SAMPLE BUSINESS PLAN: HARD

LU C K C A F E

300 East Ivy Lane

Moose Mountain, NH 03330
November 1, 200X

Ronald Smith, Commercial Lender

Megabank New England
1200 Main Street
Moose Mountain, NH 03330

Dear Mr. Smith:

I am submitting the following proposal for your consideration.

After a careful study of the market, I believe that Moose Mountain needs and will support a
small breakfast and lunch café in the downtown area. Thousands of people visit Main Street
every day for a variety of reasons: for business, to work, shop, or just sightsee. My café would
serve them a quality meal at a reasonable price. The proposed location is 200 Main Street,
which is available at a very good rent and is an excellent spot for a restaurant.

I have fifteen years of experience in the food industry. I have waitressed, cooked, and managed
restaurants. I know how to order the best food in the right amounts, and how to manage
employees effectively. I also enjoy the public and understand what they are looking for and
need.

I am requesting a loan of $30,000 for 5 years. This loan, along with my own investment of
$10,000, will enable me to purchase equipment, renovate 200 Main Street, stock up, and
establish a working capital reserve. As you will see in the business plan, my most conservative
estimates show that my Hard Luck Café will easily pay back the loan as well as cover all
expenses, including owner’s draw.

Thank you for your consideration of my request.

Sincerely,

Rosie Jenkins
Hard Luck Café Business Plan

I. Ownership

• The Hard Luck Café will be a sole proprietorship owned by Rosie Jenkins.
Rosie Jenkins will also manage the café and will be solely responsible for
financial and employee management.

II. Description of Business

• The Hard Luck Café will be located at 200 Main Street, Moose Mountain,
NH, and will seat 20 patrons at a time. The rent is $600 a month, with a five-
year lease available. The site consists of a dining room, 20x20 square feet, a
kitchen, 15x15 square feet, two bathrooms, and a storage room in back. To be
used as a restaurant, this storefront needs to be plumbed and wired
appropriately. Painting, new floors, and countertops are also needed. Due to
materials bought on sale and volunteer labor, the cost to renovate will be
$5,000.

• The kitchen will be equipped with a commercial stove, refrigerator, freezer,

walk-in-cooler, oven, microwave, and small commercial dishwasher. Due to the
diligent searching out of bargain (but quality) equipment, the cost will be
$20,000. The walk-in cooler will be custom built. Other start-up expenses will
be dishes, furniture, food inventory, rent deposit, and marketing.

• The Hard Luck Café will serve a basic American-style breakfast and lunch, with
an emphasis on healthy, tasty food. Low-fat recipes will be used whenever
possible in such a way as not to sacrifice taste or appeal. Menu items for
breakfast will range from $1.99 - 4.99. Lunch items will range from $2.50 -
5.99. Daily soups and specials will be offered. See the attached menu for details.
Hours of operation will be 6:30 a.m. - 2:30 p.m., 6 days a week, and 8:00 a.m. -
3:00 p.m., Sundays.

• Rosie Jenkins will be head cook, and additional staff will consist of a part-time
back-up cook and two waitresses. During slow times, only one waitress will be
used. Experienced staff has already been located.
Hard Luck Café Business Plan

III. Market Information

The Industry - Eating out is a growing trend, since people are increasingly pressed for time and
enjoy this convenience. Breakfast and lunch are popular, as workers and business owners often
choose not to ‘brown bag’ meals. Choosing healthy, low-fat food is a concern, but studies have
shown that people are ambivalent about it and continue to choose high-fat foods.1[2] The
menu will address this by preparing favorites in such a way that people won’t realize that much
of the unhealthy fat has been removed.

„ Customers - The Hard Luck Café will serve several customer groups. They are
detailed as follows:

„ Business Owners & Workers - During the week, 2000 people work in
Moose Mountain. Most of them work early in the morning, so the café will
open at 6:30. This group includes managers, factory employees, retail clerks,
professionals, tradesmen, laborers, and other food service workers. This
group will form the base clientele, as many will be repeat customers. A
number of tradesmen who have promised to patronize the café every day.
Fast, accurate service will be provided, as these customers often have limited
time to eat.

„ Local Residents - Many local residents come to Moose Mountain to shop

on the weekend. During the week those locals who have a day off, are
elderly, or don’t work for whatever reason will be customers. Breakfast out
on weekends is a local tradition, and lunch will be popular with hungry
shoppers.

„ Tourists - Moose Mountain receives thousands of visitors a year. Most of

them come in the summer and fall seasons, with a few during the winter for
skiing. The tourist trade will nicely round out the sales, which will firmly
rest upon the local base. Brochures from lodging establishments and
attractions will be displayed in the café, along with maps and other
information. The Hard Luck Café will be known as a friendly place to stop
and get directions as well as good food and coffee.
Hard Luck Café Business Plan

„ The Competition - The Competitor Matrix below shows the Hard Luck Café
in comparison to its competitors:

Seats Meals Pricing Hours Other

Hard Luck Café 20 Breakfast/Lunch * 6:30-2:30p.m
Dunkin Donuts 20 Donuts/Soups * 24 Hours no full meals
Local Donuts 10 Donuts/Sandwich ** 7:00-3:00 no full breakfast
Auntie Ems 30 3 meals/day * 7:00-9:00p.m Outdated menu/
high priced/ other
end of Main Street
The Pinecone 50 3 meals/day ** 7:00-9:00p.m owners ready to
retire/old building/
no parking/slow
service
Jiffy Stop, Ervins, none pastries/coffee * 24 hours no seating or full
Shell meals

The Hard Luck Café will offer a fresh point of view on Main Street. The menu will change
frequently, the service will be good, and the food will be the best. The restrooms will be clean.

„ Market Strategy - In addition to an overall strategy, different approaches and

methods will be used for the customer groups.

„ Overall - The Hard Luck Café will present an image of wholesome, healthy
food in an attractive and clean atmosphere. The floors will be black and
white tile, the curtains and tablecloths will be red and white check, and
work by local artists will hang on the walls. The sign will be large enough to
be read from the street, and will be designed to promote the Café’s image.
Comment cards will be at each table and will be collected at the register.
Suggestions for new or improved meals will be sought, as well as feedback
on service and the dining experience.

„ Local Residents & Workers - Small ads will be placed weekly in the dining
section of the local newspaper. Specials will be promoted with an A-frame
sign, and during slow periods coupons and ‘2-for-1’ deals will be offered.
Menus will be distributed to local businesses and the faxing-in of orders will
be encouraged. Take-out will be attractively boxed and given equal priority
to sit-down services.
Hard Luck Café Business Plan

„ Tourists - Menus will be distributed to the local lodging establishments to

encourage their guests to come to the Café. Advertisements and listings will
be placed in state wide and regional tourist guides and publications. Menus
will also be placed at information booths and other spots likely to have
tourist traffic.

„ Other - Pricing will be competitive and customer service excellent. The café
will stand behind the food, and if anyone is not satisfied, the item will be
replaced or taken off the bill.

IV. Management

„ Resumes - Attached are resumes for the staff of the Hard Luck Café. Rosie
Jenkins has over fifteen years experience in the restaurant business. Five of those
years were spent as manager of the Top Notch Restaurant in Moose Mountain,
NH.

Accounting and Cash Management Systems - An electronic cash register

has already been purchased. This register is capable of tracking sales of
various items, recording the different operators, and displaying the correct
amount of change due for cash transactions. Numbered sales slips will be
used, and each book signed for in a log book. All slips will be accounted for.
The Hard Luck Café will accept credit cards and a credit card machine will
be purchased.

Rosie Jenkins will prepare deposits and take them to the bank daily. All
checks will be written and signed by Ms. Jenkins, and she will keep the
restaurant books on the Quick Books software program. Ms. Bea N.
Counter, CPA, will prepare tax returns and quarterly payroll and tax
reports.
Hard Luck Café Business Plan

V. Financial Information

„ Tax Returns - The last three years of Rosie Jenkins’s tax returns are attached, as
well as a personal financial statement.

„ Sources and Uses of Funds -

Sources
Owner’s Investment $10,000
Loan 30,000
Total Sources $40,000
Uses
Purchase of Equipment $20,000
Renovations to leasehold 5,000
Rent deposit 600
Furniture 1,000
Dishes/glassware/silverware 1,000
Cookware 1,000
Supplies 500
Compressor 500
Food Inventory 5,000
Advertising 1,000
Insurance 1,000
Worker’s Comp 1,400
Working Capital 2,000
Total Uses $40,000

„ Cash Flow Statement – The Hard Luck Café is projected to open in mid-June,
and the cash flow statement (Attachment A) reflects only two weeks of revenue
for the month. Attachment B lists the assumptions that were used in preparing
the cash flow & Assumption C shows the revenue & labor calculations.
Attachment D shows the break-even point both with and without owner’s
withdrawal. Owner’s withdrawal can be adjusted during the slow seasons if
necessary. The Hard Luck Café is opening at the beginning of the busy season,
which will help it get off to a good start cash-wise.
Hard Luck Café Business Plan

VI. Attachments

• Proposed Menu

• List of Equipment & Items to be purchased

• Quotes on Renovations

• Beginning Food and Supplies Inventory

• Resumes

• Jenkins Tax Returns and Financial Statement

• Attachment A – Cash Flow Statement

• Attachment B – Assumptions

• Attachment C – Revenue/Labor Worksheet

• Attachment D – Break-even Worksheet

• Lease for 200 Main Street

• Floor plan
Hard Luck Café Business Plan

Hard Luck Café Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10 Period 11 Period 12 TOTAL
Projected Cash Flow
Pre- June July August Sept. Oct. Nov. Dec. Jan. Feb. March April May
Open 2 weeks

CASH ON HAND - BEGINNING 10,000 $2,000 $10,034 $16,021 $22,007 $26,994 $25,420 $22,970 $22,140 $22,310 $22,480 $18,930 $19,100 $10,000
CASH RECEIVED:
Breakfast Sales $6,300 $12,600 $12,600 $12,600 $6,300 $4,200 $6,300 $6,300 $6,300 $4,200 $6,300 $6,300 $90,300
Lunch Sales 6,300 12,600 12,600 12,600 $6,300 $4,200 $6,300 $6,300 $6,300 $4,200 $6,300 $6,300 $90,300
Loans 30,000 0 $0
TOTAL RECEIPTS $12,600 $25,200 $25,200 $25,200 $12,600 $8,400 $12,600 $12,600 $12,600 $8,400 $12,600 $12,600 $180,600

TOTAL CASH AVAILABLE 40,000 $14,600 $35,234 $41,221 $47,207 $39,594 $33,820 $35,570 $34,740 $34,910 $30,880 $31,530 $31,700 $190,600

CASH PAID OUT:

Food Purchases 5,000 $0 $10,080 $10,080 $10,080 $5,040 $3,360 $5,040 $5,040 $5,040 $3,360 $5,040 $5,040 $67,200
Gross Wages 1,787 3,574 3,574 3,574 3,574 2,080 2,080 2,080 2,080 2,080 2,080 2,080 $30,643
Payroll Expenses 179 357 357 357 357 208 208 208 208 208 208 208 $3,065
Owner's Draw/Salary 1,500 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 $34,500
Supplies 500 0 200 200 200 200 200 100 100 100 100 100 100 $1,600
Repairs and Maintenance 5,000 0 50 50 50 50 50 50 50 50 50 50 50 $550
Advertising 1,000 0 200 200 200 200 200 200 200 200 200 200 200 $2,200
Car, Delivery and Travel $0
Accounting and Legal 200 $200
Rent 600 600 600 600 600 600 600 600 600 600 600 600 600 $7,200
Telephone 100 100 100 100 100 100 100 100 100 100 100 100 $1,200
Utilities 400 400 400 400 400 400 400 400 400 400 400 400 $4,800
Insurance 2,400 0 1,000 1,000 1,000 $3,000
Furniture 1,000 0 $0
Dishes/Cookware 2,000 0 $0
Miscellaneous (unspecified) $0
Loan Principal Payment & Int 652 652 652 652 652 652 652 652 652 652 652 $7,172
Capital Purchases 20,500 0 $0
Reserve and/or Escrow
TOTAL CASH PAID OUT 38,000 $4,566 $19,213 $19,213 $20,213 $14,173 $10,850 $13,430 $12,430 $12,430 $11,950 $12,430 $12,430 $163,330

CASH POSITION 2,000 $10,034 $16,021 $22,007 $26,994 $25,420 $22,970 $22,140 $22,310 $22,480 $18,930 $19,100 $19,270 $27,270
Hard Luck Café Business Plan

AT TA C H M E N T B
Assumptions

REVENUE see Attachment C

LABOR see Attachment C

PAYROLL 10% of wages for fica and state unemployment tax

TAXES
FOOD 40% of sales

RENT $600/month

ELECTRICITY $400/month

TELEPHONE $100/month

BUSINESS INSURANCE $4000/year, paid quarterly, first payment in opening month

WORKER'S $4.57 per $100 in wages, $1400/year, paid in opening month

COMP
LOAN $30,000 @ 11% for 5 yrs: $652/month

ACCOUNTANT $200/year paid at end of calendar year for tax return

prep.
MAINTENANCE $50/month

OWNER'S $3000/month, $1500 in first month (1/2 month)

DRAW
ADVERTISING $200 month, first month $1000 (from
loan)
SUPPLIES $200 month-busy season, $100 month-slow season

FIRST MONTH- Busy season, but open only 2 weeks so

JUNE sales & labor are 1/2 of busy month
estimates
Hard Luck Café Business Plan

AT TA C H M E N T C
Revenue & Labor Worksheet

REVENUE
Revenue Per Day:

Capacity: 20 seats
Turn-over: 2 x per hour
Hours open: 8

Maximum customers per day: 320

Mix Between Breakfast and Lunch: 62.5/37.5

Average Ticket at Breakfast: $3

Average Ticket at Lunch: $5

Maximum Revenue per day: $3x320x.625= $600

$5x320x.375= $600

Maximum Revenue per week: $8,400 (7 days)

Maximum Revenue per month: $33,600 (4 weeks)
Note: 4 week month used for purposes of this exercise

At busiest time, average sales are 75% of capacity, or $25,200

Slow time, average sales are 1/2 of the busy season, or $12,600
Nov, Mar, average sales are 1/3 of the busy season, or $8,400
Note: Breakfast and lunch sales are half each of a month's projected sales
are each half of a month's projected sales

LABOR
Labor/week Busy Slow

1 cook $10x8x7=$560/week $10x8x5=$400/week

waitresses 2x$3x8x7=$336/week $3x8x5=$120/week

* Note: First month of operation, June, is considered busy season, but restaurant will open June 15th.
Hard Luck Café Business Plan

AT TA C H M E N T D
Break-even Point

Yearly Fixed Costs Budget

Payroll $30,643
Payroll Expenses 3,065
Rent 7,200
Utilities 4,800
Telephone 1,200
Insurance 4,000
Worker's Comp 1,400
Supplies 2,000
Advertising 3,200
Maintenance 600
Accounting 200
Loan payment 7,172
Total $65,480

w/owner's draw $101,480

Contribution margin: .60 (Cost of food

40%)

Break-even formula: fixed costs divided by contribution margin

B/E = 65480/.6 = $109,133 Average monthly sales: $9,094

B/E = 101480/.6 = $181,888 Average monthly sales: $15,157