Sample Business PlanThe Friendly Café II

Executive SummaryThe Friendly Café II will be located in the town of Mt. Vernon, a city of approximately 12,000 people. The café will offer a nostalgic atmosphere for people of all ages. We will serve a large variety of home-cooked meals and desserts.

The mission of The Friendly Café II is to provide a quality product at a quality price served by quality people. We will demonstrate our devotion to the community through customer service and community relations.

Our ideal customers are many. Some of them will be middle class families with young children. These are people who earn a modest income. Our prices and convenience are reasons to visit our café. Our other ideal customers will be retirees. These are folks who may drop in for lunch or an early dinner. Some retirees have a good income from their retirements, but some may be on a fixed income.

Customers will visit us for several reasons. First is the quality of the food at an affordable price. People want to believe that they are getting a good deal. We are dedicated to serving hot, delicious meals at a fair price.

Our café is also part of the local history. The original Friendly Café was owned by my great-grandfather and was open from the 1940s until the late 1960s. In fact, we plan to rent the old building that housed the original café. Visitors will remember the original café and be curious to see the new version. We will have pictures from the old café on the walls, which will take diners on a trip down memory lane.

Our business will be a partnership. My family members and I will run the café together. We are a close family, and we work well together. Financially, we could not open the café without each other.

Each partner will serve as a manager in the café. My mother will be the floor manager, my aunt will be the grill manager, and I will handle the accounting for the café.

Our business will thrive for a number of reasons. First, the city of Mt. Vernon has a stable population, with a number of healthy industries. Secondly, the local population is somewhat older than the national average. We believe that this segment of the population longs for “days gone by.” Our nostalgic theme will appeal to this particular segment of the population.

Our skills and knowledge in food service, combined with our connections to the community, will make this business a sound investment.

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PART 1 THE CONTEMPORARY BUSINESS ENVIRONMENT

Business NameThe Friendly Café II

Description of BusinessThe Friendly Café II will be located in the small town of Mt. Vernon, where I grew up. The café will offer a nostalgic atmosphere for people of all ages and will serve a large variety of home-cooked meals and desserts.

Form of Business OwnershipThe business will be a partnership, meaning that my family members and I will run the café together. Each partner will also serve as a manager and has special skills that they can bring to the business. My mother will be the floor manager. She has work experience in this area and knows how to organize floor space and is good with customers. My aunt has worked at a number of restaurants in the grill area and will therefore serve as grill manager. She will handle orders and manage all backroom employees. These two managers can substitute for one another so that they both do not have to be in the café everyday. Finally, I will handle the accounting responsibilities for the café. I am currently completing my degree in accounting, and I will also have two clerks that will help me keep all accounts up-to-date and accurate.

Ideal CustomerOur ideal customers are many. Some will be middle-class families with young children. These customers will visit our café for its reasonable prices and convenience. Our other ideal customers will be retirees who may drop in for lunch or an early dinner. We will have special promotions focused on each of these two groups that will be discussed later.

Our AdvantagesCustomers will visit us for several reasons. First is the quality of the food and the affordable price. People want to believe that they are getting a good deal. We are dedicated to serving hot, delicious meals at a fair price.Our café is also part of the local history. The original Friendly Café was owned by my great-grandfather and was open from the 1940s until the late 1960s. We plan to rent the old building that housed the original café. Visitors will remember the original café, and be curious to see the new version. We will have pictures from the old café on the walls, which will take diners on a trip down memory lane.

Ethical IssuesMost restaurants deal with suppliers. We will be no different. Many restaurants must make a choice between buying higher-priced produce and supplies or buying lower-priced produce and supplies. The ethical issue facing The Friendly Café II therefore is the choice between buying quality products and earning a little less money, or buying lower-quality products and perhaps earning a higher profit. In the long run, we believe that a higher-quality product will lead to higher profits because our customers will notice the difference and come back for more.

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We also believe we must behave ethically to our employees, treating them fairly at all times.

Social ResponsibilityOur business is in a small town. My family grew up in this town, so we feel an obligation to “give back” to the community. Our family owns a farm, so we all feel a strong bond with animals. Because of this, we are actively involved with the local Humane Society. And because our business is selling food, we believe that the best way to connect our business with our hometown is to provide free, hot meals to a local charity during the holiday season.

Global IssuesThe business will be a local one, so at this point in time we do not foresee there being any global issues we will need to address.

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PART 2 THE BUSINESS OF MANAGING

Mission StatementThe mission of The Friendly Café II is to provide a quality product at a quality price served by quality people. We will demonstrate our devotion to the community through customer service and community relations.

Business GoalsFirst Year Goals:1. To break even2. To build a strong customer base3. To minimize employee turnover

Intermediate to Long-Term Goals:1. To earn net profits of $25,000 within five years2. To open a second restaurant in a neighboring community within five years

SWOT Analysis for The Friendly Café II

Org

aniz

atio

nal

Strengths Weaknesses

Highly motivated management team Expertise in the business Restaurant is familiar to the

community Community-oriented business

Insufficient money for start-up Small store will limit our growth Located in a small town, not easily

reached by drop-in customers

Env

ironm

enta

l Opportunities Threats Customers attracted to nostalgia-

themed products Markets trending away from fast-food

restaurants Retirees having more discretionary

income

Economy may weaken in communities that depend on industry

More restaurants opening in the community

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ManagementThere is one level of management in the restaurant, with three different types of managers as follows:

Floor Manager Grill Manager Accounting Manager

All managers are also co-owners.

Organizational ChartThe organizational chart for The Friendly Café II is quite simple given that it contains only one level of management. As the business grows, further levels of management and more employees may be added.

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Owner/Floor Manager Owner/Grill Manager

Servers/Hosts Cooks/Dishwashers

Owner/Accounting Manager

Accounts Payable Clerks

Floor Plan

Because we are planning on occupying the space that was previously used for the original Friendly Café, we will be keeping the basic layout of the café intact. The café will include a counter area for those who wish to sit facing the kitchen, as well as a number of booths and tables to fit different sized parties.

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Raw Materials and Supplies If we are able to lease the space used by the original Friendly Café, we will use the existing tables and chairs. These may be in need of slight repair, but are in good condition at present. They carry the nostalgic look and feel we are striving for, so we prefer not to replace them.

The café will also need the following initial inventory:

(2) Cash registers @ $225 each..............................................................................................$450Squirrel POS system...............................................................................................................1500(3) Microwave ovens @ $150 each..........................................................................................450Deep Fryer..............................................................................................................................2500Refrigeration Unit...................................................................................................................2000Freezer.....................................................................................................................................4000Dishwashing Unit....................................................................................................................2000(100) Small Glasses @ $1.00 each...........................................................................................100(100) Large Glasses @$1.25 each............................................................................................125(100 sets) Plates, Bowls, Mugs @$10.00 each.......................................................................1000(100 sets) Silverware @ $12 per set.......................................................................................1200Total...................................................................................................................................$15,325

Most of our food products will be made fresh in the store, so we do not plan to carry much in the way of food inventory. We will stock some canned sauces, but most food will be shipped fresh.

Our inventories will not be affected by change in seasons or holidays. We plan to be open from 6 a.m. to 10 p.m., Monday through Saturday, and 8 a.m. to 6 p.m. on Sunday.

Quality AssuranceAll employees will have some responsibility to ensure quality, but we believe quality begins with the management team. The floor manager will be responsible for the appearance of the café and the performance of the servers and hosts. The floor manager is responsible for pleasing the customer. The grill manager will ensure that quality food is purchased from distributors and prepared for customers. The entire management team will work to ensure that our café is synonymous with quality.

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PART 3 PEOPLE IN ORGANIZATIONS

Corporate CultureOur culture is reflected in our mission statement. We want excellence in every part of our restaurant, and every employee must understand how to achieve this standard once they have completed their training. Every employee must have a commitment to pleasing the customer, both in the quality of the food and in the overall experience they will have once they are inside the store.

Our employees will be encouraged to improve the quality of the restaurant through their own suggestions and input.

We are also committed to improving our community through participation in events that make our hometown a better place to live.

Leadership Philosophy We believe that a participative approach will work well with our family-oriented business. Because each family member will have an equal stake in the restaurant, each family member (manager) will have an equal input into the operation of the store. Naturally, each manger will have an area of specialty, which will allow them to have control over their assigned functional area. We will also encourage input from our employees, inviting them to participate in some of the decision making.

Job DescriptionsThe job descriptions at the Friendly Café II will be as follows:

Floor Manager: The floor manager will be responsible for the “front end” of the café. This includes the staffing and training of servers and hosts. The floor manager will also be involved with customer relations. The floor manager will also help coordinate and work with those in the grill area to ensure customer satisfaction. Finally, the floor manager will be responsible for ordering any new non-kitchen inventory that the café needs, including new tables, chairs, dishes, and so on.

Grill Manager: The grill manager will be responsible for the “back end” of the café. This includes the staffing and training of cooks and dishwashers. The grill manager will also be involved with customer relations in overseeing that all food served is of high quality. The grill manager will also work with the floor manager to help coordinate with those on the floor to ensure customer satisfaction. Finally, the grill manager will be responsible for ordering any food-related and cooking-related inventory that the café needs, including produce, cooking equipment, and so on.

Accounting Manager: The accounting manager will be responsible for the financial side of the business and for the hiring and training of accounting clerks. Most importantly, the accounting manager will be responsible for interacting with suppliers and managing the accounts payable that the business incurs and all other matters relating to taxes and finances.

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Servers/Hosts: The servers/hosts will be responsible for serving food to customers and responding to their needs. This includes keeping their sections of the café clean and orderly and bussing dishes back to the grill area for cleaning. They will also be responsible for “side work,” such as rolling silverware and refilling the condiments on their tables. These employees will spend most of their time serving meals, but some of their time will be spent as hosts, greeting and seating customers.

Cooks: These employees will be responsible for meal preparation. They will have to “prep” everything needed for business on any given day. This includes mixing salads, estimating the amount of different foods needed for the given day, and making desserts. The closing cook will also be responsible for cleaning the kitchen so that the café will be ready for the next day’s business.

Dishwashers: The dishwashers will be responsible for washing all dishes and placing them in the correct racks. If the café is busy, they will help servers bus the tables. Dishwashers will also be responsible for cleaning the restrooms each morning and for taking out the trash at closing time. Finally, dishwashers will help the closing cook prep the back of the restaurant for the next day. This “prep” includes washing/scrubbing floors and cleaning all the food preparation tabletops.

Accounts Payable Clerks: The clerks will assist the accounting manager in recording and organizing the accounts payable that the café will assume during the course of business.

Job SpecificationsThe job specifications for the three managers at the Friendly Café II will be as follows:

Job Title: Floor ManagerNeeded Skills/Credentials/Qualification for Job: The floor manager must have strong human relations skills. These skills will be needed to deal with customers and employees. The floor manager must be energetic and willing to work long hours on his or her feet. The floor manager will be responsible for training servers and hosts. To be a successful floor manager, one must have at least two years of work experience in management, preferably in restaurant management.

Job Title: Grill ManagerNeeded Skills/Credentials/Qualification for Job: The grill manager must have strong human relations skills. These skills will be needed to deal with customers and employees. The grill manager must be energetic and willing to work long hours on his or her feet. The grill manager will be responsible for training cooks and dishwashers. To be a successful grill manager, one must have at least two years of work experience as a restaurant cook.

Job Title: Accounting ManagerNeeded Skills/Credentials/Qualification for Job: The accounting manager will need good human relations skills. These skills will be needed to deal with the clerks and with the café’s creditors. The accounting manager will also be responsible for training the accounts payable clerks. This position will require a degree in Accounting or a minimum of two years work experience in Accounts Payable or Receivable.

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Training EmployeesOur employees will have a variety of skills that they will bring to the workplace. However, it will sometimes be necessary to train new employees so that they can be successful at work. Most of the training will focus on performing the specific tasks needed to do each job efficiently. The managers of each area will be responsible for seeing that the training program is completed but may assign team members to lead that training. In many cases, the new hire will simply “shadow” the training employee for a few days to get an idea of how to do the job.

CompensationEach of the managers will earn $22,500 per year as salary. The food service industry does not tend to pay high salaries. Because the managers are also the owners, they will hope to earn more beyond their salary from the profits of the café. Compensation for all in-store personnel will begin at $8.00 per hour, with pay increases scheduled every 120 days. These increases will be connected to performance reviews. By having reviews three times per year, we hope to create greater incentive for our team members. Compensation for the accounts payable clerks will begin at $8.50 per hour. Because the clerks will need a higher level of skill and training, their compensation will be a bit higher.

IncentivesWe know that pay alone does not create incentive with our workers. The thrill of a pay raise does not last long. First and foremost, we want to offer a fun workplace to our employees, and we want them to feel like extended members of our family. We will be loyal and fair to good employees, and offer them benefits. We would also like to build relationships with other local businesses to exchange rewards for each business’s employees. Our community has florists, golf courses, salons, and a number of other small businesses. We believe that by trading with these businesses, each employer can benefit, and the employees will also benefit.

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PART 4 PRINCIPLES OF MARKETING

Target MarketOur café will have two markets:The first target market is the seniors in our community. Many of these have retired with a comfortable pension from the local industries. They do not necessarily have a high education level, since it was not needed in that time. Retirees will tend to have a good deal of discretionary income, and also time to socialize in the morning and lunchtime hours. The second target market is middle-class families with younger children. These families will be looking for a well-cooked dinner after work. They will likely have a higher education level than the retirees, but will have a modest income. Dining out is probably a once-a-week event for these families.

Product Features and BenefitsThe Friendly Café II is a small café that will serve a variety of home-cooked meals in a nostalgic atmosphere. It is a place where friends can gather over a cup of coffee, or a family can sit down for a well-cooked meal. We will strive to serve the best meals in a happy and familiar place.

Product DifferentiationPeople have a lot of choices when it comes to dining out. We know that we have to offer a product that stands out from the competition. We will have two major differences from our local competitors. The first is the quality of the food. Without good meals, nothing else will matter. Diners will place the highest importance on the meal itself, and so will we. By providing good meals at reasonable prices, word-of-mouth advertising will take care of itself. However, the food is only part of the dining experience. Our nostalgia theme will connect well with the local population. Our community is small and tightly-knit. Our older citizens grew up with the original Friendly Café, and they have happy memories of the local diner. We hope that our décor will help to build a bond with the older members of our community and create a new one with younger members.

PricingOur pricing strategy is fairly simple. Because our target markets are seniors (who remember how much things used to cost) and young families, we will focus on keeping prices low. The food will be simple, home-cooked meals. The pricing will reflect the simplicity of the café. We will also offer coupons to encourage visits by customers who are price conscious.

Place (Distribution) IssuesOur family (and our business) is connected to this small community and offers a family-oriented setting and a connection to history and nostalgia. The small-town setting allows us to emphasize our strengths, and we foresee no distribution issues. In the future, we hope to expand into other communities like ours.

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AdvertisingBecause we have two target markets, we will have two advertising approaches. For the seniors market, we will advertise in the local newspaper and in the retirement center in our town. These advertisements will include coupons for discounts on our morning and afternoon menus. Coupons will also allow us to track the success of the advertising. We will also attempt to advertise on local radio stations that feature news and talk. These are stations that have a strong senior listening audience.To get the attention of the middle-class family market, we will hang door flyers that feature our menus in the two local housing subdivisions. Many young families in our community live in these subdivisions. The flyers will also contain coupons, which will allow us to track the success of the advertising. We will also be listed in the local phone book and will have a small site on the Internet.These ideas are fairly inexpensive ways to get our message out to our target markets.

PromotionBecause we have two main target markets, we will have two types of promotions. For the senior market, we will have 2 for 1 priced coffee on weekday mornings. Coffee is not a great expense, but can be a great draw into the café for other items in the morning. We will also offer breakfast specials Monday through Wednesday, since these are the days with the least amount of customer traffic.For the young family market, we will have a “Kids Eat Free” special on Monday nights. Again, the goal is to get the family into the café on a slow night.We will also have promotions during the fall, when our community has a street festival. This festival attracts visitors from outside our community. These promotions will build attention (and word of mouth) from those who live in nearby towns.

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PART 5 MANAGING INFORMATION

IT Resources We plan to use technology to create a small Web site about the café, and to help us keep track of our customers. Specifically, we believe that we can use the coupons we offer to measure the success of our advertising and to create a database of customers. We will ask customers who use coupons to fill in their name and address when redeeming the coupon. We will then create an address list to make customers aware of special promotions for our preferred customers.

Customer ServiceLike any good restaurant, our café will be customer centered. We believe that customer satisfaction begins with a well-trained staff. First and foremost, as members of the community ourselves, we will keep in close contact with our customers, getting to know them and their families and finding out what they are looking for in an eating establishment.Our managers will also be dedicated to a strong employee training program to ensure that our focus on customers is part of every job. Our “front-end” staff will “shadow” train for at least three days before they are allowed to work on their own. It is not enough to simply know how to take an order; employees must also understand policies and procedures that are unique to our café. The training for cooks will take approximately ten days. The time spent with the cooks is longer because we aim to ensure the quality standards of the variety of dishes they will prepare.We will also keep a suggestion box at the front of the store to be used for customer feedback. We will encourage customers to submit ideas by rewarding them for their suggestions. Their incentive will be free appetizers, free drinks, and so on. We hope to use their input to improve our café.

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Cost of Doing Business

Expenses Expected Monthly Cost

Expected Yearly Cost

Rent 500 6,000

Salaries and Wages 10,000 120,000

Supplies 167 2,000

Advertising and Other Promotions 167 2,000

Utilities: Heat, Electricity, etc. 500 6,000

Telephone and Internet 100 1,200

Insurance 333 4,000

Total 11,766 141,200

Expected RevenueWe believe that we can average 100 customers per day. However, the café will experience different traffic for each day of the week and during different times of the year. We believe that the average meal ticket will be approximately $5.00 per customer. This number will also vary, depending on the time of day that the customer enters the café. This will provide our café with revenues of $500 per day. We plan to be closed on Christmas. This will lead to yearly revenues of approximately $182,000 per year.

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12-Month Income Statement (Profit & Loss Statement)The Friendly Café II

2006

Jun-

05

Jul-0

5

Aug

-05

Sep-

05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Mar

-06

Apr

-06

May

-06

YEA

RLY

Revenue (Sales)                          

Food Sales 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 182,000

Category 2                          

Total Revenue (Sales) 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 182,000

                           

Cost of Goods Sold                          

Food Purchases 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 39,996

Category 2                          

Total Cost of Goods Sold 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 39,996

                           

Gross Profit 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 142,004

                           

Expenses                          

Rent Expense 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Salary/Wage Expense 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000

Supplies Expense 167 167 167 167 167 167 167 167 167 167 167 167 2,004

Advertising Expense 167 167 167 167 167 167 167 167 167 167 167 167 2,004

Utilities Expense 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Telephone/Internet Expense 100 100 100 100 100 100 100 100 100 100 100 100 1,200

Insurance Expense 333 333 333 333 333 333 333 333 333 333 333 333 3,996

Interest from Loans 0 0 0 0 0 0 0 0 0 0 0 0 0

Other Expenses (specify)                          

Total Expenses 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 141,204

                           

Net Profit 66 66 66 66 66 66 66 66 66 66 66 66 800

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Balance Sheet

Assets  

Current AssetsCash in Bank $25,000Inventory $3,000Prepaid Expenses (insurance) $4,000Total Current Assets $32,000

Fixed AssetsMachinery & Equipment $12,900Furniture & Fixtures $8,000Real Estate / Buildings $0Total Fixed Assets $20,900

Total Assets $52,900

Liabilities & Net Worth  

Current LiabilitiesAccounts Payable $3,000Taxes Payable $6,000Notes Payable (due within 12 months) $0Total Current Liabilities $9,000

Long-term LiabilitiesBank Loans Payable (greater than 12 months) $0Less: Short-term Portion $0Total Long-term Liabilities $0

Total Liabilities $9,000

Owners' Equity (Net Worth) $43,900

Total Liabilities & Net Worth $52,900

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Startup CostsOur balance sheet shows total assets of $52,900. By subtracting the $25,000 that our three managers will invest, we will require startup costs of $27,900.

FinancingThe three managers will put a total of $25,000 into the startup of this business. The remaining $27,900 is the amount that we are requesting for bank financing.

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