Table of Contents

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Vegan Eatery Business Plan Ms. Jill Corripio

Table of Contents

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1.0 Executive Summary ............................................................................................................................................................... 1

Chart 1.0: Highlights ........................................................................................................................................................... 4 1.1 Objectives .......................................................................................................................................................................... 4 1.2 Mission .............................................................................................................................................................................. 5 1.3 Keys to Success ................................................................................................................................................................ 5

2.0 Company Summary ............................................................................................................................................................... 6 2.1 Company Ownership ......................................................................................................................................................... 6 2.2 Start-up Summary ............................................................................................................................................................. 6

Table 2.2: Start-up .............................................................................................................................................................. 6 Chart 2.2: Start-up .............................................................................................................................................................. 7

2.3 Company Location and Facility ......................................................................................................................................... 7 3.0 Products and Services ........................................................................................................................................................... 8

3.1 Product and Service Description ....................................................................................................................................... 8 3.2 Competitive Comparison ................................................................................................................................................... 9 3.3 Sales Literature ................................................................................................................................................................. 9 3.4 Fulfillment .......................................................................................................................................................................... 9 3.5 Future Products and Services ........................................................................................................................................... 9

4.0 Market Analysis Summary.................................................................................................................................................... 10 4.1 Market Segmentation ...................................................................................................................................................... 11

Table 4.1: Market Analysis ............................................................................................................................................... 11 Chart 4.1: Market Analysis (Pie) ....................................................................................................................................... 12

4.2 Target Market Segment Strategy .................................................................................................................................... 12 4.3.1 Business Participants .............................................................................................................................................. 12 4.3.2 Competition and Buying Patterns ............................................................................................................................ 12 4.3.3 Main Competitors..................................................................................................................................................... 13

5.0 Web Plan Summary ............................................................................................................................................................. 14 5.1 Website Marketing Strategy ............................................................................................................................................ 14 5.2 Development Requirements ............................................................................................................................................ 14

4.2.1 Market Needs .......................................................................................................................................................... 15 4.2.2 Market Trends ......................................................................................................................................................... 15 4.2.3 Market Growth ......................................................................................................................................................... 17

4.3 Service Business Analysis............................................................................................................................................... 17 6.0 Strategy and Implementation Summary ............................................................................................................................... 18

6.1 SWOT Analysis ............................................................................................................................................................... 18 6.1.1 Strengths ................................................................................................................................................................. 18 6.1.2 Weaknesses ............................................................................................................................................................ 18 6.1.3 Opportunities ........................................................................................................................................................... 19 6.1.4 Threats .................................................................................................................................................................... 19

6.2 Competitive Edge ............................................................................................................................................................ 19 6.2 Marketing Strategy .......................................................................................................................................................... 19

6.2.1 Pricing Strategy ....................................................................................................................................................... 19 6.2.2 Promotion Strategy .................................................................................................................................................. 20 6.2.3 Marketing Programs ................................................................................................................................................ 20

6.3 Sales Strategy ................................................................................................................................................................. 21 6.3.1 Sales Forecast ......................................................................................................................................................... 21

Table 6.3.1: Sales Forecast ......................................................................................................................................... 21 Chart 6.3.1: Sales Monthly ........................................................................................................................................... 22 Chart 6.3.1: Sales by Year ........................................................................................................................................... 22

6.4 Strategic Alliances ........................................................................................................................................................... 22 7.0 Management Summary ........................................................................................................................................................ 23

7.1 Personnel Plan ................................................................................................................................................................ 23 Table 7.1: Personnel ........................................................................................................................................................ 23

8.0 Financial Plan ....................................................................................................................................................................... 24 8.1 Start-up Funding .............................................................................................................................................................. 24

Table 8.1: Start-up Funding .............................................................................................................................................. 24 8.2 Break-even Analysis ........................................................................................................................................................ 25

Table 8.2: Break-even Analysis ........................................................................................................................................ 25 Chart 8.2: Break-even Analysis ........................................................................................................................................ 25

8.3 Projected Profit and Loss ................................................................................................................................................ 26 Table 8.3: Profit and Loss ................................................................................................................................................. 26 Chart 8.3: Profit Monthly ................................................................................................................................................... 27 Chart 8.3: Profit Yearly ..................................................................................................................................................... 27

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8.4 Projected Cash Flow ....................................................................................................................................................... 28 Table 8.4: Cash Flow ........................................................................................................................................................ 28 Chart 8.4: Cash ................................................................................................................................................................ 29

8.5 Projected Balance Sheet ................................................................................................................................................. 29 Table 8.5: Balance Sheet ................................................................................................................................................. 29

8.6 Business Ratios ............................................................................................................................................................... 30 Table 8.6: Ratios .............................................................................................................................................................. 30

8.7 The Investment Offering .................................................................................................................................................. 31 Table 8.7: Investment Offering ......................................................................................................................................... 31

8.8 Valuation ......................................................................................................................................................................... 31 Table 8.8: Investment Analysis ......................................................................................................................................... 32

8.9 Use of Funds ................................................................................................................................................................... 32 Table 8.9: Use of Funds ................................................................................................................................................... 32

8.10 Payback......................................................................................................................................................................... 32 Table 8.10: Payback ......................................................................................................................................................... 33 Chart 8.10: Payback Period .............................................................................................................................................. 33

Table: Sales Forecast (1st Year) .............................................................................................................................................. 1 Table: Sales Forecast (2nd Year) ............................................................................................................................................. 2 Table: Personnel Plan (1st Year) ............................................................................................................................................. 3 Table: Personnel Plan (2nd Year) ............................................................................................................................................ 4 Table: Profit and Loss (1st Year) .............................................................................................................................................. 5 Table: Profit and Loss (2nd Year) ............................................................................................................................................. 6 Table: Cash Flow (1st Year) ..................................................................................................................................................... 7 Table: Cash Flow (2nd Year) .................................................................................................................................................... 8 Table: Balance Sheet (1st Year) .............................................................................................................................................. 9 Table: Balance Sheet (2nd Year) ........................................................................................................................................... 10

Vegan Eatery

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1.0 Executive Summary

Vegan is the strictest sub-category of vegetarians. Vegans do not consume any animal products or by-products. Some fall short of consuming honey and yeast. Others refuse to wear any clothing made from animal products. This behavior has made vegetarianism a growing culture. More people are vegetarians/vegan than at any other time in history. There are several reasons why consumers move to vegetarianism. Most often health reasons are the determining factor. Below are reasons why Chicago residents are shifting away from meat and dairy and exploring the health benefits of becoming a vegan/vegetarian consumer.

• Obesity is a growing problem • Obesity among U.S. adults doubled between 1980 and 2008 • About 34% of adults are obese • Childhood obesity has tripled since the 1970s • One of every six U.S. children is overweight • “Food insecurity” affects 1 in 5 Chicagoans • 15 percent of residents have limited access to fresh produce • Chicago has a long history as food innovator • Healthy food offers economic development opportunities • Eating habits contribute to heart disease and poor health • Better eating reduces costs of obesity disease • Healthy food will play a crucial role in the life of families and communities, in Chicago, creating a stronger

city.

Company Summary

Vegan Eatery will operate in the City of Grayslake, Illinois within Lake County. Vegan Eatery will be offering a vegan and vegetarian quick service restaurant catering to vegan/vegetarians and those interested in a healthy alternative to tradition restaurants. Vegan Eatery will provide an appetizing menu made fresh daily, complementing the growing demand of healthier meals. Patrons will enjoy warm and inviting ambiance with impeccable attention to detail from the chosen colors to the décor to the tables and chairs.

Vegan Eater will be registered as a sole proprietorship within the City of Chicago, Illinois. Therefore, the restaurant will manage and abide by the laws that govern the State of Illinois and the United States of America. Ms. Corripio will be the sole owner of the restaurant as it capitalizes on the McDonald’s method of management. After success has been achieved, Ms. Corripio will transform the company into a franchise establishment, serving as the CEO.

Vegan Eatery will open for breakfast, lunch and dinner, featuring delicious menu items made to perfection and to the customers liking. The restaurant will be open seven days a week from 7am to 9am. The restaurant will be open most holidays except for Thanksgiving and Christmas. Opened holidays will have different opening hours to cater to the needs of customers.

Conveniently located in the heart of Grayslake, Vegan Eatery will be positioned in a busy shopping center that has several key businesses that attract thousands of customers every week. The shopping center is located on the corner of Belvedere and Ivanhoe Roads. There are approximately 143,500 residents that live within five miles of the shipping center. It is estimated that 10 percent of the population is either vegan, vegetarian or are health conscious seekers.

“Because about one-third of sales in a restaurant go to food and beverage purchases, food prices are a crucial component for operators,” said Hudson Riehle, senior vice president of the National Restaurant Association’s Research and Knowledge group. “Last year, we saw wholesale food prices post their strongest annual increase in more than three decades. In 2012, we will see continued increases in the cost of some commodities while price pressures will ease for others.”

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Services

Vegan Eatery’s primary services will promote a commitment of excellence. That means that when arrived, they must be treated kindly with excellent service and provided with delicious menu items. They will walk-in to a restaurant that is clean, clutter-free with each empty table cleaned and ready for the next customer. Customers will be encouraged to hangout and use the free WiFi system that will be in place. Once ordered, each meal will be hand delivered to the customers table with a smile and helpful personality.

Products

Breakfast:

• Bread (slice) • Muffins • Cookies • Parfait (fruit/granola/yogurt) soy and coconut yogurt available • Smoothies • Scramble tofu w/ veggies wrap • Molletes (slice of bread or torta w refried beans and melted cheese. You top it with pico de gallo) • Breakfast sandwich

Lunch:

• Cheese wrap (tomato, onion, spinach, cheese garlic peper) • Veggie sandwich (veggies and hummus) • Avocado sandwich (avocado and mayo) • Salads • Salad wrap w/chickenless strips • Soup (2 for the day) • Polenta pancake (similar pico de gallo topping)

Dinner:

• Sandwich • Salad • Wrap • Pasta special (2 weekly special) (also, permanent pasta dish and just 1 weekly special) • Vegetable special (2 weekly special) (same here) • And/or a weekly special

Additional:

• Veggie w/ hummus or dip • Dessert: • Fruit cobbler • others

Competitive Market

Personal income and entertainment needs drive demand. The profitability of individual companies depends on the ability to drive traffic and develop a loyal clientele. Large companies can offer a wide variety of food, drinks, and entertainment, and have scale advantages in purchasing, financing, and marketing. Smaller companies can compete effectively by serving a local market, offering unique products or entertainment or providing excellent customer service. The industry is labor-intensive: average annual revenue per worker is about $45,000.

Vegan Eatery

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Restaurants compete with other venues that sell alcoholic drinks or entertainment, including bars, nightclubs, hotels, casinos, and consumer homes.

Target Market

The primary target market for Vegan Eatery is men and women between the ages of 21 and 62 who are residents of the City of Grayslake, Illinois and surrounding communities. This group tends to be professional and earn over $50,000. Although they tend to be single, some guests will be married and enjoy a delicious meal away from home two or three times a week. Women represent four more percent than men represent five percent of the Chicago population that are meatless and non-dairy.

Although vegan and vegetarian consumers will be the primary target, consumers seeking a healthy alternative to meat and dairy meals will be the secondary target market. Vegan Eatery will appeal to ages 21 to 62 who are interested in a healthier alternative to meals that cater to Mexican, Italian and American foods. Vegan Eatery

Management

Vegan Eatery will initially operate as a small business. However, after the company reaches success with its business structure, it will launch a franchise business allowing other entrepreneurs to capitalize on the Vegan Eatery business model. Ms. Corripio will be involved during the build out phase of the operation and thereafter. She will be involved during the interview and hiring process, grand open preparation, grand opening and thereafter.

In addition, Ms. Corripio will take on the role of Human Resource Management (HRM) to manage her staff as the company moves to expand into a franchise type of establishment. Currently, McDonald’s is a leading user of HRM which they have found tremendous success with the management style. HRM encourages employees to perform in a more effective and effective manner leaving Vegan Eatery employees above all the rest. HRM includes four distinct areas that focus on the entire organization and its operations. These four steps include:

1. Management of strategic human resources 2. Management of transformation and change 3. Management of the employees 4. Management of the administration of the organization

Financial Projections

Vegan Eatery will be financed primarily through cash flow provided from the sales revenues after the initial six months. The investment received will be used to remodel the interior, prepare it for the grand opening and add enough funding to continue operations through the first six months to a year while awareness builds and demand increases.

Revenue projections are considered conservative and are expected to be much higher in the second and third year of operations. Growth in revenue is expecting to be 43 percent in the second year, 38 percent in the third year and 30 percent in the fourth year largely based on getting the word out that Vegan Eatery will be the “in place” for a vegan or vegetarian meal. Customers will be tempted to visit the restaurant; however, once they experience the service and taste the food, they will return with their friends while recommending it to others.

Profits will be strong in the third year through a word-of-mouth type of advertising campaign and a small advertising campaign. Profits are projected to grow at a minimum of four percent per year with revenue leading the growth trend. Profits will remain above 11 percent through the third, fourth and fifth year. Cash flow will remain strong every year due to rising revenue and tighter operating expenses. In addition, cash from the investment will help to maintain a healthy cash balance during the initial year. Vegan Eatery projects the following financials.

• Secure funding of $85,000 in investment capital • Generate gross revenue of $350,071 by the end of the first year • Generate gross revenue of $1,113,441 by the end of the fifth year • Maintain a minimum growth rate of 4% for all five years

Vegan Eatery

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• Maintain a minimum net profit of 11% for years three, four and five • Commit to a strong cash balance every year • Increase revenue through word-of-mouth

Chart 1.0: Highlights

Capital Requirements

Vegan Eatery is seeking $85,000 to assist build out, grand opening preparations and enough money to support the first six months of operations. Ms. Corripio is in the process of negotiating a contract with the shopping center owner to rent a space next door to Fitness 19. Furthermore, Ms. Corripio will need to purchase a variety of items to prepare the facility for the grand opening. Furniture, as well as appliances, will need to be purchased and installed by a licensed contractor.

There will be no dividends paid on the investment received, but a repayment plan will be negotiated to provide an investor(s) with a solid return. In exchange for the investment received, Ms. Corripio will provide up to 49 percent ownership in the company. The return on their investment, if agreed upon, will include a 28.96 percent payout for the use of $85,000. A repayment amount of $173,469 will be returned to the investor. The scheduled paid out amount is included in the appendix section of this business plan and should not extend beyond ten years.

1.1 Objectives

Since Vegan Eatery is a new business just starting out in the outskirts of downtown Chicago, segmenting the following objectives will be more effective when implementing on an operational level.

Business Objectives:

• Provide quality menu list in a relaxed and friendly atmosphere • Take advantage of consumers who are vegan, vegetarian and those who prefer to eat a healthy and

delicious meal • Hire workers who are vegetarian, friendly and outgoing • Establish the company as one of the top leading fast food vegetarian restaurants in Chicago

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Financial Objectives:

• Generate $350,071 in the first year • Increase revenue by 43.41%, 37.94%, 30.32%, 23.37% in the 2nd, 3rd, 4th and 5th year • Meet annual projected profits of 1.77%, 11.15%, 16.85%, 20.47% after the initial year • Maintain strong cash flow balance by meeting projected net cash flows through controlled expenses

Marketing Objectives:

• Establish a strong market presence in the Chicago north area assuring short-term and long-term profitability, growth and success

• Initiate strong marketing efforts through word-of-mouth and online advertising as well as person-to-person contact

• Capitalize on vegetarian’s popularity • Develop brand awareness through company colors, logo, quality and excellent service

1.2 Mission

Vegan Eatery aims to be a mainstay in the community creating a neighborhood atmosphere where customers feel comfortable and become instant regulars. Vegan Eatery will accomplish this through a profitable business by providing tasty and nutritious quick and cooked vegetarian meals. By providing a meatless and nondairy menu, Vegan Eatery will capitalize on the growing trend of vegetarian and vegan consumers through fresh ingredients that will satisfy even the pickiest vegetarian. More importantly, each customer will experience a convenient and pleasant experience with each Vegan visit.

1.3 Keys to Success

The keys to Vegan Eatery's success will surely be an effective market strategy that will target both vegetarian and non-vegetarian locals within the Chicago north area. Along these lines, the company intends to implement an aggressive advertising, personal selling and direct marketing strategy to announce the company's opening. Through a personal selling marketing strategy, Vegan Eatery will reach out to both vegetarian and non-vegetarian consumers who seek a meal made without meat or dairy products. Hence, key success factors will include the following:

• A meatless and non-dairy difference: Ms. Corripio intends to fulfill a promise of providing a vegetarian menu made from fresh and natural ingredients every day. A meatless and non-dairy menu will be diverse enough to satisfy vegetarian and non-vegetarian customers.

• Customer satisfaction: Although, Mr. Corripio knows the importance of catering to customers’ food and beverage needs, providing a safe and clean environment to enjoy their meals is as equally important. Vegan Eatery expects to have every table, chair, window and counter cleaned regularly to ensure cleanliness.

• Solid and fruitful strategic alliances: Considering the nature of the business, food cost and quality will be a primary concern for the restaurant as it makes good on its daily commitment. It will be a vital part of business establishing and maintaining fruitful strategic alliances with various establishments that will provide the food, beverages and supplies for the restaurant.

• Marketing know-how: As a new business on the market, there will be a need to market aggressively the restaurant and the services provided so as to achieve name brand recognition in Chicago north side communities. This will ensure that when it comes to a quality meatless and non-dairy meal, customers will think of Vegan Eatery.

Vegan Eatery

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2.0 Company Summary

The Vegan Eatery idea is a result of a growing trend of customers seeking a nutritious and delicious meatless and non-dairy meal. Ms. Corripio wants to provide local customers with an alternative to traditional restaurants and fast food service by catering to customers need to lose weight and improve their overall health. Ms. Corripio knows that once the Vegan Eatery opens, customers will flock to the restaurant to try the new vegetarian fast food concept.

2.1 Company Ownership

The Vegan Eatery will be registered as Sole Proprietorship in the State of Illinois. Vegan Eatery will operate under the laws that govern the State of Illinois, as well as the United States of America. Ms. Corripio will be the sole owner of the company as it builds on a reputation of service and quality.

2.2 Start-up Summary

To properly capitalize the business, Ms. Corripio is seeking investment financing. The funds will be used to complete all of the interior details of the restaurant, signage and enough operating capital to ensure that the first six months are well capitalized. After, funds from revenue will begin to provide enough funds to operate independently. Ms. Corripio will be investing $15,000 to help fund the initial start-up phase. The day of the grand opening Ms. Corripio will ensure that every aspect of the business will be brought together including advertising, which will go out a week prior to the grand opening.

Table 2.2: Start-up

Start-up Requirements Start-up Expenses Legal $1,500 Advertising Material $2,200 Insurance $1,800 Rent $10,000 Computer $1,800 Cash Register/POS System $2,000 Other $3,000 Total Start-up Expenses $22,300

Start-up Assets Cash Required $15,000 Start-up Inventory $2,500 Other Current Assets $19,000 Long-term Assets $0 Total Assets $36,500

Total Requirements $58,800

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Chart 2.2: Start-up

2.3 Company Location and Facility

Located north-east of downtown Chicago, the future home of Vegan Eatery will be positioned in the Maple View shopping center, in Grayslake. The shopping center is on the corner of East Belvidere Road and Ivanhoe Road. Many existing businesses serve to attract consumers to the shopping center. Businesses such as Osco Jewel, Dunkin Donuts, Ace Hardware, Maple View Cleaners, Jewel Fuel Center and Fitness 19 will continue to draw attention to the shopping center that will be the driving force behind the restaurants success.

The unit 2 space in the Maple View shopping center will be perfectly positioned to capitalize on memberships from Fitness 19, next door after they have completed their regular work-out routine. In addition, the number 2 space is perfectly positioned for easy access and plenty of parking. The space is 2,690 square feet and will require a complete build out to prepare it properly for a restaurant. There will be between 20 and 25 tables for customers to use while eating their meal.

The Vegan Eatery address:

• 885 East Belvidere Rd. Grayslake, IL 60030

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3.0 Products and Services

Vegan Eatery will be a quick service restaurant where customers place their orders, pay for their order, get their food, eat and exit. Service will be limited to just taking, receiving and delivering orders.

Vegan Eatery will be a service type business where customers will be able to order, pay and receive a healthy and delicious meal. Customers will be served with a smile, friendly attitude with a warm and welcoming atmosphere. In time, the staff will address all regular customers by name to complement the friendly service.

All menu items will be meatless and non-dairy. All beverages will be all natural with no preservatives or artificial flavors. Ms. Corripio will ensure that are ingredients are received regularly. This will ensure that each meal is natural and delicious. All meals will be prepared to bring out the true favor of every ingredient. The cooks will be trained to prepare meals to the customers liking.

3.1 Product and Service Description

Breakfast:

• Bread (slice) • Muffins • Cookies • Parfait (fruit/granola/yogurt) soy and coconut yogurt available • Smoothies • Scramble tofu w/ veggies wrap • Molletes (slice of bread or torta w refried beans and melted cheese. You cover it with pico de gallo) • Breakfast sandwich

Lunch:

• Cheese wrap (tomato, onion, spinach, cheese garlic pepper) • Veggie sandwich (veggies and hummus) • Avocado sandwich (avocado and mayo) • Salads • Salad wrap w/chickenless strips • Soup (2 for the day) • Polenta pancake (like pico de gallo topping)

Dinner:

• Sandwich • Salad • Wrap • Pasta special (2 weekly special) (also, permanent pasta dish and just 1 weekly special) • Vegetable special (2 weekly special) (same here) • And/or a weekly special

Additional:

• Veggie w/ hummus or dip • Dessert: • Fruit cobbler • Others

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3.2 Competitive Comparison

According to a research conducted by National Restaurant Association, the restaurant industry is projected to grow in 2012 despite sluggish U.S. recovery. The research firm estimates the entire restaurant industry will increase 3.5 percent year-over-year to a record high $632 billion, thus marking the second consecutive year of total industry sales of more than $600 billion.

Within the restaurant industry, there are niche restaurants that cater to a variety of consumer tastes. Niche restaurants can include Mexican restaurants, Taiwanese restaurants, Chinese restaurants, Thai restaurants, Greek restaurants and Vegan/vegetarian restaurants. Each niche restaurant caters to a different clientele entailing a different environment.

These niche-style restaurants are quite common in large metropolitan areas such as Chicago, which cater to a variety of people from different cities, across the country or around the world. For instance, Veggiegrill, a national chain of vegetarian/vegan fast food grills, has clearly shown that marketing meatless meals are a profitable endeavor. With non-smoking, sit-down family-style seating, as well as a plant based cuisine, Veggiegrill has essentially doubled its business and expected to expand into Seattle, Portland and Southern California.

3.3 Sales Literature

One way of reaching out to potential customers is through a brochure and flyer program. This is a fantastic way to get the ball rolling before word-of-mouth assumes the marketing strategy. The success of a brochure and flyer program rests on creating attraction and interest. They must deliver the message that will attract them into the restaurant. Once inside, the rest will be left to the personnel who will work to ensure their return.

Sales Literature will consist of flyers and brochures and anything that will create awareness and interest. The brochures will be on a high gloss 8½ x 11 sheet of paper. Each sheet of paper will be partitioned in three sections that can be folded to provide a professional looking pamphlet. Images of satisfied customers in the restaurant and outside of it will convey the message while providing a snapshot of the outside of the business.

Flyers will be on 8½ x 11 sheet of paper with a two-ink color printing process. This will provide an economical way of reaching as many middle class homes as possible. These advertising collaterals will go out a week prior to the grand opening and after the first six months. They will run annually after the initial first year. All collaterals will include contact details and the company’s web address as well as menu items and prices.

3.4 Fulfillment

The employees of the restaurant will provide the essential fulfillment and delivery. The real core value will be the friendly service provided by a combination of experience, friendliness, hard work, and knowledge (in that order). Hence, Ms. Corripio intends to ensure that the service provided is always thorough and relevant to the customer's needs.

Vegan Eatery will approach reputable companies for supplying the necessary supplies for the company’s services; hence, the need to establish exceptional relationships with all strategic allies. Vegan Eatery will build relationships with companies that will provide the food, beverages and other supplies. Building strong relationships is a long-term commitment and one that will ensure that the food is delivered fresh, on time and at a value to the restaurant.

3.5 Future Products and Services

Vegan Eatery plans to franchise the company after two years. Two years will provide enough time to build the company name, its reputation as well as the customer base. By franchising the business, Vegan Eatery will allow other to use the company's successful business model for a small fee. For Vegan Eatery, a franchise alternative builds 'chain store' type businesses to distribute products that avoids the investments and accountability of a chain. Vegan Eatery's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee package because each has a direct stake in the business.

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4.0 Market Analysis Summary

Vegetarian eating is higher profile than ever. Movies, books, articles, and celebrity interviews tout how vegetarian foods reduce disease and obesity. More and more people are aware of how traditional American meals not only hurts our health but also harms the environment and supports cruelty to animals. It's easier to eat vegetarian or vegan now than ever. Specialized products have expanded from natural foods stores to mainstream grocers, discount chains, and club stores. From fast food to five-star restaurants, vegetarian options are becoming more commonplace. Given that the trends driving interest in vegetarian eating seem likely to continue, savvy businesspeople can not only benefit by catering to this need but also create demand by offering delicious, convenient, and affordable plant-based foods. Both would-be entrepreneurs and established professionals can benefit from understanding the market and competition to determine the best opportunities for success. Vegetarian Resource Group (VRG) found that 0.8 percent of adults, or approximately 1.8 million people, are vegan-people who also avoid dairy, egg, honey, and other animal ingredients. (This number is a subset of the 7.5 million estimated vegetarians.) Another 1.3 percent, or 2.9 million people, are vegans other than the fact that they consume honey. Together more than half of vegetarians are also avoiding dairy and egg products per VRG's findings, although Cultivate Research found a slightly smaller percentage of vegetarians to be vegan. Although the trend isn't yet measurable, media coverage suggests the number of vegans may be on the rise. A 2011 article in The Chicago Sun-Times reported, "Veganism is moving from marginal to mainstream in the United States." Kathryn Peters of SPINS, a market research and consulting firm for the natural products industry, was quoted in Natural Foods Merchandiser as saying, "We're seeing more celebrity endorsements. It's becoming chic." The vegetarian sector has potential to grow. Cultivate Research identified that 7 percent of respondents were willing to give up meat (all forms) entirely. The Vegetarian Times survey revealed that, of the non-vegetarians surveyed, 5.2 percent were "definitely interested" in following a vegetarian-based diet in the future. Furthermore, 10 percent of U.S., adults, or 22.8 million people, say they usually follow a vegetarian-inclined diet. The survey also collected data on age, gender and other demographic factors. Of the vegetarians surveyed:

• 59 percent are female; 41 percent are male. • 42.0 percent are age 18 to 34 years old; 40.7 percent are 35 to 54; and 17.4 percent are over 55. • 57.1 percent have followed a vegetarian diet for more than 10 years; 18 percent for 5 to 10 years; 10.8

percent for 2 to 5 years, 14.1 percent for less than 2 years. City of Chicago

Males: 1,308,072 (48.5%) Females: 1,387,526 (51.5%)

Median resident age: 32.9 years Illinois median age: 42.2 years

Grayslake

Males: 10,149 (48.4%) Females: 10,808 (51.6%)

Median resident age: 36.1 years

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Illinois median age: 42.2 years

4.1 Market Segmentation

Vegan Eatery will be targeting three distinct customer segments, with the first being local vegan residents. Local demand for a vegan restaurant in Chicago is increasingly vital to residents seeking a meatless and non-dairy meal. The second are the vegetarians from within a seven mile radius around Maple View shopping center. Since this group represents 10 percent of the population with a 3.6 percent annual increase, more and more vegetarians are turning to a meatless healthy alternative to tradition meals.

The final customer segment is those non-vegetarians that are seeking a healthy alternative to meat and dairy products. As stated previously, non-vegetarians are finding the vegetarian menu appealing and tasteful, especially as they improve their health through proper nutrition and exercise. Obesity is forcing families to take on a healthier approach to diet, and becoming a vegetarian seems to be move in that direction.

Age and gender play a role in the Vegan Eatery’s target market. Although more women than men are vegetarians, Vegan Eatery will target men, women and families of the three market segments. Household income will be a determining factor with respect to where customers eat. Consumers who earn more than $40,000, typically, are healthier and eat healthy food. They exercise and limit the fat and cholesterol in their diet. Some are vegetarian, and others are non-vegetarian finding vegetarian meals tasty.

Table 4.1: Market Analysis

Market Analysis 2012 2013 2014 2015 2016 Potential Customers Growth CAGR 6 Years and Under 4% 4,760 4,950 5,148 5,354 5,568 4.00% 7 to 18 Years Old 5% 5,753 6,041 6,343 6,660 6,993 5.00% 19 to 24 Years Old 3% 1,232 1,269 1,307 1,346 1,386 2.99% 25 to 39 Years Old 6% 8,996 9,536 10,108 10,714 11,357 6.00% 40 to 64 Years Old 4% 9,058 9,420 9,797 10,189 10,597 4.00% 65 Years and Older 3% 2,627 2,706 2,787 2,871 2,957 3.00% Total 4.63% 32,426 33,922 35,490 37,134 38,858 4.63%

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Chart 4.1: Market Analysis (Pie)

4.2 Target Market Segment Strategy

Restaurants often specialize in certain types of food or atmospheres to attract customers. For example, those vegetarian and vegan businesses that cater to a customer’s specific dietary needs tend to have broad appeal for those that are seeking a healthy choice meal either after the gym or for a quick bite to eat.

Restaurants have been trying to win back cash-conscious guests by revamping promotions, offering discounts, focusing on value-for-meal menus and expanding appeal by offering meatless and non-dairy meals. However, the tendency to offer discounts has been moderating. Vegan Eatery will remain cautiously optimistic over the near-to-medium term, with consumers continuing to look for a healthy alternative dining experiences, as well as convenient and delicious menu items in a warm and welcoming environment in a gradually improving economic backdrop.

4.3.1 Business Participants

Vegetarian establishments, which combine vegan and vegetarian menus, are a smaller segment of the overall Chicago market. Many locations that cater to vegan or vegetarian customers tend to provide two or three vegetarian meals combined with their main menu items which are filled with meat, dairy and other bi-products. There are a few decent places outside of the City of Chicago that offer a full vegan or vegetarian menu.

The City of Chicago has an abundant of vegan and vegetarian restaurants. Their menu includes only vegan and vegetarian cuisines and do not include any meat or dairy. However, as consumers move away from the heart of Chicago there becomes less and less free standing vegan and vegetarian eateries. Most establishments add to their main menu providing something for everyone. Vegan and vegetarian meals tend to be not the main focus and, therefore, tend to lack flavor, variety and freshness.

4.3.2 Competition and Buying Patterns

The general nature of the competition is split into three types of food locations. Fast food, fast casual and full service restaurants are well represented in the greater Chicago restaurant market compared to smaller rural areas. However, each offers a slightly different menu selection and pricing structure.

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Fast food or quick service restaurants (QSR) are a specific type of restaurant characterized both by its fast food cuisine and by minimal table service. Food served in fast food restaurants offers a limited menu, which is cooked in bulk in advance and kept hot; is finished and packaged to order; and is usually available ready to take away, though seating may be provided. Fast food restaurants menu prices range from $1.00 to over $12.00. They rarely service wine or beer with liquor spirits not offered at all.

Restaurants from fast casual to full service vary considerably in appearance and offerings, including a wide variety of the main chef's cuisines and service models. Typically, restaurants offer a 24 to 150-seat restaurant with outdoor seating. The menu prices for entrees range from $7.00 to over $25.00. All of the surrounding establishments provide, at a minimum, beer and wine. Most serve liquor-spirits.

A busy population of working professionals, intent busy schedules and living a healthy lifestyle, has fewer and fewer opportunities to cook at home. These people eat out regularly and do so with friends or after they finish their gym routine. Because this population tends to eat out far more than the typical population, they look for value. While they might not regularly frequent a restaurant featuring entree prices $17.00 and above, they will return for repeat appearances at restaurants featuring healthy entrees at $7.00 compared to other type of restaurants.

Many of these patrons also try meatless and non-dairy menu and have traveled a considerable distance just to experience a vegan or vegetarian meal. Currently, very few places offer vegan or vegetarian meals in the Grayslake area. Therefore, such a venue is not only desired by the populations frequenting restaurants but also desired as more consumers fight obesity through healthy alternative meals.

4.3.3 Main Competitors

IT'S VEGGIE MEALS

• 401 North Riverside Drive, Gurnee, IL • (847) 599-9995 · itsveggiemeals.com • "Best restaurant I could find in Chicago, Illinois, kindly also try north ..."

Rosati's Pizza

• 700 East Route 22, Lake Zurich, IL • (847) 540-6600 · rosatispizzalakezurich.com • deep dish · crusts • "Rosati's Pizza is a Pizza, Vegan, and Vegetarian restaurant where most Menuism users came for a

business meeting, paid less than $10, and tipped less than 15%." - menuism.com

India House Restaurant

• 228-230 McHenry Road, Buffalo Grove, IL • (847) 520-5569 · indiahousechicago.com • lunch buffet · best indian buffet · tandoori chicken • "They have good vegetarian/non-veg platters to start. Drink menu is limited and lacks a scotch. Given the

options in Chicago, this is a good restaurant. ..." - tripadvisor.in

Murphy's Health Foods & Juice

• 400 North Milwaukee Avenue, Libertyville, IL • (847) 362-4664 · murphyshealthfoods.net • aromatherapy · homeopathic · gluten free · supplements • "Many people believe a vegetarian lifestyle is a key component to healthy living, and we believe after you

try one of our delicious meals, you?ll be ..." - insiderpages.com

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5.0 Web Plan Summary

A website will be developed as a start up expense and will be included as a sales and marketing tool for Vegan Eatery. The website will serve as the restaurant’s online business card and portfolio. It has been proven that restaurants that include a website to their business model, with take-a-way program, are able to increase their annual revenue by 10 – 15 percent.

The Vegan Eatery website will be information driven, providing users with menu items, contact information and a map identifying the restaurant's location. Although advanced flash graphics will not be included, the website will be colorful and user friendly to the online community. In addition, online ordering will be available to users who wish to use the restaurants take-a-way program. They will be able to order, pay and have the order waiting when they arrive for pick-up.

5.1 Website Marketing Strategy

The internet marketing plan for Vegan Eatery will include strategies for Search Engine Optimization (SEO), Search Engine Marketing (SEM), online reviews, newsletters, and email marketing to optimize search engine traffic. Ultimately, the strategy is to expose the Vegan Eatery’s website to acquire new customers and encourage new customers to return.

The search engine optimization campaign can easily be divided into three essential stages:

• Choose the right keywords (keyword optimization) • Optimize their web pages for the selected keywords (web page optimization), and • Get quality inbound links to their pages (off-site factors)

Search engine optimization means ensuring that web pages are accessible to search engines and focused in ways that help improve the chances the Vegan Eatery’s website will be found. The search engines below are popular choices people start with when searching for websites:

Google Ask.com MSN Search HotBot Webcrawler Metacrawler Yahoo Cuil Alta Vista Excite Dogpile Snap Bing AOL Search Gigablast Lycos My Web Search LookSmart

5.2 Development Requirements

Vegan Eatery’s website will be developed as a powerful site with a limited amount of resources. All coding will be in regular HTML and designed to mirror the ideas and goals of Ms. Corripio. Vegan Eatery will use a hosting provider that will be powerful but inexpensive at the same time. Regular updates will ensure the latest information is available as new menu items are added and unpopular items are dropped.

The graphic designer and Ms. Corripio will coordinate graphics, images and overall design. Both will work together to develop the simple, vivid, yet elegant restaurant site. Ms. Corripio will outline what the website should look like and the graphic designer will implement based on the sites parameters. The site will include:

• Images of the outside of the location • Pictures of the interior and seating area • Pictures of menu items • A list of prices • Pictures of employees (As a way to introduce the company to the community)

Vegan Eatery will appeal to healthy enthusiasts in the surrounding areas of Grayslake and its surrounding communities. Furthermore, the vegan and vegetarians who want a meatless and non-dairy meal will be able to indulge. In addition, Vegan Eatery will meet an under-served sector who are not vegetarians but enjoy a vegetarian meal.

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Members from each market segment tends to dine out two times or more per week. All three-market segments are usually made up of urban professionals between the ages of 25 and 40, married couples between the ages of 25 and 62, graduate and single women between 21 and 35. They account for 85 percent of consumers who eat vegetarian meals.

4.2.1 Market Needs

Customer’s healthy dining needs are critical to the success of Vegan Eatery. As a supplier of a meatless and non-dairy menu, Vegan Eatery must be able to appeal to non-vegetarians customers who are seeking a healthy alternative to a meat and dairy meal. It is not enough to attract vegan and vegetarian customers, Vegan Eatery must broaden its appeal through fresh, delicious meals that will have everyone talking.

Most consumers are adventurous and interested in partaking of new experiences. Keeping the menu offerings "fresh" will remain a constant challenge to the business. Segments of the target market tend to eat out, exercise and take advantage of healthy alternatives often. Furthermore, they tend to choose comfortable, affordable venues, and repeat appearances at places that offer comfortable surroundings with new twists.

4.2.2 Market Trends

2011’s Top 10 Vegan Trends 1. Chains Add Vegan Options

a. This year, popular restaurant chains across the country hopped on the vegan bandwagon, making it easier than ever to dine cruelty-free. Just a few months after adding vegan Bistro Box meals to its line of café foods, Starbucks announced that it had acquired juice company Evolution Fresh, with plans to open retail locations focused on juice and health food in 2012. More than 100 7-Eleven stores began carrying new vegan meals such as Pad Thai and Linguine Tikka Masala after a test run in New York received rave reviews. In October, Subway reached out to its vegan customers for feedback on its veg menu options before adding a vegan patty to its menu at several Canadian outlets of the more than 34,000-locations.

2. Celebrities Go Vegan

a. Whether moved by a compelling film or inspired by a groundbreaking book, it was a banner year for ditching meat and dairy among the famous and infamous. Celebrities who abandoned their omnivorous ways in 2011 included country music darling Carrie Underwood, Lost actor Jorge Garcia, actress Eliza Dushku, godfather of heavy metal Ozzy Osbourne, and actor-comedian Russell Brand. Former President Bill Clinton opted for a plant-based diet to heal his ailing heart while Oprah brought veganism to daytime television by spending a week as a vegan with nearly 400 of her employees. Just last month, vegan power couple Ellen DeGeneres and Portia de Rossi announced plans to open a new vegan restaurant in Los Angeles.

3. Shark Finning Banned

a. 2011 marks a year chock-full of added protections for sharks, who are often thrown back into the ocean, still alive, after their fins have been cut off for human use. Taiwan made history as the first Asian nation to ban shark finning, following the Pacific island of Guam. On the homefront, President Obama signed a bill to strengthen an 11-year-old ban on the practice in January. California, Washington, and Oregon all approved legislation to stop the sale, trade, and possession of fins, most to take effect in 2012 and 2013. Finally, The Food Network joined the upsurge to protect sharks—it agreed to discontinue the use of shark fin as an ingredient in its recipes after tens of thousands of viewers signed an online petition.

4. Food Trucks Take Off

a. Vegan chefs have hit the road across the US in what can only be described as a food truck explosion. Hit television series, The Great Food Truck Race, helped vegan contestant Seabirds Truck claim national notoriety for its meals on wheels. New Jersey’s The Cinnamon Snail expanded service of its organic vegan doughnuts and raw pizza into New York City in December. Other vegan food trucks that opened this year include macaroni-and-cheese specialist Mac’n Food Truck in Miami, Loving Hut

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Express in Vancouver, Dallas-based Jackalope Mobile Kitchen, and Denver’s Vegan Van, among dozens of others.

5. Nonprofits Strengthen

a. Animal organizations made enormous strides in bettering the lives of all creatures this year. Mercy For Animals, VegNews’ 2011 Nonprofit of the Year, influenced leading businesses like Target, McDonald’s, Costco, Kroger, and Safeway to eliminate cruel suppliers after releasing footage depicting inhumane treatment of hens and pigs at suppliers’ farms. Farm Sanctuary celebrated 25 years with cross-country anniversary events and hosted the first-ever National Conference to End Factory Farming in October. DC-based Compassion Over Killing made strides by uncovering a $9.5 billion price-fixing scheme in the dairy industry, expanding its VegWeek campaign, and working with meat-alternative producer Quorn to develop its first vegan product.

6. Vegan Cookbooks Explode

a. For culinary amateurs and seasoned chefs alike, 2011 brought more vegan cookbooks to bookstore shelves than ever before. The much anticipated release of The Candle 79 Cookbook had many drooling over recipes like Saffron Ravioli, Ginger-Seitan Dumplings, and Mexican Chocolate Cake. VegNews celebrated the release of Spork-Fed, the first book from LA-based sisters Jenny Engel and Heather Goldberg, with a glamorous evening bash in San Francisco. Robin Robertson’s Quick-Fix Vegan taught us how to make appetizing vegan meals in less than 30 minutes, and Isa Chandra Moskowitz and Terry Hope Romero’s Vegan Pie in the Sky gives delicious details on overhauling the all-American classic dessert. The Healthy Voyager’s Global Kitchen set for publication on January 1, we know 2012 will no doubt rival this year’s cookbook trend.

7. Dairy Substitutions on the Rise

a. In January, The Wall Street Journal reported that the alternative-milk industry, fueled by almond milk from Silk and Blue Diamond Growers, grew by 13 percent in 2010. Today, shoppers can find grocery-store shelves packed with milk substitutes ranging from hemp and cashew to coconut and oat. Clearly, the dairy industry has taken notice that competition is on the rise—Got Milk?’s current ad campaign challenges viewers to “find the real milk” while criticizing non-dairy milk alternatives. This year also brought more options such as coconut milk nog, almond-based yogurt, macadamia–based cheese, and cashew-milk ice cream.

8. School Lunches Revamped

a. With the demise of the food pyramid in favor of the new MyPlate nutrition strategy, school lunches across the US received a makeover this year, and the benefits are being felt across the country. Students at South Carolina’s Greenville County schools were in for a treat after their district teamed up with a local culinary institute to teach cafeteria workers on the preparation of vegetarian and raw lunches. In Salt Lake City, the Granite School District adopted Meatless Mondays for a month-long trial run in October, with the option of continuing the program in 2012. Even colleges have caught on—the University of North Texas in Denton revamped one cafeteria into a completely vegan dining hall just in time for the fall 2011 semester.

9. Mainstream Media Goes Veg

a. While Oprah’s vegan week brought the cruelty-free lifestyle to daytime TV, she wasn’t the only small-screen star to broach the subject. Martha Stewart devoted an episode of her show to veganism in March with guests Biz Stone and Kathy Freston while CNN aired an hour-long special on Clinton’s journey to a plant-based diet. In print and web media, Vogue, Vanity Fair, Glamour, The Washington Post, The Atlantic, and National Public Radio all published vegan-related stories this year. For the holidays, VegNews was just one of many places to turn to for vegan recipes—mainstream publications like Sunset, The New York Times, Shape, The Wall Street Journal, Women’s Health, Whole Living, Bon Appetit, and Every Day with Rachael Ray all published seasonal veg-friendly recipes. In short, veganism has never received so much ink and airtime in one year.

10. Vegan Films Hit Silver Screen

a. 2011 was a remarkable time for vegan films hitting big screens across the country. VN's Movie of the Year, Forks Over Knives, impressed audiences at sold-out screenings nationwide with its scientific evidence and inspiring stories, influencing movie attendees to jump on the vegan bandwagon. With Vegucated’s compelling storyline of three meat-and-cheese-loving New Yorkers experimenting with

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veganism for six weeks, it’s no wonder it took home myriad awards during its cross-country film festival tour. Planteat documented the lives of three men as they searched for a diet that improves the health of people and the planet while Got The Facts on Milk? gave the inside scoop on what’s actually behind the frothy white stuff. These eye-opening films captured the attention of film critics and continue to influence viewers—heck, even Ozzy Osbourne changed his diet after watching Forks Over Knives.

4.2.3 Market Growth

Vegetarian food sales in the United States are forecast to grow at an inflation-adjusted annual rate of 3.8 percent through 2013, according to Mintel, an international research group here. In fact, Mintel forecasts U.S. sales of vegetarian food to grow to more than $1.7 billion in the next five years. Healthy growth is on the horizon even though just 3 percent of the more than 1,000 adult respondents called themselves strict vegetarians or vegans in a 2005 Mintel study. Consumers who are just cutting down on their consumption of meat are expected to keep vegetarian food sales surging, the study indicated. That spells good news for marketers of fresh produce, probably even more so than for manufacturers of meat substitutes. Indeed, Mintel forecasts U.S. sales of meat and poultry substitutes to grow at an inflation-adjusted annual rate of just 0.4 percent through 2012. The report showed that of 95 adults whose diet is "usually or strictly vegetarian or vegan," a full 84 percent said they prefer food that does not contain any meat substitutes. Eight out of 10 of those 95 adults in the study, who described their diet as vegetarian or vegan, said they have adopted the eating plan for health reasons.

4.3 Service Business Analysis

All restaurants combined, from fast food to fine dining, generate an average bottom line profit of 3 – 10 percent. Margins are much better in quick service restaurants since more control is taken over shrink and labor cost. Furthermore, quick service restaurants have stronger margins due to a strong management, friendly staff, delicious menus and salad bars and fantastic locations. A quick service restaurant with all of these factors suggests a bottom line profit of 22 – 32 percent.

Restaurants range from unpretentious lunching or dining places catering to busy people looking for a healthy alternative, with simple food served in simple settings at low prices, to expensive establishments serving refined food and wines in a formal setting. In the former case, customers usually wear casual clothing. In the latter case, depending on culture and local traditions, customers might wear semi-casual, semi-formal, or even in rare cases formal wear.

The Company chosen to develop the website will have an eye for detail, know the target audience, understand the restaurant industry, provide a professional product and develop a user-friendly site. In addition, they will provide the backend maintenance for the site. As the website rolls out future upgrades, website traffic is expected to grow as a result of an increased level of awareness and demand.

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6.0 Strategy and Implementation Summary

Vegan Eatery will distinguish itself with service, quality of food and menu items. Ms. Corripio will work with the kitchen staff to ensure that each meal is prepared to the customer’s taste. She will also ensure that customers are treated with the friendliness employees of any restaurant in the area. Ms. Corripio wants to ensure that her menu will attract not only vegan and vegetarians but also non-vegetarian consumers seeking a healthy alternative to a meat and potato meal.

Building long-term relationships with customers, not single-visits will increase the restaurant’s success. Ms. Corripio will focus on becoming customer’s destination of choice through a companywide commitment of providing above average service. Ms. Corripio will ensure that each customer understands this promise of service and quality and the importance of each relationship.

Ms. Corripio will focus the restaurant’s programs toward the company’s specific targeted groups as key market segments. While Ms. Corripio does not need to compete for customers who prefer traditional meat or "microwave frozen foods" types of restaurants, she does want to challenge those restaurants that offer a healthy menu and other vegetarian establishments.

Vegan Eatery's strategy is based upon targeting and serving:

• Healthy customers who prefer to eat out and socialize with friends rather than cook at home. She/he has an active social life and spends a considerable amount of disposable income maintaining it.

• Local businesses which regularly seek healthy places to eat during lunch breaks • The tourist populations traveling outside of the city of Chicago on vacation

6.1 SWOT Analysis

The SWOT analysis provides the Company with an opportunity to examine the internal strengths and weaknesses for Vegan Eatery. It also allows the Company to examine the opportunities presented to Vegan Eatery as well as potential threats. Vegan Eatery has a valuable list of strengths that will support long-term success. These strengths include growing demand for vegan and vegetarian food, ideal location and a clear vision of the market needs. Strengths are effective, but it is also beneficial to recognize the weaknesses Vegan Eatery must address. These weaknesses include limited funding and the lack of awareness among residents. As an industry, the greatest weaknesses cited by restaurant owners are food costs, building and maintaining sales volume, and the economy. As material costs increase due to the Midwest drought, restaurants will be required to pass the extra cost onto the customer. This will weigh heavily on the consumer and possibly keep them from regular visits. Vegan Eatery’s strengths will help it capitalize on emerging opportunities. These opportunities include but are not limited to a growing obesity issue in an American and a busy Maple View shopping center. Threats that Vegan Eatery should be aware of include an increase in food costs and emerging competitors.

6.1.1 Strengths

• An excellent menu selection that is in high demand • Ideal location next door to Fitness 19 • A niche theme that caters to a growing market in the United States • Strong leadership style platform

6.1.2 Weaknesses

• Hidden away in a shopping center

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• Limited funding • Lack of awareness with residents in Grayslake, IL

6.1.3 Opportunities

• Take advantage of the number of consumers that are vegan or vegetarians • Growing trend away from obesity • Growing trend toward healthier diets • The other businesses that attract thousands of customers each week

6.1.4 Threats

• Long-term competition • A double dip recession • An increase in food costs

6.2 Competitive Edge

Vegan Eatery will maintain a competitive edge in several significant areas:

• A quality fast food format • The shopping center's existing businesses help attract thousands of customers every week • The growing demand of vegan and vegetarian food has made other vegan restaurants extremely busy. • The service provided will be superior to any other restaurant in the area. • The vegan/vegetarian concept will be a favorite among residents in the Grayslake area. • Opportunities are endless; there are very few vegan/vegetarian restaurants in the Grayslake area,

competition is minimal

6.2 Marketing Strategy

The most important element of the marketing strategy is the delivery of a quality product and service. The restaurant’s food and beverages must first sell themselves through word of mouth. Referrals are profitable and indispensable because the person doing the referral offsets the need to spend marketing dollars to get the customer in the door and to buy.

The term "referrals" has several meanings when it comes to secondary sales. The first relates to products or services a customer is considering or has purchased. When customers are proud to be associated with the business, and they believe they can talk with confidence and intelligence about the service, they will talk about it at the first opportunity. Their telling about it may result in others coming in to visit and, hopefully, return regularly.

Next, the packaging of Vegan Eatery’s concept and external messages has to fit the restaurants positioning. Vegan Eatery offers an upscale feel without a required "pinch" to the wallet. Ms. Corripio will then communicate this through the free weekly flyers, and email blasts.

Through establishing relationships with the Grayslake Chamber of Commerce as well as Visitors Bureau, Vegan Eatery will then attempt to create opportunities for businesses and visitors to the city looking for a vegetarian experience at Vegan Eatery.

6.2.1 Pricing Strategy

Vegan Eatery’s food and beverage options are priced to provide the restaurant with an attractive margin while, at the same time, offering value to the consumer. Vegan Eatery not only wants to ensure repeat business, but that each experience is enjoyable and valuable to the consumer. Furthermore, Vegan Eatery will capitalize on favorites and remove items that are not. Therein lies why the food and beverage experience will be relatively flexible.

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Vegan Eatery will price menu items that will increase customer value. Below prices reflect a healthy profit while providing consumers with a value.

• Price range for food is between $5-10 • Slice of bread (sweets) $2-5 • The same for smoothies and parfait $2-5

6.2.2 Promotion Strategy

Vegan Eatery will promote its company name to create brand/name awareness, healthy menu offerings in a clean and nicely decorated interior. Therefore, Vegan Eatery’s promotion strategy includes focusing on events and messages that match:

The restaurants participation in promotions and festivals is crucial because these are events that influence the target market together in Grayslake from surrounding communities.

These events include:

Festival Name Start Date

Farmer's Market (Fall) October 13th – December 22nd Arts Festival June 19th

5K Race & Fun Run July 10th Summer Days August 20th and 21st

• Advertising placed carefully in health food stores, gyms and other places that the target market visit including Fitness 19 (next door).

• Direct Mail (Flyers) • Email Blasts • Digital Offsite Billboard • Digital On-site Signage at the shopping center

6.2.3 Marketing Programs

By focusing on several different advertising channels, Vegan Eatery will be able to reach new customers. These include:

• Social Networking: FaceBook, MySpace, Twitter and LinkedIn • Yellow Pages listing: Ms. Corripio realizes the importance of stability and professionalism; anyone who has

been in business any length of time can be located in the Yellow Pages. Only a one-line listing will be utilized as this will not be the restaurant’s leading source for customer contact. However, it will give the professional appearance that is needed.

• Networking as members of the Grayslake Chamber of Commerce with local civic organizations, consumers and businesses in the target market

• Affiliation with local and national peer organizations, including those available on the Internet • Membership in the Better Business Bureau

Marketing strategies will be focused on developing new customers, generating repeat business and establishing a significant market presence by:

1. Digital Marketing

• Mobile Texting

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• Groupon • Website Email Club • Facebook/Twitter/MySpace • LinkedIn/Flickr • Chicago Tribune Arts & Entertainment Online • Sun Times Arts & Entertainment Online • Beacon News Arts & Entertainment Online

2. Sponsorship of community based events 3. Creation and development of a professionally designed and administered website 4. Create Vegan Eatery weekly specials and discounts for regular repeat customers 5. Yoga theme nights in conjunction with Fitness 19’s yoga schedules

6.3 Sales Strategy

The initial sales strategy will be to establish and maintain a position with the primary targeted group: residents within a five-mile radius around the Maple View shopping center. Vegan Eatery will depend upon keeping these people satisfied through its well known food and beverage products.

The second strategy is to build relationships with those businesses that cater to a holistic approach to medicine. Furthermore, yoga, fitness and wellness centers will also be a daily focus. Most consumers that favor these types of businesses are mainly interested in healthy, meatless meals that are good for the spirit as well as for the body.

Third, the restaurant will target sales to employees at other businesses. Breakfast and lunch are prime times for employees to get a quick bite to eat before work and during their lunch hour. Since Vegan Eatery will offer food-to-go service, those employees who do not have time to eat can order, pick up their food and take it back to their place of business.

6.3.1 Sales Forecast

The sales forecast assumes there will be changes in the cost of goods sold, which is a reasonable assumption for the next few years since this year’s drought disruption will affect food prices for the next few years.

Vegan Eatery is expecting to increase sales from $350,071 at the end of Year 1, to $692,494 by the end of Year 3, and $1.1 million by the end of Year 5. The growth forecast is projected smaller than other restaurants in the area and is stronger than the projected increase in population of the immediate area.

The combined sales figures for Year 1 (across all sale items for the restaurant) assume an average of one "turn" per week over an average customer count. Growth with respect to vegan meals is high because there are no vegan restaurants in the immediate area. However, as the business grows and more competitors enter the market, Vegan Eatery will be able to retain customers with superior service and a healthy menu.

Table 6.3.1: Sales Forecast

Sales Forecast FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Sales Food $205,931 $293,495 $383,616 $468,225 $559,811 Beverage $105,353 $147,833 $215,321 $297,917 $378,211 Desert $38,787 $60,711 $93,557 $136,344 $175,419 Total Sales $350,071 $502,039 $692,494 $902,486 $1,113,441

Direct Cost of Sales FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Food $86,491 $123,268 $161,119 $196,655 $235,121 Beverage $44,248 $62,090 $90,435 $125,125 $158,849 Desert $16,290 $25,498 $39,294 $57,264 $73,676 Subtotal Direct Cost of Sales $147,030 $210,856 $290,847 $379,044 $467,645

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Chart 6.3.1: Sales Monthly

Chart 6.3.1: Sales by Year

6.4 Strategic Alliances

Vegan Eatery will depend on strategic alliances with the areas businesses:

The yoga, holistic businesses, gyms, The Grayslake Chamber of Commerce, The Chicago Chamber of Commerce, and The Chicago Better Business Bureau will be the restaurants focus. Vegan Eatery needs to ensure that the personnel of these allies are generally aware of restaurants support and reciprocation.

All strategic alliances will be based on mutual respect, integrity and trust.

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7.0 Management Summary

Vegan Eatery will initially operate as a small business. However, after the company experiences success on its business structure, it will launch a franchise business allowing other businesses to capitalize on the Vegan Eatery business model. Ms. Corripio will be involved during the build out phase of the operation and subsequently thereafter. She will be involved during the interview and hiring process, grand open preparation, grand opening and thereafter.

In addition, Ms. Corripio will take on Human Resource Management (HRM) to assist her management team as the company moves to expand into a franchise type of establishment. Currently, McDonald’s is a leading user of HRM which they have found tremendous success with the management style. HRM includes four distinct steps that encourage employees to a better and more efficient way of working compared to some other system or no system at all. These four steps include:

1. Management of strategic human resources: this role is focused on the synchronization of HR strategies and practices to the business strategy. In this role, the HR professional is a strategic partner who helps achieve the business strategy by translating it into concrete HR practices.

2. Management of transformation and change: a second key role in which HR professionals can deliver value to the organization. HR professionals have to assist in the identification and implementation of change processes, being catalysts as well as guards of cultural transformations.

3. Management of the employees: this role refers to the daily problems, expectations and needs of employees. HR professionals have to motivate the employees’ contribution to the success of the business by understanding their specific needs and ensuring that these are met.

4. Management of the administration of the organization: the HR professional has to ensure that the administrative processes concerning hiring, rewarding, training and evaluation, promotion, are designed and delivered efficiently and accurately. (1997) emphasizes the importance of this role. Although many organizations and HR professionals tend to underestimate it due to a growing emphasis on strategic HRM, the successful delivery of administrative aspects of HR will prove to be an added value for the organization.

7.1 Personnel Plan

Personnel will include an eight staff member team including the owner. However, as the company begins to see a larger demand for its service and products, more employees will be hired to meet the needs of its customers. During the initial phase, Ms. Corripio will employ three counter servers, two cooks and two busboys. Maintaining excellent service through friendly and effective employees as well as quality of food prepared will be significant at ensuring customers will return.

Ms. Corripio will be responsible for hiring and training the staff. Before being hired, each staff member will be interviewed and hired based on their work experience and personality. While most will be offered minimum wage, the key to selling the restaurants vision to potential employees will be the restaurants high level of customer traffic that is expected to visit with a larger tipping behavior. This will help attract well-experienced workers from other establishments.

The table below outlines the labor cost for the Company during the first five years.

Table 7.1: Personnel

Personnel Plan FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Owner/Founder $46,200 $46,200 $46,200 $46,200 $46,200 Waitresses (3) $38,016 $38,016 $38,016 $38,016 $38,016 Cooks (2) $38,400 $38,400 $38,400 $38,400 $38,400 Busboys (2) $25,344 $25,344 $25,344 $25,344 $25,344 Total People 8 8 8 8 8

Total Payroll $147,960 $147,960 $147,960 $147,960 $147,960

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8.0 Financial Plan

The following sections focus on the financial projections for Vegan Eatery under the direction of Ms. Corripio over the next five years. These tables represent a conservative estimate of revenues, expenses, and growth. While the Company does not anticipate a significant increase in operating expenses, profits will grow largely due to an increase in demand for the restaurant’s services and products and a commitment of sustaining low operating expenses. This commitment will be implemented on a daily basis, which will ensure enough money is available to pursue an aggressive repayment of the investment amount within the first ten years. Capturing market share will be relatively easy as there are no other vegan restaurants in the Chicago greater area.

The financial plan supports a host of economic reports that project a bright financial future for Vegan Eatery. In the following sections, the Restaurant will offer a detailed look at the following tables:

• Break-even • Sales Forecast • Balance Sheet • Valuation • Start-up Summary • Profit and Loss • Exit Strategy • Use of Funds • Start-up Funding • Cash Flow • Investment Offering • Payback

8.1 Start-up Funding

In order to properly capitalize the business, Ms. Corripio is seeking $85,000 in investment financing. The funds will be used to complete all of the interior details of the restaurant as well as having enough operating capital to ensure that the first six months are well capitalized. After, funds from revenue will begin to provide enough funds to operate independently. Ms. Corripio will be investing $15,500 to help finance the initial start-up phase. The day of the grand opening Ms. Corripio will ensure every detail of the business is brought together including advertising that will go out a week prior to the grand opening.

Table 8.1: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $22,300 Start-up Assets to Fund $36,500 Total Funding Required $58,800

Assets Non-cash Assets from Start-up $21,500 Cash Requirements from Start-up $15,000 Additional Cash Raised $41,700 Cash Balance on Starting Date $56,700 Total Assets $78,200

Liabilities and Capital Liabilities Total Liabilities $0

Capital Planned Investment Owner $15,500 Investor $85,000 Additional Investment Requirement $0 Total Planned Investment $100,500

Loss at Start-up (Start-up Expenses) ($22,300) Total Capital $78,200

Total Capital and Liabilities $78,200

Total Funding $100,500

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8.2 Break-even Analysis

For the break-even analysis, Vegan Eatery assumes running costs of approximately $22,168 per month, which includes fixed expenses such as rent, utilities, phone, Internet and other related expenses. Variable costs include 42 percent of all operating expenses. These include inventory, payroll, credit card fees, and other related expenses.

With margins harder to assume, margin projections will be based on the cost of goods sold and the service along with the industry average. Although the industry standard for margin projections is 58 percent, Ms. Corripio believes that, over time, the margin percentage will increase due to efficiency and strong leadership.

The chart suggests that Vegan Eatery will need to generate $38,220 in revenue in order to break-even. Since most of the second year's monthly projections exceed the break-even amount, obtaining break-even will be easily obtained during the second year and beyond.

Table 8.2: Break-even Analysis

Break-even Analysis Monthly Revenue Break-even $38,220

Assumptions: Average Percent Variable Cost 42% Estimated Monthly Fixed Cost $22,168

Chart 8.2: Break-even Analysis

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8.3 Projected Profit and Loss

Since the company does not expect a drastic increase in revenue until after awareness builds, profits will not be significant until the second year after the restaurant opens for business. With the $85,000 in investment funding, Vegan Eatery will be able to build a solid profit structure to meet the expectations of its investors over the long-term. However, the profit structure will be slow but consistent as revenue builds. This will be a long-term objective as the company builds on its business objectives of excellent service and quality food.

Although profits will be visible in the second year, third year profits will be stronger. Profits will be 11 percent in the third year, 17 percent in the fourth year and 20 percent in the fifth year after the grand opening day. Some operating expenses will follow a normal growth curve as revenues increase but will only increase moderately. This will help increase the profit margin.

Table 8.3: Profit and Loss

Pro Forma Profit and Loss FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Sales $350,071 $502,039 $692,494 $902,486 $1,113,441 Direct Cost of Sales $147,030 $210,856 $290,847 $379,044 $467,645 Total Cost of Sales $147,030 $210,856 $290,847 $379,044 $467,645

Gross Margin $203,041 $291,183 $401,647 $523,442 $645,796 Gross Margin % 58.00% 58.00% 58.00% 58.00% 58.00%

Expenses Payroll $147,960 $147,960 $147,960 $147,960 $147,960 Marketing/Promotion/Advertising $2,976 $4,267 $5,886 $7,671 $9,464 Depreciation $3,000 $3,000 $3,000 $3,000 $3,000 Rent $60,000 $60,000 $60,000 $60,000 $60,000 Utilities $3,851 $5,522 $7,617 $9,927 $12,248 Bank Charges $1,050 $1,580 $2,077 $2,707 $3,340 Payroll Taxes $22,194 $22,194 $22,194 $22,194 $22,194 Credit Card Fees $5,251 $7,531 $10,387 $13,537 $16,702 Cleaning Supplies $1,925 $4,561 $5,302 $6,708 $7,150 POS Software License $1,050 $1,506 $2,077 $2,707 $3,340 Telephone/Internet $2,100 $2,100 $2,100 $2,100 $2,100 Tableware/Kitchen Utensils $613 $879 $1,212 $1,579 $1,949 Web Hosting Fees $378 $542 $748 $975 $1,203 Maintenance Expense $539 $773 $1,066 $1,390 $1,715 Supplies $700 $1,004 $1,385 $1,805 $2,227 Taxes / Licenses / Permits $280 $402 $554 $722 $891 General Insurance $4,617 $4,619 $4,619 $4,619 $4,619 Accounting Fees $2,626 $3,765 $5,194 $6,769 $8,351 Security System $1,750 $1,757 $1,757 $1,757 $1,757 Payroll Processing $2,100 $3,012 $4,155 $5,415 $6,681 Cash (Over) / Short $350 $502 $692 $902 $1,113 Dues & Subscriptions $700 $1,004 $1,385 $1,805 $2,227

Total Operating Expenses $266,011 $278,480 $291,369 $306,251 $320,230

Profit Before Interest and Taxes ($62,970) $12,702 $110,277 $217,191 $325,566 EBITDA ($59,970) $15,702 $113,277 $220,191 $328,566 Taxes Incurred $0 $3,811 $33,083 $65,157 $97,670

Net Profit ($62,970) $8,892 $77,194 $152,034 $227,896 Net Profit/Sales -17.99% 1.77% 11.15% 16.85% 20.47%

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Chart 8.3: Profit Monthly

Chart 8.3: Profit Yearly

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8.4 Projected Cash Flow

With the infusion of investment funds, more funds will be available to ensure a successful grand opening as wages get paid, expenses are covered, and specific milestones can be achieved. This is only an initial stage requirement; after, funds from revenue will begin to meet the needs of daily operating expenses.

The Cash Flow projections are based on revenue less cash spending and bill payments. These projections are educated assumptions with revenue generation factors carrying the most significant influence regarding outcome. The amount of funds received from investors will have a long-term repayment plan that will fit within the company’s cash flow budget. This means operating expenses will be met over the long-term.

The investor payout amount is based on negotiations between the investor(s) and Vegan Eatery. The deal must be structured so that both parties benefit from the partnership. Any structure agreement must be approved by both parties and documented to satisfy the laws that govern the State of Illinois.

Table 8.4: Cash Flow

Pro Forma Cash Flow FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Cash Received Cash from Operations Cash Sales $350,071 $502,039 $692,494 $902,486 $1,113,441 Subtotal Cash from Operations $350,071 $502,039 $692,494 $902,486 $1,113,441

Additional Cash Received Sales Tax, VAT, HST/GST Received $21,879 $31,377 $43,281 $56,405 $69,590 Subtotal Cash Received $371,950 $533,417 $735,775 $958,891 $1,183,031

Expenditures FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Expenditures from Operations Cash Spending $147,960 $147,960 $147,960 $147,960 $147,960 Bill Payments $248,423 $348,046 $474,312 $605,054 $739,848 Subtotal Spent on Operations $396,383 $496,006 $622,272 $753,014 $887,808

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $21,879 $31,377 $43,281 $56,405 $69,590 Subtotal Cash Spent $418,262 $527,384 $665,553 $809,419 $957,398

Net Cash Flow ($46,312) $6,033 $70,222 $149,472 $225,633 Cash Balance $388 $6,421 $76,643 $226,115 $451,748

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Chart 8.4: Cash

8.5 Projected Balance Sheet

The balance sheet is pretty solid. Vegan Eatery does not expect any real trouble meeting debt obligations--as long as specific objectives can be achieved. The restaurant will experience a substantial growth advantage in the second year and beyond due to a successful and aggressive advertising plan in the first year. Earnings will meet business expectation after the initial first year.

Detailed monthly projections are available in the appendix section of this business plan.

Table 8.5: Balance Sheet

Pro Forma Balance Sheet FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Assets Current Assets Cash $388 $6,421 $76,643 $226,115 $451,748 Inventory $19,396 $17,628 $33,432 $41,165 $48,080 Other Current Assets $19,000 $19,000 $19,000 $19,000 $19,000 Total Current Assets $38,785 $43,049 $129,075 $286,280 $518,828

Long-term Assets Long-term Assets $0 $0 $0 $0 $0 Accumulated Depreciation $3,000 $6,000 $9,000 $12,000 $15,000 Total Long-term Assets ($3,000) ($6,000) ($9,000) ($12,000) ($15,000) Total Assets $35,785 $37,049 $120,075 $274,280 $503,828

Liabilities and Capital FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Current Liabilities Accounts Payable $30,554 $27,467 $40,016 $50,600 $61,724 Subtotal Current Liabilities $30,554 $27,467 $40,016 $50,600 $61,724

Long-term Liabilities $0 $0 $0 $0 $0 Total Liabilities $30,554 $27,467 $40,016 $50,600 $61,724

Paid-in Capital $90,500 $90,500 $90,500 $90,500 $90,500 Retained Earnings ($22,300) ($85,270) ($80,918) ($10,441) $133,180 Earnings ($62,970) $4,351 $70,477 $143,621 $218,425 Total Capital $5,230 $9,582 $80,059 $223,680 $442,104 Total Liabilities and Capital $35,785 $37,049 $120,075 $274,280 $503,828

Net Worth $5,230 $9,582 $80,059 $223,680 $442,104

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8.6 Business Ratios

The below business ratios take into consideration several different ratios including Acid Test and Debt to ratio. The ratios for the years of this plan are based on the Standard Industrial Classification (SIC) code 5812, limited service restaurants.

Table 8.6: Ratios

Ratio Analysis FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Industry Profile Sales Growth n.a. 43.41% 37.94% 30.32% 23.37% 1.65%

Percent of Total Assets Inventory 54.20% 47.58% 27.84% 15.01% 9.54% 6.34% Other Current Assets 53.10% 51.28% 15.82% 6.93% 3.77% 43.25% Total Current Assets 108.38% 116.19% 107.50% 104.38% 102.98% 53.12% Long-term Assets -8.38% -16.19% -7.50% -4.38% -2.98% 46.88% Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 85.38% 74.14% 33.33% 18.45% 12.25% 25.40% Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 73.91% Total Liabilities 85.38% 74.14% 33.33% 18.45% 12.25% 99.31% Net Worth 14.62% 25.86% 66.67% 81.55% 87.75% 0.69%

Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Gross Margin 58.00% 58.00% 58.00% 58.00% 58.00% 58.06% Selling, General & Administrative Expenses 75.99% 57.13% 47.82% 42.09% 38.38% 23.02% Advertising Expenses 0.85% 0.85% 0.85% 0.85% 0.85% 1.74% Profit Before Interest and Taxes -17.99% 1.24% 14.54% 22.73% 28.02% 6.52%

Main Ratios Current 1.27 1.57 3.23 5.66 8.41 1.25 Quick 0.63 0.93 2.39 4.84 7.63 1.00 Total Debt to Total Assets 85.38% 74.14% 33.33% 18.45% 12.25% 99.31% Pre-tax Return on Net Worth -1203.94% 64.88% 125.76% 91.73% 70.58% 4325.19% Pre-tax Return on Assets -175.97% 16.78% 83.85% 74.80% 61.93% 29.65%

Additional Ratios FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Net Profit Margin -17.99% 0.87% 10.18% 15.91% 19.62% n.a Return on Equity -1203.94% 45.41% 88.03% 64.21% 49.41% n.a

Activity Ratios Inventory Turnover 12.00 11.39 11.39 10.16 10.48 n.a Accounts Payable Turnover 9.13 12.56 12.17 12.17 12.17 n.a Payment Days 27 31 25 27 27 n.a Total Asset Turnover 9.78 13.55 5.77 3.29 2.21 n.a

Debt Ratios Debt to Net Worth 5.84 2.87 0.50 0.23 0.14 n.a Current Liab. to Liab. 1.00 1.00 1.00 1.00 1.00 n.a

Liquidity Ratios Net Working Capital $8,230 $15,582 $89,059 $235,680 $457,104 n.a Interest Coverage 0.00 0.00 0.00 0.00 0.00 n.a

Additional Ratios Assets to Sales 0.10 0.07 0.17 0.30 0.45 n.a Current Debt/Total Assets 85% 74% 33% 18% 12% n.a Acid Test 0.63 0.93 2.39 4.84 7.63 n.a Sales/Net Worth 66.93 52.40 8.65 4.03 2.52 n.a Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a

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8.7 The Investment Offering

As stated previously, Vegan Eatery will be offering up to 49 percent ownership of the restaurant to one or several outside investment firms in exchange for $85,000 in investment capital. Investors will be offered 961 shares at a price of $88.47 per share. That means that, in exchange for $85,000, 961 shares at a price of $88.47 will be issued and documented. After the investment amount, plus a sizable return, is repaid, Vegan Eatery will buy back the 961 shares.

Although the payout amount is $391,020, Vegan Eatery is not required to payout that amount. Another amount will be equally desirable for the investor(s) and will be discussed during negotiations. Investments shares are projected to be repaid within ten years if the restaurant can achieve specific financial objectives outlined in this plan.

Table 8.7: Investment Offering

Investment Offering Seed Round 1 Round 2 Exit Proposed Year: 1 2 3 7

Valuation, Investment, Shares Investment Amount $85,000 $0 $0 Equity Share Offering Percentage 49.00% 0.00% 0.00% Valuation $173,469 $0 $0 $798,000 Investor Exit Payout $391,020 $0 $0 Investor Years Until Exit 6 5 4 Investor IRR 28.96% 0.00% 0.00%

Share Ownership Year 1 Year 2 Year 3 Year 7 Founders' Shares 1,000 1,000 1,000 1,000 Investor Shares Issued 961 0 0 Price per share $88.47 $0.00 $0.00 $406.98 Year 1 Investors' Shares 961 961 961 961 Total Shares Outstanding 1,961 1,961 1,961 1,961

Equity Ownership Percentage Year 1 Year 2 Year 3 Year 7 Founders' Equity 51.00% 51.00% 51.00% 51.00% Option Holders' Equity 0.00% 0.00% 0.00% 0.00% Year 1 Investors' Equity 49.00% 49.00% 49.00% 49.00% Total Equity 100.00% 100.00% 100.00% 100.00% Investors' Equity 49.00% 49.00% 49.00% 49.00% Founders' & Employees' Equity 51.00% 51.00% 51.00% 51.00%

8.8 Valuation

Vegan Eatery anticipates the ending total valuation of the company at the time of sale in 2019 will be $798,000, which is nearly twice EBITDA. The investment analysis demonstrates the projected valuation of an outside investor's equity. For an initial outside investment of $85,000, an investor could potentially receive a buyout package valued at $391,020 in 2019, an IRR of 29 percent. However, since the total investment amount will be repaid within a specified period. Ms. Corripio believes that the company could be sold for more than two times EBITDA in year seven, based on comparable deals in the restaurant industry.

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Table 8.8: Investment Analysis

Investment Analysis Start FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Initial Investment Investment $100,500 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 $0 Ending Valuation $0 $0 $0 $0 $0 $798,000 Combination as Income Stream ($100,500) $0 $0 $0 $0 $798,000 Percent Equity Acquired 35% Net Present Value (NPV) $359,087 Internal Rate of Return (IRR) 51%

Assumptions Discount Rate 10.00% Valuation Earnings Multiple 10 10 10 10 10 Valuation Sales Multiple 2 2 2 2 2

Investment (calculated) $100,500 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 Calculated Earnings-based Valuation $0 $90,000 $770,000 $1,520,000 $2,280,000 Calculated Sales-based Valuation $700,000 $1,000,000 $1,380,000 $1,800,000 $2,230,000 Calculated Average Valuation $350,000 $545,000 $1,075,000 $1,660,000 $2,255,000

8.9 Use of Funds

The following table outlines the use of funds for the requested investment amount. The amount will cover the initial phase of the project which includes short-term furniture and equipment and the aggressive advertising campaign. Although the total amount is $85,000, Vegan Eatery will seek 100 percent of that amount to ensure the company is fully funded to offset the start-up stage of a new business.

Table 8.9: Use of Funds

Use of Funds Use Amount Start-up Expenses $22,300 Cash Required at Start-up $15,000 Start-up Inventory $2,500 Short-term Assets $19,000 Long-term Assets $0 Total $58,800

8.10 Payback

Payback is based on a percentage of what the company can comfortably pay while maintaining its operations. It also builds solid relationships between the investor and the company’s owner. Based on the investment offering, Vegan Eatery will payout the amount received by investors with a 29 percent return by the tenth year of business. Of course, this is assuming that cash flow objectives are met providing payback and maintaining daily operating expenses in the business.

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Table 8.10: Payback

Payback Projected Payback Calculation Investment FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Investment $391,020 Cash Returns by Year $25,000 $25,000 $25,000 $25,000 $41,020 Combination as Income Stream ($391,020) $25,000 $25,000 $25,000 $25,000 $41,020 Cumulative Net Cash Flow to Investors ($391,020) ($366,020) ($341,020) ($316,020) ($291,020) ($250,000) Payback Period 10 years

Chart 8.10: Payback Period

Appendix

Page 1

Table: Sales Forecast (1st Year) Sales Forecast Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Sales Food $8,186 $9,511 $11,052 $12,735 $14,684 $16,207 $17,749 $20,104 $21,429 $23,377 $24,675 $26,221 $205,931 $293,495 $383,616 $468,225 $559,811 Beverage $3,731 $4,485 $5,203 $6,545 $7,597 $8,649 $9,234 $10,000 $11,221 $11,922 $12,974 $13,792 $105,353 $147,833 $215,321 $297,917 $378,211 Desert $779 $952 $1,450 $1,624 $2,273 $2,705 $3,463 $4,004 $4,545 $4,978 $5,844 $6,169 $38,787 $60,711 $93,557 $136,344 $175,419 Total Sales $12,697 $14,948 $17,706 $20,904 $24,554 $27,562 $30,446 $34,109 $37,195 $40,277 $43,493 $46,182 $350,071 $502,039 $692,494 $902,486 $1,113,441

Direct Cost of Sales Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Food $3,438 $3,994 $4,642 $5,349 $6,167 $6,807 $7,455 $8,444 $9,000 $9,818 $10,364 $11,013 $86,491 $123,268 $161,119 $196,655 $235,121 Beverage $1,567 $1,884 $2,185 $2,749 $3,191 $3,633 $3,878 $4,200 $4,713 $5,007 $5,449 $5,793 $44,248 $62,090 $90,435 $125,125 $158,849 Desert $327 $400 $609 $682 $955 $1,136 $1,454 $1,682 $1,909 $2,091 $2,454 $2,591 $16,290 $25,498 $39,294 $57,264 $73,676 Subtotal Direct Cost of Sales $5,333 $6,278 $7,436 $8,780 $10,313 $11,576 $12,787 $14,326 $15,622 $16,916 $18,267 $19,396 $147,030 $210,856 $290,847 $379,044 $467,645

Appendix

Page 2

Table: Sales Forecast (2nd Year) Sales Forecast Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017 Sales Food $22,695 $23,319 $23,588 $23,904 $24,149 $24,491 $24,959 $25,013 $25,237 $25,423 $25,579 $25,138 $293,495 $383,616 $468,225 $559,811 Beverage $11,330 $11,526 $11,794 $12,097 $12,228 $12,539 $12,585 $12,723 $12,770 $12,999 $12,955 $12,287 $147,833 $215,321 $297,917 $378,211 Desert $4,212 $4,360 $4,602 $4,847 $5,175 $5,336 $5,577 $5,660 $5,567 $5,580 $5,249 $4,546 $60,711 $93,557 $136,344 $175,419 Total Sales $38,237 $39,206 $39,984 $40,848 $41,552 $42,366 $43,121 $43,397 $43,573 $44,002 $43,783 $41,971 $502,039 $692,494 $902,486 $1,113,441

Direct Cost of Sales Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017 Food $9,532 $9,794 $9,907 $10,040 $10,142 $10,286 $10,483 $10,506 $10,599 $10,678 $10,743 $10,558 $123,268 $161,119 $196,655 $235,121 Beverage $4,759 $4,841 $4,954 $5,081 $5,136 $5,266 $5,286 $5,344 $5,363 $5,460 $5,441 $5,161 $62,090 $90,435 $125,125 $158,849 Desert $1,769 $1,831 $1,933 $2,036 $2,174 $2,241 $2,342 $2,377 $2,338 $2,344 $2,204 $1,909 $25,498 $39,294 $57,264 $73,676 Subtotal Direct Cost of Sales $16,060 $16,466 $16,793 $17,156 $17,452 $17,794 $18,111 $18,227 $18,301 $18,481 $18,389 $17,628 $210,856 $290,847 $379,044 $467,645

Appendix

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Table: Personnel Plan (1st Year) Personnel Plan Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Owner/Founder $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $46,200 $46,200 $46,200 $46,200 $46,200 Waitresses (3) $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $38,016 $38,016 $38,016 $38,016 $38,016 Cooks (2) $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $38,400 $38,400 $38,400 $38,400 $38,400 Busboys (2) $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $25,344 $25,344 $25,344 $25,344 $25,344 Total People 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8

Total Payroll $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $147,960 $147,960 $147,960 $147,960 $147,960

Appendix

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Table: Personnel Plan (2nd Year) Personnel Plan Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017 Owner/Founder $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $3,850 $46,200 $46,200 $46,200 $46,200 Waitresses (3) $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $3,168 $38,016 $38,016 $38,016 $38,016 Cooks (2) $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $38,400 $38,400 $38,400 $38,400 Busboys (2) $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $2,112 $25,344 $25,344 $25,344 $25,344 Total People 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8

Total Payroll $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $147,960 $147,960 $147,960 $147,960

Appendix

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Table: Profit and Loss (1st Year) Pro Forma Profit and Loss Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Sales $12,697 $14,948 $17,706 $20,904 $24,554 $27,562 $30,446 $34,109 $37,195 $40,277 $43,493 $46,182 $350,071 $502,039 $692,494 $902,486 $1,113,441 Direct Cost of Sales $5,333 $6,278 $7,436 $8,780 $10,313 $11,576 $12,787 $14,326 $15,622 $16,916 $18,267 $19,396 $147,030 $210,856 $290,847 $379,044 $467,645 Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cost of Sales $5,333 $6,278 $7,436 $8,780 $10,313 $11,576 $12,787 $14,326 $15,622 $16,916 $18,267 $19,396 $147,030 $210,856 $290,847 $379,044 $467,645

Gross Margin $7,364 $8,670 $10,269 $12,124 $14,242 $15,986 $17,658 $19,783 $21,573 $23,360 $25,226 $26,786 $203,041 $291,183 $401,647 $523,442 $645,796 Gross Margin % 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00%

Expenses Payroll $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $147,960 $147,960 $147,960 $147,960 $147,960 Marketing/Promotion/Advertising $108 $127 $150 $178 $209 $234 $259 $290 $316 $342 $370 $393 $2,976 $4,267 $5,886 $7,671 $9,464 Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 $3,000 $3,000 $3,000 $3,000 Rent $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $60,000 $60,000 $60,000 $60,000 $60,000 Utilities $140 $164 $195 $230 $270 $303 $335 $375 $409 $443 $478 $508 $3,851 $5,522 $7,617 $9,927 $12,248 Bank Charges $38 $45 $53 $63 $74 $83 $91 $102 $112 $121 $130 $139 $1,050 $1,580 $2,077 $2,707 $3,340 Payroll Taxes $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $22,194 $22,194 $22,194 $22,194 $22,194 Credit Card Fees $190 $224 $266 $314 $368 $413 $457 $512 $558 $604 $652 $693 $5,251 $7,531 $10,387 $13,537 $16,702 Cleaning Supplies $70 $82 $97 $115 $135 $152 $167 $188 $205 $222 $239 $254 $1,925 $4,561 $5,302 $6,708 $7,150 POS Software License $38 $45 $53 $63 $74 $83 $91 $102 $112 $121 $130 $139 $1,050 $1,506 $2,077 $2,707 $3,340 Telephone/Internet $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $2,100 $2,100 $2,100 $2,100 $2,100 Tableware//Kitchen Utensils $22 $26 $31 $37 $43 $48 $53 $60 $65 $70 $76 $81 $613 $879 $1,212 $1,579 $1,949 Web Hosting Fees $14 $16 $19 $23 $27 $30 $33 $37 $40 $43 $47 $50 $378 $542 $748 $975 $1,203 Maintenance Expense $20 $23 $27 $32 $38 $42 $47 $53 $57 $62 $67 $71 $539 $773 $1,066 $1,390 $1,715 Supplies $25 $30 $35 $42 $49 $55 $61 $68 $74 $81 $87 $92 $700 $1,004 $1,385 $1,805 $2,227 Taxes / Licenses / Permits $10 $12 $14 $17 $20 $22 $24 $27 $30 $32 $35 $37 $280 $402 $554 $722 $891 General Insurance $167 $197 $234 $276 $324 $364 $402 $450 $491 $531 $574 $609 $4,617 $4,619 $4,619 $4,619 $4,619 Artists Performance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Accounting Fees $95 $112 $133 $157 $184 $207 $228 $256 $279 $302 $326 $346 $2,626 $3,765 $5,194 $6,769 $8,351 CAM Charges $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Security System $63 $75 $89 $105 $123 $138 $152 $171 $186 $201 $217 $231 $1,750 $1,757 $1,757 $1,757 $1,757 Payroll Processing $76 $90 $106 $125 $147 $165 $183 $205 $223 $242 $261 $277 $2,100 $3,012 $4,155 $5,415 $6,681 Cash (Over) / Short $13 $15 $18 $21 $25 $28 $30 $34 $37 $40 $43 $46 $350 $502 $692 $902 $1,113 Dues & Subscriptions $25 $30 $35 $42 $49 $55 $61 $68 $74 $81 $87 $92 $700 $1,004 $1,385 $1,805 $2,227

Total Operating Expenses $20,720 $20,918 $21,160 $21,441 $21,762 $22,026 $22,279 $22,601 $22,872 $23,143 $23,426 $23,662 $266,011 $278,480 $291,369 $306,251 $320,230

Profit Before Interest and Taxes ($13,356) ($12,248) ($10,891) ($9,317) ($7,520) ($6,040) ($4,621) ($2,818) ($1,299) $217 $1,800 $3,124 ($62,970) $12,702 $110,277 $217,191 $325,566 EBITDA ($13,106) ($11,998) ($10,641) ($9,067) ($7,270) ($5,790) ($4,371) ($2,568) ($1,049) $467 $2,050 $3,374 ($59,970) $15,702 $113,277 $220,191 $328,566 Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,811 $33,083 $65,157 $97,670

Net Profit ($13,356) ($12,248) ($10,891) ($9,317) ($7,520) ($6,040) ($4,621) ($2,818) ($1,299) $217 $1,800 $3,124 ($62,970) $8,892 $77,194 $152,034 $227,896 Net Profit/Sales -105.19% -81.94% -61.51% -44.57% -30.63% -21.92% -15.18% -8.26% -3.49% 0.54% 4.14% 6.76% -17.99% 1.77% 11.15% 16.85% 20.47%

Appendix

Page 6

Table: Profit and Loss (2nd Year) Pro Forma Profit and Loss Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017 Sales $38,237 $39,206 $39,984 $40,848 $41,552 $42,366 $43,121 $43,397 $43,573 $44,002 $43,783 $41,971 $502,039 $692,494 $902,486 $1,113,441 Direct Cost of Sales $16,060 $16,466 $16,793 $17,156 $17,452 $17,794 $18,111 $18,227 $18,301 $18,481 $18,389 $17,628 $210,856 $290,847 $379,044 $467,645 Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cost of Sales $16,060 $16,466 $16,793 $17,156 $17,452 $17,794 $18,111 $18,227 $18,301 $18,481 $18,389 $17,628 $210,856 $290,847 $379,044 $467,645

Gross Margin $22,177 $22,739 $23,191 $23,692 $24,100 $24,572 $25,010 $25,170 $25,273 $25,521 $25,394 $24,343 $291,183 $401,647 $523,442 $645,796 Gross Margin % 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00% 58.00%

Expenses Payroll $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $147,960 $147,960 $147,960 $147,960 Marketing/Promotion/Advertising $325 $333 $340 $347 $353 $360 $367 $369 $370 $374 $372 $357 $4,267 $5,886 $7,671 $9,464 Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 $3,000 $3,000 $3,000 Rent $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $60,000 $60,000 $60,000 $60,000 Utilities $421 $431 $440 $449 $457 $466 $474 $477 $479 $484 $482 $462 $5,522 $7,617 $9,927 $12,248 Bank Charges $115 $192 $120 $123 $125 $127 $129 $130 $131 $132 $131 $126 $1,580 $2,077 $2,707 $3,340 Payroll Taxes $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $22,194 $22,194 $22,194 $22,194 Credit Card Fees $574 $588 $600 $613 $623 $635 $647 $651 $654 $660 $657 $630 $7,531 $10,387 $13,537 $16,702 Cleaning Supplies $210 $350 $368 $385 $401 $402 $403 $403 $412 $409 $409 $408 $4,561 $5,302 $6,708 $7,150 POS Software License $115 $118 $120 $123 $125 $127 $129 $130 $131 $132 $131 $126 $1,506 $2,077 $2,707 $3,340 Telephone/Internet $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $2,100 $2,100 $2,100 $2,100 Tableware/Kitchen Utensils $67 $69 $70 $71 $73 $74 $75 $76 $76 $77 $77 $73 $879 $1,212 $1,579 $1,949 Web Hosting Fees $41 $42 $43 $44 $45 $46 $47 $47 $47 $48 $47 $45 $542 $748 $975 $1,203 Maintenance Expense $59 $60 $62 $63 $64 $65 $66 $67 $67 $68 $67 $65 $773 $1,066 $1,390 $1,715 Supplies $76 $78 $80 $82 $83 $85 $86 $87 $87 $88 $88 $84 $1,004 $1,385 $1,805 $2,227 Taxes / Licenses / Permits $31 $31 $32 $33 $33 $34 $34 $35 $35 $35 $35 $34 $402 $554 $722 $891 General Insurance $352 $361 $368 $376 $382 $390 $397 $399 $401 $405 $403 $386 $4,619 $4,619 $4,619 $4,619 Artists Performance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Accounting Fees $287 $294 $300 $306 $312 $318 $323 $325 $327 $330 $328 $315 $3,765 $5,194 $6,769 $8,351 CAM Charges $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Security System $134 $137 $140 $143 $145 $148 $151 $152 $153 $154 $153 $147 $1,757 $1,757 $1,757 $1,757 Payroll Processing $229 $235 $240 $245 $249 $254 $259 $260 $261 $264 $263 $252 $3,012 $4,155 $5,415 $6,681 Cash (Over) / Short $38 $39 $40 $41 $42 $42 $43 $43 $44 $44 $44 $42 $502 $692 $902 $1,113 Dues & Subscriptions $76 $78 $80 $82 $83 $85 $86 $87 $87 $88 $88 $84 $1,004 $1,385 $1,805 $2,227

Total Operating Expenses $22,754 $23,042 $23,046 $23,130 $23,200 $23,263 $23,322 $23,344 $23,366 $23,396 $23,379 $23,238 $278,480 $291,369 $306,251 $320,230

Profit Before Interest and Taxes ($577) ($302) $145 $562 $900 $1,309 $1,688 $1,827 $1,906 $2,125 $2,015 $1,105 $12,702 $110,277 $217,191 $325,566 EBITDA ($327) ($52) $395 $812 $1,150 $1,559 $1,938 $2,077 $2,156 $2,375 $2,265 $1,355 $15,702 $113,277 $220,191 $328,566 Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Taxes Incurred ($173) ($91) $43 $169 $270 $393 $507 $548 $572 $637 $604 $331 $3,811 $33,083 $65,157 $97,670

Net Profit ($404) ($212) $101 $393 $630 $916 $1,182 $1,279 $1,334 $1,487 $1,410 $773 $8,892 $77,194 $152,034 $227,896 Net Profit/Sales -1.06% -0.54% 0.25% 0.96% 1.52% 2.16% 2.74% 2.95% 3.06% 3.38% 3.22% 1.84% 1.77% 11.15% 16.85% 20.47%

Appendix

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Table: Cash Flow (1st Year) Pro Forma Cash Flow Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Cash Received Cash from Operations Cash Sales $12,697 $14,948 $17,706 $20,904 $24,554 $27,562 $30,446 $34,109 $37,195 $40,277 $43,493 $46,182 $350,071 $502,039 $692,494 $902,486 $1,113,441 Subtotal Cash from Operations $12,697 $14,948 $17,706 $20,904 $24,554 $27,562 $30,446 $34,109 $37,195 $40,277 $43,493 $46,182 $350,071 $502,039 $692,494 $902,486 $1,113,441

Additional Cash Received Sales Tax Received $794 $934 $1,107 $1,307 $1,535 $1,723 $1,903 $2,132 $2,325 $2,517 $2,718 $2,886 $21,879 $31,377 $43,281 $56,405 $69,590 Subtotal Cash Received $13,490 $15,882 $18,812 $22,211 $26,089 $29,284 $32,348 $36,241 $39,520 $42,794 $46,211 $49,068 $371,950 $533,417 $735,775 $958,891 $1,183,031

Expenditures Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Expenditures from Operations Cash Spending $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $147,960 $147,960 $147,960 $147,960 $147,960 Bill Payments $544 $16,280 $15,615 $17,235 $19,052 $21,070 $22,332 $23,771 $25,930 $27,263 $28,830 $30,502 $248,423 $344,045 $467,608 $596,780 $730,463 Subtotal Spent on Operations $12,874 $28,610 $27,945 $29,565 $31,382 $33,400 $34,662 $36,101 $38,260 $39,593 $41,160 $42,832 $396,383 $492,005 $615,568 $744,740 $878,423

Additional Cash Spent Sales Tax Paid Out $794 $934 $1,107 $1,307 $1,535 $1,723 $1,903 $2,132 $2,325 $2,517 $2,718 $2,886 $21,879 $31,377 $43,281 $56,405 $69,590 Subtotal Cash Spent $13,667 $29,545 $29,052 $30,872 $32,917 $35,122 $36,565 $38,233 $40,584 $42,110 $43,878 $45,718 $418,262 $523,383 $658,849 $801,146 $948,013

Net Cash Flow ($177) ($13,663) ($10,240) ($8,661) ($6,828) ($5,838) ($4,216) ($1,992) ($1,065) $684 $2,333 $3,350 ($46,312) $10,034 $76,926 $157,746 $235,018 Cash Balance $56,523 $42,860 $32,621 $23,960 $17,132 $11,294 $7,077 $5,086 $4,021 $4,705 $7,038 $10,388 $10,388 $20,422 $97,348 $255,093 $490,112

Appendix

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Table: Cash Flow (2nd Year) Pro Forma Cash Flow Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017 Cash Received Cash from Operations Cash Sales $38,237 $39,206 $39,984 $40,848 $41,552 $42,366 $43,121 $43,397 $43,573 $44,002 $43,783 $41,971 $502,039 $692,494 $902,486 $1,113,441 Subtotal Cash from Operations $38,237 $39,206 $39,984 $40,848 $41,552 $42,366 $43,121 $43,397 $43,573 $44,002 $43,783 $41,971 $502,039 $692,494 $902,486 $1,113,441

Additional Cash Received Sales Tax Received $2,390 $2,450 $2,499 $2,553 $2,597 $2,648 $2,695 $2,712 $2,723 $2,750 $2,736 $2,623 $31,377 $43,281 $56,405 $69,590 Subtotal Cash Received $40,627 $41,656 $42,483 $43,400 $44,149 $45,014 $45,816 $46,109 $46,297 $46,752 $46,520 $44,594 $533,417 $735,775 $958,891 $1,183,031

Expenditures Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017

Expenditures from Operations Cash Spending $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $12,330 $147,960 $147,960 $147,960 $147,960 Bill Payments $31,312 $22,874 $27,257 $27,649 $28,250 $28,657 $29,227 $29,676 $29,657 $29,746 $30,101 $29,640 $344,045 $467,608 $596,780 $730,463 Subtotal Spent on Operations $43,642 $35,204 $39,587 $39,979 $40,580 $40,987 $41,557 $42,006 $41,987 $42,076 $42,431 $41,970 $492,005 $615,568 $744,740 $878,423

Additional Cash Spent Sales Tax Paid Out $2,390 $2,450 $2,499 $2,553 $2,597 $2,648 $2,695 $2,712 $2,723 $2,750 $2,736 $2,623 $31,377 $43,281 $56,405 $69,590 Subtotal Cash Spent $46,032 $37,655 $42,086 $42,532 $43,177 $43,635 $44,252 $44,718 $44,710 $44,826 $45,167 $44,593 $523,383 $658,849 $801,146 $948,013

Net Cash Flow ($5,405) $4,001 $397 $868 $972 $1,379 $1,564 $1,391 $1,587 $1,926 $1,353 $2 $10,034 $76,926 $157,746 $235,018 Cash Balance $4,983 $8,985 $9,381 $10,249 $11,221 $12,600 $14,164 $15,555 $17,142 $19,068 $20,421 $20,422 $20,422 $97,348 $255,093 $490,112

Appendix

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Table: Balance Sheet (1st Year) Pro Forma Balance Sheet Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015 Assets Starting

Balances Current Assets Cash $56,700 $56,523 $42,860 $32,621 $23,960 $17,132 $11,294 $7,077 $5,086 $4,021 $4,705 $7,038 $10,388 $10,388 $20,422 $97,348 Inventory $2,500 $5,333 $6,278 $7,436 $8,780 $10,313 $11,576 $12,787 $14,326 $15,622 $16,916 $18,267 $19,396 $19,396 $17,628 $33,432 Other Current Assets $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 Total Current Assets $78,200 $80,856 $68,139 $59,057 $51,740 $46,445 $41,870 $38,865 $38,411 $38,643 $40,621 $44,305 $48,785 $48,785 $57,050 $149,780

Long-term Assets Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Accumulated Depreciation $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000 $3,000 $6,000 $9,000 Total Long-term Assets $0 ($250) ($500) ($750) ($1,000) ($1,250) ($1,500) ($1,750) ($2,000) ($2,250) ($2,500) ($2,750) ($3,000) ($3,000) ($6,000) ($9,000) Total Assets $78,200 $80,606 $67,639 $58,307 $50,740 $45,195 $40,370 $37,115 $36,411 $36,393 $38,121 $41,555 $45,785 $45,785 $51,050 $140,780

Liabilities and Capital Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2013 FY 2014 FY 2015

Current Liabilities Accounts Payable $0 $15,762 $15,043 $16,602 $18,351 $20,327 $21,542 $22,908 $25,023 $26,304 $27,815 $29,448 $30,554 $30,554 $26,928 $39,464 Subtotal Current Liabilities $0 $15,762 $15,043 $16,602 $18,351 $20,327 $21,542 $22,908 $25,023 $26,304 $27,815 $29,448 $30,554 $30,554 $26,928 $39,464

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $0 $15,762 $15,043 $16,602 $18,351 $20,327 $21,542 $22,908 $25,023 $26,304 $27,815 $29,448 $30,554 $30,554 $26,928 $39,464

Paid-in Capital $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 Retained Earnings ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($22,300) ($85,270) ($76,378) Earnings $0 ($13,356) ($25,604) ($36,495) ($45,812) ($53,332) ($59,372) ($63,993) ($66,811) ($68,111) ($67,893) ($66,093) ($62,970) ($62,970) $8,892 $77,194 Total Capital $78,200 $64,844 $52,596 $41,705 $32,388 $24,868 $18,828 $14,207 $11,389 $10,089 $10,307 $12,107 $15,230 $15,230 $24,122 $101,316 Total Liabilities and Capital $78,200 $80,606 $67,639 $58,307 $50,740 $45,195 $40,370 $37,115 $36,411 $36,393 $38,121 $41,555 $45,785 $45,785 $51,050 $140,780

Net Worth $78,200 $64,844 $52,596 $41,705 $32,388 $24,868 $18,828 $14,207 $11,389 $10,089 $10,307 $12,107 $15,230 $15,230 $24,122 $101,316

Appendix

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Table: Balance Sheet (2nd Year) Pro Forma Balance Sheet Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017 Assets Current Assets Cash $4,983 $8,985 $9,381 $10,249 $11,221 $12,600 $14,164 $15,555 $17,142 $19,068 $20,421 $20,422 $20,422 $97,348 $255,093 $490,112 Inventory $16,060 $16,466 $16,793 $17,156 $17,452 $17,794 $18,111 $18,227 $18,301 $18,481 $18,389 $17,628 $17,628 $33,432 $41,165 $48,080 Other Current Assets $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 Total Current Assets $40,043 $44,451 $45,175 $46,405 $47,673 $49,394 $51,275 $52,782 $54,443 $56,549 $57,810 $57,050 $57,050 $149,780 $315,259 $557,191

Long-term Assets Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Accumulated Depreciation $3,250 $3,500 $3,750 $4,000 $4,250 $4,500 $4,750 $5,000 $5,250 $5,500 $5,750 $6,000 $6,000 $9,000 $12,000 $15,000 Total Long-term Assets ($3,250) ($3,500) ($3,750) ($4,000) ($4,250) ($4,500) ($4,750) ($5,000) ($5,250) ($5,500) ($5,750) ($6,000) ($6,000) ($9,000) ($12,000) ($15,000) Total Assets $36,793 $40,951 $41,425 $42,405 $43,423 $44,894 $46,525 $47,782 $49,193 $51,049 $52,060 $51,050 $51,050 $140,780 $303,259 $542,191

Liabilities and Capital Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY 2014 FY 2015 FY 2016 FY 2017

Current Liabilities Accounts Payable $21,966 $26,336 $26,708 $27,296 $27,683 $28,238 $28,687 $28,666 $28,742 $29,110 $28,711 $26,928 $26,928 $39,464 $49,909 $60,945 Subtotal Current Liabilities $21,966 $26,336 $26,708 $27,296 $27,683 $28,238 $28,687 $28,666 $28,742 $29,110 $28,711 $26,928 $26,928 $39,464 $49,909 $60,945

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $21,966 $26,336 $26,708 $27,296 $27,683 $28,238 $28,687 $28,666 $28,742 $29,110 $28,711 $26,928 $26,928 $39,464 $49,909 $60,945

Paid-in Capital $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 $100,500 Retained Earnings ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($85,270) ($76,378) $816 $152,850 Earnings ($404) ($615) ($514) ($121) $510 $1,426 $2,608 $3,886 $5,221 $6,708 $8,118 $8,892 $8,892 $77,194 $152,034 $227,896 Total Capital $14,827 $14,615 $14,716 $15,110 $15,740 $16,656 $17,838 $19,117 $20,451 $21,938 $23,349 $24,122 $24,122 $101,316 $253,350 $481,246 Total Liabilities and Capital $36,793 $40,951 $41,425 $42,405 $43,423 $44,894 $46,525 $47,782 $49,193 $51,049 $52,060 $51,050 $51,050 $140,780 $303,259 $542,191

Net Worth $14,827 $14,615 $14,716 $15,110 $15,740 $16,656 $17,838 $19,117 $20,451 $21,938 $23,349 $24,122 $24,122 $101,316 $253,350 $481,246