Break Even Analysis

Annual Fixed and Variable Costs:

Part Time Employees no benefits (wait staff $22,000 x 10, bus boys/washers $19,000 x 6, line cooks

$28,000 x 8, sommelier $40,000 x 1) total $598,000

Full Time Employees with benefits (manager $55,000 x 1 plus $20,000 benefits, asst manager $45,000 x

1 plus $19,000 benefits, chef $55,000 plus $20,000 benefits x 2) total $289,000

Rent & Utilities (rent $72,000, water $2,400, electric $9,000, cable $1,200, internet $500, IT support

$1,200, trash $1,200, phone $1,200) $88,700

Maintenance (equipment $15,000, facilities $15,000, preventative $12,000) $42,000

Advertising 15% of net profit

Food Ordered $350,000 per year

Revenue Per Unit:

Average number of patrons per business day (based on 13 open hours, max capacity 65, average meal

length 1.3 hours, at 650 max customers per day) – 475

Average ticket price per person - $50

Average revenue per ticket - $22.50

475 customers x $22.50 revenue = $10,687.50 per average day x 360 open days per year = $3,847,500

expected annual revenue less $1,367,700 operating costs = $2,479,800 profit less 15% advertising

($371,970) = $2,107,830 net profit

Operating costs $1,367,700 divided by average revenue per ticket ($22.50) = minimum 60,787 patrons

per year, or 169 patrons per day (minimum $3,802 revenue per day)

Sales Forecast

Sales forecast figures are for in-store sales only. An enlargement of the scope of Goldilocks operation

into catering and/or carryout will generate sales in excess of those shown.

We set as our objective and expect to generate monthly sales revenue of $200,000 by the sixth or

seventh full month of business. Our forecast of sales:

First full year of business: $2,500,000

Second full year of business: $3,500,000

Third full year of business: $3,955,000 (growth factor of 13%)

After year three, we project that in-store sales will begin to level off. We are projecting that we will have

a consistently high level of occupancy of tables by the end of year three. Therefore our sales will only

increase nominally (3 to 5% plus price increases) for two or three more years. Thereafter, at this

location, we expect increased sales due to price increases only.

We anticipate that when Goldilocks opens it will require the full attention of all the owners until the

restaurants operations are well established. When restaurant operations are established, we will begin

working on setting up the capacity to cater our food, and then market our catered meals to local

businesses and the community for special occasions.

Goldilocks has not determined whether or not it will market its cuisine by carry-out. At the present time

we do not foresee our type of food being appropriate for carryout. That could change if we see that we
can develop package combinations especially for carryout. In addition, at present we are skeptical about

the wisdom of carryout for Goldilocks. We think that carryout could hurt the image of the restaurant

that we are trying to develop.

Price sensitivity and target market: In general, restaurant menu pricing is subject to high price elasticity

of demand. Goldilocks is also subject to that, but, because of the overall nature of its business, we think

Goldilocks uniqueness and cuisine, its target market, its location, and lack of competition in its category

of restaurant, will provide a partial buffer from the full effect of high price elasticity of demand.

We project our sales based on the fact that the target market (which is in abundance in the area of

Goldilocks location see Target Market Analysis) is ripe for a full-scale restaurant that utilizes all of the

cutting-edge features of healthful and delicious dining, plus abundant choices, in an environmentally

friendly setting.

Expense Forecast

Goldilocks marketing budget is a key integrative device in our business marketing plan. It relates our

restaurants strategy to operating plans for various functions. It is a means with which to deal with a

mass of external and internal data. It should link a number of subsystems for controlling elements of

marketing expense and for evaluating the strategy for our products and services over its life cycle.

Therefore, developing and maintaining a sales and marketing budget system requires a broad

understanding of our overall business and strategy and needs. Our marketing budget process links to

product, channels of distribution, and profit a group of largely discretionary expenses that focus on

customers’ acceptance; on the downstream components of the value chain. Most restaurants try to sell

profitably what customers want, that is, what the market will bear. As a result, the marketing forecast is

a means of integrating the functional plans as well as the process capabilities of an organization. It is
important that the budget be controlled because marketing expenses, which are not only largely

discretionary but also can be changed dramatically as to priorities and mix, can be misdirected quite

easily.

As a result, a budget process will be in place that can be integrated with other plans and that can provide

useful analyses to support the judgments of our marketing executive.

Goldilocks will look at a 5 year forecast depending on our sales in addition to utilizing the Integrated

Marketing Communication (IMC) concept.