Executive Summary

This business plan was created to secure investors. La Salsa Fresh Mexican Grill is
one of the hottest franchises to team up with and offers enormous potential in Oregon.
Currently, La Salsa is in all of the neighboring states of Oregon and is still expanding. The
Santa Barbara Restaurant Group (SBRG) franchises the La Salsa chain.
There are two main reasons that La Salsa will succeed in Eugene: first is the lack of
direct competition (nothing like it in town), the second is the high demand for a product like
this in Eugene. Eugene is in preparation for a large population growth period, the current
population of the greater Eugene/ Springfield metro area is over 300,000 according to Census
2000 and expanding.
The creation of a Limited Liability Corporation (LLC) will shield owners and
investors from personal liability. Over the next three years Benjamin D. Strock plans to
expand La Salsa in Oregon, developing between 3 to 10 restaurants under the LLC. This
business plan only includes the first store plans which will help create more concrete goals.
Per store revenues for La Salsa range between $400,000 to $1,000,000 depending heavily on
location. Estimated start-up costs from SBRG are between $300,000 and $400,000, and
require an initial investment of around $600,000. Half of this money will be financed by a
small business loan, and the other half will come from private investors. Net profits will be
high, yielding an estimated $85,000 a year per store (possibly much more).
The franchisor, SBRG will control most of pricing, training, building and advertising
in exchange for between 8% and 10% of gross sales. Hopefully, the first La Salsa in
Oregon will be built and running within three months of the initial financing assuming that a
location has been agreed upon by franchisor, franchisee and investors.

1.1 Mission
La Salsa Fresh Mexican Grill will establish itself as the premier casual Mexican dining
restaurant in Eugene while maintaining uncompromising principles as we grow to more than
three restaurants. The six following guiding principles will help us measure the
appropriateness of our decisions.

Provide a great work environment and treat employees with dignity and respect.
Embrace diversity as an essential component in the way that we do business.
Apply the highest standards of excellence to the food production, preparation, and
service to our customers.
Build lasting relationships with the guests.
Contribute positively to communities and our environment.
Recognize that profitability is essential to our future success.

1.2 Objectives
1.
2.
3.
4.
5.
6.

Set up a LLC to limit investor and personal liability.

Complete construction less than three months after financing.
Reach positive net profit in first quarter.
Become a market leader in Eugene.
Average $60,000 plus in revenues monthly.
Increase annual sales between 3-7%.

1.3 Keys to Success

1. Location, Location, Location.
2. Obtaining bank financing at reasonable interest rates, and securing individual
investors.
3. Finding and hiring qualified motivated employees.
4. Controlling the effective use of marketing dollars to stimulate sales.
5. Providing extraordinary food with unparalleled taste.

Company Summary
The parent company claims that,
"La Salsa is one of the fastest growing fresh Mexican chains nationwide. The hallmark
to our fresh style is our unique open-display kitchen, where customers can enjoy seeing their
food prepared right in front of their eyes.
We are also famous for our one-of-a-kind fresh Salsa Bar, where we encourage guests
to customize their salsa...selecting a range of flavors from hot and wild to robust, yet mild. We
never use microwaves, can openers, or lard. And signature to La Salsa's superior taste is
charbroiled cooking with skinless, all white-meat chicken, tender steak, big succulent shrimp
and flavorful Mahi Mahi. Popular menu items include gourmet burritos, handcrafted tacos

and veggie specialties. It's a high-quality menu with a fresh attitude that's made La Salsa a
West Coast favorite since 1979."

2.1 Company Ownership

A Limited Liability Corporation (LLC) will be formed to limit personal liability of the
owner and investors in La Salsa. Once the LLC is formed its first holding will be in
franchising La Salsa. It is Benjamin D. Strock's intention to offer limited outside ownership in
the LLC on an equity, debt, or combination basis in order to facilitate a more rapid expansion
of the La Salsa concept. A 12% priority return will be offered to all shareholders on their
investment. Benjamin D. Strock will be the managing shareholder of the corporation.

2.2 Start-up Summary

The Santa Barbara Restaurant Group, owners of the La Salsa chain, have estimated
overall start-up costs between $300,000 to $400,000. The numbers in the start-up cost table
are meant to reflect these estimates. The allocation into each category may not be exact, but
the approximate costs have been estimated slightly higher than those of the Santa Barbara
Restaurant Group. Overestimated costs will leave room for miscalculations, so that funding
will be available and will ensure that everything runs smoothly.

Start-up Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Franchise Fee
Insurance
Rent
Development Fee
Expensed Equipment
Other
Total Start-up Expenses
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
Total Requirements

$5,000
$2,000
$1,000
$20,000
$1,000
$5,000
$10,000
$17,000
$100,000
$161,000
$102,000
$50,000
$0
$287,000
$439,000
$600,000

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
Capital
Planned Investment
Richard & Ginny Strock
Benjamin D. Strock
Investor 3
Investor 4
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital
Total Capital and Liabilities
Total Funding

$161,000
$439,000
$600,000
$337,000
$102,000
$0
$102,000
$439,000

$0
$300,000
$0
$0
$300,000

$100,000
$20,000
$80,000
$100,000
$0
$300,000
($161,000)
$139,000
$439,000
$600,000

2.3 Company Locations and Facilities

The first option for location is close to Sacred Heart Hospital on 13th Avenue in
Eugene, Oregon. This location will be important because the University of Oregon campus is

close, as is the hospital. Students and hospital employees will have a new lunch spot which is
much needed. The best location currently available is next to the Napoli Restaurant & Bakery,
but it is only 800 square feet. In order to make this location feasible a partial/full buyout of
Napoli Bakery is desirable. The bakery is not overly successful and will hopefully be
cooperative in this process.
If the first restaurant is not located on 13th Ave. there are a few high traffic strip mall
locations available. Located on the corner of 18th Ave. and Willamette Street, next to a minimall, Blockbuster Video, Little Caesar's Pizza, and Hong Kong Chinese restaurant. South
Eugene High School (open campus) is also very close by. There are 1367 square
feet available, plenty of parking, high traffic and high visibility. This location rents for $970 a
month, and appears to have excellent profit potential. Traffic counts from 1997 were
approximately 15,000 for each direction on 18th Ave., and 11,000 one way on Willamette St.
Overall revenues would most likely stay consistent with 13th Ave. location, but it is
conceivable that without the effect of demand decline during the summer months next to
University of Oregon, overall revenues could be substantially higher in this location.
As the company gains community recognition La Salsa will expand to one or both of
the neighboring shopping malls (Valley River Center or Gateway). Once the Eugene/
Springfield market is developed expansion to other Oregon cities-on-the-rise such as
Corvallis, Bend, Medford, or Ashland is anticipated. Portland is not a strong candidate
considering competition is already fierce in that region.

Market Analysis Summary

Market segmentation is described in the next section.

3.1 Market Segmentation

The 2000 Census of Eugene/ Springfield says there are currently over 300,000 people
populating this metropolitan area. Using basic demographic characteristics of age, gender,
income, location, food preferences, ethnicity, an estimate of 150,000 potential customers was
used in developing this plan.
The University of Oregon was established in 1876, and currently has over 20,000
students. It is expected to gradually increase in size as it has over the previous years.
Across the street from the University is Sacred Heart Hospital, which currently
employs over 3,500 people (according to a hospital information representative) though it is
likely moving to North Eugene in the near future. If this happens the current hospital will
remain open only as an emergency room. This move and change will take time, hence the
growth rate is listed as -50%.
Both of the proposed initial locations are close to university student residential areas.
At the 18th Ave. and Willamette St. location high school students might be substituted for
Sacred Heart Hospital employees as a source of mid-day customers. South Eugene High
School has over 1,500 students.

Market Analysis
Year 1
Potential Customers
Eugene/ Springfield
University of Oregon
Sacred Heart Hospital
South Eugene High
School
Total

Year 2

Year 3

Year 4

Year 5

Growth

CAGR

3%
3%
-50%

150,000
20,000
3,500

154,500
20,600
1,750

159,135
21,218
875

163,909
21,855
438

168,826
22,511
219

3.00%
3.00%
-49.99%

2%

1,500

1,523

1,546

1,569

1,593

1.52%

2.50%

175,000

178,373

182,774

187,771

193,149

2.50%

3.2 Target Market Segment Strategy

The target market for the quick casual dining industry is very broad and should
incorporate most demographic regions. Almost all ages, genders, races, and incomes should
be considered potential customers.

3.2.1 Market Trends

Eugene is a rapidly developing city and is building the infrastructure for a larger
metropolitan area. Currently, in this expansionary effort, Eugene is working on the following
projects....

Building a new public library near the city center.

Broadway St. is being renovated and reopened to traffic.
A new Federal Courthouse in is being built adjacent to downtown.
Low-income housing covering five square city blocks in downtown has been recently
funded by St. Vincent DePaul.
The highway off-ramps to Eugene have recently been earmarked to be renovated at an
estimated $88 million.
The University of Oregon is spending between $80 and $100 million on additions to
the football stadium.

Projects such as these are promising for the future of Eugene and show that the city is
preparing for expansionary times.

3.2.2 Market Needs

In Eugene there are no high-quality, quick food Mexican restaurants. Most local
Mexican restaurants use canned foods, lard, and shredded meats. Our food will be 100% fresh
prepared in front of our customers' eyes. Our salsa bar will allow customers to customize their
food to their specific tastes.

3.3 Main Competitors

Quick Service MexicanBurrito Boy- This is probably the most popular quick Mexican restaurant in town. We
will offer much higher food quality and service. The atmosphere will be much cleaner and
more comfortable. The food will be prepared in front of the customer, with no lard, canned
food or shredded meats. Menu prices will be very similar, though the final products will not
be.
Santa Fe Burrito- Located on Willamette St. between 25th and 26th Avenues, Santa Fe
Burrito is another low quality quick Mexican restaurant in Eugene. This store is very dirty
and is an old Taco Bell. Using canned foods and some lard products, this restaurant provides a
far-from-fresh feeling. They have a decent location that might be negotiable for
buyout, thereby eliminating a weak competitor and picking up a pretty good location.
Burrito Amigos- Not located near the university campus, this chain has been trying to
expand. Currently, they have three or more stores. They create, almost, the taco stand feeling.
Again there would be no comparison in quality of food. Though they will probably continue
to attract the traditional style Mexican food consumer. Alternatively, La Salsa's food could
almost be considered "gringo" Mexican food.
Ritta's Burritos- These folks started out with one mobile stand and did some catering
business, then opened a full-time store in Eugene, but this Mama and Papa business could not
cover costs. Currently they set up a stand on the University of Oregon campus once a week,
and during the summer they are located at the Saturday Market and do very well. They always
have a really long line, but one is left to wonder if that is because there is no real competition
in this area. Once again using shredded meats and some canned foods.
Las Brasas- Las Brasas is located on Blair Street a few miles away from campus.
From the outside Las Brasas looks really small and could be confused as a taco stand. People
like their food, but due to location and size, they are not likely to be a competitive threat to La
Salsa.

Other Quick Service Mexican-

La Salsa will most likely not be a direct competitor with drive-thru fast-food Mexican
restaurants like Taco Bell and Taco Time. The chicken, steak, shrimp, and Mahi Mahi will all
be prepared fresh in front of the customers. Quality of produce will be much higher as will the
atmosphere, so consequently the menu price range will be higher than fast-food, matching the
dietary needs and gastronomical expectations of the potential customer. We will offer a
completely different menu and should not be compared to traditional fast-food Mexican.
Sit-Down MexicanLa Salsa with its fresh and extraordinary taste will offer menu items at a fraction of the
cost of sit-down dining (perhaps 20%-50% cheaper). There will also be no charge for service
that usually comes with being waited on. Another important difference is the quick
service without compromising high quality food.

Strategy and Implementation Summary

The next sections will help in understanding the competition, and the ways in
which La Salsa plans to gain market share.

4.1 Marketing Strategy

Advertising costs can overwhelm a new business, so keeping marketing simple and
creative will be challenging. Cost effective marketing is one of our keys to success,
and fortunately a large portion of it will be taken care of by Santa Barbara Restaurant Group.
A combination of local media and event marketing will be utilized at each location.
Radio is most effective, followed by local print media. When the La Salsa construction in
Eugene is finished, broader media will be employed. Print media, radio and college events
advertising will be the most effective way of generating publicity.
The following are a list of possible places to advertise with:
Qwest Eugene/ Springfield Yellow Pages PricingCustomer Service
1/8 page-$258.50/ month Black/ White and $402/ month Color
1/4 page-$507/ month Black/ White and $740/ month Color
1/2 page-$986/ month Black/ White and $1501/ month Color
Register-Guard NewspaperContact: Dave
An advertisement 2 columns wide once a week runs for $57.02 on weekdays and
$62.44 each weekend day.

They offer a "Restaurant Special"- 13 weeks with one ad per week, including ad on
Register-Guard website, directory listing, voice message listing, and is included in the nonsubscriber paper touching nearly all of Eugene/ Springfield.
AT&T Cable Television AdvertisingContact: Kristi
A wide variety of pricing options are available, cable advertising is a proven good way
to reach potential customers.
Clear Channel Broadcasting KPNW-KODZ-KDUK
Contact: Kim
Clear Channel Broadcasting owns news radio, oldies, and new rock stations in
Eugene/ Springfield and offers many advertising plans. The price range seems to be between
$850-$1500 per month for between 40 and 80 time slots.

4.1.1 Pricing Strategy

All menu items are moderately priced. An typical customer will spend between $5-8
including food and drink. The menu prices are dictated by the Santa Barbara Restaurant
Group and there is little room for modification. A student discount might be offered.

4.1.2 Promotion Strategy

If the site location ends up being near 13th Ave. next to the University of Oregon
campus, advertising close to and on campus would be very appropriate. This is an area with
limited parking where most of the traffic will come by foot. It will be very important to gain
recognition from students and hospital employees. Promotional events close to campus, at
sporting events, in the dormitories, and through the campus newspaper will tremendously
increase sales.
On the other hand, if the store has a high traffic location with ample parking more
traditional forms of restaurant promotion and advertising will be used.

4.2 Sales Forecast

Supplies in the restaurant industry, particularly fresh produce and meats and
seafood, are constantly subject to changes in the prices, so, while we attempt to
maintain consistency, menu prices are also subject to change. The sales forecasts start out at a
moderate level and build until the end of the school year where we hope to have the strongest
sales. Due to location (by campus) it is probable that sales will see a sharp decline during the
summer months (off months). As students begin to come back to school again in the middle of
September the sales will pick up again. If the proper location is found the sales may not
decrease as much as expected, because if parking is available we could appeal to a larger
market. If it is not located near campus the sales might be more consistent, but it would yield
close to the same in revenues.

The location next to Blockbuster Video Rental and Little Caesar's Pizza would offer a
chance of more consistent sales and rental costs could also be considerably cut. This is a high
traffic location next to a wealthy residential neighborhood. It would be nice to compensate
for the sales decline during the summer months next to campus. This location offers a lot of
possibilities.
Two La Salsa franchisees who have provided helpful information on their sales
revenues. One, located in Phoenix, Arizona, said that he has a lot competition in town
(Quedoba, Chipotle's, Baja Fresh, etc.). His rough sales were at a very similar level as
predicted in the Sales Forecast table. The numbers used seem to be consistent with
experience in this industry.
In Eugene, the strongest competitors have not arrived in town yet. If La Salsa is
established first it will gain the loyalty of the community, and sales could be considerably
higher than those predicted in the Sales Forecast Table.

Sales Forecast
Year 1
Sales
Meal Deals
A La Carte
Burrito/ Taco
Other
Total Sales
Direct Cost of Sales
Meal Deals
A La Carte
Burrito/ Taco
Other
Subtotal Direct Cost of Sales

Year 2

Year 3

$266,169 $284,801 $304,737

$139,720 $149,500 $159,965
$249,068 $266,503 $285,158
$37,151
$39,752
$42,534
$692,108 $740,556 $792,394
Year 1
Year 2
Year 3
$69,204
$74,048
$79,232
$29,341
$31,395
$33,593
$77,211
$82,616
$88,399
$6,316
$6,758
$7,231
$182,072 $194,817 $208,454

Management Summary
Benjamin D. Strock will run all business operations for La Salsa Fresh Mexican Grill,
except for the final accounting which will be reviewed by an accounting professional
monthly.
Other key personnel are the day to day manager and cooks. There is not expected to be
any shortage of qualified and available staff and management from local labor pools in each
market area.

5.1 Organizational Structure

Benjamin D. Strock will be in charge of store operations. Each store will have a
general manager who oversees the day to day operation of their store. They will be rewarded
by incremental profit sharing. It will be in their best interest to see that things run properly.
Future organizational structure may include a director of store operations when store
locations exceed three and/or we expand to other Oregon cities. This will provide a
supervisory level between the executive level and the store management level.

At that juncture, a full-time accountant will need to be added. Also, a sales/marketing

director will be added to oversee the expansion effort both to support the growth of existing
business and to execute the franchise expansion strategy.

5.2 Management Team

BENJAMIN D. STROCK

5.3 Personnel Plan

When you walk into the typical La Salsa, there is one cashier (usually the manager)
and two or three cooks working at all times. Depending on the volume of sales more cooks
might be needed. This is estimated into the personnel plan under Other.
At first there will not be a marketing manager, and Benjamin D. Strock will take care
of this. As we grow the need for a marketing representative will be higher.
Benjamin D. Strock will receive $3,000 dollars a month for management of the first
restaurants. When profits begin to rise, as owner and recipient of a percentage of profits, he
may no longer be included on the payroll.

Personnel Plan
Year 1
Production Personnel
Manager
Cooks (3)
Other
Subtotal
Sales and Marketing Personnel
Marketing
Other
Subtotal
General and Administrative Personnel
Benjamin Strock
Accountant
Other
Subtotal
Other Personnel
Name or Title

Year 2

Year 3

$36,417
$58,264
$34,417
$129,098

$37,508
$60,013
$35,448
$132,969

$38,633
$61,813
$36,512
$136,958

$12,168
$0
$12,168

$12,531
$0
$12,531

$12,907
$0
$12,907

$36,501
$12,140
$0
$48,641

$37,594
$12,503
$0
$50,097

$38,722
$12,878
$0
$51,600

$0

$0

$0

Other
Subtotal
Total People
Total Payroll

$0
$0
0
$189,907

$0
$0
0
$195,597

$0
$0
0
$201,465

Financial Plan
The following sections present the financial plan for La Salsa Fresh Mexican Grill.
Year end totals for the first three years are present in each section. First year monthly figures
are presented in the appendix.

6.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the
following table. The key underlying assumptions are:

We assume that the economy gets back on its feet and returns to 'normal', after the
current recession.
We assume access to equity capital and financing sufficient to maintain our financial
plan as shown in the tables.

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

Year 1
Year 2
Year 3
1
2
3
10.00%
10.00%
10.00%
7.00%
7.00%
7.00%
30.00%
30.00%
30.00%
0
0
0

6.2 Break-even Analysis

The break-even analysis is based on planned fixed costs estimates.

Break-even Analysis
Monthly Revenue Break-even $20,895
Assumptions:
Average Percent Variable Cost 26%
Estimated Monthly Fixed Cost $15,398

6.3 Projected Profit and Loss

In order not to underestimate costs, costs listed are considerably higher than what will
most likely be experienced. This makes the profits and margins appear less attractive, but
realize there are many ways to cut costs.
The Santa Barbara Restaurant Group requires royalties of 4% of gross sales to cover
national and local advertising costs. This is included in the Profit/Loss table under Corporate
Marketing Fee. The Franchise Fee is 6% of gross sales and is labeled Franchise Fee on the
Profit/Loss table.

Pro Forma Profit and Loss

Year 1
Sales
Direct Cost of Sales
Production Payroll
SBRG Franchise Fee
Other Production Expenses
Total Cost of Sales
Gross Margin
Gross Margin %
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll
Advertising/ Promotion
SBRG Corporate Marketing Fee
Travel
Miscellaneous
Total Sales and Marketing Expenses
Sales and Marketing %
General and Administrative Expenses
General and Administrative Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other General and Administrative Expenses
Total General and Administrative Expenses
General and Administrative %
Other Expenses:
Other Payroll
Consultants
Contract/Consultants
Total Other Expenses
Other %
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense

Year 2

Year 3

$692,108
$182,072
$129,098
$41,526
$12,000
$364,696
$327,412
47.31%

$740,556
$194,817
$132,969
$44,433
$12,000
$384,219
$356,336
48.12%

$792,394
$208,454
$136,958
$47,544
$12,000
$404,956
$387,439
48.89%

$12,168
$12,000
$27,684
$1,800
$1,200
$54,852
7.93%

$12,531
$12,000
$29,622
$1,800
$1,200
$57,153
7.72%

$12,907
$12,000
$31,696
$1,800
$1,200
$59,603
7.52%

$48,641
$0
$12,000
$0
$2,400
$2,400
$36,000
$28,486
$0
$129,927
18.77%

$50,097
$0
$12,000
$0
$2,400
$2,400
$36,000
$29,340
$0
$132,237
17.86%

$51,600
$0
$12,000
$0
$2,400
$2,400
$36,000
$30,220
$0
$134,620
16.99%

$0
$0
$0
$0
0.00%
$184,779
$142,632
$154,632
$20,194

$0
$0
$0
$0
0.00%
$189,390
$166,947
$178,947
$18,690

$0
$0
$0
$0
0.00%
$194,223
$193,216
$205,216
$17,020

Taxes Incurred
Net Profit
Net Profit/Sales

$36,731
$85,707
12.38%

$44,477
$103,779
14.01%

$52,859
$123,337
15.57%

6.4 Projected Cash Flow

In the following chart and table it is imperative to realize the importance of having
cash on hand. If the company were to run into any problems the cash on hand will ensure that
the business stays running.

Pro Forma Cash Flow

Year 1
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
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
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment

$692,108
$692,108

Year 2

$740,556
$740,556

Year 3

$792,394
$792,394

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$692,108
$740,556
$792,394
Year 1
Year 2
Year 3
$189,907
$336,482
$526,389

$195,597
$432,352
$627,949

$201,465
$454,852
$656,317

$0
$0
$0

$0
$0
$0

$0
$0
$0

Long-term Liabilities Principal Repayment

Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

$21,479
$0
$0
$0
$547,868
$144,240
$246,240

$23,032
$0
$0
$36,000
$686,981
$53,574
$299,814

$24,697
$0
$0
$36,000
$717,014
$75,381
$375,195

6.5 Projected Balance Sheet

The projected balance sheet is shown below.
Pro Forma Balance Sheet
Year 1
Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

$246,240
$19,201
$0
$265,441

Year 2

$299,814
$20,545
$0
$320,360

Year 3

$375,195
$21,984
$0
$397,179

$287,000 $287,000 $287,000

$12,000
$24,000
$36,000
$275,000 $263,000 $251,000
$540,441 $583,360 $648,179
Year 1
Year 2
Year 3
$37,214
$0
$0
$37,214
$278,521
$315,735
$300,000
($161,000)
$85,707
$224,707
$540,441
$224,707

$35,385
$0
$0
$35,385
$255,488
$290,874
$300,000
($111,293)
$103,779
$292,486
$583,360
$292,486

$37,564
$0
$0
$37,564
$230,791
$268,355
$300,000
($43,514)
$123,337
$379,823
$648,179
$379,823

6.6 Business Ratios

The following table outlines some of the more important ratios from the Restaurant/
Eating Places industry. The final column, Industry Profile, details specific ratios based on the
industry as it is classified by the Standard Industry Classification (SIC) code, 5812.
Ratio Analysis
Year 1
Sales Growth
Percent of Total Assets
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities

Year 2

Year 3 Industry Profile

7.60%

0.00%

7.00%

7.00%

3.55%
0.00%
49.12%
50.88%
100.00%
6.89%

3.52%
0.00%
54.92%
45.08%
100.00%
6.07%

3.39%
0.00%
61.28%
38.72%
100.00%
5.80%

3.60%
35.60%
43.70%
56.30%
100.00%
32.70%

Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

51.54%
58.42%
41.58%

43.80%
49.86%
50.14%

35.61%
41.40%
58.60%

28.50%
61.20%
38.80%

100.00%
47.31%
34.92%
1.73%
20.61%

100.00%
48.12%
34.10%
1.62%
22.54%

100.00%
48.89%
33.33%
1.51%
24.38%

100.00%
60.50%
39.80%
3.20%
0.70%

7.13
6.62
58.42%
54.49%
22.66%

9.05
8.47
49.86%
50.69%
25.41%

10.57
9.99
41.40%
46.39%
27.18%

0.98
0.65
61.20%
1.70%
4.30%

Year 1

Year 2

Year 3

12.38%
38.14%

14.01%
35.48%

15.57%
32.47%

n.a
n.a

8.68
10.04
27
1.28

9.80
12.17
31
1.27

9.80
12.17
29
1.22

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

1.41
0.12

0.99
0.12

0.71
0.14

n.a
n.a

$228,227
7.06

$284,974
8.93

$359,614
11.35

n.a
n.a

0.78
7%
6.62
3.08
0.00

0.79
6%
8.47
2.53
0.35

0.82
6%
9.99
2.09
0.29

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

Appendix
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Meal Deals
A La Carte
Burrito/ Taco
Other
Total Sales
Direct Cost of Sales
Meal Deals
A La Carte
Burrito/ Taco
Other
Subtotal Direct Cost of
Sales

0%
0%
0%
0%

26%
21%
31%
17%

$12,588 $19,188 $24,319 $26,688 $28,044 $28,428 $23,302 $18,116 $15,604 $20,116 $24,240 $25,536
$6,582 $9,534 $12,048 $13,560 $14,431 $14,880 $12,910 $10,796 $9,658 $12,796 $11,622 $10,903
$8,844 $14,592 $20,100 $23,244 $25,104 $26,832 $22,792 $19,268 $16,804 $21,268 $24,672 $25,548
$1,378 $2,192 $3,015 $3,752 $4,042 $4,352 $3,490 $2,932 $2,072 $2,746 $3,610 $3,570
$29,392 $45,506 $59,482 $67,244 $71,621 $74,492 $62,494 $51,112 $44,138 $56,926 $64,144 $65,557
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
$3,273 $4,989 $6,323 $6,939 $7,291 $7,391 $6,059 $4,710 $4,057 $5,230 $6,302 $6,639
$1,382 $2,002 $2,530 $2,848 $3,031 $3,125 $2,711 $2,267 $2,028 $2,687 $2,441 $2,290
$2,742 $4,524 $6,231 $7,206 $7,782 $8,318 $7,066 $5,973 $5,209 $6,593 $7,648 $7,920
$234
$373
$513
$638
$687
$740
$593
$498
$352
$467
$614
$607
$7,631

$11,887 $15,597 $17,630 $18,791 $19,574 $16,428 $13,449 $11,647 $14,977 $17,005 $17,456

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Production Personnel
Manager
Cooks (3)
Other

$3,000
$4,800
$2,000

$3,000
$4,800
$2,000

$3,008
$4,812
$3,008

$3,015
$4,824
$3,015

$3,023
$4,836
$3,023

$3,030
$4,848
$3,030

$3,038
$4,860
$3,038

$3,045
$4,872
$3,045

$3,053
$4,885
$3,053

Month
10
$3,061
$4,897
$3,061

Month
Month 12
11
$3,068
$4,909
$3,068

$3,076
$4,921
$3,076

Subtotal
Sales and Marketing
Personnel
Marketing
Other
Subtotal
General and Administrative
Personnel
Benjamin Strock
Accountant
Other
Subtotal
Other Personnel
Name or Title
Other
Subtotal
Total People
Total Payroll

$9,800

$9,800

$10,828 $10,854 $10,882 $10,908 $10,936 $10,962 $10,991 $11,019 $11,045 $11,073

$1,000
$0
$1,000

$1,003
$0
$1,003

$1,005
$0
$1,005

$1,008
$0
$1,008

$1,010
$0
$1,010

$1,013
$0
$1,013

$1,015
$0
$1,015

$1,018
$0
$1,018

$1,020
$0
$1,020

$1,023
$0
$1,023

$1,025
$0
$1,025

$1,028
$0
$1,028

$3,000
$1,000
$0
$4,000

$3,008
$1,000
$0
$4,008

$3,015
$1,003
$0
$4,018

$3,023
$1,005
$0
$4,028

$3,030
$1,008
$0
$4,038

$3,038
$1,010
$0
$4,048

$3,045
$1,013
$0
$4,058

$3,053
$1,015
$0
$4,068

$3,061
$1,018
$0
$4,079

$3,068
$1,020
$0
$4,088

$3,076
$1,023
$0
$4,099

$3,084
$1,025
$0
$4,109

$0
$0
$0
0
$14,800

$0
$0
$0
0
$14,811

$0
$0
$0
0
$15,851

$0
$0
$0
0
$15,890

$0
$0
$0
0
$15,930

$0
$0
$0
0
$15,969

$0
$0
$0
0
$16,009

$0
$0
$0
0
$16,048

$0
$0
$0
0
$16,090

$0
$0
$0
0
$16,130

$0
$0
$0
0
$16,169

$0
$0
$0
0
$16,210

Month 8

Month 9 Month 10 Month 11

General Assumptions
Month 1
Plan Month
Current Interest
Rate
Long-term Interest
Rate
Tax Rate
Other

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month
12
11
12

10

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

7.00%

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

30.00%
0

Pro Forma Profit and Loss

$29,392
$7,631
$9,800
$1,764

$45,506
$11,887
$9,800
$2,730

$59,482
$15,597
$10,828
$3,569

$67,244
$17,630
$10,854
$4,035

$71,621
$18,791
$10,882
$4,297

$74,492
$19,574
$10,908
$4,470

$62,494
$16,428
$10,936
$3,750

$51,112
$13,449
$10,962
$3,067

$44,138
$11,647
$10,991
$2,648

$56,926
$14,977
$11,019
$3,416

$64,144
$17,005
$11,045
$3,849

Month
12
$65,557
$17,456
$11,073
$3,933

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$20,195
$9,197
31.29%

$25,418
$20,088
44.14%

$30,993
$28,489
47.89%

$33,519
$33,725
50.15%

$34,971
$36,650
51.17%

$35,951
$38,541
51.74%

$32,114
$30,380
48.61%

$28,478
$22,634
44.28%

$26,286
$17,852
40.45%

$30,412
$26,514
46.58%

$32,899
$31,245
48.71%

$33,462
$32,095
48.96%

$1,000

$1,003

$1,005

$1,008

$1,010

$1,013

$1,015

$1,018

$1,020

$1,023

$1,025

$1,028

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,176

$1,820

$2,379

$2,690

$2,865

$2,980

$2,500

$2,044

$1,766

$2,277

$2,566

$2,622

$600
$100

$600
$100

$600
$100

$0
$100

$0
$100

$0
$100

$0
$100

$0
$100

$0
$100

$0
$100

$0
$100

$0
$100

$3,876

$4,523

$5,084

$4,798

$4,975

$5,093

$4,615

$4,162

$3,886

$4,400

$4,691

$4,750

13.19%

9.94%

8.55%

7.13%

6.95%

6.84%

7.38%

8.14%

8.80%

7.73%

7.31%

7.25%

$4,000

$4,008

$4,018

$4,028

$4,038

$4,048

$4,058

$4,068

$4,079

$4,088

$4,099

$4,109

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,000
$0
$200
$200
$3,000
$2,220

$1,000
$0
$200
$200
$3,000
$2,222

$1,000
$0
$200
$200
$3,000
$2,378

$1,000
$0
$200
$200
$3,000
$2,384

$1,000
$0
$200
$200
$3,000
$2,390

$1,000
$0
$200
$200
$3,000
$2,395

$1,000
$0
$200
$200
$3,000
$2,401

$1,000
$0
$200
$200
$3,000
$2,407

$1,000
$0
$200
$200
$3,000
$2,414

$1,000
$0
$200
$200
$3,000
$2,420

$1,000
$0
$200
$200
$3,000
$2,425

$1,000
$0
$200
$200
$3,000
$2,432

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$10,620

$10,630

$10,796

$10,812

$10,828

$10,843

$10,859

$10,875

$10,893

$10,908

$10,924

$10,941

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11
Sales
Direct Cost of Sales
Production Payroll
SBRG Franchise Fee 6%
Other Production
Expenses
Total Cost of Sales
Gross Margin
Gross Margin %
Operating Expenses
Sales and Marketing
Expenses
Sales and Marketing
Payroll
Advertising/
Promotion
SBRG Corporate
4%
Marketing Fee
Travel
Miscellaneous
Total Sales and
Marketing Expenses
Sales and Marketing
%
General and
Administrative
Expenses
General and
Administrative Payroll
Sales and Marketing
and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
15%
Other General and
Administrative
Expenses
Total General and
Administrative
Expenses

General and
Administrative %
Other Expenses:
Other Payroll
Consultants
Contract/Consultants
Total Other Expenses
Other %
Total Operating
Expenses
Profit Before Interest
and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

36.13%

23.36%

18.15%

16.08%

15.12%

14.56%

17.38%

21.28%

24.68%

19.16%

17.03%

16.69%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$14,496

$15,153

$15,880

$15,609

$15,802

$15,936

$15,474

$15,038

$14,778

$15,308

$15,615

$15,691

($5,298) $4,936

$12,609

$18,116

$20,848

$22,605

$14,906

$7,597

$3,074

$11,207

$15,630

$16,404

($4,298)
$1,740
($2,111)
($4,927)
-16.76%

$13,609
$1,719
$3,267
$7,622
12.81%

$19,116
$1,709
$4,922
$11,485
17.08%

$21,848
$1,699
$5,745
$13,404
18.72%

$23,605
$1,688
$6,275
$14,641
19.65%

$15,906
$1,678
$3,968
$9,259
14.82%

$8,597
$1,667
$1,779
$4,151
8.12%

$4,074
$1,657
$425
$992
2.25%

$12,207
$1,646
$2,868
$6,692
11.76%

$16,630
$1,635
$4,198
$9,796
15.27%

$17,404
$1,625
$4,434
$10,346
15.78%

$5,936
$1,730
$962
$2,244
4.93%

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from
Operations
Additional Cash Received
Sales Tax, VAT, HST/GST
0.00%
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
Expenditures
Expenditures from
Operations
Cash Spending
Bill Payments
Subtotal Spent on
Operations
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
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

$29,392 $45,506 $59,482 $67,244 $71,621 $74,492 $62,494 $51,112 $44,138 $56,926 $64,144 $65,557
$29,392 $45,506 $59,482 $67,244 $71,621 $74,492 $62,494 $51,112 $44,138 $56,926 $64,144 $65,557

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$29,392 $45,506 $59,482 $67,244 $71,621 $74,492 $62,494 $51,112 $44,138 $56,926 $64,144 $65,557
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

$14,800 $14,811 $15,851 $15,890 $15,930 $15,969 $16,009 $16,048 $16,090 $16,130 $16,169 $16,210
$363
$11,044 $15,768 $22,330 $41,154 $42,603 $43,377 $32,561 $26,551 $24,497 $36,855 $39,379
$15,163 $25,855 $31,619 $38,220 $57,084 $58,572 $59,386 $48,609 $42,641 $40,627 $53,024 $55,589

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,733

$1,743

$1,754

$1,764

$1,774

$1,784

$1,795

$1,805

$1,816

$1,826

$1,837

$1,848

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0
$0
$16,896
$12,496
$114,496

$0
$0
$27,598
$17,908
$132,404

$0
$0
$33,372
$26,110
$158,514

$0
$0
$39,984
$27,260
$185,773

$0
$0
$58,859
$12,762
$198,536

$0
$0
$60,357
$14,135
$212,671

$0
$0
$61,180
$1,314
$213,985

$0
$0
$50,415
$697
$214,682

$0
$0
$44,456
($318)
$214,364

$0
$0
$42,453
$14,473
$228,837

$0
$0
$54,861
$9,283
$238,119

$0
$0
$57,437
$8,120
$246,240

Pro Forma Balance Sheet

Month 1
Assets
Current
Assets
Cash
Inventory
Other
Current
Assets
Total
Current
Assets
Long-term

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9 Month 10 Month 11 Month 12

Starting
Balances

$102,000 $114,496 $132,404 $158,514 $185,773 $198,536 $212,671 $213,985 $214,682 $214,364 $228,837 $238,119 $246,240
$50,000 $42,369 $30,482 $17,156 $19,393 $20,670 $21,531 $18,071 $14,794 $12,811 $16,475 $18,706 $19,201
$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$152,000 $156,865 $162,886 $175,670 $205,166 $219,206 $234,202 $232,056 $229,476 $227,175 $245,312 $256,825 $265,441

Assets
Long-term
$287,000
Assets
Accumulated
$0
Depreciation
Total Long$287,000
term Assets
Total Assets $439,000
Liabilities
and Capital
Current
Liabilities
Accounts
$0
Payable
Current
$0
Borrowing
Other
Current
$0
Liabilities
Subtotal
Current
$0
Liabilities
Long-term
$300,000
Liabilities
Total
$300,000
Liabilities
Paid-in
$300,000
Capital
Retained
($161,000
Earnings
)
Earnings
$0
Total Capital $139,000
Total
Liabilities
$439,000
and Capital
Net Worth $139,000

$287,000 $287,000 $287,000 $287,000 $287,000 $287,000 $287,000 $287,000 $287,000 $287,000 $287,000 $287,000
$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$286,000 $285,000 $284,000 $283,000 $282,000 $281,000 $280,000 $279,000 $278,000 $277,000 $276,000 $275,000
$442,865 $447,886 $459,670 $488,166 $501,206 $515,202 $512,056 $508,476 $505,175 $522,312 $532,825 $540,441
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9 Month 10 Month 11 Month 12

$10,525

$15,045

$20,960

$39,736

$41,145

$42,284

$31,673

$25,748

$23,271

$35,542

$38,096

$37,214

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$10,525

$15,045

$20,960

$39,736

$41,145

$42,284

$31,673

$25,748

$23,271

$35,542

$38,096

$37,214

$298,267 $296,523 $294,770 $293,006 $291,232 $289,448 $287,653 $285,848 $284,032 $282,205 $280,368 $278,521
$308,791 $311,568 $315,730 $332,742 $332,377 $331,732 $319,326 $311,596 $307,303 $317,747 $318,464 $315,735
$300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000
($161,000
)
($4,927)
$134,073

($161,000
)
($2,683)
$136,317

($161,000
)
$4,940
$143,940

($161,000
)
$16,425
$155,425

($161,000
)
$29,829
$168,829

($161,000
)
$44,470
$183,470

($161,000
)
$53,730
$192,730

($161,000
)
$57,880
$196,880

($161,000
)
$58,872
$197,872

($161,000
)
$65,565
$204,565

($161,000
($161,000)
)
$75,361 $85,707
$214,361 $224,707

$442,865 $447,886 $459,670 $488,166 $501,206 $515,202 $512,056 $508,476 $505,175 $522,312 $532,825 $540,441
$134,073 $136,317 $143,940 $155,425 $168,829 $183,470 $192,730 $196,880 $197,872 $204,565 $214,361 $224,707