Earthly Delights

Contact Information

Earthly Delights Inc.8876 Fourth Ave

San Diego CA 91214(619)707-7293

earthlydelights@gmail.comCarl Barnes, President

Janett Medrano, Kristina Morales, and Yenina Vereda, CEOs

This document contains confidential information. It is disclosed to you for informational purposes only. Its contents shall remain the property of Earthly Delights and shall be returned to

Earthly Delights when requested.

This is a business plan and does not imply an offering of securities.

Table of Contents

1. Executive SummaryBusiness Opportunity Product/Service Description Current Business Position Financial PotentialThe Request

2. Company BackgroundBusiness DescriptionCompany HistoryCurrent Position and Business Objectives Ownership

3. ProductsProduct Overview Competitive Analysis Suppliers and Inventory Research and Development

4. The Industry, Competition and MarketIndustry Definition Primary Competitors Market SizeMarket Growth Customer Profile

5. Marketing PlanCompetitive Advantage PricingDistribution Channels Promotional Plan Feedback

6. Operating Plan LocationFacilityOperating Equipment Suppliers and Vendors Personnel Plan General Operations

7. Management, Organization and OwnershipManagement/Principles Organizational Structure Professional Consultants

8. Goals and Strategies Business Goals Keys to Success Future Plans

9. Financial AssumptionsBeginning Balance Sheet Profit and LossBalance SheetCash Plan

10. AppendixEquipment List

1. Executive SummaryEarthly delights is an unprecedented restaurant concept that has been introduced to the Hillcrest market. The menu consists of paninis, salads, desserts, and coffee made from organic ingredients. The partners, who bring more than 16 years of foodservice experience, with varying backgrounds in the fields of marketing, food safety, customer service and community relations, are seeking a line-of-credit of $100,000.00 to expand to a second location.

1.1 Business OpportunityThere is a high demand for fair trade organic products specifically in the Southern California region, giving our business an advantage over other businesses in the same market.

1.2 Product/Service DescriptionFairtrade and organic products are different from mainstream source products in that they are vetted to be humanely and environmentally conscious. Human rights and environmental causes are growing movements in the world as consumers are trying to be more aware of the origin of their products and the labor associated with it. Organic products are superior due to their non-pesticide treatment, and its beneficial attributes promote sustainability and environmental awareness for the future generations. Fair trade products appeal to a similar demographic because they represent fair treatment of laborers which is in line with the ideals of the proponents of organic farming. The selection of all food ingredients come from local farms and are negotiated through strategic partnerships to promote said farms. In addition, our fair trade products are acquired from companies that have acquired a certification.

1.3 Current Business PositionEarthly Delights is established as a corporation with Carl Barnes, Janett Medrano, Kristina Morales, and Yenina Vereda each with 25% equity stake. All owners utilize their expertise in food service to contribute to the success of the business.  

1.4 Financial PotentialYTD sales are known and the remaining month of the year is estimated to produce the total revenue of $982,800. With the expansion of a second location in Year 2 there is a projected 84% increase in revenue (factoring the slightly smaller facility for the second location). In Year 3 there is a projected increase of revenue of 15%. Based on the projected cash flow there will be considerable cash on hand for future expansions.

YEAR 1 (2013) YEAR 2 (2014) YEAR 3 (2015)

Gross Profit 982,800 1,812,000 2,076,000Operational Income 322,730 555,600 710,500Net Income 126,170 193,200 295,300

1.5 The RequestEarthly Delights is seeking to establish a $50,000 credit loan to cover the costs associated with the expansion of a second brick and mortar location. The business is requesting the funds as a revolving line of credit which the company can draw from as needed.

Due to our success year-to-date and cash on hand, Earthly Delights projects it will only require funds equal to $30,000 from a line of credit. However, such a line of credit will help Earthly Delights cover the build-up cost from operating expenses. Each owner is committed to invest additional personal assets in the amount of the loan as collateral for the transaction. The business currently has a significant amount of cash on hand, however it is needed to cover day to day costs of operation as well as for paying invoices for food purchases.

2. Company BackgroundThe owners of Earthly Delights are Carl Barnes, Janett Medrano, Kristina Morales, and Yenina Vereda, whom together bring 16 years of foodservice experience to the business. The owners identify the gap of restaurants that cater to the sustainable, local, and organic (SLO) movement. This particular demographic provides a loyal clientele with a much more significant customer return rate than an average restaurant. Because of this customer base, the company does not expect to rely much on marketing to succeed. Surveys conducted on potential customers confirmed the chances for the success of the business, given that an intense internet search discovered that there are currently no businesses of the sort in Southern California.

2.1 Business DescriptionEarthly Delights is located in the Hillcrest neighborhood of San Diego, California  and sells paninis, salads, desserts all made with organic products and organic fair trade coffee. The restaurant consists of a service counter with seating arrangements similar to features of a diner. The foods will be prepared upon order with the choice of dine-in or carry out.

Earthly Delights cater to the growing population of progressive SLO advocates. San Diego is the fastest growing community that demands organic local products. San Diego is also leading the charge of promoting sustainable lifestyles.

The Hillcrest location is situated on 4th Avenue, a popular dining destination in the San Diego neighborhood. The prospective expansion location is planned to be located in the seaside neighborhood of Pacific Beach. Both of these locations have dense populations of proponents of local and organic eating.

2.2 Company History

Carl Barnes, Janett Medrano, Kristina Morales, and Yenina Vereda met in their senior year of college in 2009. They studied Foods and Nutrition at San Diego State University and share a passion in caring for the environment as well as a passion for healthy nutritious foods. As they worked on a class project, they discovered a gap in the industry in environmentally friendly restaurants and decided to partner up to develop a business that would care for this population. After further research they confirmed their chances for success and decided to carry on with their project.

2.3 Current Position and Business ObjectivesEarthly Delights has been successfully established for one year. The first establishment is located on 4th Avenue and Washington Street, one of the busiest and most popular street in the city of Hillcrest. Earthly Delights is the first of its kind in the area and one of the only promoters of the SLO movement in the city of Hillcrest. The estimated population for Hillcrest is 15,000 in just over 1.5 square miles, but in addition to this concentrated population the restaurant attracts San Diegans from throughout the County and beyond.  

Earthly Delights Mission Statement is as follows:

“Earthly Delight aims to provide the highest quality, responsibly sourced, local, and organic ingredients. Customers will consist of well-educated individuals who are health conscious and those that support the sustainable, local, and organic movement, from nearby universities such as University of San Diego, Point Loma University, University of California San Diego and San Diego State University.”

2.4 OwnershipThe business will be owned by Carl Barnes, Janett Medrano, Kristina Morales, and Yenina Vereda. It is structured as an equal partnership, with Mr. Barnes bearing the title of President and Ms. Medrano, Morales and Vereda as Chief Executive Officers. They are all equally experienced in food service, retail and customer service.

3. ProductsSupporters of the Organic movement have dramatically increased every year. In 2012, the US Organic Food Industry reached a $30 billion mark and continues to grow annually at a rate of nearly 20%, outpacing most other categories of the food industry. This rapid growth makes this industry ideal to operate within during such a lucrative time. By providing organic food options that are local we are able address the consumer demand for organic food while promoting eating locally through our use of local vendors.  

1. SustainableItems not used and waste generated is compostable and/or recyclable.

2. Local Food items are acquired from local farms and bakeries.  

3. OrganicThe business strives from purchasing and delivering organic food products.

4. Fair TradeFarms and businesses who supply the restaurant are fair trade certified.

3.1 Product OverviewThe primary food products sold by Earthly Delights include items that fall in the following categories:

Cost Price Source

Paninis $ 3.60 $ 8.25Bread: local bakery. Ingredients: local farms*

Salads $ 3.30 $ 7.00 Local farms* Tea $ 0.65 $ 3.00 Art of Tea Coffee $ 0.50 $ 2.00 Elan Organic Coffees Desserts $ 1.50 $ 3.80 Stephanie's Bakery*May vary by season and availability

In addition, food sold in this facility will be prepared in an organic certified kitchen. Select food items will be sold in a refrigerator case for customer convenience.

3.2 Competitive AnalysisCurrently, no other food service business in San Diego, CA focuses exclusively on selling products that are all sustainable, local, organic, and fair trade. The products being sold will allow the promotion of health consciousness and awareness among the neighborhood where the business is located

Future competitors are likely to arise, but we will be recognized as the restaurant with most potential due to our exceptional customer service and our overall mission.

3.3 Suppliers and InventoryEarthly delights will be supplied by different local vendors depending on the availability of the products by each vendor to ensure the freshest products of the highest quality. Farms that will supply the business will include Suzie's Farm, SeaBreeze Organic Farms, Be Wise Ranch and San Diego Organic Farms. Bakeries will include Stephanie's Bakery, Village Mill Breading Co., and Sweet Cheeks Baking Company.

3.4 Research and DevelopmentEarthly Delights' success will come from educating customers about the importance and the benefits of selecting foods that are sustainable, local and organic. Providing efficient customer service and high quality products will also drive the restaurant’s success. Prices will be set to compete with nearby restaurants serving non-organic equivalence.  

Due to the success of the first location, Earthly Delights will be expanding to a second location in Pacific Beach. Upon establishment of the second location, Earthly Delights will place more focus on satellite sale sites such as farmer’s markets as a means of additional cash flow and the continued promotion of Earthly Delights. This will also serve as a means of promoting the business and reaching other kinds of clientele.

4. The Industry, Competition and MarketEarthly Delights will take advantage of the rapid increase in the interest for sustainable, local, and organic products. With the rapid rate of growth of the organic food industry, SLO products are in higher demand by educated health conscious individuals of all ages. The city of San Diego is home to a significant grassroots foundation for the SLO movement. San Diego County currently has community organizations established to support the SLO movement.

4.1 Industry DefinitionThe SLO movement is a growing demand for emphasis on sustainability and locally grown products within the Organic Food Industry. A national survey ranked San Diego the 5th in percentage of organic food consumers with 24% of the population consuming organic foods.  

4.2 Primary CompetitorsWhile no other restaurants in San Diego operate solely on the concept of the SLO movement, there are some competitors in the area that appeal to a similar clientele and/or serve similar food products albeit not always organic. Some of these competitors serving similar food are Baby Cakes, True Food Kitchen, Fig Tree Cafe, and Peet’s Coffee and Tea. While most of these merely serve non-organic equivalents of our Earthly Delights menu, True Food Kitchen targets a very similar clientele in their efforts to promote an anti-inflammatory diet that happens to offer many organic options. In branding our concept on a cafe and casual eatery we are able to set ourselves apart from the likes of True Food Kitchen and command the market for convenient, affordable and casual organic eating.

4.3 Market Size

San Diego is a major city in California, on the coast of the Pacific Ocean in Southern California, approximately 120 miles south of Los Angeles and immediately adjacent to the border with Mexico. As of the 2012 census, the population in San Diego reached 1.4 million people. San Diego is the home to San Diego State University, a public research university with the largest and oldest higher education facility in San Diego County, which admits students from all over the world each year. University of California San Diego, University of San Diego, and Point Loma Nazarene University also influence the businesses around San Diego County due to the large amount of students that attend each university.

4.4 Market GrowthEarthly Delights is an ideal business for the San Diego area as compared to the overwhelming demand for sustainable, local and organic products with little to no competition in the market. Based on the average individual transaction of $15.00 (including all categories of sales) Earthly Delights has a great earning potential. With no other competition operating by the same business model there is ample opportunity to expand to additional locations.

4.5 Customer ProfileSan Diego is comprised of a diverse population of professionals, business owners, and students. The surrounding universities maintains the city’s predominant student population. The city is a growing community that supports local and organic products as well as a supporter of sustainability. The facility is located near a popular area with high traffic and is located relatively close to the surrounding universities.

5. The Marketing PlanEarthly Delights’ purpose in the industry is to promote sustainability, and to support the local and organic movement. In order to promote the mission statement, the main way the company will reach its customers will be through social media, word of mouth, fliers, and weekly sample tastings. Earthly Delights customer focus will consist of environmentally friendly and well

educated clientele. We want to provide our clientele an unlimited assortment of products that will increase their return rate as well as fulfill their desire for this kind of merchandise.

5.1 Competitive AdvantageUnlike any other businesses in Hillcrest, we are the only one dedicated to the SLO movement.This allows business to enter the SLO food retail market with little to no resistance to our competitors. Earthly Delights is located in a busy part of Hillcrest which is home to a dense population of our target demographic.

5.2 PricingThere are other restaurants that are based on this similar concept of SLO food. California cities such as Berkley, Los Angeles, and Sacramento are home to restaurants with a concept of the SLO movement.  Establishments such as one in Berkeley are relatively new concepts with having been around for only three years or so. Menu pricing at these establishments average lunch items at $8 and dinner for $12 with sides and desserts averaging $4. Because we have no direct competition in the area we are able to be more flexible in our pricing. On the contrary, we want to be able to deliver our products at the most reasonable prices. Because of this we have decided to match the pricing of similar restaurants in other regions. Earthly Delights’ pricing is as follows:

Paninis: $8.25Salads: $7.00Coffee: $3.00Tea: $2.00Dessert: $3.80

5.3 Distribution ChannelsThe primary distribution of our food is through a sit down/carry out basis. Other methods include pre-packaging a selection of the food items and have them for sale in a separate "grab-and-go" refrigerator. This prevents the loss of customers due to short time availability.

5.4 Promotional PlanEarthly Delights promotes organic meals to customers via:

Newspaper Advertisements:The Union Tribune newspaper advertises the benefits of eating healthier through our restaurant while supporting sustainability.

Public Relations:We advocate on sustainability and environmental awareness on health-related TV and radio broadcasts.

Flyers:Handing out, posting and mailing flyers to promote healthy food choices to residents within a five-mile radius.

Discounts:Discounts are offered occasionally and are generally a part of a marketing campaign such as an online promotional coupon.

5.5 FeedbackWhen possible, Earthly Delights management conducts a simple 5 question survey at the end of each customers visit. The survey consists of questions regarding relative enjoyment of the atmosphere, service, food, and overall satisfaction with their experience at Earthly Delights. In addition, data will be collected and analyzed for marketing campaigns to include the number of customer visits, weekly revenue and the cost of customer acquisition.

6. Operating PlanEarthly Delights is located in a popular neighborhood in San Diego known for its restaurants. The business has a seating area similar to that of a diner. The equipment necessary for the operation to thrive consists of minimal assortment of appliances. The below sections will follow up on Earthly Delights operations.

6.1 LocationEarthly Delights is established in the well-known community of Hillcrest, San Diego, which many people come and visit specifically to go eat. The area is a well-known hotspot for diverse dining options and is frequented by both Hillcrest residents and those from surrounding San Diego neighborhoods.

A second location is planned for the second year of operation at a site in Pacific Beach. Negotiations for leasing a facility are still in the works.

6.2 FacilityAn existing 3,800 square foot facility with kitchen is being leased for the Hillcrest location. Since opening its doors, Earthly Delights has added tables, seating, a refreshment bar, beverage refrigerators, wall decor and signage.  

Equipment purchased for use on site is limited considering the majority of products are fruits and vegetables purchased from local farmers at a discounted price. Appliances consist of an oven, panini grills, walk-in refrigerator, walk-in freezer and coffee makers.

6.3 Operating EquipmentEquipment needed for the function of Earthly Delights include very basic cafe fixtures. The main fixtures needed to run the business includes washing sink and storage space. Equipment, fixtures and appliances list can be found in the appendix.

6.4 Suppliers and VendorsEarthly Delights’ suppliers include various local farmers such as Suzie's Farm, SeaBreeze Organic Farms, Be Wise Ranch and San Diego Organic Farms. Organic baked goods are purchased from places such as Stephanie's Bakery, Village Mill Breading Co., and Sweet Cheeks Baking Company. These vendors supply a variety of organic and fair trade products that help stock our pantry while keeping true to our mission.

Strategic partnerships developed with each supplier allow Earthly Delights to negotiate reduced pricing  for the acquisition of produce. These partnerships leverage Earthly Delights’ community influence and potential for promotion and publicity of each supplier. This leverage creates an environment where Earthly Delights and its suppliers thrive on each others success.

These suppliers are all local, which helps to reduce the carbon footprint and creates work for local businesses. Initially, an envisioned problem with purchasing produce from local farmers was issue of all the necessary produce not being available year-round. To resolve this issue Earthly Delights adapted a rotating menu that coincides with the produce available during any given season. This concept holds true to our mission in supporting local and organic products and in turn gives our business a unique edge over potential competitors.

6.5 Personnel PlanEarthly Delights' partners performs all of the duties required to operate the store. One part-time employee will be hired to assist with the proposed idea of opening of the new establishment in Pacific Beach.

6.6 General OperationsEarthly Delights will be open seven days a week, with the following hours of operation:

Monday - Friday 10am - 9pm Saturday 10am - 10pmSunday 10am - 7pm

The current location follows all local, State and Federal codes regarding accessibility for the disabled, environmental laws, and occupational safety regulations.

7. Management, Organization and OwnershipThe Earthy Delights partners are well rounded in the restaurant hospitality industry. The partners have been exposed to customer service as well as day to day operations from a managerial standpoint. The below sections discuss the principles of Earthly Delights:

7.1 Management/PrinciplesCarl Barnes has five years of experience in the hospitality industry. He has served as Assistant Manager of the prestigious Benihanas restaurant located in the area of Mission Valley in San Diego.

Janett Medrano's experience at Feeding America brings to this business a sense of awareness of the variety of ethnicities that occupy the city of San Diego. This assists the partners with creating the menu and establishing relationships with customers.

Kristina Morales has a select variety of experience in different foodservice organizations. Her experience in this field provides the knowledge of how foodservice organizations function. Her expertise in this field contributes a wide array of insightful suggestions on running a foodservice establishment.

Yenina Vereda has three years of experience in the retail restaurant industry. She has served as Manager of the All the Perks Espresso Cafe. She is a 2009 graduate of the San Diego State University in the Food and Nutrition major. She also has 5 years of banking experience which provides the business an advantage in handling and management of monetary assets and budgeting.

7.2 Organizational StructureThe business is owned by Carl Barnes, Janett Medrano, Kristina Morales, and Yenina Vereda. It is structured as an equal partnership, with Mr. Barnes bearing the title of President and Ms. Medrano, Morales and Vereda as Chief Executive Officers. The business size allows for each owner to oversee the operations that are needed each day. The establishment calls for six part-time employees who are needed to perform the daily tasks of operation.The expansion of the second location will need three part time employees along with a current experienced employee to assist with training.

7.3 Professional ConsultantsThe number of consultants needed will be limited due to the industry experience of the four partners. The collective accounting, human resources, foodservice management and quality assurance experience will greatly reduce the need for expensive consulting. One area in need of a consultant is social media marketing. With the growing market for social media promotion of restaurants the cost of an extensive online marketing campaign will cost approximately $500 each month.

8. Goals and StrategiesEarthly Delights is the first of its kind in San Diego, a major city with more than one million people. The restaurant’s high quality products built on the foundation of the sustainable, local,

and organic movement, marketed to a health-conscious population, are expected to lead the partners to financial success.

8.1 Business GoalsEarthly Delights business goals are as follow:

To increase net revenue by 20% over the first year sales. To open a second location in the second year of operation. To implement cost saving measures that increase cash on hand for expansion expenses. To develop a customer loyalty program to increase return customer rate.

8.2 Keys to SuccessEarthly Delights success will come from educating customers about the importance and benefits of sustainable, local and organic products, and from providing quality service with high quality food products. Hillcrest in San Diego is populated by educated professionals and students who are health conscious. There is an uprising in the interest of sustainability and overall healthy lifestyles.

No other business in San Diego has a mission that supports the three fundamentals of sustainable, local, and organic products. This will give Earthly Delights the opportunity to advocate for change and initiate change within the San Diego community by promoting the SLO movement.

Earthly Delights will have a comprehensive social media marketing plan that will drive a high volume of traffic to both the Earthly Delights website as well as its Facebook/social media pages with the intention of monetizing these visits through customers visiting the restaurant. The campaign goal will be to quickly build a Facebook and Instagram following of 1,000 people minimum. This will develop a dedicated and interactive customer base and will serve as a platform for new product launches, customer feedback and event promotion.  

Customers will also be reached through newspaper advertisements, fliers, health-related TV and radio broadcasts. Location will also play a vital role in marketing and promotions. Earthly Delights is located in a high-traffic area of Hillcrest, San Diego which is also close to San Diego State University and hospitals.

8.3 Future PlansEarthly Delights continues to be successful in the future with the initial establishment. Therefore, the partners plan to establish a second operating business in another San Diego neighborhood.

Earthly Delights future plans include: To expand to a new location once every 1-2 years. To explore expansion to other cities with market demand. To consider satellite sale sites such as farmer’s markets as a means of additional cash

flow and the continued promotion of Earthly Delights.

9. Financial Assumptions

This section of the business plan summarizes the financial assumptions used in creating the projected financial statements (included in the Appendix).

The following is a summary of the assumptions used to forecast the next three years of  Earthly Delights’ planned operation, including Beginning Balance Sheet, Profit & Loss, Balance Sheet, and Cash Flow data.

9.1 Beginning Balance Sheet

Beginning Balance SheetFor Year Beginning January 2013

Assets:

Current Assets:

Cash 75,000

Inventory 3,400

Total Current Assets 78,400

Property, Plant and Equipment (net)

90,000

Other Assets (net) 35,000

Total Assets 203,400

Liabilities:

Current Liabilities:

Accounts payable 3,400

Line of Credit 0

Total Current Liabilities 3,400

Total Liabilities 3,400

Equity:

Contributed Cash 200,000

Total Equity 200,000

Total Liabilities and Equity 203,400

Debt to Equity Ratio .017

Cash: Each partner contributed $50,000 of their own cash at start-up to ensure adequate funds were available to for a smooth set-up and sustained operations.

Inventory: Due to the nature of produce and its relatively short shelf life, Earthly Delights has minimal inventory on hand on any given day which is generally no more than two days worth of inventory. This requires significant cash on hand in order to purchase produce as frequent as every other day. Beginning inventory was calculated based on the cost of goods sold for day 1 at a gross profit margin of 60% ($8500 gross sales).

Property, Plant and Equipment: This includes all costs of the appliances within the restaurant. A detailed list can be found in the appendix.

Other Assets: This account covers mostly intangible assets such as renovations, permits and licensing, advertising campaigns, and miscellaneous expenses.

Accounts Payable: Earthly Delights will have Net 15 terms with most of its suppliers. The sacrifice of a shorter payment term is one of the bargaining tools utilized in negotiating better pricing for its strategic partnerships.

Line of Credit: There is no need for a line of credit at start-up as there was sufficient cash contributed by the partners to cover all expenses.

Contributed Cash: This is the $200,000 invested by the owners.

9.2 Profit and Loss

Profit and Loss StatementFor Years 2013-2015

YEAR 1 (2013) YEAR 2 (2014)

YEAR 3 (2015)

Sales 982,800 1,812,000 2,076,000

Less Cost of Sales:

Food 393,120 724,800 830,400

    Total Cost of Sales 393,120 724,800 830,400

Gross Profit 589,680 1,087,200 1,245,600

Operating Expenses:

Salaries and Wages 196,560 362,400 415,200

Professional Services 1,000 2,000 2,200

Rent 114,000 228,000 228,000

Maintenance 10,000 20,000 22,000

Insurance 50,000 100,000 100,000

Utilities 68,000 136,000 136,000

Office Supplies 1,000 1,500 1,500

Postage 1,000 2,000 2,300

Marketing 16,000 30,000 30,000

Travel 1,200 2,500 3,000

Entertainment 1,500 3,100 3,100

Amortization 1,250 2,500 2,500

Depreciation 2,000 4,000 4,500

     Total Operating Expenses

463,510 894,000 950,300

Operating Income 126,170 193,200 295,300

Interest Expense 0 0 0

Net Income 126,170 193,200 295,300

Sales: Sales figures based on actual sales for YTD 2013 and forecasted thereafter. The forecast for Year 2 represents an 84% increase on the previous year taking into consideration the expansion that year. Year 3 represents a 14.5% increase on the previous year’s sales.  The following is a breakdown of the source of sales:

Source of SalesBased on YTD 2013 and Projections

Source of Sale YEAR 1 (2013) YEAR 2 (2014) YEAR 3 (2015)

Retail 845,800 1,531,000 1,688,000

Corporate 78,000 125,000 135,000

Satellite Service 0 65,000 150,000

Special Events 59,000 91,000 103,000

Total Sales 982,800 1,812,000 2,076,000

Cost of Sales: Calculated based on the YTD average of 40% cost of goods sold. This is slightly higher than restaurant industry average as our food costs are elevated due to the organic nature of our products.

Salaries and Wages: Based on a 5% salary for each of the partners based on gross sales. Year 1 has no planned employees other than the partners. Years 2 and 3 anticipate 2 full time and 20

part time employees due to the expansion of a second location and reduced responsibilities of the partners in operations.

Rent: Based on a $2.50/sq. ft. lease agreement locked in for 25 years for the Hillcrest location and an estimate of the same expense for the Pacific Beach expansion as a location and terms are still being negotiated.

9.3 Balance Sheet

Balance SheetFor Years 2013-2015

YEAR 1 (2013) YEAR 2 (2014) YEAR 3 (2015)

Current Assets:

Cash 75,000 2,000 8,000

Inventory 3,400 7,000 7,200

Total Current Assets 78,400 9,000 15,200

Property/Plant/Equipment 90,000 235,000 243,000

Other Assets 35,000 76,000 77,000

Total Assets203,400 320,000 335,200

Liabilities and Equity:

Accounts payable 3,400 7,000 7,200

Line of Credit 0 0 0

Total Current Liabilities 3,400 7,000 7,200

Total Liabilities3400 7,000 7,200

Equity200,000 313,000 328,000

Total Liabilities and Equity 203,400 313,000 328,000

Cash: Each partner contributed $50,000 of their own cash at start-up to ensure adequate funds were available to for a smooth set-up and sustained operations. Since opening a second location nearly all of the business’s cash has been depleted.

Inventory: Due to the nature of produce and its relatively short shelf life, Earthly Delights has minimal inventory on hand on any given day which is generally no more than two days’ worth of inventory. This requires significant cash on hand in order to purchase produce as frequent as every other day. Beginning inventory was calculated based on the cost of goods sold for day 1 at a gross profit margin of 60% ($8500 gross sales).

Property, Plant and Equipment: This includes all costs of the appliances within the restaurant. A detailed list can be found in the appendix. The expansion of a second location drastically increased the business’s total assets.

Other Assets: This account covers mostly intangible assets such as renovations, permits and licensing, advertising campaigns, and miscellaneous expenses.

Accounts Payable: Earthly Delights will have Net 15 terms with most of its suppliers. The sacrifice of a shorter payment term is one of the bargaining tools utilized in negotiating better pricing for its strategic partnerships. With the expansion of a second location, Earthly Delights has negotiated a temporary increase of terms to Net 60 in order to make up for the depleted cash on hand. The suppliers are more than accommodating as we will be doubling our orders with them.

Line of Credit: There is no need for a line of credit at start-up as there was sufficient cash contributed by the partners to cover all expenses. Earthly Delights projects to have enough cash on hand to expand without the need for a line of credit. The business has applied for one as a safe-guard and will use it if there is a need.

9.4 Cash Plan

Cash PlanFor Years 2013-2015

YEAR 1 (2013) YEAR 2 (2014) YEAR 3 (2015)

Cash Receipts 982,800 1,812,000 2,076,000Operating Cash ExpensesInventory Purchases 393,120 724,800 830,400Other Expenses 266,950 531,600 535,100Total Operating Cash Expenses

660,070 1,256,400 1,365,500

Cash from Operations 322,730 555,600 710,500Capital Expenditures 90,000 145,000 25,000Debt Activities 0 0 0Interest Payments 0 0 0Total Debt Activities 0 0 0Net Cash After Capital Expenditures and Debt

232,730 410,600 685,500

Distributions (196,560) (362,400) (415,200)Change in Cash 36,170 48,200 270,300Beginning Cash 75,000 111,170 159,370Cash Before Borrowing 111,170 159,370 429,670Line of Credit Activity 0 0 0Ending Cash 111,170 159,370 429,670

Cash Receipts - Assumes sales to all customer categories will be on a cash basis (includes credit card processed payments). Corporate and Special Events are assumed to be collected upon completion of respective jobs.

Inventory Purchases: Due to the nature of produce and its relatively short shelf life, Earthly Delights has minimal inventory on hand on any given day which is generally no more than two days’ worth of inventory.

Other Expenses: See Profit and Loss Statement for detailed expense report.

Distributions: Distributions are paid out to each partner as a part of salaries and wages and are a fixed 5% of gross sales per partner.

10. Appendix

This section contains the following information and supporting documentation:

• Equipment List

Equipment Quantity

Oven 1

Panini grills 3

Walk in Refrigerator 1

Walk in Freezer 1

Ladles 3

Knives 10

Cutting boards 5

Cambro containers (holding/storing ingredients) 10

Deli table refrigerator 1

Coffee maker 1

Coffee grinder 1

Coffee filters ongoing

Coffee thermos 6

Baking Sheets (do we need this?)

Cash register 1

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<http://www.upack.com/press/organic-cities>.

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Web. 13 Nov 2013. <http://www.worldpopulationstatistics.com/san-diego-population-2013/>.

6. True Food Kitchen. <http://www.foxrc.com/frcwp/wp-content/uploads/2013/10/TFK

_Newport_Dinner_Menu.pdf>. Web. 10 Nov 2013.

7. http://www.loopnet.com/California/San-Diego_Restaurants-For-Lease/ Web. 14 Nov 2013.