Executive Summary

The marketing plan is tied closely to the overall financial and business
plan. This plan outlines a strategy for success, and breaks it down into
comprehensible, actionable components that will enable The Sub Shop to
implement marketing activities to provide a solid return on investment.
This plan is designed to complement the business plan, but is also a way
for company officers to get a handle on the external and internal factors
that will influence the company's success in the Ashland market. The
following topics will help define how the company plans to differentiate
the business and product offering from the competition, and describe the
strategy that will drive its business forward.
Opening a franchise company has its joys and perils. While the built-in
brand recognition is a big plus for a start-up, that brand has not reached
the level of some of the largest fast food chains. The franchise brand may
not provide the level of support expected from a larger franchise chain.
With that said, the combined management experience, and synergy
between the goals of the franchisor and the company's goals will lead to
the long-term success of our franchise.
These are the marketing objectives:
To acquire 25% market share in the Ashland region.
To position ourselves as a local company, with strong ties to the community.
To be perceived as the cleanest, most responsive Quick Service Restaurant
(QSR) in Ashland.

Situation Analysis
The Sub Shop is a QSR, that resides somewhere between a fast food
restaurant (FFR) and a sit down restaurant. This category is growing
quickly, as people adjust to paying a little more than they would for
typical fast food. While the differentiation between QSR's and traditional
fast food may be transparent to most consumers, there has been a
conscious shift in purchasing towards FFRs and QSRs that provide
innovative menus and a selection of custom, or customizable menu items.
McDonald's new "All American BurgerTM" is an example of the shift towards
traditional, homemade-style menu items. The burger is much like what

you would find at a traditional sit-down restaurant, yet for half the price.
All FFRs and QSRs offer some level of food customization as well. Burger
King promises to make you lunch "Your Way.TM" This has been a point of
differentiation for Burger King in the past, yet has become less
advantageous to them as other FFRs have promised product
customization.
Ashland is a young market for QSRs. FFRs have left their mark on the
town, yet the choices remain limited to the major national chains. The Sub
Shop will will bring new lunch choices to the Ashland market.

Getting ready to create a marketing

plan?
Get practical ideas and good models with dozens of examples of
successful
marketing plans with Sales and Marketing Pro.
Finish your own Marketing Plan

Market Summary
The market consists of tourists, downtown workers, and students from
Southern Oregon University. Over 362,000 tourists visit Ashland each year
- 100,000 for the Shakespearean Festival and 262,000 for other
recreational/shopping activities. Tourists make up the largest segment of
our target market, at about 85% of the total market for our products.
There are about 18,000 people living and working in Ashland. If just 15%
of those people buy The Sub Shop sandwiches twice a month, the
company will sell 65,000 sandwiches to that market alone in 2001. Add
that amount to 20% of all tourists to the Ashland area, and those two
segments alone will buy 138,000 meals.
In addition, demographics have shifted in recent years from traditional
households (two parents with children) to more non-traditional
households; as a result, many adults feel they have less free time.
Consumers report that they are eating out more often in order to free up
time normally spent cooking, and use that time to enjoy their families and
to take advantage of other leisure activities.

From the Ashland Chamber of Commerce:

Ashland (pop. 18,560) has built its economy on a resource base of timber,
favorable climate, attractive landscape, cultural attractions, a well
educated labor force and education. In addition, Ashland's location off
Interstate 5 and the Southern Pacific Railroad, and its proximity to the
Rogue Valley International-Medford Airport, give it market access that is
more favorable than usual for a rural town.
To offset the risk that comes with dependence on one economic sector,
the City of Ashland and the Chamber of Commerce encourage the
diversification of markets. Establishment of light manufacturing firms with
value-added components, sophisticated services catering to a
geographically dispersed clientele, and retailing targeted to local residents
are especially encouraged. The Oregon Shakespeare Festival attracts
more than 100,000 visitors annually. And because Ashland is considered a
"destination" city, an additional 258,427 people visit here for its other
attractions such as recreation, shopping and sightseeing.
Ashland, while widely known for the nine-month Shakespeare Festival, is
also the location of the only federally funded wildlife forensics lab and
research facility in the country. Southern Oregon University plays a large
part in Ashland's economic health, with approximately 5,130 students,
576 faculty, 207 staff, 26 temps and 691 student employees.
The City of Ashland's population over the last four years has averaged
1.4% growth and is not expected to deviate from that rate. The City of
Ashland's "official population projections" show a 19,995 population
projection for the year 2,005. Over the 10-year period 1995-2005, a total
of 2,010 new residents to Ashland are expected. The City of Ashland's
average household size is 2.22 (1990) persons per unit compared to the
average household size of 2.34 in 1980.
Create or edit
this chart

Market Analysis
Create or edit this table

Market Analysis
2003

Potential Customers

2005

2006

2007

Growt

CAGR

Tourists

9%

Downtown Workers

2%

Weekend Shoppers

2%

Total

2004

8.66%

362,0

394,5

430,0

468,8

510,9

00

80

92

00

92

17,00

17,34

17,68

18,04

18,40

3,500

3,570

3,641

3,714

3,788

382,5

415,4

451,4

490,5

533,1

00

90

20

55

82

9.00%

2.00%

2.00%

8.66%

Market Demographics
Our marketing efforts will focus on the following groups of people:

Tourists. This is the largest market for us, making up over 93% of our

1.

yearly traffic. The majority of them are retired or semi-retired baby boomers, and
urban professionals. The median age is 52, average household income is
$80,000/year, and favorite activities include gardening, reading, attending art
exhibits, and travelling.

Downtown workers. This group is the second largest group of

2.

customers. The median age is 32, average household income is $40,000/year,

and favorite activities include camping, fishing, hunting, and spending time with
family.

Students. This includes high school students and college students

3.

from Southern Oregon University. The median age is 20, household income is
$12,000/year, and favorite activities include snowboarding/skiing, dancing,
and shopping.

Weekend shoppers. This group includes people who travel from

4.

rural areas, and nearby towns such Medford, Yreka, Grants Pass, and
Jacksonville. The median age is 44, household income is $35,000/year, and
favorite activities include fishing, hunting, gardening, and spending time with
family.

Market Needs
There are two market needs we are attempting to fill. First, there's a need
for a fast food restaurant that produces high quality, great flavored food,
at a low cost. In other words, there's a need for value beyond "cheap."
The Sub Shop will fill that need gap by providing above average quality
subs, and good, but not necessarily low prices. The niche for The Sub
Shop resides somewhere between consumers who want to be waited on
and people who want a fast lunch for less. Since we will provide cafe-like

tables for people to sit and enjoy their subs, this will attract potential
customers from the traditional restaurant chains. The food is made fast
and is relatively inexpensive, considering the quality of food.
The fast food customers who learn that a mere $1.50 will provide much
greater return in flavor will keep coming back for more, and over time, will
come to expect more from traditional FFRs.
There is also the need for eating in a clean, wholesome environment.
There are many people who will not set foot inside a fast food
restaurant due to 1) the restaurant's lack of cleanliness and 2) the relative
poverty and despair displayed by the people working in these fast food
restaurants.
To address this need, we plan to provide our employees with wages 35%
higher than traditional FFRs in the region. We will not degrade our
employees by forcing them to wear polyester uniforms, and we will
offer two group outings a year for the employees, funded entirely by the
company. As for cleanliness, we will expect the highest standards from
both our employees, and our location. The goal will be to ensure that
tables are cleaned within three minutes of being left. Floors will be
cleaned daily, and all kitchen supplies and countertops will be maintained
to the highest standards.

Market Trends
The market for fast food is becoming more demanding. While fast food
chains such as D-Lite and others in the mid-1980s failed in their attempt
to market low calorie fast food, since the 90's, some companies have
found that healthy fast food pays off.
GardenburgersTM have become prevalent at many fast food
restaurants, and even some fast food burger franchises are beginning to
offer GardenburgersTM, and other soy alternatives.
While marketing fast food only as "healthy" could amount to corporate
suicide, there is a trend towards quality in both food and ambiance.
As mentioned in the Market Needs topic, many people are heading for
restaurants that offer fast food at a slightly higher price, but at a much
higher quality, and delivered by employees who do not feel degraded or

otherwise fatalistic about their role at work. While the latter issue may be
debated by intellectuals in management school courses or readers of the
current bestselling book, "Fast Food Nation," the fact remains
that American society will continue to want more for less.
If The Sub Shop pursues the niche of customers that reside between
the bargain-hunters and the spendthrifts, as well as people who are
repulsed by standard fast food practices, lack of cleanliness, and the total
lack ambiance inherent to most fast food restaurants, the franchise will be
a success.
Create or edit
this chart

Market Growth
Consumer households today spend approximately 46% of their food
budgets on fast food. The National Restaurant Association predicts that
the QSR market will grow slightly slower than the overall market for food
services.
This is due to reduced discretionary income, and recessionary
economic pressures in 2000 and 2001. The overall growth rate in the fast
food business is expected to be 4.4% in 2001. Growth in catering services
is expected to be at around 6.5%. Since about 20% of sales will be
generated from catering services, and the market growth will

slow during the current post-recessionary period, overall market growth

rate is targeted to a weighted 4.82%.
However, because of the faster than average growth of the Ashland area,
and the increase in tourism in Jackson County over the last few years, the
potential customer base will grow at a healthy 8.59%.
Create or edit
this chart

SWOT Analysis
The SWOT analysis is available in the following subtopics.

Strengths
The company's strengths are listed below:

The business owners and managers have a combined 40 years experience

working in the restaurant industry.

The supply chain has been well established by the franchisor, and it is in
the interest of the franchisor to extend credit so that its franchisees may order
supplies and continue to pay the quarterly franchise fee.

The owners and managers are natives of Ashland, have strong ties to the
community, and are willing to build stronger ties.

Weaknesses

Cash flow is limited to owner's resources and potential bank loans.

Generous employee benefits and ownership increase financial risk slightly.

Management teams' many years of experience may include assumptions

that limit amount of risk taken, and therefore, potential returns.

Opportunities

Rapid growth in tourism.

Lack of competition in local QSR arena.

Increasing popularity of restaurants that serve high-quality fast food.

Threats

Rapid growth of QSR industry and low barriers to entry - a new

competitor could open shop within three months of determining a location.

Industry is highly susceptible to a recession.

Recessionary pressures may also reduce the amount available for

unsecured lines of credit.

Loss of lease, or regulatory measures that limit the scope of building

renovation.

Competition
The main competitors are the major national fast food franchises. SubSub
is the largest competitor, with 12,868 franchise in the U.S. alone.
SubSub licenses franchises throughout the nation, and offers two locations
in the Ashland Metro area. McDonald's only has one store in the Ashland
area.
SubSub contributes to the growth in our market by advocating for healthy
eating habits via online, TV, and radio advertising. Yet they contribute to
the nationwide growth of the healthy food segment of this market. Their
advertising will bring more people to The Sub Shop. The Sub Shop will

target their local operations through direct mail flyers that offer specials to
customers that exchange their full SubSub 10-sandwich punch cards for a
free meal and a stamp on the punch cards provided by The Sub Shop.

Product Offering
The company will offer a large variety of submarine sandwiches, salads,
soups, chili, chips, cookies, and sodas. The sandwiches are made with The
Sub Shop's unique sweet mustard sauce and each loaf of bread is made
fresh daily. The bread is toasted for every order and the soups are made
daily.
More product information is available in the sales forecast table.

Keys to Success
The most important key to success is location. It is very important that the
location live up to management's expectations, and is convenient to as
many potential customers as possible. As stipulated by the franchise
agreement, the "Type A-Profile 1" location must contain a minimum of
6,000 employees within a four block radius (or five minute walk time). The
pedestrian traffic must be adequate and the lunch habits of the customers
must be conducive to eating out.
Another key to success lies with management's ability to execute the
marketing and business plans. If they neglect one or more aspect of each
plan, whether in the numbers, employee morale, cleaning and food
standards, or a commitment to customers, The Sub Shop will not last
beyond a year.

Critical Issues
The critical issues are tied to implementing the overall strategy effectively.
The strategic elements of this plan are only as good as management's
ability to follow-through:

The Sub Shop will encourage our employees to think like owners.

The Sub Shop will respect customers and offer them real value.

The Sub Shop will stick to a spending plan, and reinvest profits for future
growth.

Marketing Strategy
Downtown workers:
The Sub Shop will target downtown workers through local businesses,
advertising, event sponsorship, and word of mouth advertising.

Students:
Ashland has a seasonal student population of around 4,700. The
company expects to reach students through campus activities and
marketing, as well as by sponsoring special student events.

Tourists:
Over 100,000 tourists will visit the Oregon Shakespearean Festival in
2001. 262,000 will visit Ashland for its premier recreational activities. The
company will reach tourists at the time they visit Ashland. Most tourists
aren't thinking, "Where am I going to find good, inexpensive lunches?"
when they plan their trips because they know fast food venues are
abundant. The strategy will be to stand out from the other venues
available on the street, and letting people know the food is relatively
inexpensive, but without degrading the experience of shopping in
Ashland.

Weekend Shoppers:
Weekend shoppers come from Medford to shop for clothes, gifts, and
crafts in downtown Ashland. Over 40,000 people live and work in Medford,
and we predict that at least 8% of those people will at some point shop in
Downtown Ashland.

Mission
The Sub Shop's mission is to bring to market the tastiest and healthiest fast food in
Ashland, offering real value over other fast food restaurants. High standards of
quality and cleanliness will establish a reputation as the cleanest QSR in Ashland.
The community is as important to us as making a profit. The Sub Shop will devote
2% of profits to a local women's shelter, and 1% to a local environmental

conservation fund. This franchise is founded on the concept that good works and
good deeds not only serve the needs of the community, but will keep the company
healthy both financially and spiritually, helping to maintain a commitment to filling
customer needs.

Marketing Objectives
The most important objectives are:

To acquire 25% market share in the Ashland region within year two of
operations.

To position The Sub Shop as a local company, with strong ties to the
community.

To be perceived as the cleanest, most responsive QSR or FFR in Ashland.

Financial Objectives

To end 2003 with a 15% increase in contribution margin.

To increase sales 10% per month the first year.

Target Markets
The market consists of both tourists, downtown workers, and students from Southern
Oregon University. Over 362,000 tourists visit Ashland each year - 100,000 for the
Shakespearean Festival and 262,000 for other recreational/shopping activities.
Tourist make up the largest segment of our target market, at about 85% of the total
market for our products. There are about 18,000 people living and working in
Ashland. If just 15% of those people buy The Sub Shop sandwiches twice a
month, the company will sell 65,000 sandwiches to that market alone in 2001. Add
that amount to 20% of all tourists to the Ashland area, and those two segments alone
will buy 138,000 meals.
In addition, demographics have shifted in recent years from traditional households
(two parents with children) to more non-traditional households; as a result, many
adults feel they have less free time. Consumers report that they are eating out more

often in order to free up time normally spent cooking, and use that time to enjoy their
families and to take advantage of other leisure activities.

Positioning
The positioning is dependant upon the franchisor. Throughout the last five years,
revenue growth for the franchisor has been in the 20% range so The Sub Shop has
faith in the franchisor's positioning strategy.
The Sub Shop products are positioned to be flavorful, sometimes healthy
alternatives to fast food. Customers will appreciate the clean seating areas,
Mediterranean ambiance, and special sauces, as well as meal specials. In this
regard, The Sub Shop is like no other QSR in Ashland.

Strategies
The Sub Shop's strategy is to keep things simple and stick to the basics.
In the employee room, large banners ask employees:

What do we want customers to think of us?

Why are you here?

You are an owner, what is your plan?

Why do our customers keep coming back?

Employees are on the front lines every day, and the goal will be to instill a sense of
simplicity and focus in their everyday actions. If employees are not happy with how
the company treats them, that negative energy will be transferred to customers. The
company will not always have control over customers, and their reactions to
mistakes (which are inevitable), but does have control over how employees deal with
mistakes and with the customers. Many fast food employees are degraded to the
point of feeling defensive when a manager address them or when a customer
challenges them. The strategy is to treat employees as owners, and help them make
decisions that benefit everyone.
This strategy will play itself out through fast service, great food, great customer
service, upbeat and friendly presentation, and cleanliness. By keeping it simple, the

strategy won't produce a lot of "noise" for customers and employees, and all goals
will be met.
Advertising strategy will focus on special offers provided through various locations
and businesses, and special offers targeted towards building a larger base of return
customers.

Marketing Mix
The company's marketing mix focuses on employees and customers first. Employee
service programs were described in the previous topic. Customer service goals will
ensure top-notch service.
Sales literature, coupons, a direct phone line, fax and website
orders, newspaper advertising, event sponsorships, and multi-purchase punch cards
will all contribute to a healthy marketing mix.

Marketing Research
Market research is based on informal research such as customer comments, letters,
as well as employee comments and perceptions. The company will occasionally
employ an outside agency in order to determine the scope of our market, to fine tune
our assumptions regarding demographics, to back up some of our assumptions, and
to act as an insurance policy against "internal groupthink." Sometimes clarity
is found by those paid to observe company day-to-day activities from a distance.

Financials
The following topics include the break-even analysis, sales forecast, and
expense forecast tables.

Break-even Analysis
The break-even analysis is based on a rough estimate of fixed costs. Through
FY2001, average fixed costs will be $4,500 per month. This figure includes the cost
to lease the building, equipment leases, and various other equipment costs and fees.
Variable costs include the cost of labor, food inventory, and other product-related
costs. The variable cost estimate is $1.20 per unit, although that number may be
revised up as actuals determine changes in the coming months.

Monthly break-even on unit sales is 2,250. This includes units other

than sandwiches, such as cookies, soda, chips and other add-ons. The basis for this
break-even point is an average of entrees (sandwiches) and add-ons. The average
per unit revenue is $3.20.
Create or edit
this chart

Break-even Analysis

Create or edit this table

Break-even Analysis

Monthly Units Break-even

Monthly Revenue Break-even

2,250
$7,200

Assumptions:
Average Per-Unit Revenue

$3.20

Average Per-Unit Variable Cost

$1.20

Estimated Monthly Fixed Cost

$4,500

Sales Forecast
The majority of revenue will be generated through medium subs and
cookies/desserts. The breakdown by products is below.
Create or edit
this chart

Sales Forecast

Create or edit this table

Sales Forecast
2003
Unit Sales

2004

2005

2006

2007

Large Subs

19,024

20,926

23,019

25,321

27,853

139,508

153,458

168,804

185,685

204,253

Small Subs

50,730

55,803

61,383

67,522

74,274

Entree Subs

19,024

20,926

23,019

25,321

27,853

Side Salads

15,219

16,741

18,415

20,256

22,282

Chips

38,048

41,852

46,037

50,641

55,705

254

279

307

338

371

Desserts

16,487

18,136

19,950

21,945

24,139

Cookies and Desserts

63,413

69,754

76,729

84,402

92,842

Soups and Chili

17,756

19,531

21,484

23,633

25,996

Drinks

50,726

55,803

61,383

67,522

74,274

430,186

473,210

520,530

572,584

629,842

Unit Prices

2003

2004

2005

2006

2007

Large Subs

$7.10

$7.10

$7.10

$7.10

$7.10

Medium Subs

$5.10

$5.10

$5.10

$5.10

$5.10

Small Subs

$3.89

$3.89

$3.89

$3.89

$3.89

Entree Subs

$5.10

$5.10

$5.10

$5.10

$5.10

Side Salads

$1.59

$1.59

$1.59

$1.59

$1.59

Chips

$0.89

$0.89

$0.89

$0.89

$0.89

$22.00

$22.00

$22.00

$22.00

$22.00

$1.49

$1.49

$1.49

$1.49

$1.49

Medium Subs

Party Subs and/or Trays

Total Unit Sales

Party Subs and/or Trays

Desserts

Cookies and Desserts

$1.39

$1.39

$1.39

$1.39

$1.39

Soups and Chili

$1.89

$1.89

$1.89

$1.89

$1.89

Drinks

$0.99

$0.99

$0.99

$0.99

$0.99

Large Subs

$135,069

$148,576

$163,433

$179,776

$197,754

Medium Subs

$711,488

$782,637

$860,901

$946,991

$1,041,690

Small Subs

$197,340

$217,074

$238,781

$262,659

$288,925

Entree Subs

$97,021

$106,723

$117,396

$129,135

$142,049

Side Salads

$24,198

$26,618

$29,280

$32,208

$35,429

Chips

$33,862

$37,249

$40,973

$45,071

$49,578

$5,580

$6,138

$6,752

$7,427

$8,170

Desserts

$24,566

$27,023

$29,725

$32,697

$35,967

Cookies and Desserts

$88,143

$96,958

$106,654

$117,319

$129,051

Soups and Chili

$33,558

$36,914

$40,605

$44,666

$49,132

Drinks

$50,219

$55,245

$60,769

$66,847

$73,531

$1,401,04 $1,541,15

$1,695,26

$1,864,79

Sales

Party Subs and/or Trays

Total Sales

$2,051,276

2003

2004

2005

2006

2007

Large Subs

$2.49

$2.49

$2.49

$2.49

$2.49

Medium Subs

$1.79

$1.79

$1.79

$1.79

$1.79

Small Subs

$1.36

$1.36

$1.36

$1.36

$1.36

Direct Unit Costs

Entree Subs

$1.79

$1.79

$1.79

$1.79

$1.79

Side Salads

$0.56

$0.56

$0.56

$0.56

$0.56

Chips

$0.31

$0.31

$0.31

$0.31

$0.31

Party Subs and/or Trays

$7.70

$7.70

$7.70

$7.70

$7.70

Desserts

$0.52

$0.52

$0.52

$0.52

$0.52

Cookies and Desserts

$0.49

$0.49

$0.49

$0.49

$0.49

Soups and Chili

$0.66

$0.66

$0.66

$0.66

$0.66

Drinks

$0.35

$0.35

$0.35

$0.35

$0.35

$47,369

$52,106

$57,317

$63,048

$69,353

$249,718

$274,690

$302,159

$332,375

$365,613

Small Subs

$68,993

$75,892

$83,481

$91,829

$101,012

Entree Subs

$34,053

$37,458

$41,204

$45,324

$49,856

Side Salads

$8,523

$9,375

$10,312

$11,344

$12,478

$11,795

$12,974

$14,272

$15,699

$17,269

Party Subs and/or Trays

$1,953

$2,148

$2,363

$2,600

$2,860

Desserts

$8,573

$9,431

$10,374

$11,411

$12,552

Cookies and Desserts

$31,072

$34,179

$37,597

$41,357

$45,493

Soups and Chili

$11,719

$12,890

$14,180

$15,598

$17,157

Drinks

$17,754

$19,531

$21,484

$23,633

$25,996

Direct Cost of Sales

Large Subs
Medium Subs

Chips

Subtotal Direct Cost of Sales

$491,522

$540,675

$594,743

$654,217

$719,639

Expense Forecast
The Sub Shop will reduce expense costs to below 3% of sales within the first year.
Since the franchisor manages and implements a large portion of the necessary
marketing activities, local activities will be minimal, yet important. Contribution/sales
margin is expected to exceed 62% within the first year.

Create or edit
this chart

Marketing Expense Budget

Create or edit this table

Marketing Expense Budget

2003

2004

2005

2006

2007

Franchisor Local and National

$10,813

$11,895

$13,084

$14,393

$15,832

Daily Offers and Discounts

$4,800

$4,896

$4,994

$5,094

$5,196

Other

$3,000

$3,060

$3,121

$3,184

$3,247

------------

------------

------------

------------

------------

$18,613

$19,851

$21,199

$22,670

$24,275

Advertising (2.2% Sales)

Total Sales and Marketing

Expenses
Percent of Sales

1.33%

1.29%

1.25%

1.22%

1.18%

Break-even Analysis
The break-even analysis is based on a rough estimate of fixed costs. Through
FY2001, average fixed costs will be $4,500 per month. This figure includes the cost
to lease the building, equipment leases, and various other equipment costs and fees.
Variable costs include the cost of labor, food inventory, and other product-related
costs. The variable cost estimate is $1.20 per unit, although that number may be
revised up as actuals determine changes in the coming months.
Monthly break-even on unit sales is 2,250. This includes units other
than sandwiches, such as cookies, soda, chips and other add-ons. The basis for this
break-even point is an average of entrees (sandwiches) and add-ons. The average
per unit revenue is $3.20.
Create or edit
this chart

Break-even Analysis

Create or edit this table

Break-even Analysis

Monthly Units Break-even

2,250

Monthly Revenue Break-even

$7,200

Assumptions:
Average Per-Unit Revenue

$3.20

Average Per-Unit Variable Cost

$1.20

Estimated Monthly Fixed Cost

$4,500

Sales Forecast
The majority of revenue will be generated through medium subs and
cookies/desserts. The breakdown by products is below.
Create or edit
this chart

Sales Forecast

Create or edit this table

Sales Forecast
2003

2004

2005

2006

2007

19,024

20,926

23,019

25,321

27,853

139,508

153,458

168,804

185,685

204,253

Small Subs

50,730

55,803

61,383

67,522

74,274

Entree Subs

19,024

20,926

23,019

25,321

27,853

Unit Sales
Large Subs
Medium Subs

Side Salads

15,219

16,741

18,415

20,256

22,282

Chips

38,048

41,852

46,037

50,641

55,705

254

279

307

338

371

Desserts

16,487

18,136

19,950

21,945

24,139

Cookies and Desserts

63,413

69,754

76,729

84,402

92,842

Soups and Chili

17,756

19,531

21,484

23,633

25,996

Drinks

50,726

55,803

61,383

67,522

74,274

430,186

473,210

520,530

572,584

629,842

Unit Prices

2003

2004

2005

2006

2007

Large Subs

$7.10

$7.10

$7.10

$7.10

$7.10

Medium Subs

$5.10

$5.10

$5.10

$5.10

$5.10

Small Subs

$3.89

$3.89

$3.89

$3.89

$3.89

Entree Subs

$5.10

$5.10

$5.10

$5.10

$5.10

Side Salads

$1.59

$1.59

$1.59

$1.59

$1.59

Chips

$0.89

$0.89

$0.89

$0.89

$0.89

$22.00

$22.00

$22.00

$22.00

$22.00

Desserts

$1.49

$1.49

$1.49

$1.49

$1.49

Cookies and Desserts

$1.39

$1.39

$1.39

$1.39

$1.39

Soups and Chili

$1.89

$1.89

$1.89

$1.89

$1.89

Drinks

$0.99

$0.99

$0.99

$0.99

$0.99

Party Subs and/or Trays

Total Unit Sales

Party Subs and/or Trays

Sales
Large Subs

$135,069

$148,576

$163,433

$179,776

$197,754

Medium Subs

$711,488

$782,637

$860,901

$946,991

$1,041,690

Small Subs

$197,340

$217,074

$238,781

$262,659

$288,925

Entree Subs

$97,021

$106,723

$117,396

$129,135

$142,049

Side Salads

$24,198

$26,618

$29,280

$32,208

$35,429

Chips

$33,862

$37,249

$40,973

$45,071

$49,578

$5,580

$6,138

$6,752

$7,427

$8,170

Desserts

$24,566

$27,023

$29,725

$32,697

$35,967

Cookies and Desserts

$88,143

$96,958

$106,654

$117,319

$129,051

Soups and Chili

$33,558

$36,914

$40,605

$44,666

$49,132

Drinks

$50,219

$55,245

$60,769

$66,847

$73,531

$1,401,04 $1,541,15

$1,695,26

$1,864,79

Party Subs and/or Trays

Total Sales

$2,051,276

2003

2004

2005

2006

2007

Large Subs

$2.49

$2.49

$2.49

$2.49

$2.49

Medium Subs

$1.79

$1.79

$1.79

$1.79

$1.79

Small Subs

$1.36

$1.36

$1.36

$1.36

$1.36

Entree Subs

$1.79

$1.79

$1.79

$1.79

$1.79

Side Salads

$0.56

$0.56

$0.56

$0.56

$0.56

Direct Unit Costs

Chips

$0.31

$0.31

$0.31

$0.31

$0.31

Party Subs and/or Trays

$7.70

$7.70

$7.70

$7.70

$7.70

Desserts

$0.52

$0.52

$0.52

$0.52

$0.52

Cookies and Desserts

$0.49

$0.49

$0.49

$0.49

$0.49

Soups and Chili

$0.66

$0.66

$0.66

$0.66

$0.66

Drinks

$0.35

$0.35

$0.35

$0.35

$0.35

$47,369

$52,106

$57,317

$63,048

$69,353

$249,718

$274,690

$302,159

$332,375

$365,613

Small Subs

$68,993

$75,892

$83,481

$91,829

$101,012

Entree Subs

$34,053

$37,458

$41,204

$45,324

$49,856

Side Salads

$8,523

$9,375

$10,312

$11,344

$12,478

$11,795

$12,974

$14,272

$15,699

$17,269

Party Subs and/or Trays

$1,953

$2,148

$2,363

$2,600

$2,860

Desserts

$8,573

$9,431

$10,374

$11,411

$12,552

Cookies and Desserts

$31,072

$34,179

$37,597

$41,357

$45,493

Soups and Chili

$11,719

$12,890

$14,180

$15,598

$17,157

Drinks

$17,754

$19,531

$21,484

$23,633

$25,996

Direct Cost of Sales

Large Subs
Medium Subs

Chips

Subtotal Direct Cost of Sales

$491,522

$540,675

$594,743

$654,217

$719,639

Expense Forecast
The Sub Shop will reduce expense costs to below 3% of sales within the first year.
Since the franchisor manages and implements a large portion of the necessary
marketing activities, local activities will be minimal, yet important. Contribution/sales
margin is expected to exceed 62% within the first year.

Create or edit
this chart

Marketing Expense Budget

Create or edit this table

Marketing Expense Budget

Franchisor Local and National

Advertising (2.2% Sales)
Daily Offers and Discounts

2003

2004

2005

2006

2007

$10,813

$11,895

$13,084

$14,393

$15,832

$4,800

$4,896

$4,994

$5,094

$5,196

Other

Total Sales and Marketing

Expenses
Percent of Sales

$3,000

$3,060

$3,121

$3,184

$3,247

------------

------------

------------

------------

------------

$18,613

$19,851

$21,199

$22,670

$24,275

1.33%

1.29%

1.25%

1.22%

1.18%

Implementation
The milestones table is attached. This table shows some of the general activities,
and their target completion dates, as well ownership. The dates are dependant upon
some other issues not listed, and may be modified as a result of changes made
during the monthly company meetings.
Milestones

Create or edit this table

Milestones

Advertising

Shakespeare Festival Ticket

Stub Promotion

50% off Coupon

Sponsorship of "Pear Blossom

Run"
Establish Menus in Hotels-Slotting Costs

Start
Date

6/1/2002

6/1/2002

End Date

Budget

Manager

Department

7/1/2002

$700

Luke

NA

$400

Jack

NA

6/15/200
2

2/1/2003

2/5/2003

$600

Luke

NA

5/1/2002

7/1/2002

$2,000

Luke

NA

Devise Special Schedule and

Logistics

7/1/2002

Wrap-up Menu, Special Offers

8/1/2002

Complete Interior Decor

8/1/2002

Name me

1/1/2003

Name me

1/1/2003

Other

1/1/2003

8/1/2002

8/15/200
2
9/1/2002
1/15/200
3
1/15/200
3
1/15/200
3

Total Advertising Budget

PR

Start
Date

1/1/2006

Name me

1/1/2006

Name me

1/1/2006

Other

1/1/2006

End Date

1/15/200
6
1/15/200
6
1/15/200
6
1/15/200
6

Total PR Budget

Name me

Jack

NA

$1,200

Jack

NA

$600

Jack

NA

$0

ABC

Department

$0

ABC

Department

$0

ABC

Department

Budget

Manager

Department

$0

ABC

Department

$0

ABC

Department

$0

ABC

Department

$0

ABC

Department

$5,600

Name me

Direct Marketing

$100

$0
Start
Date
1/1/2006

End Date

Budget

Manager

Department

1/15/200

$0

ABC

Department

Name me

1/1/2006

Name me

1/1/2006

Other

1/1/2006

1/15/200
6
1/15/200
6
1/15/200
6

Total Direct Marketing Budget

Web Development

ABC

Department

$0

ABC

Department

$0

ABC

Department

Budget

Manager

Department

$0

ABC

Department

$0

ABC

Department

$0

ABC

Department

$0

ABC

Department

Budget

Manager

Department

$0

ABC

Department

$0

ABC

Department

$0
Start
Date

Name me

1/1/2006

Name me

1/1/2006

Name me

1/1/2006

Other

1/1/2006

End Date

1/15/200
6
1/15/200
6
1/15/200
6
1/15/200
6

Total Web Development

$0

Budget

Other

$0

Start
Date

Name me

1/1/2006

Name me

1/1/2006

End Date

1/15/200
6
1/15/200
6

Name me

1/1/2006

Other

1/1/2006

1/15/200
6
1/15/200
6

Total Other Budget

$0

ABC

Department

$0

ABC

Department

$0

Totals

$5,600

Marketing Organization
The company is a very small franchise and does not need an organization chart.
There are few bureaucratic layers between the decision makers and the workers,
and there is often no difference between the two other than in title. The
Sub Shop encourages workers to think like owners and our owners to think like
workers.

Contingency Planning
The company has planned for several undesirable scenarios, all of which are
unlikely:

Solution

Potential Problem
The building doesn't meet a city code,

Work with contractors and city

or needs more updating than was

politicians to make appropriate

originally planned.

changes.

The unemployment level in Oregon

Solution: Change product position

continues to climb and people reduce

to "inexpensive alternative to

the amount of money they spend on

dining out" or "reduce your food

eating out.

bill."

The company loses the owner or

manager to an accident or an
executive recruiter.

Purchased a "successionary"
insurance policy.

Other funding sources, including

The SBA loan funding falls through.

Venture Capitalists, have shown an

interest in capitalizing the
business.

A similar sandwich franchise opens in

the Ashland Metro area and pulls
customers from us.

More aggressive promotional

campaigns.