A funnel cake business is a business that essentially fries and sells funnel cakes. Funnel cake, which is also known as a fried-dough dish is popular at fairs, carnivals, and boardwalks. To make funnel cake, the batter is swirled around into hot oil using a funnel, creating a lattice of deep-fried dough, and then served with heaps of powdered sugar. Please note that funnel cake tastes a lot like a fried doughnut, and can be finished with all sorts of toppings, from icing sugar to syrup and ice cream.
The funnel cake business is a niche idea in the cake and bakery industry and available statistics have it that the global bakery product market size was estimated at USD 203.8 billion in 2018 and is projected to expand at a CAGR of 3.2 percent from 2019 to 2025. Interestingly, the market size of the Bakery Cafes industry in the US has grown 1.3 percent per year on average between 2017 and 2022.
Steps on How to Write a Funnel Cake Business Plan
Table of Content
Executive Summary
Sharon Hills© Funnel Cake Company, Inc. is an American-based niche cake and bakery business that will major in preparing and selling different types and flavors of funnel cakes. Our Bakery will be located in a well-furnished facility in the heart of Chagrin Falls, Ohio.
At Sharon Hills© Funnel Cake Company, Inc., we will make our funnel cakes with only the healthiest and freshest ingredients. Sharon Hills is the founder and CEO of Sharon Hills© Funnel Cake Company, Inc.
Company Profile
a. Our Products and Services
Sharon Hills© Funnel Cake Company, Inc. will be involved in the sale of;
- Different types and flavors of funnel cakes
- Beverages and water.
b. Nature of the Business
Our funnel cake shop will operate with a business-to-consumer business model.
c. The Industry
Sharon Hills© Funnel Cake Company, Inc. will operate in the cake and bakery industry.
d. Mission Statement
Our mission is to produce funnel cakes and related bakery foods that will be irresistible to a wide range of customers.
e. Vision Statement
We want to be known as the funnel cake company with a unique recipe and product.
f. Our Tagline (Slogan)
Sharon Hills© Funnel Cake Company, Inc. – Mouth Watering Funnel Cake Is Our Forte!
g. Legal Structure of the Business (LLC, C Corp, S Corp, LLP)
Sharon Hills© Funnel Cake Company, Inc. will be formed as a Limited Liability Company (LLC).
h. Our Organizational Structure
- Chief Executive Officer (Owner)
- Bakery Manager
- Accountant (Cashier)
- Bakers
- Salesmen and Saleswomen
- Cleaners
i. Ownership/Shareholder Structure and Board Members
- Sharon Hills (Owner and Chairman/Chief Executive Officer) 52 Percent Shares
- Garry Button (Board Member) 18 Percent Shares
- Christian Norman (Board Member) 10 Percent Shares
- Carty Bright (Board Member) 10 Percent Shares
- Esther Bash (Board Member and Sectary) 10 Percent Shares.
SWOT Analysis
a. Strength
- Ideal location for a funnel cake business
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Access to ingredients and supplies
- A reliable, clean, healthy, and efficient method of preparing funnel cakes.
b. Weakness
- Financial Constraints
- A new business that will be competing with well-established cake shops and bakeries
- Inability to retain our highly experienced and qualified employees longer than we want.
c. Opportunities
- A rise in people who want to experiment with funnel cakes
- Online market, new services, new technology, and of course the opening of new markets
i. How Big is the Industry?
Trust me, the market for funnel cakes and baked foods are massive in the United States of America. This can be supported by the fact that Americans spent $140 million on cakes in 2016, which equals 100.1 million cakes eaten in the year so far.
ii. Is the Industry Growing or Declining?
Yes, the funnel cake line of business is growing because loads of people eat funnel cakes.
iii. What are the Future Trends in the Industry
The future trends when it comes to the funnel cake business will revolve around technology and software that is meant to predict what customers want from a funnel cake shop.
iv. Are There Existing Niches in the Industry?
No, there are no existing niche ideas when it comes to the funnel cake line of business because the business is a subset of the cake and bakery industry.
v. Can You Sell a Franchise of your Business in the Future?
Sharon Hills© Funnel Cake Company, Inc. has plans to sell franchises in the nearest future and we will target major cities with thriving markets in the United States of America.
d. Threats
- The arrival of new funnel cake shops or cake makers or even bakeries within our market space
- Unfavorable government policy and regulations.
- Steady wage expenses
- Economic uncertainty
- Liability problems
- The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
i. Who are the Major Competitors?
- Funnel Cake Friday’s
- The Funnel House
- Cameron’s
- Preppy Kitchen
- The Spruce Eats
- Churro Factory
- Cravings
- Bjorn Cakes
- Meez Meals
- Sprinkles Chicago
- The Hungry Miner Funnel Cakes & Hot Dogs County Fair Funnel Cakes
- Evy Funnel Cakes & Tacos.
ii. Is There a Franchise for Funnel Cake Business?
Yes, there are franchise opportunities for the funnel cake business. They include;
- The Hungry Miner Funnel Cakes & Hot Dogs.
iii. Are There Policies, Regulations, or Zoning Laws Affecting Funnel Cake Business?
Yes, there are county or state regulations or zoning laws for the funnel cake business, and players in this industry are expected to work with the existing regulations governing similar food-related businesses in the county where their business is domiciled.
For example, since 2013, The California Homemade Food Act has allowed home cooks to make and sell certain low-risk foods from homes, such as baked goods, jam, and granola—but it does not allow vendors to sell hot, home-cooked foods.
Marketing Plan
a. Who is Your Target Audience?
i. Age Range
Our target market comprises adults above 18 years old who have the finance to purchase funnel cakes from us.
ii. Level of Educational
We don’t have any restrictions on the level of education of those who will purchase funnel cakes from us.
iii. Income Level
There is no cap on the income level of those we will sell funnel cakes to.
iv. Ethnicity
There is no restriction when it comes to the ethnicity of the people that will purchase funnel cakes from us.
v. Language
There is no restriction when it comes to the language spoken by the people who will purchase funnel cakes from us.
vi. Geographical Location
Anybody from any geographical location is free to purchase funnel cakes from us.
vii. Lifestyle
Sharon Hills© Funnel Cake Company, Inc. will not restrict any customer from purchasing funnel cake from us based on their lifestyle, culture, or race.
b. Advertising and Promotion Strategies
- Deliberately Brand All Our Vans and Delivery Bikes.
- Tap Into Text Marketing.
- Make Use of Bill Boards.
- Share our Events in Local Groups and Pages.
- Turn our Social Media Channels into a Resource
- Develop our Business Directory Profiles
- Build Relationships with players in the event planning industry and the food services industry.
i. Traditional Marketing Strategies
- Marketing through Direct Mail.
- Print Media Marketing – Newspapers & Magazines.
- Broadcast Marketing -Television & Radio Channels.
- OOH, Marketing – Public Transits like Buses and Trains, Billboards, Street shows, and Cabs.
- Leverage direct sales, direct mail (postcards, brochures, letters, fliers), print advertising (magazines, newspapers, coupon books, billboards), referral (also known as word-of-mouth marketing), radio, and television.
ii. Digital Marketing Strategies
- Social Media Marketing Platforms.
- Influencer Marketing.
- Email Marketing.
- Content Marketing.
- Search Engine Optimization (SEO) Marketing.
- Affiliate Marketing
- Mobile Marketing.
iii. Social Media Marketing Plan
- Start using chatbots.
- Create a personalized experience for our customers.
- Create an efficient content marketing strategy.
- Create a community for our target market
- Gear up our profiles with a diverse content strategy.
- Use brand advocates.
- Create profiles on the relevant social media channels.
- Run cross-channel campaigns.
c. Pricing Strategy
When working out our pricing strategy, Sharon Hills© Funnel Cake Company, Inc. will make sure it covers profits, insurance, premium, license, economy or value, and full package. In all our pricing strategy will reflect;
- Cost-Based Pricing
- Value-Based Pricing
- Competition-Based Pricing.
Sales and Distribution Plan
a. Sales Channels
Our channel sales strategy will involve using partners and third parties—such as referral partners, affiliate partners, strategic alliances in the event planning industry, and the food services industry.
Sharon Hills© Funnel Cake Company, Inc. will also leverage the 4 Ps of marketing which are the place, price, product, and promotion. By carefully integrating all of these marketing strategies into a marketing mix, we can have a visible, in-demand service that is competitively priced.
b. Inventory Strategy
The fact that we will need ingredients (vegetable oil, milk, eggs, all-purpose flour, baking powder, salt, sugar, and ground cinnamon et al), means that Sharon Hills© Funnel Cake Company, Inc. will operate an inventory strategy for ordering, maintaining and processing items in our warehouse. We will develop our strategy with the same thoroughness and attention to detail as we would if we were creating an overall strategy for the business.
Sharon Hills© Funnel Cake Company, Inc. will make sure we work with “Just-in-time (JIT) inventory” – (JIT involves holding as little stock as possible, negating the costs and risks involved with keeping a large amount of stock on hand.)
c. Payment Options for Customers
Here are the payment options that Sharon Hills© Funnel Cake Company, Inc. will make available to her clients;
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via mobile money transfer
d. Return Policy, Incentives, and Guarantees
At Sharon Hills© Funnel Cake Company, Inc., our customers are our top priority hence if you receive funnel cake that is different from your order, we will sincerely apologize. Please call us as soon as you notice that there was an error in your order and you may come to pick up the correct food item. For credit card payments, you will be refunded the sales price amount associated with the error and recharged for the new items’ price.
For cash payments, you will be asked to pay the difference of the balance if the new funnel cake has a greater value than the food received in error. In the same way, you will receive the difference of the balance back as credit for the new item if less than the food received in error. In some cases, we may offer you store credit.
Your order will be a priority if you come to pick it up. In all cases, please return the funnel cake order in the original container(s) to our host. Please, if you have any questions regarding the Return & Refund Policy, please call our customer care officer.
e. Customer Support Strategy
Our customer support strategy will involve seeking customer feedback. This will help us provide excellent customer service to all our clients, it will help us to first understand their needs, experiences, and pain points. We will work with effective CRM software to be able to achieve this.
On a regular basis, we will work towards strengthening our Customer Service Team and also Leverage Multi-Channel Servicing as part of our customer support strategy.
Operational Plan
We plan to expand our revenue by 25 percent in the second year and the plan will include a marketing, sales, and operations component. The operations component of the plan would include attracting partnership and retainer deals that will enable us to boost our funnel cake sales.
a. What Happens During a Typical Day at a Funnel Cake Shop Business?
- The business is open for the day
- The shop, serving area, and kitchen (bakery) are cleaned and ready for the day’s business
- Funnel cake ingredients are purchased and made ready for use
- Customers’ orders are taken and they are served or their orders are delivered to them
- Cashier collects cash and reconciles account for the day
- Administrative duties are carried out
- The store or warehouse is restocked when required
- The business is closed for the day.
b. Production Process
The production process or better still preparing funnel cake starts by getting your ingredient ready. Thereafter, funnel cakes are made by pouring batter through a funnel into hot oil and swirling in a circular motion. The batter is fried until it’s lightly golden brown then topped with a sprinkle of powdered sugar or your favorite topping.
c. Service Procedure
The service procedure for a funnel cake shop starts with a customer requesting funnel cake and perhaps drinks or bottled water. Once the request is gotten, it will be processed and the customer will be served or the order delivered to a location as requested.
d. The Supply Chain
Sharon Hills© Funnel Cake Company, Inc. will rely on key layers in the culinary cum food services industry to refer business deals to us. So also, we have been able to establish business relationships with wholesale supplies of various cheeses, olives, nuts, fruit, dried fruits, crackers, or small slices of bread, jelly or jam et al.
e. Sources of Income
Sharon Hills© Funnel Cake Company, Inc. will make money from selling;
- Different flavors and types of funnel cakes
- Beverages and water.
Financial Plan
a. Amount Needed to Start your Funnel Cake Shop?
Sharon Hills© Funnel Cake Company, Inc. would need an estimate of $150,000 to successfully set up a funnel cake shop in the United States of America. Please note that this amount includes the salaries of all our staff for the first month of operation.
b. What are the Costs Involved?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $1,300.
- Marketing, Branding and Promotions – $1,000.
- Business Consultant Fee – $2,500.
- Insurance – $1,400.
- Rent/Lease – $35,000.
- Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $30,000
- Start-up Inventory – $15,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Furnishing and Equipping the Shop and Kitchen (Bakery) – $20,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000
c. Do You Need to Build a Facility?
Sharon Hills© Funnel Cake Company, Inc. will not build a new facility for our funnel cake shop; we intend to start with a long-term lease and after 5 years, we will start the process of acquiring our own facility.
d. What are the Ongoing Expenses for Running a Funnel Cake Shop?
- Cooking supplies such as vegetable oil, milk, eggs, all-purpose flour, baking powder, salt, sugar and ground cinnamon, packaging materials et al.
- Utility bills (gas, internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
- Insurance
- Marketing costs
e. What is the Average Salary of your Staff?
- Chief Executive Officer – $55,000 Per Year
- Bakery Manager – $45,000 Per Year
- Accountant – $35,630,000 Per Year
- Bakers – $27,100 Per Year
- Salesmen and Saleswomen – $26,000 Per Year
- Cleaners -$24,000 Per Year
f. How Do You Get Funding to Start a Funnel Cake Shop
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Apply for a loan from your bank/banks
- Source for soft loans from your family members and friends.
Financial Projection
a. How Much Should You Charge for your Product/Service?
The price of our funnel cake will be between $2 and $6.50 per pack or between $8 and $15 per dozen.
b. Sales Forecast?
- First Fiscal Year (FY1): $180,000
- Second Fiscal Year (FY2): $240,000
- Third Fiscal Year (FY3): $350,000
c. Estimated Profit You Will Make a Year?
- First Fiscal Year (FY1) (Profit After Tax): $80,000
- Second Fiscal Year (FY2) (Profit After Tax): $100,000
- Third Fiscal Year (FY3) (Profit After Tax): $200,000
d. Profit Margin of a Funnel Cake Shop Product/Service
The ideal profit margin we hope to make at Sharon Hills© Funnel Cake Company, Inc. will be between 20 and 40 percent depending on the additional toppings, pack, and size.
Growth Plan
a. How do you intend to grow and expand?
Sharon Hills© Funnel Cake Company, Inc. will grow our funnel cake shop by first opening other restaurant outlets in key cities in the United States of America within the first five years of establishing the business and then will start selling franchises from the sixth year.
b. Where do you intend to expand to and why?
Sharon Hills© Funnel Cake Company, Inc. plans to expand first to Miami, Florida, Houston, Texas, New York City, New York, Oklahoma City, Oklahoma, Chagrin Falls, Ohio, Kaysville, Utah, Cedar Rapids, Iowa, Las Vegas, Nevada, Los Angeles, California and Dallas, Texas.
The reason we intend to expand to these geographical locations is that statistics show that the cities listed above have the most thriving market for a funnel cake shop in the United States.
Exit Plan
The founder of Sharon Hills© Funnel Cake Company, Inc. plans to exit the business via family succession. We have placed structures and processes in place that will help us achieve our plan of successfully transferring the business from one family member to another and from one generation to another generation without hitches.