house of chefs - incubator hybrid for f&b

HOUSE OF CHEFSIncubator/VC Hybrid for F&B

14年11⽉月5⽇日星期三

HOME-RUNSCronuts

Early Jan 2014, the Cronuts fever started from NYC and became an instant Home-Run world wide.

In July 2014 Drips Cafe was the 1st to clone Cronuts to Taiwan, in no time their sales exceeds $4 mil NT monthly, got their money back 6 month after opening.

Super Sexy Products


FADSProducts such as cupcakes, doughnuts and tarts are considered as “FADS”. These products are extremely sexy, explosive, viral and profitable. Often, the 1st to a new market can make tons of money and attract tons of traffic, enough to support an entire restaurant. (ex. Drips cafe, Dazzling, Les Bebe)

The Problem

FADS usually have a short life span of 1-2 years, due to it’s sexy nature and market competitions.

The Question

How to create a sustainable, profitable and scalable business with these FADS?


WHY FADS?Why not build a sustainable restaurant like Japanese or Thai?

1. Relying on 1 Chef, if they bail, we are screwed!

2. Many things could go haywire, products, location, Chefs, ambience. Cost of failure is too high, a single attractive enough restaurant costs $ 6-10 million avg.

3. Sustainable restaurants takes decades and even generations.

4. Cloning FADS, they are already viral, lower marketing required.

6. Copy first, easier execution and faster to profitability.

7. Product quality, on a scale of 1-10, it’s much easier, cheaper, and faster from 1 to 8 than it is from 8-10.


HOUSE OF CHEFSObjective

To become the best and fastest in bringing new F&B brands to new markets, through the use of incubator concept, with lightning speed execution and fund raising capabilities.

Rocket Internet of F&B

Rocket Internet, the infamous clone factory of the hottest startups. With clones of Ebay, Facebook, Groupon, Lyft, Amazon, Birchbox. Rocket Internet recently has IPOed at Germany.


ORG CHART

HOCIncubator

1. Product cloning, innovation2. Venture prep/execution3. Private Kitchen4. Teaching Lesson5. Demo Day6. Central Kitchen7. Franchising8. Website9. Pay Service

Investors

1. Incubator2. Ventures

VenturesF&B Brands

1 2 3

Clones/New Ventures14年11⽉月5⽇日星期三

INCUBATORKitchen Lab

1. A space with kitchen equipments for chefs to clone/develop cook and desserts.

2. A space for daily operations.

3. $3 million for renovation and equipments

4. Day Time(9-6): Office for operations, chef recruitment, venture preparation, central kitchen, website and franchising.

5. Night Time(6-10): Private Kitchen, Demo Days, Teaching Lesson and Investor meetings.


INCUBATOR - TEAM1. CEO($50K/mon)- Overall strategy and execution, website operations, investors relations and assist venture operations.

2. Chief Chef($50K/mon)- Overall venture operations, chef recruitment, team training and product development.

3. Marketing/Design($40K/mon) - Overall marketing/design work for incubator, ventures, website, Demo Days, Private Kitchen and Teaching Lessons.

4. Chef Recruiter/Operations ($40K/mon) - Chef recruitment.

5. Finance/Accountant ($40K/mon)

6. Kitchen Assistant -PT($120/hr) - To assist during night session operations such as Private Kitchen, Demo Days...


KITCHEN LAB


INCUBATOR REVENUEWebsite

During Venture prep period(before launch), team work on products as training.

Target: $200/pc X 200pc/day X 22days/mon =>$880K/mon (full capacity)

Night Sessions

Host 20 person Private Kitchen event at $1000/head and wine sales.

Profit: $6000/night X 30night/mon => $180K/mon (full capacity)

Member fees, Central Kitchen, Pay Services, Franchising...


INVESTORSIncubator (Sure Home-runs)

Chosen small number of investors can invest in the incubator, the fund will be used to build the Kitchen Lab and clone the first 3 ventures.

Later fund raising rounds will be for central kitchen, full website, more clone ventures and expansion of boom ventures.

New Ventures (Not sure Home-runs)

Ventures that are not sure Home-runs will be set up as new entities and open up for outside investors to invest, while incubator gets 20% stake for services provided until the venture is funded and the rights to provide Pay Services afterwards.


VENTURESClone Ventures (Higher success rate)

1. Incubator will focus on cloning Home-runs products like Cronuts and turn them in to ventures, with each having a small budget of 2.5 million NT.

2. Products must be already viral, small operations, simple execution and scalable.

4. Ventures: Boom, scale fast. Bust, close before 1st money loosing month.

New Ventures(Lower success rate)

As we acquire more resources, chefs and experience. We can try to tackle tougher self developed ventures, start by setting new companies and allowing


VENTURE TEAMEx. Japadog

1. CEO/Chef($40K/mon) - Overall strategy and execution of the venture.

2. Chefs(Many) - Invite chefs to come in to make new product flavors and get 5% cut for each unit/piece of the products sold.

3. Store staff -5PT($120/hr) - Each store needs at least 5 PT to run it’s operations.

Later stage:

4. COO($40K/mon) - To assist CEO when the Venture boom is confirmed.


VENTURE REVENUEIn store sales

Forecasting conservatively, with sales of 100pcs/day at $200/pc and 60% margin (minus raw material).

Phone order delivery

Sales of 50pcs/day at $200/pc and 60% margin

Sales target: 4575pcs/month = > $549K/mon (minus raw material)

Boom Venture: Able to make investments back within 6 month of launch.


VENTURE EXITSBust or under performing ventures

After 4 month of operation, we should be able to accurately forecast the Venture and decide whether it’s a boom or bust. Assuming a bust, to avoid loosing all the money, we can spin off the Venture and set up a new company, through a new fund raising round, we can raise company’s valuation and let original investors sell stocks to new investors to get money back.

Valuations exit strategy

Before launch(no sales yet): $1mil invested for 1mil shares => $1/share

After launch(with sales): $3 mil valuation for 1mil shares => $3/share

Exit: Selling 1/3 shares will help get initial investments back.


GAME PLANIncubator

1. Raise money for Kitchen Lab and 3 clone ventures with 18 month runway.

2. Select clone venture targets, recruit, train, rollout ventures one after another.

3. At same time recruit chefs for New Ventures, Private Kitchen, Demo Days.

4. Venture Boom: Open 2nd and 3rd store, then start franchising.

5. Venture Bust: Close before 1st money loosing month, rollout next venture.

6. 1st Boom Venture: Start fund raising for central kitchen, website and more ventures.


TIMELINEMonth 1

Month 24

1. Incubator team recruitment,/renovation planning/locations scouting

2.

3. Kitchen Lab renovation

4. Kitchen Lab Grand Opening/Venture Chef recruitment

5. Launch Website/Demo Day/Private Kitchen/Teaching lesson

6. Plan for Central Kitchen/Full Website/More Ventures

11. Fund raise for Central Kitchen/Full Website/More Ventures

1. V1 Target confirmed/CEO, Chef and Team recruitment

2.

3. Venture Team confirmed

4. Start working on product/team training/1st location scouting/1st store renovation planning

5. Product goes on website sale

6. 1st location confirmed/renovation

7. 1st store renovation/Soft Opening

8. 1st store Grand Opening

9.

10.

11. Boom/Bust confirmed

12.

13. 2nd store renovation

14. 2nd store Soft Opening

15. 2nd store Grand opening


2.







9.

10.


12.




Month 4

Month 7


2.







9.

10.


12.





3 CLONE VENTURES3 Strike Out

1. For faster Time-To-Market and higher Venture success rate, we will clone the 1st 3 ventures, one after another.

Boom/Bust

2. Once 1st Venture boom, we will scale it with 2nd and 3rd venture budget.

3. 1st Venture Boom, start fund raise for Central Kitchen, full Website, more Ventures and expansion plan.

4. Bust: Close business before 1st money loosing month or execute Venture exit strategy.


NEW VENTURESNot clones

1. Invite chefs to come in to demo their products. If pass, next step.

2. Venture planning with help from incubator, getting ready for pitch.

3. Chef test out product response at Private Kitchen (Alpha Testing), customer feedback data will be used at Demo Days to pitch investors.

4. Pitch venture plan to investors at Demo Days (Beta Testing).

5. Keep doing Private Kitchen and Demo Days until venture is funded.

6. Start Venture preparation at Kitchen Lab and get ready for launch.


NEW V. SHARE STRUCTURE

7.5% - For venture Chef and team

2.5% - For food critiques, celebrity, bloggers

20% - Belong to incubator, for the work done up until the venture is funded.

70% - Incubator and investors invest 100% funding needed for 70% company.

Clone ventures are 100% funded by incubator.

7.5%

20%

70%

2.5%


V. ROLLOUT STRATEGYBefore Launch

1. 50K best product (foundation) competition

2. Food Porn (new flavor competition)- 5% cut for each product sold.

3. Private Kitchen, Demo Days for food critiques, bloggers to cook for media exposure.

Website sales

5. Limited qty website sales, 200/day

6. Changing product flavor frequently if possible

7. On sale price $300 now $200

8. Buy 1 Give 1 to charity events

9. Sold out for a week in advance (keep ppl waiting)

After Launch

1. Free products during store opening weekends.

2. Frequent changes of product flavor.

3. Holiday flavors ex. Halloween

4. Continue Food Porn, 5% cut for each product sold, to get publicity and new flavors.


V. EXPANSION STRATEGYIncubator

V1 V2 V31st Store Boom, scaleBust, close

S2 S3

1st Store Boom, scale After 1st store boom confirmed and 2nd and 3rd

store launched. Franchise as fast as we can.

Store 2 Store 3F1 F2 F3


CHEF RECRUITMENTChefs for Cooking/Desserts

1. Cloning and new product flavors:

A. 50K for best recipes of a products(foundation) competition.

B. Food Porn: 5% cut for each unit of product sold in the future.

2. New Venture Chefs (Start after 1st successful clone venture)

A. Recruit from cooking schools, sous chefs of restaurants.

B. Ownership and funding taken care of.


WEBSITEVenture preparation (before 1st store launch)

During Venture preparation period, once the 1st minimum viable product (MVP) is available, the product will go on website for sale. Hoping to achieve daily changes in flavor and limited qty to drive sales. Target, 200pcs ($200) sold each day.

- Determine which product sells.

- See CEO and team chemistry.

- Venture team training by working on products.

- New product flavor development.


WEBSITEPrototype

From the start, we will be able to build a simple usable free website to test out a number of different sales models.

Full Website

When the most profitable model and most of the functions needed are confirmed, we will then raise funding and hire coders to build a complete website.


NIGHT SESSIONSKitchen Lab night sessions (6-10pm) are open for chefs to book (1st come 1st serve basis), the profits of these nights will be shared between the Chef and Incubator. Incubator can observe how the chef works and gather product feedback data from customers.

1. Private Kitchen (Alpha Testing): New chefs are required to book sessions to demo products to guests. Customer feedbacks from these sessions will be used as datas for pitching investors and for chefs to make changes. Chefs will keep doing it until venture is funded.

2. Demo Day (Beta Testing): Night sessions where chefs can demo products and pitch venture plan to food critiques, bloggers and investors to get funded.

3. Teaching Lesson: Chefs can book sessions to teach guests how to


CENTRAL KITCHENObjective

1. Supply Venture stores with raw materials.

2. Operation space for Website sales.

Plan

Planning: Plans will be ready to go before 1st Venture boom confirmed.

Fund raising: Will begin once the 1st Venture boom is confirmed.

Launch: As soon as funding is raised, will start building CK and get it launched.


FRANCHISINGObjective

1. Once a Venture boom confirmed, scale as fast we can while it’s hot.

2. To make money from franchising, equipments, supplies and materials.

Plan

1. Franchising plan ready before 1st venture boom confirmed.

2. Launch plan after Venture reached some scale, with high demand for more locations.

3. Provide service from legal, design, equipments, training, materials and logistics.


PAY SERVICESObjective

To offer Pay Services to new ventures not 100% invested by Incubator.

Plan

Incubators will have 20% stake (without investing) in new ventures that got funded through the program. After being funded, incubator will continue to provide Pay Services to manage ventures on behalf of investors.

Pay Services

Kitchen Lab space, legal, team recruitment, training, website sales, franchising, central kitchen, fund raising and monthly reports.


FUND RAISING1st Round $30 million NT ($1 million US)

1. 2 year runway for Incubator

2. Kitchen Lab + 3 Clone Ventures($ 2.5 million NT/each)

2nd Round (After 1st Venture Boom confirmed)

1. Central Kitchen

2. Full Website

3. Funding for 6 more ventures or store expansion ($2 million NT/each)


COMPETITIVE EDGE1. Lightning speed execution, faster and faster with experience.

2. Non-stop fund raising.

3. Centralized operations: Central kitchen, marketing, recruiting/training, franchising and website operation.

4. Lean startup methodology, with Alpha, Beta and MVP tests.

5. Unlimited backup plan: 1st Venture fail, 2nd venture launch. 2nd Venture fail, 3rd venture launch etc...

6. Multiple revenue source(Website, Night session, Venture stores, Central Kitchen, Pay Services)


Thank you Matthew Wu


house of chefs - incubator hybrid for f&b

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