Steak Buffet Restaurant Business Plan
Steak Buffet Restaurant Business Plan
Steak Buffet Restaurant Business Plan
Executive Summary
Sagebrush Sam's - "a steak buffet," unlike a typical restaurant, will provide a unique combination of
excellent food at value pricing with a fun and entertaining atmosphere. Sagebrush Sam's is the answer
to an increasing demand. The public (1) wants value for everything that it purchases, (2) is not willing
to accept anything that does not meet its expectations, and (3) wants entertainment with its dining
experience.
In today's highly competitive environment, it is becoming increasingly more difficult to differentiate one
restaurant concept from another. Sagebrush Sam's does this by being the only buffet concept that
features mesquite-grilled, USDA-choice sirloin steaks, cooked on our display grill, for one low price. We
will be serving top quality, 21-day aged steaks that are hand-cut daily on the premises and seasoned to
perfection. Our grill will be out in the open and loaded with steaks cooked to the proper degree of
doneness that our guests request. With our high dinner volume, there will be no waiting for a steak
since we will have the grill stocked with every degree of doneness. No other national chain has tapped
this market. With red meat (in particular, steaks) increasing in demand today, we believe that this
feature will ensure our success.
This plan is prepared to obtain financing for the initial launch of this concept. The financing is required
to begin work on kitchen design, architectural plans, manuals and recipe books, site selection,
equipment purchases, and to cover expenses in the first year of business. Additional financing will need
to be secured for the two subsequent units anticipated in July, 2002 and January, 2003. Our positive
cash flow will help to offset some of this burden.
The financing, in addition to the capital contributions from the owners, will allow Sagebrush Sam's to
successfully open and maintain operations through year one. The initial capital investment will allow
Sagebrush Sam's to provide its customers with a value driven, entertaining dining experience. A
unique, mid-scale, innovative environment is required to provide the customers with an atmosphere
that will induce middle America to bring family and friends to dine and socialize. Successful operation
through year three will provide adequate cash flow to be self-sufficient in year four.
1.1 Objectives
Sagebrush Sam's objectives for the first three years of operation include:
Growing one unit per year for the first three years of operation.
Averaging sales in each location between 3-4 million dollars per year.
Maintaining tight controls on costs and operations by hiring a managing partner/proprietor for
each location and utilizing automated computer/Internet control.
1.2 Mission
Sagebrush Sam's will strive to be the premier buffet restaurant in the local marketplace. We want our
guests to have the total experience when visiting Sagebrush Sam's. Not only will our guests receive a
great meal, they will also be provided with a fun atmosphere. We will be doing unique things (such as
serving all-you-can-eat USDA-choice sirloin steaks on a display mesquite grill) that will set us apart from
the competition. We will want the dining experience to be as pleasing to the senses as it is to the
palate.
Our main focus will be serving quality food at a great value. We will feature a large selection of freshlyprepared food, most in full view of our guests. We will feature 100 items daily that are full of flavor and
zest at an unbelievable price!
Customer satisfaction is paramount. When approached by a customer with a request, our motto will be,
"Yes is the answer; what is the question?" We will strive for broad appeal. We want to be the restaurant
of choice for everyone: families and singles, young and old, male or female.
Employee welfare will be equally important to our success. All will be treated fairly with the utmost
respect. We want our employees to feel a part of the success of Sagebrush Sam's. Happy employees
make happy guests.
We will combine menu variety, atmosphere, ambiance, and friendly staff to create a sense of "place" in
order to reach our goal of over-all value in the dining/entertainment experience.
The creation of a unique, innovative, entertaining, mid-scale atmosphere that will differentiate
us from the competition.
2.
Execution of our primary goal to serve nothing but the highest quality food at unbelievably low
prices in a clean, fun environment. We must deliver on this pledge 100% of the time, without
exception.
3.
4.
Company Summary
Entertaining surroundings -- All stores will feature display cooking of our featured USDAchoice sirloin steaks cooked over a mesquite grill. Our guests will also be able to view our meatcutting cooler where steaks are hand-cut daily and aged for 21 days to ensure that they are so very
tender. The bakery, salad, and hot food stations will also be visible to our guests while they pick out
their favorites from over 100 deliciously-prepared items daily. Our walls will be decorated with
Western antiques by (confidential or proprietary information deleted).
Quality food -- Each Sagebrush Sam's will serve nothing but fresh meats, crisp salads,
delectable side dishes and scrumptious desserts, all served with old-fashioned, home-style care!
1/3 lb. Sam's Specialty Beef burger lunch -- A special treat will greet our weekday lunch
guests from 11:00 a.m. till 2:30 p.m. We will be serving 1/3 lb. Sam's Specialty Beef burgers off our
display grill. The Sam's Specialty Beef burgers will be ground fresh daily and seasoned with our
custom blend of spices designed to enhance their taste. To complement our sandwiches, we will
convert one of our hot bars to a cold "sandwich fixin's" bar, with sliced tomatoes, onions, chopped
lettuce, pickles, relish and everything necessary to complement our sandwiches.
Variety, variety, variety -- A different menu for every day of the week will feature...
(confidential or proprietary information deleted)...to name a few of our special theme dinners. We
will also change the menu items quarterly on these nights to spice things up.
Open only for peak business periods -- Buffet food does not keep well during slow time
periods because all hot food must be held above 140 degrees Fahrenheit. Therefore, we will close
our doors weekdays between 2:30 p.m.- 4:00 p.m. and at 8:30 p.m. nightly except on Friday and
Saturday when we will close at 9:30 p.m.
Breakfast buffet -- Depending upon location, Sagebrush Sam's will serve a buffet breakfast,
offering fresh fruits in-season, cold juices, hot breakfast items, and cook-to-order omelets from our
display grill. Some locations may offer breakfast daily while others may only feature it on weekends.
Self-service -- Every new guest will receive a guided tour explaining our concept and the selfserve system. We have found that by doing this we can exceed our guest perception of service
96.5% of the time. For example, if a guest is expecting to get his own drinks but a manager is
walking around pouring coffee refills, we will have exceeded their expectations.
Friendly employees -- Our employees will be ringing dinner bells when fresh-baked rolls come
out of the oven or our signature steaks are ready. Our managers will make table visits a priority, and
who knows? Our guests may even see our staff perform a line dance or two! We will dress casually
in tailored jeans and ironed logo T-shirts that our customers may purchase for a nominal price.
Dinner all day on Sat./Sun. -- We will feature our dinner menu all day on Saturday and
Sunday. Since both days are busy all day long, we will not shut down at midday.
Reduced dinner pricing -- On Monday-Thursday the dinner price will be slightly lower than on
Fri./Sat./Sun. since we will add fried shrimp and ribs to the weekend selection.
Travel/Lodging -- Travel expenses for Sam Brooks to monitor construction, hire, and train staff.
Pre-opening Labor -- This will cover training of employees and management as well as
cleaning and organizing the restaurant prior to opening.
VIP Lunch/Dinner -- We will host both a VIP lunch and dinner. This will serve the dual purpose
of training our staff and introducing ourselves to the community. The list of individuals invited will
come from the Chamber of Commerce. We will pick a local charity to be the beneficiary of our
event. A guest will receive an invitation for himself and one other to attend our event free-ofcharge. All we will ask of our patrons is that they make a small contribution to the hosting charity.
We will run the lunch on Monday, followed by the dinner on Tuesday, with our Grand-Opening on
Wednesday.
Building/Land/Equipment -- There are two methods available for the growth of Sagebrush
Sam's. We can build from ground up or we can do conversions from existing or closed restaurants.
Start-up
Requirements
Start-up Expenses
Kitchen/Architectural Plans
Travel and Lodging
Design of Logo
Manuals/Handbooks/Recipes
Recruiter Fees/Help Wanted Ads
Pre-opening Labor-staff/Mgmt/Trainers
Uniforms
VIP Lunch/Dinner
Office/Miscellaneous Expenses
Total Start-up Expenses
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
Total Requirements
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
Capital
Planned Investment
Sam Brooks
Investor 2
Other
Additional Investment Requirement
Total Planned Investment
Total Funding
2.3 Company Locations and Facilities
Sagebrush Sam's will range in size from 7,000-10,000 square feet and will seat from 300-400 guests.
Each location will feature authentic western antiques such as Native American blankets, cowboy gear,
and horse tack. We will equip the restaurant with a state-of-the-art sound system connected to an oldtime juke box where our customers will be able to select their favorite country and western songs for
free. Every restaurant will be built to our prototype specifications: clean lines, open, and pleasing to the
customer.
The site/building selection will be chosen based upon the following list of criteria:
All of these qualities are consistent with Sagebrush Sam's goal of providing a top quality, entertaining
dining experience at an unbelievably low price. We want "word of mouth" to be our best form of
marketing, where our guests cannot believe the value of their dining experience and can't wait to tell
their friends and neighbors.
Services
Sagebrush Sam's will provide quality dining seven days per week. We will only close our locations on
Christmas and Thanksgiving. All locations will be open for lunch and dinner. Selected locations will
serve breakfast either daily or only on weekends. All meals will be self-serve buffet style offerings for a
fixed price.
3.1 Competitive Comparison
Sagebrush Sam's will have broad customer appeal due to our casual family atmosphere, wide variety of
food offerings, and low price points. We will not only compete with the casual segment restaurants, but
also with the family value steak restaurants.
In competing against the casual theme restaurants, we will have the following advantages:
Lower price point for a complete meal. If our consumer is a steak lover, his Sagebrush Sam's
meal is almost half what he would pay at a theme restaurant.
There will be no tipping at Sagebrush Sam's, since we are self-service. This will reduce the
actual customer cost of our dining experience by 10-15%.
Speed of service will be instant: no waiting for a steak, salad, beverage, or dessert. Everything
will be readily available: hot, juicy, fresh, and cooked as requested.
Our portions will be "just right." Since we are "all-you-can-eat" the portion size meets the need,
rather than a pre-determined amount meant to suit the "average" person.
Variety is the name of our game. Guests will choose from over 100 different items prepared
fresh daily. It is often difficult to meet the dining requests of each family member due to
individual tastes. However, at Sagebrush Sam's, there will be something for everyone, every day
of the week.
We will provide more entertainment than our competition. Our guests will view our meat-cutting
cooler as they walk in; they will watch us cooking 70-80 steaks at a time on our mesquite grill;
and they will see us preparing and cooking their hot entrees, desserts, and salads. We want our
guests to feel a part of the "Sagebrush Sam's" dining experience!
In competing against the family value steak restaurants, we will have the following advantages:
We will serve better quality food than our competitors. Nightly, we will offer USDA-choice sirloin
steaks that are hand-cut daily and aged for 21 days. With our higher dinner price points, we will
feature better quality items on the buffet. Not only can we afford to do this, but it will also limit
the amount of steaks that our guests will consume per visit. Even though some guests will eat
4-5 steaks, the average still remains at 1.2 steaks per guest.
We will offer a lower price point at lunch than our competition and feature a fresh Sam's
Specialty Beefburger, hot and juicy off our display grill, plus the buffet! Our guest could pay the
same price at a quick service restaurant, QSR, but only receive a burger, fries, and a drink.
Our surroundings will be more entertaining than our competitors'.
Our food will be fresher since we will close weekdays between 2:30 p.m. and 4:00 p.m., and
shorter evening hours.
Our guests will not encounter service problems. Our competitors still feature servers who bring
beverages, extra plates, and dinners if ordered. Their servers, which traditionally handle as
many as 10 tables at a time, frequently have trouble being everywhere at the same time. With
Sagebrush Sam's, everything is out front and ready for our guests. We will explain our service
policy up front and, therefore, never let them down.
There will be no confusing menu board when guests arrive at our restaurant. One price will be
stated, with everything included. Some of our competitors have 10-foot-long menu boards which
are overwhelming to customers and difficult to read. Others try to up-sell and ask too many
questions while reeling off specials of the day. After all is said and done, they sell 90% buffets
and 10% dinners. We've made it simple: one price, everything included. And we've put steak
back on the menu where it belongs -- right on top!
We will not need trays for guests carrying drinks, plates, silverware and napkins from the cash
register at Sagebrush Sam's, everything is conveniently placed in the dining room near the food
stations.
We will be able to staff our restaurant with 25% fewer employees than our competition. With no
need for servers, only one cashier, shorter operating hours, and out-front servicing of our food
bars, we can efficiently run with a reduced staff.
There is no tipping at Sagebrush Sam's, since we are self-service. This will reduce the actual
customer cost of our dining experience by 10-15%.
Age -- Seniors, Baby-Boomers, young married couples with children, and blue-collar workers of
all ages.
Family Unit -- We will appeal to young families with new babies or mature families with children
under the driving age. Most of our family units will have two wage earners.
Gender -- We will equally target both sexes with a slight skew for males due to their heavy
consumption of red meat.
Income -- We will appeal to the high side of low income individuals and to all in the middle
income bracket.
Occupation -- We will target the blue-collar worker, young professionals with a family, and most
of mid-America.
Education -- High school graduates, or individuals with some college.
By our definition, we will have very broad appeal for our concept. It is our goal to be the restaurant of
choice for the largest dining audience in America.
4.1 Target Market Segment Strategy
Sagebrush Sam's intends to cater to the bulk of mid-America. We have chosen this group for several
important reasons. First and foremost is the sheer size. With our restaurants seating almost 400 people,
we will need a broad base and mass appeal to fill them. It is our goal to have "something for everyone"
every day on our menu.
Secondly, it is a very heavy restaurant user group. Last year, Americans dined out an average of 3.7
times per week (that's once every other night). They are on limited or fixed incomes and seek a
value/price relationship that will not stretch their budgets.
Lastly, this group will see a large growth in their numbers over the next decade. If we can continue to
meet and exceed their expectations, we should witness same store sales growth over this time period.
We will, however have to stay focused on their changing needs and menu choices to maintain their
loyalty. For the most part, this group is in a hurry, due to heavy time demands at work and home, so
our buffet style of service suits them to a "T."
Our lunch strategy is dual purposed. First, we are featuring fresh ground Sam's Specialty Beefburgers
with all the fixin's to fill America's craving for hamburgers. Most folks' idea of lunch is a quick sandwich,
not a heavy meal. Half of our hot food selection will be replaced with sliced tomatoes and onions,
pickles and relish, and chopped or leaf lettuce. Our guests will pick up their Sam's Specialty Beefburger
at our display grill, add melted cheese or hot BBQ sauce, and help themselves to the hottest french
fries in town seasoned with our special blend of spices. What's not to like about a hot, juicy Sam's
Specialty Beefburger served right off the grill!!!
Second, we want to keep the price point at lunch as low as possible to keep us in competition with fastfood restaurants. At $...(confidential or proprietary information deleted)...we are only slightly above the
QSR segment and we offer much, much more. Not only do our guests get a sandwich, drink, and fries
but also a salad, dessert and a selection of hot food items. By reducing the hot food assortment from
dinner, we will be able to keep our food cost in line with the reduced price. All in all, this is a win-win
strategy that will broaden our customer base at lunch to include singles, teens, and professionals while
still maintaining our core market segment.
Market Analysis
Potential Customers
Lunch
Senior Dinner
Children (3-10)
Weekday Dinner
Weekend Dinner
Total
4.1.1 Market Needs
Sagebrush Sam's sees our targeted market group as having many dining dollar needs. Taken from a
recent Consumer Reports on Eating Share Trends (CREST) survey, below are the needs we will focus on
in Sagebrush Sam's. Our core group:
Concerns about the sustainability of the current economic boom appear to have had a strong impact on
the restaurant industry within the operator community. In 1998, after three years of strong increases,
the rate of growth for restaurant units dropped to zero! This is the first time since the recession at the
start of the 1990's that the number of restaurants did not grow.
Among chains as a whole, however, smaller chains (under 99 units) were the ones that saw unit counts
decline. The most aggressive growth group remains the chains that number between 100 and 500
units.
The conservative behavior of the operator community might have led to a lackluster year for the
industry if it weren't for the fact that consumers kept right on buying more restaurant prepared foods.
In 1999, the number of meals and snacks purchased from a restaurant per person grew to 158
occasions per year (nearly half the days in a year), another all-time high!
The combined boosts in traffic counts and guest check averages resulted in a 6.5% increase in
consumer spending at restaurants. The industry has achieved the longest and strongest expenditures
growth ever recorded in the 25-year history of CREST.
All in all, 1999 has been a great year for the restaurant industry. Sales are increasing, consumers
continue to use restaurants more often and in more situations, and the restaurant companies have
managed themselves so that, on balance, they are in a fairly healthy condition. Every segment and
every category grew.
4.2.2 Industry Marketing Overview: 1999
In 1999, campaigns focused on the classic themes of value and quality. As a result of the thriving
economy, however, chains added additional elements to their campaigns. For instance, chains
approached advertising with greater creativity to differentiate themselves within the marketplace.
Chains also focused more on customer service.
(Confidential or proprietary information deleted.)
Regardless of the message, consumers perceived operators to be dealing less this year. For the third
year in a row, the rate of dealing did not increase. The trend that had never been seen before continues
to stretch! This is not all a case of operators offering fewer deals, however. Many of the deals that are
offered have been in place for many years. Consumers may no longer perceive combination meals and
$0.99 premium sandwiches as deals. The upside of this is that consumers may be sensitive to special
deals when they are introduced. The downside is that it's tough to come up with a price with more
magic appeal than $0.99.
4.2.3 Restaurant Industry Long-Term Future
In the near term, it looks as though two things are likely to happen: restaurants may not have the
resources to expand as fast as they did in the early 1990's, and consumers are likely to continue to
increase their demand for prepared meals and snacks. Well-thought-out and well-managed restaurant
companies have not enjoyed the market valuations that the dot-coms have in the past year. It seems
that nothing the industry can do will attract capital the way it did earlier in the 1990's. In spite of
continued same store sales increases, the lack of interest that the industry generates in the financial
markets could keep restaurant operators in a conservative frame of mind in the near term. That lack of
financial resources combined with the restrictions faced in the labor market should hold unit
development back.
These operators will be wondering how to get more out of the real estate they already have. One of the
ways to do this is to raise prices. They have been doing this with fair success for the past couple of
years and are likely to continue to push the envelope in this respect. In addition, they are likely to want
to get into new business segments: expand into breakfast, offer takeout or delivery service, experiment
with snacks. Those ideas will require partnership with manufacturers to develop and design those new
concepts within the existing chains.
Fortunately, consumers are likely to continue to do their part in the market. Over the long term,
consumers have spent about 5% of their disposable personal income on food away from home. That
number has stayed almost flat since 1930. Given the stability of this number, you can expect that total
spending in the industry will grow no more than a shade faster than income. All prospects look good for
income growth so we are likely to see continued 3%-5% growth. That should be plenty of room for
everyone, provided people/money are available.
4.2.4 Meeting Tomorrow's Needs
We must first look at how our population is segmented in order to understand tomorrow's needs. Below
is typically how we segment the various generations.
Generation
Birth Years
Population
Baby Boomers
1946-1964
78 Million
1965-1978
44 Million
1979-1994
70 Million
The good news is that Gen Y is almost the same size as the Baby Boomers. With their numbers so large,
our industry will have to cater to their tastes more in the future to continue increasing revenue. This
generation will have different tastes and interests; therefore, we will also need to market to them
differently.
We will see a gradual menu evolution. Mexican, Tex-Mex, and Italian will play an even larger part in the
future. Hot and spicy foods will continue to increase their presence. Chinese and Asian recipes will be
the growth of the future. Two very important reasons exist for the rise in food temperature and menu
expansion: 81% of the teens today like spicy food, and 79% are very likely to try new foods. (Sagebrush
Sam's "Theme Nights" will cater to these trends.)
We will also see that tomorrow's consumer will not be as fussy about eating healthy. Below is a table
depicting recent consumer trends concerning diet and calorie counting:
1990
1998
39%
26%
Limited snacking
41%
29%
Avoid fat
51%
41%
60%
52%
We will see an increase in the trend of putting family and food together. The future generations will
frequent family-style dining more often. Gen Y sees itself as more stressed, having more time demands,
and putting more value on fun. They like customer inter-activity, fun environments, and watching their
food cooked to order. This generation is both brand aware and brand loyal.
The biggest challenge facing the restaurant industry in the future will be proper staffing. Not only at
issue will be how to recruit a work force, but also how to retain it. Good news, however, is on the
horizon, with Gen Y easing the labor crunch. The number of 16-24 year olds in the work force:
With the arrival of the new worker will also come more body piercing and facial hair, as well as the
demand for more schedule flexibility and free time. The largest growth area of the labor market will
come from the Hispanic-Americans. We will continue to see a decline of the white-American laborer in
food service, as this table indicates:
1994
2005
White-American
71.0%
66.5%
African-American
11.4%
11.7%
Hispanic-American
13.1%
15.3%
Asian-American
4.5%
6.3%
It will be up to the wise food service operators to find the right buttons to push in order to retain
tomorrow's worker. What has worked in the past will not work tomorrow. What was once an exceptional
benefit yesterday is now the norm or minimum standard today.
What will be the right buttons to push?
Unlimited options.
Instant gratification.
Social consciousness.
Time pressures.
Global perspective.
Complex...
...and Challenging.
Among our closest competitors, six are listed in the largest 200 restaurant chains, ranked by sales
volume. All have a large national or strong regional presence.
(Confidential or proprietary information deleted.)
upon which expansion efforts are based. Not only does it add marketing muscle but it also becomes the
framework for further expansion, using both company-owned and possibly franchised-store locations.
5.1 Marketing Strategy
A combination of local media and local store marketing programs will be utilized at each location. Local
store marketing is most effective, followed by radio, then print. As soon as a concentration of stores is
established in a market, then broader media will be explored.
We believe, however, that the best form of advertising is still "word-of-mouth." By providing an
entertaining environment, with unbeatable quality at an unbelievable price in a clean and friendly
restaurant, we will be the talk of the town. Therefore, the execution of our concept is the most critical
element of our plan.
5.1.1 Promotion Strategy
We will employ three different marketing tactics to increase customer awareness of Sagebrush Sam's.
Our most important tactic will be word of mouth/in-store marketing. This will be by far the cheapest and
most effective of our marketing programs. The second marketing tactic will be Local Store Marketing
(LSM). These will be low-budget plans that will provide community support and awareness for our
facility. We plan on doing approximately two or three LSM programs per marketing quarter. The last
marketing tactic will be local media. This will be the most costly and will be used sparingly to
supplement where necessary.
5.1.2 Marketing Programs
Word Of Mouth/In-Store Marketing
Table tents.
Wall posters.
V.I.P. party.
In-store tour given to every new customer.
Outdoor marquee message changed weekly.
Grand Opening celebration.
Yearly birthday parties.
Local Media
Direct mail piece - containing interior pictures of our restaurant, our prices, "Theme Nights," and
an explanation of our concept.
Radio campaign - complete with live remotes on our parking lot. We will pick the three top local
stations with which to place our short and catchy ads. We will also sponsor radio call-in contests
with free meal coupons to Sagebrush Sam's as the prize. We will trade our complementary
dinner coupons for free radio time. We will also make "live on the air" presentations of our food
products to the disk jockeys, hoping to get the reactions broadcast to the listening audience.
Newspaper campaign - placing several large ads throughout the month to explain our concept to
the local area.
Cable TV - will be a possibility if we can secure favorable rates with enough frequency.
Sales Forecast
Sales
Lunch
Senior Dinners
Child (3-10)
Weekday Dinner
Weekend Dinner
Total Sales
5.3 Milestones
The following table lists important milestones, with projected dates, management and budget
responsibility. The milestones schedule indicates our emphasis on planning for sales strategies.
Milestones
Milestone
Grand Opening Materials
VIP Lunch & Dinner Party
In Store POP - Table Tents, Posters
Direct Mail Piece
Radio
Newspaper
LSM project #1
LSM project #2
LSM project #3
LSM project #4
Totals
Management Summary
The initial management team depends on the founders themselves, with little back-up. As we grow, we
will take on additional help in certain key areas. Part of our basic philosophy will be to run our executive
management "lean and mean." We will not add additional overhead until absolutely necessary. This will
mean that the initial staff support team will have to "wear many hats," so to speak. By doing this, we
will keep our overhead as low as possible, allowing us to adequately staff our restaurants. This will also
allow our business partners to recoup their initial investments as quickly as possible and enjoy a higher
return.
At present time, Samuel Brooks is the sole individual firmly committed to the Sagebrush Sam's concept.
Others, who have helped on the development of this business plan, have expressed a desire to join in
this venture at the appropriate time.
Other key personnel are the managing partners and management teams at each location. Several
candidates have already been identified for the first Sagebrush Sam's, depending upon location.
No shortage of qualified staff or management from local labor pools in each market area is expected.
One of our key principles in site selection is the availability of staff in the immediate area.
6.1 Organizational Structure
Future organizational structure will include a director of store operations when store locations exceed
five units. We hope that this individual will come out of the ranks of our stores' proprietor/managing
partners. This will provide a supervisory level between the executive level and the store management
level.
Currently, we plan to have our accounting and payroll functions done by a contracted bookkeeping
service. However, we will constantly monitor this expense and at such time that it is economically
feasible, bring this function in-house. Other possible positions that might be added at a later date
include marketing director, purchasing agent, controller, director of human resources, director of
training/new store opening team coordinator, director of research & development (for new recipes), and
administrative assistants.
Operations of individual stores will be the responsibility of the proprietor/managing partner.
6.2 Management Team Gaps
Specific opportunities exist in the store operations supervisory area (not needed initially). These people
will be recruited when needed in the local market. However, the first key employee needed will be the
proprietor/managing partner. This individual will assist in the detail development of the Sagebrush
Sam's concept plus operate the first restaurant. Hiring of this individual is slated during the initial
construction phase.
Temporary help has been secured that will assist in the administrative assistant area. This individual
will work on the development of all training materials and manuals plus do our correspondence.
6.3 Management Team
Sagebrush Sam's is currently the creative idea solely of Samuel Brooks. As the company is small in
nature, it requires a simple organizational structure. Implementation of this organization form calls for
Sam Brooks to make all of the major management decisions in addition to monitoring all other business
activities.
(Confidential or proprietary information deleted.)
6.4 Personnel Plan
The table below shows our initial management staffing estimates.
Personnel Plan
Production Personnel
Proprietor/Managing Partner
General Manager
Back of House Manager
Front of House Manager
Assistant Manager
Employees
Subtotal
Other Personnel
Name or title
Other
Subtotal
Total People
Total Payroll
Financial Plan
Sales -- Sagebrush Sam's is basing its projected sales on the assumption that the first unit will open on
July 1, 2001. The second restaurant will open on July 1, 2002, followed by the last one opening on
January 1, 2003. We have projected sales on the low side using $3 million dollars per year per
restaurant. We did not factor in any sales growth for subsequent years.
Cost of Goods Sold -- The cost of goods sold was determined by taking actual Profit and Loss
statements from various restaurant concepts and then using our pricing structure and guest counts to
arrive at costs.
Management Payroll -- Figures are based upon the use of five managers per unit at our maximum
bonus and salary levels. If we use four managers per restaurant, this will lower our payroll.
Fixed and Variable Expenses -- The various fixed and variable expenses were determined by taking
actual numbers from several different restaurant concepts.
Marketing Fees -- These funds will be used for the production of various marketing materials.
Advertising -- These funds will be used, if necessary, to maintain our sales at projected levels. If we
are running significantly ahead of our sales projections, then these funds may not be necessary.
Management Fees -- We will use these dollars for accounting and payroll services of our firm. As we
grow in size, this cost burden will shrink per store due to efficiencies in volume.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table
as annual assumptions. The monthly assumptions are included in the appendix. Interest rates, tax
rates, and personnel burden are based on conservative assumptions. Some of the more important
underlying assumptions are:
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
7.2 Key Financial Indicators
Food costs must be kept at, or below, 35%.
2.
3.
4.
5.
6.
2.00% - Advertising.
7.
8.
9.
10.
2.
3.
4.
5.
$40,208 - Other expenses minus marketing fees, advertising, and management fees.
6.
$85,000 - Depreciation.
7.
Break-even Analysis
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
7.4 Projected Profit and Loss
Projected Profit and Loss Income Statement for the entire company for three years. Estimates for each
month of the first year are in the appendix tables.
Sales
Direct Cost of Sales
Production Payroll
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Operating Expenses
Other Expenses:
Other Payroll
Consultants
Contract/Consultants
Total Other Expenses
Other %
Net Profit
Net Profit/Sales
7.5 Projected Cash Flow
The chart and table below show our cash flow projections. Monthly figures are in the appendix tables.
Cash Received
Expenditures
Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
7.7 Business Ratios
These business ratios are future estimates based upon current assumptions. Standard industry
comparisons are for SIC code 5812, retail eating places.
Ratio Analysis
Sales Growth
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
Appendix
Sales Forecast
Sales
Lunch
0%
Senior Dinners
0%
Child (3-10)
0%
Weekday Dinner
0%
Weekend Dinner
0%
Total Sales
Production Personnel
Proprietor/Managing Partner
General Manager
Back of House Manager
Front of House Manager
Assistant Manager
Employees
Subtotal
Other Personnel
Name or title
Other
Subtotal
Total People
Total Payroll
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Production Payroll
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Operating Expenses
2%
Production Expense
0%
Miscellaneous
Total Sales and Marketing Expenses
Sales and Marketing %
18%
Other Expenses:
Other Payroll
Consultants
Contract/Consultants
Total Other Expenses
Other %
Net Profit
Net Profit/Sales
Pro Forma Cash Flow
Jan
Cash Received
$0
$0
0.00%
$0
$0
$0
$0
$0
$0
$0
$0
Expenditures
Jan
$12,875
Bill Payments
($2,267)
$10,608
$0
$0
$0
$0
$0
$0
Dividends
$0
$10,608
($10,608)
Cash Balance
$149,392
Starting Balances
Current Assets
Cash
$160,000
$149,392
Inventory
$35,000
$35,000
$100,000
$100,000
$295,000
$284,392
Long-term Assets
$1,500,000
$1,500,000
Accumulated Depreciation
$0
$0
$1,500,000
$1,500,000
Total Assets
$1,795,000
$1,784,392
Long-term Assets
Jan
Current Liabilities
Accounts Payable
$0
$0
Current Borrowing
$0
$0
$0
$0
$0
$0
Long-term Liabilities
$0
$0
Total Liabilities
$0
$0
Paid-in Capital
$2,003,945
$2,003,945
Retained Earnings
($208,945)
($208,945)
Earnings
$0
($10,608)
Total Capital
$1,795,000
$1,784,392
$1,795,000
$1,784,392
Net Worth
$1,795,000
$1,784,392