Restaurant Business Plan (Daniyal Kamal)
Restaurant Business Plan (Daniyal Kamal)
Restaurant Business Plan (Daniyal Kamal)
City- Patna
State- Bihar
Submitted To
Galgotias University
Submitted By
Daniyal kamal
Section-3
MBA (MARKETING)
Acknowledgement
I take this opportunity to express my sincere appreciation to the people without whose support I would
have faced insurmountable obstacles in preparation of this business development plan.
Firstly, I would like to express my profound sense of gratitude to Prof. Nirmaljeet kaur VirkMs. Course
mentor, for providing me great attention and time. I really appreciate his guidance and thankful for it.
Finally, I would like to thank friends and families for their inspiration and support during the preparation
of this report.
TABLE OF CONTENTS
5.2
Strategy Pyramid----------------------------------------------------------------------------
5.3
Unique Selling Proposition (USP)-------------------------------------------------------
5.4
Competitive Edge----------------------------------------------------------------------------
5.5
Marketing Strategy and Positioning-------------------------------------------------------
5.5.1 Positioning Statement--------------------------------------------------------
5.5.2 Pricing Strategy-------------------------------------------------------------------
5.5.3 Promotion and Advertising Strategy-------------------------------------
5.5.4 Website-----------------------------------------------------------------------
5.5.5 Marketing Programs--------------------------------------------------------
5.6 Sales Strategy------------------------------------------------------------------------------
5.6.1 Sales Forecast-------------------------------------------------------------------
5.6.2 Sales Programs--------------------------------------------------------------------
5.7 Legal----------------------------------------------------------------------------------------------
5.8 Milestones-------------------------------------------------------------------------------------
5.9 Exit Strategy----------------------------------------------------------------------------------
6.0 Organization and Management-------------------------------------------------------------------
6.1 Organizational Structure-----------------------------------------------------------------
6.2 Management Team------------------------------------------------------------------------
6.3 Management Team Gaps----------------------------------------------------------------
6.4 Board of Directors-----------------------------------------------------------------------------
7.0 Financial Plan---------------------------------------------------------------------------------------
7.1 Important Assumptions---------------------------------------------------------------------
7.2 Start-Up Costs-------------------------------------------------------------------------------
7.3 Source and Use of Funds-----------------------------------------------------------------
7.4 Break- Even Analysis---------------------------------------------------------------------------
7.5 Projections----------------------------------------------------------------------------------
7.5.1 Projected Profit and Loss----------------------------------------------------
7.5.2 Projected Cash Flow----------------------------------------------------------
7.5.3 Projected Balance Sheet------------------------------------------------------
7.6 Business Ratios----------------------------------------------------------------------------------
7.7 Hourly Labour Schedule-------------------------------------------------------------------
7.8 Weekly Sales Projections-------------------------------------------------------------------
The Traditional Home-Style Restaurant (“THR”) will be a moderately priced 86 seat restaurant offering
family style food and service. Broasted chicken, pot roast, steaks and pork chops along with classic
hamburgers, wraps and generous salads are all on the menu. We will offer specialty selections including
a lighter options and smaller portions for a children’s menu.
The restaurant will be family owned and operated by Jeff and Betty Wright. Together they have over 25+
collective years’ experience in the restaurant and catering industry.
The Wrights will be leasing a 3,400 square foot space located at West Roads Shopping Centre, an existing
retail centre located in Benbrook, a suburb in Fort Worth, Texas. The site was previously leased as an
Italian Restaurant. Although the location was previously utilized as a restaurant, the former tenant removed
the majority of the furniture, fixtures and equipment which will need to be replaced. The location will also
require some additional renovation to update the lavatories and increase table space in the dining area.
The décor will feature wood accented chairs with blue and white checked table cloths. Dinner style tables
will be surrounded by wooden chairs with comfortable seating cushions.
Sales projections assume 1700 customers per week resulting in weekly sales of just over $19,777, or
$1,028,000 annually. This equates to around $302 per square foot in sales annually which positions THR
as a highly desirable concept for ownership in a table service market where $200 to $325 per square foot
is considered moderately profitable and therefore a good investment. Total start up costs will be $363,000,
$174,000 of which will be contributed by the owners and the remainder will be secured by a proposed
bank loan.
2. Gratitude
“An attitude of gratitude” shown to our customers, employees and vendors – because without their input,
service, labour and time, our business would not be here without them!
3. Our Service
Provide the warm and friendly service expected from a family-style restaurant creating an informal,
comfortable environment which will make the customers satisfied and want to return again and again.
• Repeat business. Every customer who comes in once should want to return, and recommend us.
Word–of–mouth marketing is a powerful ally.
• Hire top notch chefs and offer training to keep the chef on top of his/her game, and pay top wages to
ensure they stay with us.
• Location. Convenience is essential to us; we need to be close to our market because we are not
trying to get people to travel to reach us.
• A variety of menu offerings with a “down home” theme, reasonably priced to establish credibility, but
not so high as to limit customers.
2.1 Ownership
The restaurant will be owned by Jeff Wright. Jeff began his restaurant career at the age of 15 working in
a quick-service foodservice operation and earned his way through college as a server and bartender.
After earning his degree, he worked for a regional restaurant chain and an independent fine dining
restaurant. In these organizations he held the positions of Assistant Manager and then General Manager.
Betty Wright received her Culinary Degree from the Art Institute in Dallas. After graduation she was
employed by a local chain restaurant and then at a Five Star Hotel in Dallas. Betty will be employed as
the Kitchen Manager.
With the high turnover of help for start-up restaurants, we will rely on family to fill in where required
until we are off the ground and making a profit.
2.2 Legal Form
THR will be organized as a sole proprietorship, wholly owned and operated by Jeff Wright d/b/a
Traditional Home-Style Restaurant. THR is registered in the state of Texas a community property state.
The cost to open the restaurant is $363,000. The majority of the expenses are in furniture fixtures and
equipment totally $110,000. The location requires some build-out and renovation totally $50,000 and
will require approximately 30 days to complete. The Wrights will sub-contract the work themselves.
$175,000 of the start-up costs will be funded by the owners. The owner’s source of funds is a
combination of liquid assets and marketable securities, primarily from their existing catering business.
3.0 Services
The US restaurant industry includes about 480,000 restaurants with combined annual revenue of about
$400 billion. Major companies include Brinker International which owns Chili’s Grill & Bar) and
Maggiano’s, Ruby Tuesdays McDonald's; YUM! Brands (KFC, Pizza Hut, Taco Bell); and Darden
Restaurants (Olive Garden, Red Lobster). The industry is highly fragmented: the 50 largest companies
hold just 20 percent of the market.
• Hedarys Restaurant - This is a full service family restaurant established in 1977. The 5,000 SF
restaurant run as a sole proprietorship, has 17 employees and generates $1.7 million in revenue annually.
Prices are higher than THR and range from $8.00-$20 per entrée.
• Applebee’s - this is a chain restaurant offering standard fare. The food quality is average. Entrées range
from $6.99 - $20.
• Chili’s – this is a chain restaurant also offering standard fare. Food choices are varied and prices
range for $8-$21.
• Barbeque Ben’s – This is sole proprietorship offering primarily barbeque item. Although the food
offering does not compete directly with the subject, the restaurant targets the same neighbourhood
families and has been operating at the single location since 1978. Entrée range from $8.99-$12.
• Cracker Barrel – located along Interstate 30, the restaurant is not located within the target market area.
However due to its menu offering of home comfort food, the restaurant attracts a similar market,
although Cracker Barrel’s attract the tourist business as well. Entrées range in price from $7.99-$14.
3.3 Suppliers
Because of their years of experience combined with their existing catering business, Jeff and Betty
Wright have established relationships with qualified suppliers. These suppliers can provide reasonably
priced products, delivered according to the schedule.
The Wrights will practice sound management procedures in order to control costs, insure quality of
product and provide friendly customer service. The following systems will be used by management:
Order Guide: The restaurant will use an item specific order guide to track order history and maintain
designated levels of product in inventory.
Weekly Inventory: Management will conduct a weekly inventory to determine valuation for use in
the preparation of weekly profit and loss reports.
Daily Inventory Tracking: Daily inventory will be taken on specific items. Movement will be
compared to sales data to ensure designated products have been properly accounted for.
Daily Cash Control. Sales and receipts recorded by the POS system will be compared to actual
cash and credit card deposits on a daily basis. Acceptable over/short amounts will be limited to $5.00 per
day. Discrepancies greater than $5.00 will prompt management to conduct an immediate audit to
account for the difference. Monthly totals will be compared to actual P&L statements for accuracy.
Cash, debit card and credit card receipts will be deposited in a deposit.
Weekly Prime Cost Report Jeff Wright will prepare a weekly report that shows the gross profit
margin after cost of goods sold and labour cost has been deducted from the sales revenue. The prime
cost for this type of restaurant is expected to range from 60% to 65%. Proper control of the prime cost is
the single most effective measure of management’s ability to operate the restaurant.
Purchasing Records/Payables. A part time bookkeeper will process and record invoices and
credits daily. Reports detailing cash expenditures, payments by check, and accounts payable transactions
will be readily available. Check disbursements will be prepared by the bookkeeper. Check signing
authority for the general operating account will be given to the general manager.
Payroll Processing. Payroll checks will be issued bi-monthly. Jeff Wright will run reports from the
time & attendance system, make necessary adjustments, and prepare for transfer to the payroll system.
Payroll will be processed by a payroll processing service.
The US restaurant industry includes about 480,000 restaurants with combined annual revenue of about
$400 billion. Major companies include McDonald's; YUM! Brands (KFC, Pizza Hut, Taco Bell); and
Darden Restaurants (Olive Garden, Red Lobster). The industry is highly fragmented: the 50 largest
companies hold just 20 percent of the market. (First Research).
The industry consists of full-service restaurants (FSR) and limited service eating places, which include
quick-service restaurants (QSR); cafeterias; buffets; snack bars; and nonalcoholic beverage bars. (First
Research)
In FSRs, waiters take orders, serve beverages and meals, present the check, and process payment. FSRs
include casual dining (full bar); family dining (limited bar); and fine dining establishments.
Annual sales average $860,000 for FSRs.
An FSR's square footage and the number of seats and tables dictate how many patrons it can serve (also
known as table turns or covers) directly affects sales. Because the restaurant industry is highly
competitive, site selection is critical: companies may consider population density, household income,
competition, visibility, accessibility, and traffic.
Companies carefully manage inventory of perishable food products, such as fresh seafood and dairy
goods, to reduce losses due to spoilage.
Computerized information systems can improve and link food preparation and serving operations. Touch
screen ordering programs ensure accurate communication of customer orders. Timing systems monitor
meal progress and can alert staff if an order is running behind schedule. Reservations programs
maximize traffic flow and seating. Inventory management systems track supply levels and can help
reduce waste due to spoilage. Cost accounting programs help companies determine the profitability of
individual menu items. Handheld point-of-sale (POS) devices allow servers to place orders and print
checks tableside, improving accuracy and reducing ordering time. Some handhelds can also print
customer checks and process credit card payments. (First Research)
Major participants include Major companies include McDonald's; YUM! Brands (KFC, Pizza Hut, Taco
Bell); and Darden Restaurants (Olive Garden, Red Lobster).
• Hedarys Restaurant - This is a full service family restaurant established in 1977. The 5,000 SF
restaurant run as a sole proprietorship, has 17 employees and generates $1.7 million in revenue annually.
Prices are higher than THR and range from $8.00-$20 per entrée.
• Applebee’s - This is a chain restaurant offering standard fare. The food quality is average. Entrées
range from $6.99 - $20.
• Chili’s – This is a chain restaurant also offering standard fare. Food choices are varied and prices
range for $8-$21.
Barbeque Ben’s – This is sole proprietorship offering primarily barbeque item. Although the food
offering does not compete directly with the subject, the restaurant targets the same neighbourhood
families and has been operating at the single location since 1978. Entrée range from $8.99-$12.
• Cracker Barrel – Located along Interstate 30, the restaurant is not located within the target market
area. However due to its menu offering of home comfort food, the restaurant attracts a similar market,
although Cracker Barrel’s attract the tourist business as well. Entrées range in price from $7.99-$14.
THR will appeal to a broad base of consumers in both the residential and business community. The
location selected for THR was chosen primarily to appeal to the growing number of households in the
area.
The suburb of Benbrook located in western Forth Worth, TX has a population of over 51,000 according
to the 2010 U.S. Census Report. The residential population in the immediate area is comprised of a
mixture of single family and multi-family housing. The median household income is $46,532 for 2010
and estimated to be $54,646 for 2015. (US Census).
Major employers include Union Pacific Railroad and Bank of America.
(www.Business Decision. Info)
4.2 Market Tests
For the past 10 years, Jeff and Betty have been catering part-time. Their home-style menu is very
popular with family reunions. More often than not, the couple gets asked to open a restaurant full-time
so that patrons can return again and again.
Through Constant Contact (an online marketing program) the couple has stayed in touch with their host
and hostesses, and has been asked to return to provide catering services to several repeat events. Home-
Style Catering as also grown by word of mouth.
The couple also co-authors a home-style blog - attracting foodies nationwide and globally, swapping
recipes, compiling the most sought after home-style comfort recipes, and identifying current trends, for
example, providing expanded menus for children and for those with food allergies.
The Wrights already have a customer base through their catering business and local blog visitors. These
customers will be the first to be contacted when they announce the grand opening of the brick and
mortar restaurant.
Jeff and Betty Wright selected the subject area for its restaurant primarily because of its location to the
very busy intersection of Cherry Street and Camp Bowie. The restaurant located in a retail strip centre is
located on “going home” side of Camp Bowie. This will encourage families tired from a day of work to
stop in for a home cooked meal they can enjoy – without the clean up!
Cherry Road which runs North and South is connected to the busy Interstate 30 corridor, ½ mile north of
the shopping centre. Camp Bowie which runs East and West connects to the newer western suburbs of
Fort Worth.
The Benbrook area is in great need of a family style restaurant. This section of Camp Bowie is
commonly referred to as “fast food alley” The selection of fast food is vast however; the area is limited
on its family restaurant choices. THR’s nearest competitor, The Hedary Restaurant is located over 5
miles away from the location. Further, established in the 1970’s the Hedary Restaurant’s customers are
older than the targeted family group THR focuses on.
According to the National Restaurant Association, the top 10 trends for are:
1) locally sourced meats and seafood,
2) locally grown produce,
3) sustainability as a culinary theme,
4) nutritious kids’ dishes,
5) hyper-local items, (networked locally grown – like a Craigslist for restaurants)
6) children’s nutrition as a culinary theme,
7) sustainable seafood,
8) gluten-free allergy conscious items,
9) Back to basics cuisine, and
10) farm brand ingredients.
4.3.3 Market Growth
US consumer spending on services, an indicator of restaurant sales, rose 1.8 percent in November 2011
compared to the same month in 2010. The average US retail price for diesel and regular gas, which
influences discretionary consumer spending on eating out, rose 13.1 percent and 9.3 percent respectively
in the week ending January 16, 2012, compared to the same week in 2011. US tourism spending for food
services and drinking places, an indicator for restaurant revenues, increased 6.1 percent in the third
quarter of 2011 compared to the same period in 2010. (First Research)
4.4 Positioning
Consumers believe that meals at home are healthier and higher quality than eating at restaurants. At
THR, we will position ourselves as the premier home-style restaurant by preparing quality home cooked
meals with simple wholesome ingredients. Jeff and Betty Wright will also provide home cooked fare
that appeals to the current trends of healthier food and offer menu selections which will appeal to this
group. THR will be positioned as the premier traditional home-style restaurant.
5.1.1 Strengths
• Prime location with easy access from Interstate 30
• Exceptional staff with the can do attitude. Combined 25 years in the restaurant industry
• Because owner has catering industry experience, he already has established a customer market and
approved vendors
• Due to our small size, we believe we can provide exceptional quality by hand selecting our market
specials when compared to our larger corporate competitors
• The same concept holds true in our staffing requirements, by hand selecting our employees we will
strive to offer unsurpassed service when compared to our larger competitors
5.1.2 Weaknesses
5.1.3 Opportunities
5.1.4 Threats
• Government mandates (restaurant operation, food safety, and worker protection at the federal level and
health, sanitation, safety, fire at the local level)
• Rising operating costs
• Building/maintaining sales volume
Strategy: Be the Benbrook area’s premier Home-Style Food Restaurant in Customer Satisfaction.
Tactics: First create awareness-- our signage on the front of restaurant will bring customers to us and
once inside, we will immediately acknowledge the customer with the warmest and most sincere greeting
and begin the service process anticipating repeat customers.
Programs: Provide employee training on customer service and retention; offer ongoing training
programs for employees keeping them current on industry trends and food safety. Keep track of
employee’s progress through performance reviews and offer employees incentives attracting and
retailing customers. Employ Mystery Shoppers. Employ the use of surveys both at the table and online.
THR’s competitive edge is in its people. We truly believe that your business is not only as good as your
products (meals) but the quality of your staff as well. Our staff is a reflection of us. Initially, we intend
to employ our family members who will work for lower and reduced wages. Our long term goal is to
hire team members that are truly hand selected and have the same honest to goodness family values we
do. And unlike our big chain competitors, because of our lean size, we can turn on a dime when
economically pushed and make changes quickly allowing us to be proactive. (Whereas our corporate
competitors have to adhere more closely to their company policies thus impeding their reaction time)
We realize the success of THR will have to be achieved by doing more that serving great food, and
providing friendly service. We will utilize a marketing plan to build customer traffic. At THR we will
continually strive to win more customers by being proactive rather than reactive in our marketing efforts
and stay current with popular industry trends. We will achieve these goals by using the following:
• Database: We will begin our campaign by marketing to our existing database of customers. We will
email fliers announcing our grand opening. We will continually update our database by providing a
fishbowl for business cards in the lobby and offer a weekly or monthly drawing.
• Loyalty Program/Birthday Program. THR will offer a birthday/loyalty club proving a complimentary
hamburger or chicken sandwich or wrap to the for the birthday person. A recent report from the National
Restaurant Association explained how this simple technique can increase revenues as much as 15% due
to repeat business.
• Our restaurant team will also be active in the local community and we plan to take an active role by
participating, sponsoring, and donating to local churches, sports clubs or teams in the market area.
• We will also strive to develop rapport with local business as a quick, comfortable lunch choice. In the
future, we plan on establishing a marketing campaign to call on the local business in the market area,
deliver samples, and encourage them to consider our restaurant as the restaurant of choice for their next
business luncheon
5.5.1 Positioning Statement
THR will be the premier home-style dining restaurant in western Fort Worth. We will offer reasonably
priced meals, in a warm, relaxed and comfortable setting. We have a wide selection on our menu and
also have menu options for lighter fare as well as a children’s menu. We are open 7 days a week and
unlike our chain competitors, our servers won’t try to be your best friend our rush you thought your
meal. Our name says it all “Traditional Home-Style Restaurant - - honest to goodness food served to you
by honest to goodness people!”
• Location- The restaurant will be located in a strip centre at the busy intersection of Cherry road and
Camp Bowie. With easy access to Interstate 30 (less than ½ mile south) and located on the “going home
side” (Western Corner) of the intersection. We will have Signage on the West Roads Shopping Plaza as
well as signage over our entrance
• Word of Mouth – We already have a database of existing catering customers and will rely heavily
on this method to attract and grow new business.
• Participate with Costco as Small Business of the Month – We will leave our menu, a
fishbowl for business cards and a small ‘homey’ display with the retailer announcing us as new entrants
in the local restaurant arena.
• Direct Mail - Bulk mailing either directly to potential customers or by including a postcard in a
value-pack-type mailing.
• Event Marketing - We plan on joining our local chamber of commerce and utilizing their
networking services for our grand opening
5.5.4 Website
• We will stay current with industry trends and have a webpage, Facebook page and Twitter site. Our
menu, map, and hours of operation will be easily accessed. In the future we may consider fax or email
orders as well a phone application.
Customer service is of the utmost importance. Customer surveys estimate that only 1 in 20 customers
that have a problem in a restaurant will tell management about it. It will be our goal to provide a
wonderful home-style meal combined with superior customer service. Training programs will include
teaching materials to train our employees about service attitudes, customer perception and how to handle
guest complaints. Jeff and Betty will conduct periodic staff meetings intended to review policy, increase
guest satisfaction and to keep a general line of communication between staff and management. All guest
complaints will be acknowledged by the staff and referred to management. Programs will be in place for
all types of guest complaints. More serious complaints will be documented and kept on file. Customer
feedback will be accomplished by customer surveys or the use of mystery shoppers.
The following table shows expected Sales Forecast for the next 3 years:
Table 5.6.1 Year 1 Year 2 Year 3
Annual Sales
Forecast
Annual Sales
Forecast
Sales
Food and $1,028,422 $1,079,843 $1,133,835
Beverage
Revenues
Additional $0 $81,600 $102,000
Revenues
Total Sales $1,028,422 $1,161,443 $1,235,835
Controllable Costs
COGS $402,113 $414,176 $426,602
Payroll $269,987 $323,057 $340,027
Total Prime $672,100 $737,234 $766,628
Cost
Controllable $356,322 $424,209 $469,207
Profit
We will encourage our employees to grow our customer base and provide incentives and regular bonuses to
employees for referrals and repeat customers. These initiatives are still in the planning stages as we gear up
to hire and staff. They will play an active role in our employee culture.
It is also anticipated that as we grow our catering business, along with our lunch business group, we will hire
a sales director to facilitate this portion of the business. The sales director will be compensated similarly to
their national peers (national Restaurant Association)
5.7 Legal
Initially we will be formed a sole proprietor: Jeff Wright d/b/a Traditional Home Style Restaurant. The State
of Texas is a community property state. Over time, the couple plans to form a Limited Liability Compan5.8
Milestones
Disposal of kitchen equipment, and restaurant furniture, and fixtures would occur at auction. The
additional assets such as the staff’s uniforms, table cloths, and cutlery could be sold at auction or on e-
bay. Food inventory because of its quick perishable time would be considered a write-off.
THR expects to hire 19 employees. Together, Jeff and Betty Wright will personally select each
candidate. They’ve adopted an effective interview process designed to staff the restaurant with highly
qualified people for each position. Each applicant will be rated and evaluated according to a pre-
defined set of standards designed for each position. Background checks will be utilized for designated
positions. Recruiting efforts will always center on referrals.
The restaurant will be owned by Jeff Wright. Jeff began his restaurant career at the age of 15 working
in a quick-service foodservice operation and earned his way through college as a server and bartender.
After earning his degree, he worked for a regional restaurant chain and an independent fine dining
restaurant. In these organizations he held the positions of Assistant Manager and then General
Manager.
Betty Wright received her Culinary Degree from the Art Institute in Dallas. After graduation she was
employed by a local chain restaurant and then at a Five Star Hotel in Dallas. Betty will initially be
employed as the Kitchen Manager.
Total fixed costs associated with the restaurant are $669,186 and represent the annual expenses. The
variable cost (overhead) is estimated to be $4.51 per meal. Based on the assumption of $11.37 as the
average meal price, the breakeven revenue then is $1,108,970 or 97,535 meals (units). This is further
depicted in the Table Below and the Graph that follow:
Table 7.4 Net Fixed Variable Total Total
Break-Even Revenue Cost Cost Cost Profit
Analysis
Net
Units
Fixed Cost: $669,186.01
Variable Cost: $4.51
Number of Units: 13,934
Avg. Unit Price: $11.37
0 $0 $669,186 $0 $669,186 -$669,186
13,934 $158,424 $669,186 $62,826 $732,012 -$573,588
27,867 $316,849 $669,186 $125,653 $794,839 -$477,990
41,801 $475,273 $669,186 $188,479 $857,665 -$382,392
55,734 $633,697 $669,186 $251,306 $920,492 -$286,794
69,668 $792,122 $669,186 $314,132 $983,318 -$191,196
83,601 $950,546 $669,186 $376,958 $1,046,144 -$95,598
97,535 $1,108,970 $669,186 $439,785 $1,108,971 $0
111,468 $1,267,395 $669,186 $502,611 $1,171,797 $95,598
125,402 $1,425,819 $669,186 $565,438 $1,234,624 $191,196
139,335 $1,584,243 $669,186 $628,264 $1,297,450 $286,793
153,269 $1,742,668 $669,186 $691,090 $1,360,276 $382,391
167,202 $1,901,092 $669,186 $753,917 $1,423,103 $477,989
181,136 $2,059,517 $669,186 $816,743 $1,485,929 $573,587
195,070 $2,217,941 $669,186 $879,570 $1,548,756 $669,185
209,003 $2,376,365 $669,186 $942,396 $1,611,582 $764,783
222,937 $2,534,790 $669,186 $1,005,222 $1,674,408 $860,381