Z Restaurant Business Plan

Z RestaurantBusiness Plan

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Z Restaurant

Table of Contents

1.0 Executive Summary.......................................................................................21.1 Objectives.....................................................................................................31.2 Mission.........................................................................................................31.3 Start-up Summary........................................................................................41.4 Company Ownership....................................................................................51.5 Company Location........................................................................................5

2.0 Products and Services..................................................................................62.1 Product and Service Description..................................................................6

3.0 Market Analysis Summary............................................................................73.1 Market Segmentation...................................................................................93.2 Market Needs...............................................................................................93.3 Industry Analysis..........................................................................................93.4 Competitive Comparison............................................................................10

4.0 Strategy and Implementation Summary....................................................114.1 Competitive Edge.......................................................................................114.2 Marketing Strategy.....................................................................................11

5.0 Management Summary...............................................................................135.1 Personnel Plan...........................................................................................13

6.0 Financial Plan..............................................................................................146.1 Sales Forecast............................................................................................156.2 Break-even Analysis...................................................................................176.3 Projected Profit and Loss...........................................................................186.4 Projected Cash Flow..................................................................................206.5 Projected Balance Sheet............................................................................216.6 Sensitivity Analysis.....................................................................................22

Appendix............................................................................................................23

_______________________________________________________________________________CONFIDENTIAL – Do Not Distribute Without Permission

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Z Restaurant

1.0 Executive Summary__________ Entertainment, LLC (d.b.a. Z Restaurant and also referred to as “the Company”) is a start-up business that will launch its high-end restaurant in June 2009. Located in either Seattle, Washington or Portland, Oregon, the Company will be an elegant restaurant that serves exceptional Mediterranean-style steak and seafood to an upscale clientele. Customers will dine in a luxury atmosphere, surrounded by calming waterfalls, aquariums, and live piano music in the martini bar.

Z Restaurant’s proposed location in downtown Seattle or Portland will place it in an area characterized by wealthy individuals and fine dining. The northwest is known for its creative and upscale cuisine; in fact, Portland won the Food Network’s “Delicious Destination of the Year” award in 2007, as well as praise from the New York Times. The Company will operate in the Eating Places industry, in which individual establishments in Seattle and Portland earn average revenue of $3.9 million and $800,000, respectively, per year. Z Restaurant will compete with other upscale dining locations, such as Morton’s, Ruth’s Chris, and El Gaucho. The Company will be able to provide better food and service in a more luxurious atmosphere.

Z Restaurant will utilize a broad range of direct advertising techniques to attract customers to its upscale Mediterranean steak and seafood restaurant. The Company’s initial marketing strategy will include local commercials, a dynamic and informative website, press release kits distributed to major local media outlets, membership in the Seattle or Portland Chamber of Commerce, sponsorship of local events and organizations, partnerships with high-end hotels in the area, prominent participation in annual food festivals, and an invitation-only grand pre-opening event. Because the Company will be a social environment, Z Restaurant recognizes that its most powerful marketing tool will be positive word of mouth referrals from satisfied customers. Through these methods, Z Restaurant intends to become the preferred local destination for high-end cuisine.

______________ will operate the Company with the help of _____________ and ________________. Mr. ________ has extensive experience working in the restaurant industry, including seven years at _________’s Restaurant and six years at Salmon Street Market and Deli.build out of H2O martini bar and restaurant, and also build out and operate IBIZA restaurant located in the heart of Portland. He currently owns and operates AFJ Limousine and formerly operated Z Restaurant, located in the heart of the city of Portland.

To achieve the Company’s objectives, Z Restaurant is looking to obtain $400,000 in the form of investment or line of credit.


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Z Restaurant

1.1 ObjectivesThe objectives for the first three years of operation include:

Increase the number of services sold by 5% the second year Continue a sustainable and profitable existing business Achieve ~$2.5 million, ~$2.63 million, and ~$2.76 million in sales in Year 1, Year 2, and Year

3, respectively Maintain an approximate 81.25% gross margin throughout the first three years Realize ~$838,200 in net profit by the end of Year 3

1.2 MissionThe Company’s mission statement is as follows:

“To ensure that each guest receives prompt, professional, friendly, and courteous service. To maintain a clean, comfortable, and well-maintained premises for our guests and staff. To provide – at a fair price – nutritional, well-prepared meals using only quality ingredients. To ensure that all guests and staff are treated with the respect and dignity they deserve. To thank each guest for the opportunity to serve them. By maintaining these objectives, we shall be assured of a fair profit that will allow us to contribute to the community we serve.”


Highlights

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Year 1 Year 2 Year 3

Sales

Gross Margin

Net Profit

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Z Restaurant

1.3 Start-up SummaryThe following tables and graphs detail the capital required to bring the Company’s vision to reality. The total start-up expenses plus the total start-up assets equal total start-up requirements. The Company’s total funding is derived from adding the total liabilities and the total planned investment figures. The Company’s loss at start-up is equal to its total start-up expenses. The Company’s total capital and liabilities is derived from subtracting the total funding figure from the figure representing loss at start-up. The cash balance at the start date is the amount of cash the Company has available at start-up.


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Legal $10,000

Stationery $2,000

Brochures/Menus $5,000

Insurance $4,000

Rent $27,000

Research and Development $5,000

Advertising and Marketing $10,000

Total Start-up Expenses $63,000

Start-up Expenses

Cash Required $262,000

Inventory $55,000

Equipment $120,000

Build out Cost $300,000

Other Long-term Assets $0

Total Start-up Assets $737,000

Start-up Assets

Total Start-up Expenses $63,000

Total Start-up Assets $737,000

Total Requirements $800,000

Total Requirements

Liabilit ies and Capital

Current Borrowing $0

Long-Term Liabilit ies $800,000

Accounts Payable $0

Other Current Liabilit ies $0

Total Liabilities $800,000

Start-up Liabilities

Planned Investment

Owner $0

Investor $0

Total Planned Investment $0

Start-up Investments

Total Liabilit ies $800,000

Total Planned Investment $0

Total Funding $800,000

Start-up Funding

Loss at Start-up (Start-up Expenses) ($63,000)

Total Capital and Liabilit ies $737,000

Cash Balance on Starting Date $262,000

Start-up Capital and Liabilities

Start-up

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Z Restaurant

1.4 Company OwnershipZ Restaurant will be a Limited Liability Company registered in the state of Washington.

Company LocationZ Restaurant will be located in either Seattle, Washington or Portland, Oregon.


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Z Restaurant

2.0 Products and ServicesZ Restaurant will be a full-service, upscale restaurant that is unlike any others in the Seattle or Portland areas. The menu will feature Mediterranean seafood and steak, as well as a variety of alcoholic and non-alcoholic beverages prepared by the establishment’s outstanding chef and served by its impeccable staff. The Company’s products and services will include the following:

Food Beverages Alcohol Piano Martini Bar

2.1 Product and Service DescriptionZ Restaurant’s interior will feature hardwood floors, low lighting, and inviting wall colors that add ambiance to the setting. Lighted waterfalls and aquariums will further enhance the atmosphere, making it an ideal place to relax and socialize. The Company’s products and services are outlined in greater detail below:

Food: Z Restaurant will offer an outstanding menu, featuring Mediterranean steak and seafood. All dishes will be infused with a remarkable blend of seasoning and spices, sure to please the palate of each customer. Food will be prepared by a talented and experienced team of chefs, committed to providing customers excellence in their dining experience.

Piano Martini Bar: The Company will feature a piano martini bar that will have nightly piano music. The bar will provide a wide selection of alcoholic infusions including martinis, wine, and beer. Comfortable furniture and bar stools will be available for patrons to relax while they sip their drinks and enjoy jazz and classical piano music.

Unparalleled service: Z Restaurant will focus on creating long-lasting relationships with its customers to generate word of mouth referrals and repeat business. The staff will be friendly and personable, and will seek to get to know patrons on a first-name basis as to create greater brand loyalty.


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Z Restaurant

3.0 Market Analysis SummaryThe Company will be located in either Seattle, Washington (King County), or Portland, Oregon (Multnomah County) to capitalize on these cities’ fine dining scenes. Both locations are in thriving metropolitan areas that are home to numerous premium restaurants and affluent downtown residents and visitors. The Company will carefully select its specific location to maximize the restaurant’s ability to tap into a steady stream of consumer traffic. The following tables provide the most current U.S. Census data with regard to the population growth of King and Multnomah Counties.

King County, WA – Population & Growth1

Population, 2006 estimate 1,826,732Population, percent change, April 1, 2000 to July 1, 2006 5.2%Population, 2000 1,737,034

Multnomah County, OR – Population & Growth2

Population, 2006 estimate 681,454Population, percent change, April 1, 2000 to July 1, 2006 3.2%Population, 2000 660,486

The table below shows pertinent demographic figures for the populations of Seattle and Portland. This data is provided by ESRI, a market research firm. The Company will use this information to ensure that its operational and marketing plans resonate with the target market. The following data describe demographic characteristics in terms of income, education, and social characteristics. Note that Seattle residents have a potential spending index of 124 for food away from home, which is based on the national average of 100.

Seattle, WA and Portland, OR – Full Demographic ReportSeattle Portland

2007 Total Population 593,350 551,3022012 Total Population 615,058 567,030 2007 - 2012 Annual Rate 0.72% 0.56%

2007 Households 273,150 234,726 2007 Average Household Size 2.05 2.292007 Families 114,941 122,127 2007 Average Family Size 2.85 2.96

Median Household Income 2000 $45,760 $40,150 2007 $62,348 $52,206 2012 $77,643 $62,686

Per Capita Income 2000 $30,306 $22,643 2007 $41,272 $30,228 2012 $52,993 $37,370

Median Age

1 U.S. Census Bureau data. Obtained at: http://www.census.gov/.2 Ibid._______________________________________________________________________________

CONFIDENTIAL – Do Not Distribute Without Permission7

Z Restaurant

2000 35.5 35.2 2007 37.3 36.9 2012 39.5 38.1

2007 Households by IncomeHousehold Income Base 273,152 234,726 < $15,000 10.3% 12.0% $15,000 - $24,999 8.1% 9.0% $25,000 - $34,999 8.1% 10.9% $35,000 - $49,999 13.8% 15.7% $50,000 - $74,999 17.8% 19.9% $75,000 - $99,999 13.6% 14.1% $100,000 - $149,999 15.7% 10.5% $150,000 - $199,999 6.2% 4.4% $200,000 + 6.5% 3.4%Average Household Income $87,687 $69,766

2007 Population by AgeTotal 593,351 551,299 0 – 4 4.4% 5.9% 5 – 9 4.3% 5.6% 10 – 14 4.2% 5.4% 15 – 19 5.9% 6.1% 20 – 24 7.4% 6.9% 25 – 34 19.3% 17.0% 35 – 44 17.3% 15.4% 45 – 54 14.9% 15.5% 55 – 64 11.1% 11.1% 65 – 74 4.8% 5.0% 75 – 84 4.1% 3.9% 85+ 2.4% 2.1% 18+ 84.4% 79.7%

2007 Population by Sex Males 50.0% 49.7% Females 50.0% 50.3%

2000 Population 25+ by Educational AttainmentTotal 409,582 363,851 Less than 9th Grade 4.3% 5.2% 9th - 12th Grade, No Diploma 6.2% 9.2% High School Graduate 15.3% 22.2% Some College, No Degree 20.6% 25.0% Associate Degree 6.4% 5.8% Bachelor's Degree 29.9% 21.3% Master's/Prof/Doctorate Degree 17.3% 11.4%

2007 Consumer ExpenditureFood Away From Home: Total $ $1,149,439,289 $777,049,907Average Spent $4,208.09 $3,310.46Spending Potential Index 124 98


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Z Restaurant

3.1 Market SegmentationZ Restaurant will target affluent residents of the proposed business region for its upscale dining services. Patrons will be men and women including singles and couples. The Company has further defined its target market below.

Age range: 27 and older Income range: $80,000 or more

3.2 Market NeedsSeattle and Portland are both home to active and growing restaurant scenes. In fact, Portland won the Food Network’s “Delicious Destination of the Year” award in 2007 and has been featured in the New York Times as a national destination for fine dining and drinking.3,4 However, both areas still lack a distinctive restaurant that can satisfy customers in all aspects of fine dining, including cuisine, atmosphere, style, and service. Z Restaurant will solve this market need by establishing its restaurant in Seattle or Portland, bringing upscale dining with original flair to the city.

3.3 Industry AnalysisZ Restaurant will operate within the Eating Places industry (Standard Industrial Classification 5812). The table below shows Dun & Bradstreet data regarding the performance of the businesses in this industry on a national, state, and local level.5

Industry: Eating Places (5812)

Establishments primarily engaged in the retail sale of prepared food and drinks for on-premise or immediate consumption.

Market Size Statistics

Estimated number of U.S. establishments: 571,716Number of people employed in this industry: 6,443,741Total annual sales in this industry: $357.6 billionAverage number of employees per establishment: 18Average sales per establishment (unknown values are excluded from the average): $1.2 million

Market Analysis by State

State No Bus. % Total Total Emps. Total Sales Avg. Emps. Avg. Sales

Washington 13,260 2.3 131,028 14,697.7 15 2

Oregon 7,967 1.4 79,668 2,503.1 15 0.6

Market Analysis by Metro Area

Metro Area No Bus. % Total Total Emps. Total Sales Avg. Emps. Avg. Sales

Seattle, WA 6,242 1.1% 64,370 $13.1 billion 16 $3.9 million

Portland, OR 4,352 0.8% 45,376 $1.8 billion 16 $800,000

3.4 Competitive ComparisonZ Restaurant will compete with other upscale restaurants in its area of operations. Direct competitors will include Morton’s, Ruth’s Chris, and El Gaucho, which are all premium steakhouses in the area.

3 Food Network Awards 2007. Food Network. 2007. Obtained at: http://tinyurl.com/2w6mth.4 Asimov, Eric. New York Times. “In Portland, a Golden Age of Dining and Drinking.” September 2007. Obtained at: http://tinyurl.com/5ucsps.5 Dun & Bradstreet. Industry Data for SIC 5812-0000. April 2008._______________________________________________________________________________

CONFIDENTIAL – Do Not Distribute Without Permission9

Z Restaurant

Though these restaurants cater to an affluent crowd, the Company will outperform the competition by creating total patron satisfaction in an environment that is exclusive to wealthy consumers. The strengths and weaknesses of the Company’s direct competitors are listed below. For more information regarding the Company’s competitive advantages, see 4.1 Competitive Edge.

Morton’s, Ruth’s Chris, and El Gaucho Strengths: These upscale steakhouses cater to affluent clientele. Weaknesses: These restaurants, though they do provide fine cuisine, do not provide the high-

class atmosphere that upper-earning individuals seek.


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Z Restaurant

4.0 Strategy and Implementation SummaryBefore a company can effectively market itself, it must first establish a strong brand and identity. Z Restaurant’s brand will build on its core values of innovation and luxury with Mediterranean steak and seafood served in a classy, upscale environment featuring waterfalls, a piano martini bar, and a large aquarium. The Company will either define its brand and produce its logo using staff within the Company, or will contract with a production or design house to do so.

With its brand and core values established, the Company will be able to send a clear message about its mission and what it stands for, therefore building customer loyalty and persuading potential customers to patronize the business.

The Company intends to achieve the following objectives:

Establish itself as a luxurious high-end restaurant with excellent food Build a steady customer base that is large enough to sustain business Generate enough revenue to expand operations

In order to reach these operational goals, the Company will build on its strengths and advantages as outlined in the following section.

4.1 Competitive EdgeThe Company will face competition from other area restaurants that cater to high-end clientele. However, most of these are national chains and are not tailored to fit a local audience. Z Restaurant will capitalize on its competitors’ weaknesses by building on the following strengths (also see: 2.1 Product and Service Description):

Unique atmosphere and concept Eye-catching indoor water features Specific attention to the Seattle market Excellent customer service Knowledgeable staff

4.2 Marketing StrategyZ Restaurant will generate interest for its upscale dining destination by utilizing a variety of advertising channels that will increase the Company’s exposure among local consumers.

Press release kit: A press release kit will be sent to major Seattle- or Portland-area media outlets highlighting the launch of the Company’s restaurant. This kit will include a press release, photos of signature dishes, a color postcard with Z Restaurant’s mission statement and website address, and a copy of the menu.

Website: Z Restaurant will create a dynamic website to generate interest in its upscale dining establishment. This website will be search engine optimized and contain a number of features including: Company profile, location, photos of signature dishes, and full menu.


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Z Restaurant

Grand opening event: Z Restaurant will host an exclusive, invitation-only pre-opening event featuring tours of the facility, wine tastings, and samples of signature dishes. Hand-selected individuals and groups can sample menu items while mingling with other high-profile Seattle or Portland residents.

Chamber of Commerce: The Company will become a member of the local chamber of commerce, creating enhanced marketing throughout the immediate area. Benefits of this tactic include being listed in their monthly newsletter. This also will facilitate business through travel, as the chamber of commerce brings tourists and business travelers to the city.

Hotels: Z Restaurant will work with local high-end and luxury hotels to obtain prominent listing in in-room city guides and restaurant lists. Partnering Seattle hotels may include The Sorrento Hotel, Crowne Plaza Hotel, The Westin Seattle, The Fairmont Olympic Hotel, and W Seattle. Portland hotels may include The Westin Portland and The Governor Hotel.

Sponsorships: The Company will sponsor local charity events and organizations in an effort to give back to surrounding neighborhoods and the overall community. This will simultaneously build awareness of the Company’s restaurant within the community, while fostering loyalty from current customers who see Z Restaurant participating in community-building activities.

Food fairs: Depending on its chosen location, Z Restaurant will participate in the annual Bite of Seattle or Bite of Oregon food festival. These free events involve local restaurants providing samples of their most popular dishes to an audience of thousands of annual visitors.

Word of mouth: Word travels quickly between peers, family members, and colleagues who are pleased with the quality of food and service they receive. The Company will rely on this form of effective, yet inexpensive marketing to generate interest in its upscale dining location.


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Z Restaurant

5.0 Management Summary______________, Co-OwnerMr. ______________currently owns and operates for _______ Limousine. Prior this position, he worked at Salmon Street Market and Deli, a position he held for six years. During this time, Mr. _________ also owned and operated _______ Restaurant, a 70-seat restaurant that has an outstanding view of the city of Portland. This restaurant was featured in a January 2003 article in the Oregonian. In 2003, he began his new concept and idea for the restaurant and built the _____ martini bar and restaurant. For seven years before these roles, Mr. ________ owned and operated _________’s Restaurant.

_______________, Co-Owner

5.1 Personnel Plan


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Personnel Count

Ow ner 2 2 2

Hosts 4 4 4

Server 15 15 15

Manager 1 1 1

Bus Boys 7 7 7

Master Chef 1 1 1

Cooks 7 7 7

Total Personnel 37 37 37

Personnel Wage

Ow ner $0 $0 $0

Hosts $17,472 $18,346 $19,263

Server $11,750 $12,337 $12,954

Manager $50,000 $52,500 $55,125

Bus Boys $11,750 $12,337 $12,954

Master Chef $60,000 $63,000 $66,150

Cooks $29,000 $30,450 $31,973

Personnel Costs

Ow ner $0 $0 $0

Hosts $69,888 $73,382 $77,052

Server $176,249 $185,061 $194,314

Manager $50,000 $52,500 $55,125

Bus Boys $82,249 $86,362 $90,680

Master Chef $60,000 $63,000 $66,150

Cooks $203,000 $213,150 $223,808

Total Payroll $641,386 $673,456 $707,128

Personnel

Z Restaurant

6.0 Financial PlanThe financial plan below spells out the use of funds, net sales, and profits from increased sales. Certain assumptions were made. As with any long-range projection, accuracy is based on reasonable estimates of return on investment and past performance. The Company believes the following numbers are attainable and reasonable. However, actual results will vary.


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Profitability %'s:

Gross Margin 81.25% 81.25% 81.25%

Net Profit Margin 31.73% 31.10% 30.41%

EBITDA to Sales 34.79% 33.99% 33.14%

Return on Assets 49.12% 33.76% 25.78%

Return on Equity 108.63% 52.78% 35.15%

Activity Ratios:

Accounts Payable Turnover 4.96 5.41 5.32

Asset Turnover 1.55 1.09 0.85

Leverage Ratios:

Debt to Equity 1.21 0.56 0.36

Debt to Assets Ratio 54.78% 36.03% 26.65%

Interest Coverage Ratio 17.94 18.63 19.33

Liquidity Ratios:

Current Ratio 12.95 22.57 29.98

Current Debt to Total Assets Ratio 5.85% 3.76% 2.99%

Additional Indicators:

Sales to Equity Ratio 3.42 1.70 1.16

Financial Indicators

Z Restaurant

6.1 Sales ForecastSales forecast data is presented in the table and charts below. The total sales come from unit sales multiplied by the unit price. The direct cost of sales is derived from unit sales multiplied by the direct unit cost.


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Unit Sales

Meal 25,000 26,250 27,562

Cocktail 55,556 58,333 61,250

Beer 25,000 26,250 27,562

Wine 27,778 29,167 30,625

Total Unit Sales 133,333 140,000 147,000

Unit Price

Meal $65.00 $65.00 $65.00

Cocktail $9.00 $9.00 $9.00

Beer $5.00 $5.00 $5.00

Wine $9.00 $9.00 $9.00

Sales

Meal $1,625,000 $1,706,250 $1,791,562

Cocktail $500,000 $525,000 $551,250

Beer $125,000 $131,250 $137,812

Wine $250,000 $262,500 $275,625

Total Sales $2,500,000 $2,625,000 $2,756,250

Direct Unit Costs

Meal $10.00 $10.00 $10.00

Cocktail $2.25 $2.25 $2.25

Beer $1.25 $1.25 $1.25

Wine $2.25 $2.25 $2.25

Direct Cost of Sales

Meal $250,000 $262,500 $275,625

Cocktail $125,000 $131,250 $137,812

Beer $31,250 $32,812 $34,453

Wine $62,500 $65,625 $68,906

Subtotal Direct Cost of Sales $468,750 $492,187 $516,797

Sales Forecast

Z Restaurant


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Sales Monthly

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6.2 Break-even AnalysisThe following break-even analysis is the average monthly break-even point after new expenditures in fixed costs. It states that the Company must, on average, achieve sales of $121,989 per month to break even. It is important to note that this is an average from the first year projection. The fixed costs will not grow to this point unless sales grow accordingly.


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Monthly Units Break-even 6,506

Monthly Revenue Break-even $121,989

Assumptions:

Average Per-Unit Revenue $18.75

Average Per-Unit Variable Cost $3.52

Estimated Monthly Fixed Cost $99,116

Break-even Analysis

Break-even Analysis

($150,000)

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Monthly break-even point

Z Restaurant

6.3 Projected Profit and LossThe projected profit and loss for the Company shows substantial growth even though additional marketing, operating, and interest expenses are incurred. It should be noted that sales subtracted by direct cost of sales equals the Company’s gross margin. Additionally, the profit before interest and taxes is reached when operating expenses are subtracted from the gross margin. Finally, the Company’s net profit is calculated by subtracting interest expense and taxes incurred from the amount representing the profit before interest and taxes.


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Sales $2,500,000 $2,625,000 $2,756,250

Direct Cost of Sales $468,750 $492,187 $516,797

Other Cost of Sales $0 $0 $0

Total Cost of Sales $468,750 $492,187 $516,797

Gross Margin $2,031,250 $2,132,812 $2,239,453

Gross Margin % 81.25% 81.25% 81.25%

Expenses

Rent $200,400 $220,440 $242,484

Insurance $48,000 $52,800 $58,080

Utilities $36,000 $39,600 $43,560

Marketing/Promotion $120,000 $132,000 $145,200

Fees/Permits $2,600 $2,860 $3,146

Contractors $4,800 $5,280 $5,808

Office Supplies $12,000 $13,200 $14,520

Depreciation $28,000 $28,000 $28,000

Payroll Taxes $96,208 $101,018 $106,069

Total Personnel $641,386 $673,456 $707,128

Total O perating Expenses $1,189,394 $1,268,654 $1,353,996

Profit Before Interest and Taxes $841,856 $864,159 $885,458

EBITDA $869,856 $892,159 $913,458

Interest Expense $48,484 $47,899 $47,255

Taxes Incurred $0 $0 $0

Net Profit $793,371 $816,259 $838,203

Net Profit/Sales 31.73% 31.10% 30.41%

Pro Forma Profit and Loss

Z Restaurant


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Gross Margin & Profit Monthly

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Gross Margin

Profit

Z Restaurant

6.4 Projected Cash FlowThe important factor in the cash flow analysis is that the Company never runs out of funds. The cash flow supports the Company’s operations adequately and allows the Company to expand.


Cash

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Net Cash Flow

Cash Balance

Year 1 Year 2 Year 3Cash Received

Cash Sales $2,500,000 $2,625,000 $2,756,250

New Long-term Liabilit ies $0 $0 $0

Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $2,500,000 $2,625,000 $2,756,250

Expenditures

Expenditures from Operations

Cash Spending $641,386 $673,456 $707,128 Bill Payments $942,780 $1,110,738 $1,176,702

Subtotal Spent on O perations $1,584,166 $1,784,194 $1,883,831

Additional Cash Spent

Long-term Liabilities Principal Repayment

$9,642 $10,247 $10,890

Purchase Inventory $24,374 $23,213 $22,108 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0

Subtotal Cash Spent $1,618,182 $1,817,654 $1,916,828

Net Cash Flow $881,818 $807,346 $839,422

Cash Balance $1,143,818 $1,951,164 $2,790,586

Pro Forma Cash Flow

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Z Restaurant

6.5 Projected Balance Sheet


Year 1 Year 2 Year 3Assets

Current Assets

Cash $1,143,818 $1,951,164 $2,790,586

Inventory $79,374 $102,587 $124,695 Total Current Assets $1,223,192 $2,053,751 $2,915,281

Long-term Assets

Long-term Assets $420,000 $420,000 $420,000 Accumulated Depreciation $28,000 $56,000 $84,000

Total Long-term Assets $392,000 $364,000 $336,000

Total Assets $1,615,192 $2,417,751 $3,251,281

Liabilit ies and Capital

Current Liabilit ies

Accounts Payable $94,463 $91,010 $97,226 Subtotal Current Liabilities $94,463 $91,010 $97,226

Long-term Liabilities $790,358 $780,111 $769,221 Total Liabilities $884,821 $871,121 $866,447

Paid-in Capital $0 $0 $0 Retained Earnings ($63,000) $730,371 $1,546,631

Earnings $793,371 $816,259 $838,203

Total Capital $730,371 $1,546,631 $2,384,834

Total Liabilities and Capital $1,615,192 $2,417,751 $3,251,281

Net Worth $730,371 $1,546,631 $2,384,834

Pro Forma Balance Sheet

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Z Restaurant

6.6 Sensitivity AnalysisThe sensitivity analysis provides a crucial “what if” scenario. The best case and worst case tables below are based on factors assuming that sales are 15% higher or lower than figures projected earlier in this business plan.



Sales $2,875,000 $3,018,750 $3,169,687

COGS $539,062 $566,016 $594,316

GM $2,335,937 $2,452,734 $2,575,371

Gm% 81.25% 81.25% 81.25%

O/E $1,189,394 $1,268,654 $1,353,996

Net Profit $1,098,059 $1,136,181 $1,174,121

Cash Flow $1,193,809 $1,133,336 $1,181,711

Cash Balance $1,455,809 $2,589,145 $3,770,856

Net Profit/Sales 38.19% 37.64% 37.04%

Best Case Scenario (Sales Increase by 15%)


Sales $2,173,913 $2,282,609 $2,396,739

COGS $407,609 $427,989 $449,389

GM $1,766,304 $1,854,620 $1,947,351

Gm% 81.25% 81.25% 81.25%

O/E $1,189,394 $1,268,654 $1,353,996

Net Profit $528,426 $538,066 $546,100

Cash Flow $610,522 $523,876 $541,779

Cash Balance $872,522 $1,396,398 $1,938,177

Net Profit/Sales 24.31% 23.57% 22.79%

Worst Case Scenario (Sales Decrease by 15%)

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Appendix


Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Unit Sales

Meal 1,571 1,649 1,732 1,818 1,909 2,005 2,105 2,210 2,321 2,437 2,558 2,686

Cocktail 3,490 3,665 3,848 4,040 4,242 4,455 4,677 4,911 5,157 5,415 5,685 5,970

Beer 1,571 1,649 1,732 1,818 1,909 2,005 2,105 2,210 2,321 2,437 2,558 2,686

Wine 1,745 1,832 1,924 2,020 2,121 2,227 2,339 2,456 2,578 2,707 2,843 2,985

Total Unit Sales 8,377 8,796 9,235 9,697 10,182 10,691 11,226 11,787 12,376 12,995 13,645 14,327

Unit Price

Meal $65.00 $65.00 $65.00 $65.00 $65.00 $65.00 $65.00 $65.00 $65.00 $65.00 $65.00 $65.00

Cocktail $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00

Beer $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00

Wine $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00

Sales

Meal $102,091 $107,196 $112,556 $118,183 $124,093 $130,297 $136,812 $143,653 $150,835 $158,377 $166,296 $174,611

Cocktail $31,413 $32,983 $34,633 $36,364 $38,182 $40,091 $42,096 $44,201 $46,411 $48,731 $51,168 $53,726

Beer $7,853 $8,246 $8,658 $9,091 $9,546 $10,023 $10,524 $11,050 $11,603 $12,183 $12,792 $13,432

Wine $15,706 $16,492 $17,316 $18,182 $19,091 $20,046 $21,048 $22,100 $23,205 $24,366 $25,584 $26,863

Total Sales $157,064 $164,917 $173,163 $181,821 $190,912 $200,457 $210,480 $221,004 $232,054 $243,657 $255,840 $268,632

Direct Unit Costs

Meal $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00

Cocktail $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25

Beer $1.25 $1.25 $1.25 $1.25 $1.25 $1.25 $1.25 $1.25 $1.25 $1.25 $1.25 $1.25

Wine $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25 $2.25

Direct Cost of Sales

Meal $15,706 $16,492 $17,316 $18,182 $19,091 $20,046 $21,048 $22,100 $23,205 $24,366 $25,584 $26,863

Cocktail $7,853 $8,246 $8,658 $9,091 $9,546 $10,023 $10,524 $11,050 $11,603 $12,183 $12,792 $13,432

Beer $1,963 $2,061 $2,165 $2,273 $2,386 $2,506 $2,631 $2,763 $2,901 $3,046 $3,198 $3,358

Wine $3,927 $4,123 $4,329 $4,546 $4,773 $5,011 $5,262 $5,525 $5,801 $6,091 $6,396 $6,716

Subtotal Direct Cost of Sales $29,449 $30,922 $32,468 $34,091 $35,796 $37,586 $39,465 $41,438 $43,510 $45,686 $47,970 $50,368

Sales Forecast

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P ersonnel Count

Owner 2 2 2 2 2 2 2 2 2 2 2 2

Hosts 4 4 4 4 4 4 4 4 4 4 4 4

Server 15 15 15 15 15 15 15 15 15 15 15 15

Manager 1 1 1 1 1 1 1 1 1 1 1 1

Bus Boys 7 7 7 7 7 7 7 7 7 7 7 7

Master Chef 1 1 1 1 1 1 1 1 1 1 1 1

Cooks 7 7 7 7 7 7 7 7 7 7 7 7

Total Personnel 37 37 37 37 37 37 37 37 37 37 37 37

P ersonnel Wage

Owner $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Hosts $1,456 $1,456 $1,456 $1,456 $1,456 $1,456 $1,456 $1,456 $1,456 $1,456 $1,456 $1,456

Server $979 $979 $979 $979 $979 $979 $979 $979 $979 $979 $979 $979

Manager $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167

Bus Boys $979 $979 $979 $979 $979 $979 $979 $979 $979 $979 $979 $979

Master Chef $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Cooks $2,417 $2,417 $2,417 $2,417 $2,417 $2,417 $2,417 $2,417 $2,417 $2,417 $2,417 $2,417

P ersonnel Costs

Owner $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Hosts $5,824 $5,824 $5,824 $5,824 $5,824 $5,824 $5,824 $5,824 $5,824 $5,824 $5,824 $5,824

Server $14,687 $14,687 $14,687 $14,687 $14,687 $14,687 $14,687 $14,687 $14,687 $14,687 $14,687 $14,687

Manager $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167

Bus Boys $6,854 $6,854 $6,854 $6,854 $6,854 $6,854 $6,854 $6,854 $6,854 $6,854 $6,854 $6,854

Master Chef $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Cooks $16,917 $16,917 $16,917 $16,917 $16,917 $16,917 $16,917 $16,917 $16,917 $16,917 $16,917 $16,917

Total Payroll $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449

Personnel

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Sales $157,064 $164,917 $173,163 $181,821 $190,912 $200,457 $210,480 $221,004 $232,054 $243,657 $255,840 $268,632

Direct Cost of Sales $29,449 $30,922 $32,468 $34,091 $35,796 $37,586 $39,465 $41,438 $43,510 $45,686 $47,970 $50,368

Total Cost of Sales $29,449 $30,922 $32,468 $34,091 $35,796 $37,586 $39,465 $41,438 $43,510 $45,686 $47,970 $50,368

Gross Margin $127,614 $133,995 $140,695 $147,729 $155,116 $162,872 $171,015 $179,566 $188,544 $197,971 $207,870 $218,263

Gross Margin % 81.25% 81.25% 81.25% 81.25% 81.25% 81.25% 81.25% 81.25% 81.25% 81.25% 81.25% 81.25%

Expenses

Rent $16,700 $16,700 $16,700 $16,700 $16,700 $16,700 $16,700 $16,700 $16,700 $16,700 $16,700 $16,700

Insurance $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000

Utilities $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Marketing/Promotion $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

Fees/Permits $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217

Contractors $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Office Supplies $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Depreciation $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333 $2,333

Payroll Taxes $8,017 $8,017 $8,017 $8,017 $8,017 $8,017 $8,017 $8,017 $8,017 $8,017 $8,017 $8,017

Total Personnel $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449

Total Operating Expenses $99,116 $99,116 $99,116 $99,116 $99,116 $99,116 $99,116 $99,116 $99,116 $99,116 $99,116 $99,116

Profit Before Interest and Taxes $28,498 $34,879 $41,578 $48,613 $56,000 $63,755 $71,899 $80,450 $89,428 $98,855 $108,754 $119,147

Interest Expense $4,063 $4,059 $4,055 $4,051 $4,047 $4,043 $4,038 $4,034 $4,030 $4,026 $4,022 $4,018

Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit $24,435 $30,820 $37,524 $44,562 $51,953 $59,713 $67,860 $76,415 $85,398 $94,829 $104,732 $115,130

Net Profit/Sales 15.56% 18.69% 21.67% 24.51% 27.21% 29.79% 32.24% 34.58% 36.80% 38.92% 40.94% 42.86%

Profit and Loss

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Additional Cash Received Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Sales $157,064 $164,917 $173,163 $181,821 $190,912 $200,457 $210,480 $221,004 $232,054 $243,657 $255,840 $268,632

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $157,064 $164,917 $173,163 $181,821 $190,912 $200,457 $210,480 $221,004 $232,054 $243,657 $255,840 $268,632

Cash Spending $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449 $53,449

Bill P ayments $2,562 $76,895 $78,366 $79,911 $81,533 $83,236 $85,025 $86,903 $88,876 $90,947 $93,122 $95,406

Additional Cash Spent

Long-term Liabilities P rincipal Repayment $781 $785 $789 $793 $797 $801 $805 $810 $814 $818 $822 $826

P urchase Inventory $2,619 $2,494 $2,376 $2,262 $2,155 $2,052 $1,954 $1,861 $1,773 $1,688 $1,608 $1,531

P urchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash Spent $59,411 $133,623 $134,980 $136,415 $137,934 $139,538 $141,233 $143,023 $144,911 $146,902 $149,000 $151,212

Net Cash Flow $97,653 $31,293 $38,183 $45,405 $52,978 $60,919 $69,247 $77,981 $87,144 $96,755 $106,840 $117,420

Cash Balance $359,653 $390,946 $429,129 $474,534 $527,512 $588,431 $657,678 $735,660 $822,803 $919,559 $1,026,398 $1,143,818

Cash Flow

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Current Assets

Cash $359,653 $390,946 $429,129 $474,534 $527,512 $588,431 $657,678 $735,660 $822,803 $919,559 $1,026,398 $1,143,818

Inventory $57,619 $60,113 $62,489 $64,751 $66,906 $68,958 $70,913 $72,774 $74,547 $76,235 $77,843 $79,374

Total Current Assets $417,272 $451,059 $491,618 $539,286 $594,419 $657,390 $728,591 $808,433 $897,350 $995,793 $1,104,241 $1,223,192

Long-term Assets

Accumulated Depreciation $2,333 $4,667 $7,000 $9,333 $11,667 $14,000 $16,333 $18,667 $21,000 $23,333 $25,667 $28,000

Total Long-term Assets $417,667 $415,333 $413,000 $410,667 $408,333 $406,000 $403,667 $401,333 $399,000 $396,667 $394,333 $392,000

Total Assets $834,939 $866,393 $904,618 $949,952 $1,002,752 $1,063,390 $1,132,257 $1,209,767 $1,296,350 $1,392,460 $1,498,574 $1,615,192

Current Liabilities

Accounts P ayable $74,285 $75,704 $77,195 $78,760 $80,404 $82,130 $83,943 $85,846 $87,845 $89,944 $92,148 $94,463

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $74,285 $75,704 $77,195 $78,760 $80,404 $82,130 $83,943 $85,846 $87,845 $89,944 $92,148 $94,463

Long-term Liabilities $799,219 $798,433 $797,644 $796,851 $796,054 $795,252 $794,447 $793,637 $792,824 $792,006 $791,184 $790,358

Total Liabilities $873,503 $874,138 $874,839 $875,611 $876,458 $877,382 $878,390 $879,484 $880,669 $881,950 $883,332 $884,821

P aid-in Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Retained Earnings ($63,000) ($63,000) ($63,000) ($63,000) ($63,000) ($63,000) ($63,000) ($63,000) ($63,000) ($63,000) ($63,000) ($63,000)

Earnings $24,435 $55,255 $92,779 $137,341 $189,294 $249,007 $316,868 $393,283 $478,681 $573,510 $678,242 $793,371

Total Capital ($38,565) ($7,745) $29,779 $74,341 $126,294 $186,007 $253,868 $330,283 $415,681 $510,510 $615,242 $730,371

Total Liabilities and Capital $834,939 $866,393 $904,618 $949,952 $1,002,752 $1,063,390 $1,132,257 $1,209,767 $1,296,350 $1,392,460 $1,498,574 $1,615,192

Net Worth ($38,565) ($7,745) $29,779 $74,341 $126,294 $186,007 $253,868 $330,283 $415,681 $510,510 $615,242 $730,371

Balance Sheet

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Documents

Z Restaurant Business Plan