VENTURE PLAN

AMERICAN-STYLE MEXICAN RESTAURANT

BISHKEK, KYRGYZ REPUBLIC

American University – Central Asia

Entrepreneurship, Fall 2007

Qurban Ali Amiri

Brian Mau
Gulnaz Sairova
I. EXECUTIVE SUMMARY

This venture plan proposes to launch an American-style Mexican restaurant in Bishkek. It is

based on the experience and enthusiasm of the three partners, and it takes advantage of an
unusual window of opportunity to capture a broad market of consumers who desire an
interesting and delicious meal with excellent customer service at reasonable prices. The
initial investment is expected to be under $90,000, and after 2.4 years, annual profits should
be $42,755. This plan addresses only Phase I of the business (opening and operating the first
restaurant). Expansion of the restaurant is not covered, but it presents an attractive possibility
for additional profits.

II. VENTURE IDEA

The idea of opening an American-style Mexican restaurant in Bishkek began after the writers
of this venture plan realized a unique opportunity existed to start a business for which all of
them had experience and enthusiasm. The three well-traveled partners all noticed the variety
of international cuisine available in other countries and how easily it is accepted and
consumed by other cultures. The abundance of low-cost ingredients and obvious absence of
Mexican food in Bishkek presented a window of opportunity to launch a restaurant that could
capture this market.

III. MARKET RESEARCH

The partners in this venture determined that Mexican cuisine is a good match for the Kyrgyz
market because Mexican food (tacos, burritos, fajitas) is almost universal in every other large
city in the world after American (hot dogs, hamburgers), Chinese (egg rolls, fried rice), and
Italian (pizza) cuisines. There are several successful Mexican restaurants in Almaty, and
these are very popular with Kazakhs, Russians, and foreigners. The partners also tested the
market for this cuisine for several years by preparing Mexican dishes for friends and family
in Kyrgyzstan, receiving extremely positive feedback and enthusiasm for more.

The size of the market for this restaurant is enormous because most residents of Bishkek –
Kyrgyzstan’s wealthiest city – eat some meals at cafes, restaurants, and sidewalk kiosks
almost every week. There are over one million residents, expatriates, and tourists in Bishkek
in all age groups and income levels; most of them are potential customers for this restaurant.

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While there are many places to eat prepared meals in Bishkek, there is no direct competition
for American-style Mexican food. There is also almost no competition for the unique
standards of customer service and quality that are envisioned for this venture.

IV. BACKGROUND AND HISTORY

The partners in this venture all have extensive international travel experience and exposure to
how successful restaurants operate in more competitive markets. They bring different skills
and resources to the venture and work very well together, especially when there are
demanding timelines and workloads. All of them are students in AUCA’s MBA program and
they are extremely hardworking, intelligent, and well connected to networks of professionals,
government officials, and potential investors.

Nurzhamal Beishembieva is the informal creative leader of the venture due to her strong
leadership qualities and enthusiasm for the business. She speaks fluent Kyrgyz, Russian,
English, Turkish, and some French. Nurzhamal has experience traveling in the United States,
Germany, Russia and Turkey. She has work experience in DFID, GSAC support project
(Bishkek, Kyrgyzstan), and Turkish Metal Union (Istanbul, Turkey). She is also well
connected with private investors in Bishkek and the USA who can be tapped to fund the
startup costs of the venture.

Brian Mau is a native Californian and has lived in that state for more than 35 years. He
speaks English, Russian, and has a basic familiarity with Spanish. He grew up eating and
preparing Mexican food and has traveled many times to Mexico, Belize, and Guatemala. He
has worked as a self-employed consultant for small business and economic development
organizations in the USA and has extensive management and leadership experience.

Gulnaz Sairova is the National Director of an international charitable organization and makes
frequent travel to cities all over Europe. She has well-established contacts with potential
investors and can use her business trips to continuously research the latest trends in the
business of running restaurants.

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V. START-UP PLAN

The venture partners plan to open the restaurant in April 2009. This will give them adequate
time to complete their MBA program, line up the startup capital, select the site, deal with
permitting and bureaucracy, remodel the facility, order equipment, prepare advertising, and
hire and train staff. This date was chosen to coincide with the beginning of warmer weather,
holiday celebrations, and the tourist season.

The location for the restaurant will be in a highly-visible central location of Bishkek near
embassies, NGOs, universities, and government offices. This location was chosen because it
is easily accessible to the greatest concentration of customers with the most disposable
income and openness to international cuisine.

The opening of the restaurant will be preceded by a marketing campaign targeted toward
expatriates, university students, and high-paying employees working in the downtown area.

VI. BUSINESS DESIGN

The business is designed to minimize risk and allow for scaleable growth by beginning
successfully in one location, but allowing for expansion by opening additional restaurants
using the same model throughout the city.

The first restaurant will be a modest-sized facility (24 seats plus a bar) that serves both sit-
down and take-out (fast food) customers in an authentic-feeling Mexican atmosphere. The
selection of furniture, decorations, music, and even staff uniforms will create a unique dining
experience for customers who desire an interesting and delicious meal. Operating hours will
be 11 a.m. to 10 p.m. every day.

The menu will be limited to one page of well-prepared dishes that resemble Mexican food
popular in American restaurants. While this is not authentic Mexican food, most customers
will not know the difference, and they will be pleased and satisfied with the variety of dishes
served: burritos, tacos, enchiladas, fajitas, nachos, etc. Most of the revenue will come from
the sale of alcoholic beverages, and Mexican beer and tequila will be emphasized.

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One of the strongest success factors of the restaurant will be its emphasis on American
standards of quality and customer service. All staff will be trained and rewarded for
extremely fast, courteous, and friendly service. Staff will share profits and be involved in
marketing the restaurant through their performance. The attractive presentation of dishes and
use of fresh ingredients will be essential elements of establishing and maintaining quality
every day.

Unlike most restaurants in Bishkek, very few employees will be used. Besides the three
partners, who will work in the restaurant in different capacities before and after startup, it is
anticipated that only 6 full-time employees will be needed: a head chef, a sous chef, two
waiters, a bartender/cashier, and a busser/dishwasher. One cleaner and backup chef will be
used on a part-time basis. Accounting, payroll, and management of purchasing and business
operations will be handled by the owners.

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VII. FINANCIAL STRATEGY

The following table summarizes the financial strategy for this venture. A detailed analysis is
included in the appendix.

Units/US Kyrgyz Som

Dollars
Basic Projections
(A) Annual unit sales 23,725
(B) Price per unit $9 324
(C) Fixed costs $58,076 2,090,745
(D) Variable costs per unit $4.8 171
(E) Investment $86,000 3,096,000
(F) Working capital required $14,519 522,686
Basic Estimations
(G) Estimated annual revenues (A*B) $213,525 7,686,900
(H) Estimated annual variable costs (A*D) $112,694 4,056,975
(I) Estimated annual contribution margin (G-H-C) $42,755 1,539,180
Calculating Breakeven Point
(J) Contribution margin per unit (B-D) $4.3 153
(K) Annual breakeven quantity (C/J) 13,665
(L) Ratio of breakeven to expected quantities (K/A) 0.6
Startup Capital Required
(M) Total upfront funds requested (E+F) $100,519 3,618,686
(N) Additional units to cover upfront funds (M/J) 23,652
(O) Breakeven quantity with upfront funds (K+N) 37,317
Financial Performance Calculating
(P) Payback period of startup funds (M/I) 2.4 Years
(Q) Annual return on startup investment (I/M) 0.4
(R) Variable cost to price ratio (D/B) 0.5
(S) Contribution margin ratio (I/G) 0.2

VIII. EXIT STRATEGY

Assuming that the first restaurant is successful, the venture could be sold to another investor
at a much higher price than the original investment due to the development of the customer
base and steady income stream. Alternatively, the owners may choose to continue developing
the venture into a chain of restaurants around Bishkek and sell the business for an even higher
price after the expansion.