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1.0 Executive Summary Meals on Wheels will operate a quick service retail restaurant, Meals on Wheels Café, offering good food fast at a reasonable price to the 3000+ employee base of Appomattox Industrial Park in Colonial Heights, Virginia. The café will be part of a much larger food production facility, which will use cook/chill technology to prepare meals for homebound seniors and disadvantaged populations. The Meals on Wheels Cafe will take advantage of the efficiencies offered in a large kitchen facility staffed with professional culinary staff. Business Description The Meals on Wheels Café is a 1,800 square foot quick service restaurant located at the front of the 40,000 SF Meals on Wheels Central Kitchen Facility. The café faces the main artery, Ruffin Mill Road, of the Appomattox Industrial Park, which currently employs more than 3,000 people. Currently, two large plants are being built, and park developers project growth of the employee base to more than 6,000 people within three years. The closest competitors for employee breakfast and lunch business are McDonald’s, Subway, and WaWa, about 1.5 miles away. Many other quick and full service restaurants are about 5 miles from the industrial park—a 10-15 minute drive in the midday traffic. Market survey results strongly indicate the demand for a café within walking or short driving distance of neighboring plants. Not only do the formal responses underscore the desire for alternative lunchtime choices, but there were many anecdotal instances of employees telling Meals on Wheels staff to “hurry and get here so we have somewhere good to eat!” Based on market survey results, the café will serve take-out and eat-in breakfast and lunch meals in addition to take-out dinners. Breakfast and lunch catering for company functions within the industrial park will be offered beginning in month three of operations. Hours of operation will be 6 a.m.–4 p.m., Monday – Friday. Menu selections will include breakfast sandwiches, fruit, bakery items, juices and coffee for breakfast, and sandwiches, soups, salads, blue plate specials, sodas and desserts for lunch, and blue plate specials with desserts packaged in dinners for two and four. The management team will include an executive chef to start-up the central kitchen and café, set-up the production processes, formulate and standardize recipes, and provide periodic business audits and product development. Permanent full-time staff include a general manager to oversee the kitchen and café and a sous chef to oversee all food production. The remainder of the staff is comprised of two full-time and four part-time counter workers/sandwich preparers. A catering manager will be hired in year two to grow the catering business. In year one, the marketing manager will promote the catering services while the general manager oversees the catering production. It is important that the café and kitchen integrate production processes as this provides great efficiencies for the café and lessens the risk of food waste and spoilage. For this reason, the general manager will oversee the entire facility rather than have separate management functions. The executive chef has been hired and is providing leadership in the development of the café and central kitchen. The Meals on Wheels Café will be a separate profit center of the Meals on Wheels agency. Shared staff will include the financial and human resources staff, the president, the marketing coordinator, the staff dietitians and the kitchen production staff. Volunteers will be used heavily

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in the kitchen packaging and traying area. This will be a cost savings regarding the blue plate specials and the dinners for two and four especially. Volunteers will not be used in the café as skilled labor, but as greeters and “consumer advocates” to regularly perform customer satisfaction surveys and provide a warm feeling to each visit. Financial Information

Year 1 Year 2 Year 3 # Transactions (not including catering)

240 373 517

Weighted Average Transaction(not including catering)

$6.28 $6.66 $6.85

Breakeven (not including catering)

150 192 268

Profit Margin 10% 16% 18% Revenue $266,227 $449,376 $665,496

The greatest risk to the business is that sales will not be on target with projections and the café will drain resources from the main kitchen facility. If the café does not make a profit (however small) in eighteen months, management will look closely at the possibility of closing the café, incorporating the equipment and staff into the central kitchen, converting the space for office/training use and focusing on other parts of the business. The structural and equipment/furnishing needs of the café will be financed as part of the central kitchen development package of $8 million. This will be a combination of fundraising and tax-exempt bond financing, with initial funding of $3 million in equity and $5 million in bond financing. Construction of the central kitchen facility including the café is projected to be completed in late fall of 2004. The café is slated to open in early 2005, approximately 60 days after the production kitchen opens for business. Meals on Wheels will provide working capital to the café, which will be paid back within the first year of operation. Once the café has paid this back and has accumulated four months of working capital in the bank, the café will pay 50% of all profits to Meals on Wheels, putting the remainder into growing the café business. Additionally, the café will pay overhead and general/administrative fees to Meals on Wheels based on industry standards. The Meals on Wheels Café will succeed due to the following key factors:

• The location of the café is the true competitive advantage – it’s easily accessible, faces the main road through the park, and there are no retail competitors within the isolated industrial park

• The shared usage of the production kitchen keeps inventory and production costs low • The reliability and consistency of the menu offerings due to the cook/chill process • The staffing model supports “good food fast” • The expertise and talent of the professional staff currently on board • The Meals on Wheels branding and reputation in the community and the added value of

proceeds benefiting homebound neighbors: 69% of potential customers surveyed said they would be more likely to eat at the café because the proceeds benefit Meals on Wheels

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2.0 Description of the Business

“There can be no more noble, important, or fundamentally good purpose for any program. The ever-increasing number of people being served by the organization is irrefutable evidence of Meals on Wheels’ indispensability. We have an obligation to grow it; it is our duty to expand our capabilities. This kitchen and the onsite café is the equivalent of a launching pad which will be a foundation for propelling Meals on Wheels beyond the limits of its past dependencies and into a new sphere of community service. That service is feeding people who need our help. It must be done.” Peter Habenicht, Meals on Wheels Board Member “Smart nonprofits are realizing that they must be more self-sustaining. They must creatively stretch themselves in new directions while not abandoning their mission.” Carolyn Cuthrell, Meals on Wheels Board Member Meals on Wheels The need for in-home services such as home delivered meals has grown dramatically over the past decade as the number of seniors continues to escalate. With health care no longer providing adequate recovery time in hospitals, families dispersed, and people living longer lives, many seniors need help to remain independent and in their own homes. In the greater Richmond area alone, demand for meals has tripled over the past eight years. To position itself to meet the growing need and to eliminate the waiting list for financial sponsorship, Meals on Wheels is building a central kitchen production facility. This will allow for a number of efficiencies as well as add value to the service. Kitchen production will use cook/chill technology, which preserves the freshness and nutrients of the food and produces very attractive, delicious meals. Cook/chill will also provide efficiencies in labor because of the increased shelf life of the product. The central kitchen will allow Meals on Wheels (now outsourcing food production to a for profit vendor) to use donated food and volunteer labor to reduce the cost of each meal. The board and staff are tremendously enthusiastic about launching the new café (appendix 6.1), particularly because of the use of food production assets already existing, the diversification of income generation, the creation of awareness of the Meals on Wheels mission, and the focus on a sustainable business operation. Vision and Mission Café Mission: To Serve Our Customers Good Food Fast in a Warm Friendly Environment Café Vision:

• To generate income that will support home delivered meal service to needy seniors and persons with disabilities

• To provide a warm and comfortable neighborhood café experience that also introduces customers to the mission of Meals on Wheels

Primary Objectives:

• To create a profitable business entity that will allow Meals on Wheels to become more financially self-sufficient and less reliant on outside sources to fund its programs

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• To develop awareness of the Meals on Wheels program in order to grow the volunteer and donor base

• To establish the Meals on Wheels Café as a retail success and an asset to the community Business Summary The Meals on Wheels Café is a start-up retail operation. The products sold will be breakfast sandwiches, bakery goods, juice and coffee for breakfast; sandwiches, soups, salads, blue-plate specials and sodas for lunch; and blue plate specials packaged as dinners for two or four, which include dessert. Catering will be made available for functions within the industrial park beginning in month three of year one (café and catering menus may be seen in appendix 3.1). The primary market will be the 3,000+ employees currently working in the industrial park. With the industrial development already taking place within the park, this market will grow to over 6,000 employees within three years. The closest real competition is over a mile away and requires transportation. Beyond that, driving five miles in any direction will take customers to a plethora of restaurant offerings. Two of the existing plants have in-house cafeterias, but a recent market survey (survey results in appendix 2.1) suggests that these cafeterias are underperforming and not popular with employees. More than one-half of employees surveyed bring their lunch from home on occasion. The location of the café in the industrial park is the true competitive advantage. The area is sprawling with one story manufacturing plants dispersed throughout. Upon driving into the park, the Meals on Wheels Café is immediately visible, positioned on the front corner of the main intersection. As previously indicated, employees must drive outside of the park to get to any restaurant or fast food facility. Anecdotally, a majority of people surveyed indicated they are frustrated with the lack of close lunchtime options and they would wholeheartedly welcome a new café. The target market for the lunch meal is the 29% of park employees who currently spend between $6 and $10 for lunch each day. These are primarily administrative and professional staff. The average transaction is projected to be $6.50 for lunch, and it is anticipated that 75% of customers will eat in and 25% will take out. Breakfast will be mostly take-out business from shift workers, administrative staff and delivery drivers, with an average transaction of $3.00. 60% of potential customers surveyed stated that they would take out breakfast on a regular basis. The dinners to go program is the most closely tied to the kitchen production because it is the same menu used for home delivered meal clients. Although starting small in projections, this is seen as a growth area for the café, and marketing will be aggressive in the first few years. 42% surveyed indicated that they would order dinners for two, and 25% stated that they would take out dinners for four. Objectives Focusing on quality, service and consistency, and aligning prices with the market’s willingness to pay, the Meals on Wheels Café projects becoming profitable almost immediately, with net profit margins beginning at 10% and growing to 18% in year 3. Sales are projected to be $266,227 in year 1 with net profit of $25,497 growing to about $122,000 in year 3. Profitability is due to two primary factors - the efficiencies provided by operating within a larger production facility and the strong interest of the target market in purchasing food from the cafe. It is

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anticipated that the café will pay unrelated business income taxes on its profits because of its external focus. The quality and consistency of the food will be a factor of the internal processes of the central kitchen. Cook/chill technology delivers high quality food consistently and reliably. The general manager and executive chef will ensure recipe adherence for quality and cost controls. The volunteer greeters at the café will add value to the customer’s visit and will act as advocates for the customer, ensuring that the visit is pleasant and eliciting feedback for future improvements. Variety will be built into the menu with daily soup and blue plate specials and weekly sandwich/salad specials to discourage boredom and encourage repeat business. Expertise Meals on Wheels’ core competencies lie in the efficient distribution of meals and the effective use of diverse groups of volunteers. The organization has been touted as one of the most efficient and most highly visible nonprofits in the central Virginia region. In fact, Meals on Wheels was recently recognized as one of the top brands in the area.1 Because Meals on Wheels has grown so rapidly over the past few years and has strengthened its infrastructure and fundraising ability as it grows, the agency’s management team has a reputation for good management and entrepreneurial thinking. The governing board is known as a strong visionary board. Although Meals on Wheels has formed an LLC, MOW Cooks, initially the café will be operated as a profit center of the central kitchen facility, with oversight by the board of directors. Fundraising equity from the central kitchen facility will be used to finance the structural and equipment needs of the café. Meals on Wheels will infuse the café with $35,000 in working capital (see attached cash flow statement), which will be paid back within the first year. The venture team leader of the café and the kitchen is the president of the organization, who has been a driving force for the need to build and expand the reach of the agency in the community. To fill in the gaps of food production and restaurant management, Meals on Wheels has added to its planning team two industry experts with many years of experience in start-up operations. Short bios of the management and planning team follow: Deborah L. Marsh, MBA, President Ms. Marsh has over twenty years of nonprofit management experience. In the nine years of her presidency at Meals on Wheels, she has raised funds to purchase the building where the agency is now located; doubled the geographic serving area; established an endowment fund; enhanced the agency’s income by instituting mass-mailing campaigns, municipal advocacy and creating two prominent annual fundraising events; created numerous programs to address clients’ special needs; and by coordinating with other nonprofits, has helped establish a more seamless structure for supporting the homebound members of our population. By judiciously choosing professional staff, outsourcing certain elements and expanding the scope of the Board of Directors, Ms. Marsh has gathered a powerhouse of talent that poises Meals on Wheels on the threshold of a new dimension of community service.

1The Richmond Business Journal - Inside Business – Vol. 8 No. 18, April 29, 2002

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Colleen T. Keller, R.D., Director of Nutrition Services Colleen developed and implements the medical nutrition therapy program at Meals on Wheels for homebound elderly, disabled and ill meal recipients at nutritional risk. She is responsible for management of food service and distribution activities, and has oversight of all specialized nutrition programs. She performs nutrition screening and assessment of meal recipients, creates monthly menus to accommodate several diets, writes grant proposals and assesses outcomes of the various nutrition programs. Colleen earned a Bachelor of Science in Dietetics from James Madison University and completed her post-graduate dietetic internship with the Medical College of Virginia. She is a respected adjunct faculty member at J. Sargeant Reynolds Community College where she teaches nutrition classes for nursing students. Morgen McElroy, Public Relations/Development Coordinator Morgen is Meals on Wheels’ link with print and broadcast media outlets. She works closely with the Meals on Wheels marketing agency to coordinate publicity for all special events and fundraisers. She has single-handedly planned and executed Hunger Strike, one of the agency’s leading fundraisers, and exceeded income expectations by acquiring sponsors and effectively managing fifty teams of fundraisers. Morgen edits the quarterly newsletter, Table Talk, and works closely with the agency’s president on grant applications and government advocacy activities. Morgen graduated from the University of Georgia with a Bachelor’s degree in Journalism. Eric W. Theile, Executive Chef Chef Theile is a highly sought-after advisor on process improvement and food quality at Chilled Prepared Food plants throughout the United States. He is an innovative professional with in-depth management experience in processing and packaging operations. He has a proven track record of producing consistent positive results in operation start-ups, restructuring, and process improvements. He has introduced and implemented concepts to companies such as the “Total Cycle Time Concept” and “High Care, Low Care” process flow, reducing production time and resulting in dramatic decreases in direct labor costs. Chef Theile earned a B. S. in Business Administration from Leeds University in England and holds a diploma in Hotel Management from the Swiss School of Hotel Management. He is an active member of the Research Chef’s Association and dedicated supporter of the mission of Meals on Wheels. Roger D. Neathawk, President, Neathawk Dubuque, Inc. Mr. Neathawk’s early career path as a pharmacist and hospital administrator led him through a number of increasingly responsible positions, culminating as Chief Executive Officer of Mary Immaculate Hospital, Newport News, Virginia. His lifelong interest in marketing led him to establish Neathawk Dubuque, Inc., a full-service marketing, advertising and public relations agency. Mr. Neathawk is well-known in the Richmond community for his philanthropic leadership supporting nonprofit and charitable organizations, most notably at Meals on Wheels (twice serving as Board Chair) and as Executive Director of Virginians for the Arts. He is the recipient of numerous honors, such as the Mid-Atlantic Marketer of the Year (1987), presented by the American Marketing Association. His education includes a Bachelor of Science (Pharmacy) from Medical College of Virginia and a Master of Science (Business) from Virginia Commonwealth University in Richmond, Virginia.

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Christopher J. Ripp, Vice President, The Restaurant Company Mr. Ripp is Vice President of The Restaurant Company, Richmond, Virginia, a local owner and operator of casual full service and quick casual restaurants. These restaurants include several Arby’s Restaurants and a Vie de France, which are some of the best regarded fast-food restaurants in the Richmond metropolitan area due to their varied and healthful menu selections. He holds a B.S. Double Concentration – Finance and Marketing from the University of Richmond and also an A.O.S. degree from the Culinary Institute of America. Mr. Ripp has extensive cooking experience at a variety of fine restaurants in New York and California. He has recently joined the Board of Meals on Wheels. Steve Ellison, MBA, Brooks Adams Research, LLC Mr. Ellison serves as Director of Research and Business Development for Brooks Adams Research and is responsible for the design, management, administration and implementation of all marketing research projects. His 10-plus years in the market research field provides the experience of well over 100 different research studies, to include market and product/service feasibility studies, product/service improvement and customer satisfaction and tracking programs. Mr. Ellison is a magna cum laude graduate of Southwest Missouri State University, with a double major in Market Research and Marketing Management. He earned a Master’s in Business Administration from Virginia Commonwealth University in Richmond, Virginia. 3.0 Industry and Market Analysis

Industry Overview The “quick service” restaurant industry is experiencing explosive growth at present—this is the 12th consecutive year of real growth in the restaurant industry nationwide.2 More people are eating out than ever before; over 54 billion meals were eaten in restaurants and school and work cafeterias in 2002 and that number continues to grow.3 Quick service restaurants are filling a variety of niches for consumers, offering ready to eat and ready to heat foods packaged for “on the go” consumption. Three of the top ten trends in 2003 were heat and eat foods, retro nutrition (no added sugar, low fat, more dietary fiber, low in calories), and casual indulgence—the sense that everyday foods should be a little more gourmet; for example, new entrée salads featuring nuts and fruits, and fancier sauces on sandwiches.4 Concern over the rise of obesity in America accompanied by the need for good food quickly in today’s fast-paced society has changed what consumers want from a quick service restaurant. 5 This is reflected in the rise of innovations such as the “fresh” fully cooked, seasoned, ready-to-eat value added products offered by national grocery stores, the rise of Subway chains, and newly added curbside service windows at traditional full service restaurants like Applebee’s and Outback Steakhouse. Locally, restaurant sales are expected to increase 5% this year in Virginia.6 The Meals on Wheels Cafe will be positioned as a quick service “lifestyle friendly” restaurant targeting a specific niche of captive customers in the industrial park area. Increasing media and regulatory scrutiny about 2 Quick service (fast food) sales are projected to increase 4.1% in 2003, with sales totaling $120.9 billion—up $4.8 billion from 2002 (National Restaurant Association 2003 Restaurant Industry Forecast) 3 Restaurant.com 4 Foodtechnology Sept 2003, vol 57, #9 5 A survey of “What America Eats” in Parade magazine reports that consumers want foods that are not merely convenient, but “tastier, healthier, easier, and faster” 6 National Restaurant Association 2003 Restaurant Industry Forecast

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portion sizes and fat content is swaying consumers away from fast food and toward alternative choices that can be delivered quickly, including specials that aren’t fried and made-to-order sandwiches that can be customized for the customer. The primary key to Meals on Wheels’ success will be producing great-tasting food rapidly with personable service. The second will be that there is no comparable facility located within the industrial exchange. Restaurant Industry Entry Barriers

• Typically low profit margins—8% or less • High start-up and capital costs • High employee turnover—restaurant hours can be grueling for the average person,

including long hours, late nights, and weekends • High levels of competition both in number and variety • Location is vital to customer traffic

Entry Success Factors for the Meals on Wheels Café • Location. The Meals on Wheels Café will be the only restaurant of its type in the

industrial park, with a captive audience of 3,000 which will grow to 6,000 employees in the first three years. Restrictive zoning requirements limit entry of competitors.7

• Capital costs low, no debt burden: Because the café is a small part of a large production facility, capital costs are relatively minor and include only equipment and furnishings. Fundraising equity will be used for structural costs and equipment, and Meals on Wheels will provide the initial infusion of cash for operations.

• Higher margins due to cost advantages of larger production facility. • Lower employee turnover than industry averages due to favorable hours—no weekend or

evening work—competitive pay, a positive work environment with the “feel good” aspect of working for a nonprofit accompanied by high importance placed on employee satisfaction.

• Targeted use of volunteer labor—volunteers working as “customer advocates” in the café will serve as a cost-saving measure as well as a constant way to measure customer satisfaction and elicit customer feedback.

• Target market is a large and captive audience with limited restaurant options within a convenient travel distance; market research has indicated a high interest and likelihood to purchase goods.

Environment The Meals on Wheels Café will be located in south Richmond, 1.5 miles off of I-95S in the Appomattox Industrial Park off Ruffin Mill Road, a major industrial exchange. The actual site will be positioned at the entrance of Appomattox Industrial Park, easily accessible for all the businesses present. This specific locale and the surrounding areas are primarily industrial and the plant location of several national businesses (Hill Phoenix, Honeywell) and some smaller sales offices (TechnoBrands, Physician Sales and Service). Growth of the park will double in the

7Chesterfield County Code of Ordinance: “Retail sale of goods and articles manufactured or assembled by a permitted use shall be permitted, provided the salesroom for any one establishment does not exceed a gross floor area of 30% of the gross floor area of the establishment up to a maximum of 2,000 gross square feet per establishment.”

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next three years with the placement of new businesses and a Mitsubishi plant that will become the largest employer in the park. The industrial exchange employs a third of Colonial Heights’ civilian labor force—3,100 people out of 9,071.8 South Richmond, the city of Colonial Heights in particular, is expanding--becoming a good location for businesses because of an abundance of land and its close proximity to the city. Restaurateur Chris Ripp, owner of 18 Arby’s franchises in Richmond and surrounding counties, reports the store in Colonial Heights as having the lowest employee turnover with the most productive staff.

Competitors 1) Competition--Bringing lunch from home: 60% of those surveyed reported bringing lunch from home on occasion. These same respondents also indicated that they would be interested in frequenting the café as many as four times per week. Meals on Wheels Café competes by empowering people to vary their routine. Competitively-priced food that accommodates most lifestyle diet needs within walking distance gives people a choice of what to do for their meal while allowing for spontaneous decision making. Selling Point: Lunch from home unappealing? No time to pack one in the morning? Let’s walk to the café because we know we can all get something we like. 2) Competition--On-site cafeterias and vending machines: The largest employers in the park, Hill Phoenix and Armkel, contain cafeterias within their facilities. 1.3% of those surveyed reported using the cafeterias. Vending machines were common within the other facilities surveyed. Meals on Wheels Café competes by offering an assorted menu to please a wide range of appetites. Aggressive menu rotation, usage of fresh ingredients, and made-to-order menu items are distinct advantages over cafeteria food or vending machines. In a recent Hill Phoenix conducted survey of the company’s cafeteria, employees reported being highly dissatisfied with the food presented to them.9 Vending machines are common within the other facilities surveyed, but offer limited selection and for the most part, unhealthy choices (processed snack foods, sodas, pre-packaged sandwiches). The food offered at the Meals on Wheels Cafe will be better quality than cafeteria fare or vending services can provide. 3) Competition--Fast food restaurants: All three of the survey respondents most cited establishments are located 1.5 miles from the industrial park, and are only accessible by car. Subway’s made-to-order freshness, low-fat offerings, and reasonable cost have made it popular as the nation’s fastest growing chain. McDonald’s inexpensive menu and quick service have made it a dependable and hearty option. WaWa, with made to order sandwiches as well as pre-packaged fare, is quick and basically self-serve, offering a mix of fruit, vegetables, and heartier sandwiches.

8 Colonial Heights Chamber of Commerce, 1999 9 Verbally per Human Resources Manager at Hill Phoenix

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Meals on Wheels Café competes by proximity and variety. A two-minute drive and convenient walk from anywhere in the park (only two to five minutes for employees of Sun Chemical, Timberland, and Armkel), the café is more accessible for all employees of the park and can offer a variety of freshly made soups, salads, sandwiches and hot entrees, rather than pre-packaged or high fat lunch items. Anecdotal evidence from speaking with employees at the companies surveyed highlighted the notion that more choices are strongly desired and people have grown tired of the surrounding eateries. 4) Competition--Full service restaurants: A strip of restaurants located 5 miles from the park on Jefferson Davis Highway contains two major grocery stores and a range of traditional full service restaurants in a medium-sized thoroughfare. Meals on Wheels Café competes by proximity, price, menu rotation, immediacy. Traveling the two-lane road at lunch hour is a time-consuming hindrance for those visiting the full service restaurants. The café is closer to those working in the industrial park and is priced lower than a typical sit-down lunch from a full service restaurant. Retaining an on-site dietitian means that the café can implement special menus immediately and make menu changes based on customer feedback quickly. Because the café does not have to operate according to corporate guidelines as many chain restaurants and franchises do, Atkins-friendly, heart-healthy, diabetic, low-fat, low-sodium offerings can be added or subtracted to the menu based on the market. The ability to be creative and flexible and respond quickly to customer needs sets the Meals on Wheels Café apart. Meals on Wheels has a solid reputation in the community based on the integrity of its mission and the proven good work the agency performs on a regular basis. The café will offer good meals quickly and at a reasonable cost, while offering customers the associated good feelings of supporting the Meals on Wheels mission. Meals on Wheels will position itself as a caring member of its new community and an advocate of good nutrition. A whopping 69% surveyed responded that they would be more likely to use the café because it is associated with Meals on Wheels. 3.1 Market Analysis Customer proximity is a key success variable for the Meals on Wheels Café. Over three hundred park workers must pass by the café entering and exiting work, and the café faces the main thoroughfare of the industrial park. Drive time from anywhere in the park is less than two minutes, and for those who must pass by (Sun Chemical, Armkel, Blueprint Automation, Marva Maid, Linens of the Week, Timberland) it is a short five-minute walk to the café. Thirty-eight spaces have been marked for café parking; however customers are able to park along the street if necessary.

Survey Results Meals on Wheels surveyed the employees of the major businesses located within the park to determine their interest and potential use of the café. The survey was a four-page written

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document (appendix 1.1) and was created by a team of experts from Neathawk-Dubuque Advertising and Public Relations and Brooks Adams Research.10 One-on-one contact and the written responses (appendix 2.1) revealed that employees of the park desire the same thing regardless of age, sex, income level, or job title: an assortment of good food, multiple meal options, reasonably priced items served quickly, and convenience. Meals on Wheels’ repeat business success will lie in the following

• Exceeding customer expectations • Warm and friendly service • Appropriate pricing • Good presentation of product • Variety and rotation of menu items • General belief in the Meals on Wheels brand by the customer

Benefits The Meals on Wheels Café will offer local employees an alternative venue for dining before, during, and after work. Currently employees go to the nearby McDonald’s or Subway restaurant on their lunch break, or bring their meal and eat in. The café will be close and it will be affordable. The average price of a complete lunch with drink is $6.50, which is higher than a Subway or McDonald’s meal but significantly less than restaurant or more gourmet fare. The café will also offer a variety of menu items, providing a change from fast-food hamburgers and sub sandwiches. The food options the café will serve fit in with any lifestyle—whether it is the more calorie-conscious consumer or the hardworking laborer who wants something hot and hearty. The café will also offer dinner carry-out services, which will provide employees the additional option of taking prepared food home at the end of their workday. Benefits of using the Meals on Wheels Café are not limited to food. As mentioned earlier, survey respondents indicate that they were more likely to visit the café because it assists the Meals on Wheels mission. This is an additional “feel-good factor” that benefits the consumer. The diversity of the potential customer base also presents the opportunity for further volunteer education and recruitment beginning at the café. This is an asset to café marketing activities and the Meals on Wheels Café will aggressively position itself accordingly.

Primary Segments Sixty percent of those surveyed are between the ages of 25-44, indicating most of the prime market falls in this age range, which is important to note in terms of their likes and dislikes. Their desire for fresh, healthful food at a reasonable cost correlates well with the projected menu of the café. The café has the following customer segments: • Shift Workers Shift workers desire good food fast for a price that fits their budget. Having only 20-30 minutes for a lunch break and comprised of more males than females, shift workers will benefit from the 10 Meals on Wheels employees hand-delivered surveys to each company that was willing to participate, including a return envelope for completed surveys. Surveys were distributed in-house and kept anonymous. One hundred sixty completed surveys were returned from 475 distributed to 12 of the 16 companies Meals on Wheels collected data from, a return rate of 34%, with an error margin of approximately +/- 7.7%.

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speed and efficacy of the café and will be a prime market for breakfast and blue plate specials at lunch.

• Administrative Staff Administrative staff have indicted that they desire quality, atmosphere, and a break from their desk. Typical arrival time of administrative workers is 7:30 a.m. (Armkel, Fiorucci), corresponding with the shift schedule and “early to rise” mentality of the workforce of Colonial Heights. These workers range from management to the administrative assistants, salaried employees that remain on site for the entire day with an hour for lunch. “Brown-bagging it” (60% surveyed) is common for this group, and often lunch is eaten at one’s desk.

• Delivery Drivers Delivery drivers need speed. The businesses within the park are primarily distribution and manufacturing companies, which means that outside suppliers and truck drivers will frequent the park on a regular basis, as will service providers such as UPS, USPS, and FedEx. Twenty-five providers are currently under contract with the park. These employees are likely prospects for the café, as one or several will be inside the exchange every day. Having limited time for lunch makes them excellent candidates for quick-serve goods able to be picked up and paid for quickly. The convenience and quality of the café’s breakfast and lunch services will be the primary benefit for delivery drivers, as well as the chance to leave their vehicle without disturbing a tight schedule.

• Volunteers and Employees Volunteers and employees want a good meal at a reasonable cost. The central kitchen facility will utilize a volunteer base of more than 500 volunteers and will employ 30 workers onsite. Volunteers and employees are a loyal and captive market that already have a tie-in to Meals on Wheels and have little else to choose from at peak meal times when they are already hungry during and after their work period.

Product (Meal) Options

Breakfast Survey respondents indicated that if breakfast was served, they would be interested in either ordering breakfast take-out items (60.6%) or eating in (30%). The average breakfast meal will include a breakfast sandwich and beverage for $3.00—comparable to any other offering in or out of the park. Primary customer base: • Shift workers • Administrative Staff • Delivery Drivers

Lunch Survey respondents indicated that 29% of those surveyed currently pay $6-$10 for lunch. In an industrial park of 3,000, 29% translates into 870 people. Meals on Wheels will capture 10% of the appropriate market, or 87 people per day. The goal of Meals on Wheels Café is to reach and maintain 10% market penetration as the employee base of the park doubles in size. Primary customer base:

• Administrative Staff

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• Delivery Drivers • Volunteers • Meals on Wheels Staff

Dinners to Go Dinners to Go has proven to be a highly successful concept for local Ukrop’s supermarkets, a hugely prominent local chain that uses cook/chill technology. The Dinners to Go concept blends healthful fare with convenience, packaging a main dish with a side in a manageable Dinner for Two or Dinner for Four size. The meal is not frozen, so freshness is evident yet preparation time for the consumer is reduced. Meals on Wheels will use this same concept with items produced at the kitchen. Cost of production for Dinners to Go is extremely low, thanks to efficiencies in production—the meal offered for the evening will be what was produced in the kitchen that day. Dinners can be packaged in a cost-efficient way with no wasting of food, time, or energy, and special dishes can be offered as well to reflect popular needs (high protein, low-fat, etc). 42% of those surveyed indicated that they would purchase Dinners for Two and 25% indicated they would purchase Dinners for Four. A major shift change at 3 p.m. provides the perfect opportunity for customers to leave work and stop by the café to pick up a flavorful dinner for themselves and/or their family. Marketing efforts for Dinners to Go include providing front-desk operators at the top seven companies with a free Dinner to Go at a specified time, offering delivery of a group of Dinners to Go as incentive to purchase, special coupons offering discounts on Dinners to Go, and emphasizing the ease and simplicity of purchasing Dinner to Go for the customer in all marketing materials. Marketing will include 10%-15% of the marketing representative’s time spent fostering relationships within the park and helping to drive sales of Dinners to Go. Primary customer base:

• Shift workers • Administrative staff

Corporate Catering Catering for business functions within the industrial park will be available on or off site in month three. Corporate catering will be an option for birthday parties, client meetings, group meetings, and other gatherings of 10+ people. A great way to boost relationships with HR managers and departments throughout the park, the café will work closely with targeted company representatives to try the food and hear about the catering services available. Primary customer base:

• Administrative staff

4.0 Marketing Plan

Primary Target Market Three thousand people currently work within the exchange. In its first year of operation, Meals on Wheels will have secured 10% of the lunch market, or 87 customers per day. Breakfast targets are based on securing the 60% of the market that indicated they would take out items from the café (30% also indicated they would eat in) to come to the café once per week (48 people per

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Product Sales Estimation

Breakfast

Lunch

Catering

Dinners to Go

day). Dinner goals are based on obtaining 5% of the 42% of those surveyed that indicated they would purchase dinners for two and 5% of the 25% indicating they would purchase dinners for four (65 and 40 people per week respectively). This will grow from 290 meals per week to 750 meals per week in year three. Additionally, catering will grow to 30% of sales by year three of operation with the addition of a catering manager in year two who will market one-on-one to key decision makers of companies in the industrial park. Value to Consumers:

• New dining option for workers in and around the industrial park • Convenient location—will save time for time-sensitive workers on break who can either

dine in or take out • More variety including healthier alternatives to traditional fast food • Opportunity for food all day, including breakfast and dinner • Opportunity to pick up prepared food on the way home from work without leaving park • Prospect for Meals on Wheels to be “good neighbor” in community; advocating good

nutrition and unity within the industrial park

Pricing The Meals on Wheels Café will price its menu to average $3.00 per meal for breakfast, $6.50 per meal for lunch, $9.75 for dinners for two and $18.50 for dinners for four. These figures were reached by examining what customers pay for their meals now, what they are willing to pay, what the closest competitors charge, and projected food and labor costs to ensure adequate margins.

Distribution The main distribution method for the café will be onsite—serving food to the estimated 75% of customers who will eat on the premises or the estimated 25% that will carry-out food to take home or back to work. Meals on Wheels may also offer delivery within the park (after the first year of operation) and will explore the feasibility of using a meal cart to move throughout the park to reach a new market of customers in shift workers, laborers, and truck drivers that cannot leave their sites. Customer service is an integral part of building repeat business and increasing positive word of mouth. The good name and warm feelings associated with Meals on Wheels as an agency are imperative in the customer service consumers experience at the café. This means café workers will be educated in the Meals on Wheels mission, and be able to answer questions and give thoughtful comments regarding the agency. Friendliness, speed, and an ability to work well with all types of people are of the utmost necessity. Volunteers will serve as customer advocates and will be on the floor talking to customers, eliciting feedback, and taking care of customer needs. Word of mouth will ultimately be the most effective communication tool for the café, and

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customer service is a major component in receiving the positive person-to-person communication Meals on Wheels desires. Communication/PR Strategy

Pre-opening gala—VIP event Meals on Wheels will hold a pre-opening event for board members, staff, media, local CEOs, significant donors, local chefs and other special invitees. Free samples of specific items will be offered. A media sponsor will be secured for the pre-opening event, and a member of local broadcast media will serve as emcee. The VIP event will serve to drive interest in the café and reward persons who have been crucial to the kitchen/café process. Visitors can begin spreading good word-of-mouth throughout the community.

Soft Opening Expert industry insiders advise starting slowly, wowing every customer and building rapport. 11 Critical mass is certainly present to enjoy the café before it is fully open to the public, and employees of the park will be able to enjoy their dining experience while the café optimizes performance and flow. Customers can have a VIP-type or “sneak preview” experience before the grand opening, adding to the sense of being a valued customer, while the staff of the café works to establish relationships with the target market. Invitations will be sent luring customers to the preview opening, as well as emphasizing what is in store at the grand opening.

Public Grand Opening Two weeks after the café is open, Meals on Wheels will hold a grand opening for the public. Delay is due to the sense that the café must be operating smoothly in order to best serve the entire population. A grand-opening coupon or discount to entice people to come try the café will be offered again and on a wider scale—offering a “bring a friend” promotion or group discount to help drive numbers higher. Opportunity for more fanfare surrounding the grand opening exists, such as a radio remote or live television coverage. The grand opening will include a formal ribbon-cutting ceremony and media campaign.

Announcing the café: Plans for announcing the opening of the cafe include:

• Posting flyers at all the companies in park • Flyers posted on vehicles in parking lots (if allowed) with coupon included • Hanging a large banner on the building to show the café is open • Announcement in company newsletters • Media releases and public service announcements

Other communications efforts may include: • Securing endorsements from clients or other influencers • Developing a cause-related message to use in ongoing promotions • Offering naming/sponsorship opportunities for menu items (the “Hill Phoenix club

sandwich”) Word of mouth will be highly important in the marketing and communication of the café. Budget for expensive print ads or broadcast media is limited, and considered unnecessary as the reach of

11 Christopher J. Ripp, Vice President, The Restaurant Company and Christina Wooldridge, MBA student, Yale School of Management.

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the café is initially small in scope (limited to industrial park). Meals on Wheels will rely on person-to-person contact to issue the message that the food is good and affordable, which in turn reinforces the grassroots “neighbor helping neighbor” motto the Richmond agency was based on in 1967. Face-to-face sales and relationship marketing will be vital in retaining customers and repeat business.

Research and Development Boredom is lethal for sales in the restaurant industry. Keeping abreast of trends and popular consumer culture is important to remain current and successful. Customer retention will be maximized by offering variety, using a group of core items, daily soup specials, daily blue plate special, weekly sandwich special, and a menu rotation that will counteract boredom—all of which will be obtained by honed focus and measurement of customer feedback. The executive chef in charge of start-up will return periodically to perform business audits and product development. New products will be tested on the volunteer and client base with the chance for feedback from both groups. Successful menu items will be retained and new ones incorporated to find a balance between the two. A suggestion box and/or comment cards will be posted in the café to give customers a chance to voice opinions on menu offerings. Volunteers working as customer advocates will ask patrons for input, soliciting periodic feedback after customers have finished their meal. This adds to the feeling that the Meals on Wheels Café is a caring neighborhood establishment, respecting customer feedback, and enhancing the feeling of ownership for everyone in the park. The most important aspect of the Meals on Wheels Café research and development is the recruitment of industrial park employees from the top seven companies to serve as a special advisory council/panel that will meet regularly to evaluate new dishes, report on satisfaction with food items and service, and make recommendations. Suggested offerings may be used as weekly or daily specials in the café to register popularity of each item. A customer tracking mechanism (being researched now) through the computerized cash register will capture who is visiting from what company and how often. The results will be posted and used to encourage friendly competition and communication among businesses, e.g. “Blueprint Automation visited the café 55 times this month, providing 69 meals for client Sally Smith. Thank you Blueprint Automation”.

Marketing Milestones Following up with customers will be a constant. Quarterly meetings/tastings with the assembled panel of park employees will be scheduled, as well as quarterly check-ins with MOW Café employees and volunteers in order to obtain performance feedback.

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5.0 Management Plan Business Expertise An executive chef, Eric Theile, with more than 25 years of experience in the food service industry, has been hired to start-up the kitchen and set up the processes that support the café. The general manager will be responsible for starting up the café business under the guidance of the executive chef. Chef Theile’s resume may be seen in appendix 5.1. Chef Theile is an innovative, results-oriented professional with in-depth management experience in processing and packaging with a proven track record of producing consistent positive results in operation start-ups, restructuring, and process improvements. Also assisting in the start-up (pro-bono) is Chris Ripp, MOW Board Member and Vice President of The Restaurant Company. Business Management The general manager will be ultimately responsible for all functions of the Meals on Wheels Café, to include guest relations, management, supervision of all staff and staffing levels, ordering and fulfillment of supplies, quality of food and beverage, housekeeping safety and pace. The general manager will have financial responsibility for food costs, labor costs and operating expenses. Three candidates are already under consideration for the general manager position. The ideal candidate will be someone with retail experience and a proven track record of operating a large production facility at a high standard of efficiency and profit. The ideal candidate will possess management experience in cook-chill processes and the production/assembly of chilled prepared food. He or she will have knowledge of nutrition and diet with menu planning experience. The candidate must be computer literate and be able to calculate food and labor costs quickly and accurately. He or she must have a good understanding of people and have the ability to motivate employees to do their best. A brief description of one of the potential candidates is as follows: Candidate A is from the Richmond area and is in her mid to late thirties. She has an extremely good leadership manner and would relate well with the proposed volunteer worker base. She has worked as a catering manager for a downtown caterer and as a line and departmental supervisor for a locally owned central kitchen, and was responsible for measuring labor productivity and setting the production standards to be used in production programs. For the last three years, she has worked as an assistant production manager with daily management control of equipment and labor scheduling. The general manager will manage all central kitchen operations including supervision of the café and will report directly to the Meals on Wheels president. He or she will be the “big picture” thinker who will provide continuity between the kitchen and café staff. She will supervise and coordinate activities concerning all kitchen/café operations and personnel, including food preparation, kitchen and storeroom areas. She will hire, discharge, train, and evaluate kitchen personnel. She will work with the Meals on Wheels marketing coordinator to develop marketing strategy and to implement advertising and promotional campaigns to increase business. The general manager will review financial transactions and monitor budgets and financial statements to ensure efficient operations and to ensure expenditures stay within budget limitations.

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The sous chef will be second in command to the general manager and will be responsible for the physical aspects of the central kitchen operation, including supervision of food production and kitchen personnel. The sous chef will coordinate with personnel from the café and catering team to plan menus and related activities. The ideal candidate will be a professionally trained chef with exceptional people skills due to the unique nature of the work and the high volume of volunteers. A brief description of one of the potential candidates is as follows: Candidate A is a Raleigh-based professionally trained chef with more than 10 years experience in quantity food production. He has a strong work ethic and culinary skills. He has worked with a major airline caterer and is very accustomed to bulk production of high quality meals, similar to the proposed Meals on Wheels menu. The catering manager will be responsible for all catered functions from origination to execution, including the delegation of responsibilities. He or she will be generating new business and will maintain contact with existing accounts. The catering manager’s time will be split between overseeing the fulfillment of catering orders and marketing the business to optimize profits and increase sales. The qualified applicant will possess knowledge of food production and service and have a minimum of two years working in catering. Key traits include strong customer service and communication skills, and a strong attention to detail. Café management and staff will be part of Meals on Wheels and will have the same salary ranges, benefits, and evaluation process as all other staff. Café staff will report to the general manager who will report to the president of Meals on Wheels. The general manager is peer to director level job positions, all of whom report to the president. Final decisions regarding the café operations will be made by the president in conjunction with the general manager. Weekly management meetings will keep the president abreast of business operations. Meals on Wheels has a strong board comprised of community-minded persons representing a wide cross-section of businesses and organizations in the area offering leadership and a checks-and-balances system on the agency. The board does not make operating decisions but sets policies and provides general oversight for the organization. Members of the governing board are recruited for their expertise and corporate affiliation. Current members of the board include foodservice industry experts and Meals on Wheels will continue to recruit experts to add depth in this area. The current governing board will govern the café as well as the overall nonprofit agency. Board and staff support for the café project is strong and may be seen in appendix 6.1. In addition to competitive salaries and benefit packages, management will be provided with continuing education opportunities such as conferences and seminars. Meals on Wheels currently has an incentive/bonus system and will provide this in some form to management of the café and kitchen.

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Business Organizational Chart Café Within Meals on Wheels Agency

Personnel Labor hours and staff needed in years 1, 2 and 3 is as follows: Staff Year 1 Year 2 Year 3 Hours/week Hours/week Hours/week General Manager 6 6 6 Sous Chef 4 4 4 Packaging/Dispatch Manager 2 2 2 Catering Manager 40 40 Assistant Café Manager 40 40 40 Morning Supervisor 40 40 40 Counter Worker A 15 15 15 Counter Worker B 30 30 30 Counter Worker C 20 20 20 Counter Worker D 20 20 20 Counter Worker E 20 20 Counter Worker F 20 Counter Worker G 40 Greeter 1 10 10 10 Greeter 2 10 10 10 Total hrs/wk 197 257 317

Board of Directors

President

Director of Development

Director of Client

Services General Manager

Director of Volunteer Resources

Director of Nutrition Services

Chief Financial Officer

Catering Manager Sous Chef

Café Asst Manager Lead Cook

Cook

Receiving/Sanitation

Packaging/Dispatch

Drivers (2)

Morning Supervisor

Human Resources Manager

PR/ Marketing Manager

PT Counter Workers

Executive Chef

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Personnel Job Functions The assistant manager will arrive for work at 8:30 a.m. His or her primary responsibilities will be to provide overall management duties, handling the cash drawer and balancing at end of shifts, and closing the café at the end of business. The qualified applicant will have a high school diploma and 3 years previous management experience working in a quick service food service environment. This position requires strong customer service and communications skills, a positive attitude and the ability to keep calm and handle fast paced business. The morning supervisor will arrive for work at 5:30 a.m. to prepare the café for opening at 6:00 a.m. He/she will work in the front of the house and be in charge of running the cash register and taking orders until their shift ends at 1:30. Responsibilities also include cleaning work areas and equipment. The qualified applicant will have a high school diploma and previous experience working in a quick service food service environment. Strong customer service and communications skills will be required, as will a positive attitude and the ability to keep calm and handle fast paced business. Counter workers will be cross-trained. Front of the house responsibilities include greeting customers, taking food and beverage orders, ringing orders into register, and collecting payment and making change. Back of the house responsibilities include preparing & packaging food for eat in or take out and cleaning work areas and equipment. Qualifications include a high school diploma and previous experience working in a quick service food service environment. Strong customer service and communications skills will be required, as will a positive attitude and the ability to keep calm and handle fast paced business. Café greeters will provide support in the overall upkeep of the Meals on Wheels Café. This will include ensuring that all supplies are maintained and restocked, and keeping the café neat and presentable to the public. Hospitality will be a key part of their job – as getting to know customers and making them feel welcome will lead to a loyal customer base. Volunteers in this position will be chosen based on their positive, upbeat attitude and desire to provide customer service. Likely candidates for this position may include retired senior citizens, stay-at-home parents, and local college students. Employee Training In addition to the orientation and training programs, all employees will receive proper food-safety training. Experience serving vulnerable seniors has made Meals on Wheels very conscientious about food safety. The staff dietitian is ServSafe certified by the National Restaurant Association. She will attend a 'train-the-trainer' program to train the rest of the staff. The assistant manager will train new employees on each job in the café and the food-safety procedures that accompany them. Food safety will be written into the operations procedures for every product, and will be an integral part of how employee performance is evaluated. Management will use checklists to make sure employees are performing up to standards in each position. The café will have a HACCP plan in place, and management is responsible for making sure that employees follow policies and procedures and monitor critical control points. Personnel Benefits Competitive salaries and benefits will be offered. Meals on Wheels provides full-time employees with health insurance for which the company pays 75% of the premium, a 403B retirement plan

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for which the company will match 50% for every dollar employees contribute up to 2% of salary, life and disability insurance, optional dental insurance, paid vacation and six paid holidays. For hourly rates by position, see chart below.

Position Morning

Supervisor Café

Worker A Café

Worker B Assistant Manager

Café Worker C

Café Worker D

Status FT PT PT FT PT PT Rate $8.50/hr $7.50/hr $7.50/hr $9.50/hr $7.50/hr $7.50/hr Benefits yes no no yes no no Schedule 5:30 - 1:30 6:00-9:00 6:30-1:00 8:30-4:30 11:00-3:00 11:30-3:30 Paid hrs/day 7.5 3 6 7.5 4 4 Recruitment and Compensation Job openings for chefs, cooks and food preparation workers are expected to be plentiful through 2010, primarily reflecting substantial turnover in this occupation. Compensation rates are based on the current rates in Colonial Heights. Unemployment is higher and wage standards are lower in this area12. The employment turnover rate in Colonial Heights is expected to be much lower than the industry average of 100% for hourly employees in Limited Service Restaurants13. Discussions with the area manager for Arby’s Restaurant in Colonial Heights indicate that they have more applicants than positions and offered to provide Meals on Wheels with their overflow of qualified applicants if needed. Retaining good employees is not expected to be significant due to the variety of benefits that working in the café will offer including the following:

• Favorable hours (6 a.m.- 4 p.m.) excluding nights and weekends • Market rate for salary or above • Work under qualified managers who will regularly check-in on employee satisfaction • Flexible hours • Part of a larger entity with resources • Employees will know that their work is making a difference in their community

6.0 Operations Plan Facilities and Offices The Meals on Wheels Café will be 1,800 square feet. It is located on the front corner of the 40,000 square foot central kitchen facility. The café will seat 42 customers inside and 16 customers outside. New equipment and dining room furnishings will be purchased and installed by the general contractor. Parking consists of 82 spaces, 38 of which are parking spaces for the retail café. Two to three of the café spaces will be designated for “Pick-Up” orders. A basic drawing of the café layout is below. Refer to appendix 4.1 for an internal rendering of the Meals on Wheels Café and an external rendering of the central kitchen facility and to appendix 8.1 for floor plan scale and equipment layout.

12 Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2002-03 Edition, Chefs, Cooks, and Food Preparation Workers 13 2003Restaurant Industry Operations Report: National Restaurant Association

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Café Illustration

Daily Employee Schedule Year 1*:

Schedule Morning

Supervisor Counter

Worker A Counter

Worker B Assistant Manager

Counter Worker C

Counter Worker D

5:30-6:00 open 6:00-6:30 order/cash fill orders 6:30-7:00 order/cash fill orders fill orders 7:00-7:30 order/cash fill orders fill orders 7:30-8:00 order/cash fill orders fill orders 8:00-8:30 order/cash fill orders fill orders 8:30-9:00 order/cash fill orders fill orders prep/mgmt 9:00-9:30 order/cash lunch prep prep/mgmt 9:30-10:00 BREAK lunch prep prep/mgmt 10:00-10:30 order/cash lunch prep prep/mgmt 10:30-11:00 order/cash BREAK prep/mgmt 11:00-11:30 order/cash lunch prep BREAK fill orders 11:30-12:00 order/cash lunch prep open reg 2 fill orders fill orders 12:00-12:30 order/cash fill orders order/mgmt fill orders fill orders 12:30-1:00 order/cash fill orders order/mgmt fill orders fill orders 1:00-1:30 order/cash close reg 1 fill orders fill orders 1:30-2:00 order/mgmt b’fast prep b’fast prep 2:00-2:30 order/mgmt b’fast prep b’fast prep 2:30-3:00 order/mgmt b’fast prep b’fast prep 3:00-3:30 order/mgmt b’fast prep 3:30-4:00 order/mgmt 4:00-4:30 close *Additional Staff Year 2: An additional part-time counter worker will be hired for lunch business Year 3: An additional FT counter worker will be hired who will cover both the breakfast and lunch peak shifts. An additional part-time counter worker will be hired to work the lunch shift.

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Capacity The total number of meals forecasted for the café by year three is approximately 93,925. The total number of meals projected to be served by Meals on Wheels over the course of the same year is 500,000. The Meals on Wheels Central Kitchen facility has a production capacity of three million meals per year. Capacity at breakfast is limited to current staffing, based on 2.5 minutes spent on each customer. If goal of 90 seconds to 2 minutes per customer is reached, more customers could be served with the same staff. Seating is not expected to be a limiting factor at breakfast due to an estimated take out rate of 85%. Capacity at lunch is limited to seating availability. Parking and staffing allow for additional customers as take-out only. Capacity Per Hour Meal Year 1 Year 2 Year 3 Breakfast Peak Projected # meals/day 48 53 58

6:30-8:00 # of cashiers/order takers 1 1 2 85% take out # food preparation personnel 2 2 2

Cashier Staffinga utilization factor p 0.80 0.88 0.48* Food Prep Staffinga utilization factor p 0.60 0.66 0.73 Seating bad weatherb 58 58 58

Seating warm weatherc 82 82 82 Parkinge (# customers) 210 210 210 Lunch Peak Projected # meals/day 87 130 174

12:00-1:30 # of cashiers/order takers 2 2 3 25% take out # food preparation personnel 3 4 5

Cashier Staffinga utilization factor p 0.73 0.81 0.83** Food Prep Staffinga utilization factor p 0.73 0.81 0.87 Seating bad weatherb 58 58 58

Seating warm weatherc 82 82 82 Parkingd (# customers) 96 96 96 Dinners to Go Projected # dinners for two/day 13 26 39

2:30-4:00 Projected # dinners for four/day 8 12 18 Peak time Projected # dinners/day 21 38 57

# Cashiers 1 1 2 Cashier Staffing utilization factor p 0.35 0.63 0.48 Assumptions: aStaffing: based on total service time of 2.5 minutes (i.e. cashier service time of 60 seconds and food preparation time of 90 seconds). bcSeating: based on 70% utilization (i.e., a group of two will sit at a four-top) of 42 inside and 16 outside seats with a table turnover rate average of 30 minutes. dLunch Parking (peak hrs): based on 38 parking spaces with a turnover rate of 30 min. and 25% of cars occupying 2 people. eBreakfast Parking (peak hrs): based on 70 parking spaces with the assumption that office staff will not arrive at work before 8:30am, and a turnover rate of 15 minutes. *An additional cash register is available if necessary. A food preparation person could be transferred to order taker/cashier as needed. **If volume continues, another capital investment for an additional cash register will be needed – this is not reflected in budget.

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Production/Service Delivery

• When customers enter the café, they will be greeted by a volunteer who will smile and say

hello. The menu will be posted in large print behind the counter. The menu will rotate seasonally to take advantage of seasonal price swings and product availability. Daily or weekly specials will be handwritten on a chalkboard and displayed.

• See illustration above for customer and employee order process. *Initially, a paper system will be used for taking orders, but when affordable, a computerized system to relay orders to the back of the house will be implemented.

• Sandwiches and salads will be made to order. Grilled sandwiches will be offered and will require use of the grill or toaster oven. Side items will be pre-portioned in disposable cups.

• Blue plate specials and breakfast sandwich eggs will be held hot during peak breakfast and lunch hours for ease and efficiency of service. During non-peak hours a pre-plated meal will be microwaved in the back of the house. Pre-plating of these blue plate specials will be done by Meals on Wheels volunteers as part of the same packaging process used for home delivered meals.

Catering • Catering orders will be faxed or called in at least 24 hours in advance. Catering orders will

be overseen by the general manager until sales reach 20% at which time, a full-time catering manager will be hired (anticipated in year 2).

Dinners to Go • Dinners to Go may be picked up any time that the café is open. The daily special will be

similar to the chilled meal prepared the previous day for Meals on Wheels clients (e.g., meatloaf, mashed potatoes, green peas with pearl onions, dinner roll, cherry cobbler).

All food ordering and batch cooking will be outsourced to the Meals on Wheels Central Kitchen. This alleviates the need for large production equipment and staff in the café. Regular meetings scheduled by the general manager will take place to discuss process changes needed between kitchen and café. Work will be done ahead to compensate for “last-minute orders.” Food production required in the café will consist primarily of heating up, grilling and toasting foods and assembly of sandwiches and salads. Food preparation will be done in the central kitchen by café staff during non-peak hours.

Place order with

cashier

Pay for meal

(cash or charge)

Self-serve beverage

Wait for name to be called

Sit down or take meal to

go

Customer Process

Cashier fills out order form*

Cashier passes copy to

food prep

Cashier rings order into register & collects payment

Cashier gives

customer beverage

cup

Meal Assembly

begins

Order complete –

calls customer’s

name

Employee Process

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Equipment Requirements The equipment requirements and costs are itemized below. Equipment has a depreciable life of between 5 and 7 years. Because of the major production equipment in the central kitchen, which will have significant excess capacity, equipment costs for the café are fairly low. The interior design of the café was planned to accommodate this relationship and maximize the production value. Café Equipment List # needed Prices/each Total CostGrill (small electric) 1 $1,500 $1,500Reach-in refrigerator 1 $1,400 $1,400Café Software Package 1 $1,150 $1,150Exhaust hood 1 $10,000 $10,000Soup warmer 2 $350 $700Coffee maker provided by vendor 1 $0 $0Beverage dispenser (lemonade, iced tea) 1 $685 $685Toaster, conveyor style 1 $550 $550Cash register 2 $200 $400Microwave 2 $500 $1,000Ice machine, 100 lbs/day 1 $1,500 $1,5003-compartment sink 1 $850 $850Deli case, refrigerated - display 1 $3,000 $3,000Merchandizing refrigerator - vendor provided 1 $0 $0Display unit for bakery items 2 $275 $550Bar stools 18 $85 $1,530Chairs 12 $50 $600Tables for four (top + base) 3 $150 $450Tables for two (top + base) 6 $125 $750Patio tables 3 $100 $300Patio chairs 12 $75 $900Patio umbrellas 3 $125 $375Fountain drink dispenser - vendor provided 1 $0 $0Hand sink 1 $150 $150Menu board 1 $70 $70Ice cream reach in for novelty items 1 $700 $700Cheese Melter 1 $750 $750Refrigerated Sandwich Prep Table 1 $3,100 $3,100Misc. support items $7,000 $39,960 Purchasing Purchasing for the café will be done in conjunction with purchasing for the central kitchen, affording the café substantial buying power through volume ordering. Meals on Wheels is currently working with PFG Virginia Foodservice as the prime vendor. However, more than one vendor will be contracted so there is not a dependency on one source of goods. On an ongoing

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basis a comparative cost analysis will be performed to obtain the highest quality food for the lowest available price. Locally, Meals on Wheels has access to Baker Brothers Produce Co., one of the leading providers of fresh, quality produce. Marva Maid has been targeted as the primary dairy supplier due to their location within the industrial park, saving Meals on Wheels a substantial amount of money in delivery fees. Inventory Management The Meals on Wheels Café will set par levels for inventory and will follow the First-In-First-Out (FIFO) food rotation system. The risk of running out of product is diminished due to immediate access to the central kitchen’s inventory and food banking system and the similarity in products used by the kitchen and café. Depending on vendor schedules, orders will be placed daily, weekly or monthly. Withdrawals will be made from the central kitchen using a requisition system to maintain a separate profit center. Food inventory is not charged to the café until production. Raw food and chilled prepared inventory stays with production until it is used by the café. Dry goods inventory used by the café is immediately charged to the café (seen as direct operating expenses in the financials, this includes packaging, condiment packets, plasticware, etc.) A small percentage of unavoidable waste has been factored into the food cost, but this will be mitigated by selling excess food back to the kitchen to be incorporated into the home delivered meals program. A small number of items that will be used or sold in the café will not be used by the central kitchen such as premium coffee, ice cream and soda, most of which are not extremely perishable. Waste of these items is accounted for in the cost of food. Quality Controls The Meals on Wheels kitchen centers around the cook-chill method of food production. This process entails heating food to 165 degrees and then immediately chilling to 40 degrees to kill all bacteria. No preservatives are needed to enable a 4-6 week shelf-life. Other advantages to this system include higher quality, consistency and freshness. Quality and consistency will be maintained by following standards put in place by the executive chef, registered dietitian and others. For example, in order to assure food safety in the facility, a properly designed HACCP (Hazardous Analysis Critical Control Points) system will be in place for all recipes produced in the central kitchen and cafe. The general manager will do random detailed foodservice and sanitation audits every two weeks. The inspections will focus on food storage, personal hygiene of employees, cleanliness of equipment and facility, etc. In addition, volunteers will be recruited to periodically act as “secret shoppers” to get specific feedback. The executive chef will conduct a thorough efficiency audit every six months on the entire production facility including the café. Controlling costs will be ensured by accurately estimating customer counts and production quantities through the use of forecasting. Tight quality control measures will be in place for incoming shipments of food and beverages. All products will be checked by the receiving clerk to make sure that the proper items were delivered. Cases will be opened, counted or weighed and checked for proper temperature, spoilage, inferior quality, or damage before the delivery slip is signed by the receiving clerk. Production schedules will be utilized so that food preparation occurs in sufficient quantities to serve all customers while minimizing leftover food to prevent waste. Standardized recipes will be used to ensure consistency of quality and quantity. Portion control will be a key element in preventing waste and preserving profits. Everything will be standardized by weight (meat and cheese) and/or volume.

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The Meals on Wheels Café will use a point-of-service (POS) system to key in a customer’s order. The same system will total and print checks, function as a cash register, connect to credit card authorizers, and track sales. Daily, the general manager will tally the cash and charge receipts received and balance them against the record of sales. To obtain tight financial controls, post-meal data will also be collected such as customer counts; actual/register counts; portions served vs. prepared vs. planned; product quality feedback/customer feedback; leftovers/waste and weather conditions. Breakfast and lunch sales will be kept separate. The general manager will be responsible for depositing the day’s receipts with the Meals on Wheels controller. Accounting functions for the café will be provided by the Meals on Wheels finance department. All café accounts will be separated from the parent organization and the café treated as a stand alone profit center. The finance department, headed by a full-time controller, will perform all cafe accounting functions: vendor payments, bank reconciliations, sales tax reports and filing, financial statement preparation, etc. 7.0 Financial Plan As stressed throughout the plan, the Meals on Wheels Café is a small part of a large production facility and has a number of efficiencies allowing it to become profitable almost immediately. Staff used in the kitchen will manage the café to ensure full integration of production and can be allocated at a percentage of time instead of hiring additional full-time staff solely for the café. Volunteers will be used in the production kitchen for meal assembly and packaging and in the café as customer advocates and greeters. Inventory will not be charged to the café until the actual production of goods to be sold except for items that will only used in the café such as “to go” packaging and disposable paper products, and beverages such as sodas and coffee. Key Financial Indicators See following key indicator chart. Important Assumptions Based on survey research, industry standards14 and the advice of industry experts15, the following assumptions have been used in the financial documents: • Average transaction for breakfast: $3.00 • Average transaction for lunch: $6.50 • Average transaction for dinner: $9.75 & $18.50 • Sales for breakfast based on 60% of market who said they would take out breakfast items

coming once per week , growing 10% per year • Sales for lunch based on 29% of market who currently spend $6-$10 for lunch with 10%

market penetration. 10% maintained as employee base grows to 6,000 within 3 years. • Sales for dinner based on 42% of persons surveyed who said they would buy dinners for

two, 25% would buy dinners for four. Sales based on 5% of these buying once per week. Growth is aggressive, from 290 meals/week in year one to 500 in year 2.

14 2003Restaurant Industry Operations Report: National Restaurant Association. 15 Chris Ripp, Eric Theile, and Will Doscher, CEO, 3rd & Eats.

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• Direct labor includes 2 full-time and 4 part-time, with 1 part-time added in year 2 and 1.5 persons in year 3. Indirect labor includes general manager @ 15%, sous chef @ 10%, packaging manager @ 5%, and executive chef at $3,000/year.

• Catering sales begin in month 3 of year 1. First year at 7% of sales, 2nd year at 20%, 3rd year at 30%. Catering manager hired in year 2. Indirect labor for catering: kitchen prep @ 10%

• Food cost: 28%; direct operating expenses (packaging, menus, utensils, etc.) @ 3.5%; marketing @ 3.5% in yr 1, 2% in yr 2, 1% in yr 3 (1% is industry standard); overhead @ 9%; general and administrative @ 3%; actual depreciation.

Sources and Uses of Financing The café will be formed as a separate profit center and program of the agency. The structural portion as well as equipment and furnishings of the café will be financed through fundraising equity. Start-up working capital of $35,000 will be provided by the parent company, Meals on Wheels, from its current operating budget. The café will begin to pay back the initial cash infusion within the first year of operations—approximately month 8—and once paid, thereafter provide Meals on Wheels with up to 50% of its profits. The remaining profits will be invested back into the café to grow the business. (The cash back to owner is not shown on the following financial statements.)

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8.0 Risk Assessment and Contingency Plan

What could go wrong? First, Meals on Wheels will do everything possible to mitigate possible risks by ensuring a strong infrastructure and employee base. This begins with hiring a well qualified and experienced management staff and crew and paying decent salaries with benefits for all full-time staff. Eric Theile, the production chef already hired to start-up the production kitchen and the café, will be of great benefit in ensuring a strong and profitable café emerges. Chef Theile and his crew will develop and test recipes and set up the process flow and integration of the café and the production area. He will also be involved on an ongoing basis to periodically audit the business so that margins don’t slowly start to move because of creeping inefficiencies. Cost controls will be in place as the café opens so that recipes and portion sizes are standardized, and menu items are priced to sell and to obtain needed margins. Vendors are currently being evaluated based on quality of goods and prices so that good consistent value will be realized by consumers. Plenty of storage space is built into the kitchen so volume pricing can be obtained. A strong volunteer recruitment plan has been formalized to recruit more than 500 volunteers for the kitchen. Wonderware, a software system for manufacturing and retail facilities, will be used to generate daily reports so that variances can be recognized and addressed immediately. Having done everything possible to lower the risk of failure, certainly there is always some risk. Because the contribution margin is fairly high in years 2 and 3, there is a lower than normal breakeven point. At inception with a 10% margin (a little above industry standard), 150 meals per day need to be sold to have expenses match sales revenue (not including catering sales). Anything over that will contribute to the profitability of the bottom line. 1. What if sales are low?

Medium probability, medium costs a) Why are they low? Are customers returning? If so, increase marketing to new customers.

Offer food samplings at work sites and/or have a series of “block parties” to invite targeted company employees to try the food. There may be hidden perception that food is low quality because it is Meals on Wheels (although the market survey did not indicate this). This could be overcome with food tastings.

b) If customers are not returning, ensure quality of food is consistent and menu offerings are in demand. Check prices – are they in line with competitors? Is service fast and friendly? Does menu include enough variety? Use customer satisfaction survey and/or invite critics in for specific feedback. Make adjustments quickly.

2. What if volunteers won’t work in café or staff can’t be found?

Low probability, low cost for volunteers, medium to high cost for employees a) Volunteers will only be used as greeters or “customer advocates”, low skilled, low stress

job that emphasizes customer interaction. Current volunteers have indicated that they would gladly work in a retail café if proceeds benefit Meals on Wheels. Volunteers will primarily be used in the central kitchen as part of kitchen prep; however, even this is minimal in supporting the café. There is little risk of not finding appropriate staff as unemployment in the Colonial Heights/Petersburg area is higher than in the Richmond area, and the skill set of quick serve counter help is limited.

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3. What if margins are low/operating expenses high? Medium probability, high cost a) Ensure that cost controls are in place. Recipes must be standardized with standardized

portions, standard yields, and purchase specifications. Food cost should be no higher than 30-35%.

b) Look at labor costs. Is there room for more volunteers rather than paid labor? c) Are prices appropriate? Is there room for an increase without effecting sales?

4. What if there are marketing problems due to barriers/costs? Low to medium probability, low cost a) The market is finite, which is of some benefit in that there is no need for high cost

advertising such as television or radio spots. Flyers distributed throughout the community and good quality food with fast service and decent pricing should be enough to generate business to start. If there is a problem, the Meals on Wheels Café can take the product to the market through delivery of meals and/or through meal cart service in central locations.

5. What if there are operational problems?

Medium probability, medium cost a) Production problems will be addressed in the central kitchen facility. The volume of café

sales should not significantly impact the production processes of the kitchen. Kitchen management is being hired at the level that they should be able to solve these type problems relatively quickly by adjusting production schedules. The inventory and management software will produce daily reports so that issues can be addressed immediately.

b) Equipment will be serviced through a maintenance company so that it can be brought back quickly. The entire production and refrigeration/freezer area will be on generator power so that meal production will not be interrupted.

6. What if demand is too high?

Medium probability, medium cost a) Short-term, until customer base is stabilized, kitchen can overproduce for the café to

ensure product quantity is adequate. These products can be integrated back into client centered production for the following day if not sold. Labor can be added if sales are high, delivery and meal carts can be introduced to sell onsite at companies if café is not big enough.

b) Long-term, the café is situated so that the building can expand to accommodate growth.

7. What if a major catastrophe happened – foodborne illness, injury of volunteer, internal fraud? Low probability, high costs a) Besides having a registered dietitian on staff who is carefully trained in these matters, the

agency has a formalized comprehensive business continuity plan, the development of which was sponsored through a national grant, which addresses crisis communications and major disasters such as those listed.

8. What if another café opens in the industrial park?

Low probability, medium cost

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a) This is unlikely because of zoning ordinances restricting stand alone restaurants from developing property. Another manufacturing plant could open a small café onsite as long as it was less than 30% of the total plant, but would have little incentive to do so. If one did open, the Meals on Wheels Café will be able to compete by having a loyal customer base, good food, fast service, and competitive pricing.

9. What if businesses close within the industrial park?

Low to medium probability, low cost a) There is tremendous growth within the park of additional new businesses. Sales

projections, although increased each year, are based on the current market rather than the future 6,000+ employee base. Because of this, there is room within projected figures for current businesses to exit while new ones enter.

10. What if competitors launch aggressive action toward the Meals on Wheels Café?

Low probability, medium cost a) It is not likely that major chains such as McDonald’s and Subway would start marketing

or developing new product offerings aggressively. However, if this did occur, the Meals on Wheels Café has an advantage is its flexibility in responding to customer demands and competitive action. Meals on Wheels will stand firm on its commitment to customer service and good quality food at a reasonable cost, delivered in a convenient location. The Meals on Wheels Café doesn’t plan on responding to or waging a competitive war based solely on price.

11. What if the café totally flops?

Low probability, low cost a) A major advantage of the café is that it is part of a larger project. Start-up and capital

costs are minimal. The space can easily be converted into office or training space for the central kitchen and the equipment and staff incorporated into the larger production facility. Financial and operational benchmarks are in place that will regularly track performance to aggressively manage operations. In addition, the eighteenth month of business operations will be a critical decision making point regarding business sustainability.

Meals on Wheels Cafe

Balance Sheet

Year End2005 2006 2007

AssetsCurrent AssetsCash $83,642 $164,851 $293,328Accounts Receivable $2,032 $6,553 $13,438Inventories $776 $1,311 $1,941Total Current Assets $86,450 $172,715 $308,707Fixed AssetsEquipment $39,960 $39,960 $39,960Minus Accumulated Depreciation $7,712 $15,423 $23,135Total Net Fixed Assets $32,248 $24,537 $16,825Total Assets $118,699 $197,252 $325,532

Liabilities and Retained EarningsCurrent LiabilitiesAccounts Payable $18,242 $23,907 $30,306Total Current Liabilities $18,242 $23,907 $30,306Contributed Capital $74,960 $74,960 $74,960Retained Earnings $25,497 $98,385 $220,266Total Liabilities and Retained Earnings $118,699 $197,252 $325,532

Assumptions:1. Accounts receivable are month 12 catering (30 days collection) and 5% past due catering accounts. 2. Food inventory is not charged to the café until production. Raw food/chilled prepared inventory stays with the production operations. Dry goods inventory used primarily by the café is charged as inventory.3. Accounts payable is 1 month COGS.4. Contributed capital is cash and equipment provided by Meals on Wheels.

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Meals on Wheels Cafe

Cash Flow Statement

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12Operations:Net Income -$4,729 $1,608 $1,608 $3,001 $3,001 $3,001 $3,001 $3,001 $3,001 $3,001 $3,001 $3,001Add noncash expenses:Depreciation $643 $643 $643 $643 $643 $643 $643 $643 $643 $643 $643 $643Add decreases in current assets:Prepaid InsuranceAdd increases in current liabilities:Accounts Payable $776 $12,798Salaries Payable $6,450Taxes Payable $153Deduct increases in current assets:Accounts Receivable 1,935 97Inventories $776Cash Flow from Operations $2,516 $2,250 $2,250 $1,709 $1,709 $3,547 $3,644 $3,644 $3,644 $3,644 $3,644 $16,442Cash Flow from InvestingCash Flow from Financing 35,000 0Change in cash 37,516 2,250 $2,250 $1,709 $1,709 $3,547 $3,644 $3,644 $3,644 $3,644 $3,644 $16,442Beginning cash 0 37,516 39,766 42,017 43,725 45,434 48,981 52,625 56,269 59,913 63,556 67,200Ending cash 37,516 39,766 42,017 43,725 45,434 48,981 52,625 56,269 59,913 63,556 67,200 83,642Days of Cash on Hand 39 61 64 64 67 72 78 83 88 94 99 123

Assumptions:1. Accounts receivable are month 12 catering (30 days collection) and 5% past due catering accounts. All other accounts are cash and carry.2. Food inventory is not charged to the café until production. Raw food/chilled prepared inventory stays with the production operations. Dry goods inventory used primarily by the café is charged as inventory.(Direct Operating Expenses)3. Accounts payable is 1 month COGS4. Initial working cash capital will be provided through MOW operating budget.5. Salaries payable is direct labor for 2 weeks. Indirect labor is payed current.6. Taxes are paid quarterly.

Meals on Wheels Cafe

Cash Flow Statement

Operations:Net IncomeAdd noncash expenses:DepreciationAdd decreases in current assets:Prepaid InsuranceAdd increases in current liabilities:Accounts PayableSalaries PayableTaxes PayableDeduct increases in current assets:Accounts ReceivableInventoriesCash Flow from OperationsCash Flow from InvestingCash Flow from FinancingChange in cashBeginning cashEnding cashDays of Cash on Hand

Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24

$6,074 $6,074 $6,074 $6,074 $6,074 $6,074 $6,074 $6,074 $6,074 $6,074 $6,074 $6,074

$643 $643 $643 $643 $643 $643 $643 $643 $643 $643 $643 $643

$535$3,472$1,442

4,306$534

$11,632 $2,410 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717

$11,632 $2,410 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,717 $6,71783,642 95,274 97,685 104,401 111,118 117,834 124,551 131,268 137,984 144,701 151,418 158,13495,274 97,685 104,401 111,118 117,834 124,551 131,268 137,984 144,701 151,418 158,134 164,851

88 90 96 102 109 115 121 127 133 139 146 152

Meals on Wheels Cafe

Cash Flow Statement

Operations:Net IncomeAdd noncash expenses:DepreciationAdd decreases in current assets:Prepaid InsuranceAdd increases in current liabilities:Accounts PayableSalaries PayableTaxes PayableDeduct increases in current assets:Accounts ReceivableInventoriesCash Flow from OperationsCash Flow from InvestingCash Flow from FinancingChange in cashBeginning cashEnding cashDays of Cash on Hand

Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36

$10,167 $10,167 $10,167 $10,167 $10,167 $10,167 $10,167 $10,167 $10,167 $10,167 $10,167 $10,167

$643 $643 $643 $643 $643 $643 $643 $643 $643 $643 $643 $643

$630$2,914$2,617

6,772$630

$16,341 $4,038 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810

$16,341 $4,038 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810 $10,810164,851 181,192 185,230 196,040 206,850 217,659 228,469 239,279 250,089 260,899 271,709 282,519181,192 185,230 196,040 206,850 217,659 228,469 239,279 250,089 260,899 271,709 282,519 293,328

120 122 129 137 144 151 158 165 172 179 186 194

Meals on Wheels Cafe

Monthly Income Statement

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12Revenue Breakfast 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000Lunch 11,781 11,781 11,781 11,781 11,781 11,781 11,781 11,781 11,781 11,781 11,781 11,781Dinner 5,953 5,953 5,953 5,953 5,953 5,953 5,953 5,953 5,953 5,953 5,953 5,953Catering 1,935 1,935 1,935 1,935 1,935 1,935 1,935 1,935 1,935Total Revenue 20,734 20,734 20,734 22,669 22,669 22,669 22,669 22,669 22,669 22,669 22,669 22,669Direct CostsFood Cost of Breakfast 840 840 840 840 840 840 840 840 840 840 840 840Food Cost of Lunch 3,299 3,299 3,299 3,299 3,299 3,299 3,299 3,299 3,299 3,299 3,299 3,299Food Cost of Dinner 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667Food Cost of Catering 0 0 0 542 542 542 542 542 542 542 542 542Direct Labor 6,450 6,450 6,450 6,450 6,450 6,450 6,450 6,450 6,450 6,450 6,450 6,450Direct Operating 776 776 776 776 776 776 776 776 776 776 776 776Start-up 6,337Gross Margin 1,365 7,702 7,702 9,095 9,095 9,095 9,095 9,095 9,095 9,095 9,095 9,095Operating ExpensesIndirect Labor 1,860 1,860 1,860 1,860 1,860 1,860 1,860 1,860 1,860 1,860 1,860 1,860Marketing 776 776 776 776 776 776 776 776 776 776 776 776Overhead 1,997 1,997 1,997 1,997 1,997 1,997 1,997 1,997 1,997 1,997 1,997 1,997General Administrative 666 666 666 666 666 666 666 666 666 666 666 666Depreciation 643 643 643 643 643 643 643 643 643 643 643 643Taxes 153 153 153 153 153 153 153 153 153 153 153 153Net Cash Flow -4,729 1,608 1,608 3,001 3,001 3,001 3,001 3,001 3,001 3,001 3,001 3,001

30,271 31,879 33,487 36,488 39,489 42,490 45,491 48,493 51,494 54,495 57,496 60,497

Meals on Wheels Cafe

Revenue BreakfastLunchDinnerCateringTotal RevenueDirect CostsFood Cost of BreakfastFood Cost of LunchFood Cost of DinnerFood Cost of CateringDirect LaborDirect OperatingStart-upGross MarginOperating ExpensesIndirect LaborMarketingOverheadGeneral AdministrativeDepreciationTaxesNet Cash Flow

Cash Flow Forecast

Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24

3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,30017,604 17,604 17,604 17,604 17,604 17,604 17,604 17,604 17,604 17,604 17,604 17,60410,303 10,303 10,303 10,303 10,303 10,303 10,303 10,303 10,303 10,303 10,303 10,303

6,241 6,241 6,241 6,241 6,241 6,241 6,241 6,241 6,241 6,241 6,241 6,24137,448 37,448 37,448 37,448 37,448 37,448 37,448 37,448 37,448 37,448 37,448 37,448

924 924 924 924 924 924 924 924 924 924 924 9244,929 4,929 4,929 4,929 4,929 4,929 4,929 4,929 4,929 4,929 4,929 4,9292,885 2,885 2,885 2,885 2,885 2,885 2,885 2,885 2,885 2,885 2,885 2,8851,748 1,748 1,748 1,748 1,748 1,748 1,748 1,748 1,748 1,748 1,748 1,7489,922 9,922 9,922 9,922 9,922 9,922 9,922 9,922 9,922 9,922 9,922 9,9221,311 1,311 1,311 1,311 1,311 1,311 1,311 1,311 1,311 1,311 1,311 1,311

15,729 15,729 15,729 15,729 15,729 15,729 15,729 15,729 15,729 15,729 15,729 15,729

2,175 2,175 2,175 2,175 2,175 2,175 2,175 2,175 2,175 2,175 2,175 2,175749 749 749 749 749 749 749 749 749 749 749 749

3,370 3,370 3,370 3,370 3,370 3,370 3,370 3,370 3,370 3,370 3,370 3,3701,123 1,123 1,123 1,123 1,123 1,123 1,123 1,123 1,123 1,123 1,123 1,123

643 643 643 643 643 643 643 643 643 643 643 6431,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,5956,074 6,074 6,074 6,074 6,074 6,074 6,074 6,074 6,074 6,074 6,074 6,074

66,571 72,645 78,719 84,793 90,867 96,941 103,015 109,089 115,163 121,237 127,311 133,385

Meals on Wheels Cafe

Revenue BreakfastLunchDinnerCateringTotal RevenueDirect CostsFood Cost of BreakfastFood Cost of LunchFood Cost of DinnerFood Cost of CateringDirect LaborDirect OperatingStart-upGross MarginOperating ExpensesIndirect LaborMarketingOverheadGeneral AdministrativeDepreciationTaxesNet Cash Flow

Cash Flow Forecast

Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36

3,644 3,644 3,644 3,644 3,644 3,644 3,644 3,644 3,644 3,644 3,644 3,64423,563 23,563 23,563 23,563 23,563 23,563 23,563 23,563 23,563 23,563 23,563 23,56315,454 15,454 15,454 15,454 15,454 15,454 15,454 15,454 15,454 15,454 15,454 15,45412,798 12,798 12,798 12,798 12,798 12,798 12,798 12,798 12,798 12,798 12,798 12,79855,458 55,458 55,458 55,458 55,458 55,458 55,458 55,458 55,458 55,458 55,458 55,458

1,020 1,020 1,020 1,020 1,020 1,020 1,020 1,020 1,020 1,020 1,020 1,0206,598 6,598 6,598 6,598 6,598 6,598 6,598 6,598 6,598 6,598 6,598 6,5984,327 4,327 4,327 4,327 4,327 4,327 4,327 4,327 4,327 4,327 4,327 4,3273,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583 3,583

12,837 12,837 12,837 12,837 12,837 12,837 12,837 12,837 12,837 12,837 12,837 12,8371,941 1,941 1,941 1,941 1,941 1,941 1,941 1,941 1,941 1,941 1,941 1,941

25,152 25,152 25,152 25,152 25,152 25,152 25,152 25,152 25,152 25,152 25,152 25,152

2,921 2,921 2,921 2,921 2,921 2,921 2,921 2,921 2,921 2,921 2,921 2,921555 555 555 555 555 555 555 555 555 555 555 555

4,991 4,991 4,991 4,991 4,991 4,991 4,991 4,991 4,991 4,991 4,991 4,9911,664 1,664 1,664 1,664 1,664 1,664 1,664 1,664 1,664 1,664 1,664 1,664

643 643 643 643 643 643 643 643 643 643 643 6434,212 4,212 4,212 4,212 4,212 4,212 4,212 4,212 4,212 4,212 4,212 4,212

10,167 10,167 10,167 10,167 10,167 10,167 10,167 10,167 10,167 10,167 10,167 10,167143,552 153,720 163,887 174,054 184,221 194,389 204,556 214,723 224,890 235,057 245,225 255,392

Meals on Wheels Cafe

Income Statement

2005 2006 2007

SalesBreakfast Sales $36,000 $39,600 $43,725Lunch Sales $141,375 $211,250 $282,750Dinner Sales $71,435 $123,630 $185,445Catering Sales $17,417 $74,896 $153,576Gross Revenue on Sales $266,227 $449,376 $665,496

Cost of Goods SoldFood Cost Breakfast $10,080 $11,088 $12,243 Lunch $39,585 $59,150 $79,170 Dinner $20,002 $34,616 $51,925 Catering $4,877 $20,971 $43,001Direct Labor $77,399 $119,069 $154,039Direct Operating Expenses $9,318 $15,728 $23,292Start-up Training $4,837 Waste $1,000 Marketing $500Total COGS $167,598 $260,623 $363,670

Gross Margin $98,628 $188,753 $301,826Gross Margin % 37% 42% 45%

Operating Expenses Indirect Labor $22,322 $26,099 $35,048 Marketing $9,318 $8,988 $6,655 Overhead $23,960 $40,444 $59,895 General & Administrative $7,987 $13,481 $19,965 Depreciation $7,712 $7,712 $7,712Total Operating Expenses $71,299 $96,724 $129,274

Net Income Before Taxes $27,329 $92,029 $172,552Taxes $1,832 $19,141 $50,545Net Profit $25,497 $72,888 $122,007Net Profit/Sales 10% 16% 18%Net Income/Sales 10% 20% 26%

Contribution to MOW $44,696 $90,369 $140,863 Not reflected Overhead + Admin Costs $31,947 $53,925 $79,860 in financials 50% of profits with payout $12,748 $36,444 $61,003 beginning in month 4

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Meals on Wheels Cafe

Breakeven Analysis*

2005 2006 2007Weighted Average Transaction $6.28 $6.66 $6.85Total Costs $235,853 $319,523 $458,191Daily Unit Breakeven 150 192 268Daily Breakeven Sales Level $943 $1,278 $1,833

Key Indicators

Benchmark* 2005 2006 2007Sales per FTE employee $55,240 $61,913 $77,479 $85,320Total sales per square foot $291 $148 $250 $370Total cost of sales 30% 28% 28% 28%Income before income taxes 8.5% 10% 20% 26%Cost of Goods Sold 60% 63% 58% 55%Average transaction $7.00 $6.28 $6.66 $6.85

*2003 Restaurant Industry Operations Report - median for limited service restaurantsNote: Sales per square foot is low the first two years due to limited number of hours open. Inventory turnis high because Meals on Wheels kitchen carries all food inventory, the kitchen inventory turn is 32x/year.

Sensitivity Analysis of Key Factors

Lunch Sales Gross Revenue Profit MarginLunch Sales Year 1 Avg Transaction up 10% $155,513 $281,354 11% Avg Transaction down 10% $127,238 $251,100 9%Lunch Sales Year 2 Avg Transaction up 10% $232,375 $474,726 19% Avg Transaction down 10% $190,125 $424,026 19%Lunch Sales Year 3 Avg Transaction up 10% $311,025 $702,254 23% Avg Transaction down 10% $254,475 $628,739 21%

Direct Labor Direct Labor Gross Margin Profit MarginYear 1Direct Labor up 15% $89,009 $91,856 8%Year 2Direct Labor up 15% $127,960 $195,591 17%Year 3Direct Labor up 15% $154,511 $324,646 20%

Food Cost COGS Gross Margin Profit MarginYear 1Food Cost up 5% $176,072 $90,155 7%Year 2Food Cost up 5% $259,563 $189,813 16%Year 3Food Cost up 5% $336,447 $329,049 21%

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Meals on Wheels Cafe

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Financial Assumptions

Hours of Operation: 6 am - 4 pm

StaffingMorning Shift Supervisor $8.50/hr + 20% benefits 5:30 am - 1:30 pm $21,216Lead Supervisor $9.50/hr + 20% benefits 8:30 am - 4:30 pm $24,008Counter Helper $7.50/hr 6 am - 9 am $5,850Counter Helper $7.50/hr 6:30 am - 1:00 am $10,725Counter Helper $7.50/hr 11 am - 3 pm $7,800Counter Helper $7.50/hr 11:30 am - 3:30 pm $7,800Greeter Volunteer 6:30 am - 8:30 amGreeter Volunteer 11:30 am - 1:30 pm

$77,399One part-time worker added in year 2, one full-time and one part-time person in year 3.

Indirect LaborGeneral Manager @ 15%/$34.6/hr $10,800Sous Chef @ 10%/$26/hr $5,408Packaging Manager @ 5%/13.20/hr $1,373Executive Chef @ 40% of one month salary ($7500) - year one only $3,000

$20,581Staff Turnover and yearly raises calculated into yearly increase of 7%

Average TransactionBreakfast $3.00Lunch $6.50Dinner $9.75 (dinner for two)

$18.50 (dinner for four)

Food Cost 28% (based on industry standards, advice of industry experts)*

Sales (based on industry standards, advice of industry experts)*1. Breakfast is based on the 60% of market who said they would take out breakfast items from the café(30% also said they would eat in). If 60% of market came to café once per week, that would be 48 people per day.Breakfast is projected to grow 10% per year.

2. The primary target for lunch are the 29% of persons surveyed in the industrial park who currently spend $6 - $10 each day.If industrial park employs 3,000 people (6,000 by year 3), primary market is 870 in year one. Goal is to have 10% market penetrationand maintain as park grows (begin at 87 per day up to 174 per day in year 3).

3. 42% of persons surveyed said they would pick up dinners for two, 25% would choose dinners for four. Sales are based on 5% of this market actually purchasing dinners once per week. (65 people per week buy dinners for two, 40 people per week buydinners for four.) Growth is aggressive - from 290 meals/week in year one (65*2+40*4) to 500 in year 2 to 750 in year 3.

Catering Sales (based on industry standards, advice of industry experts)*Beginning in month 3 of year 1. First year at 7% of sales, 2nd year at 20%, 3rd year at 30% of sales (industry experts).Catering Manager hired in year 2.Food Cost: 28%Direct Labor: Catering manager @ $25,000/year plus 20% benefits (oversees catering in am, marketing in pm)Indirect Labor: Kitchen prep staff @ 10%

Operating Expenses (Industry Standards)Direct Operating Expenses: includes packaging, menus, cleaning, utensils, waste @ 3.5%Marketing: 3.5% in year one, 2% in year two, 1% in year three (1% is Industry Standard for limited service restaurants)This decreases in year 2 due to hiring of catering manager who markets the catering program.Overhead: 9% General & Administrative: 3% Depreciation: Actual based on equipment costs

Note: Industry Standard: 2003 Restaurant Industry Operations Report/Limited Service RestaurantsIndustry Experts: Chris Ripp, Vice-President, The Restaurant Company, Owner of 22 quick serve andcasual dining restaurants; Eric Theile, Food Service Consultant & Executive Chef; Will Doscher, CEO, 3rd & Eats

The Meals on Wheels Cafe

Café Equipment # needed Prices/each Total CostGrill (small electric) 1 $1,500 $1,500Reach-in refrigerator 1 $1,400 $1,400Panini grill 2 $675 $1,350Exhaust hood 1 $10,000 $10,000Soup warmer 2 $350 $700Coffee maker provided by vendor 1 $0 $0Beverage dispenser (lemonade, iced tea) 1 $685 $685Toaster, conveyor style 1 $550 $550Cash register 1 $200 $200Microwave 2 $500 $1,000Ice machine, 100 lbs/day 1 $1,500 $1,5003-compartment sink 1 $850 $850Deli case, refrigerated - display 1 $3,000 $3,000Merchandizing refrigerator - vendor provided 1 $0 $0Display unit for bakery items 2 $275 $550Bar stools 18 $85 $1,530Chairs 12 $50 $600Tables for four (top + base) 3 $150 $450Tables for two (top + base) 6 $125 $750Patio tables 3 $100 $300Patio chairs 12 $75 $900Patio umbrellas 3 $125 $375Fountain drink dispenser - vendor provided 1 $0 $0Hand sink 1 $150 $150Menu board 1 $70 $70Ice cream reach in for novelty items 1 $700 $700Cheese Melter 1 $750 $750Refrigerated Sandwich Prep Table 1 $3,100 $3,100Misc. support items $7,000

$39,960

Depreciable Life of 7 years $4,905 $701Depreciable Life of 5 years $35,055 $7,011Monthly Depreciation $7,712

Capital Equipment List

Meals on Wheels Cafe

Lunch sales avg transaction up 10%2005 2006 2007

SalesBreakfast Sales $36,000 $39,600 $43,725Lunch Sales $155,513 $232,375 $311,025Dinner Sales $71,435 $123,630 $185,445Catering Sales $18,406 $79,121 $162,059Gross Revenue on Sales $281,354 $474,726 $702,254

Cost of Goods SoldFood Cost Breakfast $10,080 $11,088 $12,243 Lunch $43,544 $65,065 $87,087 Dinner $20,002 $34,616 $51,925 Catering $5,154 $22,154 $45,376Direct Labor $77,399 $119,069 $154,039Direct Operating Expenses $9,847 $16,615 $24,579Start-up Training $4,837 Waste $1,000 Marketing $500Total COGS $172,363 $251,993 $350,670

Gross Margin $108,991 $222,733 $351,584Gross Margin % 39% 47% 50%

Operating Expenses Indirect Labor $22,421 $26,522 $35,896 Marketing $9,847 $9,495 $7,023 Overhead $25,322 $42,725 $63,203 General & Administrative $8,441 $14,242 $21,068 Depreciation $7,712 $7,712 $7,712Total Operating Expenses $73,743 $100,695 $134,901

Net Income Before Taxes $35,248 $122,038 $216,683Taxes $3,812 $30,845 $67,756Net Profit $31,436 $91,193 $148,927Net Profit/Sales 11% 19% 21%Net Income/Sales 13% 26% 31%

Income Statement