Compadre’s Mexican Restaurant123 10th Street

Springville, CA 93XXX559-000-0000(T)—559-000-0000(F)

Prepared By

Jill Robbins

“Where we know your name!”

Submitted To:

The Great Bank2461 Money Avenue

Springville, CA 93XXX

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TABLE OF CONTENTS

TABLE OF CONTENTS 2EXECUTIVE SUMMARY 3THE BUSINESS DESCRIPTION 4MARKET ANALYSIS 4VISION STATEMENT 7 VISION TRIGGER 7MISSION STATEMENT 7BUSINESS OBJECTIVES 8BUSINESS OPERATIONS 8MARKETING 9

Product 9 Price 10Place 11Promotion 12

COMPETITIVE ANALYSIS 15 LEGAL STRUCTURE 18MANAGEMENT EXPERTISE 18SUPPORT PERSONNEL 18FINANCIAL INFORMATION 19 SUMMARY 25

TABLES AND EXHIBITSTable 1 – Number and Percentage Increases in Springville Families By Income Groups, 1980-2002(Est.) 6Table 2 – Number and Percentage of Springville Families by Income

Groups Clustered within A One, Two, and Three Mile RadiusOf Sun View Centre As Of April 15, 20XX 7

Table 3 – 12 Month and 3-year Sales Forecasts and Related Promotional Costs 13

Exhibit 1 – Locations of Compadre’s and Main Competitors 16Exhibit 2 – Competitive Analysis 17Exhibit 3 – Monthly Cost of Living – Jill Robbins 21Exhibit 4 – One-Year Cash Flow Projection 22

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EXECUTIVE SUMMARY

The purpose of this business plan is to support a request for a $30,000 four-year

bank loan to purchase equipment and inventory as part of the financing for a start-up sole

proprietorship, Compadre’s Mexican Restaurant. The business will be owned by Jill

Robbins and will be located in leased space at 123 10th Street in the new Sun View

Centre, Springville, California 93XXX. The owner will provide a minimum of

$66,000 in initial equity.

The business will serve burritos, tacos, enchiladas, and quesadillas to the

generally upscale target market of Springville. Based on the financial and competitive

analysis presented in this plan, Compadre’s Mexican Restaurant will be successful. The

cash flow projection, Exhibit 4, One-Year Cash Flow Projection, indicates break-even

analysis including the owner’s draw of $25,680 for the first year of operations.

It is anticipated that Compadre’s Mexican Restaurant will become firmly

established and known throughout the Springville area in the next three years with the

potential of multiple locations. The Compadre’s Mexican Restaurant’s distinctive logo,

its reputation for a family atmosphere and fast service, plus its slogan, “Compadre’s –

where we know your name!” will provide a distinctive competitive edge.

The owner, Jill Robbins, has founded two highly successful food service

businesses in the Springville area. The owner holds an undergraduate business degree

from the School of Management, California State University, Springville. Jill Robbins

also has a cooking segment on TV called “Spice Up Your Life.”

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THE BUSINESS DESCRIPTION

Compadre’s Mexican restaurant will be a start-up Mexican restaurant located in

leased space at Sun View Centre. A ninety-day option has been taken on this location.

The estimated opening date is May 20XX.

Jill Robbins, who has founded two highly successful restaurants in the area,

during the last ten years, will own the business as a sole proprietorship. Each of the

restaurants started by Jill Robbins reached its break-even point after only nine months

and was sold for a substantial profit. Compadre’s will be an upscale restaurant selling

healthy burritos, enchiladas, tacos, and quesadillas. All of the entrees will be made fresh

daily in the kitchen.

Compadre’s will be successful because it is based on solid market research

demonstrating there is a demand for a Mexican restaurant selling fresh products. It will

be located in the most desirable retail space in the area, and the owner has a ten-year

track record of proven success.

MARKET ANALYSIS

Market analysis is favorable toward the Mexican restaurant business in the United

States. A web site, www.preparedfoods.com, explains that “theme and ethnic restaurants

have emerged as the most dynamic in many of the key markets as operators attempt to

target expanding niche pockets of demand. Led by the U.S. and Japan with each valued at

more than $200 billion in 1997, the foodservice market has taken on global proportions.”

Restaurants and Institutions, a restaurant industry journal, predicted a 2.6% growth in the

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industry, healthier than the 1.9% projected last year. This will also mark the eighth

consecutive year of growth according to the January 1999 issue.

According to a national restaurant equipment supplier, the overall restaurant

market is expected to grow substantially between 1999 and 2004 in this multi-billion

dollar industry. Today, more families are dual income so there is more disposable income

to be spent on entertainment/recreation and dining out. People eat out more because they

are tired from working long hours and they want to save time by picking up dinner on the

way home so they can spend quality time with their family. The 2000 Census of

Springville suggests this style is predominant among both affluent Americans living in

households with incomes of $30,000 or more per year (45%) and less-affluent

households with incomes of under $30,000 (55%).

Marketing a “fast” and “family” atmosphere is where restaurants are going today.

A growing trend among Americans is value priced plates and large portions of food.

According to Ron Gorodesky and Ed McCarron, leading consultants for

restaurantreport.com, large portions do work. At Compadre’s, customers will get their

entrée on a plate filled to capacity, loaded with rice and beans.

Furthermore, value pricing is in. Compadre’s menu will specialize in value and

combination meals daily. According to the January 1999 issue of Restaurant and

Institutions, “Value is still paramount, but price will become less important than good

food and service.” The customer wants good quality and that is what Compadre’s

Mexican Restaurant will provide.

In summary, the general industry analysis shows that “fast” and “quality” food

sales are on the increase and will continue to increase. Further, the target market for this

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restaurant is lower and middle-income families. The market analysis also reveals that it

is highly desirable to serve large portions and value meals at Compadre’s Mexican

Restaurant.

Since the market analysis identified lower and middle-income families as desired

target markets, what is the growth pattern in Springville regarding these groups? Table 1

presents these informative statistics.

TABLE 1

Number and Percentage Increases in SpringvilleFamilies by Income Groups, 1980 to 2002(Est)

Years Low Income Middle Income High Income Families Families Families

1980 1,885 7,105 3,045

1990 6,687 23% 11,702 40% 5,182 19%

1997 8,545 28% 14,974 49% 6,622 21%

2002(Est) 10,068 25% 17,620 55% 7,803 24%

Note: Family is estimated to be 4 persons.Source: Springville Census

Table 1 reports two important trends: the total population of Springville and the

number of families in the low and middle-income categories are both increasing at a

dramatic rate. Even more important, as presented in Table 2, Springville’s middle

income families are clustered generally within a three-mile radius of Sun View Centre.

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TABLE 2

Number And Percentage of Springville Families By Income Groups Clustered Within A One, Two, And Three Mile Radius Of Sun View Centre As Of April 15, 20XX

Radius From Sun View Centre Low Income Middle Income High Income

Families Families Families

One Mile 1,071 19% 2,593 46% 1,578 28%

Two Miles 3,100 19% 8,321 51% 3,916 24%

Three Miles 5,188 17% 14,954 49% 6,103 20%

Note: Family is estimated to be 4 persons.Source: Springville Census

VISION STATEMENT

In three years, Compadre’s Mexican Restaurant will be established and known

throughout the Springville area and expansion plans for a second restaurant will be in the

planning stages.

VISION TRIGGER

The main vision trigger will be the catchy slogan: “Compadre’s—where we

know your name!” The vision trigger will emphasize a fun, family atmosphere that

people of all ages can enjoy. This will include quality customer service, authentic food

with hearty servings, stylish décor, and a selection of food and drinks to meet the needs

of individual customers.

MISSION STATEMENT

Compadre’s Mexican Restaurant’s mission is presented below:

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We, the employees and management of Compadre’s Mexican Restaurant,

make this pledge to you, our valued customers:

We pledge that we will serve authentic fresh foods and delicious

beverages in a prompt and friendly manner.

We pledge that we will serve only quality foods that meet the health

standards for the city of Springville and the state of California.

We pledge that we will be good citizens, respectful of the environment,

and friendly neighbors to the surrounding businesses.

We pledge to put safety a high priority so you can visit with friends or

family with peace of mind.

We pledge that we will be responsive to your suggestions and concerns.

If we do not keep our pledge, your meal for the evening will be free!

BUSINESS OBJECTIVES

Compadre’s Mexican Restaurant will have these business objectives during the

first two years of operation:

1. Owners draw of $25,680 by the end of Year 1.

2. Cash break-even by the end of Year 1.

3. Owners draw of $35,000 by the end of Year 2.

BUSINESS OPERATIONS

The operations of Compadre’s Mexican Restaurant will be described using the

main functions of the business: marketing, competitive analysis, legal structure,

management expertise, support personnel, and financial information.

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MARKETING

Product

Compadre’s Mexican Restaurant will sell:

Two lines of authentic burritos: chicken and shredded beef.

Two lines of tacos: hard shell or soft-shell with chicken or beef.

One line of traditional shredded beef enchiladas.

One line of quesadillas.

Authentic imported Mexican and domestic beers and soda.

Food and Related Products

Compadre’s Mexican restaurant will sell the following: burritos, tacos, enchiladas

and quesadillas. Before receiving the main dish, our customers will enjoy chips and

freshly made salsa. This will serve as an appetizer before the main meal. Our featured

product will be our authentic chicken or shredded beef burritos. Our customers will have

the choice of selecting the traditional beef enchiladas. Another selection might be the

tacos with either a hard or soft-shell. These items will also be served with chicken or

beef. Quesadillas are served hot and cheesy, made to everyone’s satisfaction. Large

portions of Spanish rice and refried beans will be served with every main dish. Any of

the above items can be ordered a la carte.

Jill Robbins will purchase all tortillas, rice, beans, vegetables, and sauces from

Central Valley Mexican Food Distributors, a leading supplier to the Central Valley.

Chicken and beef will be purchased from a primary supplier, The Butcher’s Shop.

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Beverages and Other Food Products

Four imported Mexican beers and six domestic beers will be purchased from

Central Valley Beverage Company. The menu will have five soda choices that will be

supplied by Thirsty Company, a local wholesale beverage distributor in the area. Chips

and salsa will be made fresh daily in Compadre’s Mexican Restaurant.

All foods and beverage suppliers will be subject to change due to poor quality or

poor customer service.

Price

The majority of the restaurant sales will come from burrito and taco sales.

Representative prices are as follows: $5.00 for a shredded beef or chicken burrito, $2.50

for two shredded beef or chicken tacos (with lettuce and cheese), $4.50 for two shredded

beef enchiladas, and $3.50 for a quesadilla that includes sour cream and guacamole. The

experienced restaurant owner noted that these prices are fairly competitive to other

Mexican restaurants. Volume costs would include $.51 per burrito, $.43 per taco, $.37

per enchilada, and $.34 per quesadilla. Other volume costs will be as follows: $.068 per

16 oz. plastic cup, $.13 per 32 oz plastic cup, $.11 per plastic take-out plates, $.043 per

plastic fork or spoon. An experienced Mexican restaurant owner, who has been in

business for 12 years, estimated these costs.

A comprehensive survey was made of local restaurants offering beer and soda on

the menu. The general price range for imported Mexican beer was $2.50 to $4.25.

Domestic beer ranged from $2.00 to $4.00. Soda was priced between $.99 to $1.65.

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Compadre’s Mexican Restaurant will charge $3.25 for an imported beer, $2.50 for a

domestic beer, $1.00 for 16oz and $1.50 for a 32-oz soft drink. Soft drinks will include

free refills. Volume costs for imported beer will be $1.25, domestic beer $1.00, and soda

$.32.

Place

The Springville city urban growth statistics indicate the area around Freeway 40

and 10th street has grown rapidly. The East Side of 10th street has exploded due to the

recent population growth from 7,200 to 11,000. A new major shopping complex, Sun

View Centre, has just opened. The current anchor tenants are Ice cream You Scream,

Bullseye, Sports Today, Everyday Wear, and Furnishings 4 You. Two major franchises

are also new additions to Sun View Centre. Burger World and Deep Sea Subs add to all

of the excitement. A new 10 screen movie theatre, The Sun View Centre Cinema, will be

opening its doors at the end of the year. This area has exposure because it has easy

access off Freeway 40 and it is a direct route into town. Springville now has more

national chain stores that attract people from other neighboring communities, bringing

them to Sun View Centre. This causes higher traffic flow toward Compadre’s Mexican

Restaurant. Freeway 40 has an average traffic flow of 58,000 cars per day according to

Springville Police Department. The daily average foot traffic in Sun View Centre is

approximated to be an average of 1,800 people per day.

Customers will enjoy visiting Sun View Centre because of the diversity of the

new anchor stores and the easy access from Freeway 40. Bright colors and beautiful

décor add to the eye pleasing effect of Sun View Centre. All of these factors contribute

to the decision to locate in Sun View Centre, despite the fact that a national Mexican food

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chain restaurant is located 2.5 miles west of the Sun View Centre. The advantage is that

this national chain is located in a shopping complex that is a few years older than Sun

View Centre and two of the five major anchors have moved to Sun View Centre or

another part of town.

Compadre’s Mexican Restaurant will be located in a 2000 sq. foot building that

can possibly be expanded in the future. A real estate broker of Sun View Centre said

monthly lease payments include land rent, plumbing, heating, air conditioning. A build-

to-suit building and landscaping are included in the $2.00 sq. ft., triple-net. The broker

offered a 4-year lease plan that included three months free rent during year 1 and a

maintenance fee of $300 per month. The offer will be effective October 1. A refundable

deposit of first and last lease payments, plus a $4,000 security deposit will be made with

the leasing agent.

Promotion

Compadre’s Mexican Restaurant will be promoted with a variety of marketing

methods:

A grand opening will be held with a local Mariachi Band providing the music and

entertainment. Compadre’s will hold their 1st taco eating contest and offer chips and

salsa to the general public with a 10% discount on beer.

Compadre’s Mexican Restaurant will sponsor The Springville City Little League

baseball team and will hold “Family Nite Fridays,” where kids eat half price with the

purchase of an adult entrée.

Ronald Moeller, hospitality consultant, says, “prepare ahead of time.” This

means know your products. The manager must understand that the appearance of all

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menu items is very critical. He also suggests warm and caring service; establish eye

contact and smile, smile, smile. He also suggests that the new trend is to be your

customer’s advocate; follow the rules, and always remember the customer is first. As

restaurant owners head into the new millennium, Moeller also advises that if you

“schmooze and you won’t lose.” Pay close attention to your customer’s needs to

demonstrate their respect and validate their importance. These key ideas will be the

focus of Compadre's and Jill Robbins and her well-trained staff will completely satisfy

the customer.

One of the things that will make Compadre's a success is, with their excellent

customer service, will be the emphasis on the second best marketing tool -- the menu.

Compadre's Mexican restaurant will follow the “dos and don’ts of the millennium”

suggested by Linda Lipsky, an expert in restaurant design. In the 1999 article “Designing

Profitable Menus,” she recommends three colors for headings on the menu and to

highlight certain menu items that are the restaurant’s specialty. Another important

feature is the icons. This is a way to focus on more profitable items on the menu and

choose a symbol that is appropriate to the restaurant’s theme. The theme for Compadre’s

Mexican restaurant is families.

One and three-year sales forecasts are presented in Table 3 together with

anticipated promotional costs.

TABLE 312 month and 3-year Sales Forecasts and Related Promotional Costs

Years Sales Revenue Promotion One 206,000 4,000 Two 250,000 6,000 Three 300,000 10,000

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COMPETITIVE ANALYSIS

The prospective owner conducted a personal survey to obtain the information

presented in the following competitive analysis and in Exhibit 2, Competitive Analysis.

Burrito King

Burrito King is a national franchise located 3 miles from Sun View Centre on 10 th

Street and Walnut Ave. (See Exhibit 1, Location of Compadre’s and Main Competitors).

Burrito King specializes in low prices for burritos, tacos, and nachos. The restaurant has

been established in that location for 10 years and has an excellent reputation in the

community.

Burrito King only offers beef in its tacos and burritos whereas Compadre’s offers

beef and chicken. Although Burrito King has low prices, Compadre’s will have more

selection and offer bigger portions of rice and beans. Burrito King does not draw as

many customers because the hours are only from 11am to 7pm. This hurts them on

weekends when customers are looking to stay out later to eat and drink. They do offer a

senior discount, but they do not target the senior citizens of Springville.

La Via

La Via is another Mexican restaurant, located at 9th Street and Old Oak Avenue,

approximately 2.5 miles from Compadre’s. La Via is a family owned restaurant and their

hours are only 12pm to 9pm, 6 days a week. They are closed on Mondays. Due to an

unexpected death in the family a year ago, an inexperienced cousin took over the

restaurant and is trying to keep it in business. The new owner is working to repair the

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reputation because the older uncle created an unfavorable one by serving low quality

food and poor service coupled with high prices. They have only been in business for 5

years. They do have a small loyal customer base, but they are having trouble expanding

as Springville grows.

Their specialties are enchiladas, homemade salsa and guacamole. Their restaurant

is very clean and has a family look as décor. They offer senior discounts, but their only

local marketing strategy is to advertise in the local newspaper, The Springville Times.

El Monte’s

El Monte’s is located at Freeway 40 and 7th Street. It is 3 exits north on Freeway

40 from the Sun View Centre. This restaurant has been in business for 6 years and is

owned by a couple in their mid 40’s. They are open 7 days a week from 11am to 10pm.

They have built a fair reputation in the last 5 years. El Monte’s is based on a very

traditional view of Mexican food. In comparison to other Mexican restaurants, they do

not serve rice with any of their dishes. This could be a liability because people in

Springville expect rice to be served with every meal. Their specialty is combination

plates where the customer can mix and match any items on the menu. This is an

advantage to customers because they will always get exactly what they order.

Salvador’s

Salvador’s is located on southeast corner of Old Oak Avenue and 12th Street.

They specialize in catering to businesses and to the general public such as for weddings

and funerals. Their eating area is approximately 300 sq. ft. so most people order there

and take the entrée home or back to the office. This could hurt the business in the long

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run because most people want to eat their food right when they get it, not take it out.

There is no room for a large group of people to meet because the dining area is so small.

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EXHIBIT 1

Location of Compadre’s and Main Competitors

7th

North

8th

9th

10th

Sun View Centre

Old Oak

Walnut

11th

Freeway 40

12th

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EXHIBIT 2

Competitive Analysis

Items Compadre's Burrito King La Via El Monte's Salvador's

Hours/Days Open

11am-8pm Mon.-Sat. 12pm-5pm

Sunday

11am-7pm Sun.-Sat.

12pm-9pm Tues.-Sun.

Closed Mon.

11am-10pm Sun.-Sat.

11am-10pm Sun.-Thurs. 11am-1am

Fri.-Sat.

Price Level low/moderate low moderate moderate moderate

Specialty fast and family atmosphere

low prices salsa and enchiladas

chili rellano catering

Reputation unknown excellent fair outstanding excellentYears In Business

start-up 10 5 6 8

Discounts senior/special promotions

senior senior senior senior

National Chain

no no no no no

Methods of Promotion

yellow pages,newspaper,

radio

yellow pages, flyers

yellow pages, newspaper

yellow pages, newspaper

yellow pages, newspaper

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LEGAL STRUCTURE

Compadre’s Mexican Restaurant will be operated as a sole-proprietorship owned

by Jill Robbins.

MANAGEMENT EXPERTISE

The owner has been to many Mexican restaurants. Her father was in the Army

and she traveled around with him to many different countries. She has grown up around

Latin American food all her life and can cook every dish on the menu like it is straight

from San Jose, Costa Rica. The owner holds an undergraduate business degree from the

School of Management, California State University, Springville. Jill Robbins has

received many first place prizes for “Cook-Offs” at state fairs across the country.

Jill Robbin’s extensive business activities have used several reputable Springville

professionals who provide services to the business. These include Smith and Associates

CPAs, Easy Insurance, and George and Howard law firm. The owner has had a long

term banking relationship with The Great Bank.

Jill Robbins is a highly regarded chef in the food industry of the Central Valley.

She spends time teaching young children how to cook and hosts a cooking segment on

TV called “Spice Up Your Life.”

SUPPORT PERSONNEL

The restaurant will operate using family and high school students as its principal

employees to reflect a youthful, family oriented image consistent with its “Compadre’s—

where we know your name!” vision trigger. The assistant manager will be the founder’s

sister who has worked in Mexican restaurants since the age of 14. A special employee

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benefit will include ½ price off meals for their immediate family. Employees will receive

a book titled How To Keep the Customer Satisfied to help job performance and

politeness. The majority of the employees will be family who will work part-time with a

full-time manager. Three students will also be hired on a part-time basis. Student

employees will work for $6.00/hr. initially with an opportunity for pay increases. The

assistant manager will be paid $11.00 per hour. A policy of promotion from within will

be adopted.

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FINANCIAL INFORMATIONFinancial Objectives

The following objectives are for the first two years of Compadre’s Mexican

Restaurant:

1. Owner draws $25,680 by the end of Year 1.2. Cash break-even by the end of Year 1.3. Owner draws $35,000 by the end of Year 2.

Monthly Living Expenses for Jill Robbins

Exhibit 3, Monthly Living Expenses – Jill Robbins, show the amount required by

The owner to pay for living expenses and compute the draw.

One-Year Cash Flow Projections

The items in Exhibit 4, One-Year Cash Flow Projection, have been arranged in a

specific way: sources of cash (cash receipts), cash needed to purchase assets (equipment),

cash needed to pay expenses (rent), cash needed to pay liabilities (payroll taxes), and

owner’s draw.

Sources of Cash

1. Personal Funds. The owner will invest $66,000 into the business.

2. Loan Proceeds. The owner will borrow $30,000 from the Great Bank as a five-year revolving line of credit at 8.5%. Interest will be charged only on the amount actually borrowed with principal payments of $8,000. This information was provided by the Springville Resource Center.

3. Cash Receipts From Business. $180,000 in cash receipts net of sales taxes is estimated. This projection involves selling 7,200 burritos, 18,000 tacos, 4,000 enchiladas, 5,150 quesadillas, 9,000 16 oz. Soft drinks, 18,000 32 oz. Soft drinks, 2,700 imported beers, and 7,200 domestic beers. This is a very conservative estimate of cash receipts. A 12 year experienced Mexican restaurant manager estimates that the industry average cash flow for a start-up Mexican restaurant is $200,000.

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EXHIBIT 3

Monthly Cost of Living - Jill Robbins

Regular Monthly PaymentsRent or house payments (including taxes) 400Car payments (including insurance) 260Appliance payments 35Loan payments 130Health, life and other insurance premiums 140Miscellaneous 180Total 1145

Household ExpenseTelephone 55Utilities 140Miscellaneous 115Total 310

Personal ExpenseClothing, cleaning, laundry, shoe repair 160Medical and dental 80Education and training

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Automobile expenses

120

Spending Allowance 140 Total 550Food Expenses

Food at home 250Food away 60Total 310

Tax ExpensesFederal & State 175Personal property 50Other taxes (except house) 0Total 225

Total personal monthly cost of living expenses 2540

Subtract monthly income from sources other than business 400

Grand total - the minimum monthly draw needed from the business 2140

EXHIBIT 4

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One-Year Cash Flow Projection

Sources of cash1. Personal Funds 66,000 2. Loan Proceeds 35,000 3. Cash Receipts from Business (Net) 206,000

Total Sources 307,000

Uses of Cash

4. Equipment/Supplies 26,500 5. Vehicle Purchase/Lease 3,900 6. Real Estate - 7. Fixtures 11,300 8. Security Deposits (Rent and Utility) 5,000 9. Signs 10,300 10. Leasehold Improvements 5,000 11. Cost of Goods Sold 63,000 12. Telephone and Utilities 8,400 13. Rent 38,700 14. Business License Fee 4,500 15. Insurance Premiums 5,000 16. Office Supplies 800 17. Legal and Accounting 4,446 18. Advertising 4,000 19. Real Estate Taxes 2,600 20. Miscellaneous Expenses 4,481 21. Payroll Taxes and Benefits 9,318 22. Payroll Wages (Excluding Withholdings) 62,300 23. Loan Payments (Principal and Interest) 10,975 24. Owners Draw 25,680

Total Uses 306,200

Net Cash Flow for the Year (Sources Minus Uses) 800

Uses of Cash

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4. Equipment/Supplies. Basic equipment cost is estimated to be $26,000. This includes counters, refrigerators, freezer, stove, pots, dishwashing equipment and installation. A national restaurant equipment supplier supplied this information.

5. Vehicle Purchase/Lease. A utility van will be leased at $325/month for three years from Springville Auto Sales, a total of $3,900 per year.

6. Real Estate. Real estate expense is included in the lease expense.

7. Fixtures. Fixture costs will total $5,000 based on an estimate from Springville Fixtures and More, Inc. These costs will include purchasing tables, chairs, and all removable service items.

8. Security Deposits. Security and other deposits will include $3,000 for lease-related deposits and $2,000 for utility deposits for a total of $5,000.

9. Signs. Compadre’s Mexican Restaurant will have two giant neon lighted signs, one posted on the front of the building and the other near the road. The signs and installation will cost $10,300 according to Springville Sign Store.

10. Leasehold Improvements. Net leasehold improvements will total $5,000. This was provided by Machado Construction of Springville and includes floor and wall coverings, window treatments, painting and decorating, window decorations, and miscellaneous minor improvements.

11. Cost of Goods Sold. Cost of goods sold is based on the sales projection of $180,000 and is estimated to be an average of 35% of sales totaling $63,000. A 12 year veteran Mexican restaurant owner in Springville provided this information.

12. Telephone and Utilities. Springville City Gas, Electric, and Telephone Company estimates telephone and other utilities at $700/month for an annual total of $8,400.

13. Lease Expense. The first three months are rent-free. There will be a maintenance fee of $300/month for common areas and rent is $2/sq. ft. for the 2000sq. Ft. building space. Rent totals $38,700 at Sun View Centre, with $4,300 payments monthly.

14. Business License Fee. This business license fee based on business revenue (2.5% of gross revenue) will be $4,500 (License and Permits Office, Springville).

15. Insurance Premiums. Easy Insurance Agency, Springville, estimated annual premiums at $5,000. This will cover theft, fire, accident, workman’s compensation, and all other types of insurance.

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16. Office Expense. This item includes all office-related expenses including copying and paper supplies. The owner will perform all of the office duties. Total is estimated at $800 annually based on the owner’s previous experience.

17. Legal and Accounting. Smith and Associates, CPAs, and George and Howard law firm will provide basic bookkeeping, accounting, and legal services. Smith and Associates, CPAs has a bookkeeping subsidiary, Business Bookkeeping that specializes in low cost bookkeeping. This firm will be engaged for the bookkeeping with Smith and Associates providing tax preparation and other professional services. The total estimated annual cost is $4,446.

18. Advertising and Promotion. $4,000 will be allocated to the advertising campaign. This firm will advertise by using flyers, newspapers, and local radio.

19. Real Estate and Other Taxes. Real Estate and Personal Property taxes will total $2,600/year. The Management Office, Sun View Centre, provided this information.

20. Miscellaneous Expenses. $4,481 has been estimated for miscellaneous expenses based on information provided by a restaurant owner.

21. Payroll Taxes and Benefits. These total $9,818. Fifteen percent of wages include FICA, scholarships, and manager benefits.

22. Payroll. Wages total $62,300. This total includes 350 workdays, with 3 employees working 5 hours a day at $6.00. The manager will work 8-hour days and be paid $11.00 per hour. Payroll includes manager’s annual salary, employer taxes, unemployment insurance, and worker’s compensation, but does not include withholdings.

23. Loan Payments. All of the $35,000 loan allocation will be used during the first year of operation. Assuming this amount was available at the beginning of the fiscal year, interest at 8.5% totals $2,975. In addition, according to the loan agreements, principal payment of $8,000 is also required. The total payment for the first year is $10,975.

24. Owner’s Draw. This information, obtained from Exhibit 2, Monthly Personal Living Expenses, is $2140 per month or $25,680 annually.

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SUMMARY

Compadre’s Mexican Restaurant will be successful. The business plan has

documented that the establishment of Compadre's Mexican Restaurant is feasible. All the

critical factors such as industry trends, marketing analysis, competitive analysis,

management expertise, and financial analysis support this conclusion.

We invite you to attend our grand opening. Go to “Compadre’s – where we

know your name!”

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