Northwest Iowa’s Premiere Sports Bar
Cheap Seats Sports Bar 1515 Central Avenue Estherville, Iowa 51334 Telephone: 712-362-5555 Fax: 712-362-5556 upperdeck@ncn.net J.A., President
This document contains confidential information. It is disclosed to you for information purposes only. Its contents shall remain the property of Cheap Seats Sports Bar and shall be returned to Cheap Seats when requested. This is a business plan and does not imply an offering of securities.
Table of Contents Table of Contents.............................................................................................. 2 Executive Summary.......................................................................................... 3 Mission Statement ............................................................................................ 5 Company Overview/ Description .................................................................... 5 Marketing Plan .................................................................................................. 7 Product .................................................................................................... 7 Price......................................................................................................... 8 Place ........................................................................................................ 8 Promotion ............................................................................................... 8 Competitive Environment ..................................................................... 9 Competitive Advantage....................................................................... 10 Operating Plan ................................................................................................ 11 Financial Plan .................................................................................................. 14 Appendix .......................................................................................................... 15 Exhibit 1- Break Even Analysis.......................................................... 15 Exhibit 2- Cash Flow Analysis ........................................................... 16 Exhibit 3- Balance Sheet ..................................................................... 17 Exhibit 4- Income Statement .............................................................. 18 Exhibit 5- Twelve Month Profit and Loss Projection ...................... 19 Exhibit 6- Monthly Cost of Living- J.A. ............................................. 21
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Executive Summary
The purpose of this business plan is to support a request for a $100,000 ten-year bank loan for the purchase of equipment, furniture, and inventory for a start-up sole proprietorship. The Owner will initially invest $20,000 into the business. Cheap Seats Sports Bar is a restaurant which will provide excellent food for family diners as well as the sports enthusiast. It is scheduled to open on January 1, 2006 in Estherville, Iowa. Cheap Seats will be a sole-proprietorship owned and operated by J.A.. J. has had seven years experience in the restaurant business. He was assistant manager at the Estherville Pizza Hut for several years and has received a degree from Hawkeye Community College in Marketing Management. J. also has an uncle who owns a bar and will be able to give some advice. Cheap Seats Sports Bar will be a new and exciting addition to the Estherville area. We will use sophisticated computer programming for tracking inventory, sales, labor, and business accounts. Our staff will be highly trained at their positions and will be able to offer the best service possible. Cheap Seats will be a convenient place for Iowa Lakes Community College students to socialize with their classmates, as it is only a short walk from campus. The business will also attract customers from rural areas of northwest Iowa, particularly to the east. It’s location is ideal for traffic coming through Estherville and is located close to two major hotels in Estherville. The business will have a presence at all local sporting events through
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advertising and sponsorships. There also will hold promotional events throughout the year including pool, and dart leagues. Cheap Seats will offer specials for televised games, and before and after local sporting events. This is something that is unheard of at similar establishments in town. Cheap Seats Sports Bar will have a menu rich in variety with everything from Black Angus steaks to pizza to fried ice cream. Our chefs are experienced and are prepared to create a wide variety of delicious foods. One of the ways we will bring people in will be our daily noon menu specials such as a $4.99 burger and fries. The thing that will set Cheap Seats apart from the competition will be its numerous high definition plasma TVs. Statistics show that the majority of Estherville homes still have standard definition televisions and service. Cheap Seats will provide an atmosphere that makes you feel as if you were right at the game with large screens and top of the line audio equipment. Based on the financial and competitive analysis presented in this plan, Cheap Seats Sports Bar will be successful. We anticipate that Cheap Seats will become firmly established in the Estherville area and plan on opening up branches in other northwest Iowa towns. Cheap Seats will bring a new style of dining to Estherville’s “outdated” restaurant and bar scene.
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Mission Statement
Cheap Seats Sports Bar’s mission is to provide a wide variety of quality food and drink in an exciting sports atmosphere. We will strive to be the leader of food and drink service for northwest Iowa while being respectful to the community, its citizens, and the environment.
Company Overview/ Description Cheap Seats Sports Bar is a new restaurant/bar which I am opening in my home town of Estherville, Iowa. I have a three year lease on the property at 1515 Central Avenue, which includes a 3000 square foot building and 28,000 square feet of parking space. The restaurant will seat from 100 to 150 guests. The estimated opening date is January 1, 2006. This date will coincide with Estherville’s annual Winter Sports Festival weekend. The location is close to the shopping mall and the community college, so I expect to attract out-of-town shoppers and college students as well as the local clientele. Estherville has also opened a new Regional Wellness Center in this part of town. I expect to draw members from the center who are thirsty and hungry after their workouts. Cheap Seats will have a sports-based theme with a collection of national, state and local sports memorabilia. The restaurant (especially bar area) will be equipped with a variety of different size plasma high definition television monitors. It will be the first establishment in northwest Iowa where you can watch games in high definition broadcast. In the bar area there will be a pool table, dartboard, and foosball table for the customer’s enjoyment. Cheap Seats will sponsor a pool and dart league with food and drink specials during league
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play. The walls will be decorated with pictures, framed jerseys and newspaper articles, and other sports related items. There will be a special section dedicated to area sports teams with old uniforms, newspaper articles and pictures displayed. There will be a small amount of Estherville Lincoln Central memorabilia for sale. The restaurant will have a full size menu which would include burgers, salads, wraps, fried food, steak, and pizza. I will advertise and serve Black Angus steak which is popular in the Estherville area. There will be a variety of bottled and draft beer selections. I have also reached an agreement with Little Swan Winery, a local winery, to serve Estherville brand wines. Cheap Seats would be open daily from 11:00 a.m. to 2:00 a.m. with the kitchen closing at 10:00 p.m. There will be a noon special every weekday and nightly specials on Friday and Saturday. There will be special promotions for Sunday afternoon and Monday night football games, and Big 10 basketball and college basketball tournaments. J. A. will be the president and sole proprietor of the Cheap Seats Sports Bar. He has a Marketing Management degree from Hawkeye Community College and has over seven years of experience in the restaurant business, four of which were as assistant manager of the Estherville Pizza Hut. He also has worked for a local summer resort where he was in charge of guest services. J. A.’s uncle was in the bar business for over twenty years and will be able to provide advice.
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Marketing Plan Product Cheap Seats Sports Bar will sell: Appetizers: Buffalo wings, boneless chicken wings, onion rings, cheese balls, breaded mushrooms, mozzarella sticks, nachos, and breadsticks Beef: Black Angus steaks and burgers prepared in a variety of ways Chicken: Grilled, marinated, and fried chicken breast prepared in a variety of ways Fish: Breaded or Grilled walleye Healthy: low-carb salads and wraps Italian dishes: Pizza, Spaghetti, Chicken Alfredo, and pasta marinara. Deserts: Fried Ice cream, pies, and frozen treats. Drinks: Pepsi products, ice tea, lemonade, coffee, orange juice, red bull Beers: Draft beers will include Bud Light, Budweiser, Miller Lite, Coors Light, Michelob Golden Light, Amber Bock, Boulevard. Bottled beers will include Bud Light, Budweiser, Miller Light, Coors Light, Busch Light, MGD, Heineken, Corona, Red Stripe, Blue Moon, Ice House, Smirnoff Ice, and Bacardi Razz. Liquors: selection of top and bottom shelf rum, tequila, schnapps, scotch, vodka, and specialty brands. Wines: provided from local winery. Products will be shifted towards demand and requests by customers.
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Price The majority of the restaurant sales will come from beverage sales. Food prices will be based on local competitor’s prices and prices of product from suppliers. Bottled beers will have a regular price of $2.50 for domestics and $3.00 for imports. Liquors would be $2.00 for bottom shelf and $3.00 for top shelf products. Soft drinks will come in an adult size for $1.75 and kid’s size for $0.75. Volume costs for imported beer will be $1.25, $1.00 for domestic beer, and soda is roughly $.32. Place Estherville, Iowa is a city of 7,000 people and is the Emmet county seat. This is not including approximately 1000 students at the community college. Estherville’s east side near Central Avenue is growing rapidly with a new wellness center, hotel, strip mall, and free standing retail store. Cheap Seats Sports bar would also get business from truck drivers and travelers coming through town on Highway 4. Estherville does not have any large towns to the east, and people drive to Estherville to do their shopping. West of Estherville is Spirit Lake, Okoboji, and Spencer which have shopping and restaurants in their area. Most of my business would come from Estherville residents and rural areas east of Estherville. Promotion Cheap Seats Sports Bar will be promoted in a variety of ways. The business will sponsor men’s summer softball leagues, high school functions, and college events. Cheap Seats will hold post game parties for local athletes at all
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levels were parents can get something to eat with their kids and friends. The restaurant will advertise on local radio stations, television stations, and on the Internet. Cheap Seats will have karaoke nights, pool and dart leagues, and of course, a huge super bowl celebration.
Competitive Environment Based on my competitive map, I have found that Estherville is lacking any real sports bar. Also there is a lack of good quality sit down restaurant food. Estherville has a very limited selection of restaurants other than fast food. Woody’s Pizza and Mother Natures would be my two biggest competitors. Woody’s is the popular place to go drink on the weekends. It is usually busy on the weekends and, for the most part, gets a middle class, younger crowd. Woody’s only has four small televisions in each corner of the square building, which are not very accommodating for watching a sports game. They also do not have a very big area designated for bar customers. Hence, the drinkers and family diners are kind of mixed together. Woody’s does get a lot of business during big sports games and on the weekends, but I think this is because of a lack of competition. There are other bars, but Woody’s is the only nice bar in town. They are located on the far west side of town, while the shopping center, college, and Regional Wellness Center, and the Cheap Seats Sports Bar are located on the east side of town. Mother Nature’s is the only restaurant in town where you can order a steak. They have better food than Woody’s, but are mainly a restaurant and are
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not open until 2:00 a.m. like the other bars. Mother Nature’s caters more to the middle aged and older crowd. They are located in the central business district close to the theatre. They may get some theatre traffic, but the theatre and Mother Nature’s share the same parking lot, so parking space is a problem in the evenings. Mother Nature’s has a small sports theme, but they do not do anything special for games. If you want a good sit-down meal, you go to Mother Nature’s. If you are looking for a busy bar with a younger crowd, you go to Woody’s. These two businesses would be my biggest competition.
Competitive Advantage Cheap Seats Sports Bar would be located close to several areas of traffic; shopping center, Regional Wellness Center, community college, and the Sleep Inn (the nicest motel in town). Cheap Seats would offer more variety on their menu. Woody’s is mostly pizza and sandwiches. Mother Nature’s does not have pizza or any fish entrees, as the owner is very allergic to fish. Cheap Seats would offer better seating for customers to view the games on television. Cheap Seats’ biggest advantage would be its wide variety of food, and entertainment. It will bring a new dimension of restaurant to the area. Cheap Seats will be the number one place in Estherville to catch a game. Another thing that will make Cheap Seats a success is the high quality reasonably priced food. Cheap Seats will be located in a more highly traveled area than my competitors.
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Operating Plan Cheap Seats Sports Bar will be located in the fastest growing retail area in Estherville, Iowa. The restaurant will have a bar and seating area for a maximum of 150 customers. The restaurant will serve pizza, steak, salads, wraps, and burgers. There will also be a full bar available. The following sections elaborate on Cheap Seats’ operations. Location: Cheap Seats Sports Bar will be located on a corner at 1515 Central Avenue, Estherville, Iowa, beside a shopping mall. Across the street from the restaurant is a newly built Sleep Inn and less than four blocks away is Estherville’s Regional Wellness Center. Facility: An existing 3000 square foot facility will be leased for $1000 per month. This building was a restaurant which had closed before the new retail construction began in Estherville. Hence the facility is equipped with a kitchen and a bar area. Improvements totaling $5000 will be done by Christensen Construction of Estherville. The improvements include floor and wall coverings, window treatments, painting and decorating, window decorations and miscellaneous minor improvements. I have begun collecting sports memorabilia which will cost another $500. Equipment/Supplies: Basic equipment is estimated to be $23,000. This includes counters, refrigerators, freezer, stove, pots, dishwashing equipment and installation. A national restaurant equipment supplier supplied this information. The video and audio equipment will include six 25” televisions, two 52” televisions, and six audio-at-your- table units. The total cost of these electronics
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is estimated at $8,000 according to a representative from Best Buy. The foosball table and pool table will cost approximately $5,000. Fixtures: Fixture costs will total $10,000 based on an estimate from Jensen Furniture. These costs include purchasing tables, chairs, and bar stools. Signs: Cheap Seats Sports Bar 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 $5,300 according to Mark’s Graphics. Security Deposits: Security and other deposits will include $3000 for lease deposit and $1000 for utility deposits for a total of $4,000. Telephone and Utilities: Estherville Municipal Utilities estimates electricity, water, sewer, and garbage pickup to be $700/month for an annual total of $8,400. Aquila estimates natural gas usage to average $300/month for an annual total of $3,600. I will not have a public telephone in the restaurant. Qwest service for a single line plus high speed Internet would be $200/month including long distance for a total of $2400. Insurance Premiums: American Family Insurance estimated annual premiums at $6,000. This will cover theft, fire, accident, workman’s compensation, and all other types of insurance. Business License Fee: This business license fee based on business revenue will be $1,000. (Iowa State Liquor Department) Legal and Accounting: Johnson and Eckard, CPAs, and Fitzgibbons Law Firm will provide basic bookkeeping, accounting, and legal services. The total estimated cost is $3,000 annually.
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Advertising and Promotion: $6,000 will be allocated for the advertising campaign. Cheap Seats will advertise by radio, newspaper, coupons and the local television stations. Real Estate and Other Taxes: Real estate and personal property taxes will be paid by the landlord, as specified in the lease agreement. Payroll: Wages total $145,020. This total includes 363 workdays, with 7 employees working 6 hours a day at $6.00. The manager will work 8-hour days and be paid $11.00 per hour. I plan on working 80-hour weeks until I longer feel it is necessary. Payroll includes manager’s annual salary, employer taxes, unemployment insurance, and worker’s compensation, and payroll taxes. Loan Payments: All of the $100,000 loan allocation will be used during the first year of operation. Interest at 8.5% annually totals $8,500. In addition, according to the loan agreements, principal payment of $10,000 is also required. The total Payment for the first year is $18,500. Owner’s Draw: This information, obtained from Exhibit 2, Monthly Personal Living Expenses, is $2,500 per month or $30,000 annually. Miscellaneous Expenses: $6,000 has been estimated for miscellaneous expenses based on information provided by a restaurant owner. Cost of Goods Sold: Cost of goods sold is based on the sales projections of $539,300 and is estimated to be an average of $26% of sales totaling $144,000. A restaurant owner provided this information.
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Financial Plan The cash flow, Exhibit A, and twelve month profit and loss projection, Exhibit B, for Cheap Seats Sports Bar shows a profit of $190,000 after the first year of operation. The profit margin increases steadily from 46.4% to 49.9% over the twelve months period. The cash flow demonstrates that even a conservative estimate of cash receipts results in continued net profit. Starting with the $100,000 loan and $20,000 owner investment, after twelve months of operation, the ending balance would be $312,635, a $190,000 increase. This includes expenses for set-up and inventory. With food sales averaging 35% of costs and liquor and beer sales averaging 20% of costs, the profit will continue. According to Exhibit C, the break even point would be $343,000 in sales. This will be reached after six months of operation. This allows for continued investment in the bar and even future plans for another bar in the lakes region. .
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