RHUBARB FOODS COOPERATIVE

B U S IN E S S P L A N

23/02/2010

RHUBARB FOODS COOPERATIVE

BUSINESS PLAN

All information and data disclosed in this Rhubarb Foods Cooperative Business Plan are
strictly confidential and may not be disclosed to any other party without the express
permission of Rhubarb Foods Cooperative Limited.

RHUBARB FOODS COOPERATIVE

1.0

INTRODUCTION

1.1

MISSION

BUSINESS PLAN

Rhubarb Foods Cooperative Limited (Rhubarb) is a not-for-profit cooperative

incorporated on 8th December 2009 for the purpose of offering a broad range of
organic wholefoods to customers in Sydneys Eastern Suburbs.
It aims to enhance the local community by offering a service that:

Delivers affordable and healthy food

Encourages sustainable lifestyles

Sources products from local and ethical suppliers

Supports and promotes ethical and sustainable practices

1.2

PRODUCTS AND SERVICES

Rhubarb will provide both fresh and dry organic produce sourced either directly
from local producers (where possible) or wholesale from local or regional suppliers.
Over 200 suppliers have been identified who currently deliver all year round into
similar businesses in the Sydney area.
Following responses from public meetings and the online community it is proposed
to lease trading premises (yet to be identified) close to Randwick Junction with the
aim of trading 7 days a week. A suitable site will satisfy the following criteria:

Good public transport and bicycle access

An outdoor area to allow for composting and recycling

A garden environment for socialising

1.3

MARKET SUMMARY

According to the Rural Industries Research and Development Corporation, organic

produce is the fastest growing food sector in the world. Some areas of the Australian
market have achieved 30% annual growth since 2004 with sales estimated to be
worth $600m in 20071.
Key consumer drivers for this phenomenal growth include2:

Health concerns

A desire for natural products

Environmental concerns

Political values

RHUBARB FOODS COOPERATIVE

BUSINESS PLAN

Studies have shown that organic food consumers are more likely to be educated,
middle to high income earners; a typical demographic of the eastern suburbs.

1.4

STRENGTHS AND WEAKNESSES

Strengths and weaknesses are outlined below both for Rhubarb and for the market
in which it will operate.

MARKET

RHUBARB

STRENGTHS

WEAKNESSES

Focussed on the target market

Needs to locate an affordable trading

site

Will create loyalty through strong

customer and community
relationships

Highly perishable stock could lead to

high wastage costs until demand for
stock mix and volumes is established

Non-profit enables pricing to

remain competitive with discounts
offered to members and staff
volunteers
A small but rapidly growing market

Producers need to keep up with

increasing demand

Increasing public awareness of

food sustainability

Major supermarket chains now sell

organic produce, offering customer
convenience and bulk purchasing
power to keep prices low

2.0

FINANCIAL AND TRADING PLAN

2.1

FINANCIAL OBJECTIVE

Rhubarb needs to raise a one-off estimated funding of $160,000 to finance

establishment costs and working capital requirements. It aims to break even within
10 months of trading after which a modest 4% net surplus before re-investment is
forecast.
The detail, timing and assumptions behind the first 2 years cash flows are outlined
below.

RHUBARB FOODS COOPERATIVE

2.2

BUSINESS PLAN

TRADING PLAN

Rhubarb is basing much of its business model on the successful Alfalfa House
Community Food Cooperative.
Alfalfa House was established in 1981 and trades from retail premises in Enmore,
NSW. It currently has approximately 2,700 members with an annual turnover of
approximately $1.3million.
Other summary Alfalfa House information:

Last financial year net profit of $35,000 giving a net profit percentage of 3%

Profit is redistributed to fund future member discounts and community food

grants

Retail prices are marked up from cost by between 60% to 85%

Trading hours:

Mon Wed

11:00am 7:00pm

Thu

11:00am 8:00pm

Fri

11:00am 7:00pm

Sat

9:00am 6:00pm

Sun

11:00am 6:00pm

Staff levels:
5.9 paid full time equivalents
1.5 unpaid full time equivalents
Rhubarb estimates that it will require 4.4 paid full time equivalents plus 1.5
unpaid full time equivalents

Stock comprises approximately 75% dry goods and dairy products with the
25% balance being perishable fruit and vegetables. Maintaining a lower
proportion of perishable items helps to reduce wastage

RHUBARB FOODS COOPERATIVE

2.3

BUSINESS PLAN

CASH FLOW FORECAST

Establishment Costs
Costs required to establish the business will be minimised by using volunteered
skills and buying used equipment where possible.

RHUBARB FOODS COOPERATIVE

BUSINESS PLAN

Trading Forecast
As a largely cash-based business the trading forecast on page 8 represents the
expected operating cash flows based on the following assumptions:

Revenue
No. of households in target regions3:
Waverley

22,807

Woollahra

19,559

Randwick

44,842

East Sydney (estimated)

16,500

Total

103,708

% of households with diet comprising 50%

or more of organic foods
2

(8% per 2001 survey data , therefore assume a

conservative 15% at present, given rapid
growth of organic food market since 2001)

% of organic shoppers who buy from small,

independent retailers
No. of independent organic retailers in
target regions (including Rhubarb)
Assumed no. of Rhubarb members
(103,708 x 15% x 29% x 1/6)

15%

29%
6
752

Say, 60 new member subscriptions per month at $30 pa.

Weekly customer spending :
Average total weekly household fresh
food spending

$120

Member

$24 (20%)

Non-member

$12 (10%)

Active member numbers and revenues are assumed to level off at the end of
year 1 with non-renewing members being replaced by new members.

RHUBARB FOODS COOPERATIVE

BUSINESS PLAN

Pricing Strategy
Retail pricing will be fixed for each products growing season based upon an
average cost-plus basis to achieve an average total business mark up of 75%.
This will provide customers with predictable prices each week.
Tiered pricing will be offered as follows:

Non-member full retail price

Member 10% discount on full retail price

Volunteer - cost

Overheads
Staffing costs comprise the majority of overheads, representing 39% of sales
in year 1 and 21% of sales in year 2. It is assumed that staffing levels will
remain the same for the first 2 years of trading at 4.4 paid full time
equivalents plus 1.5 unpaid full time equivalents.
Premises rent, the other significant overhead, is allowed for at $1,000 per
week inclusive of outgoings.

Finance Costs
It is assumed that business funding will be achieved through donations and
fund raising. No allowance has been made in the cash flow for loan
repayments.

RHUBARB FOODS COOPERATIVE

BUSINESS PLAN

Profit and Cash Flow

Trading profit/loss and cash flow (including set up costs) for the first 2 years
of trading are represented below.

BUSINESS PLAN

Profit & Loss Forecast

RHUBARB FOODS COOPERATIVE

RHUBARB FOODS COOPERATIVE

BUSINESS PLAN

3.0

MARKETING PLAN

3.1

COMPETITIVE EDGE

The Rhubarb point of difference in the market is threefold:

Price
As a not for profit organisation, any surpluses are reinvested into the business for
the benefit of members, customers and the community.
The key retail outlets in the Eastern Suburbs are all for profit businesses. Rhubarb
believes that cost-comparison will enable it to attract trade away from existing
retailers and draw in people who are currently avoiding organic produce because
they are price sensitive.

Community
Community implies togetherness and common values. Rhubarb aims to become a
valued neighbour by offering a hub where the community can not only shop but
sit, relax, interact and promote local issues. Further, by respecting the local
environment and sustainable practices, Rhubarb will be far less resource intensive
than private enterprises.

Ethos
Rhubarb will create a positive environment for its customers and staff by promoting
vitality, wellbeing and ethical practices through both its products and its actions.
Rhubarb will aim to be:

Cyclic - creating no waste

Renewable - using clean energy

Efficient - using less

Safe - ensuring products and practices are harmless

Social - caring for people

Smart- adapting to change

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RHUBARB FOODS COOPERATIVE

3.2

BUSINESS PLAN

MARKETING STRATEGY

Rhubarb plans to use a combination of conventional and grass roots community

marketing

Grass Roots Marketing

Utilise networks and community resources, some of which have already

been established. These include:

Media resources
Radio stations 2SER, Wake Up Sydney and Eastside
Sydney Morning Herald food section
ABC TVs Landline

Environmental groups
Greenpeace
Alternative Technology Association
Permaculture Sydney

Industry organisations
Food Connect
Other food cooperatives

Local community groups

Randwick Parenting Group

Continue promoting Rhubarb at its market stall at the Ecoliving Fair held
every September in Randwick

Leverage Randwick City Councils policy of promoting local sustainable and

environmentally friendly programs

Other Marketing

Continued development of the Rhubarb web site and internet news group

An opening launch for publicity attended by local and major news media
(Sydney Morning Herald has indicated its willingness to attend)

Letter box leaflet drops to residents in the target areas

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RHUBARB FOODS COOPERATIVE

3.3

BUSINESS PLAN

STRATEGIC ALLIANCES

Strategic alliances are important to build strong relationships within the

community. Like-minded community groups will be targeted such as mothers
groups, play groups and existing peer co-ops. Direct supply relationships with
producers will continue to be developed to help ensure the best quality and price for
members and customers.

3.4

COMPETITIVE COMPARISON

The largest specialist retailer in the market (Macro Wholefoods) has recently sold its
businesses, leaving a gap in the market. About Life is now the largest local whole
food store, having taken over the Macro Wholefoods Bondi Junction site with its
main store at Rozelle. As a not-for-profit organisation, Rhubarb will offer a low price
alternative.
Community groups and e-commerce sites which offer organic products do not have
retail outlets and shopping here needs to be planned in advance. You cannot change
your mind at the last minute or get something extra.
However, Rhubarb does not see itself as competing with these community groups.
These are very small, discrete operations that involve a dozen or so families which
simply indicate the level of demand for organic foods within the community.

3.5

INDUSTRY PARTICIPANTS

The following organisations have been identified which compete locally in the
organic produce market.

Community groups
Thoughtful Foods (University of NSW)
Randwick Organic Buyers Group

Specialist Retail outlets

Randwick Health Foods, Randwick
Absolutely Organics, Randwick
Earth Food Store, Bondi
About Life, Bondi Junction
Health Emporium, Bondi
Wholefoods House, Alexandria

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RHUBARB FOODS COOPERATIVE

BUSINESS PLAN

e-Commerce
www.theorganicgrocer.com.au
www.organicdeliverysydney.com.au
www.lettucedeliver.com.au

Major Retailers
Coles
Woolworths
Thomas Dux
Harris Farm
Aldi

4.0

SKILLS AND RESOURCES

4.1

STAFF STRUCTURE

Members

Board of Directors
(unpaid)

Co-op Coordinator
(PT)

Bookkeeper
(PT)

Stock Coordinator Groceries

Stock Coordinator Fruit & Veg

(PT)

(PT)

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Shop Assistant
(PT x 5)

RHUBARB FOODS COOPERATIVE

4.2

BUSINESS PLAN

KEY STAFF

Cooperative Coordinator
Responsible for the daily management of the retail premises including:

Implementing business decisions and goals as directed by the board of

directors (and in line with member consensus)

Promoting Rhubarbs products and activities

Organising staff rosters and ensuring the retail premises are appropriately
resourced

Complying with all O, H & S, health and hygiene regulations

Authorising transactions for payment

Stock Coordinators
Both the Groceries and Fruit & Vegetable Stock Coordinators are responsible for the
timely sourcing of products which represent the ethics and objectives of Rhubarb.
Other duties include:

Sourcing and building relationships with suppliers

Gaining a thorough understanding of each product and responding to

customer queries about products

Communicating information about products via labelling, leaflets and

newsletters

Receiving and checking deliveries

Complying with all O, H & S, health and hygiene regulations

Minimising wastage

Deputising for the Cooperative Coordinator

Australian Food News 6th July 2009

Department of Agriculture, Fisheries and Forestry report
The Australian Organic Industry A Profile 2004
3 Australian Bureau of Statistics 2006 Census
1
2

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