B u s i n e s s Pl a n
TABLE OF CONTENTS
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02 05 08 13 19 21 32 34 40 41 49 3
Business Description Concept Description Management Team Industry Analysis Operations Trends Target Market Competitive Environment Marketing Strategy Industry Risks Operations Financial Plan
BUSINESS DESCRIPTION Brown Zync Restaurant Group, LLC was formed in 2006 as a Limited Liability Company. The company was founded to provide a unique dining establishment to one of Chicago’s affluent and upwardly mobile communities. This goal will be achieved through Brown Zync Sportz Bar and Grill (referred to as “Brown Zync”). Brown Zync entrance into the restaurant industry stemmed from research that revealed the need in the existing marketplace and the phenomenal future growth for a venture such as Brown Zync.
Location Brown Zync will be located in the Kenwood-Hyde Park-Bronzeville community of Chicago and will offer a world class dining experience as well as catering services. Brown Zync is determined to exceed guest expectations and excel in the restaurant industry. The company will lease 15,000 square feet of commercial space for its operation. Brown Zync hours of operation are Monday through Sunday from 2:00 p.m. to 11:00pm.
Capitalization The proposed restaurant will cost an estimated $2,000,000 to open. A detailed cost breakdown is provided in the Financial Projections section of this business plan. Funding for the venture will be provided by $500,000 from Stacey Jones and $1,500,000 from personal investment partners. The proposed sources of funds are as follows. Our Legal Team will develop our Partnership Agreement which will provide specific details regarding equity, cash distributions, legal responsibility, and potential cash call for each partner.
Source of Funds
Stacey Jones Personal Investment Partners TOTAL
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Amount
$500,000 $1,500,000 $2,000,000
Corporate Mission Brown Zync is a great place to enjoy quality food combined with an intriguing atmosphere. The mission is not only to have great food but efficient and friendly service because customer satisfaction is vital. We aspire to be the sports bar and grill of choice where the menu is as diverse as the community that surrounds it. We promise to offer a cuisine that without the long travel time to downtown Chicago or far suburbs. In order to achieve our vision, Brown Zync commits to the following: The company guarantees 100 percent customer satisfaction, values friendly service, and provides quality products at market competitive prices.
Corporate Values At Brown Zync, we believe that above all else, our business should be based on respect: • Respect for the community we depend on, • Respect for the customers we serve, and • Respect for the people we work with.
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Keys to Success • The creation of a unique and innovative dining atmosphere which differentiates us from the competition. • Product quality. Not only great food but great service and atmosphere. • The menu will appeal to a diverse cliental: steak, seafood, American, Italian, Asian, and Vegan. • We will have monthly theme fundraisers for example: Brown Zync grand opening will strive for a successful benefit for sickle cell anemia where a substantial percentage of the profits made will go to a charity of our choice. • We will post local artists for display throughout the restaurant to be sold to interested customers. • We will have monthly restaurant etiquette courses for children of all ages. • We will have a sister brother relationship with the Bronzeville community center offering employment to teenagers trained in the hospitality industry. • We will also offer small and large catering packages. Due to intense competition restaurants must look for ways to differentiate their place of business in order to achieve and maintain a competitive advantage. The founder of Brown Zync realizes with the redevelopment of Bronzeville and North Kenwood, the community is awaiting a unique dining and entertainment establishment. The community needs a place that will offer sports entertainment and an extensive menu from steak and seafood to burgers without the long travel time to downtown Chicago or far suburbs.
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Concept Description Concept Description and Statement Brown Zync strives to be the premier sports theme restaurant in Chicago. We want our customers to have fun during their leisure and dining time. We will combine menu selection, atmosphere, ambiance, and service to create a sense of place in order to reach our goal of over-all value in a dining/entertainment experience. Brown Zync will provide every customer, from the youngest sports fan to the season ticket holder, with an experience that keeps them coming back for more. Brown Zync will depict a unique dining and entertainment atmosphere which will offer a full menu ranging from appetizers, soups and salads, sandwiches, burgers, to steak and seafood. Brown Zync will offer 15,000 square feet of pure enjoyment through dining and features which will include state-of-the-art televisions with the capability to televise every NFL, Major League Baseball, NHL, NBA, NASCAR, College Football and Division 1 College Basketball; game areas for pool and dart players and an extended top shelf bar. Menu pricing is as follows: • Appetizer prices are expected to range from $5.00 to 15.00, • Soups and Salads prices are expected to range from $3.00 to $8.00, • Entrees are expected to range from $12.00 to $37.95, • Sandwiches are expected to range from $8.00 to $13.00, • And deserts are expected to range from $5.95 to 6.95. A sample menu can be found in the Appendices section.
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The restaurant should be perceived as a mid to high end dining and entertainment establishment appealing to business and residential customers. It should have particular appeal to the middle to high income Kenwood-Hyde Park residents. The restaurant will have approximately 400 seats in the dining room and seating at our bar. There will be no outdoor seating. Brown Zync will also offer catering services. Brown Zync promises a savory dining experience and is bound to become one of the hottest dining and entertainment destinations in Chicago. Extraordinary service, superb food, convenience, and sound business practices are all factors that will lead to Brown Zync success and allow us to thrive in Chicago’s restaurant marketplace. Brown Zync be open 7 days a week. The restaurants expected hours of operation are as follows: Brown Zync Hours of Operation Lunch & Dinner
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
2:00pm - 11:00pm 2:00pm - 11:00pm 2:00pm - 11:00pm 2:00pm - 11:00pm 2:00pm - 11:00pm* 2:00pm - 11:00pm* 2:00pm - 11:00pm*
* Extended hours will be offered on these days in accordance with the City of Chicago’s code to be determined.
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Design/Layout The design and layout of the restaurant has not been established. Brown Zync management will bring in world renowned restaurant consultant, David Gotowoko, to finalize the design of the restaurant.
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Management Team Our management team consists of people who each bring unique skills and experiences to the business. Collectively, Brown Zync management team has over 25 years of restaurant and business management. This experience is re-deployable to the restaurant market where new business opportunities exist. Our valuable “human network” will provide the company with a strong foundation that will aid in reducing the quantity of obstacles that all start-up businesses face.
In-House Management • Owner - Stacey Jones Stacey Jones has dreamed of owning and operating her very own restaurant. Her quest for great food and extraordinary service on Chicago’s Southside has prompted her to launch Brown Zync. Ms. Jones has worked in the food service industry as a supervisor at the Swiss Hotel in Chicago. She was responsible for managing a crew of 15 members in areas of special events and special culinary projects. Ms. Jones observed how the hospitality industry not only pleased the customers at the front of the house but the employees in the back of the house as well. Ms. Jones was fascinated by the small details orchestrated by the executive chefs and staff to give the customer exactly what they ordered. After leaving the Swiss Hotel in Chicago, Ms. Jones pursued a career with the Chicago Police Department. Satisfying strong communication skills which were maintained during stressful and challenging situations, the Chicago Police Department provided Ms. Jones with honesty and integrity, a practice which has been perfected to carry on through her personal life and future endeavors.
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Ms. Jones also founded Lucrative Advancements Investment Group L.L.C. in 1999, which consist of 12 women with diverse career backgrounds. Ms. Jones runs all monthly meetings by preparing monthly agendas and handling banking transactions, bookkeeping, real estate lease agreements and compiled financial statements for property and business acquisitions. During this time Ms. Jones has been able to maintain her own personal real estate business which she has managed and completed various phases of construction projects which include: negotiating payment schedules, payroll and time cards, purchasing inventory, as well as supervising and delegating work to sub contractors and sub trades people, which can be an asset during the build out of Brown Zync. Ms. Jones is a graduate of Calumet College and is currently pursuing her Masters of Business Administration at St. Xavier University, where her focus is marketing and financial fraud. Ms. Jones continues to surround herself by a “master mind group” whose expertise, are collectively gathered to make success the only option. • Minority Partner/General Manager – To Be Decided Brown Zync is seeking a partner to serve as the General Manager. The individual we seek should have at least five years restaurant management experience and be willing to learn and apply the proven systems and controls as mandated by Straw Restaurant Group, LLC, the majority General Partner. Prospective candidates will be evaluated for characteristics we feel to be essential to the success of Brown Zync. First, the prospect should posses an outgoing personality and be enthusiastic about dealing with customers in the community. Prospects will be evaluated on their work habits, appearance and attitude towards managing others as well. We are looking for an individual that holds employees in high esteem, a philosophy to which the majority General Partner prescribes.
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The General Manager will oversee day to day operations of the restaurant. He or she will also coordinate the planning, organizing, training and leadership necessary to achieve stated objectives in sales, costs, employee retention, guest service and satisfaction, food quality, cleanliness and sanitation.
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Outside Management Support • David Gotowko, Restaurant Consultant: Mr. Gotowko, President of Restaurant Business Solutions, serves the many needs of the Food & Beverage Industry developing a practice exclusively for restaurants, hotels, private clubs, caterers, and entertainment venues. In 1995 he was honored as one of “America’s Top 2000 Chefs” by Chefs in America. He has worked with numerous Restaurant & Hotel groups including A la Carte Enterprises; Phil Stefani Restaurants; Key Wester Fish & Pasta House; Luigi’s Pasta House; Wild West Town Theme Park; Hyatt Hotels; Marriott Hotels; Country Inns; several Private Clubs; numerous independents, investment groups, and accountants with industry clients. While much of Restaurant Business Solution’s clientele is centered upon concept and business development, its reputation for troubled financial “turn-arounds” is also well respected. • Robert Jones, Accountant & Small Business Planner: Mr. Jones is President of Jones and Associates Accountants, a full-service accounting and business advisory firm committed to helping clients move their businesses forward by providing accounting, business planning and capital advisory services. Mr. Jones is a passionate advocate for small business and has facilitated in the planning and successful startup of several businesses in the Chicagoland area. Jones and Associates Accountants will provide accounting services to Brown Zync including but, not limited to payroll, full service bookkeeping, and sales tax reporting. Our outside management support team also includes the architectural firm of Gonzalez Hasbrouck, our legal advisors, executive chef, and graphic design firm. Our outside management advisors will provide tremendous support for in our startup and strategic planning. They will also serve as advisors for management decisions and practices but, are not responsible for making any final decisions.
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Industry Analysis Industry Assessment According to the National Restaurant Association, industry sales for 2006 are forecasted to grow 5.1% to 511 billion dollars in the U.S. That figure is a whopping 16.1 % increase over 2004 sales of 440 billion and represents the fifteenth consecutive year of real sales growth for the industry. Restaurant industry sales account for 4% of the GNP for the United States and represents $22.3 billion of real growth after inflation adjusted menu increases are taken out. Positive economic indicators and increases in consumer’s disposable income give rise to expectations that 2006 will be another record year for the industry. 2005 sales were generated by 900,000 locations; a number expected to top 925,000 in the year 2006 and reach 1 million locations by the year 2010. Eating places, defined as full-service, limited service, cafeterias, social caterers and snack bars by the NRA, contribute the bulk of industry food and drink sales. Of that segment, full-service restaurant sales for 2004 reached almost $158 billion, a growth rate of 4.6%. Quick-service sales increased by 3.9% and topped $123 billion.
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The following chart (Figure 1.2) illustrates segment sales for 2004 as defined by the National Restaurant Association 2004 Industry Forecast. Restaurant Industry Sales by Segment
$450 $400 $350 $300
Source - National $250 Restaurant Association $200 $150 $100 $50 $-
2004 Sales in Billions Non-Commercial, Military Retail, Vending, Recreation Sports Hotel/Motel Restaurants Foodservice Contractors Drinking Places Eating Places
Figure 1.2
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$37 $34 $20 $29 $14 $306
Leading Employer The restaurant industry is the nation’s largest private-sector employer with approximately 12.2 million workers in 2005 representing almost 9% of the total U.S. workforce. According to a press release in 2006 by the National Restaurant Association, the industry has created, on average, approximately 270,000 jobs per year for the last ten years and is slated to add 1.9 million new jobs during the next ten years. Job growth for 2006 is expected to increase 1.8% for a total employment of 12.5 million workers. Nevertheless, the industry remains far behind other retail segments, posting $58,000 in annual sales for every full time equivalent employee. Furthermore, and even though the labor shortage is not as severe as it was in the mid to late 1990s, a sizeable proportion of restaurant operators report that the lack of labor is causing problems. Operators, in their effort to combat labor shortages, are expected to dedicate more resources to employees training, offer health benefits, and take measures to improve employee literacy or teach English skills. Restaurants employ an estimated 1.4 million foreign born individuals, more than any other industry. Hispanics, including foreign born, are the fastest growing ethnic segment, accounting for approximately 20% of the restaurant industry work force in 2004 as compared to only 6% in 1987. 23.3% of foreign born U.S. population is employed in service related occupations as opposed to only 14.9% of the U.S. born population.
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Meeting Challenges In addition to labor concerns, operators report that rising wholesale costs, energy cost, healthcare insurance and liability insurance costs have negative impacts on their business. As a result, the National Restaurant Association has slated these issues as part of their public policy agenda. They have pledged to take an active role in affecting commodity prices and trade and support current legislation for healthcare reform. They also support an effective energy policy and are in favor of legal reform to reduce frivolous lawsuits against the industry.
Consumer Trends In 2005, restaurants will receive approximately 47% of all food dollars spent by consumers. That figure is up dramatically since 1955 in which only 25% of all consumers spending for food and drink went to restaurants. 43% of adults are of the opinion that eating away is as cost effective as cooking at home and cleaning up. Household incomes of greater than $75,000 have increased to 26% although median household income has declined slightly to $43,318 in 2003. Higher income households tend to spend more of their food dollar in meals away from home. According to the National Restaurant Association’s Restaurant Spending-2005 the typical American household spent $2,434 on food away from home, a per capita expenditure of $974. Regionally, the Northeast accounted for the greatest expenditure averaging $2,517 per household, or $1,007 per capita. Households in metropolitan areas tend to spend more than households in non-metropolitan areas. The top five metropolitan areas posted per capita sales ranging from 1,113 to $1,221 per capita. Households with income over $70,000 spent an average of $4,350, $1,403 per capita on food away from home. Other trends noted in the
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report showed that younger households, where the head of the household is under age 25, spent the largest share of their food dollar yet, because of their age, earned less and therefore spending per capita was below the national average. Adults between 35 and 54 spend more on food away from home as a result of their higher incomes. Of that group, households headed by 35-44-year-olds spent an average of $2,712 for food away from home, however, because of larger household size, only spent $848 per capita. Flourishing economic growth, changing lifestyles and a diverse ethnic population have contributed to the variety of cuisine and restaurant concepts, making the U.S. a world leader in restaurant innovation. Ethnic cuisines have mingled with traditional restaurant fare resulting in varied menus at every industry segment. In its recent publication, the 2005 Restaurant Industry Forecast; the NRA has categorized American diners into four dissimilar groups: Adventurous, Health-conscious, Carefree, and Traditional. Adventurous diners are more eager to try new foods, have had more exposure to different type restaurants and are typically more active diners. They tend to be between 30 and 60 years of age, are educated and more upscale, usually live in large urban areas and make up 25% of all diners. 23% of all diners are considered health-conscious and are more aware of what they eat. These diners are more concerned about their general or age related health. They tend to follow specialized diets and prefer items with menu expressions such as broiled, baked, stir-fried, organic and stewed. Carefree diners make up 23% of all diners, love to eat out and are the opposite of health-conscious. They tend to be younger (under age 50), mostly male, and are not concerned with eating healthy. Traditional diners, including many diners over 60, comprise 29% of all diners. They prefer comfort foods, are less likely to experiment, and dine out less often than the other groups. They prefer terms like homemade, deep-fried, roasted, farm-fresh, and mashed and tend to live in smaller communities.
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The baby boomer population, the demographic segment that has the most significant impact in terms of marketing and menu mix, is getting older. By the year 2010, 19% of the population will be between the ages of 50 and 64. The changing dining habits of this group will greatly influence menus and restaurant concepts in the coming years. Statistics show that the average adult purchased a meal 5.3 times per week in 2004. Public awareness of health issues continues to prompt operators to provide more health conscious menu items. EntrĂŠe salads saw the most significant increase across all industry segments. Low-carb items, healthful options for children, and locally produced foods and produce have become more prevalent. Operators expect to see continued interest in ethnic foods, high flavor items such as bold and spicy foods, sandwiches and seafood. Beverage trends were characterized by the continuing popularity of bottled water, specialty coffees and iced tea, and increasing wine sales at full service restaurants. 69% of quick service operators reported that bottled water sales had significant increases. A federal survey released in September 2004 revealed that Americans spend 73 minutes a day eating and drinking. They spend approximately 5.1 hours per day on other leisure activity such as watching television, exercising or socializing. Travel and tourism is again on the rise with an expected 2% increase in domestic travel and a 5.6% increase in tourism from abroad. Tourism is expected to increase closer to pre 9/11 levels by the year 2007. Average unit sales in 2003 were $755,000 at full service restaurants and $606,000 at limitedservice restaurants.
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Operation trends Greater use of technology and more reliance on staff training will be used to increase productivity and gain higher revenues. More than two-thirds of restaurant operators say they are more productive than they were two years ago. Nearly thirty percent of food-service operators say they are increasing their budget for technology spending in 2005. Roughly 1 in 20 quick service operators plan to offer self-service customer-activated ordering terminals in 2005. Nearly two thirds of all restaurants now have websites including 9 out of 10 fine dining restaurants. In addition to posting information such as menu and location, an increasing number are expected to offer other services such as reservations, delivery and takeout ordering. Loyalty programs, also known as frequent diner programs, are on the rise. Currently, about one in five of full service restaurants offer customer loyalty programs. Of those that don’t, another 20% said they plan to in 2005 as operators take note that 60%-75% of full service business is repeat customers. Nearly 25% of quick service restaurants have a customer loyalty program with another 28% saying they plan on beginning one in 2005. Gift cards and gift certificates in restaurants continue to be the number one preference by consumers as compared to other retail industries. Expect a continued increase in the number of restaurants offering gift cards in 2005. A new law that speeds up the tax-depreciation schedule for restaurant improvements is expected to generate remodeling activity for 2005. Nearly half of all quick service operators responding to a survey by the National Restaurant Association say they plan to allocate a larger share of their budget to capital improvements.
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Banquet, catering, delivery and takeout continue to be on the rise in full service restaurants as operators take advantage of assets already in place. Nearly 40% of operators surveyed by the NRA say that takeout sales are a larger proportion of revenue than it was two years ago. Menus will be strongly influenced by the health-conscious diners as well as the adventurous. The growing sophistication of American diner’s palates as well as the ethnic diversity in the U.S. will continue to challenge operators to roll out new menu items and ingredients.
Information Sources 2005 Restaurant Industry Forecast; National Restaurant Association National Restaurant Association’s Restaurant Spending 2002 October 2004 Survey, National Restaurant Association U.S. Department of Labor, and U.S. Census Bureau
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Target Market We anticipate that Brown Zync will appeal to well targeted base of consumers. While we expect to be frequented by diners in both the residential and business community, the concept is particularly suited to a specific demographic and market conditions. The menu, location and ambiance of Brown Zync have been created to appeal primarily to the middle to high income residents of Chicago’s Kenwood-Hyde Park community. Our secondary target market includes the following communities: • • • •
Oakland, Bronzeville/Grand Boulevard, South Shore, and Woodlawn.
Our proposed location is inhabited by a moderate population of our target market, providing a sufficient customer base of which to draw from. Preferable demographic and market characteristics for Brown Zync have been identified and summarized in the following table.
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Market Characteristics
Preference
Population Residential Population - 1 mile radius Residential Population - 3 mile radius Average Age Household Size Race Location Traffic Count Household Income Per Capital Income Primary Dinner Trait Secondary Dinner Trait Major Industry Base
30,000+ 10,000+ 30,000+ 25-44 1.5 or more Unspecified >300/hr $35,000+ $20,000+ Traditional Ethnic No Preference Numerous small businesses; multiple office buildings Same as above Beer & Wine Permitted
Business - 1 mile radius Businesses - 3 mile radius Alcoholic Beverage Service
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Location Analysis The proposed location has not been determined. Brown Zync ideal location will be in conveniently located in our target community and offer parking. Specifically, the location will be blocks away from the beautiful shores of Lake Michigan in Chicago’s Kenwood-Hyde ParkBronzeville community. Brown Zync guest will experience a total dining and entertainment experience. The combined communities of Kenwood-Hyde Park have a population of over 48,000 according to the 2000 U.S. Census Report. The combined population of the Oakland, Grand Boulevard, South Shore, and Woodlawn is over 122,000.
Our Target Communities at a Glance Kenwood-Hyde Park Community: Hyde Park is surrounded by communities experiencing unprecedented levels of growth and re-development. New mixed income communities are under construction, which once completed, will be home to thousands of new residents. More 60% of The University of Chicago’s faculty and families live in Hyde Park and nearly all of it’s 11,500 graduate and undergraduate students live in Hyde Park.
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• Hyde Park is home to the Southside’s largest employer, The University of Chicago, with 12,000 employees. • Steady growth since 1990. • The Hyde Park - Kenwood communities have among the highest concentrations of buying power in the city of Chicago. • Over 35% of households have Household Incomes over $50,000 ( a • 112% increase since 1990) • Highly educated – over 40% hold a master’s, professional or doctorate degree and 22% hold bachelor’s degrees The residential population in the immediate area is comprised of a mixture of single family and multi-family housing. The median household income with earning for Kenwood is $60,533 and $51,861 for Hyde Park. The following chart shows the market characteristics for our proposed location.
Demographic & Business Characteristic
Kenwood
Hyde Park
Residential Population # of Households Avg. Household Size Avg. Age Race Household Income
18,363 8,935 2.01 35.5 Unspecified $60,533
29,920 14,360 1.85 32 Unspecified $51,861
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Target Market Food & Beverage Expenditures According to Applied Geographic Solutions (Table 1.1 and 1.2), average food and beverage spending per household in the Kenwood-Hyde Park community is $7,865.00. Kenwood Food & Beverage
Consumer Expenditures Focus Area : KENWOOD
$ Per HH Consumer Expenditures (2003) Apparel 2,680 Education 862 Entertainment 2,461 Food and Beverages 7,845 Health Care 3,143 Household Furnishings and Equipment 1,865 Shelter 8,000 Household Operations 1,478 Miscellaneous Expenses 548 Personal Care 845 Reading 259 Tobacco 438 Transportation 9,822 Utilities 3,927 Gifts 1,457 Personal Insurance 521 Contributions 1,350 Households Source: Applied Geographic Solutions, Thousand Oaks. CA
Table 1.1
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Total $000s 24.112 7,758 22,138 28,278 28,278 16,778 71,968 13,292 4,932 7,598 3,939 3,939 88,362 35,330 13,110 4,690 12,141 9
Hyde Park Food And Beverage
Consumer Expenditures & Retail Sales Focus Area : HYDE PARK
$ Per HH Consumer Expenditures (2003) Apparel 2,662 Education 867 Entertainment 2,476 Food and Beverages 7,886 Health Care 3,188 Household Furnishings and Equipment 1,882 Shelter 8,230 Household Operations 1,492 Miscellaneous Expenses 558 Personal Care 821 Reading 261 Tobacco 447 Transportation 9,860 Utilities 3,861 Gifts 1,466 Personal Insurance 534 Contributions 1,372 Households Source: Applied Geographic Solutions, Thousand Oaks. CA
Table 1.2
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Total $000s 39,419 12,843 36,661 116,776 47,207 27,875 121,870 22,099 8,256 12,162 3,864 6,622 146,008 57,169 21,705 7,901 20,315 15
Target Market Size and Estimated Market Share According to the U.S. Census Bureau, there are currently 48,000+ residents in our immediate target geographic market and over 122,000 in our additional target markets. Market size and estimated market share are as follows:
Immediate Target Market Estimated Market Share Additional Target Market Estimated Market Share Est. Avg. Customers Per Month
2007
2008
2009
2010
2011
48,000+ 2.7% 122,000+ 1.7% 3,370
48,000+ 3.25% 122,000+ 2.25% 4,305
48,500+ 4% 122,500+ 3% 5,615
49,000+ 4.5% 123,000+ 4.5% 6,510
49,500+ 4.8% 123,500+ 4.8% 7,242
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Area Map
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Buying Power of Target Market To help quantify the potential demand for Brown Zync proposed location, we have evaluated the expenditure leakage data prepared by Shorebank Corporation and total retail sales for Brown Zync total target market within a 1 -5 mile radius. This evaluation is used to identify the amount of consumer leakage in Brown Zync targeted communities, a percentage of which would ultimately be captured by Brown Zync. For Brown Zync target market within a 1 to 2.5 mile radius the total consumer expenditures total over $700 million. The following tables (Figure 1.4) show that out of $709 million in total consumer expenditures in the Hyde Park and Kenwood communities, only $325 million was spent in the community. To better understand the following tables, definitions are provided below: Total Consumer Expenditure: Total amount of dollars residents could spend in the community if 100% of purchases were made in the community area. Total Retail Sales: Actual retail sales in the community. Expenditure Leakage $: Amount of Total Consumer Expenditures spent outside the community. Expenditure Leakage %: Percent of Total Consumer Expenditures spent outside the community. Concentrated Buying Power ($ per square mile): Retail Potential per Square Mile.
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Retail Poten�al in $ Millions
Kenwood Hyde Park Grand Boulevard Woodlawn South Shore Oakland
Total Consumer Expenditure $ $ $ $ $ $
270 439 278 292 750 63
Total Retail Expenditure Sales Leakage $ 114 $ $ 211 $ $ 82 $ $ 50 $ $ 359 $ $ 3 $
Percentage Leakage 155 227 196 243 392 60
58% 52% 71% 83% 52% 95%
Concentrated Buying Power ($/sq mile) $ 259 $ 270 $ 160 $ 139 $ 255 $ 108
Source: MetroEdge calculations based on data from Claritas (2002), Chicago Association of Realtors and the US Census Bureau
Figure 1.4
We see in Figure 1.5 that a whopping $36.1 million dollars was spent on restaurants outside the Hyde Park and Kenwood communities. In the Grand Boulevard, Woodlawn, South Shore and Oakland communities a total of $105.1 million was spent outside these communities in restaurants. Expenditure Leakage in $ Millions
Kenwood Hyde Park Grand Boulevard Woodlawn South Shore Oakland
Restaurants $ $ $ $ $ $
14.9 21.2 20.6 26.8 50.5 7.2
Grocery $ $ $ $ $ $
8.1 17.8 12.1 21.8 (5.2) 4.9
General Merchandise $ $ $ $ $ $
24.4 31.9 32.0 30.1 53.7 9.5
Drugstores $ $ $ $ $ $
Source: MetroEdge calculations based on data from Claritas (2002), Chicago Association of Realtors and the US Census Bureau
F
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1.6 7.1 1.8 11.9 13.1 0.1
Competitive Environment Competitive Analysis The proposed location for Brown Zync is located in an area where the existing restaurants are comprised of mainly quick service restaurants. In Table 1.2 we have identified those restaurants within a 1 -5 mile radius that offer mid to high end dining that might be considered direct competition for our target market customers. It is important to note that the restaurants listed are not similar in their food selection or concept. However, we feel that we are competing for a similar customer base.
Name
Blu 47 Calypso Cafe Lakeshore Cafe La Petite Folie Leona’s Piccolo Mondo The Parrot Cage
Theme
B;L;D
American (New) Jamaican, Cajun & Creole, Caribbean Southern & Soul , American (Traditional) French American (Traditional), Italian Italian American (New), Eclectic & International
[L;D] [L;D] [D] [L;D] [L;D] [L;D] [D]
Check Avg. Per Person $28-33 $12-18 $17-18 $19-24 $12-17 $10-13 $22-28
Table 1.2 Brown Zync unique competitive advantage is the uniqueness of its food selection, the ambiance of our restaurant, and the quality dining experience that each and every customer will enjoy.
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Customer Preferences Brown Zync target customers desire the following when they dine out: • Quality • Diverse or Unique Menu Offering • Superior Customer Service • Friendly & Easily Accessible Environment While certain customers may place higher value on one of the above characteristics, all exists on various levels with our customers. Brown Zync will maintain a great mix of customers – from business to residential, we offer a menu selection to fit the needs of all our customers.
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Marketing Strategy Overview The success of Brown Zync will be achieved by serving superb food, providing a unique dining and entertainment experience for our customers and employing an aggressive marketing plan to build customer traffic. Today’s market requires more that great food and service to make a restaurant successful. At Brown Zync we constantly strive to enthusiastically win more customers by being proactive in our marketing efforts. Management will endeavor to crate and maintain a positive, appealing image for the restaurant. This image will be consistently portrayed throughout all marketing channels and sales promotions. By focusing our efforts on identifying, satisfying and following up on our customer’s needs, management can effectively increase market share over the next five years. The following exemplifies some of the tactics we will use to drive more sales. Smart marketing is best achieved through non-traditional techniques that are executed in our restaurant and amount our existing customer base. We will utilize this form of marketing through Bouncebacks, Birthday Programs, etc.
Customer Database Brown Zync will aggressively seek to build a database of our guests. Guests will have an opportunity to be included in the database so they can participate in our promotions such as birthday or anniversary cards and frequent diner program. The database will be gathered and maintained on a system yet to be decided. Brown Zync will respect our guest privacy by confidentially protecting personal information we collect. See Appendices for our customer Privacy Policy.
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Frequent Diner The restaurant’s marketing plan will include an active Frequent Diner program. The program will allow us to reward our guests for their continued patronage. The program shall have flexibility to allow us to be creative in our reward structure. Additionally, it should allow us to adapt to changing market trends. We anticipate implementing a Frequent Diner program as a function of our POS (Point of Sale) system. Several of the major POS systems have this feature. Alternatively, there are several stand alone programs that the management team will review. The management team will thoroughly review each program to determine which system most effectively meets the requirements to make Brown Zync successful.
Email Campaign We anticipate capitalizing on our customer database by instituting an effective email marketing strategy. We will give our customer the option to receive email communications from our restaurant. Customer’s privacy will be protected and we will not email our customers without their permission. Our email marketing strategy will include an awareness not to inundate our guests with email. Promotional content will be developed with the goal of enticement versus quantity. The program should incorporate tools to measure effectiveness and customer satisfaction.
Mailer campaign Brown Zync will further take advantage of our customer database by also implementing a consistent direct mail strategy. This strategy will include promotions such as sending a birth-
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day card to our guests and informing them of catering promotions. We will seek the use of a local mailing service program to assist us in the implementation of the campaign.
Community/Charity Involvement The general manager will be responsible for identifying community organizations such as churches, sports teams and other clubs located in the market. Brown Zync will have an active role in the promotion of these organizations through participation, donations and sponsorship. Representatives of Brown Zync will be available from time to time to take active leadership roles when feasible.
Business Relationships The concept of Brown Zync lends itself to obtain favorable benefits from strategic business relationships. Our appeal as a moderately priced full service restaurant positions us as a likely destination for workers during lunch. We also anticipate a significant catering business. The general manager will actively pursue business relationships that will be beneficial to Brown Zync.
4 Walls Marketing In house marketing will be heavily promoted at Brown Zync. Management will constantly find methods to promote the restaurant to our guests on a daily basis. Our staff will be trained and encouraged to promote suggestive selling techniques. Up-selling to our customers will be emphasized on a daily basis.
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Public Relations The general manager will be entrusted with the task of generating positive PR for Brown Zync. Likely solutions for advancing the restaurant’s public image may include the hiring of a public relations consultant or firm as deemed necessary by the general manager. Possible publicity opportunities include the promotion of charitable events, press releases and columnist reviews. Special attention will be given to connect our community and charity involvement with PR opportunities. Brown Zync does not anticipate using traditional methods of advertising. Management prefers direct marketing over the use on traditional advertising.
Branding Our goal is to build and sustain a restaurant brand that will endure for generations. Brown Zync will offer an exquisite dining atmosphere, while featuring the very best USDA prime steaks and a unique variety of seafood. Brown Zync will also offer a remarkable selection of Italian and poultry entrees comprised of only the finest ingredients. Exceptional service, an extensive wine that will both impress and excite guests and our cocktail selection will provide a great place to dine, relax and celebrate. In short, creating a dining and entertainment experience is an exercise in thoughtful details. And those details support the clearly defined brand vision that is critical to success. Every element – from food and beverage to service – will be consistent with the Brown Zync brand and must be monitored to ensure consistency over time. The ability to make and deliver a successful, unique and compelling brand promise is the ultimate goal for Brown Zync. Our brand will tell consumers why they should choose to dine
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in our restaurants and what to expect when they get there. Our well-defined brand promise will help align and integrate every guest touch point, to create an overall dining experience. These touch points represent all elements with which guests come into contact during their visit – in essence, everything they see, hear, smell and taste, as well as how they are made to feel.
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Advertising & Promotion The primary advertising goal for Brown Zync is to get potential customers inside our restaurant. We plan on achieving this goal by maintaining an environment that is pleasurable to visit; placing advertisements in geo-specific print and electronic media; and the use of direct mail. To accomplish our sales goals, our advertising budget will require 15% of sales the first year. Management will quarterly review advertising methods and reposition efforts where needed. Using advertising to get our message out to customers, advertising will be done through: Method
Size
Frequency
Avg. Cost
Min. Estimated Reach
Min. ROI
Weekly Newspaper Readers (N’DIGO, Rolling Out, The Reader, etc.)
1/2 Page Ad 1/2 Page Ad
12x 12x
$480.00 $430.00
78,000
11x
Other: Target Chamber of Commerce Organization, Local Hotel Guest, etc.
1/8 or Page
(6x Per Year)
$200
45,000
8x
Special Events: Major Sports Parties, Corporate Hosting, etc. Miscellaneous Advertising (Chicago Scene, Chicago Magazine, Dine Out, Time Out, etc.) Online Advertisting
Additional Objectives Are To: • Gain and maintain awareness of Brown Zync among community and customers. • Establish our image as one of Chicago’s premier dining establishments. • We will maximize efficiency in the selection and scheduling of advertisements in publications.
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Industry Risks Risk Factors The following risks described below are projected to be the only ones facing Brown Zync.
If Brown Zync is unable to successfully implement its strategies or manage its growing business, future-operating result may suffer.
Successful implementation of Brown Zync strategies and initiatives will require it to manage its growth. To manage growth effectively, may have to respond to increased demand in a timely fashion. It could suffer a loss of consumer goodwill if it is unable to adequately respond to increases in consumer demand for its service. Brown Zync success also depends on its ability to identify dining trends as well as to anticipate and gauge changing consumer demands in a timely manner. By closely monitoring customers dining preferences through random efforts, management believes it will be able to meet changing consumer demands in the future.
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Operations Overview Management will establish sound operating guidelines by which to conduct the day to day operations for Brown Zync. Policies, systems and procedures will be adopted and documented using the combined resources of our outside management/consulting team and the previous experiences of the management team.
Staffing Brown Zync is expected to employ from 15 to 20 employees. Management has adopted an effective interview process designed to staff the restaurant with highly qualified people for each position. Each applicant will be rated and evaluated according to a pre-defined set of standards adopted for each position. Background checks will be utilized for designated positions. Recruiting efforts will center on referrals and the direct recruiting efforts of the general manager.
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Training A thorough training program will be adopted for every position in the restaurant. Highly qualified people filling those positions will be provided training materials and personal instruction. They will learn the Brown Zync method of how to operate a successful restaurant. Newly hired personnel will be instructed in customer service, safety, and health laws in addition to the job functions of their respective positions. Training manuals for each position will be edited to reflect the unique requirements of Brown Zync.
Daily Operations & Production Brown Zync will be opened 7 days a week for lunch and dinner necessitating multiple shifts. Schedules will be written by the assistant manager and posted every two weeks. The schedules will be written in a manner that allows management to increase or decrease hourly labor according to sales volume in order to maintain a consistent labor cost control. The menu has been created in a manner to allow the preparation of many recipe ingredients to be done ahead of time. Proper labeling and rotation techniques, accompanied by ample storage facilities will ensure that high quality prepared product will be sufficiently available to meet the demands during peak business hours. Replenishment and ongoing preparation will continue during off peak business hours. Management will be responsible for ordering, receiving and maintaining sufficient inventory to meet production demands. Ordering schedules will be staggered with perishable products being ordered multiple times per week to preserve freshness. Standard grocery and supply orders will be ordered less often, according to a predetermined schedule and storage capacity.
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Management will adopt the use of operational checklists to verify that each work shift has been properly prepared for and to insure the operational standards are followed before, during and after work shifts. The restaurant layout, including the dining room, kitchen and serving line, will be designed or efficiency and flexibility to accommodate the fluctuation in customer traffic and peak meal periods. All orders will be entered into the POS system, designated by table, and then printed at the prep station. Each order will be assigned an order number and tracked through the POS system. Shift changes for all staff will entail cleanup, restocking and preparation. All monies will be settled at the end of each shift. The closing shift will involve designated closing duties that will leave the restaurant clean and fully prepared for the next day opening crew.
Customer Service Customer service at Brown Zync will be given special emphasis throughout the operation. Customer surveys estimate that only 1 in 20 customers that have a problem in a restaurant will tell management about it. It will be our goal to provide a product in a manner that exemplifies highly responsive and proactive customer service. Training programs will include specific material to teach our employees about service attitudes, customer perception and how to deal with guest complaints. Management will conduct periodic staff meetings intended to review policy, increase guest satisfaction and to keep a general line of communication between staff and management. All guest complaints will be empathetically acknowledged by the staff and immediately re-
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ferred to management. Programs will be in place to systematically deal with various types of guest complaints. More serious complaints will be documented and kept on file. Customer feedback will be accomplished by customer surveys or the use of mystery shoppers.
Suppliers Management will establish relationships with qualified suppliers (vendors) that can provide reasonably priced products, delivered according to the schedule that benefits the restaurant. Alternate suppliers will be identified for use if the regular supplier cannot deliver the products needed. The following table illustrates the suppliers we plan on doing business with:
Management Controls Management will practice sound management procedures in order to control costs, insure quality of product and provide friendly customer service. The following systems will be used by management:
POS System Careful evaluation and dutiful research will be used in the selection of a POS (point of sale) system that best meets the needs of Brown Zync. The POS system will be configured with requisition printing, a process which forces food and beverage items to be registered in the system before the items can be prepared. Requisition printing has proven to reduce costs by as much as 3-5%. The POS system will also be the control center to regulate the flow of service and item preparation. Built-in cash controls will help in tracking sales and receipts.
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Time & Attendance System The restaurant will use an automated time and attendance system. Management will evaluate systems that are integrated into the POS system as well as stand alone time clock systems. Hourly labor cost control and the ability to transfer information to our payroll processing will be key factors in system selection.
Scheduling System Management will adopt a scheduling system that expedites the preparation of schedules, reflects anticipated labor budgets, and helps to regulate labor cost.
Operations Checklists The restaurant will be managed with the use of various checklists. Consistent use of checklists will help to maintain quality control while ensuring that established procedures are followed. Checklists will be used by various personnel for customer service, purchasing, receiving and storage, preparation, cleaning, shift changes, opening and closings.
Order Guide The restaurant will use an item specific order guide to track order history and maintain designated levels of product in inventory.
Weekly Inventory Management will conduct a weekly inventory to determine valuation for use in the preparation of weekly profit and loss reports.
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Daily Inventory Tracking Daily inventory will be taken on specific items. Movement will be compared to sales data to ensure designated products have been properly accounted for.
Cash Audits Management will conduct periodic cash audits for all cashier stations. Surprise shift audits are an effective tool to determine cashier/bartender under ringing.
Video Surveillance Video surveillance will be in place to monitor activities and deter crime.
Safety Reviews Periodic safety assessments will be performed to ensure that employees and guests are not exposed to dangerous or harmful conditions or actions.
Liability Reviews Periodic assessments will also be done to evaluate the liability exposure of the restaurant. Alcohol awareness, employee relations and guest treatment will be scrutinized from time to time.
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Administrative Systems Daily Cash Control Sales and receipts recorded by the POS system will be compared to actual cash and credit card deposits on a daily basis. Acceptable over/short amounts will be limited to $5.00 per day. Discrepancies greater than $5.00 will prompt management to conduct an immediate audit to account for the difference. Monthly totals will be compared to actual P&L statements for accuracy. Cash, debit card and credit card receipts will be deposited in a deposit account that is kept separate from the general operating account. Transfers to the general operating account will be made as necessary. Separation of the two accounts is intended to aid in account reconciliation and cash flow management.
Weekly Prime Cost Report The manager will prepare a weekly report that shows the gross profit margin after cost of goods sold and labor cost has been deducted from the sales revenue. The prime cost for this type of restaurant is expected to range from 60% to 65%. Proper control of the prime cost is the single most effective measure of management’s ability to operate the restaurant. Weekly monitoring allows for quick reaction to adverse cost ratios.
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Purchasing Records/Payables A part time bookkeeper will process and record invoices and credits daily. Reports detailing cash expenditures, payments by check, and accounts payable transactions will be readily available. Check disbursements will be prepared by the bookkeeper. Check signing authority for the general operating account will be the sole duty of the owner.
Accounting System/Service. The owner will be responsible for the timely preparation of monthly financial statements, including monthly Profit & Loss and Balance sheet. To accomplish this task Brown Zync will employ a bookkeeping service or CPA.
Payroll Processing Payroll checks will be issued bi-weekly. The assistant manager will run reports from the time & attendance system, make necessary adjustments, and prepare for transfer to the payroll system. Payroll will be processed by a payroll processing service.
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Financial Plan Summary/Analysis of Financial Statements Total Start-up Cost are estimated at $65 dollars per square foot for build out and total startup cost are $2,000,000. Monthly rent is projected at $16,000 or $192,000 per year. Sales are expected to grow relatively constant throughout 2007, with an average 14 percent growth rate predicted for the years 2008 through 2011. Sales however, will tend to fluctuate depending on the month and season. Sales projections will be based on industry and market trends as well as projected market share growth. Although there is tremendous opportunity for entry in the current market, the methodology is based on a worst-case scenario forecast.
Conclusion Brown Zync would like to thank you for the opportunity to share its vision of a unique dining and entertainment experience in the Kenwood/Hyde Park/Bronzeville community. Based on the attached financial projections, we believe this venture represents a sound business investment for the company. We are confident that upon review of this document you will recognize our commitment to excellence, and our dedication to becoming a premiere viable business in this industry.
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