DIRE DAWA CAMPUS

DEPARTMENT OF BUSINESS MANAGEMNT

Master of Business Administration

Business Plan Group Assignment
BUSINESS PLAN
(Family Burger BUSINESS PLAN)

Jijiga Central Area

New Taiwan STREET
(20/03/2021)
Group Name ID NO.

1.Hawlitu Mesfin……………………………………14231

2.Melaku Balcha…………………………………….14245

3.Edilawit Abbisa…………………………………...14246

4.Dagnachew Meshesha……………………………...
 TABLE OF CONTENTS

1.0 Executive Summary………………………………………………………………………………………………………..1

1.1 back ground and history…………………………………………………………….....................................1
1.2 Business Objective............................................................................................................1
1.3 Mission Statement............................................................................................................2
1.4 Guiding Principles .............................................................................................................2
1.5 Keys to Success .................................................................................................................2
2.0 Company Description ........................................................................................................3
2.1 Ownership ...........................................................................................................................3
2.2 Legal Form ........................................................................................................................ 3
2.3 Start-Up Summary ........................................................................................................ ….4
2.4 Location and Facilities ...................................................................................................... 4

3.0 Products ........................................................................................................................4

3.1 product description..........................................................................................................4

3.2 Competition....................................................................................................................5
3.3 Product/Service Sourcing ................................................................................................5
3.4 Inventory Management ..................................................................................................5
3.5 Warehousing and Fulfilment ...........................................................................................6
3.6 Future Products/Services .................................................................................................6
4.0 Market Analysis .............................................................................................................6
4.1 Industry Analysis ...............................................................................................................7
4.2 Distributionpatterns...........................................................................................................7
4.3 Competitionandbuyingpatterns........................................................................................7
4.4 Main Competitors .............................................................................................................8
4.5 Market Needs ...................................................................................................................8
4.6 Market Trends ..................................................................................................................8
 4.7 Market Growth ...............................................................................................................9
4.8 Positioning .......................................................................................................................9

5.0 Marketing Strategy and Implementation ..........................................................................9

5.1 SWOT Analysis ....................................................................................................................10
5.1.1 Strengths .......................................................................................................................10
5.1.2 Weaknesses ..................................................................................................................10
5.2 Competitive Edge ................................................................................................................11
5.3 Marketing Strategy .............................................................................................................11
5.4 Pricing Strategy ..................................................................................................................11
5.5 Promotion Strategy ......................................................................................................... ...11
5.6 Distribution Strategy………………………………………………………………………12
5.7 Marketing Programs ...........................................................................................................12
5.8 Sales Strategy .....................................................................................................................12
5.9 Sales Forecast .....................................................................................................................13
5.10 Sales Programs .................................................................................................................14
6.0 Organization and Management ...........................................................................................14
6.1 Organizational Structure ......................................................................................................14
6.2 Management Team ..............................................................................................................14
6.3 Management Team Gaps .....................................................................................................15
6.4 Personnel Plan .....................................................................................................................15
6.5 Board of Directors ...............................................................................................................15
7.0 Financial Plan .....................................................................................................................16
7.1 Important Assumptions ....................................................................................................16
7.2 Start-Up Costs ...................................................................................................................17
7.3 Source and Use of Funds ...................................................................................................17
7.4 Projections......................................................................................................................17
7.5 Projections ..........................................................................................................................18
7.5.1 Projected Profit and Loss ...............................................................................................18
7.5.2 Projected Cash Flow .......................................................................................................19
7.5.3 Projected Balance Sheet ……………………………………………………………….20

1.0 Executive Summary

The Family burger will be a one of a kind burger house that located in Central Area, Jijiga. The
1,500 square foot house will be located in the Karamarda Bakery, on the northwest corner of the
road to the new Taiwan or Gomata road. The anchor tenant, the Price grocery store, has already
taken occupancy and the excellent location brings more than 6,000 customers weekly.

The Family burger measures its financial success in terms of increased market share and in
earnings. With a total local market of Br 54 million, this is a tremendous opportunity! The keys to
success will be the ability to offer quality gourmet burger, take advantage of its small size, and
reliance on an outstanding barista staff. The café/restaurant will hand select baristas and offer
salaries comparable to the chains. In turn the baristas will be trained to cross-sell, and sell the
higher margin products.

1.1 back ground and history

The Family burger center starts with 5,044,875 birr in Jijiga, around Central Area in 2013 E.C.
The operation capital is composition of loan liability and saving deposit. During operation we may
face many challenges from external and internal factors. Internal factors is lack of enough capital,
unfamiliarness of business managing system, strangeness of work employees, and etc. external
factor is gov’t rule and regulation, competitors, lack of customer ideology, low material supply,
low demand and etc. We start our business on our agreement base when we operate business. We
agree that we should divide profit equally.

1.2 Business Objectives

The primary objectives of the business plan for Family Burger are below:

• To increase revenues 1,188,000 or 5% in Year 2 and by 2,409,000 or 10% by Year 3.

• Achieve a profit margin of 5.2% in Year 2 and 6.90% by Year 3
• Be the Burger of Choice in Jijiga area and recipient of the Best Burger House Award Our site is
confirming in May therefore, our goal is to be up and running by August.

Our B&L and balance sheet all begin in August. Startup costs b/n May and August may be find in
the startup summary section. Repeat customer will constitute 60% of our overall business by end
of one year. We will track customer habit loyalty through a local marketing research firm, publish
the results of these finding to our employees once a quarter. Net profit for year one will be 20%.

1.3 Mission Statement

Our mission is to bring to market the taste and healthiest fast food with reduced cost and good
quality over other fast food restaurants. Our high standards of quality and clean lines will establish
our reputation as the cleanest fast food restaurant in Jijiga. Our community is as important to us as
making a profit we will devote 1.5% of profit to a local women shelters, and 1% to local
environment conservation fund. This company is find on the concept that good works and good
deed not only serve the needs of community, but will also keep our company healthy and commit
to success of its customers.

1.4 Guiding Principles

The Family Burger is committed to values such as excellence, passion, quality, integrity and
leadership which allow them to navigate challenges and provide for future opportunities. These
core beliefs start with their commitment to their products and their employees. The Family Burger
rewards excellence and cherishes loyalty. The café/restaurant will work with its employees to build
strong businesses and a secure future.

1.5 Key to success

The most important key to success is our location. It is very important that our location live up to
our expectation, and is convenient to as many potential customers as possible. As stipulated by the
franchise agreement our “Article 9 sub article 3” location must contain a minimum of 1,000
customers with in a three block radius (or four-minute walk time). The pedestrian traffic must be
adequate and the lunch habits of the customers must be conductive to eating out. The Family
Burger stands out from the competition. Below are their Keys to Success:

• Great Products – providing exemplary products at market prices – will make customers want to
return again and again .
• Hire Quality Baristas – Pay employees rates similar to the larger chains with opportunities for
long term careers and opportunities for advancement with long term plans to open a second facility.
Another to key success lies with our ability to execute our plan. If we neglect one or more aspects
of our plan whether that is our numbers, our cleaning and food standards, or our commitment to
customer we will not success and thrive.

2.0 Company Description

“The Family Burger center’’ partnership franchises and sometimes own and operate quick service
Ethiopian style Burger center. The Family Burger upscale concept fits a niche b/n fast food and
fine dining offering the customer the best benefit of both segments. The company provides the
convenience of fast food. With rapid response time affordability as well as carry out and home
meal replacement options. The Family Burger also offers a fresher and tastier alternative to typical
fried fast food products such as hamburger and French fries(chip). The Family Burger concept
was born in the kitchen of popular Ethiopian dararo restaurant called Dakacha’s. The goal of the
original owner was to provide great
Ethiopian food in a clean, urban environment, and at a reasonable price after two years as
Dakacha’s

2.1 Ownership

Hundred percent of the restaurant belongs to Hawlitu Mesfin, Melaku Balcha, Edilawit Ebbisa,
And Dagnachew Meshesha limited liability partnership. The company is form in Jijiga in 2013
E.C, 60% of the share is owned by Hawlitu Mesfin and Melaku Balcha. And 15% is owned by
Edilawit Ebbisa and 15% is owned by Dagnachew Meshesha limited partnership. The remaining
10% is held by store manager.

2.2 Legal Form

The Family Burger will be formed as an SC owned by Hawlitu M and Melaku B, Edilawit A, and
Dagnachew M.
2.3 start-up summary
The startup table shows a summary of our overall startup cost. The highest initial outlay is for
franchise fee. This is required to launch the franchise. After paying our franchise fee our only
liability to the franchise will be the 10% cost of sales, and 1.2% advertising charge. Normally the
franchise fee would be paid interest accruing installment, but we decided to fore go this to keep
the books as clean as possible and to reduce the possibility of “parent/child “conflict b/n our
company and the constitutes. The Family Burger will have seating for 40 patrons. The rent is Br
68,475 a month, with a three five-year lease available. The site consists of 1500 square feet of
leased space consisting of a dining room, two restrooms, 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. A custom Family Burger needs to be built. With materials bought
on sale and volunteer labor, the cost to renovate will be 2,366,925. The burger house equipment
will consist of two commercial espresso machines, a commercial blender, commercial brewer,
barista syrups, cold drink dispenser, frothing equipment, a commercial refrigerator, microwave
and stainless steel prep bar. The cost for the equipment is 1,263,075. The furniture will consist of
leather couches, and chairs (purchased at auction), and window treatment. The artwork will come
from local artists and will be sold on a consignment basis. Total cost to furnish is 462,000. Other
startup expenses will be dishes, furniture, rent deposit, and marketing.

2.4 Company location and facilities

The company is located in Jijiga specific address is called bus the previously called Central Area
on the main street which takes to Jijiga Bus Station. It is the busiest shopping district and is very
close to the Different Branches of Banking Area.

3.0 product

We will offer a large variety sandwiches, cheese burger hamburger and sodas. The sandwiches
made is unique sweet mustard sauce and each loaf of burger is made fresh daily. The burger is
toasted for every order the soups are made daily.
Page|4

3.1 product description

All of our burger are available for customization. In addition, customer will love the fresh toasted
burger, and the freshly sliced meats and cheeses. We purchase the needed product from the
following regions. From Rebshedy: salami roast beef, tomatoes onion, bell pepper, cheese, vinegar,
oil, salt, and pepper upon request. From Diredawa Kefira: cheese, tomato, onion, bell pepper,
vinegar, oil, salt, and, pepper upon request. From Diredawa Kefira: cheeses, white meat chicken,
sauce, tomato, carrot, onion, bell pepper, oil, salt, and pepper upon request.

3.2 Competition
Our competition is with different restaurants which offer burger service to customers. They are
Jijiga International Hotel, Istanbul Hotel, Arcad Cafe, fast food restaurant, and down to eateries,
Hotspot café, Berwako Café etc. We decided to win these fierce competitions in which following
different competition strategy. Our competition strategy is based on situation of demand and
satisfaction of customers. To compete with those café’s, we have chosen quality based and price
based competition strategy as demand. The competition will be fierce, but our specialized burger
will set us apart from competition as will our focus on healthy, yet tasty fast food. Others
competitors have emphasized the benefit of healthy burger yet their burger is often tasteless and
stales they don’t toast their burger, they don’t use a special sauce, and their production facilities
are rarely clean enough to make dining in their restaurant an appetizing venture The other fast food
restaurant in town will offer a more serious challenges How do we position ourselves so that people
food is both healthy and tasty. Many people who eat fast food burger and fries are not concerned
with healthy benefits of such activities but rather the way the food tastes. To competitive our sales
literatures and promotion will make it clear that our product is tastier than any greasy ham burger,
yet will provide a fun guilty free eating experience.

3.3 Product/Service Sourcing

The Family Burger has negotiated supplier agreements with several local food-service wholesalers
and burger wholesalers in Jijiga area that have a reputation for quality and reliability.

3.4 Inventory Management

N/A
3.5 Warehousing and Fulfillment

N/A

3.6 Future Products/Services

Arcad Café and Jijiga International hotel which comprise the First and the second largest market
share in Jijiga, are often overlooked in the burger market. To overcome this hurdle, the Family
Burger has long term plans (5 years) to open a 2nd Restaurant: A combination indoor play area.
This concept allows parents and caregivers an opportunity to meet and relax with other adults
while the children can enjoy the indoor playground amenities. Additional future services will
include in-store sales for home purchase as well as an online store. The website will have an option
to purchase prepaid gift card program – Prepaid gift cards not only provide immediate cash, but
also reduce credit card transaction charges and draw new customers to the business.

4.0 Market analysis

Our market consists of 100,000 Somali Diasporas are being entering each year from around the
world to the capital city of Somali region, and Tourists from Somali land, and The hot business
environment of Jijiga attracts more customer from different parts of Ethiopia, and down town
workers and students from Jijiga university. In addition, demographics have also shifted in recent
year from the traditional house hold (two parent with children) to more nontraditional households
as a result many adults feel they have less free times. Consumers’ reports that they are eating out
more often in order to free up times normally spent cooking and uses that times to enjoy their
families and to take advantages of others leisure activities.

4.1 Industry Analysis

Competitive Landscape

Consumer taste and personal income drive demand. The profitability of individual companies
depends on the ability to secure prime locations, drive store traffic, and deliver high-quality
products. Large companies have advantages in purchasing, finance, and marketing. Small
companies can compete effectively by offering specialized products, serving a local market, or
providing superior customer service. Specialty eateries, which include burger shops, are labor-
intensive: average annual revenue per worker is about 1,650,000. Burger shops compete with
businesses such as convenience stores, quick service and fast food restaurants, gourmet food shops,
and donut shops.

Products, Operations, Technology

Major products include beverages and food. Beverages include brewed coffee and tea; espresso
drinks; cold blended beverages; bottled water; soft drinks; and juices. Food includes pastries,
bakery items, desserts, sandwiches, and candy.

4.2 Distribution patterns

We distribute our product direct to customer both through retails and through catering service. We
don’t rely a channels of resellers or distributors to get our products into hands of customers.

4.3 Competition and buying patterns

The fast-food business is based largely on the impulsive choice customers. Many people buy the
business lunch or family dinners at a fast food restaurant and those fast food restaurant offers not
necessarily the best selection but the most reliable menu and fastest order completion times.
Customer will try other fast food restaurants and shop around but the majority of their fast food
purchase are from one of their favorite fast food or inner restaurants.

Our goals are to capture those customers and to build loyalty to the products through purchase
punch cards consistent daily specials and direct mails list.

4.4 Main competitors

Our main competitors are major national fast food franchises. Arcad café and restaurant is our
largest competitors with 3 franchises in Jijiga alone. Arcad Café and restaurants contributes to the
growth in our markets by advocating for healthy eating habits online. TV and radio advertising.
They are our largest competitors yet they also contribute to the national’s wide growth of healthy
food segments of this markets. We can count on them to bring peoples into our stores and will
targets their local operations through flyer.

4.5 Market needs

There are two market needs we are attempting to fill. First there’s needs for a fast food restaurant
that produces tasty fast food at low cost in a clean environment. There are many people considered
in the traditional sense to be “middle class’’ and above who will not set foot inside a fast food
restaurant due to a) The restaurant’s lack of cleanliness and b) The relatives poverty and despair
displayed by the people working in these fast food restaurant. To fill the needs of these customers
we will market products that appeals to their healthy lifestyle their taste buds and their sense of
“place”. In addition, our food lines tables, floors and counters will be cleaned constantly
throughout the day and we will maintain a very high standards of clean lines.

4.6 Market trends

The market for fast food is becoming more demanding while’s fast food chains such as cookies
and others in the mid 2007s failed in their attempt to market low calories fast food, since the 90s
some companies have found that healthy fast food pays off. Garden burger have become prevalent
at many fast food restaurants and even some fast food burger franchises are beginning to offer
garden burger, and other so alternatives.
4.7 Market growth
The national restaurant associated predicts that they are QSR market will grow slightly slower than
overall market for food services. This is due to reduced discretionary economic pressures in 2006
and 2007, The overall growth rate in the fast food business is the expected to be 2.7% in 2007
growth catering services is expected to be at around 6.5%. Based on the fact that only about 20%
of our sales will be generated from catering service and that our business resides in the QSR
submarket of the fast food market a slower growing market during recession we have pegged our
overall market growth rate at a weighted 4.82%. However, because of the faster than average
growth of the town area, and based on the increase of Somali born diaspora’s in Jijiga over last
few years we have estimated that our potentials customer base will grow at healthy 5.9%.

4.8 Positioning
• By charging similar prices as the large chains – the service and quality of the product will
commensurate with the price
• The Family Burger is genuinely unique place to gather and meet friends, and enjoy Burger
• Amenities such as free WIFI, chess games, comfy overstuffed chairs, create a relaxing
environment
• The Family Burger will position itself as the alternative to the chain/franchise/fast food
burger house.

5.0 Marketing Strategy and Implementation

Our number one strategy is to focus on our customer experience. Our success hinges on whether
customer receive what we promised them and pleased enough to come back for more. Our KISS
(keep it simple stupid) approach will be successful only if we don’t distract ourselves from the
core business of making good burger, and of treating customer as if they are special. As with any
business model in the new millennium we must adapt our strategy to the customer and market
trend while maintaining consistency of brand and message. This is challenge for any business in
any industry because the nature of business will always and has always determined that the best
strategy with the most resources behind it will survive.

This millennium has proved to be very successful in growing this market and of supporting
business. Contributed to customer desires to eat their meals in comfortable healthy environment.
5.1 SWOT Analysis

The SWOT analysis examines the restaurant strengths and weaknesses that need to be addressed.
Further, this section examines the opportunities presented to Café/restaurant as well as potential
threats.

5.1.1 Strengths

• Based on its smaller size, the fact that it is not a franchise, the Family Burger is a unique burger
shop concept unlike any other in the Jijiga market.

• The owner has firsthand experience, in operating and starting new restaurants.

• Handpicked baristas will bring professionalism and enthusiasm to the shop.

5.1.2 Weaknesses

• Franchises are the easiest way and often the safest conduit to start a café/restaurant; the
café/restaurant will not have the backing of one of these established entities.

• The Family Burger has a minimal budget and is competing against larger and more
established burger houses for market share.

Opportunities

• The Jijiga City demographics support the need for a unique Burger center.

• Additional opportunities to target the active and recently retired target market and 45 years+ age
group.

5.2 Competitive edge

We have a competitive edge in regard to the overall quality and differentiation of our product, and
cleanliness and ambiance of our seating area. Our hamburger, soups etc. are all of the finest quality
and have been refined through taste –tests sponsored by Blue Nile restaurant. Our seating area will
be clean the murals and print on the wall will feature airy Ethiopian land escape and European
lifestyle motifs. The walls will have painted a rich yellow color the table and chairs are a rich
walnut color and the floor will consist of high quality tile we will differentiate our food from Blue
Nile restaurant in regards to taste quality of bread and contents attentiveness to customer and
overall experience. We will build off the Blue-Nile national marketing strategy so that we gain
from their conversion of burger eaters to sandwiches eaters but alternately prove that we are more
responsive to customer and offer better far than Blue Nile restaurant.

5.3 Marketing strategy

Our market strategy is to reach the largest amount of Diasporas and tourist resident and student for
least amount of money. Our strategy will focus on three sold points:

1. Building customer loyalty.

2. Extending the franchise brand locally.

3. Develop local word of mouth advertising (buzz)

5.4 pricing strategy

Our pricing strategy is different for customers. Prices to retails customers will be fixed by the
chairs and based on a relative cost of living indicator. Retails prices will be competitive at about
110 birr for average meal, this is about 30% above Arcad Cafe and Jijiga International hotel prices,
but only about 15% above average prices of a Hotspot cafe. Customer are simple willing to pay
more for healthy flavorful food served in clean comfortable environment.

Our highest margins will come from our catering services and large sub product. We will focus on
expanding this segments of the market as soon and as aggressively as possible.

5.5 Promotion strategy

The chairs will promote our products on the national level. In order to reach our local customer
and build loyalty we will offer special mid-days promotion sponsor local community events,
advertise in the local classified paper and our president will become a leading figures and
spokesman in the community. Our strategy is to focus on promoting the business through local PR
efforts, rather than paid advertising.

13
5.6 Distributions Strategy
We plan to distribute our product direct to customer without the use of a separate channel of
distributors.
5.7 Marketing programs
Our marketing program will include customer centric appeal to switch from competition, build
loyalty, provide cost value to the customer and build words of mouth marketing.

Here’s list of sales and marketing programs we intend to implement within the next 15 months:

• Five daily in store regular specials at least 15% off one particular burger item.
• A direct mails coupon offering 50% off your first burger when you bring in a stamped
menu card and sign up for our coupon mailing list.
• High profile sponsorship of two local sporting or charity events.
• 20% off a menu item when we bring in our festivals ticket stub.
• Free delivery to any of the local hotels (market only through hotels), and offers to pay
hotels a slotting fee.

We may institute more programs as we see fit. This list of programs is aggressive when compared
to the local marketing done by our competitors so this should give us an early advantages as long
as we can keep cash balance and sales numbers up.

5.8 sales strategy

Our sales strategy will be to reach the largest amount of Jijiga resident and tourists with
consistent value added incentives to purchase our products and visit our restaurant. In this
industry and especially as a franchise our marketing programs are almost indistinguishable
from our sales program. The distinguishable handles a lot of regional marketing and we just
pay our fee to have it done Our flexibility will lie in our ability to push the bounder’s freedom
the indistinguishable has given us and to take advantages of opportunities to differentiate
ourselves on sales by sale level.

• The menu will focus on the most profitable products sold. The café will always draw
customer attention to the most profitable products.
• As warranted, the café/restaurant will raise prices to bolster brand image. Prices
communicate a perceived value of a product; so if set too low, the customers might
assume that the beverages are inferior compared to the competition.
• Control waste and theft – audit sales and inventory reports to evaluate ingredient waste
due to inefficient preparation, returned drinks and employee consumption. Retail
locations can easily waste 20% or more of their daily sales these three key categories,
which is a substantial and unnecessary loss.
• Monitor and evaluate hours of operation
 • Run employee sales contests – The baristas are the salespeople and have a great deal
of influence over the customer ordering process. All baristas will have some form of
sales and customer service training to make each transaction active, rather than
passive. Sales contests will emphasize high margin items or cross selling

5.9 Sales forecast

The sales forecast assumes a conservative 5% increase in revenues during Year Two and 10%
increase in Year Three. The following chart shows estimated sales over the next three years.
Table 1 Annual Sales Forecast
Annual Sales Forecast Year 1 Year 2 Year 3
Products 494,800 519,900 572,500
Product/Service 2 90,300 95,800 106,000
Product/Service 3 90,300 95,000 106,000
Total Income 675,400 711,500 784,5000
Cost of sales
Products 74,294 72,968 80,351
Product/Service 2 26,932 28,572 31,614
Product/Service 3 18,060 19,160 21,200
Total Cost of Sales 119,286 120,700 133,165
Gross Margin 556,114 590,800 651,335

5.10 Sales Programs

The Family Burger will run employee sales contests – The baristas are the salespeople and have a
great deal of influence over the customer ordering process. All baristas will be required to have
sales and customer service training to make each transaction. The sales contests will emphasize
high margin items and cross selling.
6.0 Organization and Management

Our manager is well skilled and experienced. We want our manager to take a personal stake in the
success of the company and for that reason we have given them a motivation rewards. Specific
information about each manager is available in the following topics.

6.1 Organizational Structure

The Family Burger is formed as an SC owned by Hawlitu Melaku Edilawit A, and Dagnachew M

6.2 Management Team

The Family Burger will be owned 100% by Own Share Company. All of us were graduates of
different Universities, and Hawlitu M has an undergraduate degree in Electrical Engineering,
Melaku B has BA degree in Management, and Edilawit and Dagnachew has BA Degree in
Accounting and Finance respectively. During high school Edilawit had worked as a waiter in a
local hospital coffee shop that purchased its beans from a local roaster In addition to being an avid
coffee drinker herself this job allowed her to learn about the business first-hand. In college,
Dagnachew had worked in a campus coffee house for three years at Hawassa and eventually he
had promoted to the position of assistant manager though he had hired as a Bank employee
following his graduation from university. Which provided first-hand exposure to the food and
beverage industry—especially the steps involved in establishing new locations.

Owners
Assistant mangers
Audit and book keeping recorded accountants
Waitresses
Cleaners
Tourist visitors and etc.

6.3 Management Team Gaps

The Family Burger will rely on its POS (Point of Sale) system to generate daily accounting and
cost activity reports. We will supply these to an outside bookkeeper for preparation of annual
income taxes.
6.4 personal plan
Our employees will be respected and will wear a company poor sweatshirt, not a tight fitting,
artificial fibers, company man date jumpsuit. our employees will be paid more (in salary
@benefits) employees than at most other fast food restaurant will be given tuition reimbursements
there by making them more empowered and more content workers. In this way we will meet the
needs of our markets and differentiate our company from myriad of fast food behemoths whose
primary goals is to churn out worthless, tasteless food in a degraded facility and by degraded
employees. Initially the café/restaurant will hire 1 manager, 5 baristas, and 2-part time servers. In
Year 2, the café plans to hire 1 additional full time barista.

Table 2 Personnel Plan

Position Year 1 Year 2 Year 3
Manager 65,000 65,000 72,000
Full Time Barista 50,000 50,000 50,000
Full Time Barista 50,000 50,000 50,000
Full Time Barista 50,000 50,000 50,000
Full Time Barista 50,000 50,000 50,000
Full Time Barista 50,000 50,000 50,000
Full Time Barista 50,000 50,000
Part Time Employee 21,500 5,000 21,500
Part Time Employee 21,500 21,500 21,500
6.5 Board of Directors

NA

17

7.0 Financial plan

The financial plan will cover the following:

• Required Cost of Start-Up

• Profit and Loss

• Cash Flow
• Balance Sheet

• Financial Ratios

7.1 Important Assumptions

• The sales forecast is conservative and assumes a 5% increase in Year 2, and a 10% in Year 3.

• The analysis accounts for economic seasonality – wherein some month’s revenues peak (such as
holidays) and wane in slower months.

• The analysis assumes the owner will take a much smaller salary compared to his baristas; at any

time, it is assumed that owner’s withdrawal is available at his discretion.

• Sales are cash basis – nonaccrual accounting

• Moderate ramp- up in staff over the 3 years’ forecast

• The average barista salary in 2013 is 50,000.

• In general, most cafes/restaurants have an 85% gross profit margin

• In general, most cafes/restaurants have a 3% net profit margin

7.2 Start-Up Costs Table 3

Start-Up Expenses Amount
Operating Capital Br. -
Salaries and Wages Br. -
Insurance Premiums Br. 158,400
Beginning Inventory Br.
Legal and Accounting Fees Br.-
Rent Deposits Br. 68,475
Utility Deposits Br. -
Supplies Br. 66,000
Advertising and promotions Br. 132,000
 Licenses Br. -
Other initial Costs Br. 264,000
Work Capital(Cash On Hand) Br. 264,000
Total Start-Up Expense Br. 952,875
Start-Up Assets
Real Estate Br. -
Buildings Br. -
Leasehold Improvements Br. 2,366,925
Equipment Br. 1,263,075
Furniture and Fixtures Br. 462,000
Vehicles Br. -
Other Fixed Assets Br. -
Total Start-UP Assets Br. 4,092,000
Total Required Start-up Costs Br. 5,044,875
7.3 Source and Use of Funds Table 4
Source and use of fund
Sources of Fund
Owner’s Injection 754,857
Commercial Loan 4,290,00
Commercial mortgage
Line of Credit
Total Source of Funds 5,044,875
Use of Funds
Fixed assets 4,092,000
Operating capital 952,875
Total Use of Funds 5,044,875
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7.4 Projections
7.4.1 Projected Profit and Loss

The estimated profit and loss for the Family Burger are as follows:

Table 5 Pro Forma Profit and Loss

Pro forma Profit and Loss Year 1 Year 2 Year 3
Income
 Total income 22,288,200 23,479,500 25,888,500
Total Cost of Sales 0 0 0
Gross Marin 22,288,200 23,479,500 25,888,500
Expenses
Total Salaries and Wages 0 0 0
Business Expense
Advertising 290,400 316,800 316,800
Car and Track Expense 0 0 0
Credit Card Charges 0 0 0
Insurance 118,800 118,800 118,800
Legal and Accounting 26,928 26,928 26,928
Office Expenses 0 0 0
Postage and Shipping 0 0 0
Rent on Business 821,700 821,700 821,700
Property

Rent on Equipment 0 0 0
Repairs 72,600 79,200 79,200
Supplies 315,084 343,728 343,728
Telephone 158,400 158,400 158,400
Travel 0 0 0
Utilities 475,200 475,200 475,200
 Miscellaneous Expenses 0 0 0
Amortized Start-up 0 0 0
expense

Depreciation 610,962 610,962 610,962

Total Business expense 2,890,074 2,951,718 2,951,718
Total Interest expense 0 0 0
Net Operating Income 19,398,126 20,527,782 22,936,782
Less Income Taxes 0 0 0
Net Profit (Loss) 19,398,126 20,527,782 22,936,782
7.4.2 Projected cash flow

The following table shows the projected cash flow.

Table 6
Pro Perform Cash Flow Year 1 Year 2 Year 3
Beginning Cash Balance 264,000 1,316,403 3,978,249
Cash Inflows
Income From sales 22,288,200 23,479,500 25,888,500
Accounts Receivables - - -
Total Inflows 22,288,200 23,479,500 25,888,500
Total Cash Outflows 21,235,797 20,817,654 24,339,942
Operating Cash Balance 1,316,403 3,978,249 5,526,807

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7.4.3 projected balance sheet

Table 7
Pro forma balance sheet Assets year 1 year 2 year 3

Assets
Current Assets
Cash 1,316,403 3,978,249 5,526,807
Inventory 0 0 0
 Accounts Receivable 0 0 0

Prepaid Expense 424,875 424,875 424,875

Other current assets 264,000 264,000 264,000
Total current assets 2,005,278 4,667,124 6,215,682
Fixed Assets
Improvements 2,366,925 2,366,925 2,366,925
Furniture and fixtures 462,000 462,000 462,000
Equipment 1,263,075 1,263,075 1,263,075
Real Estate 0 0 0
Buildings 0 0 0
Other Fixed 0 0 0
Total Fixed Assets 4,092,000 4,092,000 4,092,000
Less Accumulated depreciation 610,962 1,221,957 1,832,919
Total assets 5,486,316 7,537,167 8,474,763
Liabilities and Owner’s Equity
Accounts payable 0 0 0
Notes Payable 3,608,946 2,849,088 2,001,285
Mortgage Payable 0 0 0
Line Of Credit Balance 0 0 0
Total liabilities 3,608,946 2,849,088 2,001,285
Owner’s Equity
Common Stock 754,875 754,875 754,875
Retained earnings 1,122,495 3,933,237 5,718,603
Total Owner’s Equity 1,877,370 4,688,046 6,473,478
Total liabilities And 5,486,316 7,537,167 8,474,763
Owner’s Equity

APPENDICES