FRESHCHEF

Business 396 Business Plan

DECEMBER 16, 2015

NASYA, MAGGIE, AUSTIN, CHRIS, ANTHONY

FreshChef Business Plan

Contents
Executive Summary....................................................................................................................................... 2
Business Description ..................................................................................................................................... 2
Service Description ....................................................................................................................................... 3
Environmental Analysis ................................................................................................................................. 4
Industry ..................................................................................................................................................... 4
Market....................................................................................................................................................... 5
Marketing Plan .............................................................................................................................................. 5
Customer (Eater) ....................................................................................................................................... 5
Cook .......................................................................................................................................................... 6
Promotion ................................................................................................................................................. 6
Positioning ................................................................................................................................................ 7
Price .......................................................................................................................................................... 7
Operations Plan............................................................................................................................................. 8
Financials....................................................................................................................................................... 9
Recommendations ...................................................................................................................................... 10
Appendix 1 Business Model Canvas ......................................................................................................... 12
Appendix 2 Financial Charts ..................................................................................................................... 13
Appendix 3 Charts on Millennials ............................................................................................................ 15
Appendix 4 Charts on Competition and Industry..................................................................................... 15
Appendix 5 Uber Referral Example .......................................................................................................... 17

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FreshChef Business Plan

Executive Summary
Its a Tuesday evening and youre just getting out of a meeting. Youve probably got another
hour of work to do before you can head home for the day. And, youre hungry. Yesterday, you
and some friends went out after work to a hip restaurant, but youre tired today. Battling the
traffic and the lines doesnt seem worth it. But then again, neither does cooking and cleaning up.
Maybe its takeout again, but thats so unhealthy.
FreshChef is the solution to a young, urban professionals eating challenge. By connecting local,
creative cooks, FreshChef enables busy millennials to eat a fresh and healthy meal from the
comfort of their home without any cooking or cleanup. We will be the first such solution in New
York City and San Francisco tapping into the emerging fresh-prepared meal market. Other
sharing economy food concepts, like Munchery, are gaining momentum across the country. Our
model is unique in that we rely on a diverse network of cooks who unleash their creativity,
providing healthy and delicious meals for millennials to pick-up on their way home from work.
Over the next three years, we need around $700,000 in startup capital before we can become
cashflow positive in our first two cities. Our financial outlook is invigorating, we have an NPV
of nearly $200,000 if we are solely to focus on New York and San Francisco. With geographical
expansion, our model has significantly profit potential. Our total available market is $25 billion.
We are exploring various venture capitalists currently so that we can begin operations.

Business Description
There are many young professionals who long to eat healthy, home-cooked meals in the comfort
of their home, but lack the time to cook and clean themselves. They battle long waits and
expensive bills at crowded, overwhelming restaurants. They compromise their quality and health
standards with greasy take-out or soggy frozen food. When they feel especially brave, they
attempt to cook something themselves, which often leads to frustration and a tedious clean-up.
Enter FreshChef. On your phone, browse an expansive selection of food, all homemade by your
community. Chicken Tandoori? Check. Kimchi? Check. Pulled pork? Check. Shrimp gumbo?
Yes, please! Select the number of entrees and a pickup time. Or, add on delivery. Experience
delicious, home-cooked food in the comfort of your home.
Our cooks are top notch. Remember that friend of yours who always had incredible leftovers for
lunch? Yeah, she cooks for us. We have many different types of excellent cooks, from hobbyists
to culinary students to professional chefs. While they lacked the time, experience, or drive to
work in the notoriously difficult restaurant industry, they cook for us because we unleash their
creativity, nurture their talent, and provide flexibility.
As the sharing economy, or the Uberization of businesses, gains momentum and social
acceptance, there is huge potential to implement our concept. PricewaterhouseCoopers predicts
the sharing economy will bloom in the next 10 years, jumping from a $15 billion to $335 billion
industry. Furthermore, by taking 15% of all transactions our total available market of millennials
is $25 billion (millennial population*average dining out spending*FreshChefs transaction fee).
Our cooks can make $35,000 to $70,000 a year, with an average meal price of $14.
We are still in the exploratory stage, but plan to test this concept in New York City and San
Francisco. Our business will initially utilize a low-tech, friend referral system to test customer
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FreshChef Business Plan

interest. A small team will help coordinate cooks and customers, using text messaging and email.
This will enable us to validate our idea; if we can find cooks with the talent, capacity, and
reliability to prepare meals that delight busy, professional millennials, at our aforementioned
price point, we will proceed with our idea.
After validation, our business will operate through a web and mobile (iOS and Android)
application. We would require roughly $700,000 in start-ups costs for our first three years of
operation and scaling. This would cover app dev, marketing, quality control, and customer
service. By year four, we can be cashflow positive.

Service Description
We provide a service: matching home-cooked meals with professional millennials. We will not
limit the creativity of our chefs; any legal ingredient or dish is viable. We will ensure quality by
asking customers for reviews of each dish and requiring cooks to maintain a rating of four stars
or higher. Cooks that lack the required rating will have the opportunity to build their ratings by
selling their meals at a reduced price and paying a 15% quality control fee to FreshChefs
curation staff.
Our app with have two accounts types. One will be for the customers, and will include location,
food preferences and recommendations, credit card information, and food purchase history.
Customers can browse or search posted meals and make orders. The default setting is for
customers to pick up the meals from the cooks home, but they can add delivery for an additional
fee. This account can be created through Facebook or Google.
The second account is for our cooks, who will complete an extensive application, including
education, work history, culinary experience, and personal information. We will also conduct a
background check and identity verification. Once approved, cooks can post their meals, prices,
and any other relevant information. They will be paid upon pickup of the meal, either by the
customer or the courier service.

Ratings

FreshChef

Cooks & homecooked meals

Busy, urban,
professional
millennials
Courier

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FreshChef Business Plan

Environmental Analysis
Industry
FreshChef is part of the fresh-prepared food industry. We compare, in the minds of the customer,
with offerings like Whole Foods Markets prepared food and with similar companies like
Josephine and Munchery. Some take-out options could also been included under our umbrella.
Yet, we are not in the same industry as restaurants, cafeterias, or catering. If it is fresh, prepared,
and eaten at home, thats our industry.
FreshChef is part of the sharing economy, which is growing exponentially. Two companies are
launching concepts that are extremely similar to ours. Zomida, based out of Harvards
Innovation Lab, is preparing to launch in Boston and Philadelphia. In Oakland, Josephine is
developing their model. Both businesses are seeking to connect local, amateur cooks with
customers.
Other companies operate commercial kitchens, preparing meals with their staff and then
delivering the orders. They tend to have smaller menus and less variety. They pursue economies
of scale by mass-preparing dishes. Examples include: Lish in Seattle; Munchery in San
Francisco, New York, Los Angeles, and Seattle; and Spoorocket in Seattle and San Francisco.
All of these businesses are very young and lack differentiation. Differentiation strategies are
complicated in this industry for a number of reasons. First, any company can offer any type of
food, there is no protected IP in cuisine. Second, quality, speed, and convenience all have
ceilings. Food can only be so delicious and so fresh, while delivery can only be so fast and so
convenient. Coupled with low customer switching costs, it is likely inevitable that customers will
purchase from multiple companies and possibly switch between offerings regularly.
Immense industry potential mitigates fear of competition. Of course, the restaurant industry
which we branch off ofis intensely competitive. At the same time, as previously noted, PwC
predicts exponential growth in the sharing economy. Given the lost costs of entry, many new
competitors will likely emerge as the overall growth gains momentum. A growing pie fuels
confidence in financial viability, while increasing competition will allow for our business to
learn from the mistakes of others, further solidifying our standing.
Intense competition will necessitate the formation of a brand and an unfair advantage. As the
industry grows, the aforementioned challenges will be minimal in their impact. Eventually,
however, industry growth with slow creating intense competition. Therefore, FreshChef must
differentiate. We plan do to so by our network of cooks.
The FreshChef cook network will be unique in its geographic and culinary diversity. In order to
achieve this strategy, we need to be a first-mover, recruiting and retaining these cooks before
other businesses. Having a developed and diverse network of cooks will allows us to offer
variety, various convenient pickup locations, and meet fluctuating demand. Of course, one might
counter that we could simply learn from others failures and then steal their talent. This option
also merits consideration, but might require greater capital in incentives.
Substitutes are a significant threat to our value proposition. A MarketWatch article discusses
millennials dining out habits. They assert that many millennials view dining out as an
opportunity to interact with friends and have a social experience. While eating at home does not
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FreshChef Business Plan

preclude social interaction, some may view dining out as more conducive to conversation and
interaction with friends. Millennials currently spend, on average, $174 per month dining out.
Additionally, millennials could cook for themselves or reheat frozen meals.
As urban populations continue to grow, we see our solution as increasing in customer appeal.
More urban residents and more tourists will tend to increase transit and restaurant waiting times.
Furthermore, restaurants may need to increases prices to cover increasing property costs. Lastly,
our offerings will be priced lower than most urban restaurants that serve comparable food
options. We will increasingly provide restaurant quality food, with a lower price, more
convenience, and greater variety.

Market
Our initial customer target market is located in New York City and San Francisco.
Demographically, they are professional, urban, busy millennials. They will work for companies
like Google, Facebook, and Ernst & Young. We know that, according to a Mintel report,
millennials prefer to eat out than over cooking at home because they find cooking too timeconsuming and messy. Another Mintel report highlighted the increasing health-consciousness of
millennials. These millennials are influenced through social media advertisements, displayed on
platforms like Facebook, and blogs on communities like Buzzfeed and Mashable. They are
willing to try new services, like FreshChef, when switching costs are minimal. In New York and
San Francisco, there are over four million millennials, and there are 80 million in the United
States as a whole.
Our cook target market includes those who were and are still working in the restaurant industry
as well as hobby cooks and culinary students. We are looking for self-motivated individuals who
have been disappointed with their inability to creatively express themselves in their positon or
are disappointed with the work-life balance. Since restaurants are known to be harsh places to
worklong hours and small wageswe provide flexibility to our cooks. They are not require to
meet quotas or work a prescribed number of hours. We do provide guidelines for our cooks
regarding what they can expect to make on a monthly and yearly basis depending on their output.
We lack data to put a number to this market, but we know there are 14 million jobs in the
restaurant industry currently. We will target these prospective cooks through word of mouth
advertising and websites like Food Network.

Marketing Plan
Customer (Eater)
Target Market:

Initially located in New York City and San Francisco

Professional, urban, busy millennials.
Use Facebook, Instagram, etc.
Work for Google, Facebook, Ernst & Young, etc.

Value Proposition:

Convenience of eating a meal in the comfort of the home, without having to cook or
cleanup.
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FreshChef Business Plan

A variety of healthy, reasonably priced options

Excitement and status of trying something new

Pain Point:

Eating out is expensive and exhausting

Cooking is time-consuming, difficulty, and requires tedious cleanup

Cook
Target Market:

Chefs and restaurant industry cooks

Culinary students
Hobby cooks
In New York City and San Francisco.

Value Proposition:

Flexibility
Creative expression

Pain Point:

Frustrated with current work opportunities

Low ability for creative expression

Promotion
Social media is central to our marketing strategy. Using social media advertising, we will target
our market with crisp, modern advertisements that highlight our convenience and variety. For
our target market, it is essential that our advertisements are modern and slick. We want to
reinforce their identity and showcase our solution. Customers will feel that they are urban,
professional, and hip. Cooks will feel that they are creative and overworked.
We will use Facebook advertising as well as Google AdWords to promote our service. Below is
an example ad that we would run for our customers:

These advertisements will target both sides of our market. For our customers, they will appear
mainly on social media sites. For our cooks, they will also appear in Google when culinary job
opportunities are searched for.
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FreshChef Business Plan

Referrals will be a big part of our growth strategy as well. If you refer someone to FreshChef and
they purchase a meal, you get a meal discount. This will be a great way to get awareness up, and
stimulate growth. See Appendix 5 for an example of Ubers email marketing tactics that play on
relationships.
In order to create a brand personality and a relationship with our customers, we will follow up
each experience with an alert asking for a rating of their experience. The message will look like a
personal note from the cook that created the meal. Each cook will have a short bio and a photo,
helping to create a relationship and brand loyalty. This feedback will be useful in helping us alter
our product to best reach customer needs. We will also have live, human customer support
available.
Ultimately, all marketing activities will drive customers to download our iOS/Android app and
create accounts, and then activate their accounts with an order. Our key performance indicators
will include:

Mobile app downloads

Accounts created
Accounts activated (purchase made)
Customer LTV
o $126 if a customer orders a meal a month for five years
Meals sold
Cooks active (posting meals)

Positioning
For hip, busy, professional millennials, FreshChef is the most convenient and healthy takeout
options. We provide the joy and comfort of eating at home, without the mess.
For tired and overworked chefs, FreshChef provides a flexible, creative alternative. Showcase
your culinary talents to passionate eaterson your schedule.

Price
We will aim for a price of $14 per meal. Each cook can set their own price, so they have freedom
in their pricing, but we will offer recommendations below. Our transaction fee is 15%. As we
gain recognition and have more cooks active, we plan to recommend a price raise to $16 per
meal on average.
Income for Cook
Days Worked
Meals/Day
Meals/Year
Cost
Price
Margin
Income

250
20
5,000
$
5.00
$
14.00
$
6.90
$ 34,500.00

250
40
10,000
$
5.00
$
14.00
$
6.90
$ 69,000.00

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FreshChef Business Plan

Our price will be lower than restaurants and on par with our competition which ranges from $10$15 a meal.

Operations Plan
Recruiting cooks, maintaining food quality, improving the application, supporting customers,
and developing our cooks are the five key activities of our value chain.
As we begin to grow, recruiting a diverse group of talented cooks is key in enabling FreshChef to
provide a variety of cuisine styles. We aspire to have cooks from different ethnicities and
culinary backgrounds. Our cooks will receive more flexibility and freedom to express their
creativity. We also desire to develop our cooks, offering classes or seminars in cooking styles, as
well as providing advice on what suppliers to use. Since they are contractors, they are not
obligated to follow any protocol on professional development or food preparation. Ultimately, if
they follow the law and delight customers, we appreciated their performance.
While we will have a thorough application process, we will need to follow the performance of
each cook to ensure that our food is excellent. By allowing customers to rate their meal, we have
a built-in mechanism for quality assurance. We will require cooks to maintain a four star rating
or higher. We recognize however, that human interaction will be key in this process. Our staff
will interact with customers and cooks to understand preferences and experiences. We will also
research food trends and evaluate the offerings on FreshChef. Our staff may then provide advice
and recommendations to our cooks, suggest a type of cook for our business development team to
target, or adjust app recommendations. The business development team will be searching for top
talent, especially talent that is not on the restaurant radar.
Hand-in-hand with curation and quality assurance is customer support. We expect some
customers to request refunds, lodge complaints, and struggle using the application at various
times for various reasons. Since our service is connecting them with a perishable and healthimpacting product, we must be prepared to delightfully resolve any issues. Customer support
creates a more convenient and simple experience.
Lastly, with customer, cook, and staff input, we desire to develop an algorithm that recommends
meal options for customers. We hope to minimize search and browsing time, by offering
personalized recommendationsboth for foods that have been liked and for new foods that
havent been tried by a customer.
By empowering and enabling our cooks, we reduce costs employee-costs that restaurants and
services like Munchery must shoulder. App suggestions, diverse food offerings, and delightful
customer service all raise willingness to pay.
For our financials, we focus on the New York and San Francisco markets. If our model is
successful in those city, we would explore expansion into other similar markets, like Boston,
Seattle, or Austin. Our sequence is to go city-by-city, so that we can ensure food quality and
brand consistency. Our model of recruiting cooks diminishes some of the economies of scale that
other platforms benefit from. As we expand, we will fully own all operations. We will not
consider joint ventures or other partnerships, we are not necessary given our business model.
For our first year, we are looking for a few cooks to contract with us. We do not want more than
five as we will only need approximately two per day. We plan to hire two full-time staff, one
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FreshChef Business Plan

focusing on quality assurance and the other on customer support. We will contract the
application development and our staff will work closely with that team to incorporate learning
from customer usage. By year four, we project to expand our staff to eight.
After seven years of growth, we plan to expand into new geographies. If our model scales
quickly, we would consider expanding sooner with another round of seed funding. Ultimately,
once the model has scaled, we plan to sell FreshChef to a capital management company. A firm
we could sell to is GrubHub, who recently purchased Seamless. With the increasing competition
in this space, we expect other management firms to emerge in the interim.

Financials
FreshChef will initially require nearly $700,000 in startup funding, mainly for application
development. Once the web and mobile apps are developed, they have significant economies of
scale. This will allow FreshChef to be cashflow positive by year 4. Related expenses, such as
quality control (curation), customer service, and marketing will increase with a growing
customer base.
FreshChef does not have the economies of scale of other platforms, like Facebook, since staff
must be present in each city to establish relationships with cooks and understand the food scene.

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FreshChef Business Plan

Expenses:

Platform Dev: Developing a web and mobile app (iOS and Android)
o Contract work
Platform Maintenance: Bug fixes and improvements
Curation: Quality control and cook support
o One staff in year one
Customer Support: Assistance for customers, especially regarding their purchase and
their rating of the meal
o One staff in year one
Business Development and Marketing: Recruiting cooks and social media marketing
o Contract work
Legal & Admin: Understanding and responding to government and FDA regulations, as
well as establishing protocols and terms regarding food spoilage, food poisoning, etc.
Management: Hiring two seasoned professionals to establish operations in New York
City and San Francisco.

Assumptions:

Few refunds from poorly prepared food

Cooks are able to prepare meals for an average of $5 each
All cooks do not need to acquire a license to sell their food

Recommendations
From the legal code we have read, it seems that this concept may be illegal. At the same time,
Josephine and Zomida are operating. Before proceeding, we must interact with an experience
legal professional to understand the potential legal issues with this model.
Ultimately, this is a project worth pursuing outside of Grand Rapids. Given the exponential
growth of the sharing economies and the proliferation of food-focused companies, we see vast
potential. Moreover, our concept is unique in providing a flexible, customizable work schedule
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FreshChef Business Plan

to cooks. This would engender a large cook base, which leads to diversity in offerings. As the
sharing economy grows, we expect more individuals to entertain the possibility of working as a
contractor and benefiting from flexibility. Our model has the potential to connect those
individuals to a customer-base that desperately needs a delicious, convenient, and healthy dining
alternative.

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FreshChef Business Plan

Appendix 1 Business Model Canvas

Key Partners

Key Activities

Comfort and convenience

of eating at home w/o a
mess

Value Proposition

Personal Assistance &

Self-Service

Customer Relationships

Variety
Flexibility and creative
outlet

15% of transactions

Advertising in Google and

Social Media
Revenue Stream

Channels
Web and Mobile App

Quality control
Customer support
Finding cooks
Courier service
Key Resources
App
Recommendation
algorithm
Cook network
Cost Structure
Economies of scale with app, but human costs with
customer service and quality assurance

Customer Segments

Urban, professional,
millennials in NYC and SF

Overworked chefs and

hobby cooks

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FreshChef Business Plan

Appendix 2 Financial Charts

Year 7
Year 6
Year 5
Year 4
Year 3
Year 2
Year 1
900,000
800,000
750,000
500,000
300,000
120,000
12,000
2,466
2,192
2,055
1,370
822
329
33
123
110
103
68
41
16
2
16.00
16.00 $
16.00 $
14.00 $
14.00 $
14.00 $
14.00 $

$
$
$
$
$
$
$

50,000.00
500,000.00
500,000.00
240,000.00
200,000.00

$
$
$
$
$
$
$

50,000.00
50,000.00
500,000.00
500,000.00
160,000.00
200,000.00

$
$
$
$
$
$
$

50,000.00
500,000.00
500,000.00
160,000.00
200,000.00

50,000.00
250,000.00
250,000.00
240,000.00
100,000.00

Meals Sold
Meals Sold/Day
Cooks Needed/Day
Avg. Meal Price

$
$
$
$
$
$
$

$ 25,200.00 $ 252,000.00 $ 630,000.00 $ 1,050,000.00 $ 1,800,000.00 $ 1,920,000.00 $ 2,160,000.00

25,000.00
75,000.00
250,000.00
250,000.00
160,000.00
50,000.00
-

Revenue
Cash Inflow

$
$
$
$
$
$
$
$
$
$
$
$
$
$

50,000.00
50,000.00
80,000.00
80,000.00
160,000.00
50,000.00
-

Expenses
Platform Dev
Platform Maintenance
Curation
Customer Support
Business Dev/Marketing
Legal & Admin
Management

$ 275,000.00 $ 470,000.00 $ 810,000.00 $ 890,000.00 $ 1,490,000.00 $ 1,460,000.00 $ 1,410,000.00

$
$
$
$
$
$
$

Total Cash Outflow

$ (249,800.00) $ (218,000.00) $ (180,000.00) $ 160,000.00 $ 310,000.00 $ 460,000.00 $ 750,000.00

100,000.00
25,000.00
40,000.00
40,000.00
20,000.00
50,000.00
-

Cash Flow

For Year 7, we would have approximately 75,000 (2% of market) customers in SF and NYC
That assumes each customer purchases one meal per month

Millennials spend around $170 on dining out per month, so would take less than 20% of their
monthly wallet share
There are ~5 million millennials in NYC and San Fransisco
We are assuming each cook can prepare 20 meals a day

Quality control

Marketing. Finding cooks, courier partners, eventually establishing operations in new cities
FDA Requirements
Experienced managers

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FreshChef Business Plan

United States

Listed Cities

80,000,000

80,000,000

14,271,647

359,645,511

Rev/Yr
$ 110,540,002
$
3,175,200
$
28,751,140
$
57,828,884
$
40,831,081
$
36,303,977
$
82,215,227
29,970,459 $

Rev/Mon
$
9,211,667
$
264,600
$
2,395,928
$
4,819,074
$
3,402,590
$
3,025,331
$
6,851,269
$

2.10 $ 168,000,000 $ 2,016,000,000

Rev/Meal
$ 2.10
$ 2.10
$ 2.10
$ 2.10
$ 2.10
$ 2.10
$ 2.10

14.00 $

Avg Price
$ 14.00
$ 14.00
$ 14.00
$ 14.00
$ 14.00
$ 14.00
$ 14.00

1 $

SAM
City
Millennials
Meals/Month
New York
4,386,508
1
San Fransisco
126,000
1
Boston
1,140,918
1
Chicago
2,294,797
1
Dallas
1,620,281
1
Houston
1,440,634
1
LA
3,262,509
1

TAM

Spending Revenue Rev/Month

Rev/Yr
$ 176.00 $ 26.40 $ 2,112,000,000 $ 25,344,000,000
Average millennial spending on dining out per month

$197,464.47
NPV

16.00%
IRR

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FreshChef Business Plan

Income for Cook

Days Worked
Meals/Day
Meals/Year
Cost
Price
Margin
Income

250
20
5,000
$
5.00
$
14.00
$
6.90
$ 34,500.00

250
40
10,000
$
5.00
$
14.00
$
6.90
$ 69,000.00

Purchases per month

1
Months
12
Revenue per purchase $ 2.10
Years active
5
LTV
$ 126.00

Appendix 3 Charts on Millennials

Appendix 4 Charts on Competition and Industry

Mintel Oxygen

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FreshChef Business Plan

Tapingo
Uber Eats
GrubHub
Postmates
Caviar
Spoonrocket

delivery or pickup from restaurant; partners

with campuses and is staffed by students
delivery from Chicago restaurants; curated
menu
delivery from local restaurants; find local
gems
delivery from local restaurants and other food
locations; groceries too
delivery from local restaurants
15 minute delivery from local restaurants
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FreshChef Business Plan

Peach
Munchery
Lish

daily menu that is delivered, option to order

or not; subscription?
professional chefs prepare menu items that
are delivered
professional chefs prepare menu items that
are delivered; Seattle

Appendix 5 Uber Referral Example

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