STUFFEDCHICKEN TAKE-OUT

Business PlanPresented by: Andrew Serwadda April 2015

Business Plan

Contents1.0 Executive Summary...............................................................................................................................4

2.0 Introduction...........................................................................................................................................5

2.1 Mission Statement.............................................................................................................................5

2.2 Corporate Goals.................................................................................................................................5

2.3 Industry Overview.............................................................................................................................5

2.3.1 Opportunities and Social Trends.................................................................................................5

2.3.2 Threats........................................................................................................................................6

3.0 Operations Plan.....................................................................................................................................6

3.1 Business Structure..........................................................................................................................6

3.1.1 Organizational Structure.............................................................................................................6

3.2 Location & Floor Plan.....................................................................................................................7

3.2.1 Location..........................................................................................................................................7

3.2.2 Floor plan........................................................................................................................................7

3.3 Operations.........................................................................................................................................8

3.3.1 Hours of Operation.........................................................................................................................8

3.3.2 Daily Operation...............................................................................................................................9

3.3.3 Weekly, Monthly & Annual Operations........................................................................................10

3.4 Supply Analysis.............................................................................................................................10

3.5 Service Providers..........................................................................................................................11

3.6 Capacity Limits and Capital Budget..............................................................................................11

3.8 Operating Expenses......................................................................................................................12

3.9 Working Capital Planning.............................................................................................................12

4.0 Human Resources Plan........................................................................................................................12

4.1 Management Structure...................................................................................................................12

4.2 Scheduling.......................................................................................................................................13

4.3 Labour & Management Costs..........................................................................................................13

5.0 Marketing Plan....................................................................................................................................13

5.1 Product............................................................................................................................................13

5.2 Price.................................................................................................................................................13

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5.3 Place................................................................................................................................................14

5.4 Promotion........................................................................................................................................14

5.5 Targeting, Segmenting & Positioning...............................................................................................14

5.5.1 Target & Segment.........................................................................................................................14

5.5.2 Market Share................................................................................................................................15

5.6 Positioning Statement.....................................................................................................................15

5.7 Sales and Profit Objectives..............................................................................................................15

5.8 Marketing Budget............................................................................................................................16

5.8.1 Projected Revenues......................................................................................................................16

6.0 Financial Plan.......................................................................................................................................17

6.1 Major Shareholders.........................................................................................................................17

6.2 Financing Structure..........................................................................................................................17

6.3 Financial Analysis.............................................................................................................................18

6.3.1 Critical Variables...........................................................................................................................18

6.3.2 Break-even Analysis......................................................................................................................20

6.3.3 Financial Feasibility.......................................................................................................................20

Bibliography...............................................................................................................................................21

9.0 Appendix..............................................................................................................................................22

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1.0 Executive SummaryThe proposed business plan for Stuffed Chicken Takeout is for a healthy chicken takeout option currently

unavailable in Saskatoon. The mission of Stuffed Chicken Takeout is to provide customers with a

healthier stuffed chicken option. We want to be the first choice for a healthy, chicken takeout option in

Saskatoon; with chicken being Canada’s second most consumed protein, we will satisfy the masses.

Stuffed will be a corporation with one shareholder, who will also be employed full time. Stuffed will be

located on 716 2nd avenue North in downtown Saskatoon. The 1000 square foot rental property will

consist of a walk-in storefront and a production area for in-house preparation. The store will be open

from 10am – 8pm, Monday to Saturday and from 10am – 6 pm on a Sunday, with roasting commencing

at 9am daily. We plan to operate 360 days per year and can maintain a maximum capacity for

production of 100 whole chickens and 140 chicken breasts a day. Cooking supplies, packaging and other

service providers will be primarily sourced from local suppliers.

The capital budget will include costs for equipment, including production area, and product displays,

totalling approximately $95,000. The Stuffed plans to use $110,000, including debt and equity, towards

the working capital budget for the first year to ensure a positive cash flow. Therefore, the total

requirements for the capital budget are $205,000 at the onset of operations.

Andrew will be working for an annual wage of $40,000. The rest of the staff, which includes two cooks

and a front-end worker, will be part time and will be paid on an hourly basis.

The initial start-up is fairly average and will provide healthy dividends from the 4 th year onwards. I

believe Stuffed Chicken Restaurant is a feasible business that will provide a unique, convenient and

healthier option of fast food.

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2.0 Introduction2.1 Mission Statement

The mission of Stuffed Chicken Takeout is to provide customers with a healthier stuffed chicken option.

With a great taste and through memorable customer service, we will strive to be you number one

chicken stop and a household name. In the long run we will look to spreading the message of our

healthy stuffed option.

2.2 Corporate Goals

Short-run:

To provide Saskatoon with a healthy chicken takeout option

To provide memorable customer service

Become a household name in Saskatoon

Long-run:

Maintain the memorable customer service

Look to franchising after a successful 5 years and opening a second store in Regina

2.3 Industry Overview

2.3.1 Opportunities and Social Trends

There are three key opportunities that we have identified. These being:

The popularity of chicken among consumers

The increasing population of Saskatoon

A trend towards healthy living

Over the last 20 years chicken consumption in Canada has doubled. In 2009 it was the second most

consumed meat in Canada (Canadian Meat Council, 2009) and became Canada’s favourite protein in

2011, with a per capita consumption of 31.2 kg a year (Farm Credit Canada, 2012).

For the third consecutive year, Saskatoon has been one of the four fastest growing census metropolitan

areas in Canada with a growth rate of 3.2% between 2013 and 2014 (Davis, 2015). With Saskatchewan

having the lowest unemployment rate in Canada, there will be a steady increase in the growth rate over

time coupled with having the second highest median income in Canada (Bromstein, 2014)

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Canadian consumers are actively seeking lower calorie alternative, and this is shown in a 29% increase in

retail grocery dollar sales on sugar alternatives. Stuffed Chicken Takeout will provide this option with

quality, well prepared stuffed chicken.

2.3.2 Threats

There are a number of threats in starting a new business, which range from competing restaurants, rent

increases as property becomes more expensive and consumer taste. Fluctuating oil prices provide the

most threat as Saskatchewan is heavily invested in the oil industry and changes here can heavily affect

disposable income, population size and population growth.

3.0 Operations Plan3.1 Business Structure

3.1.1 Organizational Structure

Figure 3.1 – Organizational Structure

The organizational structure of Stuffed Chicken Takeout will be tiered, with myself as manager, two

cooks that report to me, and two front-store staff that report to myself and the cooks. It is a takeout

restaurant so no additional staff will be needed, but more staff could be added in future to reduce

individual work hours.

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Manager (Me)

Part-time Cook

Staff #2

Part-time Cook

Staff #1

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3.2 Location & Floor Plan

3.2.1 Location

Stuffed Chicken Takeout will be located in downtown Saskatoon at 716 2nd avenue North. This 100

square foot location was chosen due to its high traffic volume and visibility of the store. This location is

seen as a common entry and exit route from the downtown area during the morning and evening rush

hours, as well as lunchtime.

Figure 3.2.1 – Location

3.2.2 Floor plan

The floor plan is divided into two areas, the storefront and the production area behind it. The storefront

has six high stools for customers to wait for their orders. Customers are separated from the front staff

by a store width counter where orders are collected. The production area is on the other side of a wall

that contains heating ovens for orders that are ready to be picked up. The production is fairly sized, with

a centred rotating spice and utensil rack to allow for easy mobility and access. A staff exit is located at

the back and will be used for inventory replenishing deliveries so as to not inconvenience customers.

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Figure 3.2.2 – Stuffed Chicken Takeout Floor Plan

3.3 Operations

3.3.1 Hours of Operation

Door will open at:

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Monday – Saturday: 11:00am – 8:00pm

Sunday: 11:00am – 6pm

These hours will cater to customers wanting lunch and/or dinner. However, customers will be allowed to call make orders telephonically from 10 am to give us time to get the products ready.

3.3.2 Daily Operation

Table 3.3.1 – Work hours

Staff will be required to come report to work at 10am. At any given time there will be three people working, one cook, one front staff and myself. Work hours are provided in Table 3.3.1.

Preparation of the next days inventory will begin 1 hour before the store closes. The manager and the

cook will season the first batch of chicken and prepare it for roasting in the morning. They will also

prepare the stuffing to be put in the bird on arrival the next day. These will be put in the cooler

overnight. In the last hour before close the will stop making and preparing food and begin to clean the

kitchen. At close, the front staff will do a count of the float and cash-out. The manager will take the float

and deposit the profits on a daily basis. An inventory count by the manager will be done for record

keeping. The manager will then close at 8:30pm.

The manager will open in the morning at 9:45am. Then next morning at 10am staff will arrive and begin

stuffing the already seasoned birds. The manager will return the float to the cash register and man the

incoming orders while setting up the storefront as well as take telephonic orders.

When the doors open at 11am it will be lunchtime and customers will be arriving to collect their orders.

The front staff will be focused on doing the sales and interacting with customers. The manager and the

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Business Plan

cook will be preparing the chicken. The manager will provide assistance when individuals are

overwhelmed.

At 3pm there will be a change in staff except for the manager. The float for the first front staff of the day

will be cashed out and given to the manager. The manager will give the second shift staff a new float and

tally the first. This second shift staff will be the ones to close for the following day. Dinnertime will arrive

with the manager constantly checking to see that the store is running smoothly. The operations will

repeat itself an hour before close.

3.3.3 Weekly, Monthly & Annual Operations

Weekly operations include inventory management, ordering of supplies, and staff scheduling. Monthly

operations include a review of the income statement and preparing for monthly expenses. Reviewing

short-term goals also takes place here. Annual operations include a review of the year’s financial report,

while comparing it to previous years reports. Revisiting long- term goals and changes to business plan

also take place annually. Annual activities will include a review of the year’s financial report in

comparison to the budget, and making any potential changes to the overall business plan for the

upcoming year.

3.4 Supply Analysis

Table 3.4.1 – Capital Budget

Denson, Superior Cabinets Costco and various others for furnishing and kitchen utensils will supply

capital budget requirements. These are all local service providers.

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Table 3.4.2 – Cost of Goods Sold

Initially, local farmers will supply our chicken but around the 2-month mark we will make a change to

Sysco, as local farmers will be unable to keep up with our capacity demands. Sysco requires large,

sustainable orders so these three months will be used to provide us with better estimates moving

forward. Costco will supply us with our produce requirements. These estimates are like to change due to

the unpredictability of the restaurant market and the fact that Stuffed provides a unique product.

3.5 Service Providers

Stuffed will have access to various service providers including the financial services of a accountant, legal

support and technological support for their website and social media platforms. We will also outsource

the services of local delivery companies to cater for customers who want to order in. The legal costs

would cover incorporation and other legal service like contractual agreements with various service

providers, and also provide for legal advice. Our Board of Directors will consist of myself (owner and

manager), my mentor and fellow Saskatoon business professional, Fred Khonje and legal counsel. The

bookkeeping will be handle by a local accounting firm.

3.6 Capacity Limits and Capital Budget

Stuffed has a maximum demand capacity of 100 whole chickens and 140 chicken breasts. This equates

to 240 customers/units per day. Taking into consideration industry averages and the location of Stuffed,

we decided upon a base case of 140 customers per day (40 whole chickens and 70 chicken breasts).

The capital budget can be viewed in section 3.4.

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Denson will provide Stuffed with a 2-year warranty on all appliances, but do not cover wear and tear. All

of their kitchen appliances have an 8 to 12 year life expectancy. Utensil and pots have a short life

expectancy, so should be replaced bi-annually.

3.8 Operating Expenses

Operating expenses for the Stuffed will include utilities, rent, wages, benefits, marketing costs,

insurance, interest, consulting services and CCA expense. These costs are outlined in the table below.

Table 3.8 - Operating Expenses

3.9 Working Capital Planning

To ensure a positive cash flow in the initial year Stuffed Chicken Takeout plans to use $120,000 including

debt and equity towards the working capital budget. This is included in a total investment is $160,000.

4.0 Human Resources Plan4.1 Management Structure

The owner, who is also the manager, will be involved in the daily operations. They will manage and

oversee the restaurant, employees, and Stuffed’s daily activity. All employees will be hired on a part-

time basis. All staff should have basic knowledge of the fast food industry and have past experience

working in the industry. As explained earlier, there will be no additions to the staff. Additions will only

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be made in order to divide up the daily hours per day and this will only be done if capacity cannot be

handled by current staff. Cooks will need to be recent graduates from a cooking school and have past

experience. Stuffed will be providing training to all staff into the production process. See figure 3.1 in

operations to view organizational structure.

4.2 Scheduling

The manager is responsible for opening and closing the store everyday. He will be the only full-time

employee and work from 9:45am to 8:15pm on Monday to Saturday. On Sunday he will work from

9:45am to 6:15pm. The other four employees are part-time. Cooks #1 and staff #1 will alternate with

their respective #2’s daily according to the shifts. There are two shifts, the first running from 10am to

3pm and the second from 3pm to 8pm. If more staff is needed then staff members will be required to

relinquish hour as to spread them out evenly.

4.3 Labour & Management Costs

The manager will be paid a salary of $40,000 a year. The other employees will be paid an hourly wage,

with the cooks getting $15 per hour and the front staff getting $11 per hour.

5.0 Marketing Plan5.1 Product

Stuffed offers 10 different stuffed chicken options, and 10 chicken breast options. There is an option to

customize your own chicken upon ordering. Fresh side of vegetables is also on offer as a meal with the

inclusion of the whole chicken or the breasts. There will also be the option of ordering a quarter or

whole chicken. Stuffed will provide customers with fresh, high quality ingredients which will be

replenished weekly. We offer friendly, helpful customer service to guide you in making healthier the

healthier choice.

5.2 Price

Stuffed used competition based pricing and market averages to price its products. We are a unique

product, so we used averages of indirect competitors that also offer healthy meals. We did not want to

enter the market at a high price since we will need to create a market for this new product. Hence we

set our average purchase per customer at $14 for a base.

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5.3 Place

Our location on 2nd avenue provides us with an average of between 22,000 to 23,000 cars driving past

our establishment everyday. Although our product is geared towards everyone, we want to primarily

target working individuals on their way home from work.

5.4 Promotion

Stuffed will be running an intensive marketing campaign for the first 3 months that involves going to

downtown offices, the University of Saskatchewan and schools. There we will provide a number of free

products for people to try. This will create a buzz about our product and introduce potential customer to

our brand. We will be posting on billboards throughout the year and also make use of our own billboard

of the side of out building.

Figure 5.4.1 – Location

Other areas of promotion will include:

Print media (newspapers, flyers) Social media (Facebook, Twitter, Pinterest and Instagram) Radio Word of mouth

5.5 Targeting, Segmenting & Positioning

5.5.1 Target & Segment

Since Stuffed is targeting everyone, our target market is anyone in and around downtown Saskatoon.

Individual between the ages of 20 and 35 will be a primary target as they are most likely to advertise

Stuffed on various social media platforms creating buzz. Kids below the age of 16 could also be seen as a

primary target as they tend to drive the purchasing habits of their parents, hence the entire household.

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People above the age of 35 are a target market as social trends show that Canadians are moving toward

a healthier lifestyle. Stuffed Chicken Takeout will be the option for all these groups.

5.5.2 Market Share

With a city population of around 240,000, our expected market share is 10%. This will be due to or

location and intensive marketing campaign. There are a lot of food options downtown, including a few

healthy options, but none as tasty and unique as Stuffed Chicken Takeout.

5.6 Positioning Statement

For those looking for a healthier lifestyle, Stuffed Chicken Takeout is a tasty chicken restaurant that

provides you with the healthy Stuffed option.

Less Healthy

Uniq

ue

Healthy

Ord

inar

y

Figure 5.6.1 – Positioning Map

5.7 Sales and Profit Objectives

The Stuffed has the following sales and profit objectives, which are the selected bases in the financial

plan:

To sell 110 units per day in Year 1, and to increase to 174 by Year 4;

To achieve a profit margin of 36%; and

To sell at an average unit cost of $14 per unit selling price, increasing at the rate inflation.

5.8 Marketing Budget

The table below is Stuffed’s marketing budget, comprised of all the promotional initiatives listed above:

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Table 5.2 - Marketing Budget

5.8.1 Projected Revenues

The total revenue is calculated from the 360 days per year that the Stuffed will be open, times the

estimated volume sold per day, times the projected sale price. The total revenues are seen in the table

below.

Table 5.3 - Revenue

6.0 Financial Plan6.1 Major Shareholders

The major shareholder Andrew Serwadda of Stuffed is backing the bank financing with a personal

guarantee of cash in his savings account, coupled with a good and longstanding credit history. Please see

our estimated statement of net worth below; further detailed statements on net worth can be obtained

from me, Andrew Serwadda, Stuffed, Saskatoon, SK, andrew.serwadda@stuffed.com.

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Table 6.1 – Estimated Statement of Net Worth

6.2 Financing Structure

Table 6.2 - Financing Structure

69%

31% Debt Financing Equity Financ-ing

Figure 6.1 - Financing Structure

The Stuffed will be financed 31% by equity and 69% by a bank loan.

6.3 Financial Analysis

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Table 6.3 - Summary Income Statement

The fixed expenses that are included in the income statement above are:

Legal and financial representation

Marketing costs

Insurance

Rent

Fixed utility charges

Equipment maintenance costs

Wages and benefits for staff

Capital cost allowance for equipment

Interest on the $110,000 bank loan

6.3.1 Critical Variables

Three critical variables analyzed were customers per day, sales price and the average cost of goods sold. The sensitivity analyses below demonstrate the effects the variables have on the average annual profit and owner’s compensation.

Changing customers per day: Holding all other critical variables constant, the analysis showed

significant sensitivity to changes in customers per day. The table below shows that these

changes impact the profitability of Stuffed.

Changing sales price: Holding all other critical variables constant, a 10% decline in sales price led

to a severely decreased average annual profit and halved owner’s compensation in year 5. The

table below shows that Stuffed will still be profitable and be able to provide dividends if the

sales price were to decrease within 10%.

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Table 6.4 – Sensitivity Analysis #1

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Changing the cost of goods sold: Holding all other critical variables constant, we analyzed the

cost of goods sold as a change in the gross profit margin (GPM). The changes again showed the

significant as shown below.

6.3.2 Break-even Analysis

A break-even analysis was performed to determine the number of customers required in order to break

even over the next 5 years:

As the table shows, we start off well below the breakeven number in the first year and surpass it in the

preceding years. Then there is a steady increase in the gap between the base case and the breakeven to

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Table 6.5 – Sensitivity Analysis #2

Table 6.6 – Sensitivity Analysis #3

Table 6.7 – Break Even Analysis

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44 customers in 2019. This provides some added security in case there is a reduction in the sales price or

the cost of goods sold.

6.3.3 Financial Feasibility

After an analysis of the critical variables, we believe that the strength of average 5-year profit and year 5

owner compensation after we breakeven is feasible. We would need to take into account the high risk of

failure in the first 2 years and put into place contingencies to prevent this. The contingencies would

need to maintain the average purchase per customer is steadily increasing further above the breakeven.

Potential contingencies:

This can be done with annual intense marketing campaigns to improve on market share

Searching for cheaper suppliers to improve on your gross profit margin

Adding seating to Stuffed to give customers the option of sitting down and increase your pool of

potential customers

ConclusionStuffed Chicken Restaurant has a bright future in Saskatoon and future success could pave the way for

franchising. As chicken sales continue to climb, like they have over the past 20 years, now is the time to

make a mark in the restaurant industry with the next big thing.

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ReferencesBromstein, E. (2014, December 10). How much do Canadians earn by province. Retrieved from Workopolis Web site: http://www.workopolis.com/content/saskatchewan/article/how-much-canadians-are-earning-by-province/

Canadian Meat Council. (2009). Industry Statistics. Retrieved from Canadian Meat Council website: http://www.cmc-cvc.com/en/about-us/industry-statistics/industry-statistics

Davis, A. (2015, February 12). Regina and Saskatoon in top-four fastest growing cities. Retrieved from Leader Post: http://www.leaderpost.com/Regina+Saskatoon+four+fastest+growing+cities/10806110/story.html

Farm Credit Canada. (2012, June). Poultry Facts. Retrieved from Farm Credit Canada web site: https://www.fcc-fac.ca/fcc/agKnowledge/publications/ag-sector-guides/pdfs/poultry-facts.pdf

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9.0 Appendix

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