In January 2017, John Christ needed to make some decisions about his business, Wil's Grill. Not long ago, his dad had said, "Son, passion has gotten you here; not the money." Now, John needed to focus on "the money" - but which path should he take? He could expand his "street food" business, add a catering business, or do something else. John, who loved to make customers happy by serving them great healthy local food, recognized that he also needed to do so profitably. BacKgrOUND John grew up on a ranch in Cave Creek, AZ, a small community northeast of Phoenix Arizona. His parents had food service and restaurant experience, and cooking and entertaining were an integral part of spending time with them. "By age 10," John recalled, "I could cook." As a teenager, John bussed tables at a restaurant where his dad Wil worked. He also spent many mornings with his dad at a clay-bird sport shooting range near Cave Creek. When done, they needed to go elsewhere for lunch, since the range did not offer food or beverages. So, father and son worked out an agreement with the range owner to open a small food booth on-site, which they named "Wil's Grill." On a single grill they cooked burgers, fries and served beverages. Wil taught his son the nuts and bolts of running the business: obtaining necessary permits and licenses, ordering food and supplies, shopping, transportation, inventorying, cooking, cleaning and most importantly, "treating customers as friends." Hospitality-driven service was a core value To celebrate his high school graduation in December 2009, John went on a 30-day backpacking excursion with the National Outdoor Leadership School in Wyoming, where he later recalled, "I honed my leadership skills there and this would serve me well in managing my future business." In August 2010 Wil closed Wil's Grill when John enrolled at Northern Arizona University (NAU), in Flagstaff, about 120 miles north of Phoenix. At that time NAU The breakup was amicable. John reestablished Wil's Grill as a sole proprietorship Without his partner, at first John relied on "gut instinct" to run his business. Summer 2014 was tough, especially interviewing and hiring people. John felt this "was challenging. I didn't know what I was looking for." To hire temporary employees for street events he posted ads and networked with local bar owners. In June John hired what he referred to as "my first permanent part-time employee, Cody McCrae, a Hotel and Restaurant Management student." Cody had also "grown up in the kitchen." On his first day John gave him some instructions and left for another commitment. Working alone, Cody prepared sliders and coleslaw and proved himself. John placed a lot of trust in Cody, his first assistant manager. Cody flexed his hours and worked as business levels demanded Preparation and cooking was fast paced, whether in a leased kitchen or on the grill at an event.There were many 18 to 20 hour work days. Tohn believed that he treated his temporary employees fairly, and therefore they were customer focused and wanted to work for him again. John also learned that he needed to define routines and flow- chart responsibilities for some job positions, and to calculate staffing based on the estimated number of plates/day to be served. Exhibit 1-Wil's Grill Sample Menu Items Marinated Chicken & Veggie Kabob Grass-fed Hamburgers Beer Brat with Sauerkraut Mac & Cheese, Cole Slaw BeanS Bottled Water $5.00Pork & Brisket $12.00% Sandwich $10.00Grilled Chicken Legs $8.00% Loaded French Fries $3.00* Gatorade $5.00 $6.00* $2.00 $1.00 *Price varied based upon the vendor fee charged by event management. Note: John targeted a minimum avg. ticket order of $10.00 and a 25%-35% food cost. Source: John Christ - Owner, Wil's Grill (July 2017) - Sample Street Food Menu Example -BBQ Lunch Garden Party for 30 people; Buffet Service Sample Catering Menu uantity 1 tray Line Total $120.00 Unit Price Appetizer Garden Fresh Bruschetta Salad -Mixed Field Greens Entre -Slow Smoked Brisket Entre - Slow Smoked Turkev Side- Buttermilk Cornbread Side -Mama's Tater Salad Side - Cowboy Beans BBQ Sauce Beverage - Unsweetened Tea Beverage - Fresh Squeezed Lemonade Services - On-site Buffet $120/tray 30 cnt 8 lbs 8 lbs 3 trays 7.5 lbs 7.5 lbs 0.75 gal 1.5 gal 1.5 gal 3.50/cnt 22.99/lb 22.99/lb 4.99/dzn 9.99/lb 7.50/lb 20.00/gal 5.50/gal 10.00/gal $105.00 $183.92 $183.92 $37.50 $74.93 $56.25 $15.00 $8.25 $15.00 125.00/hr Sub-Total Tax at 10.95% Grand Total 1 hour $125.00 $924.77 $101.26 $1,026.33 Notes: Menus available on Wil's Grill website. Clean food discussed on website and menu boards at events. Source: John Christ - Owner, Wil's Grill (April 2017) Exhibit 2 - Profit and Loss Statement (2014-2016) Ordinary Income/Expense ($ US) - Accrual Basis January through December 2014 2015 2016 Comments Income Food Sales Total Income 18,000 18,00024,568 24,56886,921 86,9212014: 8 special public events seasonal weekend street service; 2015: 15 special public events; 2016: 40 special public events Cost of Goods Sold Food Purchases 12,533 | 32,401 | Goal:-30% of Food Sales thru urchasing efficiencies and soufcing co-opefative Direct Labor Payroll (Cody paid $3,613 (2015) and $6,470 (2016)) 4,93710,675|2015: Cody (450 hrs) & sub- contract labor 2016: Cody (650 hrs) & sub- contract labof Business Licenses/ Permits/Insurance Total COGS Gross Profit Operating Expense (Fixed 1,434 4,005 Per event basis 6,000 12,000 18,90447,081 dvertising & Promotion Automobile Expenses Bank Service Charges Computer and Internet xpenses 5,66439,840 2,131 210 1,105 369 287 228 4,700 |Fuel and maintenance 1,000 Office Supplies Professional Fees Propane Reimbursement Rent Expense Repairs and Maintenance Restaurant Supplies Supplies Uniforms Utilities 283 286 1,412 1,454 53 2,0432,300Client meetings, Legal, Acct, R&D 109 1,500 Leased kitchen space 92 549 382 1,239 73 255 Total Operating Expense 15,000 7,84914,7662014 Operating Expense not itemized Net Ordinary Income Other Income/Expense Ask My Accountant Total Other Expense Net Operating Income 2,185 25,074 1,604 1,604 (3,000)(2,218)23,470 |John paid himself a salary from Net Income after reinvesting back in business (2016 Source: John Christ - Owner, Wil's Grill (July 2017) Exhibit 3 - Estimated Investment Levels and Future Revenue Projections (rounded) 2017 Total/ YOY Rev. 2018 Total/ YOY Rev. 2019 Total/ YOY Rev. 2016 Actual Revenue Est. Investment (A) Expand Street Food: $9,000$122,000/$35,000 $162,000/$40,000 $212,000/$50,000 $87,000 (B) Add Catering and Maintain Street Food: $87,000 $25,000$147,000/$60,000 |$217,000/$70,000 $307,000/$90,000 John research assumed: 20%-25% (A) & 40%-45% (B) profit before taxes " discount rate range 5%-18% 20% YOY "normal" growth rate for street food revenue (2016-2019) -2% YOY inflation rate: +3% YOY contingency expense $3,500 revenue per catering event (2017) 5% YOY higher operating expenses for(B) vs. (A) 2017 COGS 50% (A) and 52% (B) of Total Income bef. inflation/contingency " "Est. Investment" primarily kitchen equipment . " Source: John Christ - Owner, Wil's Grill (July 2017) In January 2017, John Christ needed to make some decisions about his business, Wil's Grill. Not long ago, his dad had said, "Son, passion has gotten you here; not the money." Now, John needed to focus on "the money" - but which path should he take? He could expand his "street food" business, add a catering business, or do something else. John, who loved to make customers happy by serving them great healthy local food, recognized that he also needed to do so profitably. BacKgrOUND John grew up on a ranch in Cave Creek, AZ, a small community northeast of Phoenix Arizona. His parents had food service and restaurant experience, and cooking and entertaining were an integral part of spending time with them. "By age 10," John recalled, "I could cook." As a teenager, John bussed tables at a restaurant where his dad Wil worked. He also spent many mornings with his dad at a clay-bird sport shooting range near Cave Creek. When done, they needed to go elsewhere for lunch, since the range did not offer food or beverages. So, father and son worked out an agreement with the range owner to open a small food booth on-site, which they named "Wil's Grill." On a single grill they cooked burgers, fries and served beverages. Wil taught his son the nuts and bolts of running the business: obtaining necessary permits and licenses, ordering food and supplies, shopping, transportation, inventorying, cooking, cleaning and most importantly, "treating customers as friends." Hospitality-driven service was a core value To celebrate his high school graduation in December 2009, John went on a 30-day backpacking excursion with the National Outdoor Leadership School in Wyoming, where he later recalled, "I honed my leadership skills there and this would serve me well in managing my future business." In August 2010 Wil closed Wil's Grill when John enrolled at Northern Arizona University (NAU), in Flagstaff, about 120 miles north of Phoenix. At that time NAU The breakup was amicable. John reestablished Wil's Grill as a sole proprietorship Without his partner, at first John relied on "gut instinct" to run his business. Summer 2014 was tough, especially interviewing and hiring people. John felt this "was challenging. I didn't know what I was looking for." To hire temporary employees for street events he posted ads and networked with local bar owners. In June John hired what he referred to as "my first permanent part-time employee, Cody McCrae, a Hotel and Restaurant Management student." Cody had also "grown up in the kitchen." On his first day John gave him some instructions and left for another commitment. Working alone, Cody prepared sliders and coleslaw and proved himself. John placed a lot of trust in Cody, his first assistant manager. Cody flexed his hours and worked as business levels demanded Preparation and cooking was fast paced, whether in a leased kitchen or on the grill at an event.There were many 18 to 20 hour work days. Tohn believed that he treated his temporary employees fairly, and therefore they were customer focused and wanted to work for him again. John also learned that he needed to define routines and flow- chart responsibilities for some job positions, and to calculate staffing based on the estimated number of plates/day to be served. Exhibit 1-Wil's Grill Sample Menu Items Marinated Chicken & Veggie Kabob Grass-fed Hamburgers Beer Brat with Sauerkraut Mac & Cheese, Cole Slaw BeanS Bottled Water $5.00Pork & Brisket $12.00% Sandwich $10.00Grilled Chicken Legs $8.00% Loaded French Fries $3.00* Gatorade $5.00 $6.00* $2.00 $1.00 *Price varied based upon the vendor fee charged by event management. Note: John targeted a minimum avg. ticket order of $10.00 and a 25%-35% food cost. Source: John Christ - Owner, Wil's Grill (July 2017) - Sample Street Food Menu Example -BBQ Lunch Garden Party for 30 people; Buffet Service Sample Catering Menu uantity 1 tray Line Total $120.00 Unit Price Appetizer Garden Fresh Bruschetta Salad -Mixed Field Greens Entre -Slow Smoked Brisket Entre - Slow Smoked Turkev Side- Buttermilk Cornbread Side -Mama's Tater Salad Side - Cowboy Beans BBQ Sauce Beverage - Unsweetened Tea Beverage - Fresh Squeezed Lemonade Services - On-site Buffet $120/tray 30 cnt 8 lbs 8 lbs 3 trays 7.5 lbs 7.5 lbs 0.75 gal 1.5 gal 1.5 gal 3.50/cnt 22.99/lb 22.99/lb 4.99/dzn 9.99/lb 7.50/lb 20.00/gal 5.50/gal 10.00/gal $105.00 $183.92 $183.92 $37.50 $74.93 $56.25 $15.00 $8.25 $15.00 125.00/hr Sub-Total Tax at 10.95% Grand Total 1 hour $125.00 $924.77 $101.26 $1,026.33 Notes: Menus available on Wil's Grill website. Clean food discussed on website and menu boards at events. Source: John Christ - Owner, Wil's Grill (April 2017) Exhibit 2 - Profit and Loss Statement (2014-2016) Ordinary Income/Expense ($ US) - Accrual Basis January through December 2014 2015 2016 Comments Income Food Sales Total Income 18,000 18,00024,568 24,56886,921 86,9212014: 8 special public events seasonal weekend street service; 2015: 15 special public events; 2016: 40 special public events Cost of Goods Sold Food Purchases 12,533 | 32,401 | Goal:-30% of Food Sales thru urchasing efficiencies and soufcing co-opefative Direct Labor Payroll (Cody paid $3,613 (2015) and $6,470 (2016)) 4,93710,675|2015: Cody (450 hrs) & sub- contract labor 2016: Cody (650 hrs) & sub- contract labof Business Licenses/ Permits/Insurance Total COGS Gross Profit Operating Expense (Fixed 1,434 4,005 Per event basis 6,000 12,000 18,90447,081 dvertising & Promotion Automobile Expenses Bank Service Charges Computer and Internet xpenses 5,66439,840 2,131 210 1,105 369 287 228 4,700 |Fuel and maintenance 1,000 Office Supplies Professional Fees Propane Reimbursement Rent Expense Repairs and Maintenance Restaurant Supplies Supplies Uniforms Utilities 283 286 1,412 1,454 53 2,0432,300Client meetings, Legal, Acct, R&D 109 1,500 Leased kitchen space 92 549 382 1,239 73 255 Total Operating Expense 15,000 7,84914,7662014 Operating Expense not itemized Net Ordinary Income Other Income/Expense Ask My Accountant Total Other Expense Net Operating Income 2,185 25,074 1,604 1,604 (3,000)(2,218)23,470 |John paid himself a salary from Net Income after reinvesting back in business (2016 Source: John Christ - Owner, Wil's Grill (July 2017) Exhibit 3 - Estimated Investment Levels and Future Revenue Projections (rounded) 2017 Total/ YOY Rev. 2018 Total/ YOY Rev. 2019 Total/ YOY Rev. 2016 Actual Revenue Est. Investment (A) Expand Street Food: $9,000$122,000/$35,000 $162,000/$40,000 $212,000/$50,000 $87,000 (B) Add Catering and Maintain Street Food: $87,000 $25,000$147,000/$60,000 |$217,000/$70,000 $307,000/$90,000 John research assumed: 20%-25% (A) & 40%-45% (B) profit before taxes " discount rate range 5%-18% 20% YOY "normal" growth rate for street food revenue (2016-2019) -2% YOY inflation rate: +3% YOY contingency expense $3,500 revenue per catering event (2017) 5% YOY higher operating expenses for(B) vs. (A) 2017 COGS 50% (A) and 52% (B) of Total Income bef. inflation/contingency " "Est. Investment" primarily kitchen equipment . " Source: John Christ - Owner, Wil's Grill (July 2017)