The Pasta Tree is the only fresh pasta retail producer in the city of
Springfield. For the past three years, the company has sold its fresh
pasta products out of its own storefront and in the city's five natural
food stores. The company has built a loyal consumer base with customers
that have increased sales by 15% each year for the past three years.
This year, The Pasta Tree will gross more than $300,000 in sales. This
was generated from an initial investment of $80,000.
The Pasta
Tree is planning to expand its operation to include distribution to the
major supermarket chains within the entire city. There are fifteen major
supermarkets that operate in Springfield and over thirty-five
smaller grocery stores that serve the metro and expanding suburban
communities. To meet the increased product demand, The Pasta Tree will
have to double production. Owner funding and internally generated cash
flow will enable only a portion of the expansion plan. The Pasta Tree
will secure a $50,000 loan to fund the expansion of its production
facility. Sales projections for the next three years are based on
current sales success with the target customer base in Springfield.
This plan will result in sales revenues growing to almost $420,000 by Year 3.
The
Pasta Tree is located in a 3,000 square feet facility that operates as a
storefront and a production facility. With the expansion, 3/4 of the
area will be dedicated to production. The preparation of the new
production space will cost $10,000. The new equipment will cost an
additional $30,000. The company will also have to upgrade its packaging
equipment to meet the new demand. This will cost $10,000.
The
Pasta Tree will embark on a new marketing program in supermarkets and
grocery stores that will be carrying its products. Eye catching in-store
displays have been created to attract new customers. The displays will
also hold discount coupons to promote sales to new customers.
In
conjunction with the introduction of the products, The Pasta Tree will
be a major sponsor of the Canal Run which raises funds for children's
cancer research.
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