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Pizzeria Franchise Business Plan

Executive Summary
The following plan is based on years of experience, is highly focused and promises to
follow a path of prosperity. It is based on conservative sales figures, and actual sales may
be higher. The projections contained herein are authentic and will be used as the budget
for the business. 4 Moons Pizzeria will show a profit almost immediately, and will
increase sales and profits each year thereafter.

1.1 Objectives
The objective is to lease a site at 555 West Blue Plum Lane. We will need to remodel the
interior according to the Franchisor's design. We plan to duplicate and massage the
successful formula used by Franchisor. We will use our own personal strategies and skills
to create our own success in our 4 Moons Pizzeria. We plan to train our crew to ensure
outstanding results in quality food and customer service. Our objectives are as follows.

Be the first 4 Moons Pizzeria in Nevada


Provide the highest quality product, duplicating Franchisor's successful pizzerias
in Oregon
Give top notch service in a quick and efficient manner
Keep our menu simple to maintain low food cost
Maintain the competitive, fast-casual dining at the mid-range price point
Use marketing strategies to build volume quickly
First year sales over $677,000 with a 6% growth yearly
Maintain and expand an outstanding reputation as being the best neighborhood
pizzeria

1.2 Mission
4 Moons Pizzeria exists for the purpose of generating sales and profit. Because we are a
service business, we will also exist to serve our customers. These two reasons for our
existence are inextricable. If one aspect does not exist, the other will cease to exist.

We will always offer a fresh product and welcoming environment


We will remain cheerful, courteous, well trained, and focused on pleasing our
guests
We will strive to become the first destination of choice for those in our
neighborhood and community

Our staff will be offered a workplace where they can prosper and grow in a
dignified, fun, and rewarding manner
We will give support to and contribute to our community schools, churches,
groups, and businesses

1.3 Keys to Success


Our policy of being operating managing members is to make sure we pass by every table
to greet, visit with, or at least send a smile to our guests.
We will visit any table or answer to any phone call that has feedback, positive or
negative. We will use every means available to satisfy our customers.
We will be committed to the success and happiness of our staff.
We will be committed to providing quality food and beverage at all times.
We will consistently follow the franchisor's proven methods.

Company Summary
Established in 1958, 4 Moons Pizzerias are an award winning, "Home of the brick oven
Pizza". They offer a comfortable, friendly ambience, with its new "Modern Pizzeria"
design. The menu features pizza, hot calzones, strombollis, sandwiches, baked pastas, and
fresh tossed salads. The pizza dough is made fresh everyday on site. Beverages include
soft drinks, imported and domestic beer, micro brews, and an impressive wine list. Food
ingredients are the finest available including USDA Choice meats.

2.1 Company Ownership


We are an LLC, limited liability company, with four managing owners holding an equal
share (25%) and interest in the franchise.

Carol Mittani: General Managing Owner - Hands-on management of all daily


restaurant and company operations.
Steve Solutrian: Vice Managing Owner / Sales and restaurant operations. Handson management of daily operations and sales trends.
Diane Solutrian: Vice Managing Owner / All office procedures. Hands-on
management of daily operations.
Rikard Mittani: Vice Managing Owner / Marketing and future finances and
investments. Hands-on management of daily operations.

2.2 Start-up Summary


We hope to take advantage of an existing structure located at 555 West Blue Plum
Lane, at Lakeside Center. It is 2,828 square feet. We will remodel according to the
Franchisor's designs to make our concept both visually and functionally suitable.
Construction is estimated at $214,630 - see attached "Franchisor's Construction Cost
Sheet" for item breakdown.*
Start-up cash on hand is estimated for 3 months working capital, inventory, labor and
rent.
Short-term assets include phone equipment, smallwares, booths, chairs, tables, pendants,
sconces, and lighting.
Long-term assets include all kitchen equipment, POS system, and signage.

*Confidential and proprietary information omitted from this sample plan.

Start-up Requirements Start-up Expenses Remodel Costs $214,630 Proscreen/WallpaperMenu Boards $3,644 Insurance $1,500 Franchise Fee $25,000 1st month rent $4,242
Drafting/Engineering $3,000 City fees/Misc costs $2,491 Beer and wine license $500
Training/travel $2,000 Utility start-up costs $5,000 Design $4,200 Total Start-up
Expenses $266,207 Start-up Assets Cash Required $87,286 Start-up Inventory $10,000
Other Current Assets $41,775 Long-term Assets $99,732 Total Assets $238,793 Total
Requirements $505,000

Services
4 Moons Pizzerias are comfortable and inviting. We are a fast-casual operation with dine
in, take-out, and delivery. The decor and theme are centered around the cutting edge open
kitchen with brick arches and distinctive lighting. Our energy and atmosphere will appeal
to families, groups, and schools.
The real power and energy of the pizzeria will come from the attentive and courteous
service provided by our managers and staff. Our fresh menu will be prepared by our
motivated kitchen team, and carefully orchestrated to provide the best service to our
customers who are our priority. We will have at least one manager on duty at all times.

Our hours are Sunday thru Thursday 11 am. to 10 pm. Friday and Saturday 11 am. to 11
pm. Take out available during store hours. Delivery hours are 4 pm to closing everyday
we are open. We will offer delivery all day on Saturday and Sunday and some holidays.

Market Analysis Summary


Ohno is one of the fastest growing cities in America with Nevada being voted the best
small business state in the country. Ohno is a community diverse in the arts and culture.
We have a strong labor market, low taxes, affordable housing, and natural amenities
making Ohno an attractive place to live and do business.
The greater Ohno metropolitan area population has grown one third through the last
decade and is projected to grow 11.4% in the next five years.
The median age is 36 years old with household incomes averaging $65,895. With a strong
local economy we have a population with disposable cash for dining and entertainment.
According to the Nevada Restaurant Association, Nevada restaurants are expected to lead
the nation in sales growth at 7.6%. Nevada is also the fastest growing state in the union.

4.1 Market Segmentation


4 Moons target market is a three mile radius of site location. Within the three mile
operating radius is a population of 121,705. The total number of households in this area is
48,839 with an average income of $58,197.
This area is densely populated, and a desirable part of town in which to live. It is an
under-served portion of town, especially to the west up to the Caughlin Ranch area. It is
on one of the most traveled corridors in Ohno, Blue Plum Lane. Located near two of
Ohno's most popular malls, Parklane and Shopper's Square.
Our target market includes adults 20 to 54 years old who socialize and have families.
Children are a big part of our market, at a third of the population is this area. Ages 4 to
19 prefer pizza over any fast food and often influence family dining decisions. According
to one study, 93% of the U.S. population eats pizza. If we sold one pizza per month with
an average of $17.00 per household, we would generate $721,141 in one month. This
illustrates that with effective marketing, superior product, and proper management we
will reach and exceed our projected sales goals.
In this area we have some of the best schools. 4 Moons Pizzerias provides support for
local area school groups and sports teams, as well as local church groups. We will be
involved through providing sponsorships, discounts, and donations.

Market Analysis
Year 1
Potential Customers
Ages 0-19 (preferred fast
food)
Ages 20-54 (w/disposable
cash)
Over 55
Total

Year 2

Year 3

Year 4

Year 5

Growth

CAGR

4%

30,426

31,643

32,909

34,225

35,594

4.00%

4%

61,583

64,046

66,608

69,272

72,043

4.00%

3%
3.87%

26,775
118,784

27,685
123,374

28,626
128,143

29,599
133,096

30,605
138,242

3.40%
3.87%

4.2 Target Market Segment Strategy


We haven't ruled any one group or class out in our target market area. Just about everyone
eats pizza. Most residents in this area have busy schedules, and find value in exceptional
and timely service, as well as mouth watering, delightful food. We believe most everyone
will appreciate our value based menu and family atmosphere. We have a strong
commitment to community involvement including sponsorship for school/group teams.
We strongly believe we will overcome any competition in our area. The local competition
includes Sticky Paws Pizza, Damynos, Gridlow's Pizza, Hoopla Take-and-Bake,
Clodhopper's, and Little Sayzar. Most of these are at least two miles from our location
and are no competition to our concepts, ideals, fresh products, and welcoming service.

4.3 Service Business Analysis


Pizza Statistics:

Represent 17% of all restaurants.


Americans eat approximately 100 acres of pizza a day.

Pizza is a $32+ billion per year industry with continuing overall restaurant
growth.
Accounts for 10% of all food service sales.
93% of Americans eat pizza at least once a month.
67% of Americans order pizza for a casual evening with friends.
Children between 3-11 prefer pizza over all other food groups.

4.3.1 Competition and Buying Patterns


4 Moons Pizzerias are competitive in the mid price point, fast casual dining market. With
an average ticket of $17.00, we are priced above Hoopla Take-and-Bake and Damyno but
below Squaretable.
Quality, Quick, and Simple is the goal of 4 Moons Pizzerias. The customers are provided
with the highest quality product. Store design provides a warm and friendly environment
for all.

Strategy and Implementation Summary


Emphasize service
We will differentiate ourselves with SERVICE! We will establish our business offering as
a clear and viable alternative for our target market.
Build a relationship-oriented business
Build long-term relationships with customers, not single-visit deals. Become their
restaurant and destination of choice. Make them understand the value of the relationship.
Focus on target markets
We need to focus our offerings on specific population groups as the key market segment
we should own. We do not want to compete for the buyers who go to "fast food" or "take
and bake" types of restaurants. We definitely want to be able to sell to smart, quality
conscious customers.
Utilize the various skills of our Managing Owners and learn through the extensive
training program provided by Franchisor.

5.1 Competitive Edge


Clearly our competitive edge will be our customer service experience and management
approach. Our smiling, unassuming, and good natured approach to all of our customers
will be evident, and highly appreciated.

We will constantly monitor our product to ensure quality food and beverage at all times.
Our recipes are delicious, made fresh daily, and our toppings go all the way to the edge of
the pizza crust.

5.2 Marketing Strategy


We will start our marketing during the construction phase. Our main factor in success is
simply that a person can enjoy a good pizza, fast service, and friendly familiar faces.
We will all be involved in Sales and Marketing. We will gather information about the
neighborhoods, use our POS System to track top sellers and gather a customer base for
marketing offers.

Kids school tours


Gift Certificate Program
Phone book advertisement
Coupons
Door hangers
Sporting events for schools and group events
Eye catching signage
Excellent service and high quality food
Word of mouth

5.3 Sales Strategy


The marketing strategy discussed previously in this business plan will generate the
desired sales.
We require our staff to have a thorough and comprehensive understanding of the menus,
ingredients and methods of preparation of all of our foods. We train our staff to always
describe and recommend items, even to regular customers, and to always up-sell. The key
to our employee's success in up-selling is the realization that it almost always brings in
better tips because the checks are higher.
We will emphasize service to differentiate ourselves. We will establish our business
offerings as a clear and viable alternative for our target market, from the scores of "slow
delivery", "frozen dough", and "your average" pizza chains.
We will build long-term relationships with our customers, becoming their destination of
choice for delivery, take out, and dine in. We will sell ourselves as the best neighborhood
and community pizzeria.

5.3.1 Sales Forecast


We are forecasting sales of approximately $677,000 in our first fiscal year (May 2005 to
April 2006) with an opening date of mid-May 2005. We foresee sales increasing at .

5% monthly, an overall yearly rate of 6% per year. Our forecast is conservative and is
based on an average of $17.00 average per order.
We are convinced that our business will increase with time. We have a strong
management team who will be on property daily to monitor daily operations. We will
constantly watch food quality, customer service, and costs.

Sales Forecast Year 1 Year 2 Year 3 Sales Total Restaurant Sales $677,297 $717,935
$761,011 Other $0 $0 $0 Total Sales $677,297 $717,935 $761,011 Direct Cost of Sales
Year 1 Year 2 Year 3 Cost of Sales $135,461 $143,590 $152,206 Other $0 $0 $0 Subtotal
Direct Cost of Sales $135,461 $143,590 $152,206

Management Summary
4 Moons consists of four members with an equal concern in our franchise. We will owner
operate our pizzeria daily. We will keep our starting salaries low to keep labor
costs down. Each member contributes with a generalized assignment as well as being
trained in all restaurant operations, including making pizza, working the counter, and
delivering pizza. We are an extremely experienced, and well balanced team.

Please see our attached resumes for a precise summary.*

Carol Mittani will be General Manager working every day to insure success. Steve
Solutrian, Diane Solutrian, and Rikard Mittani will be on site various hours, and during
peak dinner hours to help with general operational tasks, plus opening to closing hours on
the weekend.
* Confidential and proprietary information omitted from this sample plan.

6.1 Personnel Plan


We plan to have a part-time staff to include pizza makers, delivery drivers, and counter
persons. We are planning on a staff of 10 employees to come on at peak business levels.
Our first month will have a higher labor rate due to training, pre-opening preparation and
grand opening labor.
We have forecasted labor at 18% of gross sales. We will strive to keep our payroll at 18%
or lower.

Personnel Plan
Wages
Other
Total People

Year 1
Year 2
Year 3
$126,738 $129,228 $136,982
$0
$0
$0
14
14
14

Total Payroll

$126,738 $129,228 $136,982

Financial Plan
Our main concerns will be aggressive time management to keep labor costs under
control. Proper purchasing, food preparation and handling, and control of cheese
consumption to keep food costs down. Growth will be sustained through increased sales.

7.1 Start-up Funding


Our start-up figures are approximate costs for start-up of a 4 Moons Pizzeria franchise as
prescribed by the Franchisor.
4 Moons has $160,000 initial investment, $25,000 of which will cover the franchise fee.
Our estimated start up is $505,000. We are seeking an SBA Loan in the amount of
$345,000 (see Long term liability line).

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$266,207
$238,793
$505,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$151,507
$87,286
$0
$87,286
$238,793

Liabilities and Capital


Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$345,000
$0
$0
$345,000

Capital
Planned Investment
Solutrian, Steve and Diane
Mittani, Rikard and Carol
Additional Investment Requirement
Total Planned Investment

$75,000
$75,000
$10,000
$160,000

Loss at Start-up (Start-up Expenses)


Total Capital

($266,207)
($106,207)

Total Capital and Liabilities

$238,793

Total Funding

$505,000

7.2 Important Assumptions


We are projecting profit based on the performance of other franchises and our own
judgement based on the following:

We assume by using marketing strategies, sales strategies, good customer


relationships, fresh food, and good management practices, we will succeed.
In order to meet the sales goal in the first year, open for at least 360 days, we
would have to sell 111 checks each day with a $17 per check average.
Our sales each day should reach an minimum average of $1,881.43.
Our forecast is based on an average. Some months will increase and others
decrease. We do not predict any major decreases in sales, as Ohno area restaurants
are busy all year round.

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1
Year 2
Year 3
1
2
3
0.00%
0.00%
0.00%
7.00%
7.00%
7.00%
30.00%
30.00%
30.00%
0
0
0

7.3 Break-even Analysis


Break-even based on fixed costs including rent, insurance, maintenance, investor note,
and pre-opening amortization. Additionally, controllables such as service labor, kitchen
labor, management labor, excess rent, advertising, royalty, and legal/professional fees are
included.

Break-even Analysis

Monthly Revenue Break-even $22,254


Assumptions:
Average Percent Variable Cost 20%
Estimated Monthly Fixed Cost $17,804

7.4 Projected Profit and Loss


As the Profit and Loss table shows, the company expects to continue its steady growth in
profitability over the next three years. We predicted a conservative 6% per year increase
in sales.
The first month may have higher payroll due to employee training and restaurant set up.
Our operating expenses include rent at $4,242 estimate per month, royalty fees of 5% of
gross sales, equipment rental and repair, utilities projected at 11% of gross sales,
administrative charges including PC charges, cleaning supplies, payroll charges, and
office supplies.
Marketing fees are 4% of gross sales per month.

Pro Forma Profit and Loss


Sales
Direct Cost of Sales
Other Costs of Sales
Total Cost of Sales

Year 1
Year 2
Year 3
$677,297
$717,935
$761,011
$135,461
$143,590
$152,206
$0
$0
$0
$135,461
$143,590
$152,206

Gross Margin
Gross Margin %

$541,836
80.00%

$574,345
80.00%

$608,805
80.00%

Expenses
Payroll
Marketing/Promotion
Depreciation
Rent
Royalty fees
Equip rent/repair
Utilities
Admin charges

$126,738
$0
$30,000
$50,904
$0
$3,000
$0
$3,000

$129,228
$0
$30,000
$50,904
$0
$5,400
$0
$3,000

$136,982
$0
$30,000
$52,431
$0
$5,400
$0
$3,000

Total Operating Expenses

$213,642

$218,532

$227,813

Profit Before Interest and Taxes


EBITDA
Interest Expense
Taxes Incurred

$328,194
$358,194
$23,367
$91,448

$355,813
$385,813
$21,648
$100,249

$380,992
$410,992
$19,738
$108,376

Net Profit
Net Profit/Sales

$213,378
31.50%

$233,915
32.58%

$252,878
33.23%

7.5 Projected Cash Flow


The cash flow depends on assumptions for good daily operational management, good
traffic counts in the restaurant, inventory turnover, payment days, and accounts receivable
management. We do not predict any new financing until we open our second franchise.
Principal amounts are based on a loan of $345,000 with a 10 year SBA Loan at 7%
interest.

Pro Forma Cash Flow


Year 1

Year 2

Year 3

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations

$677,297
$677,297

$717,935
$717,935

$761,011
$761,011

Additional Cash Received


Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

$0
$0
$0
$0
$0
$0
$0
$677,297

$0
$0
$0
$0
$0
$0
$0
$717,935

$0
$0
$0
$0
$0
$0
$0
$761,011

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations


Cash Spending
Bill Payments
Subtotal Spent on Operations

$126,738
$276,887
$403,625

$129,228
$324,767
$453,995

$136,982
$340,189
$477,171

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets

$0
$0
$0
$22,576
$0

$0
$0
$0
$26,332
$0

$0
$0
$0
$28,237
$0

Purchase Long-term Assets


Dividends
Subtotal Cash Spent

$0
$0
$426,201

$0
$0
$480,327

$0
$0
$505,408

Net Cash Flow


Cash Balance

$251,096
$338,382

$237,608
$575,990

$255,603
$831,592

7.6 Projected Balance Sheet


The balance sheet is quite solid. We do not project any real trouble meeting our debt
obligations--as long as we can achieve our specific sales objectives.

Pro Forma Balance Sheet


Year 1

Year 2

Year 3

Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets

$338,382
$6,044
$41,775
$386,201

$575,990
$6,407
$41,775
$624,171

$831,592
$6,791
$41,775
$880,159

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$99,732
$30,000
$69,732
$455,933

$99,732
$60,000
$39,732
$663,903

$99,732
$90,000
$9,732
$889,891

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$26,338
$0
$0
$26,338

$26,725
$0
$0
$26,725

$28,071
$0
$0
$28,071

Long-term Liabilities
Total Liabilities

$322,424
$348,762

$296,092
$322,817

$267,855
$295,926

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$160,000
($266,207)
$213,378
$107,171
$455,933

$160,000
($52,829)
$233,915
$341,086
$663,903

$160,000
$181,086
$252,878
$593,964
$889,891

Net Worth

$107,171

$341,086

$593,964

7.7 Business Ratios


The company's projected business ratios are provided in the following table. The final
column, Industry Profile, shows ratios for the "Pizza Restaurant Industry", as determined

by the Standard Industry Classification 5812.0600 with annual sales of $500,000 to


$999,000.

Ratio Analysis
Year 1

Year 2

Year 3 Industry Profile


5.24%

Sales Growth

0.00%

6.00%

6.00%

Percent of Total Assets


Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

1.33%
9.16%
84.71%
15.29%
100.00%

0.97%
6.29%
94.02%
5.98%
100.00%

0.76%
4.69%
98.91%
1.09%
100.00%

4.34%
35.11%
43.74%
56.26%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

5.78%
70.72%
76.49%
23.51%

4.03%
44.60%
48.62%
51.38%

3.15%
30.10%
33.25%
66.75%

18.93%
25.48%
44.41%
55.59%

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes

100.00%
80.00%
48.50%
4.43%
48.46%

100.00%
80.00%
47.42%
0.00%
49.56%

100.00%
80.00%
46.77%
0.00%
50.06%

100.00%
61.91%
39.08%
2.55%
1.38%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

14.66
14.43
76.49%
284.43%
66.86%

23.36
23.12
48.62%
97.97%
50.33%

31.35
31.11
33.25%
60.82%
40.60%

1.14
0.79
49.97%
3.97%
7.93%

Additional Ratios
Net Profit Margin
Return on Equity

Year 1
Year 2
Year 3
31.50%
32.58%
33.23%
199.10%
68.58%
42.57%

n.a
n.a

Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover

23.52
11.51
27
1.49

23.07
12.17
30
1.08

23.07
12.17
29
0.86

n.a
n.a
n.a
n.a

Debt Ratios
Debt to Net Worth
Current Liab. to Liab.

3.25
0.08

0.95
0.08

0.50
0.09

n.a
n.a

Liquidity Ratios
Net Working Capital
Interest Coverage

$359,863
14.04

$597,446
16.44

$852,087
19.30

n.a
n.a

Additional Ratios
Assets to Sales
Current Debt/Total Assets

0.67
6%

0.92
4%

1.17
3%

n.a
n.a

Acid Test
Sales/Net Worth
Dividend Payout

14.43
6.32
0.00

23.12
2.10
0.00

31.11
1.28
0.00

n.a
n.a
n.a