A Sample Business Plan - Frank's All-American BarBeQue

16.1: Executive Summary CO@ Last updated: Aug 1, 2021 Downloads Submit Adoption Report Peer Review Donate Contents Anonymous LibreTexts The following business plan for Frank's All-American BarbeQue was built using Business Plan Pro software. It is for the purpose of illustration and does not represent the full capabilities of the software. Frank's All-American BarbeQue has operated for decades in the southern Connecticut shore region. With a tradition of superlative food at fair prices served in a family-friendly atmosphere, the owners now believe it is time to open a second restaurant and expand the production and the distribution of Frank's signature barbecue sauces. This second restaurant will be in Darien, Connecticut, and will be nearly twice as large, in terms of seating capacity, as the current Fairfield restaurant. The company also plans to ramp up production of its sauces and increase their sales fourfold in the next three years. Readability Objectives The owners of Frank's All-American BarbeQue and other investors plan to put $160,000 of their own money into the second restaurant and expand the production of the signature sauces. They seek to raise an addition $175,000 from a bank loan that will be repaid in two years. Mission Vision Statement To produce the best barbecue food in New England. Resources Mission Statement The mission of Frank's All-American BarbeQue is to provide the southern Connecticut shore region with the finest barbecue food in four major regional styles at affordable prices in a family-friendly setting. As we grow, we will never forget and remain faithful to those factors that have made us a success. Keys to Success Frank's All-American BarbeQue has been in business for nearly forty years. It has weathered good times and bad times through all types of economic conditions. We have survived because Frank's has remained committed to several principles. Libraries . The only objective of a restaurant is to serve the finest food it can prepare. Good food-not more gimmicks or advertising-brings in customers and, more importantly, keeps customers. . Preparing the finest foods means a commitment to excellence, which means obtaining the best ingredients and a dedication to cooking barbecue properly, which means cooking carefully and slowly. . In addition to providing the finest food, we remain committed to providing excellent service. To us, this means friendly and knowledgeable staff members who make the customers feel like they are dining with family. . We provide the right atmosphere. Our goal is to have a setting that says "barbecue."We do not provide a fancy setting; our basic setting complements the food we serve. Tools Company Summary Frank's All-American BarBeQue has been a highly successful restaurant in Fairfield, Connecticut, for nearly forty years. It was started and is still managed by Frank Rainsford. Its food and sauces have won awards at both regional and national barbecue cook-offs. In addition, Frank's has been voted the best barbecue establishment in Connecticut numerous times by many local newspapers and magazines.Company Summary Frank's All-American BarBeQue has been a highly successful restaurant in Fairfield, Connecticut, for nearly forty years. It was started and is still managed by Frank Rainsford. Its food and sauces have won awards at both regional and national barbecue cook-offs. In addition, Frank's has been voted the best barbecue establishment in Connecticut numerous times by many local newspapers and magazines. Contents The management team of Frank's All-American BarBeQue has decided that nowis the time to expand to an additional location. After careful analysis, a second Frank's All-American BarBeQue can and should be opened in Darien, Connecticut. This restaurant will be larger and geared to better tap into the growing premade, take-home dinner market. In the last few years, Frank's has been selling its four signature barbecue sauces-Texan, Memphis, Kansas City, and Carolina-in local supermarkets. Although this represents a small portion of overall revenues, sales have been growing at a remarkable pace. This market must be exploited. Preliminary market research indicates that this segment of the business will grow at 20 percent per year for the next five years. Company Ownership Readability Presently, Frank's All-American BarBeQue is a limited liability partnership with Frank Rainsford and his wife Betty as owners. Each has a 50 percent share in the business. The plans for expansion will bring in capital from three other investors: Robert Rainsford, Susan Rainsford Rogers, and Alice Jacobs. Robert Rainsford and Susan Rainsford Rogers are the son and daughter of Frank and Betty. Both have extensive work experience at Frank's. Alice Jacobs has been the restaurant's accountant for over twenty years. To assist the financing of the expansion, Robert Rainsford and Susan Rainsford Rogers will each invest $50,000, while Alice Jacobs will invest $60,000. The new limited liability partnership will result in the investors holding the following equity percentages: Frank Rainsford 40.00% Resources Betty Rainsford 40.00% Robert Rainsford 5.25% Susan Rainsford Rogers 5.25% Alice Jacobs 7.50% Company History Libraries Frank's All-American BarbeQue was founded in 1972 by Frank Rainsford. Although a native New Englander, Frank learned about cooking barbecue while serving in the US Air Force. During his twelve years of service, he traveled across the country and learned about the four major styles of American barbecue-Texas, Memphis, Kansas City, and Carolina. His plan was to introduce people in southern Connecticut to real barbecue that entailed high- quality meats properly cooked and smoked over an appropriate length of time. In the beginning, Frank's All-American BarBeQue was a small facility; it could seat about thirty people. It was located near the Fairfield railroad station and was the first full-service barbecue restaurant in Fairfield. Frank's placed an emphasis on featuring the food; it had a highly simplified decor where the tables were covered with butcher paper, not linen tablecloths. The restaurant was an immediate hit, received considerable local press, and won several food awards. This success enabled Frank's to move to a larger facility in Fairfield on the town's main thoroughfare-Boston Post Road. The new Tools location was a midsize restaurant of about eighty seats. Frank has built this location into a relatively successful and locally well-known enterprise. It has been at the present location since the early 1980s. It shares a parking lot with several other stores in the small mall in which it is located. Frank's has won many awards at regional and national barbecue cook-offs (for both the food and the sauces), which is unusual for a barbecue business in New England. The restaurant has been written up, repeatedly, in the local and New York papers for the quality of its food and its four signaturein New England. The restaurant has been written up, repeatedly, in the local and New York papers for the quality of its food and its four signature barbecue sauces. In the last few years, Frank's has sold small lots of these sauces in local supermarkets. They have been distributed because of Frank's personal connections with the store managers. Frank Rainsford has been approached by a major regional supermarket to sell his sauces. The supermarket is willing to find a facility that could produce Frank's sauces in significantly larger volumes, which would represent a substantial increase in Contents the sales of sauces. Table 16.1.1 provides a summary of key financial figures for the last three years-2008 to 2010. Table 16.1.1 illustrates these key numbers for that period of time. Table 16.1.1: Past Performance of Frank's All-American BarBeQue Past Performance 2008 2009 2010 Sales $1,637,610 $1,696,564 $1,793,268 Gross margin $851,557 $909,358 $943,259 Gross margin % 52.00% 53.60% 52.60% Readability Operating expenses $542,080 $577,315 $600,408 Inventory turnover 13.20 12.10 12.90 Balance Sheet Current Assets Cash $102,665 $125,172 $102,665 Inventory $391,238 $331,045 $345,678 Resources Other current assets $278,372 $230,074 $278,372 Total current assets $772,275 $686,291 $726,715 Long-Term Assets Long-term assets $504,580 $388,820 $423,675 Accumulated depreciation $180,856 $135,739 $145,765 Total long-term assets $323,724 $253,081 $277,910 Libraries Total assets $1,095,999 $939,372 $1,004,625 Current Liabilities Accounts payable $155,534 $132,206 $145,321 Current borrowing $170,000 $150,000 $135,000 Other current liabilities (interest free) $81,888 $63,972 $74,329 Tools Total current liabilities $407,422 $346,178 $354,650 Long-term liabilities $220,000 $190,000 $175,000Total current liabilities $407,422 $346,178 $354,650 Long-term liabilities $220,000 $190,000 $175,000 Contents Total liabilities $627,422 $536,178 $529,650 Paid-in capital $75,000 $75,DDD $75,000 Retained earnings $281,838 $234,377 $287,114 Earnings $111,739 $93,817 $112,861 Total capital $468,577 $403,194 $474,975 Total capital and liabilities $1,095,999 $939,372 $1,004,625 Readability Other Inputs Payment Days 30 30 30 Part Performance $1800,600 $1600,600 Sales $1400,060 $1200,000 $1060,060 $800,000 Resources $600,600 $400,000 $200,60 $0,000 2006 2009 2010 Figure 16.1.1: Past Performance Chart Company Locations and Facilities Frank's All-American BarBeQue has been in Fairfield, Connecticut, for decades. It has a reputation throughout the southern Connecticut shore region Libraries for excellent food and has received numerous awards. The management team determined that a second location could tap into this local name recognition. Several towns in the region were evaluated for total population, population density, family income, and home value. These factors were considered because of their impact on generating traffic and consumers being able to pay for meals that are priced slightly higher than typical fast-food outlets. In addition, the average family size and the percentage of family households were considered because Frank's is a family restaurant, Lastly, data were gathered on the average travel time to and from work for residents and the real estate tax rate. Because the new location of Frank's will emphasize prepared meals, we felt that individuals with longer commutes would be more likely to order meals and pick them up at Frank's. A summary of these data is provided in Table 116.1.2_. After thorough analysis, it was concluded that Darien, Connecticut, would be the best location for the new branch of Frank's All-American BarbeQue. It has a high-income population and a high population density, and a large percentage of its inhabitants are members of family households. They have Tools longer commuting times, which increase the potential need for prepared meals. Table 16.1.2: Demographic Data for Selected Connecticut Towns-Part 1 Item Fairfield Westport Easton Darien NorwalkPopulation 57,578 25.884 7,383 19,375 83,802 Population density 1,917 1,293 269 1,508 3,675 Contents Income $108,209 $155,322 $162,688 $180,474 $79,693 House value $589,179 $1,169,081 $868,622 $1,430,589 $504,100 Percentage of family 72.6% 74.6% households 84.3% 81.7% 64.1% - Travel time (minutes) 31.3 39.4 34.8 36.4 25.4 Readability Real estate tax rate 1.3% 0.9% 1.3% 0.8% 1.1% Family size 3.07 2.70 3.0 3.0 2.50 Table 16.1.3: Demographic Data for Selected Connecticut Towns-Part 2 Item Stamford Weston Wilton Trumbull State of Connecticut Resources Population 121,026 10,199 17,771 34,422 3,574,097 Population density 3,206 515 659 478 739/sq. mile Income $81,206 $190,080 $183,252 $103,019 $68,595 House value $612,900 $1,198,615 $1,044,316 $492,623 $306,000 Libraries Percentage of family households 63.8% 84.9% 82.3% 81.5% 67.7% Travel time (minutes) 24.0 41.6 39.2 27.1 Real estate tax rate 0.7% 1.1% 1.2% 1.5% 1.8% Family size 2.50 3.0 Tools 3.25 2.80 A specific location has been identified in Darien for the second Frank's All-American BarbeQue. It is in a small mall and is large enough to have a seating capacity of 150-160 plus takeout facilities. The mall has more than adequate parking for future customers. The mall is located three blocks from theA specific location has been identified in Darien for the second Frank's All-American BarBeQue. It is in a small mall and is large enough to have a seating capacity of 150-160 plus takeout facilities. The mall has more than adequate parking for future customers. The mall is located three blocks from the Metro-North Darien railroad station and is four blocks from the I-95 exit. It is therefore well positioned to attract traffic from both car and rail Contents commuters. The lease fee for a three-year contract is very reasonable for a property of this size. Products and Services Frank's All-American BarbeQue specializes in the finest barbecue served in a family-friendly format. It uses the finest cuts of meats that are free of any growth hormones. It is known for a variety of slow-smoked and slow-cooked meats, such as ribs, beef, pulled pork, and chicken. These are served with Frank's famous and award-winning sauce varieties, which represent the four major styles of barbecue cooking. Frank's is also noted for its side dishes and desserts. Readability Our goal is to expand operations to a second location in Darien, Connecticut. This outlet will be significantly larger and will have a section devoted to takeout meals. Competitive Comparison There are approximately forty specialty barbecue restaurants in Connecticut. They are spread throughout the state, but only four (including Frank's All- American BarbeQue) are in the southern shore region. The three competitors are smaller operations. None of the barbecue restaurants in Connecticut have the history, reputation, acclaim, or awards that match Frank's All-American BarBeQue. It is not an exaggeration to say that Frank's is the Resources preeminent barbecue restaurant in Connecticut. It has a loyal following that reaches as far as New York City. Frank's is the only barbecue restaurant in Connecticut where supermarkets are vying for the right to market Frank's signature barbecue sauces. This sideline business promises to be extremely profitable and support the overall marketing efforts for both locations of Frank's All-American BarBeQue. Fulfillment Frank's All-American BarbeQue has always been committed to providing the absolute best in barbecue food. This has meant assuring the highest quality ingredients in food preparation. Frank has established a decades-long relationship with suppliers in the New York and Connecticut areas. He selects Libraries nothing but the choicest selections of beef, pork, and chicken. He has always made sure that his meats come from suppliers who are committed to quality ingredients and who never use growth hormones. This long-term relationship with a variety of key suppliers enables Frank to secure the best cuts at reasonable prices. Frank is equally careful in using the finest spices for his barbecue sauces. The same is true for all the side dishes that Frank's All-American BarBeQue offers its customers. This commitment to quality is not limited to the selection of meats and ingredients. Frank and his staff recognize that top-quality barbecue food requires a knowledgeable and deep commitment to cooking the food properly. All meats must be cooked and smoked slowly. This requires time, effort, expense, Tools and commitment, but the results are spectacular. Some cuts of meat at Frank's may require as many as eleven hours of preparation and cooking. Excellence is not achieved without a commitment to effort. This effort has been recognized with numerous awards at national barbecue cook-offs. Frank has clearly recognized that the meal is clearly a function of the quality of the meat, quality ingredients, and careful preparation.Frank's All-American BarBeQue is ready to accept new challenges. Opening a second restaurant will significantly increase sales, but the second location is only the beginning of new directions for Frank's. Although Frank has been selling his regional barbecue sauces in local outlets for years, he is now ready to sign a contract with a major regional supermarket chain to market and sell these sauces throughout New England. Preliminary studies indicate Contents that Frank can anticipate a 20 percent annual growth rate in the sales of sauces for the next five years. With the growth of two-income families, less and less time is available to prepare meals at home. Recognizing this simple fact, Frank's All-American BarBeQue plans to offer a variety of prepackaged barbecue meals that can be picked up at the restaurant and reheated at home. As part of its new commitment to a web-based presence, customers will be able to order these meals by regular phone, with smartphones, or through the Internet. Customers will be able to select from a list of prepackaged dinner meals or any combination of items. Customers can designate the time to pick up the meals, and the meals will be ready for them. This service promises significant revenue growth. Market Analysis Summary Since the 1930s, the American public has spent at least 5 percent of its disposable income on eating out. Even with annual fluctuations, this is a strong Readability indicator of the viability of this industry. This can be best illustrated by reviewing industry results for the last few years. Both 2009 and 2010 were difficult years for the restaurant industry. In 2008, sales increased by 3.8 percent. However, sales fell by nearly 0.75 percent n 2009. This was the first year in the history of the industry that sales actually dedined. The restaurant industry's sales in 2009 were $566 billion, down from over $570 billion. Prices rose by 2.2 percent in 2009. The increase in sales for 2010 was 0.5 percent, and price increases stabilized at 0.75 percent. It is anticipated that there will be significant price competition in every segment of the restaurant industry. Some analysts argued that the poor performances for the restaurant industry in both 2009 and 2010 could be attributed to declines in both business and personal travel. Hotel occupancy rates in 2009 were down by nearly 10 percent. A study conducted by the National Restaurant Association argued that 20 percent of the sales in casual dining restaurants might be due to travelers and visitors. Frank's All-American BarbeQue relies to a far lesser extent on travelers as customers. A rough Resources estimate based on credit card receipts, for the period 2006-2010, indicated that travelers represented less than 2 percent of Frank's sales. The pressure on the restaurant industry has been felt by many chain restaurants, which significantly curtailed their expansion plans. Even though the recession was in full bloom in 2009, many food prices rose and rose significantly. Beef prices rose between 4 percent and 12 percent, while pork prices rose between 5 percent and 13 percent. Numerous studies have indicated that the increase in commodity prices will not be a transitory phenomenon. With 925,000 food service locations in operation in the United States, this translates into 1 restaurant for every 330 Americans. The health-care reform bill passed in 2010 should, in the near future, provide some relief for restaurants by creating a system that will assume greater responsibility by individuals to pay for their own health-care coverage. Libraries Restaurants must also be much more cautious in the future about the possibility of hiring illegal aliens. As a whole, the National Restaurant Association supports immigration reform. However, it is concerned that any legislation should not limit a restaurant's ability to hire workers. It is also concerned about the cost to assure worker eligibility. The Mintel Group, a market research firm, found that consumers who are interested in quality opt for independent restaurants over chain outlets. An increasing consumer focus on health translates into an emphasis on natural ingredients. In the barbecue industry, this translates into naturally raised meats (i.e., the avoidance of artificial growth hormones in cattle), which are a hallmark of Frank's All-American BarBeQue. The National Restaurant Association estimated that sales in full-service restaurants in 2010 would exceed $184 billion-an increase of 1.2 percent from 2009 sales. Tools Several macroeconomic factors make opening a restaurant in Darien attractive, including the following: . Increases in the growth domestic product (GDP). The GDP is estimated to grow 1. 7 percent in 2011 and 1.5 percent in 2012. The estimates for Fairfield County are significantly higher.for Fairfield County are significantly higher. Disposable personal income. The national level of personal income should rise nearly 4 percent in 2011, and there is an expectation of 3 percent growth in 2012. These numbers appear to be much stronger in the Fairfield County area. Although 2010 was not a banner year for the restaurant industry-it was one where more restaurants closed than opened each month-there was one Contents bright spot: Chain barbecue restaurants grew between 2 percent and 3 percent-an auspicious sign even for independent operators. The home meal replacement market and the existing investment in restaurant equipment provide a nice growth opportunity for restaurants. It is been estimated that takeout sales in limited service chain restaurants might be as large as 60 percent of total sales. The same study found that takeout food has been growing twice as fast as the overall restaurant industry. Natural competitors in this market are supermarkets that offer prepackaged meals. However, we feel that few-if any-supermarkets provide the quality barbecue food that can be found at Frank's. Market Segmentation Frank's All-American BarbeQue views its major market segment as suburbanites in the south shore region of Connecticut. One way of further segmenting the market is by the type of meal being provided. Table 16.1.4: Market Analysis provides estimated growth rates for each type of meal (plus Readability sauce sales) and projected number of meals (and jars of sauce) for the period 2011 to 2015. Figure 16.1.2 illustrates the relative contributions. Table 16.1.4: Market Analysis Potential Customers Growth 2011 2012 2013 2014 2015 Lunch 80% 17,000 18,275 19,646 21,119 22,703 Dinner 5% 40,000 42,000 44,100 46,305 48,620 Takeout 20% 10,000 12.000 14,400 17,280 20,736 Sauces 150% 12,000 13,800 15,870 18.251 20,989 Resources Total 9.37% 79,000 36,075 94,016 102,955 113,048 Sauces Take-out Dinner Lunch Libraries Tools Figure 16.1.2: Market AnalysisMarket Needs We believe that the market centers on excellent barbecue food served at reasonable prices and served in a family-friendly manner. We further believe that a growing segment of the market will want prepared meals that can be conveniently picked up and served at home. Table 16.4 "Market Analysis" Contents provides a projected breakdown of the potential customers for the next five years. This breakdown is predicated on the type of meals served and includes the sale of sauces. We provide estimated growth rates and forecasted sale of meals (and bottles of sauces) for the period 2011 to 2015. Figure 16.2 "Market Analysis" shows the breakdown of the number of meals by type in 2015. Web Plan Summary Presently, Frank's All-American BarBeQue has a very simple website. The website provides minimal information-listing some of the menu items and the restaurant's telephone number. It was created eight years ago by a college student who was working at Frank's. Robert Rainsford's professional expertise is in the area of website development. After graduating from college, Robert was hired by a firm that specialized in developing web and social media presences for other companies. He worked for that firm in New York City for seven years. Robert rose Readability rapidly through the company's ranks, eventually becoming one of its vice presidents. His expertise in this area will enable Frank's All-American BarBeQue to significantly enhance its web presence. Rather than just having a website that identifies the restaurant's location and telephone number, along with a brief summary of its menu, the new website will be far richer in content and capability. It will provide a complete menu listing, identifying all items with corresponding images. The new website will enable customers to place orders through the Internet for lunch, dinner, or takeout items. The section devoted to takeout items will enable a customer to purchase prepared meals or choose from all items on the menu to develop a prepackaged meal. Customers will be able to identify the time that they will arrive for the pickup. The website will have links to the Facebook and Twitter accounts of Frank's All-American BarbeQue. These connections will enhance its social media presence. Customers will be asked to post comments about their dining experience and suggestions on how Frank's can improve its operations and service. It will enable Frank's to expand operations and still maintain the same close customer relationship that currently exists at the Fairfield Resources restaurant. Website Marketing Strategy The new web presence for Frank's All-American BarBeQue will be geared to developing a new level of customer relationships. Customers at both restaurants will be asked to fill out forms where they will supply an e-mail address and a birthdate. (This information can also be supplied through Frank's new website.) This information will enable Frank's to keep customers informed of specials and offer coupons and the new rewards card program for special occasions, such as holidays or birthdays. We view the website of Frank's All-American BarbeQue as a major component of enhancing our relationship with our customers. It should provide convenience to customers through their ability to see what is on the menu, identify new specials, and order meals and pick them up at their Libraries convenience. The use of social media will expand awareness of Frank's and enable it to develop closer relationships with present and future customers. Development Requirements Robert Rainsford tapped into his expertise in social media and has already developed a far more sophisticated website for Frank's All-American BarBeQue. He has secured the necessary server capacity to handle additional traffic on the website. In addition, he has set up several social media accounts for Frank's All-American BarbeQue, including Facebook and Twitter. Robert also created a program linked to a database that will monitor customer purchases through the rewards card program. This program will send out birthday notices and discounts to customers and will inform them of their current status in the rewards card program. Tools Robert contacted several former colleagues at his former place of employment and has identified several candidates for the role of website manager. This individual will be responsible for updating the website and the social media sites on a daily basis. He or she will also be responsible for analyzing the flow of information that comes through these sites and preparing management reports. Strategy and Implementation Summary