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Business Plan Tuesday, March 14, 2006 ®. Slide 2 Contact Jack Smith 123 Mainstreet Columbus, IN 47203 (555) 555-5555

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Presentation on theme: "Business Plan Tuesday, March 14, 2006 ®. Slide 2 Contact Jack Smith 123 Mainstreet Columbus, IN 47203 (555) 555-5555"— Presentation transcript:

1 Business Plan Tuesday, March 14, 2006 ®

2 Slide 2 Contact Jack Smith 123 Mainstreet Columbus, IN 47203 (555) 555-5555 jsmith@chipotle.com jsmith@chipotle.com Company Website: www.chipotle.comwww.chipotle.com

3 Slide 3 The Idea The idea for Chipotle (pronounced chi- POAT-lay) is simple: Offer a simple menu of great food prepared fresh each day, using many of the same cooking techniques as gourmet restaurants. Then serve the food quickly, in a cool atmosphere.

4 Slide 4 The Sandbox: Fast-Casual We compete in a category of dining called fast- casualthe fastest growing segment of the restaurant industry. The fast-casual market pulls together the finer qualities of multiple restaurant sectors. It takes the fast from fast-food, the quality and ambience of casual dining, and adds a focus on health and freshness, all at an average ticket price below $10. Because of these appealing characteristics, sales for the market have grown at an average of 12.5% per year since 2001.

5 Slide 5 The Business Model Using higher-quality ingredients. We use a variety of ingredients that we purchase from carefully selected suppliers. We concentrate on where we obtain each ingredient. Some of the ingredients we use include naturally raised pork, beef and chicken, as well as organically grown produce, and we continue to investigate using even more naturally raised, organically grown ingredients, in light of pricing considerations. A few things, thousands of ways. We only serve a few things: burritos, burrito bols (a burrito without the tortilla), tacos and salads. We plan to keep a simple menu, but we'll always consider sensible additions.

6 Slide 6 The Menu: Choose an Entrée…

7 Slide 7 And Finish Up… A focused menu. You choose exactly what you want. We make it while you watch. That may mean a little more salsa, a little less sour cream, whatever you'd like. Build your version of the perfect burrito. Price of Desire: About 5 Bucks.

8 The Customer: Market Analysis

9 Slide 9 The Customer The primary customer for Chipotles is between the ages of 25 and 54. The customer is slightly older than the typical fast- food customer mainly due to their desire for a more healthy menu without sacrificing speed. These customers desire a… –Focus on freshness, with products made to order, and excluding the use of frozen ingredients and microwaves –Focus on innovative flavors, including condiments that fuse elements from distinct cuisines –Focus on consumer choice, sometimes provided through extensive selection of condiments, but frequently extended to complete control of product content –Focus on health, including whole-grain, and organic, as well as trans-fat and MSG free ingredients

10 Slide 10 Bartholomew County, Indiana

11 Slide 11 Community Profile Population of Columbus is 40,000 County (Bartholomew) population is 70,000 Manufacturing is main industry. Two Fortune 500 companies – Cummins Engine Co. (diesel engines) and ArvinMeritor (auto parts) Also, a regional hub for retail, educational and medical services In 1994, Columbus, Indiana was one of ten cities in the United States awarded All America City status

12 Slide 12 Business Climate Columbus has the best business climate in Indiana: Ranked #1 of any city under 50,000 population in Indiana (Site Selection Magazine) Columbus has the 30 th best small community business climate in the United States Based on a February 2002 ranking by BizDemographics of 496 small U.S. cities

13 Slide 13 A Growing Community

14 Slide 14 An Educated Customer Base

15 Slide 15 A Market of Wealth

16 Slide 16 Targeted Customers Within Columbus, Indiana, Chipotles will target three primary customer segments. These are as follows: –The Local Market: Defined as customers within a seven mile radius of the store location. –Commuting Workers and Tourists: Customers commuting into the city on a daily basis or for leisure travel. –Commercial Events: Business customers within the county that require catering services.

17 Target Market Descriptions DescriptionTarget Market #1Target Market #2Target Market #3 NameLocal MarketCommuting Workers & Tourists Commercial Events DescriptionPeople and households within 7 miles of the restaurant People migrating into Bartholomew County for work or tourism Commercial business in Bartholomew County that need catering event services DemographicsConsumers ages 25 to 54 / $54,000 average household income Workers and Tourists ages 21 to 54 Businesses from 20 to 300 employees Buying BehaviorFrequent but small purchases (5 times per year at about $9.00 per patron) Infrequent but larger purchases (1 time but spends upward of $12.00 per patron) Infrequent but very large purchases (2 events per year spending $600.00 per event) Size (numbers/dollars)58,600 residents / 20,000 households / $58 million local market for restaurant sales 9,000 daily commuters / 28,000 annual tourists 400 businesses Projected Sales$400,000$150,000$100,000 Trendsslow to moderate growth / spending less on meals away from home on average Good growth / new arts theatre nearby should improve traffic Excellent growth in company numbers and employment trends

18 Target Market Strategy StrategyTarget Market #1Target Market #2Target Market #3 Positioning MessageThe Gourmet Restaurant Where You Eat With Your Hands Gourmet Burritos…FastBig Burritos For Big Crowds PricingEntrees between $4 and $6Entrees between $4 and $16Per head range from $8 to $12 Product CustomizationLunch time drive-thru speed is largest consideration Banquet style service DistributionAt retail location On-site catering set-up and service Promotions: -Contact SphereVisitors center, community development, tourism bureau, hotel concierges Chamber of commerce, HR managers, event planners, public relations managers -AdvertisingNewspaper, yellow pages, specialty publications, website Hotel brochures, tourism directory, billboards, restaurant guide Direct mail, business section of newspaper -Public RelationsAnnual 5K charity run for diabetes assn. -Personal SellingPart-time banquet sales coordinator -Sales PromotionsDiscount coupons, samplesHotel referral fees15% off first event promotion

19 Slide 19 Commuting Patterns More than 16% of Bartholomew Countys workforce commutes into Columbus on a daily basis. This commuting inflow surges the daily workforce to over 39,000 employees. Almost 9,000 workers commute into Bartholomew County every day.

20 Slide 20 Customer Ring Study The proposed location for Chipotle is 500 Franklin Street in Columbus, IN Within a 7 mile radius of this location the market contains… Description7 Miles Population58,600 Households20,000 Average Household Income$54,000 Source: Easidemographics.com

21 Slide 21 The Size of the Market According to the 2002 Economic Census for Bartholomew County: –Full Service Restaurants:104 –Total Restaurant Sales 02:$78 million –Average Sales Per Rest:$750,000

22 Slide 22 Targeted Market Size in Dollars According to the Consumer Expenditure Survey in 2003, consumers spent an estimated $885 on Food away from home This would predict the 7 mile market radius to be worth approximately $52 million in restaurant and meal preparation services. ($885 times 58,600 consumers) and could support about 70 establishments.

23 Slide 23 The Food Service Market in Columbus, IN Source: Google Earth Future Site of Chipotle X

24 Slide 24 The Competition Qdoba, is a fresh-Mex chain that offers more choices, like poblano pesto burritos, but less discipline in its execution. Its wider menu offerings sometimes compromise food quality. Nonetheless, Qdoba is a series competitor in all respects as it plays in the same sand box. In 2003, Qdoba was acquired by Jack in the Box Inc., a publicly traded (NYSE: JBX) restaurant company headquartered in San Diego. Bajio Mexican Grill is also a fresh-Mex franchise chain that again offers more choices than Chipotle, but its franchising model puts a strain on store-to-store consistency.

25 Slide 25 The Message

26 Slide 26 The Sales Approach Chipotle will use a combination of the following media in creating its advertising and promotional campaign: –Yellow Pages –Newspaper –Direct Mail –Radio –Website

27 Slide 27 The Sales Approach MediaAnnual Cost Yellow Pages (South Central Edition) Category: Restaurants, Restaurant Guide$3,600.00 Newspaper (The Republic: Circulation 28,000) Ad Design Costs$800.00 Media Costs (24 ads @ $328)$7800.00 Direct Mail (Brochures and Special Occasions) Distribution (5,000 @ $.50 per piece @ $.27 postage)$3,850.00 Radio (QMIX 103 / Adult Contemporary & WTIU/NPR) Media Costs (600 :30 second ads @ $6.20 per spot)$3,720.00 Total Annual Advertising and Media Costs$19,770.00

28 Slide 28 The Inner Workings: The Line

29 Slide 29 Two Things, Thousands of Ways We only serve a few things, so we can concentrate on doing them very well. And we use only the best ingredients. But they're simple. And that idea, taking something simple and elevating it to something special is what Chipotle is all about. It's all summed up in our name. A chipotle pepper is just a simple jalapeño pepper that's been smoked and dried elevating it from ordinary to something extraordinary. Tasting is believing.

30 Slide 30 The Inner Workings Chipotle will be open six days a week from the hours of 10:00am to 9:00pm. To operate the location we require 8 full-time employees and 7 part-time staffers all of which work on a rotating schedule which avoids overtime scheduling. Wages are about $8.00 to $9.00 per hour. It is imperative that we keep food costs below 28% of sales and labor costs just under 40%.

31 Slide 31 Location Design The design of Chipotle mirrors the idea behind our food: simple ingredients put together in creative, new ways, elevating them to a higher level. Each Chipotle uses the same basic materials wood, concrete, raw steel and metalsbut no two look the same.

32 Slide 32 Location Interiors

33 Slide 33 Location Exteriors

34 Slide 34 The Management Team Jack Smith, Location Manager Mr. Smith will oversee the day-to-day operations and management of the location. He has over 14 years of experience in retail fast food and is one of the founding members of Chipotle. Loretta Johnson, Assistant Manager Ms. Johnson is an experienced chef with over 12 years of commercial cooking knowledge. She will oversee the all ingredient purchasing and grill staffing according to the philosophies of Chipotle as presented within this business plan.

35 Slide 35 The Legal Structure Chipotle will be legally formed as an s corporation. This structure was selected for its pass through tax advantages, limited liability protection, and freedom from having to pay corporate income taxes. Ownership of shares will be broken down as follows: OwnerSharesPercent Owned Jack Smith 1,00050% Loretta Johnson 50025% Equity Investors 50025%

36 Slide 36 Risk Management Chipotle will require the following types of insurance in its efforts to manage risk: –General Liability (up to $2 Million in coverage) –Workers Compensation Policy –Property Insurance (building & contents) In addition, it will also provide health care for its two member management team estimated at about $1,000 per month.

37 Slide 37 Required Start-Up Funds ItemAmount Real Estate$220,000 Building$580,000 Equipment$68,000 Furniture & Smallwares$12,000 Initial Inventory$4,500 Deposits$900 Legal & Accounting$2500 Advertising$5000 Working Capital$15,000 Totals$907,900

38 Slide 38 Capital Strategy Total Amount Required$907,900 -4 Investors ($50,000 each will get 25% share of company)$200,000 -Commercial Bank Loan (Real Estate & 80% Building)$684,000 -Owners$23,900 Debt Service Payments -Principal Amount Borrowed$684,000 -Interest Rate7.25% -Term In Months240 Total Monthly Loan Payment$5,406.17

39 Slide 39 The Milestones Present business plan to investorsMarch 2006 Finish legal work around investmentsMarch –April 2006 Request and review construction bidsApril 2006 Obtain building permitsMay 2006 Begin constructionMay 2006 Begin final fixturing of locationJuly 2006 Conduct health department inspectionsAugust 2006 Begin hiring and grand opening marketingAugust 2006 Cold openingAugust 22 th, 2006 Grand openingSeptember 1 st, 2006


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