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Restaurant Sample Business Plan Outline

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Table of Contents

Cover Letter

Executive Summary

Company Description

Industry Analysis

Products & Related Services

The Target Market

The Competition

Marketing Plan & Sales Strategy

Operations

Management & Organization

Long-Term Development & Exit Plan

Financial Data & Projections

Appendices


 

Company Description

Kundo, Inc., a Massachusetts based company, will operate Abonda, a single unit, medium-size restaurant serving healthy, contemporary style food. The restaurant will be located at 645 Deacon Street in Cambridge, Massachusetts.

Mission Statement
The company's goal is that of a multi-faceted success. Our first responsibility is to the financial well-being of the restaurant. We will meet this goal while trying to consider; 1) the effect of our products on the health and well being of our customers (and our staff), 2) the impact that our business practices and choices will have on the environment, and 3) the high quality of attitude, fairness, understanding, and generosity between management, staff, customers, and vendors. Awareness of all these factors and the responsible actions that result will give our efforts a sense of purpose and meaning beyond our basic financial goals.

Development & Status
The company was incorporated in September of 1995 and elected sub-chapter S.

The founders are Jack Morton and Wilma Mason. Jack is the President and Wilma the Vice President. There is a total of 10,000 shares of common stock issued. Wilma and Jack each own 3,000 and the remainder are retained by the company for future distribution. In addition they have loaned the company $25,000 of their own money for research and start-up costs.

A suitable site for the first restaurant was found last month and lease negotiations are in the final stages. The location will be on Deacon Street, just outside Harvard Square and close to a dense population of the target market. When the lease is signed there will be three months of free rent for construction and in that time the balance of the start-up funds must be raised. With that phase completed, Abonda Restaurant can then open and the operations phase of the project can begin.

Future Plans
If the business is meeting its projections by month nine, we will start scouting for a second location and develop plans for the next unit. Our five year goal is to have 3 restaurants in the greater Boston area with a combined annual profit of between $500,000 and $1,000,000.

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Industry Analysis

Although the restaurant industry is very competitive, the lifestyle changes created by modern living continue to fuel its steady growth. More and more people have less time, resources, and ability to cook for themselves. Trends are very important and Abonda is well positioned for the current interest in lighter, healthier foods at moderate to low prices.

The Restaurant Industry Today
The food service business is the third largest industry in the country. It accounts for over $240 billion annually in sales. The independent restaurant accounts for 15% of that total. The average American spends 15% of his/her income on meals away from home. This number has been increasing for the past seven years. In the past five years the restaurant industry has out-performed the national GNP by 40%. The reasons given by the Folkney Report (November 1994) are 1) lifestyle changes, 2) economic climate, and 3) increase of product variety.

There are 600 new restaurants opening every month and over 200 more needed to keep pace with increasing demand.

Future Trends & Strategic Opportunities
The predicated growth trend is very positive both in short and long-term projections. Folkney states again that as modern living creates more demands, people will be compelled to eat more meals away from home. The DMR Industrial Report (April 1995) estimates this as high as 30% over the next five years.

In 1988 The National Restaurant Association released the Foodservice Industry 2000 report that forcasted how the industry might look in the year 2000. Some highlights from the panel's findings:

  • "Consumers will spend a greater proportion of their food dollar away from home.
  • Independent operators and entrepreneurs will be the main source of new restaurant concepts.
  • Nutritional concerns will be critical at all types of foodservice operations, and food flavors will be important.
  • Environmental concerns will receive increased attention."

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Products & Related Services

Abonda Restaurant will be offering a menu of food and beverages with a distinctive image. There will be three ways to purchase these products; table service at the restaurant, take-out from the restaurant, and delivery to home or office.

The Menu
The Abonda menu (see appendices) is moderate sized, and moderate-low priced offering a collection of ethnic and American items with a common theme -- healthy (low-fat, low cholesterol, natural ingredients), flavorful, and familiar. Our goal is to create the image of light satisfying and still nutritious food.

There has been an increased awareness of nutritional and health concerns in recent years and a growing market of people who now eat this style of cooking regularly.

Production
Food production and assembly will take place in the kitchen of the restaurant. Fresh vegetables, meat and dairy products will be used to crate most of the dishes from scratch. The chef will exercise strict standards of sanitation, quality production, and presentation or packaging over the kitchen and service staff.

Service
There will be three ways a customer can purchase food. They may sit down at one of the 54 seats in the dining room and get full service from a waitperson. A separate take-out counter will service those who wish to pick up their food. Most take-out food will be prepared to order with orders coming from either the telephone or fax. Delivery (an indirect form of take-out) will be available at certain times and to a limited area.

Future Opportunities
There is a market segment that prefers to eat this type of cooking at home although they do not have the time to cook. There are already caterers and even mail order companies that provide individuals and families with up to a month's supply of pre-prepared meals.

This opportunity will be researched and developed on a trial basis. If successful, it could become a major new source of income without creating the need for additional staff or production space.

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The Target Market

The market for Abonda's products covers a large area of diverse and densely populated groups. Although it will be located in a downtown urban setting, it is an area where people travel to eat out and one that is also frequented by tourists. It is also an area known for and catering to the demographic group we are targeting.

Market Location & Customers
The Harvard Square area is one of the most desirable retail locations in New England. The Mass. Chamber of Commerce rates it as the third best retail market in the state. There are more than 400 businesses in a 1/4 square mile area with average sales of $330 per square foot.

The customer base will come from 3 major segments;

  • Local population -- the city of Cambridge with a year-round population of 145,000 is centrally located in the Boston area and is within 15 minutes drive of 8 major suburbs.
  • Colleges and Universities -- Harvard alone has 6 different schools within walking distance of Deacon Street and a seasonal population of 22,000. In addition 5 more colleges near the square have large student bodies.
  • Tourism -- between hotels, motels, bed & breakfast rooms and inns, there are over 8,500 rooms available. Last year they were at 92% occupancy.
  • Local businesses -- The Cambridge Chamber of Commerce lists over 900 businesses with an average of 12 employees in the Harvard square area.

The food concept and product image of Abonda will attract 3 different customer profiles;

  • The student -- more and more young people have developed healthy eating habits. Some also go through a "health food phase" while in college.
  • The health conscious person of any age or sex -- this includes anyone on a restricted or prescribed diet or those who have committed to a healthy diet.
  • Curious and open-minded -- "if you try it, you will like it." Through marketing, publicity, and word-of-mouth, people will seek out a new experience and learn that nutritious food can be tasty, fun, convenient, and inexpensive.

Market Trends & The Future
The population and demographics of Harvard square have remained steady for the last 14 years. Tourism has increased 24% over the last 3 years and is predicted to keep growing. Local businesses are increasing at a rate of 18% yearly.

The idea of a health consciousness through nutritional awareness and dietary change has been slowly building for the last 7 years. The extensive government studies and new Food Guide Pyramid have given everyone a new definition of a balanced, healthy diet. This is not a fad but a true dietary trend

backed by the scientific and medical community, the media, the government, and endorsed by the big food manufacturers. As the Foodservice 2000 report stated, this trend will be even more important by the turn of the century.

As people want to stay home more and cook less our strategy of delivering prepared meals on a weekly or monthly arrangement may be a widespread accepted new way of eating.

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The Competition

There are over two dozen restaurants in the Harvard Square area that sell food at similar prices. Although this presents an obvious challenge in terms of market share, it also indicates the presence of a large, strong potential. The newest competitors have made their successful entry based on an innovative concept or novelty. Abonda will offer an innovative product in a familiar style at a competitive price. Our aggressive plans of take-out and delivery will also give us an advantage to create a good market share before the competition can adjust or similar concepts appear.

Competitor's Profile
Competing with Abonda for the target market are these categories of food providers:

  • Independent table service restaurants of similar menu and price structure.
  • Chain " " " " "
  • Commercial foodservice companies serving students directly.

Independent operators include Grendel's Den, Iako, Bombay Club, Iruna, and The Border Cafe. Most are ethnic based and will carry at least two similar menu items. Grendel's and Iruna are long-standing businesses while the others are fairly new. They all are doing very well.

The major chain restaurants are House of Blues, Chili's and Bertucci's. All are relatively new but well established and profitable. They have big resources of marketing and/or a specialty product or attraction (House of Blues is also a live music club). Ogden Foods and Cysco both service 24,000 Harvard students but their product is not appealing enough to prevent students from eating out 5 to 7 meals a week. In addition there are two local catering companies that deliver prepared meals daily to offices.

Competitive Strategy
There are three major ways in which we will create an advantage over our competitors;

  • product identity, quality, and novelty
  • high employee motivation and good sales attitude
  • innovative and aggressive service options.

Abonda will be the only restaurant among all the competition which focuses the entire menu on healthy, low-fat cooking. Each of the competitors offers at least one "healthy" selection on their menu. Grendel's Den even has an entire section called "On the Lighter Side" but in all cases they are always seen as alternatives to the main style being offered. The target market will perceive Abonda as the destination location for healthy, low-fat cooking.

Once they have tried the restaurant, their experience will be reinforced by friendly, efficient, knowledgeable service. Return and repeat business will be facilitated by accessable take-out and delivery options. At the time of this writing all of the competitors offered take-out but only two (Bertucci''s & Chili's).

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Marketing Plan & Sales Strategy

Market Penetration
Entry into the market should not be a problem. The store has high visibility with heavy foot traffic all day long. The local residents and students always support new restaurants and the tourists do not have fixed preferences. In addition, $10,000 has been budgeted for a pre-opening advertising and public relations campaign.

Marketing Strategy
Focusing on the unique aspect of the product theme (healthy, tasty foods) a mix of marketing vehicles will be created to convey our presence, our image, and our message.

  • Print media -- local newspapers, magazines and student publications
  • Broadcast media -- local programming and special interest shows
  • Hotel guides, concierge relations, Chamber of Commerce brochures
  • Direct mail -- subscriber lists, offices for delivery
  • Misc. -- yellow pages, charity events

A public relations firm has been retained to create special events and solicit print and broadcast coverage, especially at the start-up.

The marketing effort will be split into 3 phases;

1) Opening -- An advanced notice (press packet) sent out by the PR firm to all media and printed announcement ads in key places. Budget - $10,000

2) Ongoing -- A flexible campaign (using the above media), assessed regularly for effectiveness. Budget - $10,000

3) Point of sale -- A well-trained staff can increase the average check as well as enhancing the customer's overall experience. Word-of-mouth referral is very important in building a customer base.

Future plans and Strategic Opportunities
Catering to offices (even outside of our local area) may become a large part of gross sales. At that point a sales agent would be hired to directly market our products for daily delivery or catered functions.

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Operations

Facilities & Offices
The restaurant at 645 Deacon Street is a 2400 Square foot space. It was formerly a restaurant and needs on minor structural modifications. The licenses and codes' issues are all in order. New equipment and dining room furnishings will be purchased and installed by the general contractor. Offices of the corporation are presently at Jack Morton's home but will be moved to the restaurant after opening.

Hours of Operation
The restaurant will be open for lunch and dinner 7 days a week. Service will begin at 11:00 AM and end at 11:00 PM. The restaurant will be closed Christmas, Thanksgiving, and the Fourth of July.

Employee Training & Education
Employees will be trained not only in their specific operational duties but in the philosophy and applications of our concept. They will receive extensive information from the chef and be kept informed of the latest information on healthy eating.

Systems & Controls
A big emphasis is being placed on extensive research into the quality and integrity of our products. They will constantly be tested for our own high standards of freshness and purity. Food costs and inventory control will be handled by our computer system and checked daily by management.

Food Production
Most food will be prepared on the premises. The kitchen will be designed for high standards of sanitary efficiency and cleaned daily. Food will be made mostly to order and stored in large coolers in the basement.

Delivery & Catering
Food for delivery may be similar to take-out (prepared to order) or it may be prepared earlier and stocked. Catering will be treated as deliveries.

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Management & Organization

Key Employees & Principals
Jack Morton, President. Jack Morton is also the owner and manager of Grains & Beans, a local natural food wholesaler and retail store. Since 1977 his company has created a high-profile mainstream image for natural foods. In 1992 Grains & Beans opened a small cafe within the retail store that became so popular and profitable, he decided to expand the concept into a full service restaurant.

Jack brings with him a track record of success in the natural foods industry. His management style is innovative and in keeping with the corporate style outlined in the mission statement.

Compensation & Incentives
Abonda will offer competitive wages and salaries to all employees with benefit packages available to key personnel only.

Board of Directors
An impressive board of directors has been assembled that represents some top professional from the area. They will be a great asset to the development of the company.

Consultants & Professional Support Resources
At the present, no outside consults have been retained, excepting the design department at Best Equipment.

Management to be Added
We are presently searching for a general manager and executive chef. These key employees will be well chosen and given incentives for performance and growth.

Management Structure & Style
Jack Morton will be the President and Chief Operating Officer. The general manager and chef will report to him. The assistant manager and sous-chef will report to their respective managers, and all other employees will be subordinate to them.

Ownership
Jack Morton and the stockholders will retain ownership with the possibility of offering stock to key employees if deemed appropriate.

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Long-Term Development & Exit Plan

Goals
Abonda is an innovative concept that targets a new, growing market. We assume that the market will respond, and grow quickly in the next 5 years. Our goals are to create a reputation of quality, consistancy and security (safety of food) that will make us the leader of a new style of dining.

Strategies
Our marketing efforts will be concentrated on take-out and delivery, the areas of most promising growth. As the market changes, new products may be added to maintain sales.

Milestones
After the restaurant opens, we will keep a close eye on sales and profit. If we are on target at the end of year 1, we will look to expand to a second unit.

Risk Evaluation
With any new venture, there is risk involved. The success of our project hinges on the strength and acceptance of a fairly new market. After year 1, we expect some copycat competition in the form of other independent units. Chain competition will be much later.

Exit Plan
Ideally, Abonda will expand to five units in the next 10 years. At that time, we will entertain the possibility of a buy-out by a larger restaurant concern or actively seek to sell to a new owner.

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