Lear Stuff

Food Truck Assignment:

1. Ice cream and related frozen desserts are consumed by more than 90% of households in Canada. Source: ACNielsen. So, after looking at this need we chose to introduce Subzero Sweets, an ice cream truck that sells liquid nitrogen ice cream. Subzero sweets positions itself as a mid-class food truck; not cheap and not gourmet. We provide a new and unique experience with eating ice cream that customers in the Durham region cannot get anywhere else. Our ice cream is not only smoother and creamier than normal ice cream but is only a couple dollars more. Customers will be able to watch their ice cream get made with cool smoke pouring out the truck (because of how the ice cream is made). We have decided to market our truck as a food for adventure seekers, those who want to experience something new. This is because these are the people who will document their new discovery through social media which will gain us free advertising. Marketing our brand as a cool experience will create a buzz within Durham and everyone will want to try it out. We will have our slogan as “better than normal ice cream” and this way will challenge people to try our food and let them decide what they like best. We will have endorsements from Ed Sheeran, a vocal ice cream enthusiast and singer who is loved by Canadians everywhere. He himself portrays himself as an adventurer who loves to try new things, so the partnership seems fit. At the moment, we have no other company making liquid nitrogen ice cream; in fact, the closest restaurant doing so is in Markham, so we have a vast area beyond Durham we can expand to. The truck will focus on areas close to schools/campuses, community gathering areas (Luther Vipond arena for example), and walking distances to large malls (Oshawa town center for example). [pic 1]

As one can see, since Whitby and Oshawa’s population is the largest, we will focus more advertising and selling there.  [pic 2]

Looking at the population breakdown, our brand will appeal towards 25 year olds (“adventurous millennials that are willing to try new things”) to 45 year olds (parents who will introduce their children to a cool ice cream experience); 45% of two parent families in Durham have 2 children. Average income in Durham is $44 443 so being able to spend money on “treating yourself” won’t be a problem. The ages that I will focus on will have disposable income. The population around the downtown area is highly populated by the 25+ age demographic as well. We will also target "first families". They have limited entertainment dollars to spend each year, and our company can offer them some family bonding time for approximately $15, versus $30 to $40 for dinner or a movie. 

1. (See below for all calculations) The price of one’s ice cream gives their customers information about how you see your product and what type of target market you expect to buy your offerings. The price of an ice cream cone from a truck that frequents playgrounds in low-income neighborhoods will be different from the price of a designer ice cream dessert at a corner shop in a ritzy part of town. The customers of the former outfit are likely to be concerned with saving pennies while the patrons of the latter establishment will more likely be seeking a dining experience. We however, will find a happy middle. We will price our ice cream at only $4.00 a scoop, as it is cheap to make but is a specialty item for the people buying it. Taking a look at our food truck, we don’t have much money spent: We will buy a used food truck for $20000, 2 kitchen aid mixers and a fridge for $700 total, ingredients [fruits, cream, and milk (variable costs)] for around $1.00 per 3 scoops, and $0.06 per liter of liquid nitrogen (it takes one liter of liquid nitrogen to make 3 scoops of ice cream). As well we will need to pay for gas but don’t know how much, as we might just stay in one place or travel to an area where we are requested. Therefore, we need to pay off $20 700. If we sell 3 scoops for $12.00 and it costs around $1.06 to make it, we will make $10.94 (markup), that’s a 91% profit margin and a 1032% markup. Overall, we will have a gross profit of $3.644 for one scoop of ice cream. The price is influenced by the quick convenience, the quality of the ice cream, the cost to make it, the fact that we are the market leader, and the status of the ice cream as a cool innovative thing to try. Since the price is fairly higher than a normal $1 scoop of ice cream and there is almost no competition, I will be using the price skimming pricing policy. With that I will also be using prestige psychological pricing; this is because I will be setting higher prices to convince our customers that our ice cream is created with top quality liquid nitrogen (which to them should look like it costs a lot even though it doesn’t). To break even we will need to sell around 5676 scoops of ice cream or around 63 scoops a day for 3 months. Our truck will be using fresh fruit and therefore will need a fridge to keep everything cool. Since we will be using both a fridge and mixers, a generator will be needed which we will plug in at night at my own house. Lastly, based on previous bills with personal cars, we predict we will be spending around $100 a week on gasoline. Overall, we should be able to make our money back in one year. My idea is great because we will be making ice cream for less and selling it for almost 9 times more. As well, our ice cream will not need heavy expensive equipment since all we need are a fridge, mixer, and nitrogen (no need to freeze/chill the ice cream because we will make it and immediately give it to the customer). In the end, our price is affected by the status and image, low competition, and how quickly we want to break even.

Calculations:

Gross Profit = Selling Price – Variable Costs

GP = $4 (for one scoop) – [$0.35 (ingredients + Liquid Nitrogen) + $0.006 (electricity needed to make one scoop)]

GP = $3.644

$20 700/$3.64 = 5676 scoops of ice cream

5676 scoops/90 days = 63 scoops per day

Menu:[pic 3][pic 4][pic 5][pic 6][pic 7]

[pic 8]

1. We will be serving our ice cream in cups that look like science beakers. This will go with our idea of a science-like experiment ice cream, which uses liquid nitrogen. The plastic will be eco-friendly and disposable. The packaging is made out of a special plastic which will withstand the colder ice cream and will make it easier for customers to hold our product. The packaging will be blue and white. This represents the cold, frozen product that we sell, ice cream. As well, blue symbolizes being bold, unique, and fresh, and will make our brand and product look the same to the customers. We’ll have a topping station on the side of the truck; this is where all available toppings will be in test tubes and customers can add their “potions/ingredients” to their ice cream.  This will control ingredient sizes and make sure customers are not using too much of the toppings. [pic 9]

1. Distribution: