Olivia Betty Cole

1415 Broadway

Seattle, WA 98122

360-890-8062 oliviabettycole@yahoo.com

Presenting a Chipotle Mexican Grill franchise to the Husky Union Building

November 24th, 2015

Ms. Samantha Pletsch Husky Union Building 4001 E Stevens Way NE Seattle, WA 98195

Dear Ms. Pletsch,

This letter is in regards to our recent conversation over the phone as well as to our meeting today. I would like to begin by thanking you for agreeing to meet with me today to discuss Chipotle Mexican Grill’s future with the University of Washington. We believe that a Chipotle franchise would be a prosperous addition to the Husky union Building.

Today, we will start our meeting with a discussion of the needs of the HUB. We unearthed a few of these needs during our phone call last Tuesday. You mentioned that several parents and students have complained about the lack of options they had when buying food with their required dining plans. This can be troubling as it may result in parents opting for smaller dining plans and giving their children money to buy food off of campus. We will go into more detail on this and will pinpoint other needs that a restaurant must fulfill to be added to the HUB.

Following our needs discussion we will address the areas of concern that you have towards this franchise agreement. I will work through each of these areas of concern, explaining how a Chipotle franchise will satisfy them. I will also provide recommendations for how you can get the most out of your Chipotle franchise and ensure that your needs are met. Finally, we will discuss the implementation schedule which will follow after you sign the franchise agreement.

I am certain that a Chipotle franchise will not only satisfy your needs but also far surpass your expectations of what a normal fast food franchise can achieve. Chipotle Mexican Grill will work diligently to keep our relationship with the University of Washington a mutually beneficial and prosperous one.

Thank you again for your time today.

Sincerely,

Olivia Betty Cole

Table of Contents

The Husky Union Building’s Needs 1

Areas of Concern 2

Objectives 3

Recommendations4

Implementation Schedule 5

Addenda Table of Contents 6

Husky Union Building’s Needs

Culture

A restaurant that will add diversity to the proudly culturally-colorful Husky Den Food Court. The restaurants currently celebrate the cuisine of Southeast Asian, Chinese, American, Italian, Korean and Mediterranean styles.

Increased Meal Options

Recent student, alumni, and parent complaints have made it apparent that the HUB needs to increase its food items and meal options for students who are restricted to vegetarian, vegan, and/or gluten-free diets.

Fast Food

The HUB’s customers are busy students and faculty that need to get their food quickly between classes, work, meetings, and studies. They usually do not have enough time to wait for more than 10 minutes for their food to be prepared, so they seek fast food restaurants that they know and trust.

Increased Revenue

Restaurants have been closing recently at the Husky Den food court due to lack of profitability. Additions must have high enough sales to make them worth the investment. The average restaurant return on investment (ROI) at the HUB is 15%, lower than desired. Only additions that will meet or surpass this ROI will be considered.

Areas of Concern

Cost of Investment

1

This cost of investing in this franchise is significantly higher than the up-front cost of competing franchises. The average investment cost of franchises at the HUB is $300,000. In its past experience, higher investment costs have tended to foreshadow lower returns on investment which the HUB tries to avoid.

Timing of Purchase

This is not a good time to add another restaurant to the Husky Den. The construction of the new Starbucks proved to be long and disruptive to students during the summer quarter. As there are far more students on campus for Fall, Winter and Spring quarters, no new projects will be considered until it draws closer to Summer quarter.

Need for Product

Although the HUB is interested in diversifying its overall menu, a Mexican themed restaurant is not at the top of its list. This is because UW’s has its own taco truck, Síganos, parked on red square that is a student favorite. It would make more sense to avoid potential cannibalism and to invest in a restaurant that represents a different culture.

OR Although the HUB has been

Objectives

Cost of Investment

2

Regarding investment cost concerns, the revenue that this franchise is projected to generate is more than high enough to justify the investment cost. The ROI of this Chipotle franchise is significantly higher than both that of the HUB’s current restaurants and the entire fast food industry itself. Chipotle’s ROI is expected to be 36.56% in comparison to the HUB’s minimum allowed ROI of 15%.

Timing of Purchase

A construction and development plan has been made to ensure that this restaurant will can be up and running within one month, far faster than the average Chipotle franchise. This will significantly minimize disruption of students, faculty, and neighboring restaurants within the HUB during the construction and development of this restaurant

Need for Product

Despite the representation of Mexican culture on Red Square with Síganos, students actually feel that the HUB should offer more. A random survey of HUB customers found that 61% of them would like to see Mexican Culture represented at the HUB. Chipotle Mexican Grill would not only be a great representation of Mexican cuisine, but it would also offer a menu with more options that customers can enjoy.

Recommendations

Cost of Investment

3

Purchase this Chipotle franchise to take advantage of its high ROI. It should even raise the HUB’s average ROI in the long run. In order to maximize profits, the Chipotle Mexican Grill restaurant hours of operation should be from 10am to 9pm Monday through Friday, noticeably longer than those of the other restaurants at the HUB. This should attract students who are studying late at the campus libraries, who are enjoying the games at the HUB or who missed typical dining hours. This will increase the revenue that this restaurant will bring and while also increasing foot traffic in other areas of the HUB.

Timing of Purchase

Sign this agreement today so that construction and development of this restaurant will begin immediately. This implementation plan will ensure that your Chipotle franchise will have its grand opening on Monday January 4th, the first day of Winter Quarter. This plan instructs that all major movement and installation of equipment and food orders takes place while students are off campus and restaurants are closed for winter break. This strongly minimizes disruption of students, faculties and neighboring restaurants.

Need for Product

Implementation Schedule4

Tuesday November 17 th Initial contact with Ms. Pletsch over the phone. Discussed basic needs of the Husky Union Building. Agreed to meet the following week in person to discuss a franchise agreement.

Tuesday November 24 th Meeting with Ms. Pletsch at the Husky Union Building. Presented the Chipotle Franchise to her and she signed the franchise agreement. Made plans to meet the following week, but she asked to meet with another Sales Representative.Managers and employees for the new restaurant are selected from current Chipotle restaurants and are contacted by 5pm.

Friday November 27 th Managers and employees gather at the Chipotle on Broadway. They are informed of and prepare for the implementation plan. Kitchen, office, and cleaning equipment and food are ordered.

Monday November 30 th Managers and new sales representative meet up with Ms. Pletsch and her team to discuss the development of the new restaurant. The entire investment fee is paid for at this meeting, and keys to the HUB are passed to Chipotle management.

Saturday December 5 th Cooking, office, and cleaning equipment is delivered to the HUB between 10am and 12pm. Previously selected Chipotle employees and managers set up and install this equipment until 8pm.

Saturday December 12 th Installation of equipment is continued Saturday December 19 th through Tuesday December 22 nd : Employees and managers

finalize installation of equipment. Training sessions are held to prepare workers for new environment. Restaurant area is cleaned heavily.

Monday December 28 th Ms. Pletsch visit the new Chipotle in the HUB and meet with managers and Sales representative. They discuss the organizational culture of the Husky Den. Advertisements in the Husky Student Survival Kit are purchased. Buy-One-Get-One free meal coupons are mailed out to students and faculty to promote the grand opening.

Saturday January 2nd: food orders are delivered. Workers put it in place and prepare restaurant for opening.

Monday January 4 th Grand opening of Chipotle in the HUB Friday January 8 th Meeting with managers, salesperson, Ms. Pletsch and team to

discuss the restaurant’s assimilation successes in the HUB and places to improve. Tuesday February 1 st Meeting between Ms. Pletsch and salesperson to discuss the

progress of Chipotle in the HUB

Addenda Table of Contents5

ROI Calculations 7

Allergens Menu 8

Survey Results 9

Advertising plan 10

Implementation Schedule 5

Addenda Table of Contents 6

ROI Calculations

Cost of investment for Chipotle Mexican Grill: 6

$40,000 Franchise fee+$150,000 Construction Cost

+$653,000 Development Costs $483,000 Total Investment Cost

Return on Investment (ROI) for Chipotle Mexican Grill

$ 445,000Company Revenue1800Stores

=$247,222.22Revenue per Store

$ 247,222.227daysa week

×5days per week=$176,587.30 Revenueat the HUB location

$176,587.30 Revenue per Store$ 483,000 Invesment Cost

=0.3656=36.56%

Average ROI for Fast Food Restaurants=17%−22%

Comparison of ROI’s

Chipotle Mexican Grill 36.56%Average of Restaurants at the HUB 15%Average in the Fast Food Industry 17%-22%

Chipotle Mexican Grill Avg. Offerings at HUBFranchise Fee $40,000 $12,000Cost of Investment $443,000 $315,000Total Cost of Investment $483,000 $330,000Return on Investment 36.56% 15%Royalty Fee (percentage of annual revenue)

6.5% 8%

Ave. time to prepare 1 meal 2.5 minutes 3.8 minutesAve price per meal (no add-ons)

$7.20 $7.60

Allergens Menu7

Possible combinations for vegans and vegetarians with Celiac disease

4 Corn tacos hard or soft, bowl, salad 1. 4 beans (black, pinto, both, none) 2. 4 rice (brown, white, both, none)3. 2 fajitas (with, without) 4. 2 sofritas (with, without) =15,360 meal combinations5. 15 salsa combinations6. 2 taco lettuce (with, without)7. 2 guacamole (with, without)

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Results of Open-ended Survey on Cultural Food at the HUB

What Culture would you like to see represented at the HUB?

1. Mexican…………...61%2. Indian……………..17%3. French/Cajun….…8%4. Japanese…………7%5. Other………………7%