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Category: Free Business Plans and Business Ideas | Views: 248

Pizzeria Franchise Business Plan


PIZZA TO GO, INC.


3215 Sturges St.
Pittsburgh, PA 15233


This plan relies on a proven name and business philosophy to propose the creation of a franchise takeout pizza store. The company does an excellent job of establishing the typical area these franchises are started in, then showing the proposed location to be identical. Ideas for capital cost reduction, as well as the proven success of the other franchises, solidifies this proposal's viability.





  • INTRODUCTION
  • STRATEGIC PLAN
  • THE FRANCHISE/FRANCHISOR
  • THE FRANCHISE AGREEMENT
  • PURPOSE OF FINANCING
  • THE INITIAL STORE
  • THE COMPETITION
  • MARKETING PLAN
  • PRO-FORMA FINANCIAL STATEMENTS

INTRODUCTION

Pizza to Go, Inc. is a Pennsylvania corporation, having been incorporated in September of 1996, primarily for the purpose of selling pizza, salads, submarine sandwiches, and various other food products, as a licensed franchisee under the franchise name of "Mama's Pizza." The company presently maintains an office in Pittsburgh, Pennsylvania. The president and principal shareholder of the company is Robert Warren.



STRATEGIC PLAN

The company intends to open, over the course of the next three years, several franchised retail pizza establishments in the greater Pittsburgh, Pennsylvania area, with its first store scheduled to open in January of 1997. The company's primary thrust will be to locate each of its stores in newly developing, high density, residential areas, with little pre-existing competition. The company also will maintain high quality control standards, strictly adhering to the Mama's Pizza "formula," which has, to date, proven successful (Mama's Pizza has previously been voted the number 1 best tasting pizza in Pennsylvania). The company also will utilize mid-level pricing.



STRATEGIC PLAN

The name of the franchisor is Mama's Pizza Franchising, Inc., a Pennsylvania corporation formed in 1996 for the purpose of offering and selling Mama's Pizza franchises, and servicing, supporting, and administering all functions inherent in operating the franchise system. William A. Becker is the president, treasurer, director, and 50% shareholder of Mama's Pizza Franchising, Inc.

The names of Mama's Pizza predecessors are William A. Becker, Inc. and the Becker Group, Inc., both Pennsylvania corporations. William A. Becker, Inc. and Mama's Pizza Franchising, Inc. maintain their principal business address in Pittsburgh, Pennsylvania. Since its inception in 1990, William A. Becker, Inc. has been engaged in the ownership and operation of Mama's Pizza stores that specialize in the sale of pizza and other food products in the metropolitan Pittsburgh area. Over the last three years William A. Becker, Inc. has owned and operated two Mama's Pizza stores, located in nearby suburbs. There are presently eight additional franchised Mama's Pizza establishments in the metropolitan Pittsburgh area. Negotiations are pending for additional stores. Another company store is expected to open in January of 1997.



THE FRANCHISE AGREEMENT

On November 12, 1996 the company did execute with Mama's Pizza Franchising, Inc. the Franchisor's standard franchise agreement with numerous amendments, deletions, and additions. Under the agreement, the company has a protected territory defined as a five-mile radius from each of its stores. Under the agreement, no other Mama's Pizza franchise or company store can be opened within this five-mile radius protected area. Furthermore, the company has negotiated and the agreement provides that the company has a 30-day right of first refusal anywhere within Washington and Westmoreland counties. This right of first refusal will allow the company, if it chooses, to "lock-in" these counties, thereby becoming and remaining the sole Mama's Pizza franchisee in such counties.

Finally, under the agreement, the company is required to pay an ongoing franchise royalty equal to 3% of gross revenues during the first year of operations and 4% thereafter. An industry wide review of franchise fees and royalties reveals that the Mama's Pizza royalty is substantially less than those found with competing pizza franchises.

PURPOSE OF FINANCING

The company is seeking financing for the express purpose of providing cash funding to allow (1) the acquisition of various machinery, equipment, and supplies and (2) the construction of its first retail pizza establishment.

  1. The Equipment: Schedule A, is a pro-forma list of the equipment and supplies anticipated to be required for the operation of the company's first pizza store, together with a projected aggregate cost of such items. It is important to note that the company has decided to acquire wherever possible used equipment and supplies, recognizing that quality used equipment is readily available in the marketplace at substantial savings. The purchase of high quality, well maintained used equipment will allow the company to reduce its capital outlays to approximately 30% of what would otherwise be expected as a result of purchasing new equipment. This will obviously preserve working capital, reduce ongoing interest costs, and increase net profitability.
  2. The Build-Out: Schedule B is a list of the items associated with the "Build-out," which is capable of being financed together with their anticipated cost.

The total cash financing sought for both the equipment and the "Build-out" is $90,000.



THE INITIAL STORE

The company's initial store will consist of 1,600 square feet of retail space. Indeed, the company has executed a five-year lease with a five-year renewal option at an annual rent of $12.00 per square foot. This results in a monthly rent charge of $1,600, plus common area charges which are anticipated to approximate $300 monthly. The initial store will be located in a plaza consisting of 7 retail establishments. The plaza includes two other retail food establishments an Outback Steak House which can be described as an "anchor" and Bagel Factory. Neither the Outback Steak House nor Bagel Factory are considered to be direct competitors. Each of their product lines are substantially different and their markets are likewise different. The company is a takeout retail pizza franchise, while both Outback Steak House and Bagel Factory are essentially sit-down restaurants with different product lines. The remaining retail outlets in the plaza include Delta Florist, Century Cellunet, Airway Oxygen, and Benjamin Moore.



THE COMPETITION

The company has examined in detail the geographic area consisting of a two-mile radius from the initial store to determine the extent of competition. It is apparent that little competition exists. The nearest retail pizza establishment west of the initial store is located in a town which is approximately five miles further west. In this town one will find a wide array of pizza establishments, including Little Caesars, Dominos, Pizza Hut, and Hungry Howies. The nearest competing business is approximately one quarter mile to the east and is a nonfranchised, independent pizza establishment known as Jack's Pizza. Approximately two miles to the east are Little Caesars and Papa Mario's. Approximately one and one half miles to the south is a Whatta Pizza. There are no competing pizza establishments within three miles to the north of the initial store.



MARKETING PLAN

The company's marketing thrust will be twofold. First, the company will be participating in and benefiting from the franchise wide marketing fund. Under the "agreement," each franchisee pays to the franchisor a marketing fee equal to $.10 per pizza box purchased. This amount is then forwarded to the franchisor by the box manufacturer and utilized for the benefit of the franchise. The advertising is not store specific and is geared toward promoting the franchise name and the franchise's product line as a whole. Second, under the "agreement," the company is obligated to expend 1% of its gross revenues on local advertising. However, the company fully expects to exceed the 1% requirement. Indeed, the company's marketing thrust will consist of fliers, discount coupons, and inserts as well as direct mail promotions.

With respect to packaging, it is important to understand that as a franchisee, the company will be licensed to utilize each and every one of the Mama's Pizza trademarks. Indeed, the "agreement" specifically requires that each of the franchisees strictly adheres to trademark packaging. This is common industry practice.

Editor's note: this plan also includes a Schedule C reflecting the probable pricing structure of each of the company's proposed products. This pricing is mid-tier and represents, in the opinion of the company, good value, when compared to the quality of the company's product line.





PRO-FORMA FINANCIAL STATEMENTS

Schedule C is a pro-forma income statement, before depreciation charges, reflecting the company's anticipated cash flow generated by the initial store during the calendar year ending December 31, 1997.




SCHEDULE A

DESCRIPTION COST
MIDDLYBY MARSHALL  
350 DOUBLE OVENS 15,000
ACME SHEETER 1,600
VCM MIXER 3,000
3 DOOR PIZZA PREP TABLE 1,800
3 DOOR SALAD PREP TABLE 1,500
THREE COMPARTMENT SINK 675
TWO HAND SINKS (125ea.) 250
FREEZER 400
THREE 8' SS TABLES (275ea.) 825
ONE 6' SS TABLE 125
SMALLWARES 6,000
EXTERIOR SIGNS 4,000
INTERIOR SIGNS 600
UNDERCOUNTER COOLER 900
PROOFER 1,100
PHONE SYSTEM 2,600
CAR TOP SIGNS 850
FAX MACHINE & CASH REGISTER 600
PIZZA BAGS 265
8' X 12' WALK-IN COOLER (INSTALLED) 5,300
TOTAL 47,390
TAX 2,843
DELIVERY AND SET-UP 750
TOTAL $50,983

SCHEDULE B

DESCRIPTION COST
FLOORING $3,680
CEALING 840
WALLS 4,100
COUNTERS & CABINETS 2,000
HVAC 1,000
MAKEUP AIR 5,000
HOOD FOR MAKEUP AIR 2,000
ELECTRICAL 2,600
PLUMBING 4,400
MISC. LABOR & RELATED SERVICES 7,200
MISC. EXTRAS 1,200
TOTAL $34,020

SCHEDULE C

Pro-Forma Income Statement

Net Income Before Depreciation & Taxes

First Year-3% Per Month Growth

  Jan Feb Mar April May
INCOME          
Sales-Food 36,000 37,080 38,192 39,338 40,518
Sales-Pop & Bottles 1,800 1,854 1,910 1,967 2,026
Sales-Deliv. 2,600 2,678 2,758 2,841 2,926
Total Gross Income 40,400 41,612 42,860 44,146 45,471
COST OF GOODS SOLD          
Purchases 10,100 10,403 10,715 11,037 11,368
Delivery Expense 1,620 1,669 1,719 1,770 1,823
Operating Supplies 121 124 128 132 136
Total C.O.G. Sold 11,841 12,196 12,562 12,939 13,327
Gross Profit 28,559 29,416 30,298 31,207 32,144
EXPENSES          
Franchise Fee 1,212 1,248 1,286 1,324 1,364
Insurance 350 350 350 350 350
Maintenance & Repair 400 400 400 400 400
Office Supplies 40 42 43 44 45
Advertising 3,500 2,000 1,000 1,000 1,000
Bank Charges 40 42 43 44 45
Laundry 121 125 129 132 136
Rent - Office 1,900 1,900 1,900 1,900 1,900
Equipment Lease 1,500 1,500 1,500 1,500 1,500
Rubbish Removal 40 40 40 40 40
Telephone 300 300 300 300 300
Utilities 525 541 557 574 591
Sales Tax 2,160 2,225 2,292 2,360 2,431
Wages 9,898 10,195 10,501 10,816 11,140
Total Expenses 21,987 20,907 20,340 20,785 21,244
Net Operating Income 6,572 8,509 9,959 10,422 10,900
Cumulative Net Operating Income   15,081 25,040 35,462 46,361
June July Aug Sept Oct Nov Dec
41,734 42,986 44,275 45,604 46,972 48,381 49,832
2,087 2,149 2,214 2,280 2,349 2,419 2,492
3,014 3,105 3,198 3,294 3,392 3,494 3,599
46,835 48,240 49,687 51,178 52,713 54,294 55,923
           
11,709 12,060 12,422 12,794 13,178 13,574 13,981
1,878 1,934 1,992 2,052 2,114 2,177 2,243
140 144 149 153 158 162 167
13,727 14,139 14,563 15,000 15,450 15,913 16,391
33,108 34,101 35,124 36,178 37,263 38,381 39,533
           
1,405 1,447 1,491 1,535 1,581 1,629 1,678
350 350 350 350 350 350 350
400 400 400 400 400 400 400
47 48 50 51 53 54 56
1,000 1,000 1,000 1,024 1,054 1,086 1,118
47 48 50 51 53 54 56
141 145 149 154 158 163 168
1,900 1,900 1,900 1,900 1,900 1,900 1,900
1,500 1,500 1,500 1,500 1,500 1,500 1,500
40 40 40 40 40 40 40
300 300 300 300 300 300 300
609 627 646 665 685 706 727
2,504 2,579 2,657 2,736 2,818 2,903 2,990
11,474 11,819 12,173 12,538 12,915 13,302 13,701
21,717 22,203 22,705 23,245 23,807 24,387 24,984
11,391 11,898 12,419 12,933 13,456 13,994 14,549
57,753 69,650 82,070 95,003 108,459 122,453 137,001

Cash Flow

  01/31 02/07 02/14 02/21 02/28
BEGINNING BALANCE          
Checking 14,154 12,337 14,534 13,216 15,111
SALES          
Food 0 2,900 3,335 3,835 4,411
Pop 0 100 110 121 133
Deliveries 0 200 220 242 266
Total 0 3,200 3,665 4,198 4,810
COSTS          
Drivers 30 102 117 134 154
Food 0 598 992 1,099 1,259
Total 30 700 1,109 1,234 1,413
Subtotal 14,124 14,837 17,090 16,180 18,507
EXPENSE          
Franchise Fee       217  
Insurance          
Maintenance & Repair          
Office Supplies     50    
Advertising     590 460  
Bank Charges          
Laundry     34 34 34
Rent - Office 0       1,975
Equipment Lease 0 0 0 0 0
Rubbish Removal   129   128  
Telephone 354       354
Utilities 79       350
Wages - Gross 1,354   3,000   3,000
Taxes 0 174 200 230 265
Total Expenses 1,787 303 3,874 1,069 5,978
Ending Balance 12,337 14,534 13,216 15,111 12,530
Labor         38.2%
03/07 03/14 03/21 03/28 04/07 04/14 04/21 04/28
         
12,530 14,799 15,286 19,479 17,342 23,030 24,685 29,903
               
5,072 5,833 6,708 7,714 8,871 8,871 8,871 8,871
146 161 177 195 214 214 214 214
293 322 354 390 429 429 429 429
5,511 6,316 7,239 8,299 9,514 9,514 9,514 9,514
               
176 202 232 266 304 304 304 304
1,443 1,653 1,895 2,172 2,490 2,854 2,854 2,854
1,619 1,856 2,126 2,437 2,794 3,159 3,159 3,159
16,422 19,260 20,399 25,341 24,063 29,386 31,040 36,259
               
270 0 355 0 466 0 571 0
336 0   336 0 0 0 336
50     50 0 0 0 50
500 590            
34 34 34 34 34 34 34 34
      1,975 0 0 0 1,975
0 0 0 1,149 0 0 0 1,149
128   128          
      354 0 0 0 354
      500 0 0 0 500
  3,000   3,137 0 4,135 0 4,412
304 350 402 463 532 532 532 532
1,623 3,974 919 7,998 1,032 4,701 1,137 9,343
14,799 15,286 19,479 17,342 23,030 24,685 29,903 26,916
  29.1%   23.1%   23.2%   23.2%

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