Development of a New Restaurant in South Australia - Example

Business Plan for a New Restaurant in South Australia (Name) (Institution) Cover Letter The food business is timeless; the demand for food never diminishes. The idea to open a restaurant in Adelaide, South Australia, arose from the need to exploit this booming industry and satisfy the growing demand (South Australia Tourism Commission, 2005). Through a survey conducted in this region, we found out that the citizens of South Australia have an insatiable appetite for gourmet foods, and we intend to contribute towards the satisfaction of those needs through the business. In the course of planning for the business, we collected information from existing businesses in the area (Slater, 2002) and established that there is still a chance to join the business of fine dining in South Australia. In addition, we discovered a suitable location in Highbury, Adelaide, where Signature Lounge will operate. The location is advantageous since it is easily accessible and its location is in an upscale neighborhood. It is also visible from the highway and commuters can clearly see the restaurant’s sign. According to research done by the owners, the average income for citizens in South Australia is on a steady rise (Australian Bureau of Statistics, 2012), and this assures us of the sustainability of the business. With the exception of Viva Gourmet and Harry’s Fine Dining, there is little competition within the area. We believe that clients value both the quality of the food and the fine-dining experience, and this is what we intend to offer. Signature Restaurant & Lounge Business Plan 2012/2013 Table of Contents Cover Letter 2 Signature Restaurant & Lounge 3 Table of Contents 4 Executive Summary 6 The business 7 Background and Description 7 Vision Statement 7 Mission Statement 8 Objectives 8 Products/Services/Industry 8 Product description 8 Industry description 9 The Market 9 Market description and target customers 9 Competitor analysis and competitive advantage 10 Marketing strategies and differentiation 10 The Organization 11 Legal and organizational structure 11 HRM and key personnel 11 Key suppliers 12 The location 12 The Financials 12 Critical risks 12 Income statement 13 Cash flow forecasts 14 Balance sheet 15 Start-up costs 16 Assumptions 17 Risk Analysis 18 Appendices – Owner’s resumes 19 Executive Summary Signature Restaurant & Lounge is a stylish restaurant, with a seating capacity of 60 people at the restaurant and 30 at the lounge. The focus of the restaurant is on the provision of an exceptional dining experience; thus the menu for the restaurant will incorporate both oriental recipes and local foods loved by South Australian citizens. This way, the menu can appeal to a diverse population, thus guaranteeing more clients. The business is the brainchild of John Smith and Jane Doe, both culinary arts students, with Master’s degrees from the prestigious Le Cordon Bleu, Adelaide. Marisa Heller will be the restaurant manager, having studied Hospitality and Tourism Management from the Cambridge University. The business Background and Description The idea to open Signature Restaurant & Lounge came from the need to expand the existing outdoor catering business began by John and Jane two years ago. As a result of increasing demand from clients, we decided to expand operations and venture into the restaurant business. Thus, the idea for Signature Restaurant & Lounge was born. The outdoor catering business will still be operational, but as part of the restaurant, in addition to a home delivery business. The business will operate all through the week, from Monday to Sunday, with a unique theme night during the weekends to attract new clients. Vision Statement Signature Restaurant & Lounge is committed to a fine dining experience like no other, characterized by quality food and service. The business guarantees unmatched service and hopes to achieve a strong financial performance, leading to the expansion to the rest of the country. Mission Statement Signature Restaurant & Lounge combines an intriguing dining atmosphere with a unique menu to provide an experience for the client. The restaurant’s mission is to, not only offer quality gourmet food, but also friendly and efficient service. In addition, the restaurant also seeks to attain profitability by the second year of operation. Objectives The short-term objectives for the Signature Restaurant & Lounge are the acquisition of one movable truck for the expanding outdoor catering business and three motorcycles for the home delivery business, and the achievement of sales revenue of $990,000 by year-end. The long-term objectives for the business are to expand the restaurant’s services to the rest of the country, reduce the amount of labor costs to below 30% of revenue, and attain a return on investment of 15% for investors. Products/Services/Industry Product description Signature Restaurant & Lounge promises to be a unique business in Adelaide. With a creative menu consisting of a fusion of oriental cuisine and local food and friendly service, the business hopes to satisfy the needs of its clients and make each of them feel welcomed. The food offered at the restaurant will be organic, of the highest quality, prepared under the supervision of the owners themselves. In addition, all the food will be organic and procured locally to promote local agriculture. The business will also have a modest wine list, consisting of a range of quality wines from different countries in the world. There will also be other liquor, ranging from beers, vodkas, scotches and whiskeys. Industry description According to the census for the previous year, the population in South Australia increased by 0.8% (Australian Bureau of Statistics, 2012), meaning an increase in the number of potential clients. Aging baby boomers are more willing to spend money on such services as compared to the rest of the population. In addition, more people are willing to eat out as the economy improves unlike the few years following the global economic downturn. A liquor license and health certification is a requirement for operating in the food industry. A liquor license costs $75,000 while the local council, at no charges, carries out health certification. The Market Market description and target customers According to statistical data, the average market in South Australia is over $6 million a year (Frommer's Shortcuts, 2011). Signature Restaurant & Lounge targets both locals and tourists, who are seeking a different dining experience in South Australia. Since the owners are residents of Adelaide, we understand the market and the clients. As the business expands, we will increase the menu charges to maintain our ‘classiness’. Given that the business will be offering quality food within a high-class neighborhood, the primary target customers will be the rich, who are likely to spend on expensive wines, appetizers and tips. In addition, we are hoping that the atmosphere at the lounge will attract young couples seeking a cozy and romantic environment. Furthermore, being that the menu will consist of organic food, the restaurant hopes to attract vegans and healthy eaters. Competitor analysis and competitive advantage The main competitors in this area are Viva Gourmet and Harry’s Fine Dining. Being the wine city, there are numerous restaurants that operate in the area; however, with the quality of service we will offer only the businesses mentioned above will be the main competition. Our competitive advantage stems from the fact that, although restaurants in this area offer organic food, none do so exclusively as we will. Marketing strategies and differentiation Signature Restaurant & Lounge will focus mainly on attracting a diverse clientele between the age group of 25-65. This includes both the young generation and the elderly, with annual incomes of at least $30,000. This is because they are more likely to visit the restaurant and the bar that both the younger and much older age group. The restaurant’s geographic includes people from Adelaide, as well as, the neighboring cities. The characteristics of our clients will be people who are adventurous and value fine dining. The Organization Legal and organizational structure In the future, the organizational structure for Signature Restaurant & Lounge will include a store manager as the business expands. The individual will be responsible for the supervision and management of the restaurant’s stores. The business will hire an accountant to oversee the financial transactions of the business and offer assistance to Marisa with bookkeeping. As the business expands other management positions such as administrative support team and purchasing manager will become available. For any legal issues, the company will seek the services of Thomsons Advocates, a prominent law firm with offices in Adelaide. HRM and key personnel Marisa Heller has sufficient knowledge and experience to manage personnel within the restaurant and is confident that she will hire only the best staff for the restaurant. Both John and Jane will be responsible for the supervision and the operations of the kitchen. The restaurant expects to invest only in the top quality staff, which will be compensated appropriately. The initial number of employees will be 13, to include two hostesses, two chefs, four waiters, one barman, two cleaners, an accountant and a manager. Key suppliers Since all the food offered at Signature Restaurant & Lounge will be organic, all the supplies will be obtained from Jupiter Creek Organic Farm, and Nirvana Farm both located a few miles away from Adelaide. The location After a critical search for a suitable location, the owners decided on Highbury in Adelaide as a prime location likely to guarantee the success of the restaurant. The potential for this location arises from the fact that it is near the highway thus visible to commuters and in a high-class neighborhood with good security and potential clients. Signature Restaurant & Lounge will also have a website where clients can make reservations, book for outside catering services and order for home deliveries. The Financials Critical risks According to Brown (2007), the critical risks associated with the business mainly concern the competence of suppliers. The business has created contingency plans to deal with this issue. Having two suppliers of organic produce ensures that the business cushions itself from any adverse effects of supplier incompetence. In addition, the business has compensation insurance policies for all its employees and has insured its assets against any risks that may occur in the course of operations. Succession plans have also been drawn with the lawyers, enforceable in the event that an owner or the owners are incapacitated. In the event that sales revenues do not match up to the estimated amounts, the owners have agreed to a temporary reduction in salaries of up to 30% until the business regains profitability. Income statement Year 1 Year 2 Year 3 $ $ $ Sales 953,882 1,095,465 1,258,285 Direct cost of sales 301,481 348,200 401,930 Gross margin 652,401 747,265 856,355 Gross margin % 68.39 68.21 68.01 Expenses Salaries 240,000 300,000 306,000 Selling and distribution 55,000 70,000 82,000 Depreciation 0 0 0 Administrative expenses 5,000 5,000 6,500 Accounting fees 2,500 2,500 3,000 Legal fees 1,500 1,500 1,500 Operating licenses and health permits 1,500 1,700 2,050 Restaurant utilities 19,500 19,500 21,500 Rent for restaurant premises 38,500 38,500 38,500 Insurance 13,500 16,500 19,500 Other expenses 0 0 0 Total operating expenses 377,000 455,000 480,350 Profit before interest and tax 275,401 292,265 376,005 Interest expense 12,500 10,900 9,200 Taxes 82,098 85,453 113,512 Net Profit 180,803 195,912 253,293 Net Profit/Sales 18.95 17.88 20.13 Cash flow forecasts Year 1 Year 2 Year 3 $ $ $ Cash received Cash sales 953,882 1,095,465 1,258,285 Total cash received 953,882 1,095,465 1,258,285 Expenditure Cash spending 246,592 311,512 317,512 Payment of bills 534,954 602,064 712,965 Total spent on operations 781,546 913,576 1,040,477 Additional cash spent BankSA loan repayment 23,950 25,607 27,388 Purchase of other current assets 0 0 0 Purchase of long-term assets 0 0 0 Other liabilities principal repayment 0 0 0 Dividends 0 0 0 VAT 0 0 0 Total cash spent 805,496 939,183 1,067,865 Net cash flow 148,386 156,282 190,420 Cash balance 238,386 394,668 585,088 Balance sheet Year 1 Year 2 Year 3 $ $ $ Assets Current assets cash 238,386 394,668 585,088 Other current assets 0 0 0 Total current assets 238,386 394,668 585,088 Long-term assets Accumulated depreciation 0 0 0 Total long-term assets 0 0 0 Total assets 238,386 394,668 585,088 Liabilities Current liabilities Accounts payable 22,200 52,150 60,170 Current borrowing 0 0 0 Other current liabilities 0 0 0 Total current liabilities 22,200 52,150 60,170 Long-term liabilities Total liabilities Paid-in capital 240,000 240,000 240,000 Retained earnings (350,000) (169,197) 26,715 Earnings 180,803 195,912 253,293 Total capital 70,803 266,715 520,008 Total liabilities and capital 238,386 394,668 585,088 Net worth 70,803 266,715 520,008 Start-up costs We have committed $90,000 of capital, in addition to a $200,000 loan, procured from the Bank of South Australia (BankSA). We are seeking additional finances totaling $150,000 from investors to establish the business. Start up Costs Items $ Assets 90,000 Expenses 350,000 Total funds required 440,000 Assets Cash assets 90,000 Non-cash assets 0 Additional cash raised 0 Cash balance on start date 90,000 Total assets 90,000 Liabilities Current borrowing 0 Long-term liabilities 200,000 Accounts payable 0 Other current liabilities 0 Total liabilities 200,000 Capital Capital from owners 90,000 Investors 150,000 Total planned investment 240,000 Loss at startup (expenses) (350,000) Total capital (110,000) Total capital and liabilities 90,000 Total funds 440,000 Assumptions 1. We assume the restaurant will obtain health certification and a liquor license from the Adelaide local council without any problems. 2. We assume that the ability to acquire the funds needed for startup will be sufficient to sustain the financial plan for the business. 3. We assume a steady growth in the economy, without any recessionary tendencies. Risk Analysis 1. What will we do to ensure clients return after the first visit? The restaurant will utilize an on-the-table survey to gather information on the views of the customers regarding the meal and overall service quality. In addition, the restaurant intends to host food critics, once in a while, to gain an honest opinion of the overall quality of service and the food. 2. How will we manage the business in case of an economic downturn? Since the economy is recovering from the recent global economic downturn, the restaurant management takes these conditions into account. The organizational structure of the business is one that accommodates enough employees to ensure reduced operation overheads and start-up requirements. 3. How do we ascertain that the funding required is adequate? All the owners have worked within the industry and thus have a faint idea of the needs of the restaurant during start-up. However, since this is not enough knowledge to go by, we have conducted interviews and surveys with successful businesses within the area and beyond to derive an estimate. Appendices – Owner’s resumes John Smith (Address) (Telephone Number) (Email address) PERSONAL INFORMATION Nationality: Australian Date of Birth: 23rd August 1975 Marital Status: Married Language: English EDUCATION Bachelor of Arts in Culinary Art – Scottsdale Culinary institute 1993-1996 Master of International Hospitality Management - Le Cordon Bleu, Adelaide 1997 - 2001 EXPERIENCE Culinary arts chef at the Creek Hotel (2002-2004) Private chef at Crowne Plaza (2004-2008) Assistant head chef at Signature Outside Caterers (2009-2012) SUMMARY OF SKILLS 14 years experience as a chef in the Australian hotel industry Ability to work both as an individual and as a team member Self motivated and industrious Independent Jane Doe (Address) (Telephone Number) (Email address) PERSONAL INFORMATION Nationality: Australian Date of Birth: 4th April 1979 Marital Status: Married Language: English EDUCATION Bachelor of Arts in Culinary Art – University of South Australia 1996 - 1999 Master of International Hospitality Management - Le Cordon Bleu, Adelaide 2000 - 2004 EXPERIENCE Pantry supervisor at Hilton Hotel (2004-2006) Sous Chef at Harding Fine Foods (2006-2009) Head Chef at Signature Outside Catering (2009 – 2012) SUMMARY OF SKILLS 10 years experience as a Sous Chef at leading hotels in Australia Excellent communication skills Ability to work under pressure Excellent management skills Marisa Heller (Address) (Telephone Number) (Email address) PERSONAL INFORMATION Nationality: Australian Date of Birth: 3rd September 1978 Marital Status: Married Language: English EDUCATION Bachelor of Arts in Hospitality and Tourism Management – Cambridge University 1995 - 1998 Bachelor’s degree in Public Relations and Psychology – London College of Arts 1999-2002 EXPERIENCE Human resource manager at Mantra on Frome (2004-2006) Operations’ manager at Intercontinental Adelaide (2006-2012) SUMMARY OF SKILLS 10 years experience in the hospitality and tourism industry Excellent decision-making skills Excellent management skills Dynamic Bibliography Australian Bureau of Statistics, 2012. 6302.0 - Average Weekly Earnings, Australia, May 2012. 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Anatomy of a Business Plan: The Step-by-Step Guide to Building a Business and Securing Your Company's Future. 7th ed. Chicago: AKA Associates. Slater, P., 2002. Discovering Adelaide, South Australia. Brisbane: Steve Parish Publishing. South Australia Tourism Commission, 2005. In and Around Adelaide: A Souvenir Guide. Adelaide: Wakefield Press. Walker, J. R., 2007. The Restaurant: From Concept to Operation. 5th ed. New York: John Wiley & Sons. Read More