group assignment - carnard foie gras business plan

Asian Institute of Technology

International Executive MBA Program

Vung Tau 3

**************************

Innovation and Techno Entrepreneurship

Group Assignment

CARNARD FOIE GRAS COMPANY LIM ITED

BUSINESS PLAN

Student Name: Mr. Tran Xuan Thien

Mr. Doan Huu Hai

Mr. Vu Xuan Lai

Mr. Dang Ngoc Anh

Instructor: Dr. Yuosre Badir

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Table of Contents 1. Introduction ............................................................................................................................. 5

2. The Company .......................................................................................................................... 6

3. The Product and Production .................................................................................................... 7

3.1. Farming the Duck ............................................................................................................. 7

3.2. Forced feeding process ..................................................................................................... 8

3.3. Primary product – Foie Gras ............................................................................................ 8

3.3.1. Preparing the fresh foie gras ..................................................................................... 8

3.3.2. Cooking process ........................................................................................................ 9

3.4. Secondary products ........................................................................................................ 10

3.4.1. Fresh duck breast .................................................................................................... 10

3.4.2. Duck confit.............................................................................................................. 10

3.5. Product quality and hygiene control............................................................................... 10

3.5.1. Product quality control ............................................................................................ 10

3.5.2. Hygiene control ....................................................................................................... 10

3.5.3. Production Capacity ................................................................................................ 11

4. Market Analysis ..................................................................................................................... 11

4.1. Targeted Customers........................................................................................................ 11

4.2. Market growth forecast .................................................................................................. 11

4.3. Competitors .................................................................................................................... 12

5. Marketing Strategies .............................................................................................................. 12

5.1. Product Strategy ............................................................................................................. 12

5.2. Pricing Strategy .............................................................................................................. 12

5.3. Advertisement and Promotion Strategies ....................................................................... 13

5.4. Distribution Strategy ...................................................................................................... 13

6. Management Team ................................................................................................................ 13

7. Capital and Sources ............................................................................................................... 14

8. Forecast Profitability ............................................................................................................. 14

9. Reference: .............................................................................................................................. 16

APPENDIX 1 – FINANCIAL FIGURES..................................................................................... 17

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EXECUTIVE SUMMARY

Nowadays, along with developing of Vietnam economi and life standard level, the demand of

gourmet is also increased. Revered as one of the most exquisite foods in the world, foie gras is

synonymous with great taste and unabashed elegance. So the foie gras are quite popular on the

menu in big hotel an luxury restaurant. Foie gras is the fattened liver of a duck or goose which is

made through the intentional force-feeding of a duck or goose to fatten and enlarge the liver.

The foie gras currently sale in Vietnam are imported either from French or other European

countries such as Romania or Bungari. Foie gras has never been produced by Vietnam, although

it has good nature condition such as low labor cost, abundance of food for duch feeding such

corn, and especially foreseeing of the increasing demand on foie gras in Vietnam market. In

attempt to meet with the demand and supplying to the market with the foie gras quality same as

those imported from overseas however with lower price, Carnard Foie Gras Company Limited

shall be established.

Carnard Foie Gras’s farm and factory shall be built on the block of plan with total area about one

hecta in which includes the out-door and indoor farm, slaughtering areas, cooking and packing

areas, twenty meter square cool room, offices and dormitory for workers.

Carnard Foie Gras has two main line of products. Their flagship product is foie gras, renowned

for its freshness, delicacy texture, quality ingredients and lower price than imported product. The

secondary product categories are other duck products such as fresh duck meat and pre-cooked

duck meat such as duck confit and rendered duck fat. The products shall be produced in closed

cicle from breeding the duck, farming, slaughtering, cooking, packing and delivery to customers.

Customer of Carnard Foie Gras are high class restaurants and luxury food stores or delicatessen

in the four largest cities of Vietnam i.e. Ho Chi Minh, Ba Ria Vung Tau, Ha Noi and Da Nang.

For later stage of development, customers can be expanded to other cities and also exported.

Together with the increment of income, number of Vietnamese middle class and high rate of

income spending on restaurant, it would be reasonable to expect the market growth rate of foie

gras to be around 30%-35% per year until 2016. The product prices are set at the lower prices

than those imported from oversea in order to penetrate the market and attacting customer to use

the products.

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With the estimated market demand and growth, the profit are expect to achieve in the second

year of operation.

Carnard Foie Gras shall be established with an investment of US $600,000 from equally shared

four investors who are very passion and having approriate skills to establish as well as running

the business.

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1. Introduction

Foie gras, which means “fat liver” in English, is the fattened liver of a duck or goose. The

delicacy is made through the controversial process called “gavage,” or the intentional force-

feeding of a duck or goose to fatten and enlarge the liver. This fattened liver is made to a pâté

with rich flavour and the silky smooth texture.

The traditional of force-feeding of duck or goose is very old, probably originating from the

incent Egypt. The gavage was spread throughout the Mediterranean, and adopted by the Greeks

and then the Romans of whom made foie gras into a delicacy in its own right. As Rome

expanded territorially, its gastronomic influence also expanded, turning foie gras into a food

enjoyed by gourmets. After the fall of Rome, it was the Jewish who kept and brought with them

the tradition of foie gras alive wherever Jews moved across Europe during the Middle Ages. The

foie gras became more popular when the king of French, Louis XIV, a gourmand, enjoyed haute

cuisine, but his tastes began to trickle down to the aspirations of the French middle class. After

the French Revolution, the bourgeois became the new consumers of cuisine, and they began to

frequent a new establishment known as the restaurant (Guemene and Guy, 2004). And though it

has enjoyed a long history, foie gras is still produced using the traditional methods passed down

by generations.

Globally, France produces about 20,000 tons of foie gras each year. Bulgaria is the world’s

second with 2,200 metric tons in 2009 and Hungary comes third with1,800 tons of goose foie

gras. Although the economic crisis the demand and production of foie gras is still expecting to

increase from 5%-10% in the next few years.

In Asia, especially in China where with the high economic growth and increasing number of

middle class who have more and more money, and they are looking for quality, and are willing

to pay for it. China’s total annual foie gras production of about 1,000 tons is still far off that is

demanded (Anakin, 2010).

Nowadays, along with developing of Vietnam economic, life standard level is increase. The

demand of gourmet is also increased and so the foie gras are quite popular on the menu in big

hotel an luxury restaurant. Although there is no previous study about demand of foie gras in

Vietnam, however, similar to China, we foresee a good indication of the opportunities for foie

gras business through the fast growing of Vietnamese's middle class which is now about 7

million households and the spending on average of 7% of the annual income on restaurant

(which is one of the highest rates in the worlds) (Hoang Yen, 2008). The demand of the foie gras

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is also represented at the increasing of number in luxury restaurants and hotels/resort and

entertainment complex in Viet Nam.

2. The Company

Carnard Foie Gras Company Limited is a startup company which farms the duck from which the

foie gras and other related duck product are produced. The facility is planned to be unique in that

all the stages of production, from breeding, farming, slaughtering, pre-cooking to packaging,

exist in one location. This design is to ensure the freshness and controlling of product hygiene.

The duck growing in Canard Foie Gras is the Moulard Duck which is believed to give the most

productive fatten liver.

Company plant is located in Ba Ria Vung Tau province which is about100 km from Ho Chi

Minh City and being the province of many luxury hotel and entertainment complex such as the

Ho Tram Strip Resort Complex with US 4.2 billions investment and the Good Choice Resort and

Convention Complex with US 1.4 billions investment. Company farm and factory shall be built

on the block of plan with total area about one hecta in which includes the out-door and indoor

farm, slaughtering areas, cooking and packing areas, twenty meter square cool room, offices and

dormitory for workers.

Company Vision:

To provide competitive prices and finest foie gras and related duck meat products to Vietnam

high class hospitality industry.

Company Mission:

Carnard Foie Gras is committed to the highest standards of animal welfare, and utilizes humane

techniques in the raising and feeding of ducks. Ducks are never individually caged and are

allowed to roam free range.

Objective of the Company:

Carnard Foie Gras's has several objectives that we will achieve within the first three years of

operation.

- Roll out the first product sale launch on October 2012

- Establish supplying strategic relationships with 10-15 high class hotels and restuarants in

Ho Chi Minh, Vung Tau, Da Nang and Ha Noi in the first year.

- Achieve sale revenue of US 200,000 for the first year operation, increase to US 300,000

for the next year and at minimum 20% for the third years.

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- Start to have profit from the second year.

Key success factors for Carnard Foie Gras

- Providing the best product quality duck products with lower prices than imported

products which is thank to the lower labor cost and duck feeding food. Our goal is to

produce the same high-quality foie gras, whether in Canada, France, Hungary, United

State or Vietnam.

- Carnard Foie Gras is the only one foie gras producer in Vietnam who can provide the

fresh, timely and making to order foie gras and duck related products.

- Establishing and maintaining working relationships and contractual agreements with high

class restaurant and retailer

- Effectively communicating potential customers, our position as a differentiated provider

of the highest quality specialty duck products

3. The Product and Production

Currently, Carnard Foie Gras's has two main line of products. Their flagship product is foie gras,

renowned for its freshness, delicacy texture, quality ingredients and lower price than imported

product. The secondary product categories are other duck products such as fresh duck meat and

pre-cooked duck meat such as duck confit and rendered duck fat.

3.1. Farming the Duck

The duck chosen for foie gras production is a hybrid between the muscovy duck and the

Pekin duck. There is an important sexual dimorphism in muscovy ducks, the adult male

weighs between 4.5 and 5 kg while the adult female weighs between 2.2 and 3 kg. The

Muscovy duck were too nervous and at the end of the force feeding period, their fatty liver

had a tendency to lose fat by melting. For all these reasons Muscovy ducks are crossed with

Pekin duck. A male muscovy duck is crossed with a female Pekin duck of and the product is

a sterile hybrid, the so-called mulard duck.

After hatching, the mulard ducks shall be grew in door for about 4 weeks, in order to

minimize the death rate, infected diseases and to increase the immune system of the duck.

After 4 weeks, the ducks are then allowed to go outside for four weeks. At this stage, the

duck are fed by mixture of bran, vitamin and minerals

The duck is then grown rapid muscle growth which generally lasts about four weeks, the bird

receives a large quantity of food. This results in esophagus dilation and progressively leads to

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the half fatted. Prior to force feeding, the ducks shall be trained to dilate the esophagus, for

example by grass ingestion. Such preparation makes it possible for the bird to receive a large

quantity of food in the forced feed process. The feeding mixture of this stage shall be

controlled with the components as followings: corn 20%, rice 50%, soya cake 22%, mineral

and vitamin supplement 8%.

Two week prior to the slaughtering, the ducks are went to the forced feed stage where they

shall be fed two meals per day with very high carbohydrate and fat mixtures which includes

corn 60%, rice 10%, soya cake 25%, mineral and vitamin supplement 5%. Corn is selected as

the main ingredient in the force-feeding diet because it is a low cost ingredient and also

because of its high starch content, starch being one the best substrates to stimulate neo-

lipogenesis in the duck livers.

3.2. Forced feeding process

The food is fed into the duck by a tube inserted to the esophagus. The food delivered to the

tube a hydraulic dispenser which can be pre-programmed to amount of foods and speed.

Another advantage of this dispenser is the opportunity to incorporate a certain amount of

uncooked whole corn grain into the mixture.

Regarding to the rearing conditions the ducks are placed in individual cages during the

cramming period. The main advantages being that there is no risk of confusing the ducks and

that they always remain in the right position. These practical changes together contributed to

enhancing productivity, with up to 400 ducks being force-fed by one person per hour.

3.3. Primary product – Foie Gras

3.3.1. Preparing the fresh foie gras

The fattened liver should be removed from the duck quickly after its death while the

duck is still warm. The fattened liver is examined closely in order to remove all tiny

veins that run through the two lobes of the livers. The veins shall affect on the taste and

smoothness of the foie gras as they are quite chewy. The foie gras is then soaked in milk

and honey with the ratio thirty to one which make the foie gras swell as well as flavoring

it. The foie gras shall be seasoned at precise ratios to one (01) kilogram of foie gras as

followings:

- Salt 18g per kg

- Fesh ground pepper 5g – 7g per kg

- Sugar: 15-20g per kg

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- Fresh grouned nutmeg: 5g – 7g per kg

The foie gras is then marinated for at least one day under refrigeration to ensure the

freshness and product hygiene. After marinating, the foie gras shall be cooked in the

terrine or vacuum bag depending on the quality of the foie gras. The high quality foie

gras shall be cooked in vacuum bag to retain the whole liver lobes, while the less quality

shall be cooked in terrine.

3.3.2. Cooking process

The half cooked foie gras (in French Mi-cuit Foie Gas) is applied to two foie gras

products, each of which is cooked to a different internal temperature. The mi-cuit foie

gras is cooked in a terrine in a water bath, or steamed in a vacuum bag, is taken to an

internal temperature of 46-50 Celsius degree and then removed from the heat source. It

is pale pink in color and melting in texture and is generally agreed to have the best

flavor. This cooking process shall retain the freshness and full texture of the foie gras

and shall be the highest quality and most expensive foie gras in Cardnard Foie Gas’s

products. However, this product shall also have shorter product life i.e. maximum two

month if keeping at temperature below 4 Celsius degree. This product is more suitable

for high turn-over restaurant and hotel.

For longer product life, the foie gras has to be cooked in the following ways:

- to an internal temperature of 70 Celsius degree and held at that temperature for 92

minutes or

- to an internal temperature of 80 Celsius degree and held for 16 minutes

This cooking process shall allow the product life to 6 months and must be stored under

refrigeration. It tastes pretty good but does not have the finesse of the less cooked

products.

The full cooked foie gras (in French En conserve foie gras) is the foie gras has been

cooked in an internal temperature of 105 Celsius degree and completely sterilized. It is

shelf-stable and can be stored anywhere for 1-2 years. It shall have beige color and has a

denser, and stronger flavor than half cooked foie gras.

When the foie gras is cooked, it must be cool and drain the excess water, then refrigerate

for at least 24 hours before it can be delivered to customer.

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3.4. Secondary products

3.4.1. Fresh duck breast

Duck breast is de-boned, remove the excess fat and air-seal packed for fresh products.

3.4.2. Duck confit

Duck confit is the duck breast or duck leg which is salted and marinated, then slow

cooked in duck fat. Duck leg shall be marinated for at least 24hrs with the mixture of

thyme, bayleaf, junipers, pepper and 50g coarse salt per kilogram of duck leg. The

marinating process must be stored in the refrigeration to ensure the hygiene of the

products. After 24hrs, the marinating mixture is brushed off the duck which is then slow

cooked in duck fat for about 4 hours until the duck meat is tendered.

The cooked duck confit is removed from the pot and cool in the refrigerator and covered

by duck fat for reservation. This reservation can keep the duck confit for at least two

months until they are packed in the air sealed bag and delivered to customer which is

expected to last for another two month under refrigeration conditions.

3.5. Product quality and hygiene control

3.5.1. Product quality control

The quality of the foie gras is classified based on the size, color and texture of the liver.

The highest quality foie gras shall have the size about 700-800g, well lobed, smooth and

round and putty coloured. The foie gras shall be the category 1 product or called foie

gras d’oie entire in French. The category 2 products are those liver with less than 100g

smaller in size or oversized but still have the smooth and putty coloured. The category 1

and category 2 products shall be cooked in the vacuum bag for whole foie gras.

The other kind of foie gras shall be the category 3 which shall be reconstituted and

cooked in the terrine which shall sale as foie gras terrine.

3.5.2. Hygiene control

Carnard products naturely are always in high risk of for food poisioning, therefore

hygiene control is vitally important as same as the product quality. Temperature of the

cooking process and storage shall be strictly controlled. Products are delivered to be

packed in air sealed bag and insulated box with ice bag inside. The slaughetering

process also separated from the cooking to prevent the cross contamination.

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Sample of each production batch shall be retained for hygenie check and testing

purposes. Carnard Foie Gras also works closely with the local Bureau of Veternary for

regular health check and vaccination of the ducks.

3.5.3. Production Capacity

The initial investment for the farm shall be able to grow simutaneously production

capacity of the first three years shall be around 4 tons of foie gras and 6 tons of confit

per years. However, in planning for future development, the land of the farm and

production facilities can be able to expand and produce up to 10 tons of foie gras per

year.

4. Market Analysis

4.1. Targeted Customers

Carnard Foie Gras's has targeted two main local customer groups to sell the products to. The

first group is high class restaurants such as Au Manior De Khai, An Nam and luxury hotel

/resort in the large cities such as Ho Chi Minh, Ha Noi, Da Nang and Ba Ria-Vung Tau such

as the New World hotel, Park Hyatt hotel, Caravell hotel, Sofitel Plaza hotel, Sedona hotel,

Equatorial hotel, Sheraton hotel, the six star resort Six Sense in Con Dao and the potential Ho

Tram Strip. These restaurant and hotel shall purchase our product to serve their customers

who are willing to pay for high price. This segment is expecting to grow at double in the first

two years and there currently are 50 potential customers. The second group is the luxury food

stores or delicatessen will be then sell directly to the end consumer. This segment has a lower

growth rate with 5 potential distributors.

Carnard Foie Gras is also looking forward to the last customer segment which is exporting to

oversea reseller, however this shall be the long term plan. As mentioned before, Carnard Foie

Gras’s originally targeted firstly to the Vietnam customers. The market has indicated that

their products have broader appeal and Carnard Foie Gras's has recognized this and acted

accordingly.

4.2. Market growth forecast

Business Monitoring International forecasted the pre-cooked and canned food market of

Vietnam shall have significant growth in the next few years, in particular in the year 2014

this market shall increase with approximate of 24.2% in quantity and 48.7% in revenue

(Vietrade, 2010). The double increment in revenue comparing with the growth in quantity

can be a good indication that Vietnamese’s are willing to pay more on the luxury and high

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price food products. Together with the increment of income, number of Vietnamese middle

class and high rate of income spending on restaurant as mentioned above, it would be

reasonable to expect the market growth rate of foie gras to be around 30%-35% per year until

2016. This forecast growth rate is also further supported by the increasing number of high

class hotel and resorts projected invested to Vietnam or going to operate in the next few

years.

4.3. Competitors

While there are many competitors from oversea who can export their product to Vietnam,

there are none direct and local competitor at Carnard Foie Gras's foie gras and pre-cooked

duck meat. This is quite advantageous for Carnard Foie Gras's, providing them with

additional breathing room to establish itself as the premier brand of luxury food.

The competition threat from the new entrant shall also be low because of the barriers of

know-how, technical aspects on farming the duck and cooking the foie gras, well established

strategic customer of Carnard Foie Gras.

5. Marketing Strategies

5.1. Product Strategy

The products are positioned at the high end restaurant or hotel or delicatessens in terms of

both quality and price. The products shall be categorized depending on the quality, sizes and

texture, however, there shall not differentiate between those customer segments.

5.2. Pricing Strategy

Given that Carnard Foie Gras needs to penetrates the local market, gaining competitors'

customers and attracting non-users of our product or convincing current customer to switch

using more of our product as local provider. Therefore, the Carnard Foie Gras products shall

follow the penetrating market pricing which the prices are set at the lower prices than those

imported from oversea. The products prices shall be as followings:

No Products Description Unit Unit Prices

(USD)

1 Foie Gras

1.1. Category 1 (premium quality) Per kg 80.00

1.2. Category 2 (high quality) Per kg 72.00

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1.3 Category 3 (terrine foie gras) Per kg 65.00

2 Duck confit Per kg 20.00

3 Fresh duck breast Per kg 7.00

The prices of the foie gras and confit are set at the level 10% lower than those imported. The

above prices shall be adjusted subjected to the significant fluctuation of the input raw

materials and inflation each year.

5.3. Advertisement and Promotion Strategies

Given that Carnard Foie Gras products are mainly sold to other businesses, therefore we shall

establish the sale office and sale team in Ho Chi Minh City. This sale team shall directly

market our products to the targeted hotel, restaurant and delicatessen. Free samples shall be

provided to the head chef for trail.

We also cooperate with Au Manior De Khai restaurant to organize the foie gras weeks in

order to promote and increasing the awareness of restaurant goer. This event shall be

advertised on selected magazine such as on-flight magazines, the entrepreneur weekly

magazine and picture of foie gras or confit duck dishes shall be displayed outside of the

restaurant.

For the long-range goal, Carnard Foie Gras aims to gain enough visibility to leverage the

product into other distribution sites within Vietnam, then to move on to other countries in

Asia.

5.4. Distribution Strategy

The products shall be packed in the air tight sealed plastic bag and delivered to customer in

the insulated spongy box with ice bags. This is to ensure the products quality and hygiene.

The products shall be delivered to customer in Ha Noi and Da Nang by airfreight, while for

customer in Ho Chi Minh and Vung Tau by car or motorbike.

6. Management Team

Carnard Foie Gras's management team includes experienced person from diversified background

such as marketing, chef graduated from French culinary school and experienced in Australia,

engineering and veterinary will ensure sustainable growth for Carnard Foie Gras. Carnard Foie

Gras's management team included of three highly motivated individuals who experiences and

qualification are briefed as following.

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Mr. A is the Director of the Company. He has a MBA degree and graduated from University of

Finance and Economic, Vietnam for his bachelor. He is very experience in managing business,

especially for start-up company. Good inter-personal skill and influencing on the people are also

his other strength

Mr. B is the Production Manager of the Company. He hold a bachelor in biotechnology and

diploma in culinary from Le Cordon Blue-French. He had many year working experiences in

high class restaurant in Sydney, Australia and under supervised by one of the most well known

master chef in Australia. He shall also be the person in charge for the cooking, product quality

and hygiene control.

Mr. C is Sale and Administration Manager. He graduated from University of Finance and

Economic, Vietnam and majored in Marketing. Previously, he was the sale manager for a FMCG

company in Ho Chi Minh City. He is native in inter-personal relationship skilled and has good

connection with the hotel restaurant owner in Ho Chi Minh City and Ba Ria Vung Tau.

Mr. D is Maintenance and Site Manager. His background is in engineering and construction. He

has more than ten years experiences in international companies for design, structuring and

facilities maintenance.

7. Capital and Sources

Carnard Foie Gras shall be started with a total investment of USD 600,000 which is equally

funded 4 founders. This fund shall be used for land rental, factor, farm building, equipments,

ducks, food for feeding the ducks of the first years, labors. For the first three years, Carnard Foie

Gras does not intend to have any long terms borrows or increasing of capitals.

However, Carnard Foie Gas also plans to seek for fund from Venture Capital in the next stage

which is for further development and expansion of the business. This plan shall be depended on

the forecast and performance of the first three years.

8. Forecast Profitability

Carnard Foie Gras will plan to launch the product in October 2012 to take the advantage of

special events of the year such as Christmas, New Year in which foie gras is the traditional food

for Westerners. It is expected that Canard Foie Gras will not gain profit in the first year. Loss

mostly arrives from fixed monthly expenses such as labor, rent, and insurance. However, there is

still reason for company to continue i.e. sales is increasing and the optimizing of the cost.

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Carnard Foie Gras's forecasts profitability in net profit in second years. The financials within the

plan further reinforce the exciting nature of this business.

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9. Reference:

1. Anakin, 2010, China goes gourmet with foie gras, Luxyo, viewed on 27th July 2011, access

at http://www.luxuo.com/gastronomy/china-foie-gras-euralis.html

2. Guemene D. and Guy G., 2004, The past, present and future of forcefeeding and “foie gras”

production, World’s Poultry Science Journal, Vol. 60, June 2004, pg 211-222

3. Hoang Yen, 2008, Xem cách chi tiêu của người dân các nước và Việt Nam, Vnmedia,

viewed on 27th July 2011, accessed at

http://www.vnmedia.vn/newsdetail.asp?NewsId=140072&CatId=26

http://www.vnmedia.vn/newsdetail.asp?NewsId=140072&CatId=26

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APPENDIX 1 – FINANCIAL FIGURES

1. Start up Funding

Start-up Funding Start-up Expenses to Fund $14,800 Start-up Assets to Fund $499,000 Total Funding Required $513,800 Assets Non-cash Assets from Start-up $489,000 Cash Requirements from Start-up $10,000 Additional Cash Raised $86,200 Cash Balance on Starting Date $96,200 Total Assets $585,200 Capital Planned Investment Investor 1 $150,000 Investor 2 $150,000 Investor 3 $150,000 Investor 4 $150,000 Total Planned Investment $600,000 Loss at Start-up (Start-up Expenses) ($14,800) Total Capital $585,200 Total Capital and Liabilities $585,200 Total Funding $600,000

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2. Sale Forecast

Sales Forecast FY 2013 FY 2014 FY 2015 Unit Sales Foie Gras 1,760 2,100 2,500 Confit 2,940 3,500 4,200 Fresh Duck Meat 3,530 4,200 5,100 Total Unit Sales 8,230 9,800 11,800 Unit Prices FY 2013 FY 2014 FY 2015 Foie Gras $70.00 $88.00 $102.00 Confit $20.00 $22.00 $25.00 Fresh Duck Meat $7.00 $8.00 $10.00 Sales Foie Gras $123,200 $184,800 $255,000 Confit $58,800 $77,000 $105,000 Fresh Duck Meat $24,710 $33,600 $51,000 Total Sales $206,710 $295,400 $411,000 Direct Unit Costs FY 2013 FY 2014 FY 2015 Foie Gras $17.50 $22.00 $25.50 Confit $5.00 $5.50 $6.25 Fresh Duck Meat $1.05 $1.20 $1.50 Direct Cost of Sales Foie Gras $30,800 $46,200 $63,750 Confit $14,700 $19,250 $26,250 Fresh Duck Meat $3,707 $5,040 $7,650 Subtotal Direct Cost of Sales $49,207 $70,490 $97,650

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Foie Gras

Confit

Fresh Duck Meat

Figure 1-First Year Monthly Sale Plan

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3. Projected Profit and Loss

Pro Forma Profit and Loss FY 2013 FY 2014 FY 2015 Sales $206,710 $295,400 $411,000 Direct Costs of Goods $49,207 $70,490 $97,650 Production Payroll $22,800 $25,100 $26,900 Other Costs of Goods $21,000 $25,000 $30,000 ------------ ------------ ------------ Cost of Goods Sold $93,007 $120,590 $154,550 Gross Margin $113,704 $174,810 $256,450 Operating Expenses Sales and Marketing Expenses Sales and Marketing Payroll $16,404 $28,400 $28,400 Advertising/Promotion $12,000 $12,000 $17,000 Other Sales and Marketing Expenses $6,000 $6,000 $13,000 ------------ ------------ ------------ Total Sales and Marketing Expenses $34,404 $46,400 $58,400 General and Administrative Expenses General and Administrative Payroll $13,200 $14,600 $16,600 Marketing/Promotion $3,500 $6,000 $3,000 Depreciation $53,200 $53,200 $53,200 Sell and Representative Office $4,800 $4,800 $4,800 Telephone and Stationary $1,240 $1,300 $1,300 Electric and water $14,900 $20,000 $25,000 Other General and Administrative Expenses

$13,200 $14,000 $20,000

------------ ------------ ------------ Total General and Administrative Expenses

$104,040 $113,900 $123,900

------------ ------------ ------------ Total Operating Expenses $138,444 $160,300 $182,300 Profit Before Interest and Taxes ($24,741) $14,510 $74,150 Interest Expense $733 $0 $0 Taxes $0 $3,627 $18,537 Net Profit ($25,474) $10,882 $55,612

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4. Cash Flow

Pro Forma Cash Flow FY 2013 FY 2014 FY 2015 Cash Received Cash from Operations Cash Sales $155,033 $221,550 $308,250 Cash from Receivables $47,545 $72,077 $100,439 Subtotal Cash from Operations $202,578 $293,627 $408,689 Additional Cash Received Sales Tax, VAT, HST/GST Received $20,671 $29,540 $41,100 Subtotal Cash Received $223,249 $323,167 $449,789 Expenditures FY 2013 FY 2014 FY 2015 Expenditures from Operations Cash Spending $52,404 $68,100 $71,900 Bill Payments $127,180 $152,616 $183,279 Subtotal Spent on Operations $179,584 $220,716 $255,179 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $11,200 $15,000 $20,000 Principal Repayment of Current Borrowing

$5,000 $0 $0

Purchase Other Current Assets $4,000 $5,000 $7,000 Dividends $0 $0 $40,000 Subtotal Cash Spent $199,784 $250,716 $322,179 Net Cash Flow $23,465 $72,415 $127,610

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5. Balance sheet

Pro Forma Balance Sheet

FY 2013 FY 2014 FY 2015

Assets

Current Assets Cash $132,665 204665 324665

Accounts Receivable $4,133 $5,906 $8,217

Inventory $8,754 $12,540 $17,371

Other Current Assets $54,000 $59,000 $66,000

Total Current Assets $199,551 282111 $416,253

Long-term Assets Long-term Assets $427,000 $427,000 $427,000

Accumulated Depreciation $53,200 $106,400 $159,600

Total Long-term Assets $373,800 $320,600 $267,400

Total Assets $573,351 $602,711 $683,653

Liabilities and Capital FY 2013 FY 2014 FY 2015

Current Liabilities

Accounts Payable $4,153 $5,240 $6,300

Current Borrowing $0 0 0

Other Current Liabilities $9,471 $24,011 $45,111

Subtotal Current Liabilities $13,624 $29,251 $51,411

Total Liabilities $13,624 $32,103 $51,4111

Paid-in Capital $600,000 $600,000 $600,000

Retained Earnings ($14,800) ($40,274) ($23,370)

Earnings ($25,474) $10,882 55,612

Total Capital $559,726 $570,608 $632,242

Total Liabilities and Capital $573,351 $602,711 $683,653

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6. Break-even Analysis

Break-even Analysis Monthly Units Break-even 603 Monthly Revenue Break-even $15,141 Assumptions: Average Per-Unit Revenue $25.12 Average Per-Unit Variable Cost $5.98 Estimated Monthly Fixed Cost $11,537

($15,000)

($10,000)

($5,000)

$0

$5,000

$10,000

0 200 400 600 800 1000

Monthly break-even pointBreak-even point = where line intersects with 0

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