Sample Business Plan

The Friendly Caf II

Executive Summary
The Friendly Caf II will be located in the town of Mt. Vernon, a city of approximately 12,000
people. The caf 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 Caf 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
caf. 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 caf is also part of the local history. The original Friendly Caf was owned by my greatgrandfather and was open from the 1940s until the late 1960s. In fact, we plan to rent the old
building that housed the original caf. Visitors will remember the original caf and be curious to
see the new version. We will have pictures from the old caf 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 caf together. We are a
close family, and we work well together. Financially, we could not open the caf without each
other.
Each partner will serve as a manager in the caf. My mother will be the floor manager, my aunt
will be the grill manager, and I will handle the accounting for the caf.
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. Secondly, 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.

PART 1

THE CONTEMPORARY BUSINESS ENVIRONMENT

Business Name
The Friendly Caf II

Description of Business
The Friendly Caf II will be located in the small town of Mt. Vernon, where I grew up. The caf
will offer a nostalgic atmosphere for people of all ages and will serve a large variety of homecooked meals and desserts.

Form of Business Ownership

The business will be a partnership, meaning that my family members and I will run the caf
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
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 caf everyday. Finally, I will handle the accounting
responsibilities for the caf. 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 caf 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 caf is also part of the local history. The original Friendly Caf was owned by my greatgrandfather and was open from the 1940s until the late 1960s. We plan to rent the old building
that housed the original caf. Visitors will remember the original caf, and be curious to see the
new version. We will have pictures from the old caf 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 Caf 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. 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.
3

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.

PART 2

THE BUSINESS OF MANAGING

Mission Statement
The mission of The Friendly Caf 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

Environmental

Organizational

SWOT Analysis for The Friendly Caf II

Strengths

Weaknesses

Highly motivated management team

Expertise in the business
Restaurant is familiar to the
community
Community-oriented business

Opportunities

Insufficient money for start-up

Small store will limit our growth
Located in a small town, not easily
reached by drop-in customers

Threats

Customers attracted to nostalgiathemed products

Markets trending away from fast-food
restaurants
Retirees having more discretionary
income

Economy may weaken in

communities that depend on industry
More restaurants opening in the
community

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 for The Friendly Caf II is quite simple given that it contains only one
level of management. As the business grows, further levels of management and more employees
may be added.
Owner/Floor Manager

Owner/Grill Manager

Owner/Accounting
Manager

Servers/Hosts

Cooks/Dishwashers

Accounts Payable Clerks

Floor Plan
Because we are planning on occupying the space that was previously used for the original
Friendly Caf, we will be keeping the basic layout of the caf intact. The caf 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.

Raw Materials and Supplies

If we are able to lease the space used by the original Friendly Caf, 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 caf will also need the following initial inventory:
(2) Cash registers @ $225 each..............................................................................................$450
Squirrel POS system...............................................................................................................1500
(3) Microwave ovens @ $150 each..........................................................................................450
Deep Fryer..............................................................................................................................2500
Refrigeration Unit...................................................................................................................2000
Freezer.....................................................................................................................................4000
Dishwashing Unit....................................................................................................................2000
(100) Small Glasses @ $1.00 each...........................................................................................100
(100) Large Glasses @$1.25 each............................................................................................125
(100 sets) Plates, Bowls, Mugs @$10.00 each.......................................................................1000
(100 sets) Silverware @ $12 per set.......................................................................................1200
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 caf 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 caf is
synonymous with quality.

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. Naturally, 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 Caf II will be as follows:
Floor Manager: The floor manager will be responsible for the front end of the caf. 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 caf needs, including new tables, chairs, dishes,
and so on.
Grill Manager: The grill manager will be responsible for the back end of the caf. 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 foodrelated and cooking-related inventory that the caf 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
responding to their needs. This includes keeping their sections of the caf 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 caf will be ready for the next days
business.
Dishwashers: The dishwashers will be responsible for washing all dishes and placing them in
the correct racks. If the caf 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 caf will assume during the course of business.

Job Specifications
The job specifications for the three managers at the Friendly Caf 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 cafs
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 work
experience in Accounts Payable or Receivable.

10

Training Employees
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 that 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 caf. 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 businesss 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.

11

PART 4

PRINCIPLES OF MARKETING

Target Market
Our caf 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 Caf II is a small caf 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 Caf, and they have happy memories of the local diner. We hope that our dcor 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
caf. 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.

12

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

13

PART 5

MANAGING INFORMATION

IT Resources
We plan to use technology to create a small Web site about the caf, 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 caf 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
caf. 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 caf.

14

Cost of Doing Business

Expected Monthly
Cost

Expected
Yearly Cost

500

6,000

10,000

120,000

Supplies

167

2,000

Advertising and Other

Promotions

167

2,000

Utilities: Heat, Electricity, etc.

500

6,000

Telephone and Internet

100

1,200

Insurance

333

4,000

11,766

141,200

Expenses
Rent
Salaries and Wages

Total

Expected Revenue
We believe that we can average 100 customers per day. However, the caf 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 caf. This will provide our caf 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.

15

12-Month Income Statement (Profit & Loss Statement)

The Friendly Caf II

Jun-05

Jul-05

Aug-05

Sep-05

Oct-05

Nov-05

Dec-05

Jan-06

Feb-06

Mar-06

Apr-06

May-06

YEARLY

2006

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

182,000

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

15,166

182,000

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

39,996

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

3,333

39,996

11,833

11,833

11,833

11,833

11,833

11,833

11,833

11,833

11,833

11,833

11,833

11,833

142,004

500

500

500

500

500

500

500

500

500

500

500

500

6,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

10,000

120,000

Supplies Expense

167

167

167

167

167

167

167

167

167

167

167

167

2,004

Advertising Expense

167

167

167

167

167

167

167

167

167

167

167

167

2,004

Utilities Expense

500

500

500

500

500

500

500

500

500

500

500

500

6,000

Telephone/Internet Expense

100

100

100

100

100

100

100

100

100

100

100

100

1,200

Insurance Expense

333

333

333

333

333

333

333

333

333

333

333

333

3,996

Interest from Loans

11,767

11,767

11,767

11,767

11,767

11,767

11,767

11,767

11,767

11,767

11,767

11,767

141,204

66

66

66

66

66

66

66

66

66

66

66

66

800

Revenue (Sales)
Food Sales
Category 2
Total Revenue (Sales)
Cost of Goods Sold
Food Purchases
Category 2
Total Cost of Goods Sold
Gross Profit
Expenses
Rent Expense
Salary/Wage Expense

Other Expenses (specify)

Total Expenses
Net Profit

16

Balance Sheet
Assets
Current Assets
Cash in Bank
Inventory
Prepaid Expenses (insurance)
Total Current Assets

$25,000
$3,000
$4,000
$32,000

Fixed Assets
Machinery & Equipment
Furniture & Fixtures
Real Estate / Buildings
Total Fixed Assets

$12,900
$8,000
$0
$20,900

Total Assets

$52,900

Liabilities & Net Worth

Current Liabilities
Accounts Payable
Taxes Payable
Notes Payable (due within 12 months)
Total Current Liabilities
Long-term Liabilities
Bank Loans Payable (greater than 12 months)
Less: Short-term Portion
Total Long-term Liabilities
Total Liabilities

$3,000
$6,000
$0
$9,000

$0
$0
$0
$9,000

Owners' Equity (Net Worth)

$43,900

Total Liabilities & Net Worth

$52,900

17

Startup Costs
Our balance sheet shows total assets of $52,900. By subtracting the $25,000 that our three
managers will invest, we will require startup 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.

18