Business Plan

for

Java Joe’s Joint

Dated: January 28, 2010

[Afternoon Session Case Study]

OWNERS

Java Joe, LLC 1234 Small Business Way Arlington, Virginia 22205 Telephone: 703-222-3333 Fax: 703-222-4444 E-Mail: jjaconi@javajoesjoint.com

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Table of Contents

EXECUTIVE SUMMARY ...................................................................................................................................... 1

GENERAL COMPANY DESCRIPTION .............................................................................................................. 3

PRODUCTS AND SERVICES ............................................................................................................................. 4

PRODUCT DESCRIPTIONS ............................................................................................................................................. 4 VALUE PROPOSITION ................................................................................................................................................. 4 FUTURE PRODUCTS AND SERVICES ................................................................................................................................ 4

MARKETING PLAN .............................................................................................................................................. 5

ECONOMIC PROJECTIONS ........................................................................................................................................... 5 OVERALL INDUSTRY TRENDS ........................................................................................................................................ 5 THE TARGET MARKET SEGMENT SIZE ............................................................................................................................ 5 MARKET PENETRATION CALCULATIONS .......................................................................................................................... 6 DEMAND FROM CUSTOMER’S PERSPECTIVE .................................................................................................................... 6 COMPETITIVE ANALYSIS.............................................................................................................................................. 7 MARKETING STRATEGY ............................................................................................................................................ 10 PROMOTIONAL BUDGET ........................................................................................................................................... 10 PRICING STRATEGY .................................................................................................................................................. 10 SALES PROJECTION .................................................................................................................................................. 11

OPERATIONAL PLAN ....................................................................................................................................... 12

OVERVIEW ............................................................................................................................................................ 12 LOCATION CONSIDERATIONS ..................................................................................................................................... 12 BUSINESS HOURS .................................................................................................................................................... 12 STAFFING PLAN ...................................................................................................................................................... 12 SUPPLIERS ............................................................................................................................................................. 13 CREDIT POLICIES ..................................................................................................................................................... 13

MANAGEMENT AND ORGANIZATION ........................................................................................................... 14

ORGANIZATIONAL STRUCTURE ................................................................................................................................... 14 ADVISORY BODIES................................................................................................................................................... 14

PERSONAL FINANCIAL STATEMENT ........................................................................................................... 15

STARTUP EXPENSES AND CAPITALIZATION ............................................................................................ 16

FINANCIAL PLAN ............................................................................................................................................... 17

12-MONTH PROFIT AND LOSS PROJECTION .................................................................................................................. 17 THREE-YEAR PROFIT PROJECTION ............................................................................................................................... 17 PROJECTED CASH FLOW ........................................................................................................................................... 17 BALANCE SHEET ..................................................................................................................................................... 18 BREAK EVEN ANALYSIS ............................................................................................................................................. 18

APPENDICES ...................................................................................................................................................... 23

RESUME OF MR. JOE JACONI ................................................................................................................................. 24

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Executive Summary

Java Joe’s goal is to provide casual dining and refreshments in an atmosphere conducive to social and business networking. We plan to take full advantage of the location of the business (3232 Wilson Blvd. in Arlington) and the market demographics. The Clarendon neighborhood has a high concentration of young professionals; however, there are very few businesses catering to the specific needs of this target market. At Java Joe’s our mission is to be the first place thought of by our target market when they are looking for a place to get together either for business or socializing.

We see two primary markets for the services of Java Joe’s: the first is self-employed professionals working in a virtual office environment; the second target market is young professionals looking for a gathering place for social networking.

Java Joe’s will sell moderately-priced food to an upscale casual dining market. We will feature brewed coffee and espresso-based beverages, and will provide a full-service dining with a limited bar (bottled beer and wine). Our positioning statement is, “Java Joe’s provides the needed facilities for successful gatherings (either business or social) with a highly convenient location.”

The Clarendon area is a vibrant market for the services offered by Java Joe’s. In 2008 consumers spent over $116 million within 1 mile of the Java Joe’s location for food away from home. The market has grown by 13.9% over the last eight years and is projected to grow an additional 7% by 2013. The National Restaurant Association (NRA) has studied the solid growth in this industry and also listed casual dining as one of the strongest areas in this market segment. Realizing that this is a competitive field, we commissioned a market analysis before selecting the location for Java Joe’s. That analysis shows that our competition has been distracted by an overemphasis on table turnover (as with the regional chain) or by the loss of local identity (as with the national chain).

We have established reasonable market penetration goals and an operational plan that will allow us to be profitable within the first year of business. We are targeting the following first year goals:

To have 1.5% of the day time population within 1 mile of Java Joe’s make a counter purchase once a week,

To have 2% of the Professional & Related Occupations market within 5 miles eat lunch at Java Joe’s once a week, and

To have 1.5% of the population 21 or older within 5 miles of Java Joe’s have dinner once every two months.

By reaching these relatively modest goals Java Joe’s will have positive cash flow after month 4 of operation.

In order to be successful Java Joe’s must provide an atmosphere that resonates with our target market segment. This means accomplishing one main goal: having areas that are clean and appropriate for business meetings. During the daytime hours, the dining area will serve as a place to hold quiet conversations with business associates. It will also serve larger groups

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(when scheduled) with full audio visual features. During the evening hours and on weekends, the dining area will be configured to provide clusters of more informal settings with appropriate background music.

Staffing will also be a critical factor for success. The principal operator for Java Joe’s is Joe Jaconi. Mr. Jaconi has more than 20 years experience operating a restaurant and has just recently completed work as the general manager of Saba Sam’s, a coffeehouse in the Charlottesville, Virginia area. Mr. Jaconi is a long-time resident of the Arlington area and is very familiar with the local community. The full staffing plan has been prepared and we have reviewed the wages and salaries with the Arlington Employment Center to ensure it can be met in the local environment.

We have detailed the costs required to prepare the business for operation and are ready to

proceed. We have obtained investor financing for most of those required startup costs. We have

carefully estimated the profit and loss for the first three years of operation. Using conservative

estimates we believe we may require up to $100,000 of financing for some of the initial costs

and as a line of credit during the first year of operation. We expect to completely pay off the line

of credit by the end of year 1. The full details of our financial plan are contained within this

document.

In summation, we have carefully analyzed our target market. We have consulted with Arlington

Economic Development to ensure we fully understand the local market conditions and all local

requirements. We have leveraged the industry experience of Mr. Jaconi both to ensure we have

a successful operational plan and the suppliers to make it work smoothly. We have developed a

comprehensive marketing plan to ensure we can effective get our message to our audience. We

have leveraged the support of SCORE Chapter One to validate the reasonableness of our plan.

We have the initial capital needed to make our plan successful. We are seeking the financing to

ensure we can meet our operational needs as we ramp up the business.

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General Company Description

Java Joe’s goal is to provide casual dining and refreshments in an atmosphere conducive to social and business networking. We plan to take full advantage of the location of the business and the market demographics. The Clarendon neighborhood has a high concentration of young professionals; and while there is a wide choice of dining and entertainment businesses in the area, there are very few businesses catering to the specific needs of this target market. At Java Joe’s our mission is to be the first place thought of by our target market when they are looking for a place to get together either for business or socializing.

To be successful Java Joe’s will maintain an intense focus on our target markets and establish an environment that will resonate with people seeking a gathering place for either business meetings and events or for social networking. We see two primary markets for the services of Java Joe’s:

The first is self-employed professionals or employees working in a virtual office environment. Java Joe’s plans to become the most desirable place in North Arlington to meet with clients or to hold small-scale business events.

The second target market is young professionals looking for a gathering place for social networking. Java Joe’s will be only one of many places serving this market but intends to be successful with this market by keeping our menu selections fresh and by hosting social networking events.

The Arlington market is representative of national trends in a number of aspects. There are a large number of small businesses within urban concentrations (75% of which are non-employers and home-based). When this is combined with the explosive growth of virtual companies and reduced office facilities such as conference rooms, the result has been that many professionals are left with fewer places to hold business meetings. This has reduced the significance of the office as a center for meeting both to conduct business and to socialize. The philosophy of Java Joe’s is that providing the facilities that allow that social and business interaction can be seen as a valuable asset to our target market and profitable to operate.

One of the primary assets of Java Joe’s is the location. At 3232 Wilson Blvd. in the heart of Clarendon, we are centrally located for both our target markets. With a daytime population of over 60,000 and a residential population of over 40,000 within 1 mile of our location, Java Joe’s can tap into a vibrant and robust market. Our close proximity to Metro extends our market reach even further.

Java Joe’s has been formed as a Limited Liability Company (LLC) in Virginia to streamline our management structure while still providing the required protections.

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Products and Services

Java Joe’s is a coffeehouse and restaurant that sells moderately-priced food to an upscale casual dining market typified by young professionals. The coffee shop counter service will feature brewed coffee and espresso-based beverages, teas, fruit smoothies and juices, and other beverages typically associated with a coffee shop.

Our luncheon service will contain both carry-out and dine-in menu selections, while the evening dinner service will provide a full-service dining and a limited bar (bottled beer and wine).

Product descriptions

Java Joe’s menu will feature a selection of pan-ethnic dishes influenced by African and French cooking traditions. Whether South American, Caribbean, Mediterranean or African-American, the menu items will have an identifiable African origin and/or influence.

Generally, the dishes will offer variations on "country" cooking themes. Braised and smoked meats and poultry, seafood, and vegetarian offerings will change seasonally.

Dinner items will only be available in the dining room section of the establishment. Standard appetizer offerings will be available in the coffee shop counter and patio area through the late evening.

Specialty coffees, espresso-based drinks, desserts and pastries, and light sandwiches will be available in the coffee shop counter.

Value Proposition

We think our value proposition is quite clear and quite easily distinguished from most others in the market. Java Joe’s will provide the needed facilities for successful gatherings (either business or social) with a highly convenient location.

Future Products and Services

While not part of the initial plans for Java Joe’s, we will explore two options for expanding our business. The first option is to include catering for the businesses in Northern Arlington and events at residential buildings within a 5 mile range of Java Joe’s. The second option is to provide live entertainment at Java Joe’s in the evenings and weekends. The lounge area will provide ample space for an artist, poet, reader, etc.

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Marketing Plan

Economic Projections

The Clarendon area is a vibrant market for the services offered by Java Joe’s. In 2008 consumers spent over $116 million within 1 mile of the Java Joe’s location for food away from

home1. Of that $116 million:

9.5% was for breakfast or brunch,

34.5% was for lunch,

38.5% was for dinner, and

15.1% was for snacks and non-alcoholic beverages. (The remaining 2.3% was for catering.)

The market has grown by 13.9% over the last eight years and is projected to grow an additional 7% by 2013. When considered within the context of this vibrant market, the sales projections used for this plan are purposefully conservative.

Overall Industry Trends

According to the National Restaurant Association (NRA) eating out has become a stable part of the American lifestyle and in a single day an average of four out of every ten people frequented an eating establishment. The total portion of the American food dollar spent eating out has grown to 45 percent. NRA reports that more than 70 percent of eating establishments are independent, single-unit businesses with fewer than twenty employees. One of the strongest areas within this market has been casual dining, which is defined as moderately priced dining

houses offering a comprehensive menu at a reasonable price.2

The Target Market Segment Size

The area served by Java Joe’s is characterized by a high density of professionals engaged in the services industries. The daytime population within 1 mile of our location is high (60,817 in 2008) and comprised of predominately professional and related occupations (57%). Within 5 miles of Java Joe’s, there are 48,753 people in professional and related occupations. The 2007

Census Bureau data3 also shows that there are over 15,000 non-employer firms (one person

firms) in Arlington. The largest segments of those firms are providing professional services (33%) and real estate services (9.2%). These home-based businesses when combined with

1 Demographics & Statistics Report prepared by Arlington Economic Development, dated August 31,

2009.

2 Business & Company Resource Center report – Eating Places dated 10/15/2009.

3 2007 Non employer Statistics, U.S. Census Bureau.

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national trends to virtual companies represent a potential market that is becoming underserved when it comes to finding a place to hold business meetings.

The second target market segment for Java Joe’s is urban professionals residing within five miles of our location. Java Joe’s will appeal to residents who desire a sophisticated yet casual eating, coffeehouse experience. Members of this market segment dine out frequently, approximately three times or more per week. The resident population within 1 mile of our location is high (41,037 in 2008) and characterized as young (29.35% between 25 and 34 years old), never married (49.9%), renters (65.7%). They are highly educated (37% have advanced degrees). They have high income (average household income of $114,626), small families (79.8% are I or 2 person households), and a very high per capita income ($59,614). Within five miles of Java Joe’s there are 468,211 people who are 21 years or older.

Because this population tends to eat out far more than the typical population, they look for value. While they might not regularly frequent a restaurant featuring entree prices of $17.00 and higher, they will repeat appearances at restaurants featuring entrees ranging between $7.00 and $16.00.

The general nature of the competition is typically a 70 to 150 seat restaurant with outdoor seating. The menu prices for entree's range from $7.00 to over $25.00. All of the surrounding establishments serve, at a minimum, beer and wine. Most serve liquor-spirits as well.

Market Penetration Calculations

Given the size and characteristics of the market we have established first year goals for Java Joe’s sales. While we are optimistic and excited by the potential of our products to resonate with this market segment, we need to temper that optimism with reality. There are 229 eating and drinking places within 1 mile of our location. Competition will be stiff, but with an effective marketing plan we believe Java Joe’s will succeed. Our plan is based on the following reasonable market penetrations:

Counter Service – Our First Year goal is to have 1.5% of the day time population within 1 mile of Java Joe’s make a counter purchase once a week (60,817 * 1.5% * 4 times in each month for approximately 3,600 purchases per month).

Table Service:

o Lunch – Our First Year goal is to have 2% of the Professional & Related Occupations market within 5 miles eat lunch at Java Joe’s once a week (48,753 * 2.0% * 4 times each month, for approximately 4,000 meals per month)

o Dinner – Our First Year goal is to have 1.5% of the population 21 or older within 5 miles of Java Joe’s have dinner once every two months (468,211 * 1.5% * 0.5 times each month, for approximately 3,500 meals per month)

Bar Service – Our First Year goal is to have 30% of the lunch or dinner guests order an alcoholic drink.

Demand from Customer’s Perspective

Our customer's dining and entertainment needs are critical to the success of Java Joe’s. As a supplier of a full-service dining experience, Java Joe’s must appeal to people who are interested in integrating our type of cuisine regularly into their dining/food purchase experiences. Our

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customers are well educated and interested in partaking of new experiences. Keeping the menu offerings "fresh" will remain a constant challenge to the business. Our business related customers will seek out a location conducive to holding business discussions in a professional setting. They tend to choose comfortable, affordable venues, and repeat appearances at places that offer familiar scenery with new twists.

Competitive Analysis

The Clarendon area is characterized as an eating destination that has a high density of eating

and drinking places at 229 establishments within 1 mile, employing 3,999 people. Gaining a

clear understanding of the competitive situation is complicated by the fact that the vast majority

of these firms are privately held, making data about their operation difficult to obtain. For that

reason we engaged the services of Marketing Roadmap, LLC to perform a market analysis.

That analysis indicated that the three primary competitors for Java Joe’s are Cozies, a national

coffeehouse chain (with 17% of the market), Hooeyflungers, a regional chain (with 13% of the

market, and Muddy Coffee, an independent coffeehouse (with 7% of the market). The remaining

63% of the market is unclaimed with no other established competitors. Table 1 presents the

analysis of the competition and Java Joe’s Strengths, Weaknesses, Opportunities, and Threats

(SWOT).

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Table 1: Strengths, Weaknesses, Opportunities, and Threats Analysis

Characteristic Java Joe's Joint Cozies Hooeyflungers Muddy Coffee

Strengths

What are your business advantages?

Several Years Experience in the Restaurant/Coffee Industry

Convenient location & private areas for conversation

Consistent quality food (breakfast/dinner) quickly.

Owner is nationally known coffee expert

What are your core competencies?

Customer service, quality of product and new technology

Fresh baked breads; space for small meetings; Dinner

Customer service, quality food, catering

Excellent coffee. Great location.

Where are you making the most money?

Evening Customers who will be dining in for dinner

Breakfast & Dinner

Catering and daily clients. Dinner weaker than breakfast

Clients from local University and business community.

What are you doing well?

Realistic goals and clear picture of financial position

Quick tasty food. Cater to business market.

Built loyal customer base. Brand name of regional, locally owned company

Coffee and food product consistently rated high by critics

Weaknesses

What areas are you avoiding?

Marketing ~ we are hiring a firm to assist

Cleanliness. Impersonal staff.

Additional locations in Northern Virginia

Hiring additional employees.

Where do you lack resources?

Seeking the right employees who exemplify the same vision

Parent company in the process of reorg. Franchise.

Not enough parking for customers. Many customers are towed.

To hire enough staff to help keep floor areas clean

What are you doing poorly?

Understanding the market share based on competition

Not earning additional income. Financial difficulties.

Catering opportunities could be expanded into more NOVA locations

Maintaining cleanliness of location. Keeping staff after trained.

Where are you losing money?

Construction Build-out Too many locations.

Weekends. Towed customers.

Not enough turnover of customers during the day.

What needs improvement?

Marketing strategy. Decrease locations and emphasize local market.

Increase number of customers during the weekends/holidays.

Build-out of main food area to increase number of customers

Opportunities

Any beneficial trends?

People are going out to eat and are willing to pay moderate prices

Affordable price points for consumers

Affordable quality food. Price points are good.

Coffee market is increasing numbers in the US

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Characteristic Java Joe's Joint Cozies Hooeyflungers Muddy Coffee

Niches that competitors are missing?

Clean, private location for meetings

Brand name. Consumer knows what to expect.

Catering and daily customers. Write up in Washington Post.

High quality of coffee brewing & products

New technologies?

AV equipment available for business meetings

Ovens used to bake bread on location.

Computerized order system linked from cashier to kitchen.

Better coffee machines to make the perfect cups

New needs of customers?

We need to meet our goals and increase the numbers annually

Yes, to continue to bring in additional cash revenue.

Expansion of additional catering opportunities into other jurisdictions.

Increase number of businesses and companies

Threats

Obstacles to overcome?

Creating a brand name where there are successful existing businesses

Limit amount of costs in order to gain positive cash flow.

Parking difficulties. Number of local coffee shops opening that have lower prices.

Aggressive competitors?

Starbucks, Caribou, Hoeeyflungers & Muddy Coffee

Indirectly: Starbucks, Caribou, Hooeyflungers & Muddy Coffee

Muddy coffee. Ballston Café. (Located less 1/2 mile)

Starbucks & Hooeymongers

Successful competitors?

Hooeymongers & Muddy Coffee

Hooeyflungers doing very well and have taken % of market

Muddy Coffee. Has more parking spaces.

Hooeymongers ~ although they don't have quite the same product

Negative economic conditions?

Overall economy. Banks not lending as readily as in the past.

Parent company expanded itself too quickly. Not enough access to capital

Price of food gone up over year but prices remain same.

Cost of coffee beans are increasing ~ Customers partaking of Dunkin Donuts

Government regulation?

Yes: Daily Food Health inspections; Initial Construction Buildout

Yes: Daily Food Health Inspections

Yes: Daily Food Health Inspections

Yes: Daily Food Health Inspections

Changing business climate?

Current economy is a challenge to start a new food venture. Financing Tight.

Younger nighttime population may not choose location to dine

Cost of food creeping up may need to increase coffee & fruit prices.

People are paying less prices for coffee

Vulnerabilities? Construction delays & costs. AV Equipment costs.

Not enough capital to maintain growth opportunities

If another similar shop/restaurant opens in the area that has more parking.

High price per coffee. Great product but are customers willing to pay the higher prices

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Marketing Strategy

We will promote our company name and label more than the products we sell because to be successful we have to stand for brand-name integrity, excellent menu offerings, and first class facilities for meetings (both business and social). Therefore, our promotion strategy includes focusing on events and messages that promote:

Java Joe’s as a place to hold business meetings in a casual yet professional

atmosphere

Java Joe’s as a sponsor for small business related organizations and events (such as

SCORE roundtables and workshops)

Java Joe’s as the place to meet for your social club or group

Java Joe’s as a sponsor for local community events associated with young professionals

Initially, we have planned campaigns specifically designed for each of our services.

The coffee shop counter service will be promoted by extensive use of social networking

tools to create “buzz” concerning the monthly flavors of our coffees, specials on food

items, and retail items being offered. We will use Facebook and Twitter to raise

awareness of our services and maintain a blog on the Java Joe’s Web site for

discussions relevant to our target market segment.

Promotions for lunch service will focus on professional networking groups such as

LinkedIn groups, by hosting networking events for professional associations, and by

offering discounts for professional groups.

Dinner service (and bar service) will be promoted primarily by aggressive use of social

networking tools and subscribing to local online directory listings.

Internet sales will be supported by pay-per-click promotions and by search engine

optimization (SEO).

Promotional Budget

In order to ensure we are effective in getting out our marketing message, we have retained Marketing Roadmap, LLC to advice us on our marketing campaigns. With an annual budget of $24,000 we expect Marketing Roadmap to be effective in helping us establish the Java Joe’s brand.

Pricing Strategy

Our market analysis indicates that price will not be the primary driver for our customer base. Factors such as the quality of the meeting facilities, the attitude of the staff toward supporting but not interrupting business discussions, and our location with easy access to Metro will be much more important drivers for our target market segment. Therefore, pricing will be used to raise interest in special promotions but generally set at slightly higher than the competition. Discounts to our competitor’s levels will be given to encourage repeat business through a loyalty club membership.

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Sales Projection

Two factors will impact our sales during the first year of operation. The first will be the time it takes to establish our brand identity and become known as the place to meet for our target market segments. The second factor will be seasonal fluctuations in demand for our services. We expect to ramp up to full, steady state operation within six months of operation. At that point seasonal fluctuations will take effect. We expect the Fall and Winter months to have strong demand and the Summer months to be relatively slower for business. Figure 1 shows our sales projection for the first year based on these assumptions.

Figure 1: First Year Sales Projection

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Operational Plan

Overview

One of the critical success factors for Java Joe’s will be providing an atmosphere that resonates with our target market segment. The dining area will have the same configuration of tables for lunch and dinner, with lighting and background music being tailored to the time of day.

The coffee shop counter area will be located on the ground floor and will be laid out to facilitate the flow of foot traffic through the area. The emphasis of this portion of the building will be getting customers in and served as quickly as possible.

To accomplish our objectives, our staff will need to continuously bus the tables to ensure customers have a clean and attractive environment. Staff will be trained to support customers when needed but not to cause disruptions to the conversations. Our goal will be to support the business or social interactions, not to just “push product.”

Location Considerations

Our location is a key asset for Java Joe’s. The central location in the heart of Clarendon will be leveraged whenever possible. Our floor layout will be designed to accommodate foot traffic (either from Metro or the local buildings) and minimize parking. We will maintain a listing of available parking facilities but will encourage the use of mass transit in all of our advertisements. The limited parking that will be available will be enforced rigorously to ensure people don’t park on our property and then shop elsewhere.

Business hours

The hours of operation will be from 7:00 am until 11:00 pm, Monday through Thursday. On Friday and Saturday, the hours of operation will be from 7:00 am until 1:00 am the next day.

The counter service will be available from 7:00 am until 7:00 pm each day.

Lunch will be served from 11:00 am until 3:00 pm each day. Dinner will be served from 5:00 pm until 10:00 pm each day.

Staffing Plan

The principal operator for Java Joe’s is Joe Jaconi, the owner of Java Joe’s, LLC. Mr. Jaconi has more than 20 years experience operating a restaurant and has just recently completed work as the general manager of Saba Sam’s, a coffeehouse in the Charlottesville, Virginia area. Mr. Jaconi is a long-time resident of the Arlington area and is very familiar with the local community. Mr. Jaconi’s resume is attached in the appendix to this plan.

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In addition to Mr. Jaconi, we will employ two full-time managers to handle the day to day operations of the business. The managers will oversee the operation of the counter and dining area. They will direct the staff and ensure appropriate levels of service.

The kitchen will be staffed by three chefs, one during the lunch service and two for dinner. They will be supported by a kitchen staff of 3 workers. Table service will be provided by 6 waiters to cover the lunch and dinner shifts. The table area will be cleaned by a staff of 3.

Finally, the counter will be served by a staff of 3 staggered to cover the hours of operation.

In preparing this plan we consulted with the Arlington Employment Center to ensure that our wage and salary projections were reasonable in today market.

Suppliers

Mr. Jaconi has already established supplier agreements with all required suppliers based on his knowledge of the industry and the local market. Backup suppliers have been identified for all critical supplies.

Credit Policies

Java Joe’s will operate on a cash and carry basis for the majority of its business. We anticipate that 90% of our transactions will be by credit card or debit card and there will be limited need to extend credit. To be conservative, we have made our financial projections based on 20% of our receivables being between 31 and 60 days and 5% requiring more than 60 days for collection.

Java Joe’s will aggressively pursue discounts for prompt payment; otherwise payments will be according to terms.

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Management and Organization

Organizational Structure

Java Joe’s, LLC is a Limited Liability Company in the state of Virginia. The company is owned and managed by the primary stakeholder, Joe Jaconi of Arlington, Virginia. Mr. Jaconi is supported by 2 full-time managers supervising the daytime and nighttime shifts of the company. The managers direct the activities of the kitchen staff, the waiters, the counter sales agents, and the cleaning staff. Mr. Jaconi controls the purchasing from suppliers and payment of invoices.

Advisory Bodies

Java Joe’s, LLC does not have a separate board of directors; but it does receive advisory services from a number of sources:

Legal – Java Joe’s, LLC has engaged the services of McLaw & Associates, PLC for its legal needs

Accounting – Java Joe’s, LLC has retained the firm of Mac N. Accounting, P.C for its accounting needs

Insurance – Java Joe’s has obtained insurance coverage from Small Business Insurance Agency, Inc.

Marketing – Java Joe’s, LLC has retained Marketing Roadmap, LLC for its marketing needs

Business Mentoring – Java Joe’s, LLC receives business counseling from SCORE Chapter One of Washington, DC

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Personal Financial Statement

The personal financial statement for Mr. Joseph Jaconi is presented below.

Personal Financial Statement of: Joseph Jaconi as of: 1/28/2010

Assets

Amount in Dollars

Cash - checking accounts $ 8,760

Cash - savings accounts 25,691

Certificates of deposit 150,456

Securities - stocks / bonds / mutual funds 245,690

Notes & contracts receivable -

Life insurance (cash surrender value) 24,567

Personal property (autos, jewelry, etc.) 24,500

Retirement Funds (eg. IRAs, 401k) 457,098

Real estate (market value) 752,900

Other assets (specify) -

Total Assets $ 1,689,662

Liabilities

Amount in Dollars

Current Debt (Credit cards, Accounts) $ 2,306

Real estate mortgages (Residence) 351,867

Other liabilities (None) -

Total Liabilities $ 354,173

Net Worth $ 1,335,489

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Startup Expenses and Capitalization

Java Joe’s, LLC is fortunate in obtaining a lease commitment from the landlord of 3232 Wilson Blvd. for operation of its business. In addition to the ideal location for our target market segment, the property’s current floor plan will minimize the build out costs needed to start operation. The counter area and dining area are already configured for a food service and will require only minor leasehold improvements. A budget of $100,000 has been allocated for leasehold improvements, equipment, and furniture and fixtures. This figure includes approximately $5,000 already expended for architectural drawings for the proposed build out.

The other major startup costs are for lease deposits, starting inventory, salaries for the startup staff, and other deposits and fees. The budget allocated for this category of costs is $96,475.

A number of assumptions have been made in preparing this portion of the plan.

The landlord will not charge rent until after the build out has been completed and the

certificate of occupancy granted.

That obtaining zoning approvals, conducting the build out, and receiving the Certificate

of Occupancy will take no more than 4 months.

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Financial Plan

A number of assumptions have been made in preparing this portion of the plan.

That costs from our suppliers will remain constant for the first year of operation.

Payroll expenses will increase by 3% for year 2 and 3 each.

Fixed operating costs will increase by 3% for year 2 and 3 each.

That cost of goods for the counter service and table services (lunch and dinner) can be

held to 30% or lower. Cost for goods of the remaining services will be even less (under

20% for the bar service).

We will begin to pay down the line of credit as soon as operational profits allow.

12-Month Profit and Loss Projection

The Table 2 presents the 12-Month Profit and Loss Projection for Java Joe’s. That analysis shows Java Joe’s operation generating a sustained positive cash flow by month 4. It should be pointed out that this represents a conservative projection. For example, our projection assumes that the full staff will be hired as soon as we are operational. Given today’s employment market, our intent is to delay hiring for non critical positions until the volume of business warrants bringing staff onboard. The same types of assumption apply to some of the other operating expenses such as utilities and equipment rentals. Our philosophy for financial planning is to plan for the worst and then manage our risks as closely as possible. Even with that philosophy in place our Profit and Loss Projection shows Java Joe’s reaching sustained positive operation by month 4 and then continuing to be profitable. While we envision needing financing of approximately $100,000 during the first year, we expect to complete paying that line of credit down by the end of year 1.

Three-Year Profit Projection

Table 3 presents the detailed profit projections for the first three years of operation at Java Joe’s. That projection shows that if the full $100,000 of financing is needed we will have a 10.14% gain for the first year. The outlook remains strong for the remaining years of the analysis: we expect to show a profit of 23.97% in year 2 and 27.40% in year 3.

Projected Cash Flow

As mentioned above, our financial planning philosophy is conservative. We believe we can generate positive cash flow by month 4 and begin paying down the line of credit by month 5. If we are able to contain expenses (by delaying some hiring decisions, etc.) we hope to be able to exceed these expectations. There is no plan for dividend payments or returns of equity during

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the first two years of operation. We do expect to pay a dividend during year 3. Table 4 presents the details of our Projected Cash Flow for the first year of operation.

Balance Sheet

Table 5 shows the Balance Sheet for the base period (opening day) and the end of year 1. It shows Java Joe’s ending the year with assets of $310,225, liabilities of $21,950, and owner’s equity of $288,277.

Break Even Analysis

Java Joe’s breakeven points for the four services are well within the sales projections. Specifically:

Service 1st Year Projection Breakeven Point

Counter Service 38,500 transactions 6,947 transactions

Lunch Service 42,750 meals 7,120 meals

Dinner Service 27,500 meals 4,984 meals

Bar Service 22,500 drinks 4,549 drinks

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Table 2: 12-Month Profit and Loss Projection

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Table 3: Three Year Profit Projection

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Table 4: Projected Cash Flow

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Table 5: Balance Sheet

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Appendices

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Resume of Mr. Joe Jaconi

Mr. Joe Jaconi has more than 20 years experience operating restaurants and has just recently completed work as the general manager of Saba Sam’s, a coffeehouse in the Charlottesville, Virginia area. Mr. Jaconi is a long-time resident of the Arlington area and is very familiar with the local community.

2004 – 2009

Mr. Jaconi was the general manager of Saba Sam’s coffeehouse in Charlottesville, Virginia. As general manager, he was responsible for all staffing, marketing, and operation of the coffeehouse. Saba Sam’s is a 80 seat coffeehouse/café catering to the relatively upscale market in Charlottesville historical district. When Mr. Jaconi joined Saba Sam’s he introduced full service dining service and expanded the menu to include regional selections. Under his direction the Saba Sam’s annual sales grew from $400,000 to over a million dollars.

Mr. Jaconi was responsible for back office operations in addition to the restaurant operation. He supervised purchasing and developed a network of reliable suppliers for the café. He initiated an Internet sales division to market branded items to the local and regional markets.

2000 – 2004

Mr. Jaconi joined Mega Bean, the national coffeehouse/café chain, in 2000 as the shift manager for the evening shift at the Arlington, Virginia Mega Bean store. While at Mega Bean, he advanced from the position of shift manager to the position of Washington Region Manager, overseeing the operation of 3 Mega Bean stores. His duties included recruiting staff, overseeing the operations of the individual stores, and developing contracts with regional suppliers. Mr. Jaconi had profit/loss responsibility for the Washington Region.

1992 – 2000

Mr. Jaconi has held a number of management positions at restaurants in the Washington, DC area. His positions have ranged from head waiter to shift supervisor. The size of the restaurants has ranged from 20 seats to over 200 seats.

1987 – 1992

Mr. Jaconi has worked in the restaurant industry since graduating from James Madison University in 1987. He has held positions as waiter, counter service, and back office staff.

Education

Mr. Jaconi graduated from James Madison University in 1987 with a BA degree. In 2008, Mr. Jaconi earned an MDB specializing in restaurant management.