential customers daily. Given that 200-300 food stalls are within reach, every stall would get approximately 400 orders every business day, or approximately 100,000 annually. Industry Drivers Demographics Rising workforce population has led to more congested conditions within the Central Business District and business hubs island-wide, leading to longer queues at eateries. Lifestyle Changes The Health Promotion Board has increased consumer awareness of the benefits of a healthier lifestyle, leading to a trend towards healthy eating, ranging from the increasing prominence of fruits and vegetables in menus to the use of fresh, organic produce, while cutting down on oil, preservatives and food additives. Higher household disposable income allows consumers to spend more on higher quality consumption lifestyles. Competition brownbags main competitors are other sandwich shops and quick-serve shops that serve sandwiches within the Central Business District. Other competitors include food courts, hawker centers, fast food, restaurants, and active lifestyle establishments. Sandwiches / Quick-Serve (*brownbag provides a faster alternative and more variety) Traditional cafes: Overall menus usually contain a large selection, but offer a limited variety of boring sandwiches. Queues are typically long during lunchtime. Sandwich chains (i.e. Subway): Customizable sandwiches, but generally uses cookiecutter low-quality ingredients. Waiting line tends to be long at these outlets. Gourmet sandwich shops: Good quality, nutritious sandwiches, but pricier ($8+). Subject to long waiting times while the sandwiches are made. Ready-made sandwiches (i.e. supermarket and convenient stores): Cheap, but neither fresh nor nutritious. Generally offers a limited selection of boring sandwiches. Other Competitors (*brownbag provides a healthier and faster alternative) Food Courts/Hawker Centers: Wide variety but unhealthy. Long waiting times. Fast Food (i.e. McDonald's): Less expensive but uses cookie-cutter low-quality ingredients, and unhealthy. Not so fast due to long queues during lunchtime. Restaurants: Pricey. Requires dining in, coupled with long queuing and waiting times. SWOT Analysis Strengths Unique positioning and target market Highly flexible business model Accommodative to high volume traffic Opportunities Weaknesses Lack of brand awareness by consumers Dinner and weekend traffic may be low Threats

First mover advantage into new market Copycats due to low barrier of entry niche: healthy quick-serve Established brands infiltrating market Expansion into business hubs

Start-Up@Singapore

EXECUTIVE SUMMARY

brownbag

CONFIDENTIAL

Business Overview Operations Kitchen Fresh ingredients are delivered to each store on a daily basis. Staff begin food assembly at 6am, and refresh the food supply throughout the day as needed. Assembly instructions, along with photographs on how ingredients are positioned for each food product, are available for employee reference. After preparation and assembly, all items are taken to the storefront. Storefront Open concept storefront with glass theme allows customers to view food without restriction and provides easy access. The store layout will guide customers from entry to exit and streamline the entire process. Customers select items and bring them to the counter to pay. Cashiers are positioned shoulder-to-shoulder to allow for high volume traffic during peak hours. The aim is to limit the time customers spend in the queue to 60 seconds. Sales & Marketing Highly visible and attractive storefront in high-traffic areas will be crucial to brownbags appeal. Low cost marketing techniques, such as word-of-mouth and viral marketing techniques will be utilized to spread awareness of the brand. In addition, brownbag will maintain a consumer-friendly website, a Facebook and Twitter presence to showcase sandwich selection, solicit customer feedback, and advertise new food products. Leadership Key Management Chief Executive Officer: Responsible for operations, investor relations and expansion. Chief Operating Officer: Responsible for day-to-day operations, marketing, and logistics. Chief Financial Officer: Responsible for accounting, forecasting, and business development. Board of Advisors Culinary Expert: Provides culinary advice on menu selection and new sandwich designs. Independent Directors (3): Provides advice on business development and operations. Intellectual Property The brownbag name will be copyrighted and the brownbag logo will be trademarked. All copyright, trademarks and all other intellectual property rights, including but not limited to proprietary know-how, will be owned by or licensed to brownbag. Financial Summary
2011 Avg. Unit Price Avg. Unit Cost Avg. Unit Margin No. of outlets Total Volume Revenue EBITDA % Margin $ 6.00 2.50 3.50 1 94,800 $ brownbag Financial Projections 2012 2013 6.00 2.60 3.40 3 351,500 $ 6.20 2.70 3.50 6 868,900 $ 2014 6.20 2.81 3.39 9 1,611,400 $ 2015 6.20 2.92 3.28 10 2,211,700 13,712,500 5,057,300 37%

568,800 $ 110,400 19%

2,109,000 $ 583,900 28%

5,387,200 $ 1,808,400 34%

9,990,700 $ 3,563,400 36%

Based on market potential, annual volume for the first store is anticipated to be about 100,000. brownbag is expected to generate positive cash flow in the first year, with margin expansion as new stores open. The average unit cost will grow in line with inflation.

Start-Up@Singapore

EXECUTIVE SUMMARY