Great American Cookies in China

1. Great American Cookies in China Juyi Li (Jerry)-Louis Morris-Jessica Rogers-AlenaTatum Group 2

2. Background • Founded by Michael Colesand partner Arthur Karp • First store opened in Atlanta, Georgia’s Perimeter Mall in 1977. • Founded on the strength of a generations-old family chocolate chip cookie recipe • Great American Cookies expanded in malls across the country • Developed a complete line of cookies and brownies, including our signature Cookie Cake product • Operates 300 stores in over 40 US states, Bahrain, Chile, Guam, Mexico, Puerto Rico, Saudi Arabia and the United Arab Emirates.

3. Strategy-Brief • Flagship Store on Nanjing Road, Shanghai • High Foot Traffic • Great visibility • Marketing and promotional advantages • Food and Drinks Offered • Chocolate Chip Cookie as signature cookie • Regionalized favors • Red Bean • Green Tea • Sesame Seed • Drinks • Coffee • Tea

4. Strategy-Brief • Hands on baking experience • An opportunity for kids to participate in making and baking cookies • Couples and young adults to enjoy a baking experience • Distribution Hub for Micro Stores • Advertisement for Micro Stores • Extended Nighttime Hours • Company Owned • New Product Testing

5. Strategy-Hub Store Design Interior view of flagship store. Aiming to provide a classic baking experience as if the cookies are baked in the kitchen of an American family.

6. Strategy- Micro Stores Micro Stores (x6)(Spokes) • Supplied through Distribution Hub • No Ovens • High Traffic Areas • Normal Hours of Operation • Franchise/Partnerships • Limited Menu (products that tailor to local tastes)

7. Strategy-Industry Facts Cookie consumption market size in Shanghai alone is $98.71 million dollars. Total market size in China is $3.8B Growth rate projected to be 11% annually

8. Strategy-Competition • Major competition: • Mrs. Field’s Cookies (American) • Mr. Donut (Japanese) • Minor (supermarket based) competition: • Kraft foods • Specific Brand, Oreo and Chips Ahoy! • Venerability of the Business Model • If Great American Cookie is successful in providing both a dining and baking experience for its customers, GAC does foresee our business model being copied

9. Strategy- Growth Focusing in the 1st tier cities in China, i.e. Shanghai and Beijing Providing franchising and licensing rights to Chinese partners who wish to open Great American Cookie to their locations in 2nd and 3rd tier cities. All locations will retain the chocolate chip cookie as its signature cookie. If the market allows, the 2nd and 3rd tier cities will also provide a baking experience for customers. However, if not, we will focus on just selling finished products

10. Strategy-CFDA Great American Cookies will follow China Food and Drug Administration’s rules and regulations. Furthermore, GAC will also never compromise the quality of our food by importing frozen dough and dry goods from the United States. GAC will employ Jun He Law Firm to ensure that all food related regulations are met under Chinese Law.

11. Strategy- Changing Trends Growing number of kids eating cookies and deserts Growing number of families having disposable income Growing number of adults willing to experiment with western cooking GAC will still have to educate the consumer on a dessert eating culture, however, with the one child policy, young adults today are much more willing to eat sweeter tasting treats compared to their counterparts 20 years ago.

12. Marketing- TM • Target Market: • 20-35 year old women • Students • Financially well-off • Children between 10-18 years old • Expats and general tourist trade • Market taste tests on a semi annual to annual basis • Surveys of the experience

13. Marketing- Branding • Giving the experience of a real American home • Branding Strategy • Recognizable logo: American Brown Bear, GAC apron, Blonde American Sales Girls • Establish an impression on children • Product Placement • TV advertisements • Yao Ming • Zhang Ziyi

14. Marketing • Market Entry Strategy • Increase brand awareness • Television- cartoon adverts • Nanjing Road Fridays • Mainly foot traffic • Intensive Distribution- while still keeping quality • Importing goods from US, Japan and Australia

15. Management • Partners • Intellectual property • Employees • Lack of loyalty • Handling cultural differences • Government • Auntie Anne’s Example • Doesn’t help enforce litigation claims • Guanxi

16. Location • Nanjing Road (Flagship/Distribution Hub) • Sichuan North Road (Spoke) (8 min) • Super Brand Mall (Spoke) (14 min) • Zhangyang (Spoke) (24 min) • Yuyuan Commercial City (Spoke) (9 min) • Hunihai Zhong Lu (Spoke) (10 min) • Xujiahui (Spoke) (18 min)

17. Location Locations Represent Major High Traffic Areas (Shopping, Dinning, Etc…) Total Route Supply Time (A-G): 1 hour 12 min

18. Location Flagship Store Strengths • High Traffic Area • Located in Key Shopping Area • High Visibility • Takes Advantage of Surrounding Attractions • Provides an Experience and Lasting Impression Weaknesses • High Real Estate Costs • Large Square Footage Requirement • High Staffing Costs • Business Success Relies in Larger Part on Flagship Customer Impressions

19. Location Micro Stores (x6) Strengths • High Traffic Areas • Low Overhead Costs • Low Staffing Costs • Takes Advantage of Surrounding Attractions • Distance from Hub • Under Direction of Franchise Partners Weaknesses • Not as Visible as Flagship Stores • Limited Menu Items • Under Direction of Franchise Partners

20. Execution Set Realistic Goals • 6 stores at the end of 3 years • Expand Beyond Initial Market Within 5 Years Petition for Government Approval to Enter the Market • Continue to Dialogue to Stay Aware of Changes • Secure Proper Licensing/Meet any Regulatory Requirements Establish Budget Secure Adequate Funding

21. Execution Begin Market Analysis • Assess Target Market • Develop Products Based on Local Tastes Begin to Establish and Develop Strategic Partners • Local Partners • Established Businesses Determine Store Location Availability and Cost

22. Execution Secure Distribution Lines • Frozen Shipment of Goods (Basic Dough) • Machinery Shipments • Non Perishable Goods Shipments or In Country Purchase Assess Workforce Requirements and Availability Secure Material Sourcing As Required • Adequate Power & Water • Food Items • Potential Manufacture of Some Products in Country

23. Execution • Develop Store Design as Required • Set Date for Grand Flagship Store Opening • Establish Marketing Campaign

24. Execution

25. Execution

26. Supply Chain Initial Cookie Dough and Frozen Products Sent From the United States to Storage Warehouse for Immediate Distribution to Flagship Store Non Perishables Purchased in House or Sent With Frozen Products- Cost Dependent Local Adaptations Added to Dough and Desert Products as Needed Product Decoration and Design Conducted at Flagship Store

27. Supply Chain Daily Distribution from Hub Store of Finished Cookie/Dessert Products and other Perishable Items (Soft drinks) to Micro Stores via Ground Transportation (Conducts Resupply as Needed) Bi-weekly Distribution of Non- Perishable Items (Napkins, Straws, Bags, etc…) Cookie Cake Orders Distributed from Hub Store Only. Picked up at Hub or at Micro Store Solicit Customer Feedback Place Additional Orders for Products

28. Supply Chain GAC Sourcing Local Sourcing Local Distributor Local Taste Adaptations Finish Design Flagship Store Micro Store Micro Store Micro Store Micro Store Micro Store Micro Store Feedback

29. Start-Up Funding

30. GAC Financial Position Revenues in excess of $6million for the past 3 years. Multi-million dollar net income and cash flows for the past 3 years Ratios Recent acquisition of NexGen

31. Projections

32. Projections Cont.

33. Conclusion Location Selection Tailored Local Flavors Dinning Experience and Memories Partnerships Supply Chain Proper Execution

34. Questions