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Pizza - Old but Good Business Plan

 

Note from Real Business Plans - This copy of my first business plan used for a pizza delivery restaurant that I started in 1993 with 2 college buddies.  This business plan attracted $30,000 in funding from two investors; not much in today's standards, but enough to get the business going.  The name was changed to Sierra Nevada Pizza before we opened. The business did very well, and after 8 months we moved to a new location that included sit down dining, a cocktail bar and gaming machines. We even had TV commercials that still live on today (http://www.youtube.com/catskillplay). 

The financial link at the bottom is only for sample P&L's from other plans; to complete your plan you will need more than a P&L.  Our free Financial Guide will give you more information.   Once you are at this stage, read up on the Offering Memorandum and Subscription Agreement which you  need to accept payment for shares from investors.  A business plan alone is not enough.

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North Shore Pizza Business Plan

EXECUTIVE SUMMARY

Incline Village, Nevada, is a typical North Lake Tahoe town. There are a large number of second homes and the economy is tourist based. It has all of the amenities of any, destination town, as well as, the thrill of 24 hour gambling. What Incline Village lacks is a true pizza delivery business. We, the partners of North Shore Pizza, believe that now is the time to give Incline what it wants.

In short, North Shore Pizza is aiming to become Lake Tahoe's first chain of delivery-only, pizza restaurants covering the North Tahoe/Truckee area. North Shore Pizza wishes to raise $40,000 from a private investor(s) to take advantage of the opportunity explained in the plan.

North Shore Pizza will become Incline Villageís first, fast and free delivered pizza. For quite a while, Incline Village has had only one pizza deliverer who charges for a delivery which takes an average of one hour. It is time the residents and visitors of Incline have access to a pizza that is made fresh, hot and delivered free.

This is not a new concept. Every town in the country has some form of "Domino's". They all earn large profits; the reason being the lack of necessary space and overhead required to operate a DELIVERY-ONLY business.

Incline Village is not only ready for a true pizza delivery operation, Incline needs it. An operation that will focus on quality, price and convenience.

Money ($40,000) is needed by North Shore Pizza to properly insure a successful enterprise. How the money will be used is covered in detail in the balance of this business plan.

OBJECTIVES

We, the three partners of North Shore Pizza, plan on being open by December 15, 1993. A location will be agreed upon by the end of October, 1993. For the first two years of operation, we will be working managers drawing small salaries. This will enable the profits to be used for future expansion. By 1996, new locations will be investigated and will require our total attention.

By 1998, we intend to have a 4 location pizza delivery chain throughout the North Tahoe and Truckee area. We are confident we can do so because a) pizza delivery is the #1 growth business in the United States, b) the Tahoe/Truckee area is rapidly growing, and c) competition is virtually non-existent.

In summary, the primary North Shore Pizza objectives are as follows:

1. Achieve over $360,000. in gross sales by end of first year of operation.
2. Begin work on a second location in the early part of 1996.
3. By 1998 we intend to have a fourth location underway.
4. Be the number one growth bus1ness 1n the Tahoe/Truckee area.

 

MARKET ANALYSIS

Incline Village, like every town in the Tahoe/Truckee area, has a tourist based economy. The key to a successful business in this area is the ability to capture a healthy local clientele.

Target market. The most recent demographic study of Incline Village/Crystal Bay shows a permanent population of 9,193 growing at a rate of 6% annually (Exhibit #1). During peak winter and summer months,

the population more than doubles. Here lies the bonus of a pizza delivery business; Everyone of all ages loves PIZZA! Our target market is not a segment of the whole, but indeed the whole. Every single person in the Incline Village area is a potential customer and a target of our marketing campaign.  

We conducted a market survey of some of the Incline residents (Exhibit #2). The results were not so surprising...

-  76% do take-out food.
-  90% eat pizza.
- 38% would have pizza delivered 4 times per month. (theoretically, 14,000 pizzas per month)
- 31% would have pizza delivered twice per month. . (theoretically, 6,000 pizzas per month)

Of course, the theoretical numbers are excessive but good sign non-the-less.

Intermediate influences. The influences on the local market will differ somewhat from those on the tourist end. Our local market wants quality pizza at a franchise price and free, prompt delivery. The tourist

market wants convenience above all else. We can satisfy all of the ~ above needs which is explained in detail later in the business plan.

Competition. Present direct competition is Mofo's pizza. Primarily an eat-in pizza restaurant that also delivers. They, at present, are the only deliverers of pizza in the Incline area. Their hours of delivery are from 5pm to 8pm. Delivery time averages one hour and at a $2.00 surcharge. Your average 3 item pizza, delivered, costs over $17.00.

The indirect competition includes Bar Bar Bar and China Chef. Bar Bar Bar sells pizza at a very reasonable price, but, they do not deliver and you bake it yourself. Their dough is pre-made and not hand tossed. The china Chef is a Chinese restaurant that delivers. Again, they charge for delivery ($4.00), and only until 10pm nightly.

Any anticipated future competition would be in the form of our present competition playing catch-up. We figure that free delivery will be the first move by the others. Then, possibly a price war with Mofo's. Our advantages being lower fixed expenses, a superior ad campaign, a better pizza and the best service.

As far as pricing, overall, our prices will be comparative to ~ the franchise delivery outfits that operate in larger areas. Along with low prices, free toppings and free soda are effective sales boosters (exhibit #3).

The break even analysis works out to 874 pizzas per month or $10,925 in sales (exhibit #4).

PRODUCTION

Location. There are two ways to go: Either find a great location and build the kitchen from scratch, or find an existing kitchen to lease. Although building a kitchen would allow for a layout designed to our specifications, this option is cost prohibitive. Construction/renovation costs would exceed $45,000. So, an existing kitchen is the answer and we have found one. This kitchen is currently in limited use and is located in one of Incline's drinking establishments. The owner has agreed to $1.80 per square foot in rent ($900/mo.) and will include garbage pickup and water. utilities will be based on use.

This location is on Hwy 28, the main road through town, allowing for excellent exposure. Specific terms of the lease have yet to be discussed.

Equipment. The kitchen is fully equipped but lacks a pizza oven, large mixer, and a few misc. items. Also, we will need to purchase a computer. The total equipment costs will be $9,800., which includes maintenance expenses. (Exhibit #5)

Variable Items. The variable costs involved are for the flour, cheese, vegetables, etc. Including the carry-out box, each pizza will cost us

an average of $2.85 (Exhibit #6). Quality control is important, so each . topping will be weighed to specified amounts. This will also help in cost control.

MARKETING

In the pizza delivery business, aggressive marketing is the key. For the most part, having a pizza delivered to your home is an impulse purchase. So, a lot of reminders are needed to trigger the need for a hot pizza delivered whenever desired.

We will have a complete marketing package which will include extensive advertising, strong resort/condo relations, computerized sales and sponsorship of local sports teams & events.

Advertising. The advertising campaign will consist of a mass mailing program and print ads.

The mass mailing will cover every box holder in Incline Village. There will be a flyer style menu with a circular, fridge magnet affixed to the bottom portion (Exhibit #7). The magnet will look like a pizza and will have our name and phone number printed on it. This will be the perfect constant reminder. The bottom 1/2 inch of the flyer will always be blank. This will enable us to stamp a coupon with one of four different rubber stamps. Each stamp will have a special deal or price break written on it, saving on added printing expenses. There will be four mailings in the first year of operation: The first, in December, will announce our grand opening and the others will occur in January, July and August.

Corresponding with the mass mailing dates, we will have an insert in the Tahoe Bonanza, a local bi-weekly newspaper with a distribution of 9,000. The insert will be similar to that of the mailing but larger and without magnet. Also, on a weekly basis there will be 3 " print ads in the Bonanza and the North Tahoe Weekly, a free magazine dealing with local events and news. The Weekly is popular both with locals and tourists, and has a distribution from 18,000 to 30,000 (depending on the season). (For advertising cost break-down see exhibit #5)

Television ads have been considered but have yet to be proven effective in the area due to limited cable subscribers.

Resort relations. Our collective background in the resort arena is going to be a big plus with Incline's large number of condo vacation rentals. Of course the competition puts out menus at the few well known, hotel type establishments, but untapped are management companies and Realtors who deal in short term rentals. These people cater to a large chunk of the tourist trade of Incline. Our strategy is to develop a relationship with these businesses by offering an incentive program of free pizza and special, preferred rates. If we treat them right they will be more than happy to supply their clients with our menus and I a positive recommendation. This will be an ongoing relationship that will not only increase tourism sales but boost our image within the community.

Local relations. This brings us to the sponsorship of locals teams and events. of course, the free publicity and local recognition factor goes without mentioning, but another benefit is a positive image within the community. If they know you... like you... they will buy from you. This is true for any small community and we plan to take full advantage.

Computerized sales. The computer is going to be one of our great marketing tools. To capture the office lunch crowd, we will take orders by fax. Also, we will advertise with the fax by hooking up a modem to the computer. Everyday at 11am the computer will fax the day's specials with an order form to be faxed back to us. We will also have a complete database of our customers. So complete, it will aid in creating charge accounts for local businesses and personalize our relations with our customers. When someone calls to order a pizza, and 11-he has done so at least once before, we will have all the information of this customer logged by their phone number. Their name, address, ordering history, preferred method of payment, etc. will instantly appear on the computer screen. Here is an example of how a typical order would be taken:

N.S.P.: Thanks for calling North Shore Pizza, may I have your phone number please?
    Customer: 831-1234
N.S.P.: Thank-you. (the number is entered and the customer's file appears) Is this Mr. smith?
    Customer: Why yes.
N.S.P. : Would you like to order your usual large

pepperoni & olive pizza and charge it to your visa card?

    Customer: Sure, why not.
N.S.P.: Thanks for your order Mr. Smith, we'll see you in I a little while.

Also, the database will aid in forecasting, accounting and inventory.

Product features. Of the great selling points our product will have, hand tossed dough and the secret sauce are going to be the biggest. The other top selling points are the price, free delivery, available wheat dough and flavored crust.

  

Everyone agrees that the best pizza comes from out East: New York, Chicago, Boston. As of yet, there are not many great pizzas made in this area. Along with our desire to succeed, we are bringing tried and true recipes into this business. Recipes that have launched some of the biggest pizzerias on the East Coast.

Price is going to surprise many. Our average large pizza will be priced I between $13.00 -14.00, delivered. The competition can not deliver a r large pizza for less than $17.00. Along with the great prices, there is the free delivery. Until every other deliverer follows suit, this will be a large selling point.

More and more, people today want to eat healthier. So, as an option, we will offer wheat dough at no additional charge. Along those same lines, there will be an added choice of five crust flavors. They will be called "crust toppings": Garlic, butter, cheese, poppy and sesame seed. This I will be a unique feature to North Shore Pizza, and again, offered at no extra charge.

As well as delivery, we will provide slices on premise in conjunction with bar sales. Our hours of operation will be between llam until midnight (2am on week-ends).

Sales results. Earlier in the plan, we mentioned the results of our ~ market survey which were quite impressive. Although those numbers would be more than welcome, we do not foresee selling 4,000 pizzas in a month during our first year. To achieve a more realistic picture of sales, we based our numbers on the 2,963 permanent residential households in I Incline Village. The following is a projection of pizza sales per household:

(These numbers do not account for the added tourists during the peak months.)

  • 5% will order 1 pizza per week                  7,704 per year
  • 8% will order 2 pizzas per month               5,689
  • 15% will order 1 pizza per month.              5,333
  • 9% will order 6 pizzas per year                  l,600
  • 63% will order no pizzas                                  0

                                                                    20,326 pizzas/year or 56 pizzas/day

 

The above numbers show that 56 pizzas sold per day will yield $254,000 in gross sales. When week-ends and tourism are added into the picture, these numbers will increase. For example, 56/day equates to roughly 5 per hour of operation. Non holiday week-ends, between 7pm and lam, we figure on 10 pizzas per hour. During the peak months, (January, February, July, and August) 100 pizzas per day will be a minimum. Then there are the 'in-between' months (second half December, first half September and March) where tourism is either picking up or starting to slow down, 90 pizzas per day should be the norm. These added pizza sales (8,760 pizzas) total $109,000, along with the previous sales estimate, we will have $363,575 in gross sales. This is a moderate -projection; those numbers could easily be doubled. A King's Beach pizzeria boasts 100 pizzas per day as average during non-tourist months. To see how this amount breaks down with expenses, see exhibits #8 & #9.  

ORGANIZATION AND PEOPLE

The management will consist of three people:

J. is currently the Resident Manager at Lake Village Resort. He has extensive experience in computers such as creating database and reservation programs for resorts plus spreadsheets to track marketing and sales.  He has a strong sales background which includes two years of door-to-door sales and three years as a life insurance representative, servicing 300 clients in Southwestern Florida. His marketing experience consists of budgeting, design and execution of numerous advertising campaigns for two resorts in the Tahoe area, as well as handling public relations and special events.  He has participated fully in the preparation of this plan. J is 28 years old, has a degree in business and minored in computers at the Nevada College in NV.

 

A. is currently the front desk manager of Seasons Resort.  His experience includes starting, from the ground up, an upscale deli at the Resort at the Creek.  He supervised all aspects of floor design, purchasing, menu pricing, forecasting, hiring and scheduling of employees.  He has a broad based management background that includes very large, four-star resorts to a smaller, hands-on resort.  A is 26 and has a degree in business with emphasis in resort management from Nevada College, NV.

 K. is the assistant front desk manager at the Seasons Resort.  He has worked with A for the last three years, beginning with the deli project at the Resort at the Creek.  From the east coast, he has experience in the pizza business which consisted of back-line operations such as dough and sauce prep, consistency control and recipe creation.  He has experience as revenue auditor for restaurant, casino and hotel operations.  K is 26 and has a degree in business administration from Nevada College

 Fincancials

See the attachments for pro-forma income statements and P&Lís.

       Ownership

At this point of the plan, we need to discuss funding and ownership;  $40,000 is needed to insure success.  From the cash flow projection, it is obvious that after the first month of operation, North Shore Pizza will be essentially self funding.  But, we want to be safe and prepared for any surprises.

 

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