Good food. Good beer.

Great fun

River Run
Restaurant and Microbrew
Business Plan
January 5, 2012 Meg Kokesh
10063 Armstrong Plaza Omaha, NE 68134 (605) 210-1003 margaretkokesh@creighton.edu

Bo Borisow
3703 Cass Street Omaha, NE 68131 (402) 720-7769 boborisow@creighton.edu

Samantha Peterson
Box 222 Deglman Hall, Creighton University Omaha, NE 68178 (402) 720-0508 sam@creighton.edu

This document is for information only and is not an offering for sale of any securities of River Run Restaurant and Brewery. Information disclosed herein should be considered proprietary and confidential. The document is the property of River Run

Restaurant and Brewery and may not be disclosed, distributed, or reproduced without the express written permission of River Run Restaurant and Brewery.

Contents
I. II. a. b. c. III. a. b. IV. V. EXECUTIVE SUMMARY....3 MARKET ANALYSIS...........4 Industry Analysis..................4 Market Analysis....................5 Competitor Analysis.............6 OPERATIONS AND TEAMING...... 9 Operations.............................9 Teaming....................................15 FINANCIAL ANALYSIS ASSUMPTIONS.........16 APPENDICES... 19 a. Appendix I Location b. Appendix II - Market Size by Month c. Appendix III - Dell Restaurant Point-Of-Sale Solution System d. Appendix IV - Financials e. Appendix V - References

__________________________________________________________________ EXECUTIVE SUMMARY

River Run Restaurant and Microbrew is a unique restaurant located in Belle Fourche, South Dakota. Its distinct western atmosphere is amplified by its situation in a historical building and its offerings of home-brewed beers. After renovations, this building will provide River Runs two target customer groups with a family-friendly, service-oriented atmosphere. River Runs location will serve as a major source of competitive advantage, as it is located on the corner of Highway 85 and Roundup Street (see Appendix I). Roundup Street serves as the only entrance to Belle Fourches busy and popular Sports Complex (see Appendix I). The restaurant industry is one business which has remained strong over the last few decades. Market trends toward increases in disposable income, decreases in the price difference of eating out versus cooking at home, as well as an increase in the number of dual-income and singleparent families have contributed to the continuation of this growth. River Run will take advantage of industry trends by offering crafted beers and quality entrees. The market size in Belle Fourche supports its success, as a population of approximately 5,000 live inside or within close proximity of Belle Fourche (Target Market A). Additionally, rodeo, sports and community events in the Sports Complex will draw people from within a 100 mile radius of Belle Fourche (Target Market B), increasing the target population during the summer months. River Runs three main competitors, Stadium, American West, and Firehouse Brewing Company all currently have advantages which will be countered by River Runs entrance into the market. Stadium, while offering kid-friendly food, has a smoky interior and a customer base which is not conducive to children. American West offers a quiet, family-oriented environment, but does not have a dance floor or catering to offer to customers who want to house receptions in the establishment. Firehouse Brewing Company does not offer any entertainment options and is a distance of 65 miles from Belle Fourche. An additional point of difference from competitors is that River Run will use the Dell Restaurant Point-of-Sale Solution System, which will allow the restaurant to speed up order time and deliver higher levels of satisfaction to customers. To attract customers to River Run, the restaurant will capitalize on its prime location on the only entrance to the Sports Complex. An on-site billboard will be set up during renovations to let people know what is happening to the building and to generate word-of-mouth marketing among the people of Belle Fourche. Balloons will be put outside during major events in the Sports Complex. Sports and rodeo sponsorships will let community members know that River Run cares about the people of Belle Fourche, and a few television and radio spots will help draw people from the surrounding community into Belle Fourche to eat. Owner and manager Rich Kokesh will be in charge of the renovations, installation of equipment, hiring and termination of management staff and, initially, all day-to-day operations. Bo Borisow will be brought in as an operational advisor to help at the outset. Experienced brew masters and 3

chefs will be recruited to work at River Run. This potential risk they would face in beginning work with River Run will be off-set by the input they will be given into the beer list and menu. All of these advantages place River Run in an excellent position to become a successful restaurant. River Run projects 3,720 meals will be sold per month when the restaurant is running at full capacity in the busy months of June, July, and August. This would consist of 120 meals per day at an average of $17 spent per person. During the less busy months, sales are expected to be 70% lower than full capacity. While estimating that sales will grow at 5% per year, all expenses are a percent of sales, and River Run falls into the 28% tax bracket, we found that our yearly ending gross revenue on May 31, 2009 would be $670,344. This number would increase in 2010 and 2011 to $703,861 and $739,054, respectively.

__________________________________________________________________ MARKET ANALYSIS Industry Analysis

River Run Restaurant and Microbrew is in an excellent position to take advantage of some of the evolving trends in the restaurant industry. Industry Trends Full-service dining is one industry that has remained strong over the last few decades, driven by an increase in disposable income, a long-term trend toward eating out, a decline in the price difference between eating out and cooking at home, and an increase in the number of dualincome and single-parent families. According to the U.S. Department of Agriculture, consumption of food away from the home accounted for 48.5% of total food expenditures in 2005, up from 44.9% in 1990 and 26.3% in 1960. Restaurant Brewery Viability As a restaurant that will brew its own beer, we are also interested in current trends within the alcohol industry. Currently, consumer tastes in the alcoholic beverage industry are swaying toward high-priced, seasonal beer. The craft and imports segment increased in market share from 14.7% to 15.85% in 2005. Craft beer represents the domestic beer industrys only robust growth segment. Louisville, Colorado-based Rock Bottom Restaurant and Brewery, which is one large restaurant and brewery chain, has achieved substantial growth within the past few years. Even Standard and Poors cited new product innovation as one way that restaurants could succeed in the current business environment, which is exactly what River Run will be doing with its continually changing lines of brews. Most breweries like this one focus on developing an excellent casual dining atmosphere and a menu of delicious food, not just appetizers. River Run plans to follow this same focus.

Strategic Opportunities The lack of any strong competitors in Belle Fourche, South Dakota and the surrounding areas presents a major market opportunity. Since customers will be visiting Belle Fourche to attend the many rodeos, softball tournaments, and soccer tournaments that occur at the Belle Fourche Sports Complex, they will automatically be exposed to River Run Restaurant and Brewery as it is on the single roadway to the rodeo arena and sports fields.

Target Market
Market Description and Target Customers River Run Restaurant and Brewery will be located in Belle Fourche, South Dakota. It will target two main markets. Market A will consist of Belle Fourche families consisting of two to seven individuals. Market B will consist of families entering Belle Fourche to participate in rodeo, soccer, and softball events at the Sports Complex located next to River Run. These individuals will come primarily from Buffalo, Dupree, Faith, Lemmon, Bison, Rapid City, Spearfish, Sturgis, Whitewood, Deadwood, Lead, Newell, Alzada (Montana), and many other small towns within a 100 mile radius of Belle Fourche. Belle Fourche is a smaller community located in a rural area of the country. River Run will provide a full-service dining experience to customers that are looking for this more relaxing environment. Since customers will tend to be somewhat price sensitive in this rural area, the menu will be priced only just slightly higher than the two main competitors, Stadium and American West. River Run will focus on providing an excellent quality food and beer product, as well as making sure that customer service is excellent. Market Size and Trends Belle Fourche, South Dakota, a town with a population of 4,565 individuals, will serve as an excellent location for River Run. This population, plus a 5% increase made up of individuals who enter Belle Fourche regularly to shop and run errands will serve as our base target population. Located just north of the Black Hills, River Run will be situated on the corner of Highway 85 and Roundup Street on the edge of the Sports Complex, which will give the new business the advantage of drawing the numerous rodeo and sports participants, as well as any tourists traveling through town toward the Black Hills. The graph below shows the number of people who will be in Belle Fourche by month for the various events that occur throughout the year, as well as the rest of the market size. Please see Appendix II for the exact number of people expected at each event.

Market Size by Month

10,000

Parade of Lights Sturgis Bike Rally Youth Soccer Leagues

7,500 Month

High School Soccer Slowpitch Softball League High School Baseball

5,000

Dakota Roping Teamroping Belle Jackpots SDRA Tri-State Rodeo Belle Fourche 4-H Rodeo Fireworks Black Hills Roundup and Rodeo
Au gu st Se pt e mb er Oc to b er No ve mb er De ce mb er Ju ne Ap ril Ma y Ju ly

2,500

0
Ja nu a ry Fe br u ar y Ma rc h

SD State High School Rodeo 5% from Surrounding Area Belle Fourche

Number of People

Competitor Analysis
Local Competitors River Run will be competing directly with two main restaurants in Belle Fourche, American West and Stadium. Additionally, there is another microbrewery and restaurant in Rapid City called Firehouse Brewing Company which could pose a threat. River Run will be competing indirectly with several fast food venues and other dining establishments, such as Subway, Taco John's, Dairy Queen, Hardees, Pizza Hut, The Belle Inn, Bob's Cafe, and Gregemo's Take and Bake Pizzas. The remaining food vendors in Belle Fourche pose a threat to River Run because of the convenience factor that may be seen by consumers when at a sporting event. They may find it easier to get a value meal from Subway than to sit down to eat at River Run. For this reason, River Run will offer take-out as an option for patrons. Other Competitors There are several restaurants within fifteen miles that may challenge River Run. These include: Seven Grill, Roma's Cafe, Bay Leaf Cafe, Golden Dragon, Sanford's Grub and Pub, Shoot the Bull Steakhouse, Applebees, The Club Room, Chop House, and Guadalajara.

Restaurants within 25 miles include Jake's and Miss Kitty's. All other fine-dining restaurants are approximately 65 miles away. Competitive Positions The first, second, and third most prominent competitors for River Run will be Stadium, American West, and Firehouse Brewing Company, respectively. Stadium caters to the family with kid-friendly food. It is relaxed, yet upbeat. It offers low-priced meals and has XM radio for the whole restaurant. Stadium also provides some pool tables and a pinball machine. It also has an annual Macho Nacho Food Challenge, daily food specials, and brand name drink specials. However, River Run will easily be able to counter some of these advantages. Although Stadium has kid-friendly food, it is smoky throughout the restaurant and caters to a customer base that is non-conducive to children. River Run will counter this by having dining in a separate location from the bar. Smoking will only be allowed in the bar area. River Runs western dcor in a historical building with a calm lighting scheme will provide the proper ambiance for families and bar patrons alike while still keeping them separate so that families can enjoy their meals away from the bar scene. Like Stadium, River Run will also offer XM radio in the dining section of the restaurant which will be played softly throughout the day and evening. Music will be conducive to regional tastes, playing mostly country and southern rock. This counters Stadium, where waiters select the music station, which is sometimes what patrons do not care to hear. In the bar area, however, a juke box will be provided for patrons to choose their own songs. There will also be two pool tables, two pinball machines, two dart games, and a Buck Hunter game offered in the bar section providing additional entertainment for patrons. River Run will have league pool play as well as weekly food and drink specials and challenges. There will be specials relating the local community events. American West is the second most prominent competitor for River Run. American West has a low-energy environment and is generally quiet. This quiet atmosphere caters to families, although American West does not have upbeat and friendly staff members, which will be something that River Run will focus on when hiring employees. American West can have buffet-style parties in its basement for less than fifty people. American West also has daily food specials. These advantages are also easily countered. No local competitors brew any of their own beers, sell tobacco products, or sell any of their own merchandise as River Run plans to do. River Run will offer larger, buffet-style or catered banquets, which is something neither major competitor can do. There will also be a stage and dance floor available, which will be used for a general seating area during the day. Entertainment will draw more people to the business. Additionally, there is limited parking at River Runs top two competitors. River Run will have more than enough parking, with over 100 spaces. It will also have the Dell Restaurant Point-of-Sale Solution System, which will enable faster, more accurate order times and helps to eliminate waste. See Appendix C for the Dell Restaurant POS Solution Systems additional features. Since both competitors are slow when it comes to getting orders on the table, this will be a major advantage. One of the largest advantages for River Run will be the atmosphere that it will provide for patrons.

Firehouse Brewing Company will be the third most prominent competitor for River Run. Firehouse does not offer a family-friendly atmosphere, as it offers no kid-friendly food. It also does not offer any entertainment such as pool tables or pinball machines. While there is music played in the background of the restaurant, it does not add to the atmosphere of the restaurant. There is a microbrew in Firehouse, and the food quality is fairly good; however, since Firehouse is about 65 miles away from Belle Fource, it will not pose a significant threat to River Run. Firehouse does not provide reception rental or a dance floor, which would also keep it from being a major draw. Additionally, although Firehouse has a rustic atmosphere, it is not westernthemed, which is an advantage that River Run hopes to use to draw many of the ranchers of the area. The chart below gives a more visual representation of the competitor comparison. American West Family Friendly Entertainment Music Microbrew Food Quality Restaurant Location Merchandise Upbeat Staff Catering Reception Rental Dance Floor and Stage Western Atmosphere Barriers to Entry There are a few barriers to entry that would prevent competitors from entering the market. First, Belle Fourche has a small population, which would prevent competitors without River Runs competitive advantages from entering the market. Since there are already two other fine dining restaurants in Belle Fourche, this will also prevent Belle Fourche from being an attractive market to competitors. Finally, the high start-up costs of entering the restaurant industry, and particularly the microbrew industry, will keep competitors from entering this industry. Strategic Opportunities River Run has a definitive advantage in that it can employ the first-mover strategy. Since there are no other restaurants with microbrew set-ups, and since converting their existing operations would be difficult, River Run can use this to its benefit. The defined need in the market for a microbrew restaurant will prove to be a definite competitive advantage for River Run. X X X X X X X X X X X X X Stadium Firehouse Brewing River Run X X X X X X X X X X X X

__________________________________________________________________

OPERATIONS AND TEAMING Operations

Facilities This section provides an overview of River Runs location, square footage allocation, upgrades on the building itself, and utilities required. River Run will be located on the corner of Highway 85 and Roundup Street. Highway 85 is the main thoroughfare through Belle Fourche, and is the only highway connecting the towns in northern South Dakota to cities in southern South Dakota. Roundup Street is the only entrance to the Sports Complex, which includes the rodeo arena, stabling barns, and the soccer and softball fields. The lot size that River Run will be located upon is roughly three acres. Two and a half acres will be paved for customer parking, and the remaining half acre will be dedicated to the building. The building itself is approximately 8,000 square feet. It will be allocated as follows: Kitchen: 1,000 square feet Server Stations: 2 stations, 50 square feet each Brewery: 700 square feet Storage: 2,000 square feet Bar: 105 square feet Customer Waiting Area: 150 square feet Stage: 300 square feet Dance Floor: 1,000 square feet Seating Area: 2,695 square feet Additionally, there will be a loading dock in the rear of the building that links directly to dry storage. Improvements will also need to be made to the building. These improvements include changing the internal structure of the building, upgrading electrical systems, installing additional water and sewer pipes, designing and mounting a sign, and constructing the bar, stage and dance floor. The land and building improvements will all be financed through investments made by angel investors who are already committed to the venture. Financial data for these improvements and modifications can be found in Appendix IV under Land and Building Improvements. Inventory Control Food inventory and kitchen equipment will be monitored by the Head Chef. Dinnerware, tables, alcohol and bar equipment will be monitored by the Operations Manager. A first in, first out (FIFO) inventory system will provide the kitchen staff with fresh products and will be cost effective. Inventory can arrive at any time and will be kept on a rolling basis as some foods are perishable. The minimum amount of time needed to receive inventory is three to five days. Order times will be approximately 10 to 20 minutes, depending on the current traffic flow in the

restaurant. This is the average food-prep time of other sit-down restaurants, but is considerably faster than our two major competitors. The Head Chef will communicate inventory requirements to the Operations Manager before orders are placed, but will be primarily responsible for keeping inventory stocked. The Brew Master will be responsible for inventorying all ingredients needed for brewing, then passing these requirements to the Operations Manager for ordering. The Operations Manager will be responsible for tracking and stocking bar inventory, in addition to her responsibilities in the ordering of all other inventories. Management information systems will consist of a hand-count of inventories and Restaurant Pro Express software-based system, which is included in the purchase price of the Dell Restaurant Point-Of-Sale Solutions System. This is the system most commonly used by comparable restaurants. We will ensure the security of our products by having keypad entry locks on all staff doors. Individual entry codes will be given to kitchen staff, wait staff and management. The codes will change every 90 days to maintain the security of the building. Also, all refrigerators and freezers will be locked upon closing every night. Every Friday afternoon, the Head Chef will take a food and equipment inventory while the Operations Manager counts tables and chairs and inventories the bar. Dinnerware and condiments will be inventoried once every two months, as will all glasses and cups. Supply and Distribution Purchasing decision will be made by the Operations Manager with input from Head Chef. Key goods and materials include food, alcohol, beer-making ingredients and equipment, plates, utensils, glasses, cups, tables and chairs, and food storage equipment. Average costs of these goods are as follows: Source of Product Sysco, Shamrock Foods Materials Food Cost Food inventory will remain at approx $7,650 Liquor inventory will remain at approx $2,000 Wine inventory will remain at approx $500 Microbrew ingredients inventory will remain at approx $1,000 (enough for about 35 bbls.) $33.87/case, 24 glasses/case, we will stock 216 beer glasses ($33.87x9=$304.83) $62.17/case, 24 glasses/case,

West River Beverage Inc., Liquor Rohl Beverage Inc. West River Beverage Inc., Wine Rohl Beverage Inc. Listerman Brewery Supply and Microbrew ingredients Mfg., Mountain West Brewery and Brew Supply Restockit.com, Heartland Restaurant Supply, Dakota Restaurant Supply Beer glasses Wine glasses

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Water/Beverage glasses

Miscellaneous bar glasses Coffee cups Flatware (fork, knife, spoon included in set) China (small) China (large) Nabbrewing.com Instawares.com Brewing Equipment Grill48 char broiler Flattop30 gas Dbl Oven and Steamergas Microwave Oven 3-vat fryer Icemaker Worktop refrigerator Walk-in cooler Walk-in freezer Prep Table Work Table Conveyer Dishwasher Restaurant Tables Wooden stack chairs Wooden double-side booths Used Dell POS (Point-of-Sale) Receipt Printers

we will stock 96 wine glasses. ($62.17x4=$248.68) $81.94/case, 36glasses/case, we will stock 540 water/bev glasses. ($81.94x15=$1,229.10) $43.74/case, 24 glasses/case, we will stock 96 bar glasses. ($43.74x4=$174.96) $22.41/case, 12 cups/case, we will stock 120 of these. ($22.41x10=$224.10) $8.67/case, 36 pieces/case, 12 sets/case, we will stock 300 sets. ($8.67x25=$216.75) $27.67/case, 12/case, we will stock 396 of these. ($27.67x33=$913.11) $45.39/case, 12 per case, we will stock 396 of these. ($45.39x33=$1,497.87) $49,900 (gently used) $1,672.39 $3,954.78 $21,985.66 $346.16 $1239.75 $783.77 $2.939.94 $5.656.67 $6,100.05 $2,017.59 $368.98 $13,205.20 (204 racks/hour) $132.00/table, we will have 50 tables. ($132x50=$6,600) $52.00/chair ($52.00x155=$8,060) $541.00/booth, we will have 15 booths. ($541 x15=$8,115) $2,195.00/system, we will need 4 systems. ($2,195x4=$8,780) $350.00/printer, we will need 2 printers. ($350x2=$700.00

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Merchantequip.com South Dakota Department of Revenue and Regulation South Dakota Department of Health

Check verification machine Beer license (for brew pub type) Liquor license Food service license

$200.00 $500 per year $1,500 per year $75 per year

All materials, except brewery equipment, are available from more than two geographically feasible suppliers. By contact with customers of said brewery suppliers, we have established that suppliers are reliable and secure. We must begin the food service license application process 30 days before construction begins, and application fees must be paid 30 days before construction is complete. Liquor and beer licenses must be applied for no later than 90 days prior to opening. Due to the nature of business and the distance from suppliers, short notice goods and those requiring delivery within one business day will be nearly impossible to obtain, thus putting added pressure on our inventory system. We will use a FIFO method in dealing with food stock; however, due to the possibility that our initial customer projections may be incorrect, there may be excess inventory, which could lead to spoilage of some of our perishable food stock (approximately 60% of total food inventory). If we deem this to be a problem we will take necessary steps to reduce perishable food stock to a more efficient level. Key factors in determining our suppliers include price, location and reputation. Order Fulfillment and Customer Service Prior to River Runs grand opening, all new employees will attend a two week training program covering food and beverage knowledge, customer service simulations, POS (point-of-sale) training, cook training, bartender training, and team-building exercises. If deemed necessary ongoing training will be initiated for existing employees to help solve any problems that may arise in the areas listed above. Orders will be processed by cooks, bartenders and servers, depending on the contents of the order. We will use a Dell Restaurant Point-of-Sale Solution System (see Appendix III). The POS system will automatically route tickets from servers placing orders to the necessary station in the kitchen or bar. When the order is entered into the POS system, it will be printed to the kitchen and bar with an automatic time stamp included. This enables cooks and bartenders to ensure that orders are being filled in a timely manner. Time between order and delivery of meals varies between 10-20 minutes depending on the menu item ordered and the amount of orders currently being prepared by cooks. Orders are prepared by kitchen staff, bartenders or servers depending on the order, and then orders will be placed in the pickup area to be delivered by the server to the appropriate table. Average cost of incorrectly prepared orders varies with the contents of the order, but could be as high as $20.00 per entre. At the time of opening, incorrect preparation of orders will be estimated around 5%. After one month of familiarization to the POS system, incorrect

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preparation estimates will be cut in half to equal 2.5%, as per industry standard. If the percent of incorrect orders exceeds 2.5% per employee, warnings will be warranted. Continued inaccuracy will result in termination. Any order not meeting customer standards will be re-prepared in an attempt to rectify the situation. Customer opinions are solicited through comment cards delivered to the tables by servers and through individual table visits by the Manager on Duty (MOD). Data is then collected from the MOD and surveys by the Operations Manager who reviews feedback and decides on a course of action, if one is warranted. Financial Control The Operations Manager will create the financial controls. Also, all activities must be on a checks and balances system. A review of these activities will be performed by the contracted accountants, bankers and company owners every six months. Accounts payable will be handled mainly by the Operations Manager. Outstanding bills will be paid upon receipt of service, or within 30 days of receipt of invoice. Due to the newness and nature of our business, it will be nearly impossible to buy goods on credit, therefore all inventory will be paid for upon receipt. River Run will only accept Visa and MasterCard credit cards, checks and cash. Credit cards will be required to open any and all tabs at the bar. All checks will be run through our check verification machine to guarantee available funds. Any delinquent accounts (unpaid tabs) will be settled by first attempting to contact the customer, then charging the card. The POS system will generate nightly financial reports containing total sales including: food, beer, wine, soda sales, customers served, average order completion time, inventory totals, and individual server sales. Other Operational Issues Safety signs will be posted in the kitchen. I wash signs will be posted in bathrooms and above sinks in kitchen. There will also be a chemical burn station and first aid kit in the kitchen. Watch your step signs will be placed around any wet areas and areas with steps. Employees will be required to wash hands before and after handling food, after using the restroom, and after handling any hazardous chemicals. First offense of an employees failure to do so will result in a write up that goes in their permanent file. Second offense results in immediate termination. Each employee will sign a form noting that they have been notified of washing stations, the first aid kit and the chemical burning station. This complies with Occupational Safety and Health Administration (OSHA) regulations. Also, employees with first aid certification will be on hand at all times during operating hours. River Run will require fire and liability insurance. We will need approximately two million dollars in coverage for both policies.

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River Run could be faced with legal issues involving food poisoning, slips and falls and workers compensation claims. Except in the case of any legal actions taken against us, we will not require extended legal advice. The establishment will require a liquor license and will be monitored and held accountable by the Food and Drug Administration (FDA), OSHA, and the governmental ruling body of Belle Fourche. Marketing and Event Planning River Run will constantly be working on research and development. New products in development will include beer and menu selection based upon customer preference. New services will include event reception packages, such as reduced fee catering if the customer will choose River Run as the event venue. River Run will attract Market A customers (Belle Fourche residents) through an on-site billboard while River Run is being renovated. River Run will advertise to Belle Fourche target customers with television and radio advertisement, which will begin three weeks before opening. These advertisements will describe menu options so that River Run can draw customers to make a profit as quickly as possible. A main source of marketing for River Run will be word-of-mouth marketing. Since Belle Fourche is a small town, residents are interested in the goings on of the town and will want to know what is happening. Market B customers will be attracted to River Run mainly by the location and proximity of the business to the Sports Complex. River Run will capitalize on this location by putting bunches of balloons outside on days when rodeos or sporting events are taking place down at the Sports Complex so that consumers are more likely to stop by. River Run will also look into sponsoring events or parts of events so that their name is on the program or announced over the loudspeaker at the games. Research and development will be headed by Bo Borisow and Samantha Peterson. Bo will be in charge of heading up the products division of research and development, while Samantha will focus on services. As these important players in the company will have many other tasks, only a small amount of time will be devoted to research and development. Research and development will be conducted primarily through computers where Bo and Samantha can talk to clients, travel and look at the competition. Paper surveys will also be handed out on site that customers can take to determine what the local market would like to see at River Run. River Run will subscribe to Restaurant Business Magazine to learn about industry trends.

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Teaming
Management Structure Manager Rich Kokesh will be in charge of facilitating renovations, installation of equipment, the hiring and termination of management staff and, initially, all day-to-day operations. Due to Mr. Kokeshs limited restaurant experience, Bo Borisow will be brought in as an operational advisor to help initially. Bo Borisow has over seven years of restaurant management and operational experience in comparable venues. Once the management staff has been hired and trained, they will take over most of the day-to-day activities, while Rich will have the final say in major decisions. The managers and Rich will have daily scheduled meetings to make sure they all know exactly what is going on in the company. The most qualified and experienced brew masters and chefs will be solicited from comparable restaurants in the area. We are looking for individuals that are willing to give up their current jobs in order to join a riskier venture in which they will have great influence on the menu and beer list as well as the future direction of the company. The management hierarchy is listed on the flow chart below.

In order to encourage superior customer service, rewards will be given by management to the service staff members who go above and beyond the call of duty for our customers. Consultants Anne York, Ph.D. Dr. Anne York, Professor of Strategic Management and Entrepreneurship at Creighton University will serve River Run as a consultant by providing market research tools and information. Donna Walsh, MBAOdin Capital Donna Walsh, partner in Odin Capital, a venture capital firm, will serve as a consultant for River Run, aiding in the design and implementation of the business plan.

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Bo BorisowRestaurant Management Consultant Bo Borisow, a Creighton University senior graduating with a BSBA in Entrepreneurial Management in May, will assist River Run with his extensive knowledge of the restaurant industry. Meg KokeshMarket Industry Consultant Meg Kokesh, a Creighton University senior graduating with a BSBA in Finance in May, will assist River Run with her extensive knowledge of the region and target markets. _____________________________________________________________________________

FINANCIAL ANALYSIS ASSUMPTIONS

Labor River Run will start operations with a total of 21 employees. Each employee will be paid twice a month on Friday; payments will start on the second Friday of each month. The Operations Manager and Head Chef will be paid on a salary basis with all other employees being paid a wage per hour. The table below provides a layout of each position, number employed, wage per hour and projected annual income. Year 1 Labor Projections # TITLE EMPLOYED Food Service Mgr 1 Head Chef 1 Cooks 2 Brew Master 1 Bartender 2 Dishwasher 2 Wait Staff 10 Operations Manager 1 Total Labor WAGE/HR $20.00 Salary $10.00 Salary $ 8.00 $ 7.50 $ 2.15 Salary $50.65 ANNUAL INCOME 43,200.00 38,994.00 31,200.00 38,994.00 24,320.00 15,480.00 15,910.00 39,230.77 247,328.77

$ $ $ $ $ $ $ $ $

We assume that each employee, except the Operations Manger, will begin training two weeks in advance of opening. The Operations Manager will begin work in February 2008 in order to organize food shipments, inventory, and required licenses. This employee will also be in charge of setting up employee interviews and staffing. The Food Service Manager will work 40 hours per week. Each Food Preparer will work 20 hours per week. The Head Chef is scheduled to work 50 hours per week. Each Cook and Bartender will work 30 hours per week. The two Dishwashers will work 21 hours per week each. There will be five wait staff employees scheduled to work every shift. River Run wait and kitchen staff will be trained to turn tables at a rate of 60 minutes per table during busy times and 90 minutes per table when business is slow.

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Shifts are as follows: Wait Staff Shift Schedule Monday Hours of Operatio n Shift One Shift Two Materials Food, wine, liquor and microbrew ingredients will continually be in stock. The cost of food will be approximately 25% of the price of each meal. In mid-May 2008, the Operations Manager will order enough food for each cook and the Head Chef to prepare each meal twice to practice technique before the opening. For June, July, August and December the food inventory will be set at 1,860 meals per month at an average of $17 spent per person, which gives a total of $7,905. The rest of the year has been projected be to slower with an assumed 70% of a busy months sales. River Run will keep a $500 wine inventory and a $999.95 microbrew inventory at all times. Liquor inventory will fluctuate with sales, full stock being at 130 bottles and $2,600 per month. Equipment All equipment will be purchased in March 2008 for setup and trial runs. River Run will order in one case of all glasses, flatware and china (small and large) every six months. Administrative Expenses Administrative expenses consist of the Operations Manager salary, all required licenses and insurance expenses. Licenses required include a beer license for a brew pub type establishment, a liquor license and a food service license. Each will be repurchased annually to comply with all government and FDA standards. Health insurance benefits will be provided to both the Operations Manager and the Head Chef. River Run will also purchase workmens compensation insurance for all employees, which will cost $700.00 per month. Liability insurance will be used in the event that a customer should have any kind of a slip and fall accident either in the building or on the property. 11:00am to 11:00pm 10:00 am to 5:00 pm 5:00 pm to close Tuesday 11:00am to 11:00pm 10:00 am to 5:00 pm 5:00 pm to close Wednesday Thursday 11:00am to 11:00pm 10:00 am to 5:00 pm 5:00 pm to close 11:00am to 11:00pm 10:00 am to 5:00 pm Friday Saturday 11:00 am to 2:00 am 10:00 am to 5:00 pm 5:00 pm to close Sunday 11:00 am to 2:00 am 10:00 am to 5:00 pm 5:00 pm to close

11:00 am to 2:00 am 10:00 am to 5:00 pm 5:00 pm to 5:00 pm close to close

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Marketing Marketing includes both radio and newspaper ads. In any month prior to a projected busy month, River Run will allocate $150 to each. During busy months, $400 will go to radio and newspaper with $200 paid out in slower months. River Run will also sponsor events and leagues at the Sports Complex; we will allocate $350 per month to sponsorships from beginning May through the end of August totaling $1,400 per year. Many people attend or participate in events at the Sports Complex and advertising there will increase our exposure to the market. Land and Building Expenses Land and building modifications will cost approximately $30,000 in year one. River Run has allocated $5,000 to building expenses in years two and three. Cash Flow Net cash out consists of sales minus all expenses listed in Appendix IV. The company then accounts for taxable income at a rate of 28% and finally has net cash flow listed. River Run has also included the initial purchase of the building for $1,000,000. Capital Structure River Run will be financed by a group of individual investors. Each will contribute an initial investment equal to a percent of total capital needed, which is approximately $1,050,000. The million dollars consists of the building and land purchase while the $56,000 will go towards materials and equipment. Investors plan to finance the building purchase with $250,000 cash and $750,000 debt financing. Debt financing will be obtained individually by each investor. Payback will begin after five full years of positive net cash flow. It will be based upon the percentage of each individuals total investment relative to the total investment required. Payback will be calculated as a percent of net cash flow at year end, May 31st, every year following the first five years of positive cash flow.

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Appendix I Location of River Run Restaurant and Microbrew and Nearby Sports Complex __ = River Run

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Appendix I (cont.) Location of River Run Restaurant and Microbrew and Nearby Sports Complex Sports Complex

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Appendix III Dell Restaurant Point-of-Sale Solution System Features

Restaurant Pro Express software provides fast and accurate order taking, streamlined operations, table seating, split checks, tip tracking, unlimited menu items and modifiers. Track inventory and customers, measure the performance of menu items and ring up orders fast and easily with Restaurant Pro Express. Included in this system are the following: OptiPlex - ultra small form factor PC Restaurant Pro Express Enterprise Edition Elo 15 LCD Desktop Touch screen Monitor with MSR Epson T88IV Thermal Receipt Printer 3 YR Hardware Support Service for OptiPlex + 5 Peripherals General Features

Fine Dining Features

Designed for Touch Screen Invoicing Customizable Touch Screen Separate Department and Item Selection Modifier Items Prompting Line Discount Option Passwords on Voided or Discounted Sales Exportable Report Information Unlimited Department, Item and Modifier Content User Definable Menus Handles Unlimited Multiple Remote Printers Kitchen Order Printing Detailed Customer History Detailed Sales History Stores Old Invoices Puts Invoices on Hold Purchase Orders Detailed Order History Ability to Recall Reports from Any Given Day Easy Printer Management Vendor Tracking Create Hotkeys Inventory Control Food Cost and Use Reporting Tracks House Accounts

Table Layout for Quick Table selection Table Diagram - Design where tables are located Automatic Server and Table Number Prompting Dining Room Table Management Quick Table selection prompting User Definable remote printing Customer Tabs Splitting checks Multiple Credit Cards on One Receipt Table and Server Swapping Special Orders On Screen Keyboard for Special Instructions Bulletproof on the Network User Definable Hotkeys User Definable Touch Screen Daily Specials (i.e. Happy Hour Specials) Order Filling Screen for Kitchen Monitor Station Specific Settings Employee Card Swipe Support Automatic Gratuity Party Size Prompting Customer Loyalty Features Individual Order Tracking (tracks what each customer orders) 21

Multilevel Password Protection Prints Reports to Screen, Printer Detailed Profitability Reports Online Credit Card Processing Adds Multiple Modifiers

Order Status Prompting Online Credit Card Processing in 2-5 seconds Attractive Receipt Printing

Microsoft Access Compatible Quick Service and Delivery

Phone Order Processing Invoice Notes for Delivery Directions Fast Customer Entry Order Filling Station To-Go Order Status settings Store Unlimited Customers Add Customers from any station Easy Lookup by customer number or name User Definable Hotkeys Print Extra Order to printer Customer Loyalty Features Coupons on the receipts Fixed Item Hotkeys Customer Notes Password Protection Employee Swipe Cards Works with Weight Scales Programmable Keypad Ready Prints To Stay, To Go or Delivery on remote printer Easy Invoice on Hold Support Multiple Stations Customizable and colorful touch screen Supports pictures in buttons

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Appendix V References
Belle Fourche Chamber of Commerce. Belle Fourche Maps http://www.blackhillsportal.com/dbs/bellefourchechamber/dyncat.cfm?catid=558 Buchthal, K.(2005, November). Better business brewing. Restaurants & Institutions, 115, 20. Retrieved April 2, 2007, from Business Source Premier database. Milton, D.P. (2006, October 26). Restaurant Analyst. Standard and Poors. Strenk, T. (2006, August). Foodservice buyer: Seasonal beers. Restaurant Business, 105, 8. Retrieved April 2, 2007, from Business Source Premier database. United States Census Bureau. Census 2000 Demographic Profile Highlights www.census.gov United States Census Bureau. U.S. Census Bureau: Restaurant Sector-722110 http://www.bls.gov/oes/current/naics4_722100.htm#b00-0000

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