SAMPLE BUSINESS PLAN

THE FRIENDLY CAFÉ II

Executive Summary

The Friendly Café II will be located in the town of Mt. Vernon, a city of approximately 12,000
people. The café will offer a nostalgic atmosphere for people of all ages. We will serve a large
variety of home-cooked meals and desserts.

The mission of The Friendly Café II is to provide a quality product at a quality price served by
quality people. We will demonstrate our devotion to the community through customer service
and community relations.

Our ideal customers are many. Some of them will be middle-class families with young children.
These are people who earn a modest income. Our prices and convenience are reasons to visit
our café. Our other ideal customers will be retirees. These are folks who may drop in for lunch
or an early dinner. Some retirees have a good income from their retirements, but some may be
on a fixed income.

Customers will visit us for several reasons. First is the quality of the food at an affordable price.
People want to believe that they are getting a good deal. We are dedicated to serving hot,
delicious meals at a fair price.

Our café is also part of the local history. The original Friendly Café was owned by my great-
grandfather and was open from the 1940s until the late 1960s. We plan to rent the old building
that housed the original café. Visitors will remember the original café and be curious to see the
new version. We will have pictures from the old café on the walls, which will take diners on a
trip down memory lane.

Our business will be a partnership. My family members and I will run the café together. We are
a close family, and we work well together. Financially, we could not open the café without each
other.

Each partner will serve as a manager in the café. My mother will be the floor manager, my aunt
will be the grill manager, and I will handle the accounting for the café.

Our business will thrive for a number of reasons. First, the city of Mt. Vernon has a stable
population, with a number of healthy industries. Second, the local population is somewhat
older than the national average. We believe that this segment of the population longs for “days
gone by.” Our nostalgic theme will appeal to this particular segment of the population.

Our skills and knowledge in food service, combined with our connections to the community,
will make this business a sound investment.

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PART 1 THE CONTEMPORARY BUSINESS ENVIRONMENT
Business Name
The Friendly Café II
Description of Business
The Friendly Café II will be located in the small town of Mt. Vernon, where I grew up. The café
will offer a nostalgic atmosphere for people of all ages and will serve a large variety of home-
cooked meals and desserts.

Form of Business Ownership

The business will be a partnership, meaning that my family members and I will run the café
together. Each partner will also serve as a manager and has special skills that they can bring to
the business. My mother will be the floor manager. She has work experience in this area, and
she knows how to organize floor space and is good with customers. My aunt has worked at a
number of restaurants in the grill area and will, therefore, serve as grill manager. She will
handle orders and manage all backroom employees. These two managers can substitute for one
another so that they both do not have to be in the café every day. Finally, I will handle the
accounting responsibilities for the café. I am currently completing my degree in accounting, and
I will also have two clerks that will help me keep all accounts up-to-date and accurate.

Ideal Customer
Our ideal customers are many. Some will be middle-class families with young children. These
customers will visit our café for its reasonable prices and convenience. Our other ideal
customers will be retirees who may drop in for lunch or an early dinner. We will have special
promotions focused on each of these two groups that will be discussed later.

Our Advantages
Customers will visit us for several reasons. First is the quality of the food and the affordable
price. People want to believe that they are getting a good deal. We are dedicated to serving hot,
delicious meals at a fair price.
Our café is also part of the local history. The original Friendly Café was owned by my great-
grandfather and was open from the 1940s until the late 1960s. We plan to rent the old building
that housed the original café. Visitors will remember the original café and be curious to see the
new version. We will have pictures from the old café on the walls, which will take diners on a
trip down memory lane.

Ethical Issues
Most restaurants deal with suppliers. We will be no different. Many restaurants must make a
choice between buying higher-priced produce and supplies or buying lower-priced produce
and supplies. The ethical issue facing The Friendly Café II, therefore, is the choice between
buying quality products and earning a little less money, or buying lower-quality products and
perhaps earning a higher profit.

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 SWOT Analysis for The Friendly Café II

In the long run, we believe that a higher-quality product will lead to higher profits because our
customers will notice the difference and come back for more.
We also believe we must behave ethically to our employees, treating them fairly at all times.

Social Responsibility
Our business is in a small town. My family grew up in this town so we feel an obligation to
“give back” to the community. Our family owns a farm so we all feel a strong bond with
animals. Because of this, we are actively involved with the local humane society. And because
our business is selling food, we believe that the best way to connect our business with our
hometown is to provide free, hot meals to a local charity during the holiday season.

Global Issues
The business will be a local one so at this point in time, we do not foresee there being any global
issues we will need to address.

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PART 2 THE BUSINESS OF MANAGING
Mission Statement
The mission of The Friendly Café II is to provide a quality product at a quality price served by
quality people. We will demonstrate our devotion to the community through customer service
and community relations

Business Goals
First Year Goals:
1. To break even
2. To build a strong customer base
3. To minimize employee turnover

Intermediate to Long-Term Goals:

1. To earn net profits of $25,000 within five years
2. To open a second restaurant in a neighboring community within five years

See SWOT analysis chart above.

Management
There is one level of management in the restaurant, with three different types of managers as
follows:
• Floor Manager
• Grill Manager
• Accounting Manager All managers are also co-owners.

Organizational Chart
The organizational chart, see below, for The Friendly Café II is quite simple given that it
contains, see below, only one level of management. As the business grows, further levels of
management and more employees may be added.

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Floor Plan for The Friendly Café lI

Floor Plan
Because we are planning on occupying the space that was previously used for the original
Friendly Café, we will be keeping the basic layout of the café intact, see exhibit above. The café
will include a counter area for those who wish to sit facing the kitchen, as well as a number of
booths and tables to fit different-sized parties.

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Raw Materials and Supplies
If we are able to lease the space used by the original Friendly Café, we will use the existing
tables and chairs. These may be in need of slight repair, but are in good condition at present.
They carry the nostalgic look and feel we are striving for so we prefer not to replace them.
The café will also need the following initial inventory:
2 Cash registers @ $225 each........................................ $450
Squirrel POS system......................................................1,500

3 Microwave ovens @ $150 each ................................... 450

Deep Fryer.....................................................................2,500
Refrigeration Unit .........................................................2,000
Freezer ...........................................................................4,000
Dishwashing Unit ..........................................................2,000

(100) Small Glasses @ $1.00 each....................................100

(100) Large Glasses @ $1.25 each....................................125
(100 sets) Plates, Bowls, Mugs @ $10.00 each .............1,000
(100 sets) Silverware @ $12 per set...............................1,200
Total.............................................................................$15,325

Most of our food products will be made fresh in the store so we do not plan to carry much in
the way of food inventory. We will stock some canned sauces, but most food will be shipped
fresh.
Our inventories will not be affected by change in seasons or holidays. We plan to be open from
6 A.M. to 10 P.M., Monday through Saturday, and 8 A.M. to 6 P.M. on Sunday.

Quality Assurance
All employees will have some responsibility to ensure quality, but we believe quality begins
with the management team. The floor manager will be responsible for the appearance of the
café and the performance of the servers and hosts. The floor manager is responsible for pleasing
the customer. The grill manager will ensure that quality food is purchased from distributors
and prepared for customers. The entire management team will work to ensure that our café is
synonymous with quality.

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PART 3 PEOPLE IN ORGANIZATIONS
Corporate Culture
Our culture is reflected in our mission statement. We want excellence in every part of our
restaurant, and every employee must understand how to achieve this standard once they have
completed their training. Every employee must have a commitment to pleasing the customer,
both in the quality of the food and in the overall experience they will have once they are inside
the store.
Our employees will be encouraged to improve the quality of the restaurant through their own
suggestions and input.
We are also committed to improving our community through participation in events that make
our hometown a better place to live.

Leadership Philosophy
We believe that a participative approach will work well with our family-oriented business.
Because each family member will have an equal stake in the restaurant, each family member
(manager) will have an equal input into the operation of the store. Each manger will have an
area of specialty, which will allow them to have control over their assigned functional area. We
will also encourage input from our employees, inviting them to participate in some of the
decision making.

Job Descriptions
The job descriptions at the Friendly Café II will be as follows:

Floor Manager: The floor manager will be responsible for the “front end” of the café. This
includes the staffing and training of servers and hosts. The floor manager will also be involved
with customer relations. The floor manager will also help coordinate and work with those in the
grill area to ensure customer satisfaction. Finally, the floor manager will be responsible for
ordering any new non-kitchen inventory that the café needs, including new tables, chairs,
dishes, and so on.

Grill Manager: The grill manager will be responsible for the “back end” of the café. This
includes the staffing and training of cooks and dishwashers. The grill manager will also be
involved with customer relations in overseeing that all food served is of high quality. The grill
manager will also work with the floor manager to help coordinate with those on the floor to
ensure customer satisfaction. Finally, the grill manager will be responsible for ordering any
food-related and cooking-related inventory that the café needs, including produce, cooking
equipment, and so on.

Accounting Manager: The accounting manager will be responsible for the financial side of the
business and for the hiring and training of accounting clerks. Most importantly, the accounting
manager will be responsible for interacting with suppliers and managing the accounts payable
that the business incurs and all other matters relating to taxes and finances.

Servers/Hosts: The servers/hosts will be responsible for serving food to customers and

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responding to their needs. This includes keeping their sections of the café clean and orderly and
bussing dishes back to the grill area for cleaning. They will also be responsible for “side work,”
such as rolling silverware and refilling the condiments on their tables. These employees will
spend most of their time serving meals, but some of their time will be spent as hosts, greeting
and seating customers.

Cooks: These employees will be responsible for meal preparation. They will have to “prep”
everything needed for business on any given day. This includes mixing salads, estimating the
amount of different foods needed for the given day, and making desserts. The closing cook will
also be responsible for cleaning the kitchen so that the café will be ready for the next day’s
business.

Dishwashers: The dishwashers will be responsible for washing all dishes and placing them in
the correct racks. If the café is busy, they will help servers bus the tables. Dishwashers will also
be responsible for cleaning the restrooms each morning and for taking out the trash at closing
time. Finally, dishwashers will help the closing cook prep the back of the restaurant for the next
day. This “prep” includes washing/scrubbing floors and cleaning all the food preparation
tabletops.

Accounts Payable Clerks: The clerks will assist the accounting manager in recording and
organizing the accounts payable that the café will assume during the course of business.

Job Specifications

The job specifications for the three managers at The Friendly Café II will be as follows:

Job Title: Floor Manager Needed Skills/Credentials/Qualification for Job: The floor manager
must have strong human relations skills. These skills will be needed to deal with customers and
employees. The floor manager must be energetic and willing to work long hours on his or her
feet. The floor manager will be responsible for training servers and hosts. To be a successful
floor manager, one must have at least two years of work experience in management, preferably
in restaurant management.

Job Title: Grill Manager Needed Skills/Credentials/Qualification for Job: The grill manager
must have strong human relations skills. These skills will be needed to deal with customers and
employees. The grill manager must be energetic and willing to work long hours on his or her
feet. The grill manager will be responsible for training cooks and dishwashers. To be a
successful grill manager, one must have at least two years of work experience as a restaurant
cook.

Job Title: Accounting Manager Needed Skills/Credentials/Qualification for Job: The accounting
manager will need good human relations skills.
These skills will be needed to deal with the clerks and with the café’s creditors. The accounting
manager will also be responsible for training the accounts payable clerks. This position will
require a degree in accounting or a minimum of two years of work experience in accounts
payable or receivable.

Training Employees

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Our employees will have a variety of skills that they will bring to the workplace. However, it
will sometimes be necessary to train new employees so they can be successful at work. Most of
the training will focus on performing the specific tasks needed to do each job efficiently. The
managers of each area will be responsible for seeing that the training program is completed but
may assign team members to lead that training. In many cases, the new hire will simply
“shadow” the training employee for a few days to get an idea of how to do the job.

Compensation
Each of the managers will earn $22,500 per year as salary. The food service industry does not
tend to pay high salaries. Because the managers are also the owners, they will hope to earn
more beyond their salary from the profits of the café. Compensation for all in-store personnel
will begin at $8.00 per hour, with pay increases scheduled every 120 days. These increases will
be connected to performance reviews. By having reviews three times per year, we hope to create
greater incentive for our team members. Compensation for the accounts payable clerks will
begin at $8.50 per hour. Because the clerks will need a higher level of skill and training, their
compensation will be a bit higher.

Incentives
We know that pay alone does not create incentive with our workers. The thrill of a pay raise
does not last long. First and foremost, we want to offer a fun workplace to our employees, and
we want them to feel like extended members of our family. We will be loyal and fair to good
employees and offer them benefits. We would also like to build relationships with other local
businesses to exchange rewards for each business’s employees. Our community has florists, golf
courses, salons, and a number of other small businesses. We believe that by trading with these
businesses, each employer can benefit, and the employees will also benefit.

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PART 4 PRINCIPLES OF MARKETING
Target Market
Our café will have two markets:
The first target market is the seniors in our community. Many of these have retired with a
comfortable pension from the local industries. They do not necessarily have a high education
level since it was not needed in that time. Retirees will tend to have a good deal of discretionary
income and also time to socialize in the morning and lunchtime hours.

The second target market is middle-class families with younger children. These families will be
looking for a well-cooked dinner after work. They will likely have a higher education level than
the retirees, but will have a modest income. Dining out is probably a once-a-week event for
these families.

Product Features and Benefits

The Friendly Café II is a small café that will serve a variety of home-cooked meals in a nostalgic
atmosphere. It is a place where friends can gather over a cup of coffee, or a family can sit down
for a well-cooked meal. We will strive to serve the best meals in a happy and familiar place.

Product Differentiation
People have a lot of choices when it comes to dining out. We know that we have to offer a
product that stands out from the competition. We will have two major differences from our
local competitors. The first is the quality of the food. Without good meals, nothing else will
matter. Diners will place the highest importance on the meal itself and so will we. By providing
good meals at reasonable prices, word-of-mouth advertising will take care of itself. However,
the food is only part of the dining experience. Our nostalgia theme will connect well with the
local population. Our community is small and tightly-knit. Our older citizens grew up with the
original Friendly Café, and they have happy memories of the local diner. We hope that our
décor will help to build a bond with the older members of our community and create a new one
with younger members.

Pricing
Our pricing strategy is fairly simple. Because our target markets are seniors (who remember
how much things used to cost) and young families, we will focus on keeping prices low. The
food will be simple, home-cooked meals. The pricing will reflect the simplicity of the café. We
will also offer coupons to encourage visits by customers who are price conscious.

Place (Distribution) Issues

Our family (and our business) is connected to this small community and offers a family-
oriented setting and a connection to history and nostalgia. The small-town setting allows us to
emphasize our strengths, and we foresee no distribution issues. In the future, we hope to
expand into other communities like ours.

Advertising
Because we have two target markets, we will have two advertising approaches. For the seniors

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market, we will advertise in the local newspaper and in the retirement center in our town. These
advertisements will include coupons for discounts on our morning and afternoon menus.
Coupons will also allow us to track the success of the advertising. We will also attempt to
advertise on local radio stations that feature news and talk. These are stations that have a strong
senior listening audience.
To get the attention of the middle-class family market, we will hang door flyers that feature our
menus in the two local housing subdivisions. Many young families in our community live in
these subdivisions. The flyers will also contain coupons, which will allow us to track the success
of the advertising.
We will also be listed in the local phone book and will have a small site on the Internet.
These ideas are fairly inexpensive ways to get our message out to our target markets.

Promotion
Because we have two main target markets, we will have two types of promotions. For the senior
market, we will have 2-for-1 priced coffee on weekday mornings. Coffee is not a great expense,
but can be a great draw into the café for other items in the morning. We will also offer breakfast
specials Monday through Wednesday since these are the days with the least amount of
customer traffic.
For the young family market, we will have a “Kids Eat Free” special on Monday nights. Again,
the goal is to get the family into the café on a slow night.
We will also have promotions during the fall, when our community has a street festival. This
festival attracts visitors from outside our community. These promotions will build attention
(and word-of-mouth) from those who live in nearby towns.

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PART 5 MANAGING INFORMATION
IT Resources

We plan to use technology to create a small Web site about the café and to help us keep track of
our customers. Specifically, we believe that we can use the coupons we offer to measure the
success of our advertising and to create a database of customers. We will ask customers who
use coupons to fill in their name and address when redeeming the coupon. We will then create
an address list to make customers aware of special promotions for our preferred customers.

Customer Service

Like any good restaurant, our café will be customer centered. We believe that customer
satisfaction begins with a well-trained staff. First and foremost, as members of the community
ourselves, we will keep in close contact with our customers, getting to know them and their
families and finding out what they are looking for in an eating establishment.
Our managers will also be dedicated to a strong employee training program to ensure that our
focus on customers is part of every job. Our “front-end” staff will “shadow” train for at least
three days before they are allowed to work on their own. It is not enough to simply know how
to take an order; employees must also understand policies and procedures that are unique to
our café. The training for cooks will take approximately ten days. The time spent with the cooks
is longer because we aim to ensure the quality standards of the variety of dishes they will
prepare.
We will also keep a suggestion box at the front of the store to be used for customer feedback.
We will encourage customers to submit ideas by rewarding them for their suggestions. Their
incentive will be free appetizers, free drinks, and so on. We hope to use their input to improve
our café.

Cost of Doing Business

Expected Expected
Expenses Monthly Yearly
Cost Cost
Rent $500 $6,000
Salaries and Wages 10,000 120,000
Supplies 167 2,000
Advertising and
167 2,000
Other Promotions
Utilities: Heat,
500 6,000
Electricity, etc.
Telephone and
100 1,200
Internet
Insurance 333 4,000
Total $11,766 $141,200

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Expected Revenue
We believe that we can average 100 customers per day. However, the café will experience
different traffic for each day of the week and during different times of the year. We believe that
the average meal ticket will be approximately $5.00 per customer. This number will also vary,
depending on the time of day that the customer enters the café. This will provide our café with
revenues of $500 per day. We plan to be closed on Christmas. This will lead to yearly revenues
of approximately $182,000 per year.

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 PART 6 FINANCIAL ISSUES

12-Month Income Statement (Profit-and-Loss Statement)

The Friendly Café II (amounts in dollars) 2006
Aug- Nov- Dec-
Jun-05 Jul-05 Sep-05 Oct-05 Jan-06 Feb-06 YEARLY
05 05 05
Revenue (Sales)
Food Sales 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 182,000
Category 2
Total Revenue 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 182,000
(Sales)

Cost of Goods Sold

Food Purchases 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 39,996
Category 2
Total Cost of 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 39,996
Goods Sold

Gross Profit 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 142,004

Expenses
Rent Expense 500 500 500 500 500 500 500 500 500 6,000
Salary/Wage 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
Expense
Supplies Expense 167 167 167 167 167 167 167 167 167 2,004
Advertising 167 167 167 167 167 167 167 167 167 2,004
Expense
Utilities Expense 500 500 500 500 500 500 500 500 500 6,000
Telephone/Internet 100 100 100 100 100 100 100 100 100 1,200
Expense
333 333 333 333 333 333 333 333 333 3,996
Insurance Expense
0 0 0 0 0 0 0 0 0 0
Interest from Loans
Other Expenses
(specify)
Total Expenses 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 141,204

Net Profit 66 66 66 66 66 66 66 66 66 800

Balance Sheet

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 Assets

Current Assets
Cash $25,000
Inventory 3,000
Prepaid Expenses (insurance) 4,000
Total Current Assets $32,000

Fixed Assets
Machinery and Equipment $12,900
Furniture and Fixtures 8,000
Real Estate/Buildings 0
Total Fixed Assets $20,900

Total Assets $52,900

Liabilities & Owners’ Equity

Current Liabilities
Accounts Payable $3,000
Taxes Payable 6,000
Notes Payable (due within 12
0
months)
Total Current Liabilities $9,000

Long-Term Liabilities
Bank Loans Payable (greater than 12
$0
months)
Less: Short-term Portion 0
Total Long-term Liabilities $0

Total Liabilities $9,000

Owners’ Equity (Net Worth) $43,900

Total Liabilities and Owners’ Equity $52,900

Start-up Costs

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Our balance sheet shows total assets of $52,900. By subtracting the $25,000 that our three
managers will invest, we will require start-up costs of $27,900.

Financing
The three managers will put a total of $25,000 into the startup of this business. The remaining
$27,900 is the amount that we are requesting for bank financing.

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