Pizzeria Business Plan
Pizzeria Business Plan
Pizzeria Business Plan
Olympic Pizzeria has a strong financial plan with first year earnings exceeding $30,000 and cash flow positive by month 5. It is expected that the company will have losses during the five months that tourism is slow, however during the busy months monthly profits will exceed $10,000. Yearend cash balances will exceed $30,000, and the bank loan will be paid off within two years. 1.7 FUNDS REQUIRED & USE Olympic Pizzeria requires $85,000 in capital to begin operations. The three owners have personally invested $60,000 into the company. The remaining $25,000 will come from a bank loan that has already been secured. Funds will be used for building renovations, marketing and advertising, and daily operations for the first five months until the company becomes cash flow positive.
office areas. The owner has agreed to $1.80 per square foot in rent ($900/mo.) and will include garbage pickup and water. Utilities will be based on use. 2.5 KEY ASSETS The most significant assets will be the kitchen equipment, including the oven, mixer and prep tables. As the reputation for our pizza grows, our most important assets will become our recipes and the Olympic Pizzeria brand.
As there is limited competition, Olympic Pizzeria will have a first mover advantage in offering quality pizzas for fast, free delivery. Once established, it will be difficult for another pizzeria to enter the market, as Seaside is not large enough to support three pizza restaurants year-round. Additionally, Olympic Pizzeria has lower fixed costs through negotiations on a long term building lease. The pizzeria also offers a wider variety of menu items, including whole wheat crust options, which the competition does not offer. 3.5 DEVELOPMENT Olympic Pizzeria plans to open another location near the waterfront, which will serve as a convenient place to eat while tourists are enjoying the beach. This location will act as a hub for several mobile carts strategically located along the beach, which will offer pizza by the slice and drinks to customers. As customer's preferences are further defined, menu items will be added to expand the target market. For example, a healthier alternative, such as wraps, will be added to the menu. Additional locations in other towns along the coastline may also be considered.
Strengths: fast, free delivery; unique recipes and secret sauce; first mover advantage; healthy menu options; low overhead and fixed expenses; prime location; management team Weaknesses: higher variable costs for ingredients due to better quality; competing pizzeria already operating; three person management team Opportunities: tourists allow higher margins; mobile beach carts for additional delivery method; capture local delivery market with faster and cheaper delivery Threats: new pizzeria entering market; existing competition offering fast, free delivery
Given the target market of tourists, Olympic Pizzeria can charge a premium for its menu items. As dining is often an impulse purchase, it is difficult to estimate sales forecasts, however it is expected that during the tourist season, sales will increase significantly. We have estimated that of the 3,000 full time households, 25% will make at least one order per month, which equals 25 pizzas per day. During the tourist season we expect at least 50 orders per day. This equates to 14,250 pizzas per year, and gross revenues of $285,000. 5.6 STRATEGIC ALLIANCES Olympic Pizzeria has formed alliances with area resorts and hotels to allow marketing and advertising of our menu to guests and tourists. Additionally, the restaurant has been given permission to place mobile vending carts on the beach, in exchange for sponsorships of local community events. Partnerships with fresh ingredient suppliers are also being negotiated. 5.7 OPERATIONS Operations will be managed by the three managing partners. This will include all marketing activities, financial and accounting activities, and operational activities. The restaurant will employ a small staff of waiters, cooks, and delivery drivers. Staff will be trained by the management team to ensure quality and consistency of food preparation. 5.8 GOALS
Be the premier pizza delivery restaurant with quality menu items First year revenues of $250,000 Expansion to second location and beach mobile vending carts within 12 months Have a strong community involvement Open additional locations in other neighboring coastal towns
5.9 EXIT STRATEGY It is anticipated that within 10 years, there will be 10 Olympic Pizzeria locations in operation. At this time, company valuation is expected to be around $5 million, which will allow an adequate-sized venture to become interested in acquiring the company.
6.2 MANAGEMENT TEAM The initial management team will consist of the following three owners: Sean Smith is currently the Resident Manager at Oceanside Resort. He has extensive experience resorts operations and management, as well as computer database administration. He also is experienced with resort marketing. His background will aid in resort relations, as well as handling public relations and special events. He has a degree in business from Oregon State University. Aaron Lambert is currently the front desk manager of Pacificview Resort. He has experience in starting and operating an upscale deli at the Hilton in Portland. He has a broad based management background that includes very large, four-star resorts to a smaller, hands-on resort. Aaron has a degree in business with emphasis in resort management from Azusa State University. David Crawford is the assistant front desk manager at the Pacificview Resort. He has worked with Aaron for the last three years, beginning with the deli project at the Hilton. David comes from the East Coast, where he has experience in the pizza business. He has background with backline operations such as dough and sauce prep, consistency control, and recipe creation. He has experience as revenue auditor for restaurant, casino and hotel operations. David has a degree in business administration from the University of Ohio. 6.3 PERSONNEL NEEDS It is estimated that a staff of 10 will be needed to maintain operations. As this industry does not require special training and turnover is typically high, staff wages can be relatively low. Most of the staff will maintain part time hours, as many will be high school students and retirees. This will eliminate the need for expensive benefits and other requirements. 6.4 BOARD MEMBERS & ADVISORS Olympic Pizzeria's advisory team consists of a certified public accountant, who takes care of all tax accounting requirements, as well as a corporate attorney that is held on retainer in case any legal needs arise.
7.2 USE OF FUNDS Funds will be used primarily for renovation and upgrades to the kitchen ($55,000), including new pizza ovens, kitchen equipment, and dining room dcor. Additionally, advertising expenses and marketing collateral, as well as initial inventory, insurance, rent, and utilities, will all need to be purchased in the first month of operations. Remaining funds will be used as operating capital. 7.3 INCOME STATEMENT PROJECTIONS It is projected that first year revenue will exceed $285,000, with the sale of nearly 15,000 pizzas. Monthly revenues are expected to vary between $15,000-$30,000, depending upon tourist seasons. Fixed expenses are projected to be around $15,000 monthly, which includes wages, marketing and advertising, insurance, rent, and utilities. Variable costs are estimated to be $3 per pizza. Net losses are anticipated during the non-tourist months, however during tourist seasons the monthly profits are expected to exceed $10,000. First year earnings are estimated to be $37,000, with second and third year earnings projections of $45,000 and $52,000. 7.4 BREAK-EVEN ANALYSIS The break even analysis works out to 901 pizzas per month or $18,020 in sales. 7.5 PROJECTED CASH FLOW The company is expected to be cash flow positive by the fifth month of operations. The initial owners' investment of $10,000, along with the bank financing of $25,000 ensures that free cash never drops below $2,000, with most months exceeding $5,000. By the end of Year 1, the bank account balance is expected to exceed $35,000, which will allow expansion of the company operations. 7.6 BALANCE SHEET Olympic Pizzeria's balance sheet will show $85,000 in assets, attributed mainly to equipment, leasehold improvements and cash. Liabilities will be only $25,000 upon launch and zero within two years. Equity will continue to increase as retained earnings stay positive and debt is paid down. 7.7 IMPORTANT ASSUMPTIONS
Variable costs (including ingredients, packaging, and delivery) remain at $3 Tourist months stay strong April-October The tourist economy continues to grow over the next 5 years