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Executive Summary
This food restaurant business plan, is a candid disclosure of a business venture to be situated in Nsukka,
Enugu State. Our intent is to set realistic business expectations, and eliminate any questions about the
profitability of this business venture.
Entrepreneurs have a tendency to paint the restaurant business plan with a very optimistic brush,
highlighting strengths and camouflaging the risks. Our intent is to have a definitive business, financial, and
marketing plan that not only serves our need for capital financing, but is utilized as our daily business
roadmap. We have taken all precautions to validate our business and financial models, focusing on realistic
projections. We have accomplished this as follows:
1. Our financial model is rooted in industry facts, not optimism. We have based costs on a vast
industry and practical research with similar ventures, validation against National Hospitality Industry
cost averages, and analysis against local Nsukka market averages. We have taken a collective look at
all figures to make solid business estimates.
2. Our business concept was derived from detailed Market Analyses. Instead of building a
business around a preconceived concept, we analyzed the market findings and built a concept around
our consumers. In other words, our business is built to service an unmet consumer 'want'.
3. A buffered financial plan that ensures adequate capitalization. A contingency buffer is included
in the start-up cost to ensure the business in not under financed, as well as giving the business
adequate funding to sustain it in the first six months of start-up. Industry experts confirm a longer
ramp-up stage for restaurants over other retail/service businesses. A common mistake for new
entrepreneurs, but fully addressed in this business plan.
4. A solid Risk Mitigation Plan. We have evaluated traditional and non-traditional risks associated
with Restaurant failure and accounted for them directly in the business plan. Instead of dismissing the
risks, we have identified valid mitigation strategies for each.
5. Deep Management Experience. Our management team has 20 years combined experience, and
deep involvement with the Nsukka restaurant industry.
The total capital requirement to launch Classic Restaurant & Lounge is N7, 400, 000.00 of which N6, 430,
000.00 is allocated to start-up capital, and N970, 000.00 as business operations cash reserve.
Mission
• Classic will be an inspiring restaurant, combining an eclectic atmosphere with excellent and
interesting food. The mission is to have not only a great food selection, but also efficient and superior
service - customer satisfaction is our paramount objective. Classic will be the restaurant of choice for a
mature and adult crowd, couples and singles, young and old, male or female.
• Employee welfare, participation, and training are equally important to our success. Everyone is
treated fairly and with the utmost respect. Our employees will feel a part of the success of Classic
Restaurant & Lounge.
• Our concept combines variety, ambiance, entertainment and a superior staff to create a sense of
'place' in order to reach our goal of overall value in the dining/entertainment experience. We offer fair
profits for the owners and investors, and a rewarding place to work for the employees.
Keys to Success
1. Unique, Innovative & Contemporary: The creation of a unique and innovative fine dining
atmosphere will differentiate us from the competition. The restaurant will stand out from the other
restaurants in the area because of the unique design and decor. We will offer a fine dining experience
in an electric atmosphere.
3. ‘Spice of Life' Menu: The menu will appeal to a wide and varied clientele. Our eclectic
menu features regional specialties around the country.
4. Employee Retention Focus: Employee retention and development programs will be a primary
focus and success platform for this business. Through these programs, we will be able to draw
seasoned and elite professionals and build a committed work force. We have budgeted for a stock
option program for Chef and Management positions to subsidize a lower salary base. This lowers
our immediate overhead and attracts quality staff.
5. Cost Control Focus: We will control costs at all times, without exception. Cost Control will be an
integrated function of the restaurant from the onset. Cost control is about managing the numbers
- interpreting and comparing the numbers that impact the bottom line. 80 percent of the success of a
restaurant is determined before it opens. Our focus is to reduce the cost of goods sold to meet our
profit margin goals by managing the following crucial elements of cost: Purchasing, Receiving,
Storage, Issuing Inventory, Rough Preparation, Service Preparation, Portioning, Order Taking, Cash
Receipts, Bank Deposits and Accounts Payable. We will use of this restaurant food business plan to
track actual costs against our forecasts in managing the business.
Due to intense competition, restaurateurs must look for ways to differentiate their business to achieve and
maintain a competitive advantage. Midtown/Downtown Nsukka’s redevelopment requires a place that will fit
into the 'new look' of the community, one that is contemporary and entertaining. Classic will fill that niche.
Objectives
Classic Restaurant & Lounge's objectives for the first three years of operation include:
Company Summary
The Design
Classic Restaurant & Lounge is unique to Midtown Nsukka. The restaurant features 2 venues in one
(a concept called ‘Multi-Branding'): A Lounge, and Full Service Dining. This concept offers customers
variety, offering multiple dining and entertainment options within a single establishment. The spatial and
menu divisions will broaden our appeal and provide our customers with a different experience on each visit.
The atmosphere caters to a young but mature adult crowd. This is not a family dining establishment. Total
space requirements are 3,000 square feet. In total, the restaurant will provide seating for 110 patrons.
Where possible, consideration will be given to incorporate a dining patio. Parking and accessibility issues
will be reviewed as key criteria. We will draw on our Advisory Board as part of the site selection and lease
negotiation.
The Menu
Classic is focused on servicing Nsukka's growing demand for an electrifying eating experience. For lack of a
better term we are launching a ‘multi-ethnic' cuisine restaurant - a restaurant concept that responds
to Nsukka's need for selection and choice. Classic is a complimentary mingling of national cuisine on a
single menu. The Midtown demographics fit this concept perfectly.
The Management
Our management team has over 20 years combined experience in food, restaurant and hotel, business
management, finance, and marketing arenas.
Company Ownership
The restaurant will start out as a private Limited Liability Company, owned by its founders, _________ and
__________.
Start-up Summary
We are currently negotiating a restaurant space of 3,000 sq. ft. in Midtown Nsukka, Enugu State, and will
open Classic in December of this year.
Our start-up costs are mostly expensed equipment, furniture, painting, reconstruction, rent, start-up labor,
and legal and consulting costs associated with opening our restaurant. At the start of business, $97,000 will
be allocated for business operations reserve. This is a solid start-up forecast based on our market analysis.
We will purchase the following $73,311 worth of current assets during start-up:
We have budgeted for the services of a premier Restaurant Consultant familiar with the South-Eastern
Market. This is especially key during the site selection and start-up stage. This company will have an integral
role in validating the final restaurant location and personnel selection, and participate on the Classic
Advisory Board.
Restaurant Location
Midtown Nsukka is the location selected for the Classic concept. The outlook for the future of Nsukka's
Midtown district is exceptionally positive and the most progressive development area in the city. Developers
are infusing over 500 million in Commercial, Residential, and Retail development.
The market has been carefully selected and tested for the necessary demographics and retail traffic
necessary to meet the goals laid down for profitability. The busy Midtown commercial/residential location
has been chosen based upon a successful demographic model and a traffic count of more than 33,000 cars
daily.
Restaurant Design
Single-Level Design Concept: The total space requirement is 3,000 square feet. The restaurant will feature a
comfortable and open concept design. The central dining area will allocate 88 seats, and the lounge 22
seats. In total, the restaurant will provide seating for 110 patrons. Where possible, consideration will be
given to incorporate a dining patio. Parking and accessibility issues will be reviewed as part of this analysis.
Optional Patio: During the busy summer months customers can also sit outside on our patio and we will offer
a special summer menu, featuring lighter fare, exotic drinks, as well as non-alcoholic offerings. The patio
setting will be a fun and casual atmosphere for the summer crowd.
Operating Criteria
The restaurant will be located in Midtown Nsukka. The restaurant will service brunch, dinner, and after-hours
dining during the week and weekends. The restaurant will operate during peak service time to take
advantage of street traffic, and after-hour patronage from the entertainment facilities in the area. Service will
be available during the following hours:
Lunch: Monday to Saturday, 9 a.m. - 2:30 p.m.
Dinner: Monday to Saturday, 5:30 p.m. – 8:00pm
Sundays - Market brunch takeout only.
Start-up
Requirements
Start-up Expenses
PROJECT MANAGEMENT $0
CONSTRUCTION $0
Plumbing $33,244
Electrical $7,964
Flooring $14,622
EQUIPMENT $0
OPERATIONAL $0
Inspections $750
Start-up Assets
Start-up Funding
Assets
Current Borrowing $0
Capital
Planned Investment
Investor 1 $40,000
Investor 2 $40,000
Investor 3 $40,000
Investor 4 $40,000
Investor 5 $40,000
Services
Classic Restaurant & Lounge will feature national dishes, an eclectic ambiance, and superior service. Our
food will be of the finest quality and prepared with exotic flare. Customer satisfaction is the driving force
behind our success. We will review our menu every 4 months, while maintaining the 'favorites' for loyal
patrons. Portions will be modestly sized, garnished with stunning presentation.
Our wine list will be modest and primarily focused on wines from California, Spain, Portugal, and Argentina.
Approximately 25% will be available exclusively by the glass, and the remaining labels will be available by
the bottle. The kitchen staff will have the best in culinary education and work experience. Their creative
talents will compliment one another. The lounge and restaurant staff will offer the finest service in an electric
atmosphere and offer customers an extraordinary dining experience.
Classic’s Menus
Classic's varied national menu will feature basically regional flavors. The menu flows together to create
complementary elements. The list below offers a small selection of our opening menu offerings:
1. Portion Selection: Nearly 95% of our surveyed focus group endorsed having a choice of different
size portions. This statistic is in line with findings reported by the Tableservice Operator Survey. Zara's
Tapas concept is built to offer different-sized portions. Our customers want the option to choose what
satisfies their appetite.
2. Menu Variety: Ethnic restaurants are increasing in Atlanta. The proliferation of international
cookbooks, food magazines, TV cooking shows and imported goods offers ample evidence that
America, as a whole, is currently on an international tasting spree. In fact, eating places that identify
themselves as ethnic establishments numbered nearly 78,000 in 1999 and recorded sales of $30.5
billion. Our research results do not identify any single ethnic style of restaurant as desired, but rather
suggest that incorporating strong multi-ethnic influences in the menu selection will be popular. Again,
variety is the underlying element for this concept.
3. The Dining Experience: Customer satisfaction with food and service has been and continues to
be of utmost importance, but our findings indicate that the décor, lighting, bar, and other options to
improve the dining experience are also factors in customer decisions. Zara takes all these factors in
consideration for the design of this cosmopolitan restaurant.
4. Reasonable Prices: This was no surprise given the economic tide. Although the restaurant
industry as a whole has seen growth in 2002/2003, customers are demanding value for their dining
dollar. Zara's menu is priced at a mid-tier level, with no entrée over $20. In addition we have an
extended Tapas and Appetizer selection priced between $3.50 - $9.50, allowing budget dining in a full-
service restaurant.
Market Segmentation
Classic's Restaurant & Lounge intends to cater to a wide customer base. We want everyone to feel welcome
and entertained. We have defined the following groups as targeted segments that contribute to our growth
projections:
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Downtown Atlanta
32% 17,645 18,527 20,565 21,593 22,673 6.47%
Couples
The Destination
8% 4,411 4,499 4,724 4,818 4,914 2.74%
Customer
Restaurants make money by taking inexpensive ingredients, combining them in creative ways, cooking them
properly, and selling them at a much higher price. Any ingredients wasted in the kitchen are money thrown
out. Any time wasted in seating customers, taking orders or preparing food is money walking away. While
some entrepreneurs think that success is as simple as a good location and a trendy concept, we know the
truth:
To succeed in the restaurant industry, you need an understanding of the risks and financial
conditions, the ability to handle enormous pressure, and the organizational skills to bring off what is
essentially a giant catered party, two to three times a day.
Nsukka consumers are seeking variety and new experiences. Location is clearly important, but so is
atmosphere and distinctiveness. Our marketing challenge is thus to stand out from our competitors, not only
as the "new" restaurant, but as one that offers consistently high quality food, menu variety, and a unique
atmosphere.
We will focus on establishing a strong identity in our community with a grand opening. Our main focus in
marketing thereafter will be to increase customer awareness in the surrounding communities. We will direct
all of our tactics and programs toward the goal of explaining who we are and what we do. We will keep our
standards high and execute the concept flawlessly, so that word-of-mouth will be our main marketing force.
We will create an appealing and entertaining environment with unbeatable quality at an exceptional price. As
an exciting and eclectic restaurant, we will be the talk of the town. Therefore, the execution of our concept is
the most critical element of our plan.
All menu items are moderately priced for the area. While we are not striving to be the lowest-priced
restaurant, we are aiming to offer exceptional food at reasonable prices for the average restaurant diner.
Competitive Edge
Classic competitive edges are:
At the end of the day, everyone that sells prepared meals in this district is a Classic competitor, because we
all compete for the same home meal replacement dollar. However, there are two segments of the restaurant
industry that are our main competition: the casual dining restaurant and the fine dining value restaurant.
So, if the food and service is better at a fine dining restaurant than a casual restaurant, but price has
become a factor as a result of the economic turns, where is a customer more likely to go?
There is no absolute answer to the question, but the solution is to deliver the best food at the best price with
the highest level of service in one establishment. This is the very definition of value and the concept at the
heart of Classic's business model.
Marketing Strategy
Classic Restaurant & Lounge's Marketing strategy will be to promote our electric food, superior service, and
exciting concepts to draw in the local repeat customers. Marketing initiatives will concentrate on the
following:
Customer Service:
In our years within the restaurant industry, customer service has always been the major draw for the dining
clientele. Food and atmosphere is far out-shadowed by superior customer service that turns a new customer
into a repeat customer.
Management will demand the wait-staff provide the very best in quality services to the customer, making
certain that they are content and satisfied with their dining experience. Wait-staff are thoroughly trained, and
every 90 days they undergo a performance appraisal. This is part of our Employee Manual, and Operations
Manual guide.
Management recognizes the key to success at this time of initial opening is extensive media promotion. This
must be done aggressively in order to accomplish our service goals. A healthy budget is allocated for the
first year. A primary part of the budget is allocated to create the media and customer buzz for the month
prior to opening and the next three months after the grand opening. The full Marketing program is as
follows:.
Additionally, we will develop a consistent reach and frequency throughout the year, targeting each specific
customer segment within a five-mile radius, and new 'suburbanites,' who still appreciate in-town dining.
Promotional Campaign:
The best way to reach our potential customers is to develop an intense advertising campaign promoting our
Classic concept of "Spice of Life." In addition to standard advertising practices, we will gain considerable
recognition through newspapers, newsletters and public announcements. Consumers will be encouraged to
visit our website to be greeted with a flash media intro that highlights the restaurant, past happenings,
upcoming attractions and our dynamic menu.
Our periodic customer surveys and weekly menu item sales evaluations will help us to understand what
advertising is working and what is not; basically, who we are reaching. Our goal is to understand our
customer, measure the success of our direct marketing and media activities, and redirect advertising as
effectively as possible.
Publicity Strategy:
Working with a media company, Classic will focus on the following publicity strategies:
• Develop a sustained public relations effort, with ongoing contact between key editors
• Develop a regular and consistent package update program for the major target media, keeping key
editors abreast of all new promotions, and menu introductions.
• Establish contact with editorial staff for the purpose of being included in entertainment "round-
ups"--product comparisons in dining publications and the local papers.
• Produce a complete Classic Restaurant history and menu offering piece to be used as the primary
public relations tool for all target media editorial contact. This will also be effective for inclusion in press
kits.
Press Release/Grand Opening: Classic Restaurant will release a series of press releases on the Grand
opening.
Publicity Revenues: We anticipate at least 10% of our annual sales will be generated directly from our
publicity. A full media kit will be sent to all local publications, and releases on new menu items will be made
monthly.
Community: Classic will look for key opportunities to pair with local community development organizations
and radio stations to interface with our customers. We will continually look for local community programs in
which we can participate, in order to better our community, and give something back.
Marketing Program
In line with our Marketing strategy, we will employ three different marketing tactics to increase customer
awareness of Classic: In-Restaurant Marketing, Public Relations Marketing, and Media Marketing. Our most
important tactic will be word-of-mouth/in-restaurant marketing. This will be by far the cheapest and most
effective of our marketing programs.
Word-of-mouth/In-Restaurant Marketing
• Restaurant Night: Every first Monday of the quarter, we will have a special evening for restaurant
people. A perfect night for the local area's restaurant owners, chefs and staff to get together to discuss
the market and food trends, and possible Co-op efforts to promote the Midtown district.
• Monthly Dating Connection: With the increasing appeal of Internet and speed dating, the
restaurant will offer a monthly dating night. In addition to food and beverages, customers can choose
from an array of dating packages up for auction.
• Wait Area Marketing: Wait staff will service appetizers to customers waiting to be seated or on the
wait list.
Media Marketing
• Newspaper campaign: A much targeted media campaign to obtain featured articles about the
restaurant in their Living, Entertainment and Dining segments. Notices of all live entertainment
segments and special features will be posted to local newspapers' calendar announcements.
• Restaurant and Special Events Website: We have contracted with local design teams to deliver
a high-quality, navigable, constantly updated website.
• Media Relations: Several media relations teams will be utilized to market the Restaurant.
• Billboard Advertisement: One month prior to the opening, distinct billboard ads will advertise the
launch of the Restaurant.
• Inner & Outer City Marketing: We will budget to attract customers from the suburbs.
Sales Strategy
Our strategy is simple: we intend to succeed by giving our customers a combination of delicious and
interesting food in an appealing environment, with excellent customer service, whether on their first visit or
their hundredth.
Our marketing strategies are designed to get critics and initial customers into our doors. Our sales strategies
must take the next step and encourage customers to become repeat customers, and to tell all their friends
and acquaintances about the great experiences they just had at Classic.
New restaurants often make one of two mistakes: they are unprepared or under prepared for opening, and
initial poor service, speed, or quality discourages customers from returning, or they spend all of their efforts
at opening, and are unable to maintain the initial quality customers expect on return visits, decreasing word
of mouth advertising and leading to poor revenues.
Classic's sales strategy requires consistently high quality food, service, speed, and atmosphere. We can
accomplish this by:
• Hiring employees who genuinely enjoy their jobs and appreciate Classic's unique offerings
• Continually assessing the quality of all aspects mentioned above, and immediately addressing any
problems
• Interacting with our customers personally, so they know that their feedback goes directly to
the owners
• Evaluating food choices for popularity, and keeping favorites on the menu as we rotate seasonal
foods and specials
Sales Forecast
The following sales graph is based on first year start-up estimates only. We anticipate that the business will
not be at full operating capacity until the sixth month of operations. This is due to the competitive nature of
the market and existing customer loyalty. All factors governing our sales progress are outlined below in the
Important Assumptions section.
Our sales forecasts for years 3 through 5 are very conservative, compared to industry standard growth
rates.
Although we hope to do catering for local businesses and government offices with time, we will insist on
payment at delivery - we will not sell on credit.
Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Other $0 $0 $0 $0 $0
Total Sales $1,073,769 $1,211,088 $1,279,204 $1,341,260 $1,406,670
Other $0 $0 $0 $0 $0
Our website will be used to try out new offers, starting with an on-line order feature for the Sunday Market
Brunch, and expanding if the concept gains favor with our customers. A customer will be able to order a
selection for pickup using a debit card. Selections will be based on our pre-packaged meals available during
the Sunday Market Brunch. This is also a potential for customers needing catering.
The website will include email capabilities and online reservations and special events scheduling.
Personnel Plan
We believe the personnel plan is in good proportion to the size of the restaurant and projected
revenues. The staff will include 13 full-time employees and 8 part-time employees, who will work a total of
754 man-hours per week and generate an average monthly gross payroll of $27,308 for the first year in
business. The estimated gross annual payroll of $399,588 (including Partner Salaries) is 37% of total sales.
Wage salaries for service personnel (wait staff, busboys, lounge tenders) do not include anticipated tips.
With average tipping rates for the Atlanta, Georgia area, and our menu prices, service employees should
average at least twice the minimum wage in any given shift. Skilled waitresses and lounge tenders on
weekends and evenings will make substantially more.
Kitchen:
Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
General Manager (Year 2+) $28000 $28000 $28,000 $28,500 $29,000
Partner/Manager $48,000 $48,000 $48,000 $48,000 $48,000
Partner/Asst. Manager/Exec.
$32,160 $32,160 $32,160 $32,160 $32,160
Chef
Hostess (Full Time) $24,000 $24,500 $25,000 $25,500 $26,000
Hostess (Part Time) $13,200 $13,500 $14,000 $14,300 $14,800
Waitperson 1 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 2 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 3 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 4 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 5 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 6 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 7 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 8 $5,640 $5,640 $5,640 $5,640 $5,640
Waitperson 9 $5,640 $5,640 $5,640 $5,640 $5,640
Wait/Barperson $10,440 $10,440 $10,440 $10,440 $10,440
Bartender 1 $14,400 $14,400 $14,400 $14,400 $14,400
Bartender 2 $7,200 $7,500 $7,500 $7,500 $7,600
Busboy 1 $9,120 $9,120 $9,120 $9,120 $9,120
Busboy 2 $11,760 $11,760 $11,760 $11,760 $11,760
Busboy 3 $7,200 $7,200 $7,200 $7,200 $7,200
Assistant Chef $44,400 $44,400 $44,400 $44,400 $44,400
Sous Chef $32,400 $32,400 $32,400 $32,400 $32,400
Cook 1 $24,240 $24,240 $24,240 $24,240 $24,240
Cook 2 $18,960 $18,960 $18,960 $18,960 $18,960
Prep Cook/Dishwasher $12,288 $12,288 $12,288 $12,288 $12,288
Prep
$12,960 $12,960 $12,960 $12,960 $12,960
Cook/Dishwasher/Cleaning
Dishwasher 1 $8,640 $8,640 $8,640 $8,640 $8,640
Dishwasher 2 $5,700 $5,800 $5,800 $5,800 $5,800
Cleaning/Dishwasher $11,760 $11,760 $11,800 $11,800 $11,800
Open $0 $0 $0 $0 $0
Total People 20 24 25 25 25
Total Payroll $399,588 $400,788 $429,828 $431,128 $432,728
Financial Plan
Classic Restaurant & Lounge financial model is based on a business concept to "Plan for the Worst, but
Manage for the Best." We have approached the financial plan as follows:
The First Year projections anticipates a below average sales volume, below average seat turn, and above
average food/beverage cost. This position will help us ensure sufficient financial planning to accommodate a
reasonable ramp-up period, and business success, also ensuring that we do not enter this venture under-
capitalized.
In addition to the $110,000 of owner investment and $130,000 in grant monies, Classic is seeking $300,000
in long-term loans and $200,000 in investment for renovations, furniture, kitchen equipment, liquor license,
food & restaurant supplies, legal fees, working capital, marketing and personnel.
• Important Assumptions
• Risk Analysis & Mitigation Plan
• Sales Forecast (5.3.1, above)
• Break Even Analysis
• Profit and Loss Statement
• Cash Flow Statement
• Balance Sheet
Important Assumptions
The financial plan depends on important assumptions, most of which are reflected in the financial
statements that follow. We have been cautious with our projections, and incorporate mitigation for all
manageable risks. The key underlying assumptions are:
Economy
Emerging Economy. We anticipate a robust-growth economy, recovering from an economic slow down.
Business Growth
Annual Growth Rate Percentage. We anticipate modest growth over the coming years. The financials
account for the following growth projections:
o Year 2: 6% Year 4: 4%
o Year 3: 5% Year 5: 4%
Weekly Sales Variance. Saturday will typically be our best sales for the week. The sales volume for all
other days is represented as a percentage relative to Saturday. Therefore our weekly sales will vary as
follows:
Monday: 55% Thursday: 95%
Tuesday: 60% Friday: 90%
Wednesday: 75% Saturday: 100%
Seasonal Sales Variance. In Nsukka, October through the late season is the most productive sales period,
while the summer months tend to be the slowest restaurant period. This trend is reflected in the financials
though a seasonal variance as follows (where October is targeted to be our most successful sales month):
June: 70% October: 100% February: 95%
July: 75% November: 95% March: 85%
August: 80% December: 95% April: 90%
September: 85% January: 85% May: 90%
Six-Month Start-Up Stage. As a new restaurant entry to the Midtown market, the ramp-up in customer draw
is expected to extend over 6 months. This is reflected in a higher than average monthly sales variance
shown as follows (Worst-case / Expected-case):
• Month 1: 32% / 51% Month 4: 64% / 75%
• Month 2: 41% / 58% Month 5: 80% / 90%
• Month 3: 52% / 66% Month 6: 90% / 92%
Market Analysis findings are static. We assume that there are no unforeseen changes in findings outlined
in the Market Analysis.
Competitive Pricing Model. Revenue calculations are based upon competitive price comparisons and
established menu values in the current marketplace. The following are baseline assumptions on Average
Check Totals, and Average Seat Turns:
Daily average for lunch spending is N1, 050 per person, dinner at N2, 750 per person; and N1, 750 per
person for After-Hours dining. Seat Turn averages are modestly estimated at:
Cost Control. Cost of goods sold have been calculated as a percentage of sales and will be monitored on a
daily basis in order to keep Cost of Food within the range of 31 - 33%, and Cost of Beverages (Non
Alcohol) below 9%. With a focus on Cost Control, we anticipate 6 months to fine tune the restaurant
operations and manage our costs within the defined tolerance range.
Inventory turnover and Accounts Payable. Accounts receivable turnover is calculated to be 0 days, as
payment is rendered with service. Inventory is turned on a 7 day cycle as inventory is used daily within all
categories, and accounts payable are projected to be 30 days.
Risk Analysis/Mitigation
1. How do we allow an adequate startup period and capital to launch the concept and grow our
customer base in a competitive sector?
Our financial plan is budgeted to support the Worst-Case business scenario. We addressed the financial risk
as follows:
Owners have a combined 20 years of Restaurant Management, Operations and Business Management
Experience.
The Financial Plan incorporates a budget for a Nigerian Restaurant Consulting group. Their services are
budgeted for the business start-up analysis, rollout, and on retainer for 4 months of business operations.
The selected firm has experience with over 72 Restaurant launches, specializing in the Nigerian Market.
We will be recruiting a seasoned chef (national search) whose style is in accord with the Restaurant concept
and our market segment. We will be offering an equity interest to our select Chef to maintain the industry
knowledge.
3. The current Economic slowdown and recovery state was a key consideration in our restaurant
concept. How do we manage a successful restaurant in current market conditions?
Our original effort was to open a restaurant twice the proposed size. As we are in the midst of an economic
recovery, we have scaled back the size to reduce business overhead, startup requirements, and business
operating capital.
Another mitigation has been our overall Restaurant concept. We have the menu priced at a mid-tier level
with no entrée over N2, 000. In addition, we have an extended Appetizer selection priced between N550 –
N950, allowing budget dining in a distinguished restaurant.
We have leveraged our membership with the National Hospitality Industry Association to look at industry
averages for this market segment for Restaurant startup and Operations. Additionally, we included a
contingency buffer in the financial estimates to account for any potential cost variance.
We have worked with our Restaurant Consulting firm to validate our cost estimates to their industry
knowledge.
5. How do we know we have selected the right location for this concept?
Again we will draw on the Consulting group that has the expertise in site selection and lease negotiation. In
all, there are no guarantees with location, but we took a very objective approach with our concept. Instead of
going in with a predefined business concept, we let the Market Analysis define the need. Based on the
results, the Classic Restaurant concept was formed specific to Midtown Atlanta. Site selection was based on
space, visibility, and functionality.
6. What if there is an additional need for Business Capital after the Restaurant has exhausted its 6-
month buffer?
Our intent is to be a self-sufficient business far in advance of the 6-month probation period. But as we are
considering all contingencies, we have looked at this risk. We have accounted for an operational
contingency budget that will be used to supplement any slow periods. Our next step would be to approach
our private investors for capital by extending their return on investment. We would also look to the partners'
capital reserves as another source of funds.
General Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Plan Month 1 2 3 4 5
Current Interest Rate 6.00% 6.00% 6.00% 6.00% 6.00%
Long-term Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0
Expenses
Payroll $399,588 $400,788 $429,828 $431,128 $432,728
Marketing/Promotion $18,656 $22,000 $25,000 $15,000 $15,000
Depreciation $6,500 $6,500 $6,500 $6,500 $6,500
Leased Equipment $12,000 $12,000 $12,000 $12,000 $12,000
Accounting/Payroll Processing $6,600 $6,600 $6,600 $6,600 $6,600
Legal Retainer Fees $2,400 $2,400 $2,400 $2,400 $2,400
Business Licenses & Permits $6,000 $6,000 $6,000 $6,000 $6,000
Credit Card Expense $18,576 $19,983 $21,107 $22,131 $23,210
Bank Fees $1,200 $1,200 $1,200 $1,200 $1,200
Music & Entertainment $3,744 $3,744 $3,744 $3,744 $3,744
Training / Employee Retention
$0 $5,008 $6,008 $6,008 $6,008
Programs
Repairs & Maintenance $9,000 $9,000 $9,000 $9,000 $9,000
Utility Services
$24,996 $26,496 $27,821 $28,933 $30,091
(Gas/Electric/Water/Sewer)
Telephone/Communication Expense $1,800 $1,800 $1,800 $1,800 $1,800
Insurance:
$20,400 $21,624 $22,705 $23,613 $24,558
Fire/Theft/Liability/Liquor/Product
Restaurant Occupancy Cost (Lease) $75,000 $77,250 $79,568 $81,955 $84,413
Payroll Taxes (FICA/FUTA/SUTA)
$0 $0 $0 $0 $0
& Employee Benefits
Exterminator/Trash Removal $4,800 $4,800 $4,800 $4,800 $4,800
Dishware/Uniforms/Cleaning
$11,760 $12,466 $13,089 $13,612 $14,157
Supplies/Decor
Printing/Paper/Postage/Subscriptions $9,156 $9,500 $9,500 $9,500 $9,500
Facility (Exterior Cleaning/Grease
$3,333 $3,640 $3,640 $3,640 $3,640
Trap/Hood/Windows,etc.)
R&D Meals $2,200 $2,400 $2,400 $2,400 $2,400
General Business Comps $12,400 $22,850 $23,125 $23,125 $23,125
Owner Comps $2,124 $2,124 $2,124 $2,124 $2,124
Other Expenses (ComAreaMaint, $4,200 $4,200 $4,200 $4,200 $4,200
etc.)
Profit Before Interest and Taxes $45,920 $128,309 $148,070 $204,571 $253,875
EBITDA $52,420 $134,809 $154,570 $211,071 $260,375
Interest Expense $19,189 $15,984 $12,640 $9,296 $5,952
Taxes Incurred $8,020 $33,698 $40,629 $58,582 $74,377
Break-even Analysis
For our First Year Break-Even Analysis, we have an average running fixed costs of $60,230 per month
which includes our full payroll, rent, and utilities, and an estimation of other running costs. With direct cost of
goods (inventory, in this plan) at 35% of sales, our monthly break-even point is $92,081. We will surpass our
break-even point in October of our first year.
As we exit the start-up phase of the business and focus on cost control, we will drive the Cost of Goods Sold
(COGS) down, dropping our break-even value, and increasing our Gross Margin.
Break-even Analysis
Assumptions:
Cash Received
Assets
Current Assets
Long-term Assets
Current Liabilities
Current Borrowing $0 $0 $0 $0 $0
We have set multiple financial goals to grow the success of the Classic concept, and compound the profit
return for Classic Investors.
1. Expansion (Option 1): Our overall goal to maintain Classic as a unique and eclectic concept. Based
on projections, the business has captured market share by the end of the first year. In addition Year 2
brings an increased sales and profit margin to sustain the addition of a full-time General Manager. By
second quarter of Year 2, the owners will look to launch a second restaurant concept. This is not a
chain, but another unique restaurant concept with strong growth potential. Expansion will be
considered with our financial backers and Investor partners.
2. Expansion (Option 2): Throughout our business plan we have stayed focus that Classic would be
successful as a larger venue, with greater sales capacity and revenue potential. Our objective with the
site selection and lease negotiation is to have the opportunity to expand the restaurant as a logical
growth and profit plan.
3. Private Sale: We are in the business of making money. At the close of Year 3, we see Classic as
meeting 80.4% of its optimum sales potential with the current seating and space allocation. At this
stage the business debt is reduced, profit margins are increasing, and Classic has established market
share. We will look at the private sale of the majority interest via A) Leveraged Buyout, or B) A larger
Restaurant consortium. In both cases, our interest is in delivering healthy profits to our Investors and
Financial backers. Sales and profit margins will be based on the restaurant valuation in Year 3.
4. Financial Solvency: The financial projections indicate that exit will be achievable over 3 years for
the operating capital line of credit. Under a realistic scenario the Company should have over $70,000
in cash in the bank after income taxes the second year. The entire financial debt would be retired by
Year 7.
In the event that our venture cannot achieve profitability and retire the encumbrances, we will first attempt to
sell the operation and use the proceeds to clear all outstanding balances. If we are unable to sell the
operation for sufficient proceeds we will be forced to default whereby the loan will be in senior standing. Any
further outstanding balances will be borne by the investors on a weighted percentage basis of the total
amounts due.