Do you want to start breakfast restaurant business?

Are you thinking about starting a breakfast restaurant? Well, it is undoubtedly one of the most profitable startups, yielding the greatest rate of return as compared to other businesses.

Breakfast is the most important meal of the day and a lot of people pay emphasis on having a great breakfast. Many of them don’t mind to spend heavy cash on a routine basis, provided they get delicious and healthy food. This business is not affected by any season and yields equal profit throughout the year. The biggest advantage in starting this business is that it gives us the maximum rate of return on relatively small investments as compared to other businesses.

But this business is very difficult to plan in the initial stages. From the planning of menu to the procurement of inventory, you have to think through nearly everything. Food-related businesses have got more constraints as compared to other businesses, that is why before starting it, you need to have a well-structured business plan covering even the tiniest bit of details.

To help you avoid all the trouble of thinking and making a plan yourself, we are providing a detailed business plan of a startup ‘The Food Court’.

Executive Summary

2.1 The Business

The Food Court will be a registered American breakfast restaurant business based in the central business district of Manhattan borough of the New York City. Manhattan is the most densely populated borough of the city and we will be strategically located in the main commercial zone of this populated borough. We will be surrounded by a number of commercial and business centers of the city.

The business will be owned and operated by John Vent who is a renowned chef of the United States and has won several chef awards during the course of his service at various food chains.

2.2 Management

The Food Court will be primarily a breakfast place aimed to provide delicious and healthy breakfast to its customers. It will be managed by Mr. Vent and his son who has recently graduated from the Harvard University, after doing his MBA.

2.3 Customers

The restaurant will provide both dine in and takeaway breakfast facility to the commercial and residential zones of Manhattan borough, New York.

2.4 Target of the Company

Mr. Vent’s target is to become the best breakfast business of the New York City by introducing traditional foods to the diverse US culture.

Breakfast Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Mr. Vent is a famous chef of the United States, best known for his traditional dishes which are loved and cherished by everyone. He has been serving the food industry for more than 30 years and has also made appearances in various cooking shows. The two times ‘US-Chef of the Year’ award winner is now all set to renew the traditional breakfasts by his own venture.

3.2 Why the Business is being started

Throughout his career, Mr. Vent has strived for introducing traditional foods to the fast-food loving younger generation. He is strictly against fast-food because of the nutritional deficiency caused by them and the artificial materials used in them. He has also raised this concern in various talk shows to several media outlets. Finally, he has made his mind for opening a breakfast restaurant for fulfilling his dream of the revival of traditional nutritious foods in America.

3.3 How the Business will be started

Mr. Vent, with the help of financial experts, has forecasted following costs for expenses, assets, investment, and loans for the Start-up.

Breakfast Business Plan - Startup Cost

The detailed start-up requirements, start-up funding, start-up expenses, total assets, total funding required, total liabilities, total planned investment, total capital and liabilities as forecasted by company’s analysts, is given below:

Start-up Expenses 
Legal$755,300
Consultants$0
Insurance$632,750
Rent$232,500
Research and Development$432,750
Expensed Equipment$432,750
Signs$31,250
TOTAL START-UP EXPENSES$2,517,300
Start-up Assets$0
Cash Required$3,232,500
Start-up Inventory$532,625
Other Current Assets$2,232,500
Long-term Assets$1,235,000
TOTAL ASSETS$3,121,875
Total Requirements$3,245,000
START-UP FUNDING$0
START-UP FUNDING$2,733,125
Start-up Expenses to Fund$121,875
Start-up Assets to Fund$195,000
TOTAL FUNDING REQUIRED$0
Assets$203,125
Non-cash Assets from Start-up$118,750
Cash Requirements from Start-up$0
Additional Cash Raised$1,318,750
Cash Balance on Starting Date$121,875
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$3,132,500
Investor 2$0
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$6,295,000
Loss at Start-up (Start-up Expenses)$3,413,125
TOTAL CAPITAL$2,521,875
TOTAL CAPITAL AND LIABILITIES$2,251,875
Total Funding$2,655,000

Services for customers

The Food Court will provide all sort of traditional foods, American as well as other regions’, to its esteemed customers. Just like other restaurants that serve breakfast we will also present both options of dine in and takeaway to our customers. Each one of our offering will be prepared by maintaining strict health and quality measures.

We will offer the traditional American breakfast comprising of beans, bacons, sausages, eggs, toasts with butter, marmalade, or jelly along with tea, coffee or drinks. We will also offer traditional food packages of five other countries:

  • Chinese breakfast comprising of rice in vegetable soup, dumplings, fried sponge cake, porridge and steamed creamy custard bun
  • French breakfast comprising of tea, juice, coffee, hot chocolate, with bread, butter and pastries
  • Turkish breakfast comprising of cheese, jam, bread, olives, honey, omelette, and fruits
  • English breakfast comprising of eggs, fried bread, baked beans, bacon, sausages, and mushrooms
  • Italian breakfast comprising of caffè latte (hot coffee with milk), fette biscottate (cookie-like rusk hard bread), coffee with bread and rolls, butter, jam and cookies

Marketing Analysis of breakfast restaurant business

The most important thing to do before you open a breakfast restaurant is to carry out its accurate marketing analysis. It helps to decide the company’s strategies over the next years. It must be incorporated in the initial business plan and all subsequent things must be plan according to it. Considering its importance, Mr. Vent obtained the services of marketing experts to help him develop a breakfast restaurant business plan taking in account the current marketing demands.

As per current market, breakfast industry is seen with a tremendous increase over the last years and is expected to increase steadily in the future. According to the NPD Group, the open breakfast places have increased by about 17% in the last 6 years. Moreover, this industry is not affected by any season or time of the year so we can say that its market demand is quite high.

The success or failure a startup totally depends upon how they market themselves to target their specific customer groups. A successful marketing strategy can only be developed after knowing the target audience and potential customers. Mr. Vent has carried out an extensive research with marketing experts to know their target customers and focus their marketing strategy towards them before they open a breakfast restaurant.

5.1 Marketing Segmentation

The marketing experts from The Food Court have identified following type of target audience which can become the potential customers of the company.

Breakfast Business Plan - Market Segmentation

The detailed marketing segmentation comprising of the company’s target audience is as follows:

5.1.1 General Traffic:

Our customers are very diverse and it is very difficult to categorize them. General traffic refers to those customers who happen to be near our restaurant and decides to have their breakfast here. This category includes all those people who have come to our area for their own tasks and activities. As we discussed already that we are situated in the main commercial district of Manhattan which is visited by several thousands of people daily. This general traffic is very diverse and comprises of people from different nationalities, hence we will offer the traditional foods of their regions to make them feel like home.

5.1.2 Companies and Businesses:

This category includes all employees working in the various office, companies and businesses situated near us. Most of these workers are single and usually rely on restaurants like us for their daily breakfast. We will be the perfect choice for them for having a variety of breakfasts of several regions at their disposal. Some of these people, which are not single, are very busy in their routines and most of the time they don’t even have time to take breakfast in their homes. We will prepare special packages for these busy people which can be easily consumed while walking. The employees of these companies and businesses will eat our breakfasts on a daily basis.

5.1.3 Local Residents:

Although we are situated in a commercial zone yet the resident zone is also not too far. We also aim to target the local residents residing in nearby areas. We are sure that once they have tasted our traditional offerings, they will turn into our regular customers.

The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
General Traffic38%11,43313,34416,55318,74520,54513.43%
Companies and Businesses44%22,33432,34443,66552,54466,43210.00%
Local Residents18%8,3229,45510,65512,86714,43315.32%
Total100%42,08955,14370,87384,156101,4109.54%

5.2 Business Target

Our target is to become the best breakfast restaurant of New York within next 5 years of launch. We also aim to recover our initial capital within 3 years of our launch and grow our sales by 20% each year. At our restaurant, we will also provide a top-notch customer service. Our every employee and waiter will treat our customers with utmost respect so as to build a long-lasting relationship with them.

5.3 Product Pricing

Product pricing is the most important factor affecting the sales of a food business. People are really picky about menu prices while selecting a place to eat. In order to revive the traditional foods and to make sure that a lot of people will be attracted towards us we have priced our basic American menu in the same range as of our competitors. But the traditional packages of other countries are slightly costlier because they require a lot of effort and imported materials.

Strategy

After carrying out an accurate market analysis, Mr. Vent created an exceptional strategy for targeting the identified potential customers. The sales strategy developed by him with the help of finance experts, is as follows:

6.1 Competitive Analysis:

The Food Court will have a tough competition ahead because there are thousands of already established breakfast restaurants in Manhattan so the average cost of breakfast will be kept nearly the same as of other similar restaurants. Moreover, people are always hesitant to try a new restaurant and are more willing to dine in their usual trusted restaurants. That’s why something innovative and extraordinary is needed to stand out in this challenging environment.

6.2 Sales Strategy

Mr. Vent, with the help of company experts, has developed an ingenious strategy to advertise his new venture and to make sure that everyone gets a taste of what he has to offer. Firstly, we will offer free breakfasts for the first three days of our launch. We will also send our breakfast packages to the various companies, offices and businesses located near us, so that they may also get to know the taste of our unique and delicious foods. We will offer free-delivery services to encourage sales for local residents businesses. We will advertise our restaurant and menu on social media and will also allow users to order their food or reserve their table by means of online channels.

6.3 Sales Forecast

We believe that if people try our delicious and healthy traditional foods, they will then eat them for the rest of their lives. That’s why we have forecasted our sales pattern to increase with years. By analyzing our market segmentation strategy, our experts have forecasted the following sales on yearly basis which are summarized in the column charts.

Breakfast Business Plan - Unit Sales

The detailed information about sales forecast, total unit sales, total sales is given in the following table:

Sales Forecast   
Unit SalesYear 1Year 2Year 3
American Traditional Breakfast Package187,030260,320258,240
French Traditional Breakfast Package802,370815,430823,540
Chinese Traditional Breakfast Package539,3207702301,002,310
Turkish Traditional Breakfast Package265,450322,390393,320
English Traditional Breakfast Package143,530125,030176,240
Italian Traditional Breakfast Package134,240394,340842,230
TOTAL UNIT SALES2,071,9402,687,7403,495,880
Unit PricesYear 1Year 2Year 3
American Traditional Breakfast Package$140.00$150.00$160.00
French Traditional Breakfast Package$600.00$800.00$1,000.00
Chinese Traditional Breakfast Package$700.00$800.00$900.00
Turkish Traditional Breakfast Package$650.00$750.00$850.00
English Traditional Breakfast Package$140.00$120.00$100.00
Italian Traditional Breakfast Package$150.00$1,300.00$1,450.00
Sales
American Traditional Breakfast Package$214,800$274,000$333,200
French Traditional Breakfast Package$120,050$194,500$268,500
Chinese Traditional Breakfast Package$50,110$71,600$93,000
Turkish Traditional Breakfast Package$139,350$194,600$249,850
English Traditional Breakfast Package$62,350$72,300$82,250
Italian Traditional Breakfast Package$229,500$365,500$501,500
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
American Traditional Breakfast Package$0.70$0.80$0.90
French Traditional Breakfast Package$0.40$0.45$0.50
Chinese Traditional Breakfast Package$0.30$0.35$0.40
Turkish Traditional Breakfast Package$3.00$3.50$4.00
English Traditional Breakfast Package$0.70$0.75$0.80
Italian Traditional Breakfast Package$3.00$3.50$4.00
Direct Cost of Sales
American Traditional Breakfast Package$98,300$183,000$267,700
French Traditional Breakfast Package$66,600$119,900$173,200
Chinese Traditional Breakfast Package$17,900$35,000$52,100
Turkish Traditional Breakfast Package$19,400$67,600$115,800
English Traditional Breakfast Package$27,700$69,200$110,700
Italian Traditional Breakfast Package$64,200$224,700$385,200
Subtotal Direct Cost of Sales$294,100$699,400$1,104,700

Personnel plan

Along with providing dine in facility, The Food Court will be a restaurant that delivers breakfast to its customers as well. That’s why it will need a lot of staff for its proper operation. The company experts have developed the following plan for the staff needed for the company along with their average salaries.

7.1 Company Staff

Mr. Vent will act as the General Manager as well as the Head Chef of the restaurant. The company will initially hire following people:

  • 1 Manager to manage the overall operations of the restaurant
  • 1 Cashier to receive cash from the people
  • 2 Administrators / Accountants to maintain financial records
  • 4 Sales and Marketing Executives responsible for marketing and advertising of the restaurant
  • 10 Chefs for making the breakfasts
  • 20 Waiters to serve the customers
  • 8 Cleaners to clean the dishes and other facilities at the restaurant
  • 10 Drivers to deliver the breakfasts to the local residents, companies and businesses

To ensure the best quality service, all employees will be selected through vigorous testing and will be trained for a month before starting their jobs.

7.2 Average Salary of Employees

The following table shows the forecasted data about employees and their salaries for next three years.

 Personnel Plan   
Year 1Year 2Year 3
Manager$85,000$95,000$105,000
Cashier$66,000$73,000$80,000
Administrators / Accountants$45,000$52,000$59,000
Sales and Marketing Executives$145,000$152,000$159,000
Chefs$550,000$650,000$750,000
Waiters$410,000$440,000$480,000
Cleaners$60,000$63,300$70,000
Drivers$70,000$73,300$80,000
Total Salaries$1,280,000$1,430,600$1,598,000

Financial Plan

The Food Court will be one of the manyrestaurants open for breakfast in Manhattan. The business will be solely financed by Mr. Vent and no equity funding or outside loan will be required unless it expands faster than forecasted.

8.1 Important Assumptions

The company’s financial projections are forecasted on the basis of following assumptions.

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%
Other000

8.2 Brake-even Analysis

The following graph shows the company’s Brake-even Analysis.

Breakfast Business Plan - Brake-even Analysis

The following table shows the company’s Brake-even Analysis.

 Brake-Even Analysis 
Monthly Units Break-even5530
Monthly Revenue Break-even$159,740
Assumptions:
Average Per-Unit Revenue$260.87
Average Per-Unit Variable Cost$0.89
Estimated Monthly Fixed Cost$196,410

8.3 Projected Profit and Losss

The following charts show the company’s expected Profit and Loss situation on the monthly and yearly basis.

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$309,069$385,934$462,799
Direct Cost of Sales$15,100$19,153$23,206
Other$0$0$0
TOTAL COST OF SALES$15,100 $19,153 $23,206
Gross Margin$293,969$366,781$439,593
Gross Margin %94.98%94.72%94.46%
Expenses
Payroll$138,036$162,898$187,760
Sales and Marketing and Other Expenses$1,850$2,000$2,150
Depreciation$2,070$2,070$2,070
Leased Equipment$0$0$0
Utilities$4,000$4,250$4,500
Insurance$1,800$1,800$1,800
Rent$6,500$7,000$7,500
Payroll Taxes$34,510$40,726$46,942
Other$0$0$0
Total Operating Expenses$188,766$220,744$252,722
Profit Before Interest and Taxes$105,205$146,040$186,875
EBITDA$107,275$148,110$188,945
Interest Expense$0$0$0
Taxes Incurred$26,838$37,315$47,792
Net Profit$78,367$108,725$139,083
Net Profit/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Breakfast Business Plan - PROFIT MONTHLY

8.3.2 Profit Yearly

Breakfast Business Plan - PROFIT YEARLY

8.3.3 Gross Margin Monthly

Breakfast Business Plan - GROSS MARGIN MONTHLY

8.3.4 Gross Margin Yearly

The following table shows detailed information about profit and loss, and total cost of sales.

Breakfast Business Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

The following column diagram shows the projected cash flow.

Breakfast Business Plan - Projected Cash Flow Diagram

The following table shows detailed data about pro forma cash flow, subtotal cash from operations, subtotal cash received, sub-total spent on operations, subtotal cash spent.

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$40,124$45,046$50,068
Cash from Receivables$7,023$8,610$9,297
SUBTOTAL CASH FROM OPERATIONS$47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$47,143 $53,651 $55,359
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$21,647$24,204$26,951
Bill Payments$13,539$15,385$170,631
SUBTOTAL SPENT ON OPERATIONS$35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$35,296 $35,489 $43,882
Net Cash Flow$11,551$13,167$15,683
Cash Balance$21,823$22,381$28,239

8.5 Projected Balance Sheet

The following projected balance sheet shows data about total current assets, total long-term assets, total assets, subtotal current liabilities, total liabilities, total capital, total liabilities and capital.

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$184,666$218,525$252,384
Accounts Receivable$12,613$14,493$16,373
Inventory$2,980$3,450$3,920
Other Current Assets$1,000$1,000$1,000
TOTAL CURRENT ASSETS$201,259 $237,468 $273,677
Long-term Assets
Long-term Assets$10,000$10,000$10,000
Accumulated Depreciation$12,420$14,490$16,560
TOTAL LONG-TERM ASSETS$980 $610 $240
TOTAL ASSETS$198,839 $232,978 $267,117
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$9,482$10,792$12,102
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$9,482 $10,792 $12,102
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$9,482 $10,792 $12,102
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$48,651$72,636$96,621
Earnings$100,709$119,555$138,401
TOTAL CAPITAL$189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL$198,839 $232,978 $267,117
Net Worth$182,060$226,240$270,420

8.6 Business Ratios

The following table shows data about business ratios, ratio analysis, total assets, net worth.

 Ratio Analysis    
Year 1Year 2Year 3INDUSTRY PROFILE
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets
Accounts Receivable5.61%4.71%3.81%9.70%
Inventory1.85%1.82%1.79%9.80%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Current25.8629.3932.921.63
Quick25.428.8832.360.84
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.