Business Plan
Name of the Student
University Name
Business Plan of M-Organic
Executive Summary
This business plan is for a restaurant named M-Organic. Two partners are investing money to start this food business. The location for this business is selected in the Mid Town New York. It will be a new medium-sized restaurant. M-Organic will emphasize organic and original cultural and innovative food. M-Organic is dedicated to ecological and sustainable development and health of the populace.
Moreover, the restaurant will be buying local foods and local food materials. The aim of M-Organic is not only the profits but the health of the society. It will benefit the local farmers and develop a taste for organic food in the community. The investors felt the need for this business because of the excessive junk foods and limited availability of healthy and hygienic foods. The business will be financed by the contribution of both partners, with an equal ratio of investment. The initial required investment is forecasted as the US $ 100,000. For this business both the partners will be actively involved in the operations, One of the partners will manage the accounts and general administration of the business, while others will manage the market, procurement and legal obligations of the business. The business will be registered as a limited liability company.
Services
M-Organic will be offering a fun place to have food that is naturally rich in taste and healthy as well. The restaurant will also be providing free reading materials regarding organic foods and its benefits, plus some free sample recipes so that people can make them at home as well. Our Chef Betty has an extensive catalog of ethnic ingredients and recipes. M-Organic projections are that most of the purchases will be from the recommendations of the chef. Traditional ways will be used to offer the consumers with a varied, rare menu. Chef Betty will be emphasizing healthy organic meals, being aware of the drift towards healthy and sustainable cuisines within the restaurant industry.
Customers
M-Organic will be looking forward to segment the market into various groups and target accordingly. The first group will be the lonely rich people who are growing in numbers and who can afford healthy organic meals. Also, these people have to eat clean, healthy and foods naturally rich with vitamins and minerals. M-Organic will also provide these customers with statistics related to the ingredients used in the cuisines so they can select their meals in accordance with their dietary and supplementary needs and wants. The second segment will be the happy young couples who prefer to eat healthily and live a healthy happy life with healthy children. The third group will be rich people who are tired of fast foods and desire organic diets as well as traditional cookery. The fourth segment will be dieting women. More and more women are getting interested in getting in good shapes and joining gym classes etc. These consumers are expected to be predominantly interested in healthy foods offerings.
Management
M-Organic has already gathered a strong team that will be managing the operation of the business. Mr. Hector will be the GM (general manager) and co-owner of the restaurant. Hector has a master degree in hotel management and a vast experience in the hotel industry. Jordan is the second partner with an equal amount of investment. He is the direct marketing and supply chain of the business. Jordan is holding a masters degree in Marketing and supply chain management. He has experience as a marketing manager in a multinational organization. The restaurant will initially require 20 staff, including one Accountant, two Sales executives, four 4 Chefs, eight waiters, three cleaners and two security guards. Mr. Kyle will be in charge of all of the accounting and finance functions. Mr. Kyle has five years of experience as an Auditor and Accountant (CPA). Mr. Kyle fiscal control expertise will be valuable in keeping M-Organic on point and cost-effective. He will report directly to the GM Hector. Mr. Weidman and Mr. John will manage the sales and marketing department. They will report to and report to the Director of Marketing and Supply Chain Mr. Jordan. The hiring of staff will be done through a committee of Mr. Hector, Mr. Jordon, and The Chief Chef Mr. Betty. Besides the hiring of employees and managing all the documents concerning employees. Lastly, Betty will be the head chef of M-Organic. She will be in charge of the back-end production along with three assistant chefs who will be hired after a month of initial operations. Chef Betty has over 15 years of knowledge and expertise in traditional foods and more than eight decades of experience in pure organic meals. Ms. Betty will be the production manager, and she will supervise all the staff working inside the restaurant such as chefs and waiters. The security guards will report to the Accountant as he will also work as an Admin manager.
Most important to M-Organic is the economic accomplishment which will be realized through stern financial controls. This is important for M-Organic because we want to flourish and become economically stable so that we can expand our business in terms of employees and locations.
Human Resource budget
In the table below the detailed budget of the monthly salaries of the employees is given.
Position
No. of Employee
Salary
Total
General Manager
1
3000
3000
Director of Marketing
1
3000
3000
Chief Chef
1
2000
2000
Accountant
1
1800
1800
Sales Executives
2
1500
3000
Chefs
3
1500
4500
Waiters
8
1200
9600
Security
2
1200
2400
Cleaners
3
1200
3600
22
32900
Financial Budgeting
The cost to open the restaurant is $100,000. The bulk of the expenditures are in restaurant layout and the purchase of all necessary assets which will pay worth $ 60,000 only. The revenue generation will cover the expenses excluding the initial month salaries. The owner's source of money is in the form of cash in hand. The total Human resource budget for the first month is the US $ 32900. The total Marketing budget for one month is the US $1000 excluding the salaries of the marketing staff. The total registration and license expenses of the company per year are the US $ 500. The total operating budget of the company is the US $ 3000 per month which includes the purchase of materials for cooking, the total variable cost and the factory overhead cost.
Start-Up Summary
The cost to open the restaurant is $100,000. The bulk of the expenditures are in furniture and the kitchen equipment $ 60,000. The total capital of the business is worth $100,000 of the start-up expenses will be sponsored by the owners. There is no debt financing, and the working capital is 100 percent based on equity financing. Moreover, the company's forecasted cash flow statement with monthly details forecasted balance sheet and projected income statement is prepared. Which reflects the budgeted sales, investments, and performance of the company.
Balance Sheet
M-Organic projected company balance sheet follows. We anticipate running at a loss in the initial stage of the first year, shrinking our net worth marginally. As the operations become lucrative in the later years, our net worth will grow. Total working capital that M-Organic will need initially is $140,000, out of which $40,000 will be borrowed from an investor.
Pro Forma Balance Sheet
Year 1
Assets
Current Assets
Cash
$ 5,000
Inventory
Other expenses
$ 5,000
$ 35000
Total Current Assets
$ 10,000
Long-term Assets
Furniture
$ 30,000
Office e\Equipment’s
Kitchen Equipment’s
$ 5,000
$ 20,000
Total Long-term Assets
$ 55,000
Total Assets
$ 100,000
Liabilities and Capital
Year 1
Current Liabilities
Subtotal Current Liabilities
$ 0
Long-term Liabilities
$ 0
Total Liabilities
$ 0
Capital
$100,000
Total Capital
$ 100,000
Net Worth
$100,000
Profit and Loss/Income statement
Pro Forma Profit and Loss
Year 1
Sales
$505,000
Direct Cost of Sales
$320,000
Other Costs of Sales
$0
Total Cost of Sales
$320,000
Gross Margin
$ 185,000
Expenses
Payroll
$120,000
Marketing/Promotion
$12,000
Depreciation
$0
Rent
$ 36,000
Utilities
$ 20,000
Taxes
$8,000
Net Profit
($11,000)
The negative value of an income statement shows the net losses of 11,000 during the first years due to some unavoidable expenses for the long term benefits of the organization.
Cash FlowCashflow statement of the company shows the monthly flow of cash during the first fiscal year of the company.
Table
Month
Cash Inflow
Cash outflow
January
$ 20000
$ 40,000
February
$ 25000
$ 40,000
March
$ 35000
$ 42,000
April
$ 35000
$ 42,000
May
$ 40000
$ 43000
June
$ 40000
$ 43000
July
$ 45000
$ 43000
August
$ 50000
$ 44000
September
$ 50000
$ 44000
October
$ 55000
$ 45000
November
$ 55000
$ 45000
December
$ 55000
$ 45000
Total
$ 505,000
$ 516,000
The business is a new idea which will need a lot of fo expenses and struggle in the first year. In the initial six months it was going in loses then restaurant's cash inflow will go higher than the cash outflow. The total cash flow it the end is forecasted as the net outflow. Shows the losses of $ 11,000.
Market Plan
Industry
Restaurants performance in 2018 was considered moderate in terms of growth and more of the same is expected in the coming year as customers continue to demand handiness and value. The race is growing because grocery stores and bakeries are increasing their effort on readymade meals. The wage growth rate is also forecasted to increase by the end of 2019 (business outlook, 2019). Business environments for the eatery industry are projected to continue to be positive
Customers are progressively getting interested in wholesome and healthy menu preferences, locally obtained food and food manufactured in an ecologically and naturally conscious way. Customers are paying closer thoughtfulness to food quality, food production, sustainability, and nutrition content. The NRA(National Restaurant Association) "What's Hot survey of professional chefs," American Culinary Federation associates make public a new age of concept-based diet developments that emphasize more on how foodstuff is manufactured and arranged than on precise constituents or items (Cavusoglu, 2018)
Market anticipation
M-Organic anticipates that it will attract customers with different characteristics or of various segments such as couples, diet conscious employees, rich people, etc. The business also assumes that in the beginning, the business will not be able to attract a huge number of customers, but with the passage of time when the taste starts getting developed, and dieting women, rich and diet conscious people start arriving, many prospective customers will get attracted and will start following these healthy smart people. Most importantly, M-Organic looks forward to attracting customers with its tasty cuisines and corporate social responsibility gestures in the community and on social media.
Competition
Currently, there are no competitors in the locality that specifically offers only organic meals and operates with the idea of providing organic, healthy food for diet-conscious customers.
Pricing structure
Important Assumptions
Our meal prices will be ranging from $7.00 - $20.00
Average lunch prices will be around $8
Average dinner prices will be around $12
Marketing and Sales Strategy
Customers
M-Organic will be looking forward to segment the market into various groups and target accordingly. The first group will be the lonely rich people who are growing in numbers and who can afford healthy organic meals (Lian et al., 2017). Also, these people have to eat clean, healthy and foods naturally rich with vitamins and minerals. M-Organic will also provide these customers with statistics related to the ingredients used in the cuisines so they can select their meals in accordance with their dietary and supplementary needs and wants. The second segment will be the happy young couples who prefer to eat healthily and live a healthy happy life with healthy children. The third group will be rich people who are tired of fast foods and desire organic diets as well as traditional cookery. The fourth segment will be dieting women. More and more women are getting interested in getting in good shapes and joining gym classes etc. These consumers are expected to be predominantly interested in healthy foods offerings.
M-Organic will only be providing dine-in services to the customers. In the future, we plan to offer home delivery services nearby.
Sales strategy
Attracting customers through various promotional activities and implementing these strategies at the right time at the right place is essential for any business success (Ingram, et al., 2015).M-Organic will be promoting its food and menu in seminars in the local community, on social media and word to mouth in the initial stages of its operations. M-Organic does not plan to spend a lot on the marketing strategies on media except on social media and banners. M-Organic pricing will focus on rich customers as well as the middle-level customer. The middle-level customers will have less variety of food in the initial stages of the business and will not include in luxury items in contrast to the rich class menu.
We also plan on connecting with our local chamber of commerce and food authority so to utilize their networking amenities for our opening and marketing. M-Organic will be operating in a prime location with easy entrance. Due to our small size, we will be able to provide outstanding quality by hand-selecting our market specials. The same notion holds in our employment requirements, by hand picking our workers we will be able to attempt to provide unrivaled service to clients and also growth opportunities to our employees. The total marketing budget is the salaries of marketing staff and the advertisement campaign expenses. The salaries of marketing staff per year are $ 72,000, and the advertisement expenses are 12,000 per month. So the total marketing budget will be $ 84,000. The wage growth rate is also forecasted to increase by the end of 2019 (business outlook, 2019).
Operational Budget
The operational budget of the business includes the purchases of materials, utilities, maintenance cost, and overhead expenses. The restaurant operational budget will change with the changes in sales. The volume of sales influences it. The company has forecasted the estimated operational budget at $ 40,000.
Capital Budget
The capital budget includes the purchase of machinery and other long term assets. The restaurant needed total long term assets worth $ 60,000 which includes the ovens, stoves, other kitchen instruments. The details of the company's capital budget are given below.
Kitchen Utensils are purchased worth $ 10,000. Cooking instruments and stainless steel tables with food graded material are purchased worth $ 10,000. The furniture, chairs, tables, and restaurant layout cost worth $ 10,000.
Summary
M-Organic will be looking forward to segment the market into various groups and target accordingly. The first group will be the lonely rich people who are growing in numbers and who can afford healthy organic meals. Customers are paying closer thoughtfulness to food quality, food production, sustainability, and nutrition content. The organic food menu will be having a line of really delicious and low-fat meals. Now a day, most of the lonely rich are tech employees, and most of those these tech employees work on the internet. They tend to hang out with alike individuals, but badly want to get away from their jobs and use their earnings that they are racking up. M-Organic has already gathered a strong team that will be managing the operation of the business. Mr. Hector will be the GM (general manager) of the restaurant while the other partner Jordan will control the marketing and supply chain functions of the restaurant. M-Organic will be offering a fun place to have food that is naturally rich in taste and healthy as well. The restaurant will also be providing free reading materials regarding organic foods and its benefits, plus some free sample recipes so that people can make them at home as well. The cost to open the restaurant is $100,000. The bulk of the expenditures are in furniture and the kitchen equipment $ 60,000. The total capital of the business is worth $100,000 of the start-up expenses will be sponsored by the owners. There is no debt financing, and the working capital is 100 percent based on equity financing.
References
2019 business outlook: Restaurant industry. (2019). Rsmus.com. Retrieved 26 February 2019, from https://rsmus.com/economics/the-real-economy/the-real-economy-volume-48/update-by-industry-restaurants.html
Cavusoglu, M. (2018). An analysis of technology applications in the restaurant industry. Journal of Hospitality and Tourism Technology.
Ingram, T. N., LaForge, R. W., Williams, M. R., &SchwepkerJr, C. H. (2015). Sales management: Analysis and decision making. Routledge.
Lian, J., Zhang, F., Xie, X., & Sun, G. (2017, April). Restaurant survival analysis with heterogeneous information. In Proceedings of the 26th International Conference on World Wide Web Companion (pp. 993-1002). International World Wide Web Conferences Steering Committee
