Peer Review Activities

Sensitivity to the economic cycle is a concern as people tighten their discretionary spending during recessions or low ends of the cycle, they are less likely to eat out. However, in the operating conditions section, “volatility has decreased over the past five years as consumers have resumed normal spending habits” (Alvarez, 2017). Additionally, consumers attitudes towards eating out and it isare not as closely tied to the economy as it once was. The current rebound from the recession is showing growth in most areas to be much slower than in past rebounds, however the restaurant sector has seen a much steadier growth (Lee, 2016).

Socio-cultural Concerns

Health concerns lead the reasons for cutting back on ice cream and frozen novelties., hHowever, selling indulgence and organic and natural buzzwords continue to perform well (Bloom, 2016). SpecificallySpecifically,, gelato seems to be performing well for those that are health conscious with a sweet tooth as it has 30% less fat and less air than the ice cream counterpart, packing a stronger flavor in a smaller package (Zhu, 2016). Additionally, the average consumer may not differentiate gelato from ice cream or frozen yogurt. Comment by Jackie Clark: Might want to rework this so there isn’t “and organic and” Comment by Jackie Clark: This sentence seems out of place.

Economic Condition

With the passing of Senate Bill 1532 in 2016, the minimum wage in Oregon is now on a tiered system with annual increases in Jackson county to $13.50/hour by July 2022 (Theen, 2016).The restaurant industry is largely dependent on minimum wage workers and employs a higher percentage of minimum wage workers than any other industry (Maze, 2017). The effects of the higher minimum wage on Jackson counter are not yet known, but there have been mixed results in other cities like Seattle and San Francisco. While Seattle has not seen a large decrease in restaurants (Sherman, 2017), the San Francisco market has seen increases in restaurants closing as much as 14% in some sectors. While it is not solely a result of the increased minimum wage, for every $1 increase in minimum wage, the number of new restaurants falls by roughly 5% (Maze, 2017). Comment by Jackie Clark: “in Jackson County”?? Comment by Jackie Clark: Is this nationally? May want to ad that info.

Target Market

Geographic area

The city of Medford has a population of 79,805 as of July 2015 and a land area of 25.73 miles (U.S. Census Bureau, 2016). The specific location being considered is at Roberts Road & Crater Lake Avenue and a three-mile radius around the address.

Target Customers

The target customers in this radius are those labelled as “Middleburg” (ESRI, 2017c), with a median age of 35.3 and income of $55,000. This falls nearly in the middle of the two groups above, so a target age group would consist of families, aged 25-44, accounting for 25.3% of households in the three-mile radius of the proposed location (ESRI, 2017a). A secondary target is students attending North Medford High School (NMHS) due to the proximity to the proposed location. NMHS has 1,750 enrolled students (Medford School District, 2017).

The ice cream market drivers are “premium” and “flavor,” while health plays a role for 19% of frozen treat buyers (Bloom, 2016). In other words, people are willing to spend more for a quality product in the name of indulgence. The Middleburg group generally spends their entertainment budget on family-oriented activities and restaurants (ESRI, 2017b). They also prefer to buy American when possible, and are comfortable with technology. This group makes up for 6.5%, or 1,759 households in the target area (ESRI, 2017c).

The Middleburg set prefers SUVs and trucks, enjoys country music, and likes to focus on family friendly television. This group can be young couples, but most likely has at least one child. They are generally conservative and a higher percentage are home-owners compared to the United States as a whole. They are thrifty, but are more willing to spend on activities they can do with the whole family rather than things (ESRI, 2017b).. Comment by Jackie Clark: The “Middleburg” set isn’t heath conscious? I feel like that could tie back to some of your previous sections Comment by Jackie Clark: This is bold and I cant change it.

Market Potential

Given the total sales of $860,000 (Bizminer, 2016), spread among five businesses, if things were split equally at 20% they would each have revenues of $172,000. This does include a business or two outside of Medford. Using a breakeven analysis tool, it is estimated that the business will need to have at least $60,000 in gross sales to stay profitable. Assuming an average sales price of $3, roughly 20,000 sales would need to be completed in the year to meet the above benchmark. Sales will be heavier in the summer months versus the cold season, however average sales per day would need to be 55. Considering the target customer, sales forecast would be for 50% in the Middleburg group, 15% students at NMHS, and 35% other. Comment by Jackie Clark: Move cite to the end of the sentence?

For the Middleburg group explored above, that would require 10,000 sales. Assuming an average group of 3 people, that would be about 3,300 annual visits. Within a three-mile radius, there are an estimated 3,640 Middleburg adults (ESRI, 2017c). This requires less than 1 visit annually by each adult which is well within feasibility.

For the high school group, gross sales of $9,000 would be required. At $3 per sale, 3000 annual visits would be needed. This is less than 2 visits per student at the school. Assuming even half of students visit the shop, only 3 annual visits would be necessary.

The remaining $21,000 gross sales, or 7,000 individual sales will be made up of miscellaneous demographics in surrounding areas. Within the three-mile radius, there are an additional 48,625 adults. It should not be difficult to capture 7,000 sales from this population annually.

Competition Analysis

Primary and Secondary Competitors

Below is a list of all primary and secondary competitors in Medford. Due to the short lifespan of ice cream, businesses in surrounding cities have not been included. Additionally, average ratings between 1 and 5 have been included from Yelp (n.d.) along with how many reviews are averaged to come up with that rating.

Summary

Highest rated companies include Sweet Cream and Cookie Connection, while All American Ice Cream and the north Medford location of Yogurt Hut with low scores (Yelp, n.d.). In general, local companies garnered more favorable reviews while franchises suffered from a higher quota of negative reviews.

Below is a map with the 12 local competitors pinpointed to show concentration of businesses (Google, 2017).

1 – All American