- Investment sought:
- Equity offered:
Tart is a bakery & coffee-shop concept serving high-quality savoury tarts, imaginative salads, baked goods and gourmet hot drinks. The focus is on convenience through ready-made baked goods for the grab-and-go customer & comfortable surroundings for those looking to eat in.
The concept benefits from:
◆ a distinct product offering, yet to be exploited in the UK.
◆ an easy and simple-to-understand product.
◆ a bakery model that's easily scalable.
Tart’s primary offering consists of imaginative savoury tarts that are dished up with fresh salads. The tarts have been reinvented to offer exciting flavour combinations that elevate them from the uninspiring quiches on supermarket shelves.
The first store in Clapham opened three years ago and has been a great success. The second, in East Dulwich, is trading well since opening five months ago. The business is looking to accelerate growth through new store openings and the addition of a central production kitchen.
"Nobody bakes an amazing savoury tart", were the words that started our journey. Our mission to elevate the humble quiche is underscored by three success factors that we think are critical:
► Product novelty:
◆ Tart is different from the competition in terms of product focus. We have not come across a direct competitor.
◆ Our brand name, Tart, and brand design is distinctive and memorable.
► Product simplicity and scalability.
◆ Our tarts are uniform products and baked in large batches. The same applies to our salads and sweet goods, minimising wastage.
◆ Our new production kitchen will centralise production and all products will be delivered by Dropper to our stores, providing efficiencies in production, staffing and rental costs.
► Alignment with current market trends:
◆ Consumer desire for independent, local and artisan products.
◆ Popularity of home-baked goods and 'free-from' products.
◆ The rise of singularly-focused food businesses, e.g. burger joints and burrito bars.
Substantial accomplishments to date
The first store in Clapham opened three years ago, broke even in nine months and has grown every year since. The second, in East Dulwich, is trading strongly since opening five months ago. We have accomplished much in our first three years:
► Raised equity finance:
Secured £75k on Seedrs in 2014 which, along with founders’ capital, opened Clapham. Our oversubscribed second round brought in £225k in 2016 to open East Dulwich.
► Revenue & YoY growth:
Clapham’s net sales grew from £262k in 2015 to £372k (42%) in 2016 and £393k (5.6%) in 2017*. East Dulwich is currently trading at 27% behind Clapham, but is also currently 24% ahead of where Clapham was when it first opened (based on monthly revenue figures)*. Given East Dulwich has nearly 50% more capacity than Clapham, we expect the former's sales to surpass Clapham this year.
► Local endorsement and a large social media following:
Voted for by the local community, we came runner-up in the 'favourite cafes in Clapham' section of the Time Out Love London Awards both years the programme ran. We have also built an engaged audience of over 13k followers on Facebook & Instagram.
► Attracted top talent:
- Mentor: Faisal Haque, Co-founder of Wrap It Up! and Dropper, has been mentoring Tart since mid-2015.
- Operations Manager: as former Café Manager at St. Martin In The Fields, Louise Maddy recently joined to help us efficiently scale up operations and grow revenue.
*Source: unaudited management accounts.
► Pricing Strategy:
All stores are open seven days a week, with East Dulwich being open from 9am - 5:30pm, and Clapham usually open from 8am - 6pm. We've observed that our product sales flow from hot drinks and brunch in the morning to tarts and salads at lunchtime and cakes and coffees in the afternoon. Our busiest times are the weekends, with Fridays and Mondays also proving popular. No product costs more than £10 in an effort to offer good value to our customers while still maintaining a minimum gross profit on our homemade products of 75%. The key product, the tart, starts at £4.75.
► Store set-up costs:
The third store is modelled on 700-1000sq ft and a rent of £35k p/a. Central baking means that subsequent stores can be 400-700sq ft. The third store costs c. £233.2k to set up including fees.
► Cost of sales:
We expect this to be similar to the industry standard of 35%.
Use of proceeds
The £250k Seedrs raise is planned to cover the cost of launching our third store plus central kitchen and paying a salary. The planned expenditure breakdown is as follows:
► New store and kitchen:
◆ Rent premium £50k.
◆ Rent deposit £21k.
◆ Fit-out £90k.
◆ Professional fees £9k.
◆ Equipment £43.2k.
◆ Working capital £15k.
◆ Stamp duty £5k.
► Central costs:
◆ Central overheads £15k.
Please note, Tart has a business loan with NatWest Bank of £75,000, of which the current outstanding balance is circa £65,000. This loan accrues interest at 5.85% p.a. and is repaid via fixed monthly payments of £1,443.19 until July 2022.
With three years of trade under our belts, we understand our target audience and where to find them.
► Our prime target customer is the 'Yummy Mummy'. They are aged 28-50 and make up half of our customer base. They eat in 50% of the time and take away the other 50%. They tend to choose our tart and salad deal, drink decaf skimmed lattes and buy our veg juices. Half the time, their motivation is to seek out a treat away from the kids with friends, and the other half it is to have a healthy lunch with the kids!
► We've seen that our secondary customer is the 'Business Worker' and, by our estimates, they constitute approximately 30% of our audience. They eat in 75% of the time, tend to stay the longest, and work their way through the menu from coffee to tarts to cakes. We have laptop-friendly sections with charging points.
► Lastly, we've observed that our tertiary customer is the 'Coffee Fan'. They seem to be largely takeaway customers and are looking for consistently high standards of gourmet coffee / coffee preparation.
Characteristics of target market
The pastries and quiche sector in the UK grew from £655m in 2007 to £1bn in 2012 and was predicted to reach £1.2bn by the end of 2017. Meanwhile, the broader bakery market is predicted to grow by 9% by 2020.
While the perception of the quiche is one of an unhealthy dish, we believe it also represents an opportunity to showcase our healthier and more-nourishing alternative based on high-quality ingredients and artisan baking techniques.
Additionally, the sales context for our tarts is one of an upmarket bakery & coffee shop, with the flexibility of sit-down or grab-and-go sales. Hence, the key market drivers on which Tart aims to capitalise are as follows:
◆ Consumer desire for independent, local and artisan products.
◆ The popularity of home-baked goods and, in particular, ‘free-from’ products.
◆ The rise of singularly-focused food businesses, e.g. burger joints, burrito bars and wrap chains.
► Tart London’s Brand Values:
- Eye-catching interest: our products are in the window for a reason - they look great and pull people in.
- Uncompromising quality: our tarts are full, custard filling is minimal, the result is awesome.
- Familiar warmth: frequent warm interactions turn a customer into a regular.
► Marketing Strategy:
We focus on (1) local brand awareness that drives (2) customer acquisition as most customers live a 10-minutes' walk away. Our audience is digital first, snacking on social networks. Hence, our primary channels are digital and all activity is local.
1) Local brand awareness:
◆ Digital: frequent promotion on Facebook and Instagram. Content aims to intrigue the audience to trial our attractive products.
◆ Key publications: through PR activity we’ve featured in The Nudge (a go-to entertainment site in UK), many online food blogs and local newspapers/magazines.
2) New customer acquisition: resulting from brand awareness activity, plus local offers.
Our long-term vision is to be the leading retailer of tarts in the UK. As our reputation and store numbers grow, barriers to entry will further cement our position as the top purveyor of tarts.
► Early-mover advantage: we have a useful early-mover advantage as there is little or no direct competition in our tart niche. More broadly, there is high indirect competition from bakeries, café and restaurants, some of which offer simple quiches.
► Local competitors: in our target locations of south London, key competitors include Gail’s Bakery (multiple locations), Esca in Clapham, Milk in Balham and The Brickhouse Bakery in East Dulwich. They are direct competition in the ‘coffee shop’ market.
► Favourable market trends: we think the trends in the market are playing in our favour: the popularity of home-baking, preference for independent retailers plus healthier eating. Overall, we believe it is our inventive menu, smart stores and top ingredients that create our long-term success.