Pizza Hut Franchise

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Table of Contents
1.0

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1
Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2
Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3
Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
3
4
4

2.0

Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1
Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1.1
Community Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1.2
Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2
Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.3
Historical Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5
5
5
5
5
7

3.0

Products and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

4.0

Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1
Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1.1
Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1.2
Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1.3
Marketing Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2
Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3
Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4
Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4.1
Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9
11
13
14
14
16
18
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18

5.0

Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1
SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1.1
Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1.2
Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1.3
Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1.4
Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2
Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3
Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4
Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4.1
Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.5
Marketing Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.5.1
Expense Budget Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.5.2
Expense Budget Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.6
Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18
19
19
19
20
20
20
20
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21
24
24
24
25

6.0

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.1
Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26
27

7.0

Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.1
Start-up Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.2
Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.3
Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.4
Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.5
Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.6
Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.7
Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.8
Long-term Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40

Pizza Hut Franchise
1.0 Executive Summary
The following plan is based on years of experience, is highly focused and promises to follow a path of prosperity. It is
based on conservative sales figures, and actual sales (2006) may be higher. The projections contained herein are
authentic and will be used as the budget for the business. Restaurant A will continue the road of profitability, and will
increase sales and profits each year thereafter. Restaurant A has plans of franchising three different packages.
Packages that will yield a high rate on return while assuming new management styles.



The first package includes 15 stores in the Riverside, Corona and Moreno Valley area. The stores in these
general areas range, in sales, from $130,000 to $1.35 million annually.
The second package includes 12 stores located in the San Bernardino area. The stores annual sales range
from $733,000 to $1.55 million.
The third package includes 13 stores located in the South Los Angeles areas. The stores annual sales range
from $760,000 to $1.58 million.
The fourth package option.

Products
Restaurant A offers a variety of products that provide customer with a delicious alternative to other fast food restaurants.
Some of the products that Restaurant A offers include Pan Pizza, Restaurant A also sells "Stuffed Crust" (with the
outermost edge wrapped around a coil of mozzarella cheese); "Hand-Tossed" (which is more like traditional pizzeria
crusts); "Thin 'N Crispy" (a thin and crispy dough which was the original crust); "XXXXX", which is a two-foot by one-foot
square cut pizza; and the XXXXXXX pizza, which is similar to a Sicilian pizza but is cut into small strips that can be
dipped into a number of sauces. Another is the "XXXXX" pizza, where the pizza is baked with no puffy crust, and the
toppings reach nearly to the edge of the pie.
Service
Restaurant A are bright and inviting. We are a fast-casual operation with take-out and delivery. The decor and theme
are centered around the cutting edge open kitchen with brick arches, information signage and distinctive lighting. Our
energy and atmosphere will appeal to families, groups and schools.
The real power and energy of the pizzeria will come from the attentive and courteous service provided by our managers
and staff. Our fresh menu will be prepared by motivated kitchen team, and carefully orchestrated to provide the best
service to our customers who are our priority. We will have at least one manager on duty at all times.
Our hours are Sunday thru Thursday 11am to 10pm. Friday and Saturday 11am to 11pm. Carry-out available during
store hours. Delivery hours are 4pm to closing everyday we are open. We will offer delivery all day on Saturday and
Sunday and some holidays.
Management Team
Restaurant A is a franchise and has an established management team already in place in each unit. In addition,
Restaurant A will provide an on-site management team member that will support our new ownership allowing for
transition ease. The owner and the new management team of the franchise have years of experience and education in
the restaurant industry.
To ensure established management team is effective and will meet our expectations, we will evaluate each manager
associate with a 15, 30, 45 and 90-day evaluation. Evaluations allow management associates to observe any potential
weakness in the management style of the associate and redirect them into a successful career. In addition, when
weaknesses have been documented, we will work with the management associate to help further develop their
management style with additional training and development. Of course, if for example, a management associates does
not meet our expectations and we have provided all of the training possible then we will terminate the management
associate.
Plan A
Our management plan includes First Owner responsible for both Restaurant A and Restaurant B. Second Owner will be
Page 1

Pizza Hut Franchise
responsible for the operations of the restaurant B while XXXX will be responsible for the operations of Restaurant A.
Each manager will oversee the operations of each company reviewing the effectiveness of all managers and their crew.
Plan B
If the management coach or general manager do not meet Restaurant A or our expectations then XXXX will be
responsible for the daily operations of the Restaurant B business. First Owner and Second Owner will remain
responsible for the Restaurant A operations.
First Owner
First Owners education and experience have been omitted.
Second Owner
Second Owners education and experience have been omitted.
First Manager
First managers education, experience and training have been omitted.
Second Manager
Second managers education, experience and training have been omitted.
Crew Associates
We plan to duplicate and massage the successful formula used by the Restaurant A Franchisor. We will use
Restaurant A's personnel strategies and skills to create our own success in Restaurant A with established and new hire
associates. Furthermore, we will train and develop these associates to exceed Restaurant A’s already awarding winning
customer service.
We plan to assess our management team to locate weakness within each individual associate and help develop their
skills. Our management team will assist our crew staff by developing their knowledge of menu items while developing
their energized, enthusiastic personalities to better assist customers with their meal decisions. Each new hire will be
sent to one of the four units that will be designated as training facilities where they will develop their customer service
skills. In addition to our extensive customer service training program, we will hire the secret shopper service to ensure
that all associates are giving customers exceptional customer service. Below you will find an outline of our management
team and crew.

Page 2

we will include a management team member from Restaurant A to help ease the transition period from the previous owners of the Restaurant B package. In addition. Costs for remodel and development will range from $10.1 Objectives Our objective is to win the opportunity to buy one of the store packages that Restaurant A is franchising. We believe that with our years of experience. Each unit will be visited each month by a maintenance company to ensure all equipment is operating properly. The below chart outlines cost associated with remodel and development. In addition. This business plan is written for the option 1 package located in the Riverside area.03 million depending on the level of involvement. Page 3 . We will need to remodel the interior as well as the exterior of each store according to the Franchisor's design. We will achieve this first by remodel each store.Pizza Hut Franchise 1. feel inviting and have a friendly and knowledgeable staff. we will hire a maintenance company to review and maintain our equipment monthly. determination and a history of high profit restaurant operation will be a leading contender in winning one of the three Restaurant A will package.000US to $3. Once we have won the opportunity of owning a franchise option package we will move aggressively to ensure each restaurant will look newer.

churches. and businesses. We will consistently follow the franchisor's proven methods. We will remain cheerful. We will be committed to providing quality food and beverage at all times. Page 4 . 1. safety and happiness of our staff. We will strive to become the first destination of choice for those in our neighborhood and community. we will also exist to serve our customers. We will be committed to the success. Because we are a service business. These two reasons for our existence for inextricable. Our staff will be offered a workplace where they can prosper and grow in a dignified.2 Mission Restaurant A exits for the purpose of generating sales and profits.3 Keys to Success • • • • • We will use every means available to satisfy our customers by providing customer cards at all locations to help us identify opportunities within our business. We will exceed Restaurant A's already outstanding service in customer service. well trained. We will give support to and contribute to our community schools. focused on pleasing our guests.Pizza Hut Franchise 1. courteous. the other will cease to exist. If one aspect does not exist. • • • • • We will always offer a fresh product and a welcoming environment. groups. fun and rewarding manner.

inventory.1 Community Involvement First Owner's community involvement award has been omitted. Page 5 .2 Start-up Summary We hope to take advantage of an existing structure located in various locations in the Riverside area. 2. Start-up cash on hand is estimated for three months working capital. limited liability company. operating supplies and maintenance. The name of the associate is (has been omited) and we have decided to reward her by implementing a new program in honor of her name. The program is geared to raise the level of customer service awareness while improving the service to customers. Short-term assets include phone equipment. Long-term assets include all kitchen equipment. 2.0 Company Summary Restaurant A's company summary has been omitted. labor and rent. Our franchise will be located in the Riverside county area with fifteen restaurants. with two managing owners holding an equal share (50%) and interest in the franchise. Construction is estimated at $65. This example is no exception.000US tip after providing a customer with excellence service. one of Restaurant A's associates received a $10.Pizza Hut Franchise 2. and signage. the XXXXX Program.1.1 Company Ownership We are an LLC.2 Social Responsibility Periodically we receive feedback from customers rewarding associates for their outstanding customer service ability.1.000 and other related expense are included in the below table. We will remodel all locations according to the Franchisor's designs to make our concept both visually and functionally suitable. The XXXXX Program will be incorporated into our current training program for new hires and established associates. POS system. 2. • • • First Owner Second Owner First Manager 2.

052 Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets $647.628 $405.000 $0 $0 $692.404 $36.880 $18.484 Page 6 .020 $61.000 $29.432 $45.752 $25.000 $80.432 Total Requirements $1.476 $50.892 $37.Pizza Hut Franchise Table: Start-up Start-up Requirements Start-up Expenses Remodel Costs Royalty Fees Insurance City Fees/Misc Costs Drafting/Engineering Training/Travel Utility Start-up Costs Rent Design Total Start-up Expenses $65.097.

Shahin and his partner introduced a variety of programs that were introduced to help create customer excitement and generate sales. there are services that we use in order to maintain our success. The E-Club allows customers to sign up for exclusive special offers and coupon savings each time they visit a Carrows restaurant. that has been a huge success for us is the Everclean janitorial and maintenance service.Pizza Hut Franchise 2. Ghaleb. Their combine leadership and management skills have enabled their restaurants to maintain limited employee turnover while keeping operating expenses down. Page 7 . Everclean Services In addition to our Carrows restaurant success. in particular. Everclean maintains our heating and cooling temperatures in the cooking and preparation areas. One particular program that has been a huge success is the E-Club program. Below is an examples of the form created and used to obtain customer information for E-Club. Our plan is to incorporate Everclean into Pizza Huts already strong cleaning practices. They regulate cleaning solutions and supplies and provide additional education to our management and crew on safe practices. One service. The E-Club was an instant success and is still an active program at our Carrows restaurant. are two established franchisee's. both own and operate two Carrows restaurants. Currently. Customers love to save money and what a great way to help them save than rewarding them with money savings coupons received via the mail or internet. Eight years ago when they purchased their first Carrows they were able to grow the restaurant into one of the most successful and profitable franchisor's in Southern California. Special Programs During the first two years of ownership of Carrows.3 Historical Ownership Shahin and his partner.

Unlike most of Restaurant A's competitors (such as Domino's deep dish or Papa John's Perfect Pan). Restaurant A does not charge extra for its XXX pizza. They come in a variety of toppings. Another is the Page 8 . "Thin 'N Crispy" (a thin and crispy dough which was the original crust). which usually comes in four different sizes including Personal Size (which is an individual serving). which is a two-foot by one-foot square cut pizza. In addition to the XXX Pizza.0 Products and Services Products The most commonly sold food at the restaurants is the "XXXXXXXX". Small.Pizza Hut Franchise 3. including "specialty" styles. which is similar to a Sicilian pizza but is cut into small strips that can be dipped into a number of sauces. "XXXXXX". and Large. and the XXXXXXX. "Hand-Tossed" (which is more like traditional pizzeria crusts). Restaurant A also sells "Stuffed Crust" (with the outermost edge wrapped around a coil of mozzarella cheese). XXX Pizza has a thicker crust than most other commercially available pizzas. although some stores have done away with the small size. Medium.

mozzarella sticks. They often come with a side of garlic bread. Some Restaurant A's also serve lunch and dinner buffets with numerous types of pizza. Services Restaurant A's are bright and inviting. The city is named for the nearby Santa Ana River. similar to the "Stuffed Crust" except the crust has been divided into bite-sized pieces that can be pulled apart. In 2005. These include Chicago Dish Pizza and Sicilian Pizza. chicken pomodoro. chicken munchers. a staunch temperance-minded abolitionist from Tennessee. groups. Riverside County is a county located in the southeastern part of the U. upscale concept was unveiled in 2005. hot and mild chicken wings. white. and part of the 14th-largest metropolitan area in the nation. breadsticks and pastas. state of California. is similar to a traditional Restaurant A. such as penne pasta. toasted sandwiches and other foods are also offered. and Rotelle (wheels). As a result. The decor and theme are centered around the cutting edge open kitchen with brick arches. This county is part of the Greater Los Angeles Area.255. Riverside was temperance minded (few saloons if any were allowed in Riverside proper). jalapeño poppers. Investors from England and Canada transplanted traditions and activities adopted by prosperous citizens. Friday and Saturday 11am to 11pm. Geographically. the first golf course and polo field in Southern California were built in Riverside. Restaurant A has experimented with new products frequently. As of 2006. Our energy and atmosphere will appeal to families. called "Restaurant A Italian Bistro". California. Instead of black. and garlic bread. churches and schools. Our hours are Sunday thru Thursday 11am to 10pm. Riverside was the largest city in the Inland Empire region. Most of Joshua Tree National Park is located in the county. stretching from Orange County to the Colorado River. onion rings. where a layer of cheese is in between two layers of dough.S. The city was founded in the early 1870s beside the Santa Ana River by John W.a mixture of Cavatelli (shells). in an area of Southern California known as the Inland Empire. cinnamon sticks. Restaurant A also has a number of side dishes including bread sticks. Bistro locations feature a burgundy and tan motif. Restaurant A also may offer pasta dinners such as Spaghetti and Cavatini .Pizza Hut Franchise "XXXX" pizza. Less successful ones have been discontinued. Riverside had an estimated population of 305. boneless wings. Restaurant A still serve the chain's traditional pizzas and sides.803. the navel orange was planted and found to be such a success that full-scale planting started. the 62nd-largest city in the United States. except that new pasta dishes are offered. The county seat is the city of Riverside. Restaurant A's version of the calzone. A new. and the "Insider". as well. cheese sticks. United States and is also a focus city of the Greater Los Angeles Area.0 Market Analysis Summary Riverside is the county seat of Riverside County. Depending on the size. We will offer delivery all day on Saturday and Sunday and some holidays. North. and carefully orchestrated to provide the best service to our customers who are our priority. Minnesota. unveiled at fifty locations nationwide. Other products Restaurant A has offered are the "XXXX". As of 2006 Census the population was 2. as well as a salad bar. Our fresh menu will be prepared by motivated kitchen team. Riverside County lies Page 9 . and the toppings reach nearly to the edge of the pie. the "Cheesy Bites". A few years after. Rotini (spirals). Carry-out available during store hours. which is the border with Arizona. The real power and energy of the pizzeria will come from the attentive and courteous service provided by our managers and staff. and red. The concept. the Sicilian Pizza made a 2006 comeback as the Lasagna Pizza. who had previously founded Northfield. We are a fast-casual operation with take-out and delivery.026. the county is desert. 4. Delivery hours are 4pm to closing everyday we are open. and Republican. information signage and distinctive lighting. where the pizza is baked with no puffy crust. We will have at least one manager on duty at all times.

313.544 49.1 34.968 1.2 409.936 54.822 75.916.978 21.9 9.9 54.7 Page 10 .277 62.3 16. except separated (population 15 years and over) Female.8 689.691 8. Now married.9 Social Characteristics Population 25 years and over High school graduate or higher Bachelor's degree or higher Civilian veterans (civilian population 18 years and over) Disability status (population 5 years and over) Foreign born Male. General Characteristics .6 50. it is one of the fastest growing parts of Greater Los Angeles.077 13. starting with the addition of toll commuter lanes to the 91 freeway. Now married. and large numbers of Los Angeles workers have moved to the county in recent years to take advantage of relatively affordable housing costs. the main traffic artery to the western metropolis.2 68.9 17.584 90.6 8 One race White Black or African American American Indian and Alaska Native Asian Native Hawaiian and Other Pacific Islander Some other race 1.4 232.4 375.061 205.9 867.916.994 39.227.665 950.305 112.8 0. except separated (population 15 years and over) Speak a language other than English at home (population 5 years and over) Estimate Percent 1.665 3.Pizza Hut Franchise inland of Los Angeles. Below is a market summary survey outlining growth from 2000 to 2009.2005 Estimate Percent Total population Male Female 1.802 588.114.665 1.966 45. This spawned a wave of toll road construction in the area in the 1990s.1 1 5.1 361.987 18.045 323. Alongside neighboring San Bernardino County.5 123.2 156.697 2.218 383.71 652.072 174.861.4 Median age (years) Under 5 years 18 years and over 65 years and over 30.1 65.157 64.121 966.925 152.2 Economic Characteristics In labor force (population 16 years and over) Estimate Percent 869.26 3.1 64 9.378 9.535 97.3 Two or more races Hispanic or Latino (of any race) Household population Group quarters population Average household size Average family size Total housing units Occupied housing units Owner-occupied housing units Renter-occupied housing units Vacant housing units 1.024 6.195 49.

Riverside county makes 5.506 19.061 322. 93% of the US population eats pizza. There are approximately 85.803.026 53. churches and groups.7 49. by and large. This area is widely open and the population is spread out over 7. residents are spaced out accordingly.7% of the states population with the Hispanic population making the largest percentage growth rate by 2009.15 people per household.400 1. we would generate $721.3 15 Estimate Percent 383. there are densely populated areas within Riverside County but.141 in one month. Restaurant A provides support for local area school groups and sports teams.520 353 4.991 12. discounts. Within the area there is a population of 2.1 Market Segmentation Restaurant A's target market is the Riverside County area.2 people per square mile with 3.207 sq miles. Ages 4 to 19 prefer pizza over any fast food and often influence family dining decisions. Of course. The total number of households in this area is 652. We will be involved through providing sponsorships. and donations. Children are a big part of our market. and proper management we will reach and exceed our projection sales goals. superior product. According to one study. Page 11 .179. This illustrates that with effective marketing.802 with an average income of $43. Our target market includes adults 20 to 54 years old who socialize and have families. as well as local church groups. at a third of the population is this area.Pizza Hut Franchise Mean travel time to work in minutes (workers 16 years and over) Median household income (in 2005 inflation-adjusted dollars) Median family income (in 2005 inflation-adjusted dollars) Per capita income (in 2005 inflation-adjusted dollars) Families below poverty level Individuals below poverty level Housing Characteristics Owner-occupied homes Median value (dollars) Median of selected monthly owner costs With a mortgage (dollars) Not mortgaged (dollars) 30.026. In this area we have some of the best schools. If we sold one pizza per month with an average of $19.00 per household.

00% 2.517 174.899 171.505 83.411 29.699 164.701 30.Pizza Hut Franchise Table: Market Analysis Market Analysis Potential Customers Ages 0-24 Ages 24-54 Over 55 Total Growth -1% 4% 2% 1.00% 4.940 87.049 31.739 57.763 57.293 167.91% 2007 2008 2009 2010 2011 58.076 80.506 CAGR -1.387 29.91% Page 12 .851 56.105 55.482 30.00% 1.653 77.117 161.235 74.

0% of those age 65 and over.059 people (305.1.2/mi²).674 housing units at an average density of 31/km² (81/mi²).0% were nonfamilies.25% Pacific Islander. The population density was 1.2% of all households were made up of individuals and 6. About 11.58% White. 21. there were 93.405 were occupied 66.545. there were: • • • 294. of which 93.328 for females.7% Asian 4. The median age was 30 years.016 households.70.5% had children under the age of 18 living with them.(2006 Census .18% Native American. 1. there were: • • • • • 1.1 males.0% Native American 0.2. There were 584. and 9. 3. For every 100 females age 18 and over.9% from 18 to 24.100.4% from two or more races.15 and average family size 3. 18.6 males.317 families residing in the city. 0. The racial makeup of the city was: • • • • • • • • 54.Pizza Hut Franchise 4.population . 49.8% had a female householder with no husband present. There were 85.0% from 25 to 44.261. Page 13 .69% Asian.9% Pacific Islander There were 93.0% who were 65 years of age or older. The median income for a household in the city was $41. including 18.0% from other races 7. Males had a median income of $36. For every 100 females there were 97.254.026.5/km² (3.1% under the age of 18. The per capita income for the city was $17.255 per 2006 estimates) 98. 14. The racial makeup of the county was: • • • • • 65.8% Hispanic or Latino of any race 26.218 households 372.882.576 families residing in the county. 1.405 occupied households out of which 44.646.387 people (2000) . 30. and the median income for a family was $47.24% Black or African American.6% had someone living alone 65 or older.9% of those under age 18 and 8. The county of Riverside's census of 2005.1 Market Demographics The city of Riverside's census of 2005. 6.6% were married couples living together.920 versus $28.974 housing units at an average density of 425.0% from 45 to 64.7% of families and 15.8/mi²).803) 506.0/km² (1.3% African American 5. The population density was 83/km² (214/mi²). 12. In the city the population was spread out with: • • • • • • • • 30.7% White 44. 29.8% of the population were below the poverty line.267. The average household size was 3.

The per capita income for the county was $18.2% spoke English and 27. 18. in the U. About 10. Males had a median income of $38. For every 100 females there were 99.50% of those under age 18 and 7. 28.20% from 18 to 24. as of December 31.20% of the population were below the poverty line. Inc.S. and 12. In the county the population was spread out with: • • • • • • • • 30.60% of those age 65 or over.50% were married couples living together. customers will be surveying the area for fast-food restaurants that meet their dinning needs.80 males.887.21% of the population was Hispanic or Latino of any race. is dependent on products and services. The average household size was 2. For every 100 females age 18 and over.37% from two or more races.70% of all households were made up of individuals and 9. In addition to our target market's fast-food needs. The median age was 33 years.00% had a female householder with no husband present.1. 2005.90% from 25 to 44. on average. including 18.90% from 45 to 64. 67. There were 506.7% Spanish as their first language. 4.98 and the average family size was 3. there were 96.40% were nonfamilies. 56.10 males. 36.032 for females.2 Market Needs Our target market.30% under the age of 18.174 facilities listed as of December 31.218 households out of which 38. and the median income for a family was $48. 4. 9. 2006.343 Pizza Restaurants SIC (5812-22). there are now 71. and 26. a gain of 1.70% who were 65 years of age or older.30% had someone living alone who was 65 years of age or older. 4. The median income for a household in the county was $42.Pizza Hut Franchise • • • • 18.639 versus $28. 12.169 facilities or 1. Profitability will be the issue as competition continues to hold pricing down for the consumer while the operator focuses on margins.1.3 Marketing Trends According to InfoUSA. As the area grows and more people are moving into the area.90% had children under the age of 18 living with them.689.409.47. fast and friendly service is highly important to our customers who lead rapid busy lives.7% for the year. Page 14 .70% of families and 14. Growth will continue to be issue in 2007 as the Economy slows and Families become even more concerned with the weekly budget.69% from other races. Up from 70. 20. We believe that even though most of our competitors focus on price we will succeed by focusing on customer service and fresh products.

886 3. Of the companies interviewed. according to Manpower spokesperson Evelyn Wilcox.882 $219. While 40% of the areas employers plan on hiring more employees.231 $135. That’s a marked improvement over the second quarter.08 73.952 $17. when 13% reported they planned to reduce headcount.05 63.193 $20. the fast-food industry will see growth to increase by 17% into 2010.02 58.59 104.166 283. according to Wilcox.247 331.54 90.349 3.882 3.155 3.921 3. The quarterly Manpower Employment Outlook Survey has found that in the third quarter.915 $25. 40% plan to hire more employees.165 Households Ave. Household Size Families Average Family Size 82.119 Median Household Income Medium Home Value Per Capita Income Page 15 .783 46.Pizza Hut Franchise Jobs are definitely being created.899 $290.64 41.005 3.934 54. Riverside area employers expect to hire at a rapid pace. City of Riverside Statistic Year 2000 Year 2004 Projected 2009 Population 255. while none plan to reduce their payrolls.

545 $43.72 812.910 $18.23 469. traffic at quick-serve restaurants was up 2 percent in 2005.452 3.545.811. The overall growth rate in the fast food business is expected to be 5. This is due to reduced discretionary income. and the segment added jobs at a rate of 3. ending the year at $136.179 $48.321 $384.387 1.944 3.67 652.802 3. The NRA forecasts quickserve sales of $142.2 billion in 2005.689 $412.3% for 2007.3 percent.19 462. According to the NRA.15 346.5 billion.933 3. Household Size Families Average Family Size 489.277. and recessionary economic pressures from the housing slump and high fuel costs.Pizza Hut Franchise County of Riverside Statistic 2000 2004 2009 Population 1. The National Restaurant Association (NRA) predicted that sales at fast-food restaurants would rise to $134. a gain of more than 5 percent.4 billion in 2006. Sales exceeded expectations.336 Median Household Income Median Home Value Per Capita Income 4.281 2.175 Households Ave.070 3.478 $486. Page 16 .2 Market Growth Consumer households today spend approximately 46% of their food budget on fast-food.100 $27. The National Restaurant Association predicts that the QSR (Quick Service Restaurant) market will grow slightly slower than the overall market for food services.000 $23.214 3.79 $37.

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Dalia's Pizza and Alfredo's Pizza and Pasta. Maxwell Pizza. we are priced above our private competitors like Maxwell Pizza. Pizza is a $32. Page 18 . fast casual dining market. In addition. Build a relationship-oriented business Build long-term relationships with customers. Just about everyone eats pizza. Become their restaurant and destination of choice. Quick. We have a strong commitment to community involvement including sponsorship for school/group teams. In addition. Dalia's Pizza Market and Two Guys Pasta & Pizza. Most residents in this area have busy schedules. and find value in exceptional and timely service. The customers are provided with the highest quality product.00. The local competition includes Dominos Pizza. Quality. not single-visit deals. We believe most everyone will appreciate Restaurant A's value based menu and family atmosphere.0 Strategy and Implementation Summary Emphasize service We will differentiate ourselves with Service! We will establish our business offering as a clear viable alternative for our target market. 93% of Americans eat pizza at least once a month.1 Competition and Buying Patterns Pizza Hut Pizzerias are competitive in the mid price point. welcoming services and great ideas. we want to be able to sell to smart.4 Service Business Analysis Pizza Statistics: • • • • • • • Represent 17% of all restaurants. delightful food. and Simple is the goal of Restaurant A. 67% of Americans order pizza for a casual evening with friends. Accounts for 10% of all food service sales. We want to compete for the buyers who go to "fast food" or "take and bake" types of restaurants. Focus on target markets We need to focus our offerings on specific population groups as the key market segment we should own. We strongly believe we will overcome any competition in our area. as well as mouth watering. With an average ticket of $17. Little Caesars Pizza. Papa John's Pizza.3 Target Market Segment Strategy We haven't ruled any one group or class out in our target market area. Children between 3-11 prefer pizza over all other food groups. Alfredo's Pizza & Pasta. Reaffirm customers that at Restaurant A a relationship between our customers and staff is a value added service that always exceeds guest's expectations. Most of these are at least two miles or less from the location of our stores in the Riverside area. 5. Store design provides a warm and friendly environment for all. 4. 4.Pizza Hut Franchise 4.5 billion per year industry with continuing overall restaurant growth. the competition does not offer our concept of fresh products.4. Americans eat approximately 100 acres of pizza a day. quality conscious customers.

5. 5. self-service machines that will allow guests to refill at ones own request. 3.All employees must wear the same uniform. and a clear vision of the market need. These opportunities include. Supply Companies . Uniforms . Clear vision of the market need.Restaurant A's franchise agreement includes redesign signage. We will continue with the franchisor's commitment to find and promote people with a passion for helping other people. but not least. 5.1 SWOT Analysis The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses Restaurant A must address. Our staff is both knowledgeable and eager to please. Restaurant A has a valuable inventory of strengths that will help it succeed. Restaurant A's strengths will help it capitalize on emerging opportunities. delicious product. Signage must be consistent in all Restaurant A's stores whether in Germany or the United States. and a slowing economy due to high fuel prices and a slumping housing market. 3. High level employee turnover. restrictions. Signage . but it is also important to realize the weaknesses Restaurant A must address.1 Strengths 1.1. but are not limited to. Uniforms must be consistent in all Restaurant A stores in color and design. Knowledgeable and friendly staff. a growing population. 2. 2.2 Weaknesses 1. not only within the pizza industry but also within the fast-food industry. Up-scale ambiance. fresh signage and a friendly staff will all be apart of the total package when a guests visits anyone of our shops. you'll experience an inviting environment. and we know how to build the service that will bring the two together. and the cost of employment turnover due to minimum wage. High employee turnover can generate high expense and in time can reduce company profits. 2. Bright colors. and the growing social bonds fostered by community involvement. Because most starting employees make minimum wage employee turnover is very high. When you walk into Restaurant A. we know how to provide a fresh. These strengths include: an established.Pizza Hut Franchise Utilize the various skills of our Managing Owners and learn through the extensive training programs provided by Franchisor. Strengths are valuable. We will utilize our established staff members to assist in training and developing our new staff members. Last. on the outside as well as the inside of the building. a highly charged competitive environment. fresh ingredients.All Restaurant A stores must utilize the same supply companies that Restaurant A has an established contract. Page 19 . Aluminum track lighting and Restaurant A's award winning art will set the mood.1. It also allows us to examine the opportunities presented to Restaurant A as well as potential threats. 1. These weaknesses include: loss of control due to franchise agreement. Loss of control. experience and friendly staff. We know the customers. Threats that Restaurant A should be aware of include. Restaurant A knows what it takes to build a strong customer base and retain each guest.

Restaurant A is enjoying a first-mover advantage in the local pizza market over other competitors. New customers will want to try Restaurant A to satisfy their dinning needs. If the store exceeds customer expectations then repeat business is definite.1.1. Growing population in the Riverside county area. 2. Restaurant A is committed to getting involved with local churches.3 Marketing Strategy We will start our marketing during each stores re-modeling phase. We will constantly monitor our products to ensure quality food and beverage at all times. and we need to be prepared for their entry into the market. 5.2 Competitive Edge Clearly our competitive edge will be our customer service experience and management approach. fast service and friendly familiar faces. Emerging local competitors. We will be involved in Sales and Marketing. 2.3 Opportunities 1.Pizza Hut Franchise 5. unassuming. We believe that involvement with these institutions will enable our company to be the first thought when customers are thinking about their evening meal. We will gather information about the neighborhoods. growth and potential profits. and highly appreciated. and good natured approach to all of our customers will be evident. Also.4 Threats 1. However. As fuel prices increase more consumers will tend to cut back on discretionary spending which will effective the restaurant industry as a whole including fast-food restaurants. A slowing economy. and that our toppings are fresh and evenly spread over the pizza. schools and groups. Our main factor in success is simply that a person can enjoy a good pizza. made fresh daily. Currently. Our smiling. we will continue to follow Restaurant A's own recipes to ensure that each pizza is delicious. Community Involvement. Many of our programs will be designed to build customer loyalty. 5. additional privately own competitors are on the horizon. and it is our hope that our product quality and exceptional service won't be easily duplicated. • • • • • • • • • Kids school tours Gift Certificate Program Drawings/Give-a-ways Coupons Sporting events for schools and group events Excellent service and high quality food Word of Mouth Restaurant A's own eye catching signage Flyers Page 20 . use our POS system to track top sellers and gather a customer base for marketing offers. A cut in discretionary spending will affect our sales. As the population of Riverside increases so will the demand for fast-food. 5.

5% annually.1 Sales Forecast We are forecasting sales of approximately $16. We will build long-term relationships with our customers. The key to our employee's success in recommending items is the realization that it almost always brings in higher sales and bigger profits. We will constantly watch food quality.317 in our first fiscal year (July 2007 to June 2008) with an opening date of mid-June 2007. We are convinced that our business will increase with time.532. We will sell ourselves as the best neighborhood and community pizzeria 5. even to regular customers.4 Sales Strategy The marketing strategy discussed previously in this business plan will generate the desired sales. We train our staff to always describe and recommend items. however. We have a strong management team and a Restaurant A supervisor who will be on property daily to monitor operations. customer service and expense. ingredients and methods of preparation of all of our foods. We will emphasize service to differentiate ourselves. our forecast is conservative and is based on an average sale of $19. from the scores of "slow delivery". We foresee sales increasing by 6.00 per order. and "your average" pizza pizzerias. We will establish our business offerings as a clear and viable alternative for our target market. becoming their destination of choice for delivery and take out.Pizza Hut Franchise 5. Page 21 . "frozen dough". We required our staff to have a thorough and comprehensive understanding of the menus.4.

377 $4.832 115.25 $0.00 Sales Pizza Chicken Meals Side Dishes Desserts Beverages Total Sales $10.00 FY 2010 $16.571.022.740 579.225.22 FY 2011 $4.861 477.380 $1.858 $308.00 $2.60 $0.650 2.850 $1.40 $0.267 $890.344.172 $49.616.824 $5.699 365.301.030 108.00 $3.158.095.25 $0.791.00 $2.725 $1.560.443.50 $9.334 $1.569 448.762 Unit Sales Pizza Chicken Meals Side Dishes Desserts Beverages Total Unit Sales Direct Unit Costs Pizza Chicken Meals Side Dishes Desserts Beverages Direct Cost of Sales Pizza Chicken Meals Side Dishes Desserts Beverages Subtotal Direct Cost of Sales Page 22 .956 $158.246 $4.207 $4.00 $3.163 421.190 $3.00 FY 2012 $16.948 $52.50 $9.889 $4.004.50 $9.95 $2.95 $2.541 $149.045.404 $3.381.740 $328.130 $5.607.580 131.352 677.708 139.084 $247.300.019.60 $0.468 395.488 683.25 $0.926 2.40 $0.175.646 2.22 FY 2012 $4.711.00 $2.324 $12.222 $3.60 $0.562 $1.40 $0.573 $219.300 $16.22 $3.763 727.235.334 $140.100 $192.291 $1.364 $12.272.865 2.584.025 $55.95 $2.535.00 $3.926 411.826 $1.580.785 $1.195.075.523 $4.657 $947.730 $19.890 721.00 FY 2011 $16.028 $5.00 $2.520 $1.50 $2.084.785.874 $1.467 $1.383 774.496 $127.196 $231.499 $46.272.336 636.Pizza Hut Franchise Table: Sales Forecast Sales Forecast FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 641.957 $204.090 $271.018 $43.292 $17.281 FY 2008 $4.50 $2.124 $349.50 $9.677 Unit Prices Pizza Chicken Meals Side Dishes Desserts Beverages FY 2008 $16.145.720.601.865 386.986 $18.929.574 $3.428.159.25 $0.340 $1.009.691.038.40 $0.50 $2.159.482 $4.22 FY 2010 $4.00 $3.286 123.50 $9.448.50 $2.00 $2.60 $0.323 $131.808 597.60 $0.400 $960.600 320.496 $289.862 $11.314 340.355.95 $2.852 $21.842 $13.918 $3.227 508.835.95 $2.50 $2.22 FY 2009 $4.00 FY 2009 $16.523 825.00 $3.25 $0.40 $0.493 2.

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2 Expense Budget Chart Page 24 . radio and billboard advertisements and allocates those charges to each store based on the market and the amount of sales.5 Marketing Expense Forecast Our marketing expense of the business includes advertising.Pizza Hut Franchise 5. Advertising accounts for 92% of our marketing expense.99 The combination of a large pizza with one side order and drink for $17. We utilize promotion as a way to energize our customers and staff members.99 Other promotions include: • • X-Club Unit Visitation Our give-a-ways include: • • • Raffle: raffling-off a big screen television for those customers that eat at Restaurant A the most.5. A punch card for a FREE pizza and soft drink. Promotions include: • • • The purchase of a large pizza with two side dishes for $17.99 The combination of two large pizzas with two deserts for $19.5. promoting repeat business.1 Expense Budget Table 5. we allocate funds for promotion and give-a-ways. In addition to advertising. Raffle: raffling-off a surround sound stereo system. Each quarter Restaurant A adds up all of the advertising dollars used to produce television. 5. promotion and give-a-ways. Our advertising budget is an expense that is charged to us by Restaurant A as a percent of sales. one per store.

000 $65. and budgets for each.000 $65. Milestones maybe adjusted pending franchisor's agreement and at franchisees discretion.Pizza Hut Franchise 5.6 Milestones The following table lists important store milestones.000 $65.000 $65.000 $65. with dates.000 $65.000 $780.000 $65.000 $65.000 $65.000 Manager Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Shahin Department Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Owner Page 25 .000 $65.000 $65. The milestone schedule emphasizes the timeliness for implementation per the sales and marketing targets listed in the detail in the previous topics. implementation duty. Table: Milestones Milestones Milestone Franchise Pre-approval Business Plan Franchise Approval Store Operations Interview Management Remodel 1st Shop Remodel 2nd Shop Remodel 3rd Shop Remodel 4th Shop Remodel 5th Shop Remodel 6th Shop Remodel 7th Shop Remodel 8th Shop Remodel 9th Shop Remodel 10th Shop Remodel 11th Shop Remodel 12th Shop Totals Start Date 4/1/2007 5/22/2007 6/15/2007 7/15/2007 7/22/2007 9/1/2007 2/1/2008 7/1/2008 12/1/2008 4/1/2009 9/1/2009 2/1/2010 7/1/2010 1/15/2011 6/1/2011 11/1/2011 4/1/2012 End Date 5/1/2007 6/10/2007 7/15/2007 7/22/2007 8/1/2007 12/1/2007 5/1/2008 10/1/2008 3/1/2009 7/1/2009 12/1/2009 5/1/2010 10/1/2010 4/1/2011 9/1/2011 2/1/2012 7/1/2012 Budget $0 $0 $0 $0 $0 $65.

First Owner and Second Owner will remain responsible for the Restaurant A operations. Second Owner will be responsible for the operations of the restaurant B while XXXX will be responsible for the operations of Restaurant A. In addition. 30.Pizza Hut Franchise 6. when weaknesses have been documented. In addition. 45 and 90-day evaluation. To ensure established management team is effective and will meet our expectations.0 Management Summary Management Team Restaurant A is a franchise and has an established management team already in place in each unit. we will evaluate each manager associate with a 15. if for example. Plan A Our management plan includes First Owner responsible for both Restaurant A and Restaurant B. The owner and the new management team of the franchise have years of experience and education in the restaurant industry. Each manager will oversee the operations of each company reviewing the effectiveness of all managers and their crew. we will work with the management associate to help further develop their management style with additional training and development. Plan B If the management coach or general manager do not meet Restaurant A or our expectations then XXXX will be responsible for the daily operations of the Restaurant B business. a management associates does not meet our expectations and we have provided all of the training possible then we will terminate the management associate. Of course. First Owner Page 26 . Evaluations allow management associates to observe any potential weakness in the management style of the associate and redirect them into a successful career. Restaurant A will provide an on-site management team member that will support our new ownership allowing for transition ease.

In addition to our extensive customer service training program. We plan to assess our management team to locate weakness within each individual associate and help develop their skills.000US tip after providing a customer with excellence service. Second Manager Second managers education. we will train and develop these associates to exceed Restaurant A’s already awarding winning customer service. We will use Restaurant A's personnel strategies and skills to create our own success in Restaurant A with established and new hire associates. Our management team will assist our crew staff by developing their knowledge of menu items while developing their energized. Second Owner Second Owners education and experience have been omitted. enthusiastic personalities to better assist customers with their meal decisions.Pizza Hut Franchise First Owners education and experience have been omitted. Below you will find an outline of our management team and crew. We plan to assess our management team to locate weakness within each individual associate and help develop their skills. we will hire the secret shopper service to ensure that all associates are giving customers exceptional 6. enthusiastic personalities to better assist customers with their meal decisions. This example is no exception. In addition to our extensive customer service training program. First Manager First managers education. Crew Associates We plan to duplicate and massage the successful formula used by the Restaurant A Franchisor.1 Personnel Plan Periodically we receive feedback from customers rewarding associates for their outstanding customer service ability.Support) Second Manager (Office Manager) Page 27 . The program is geared to raise the level of customer service awareness while improving the service to customers. The XXXXX Program will be incorporated into our current training program for new hires and established associates. The name of the associate is (has been omited) and we have decided to reward her by implementing a new program in honor of her name. Furthermore.Owner) First Manager (Restaurant B . Each new hire will be sent to one of the four units that will be designated as training facilities where they will develop their customer service skills. Each new hire will be sent to one of the four units that will be designated as training facilities where they will develop their customer service skills. Our management team will assist our crew staff by developing their knowledge of menu items while developing their energized. the XXXXX Program. Administrative First Owner (Owner) Second Owner (Partner . we will train and develop these associates to exceed Restaurant A’s already awarding winning customer service. experience and training have been omitted. We plan to duplicate and massage the successful formula used by the Restaurant A Franchisor. We will use Restaurant A's personnel strategies and skills to create our own success in Restaurant A with established and new hire associates. Furthermore. one of Restaurant A's associates received a $10. experience and training have been omitted. we will hire the secret shopper service to ensure that all associates are giving customers exceptional customer service.

293. and control supplies will help keep costs down.658.789 $1.0 Financial Plan Our main concerns will be aggressive time management to keep labor costs under control.1 Start-up Funding Restaurant A Franchise start-up costs are detailed below.002 276 FY 2010 $0 $0 $706.070.404 $736.039.050 7.205 $6.678 $673. investor capital and merchant loans.449 $979.Pizza Hut Franchise Restaurant Management Team Shift Manager Crew The Personnel Plan chart.109 $3.102.648 $694. Growth will be sustained through increased sales.104. 7. Table: Personnel Personnel Plan Shahin (Owner) Partner Management Team Shift Manager Crew Pay Bonus/Benefits/Taxes/Other Total People FY 2008 $0 $0 $665.003.333.614 276 FY 2009 $0 $0 $685.218 $714.892 $3.451 $5.198.828. in the Start-up Table.226 $758.641 $5.014.633 $5.493.882 $1. Proper purchasing.380 $3.009.392. food preparation and handling.932 $3. Page 28 . The following table shows how these start-up costs will be funded by owner.451 276 FY 2012 $0 $0 $749. reflects how we will utilize our people's assets.564 276 Total Payroll $5. below.471 $3.029 $1.970 $1.272 276 FY 2011 $0 $0 $727.

fresh food. We assume of course that there are no unforeseen equipment problems or damages. and good management practices. experienced and well trained to satisfy the needs of customers. 5. We assume by using marketing strategies. 2.535. open for at least 360 days. We assume that the current staff at each location is highly energized.432 $1.484 $45.432 $692. we would have to sell roughly 11.484 7.862 in the first year. In order to meet the net sales of $16.973 pizzas per week with a $17 per pizza average.030 per store (15 units). 6.432 $1.484 Loss at Start-up (Start-up Expenses) Total Capital ($405. sales strategies. we will succeed.000 $647.097.432 Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities $0 $0 $0 $0 $0 Capital Planned Investment Owner Investor Additional Investment Requirement Total Planned Investment $0 $0 $1. 4.097. Some months will increase and others decrease.432 $0 $647. as Riverside county area restaurant are busy all year round.Pizza Hut Franchise Table: Start-up Funding 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 $405.484 $1.2 Important Assumptions We are projecting profit based on the performance of other franchises and our own judgment based on the following: 1.097. 3.052) $692.432 Total Capital and Liabilities Total Funding $692. Our sales each day should reach a minimum average of $3. Our forecast is based on an average of fifteen stores.052 $692. good customer relationships. Page 29 .097. We do not predict any major decreases in sales.

Our overall average of $1.469 per month.176 $1. we assume running costs of approximately $853. however.531 $8.165. we will anticipate growth as our franchise ages. according to these assumptions. and an estimation of other running costs. This is about half of our planned 2008 sales level. royalties and utilities.3 Break-even Analysis For our break-even analysis.165. which includes our full payroll.531 per month to break even.16 $853. Margins are harder to assume. at our present run rate. rent.Pizza Hut Franchise 7.367 is based on projections for the coming year and is based on all fifteen stores in option 1. is only about $444.395 per month.010.395 Page 30 . The chart shows that we need to sell about $1. Table: Break-even Analysis Break-even Analysis Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 144. Payroll alone.08 $2. We hope to attain a margin that high in the future.

803 $986.184 $628.790 73. royalty fees of 6% of gross sales.344.700.007 $0 $0 $79.762 Gross Margin Gross Margin % $12.27% $1. payroll charges.614 $986.179 -----------$11.514 estimated per month.458 73.153 $609.453 $171. Delivery Expense Cash Loss Vending Income Tax Cred/Insur Claims Other Controllables Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales Page 31 .393 $654. equipment rental and repair. • • • • The first month may have higher payroll due to additional employee training and ownership conversion.365.377 FY 2012 $21.1% of gross sales.760.042.862 -----------$10.019.929.448 $951.658.171 $4.531. administrative charges including cash loss.535.112 $0 $560.4 Projected Profit and Loss As the profit and loss table shows.691.833.903 $3.859.377 $0 -----------$5.918 $0 -----------$4.220.516 $137. Table: Profit and Loss Pro Forma Profit and Loss Cost of Goods Sold FY 2008 $16.818.576 11. annually.862 $4. Remodeling of established restaurants will impact the P&L statement 1 .328 $3.344.19% $14.711.641 $919.009.2 %.384.878 $675.918 FY 2010 $18.82% $2. We predicted a conservative 6.762 $0 -----------$5.60% $2.464 73.760 $2.887 $5.943.184 $616.719 $2.574 FY 2011 $19.313 $0 $0 $89.18% $13.428.355 $6.366 $153.861 $1.333 $0 $698.573 $655.279.107.281 $5.102 $129.704 7.404 $0 -----------$4.998.055.240.451 $979.457 $0 $1.300 $157.22% $12.574 $0 -----------$5.251 $29.18% $5.755 $557.493.182.290 $541.690 $919.184 $592.457 -----------$10.786. delivery expenses and other operating controllables are projected to be 36.665 -----------$10.439 $29.019.225.428.585.696 $149.669 $591.782 $192.445 -----------$11.614 $0 $0 $71.629.590.184 $586.019.050 $1.00% Sales Direct Costs of Goods Other Costs of Goods Expenses Payroll Marketing/Promotion Depreciation Rent Royalties Utilities & Phone Operating Supplies RGM Repairs & Maint.324 $4.026 $716.183 $31.364 $5.691.519 73.003.866.742 $986.219 $0 $0 $100.542 $574.780 $127.866.90% $1.337 $1.333.404 FY 2009 $17.2% of gross annual sales.842 $5.571.983.606 $984.720.646 $5.208 $0 $1.18% $15.109 $3.739 $5.533 $4.732 10.168 $986.711.533.583 $0 $0 $63.205 $1.1%.828.016 $3.213 $28.348 $695. Our operating expenses include rent at $54. Marketing fees are 5.955 $1.406 73.227 13.781 $0 $850.355.432 9.184 $604.Pizza Hut Franchise 7.166 $135.327.110. utilities projected at 5.182 $2.633 $869. option 1 stores expect to continue its steady growth in profitability over the next three years.300 $142.5% increase in sales through 2017.306.489 $30.478 $986.647 $1.

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Pizza Hut Franchise Page 33 .

862 $17.466 by 2012.674.353 $1.208 $0 $0 $0 $16.409.731 $0 $0 $0 $0 $0 $0 $18.554.691.221 $2. Table: Cash Flow Pro Forma Cash Flow FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $16.324 $18.243. VAT.244 $0 $0 $0 $18. remodeling of established restaurants will affect the cash flow by 3 .822.620 $0 $0 $0 $17.687 $5.387 $1.571.698.497.333.029 $0 $0 $0 $0 $0 $0 $20.387 $1.726.592 $15.828.3% or $11.629 $1.381 $15. We do not predict any new financing until we open more franchise units.233 $5.365 $2.242 $3. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax. Our projected net cash flow will increase by 79.571. and accounts receivable management. VAT.706 $1.536.050 $11. however.322.093.977.923.993 $0 $0 $0 $0 $0 $0 $21.521 $1.129 $11. inventory turnover.896.720.298.540.974.101.217.515.022 $0 $0 $0 $0 $0 $0 $17.220.658.718.225.597 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $15.324 $17.726.113 $3.929.535.574 $17. annually.842 $19.594.720. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance Page 34 .281 $21.524.523 $3.281 $1.5%.356.751.054 $14.869 $1.491.451 $10.082 $15.229 $0 $0 $0 $0 $0 $0 $22.099 $0 $0 $0 $19.746 $6.007.003.225.400.364 $19.143.5 Projected Cash Flow The cash flow depends on assumptions for good daily operational management.322.862 $16.541 $16.410 $5.633 $8.364 $18.620.Pizza Hut Franchise 7.588.381. good traffic counts in the restaurants.406.748 $8.405. payment days.412 $1.832 $5.858.183.303 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $5.314.493.955 $2.929.624 $1.842 $21.324 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax.641 $9.535.205 $10.

324 and we do not project any real trouble meeting our debt obligations--as long as we can achieve our specific sales objectives.085.556 by 2012.1% or $7.6 Projected Balance Sheet The balance sheet is quite solid. Page 35 .Pizza Hut Franchise 7.490. Our projected net worth will increase by 81. While our projected assets are expected to increase by 73% or $7.487. a decrease is also expected to affect our liabilities by 6% or $61.

135 ($1.628.725 $11.183.728.192) $8.999.493 $8.Pizza Hut Franchise Table: Balance Sheet Pro Forma Balance Sheet FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $3.488 $0 $16.7 Business Ratios The company's projected business ratios are provided in the following table.567 $1.432 $3.612.628.966 $2.324 $914.052) $1.564 $0 $9.426.967.103 $2.000.192 $4.218 ($919.612.484 $6.242 $858.652 $1. shows ratios for the "Pizza Restaurant Industry".218) $11.960 $853.297.870.491 $0 $976.833 $8.976.097.097.097.876 $1.844) $6.527 ($2.484 $2.355.704 $1.667 $833.732 $5.573 $0 $3.718.884 $885.567 $5.931 $0 $25.875.918 $942.870.136 $1.393) $2.855.728.491 Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital $1.930. The final column.534 $911.344 $976.983.917 $15.135 $4.365 $757.000 to 24.674 $0 $12.651 $0 $8.484 $4.976.147 $0 $32.097.650 $0 $19.097.531.702.760.879.426.812 $0 $0 $0 $0 $0 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 $919.528 $5.113 $806.392 $2.515.540.393 $1.299 $7.999.855.484 ($405.306.999.465.844 $3.594 Net Worth $1.896.895. Industry Profile.849 $974.879.930.129 $0 $6.754.321.465.833 ($3.849 $0 $974.999.967.702.960 $0 $853.815 $2. Page 36 .966) $4.348 $784.293 $0 $13.083 $1.227 $10.955 $711.725 ($4.527 $6.103 Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities 7.299 $1.999 $797.999 $0 $797.876 $10.484 $901.870.576 $7.534 $0 $911.136 $3.514.632.677 $11. as determined by the Standard Industry Classification 311991 SIC 2099 with annual sales of $10.629.594 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $968.875.

00% 130.13 8.918.42 12.23% 16.83% 13.09% 6.23% 18.00% 13.27% -42.42 12.07 16.00% 32.49 1.27% 42.143 0.89% -30.80% 10.18 33% 3.00% 25.17 29 1.23% 15.529 0.17% 18.a 0.22 1.05 10.81 n. General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.658.25% 5.32% 63.90% 17.00 $5.26% 6.11 1.00% 17.23% 37.00% 73.00% 73.99 3.20% 50.46% 6.76% 33.50% Industry Profile 6.00% 73.69% 1.00 9.18% 100.22% FY 2008 7.19% 100.50 0.15 1.27% 0.33% 0.51% 65.55 8% 16.94 4.17 34 3.95 27 5.17% 100.64% -43.a n.00% 8.27% 89.34 0.17 29 2.00 0.01% 25.68 66.00 $11.00% 7.68% 23. 0.10% 0.068 $15.64% 100.05 2.Pizza Hut Franchise Table: Ratios Ratio Analysis FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 0.a n.00 0.47% 0.86% 43.81% 0.56 6.97% 13.13% 100.18% 100.59% 10.73% n.53% 3.27% 100.91% 62.a n.36% 60.03% 0.90% 65.92 9.45 10% 13.00% 18.18% 10.a n.00% 73.56% FY 2012 13.a Debt Ratios Debt to Net Worth Current Liab.88% 52.00 0.89% 100.90 6.a $2.00% 12.99 13.21 0.15% 52.20% 86.26% 11.85% 56.321 0.72% 7.31% 100.14% 5.35 13% 9.29% 25. to Liab.67% 0.13% -42.00% 144.00 n.499.36% FY 2009 9.a n.60% 35.26 32.38% 62.59% 61.a n.00 0.a Page 37 .29% 5.54% 6.23% 13.88% 5.a Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover 8.00 0.468.58% 0.35% FY 2011 11.00% 20.27% 44.98 0.84 0.533 0.42 12.a n.40% 2.24 6.18% 100.00 0.97 6.20% 0.22% 100.09 1.83% 93.843.00% 73.67% 31.00% 12.49% 43.13 1.00 $8.00% 142.98 13.00% 6.00% 142.00 Sales Growth Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling.82% 29.00 n.83% 0.a n.25 18% 6.03% 64.00 n.17% -44.91% FY 2010 10.69% 47.33% 36.91% 0.14% 100.00% 10.a n.00% 143.27 0.00% 9.00% 32.42 12.78% 5.80% 1.26 8.00 0.33% 91.89 6.a n.73% 8.83% 67.17 29 2.98 3.00 0.03% 81.94 18.

225. 596 $5. 924 $6.534 0 FY 2011 $19.478.1 $3. 464 FY 2012 $21.720.612.639. ($4. $10.859. 474 $7.321. 790 73.9 04 18 $12.19% $10. 869 $7.115. We believe that our 35% new customer rate for current growth is a conservative figure and should expand at a much faster rate by 2017.6 93 77 ($1.7 $2. 610 $7.604.287.Pizza Hut Franchise 7.287.963. Our focus will be in markets that we are not currently represented and see growth potential. 350 FY 2017 $29.983.18% 73.531.880.780.983.533.8 07 $21.0 87 $46.2 76 27 $12. We provide high quality food at a value. 663 $6.5 74 $13.754.359.019. 519 73.5 28 ($919.5 35 $6.688. 569 $7.875.7 04 $3. 176 $12.327. 646 887 $2.7 32 32 $6. 862 324 $4. 667 Page 38 .535.711. We plan on opening new units as early as 2009 after all established stores have been remodel. our plan includes an aggressive new store development as we grow as a franchise. 458 406 73.875.728.884.330.930.943.403.2 60 $19.18% 73.074.6 01 $3. more customers will find our pizza and other products of high quality.355.700. 179 $11. Table: Long-term Long-term Sales Cost of Sales Gross Margin Gross Margin % Operating Expenses Operating Income Net Income Current Assets Long-term Assets Current Liabilities Long-term Liabilities Equity FY 2008 FY 2009 $16.895.455.504. $16.96 $853.833. 364 $5.792.344. 355 337 $3.629.5 84 $37.866.20% $11. 197 FY 2014 $24. will continue to flourish combine with our new customers.18% FY 2010 $18.18% 73.5 36 67 $5.18% 73. 859 $12.6 92 $30. 966) 844) $797.938. We believe that combine with a constant growth rate and growing economy. 949 $0 $0 $0 $0 $1.763.7 27 $16. 244 $6.491 9 $10. Our repeat business. $11.1 09 82 $2. $17.691.220.7 81 $5.8 Long-term Plan Our long term goal is to increase sales and profits with continued growth through year 2017. ($2.019.7 62 $15. 103 FY 2013 $22.107.7 19 $1.080. 281 $5.999.297.18% 73. 917 812 ($3.0 83 $24.365.22% $10.8 42 $4. 739 $1.898.585.647.305.3 77 $14.560. $12. 842 $5.855.618. 708 FY 2016 $27.4 $1. 101 $11.760.2 192) 18) $911.5 $2.4 $9. 070 $6. 132 $8.061.2 99 $7.18% 73.8 39 $4. 505 FY 2015 $25.929.7 39 $17.428.4 $4.590.3 62 $18.39 3) $976.571.604.543.870. In addition.632.306.184.240.99 9 $0 73.9 60 03 $1.628.322.8 76 $10.967.4 35 $57.84 $974.1 $3.866. which accounts for 65% of our sales.319.

Pizza Hut Franchise Page 39 .

009.381.650 $127.160 18.613 $14.858 $308.084 $247.324 $12.470 193.616.084.657 $947.845 $20.564 $55.00% 25.140 $187.080 10.320 34.018 $43.656 $193.50 $9.820 33.00 $3.280 22.25 $0.496 $127.00 $2.400 59.270.00% 16.845 $10.736 $7.562 $1.40 $0.720 24.00 Dec $16.861 477.918 $3.201 $74.468 395.842 $2.095.50 $9.40 $0.332 $255.195.100 $192.40 $0.573 $219.296 $3.063 $294.159.60 $0.25 $0.500 $1.25 $0.569 448.600 320.160 $371.380 $54.538.688 $3.22 FY 2009 $4.970 $251.00 $2.820 $14.00 $2.00 $3.590 $408.00 FY 2012 $16.020 6.00 Mar $16.784.580 $86.25 $0.480 9.500 154.60 $0.95 $2.190.360 43.880 11.40 $0.60 $0.60 $0.184 $11.499 $46.95 $2.00 FY 2011 $16.768 $277.00 $3.60 $0.500 $16.22 Aug $4.25 $0.Appendix Table: Sales Forecast Sales Forecast Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 63.40 $0.780 39.141 $328.350 $10.440 59.225.520 $1.926 2.840 35.25 $0.60 $0.785 $1.246 $4.500 $63.00 Oct $16.22 FY 2008 $4.314 340.560 $13.00 $3.130 $5.60 $0.128 $24.920 24.480 $838.50 $2.00 Jun $16.25 $0.889 $4.586 $274.280 $73.560 55.591 $62.850 50.172 $49.00 $3.00 $3.030 108.929.400 $87.50 $2.95 $2.467 $1.088 $3.280 $82.355.00 Sep $16.00 FY 2008 $16.005 $474.628.196 $231.200 $79.22 Oct $4.607.40 $0.50 $9.510 $122.380 $1.865 386.25 $0.25 $0.601.25 $0.075.842 $46.580 131.370 $342.045.491 $261.00 $3.50 $9.050 24.019.490 46.00 $3.00 $2.95 $2.650 2.820 $21.00 $3.600 $115.910 61.890 721.22 $313.320 $19.00 $2.582.791.541 $149.00 $2.40 $0.000 28.390 $890.00 $2.986 $18.832 115.100 $22.280 $4.535.816 $3.050 119.850 $1.965 $209.00 Feb $16.160 20.00 $2.00 $2.390 40.977 $102.920 46.880 39.00 $3.890 66.560 $1.00 $2.168 $10.038.736 $3.25 $0.811 $85.272.60 $0.203 $424.40 $0.744 $9.00 May $16.430 $980.680 $18.488 683.696 $10.028 $5.50 $2.50 $2.990 205.820 18.054.40 $0.300 $16.848 $4.842 $13.862 $11.533 $100.50 $2.50 $9.190 $3.852 $21.50 $9.25 $0.267 $890.50 $9.228 $82.381.124 $349.50 $9.450 $73.826 $1.00 $3.240 $26.00 $2.50 $9.25 $0.100 $70.50 $2.691.360 9.763 727.708 139.272.880 $221.570 $341.620 $199.240 48.95 $2.400 $1.160 9.22 Mar $4.00 $3.000 $84.740 579.50 $2.019.364 $12.336 636.480 $23.208 42.40 $0.00% 11.560.096.60 $0.360 $1.025 $55.00 $2.630 $228.420 40.50 $2.824 $5.923 $76.740 $328.580.00 $3.022.598 $251.22 May $4.50 $2.95 $2.785.95 $2.50 $9.163 421.948 $201.730 $19.750 207.704 $412.460 45.22 Apr $4.334 $1.22 Nov $4.207 $4.60 $0.159.40 $0.50 $9.00 FY 2009 $16.344.890 55.428.811 $89.800 11.800 $92.835.60 $0.286 123.956 $158.677 Unit Prices Pizza Chicken Meals Side Dishes Desserts Beverages Jul $16.22 Jan $4.220 $3.920 36.00 $2.560 42.523 825.200 190.00% Page 40 .291 $1.500 $119.500 53.070 $16.936 $12.710 $10.880 $1.95 $2.50 $2.302 $318.762 Unit Sales Pizza Chicken Meals Side Dishes Desserts Beverages Total Unit Sales Direct Unit Costs Pizza Chicken Meals Side Dishes Desserts Beverages Direct Cost of Sales Pizza Chicken Meals Side Dishes Desserts Beverages Subtotal Direct Cost of Sales 56% 10% 7% 4% 24% 30.571.019.960 53.045.323 $131.574 $3.100 $97.95 $2.222 $3.383 774.646 2.855 $13.227 508.070 7.738 $282.380 22.725 $1.032.090 $1.301.400 $28.60 $0.377 $4.250 641.464 $3.286 $49.480 7.50 $2.900 $84.95 $2.980 32.404 $3.158.000 $1.090 $271.808 597.352 677.758 $434.679 $380.22 Feb $4.440 $19.948 $52.95 $2.552 $8.860 63.440 $56.22 FY 2012 $4.40 $0.681.300.699 365.50 $9.700 8.004.280 $109.620 28.060 $17.874 $1.60 $0.865 2.50 $2.50 $2.620 $1.320 $1.310 $1.744 $14.440 36.940 $1.528 $4.22 FY 2011 $4.00 $3.720 131.711.060 $761.780 38.395 $17.440 $23.60 $0.292 $17.60 $0.25 $0.913 $305.00 FY 2010 $16.049 $305.95 $2.40 $0.957 $204.540 34.25 $0.310 124.95 $2.50 $2.660 228.640 $29.50 $9.00 Apr $16.40 $0.443.420 $66.840 57.920 27.100 $974.145 $448.340 $1.410 $306.22 Sep $4.300 $68.130 $671.448.926 411.50 $9.416.25 $0.95 $2.281 Jul $4.950 $916.00 Jan $16.95 $2.720.560 7.080 $1.808 28.080 $24.00 $3.00 $2.740 39.900 $106.900 61.400 $51.50 $9.50 $9.95 $2.496 $289.180 168.224 $12.482 $4.632 $697.210 $18.40 $0.40 $0.00 $3.440 $1.860 $11.00% 20.334 $140.180 27.440 7.175.380 $100.145.22 FY 2010 $4.024 $9.400 $960.00 Nov $16.00 $3.400 $110.00 $2.235.760 $331.584.50 $2.382 $3.670 $296.50 $2.60 $0.493 2.50 $2.280 148.40 $0.00 $2.00 Aug $16.370 $359.22 Jun $4.00 $2.540 171.60 $0.340 44.928 $7.980 $1.212 $2.523 $4.473 $267.95 $2.800 $646.50 $9.25 $0.00 Sales Pizza Chicken Meals Side Dishes Desserts Beverages Total Sales $1.110 $401.600 17.22 Dec $4.

957 $24.029 $1.927 $52.425 $559.678 $673.641 $5.449 $979.672 $316.014.648 $694.733 276 May $0 $0 $73.789 $1.710 $60.226 $758.205 $6.127 $102.493.002 276 FY 2010 $0 $0 $706.970 $1.380 $3.293.676 276 Nov $0 $0 $29.009.499 $579.109 $3.882 $1.740 $186.828.Appendix Table: Personnel Personnel Plan Shahin (Owner) Partner Management Team Shift Manager Crew Pay Bonus/Benefits/Taxes/Other Total People Total Payroll 0% 0% 0% 0% 0% 0% Jul $0 $0 $69.295 $73.644 $191.416 276 Mar $0 $0 $61.342 $589.451 276 FY 2012 $0 $0 $749.165 $139.810 $70.050 Page 41 .308 $90.146 $76.103 276 FY 2008 $0 $0 $665.406 $45.303 276 Feb $0 $0 $51.621 $369.392.616 276 Oct $0 $0 $41.382 $106.047 $653.568 $235.564 276 $553.255 $482.892 $3.518 $74.102.442 276 Apr $0 $0 $69.458 $62.057 $492.189 276 Jun $0 $0 $81.633 $5.390 276 Sep $0 $0 $60.255 276 Jan $0 $0 $30.932 $3.688 $88.188 $327.949 $246.614 $82.482 $330.785 $31.357 $238.404 $736.961 $272.917 $108.333.471 $3.917 $5.423 $332.217 $278.876 $43.658.252 $108.152 $134.485 $35.039.451 $5.081 $69.933 $312.825 $101.659 $416.198.614 276 FY 2009 $0 $0 $685.003.231 $41.831 276 Dec $0 $0 $23.218 $714.070.217 $60.104.579 $120.785 $30.660 276 Aug $0 $0 $72.272 276 FY 2011 $0 $0 $727.

42% $12.60% $2.700.333 $0 $698.542 $574.063 Apr $1.950 $104.762 Gross Margin Gross Margin % $1.14% $170.062.09% $772.060 $277.656 $0 -----------$282.144 $278.781 $0 $850.377 $0 -----------$5.861 $1.760 $2.227 13.790 $100.19% $14.524 $1.232.965 Nov $1.158.182 $63.300 $157.641 $919.493 $559.182 $27.Appendix Table: Profit and Loss Pro Forma Profit and Loss Cost of Goods Sold Jul $1.627 $0 $0 $8.514 $82.018.055.182.866.080.782 $3.184 $592.327.586 $0 -----------$424.00% 1.251 $29.281 $5.182 $36.828.814 $0 $28.047 $90.948 Jan $1.054.291 7.10% $871.143 14.669 $591.041 $58.531.065 $0 $0 $2.687 $5.533.536 $13.049 $0 -----------$412.574 $4.225.586 Sep $1. Delivery Expense Cash Loss Vending Income Tax Cred/Insur Claims Other Controllables Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales 5.102 $129.800 $82.582 -----------$1.590.300 $54.514 $82.204 $155.630 $0 -----------$277.003.711.393 $654.267 $0 $0 $7.342 $71.242 $54.447 $653.116 $0 $32.129 -----------$911.43% $166.628.483 $214.878 $675.21% $152.514 $82.650 $56.529 $5.182 $281.328 $3.514 $82.384.800 $282.614 $986.633 $869.300 $142.872 $8.184 $586.451 $979.667 73.213 $28.711.279.457 $0 $1.337 $177.168 $3.355 $6.658.833.18% $13.070 $0 $0 $7.795 4.34% $1.255 $89.893 $13.035.050 $54.862 $0 $37.457 -----------$10.18% $15.126.364 73.363 $217.264 $0 $30.514 $82.18% $553.935 6.208 $0 $1.406 73.463 -----------$1.731 $0 $0 $5.887 $5.773 $9.776 $3.049 May $1.344.357 $69.750 $84.182 $53.031 $1.219 $0 $0 $100.732 10.313 $0 $0 $89.054.669 $54.404 FY 2009 $17.127 $492.74% $59.00% 1.727 $13.574 FY 2011 $19.823 -----------$537.962 $2.144 73.050 $1.785 $24.009 $259.216 $253.377 FY 2012 $21.979 $25.799 $1.23% $86.103 $0 $0 $6.179 -----------$11.629.184 $628.473 Mar $1.117 $222.516 $137.917 73.310.514 $82.430 73.790 73.240.354 18.960 $95.306.258 $300.169 73.598 -----------$458.862 -----------$10.22% $12.22% $1.355.429 -----------$1.083 $416.722 $109.89% $76.878 $5.913 Aug $1.762 $0 -----------$5.430 $371.482 $76.00% 3.928 $191.182 $61.859.646 $5.182 $45.574 $0 -----------$5.368 $0 $0 $2.514 $82.150 $40.435 -----------$1.165 $286.82% $2.080 $70.955 $124.22% 3.193 $243.99% $70.600 $482.614 $0 $0 $71.612 5.366 $153.480 $380.324 $4.838 $54.943.019.288 $54.918 $0 -----------$4.489 $30.761 $3.850 $112.498 $11.851 $66.182 73.514 $82.632 $341.922 -----------$684.283 -----------$534.514 $82.742 $986.365.690 $919.110.290 $541.571.182 $21.710 $474.915 $10.000 $100.11% $754.559 $56.010.719 $2.74% $177.493.882 73.971 $2.109 $3.859 $0 $53.696 $48.618 $579.681.250 $42.514 $82.18% $1.983.691.085 $42.598 $0 -----------$380.691.739 $5.026 $716.353 4.344.831 73.078 $0 $25.606 4.653 $19.478 $986.019.458 73.416.819 $246.183 $31.425 $59.041 $0 $32.432 9.10% 3.112 $0 $560.665 -----------$10.499 $105.081 $11.105 $0 $71.448 $951.948 $0 -----------$261.606 $984.786.037 $14.582.464 73.364 $5.670 13.613 -----------$1.650 $0 $34.729 $206.251 $0 $76.00% Sales Direct Costs of Goods Other Costs of Goods Expenses Payroll Marketing/Promotion Depreciation Rent Royalties Utilities & Phone Operating Supplies RGM Repairs & Maint.308 $0 $0 $3.866.177 73.918 FY 2010 $18.804 $14.610 $0 $65.889 $54.860 4.268 $191.450 $96.535.190.439 $29.221 $2.382 $0 -----------$474.764 $124.453 $171.182 $54.479 $1.832 $0 $0 $3.573 $655.473 $0 -----------$318.689 $330.107.263 $54.009.704 -----------$787.800 $32.949 $43.519 73.814 $237.803 $986.514 $82.200.656 Dec $974.784.213 $0 $0 $7.950 $424.553 $589.585.90% $1.928 $54.278 $113.903 $3.032.11% $75.051 15.184 $604.217 $1.576 11.390 $318.39% $67.344 $7.130 $261.310 $434.818.853 $238.153 $609.168 $986.220.929.367 73.141 $0 -----------$434.862 $4.704 7.090 $448.998.559 $95.184 $616.117 $4.755 $557.348 $695.27% $1.328 73.647 $1.428.194.254 $5.166 $135.262 $204.804 $14.514 $82.190 $13.937 $49.659 $43.941 $15.676 $0 $0 $5.381.329 $13.205 $1.171 $4.182 $64.30% $1.874 $108.333.428.347 $84.880 $412.063 $0 -----------$371.141 Jun $1.279 $59.382 FY 2008 $16.390 $54.182 $26.270.019.008 $33.136 $5.13% $928.917 $115.016 $3.007 $0 $0 $79.14% $1.696 $149.888 $54.182 $71.323 $0 $0 $2.437 $185.780 $127.760.93% $79.842 $5.630 Feb $1.583 $0 $0 $63.417 $56.035 4.182 $60.25% $1.057 $50.684 -----------$909.359 $3.644 $53.31% $1.735 $11.00% 6.533 $4.598 Oct $1.940 $2.583 $15.648 $54.042.913 $0 -----------$448.965 $0 -----------$341.720.782 $192.174 $11.20% $712.00% 0% 0% 0% 0% 0% Page 42 .404 $0 -----------$4.462 $0 $73.445 -----------$11.538.

815.825 $230.418.575 $0 $0 $0 $0 $0 $0 $1.381 $15.493.430 $1.917 $895.281 $21.550 $87.854 $111.060 $0 $0 $0 $0 $0 $0 $1.181 $653.425 $709.261 $2.054.270.189 $1.955 $2.591.709.859 $1.523 $3.597 $1.624 $129.923.122 $0 $0 $0 $980.113 $589.390 $1.190.100 $91.Appendix Table: Cash Flow Pro Forma Cash Flow Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $1.535.412 $1.281 $134.908 $191.322.538.848 $2.755 $248.451 $10.480 $1.990 $416.318 $101.123 $166.520 $1.669 $257.515 $889.945 $559.841 $3.955 $2.381.221 $1.183.941 $712.625 $0 $0 $0 $0 $0 $0 $1.515.974.758.615.588.406.114 $230.374.027.235 $2.930 $82.225.921 $0 $0 $0 $1.270.032.358.119.416.310 $1.032.244 $0 $0 $0 $18.353 $1.726.925 $1.798 $0 $0 $0 $0 $0 $0 $1.430 $1.310 $1.953.022 $0 $0 $0 $0 $0 $0 $1.150 $98.681.201.224.574 $17.529.485.070 $2.832 $5.387 $1.621 $0 $0 $0 $0 $0 $0 $1.205 $10.291 ($504.828.862 $17.054 $14.592 $15.220.577 $0 $0 $0 $0 $0 $0 $1.500 $134.880 $1.003.184 $0 $0 $0 $0 $0 $0 $1.314.303 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $553.691.402 $147.101.629 $0 $0 $0 $1.324 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax.632 $1.582.265 $142.777 $1.514 $123.822.231 $110.090 $1.869 $1.322.480 $1.190.565 $95.661.710 $1.632 $1.079 $330.134 $1.710 $16.993 $0 $0 $0 $0 $0 $0 $21. VAT.390 $0 $0 $0 $1.950 $1.114.503.130 $974.861 $112.610.324 $17.115.357 $696.929.629 $1.808 $132.729.540.217.300.799 $0 $0 $0 $1.720.050 $11.536.773 $0 $0 $0 $1.521 $1.081.718.082 $15.387 $1.646 $0 $0 $0 $15.950 $1.751.731 $0 $0 $0 $0 $0 $0 $18.390 $1.022.364 $19.586 $0 $0 $0 $0 $0 $0 $1.977.208 $0 $0 $0 $16.130 $1.571.331 $789.242 $3.377 $0 $0 $0 $1.896.324 $18.549.00% Page 43 .698.333.641 $9.658.583 $0 $0 $0 $1.842 $19.633 $8.409.047 $870.482 $800.060 $1.497.169 $1.597 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $733.060 $165.159 $191.365 $2.146 $2.283 $0 $0 $0 $0 $0 $0 $1.459.243.487 $0 $0 $0 $0 $0 $0 $17.283.628.651 $84.253.535.082.720.029 $0 $0 $0 $0 $0 $0 $20.060 $1.991 $2. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance 8.628.233 $5.582.057 $617.990 $0 $0 $0 $884.774.491.113 $3.400.524.718 $0 $0 $0 $2.990 $0 $0 $0 $0 $0 $0 $1.636 $113.411 $579.880 $1.929.255 $1.322 $238.384 $77.516 $482.356.033.944 $0 $0 $0 $0 $0 $0 $1.706 $1.457 $5.100 $94.800 $1.487 $126.687 $5.093.052.342 $814.791) $1.949 $520.214.890 $246.160 $1.143.541 $16.594.364 $18.307 $131.620.405.858.259 $0 $0 $0 $803.372.771 $1.395.110 $130.912 $604.538.090 $1.099 $0 $0 $0 $19.229 $0 $0 $0 $0 $0 $0 $22.927.659 $543.842 $21.566 $1.054 $176.784.381. VAT.400 $86.786.410 $5.784.285.696.681.381.183.620 $0 $0 $0 $17.139.540 $1.800 $91.674.054.499 $50.225.965 $1.129 $11.571.644 $650.830 $158.746 $6.726.623 $492. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax.862 $16.554.491.800 $974.069 $2.416.007.748 $8.

336 $1.786.484 ($405.132 $0 $633.147 $0 $0 $5.528 $3.651 $0 $784.484 ($405.445 $0 $2.976.052) $1.770 $0 $517.387 $0 $855.276 $1.465.000 $0 $692.002.729.976.350 $283.766.677 $11.514.628.263 $2.404.506 $2.888 $0 $674.632.426.573 $0 $3.888 $674.097.432 $45.444) $2.637 $777.423 $0 $785.183.135 ($919.052) $448.097.136 $1.135 $4.564 $0 $9.052) $1.484 ($405.174 $2.484 $2.481.307.650 $0 $885.768 $1.844) $6.637 $0 $777.704 $1.818.636.697.224.895.444 $455.725 $11.646.348 $8.291 $816.747 $0 $510.097.898 $976.052) $792.723 $1.500 $636.976.052) $278.479 $1.844 $1.898 $0 $976.414 $1.414 $1.797.054 $556.415.515.760 $8.728.876 $1.760.300 $200.484 ($405.967.576 $7.947 $0 $2.651 $0 $968.740 $2.110 ($380.326 $883.548 $1.097.484.380 $1.150.758 $1.183.484 ($405.363 $1.444 $1.484 ($405.002.595 $14.223 $807.770 $517.725 ($4.385) $2.855 $0 $647.123 $618.870.Appendix Table: Balance Sheet Pro Forma Balance Sheet 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 $647.999.707) $2.897 $12.365 $757.484 $6.488 $0 $16.982 $1.797.291 $673.180 ($45) $724 $14.847 $0 $594.147) ($8.669 $570.136 $1.870.855.696.227 $10.999.052) $1.030 $1.060 $416.884 $25.732 $5.276 $1.832 $1.052) $191.213.718.385 $706.272 $0 $675.432 Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $1.540.097.707 $525.667 $380.297.612.135 $2.830 $512.360 ($200.481.019 $339.239 $1.818.636.861.960 $0 $853.556 $413.870.097.628.895.999.003.303 $0 $874.960 $853.298.321.484 ($405.432 $816.855 $647.097.432 ($104.567 $1.967.242 $858.858 ($5.174 ($919.896.548 ($339.484 ($405.065) $3.723 $883.610.019) $1.973 $2.995) $2.792 $0 $840.671 $1.880 $0 $1.166.612.418.370.052) $0 $692.136 $1.693 $1.358 $789.128.669.136 $3.052) $1.758 $970.348 $13.052) $124.253.052) $944.825 $392.528 $5.097.097.912 $0 $522.876 $1.358 $0 $789.426.594 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 $0 $0 $1.484 $901.324 $914.303 $874.574 $7.922 $0 $2.855.299 $1.922.799 $2.083 $1.652 $1.484 ($405.432 $3.300) $2.052) $1.074 $0 $3.493 $8.484.141.192 $4.110 $1.693 $1.135 ($1.842.833 ($3.617 $2.955 $711.573 $0 $3.113 $806.966) $4.876 $1.556) $1.697.812 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $104.303 ($455.999 $797.184 ($413.615.594 $0 $3.355.955 $711.879.667) $1.325 $3.660 $1.567 $1.457 $0 $777.293 $0 $833.911 $1.035 $0 $682.173 $0 $502.999 $976.622 ($610.350) $1.484 ($405.484 ($405.931 $0 $942.360 $1.922.484 ($405.709 $0 $2.976.930.097.141.103 $692.198.696.393) $2.754.074.995 $610.917 $15.358.671 $1.393) $2.363 $1.151 $919.476.799 ($525.953.918 $32.648 $2.272 $675.931 $1.393 $1.484 ($405.667 $19.747 $2.999 $0 $797.534 $0 $911.556.567 $5.370.527 ($2.728.704 $1.022.097.196 $2.264 $1.594 $692.929.876 $10.097.432 $2.402.777 $1.747 $510.213.897 $0 $1.973 ($807.223) $2.129 $0 $6.999.103 Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Jul Starting Balances Page 44 .966 $2.264 $1.875.030 ($283.299 $7.556.303 $2.306.930.896.097.789.789.908 $477.392 $2.999 $0 $976.138 $0 $968.052) $614.432 $1.218) $11.702.484 $4.192) $8.052) $1.393 $919.911 $1.875.879.151) $2.211 $0 $3.298.536 $0 $576.484 ($405.622 $2.755 $423.661.317 $0 $675.985 $0 $2.307.387 $855.097.983.815 $2.491 $0 $0 $0 $1.263 ($706.114 $651.218 $0 $692.849 $974.674 $0 $12.629.184 $2.097.097.306.229.849 $0 $974.311) ($17.527 $6.536 $576.370 $0 $2.604.531.842.702.661.534 $911.261 $970.344 $0 $1.844 $3.833 $8.097.768 $1.465.766.774.406 $0 $862.491 $1.646.097.

Appendix Page 45 .

Appendix Page 46 .

601 $3.115.136 FY 2009 $17.319.963.22% $10.101 FY 2015 $25.393) $976.887 $2.364 $5.999 $0 $1.087 $46.728.519 73.983.781 $5.080.629.604.918 $12.220.792.428.176 FY 2016 $27.812 ($4.074.474 $7.240.478.20% $12.943.184.949 Page 47 .192) $911.455.667 73.960 $0 $3.844) $853.677 ($2.983.632.403.884.528 ($919.287.584 $37.18% $11.833.019.18% $12.197 73.866.531.688.628.543.227 $16.182 $2.903 $1.760.458 73.337 $3.504.435 $57.365.999.762 $15.612.103 FY 2013 $22.355.646 $2.855.083 $24.344.244 $6.18% $11.576 $12.917 ($3.464 73.763.330.061.870.780.839 $4.321.432 $6.596 $5.324 $4.107.711.Appendix Table: Long-term Long-term Sales Cost of Sales Gross Margin Gross Margin % Operating Expenses Operating Income Net Income Current Assets Long-term Assets Current Liabilities Long-term Liabilities Equity FY 2008 $16.966) $797.719 $1.754.491 $0 $10.377 $14.070 $6.790 73.849 $0 $7.880.876 FY 2012 $21.704 $3.875.807 $21.306.610 $7.533.639.700.132 $8.727 $16.322.663 $6.109 $2.225.406 73.924 $6.560.571.859.534 $0 $5.898.535.297.567 FY 2010 $18.604.618.875.647.18% $11.760 $1.359.574 $13.585.18% $11.842 $4.842 $5.938.732 $9.260 $19.179 FY 2014 $24.18% $10.895.708 73.355 $3.327.739 $17.590.493 ($1.305.535 $6.019.299 FY 2011 $19.692 $30.505 73.967.930.287.859 FY 2017 $29.929.869 $7.362 $18.281 $5.739 $1.404 $12.569 $7.18% $10.866.862 $4.720.691.218) $974.350 73.19% $10.

Appendix Page 48 .

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