The company is a joint venture start-up company between the principals, Mr. Bean and his associates, and the management of Martin-Bower, one of the country's largest and most successful food distributors. The company will be incorporated as a class C corporation in the state of Delaware with all shares held by private investors.
Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a further 11% shares based on growth and profitability after the first five years. MillenniumMart is expected to open its first store in downtown Manhattan in March of Year 1.
The company will be set up with a board of directors. Mr. James Bean, a former senior manager of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of CFO.
MillenniumMart will sell the same products as other convenience stores in the same packaging sizes, quality, and quantity as other stores. This includes newspapers, magazines, soft drinks, fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items such as canned soups, microwaveable meals, condiments, bread, auto products such as fuel additives and cleaning supplies, pet supplies, paper products, toothpaste, etc.
All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant, Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash, stamps, Lotto and phone cards and other coupons and will have the ability to create personal accounts that can display preferred items, retain shopping lists and other services. An automated, interactive "customer service rep" will be able to answer questions and pass on comments to the company's management.
In addition, the company is looking into ways to sell restricted items such as beer, wine and cigarettes and to set up a separate Internet area for remote access to the Web and email for its customers.
Our market is booming. Convenience store industry sales rose 8.6% last year. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing.
Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. Therefore we have segmented our market into night shoppers, quick shoppers, and others. Growth rates for these three segments match the population growth for the surrounding area.
Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.
Our start-up requirements come to $453,000, which are largely single time fees associated with opening the store. These costs are financed by both private investors and the investment of Martin-Bower. It should be noted that we expect to be operating at a loss for the first six months before advertising begins to take effect and draw in customers.
MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses during the first two years as it strives toward sustainable profitability. Almost all of this funding has been arranged through lending institutions and private investors already. We do not anticipate any cash flow problems during the next three years.