peacham cafe business plan

7/28/2019 Peacham Cafe Business Plan

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Peacham Caf and Store

A Community Supported Enterprise

Business Plan

June 2013


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Business Plan

Peacham Caf and Store

Peacham Caf Group, LLC

June 2013

Introduction

It doesnt take much imagination to envision a small caf and convenience store in anactive little village like Peacham, Vermont. A picturesque hill town, home to dairyfarms, a few small businesses, senior apartments, and a citizenry actively involved intown government and a host of civic organizations all combine to create the perfectcontext for a gathering-place and store in the town center. But there is no such gatheringplace, and that is what this business plan is about. A group of residents is planning toopen a caf and store in the heart of Peacham village, which will cater not only to thelocal residents, especially seniors, but will also serve tourists at Fall Foliage, the annual

Peacham Acoustic Music Festival, the July 4 gala with its famous tractor parade, thefarmers market, plus a steady stream of summer visitors who make Peacham a touristdestination despite the lack of commercial establishments.

People coming together on a regular basis, enjoying old friendships and creating newones, is what community is all about. The idea for a caf/store in town has been brewingfor over ten years, ever since out-of-state owners closed the popular and successfulBayley-Hazen Store in South Peacham, leaving the town with no gathering place and noplace to buy staple groceries. It was a loss for everyone, particularly for seniors withlimited transportation.

Peacham Community Housing (PCH), a local volunteer organization supportingaffordable senior housing, expanded its mission to include providing services - such asthe weekly farmers market - for seniors. The farmers market has been very successful,but more is needed. A year-round caf and store in the village became a priority forPCH. Slowly but resolutely, steps have been taken to turn this idea into a reality.

The first step was to acquire a centrally located building for the new enterprise. Townresidents voted to sell the old town office (now Craft Guild) and adjoining building toPCH for one dollar for purposes of opening a store/caf. The adjoining building was astore - the Union Store - in the 19th century. It is located directly across the street fromthe library. PCH applied for and received a $40,000 pledge from the Preservation Trustof Vermont (PTV) for money to help renovate this historic Union Store building.

In addition to PTVs grant, another $30,000 was raised from foundations and localdonors. These preliminary funds were spent on having Black River Design Architects doa complete structural analysis of the building (PTV); hiring an architect to create afeasibility report and interior and exterior designs (Vermont Community Foundation);and having the electrical systems updated, the building repainted, and a new septic tank


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installed (local donors). Local donors also bought store equipment from the now-closedWest Barnet Store.

During the past two years, a local collaboration of town organizations also took on thecaf/store as a priority issue and set in motion the gradual establishment of an

organizational structure to oversee the project. This resulted in the formation of aLimited Liability Corporation (LLC) to operate on a model successfully used in the townof Hardwick for its community-supported restaurant, Claires. Kristina Michelsen, alawyer who was involved in the Hardwick project, assisted in the formation of the LLCand in designing the financial relationship among PCH, owner of the building; the LLC,which would assemble the financing package and oversee the renovation and fitting-up ofthe building; and the eventual operator of the caf. The LLC is a for-profit subsidiary ofPCH and will protect PCH from liability related to the conversion of the building and theoperation of the caf.

For many months, the LLC was engaged in finding a suitable land-based wastewater

system for the caf. Such a site has been identified, and a design is underway. Withthese crucial steps forward, PCH now stands on the threshold of moving ahead torenovate its historic building and open the Peacham Caf and Store.

In this day and age, the old entrepreneurial model for retail establishments in small ruralmarkets is no longer viable. The closing of countless village stores attests to this fact.No longer can an entrepreneur establish a coffee shop or grocery store in a rural villageand expect to turn a profit. A new model, of community ownership and volunteersupport, is taking hold across Vermont and the country. With this new model, small,rural communities are once again enjoying the vitality and other benefits of a store andgathering place in their own neighborhood.

This business plan is based on this new model. It reflects a can-do attitude, mirroring theenthusiasm of all the people and groups that are making this dream come true. But it iscouched in a thoughtful, carefully planned, and appropriately cautious approach.

Mission of the Caf/Store

The mission of the Caf/Store is two-fold:

To create a financially sustainable, community-supported caf and store inPeacham that meets the communitys needs for a local eatery, gathering place,and staple grocery; and

To provide a market for local food producers in Peacham and surroundingcommunities by selling their produce and incorporating them as much as possiblein the caf menu.


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In addition to defining the above mission, the Peacham Caf LLC has taken the furtherstep of defining what we will consider to be success. There are several criteria:

1. A caf is operating in Peacham by early 2014.2.

The caf provides at least breakfast, lunch, and afternoon tea/coffee/snacks.3. The store provides staples such as milk, bread, and eggs, as much as possiblefrom local sources.

4. The cafe is pleasant and welcoming with high quality offerings. People choose tospend time there.

5. The caf is perceived to be "appropriate" for Peacham, in that ito Uses quality materials and design (and local workers);o Embodies values of thrift, respect for the earth, and support of local

enterprises.6. The cafe operates in a way that is sustainable indefinitely. That would mean it

o Complies with relevant laws and regulations;o

Is cash-flow positive on a quarterly basis, at least after 2-3 quarters;o Produces a profit after deduction of operating expenses plus a realistic

accrual for periodic replacement/refurbishment of equipment andfacilities;

o Pays a salary that is sufficient to keep the manager happy.This list will likely be modified over time, but it provides the LLC and others whobecome involved with the project with the practical and philosophical basis for theendeavor. Discussions with others in town have identified a range of other practical usesfor the caf. These range from a venue for literary, musical and game events; displays ofart; senior meals; and other events.

Organizational Structure

The organizational structure was developed through a thoughtful process consideringbasically three options: non-profit cooperative; for-profit commercial; and a combinationof the two. We canvassed similar communities in Vermont and New Hampshire to seewhat their experiences could teach. The Preservation Trust of Vermont has had an activehand in many of these community projects, and its leader Paul Bruhn provided invaluableadvice for us. He confirmed that our proposed organizational structure - a combinationnon-profit/for-profit, with the non-profit PCH as the parent, a for-profit LLC as theoperating group, and a store manager to run the business made sense based on othersexperience (Putney Store, Brattleboros Latchis Theatre, Hardwicks Claires, forexamples). Bruhn stressed that PCH should own the building and the equipment. Thatway, if a store manager leaves, the infrastructure is in place for another manager to stepin, ensuring continuity of the operation.


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One of the important features of the proposed structure is that it provides a mechanismfor individuals to make tax-deductible donations to the project through PCH. PCH willthen pass along the gift to the LLC for use in renovating the building and purchasingequipment. The expectations for funding are covered in another section on financing.However, it is assumed that a considerable amount of local funding will be raised through

this method of gift-giving.

The organizational structure is illustrated in the chart below. It includes an InterimPlanning and Management Team that was phased out with the creation of the LLC.

Organizational Structure

Peacham Caf/Store

Peacham Community Housing- 501(c)-3Board of Directors

(parent organization provides for tax-deductible gifts for caf renovation)

Interim Planning and Management Team

(determine project feasibility,appropriate organization phased out)

Peacham Cafe Group, LLC(for-profit subsidiary of PCH - develops

business plan; raises funds for renovationand initial operating expenses, oversees

renovation and set-up; manages facility; andholds the lease with the cafe manager)

Peacham Caf and Store Manager/Chef

Caf Food Marketing & CafStaff Preparers Promotion Operation


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The seven members of the Peacham Caf LLC are:

Joe AlperCharles ByronDave Edwards

Bob FuehrerBarry LawsonBetsy McKayMary Ellen Reis

Each of these individuals brings relevant skills, experience and enthusiasm to the team.They have overseen caf/store design, obtained cost estimates, located a site for awastewater system; solicited foundations for grants. They have begun work on a localfundraising campaign, developing a strategy and creating a brochure. They are workingon permits, recruiting volunteers, and organizing the work schedule. Soon, work willbegin on a web-site. Throughout, the LLC group has been carefully documenting the

process for posterity and so that other communities can learn from our experience.

The LLC members have developed the following committees to spread the workload:

Financial and Accounting Fundraising Marketing and Promotion

Renovation and Design Volunteer Coordination Documentation

Other professionals involved with the project include:

Patrick Kane, architect Steve Pitkin, engineer and cost estimator Kristina Michelsen, lawyer and advisor Paul Bruhn, Preservation Trust of Vermont, advisor Don Marsh, sanitary engineer Ed Shields, local building contractor Neal Gombas, local building contractor Allen Thresher, local excavator Robert Van Vranken, local artist Tony Cuda, local baker and vendor Robert Pelosi, Vermont state wastewater engineer

Caf/Store Manager

The Caf LLC is responsible for selecting a capable manager for the new enterprise.Several criteria have been developed. They include experience in cooking and baking, afriendly personality, strong business acumen, and a passion for the collaborative andcooperative nature of this project and its community-minded mission.


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With help from Tony Cuda, a popular vendor in the summer and winter PeachamFarmers Market, a conceptual floor plan for the caf/store has been designed. We havediscussed different menus and considered likely prices. Tony has also researchedequipment, including used equipment. A Program Committee came up with threeversions of opening hours for the caf.

Schedule for the Project

The LLC has created a schedule for the completion of the project, to the point where thecaf/store opens for business. The schedule includes necessary assumptions regardingavailability of funds, availability of volunteers, scope of the renovations, procurement ofpermits, and other intangibles. The proposed schedule is outlined on the following page.

Cost of Project

The remaining cost to renovate and fit up the old Union Store for use as the new PeachamCaf/Store is estimated at $150,000 - $160,000. This estimate comes from a qualifiedarchitect working together with an engineering/building consultant plus input from localcontractors and building material suppliers. The main reason for the range in estimatedcost is that it is difficult to predict how much of the labor can be done by volunteers. Weanticipate using a volunteer crew for the interior demolition work, for example, and theLLC plans to take on many of the responsibilities of clerk-of-the-works. Otherconstruction work may be volunteer as well. Volunteer efforts could make a substantialbut difficult-to-quantify dent in the total project cost.

Another hard-to-determine cost is site work to be done for the parking area outside thecaf/store. A telephone pole currently resides in the middle of this area and may need tobe moved. In addition, a water drain should be re-done, and the entire parking area needsto be reconfigured.

We expect some of the costs to increase and some to decrease as the project movesforward. The cost of concrete, for example, has been going down, so it is expected thatthose costs will be less than estimated.

The Peacham Caf Group LLC is very frugal. We have considerably scaled down theproject from its original conception as a full-fledged grocery store and caf, combiningthe Craft Guild building and the Union Store building. This proved too ambitious andexpensive. What we have now is a simple design, a basic renovation, a limited grocery, asmall caf, in one building. However, we also believe that the quality of the renovation


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By December 30, 2012 Establish Challenge Grants

Undertake Initial Design Work

Create Organizational Structure

Develop Business Plan

Research Permits, InfrastructureClean Out Barn

Select Historical Exterior Design

Produce Brochure

Select Logo

Develop Fund-Raising Plan

By June 30, 2013 Design Wastewater System

Complete Interior Demolition

Begin Permitting Process

Pour Concrete Floor

Refine Project CostsBegin Site Work

Raise Initial Funds to Match Challenges

By September 30, 2013 Continue Fund-Raising

Install Wastewater System

Undertake Rough Carpentry Work,including Insulation and Wallboard

Perform Initial Electrical and Plumbing,Flashing and Waterproofing

By December 31, 2013 Continue Fund-Raising

Install Windows, Doors, Design ofHistoric Exterior to Building

Continue Interior Work, includingBathroom, Kitchen, Ventilation and FireProtection

By March 31, 2014 Finish Interior Work, including Cabinets,Equipment, Appliances

Complete Plan for Landscaping and

Exterior Appearance

By June 30, 2014 Complete Exterior Landscaping

Finish Painting

Open For Business


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and the caf/store equipment should not be compromised to save a few dollars. Thosesaved dollars will only have to be spent later on fixing or replacing or otherwisedealing with cheap materials or workmanship. We believe that the energy-efficient,simple, yet attractive ambience of the caf will contribute to its success.

AnticipatedRevenues

Funds for Renovation

Funding for renovation costs would come primarily from grants and gifts from localdonors. While we use the term donors, these contributors are also investors in theircommunity. The goal is to raise $60,000 in foundation grants and an additional $100,000from local donors. We anticipate the following breakdown:

Vermont Preservation Trust $40,000 (pledged)

Vermont Community Foundation $10,000 (partially pledged)Other Vermont/New England Foundation Support $10,000

Total Grant Support $60,000

One (1) major local donor $25,000 (matching, pledged)Lead local donors @ $5,000 plus $50,000 (partially pledged)Multiple smaller supporters $25,000

Total Local Support $100,000

Total Renovation Revenue $160,000

To date (June 2013), a $40,000 historic preservation grant from the Preservation Trust ofVermont has been pledged. The Vermont Community Foundation has so far given$2,500. In addition, a major local donor has offered to match up to $25,000 in localcontributions. A few lead donors have already collectively pledged $15,000, and severalsmaller pledges have also been made. Our plan is to find additional lead donors ($5,000-plus each) not only to secure the $25,000 local matching grant, but also help to match thePTV grant, before we begin soliciting smaller gifts from the broader community. Somein-kind construction costs have been pledged, as well as volunteer labor for at leastinterior demolition and painting.

A brokerage account for the receipt of securities and a checking account have beenestablished to hold the funds raised for the project. Except for essential initialinfrastructure costs, no major expenditures will be made until $100,000 has been raised.Therefore, individuals will either pledge funds or provide actual funds to be kept in thebank account until sufficient funds have been raised. If in the unlikely event thatsufficient funds are not raised, any accumulated funds will be returned to the donors.


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Funds for Operating Costs

Once there is positive momentum toward raising the required renovation costs, acampaign to raise up to $25,000 in initial operating costs will begin. The purpose of thisfundraising is to pay the operators overhead expenses utilities and insurance, for

example for a short start-up period until the operator is over the hump in terms ofstart-up costs for the caf/store. We envision raising these initial funds after a modelused by other communities in Vermont - the Community Supported Restaurant (CSR)model. In the CSR model, customers buy certificates up-front, which they can usegradually (a certain amount per month) towards goods and products from the caf/storeover a pre-determined period of time. Using the model from Claires Restaurant inHardwick, we propose something along the following:

Selling shares (certificates) for $100, $150, and $200. Shareholders can redeem $10 oftheir share each month until the value of the certificate is reached. Shareholders wouldhave to use the $10 each and every month, not being allowed to hoard shares for more

than one month (although shareholders could give their monthly share to someone else).This would encourage people to use the caf on a regular basis and would also ensure thatthe caf operator does not lose significant income in any one month by shareholdersredeeming large amounts at one time. We would also sell Summer Shares that wouldencourage the numerous people who only spend summers in Peacham to be able tosupport the caf/store.

The LLC will help the caf operator sell these certificates. After this initial boost,ongoing overhead costs will be the responsibility of the caf manager.

The Caf Operators Business Plan

Candidates for caf operator will submit a business plan, including cash flow, to the LLCfor review. The LLC may help the operator with this plan if desired.

The Program Committee will work with the operator to determine the opening hours forthe caf. The hours should meet the needs of the Peacham community as much aspossible. It is anticipated that the initial hours will be roughly 7 a.m. to 2 p.m., at leastfour days per week. Based on this schedule, the operator will decide the menus to beoffered.

In the first few years of operation, the rent charged to the operator will clearly favor theoperator. The success of the caf is the high priority, and getting off on an economicallysound footing is essential to that success.

An expected, reasonable five-year cash flow for the caf/store and for the LLC areprovided in a table on the next page. The general assumptions supporting these estimatesare shown in yellow.


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Caf Business Date Prepared: 1/20/12

Revised 5/25/13Totals

Year 2014 (6 mos.) 2015 2016 2017 2018Revenues

Cash Brought Forward $0 $266 $9,713 $15,999 $24,573Sales $14,976 $54,000 $102,960 $129,024 $140,400 $441,360

TOTAL REVENUE $14,976 $54,266 $112,673 $145,023 $164,973 $491,910

ExpensesCost of Ingredients, and

other products for sale $5,990 $21,060 $39,125 $47,739 $49,140 $163,054Initial Capital Investment

by OperatorCost of Labor $6,720 $16,800 $48,384 $62,208 $69,120 $203,232Rent to LLC $0 $3,843 $5,460 $6,188 $6,637 $22,128

Other operating costs**** $2,000 $2,100 $2,205 $2,315 $2,431 $11,051

TOTAL EXPENSE $14,710 $43,803 $95,174 $118,450 $127,328 $399,465

Contribution to Reserve

Fund $0 $750 $1,500 $2,000 $2,500 $6,750Cash brought forward $266 $9,713 $15,999 $24,573 $35,145 $85,695

Assumptions 6-mo year2014 2015 2016 2017 2018

Customers per day (average) 26 36 55 64 65Average sales per customer $6.00 $6.25 $6.50 $7.00 $7.50

Weeks Open 24 48 48 48 48Sales per Day (ave) $156 $225 $358 $448 $488Days Per Week Open (ave) 4 5 6 6 6

Hours Per Day (ave) 7 7 10.5 12 12Hourly Wage Paid (total, all people, per hour) $10.00 $10.00 $16.00 $18.00 $20.00

Rent Formula:Base Rent 0 3600 3600 3600 3600

% of sales over 5.00% 10.00% 15.00% 15.00% 15.00%

Sales Threshold $30,000 $30,000 $30,000 $30,000 $30,000Cost of Goods as % of Sales 40% 39% 38% 37% 35%Increase in Other costs per year 3% 3% 3% 3% 3%

**** other operating costs Replacements, new appliances, equipment

customers per hour 3.7 5.1 5.2 5.3 5.4

sales per hour $22.29 $32.14 $34.05 $37.33 $40.63

wages per day $70.00 $70.00 $168.00 $216.00 $240.00

other operating costs/mo $166.67 $175.00 $183.75 $192.94 $202.58


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LLC Date Prepared: 01/13/12

Date Revised: 06/01/13Totals

Year 2013 2014 2015 2016 2017 2018

Revenues

Cash Brought

Forward $0 $24,500 $900 $1,821 $1,035 $3,903

Gifts-Donations $40,000 $40,000 $2,500 $1,000 $1,000 $1,000 $85,500

Grants $50,000 $10,000 $2,500 $0 $0 $0 $62,500Rent from Caf $0 $0 $3,843 $5,460 $6,188 $6,637 $22,128

Contribution to

Reserve Fund $0 $0 $750 $1,500 $2,000 $2,500 $6,750

TOTAL REVENUE $90,000 $74,500 $10,493 $9,781 $10,223 $14,040 $209,037

Expenses

Construction $80,000 $80,000 $2,500 $2,500 $0 $0 $165,000

Other Costs -

promotion, admin. $500 $2,500 $2,500 $2,500 $2,500 $2,500 $13,000

Minimum Payment to

PCH in lieu of rent $0 $3,600 $3,672 $3,745 $3,820 $3,897 $18,735

Volunteer Labor $15,000 $12,500 $2,500 $5,000 $5,000 $5,000 $45,000

TOTAL EXPENSE $65,500 $73,600 $8,672 $8,745 $6,320 $6,397 $169,235

Cash brought forward $24,500 $900 $1,821 $1,035 $3,903 $7,643

Assumptions 2013 2014 2015 2016 2017 2018

Building Insurance $0 $500 $510 $520 $531 $541

Water-Village $0 $350 $357 $364 $371 $379

Property Tax $0 $750 $765 $780 $796 $812

Septic Service $0 $500 $510 $520 $531 $541

Electricity $0 $500 $510 $520 $531 $541

Telephone $0 $400 $408 $416 $424 $433

Propane Gas $0 $600 $612 $624 $637 $649

Annual

Increase 2% $0 $3,600 $3,672 $3,745 $3,820 $3,897


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PCH LLC Financial Relationship

The collaboration between PCH (owner of the building) and the LLC is set up in such away that the non-profit PCH is protected from liability by the for-profit LLC; thefinancial arrangement between the two entities will reflect that reality. For tax

considerations, the LLC will not pay PCH rent for the space, but will distribute dividendsthat will at least cover any out-of-pocket expenses that PCH incurs for the building. Thiswould include, for example, taxes, utilities, and insurance. With the eventual success ofthe caf/store, this dividend would increase. The LLC, as the middle party (betweenPCH and the caf operator), will carry the responsibility for capital investments in thecaf over time, using funds (from the operators rent) set aside in reserve for suchpurpose.

Promotion and Marketing

One of the major tasks of the LLC is to promote the project in the town and local region.While there is already considerable enthusiasm for the venture among town residents andparticipants in both the summer and winter farmers markets, much work remains to bedone to inform and encourage involvement in this community-building project. Acommittee of the LLC has been formed for the purpose of promotion.

A brochure has been prepared to serve as a part of the fund-raising program, and aversion of the brochure will also serve the more general purpose of informingtownspeople and others of the new facility and encouraging their support and patronage.The information in the brochure and other facts about the project will be available on awebsite. Links to other town websites, as well as regional organizations that can supportthe caf/store, will be created.

In addition, and particularly in light of the forthcoming fundraising, a series of questionsand answers have been developed to address a wide range of concerns that localsupporters are likely to have. See the Frequently Asked Questions section at the end ofthis business plan.

When the caf/store begins operation, its opening will be announced and broadcastlocally and within the region and state through newspaper ads, posters, and short articleswritten as press releases for the media. The title Caf and Store has been chosen toemphasize both the caf and convenience goods aspects of the operation. The namePeacham has been added to take advantage of the brand that Peacham representsthroughout the state as a tourist destination boasting beautiful landscapes and historicvillage architecture, in addition to the various regularly scheduled events (e.g., July 4,Peacham Acoustic Music Festival, Fall Foliage) throughout the year.


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The Market for the Caf

Demographics

Peacham, Vermont is in Caledonia County, located in the northeast section of the state, atthe southern edge of the Northeast Kingdom. The area is served principally by Interstatehighway 91 (7 miles to the east), US highway 2 (6 miles north) and US highway 302 (9miles south). It lies at the intersection of the two major black-topped roads in town.

The population of Peacham, according to the 2010 Census, was over 700 permanentresidents. The population increases in the summer with seasonal residents arriving.Peacham is a family town, and children under 20 years make up about 30% of itspopulation. The town also has many retired residents; more than 20% of the residents areover 60 years old. Its working population includes farmers, craftsmen, loggers,professionals, and other self-employed workers. Peacham has seven working farms and

several small businesses.

Customer Mix

Local residents, year-round and seasonal, would be the foundation of our business.However, tourists are also expected to be an important part of the customer base.Peacham is a destination on state tour maps and is one of the most photographed villagesin New England. The town sees many tourists and other travelers throughout the year.Peacham has been a popular stop for tour buses from around the United States as well asCanada, although bus tours have declined in recent years with the lack of a reliable eatingplace. Harveys Lake in West Barnet is located less than two miles from the caf/storeand Groton State Park lies partially within Peachams boundaries. The caf/store willdraw visitors and tourists from these areas.

There are several categories of customers:1. Regular local shoppers, including seniors, for grocery staples.2. Local residents, including seniors, for the caf.3. Tourists for groceries and the caf.4. Workers from Peacham and surrounding towns including carpenters, plumbers,

electricians, farmers and others for morning coffee, pastry and lunch from the caf.5. Outdoor sports people for groceries and the caf.This range of clientele made the former Bayley-Hazen Store in South Peacham asuccessful operation, despite competition from at least one and sometimes two stores inWest Barnet, only a few miles down the road. In its last year of operation, the Bayley-Hazen Store had revenues in excess of $500,000. Admittedly, the store offered a muchwider range of groceries and prepared foods than our caf/store will be able to provide.However, the Peacham Caf and Store will offer a respectable range of prepared foodsand, more importantly, inside and (seasonal) outside seating, which the Bayley-Hazen


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Store did not provide. The caf/store will also be the site of the winter farmers market,and will offer and use local food as much as possible.

The bottom line is that the caf/store operator and the LLC must be able to lure customerswith attractive pricing; good-quality food; food that people want and need; and an

attractive, welcoming atmosphere. Our business model keeping the operators cost to aminimum by charging a minimal rent and providing the major equipment is designedspecifically to meet this challenge. The model is working in similar communities aroundVermont, and we are confident that it can work here.

Permitting and Regulations

The establishment of a public caf and retail store requires a set of permits andcertificates for construction and operation. A list of these permits has been identified.They include building permits, fire prevention, American Disabilities Act (ADA),

wastewater disposal, water and health certificates. The architect will guide us throughthe permitting process. Conversations have begun with permitting agencies, and weanticipate no permitting problems.

Collaboration with the Peacham General Store

The LLC has been discussing this project with the proprietors of the Peacham GeneralStore. This store is currently a part-time operation that specializes in gifts rather thanconvenience goods, but it does sell prepared lunches sporadically. While many peoplefeel that this store would be an ideal location for the proposed caf and store, it is notavailable. However, we are working to develop a collaborative relationship with theproprietors that could result in a coordination of opening hours; provision of some menuitems at the new caf and store by the General Store proprietors; and cooperation on theredesign of the parking area serving both operations.

Competition

Competition for the caf/store includes Martys First Stop in Danville, a major magnetalong Route 2 providing a wide range of groceries and non-food items, gasoline, a bank,and a small hardware store. Martys is very successful and patronized by many Peachamresidents. It is ten miles away.

Bentleys is a bakery in Danville ten miles from Peacham that provides breakfasts andlight lunches as well as bakery products. Bentleys closes during the winter months, butduring the spring, summer and fall it draws many customers, some of whom we wouldwant to attract as well.


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The West Barnet Quick Stop four miles away has become a dependable and convenientdestination for convenience food, gasoline, and some non-food items.

The Peacham General Store in the center of Peacham, as mentioned, is open irregularly.In the summer, a lunch menu is offered fairly regularly.

The Peacham Caf and Store will not attempt to compete in any meaningful way with themore comprehensive grocery stores in the area. People will not be able to do their largegrocery shopping at the caf/store. Grocery items will be limited, and will be attractiveto the person who just needs to grab items such as a gallon of milk, some cheese, bakeryproducts, or some eggs. We envision it being the home of the winter farmers market, andthe caf/store will offer local produce to the extent possible; this offering will be a uniqueand strong attraction.

Contingencies

We recognize that there are risks involved in starting an operation such as the caf/store.We have set out to identify those risks and to prepare contingency plans in the case ofproblems. The following is a list of the most obvious problems that could arise and ourintended response.

What if the necessary funds are not raised within a reasonable amount of time?

This is an appropriate question for people who have donated money. Donations will beheld in a bank account, and no donations will be spent until enough funds have beenraised to have an attractive, insulated space with a bathroom and a wastewater system.

What if volunteer labor fails to materialize?

Our $160,000 cost estimate assumes no volunteer labor (except for interior demolition).Whatever volunteer labor we use will reduce our estimated cost.

What if the costs are underestimated and there is not enough money to finish?

Although we have hired professionals to do the estimating, there is always a risk of costoverruns, and we will continue to refine the estimates as necessary. The project budgetincludes $10,400, or 10% of the construction costs, for contingencies.

What if needed permits are not granted, or not granted in a timely manner?

A complete structural analysis of the building, sponsored by the Preservation Trust ofVermont, was conducted by Black River Design Architects. Our architect has examinedthe structural analysis, and from his experience with permitting on other projects, he does


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not foresee problems with permits on this project. Because of the age of the building, thestructural analysis recommended getting a fire prevention official on board early toidentify code issues regarding fire prevention. In general, we feel that our best strategy isto contact permitting agencies as soon as possible to let them know about our plans sothat, if there are concerns, they will be identified as quickly as possible.

What if there are delays in the construction work?

Delays are inevitable, and the use of volunteer labor would increase the likelihood thatwork will not proceed as quickly as it might with a fully paid workforce. We have set apreferred opening date of spring 2014, but are prepared to extend that if necessary. It willbe important, however, to capture as much of the summer business as possible.

What if we lose the caf/store operator?

Our business model is set up to give the caf operator every financial advantage to make

a go of the business. The manager will be able to operate without any mortgage debt orlarge debt for equipment, and the rent paid to PCH will be minimal. The rent will besubsidized in the early going. In this way, we greatly reduce the financial burden on thebusiness and increase the likelihood of success. However, the manager may leave forother reasons than financial failure. In that case, because the building and most of theequipment will be owned by PCH, a new manager can step in and start up quickly andwith little capital expense.

What if the situation at the Peacham General Store changes and becomes competition forthe new caf/store?

The Peacham General Store, located adjacent to the caf/store, has potential to be a full-time store as it used to be years ago. If the current or future owners decided to open full-time, we would hope that the two businesses would complement each other throughproduct differentiation. For instance, the General Store could sell groceries, while thecaf concentrates on prepared food and a sit-down breakfasts and lunches. Such ascenario could benefit both businesses. We are working cooperatively with the currentowners of the General Store on issues of mutual interest (parking, landscaping) and havetalked to them about the possibility of their selling prepared food at the caf. We expectthat that cooperative relationship will continue.

Frequently Asked Questions

1. Why do we need a caf/store in Peacham?Peacham has been without a store or gathering place since the Bayley-Hazen storein South Peacham closed about 10 years ago, and the town has missed theamenities that a caf/store provides. Among these amenities are a place tosocialize over a cup of coffee and a sandwich or pastry; a place to get take-out


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food; and a place to buy basic groceries like milk, eggs, and bread. This isespecially important for our less-mobile seniors. By renovating the historic UnionStore, the project will also enhance the look and vitality of the village, andprovide limited jobs.

2.Is there a sufficient market for a caf in Peacham, especially with Bentleys Cafin Danville?

When it was open, the Bayley-Hazen store and deli in South Peacham did a briskbusiness in spite of two other similar stores in West Barnet three miles away. ThePeacham Farmers Market also draws substantial business. So the market for afood outlet in Peacham exists.

3. Why do you think this project will succeed when so many similar stores have beenclosing in towns around Vermont, including here in Peacham?

The stores that have closed typically were based on the traditional business modelwhere an entrepreneur invests in a building and equipment and tries to pay backthe loans in addition to making a living by selling goods. In a small market, thereisnt enough income to do this. Around the state of Vermont a different modelhas developed: a local non-profit organization raises money to buy and equip abuilding, then leases it at minimal cost to a manager to run the business. Withoutthe burden of a mortgage or large debt, and with wide community support, thebusiness has a good chance of success. Claires Restaurant in Hardwick is anexample of this approach. We are following this model.

4. Wouldnt it make more sense to use the existing Peacham Store?Peacham Community Housing (PCH) and the caf group have explored thepossibility of purchasing or leasing the Peacham Store, which is currently openonly on a limited basis. The owners of the store are not interested in selling, sowe are working cooperatively with them as we go ahead with our plans torenovate the Union Store building.

5. Wont this caf conflict with the Librarys Friday Coffee Hour? The librarys popular and successful coffee hour on Friday is a great tradition thatwill continue. It operates one morning a week for 60-90 minutes, is free, and isgeared toward locals. The caf will be open much more often, will service thegeneral public as well as locals, and will offer a selection of drinks and bakeryproducts as well as basic groceries. The two operations are fundamentallydifferent, yet not incompatible. Residents who come to the caf may also bedrawn to visit the library, and outsiders might shop for books at the ongoinglibrary book sale. The cafs baked goods could be a source of refreshments forthe Friday Coffee Hour.


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6. Will Town money be used on this project?It is not anticipated that any public money will be used to renovate the caf/store.Funds for renovation will come from a number of sources including privatefoundations, businesses, and local residents. Town cooperation will be sought,

however, to define the parking area, revise the drainage basin, and coordinatesnow plowing in the winter.

7. Who will own and manage the caf?Peacham Community Housing owns the building, and is leasing it to a group ofresidents who have formed a Limited Liability Corporation (LLC) to raise moneyand oversee the renovations. When the building is ready, the LLC will lease thecaf business to an operator.

8. Do you plan to hire people to work in the caf?The caf/store operator may hire additional staff if business can support it. Thiscould be a great opportunity for part-time work, including for young people.

9. What days/hours do you plan to be open?The exact schedule has not been determined, but we do plan to be open mostweekdays during the breakfast and lunch hours.

10.What do you plan to sell at the caf/store?We plan to sell cold and hot drinks (coffee, espresso, cappuccino), pastries,sandwiches, pizza, and soup - for on-site consumption and for take-out. We alsoplan to sell basic groceries like milk, eggs, and bread. There are no plans to sellalcohol or tobacco at this time. We want to use and sell local food as much aspossible.

11.Arent there limitations on restaurant seating because of the septic system?We have located a site for a land-based wastewater system, which is therequirement for indoor seating and a kitchen. We plan to be able to seat around20 people inside and an additional 16 outside.

11.Parking could be a real problem, and there is that telephone pole right in front ofthe building. How will you provide sufficient, safe parking?

We are working with the utilities to relocate the telephone pole and with the townand the owners of the Peacham Store to enhance the look and the functioning ofthe parking lot to make it bigger, safer and more efficient.


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12.How can people in the community be involved in the project?We welcome everyones suggestions financial, culinary, design, whatever -during the planning phase of the project. Well need volunteers to help with the

interior demolition and fix-up of the building and to work at the caf/store. Whenthe caf is closer to opening, you can buy a certificate for use over time, whichwill provide up-front money for operating costs. And, of course, were countingon local donations to pay for the renovations. Please contact one of the LLCmembers (listed below) if you want to contribute.

13.Who are the decision-makers on this project?Peacham Community Housing, owners of the building, and the Peacham CafGroup Limited Liability Corporation (LLC) are in charge of the project.

Peacham Community Housing

Joseph BarbieriOlive CheneyMark CloughCornelia HasenfussRoss MacDonald, ChairDiana SenturiaDart Thalman

Peacham Caf LLC

Joe AlperCharlie ByronDave EdwardsBob FuehrerBarry LawsonBetsy McKayMel Reis

peacham cafe business plan

Documents