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Nightclub Sample Business Plan Sample

If you are looking into starting a nightclub then this sample business plan is a great guide.

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If you are looking into starting a nightclub then this sample business plan is a great guide. Use this example to compile your own.

1Executive Summary

The Nightclub will be the premier, high-energy, themed dance and nightclub in Waldport, Your State. Our goal is to remain a step ahead of our competition through an exemplary service provision. We expect our guests to have more fun during their leisure time. We will provide more video and electronic technology per square footage than anyone else in the region.

A simple, yet unique, themed menu and atmosphere will create a sense of ‘belonging’ for locals and tourists alike. Our operating credo is: “happy enthusiastic employees create happy enthusiastic guests.”

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The main objectives of the development of this new venue are:

  • Capitalise on excellent location opportunity with swift commitment to the new Town Square development.
  • To launch the venue with a highly publicised grand opening event in the summer of Year 1.
  • To maintain tight control of costs, operations, and cash flow through diligent management and automated computer control.
  • To maintain a food cost below 33% of food revenue.
  • To maintain a total beverage cost below 25% of beverage revenue.
  • To exceed $3 million in annual sales by the fourth year of plan implementation.

The keys to success in achieving our goals are:

  • Provide exceptional service that leaves an impression.
  • Consistent entertainment atmosphere and product quality.
  • Managing our internal finances and cash flow to enable upward capital growth.
  • Strict control of all costs, at all times, without exception.

2Company Summary

nightclub-business-advice

The key elements of The Nightclub’s concept are as follows:

      • Entertainment and dance based themes – The company will focus on themes that have mass appeal.
      • Distinctive design features – The Nightclub will be characterised by the elaborate dance club situated in a spectator setting which comfortably accommodates 350 guests. The area will also offer three private sky boxes which can be combined for use in a conference or private party setting. This room is intended for special events and daily use. The adjoining dining room and bar would present an inviting and relaxing atmosphere, which displays a collection of musical and dance memorabilia. A live dj will coordinate the events and entertain the patrons with music and games during music breaks and off-times.
      • Location, location, location – One of the major advantages that The Nightclub will have over its competition will be its location in the new, high-profile Your Town Centre.
      • Gaming – The Nightclub will provide several interactive style video games and pool tables to provide for both additional entertainment and revenue.
      • Quality food – All would be lost without special attention being paid to the level of food quality. A simple menu offering foods similar to those found at a premier venue. Traditional ‘bar’ appetizers will be on hand for people craving nachos, wings, or quesadillas while they drink and enjoy themselves.
      • Exceptional service – In order to reach and maintain a unique image of quality, the Nightclub will provide attentive and friendly service through a high ratio of service personnel to customers, and will also invest in the training and supervision of its employees. We estimate nearly one service staff member for every 35 guests.

2.1 Start-up Summary

The company is seeking a loan for start-up purposes for a new entertainment venue in Waldport. Funds needed to accomplish goal referenced above will be $x.x million. The applicant will require the entire $x.x million to finish project build-out. We will utilise the anticipated loans in the amount of $x.x million to build out the approximate 10,000 square foot space and purchase equipment necessary for the start-up of a new nightclub venue. The following tables and charts illustrate the capital requirements.

2.2 Company Ownership

The Nightclub is a privately-held LLC, the details of which have not been solidified as of the date of this publication. The LLC consists of three principals DD, HK, BK. D D holds a BS in business administration from the The State University. He has held restaurant management positions for the PepsiCo Corporation.

He successfully opened and managed two nightclubs, and went on to open other operations including a sports bar. He is currently in his fifth year in the hotel industry, where he manages a successful sales department. HK holds a BA in Industrial Media Management, with a concentration in marketing.

She has held a financial analyst position with Lockheed Martin and L3 Communications for two years. BK has been managing a staff for eight years. He is currently in his fifth year in the automotive industry, where he is a successful finance manager.

Related: Where Your Business Is Located is Super Important


3Services

nightclub-business-services

The emergence of the Main Street area of Waldport represents a unique opportunity for a high-energy, dance-themed venue. The development’s central location, demographics, and lack of direct competition are major advantages to this project.

The proposed venue will provide a local solution to the lack of social atmosphere and live sports venues geared primarily toward the 21-35 age group in the Waldport area and will help keep late night entertainment expenditures within the localised region.

The new venue will specialise in high-energy themes, a quality video and gaming area, and will offer beer, wine and an array of liquors and mixed drinks. In addition, the venue will sell non-alcoholic beverages such as soft drinks, juices and bottled water.

A “casual” food menu consisting mostly of appetizers and small entrees ranging in cost from six to nine dollars will also be available. The initial hours of operation will be 11:00 P.M. to 2:00 A.M., four nights a week. The establishment will draw primarily from the Waldport market while attracting guests from the area’s other surrounding cities and towns.

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4Market Analysis Summary

nightclub-market-analysis-summary

The concept and management of the Nightclub has been well received, and has been offered key placement at the centre of Waldport’s new First & Main Town Centre development. This commercial centre spans 138 acres and promises an immediate primary trade population of 332,000 people with a secondary population of 164,000 people.

The Boulevard at the Avenue average daily traffic counts are currently 53,000, and will increase to 72,000 by 2003 following the Boulevard’s connection northward to I-25 in 2001. At the centre of the complex will be a 16-screen Cinemark and IMAX theatre opening March, 2000.

The Centre’s planners having met the Nightclub’s management and have reviewed the concept. They have indicated that the Nightclub is “exactly” what they were looking for and wish to place it directly in front of the theatre. The annual projected traffic for what Cinemark is calling their ‘flagship’ location is 1.4 million people, which exceeds their current Tinseltown location at the arena.

The Nightclub will be a 10,000 square foot unit, which will also house the company’s corporate business office. The dance club and bar will accommodate 750 people. With Waldport’s rapidly growing population, the variety of the Nightclub from across the country would create mass appeal for all of the Nightclub’s customers. The store will be equipped with state-of-the-art audio and video systems like none other found in Your City.

It will serve the need for a true nightclub in Waldport. The general appearance will be clean, open, and pleasing to the customer. The demographics are favourable, with minimal competition from other dance-themed venues and bars.

Related: How To Create A Marketing Strategy

4.1 Market Segmentation

We see The Nightclub as appealing to three major market segments. Fortunately, the long, late night hours of operation help The Nightclub lend itself to multiple segment appeal. Our market segmentation scheme allows some room for estimates and nonspecific definitions.

Childless Young Professionals – Due to our proximity to the IMAX and Cinemark theatres, we must appeal to single adults and young couples. Whether it is a group of friends or a couple out to see a movie together, these people need a place to eat/drink either before and/or after their movie.

These customers will range in age from 27 to 40. The Nightclub will appeal to this category by switching the tempo and entertainment to be more appealing to adults as it gets later into the evening. We also anticipate a 15% annual growth rate in tandem with the growth rate of Waldport and through increased popularity.

College Students – By creating an environment that is appealing to college students, we secure a natural progression between the high school student and the young professional. Through word of mouth, the Nightclub expects realise an increase of five percent annually from this segment.

Tourists and Business Travelers – More and more business and travelers and tourists are finding themselves in Waldport every year as is made evident by the increased demand and subsequent expansion of the local airport. We plan to reach these people through direct marketing to local hotel patrons. We anticipate a 20% annual growth rate in this segment. As our relationships grow with the local hotels, so too will the word of mouth recommendations from the hotel staff as well as the patronizing of our restaurant by their families. Our future plan is to publish a simple website in order to create awareness to any traveler who wants to take an advanced look at the club before their visit.

4.2 Target Market Segment Strategy

Our strategy is based on serving our niche markets exceptionally well. The nightclub enthusiast, the tourist and business traveler, the local nightclub crowd, the local service industry as well as groups going out together, can all enjoy The Nightclub experience.

The marketing strategy is essential to the main strategy:

  • Emphasise exceptional service.
  • Create awareness of The Nightclub’s unique features.
  • Focus on our target markets.

We must charge appropriately for the high-end, high-quality service and food that we offer. Our revenue structure has to match our cost structure, so the wages we pay and the training we provide to assure superior quality and service must be balanced by the fees we charge.

Part of the superior experience we offer is the simplicity o the menu items. While being unique, they are relatively inexpensive and easy to prepare. While a premium is appropriate for the experience, the pricing has to be balanced in accordance with what we are serving.

All menu items will be moderately priced. We expect an average guest expenditure of $12.50 for beverages and $7.50 for the percentage of our guests who choose to take advantage of our food menu. Our target customer spends more than the industry average for moderately priced establishments. This is due to our creating an atmosphere that encourages longer stays and more spending, while still allowing adequate table turns due to extended hours of appeal.

4.3 Service Business Analysis

High energy and dance themed venues have significantly impacted cities from coast to coast in the nineties. Los Angeles’ Hollywood, New York’s Times Square, and Seattle’s Pioneer Square are just a few examples. Entrancing their audiences with high-powered lights, sound, music, and interactive entertainment, these venues are still one of the highest cash flow businesses in the world.

Our localised studies have shown that the average person will spend three to four hours per weekend in this type of an environment and will spend an average of twenty to fifty dollars in that time frame. As we approach the new millennium, this trend shows no signs of declining.

The typical venue of our style is open from 8:00 P.M. to 2:00 A.M., and within this time frame, the venue can achieve gross revenues anywhere from $3,500 to $25,000, nightly. The primary sources of revenue in a venue of this type are high volume traffic, coupled with comparably nominal spending. In addition to alcohol revenues, we will also generate substantial revenues from food sales that can typically range from seven to ten dollars per person, and admission fees that range between five and ten dollars per admit.

Entertainment venues in the late 1980’s and 1990’s focused on high-energy light and sound, multiple source video screens, and participative events. This relatively simple concept is still quite popular today. However, these concepts have greatly evolved with society. In recent years this industry has become more sophisticated with the availability of new technology. Larger metropolitan areas have taken this technology to new heights with sound, lighting, video and interactive designs that create an exciting and memorable experience. Fortunately, no one in Your State area has been a pioneer in this specific segment of the industry as of the date of this report.

Additionally, the nightclub and bar industry is shifting towards a more entertainment-oriented concept. Guests of these venues are not only offered a dynamic place to gather and mingle, but also a place to participate in the entertainment through interactive contests, theme nights, and other events. We intend to heavily utilise entertainment-oriented marketing in an effort to withstand the perpetual shift in trends and cater to as large a client base as possible.

Nightclubs and other drinking establishments rely heavily on their primary suppliers. The primary suppliers are the various beverage distributors that provide the establishment with both alcoholic and non-alcoholic beverages. The alcoholic beverages (beer, wine, and liquor) are the primary sources of income in this industry. Other beverage suppliers also play a crucial role by providing non-alcoholic beverages. These are either served alone or mixed with alcohol.

In the area, all major brands of alcoholic beverages are available, in addition to several regional brands of beer. Initial research shows that the major distributors in the market have a high rating in both product availability and delivery.

4.3.1 Main Competitors

The Nightclub competition lies mainly with other casual facilities and less with conventional and chain entertainment establishments. We need to effectively compete with the widely held idea that you can’t get good service anymore, while maintaining the idea that being out can be a lot of fun. Our polling has indicated that consumers think of atmosphere, price, and quality respectively. Additionally, price was frequently mentioned by pointing out that if the former concerns are present then they are willing to pay more for the experience.

Our review of the market concludes that there are four entertainment venues that can be considered direct competition to the proposed new venue. We do realise that the proposed venue will also compete indirectly for every entertainment dollar spent in the Waldport area.

Related: Free Competitor Analysis Example

The main competitors of the Nightclub will be:

Club A
Hours of Operation: 5:00 P.M.-2:00 A.M.
Wednesday through Saturday
Capacity: 300
Wednesday College Night ($1 beers)

  • This nightclub appeals to a college crowd seeking cheap drinks.
  • The club is known for being dingy and dirty.

Bar B
Hours of Operation: 10:00 A.M.- 2:00 A.M.
Monday through Sunday
Capacity: 400
Thursday College/Ladies Nights

  • This club appeals to 25-35 year olds.
  • Pool and video games are central focus.
  • Dancing is pushed to the back of the club.

Grill C
Hours of Operation: 6:00 P.M.-2:00 A.M.
Wednesday through Saturday
Capacity: 250

  • This club’s target customer is 25 to 45 years old / middle class or above.
  • This club is known for its older, dressed up crowd and cramped space.

Club D
Hours of Operation: 11:00 A.M.-2:00 A.M.
Monday through Sunday
Capacity: 350

  • This club’s target customer is 25 to 45 years old.
  • This club is known for live jazz and blues entertainment and their draught beers.

4.3.2 Business Participants

The Nightclub will be part of the restaurant and bar industry, which includes several kinds of businesses:

  • Locally Operated Bars and Nightclubs – This genre usually appeals to the local neighbourhood clientele. This same client base dictates that the average price structure be drastically scaled down in order to create “regulars.”
  • Nightclub Entertainment Complexes – This type of complex represents the concept we will most closely compete with. They are typically placed in high traffic locations and are normally treated as destination entertainment. An admission charge is usually in place and the associated price structure is also most like our proposed structure. Thankfully there is not an abundance if this type of entertainment within our region.
  • Conventional Dining – Primarily owned by large national chains, usually less than 10,000 square feet, focused on serving good quality food in a reasonable amount of time in a dining room setting. The service and food quality are superior to that of a fast food establishment. People go there to eat and leave when they’re done eating since there’s rarely a reason to stay.
  • Formal Dining – Similar to conventional dining yet offering a higher quality of food and service for the added expense. As with the conventional dining facilities, there is little interaction and when people are done eating, they leave.
  • Casual Dining – Commonly building upon conventional dining with the addition of a bar, playing of music and sporting events on numerous televisions. Some establishments offer their own brand of beer made on the premises. The food quality and service are at best, similar to that found in a conventional dining experience.
  • Chain Entertainment – Typically manifested in each market through the Hard Rock Cafes, the Planet Hollywoods, etc. We expect to create an atmosphere that thrives on its trendy feel. These chain entertainment venues can not hope to draw the same “hip” clientele.

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Restaurants & Bars

Irish Pub Bar Business Plan

A sample business plan to show you how to start a traditional pub.

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Irish Pub Bar Business Plan

Executive Summary

Introduction
McKnight’s Pub has been a successful Irish bar in the heart of downtown Portland, Oregon for one hundred years. However, recently McKnight’s has seen a drop in its clientele due to the rise of microbreweries in the Portland area. In order to successfully compete with this new threat, McKnight’s objectives are to create its own microbrewery on-site and to offer superior kinds of beers than that of its new competitors.

The Company
McKnight’s Pub was established in 1902 by Walter McKnight and over the years has become a well known fixture of Portland. Two years ago, Charles McKnight sold the pub. The establishment is now a sole proprietorship owned and operated by Ian Davis. The company is licensed in Oregon.

McKnight’s Pub is located in one of the most outstanding downtown places in Portland as it is strategically located to attract the middle-class and upper middle-class working public during lunch and after quitting time. The building itself is one of the oldest still standing in Portland and has an old world style to it.

The Products
McKnight’s Pub offers a wide variety of spirits, from domestic and imported beers to hard alcohol with concentration on imports from Ireland. In addition, the pub offers a limited menu of light food and snacks, and specialty items for holidays.

Once the brewery begins production, we will concentrate on ale production including wheat beers, stouts, and porters as these include the more traditional types of Irish brews. We intend to initially start with five different types of beer, eventually increasing to ten. All brews will have a different brand name.

The Market
Over the past five years, McKnight’s has seen a declining trend in sales. Much of this is due to the rise of microbreweries in the Portland area. Many customers are taking advantage of the proliferation of beer varieties in the U.S. (due to changes in the law on alcohol production) by seeking establishments that have unique brew styles.

The market segmentation is divided into the leading target markets. The division reflects the differences in marketing strategy that will be used to target each different market.

Middle class, “white collar” office workers from the downtown area.
Late nighters and weekend partiers.

Brew Connoisseur
McKnight’s Pub exists in a highly competitive industry whose environment creates low margins due to the high amounts of pressure placed upon participants from customers, suppliers, other rivals, potential entrants, and substitute products. This has created a fragmented industry in which no one participant has significant market share.

Financial Considerations
Break-even analysis indicates that at the moment McKnight’s is close to dropping below its level to produce profits unless margins are increased or the number of customers is increased. In order to finance the changes and expansion needed, McKnight’s will secure a long-term loan of $390,000. This will keep initial growth slow and manageable, and will allow the management to maintain control. With the new expansion and the forecasted increase in clientele, McKnight’s will remain profitable and keep a positive cash flow.

1.1 Objectives

McKnight’s Pub has been a successful Irish bar in the heart of downtown Portland, Oregon for one hundred years. However, recently McKnight’s has seen a drop in its clientele due to the rise of microbreweries in the Portland area. In order to successfully compete with this new threat, McKnight’s objectives are to create its own microbrewery on-site and to offer superior kinds of beers than that of its new competitors.

1.2 Mission

In the past, McKnight’s (soon to be called McKnight’s Pub and Brewery) philosophy was to create an old world pub style atmosphere that attracted it high-end clientele and offered excellent customer service. With its new strategy to include a brewery, McKnight’s also plans to offer specialty in-house, local, and international brands of beer to attract a new type of customer, the brew connoisseur.

1.3 Keys to Success

To succeed McKnight’s must:

  • Implement a successful advertisement and marketing campaign to inform the existing clientele and the public of our new image.
  • Purchase new brewery equipment.
  • Retain the services of a reputable brewmaster.
  • Build brand image and brand equity through marketing.

Company Ownership

McKnight’s Pub was established in 1902 by Walter McKnight and over the years has become a well known fixture of Portland. This includes having articles published in various travel magazines such as Oregon Magazine and US Travels and recommended by Portland Online as one of the most popular drinking establishments in the city. Two years ago, Charles McKnight, Walter’s grandson, sold the pub, citing poor health and lowering profits. McKnight’s Pub is now a sole proprietorship owned and operated by Ian Davis. The company is licensed in Oregon.

2.1 Company Locations and Facilities

McKnight’s Pub is located at the corner of SE Salmon St and SE 19th Ave. approximately four blocks from Ladd’s Circle and within walking distance of the city’s business district. This is one of the most outstanding places for a pub in Portland as it is strategically located to attract the middle-class and upper middle-class working public during lunch and after quitting time.

The building itself is one of the oldest still standing in Portland and has an old world style to it. Presently the establishment can seat 96 customers. McKnight’s has secured the purchase of the adjacent storefront for its expansion, and with renovation, will have room for the brewery and another 24 persons. The current facilities, including two large bars and fireplace, kitchen, and plenty of room for darts, pool, and other amusements make this an excellent attraction.

Products

McKnight’s Pub offers a wide variety of spirits, concentrating on imports from Ireland such as Harps, Guiness, Erin’s Rock, Murphy’s Irish Stout, and Wild Irish Rouge on tap along with Baileys Irish Creme, St. Brendan’s and other liquors. In addition the Pub offers domestic and other imported beers by the bottles and a full bar for mixed drinks. In the back the pub has a small kitchen that offers a limited menu of such things as sandwiches, fish and chips, etc. For St. Patrick’s Day and other Irish holidays the pub offers traditional favorites such as Irish stew, leek and potato soup, and corned beef and cabbage.

Once the brewery begins production, we will concentrate on ale production including wheat beers, stouts, and porters as these include the more traditional types of Irish brews. We intend to initially start with five different types of beer, eventually increasing to ten. All brews will have a different brand name.

3.1 Sales Literature

Although McKnight’s has never printed or distributed sales literature by itself, it has certainly taken advantage of the various articles in the local paper and travel/entertainment magazines that have been written about the pub. With the change in focus to a pub and brewery, Mr. Davis, the owner, plans to insure that the press is made aware of the changes in the hopes that this will create additional articles and literature.

3.2 Sourcing

The Pub purchases large quantities of alcohol from local and regional distributors including Kitsap Distributors and Darian Beverages. Most of the inventories of food come from Portland Produce. McKnight’s receives discounts when certain volumes are purchased. The pub seeks to maintain good relations with its distributors in order to insure high-quality products are delivered on time. McKnight’s markup prices from that of wholesale generally runs between 15-20% depending on the drink or meal. Junkboxes, pool tables, and other amusements between are leased and serviced by the leasing company under existing contracts.

The new brewery equipment to be installed in March of 2003 will come from Key West Brewery Equipment. Much of this equipment will be secondhand, but all of it will be personally selected by our new brewmaster, Mark Hudson. Storage, kegging and bottling of our in-house brews will be done personally.

3.3 Technology

The pub as a whole is a relatively low-technology establishment in keeping with its old world personally. The establishment does use a computer to track inventory, sales and other crucial aspects of profitability. In addition there is an electronic cash register used to ring up sales.

Much of the brewing process done these days is computer controlled so as to insure that heat, pressure, fermentation, and other aspects of beer production stay constant and insure high quality. McKnight’s will be investing in two top of the line Pentium three computers plus all the necessary gauges for production.

3.4 Competitive Comparison

McKnight’s primary competitive advantages are its existing reputation, location, and high quality establishment with expensive and decorative exterior and interior that embraces the Irish motif.

3.5 Future Products

As stated earlier, McKnight’s is currently expanding its products by including a microbrewery establishment gauges. This includes installation of a mash kettle, fermentation tanks, agitators, pumps, heat exchanger, refrigeration unit, etc.

Mr. Davis plans to observe how sales of in-house microbrews develop to determine if there is a future market for bottling the pub’s homebrews for sale in the pub and in local beer stores.

At this time, Mr. Davis is also contemplating expanding the limited kitchen facilities so as to furnish a larger number of meals with greater variety. However, this expansion is not planned for the immediate future.

Market Analysis Summary

Over the past five years, McKnight’s has seen a declining trend in sales. While some of this is due to the lack of initiative on behalf of the old management, much of this is due to the rise of microbreweries in the Portland area. Many customers are taking advantage of the proliferation of beer varieties in the U.S. (due to changes in the law on alcohol production) by seeking establishments that have unique brew styles. In this day and age of massive fragmentation and proliferation of brew recipes, innovation and experimentation is the name of the game.

4.1 Market Segmentation

The market segmentation is divided into the leading target markets. The division reflects the differences in marketing strategy that will be used to target each different market.

  • Middle class, “white collar” office workers from the downtown area. These are people seeking to have a drink or some quick food during lunchtime and sometimes want to show out-of-towners some of the local highlights. In addition, the pub can expect to see these types of customers dropping in for some hours after work to unwind. The growth of this market segment as demonstrated in the Market Analysis table is based on the estimated growth of business establishments in the Portland downtown area.
  • Late nighters and weekend partiers. These are the folks that drop by and stay for many hours socializing and drinking. Growth of this segment is based on the estimated population growth of Portland itself.
  • Brew Connoisseur. These customers are a relatively new type to the American scene. Although there have been beer connoisseur all over since beer was invented, until recently government regulation was such that the industry was concentrated within a few national companies such as Anheuser Busch, Coors, etc. These companies had few product lines and sought to produce large amounts of beer over very short time periods. This made for an overall low quality of domestic beers available to Americans at reasonable prices. Since deregulation the industry has rapidly fragmented, allowing small brewers to compete against the larger established companies on a local and even national level. All this has inspired new connoisseur in brewing that has revolutionized the industry. With so many new types and brands of beer available, the customer that wants to try new types is being wooed by all industry participants.

4.2 Target Market Segment Strategy

McKnight’s Pub exists in a highly competitive industry whose environment creates low margins due to the high amounts of pressure placed upon participants from customers, suppliers, other rivals, potential entrants, and participants products. This has created a fragmented industry in which no one participant has significant market share.

Customers have an great deal of power and influence in this industry since there are virtually no switching costs.

Customers regularly go to more than one pub or bar to socialize and drink. In addition, while this pastime is very popular, the overall quality of the customer’s life is unaffected if they choose to forgo pursuing it.

Finally, even with the rise of microbreweries, many customers still find that most pubs have the products that they seek, making the pub visit itself undifferentiated.

Suppliers also have a great deal of power in relation to the pubs and taverns. Almost all suppliers are regional companies that have a wide variety of customers including grocery stores, liquor stores, restaurants, caterers, etc.

This means that any one customer of these distributors makes up a fraction of their sales and has little influence on their prices, quality and terms.

Furthermore, while these distributors often sell a wide variety of products such as produce, poultry and meat products, tobacco, and others, pubs and taverns are solely dependant upon the distributors for all their merchandise. The only real way to offset the distributor’s influence is to backward-integrate by brewing and marketing the alcohol itself.

The rivalry among other taverns, bars, pubs, etc. is especially intense. This is because there is a large number of them in the Portland area who are more or less equally balanced in terms of size, popularity, and resources.

Since industry growth is small, there is strong moves by all competitors to gain market share at the expense of others. The lack of a differentiated product or service by most pubs or taverns only makes this worse.

In this type of environment, each firm tries to cut prices, increase services and products and cut costs. This in turn creates retaliation among rivals and leads to lower profits.

There are relatively few barriers to entry in the pub/tavern industry, making the threat of new entrants to the market very real. The capital costs of starting up a bar or tavern are low and access to distribution channels is quite easy.

Where firms seek advantages is in gaining a favorable location, building brand equity through customer loyalty, creating a unique environment, or backward-integration by producing unique products. All this takes luck, persistence, and awareness of customer needs.

Finally, the existance of substitutes creates a great deal of pressure on pubs and taverns to attract and retain customers. Restaurants, breweries, and any other place where drinking and socializing goes on is a direct threat to McKnight’s and other rivals.

In addition, grocery and liquor stores that sell alcohol are an indirect threat that offers alternatives to potential customers. These substitutes, who often offer lower costs, decrease the overall potential of the pub and tavern industry as a whole.

4.2.1 Main Competitors

There are a wide variety of bars, restaurants, nightclubs and other direct and indirect competitors in the Portland area. Some of the closest in terms of location and quality include the following:

  • Columbia River Alehouse and Brewery. Columbia River offers the largest threat to McKnight’s as it has created an excellent reputation for its microbrews by retaining the services of Michael Evan, a former brewmaster for Henry Weinhards. Columbia River specializes in beers with lots of hops, such as hefeweisens. Furthermore the establishment has just had a very favorable article written about its cuisine in the Oregonian. Its separate bar has an established clientele that attracts the young college crowd.
  • Fitzgerald’s Sportsbar. This establishment is located only one block from McKnight’s Pub. It attracts a niche market of sports fans especially as it has widescreen TV’s and hosts parties during Portland Trailblazer games. During other times it attracts some of the customers that McKnight’s is targeting such as the late night crowd.
  • Argosy Brewery. Argosy is local brewery more oriented toward production and distribution of its premier lagers and stouts in the pacific northwest region. However, its tasting room has recently been expanded into a full-time pub and has gotten great reviews. Its location close to the waterfront draws a large crowd.

4.2.1.1 Market Growth

McKnight’s opens at 11 a.m. each day to catch the lunch crowd and closes at 2 a.m.. Revenues are quite variable in the short-term with the majority of sales occuring on the weekends between the hours of 8 p.m.-midnight. Seasonally, McKnight’s is usually more busy during the summer months due to the heat and with more people wishing to be outside during this time.

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Restaurants & Bars

Steak Buffet Sample Business Plan

Use this sample business plan if you are thinking of starting up a restaurant that specializes in buffets.

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Steak Buffet Business Plan

Executive Summary

Sagebrush Sam’s – “a steak buffet,” unlike a typical restaurant, will provide a unique combination of excellent food at value pricing with a fun and entertaining atmosphere. Sagebrush Sam’s is the answer to an increasing demand. The public (1) wants value for everything that it purchases, (2) is not willing to accept anything that does not meet its expectations, and (3) wants entertainment with its dining experience.

In today’s highly competitive environment, it is becoming increasingly more difficult to differentiate one restaurant concept from another. Sagebrush Sam’s does this by being the only buffet concept that features mesquite-grilled, USDA-choice sirloin steaks, cooked on our display grill, for one low price. We will be serving top quality, 21-day aged steaks that are hand-cut daily on the premises and seasoned to perfection. Our grill will be out in the open and loaded with steaks cooked to the proper degree of doneness that our guests request. With our high dinner volume, there will be no waiting for a steak since we will have the grill stocked with every degree of doneness. No other national chain has tapped this market. With red meat (in particular, steaks) increasing in demand today, we believe that this feature will ensure our success.

This restaurant business plan is prepared to obtain financing for the initial launch of this concept. The financing is required to begin work on kitchen design, architectural plans, manuals and recipe books, site selection, equipment purchases, and to cover expenses in the first year of business. Additional financing will need to be secured for the two subsequent units anticipated in July, Year 2 and January, Year 3. Our positive cash flow will help to offset some of this burden.

The financing, in addition to the capital contributions from the owners, will allow Sagebrush Sam’s to successfully open and maintain operations through year one. The initial capital investment will allow Sagebrush Sam’s to provide its customers with a value driven, entertaining dining experience. A unique, mid-scale, innovative environment is required to provide the customers with an atmosphere that will induce middle America to bring family and friends to dine and socialize. Successful operation through year three will provide adequate cash flow to be self-sufficient in year four.

Objectives
Sagebrush Sam’s objectives for the first three years of operation include:

  • Growing one unit per year for the first three years of operation.
  • Keeping food cost under 35% of revenue.
  • Keeping employee labor cost between 16-18% of revenue.
  • Averaging sales in each location between 3-4 million dollars per year.
  • Maintaining tight controls on costs and operations by hiring a managing partner/proprietor for each location and utilizing automated computer/Internet control.

Mission
Sagebrush Sam’s will strive to be the premier buffet restaurant in the local marketplace. We want our guests to have the total experience when visiting Sagebrush Sam’s. Not only will our guests receive a great meal, they will also be provided with a fun atmosphere. We will be doing unique things (such as serving all-you-can-eat USDA-choice sirloin steaks on a display mesquite grill) that will set us apart from the competition. We will want the dining experience to be as pleasing to the senses as it is to the palate.

Our main focus will be serving quality food at a great value. We will feature a large selection of freshly-prepared food, most in full view of our guests. We will feature 100 items daily that are full of flavor and zest at an unbelievable price!

Customer satisfaction is paramount. When approached by a customer with a request, our motto will be, “Yes is the answer; what is the question?” We will strive for broad appeal. We want to be the restaurant of choice for everyone: families and singles, young and old, male or female. Employee welfare will be equally important to our success. All will be treated fairly with the utmost respect. We want our employees to feel a part of the success of Sagebrush Sam’s. Happy employees make happy guests. We will combine menu variety, atmosphere, ambiance, and friendly staff to create a sense of “place” in order to reach our goal of over-all value in the dining/entertainment experience.

Keys to Success
The keys to the success of Sagebrush Sam’s are:

  • The creation of a unique, innovative, entertaining, mid-scale atmosphere that will differentiate us from the competition.
  • Execution of our primary goal to serve nothing but the highest quality food at unbelievably low prices in a clean, fun environment. We must deliver on this pledge 100% of the time, without exception.
  • Controlling costs at all times, in all areas.
  • Hiring the best people available, training, motivating and encouraging them, and thereby retaining the friendliest, most efficient staff possible.

Company Summary

  1. Entertaining surroundings — All stores will feature display cooking of our featured USDA-choice sirloin steaks cooked over a mesquite grill. Our guests will also be able to view our meat-cutting cooler where steaks are hand-cut daily and aged for 21 days to ensure that they are so very tender. The bakery, salad, and hot food stations will also be visible to our guests while they pick out their favorites from over 100 deliciously-prepared items daily. Our walls will be decorated with Western antiques by (confidential or proprietary information deleted).
  2. Quality food — Each Sagebrush Sam’s will serve nothing but fresh meats, crisp salads, delectable side dishes and scrumptious desserts, all served with old-fashioned, home-style care!
  3. 1/3 lb. Sam’s Specialty Beefburger lunch — A special treat will greet our weekday lunch guests from 11:00 a.m. till 2:30 p.m. We will be serving 1/3 lb. Sam’s Specialty Beefburgers off our display grill. The Sam’s Specialty Beefburgers will be ground fresh daily and seasoned with our custom blend of spices designed to enhance their taste. To complement our sandwiches, we will convert one of our hot bars to a cold “sandwich fixin’s” bar, with sliced tomatoes, onions, chopped lettuce, pickles, relish and everything necessary to complement our sandwiches.
  4. Variety, variety, variety — A different menu for every day of the week will feature…(confidential or proprietary information deleted)…to name a few of our special theme dinners. We will also change the menu items quarterly on these nights to spice things up. Open only for peak business periods — Buffet food does not keep well during slow time periods because all hot food must be held above 140 degrees Fahrenheit. Therefore, we will close our doors weekdays between 2:30 p.m.- 4:00 p.m. and at 8:30 p.m. nightly except on Friday and Saturday when we will close at 9:30 p.m. Breakfast buffet — Depending upon location, Sagebrush Sam’s will serve a buffet breakfast, offering fresh fruits in-season, cold juices, hot breakfast items, and cook-to-order omelets from our display grill. Some locations may offer breakfast daily while others may only feature it on weekends.
  5. Self-service — Every new guest will receive a guided tour explaining our concept and the self-serve system. We have found that by doing this we can exceed our guest perception of service 96.5% of the time. For example, if a guest is expecting to get his own drinks but a manager is walking around pouring coffee refills, we will have exceeded their expectations.
  6. Friendly employees — Our employees will be ringing dinner bells when fresh-baked rolls come out of the oven or our signature steaks are ready. Our managers will make table visits a priority, and who knows? Our guests may even see our staff perform a line dance or two! We will dress casually in tailored jeans and ironed logo T-shirts that our customers may purchase for a nominal price.
  7. Dinner all day on Sat./Sun. — We will feature our dinner menu all day on Saturday and Sunday. Since both days are busy all day long, we will not shut down at midday.
  8. Reduced dinner pricing — On Monday-Thursday the dinner price will be slightly lower than on Fri./Sat./Sun. since we will add fried shrimp and ribs to the weekend selection.

Company Ownership

Sagebrush Sam’s – “a steak buffet” is a sole proprietor business. Samuel Brooks is the principal owner. It is Mr. Brooks’ intention to offer outside ownership in Sagebrush Sam’s on an equity, debt, or combination basis in order to facilitate the start-up and growth of Sagebrush Sam’s.

Mr. Brooks holds a BS degree in management from the University of Alberta. He has held executive level positions in management with several successful national restaurant chains.

Company Locations and Facilities

Sagebrush Sam’s will range in size from 7,000-10,000 square feet and will seat from 300-400 guests. Each location will feature authentic western antiques such as Native American blankets, cowboy gear, and horse tack. We will equip the restaurant with a state-of-the-art sound system connected to an old-time juke box where our customers will be able to select their favorite country and western songs for free. Every restaurant will be built to our prototype specifications: clean lines, open, and pleasing to the customer.

The site/building selection will be chosen based upon the following list of criteria:

  • Community size minimum of 40,000 people within five miles.
  • High visibility.
  • Easy access to parking lot with a minimum of 120 parking spaces.
  • Mid- to low-cost land not to exceed $600,000.
  • Heavy blue-collar worker makeup in the community.
  • No overabundance of competition in the trade area.

All of these qualities are consistent with Sagebrush Sam’s goal of providing a top quality, entertaining dining experience at an unbelievably low price. We want “word of mouth” to be our best form of marketing, where our guests cannot believe the value of their dining experience and can’t wait to tell their friends and neighbors.

Services

Sagebrush Sam’s will provide quality dining seven days per week. We will only close our locations on Christmas and Thanksgiving. All locations will be open for lunch and dinner. Selected locations will serve breakfast either daily or only on weekends. All meals will be self-serve buffet style offerings for a fixed price.

Competitive Comparison

Sagebrush Sam’s will have broad customer appeal due to our casual family atmosphere, wide variety of food offerings, and low price points. We will not only compete with the casual segment restaurants, but also with the family value steak restaurants.

In competing against the casual theme restaurants, we will have the following advantages:

  • Lower price point for a complete meal. If our consumer is a steak lover, his Sagebrush Sam’s meal is almost half what he would pay at a theme restaurant.
  • There will be no tipping at Sagebrush Sam’s, since we are self-service. This will reduce the actual customer cost of our dining experience by 10-15%.
  • Speed of service will be instant: no waiting for a steak, salad, beverage, or dessert. Everything will be readily available: hot, juicy, fresh, and cooked as requested.
  • Our portions will be “just right.” Since we are “all-you-can-eat” the portion size meets the need, rather than a pre-determined amount meant to suit the “average” person.
  • Variety is the name of our game. Guests will choose from over 100 different items prepared fresh daily. It is often difficult to meet the dining requests of each family member due to individual tastes. However, at Sagebrush Sam’s, there will be something for everyone, every day of the week.
  • We will provide more entertainment than our competition. Our guests will view our meat-cutting cooler as they walk in; they will watch us cooking 70-80 steaks at a time on our mesquite grill; and they will see us preparing and cooking their hot entrees, desserts, and salads. We want our guests to feel a part of the “Sagebrush Sam’s” dining experience!

In competing against the family value steak restaurants, we will have the following advantages:

  • We will serve better quality food than our competitors. Nightly, we will offer USDA-choice sirloin steaks that are hand-cut daily and aged for 21 days. With our higher dinner price points, we will feature better quality items on the buffet. Not only can we afford to do this, but it will also limit the amount of steaks that our guests will consume per visit. Even though some guests will eat 4-5 steaks, the average still remains at 1.2 steaks per guest.
  • We will offer a lower price point at lunch than our competition and feature a fresh Sam’s Specialty Beefburger, hot and juicy off our display grill, plus the buffet! Our guest could pay the same price at a quick service restaurant, QSR, but only receive a burger, fries, and a drink.
  • Our surroundings will be more entertaining than our competitors’.
  • Our food will be fresher since we will close weekdays between 2:30 p.m. and 4:00 p.m., and shorter evening hours.
  • Our guests will not encounter service problems. Our competitors still feature servers who bring beverages, extra plates, and dinners if ordered. Their servers, which traditionally handle as many as 10 tables at a time, frequently have trouble being everywhere at the same time. With Sagebrush Sam’s, everything is out front and ready for our guests. We will explain our service policy up front and, therefore, never let them down.
  • There will be no confusing menu board when guests arrive at our restaurant. One price will be stated, with everything included. Some of our competitors have 10-foot-long menu boards which are overwhelming to customers and difficult to read. Others try to up-sell and ask too many questions while reeling off specials of the day. After all is said and done, they sell 90% buffets and 10% dinners. We’ve made it simple: one price, everything included. And we’ve put steak back on the menu where it belongs — right on top!
  • We will not need trays for guests carrying drinks, plates, silverware and napkins from the cash register at Sagebrush Sam’s, everything is conveniently placed in the dining room near the food stations.
  • We will be able to staff our restaurant with 25% fewer employees than our competition. With no need for servers, only one cashier, shorter operating hours, and out-front servicing of our food bars, we can efficiently run with a reduced staff.
  • There is no tipping at Sagebrush Sam’s, since we are self-service. This will reduce the actual customer cost of our dining experience by 10-15%.

Sales Literature

Currently, there is not any sales literature produced for Sagebrush Sam’s. However there are plans to produce three different pieces once we open. All should be relatively inexpensive to produce and most will be accomplished in-house by using desk top publishing. Below are the pieces that we are planning to produce.

Table Toppers — will explain concept and differences between lunch/dinner, “Theme Nights,” selling gift certificates, announcing job opportunities, and possibly mentioning franchise possibilities.
Brochures/Handouts — will explain that we can handle large parties, banquets, or buses; another will list our daily featured entrees.
Direct Mail Piece — will explain our concept, list prices, and show inside photographs of our restaurant. We will produce and mail this after our first quarter of operation.

Technology

Each Sagebrush Sam’s will invest in a single high-speed computer to provide a fast and efficient connection to the Internet and also be a link to our cash registers. We will then be able to poll each restaurant nightly to our Corporate Support Center and be able to daily digest key financial information. We will also order online, email, and have a Web page.

Future Services

Sagebrush Sam’s plans for slow and cautious growth during its initial start-up phase. We foresee no more than three units within the first three years of operation. Thereafter, we will never develop more units than we have adequate manpower to operate. A second principle in our growth will be to cluster our development. Our first three units will be within a short distance of each other (a three-hour drive). Afterwards, we will work with neighboring geographical areas for development. Thirdly, we will develop one ground-up unit and one conversion with the first three restaurants. This will then allow us to test which model will work best for future, long-term development.

Market Analysis Summary

Sagebrush Sam’s is faced with the exciting opportunity of being the first mover in the “all-you-can-eat steak buffet” concept to become a national player. The consistent popularity of steak, combined with a value price point in a buffet concept, has proven to be a winning concept in other markets and will produce the same results nationally.

In looking at our market analysis, we have defined the following groups as targeted segments. The only exception comes when we define our targeted segment for lunch. We firmly believe, and have witnessed, that a much broader appeal exists for this midday time slot because we have priced it so low and feature our Sam’s Specialty Beefburger. Below are our targeted market segments.

  • Age — Seniors, Baby-Boomers, young married couples with children, and blue-collar workers of all ages.
  • Family Unit — We will appeal to young families with new babies or mature families with children under the driving age. Most of our family units will have two wage earners.
  • Gender — We will equally target both sexes with a slight skew for males due to their heavy consumption of red meat.
  • Income — We will appeal to the high side of low income individuals and to all in the middle income bracket.
  • Occupation — We will target the blue-collar worker, young professionals with a family, and most of mid-America.
  • Education — High school graduates, or individuals with some college.

By our definition, we will have very broad appeal for our concept. It is our goal to be the restaurant of choice for the largest dining audience in America.

Target Market Segment Strategy

Sagebrush Sam’s intends to cater to the bulk of mid-America. We have chosen this group for several important reasons. First and foremost is the sheer size. With our restaurants seating almost 400 people, we will need a broad base and mass appeal to fill them. It is our goal to have “something for everyone” every day on our menu.

Secondly, it is a very heavy restaurant user group. Last year, Americans dined out an average of 3.7 times per week (that’s once every other night). They are on limited or fixed incomes and seek a value/price relationship that will not stretch their budgets.

Lastly, this group will see a large growth in their numbers over the next decade. If we can continue to meet and exceed their expectations, we should witness same store sales growth over this time period. We will, however have to stay focused on their changing needs and menu choices to maintain their loyalty. For the most part, this group is in a hurry, due to heavy time demands at work and home, so our buffet style of service suits them to a “T.”

Our lunch strategy is dual purposed. First, we are featuring fresh ground Sam’s Specialty Beefburgers with all the fixin’s to fill America’s craving for hamburgers. Most folks’ idea of lunch is a quick sandwich, not a heavy meal. Half of our hot food selection will be replaced with sliced tomatoes and onions, pickles and relish, and chopped or leaf lettuce. Our guests will pick up their Sam’s Specialty Beefburger at our display grill, add melted cheese or hot BBQ sauce, and help themselves to the hottest french fries in town seasoned with our special blend of spices. What’s not to like about a hot, juicy Sam’s Specialty Beefburger served right off the grill!!!

Second, we want to keep the price point at lunch as low as possible to keep us in competition with fast-food restaurants. At $…(confidential or proprietary information deleted)…we are only slightly above the QSR segment and we offer much, much more. Not only do our guests get a sandwich, drink, and fries but also a salad, dessert and a selection of hot food items. By reducing the hot food assortment from dinner, we will be able to keep our food cost in line with the reduced price. All in all, this is a win-win strategy that will broaden our customer base at lunch to include singles, teens, and professionals while still maintaining our core market segment.

Market Needs

Sagebrush Sam’s sees our targeted market group as having many dining dollar needs. Taken from a recent Consumer Reports on Eating Share Trends (CREST) survey, below are the needs we will focus on in Sagebrush Sam’s. Our core group:

  • Seeks strong value.
  • Wants variety and flavor in its food.
  • Looks for speed of service.
  • Wants an entertaining dining experience.
  • Insists upon a clean, friendly, and attractive dining environment.

Market Survey

A market survey was conducted in February, 2000 (seven months after the opening of the second …(confidential or proprietary information deleted)…steak buffet restaurant by Sam Brooks. Key questions were asked of 505 customers called at random in the surrounding area to determine how they rated their dining experience at the steak buffet concept. Some key findings include: (confidential or proprietary information deleted).

Service Business Analysis

The restaurant industry in the U.S. has experienced rapid growth in the last 20 years and is now moving into the mature stage of its life cycle. Many factors contributed to the large demand for good restaurants in the U.S. today. People want more leisure time. There are more two-wage earner families today, and more discretionary income. The competition is strong, with many formidable chains competing for the consumer dollar. It is almost impossible today to strike off into a new, unique, untried venue. Only the strong will survive and prosper.

Due to intense competition, restauranteurs must look for ways to differentiate their place of business in order to achieve and maintain a competitive advantage. The founder of Sagebrush Sam’s realizes the need for differentiation and strongly believes that combining the popularity of steak with the buffet concept is the key to success. The fact that no other national chain has entered this arena as yet presents us with a window of opportunity and an entrance into a profitable niche in the market.

Competition and Buying Patterns

1999 was a prosperous year for the restaurant industry. While not every chain was as successful as it could be, consumers stepped up and continued to increase their use of restaurants. They appeared to have happily paid a bit more for a meal. They don’t seem to need promotions to be inspired to buy. At the same time, operators, particularly chains, appeared fairly cautious. No incremental units were built for the first time since the early 1990’s. Though there were some rocky points in the American economy over the course of the year, things finished up on a high note, and prospects bode well for 2000.

Gross Domestic Product (GDP) percolated along at a growth rate of roughly 4%. The remarkable thing about the GDP is how strongly it finished the year. Disposable personal income grew a little under the pace it set the past two years. The unemployment rate continued to decline throughout the year, and the Consumer Price Index (CPI) popped above 2% but stayed remarkably low.

Concerns about the sustainability of the current economic boom appear to have had a strong impact on the restaurant industry within the operator community. In 1998, after three years of strong increases, the rate of growth for restaurant units dropped to zero! This is the first time since the recession at the start of the 1990’s that the number of restaurants did not grow.

Among chains as a whole, however, smaller chains (under 99 units) were the ones that saw unit counts decline. The most aggressive growth group remains the chains that number between 100 and 500 units.

The conservative behavior of the operator community might have led to a lackluster year for the industry if it weren’t for the fact that consumers kept right on buying more restaurant prepared foods. In 1999, the number of meals and snacks purchased from a restaurant per person grew to 158 occasions per year (nearly half the days in a year), another all-time high! The combined boosts in traffic counts and guest check averages resulted in a 6.5% increase in consumer spending at restaurants. The industry has achieved the longest and strongest expenditures growth ever recorded in the 25-year history of CREST.

All in all, 1999 has been a great year for the restaurant industry. Sales are increasing, consumers continue to use restaurants more often and in more situations, and the restaurant companies have managed themselves so that, on balance, they are in a fairly healthy condition. Every segment and every category grew.

Industry Marketing Overview: 1999

In 1999, campaigns focused on the classic themes of value and quality. As a result of the thriving economy, however, chains added additional elements to their campaigns. For instance, chains approached advertising with greater creativity to differentiate themselves within the marketplace. Chains also focused more on customer service.

(Confidential or proprietary information deleted.)

Regardless of the message, consumers perceived operators to be dealing less this year. For the third year in a row, the rate of dealing did not increase. The trend that had never been seen before continues to stretch! This is not all a case of operators offering fewer deals, however. Many of the deals that are offered have been in place for many years. Consumers may no longer perceive combination meals and $0.99 premium sandwiches as deals. The upside of this is that consumers may be sensitive to special deals when they are introduced. The downside is that it’s tough to come up with a price with more magic appeal than $0.99.
Restaurant Industry Long-Term Future

In the near term, it looks as though two things are likely to happen: restaurants may not have the resources to expand as fast as they did in the early 1990’s, and consumers are likely to continue to increase their demand for prepared meals and snacks. Well-thought-out and well-managed restaurant companies have not enjoyed the market valuations that the dot-coms have in the past year. It seems that nothing the industry can do will attract capital the way it did earlier in the 1990’s. In spite of continued same store sales increases, the lack of interest that the industry generates in the financial markets could keep restaurant operators in a conservative frame of mind in the near term. That lack of financial resources combined with the restrictions faced in the labor market should hold unit development back.

These operators will be wondering how to get more out of the real estate they already have. One of the ways to do this is to raise prices. They have been doing this with fair success for the past couple of years and are likely to continue to push the envelope in this respect. In addition, they are likely to want to get into new business segments: expand into breakfast, offer takeout or delivery service, experiment with snacks. Those ideas will require partnership with manufacturers to develop and design those new concepts within the existing chains.

Fortunately, consumers are likely to continue to do their part in the market. Over the long term, consumers have spent about 5% of their disposable personal income on food away from home. That number has stayed almost flat since 1930. Given the stability of this number, you can expect that total spending in the industry will grow no more than a shade faster than income. All prospects look good for income growth so we are likely to see continued 3%-5% growth. That should be plenty of room for everyone, provided people/money are available.

Main Competitors

Everyone that sells prepared meals is our competition because we all compete for the same home meal replacement dollar. However, there are two segments of the restaurant industry that are our main competition: the casual dining steakhouse concept and the family value steak restaurant.

Business Participants

In the United States today, there are 3,349 chain restaurants that compete for the U.S. restaurant dollar. This number does not take into account the thousands of sole proprietor restaurants that dot the American landscape. These chain restaurants accounted for $108,238,150,121 dollars of business in 1999. In the segments that competed against us there were:

40 chains in the cafeteria segment
1,421 chains in the casual dining segment
274 chains in the family dining segment
1,676 chains in the quick service segment

Among our closest competitors, six are listed in the largest 200 restaurant chains, ranked by sales volume. All have a large national or strong regional presence.

(Confidential or proprietary information deleted.)

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Restaurants & Bars

Bar and Tavern Business Plan

This sample business plan will provide you with the necessary guidelines for opening a bar or tavern in your area.

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Bar and Tavern Business Plan

Executive Summary

Foosball Hall is a new gaming hall and bar serving the Madison, Wisconsin community. Foosball or table soccer is an exciting table game originating from 1920’s Germany. The game involves two to four people in an exciting match that tests skill, strategy, and willingness to have fun. People, primarily male students, play foosball as an exciting alternative to pool. They are looking for skill oriented game that they can play in the social setting of a bar. While there are many different pool hall bars in Madison, there are no foosball bars even though the demand is quite apparent. Demand can be witnessed anywhere there is a foosball table. There are always lines of people waiting to play, and it is extremely rare to be able to walk up to an unused foosball table. Foosball Hall will meet the unmet demand in Madison, Wisconsin with a bar offering beer, food, beverages and plenty of foosball tables for casual play as well as tournaments.

Keys to Success
Foosball Hall has identified three keys that will be critical for their success. The first is the need to design and implement strict financial controls. This is particularly important for an establishment that serves alcohol, as employee theft is one of the largest drains on this type of business. The financial controls will help minimize this risk. The second key is the behavior of all employees toward customers – that each customer is treated as if they were the most important customer of Foosball Hall. The last key to success will be the constant analysis for improvement of the business model. It will be management’s task to continually analyze the business model looking for ways that it can be adjusted to increase profitability for the business. Foosball Hall will not assume that this business model is static, rather, they believe that in order to improve it must be dynamic.

Target Market Customers
Foosball Hall has identified two population target segments. The first segment is casual players of table games. This segment enjoys playing table games such as foosball or pool in a bar setting. They appreciate the opportunity to play a fun game while they consume beverages (alcoholic or not) and socialize with friends or strangers. This group is growing at the annual rate of 8% with 54,889 potential customers. The second segment of the population that will be targeted is competitive players. These people appreciate foosball for the same reasons as the casual players, however, this group is also quite competitive. They play foosball to win, either with friends or in a tournament and continually work on their skills to become better players. This segment has an annual growth rate of 7% and 12,445 potential customers.

Management
Foosball Hall will be lead by Stan Spinner. Stan received his undergraduate degree in Philosophy from University of Wisconsin-Stevens Point. While in college, Stan managed a pool hall. This was Stan’s first experience in a retail establishment and provided him with invaluable experience in tavern operations, as well as insight into customer habits and preferences. Recognizing that one day he wanted to run his own business, but was not comfortable with his incomplete skill set, Stan enrolled in the University of Wisconsin’s MBA Entrepreneurship Program. Stan went through the two year program with the intention of opening a foosball bar upon graduation. Having this goal in his head while taking the course work proved to be quite valuable as it became a lens through which Stan studied all the new material.

Foosball Hall is a start-up gaming (foosball) bar primarily serving the students of Madison. Sales have been forecast to be approximately $200,000 for year two, increasing to approximately $290,000 in year three. Net profit will be negative in year one, rising to a positive % in years two and three.

1.1 Keys to Success

Foosball Hall has identified several business elements that must be implemented in order to succeed in this competitive market.

  • Employ strict financial controls. This is especially important for a bar where, without financial controls, employ theft could bring the business to bankruptcy.
  • Treat every customer as though they are the most important customer to Foosball Hall.
  • Continually look for improvements in the business model as well as operating systems.

1.2 Mission

It is Foosball Hall’s mission to become a premier night spot for Madison students and locals who are interested in playing table games and drinking. Foosball Hall will accomplish this by offering abundant foosball tables, beer, and food at reasonable prices. By providing the Madison market with the opportunity to participate in this increasingly popular table game, Foosball Hall will become a Madison favorite. The business will be operated on the premise that satisfied customers are imperative to a sustainable business.

1.3 Objectives

  • To become one of the premier venues in Madison that offers table games (in this case specifically foosball), beer and food.
  • To grow the game of foosball in Madison, adding legitimacy to the game and increasing the number and participation levels of the tournaments.
  • Reach the point of sustainable profitability by year two.

Company Summary

Foosball Hall, a start-up business has been formed as a Wisconsin Limited Liability Corporation (L.L.C.) with the main purpose as a table game (foosball) operation that offers soft drinks, beer, and light food.

2.1 Company Ownership

Foosball Hall is an L.L.C. registered in Wisconsin. The L.L.C. business formation structure was chosen as a personal liability shield for the owner Stan Spinner. While Stan has outside investors who possess a note securing their investment, Stan is the majority owner.

2.2 Start-up Summary

The following list details the expenses associated with the start up of this organization:

  • Foosball tables: There are 10 U.S.-based manufacturers of tables. The specific vendor will be chosen soon based on a competitive bidding process. All of the manufacturers produce high quality tables and compete primarily on price. Foosball Hall is in need of 10 tables @ approximately $3,000 each. In addition to the tables, two large white boards will be needed for tournament play.
  • Lighting: While the chosen space has lights for the area in general, additional lighting will need to be set up for proper table play.
  • Stools, tables, counter top and chairs: These items will be purchased to provide a place for non-players to relax and socialize.
  • Kitchen equipment: These are the items necessary for serving a bar menu and liquid refreshments. Needed items include: glasses, silverware, plates, microwave, convection oven, refrigerator and freezer, serving/cooking utensils, a beer tap system, a fountain dispenser for soft drinks.
  • Attorney fees: The needed legal services include business formation advice and assistance, basic contract reviews, and general business advice.
  • Consultants: A business consultant will be utilized for assistance in setting up various operating systems for the entity.
  • Various marketing information such as brochures, stationery, etc.
  • Website: The website will be developed as a form of communication regarding the activities of Foosball Hall and the game of foosball. This includes disseminating information regarding tournaments as well as advertising the fact that there is a place that offers foosball. There are numerous foosball associations that will then link Foosball Hall’s site to theirs for general game promotion.

Products

Foosball
Foosball, or table soccer is a popular table game that looks sort of like a soccer game. The name is derived from the German word for field soccer which is fubball. The adopted name in the States is foosball or table soccer. The game itself originated in Germany during the late 1920’s and early 1930’s.

A fact that may come as a surprise to many is that foosball is played on a competitive (professional) level. There are several tours which exist with regional, national and international competitions. Within the U.S. there are two well established associations, United States Table Soccer Association and the American Table Soccer Federation. So while most participants are recreational players, there are many people who play foosball at a competitive level. The bulk of Foosball Hall customers are the recreational players.

Foosball Hall offers 10 different tables for foosball. Five days a week the tables are open to first-come/first-served play. Two days a week half of the tables will be reserved for league/tournament play. Customers are able to play foosball by paying an hourly rate. Players can either play games with people within their party or have pickup opponents. Foosball Hall serves a rotating tap of three beers as well as several bottled varieties. Other beverages include fountain soft drinks. Foosball Hall offers a light bar food menu of sandwiches and several different appetizer items.

So while foosball is the main attraction, i.e. why customers would choose Foosball Hall over another bar, the main source of revenue is from the offered food and beverages. The foosball revenue, both from individual play and from tournaments will help supplement the business, profitability depends on selling sufficient levels of food and drinks.

Offering foosball is an attractive service as many people enjoy participating in some sort of game while they are at a bar drinking and socializing. Foosball provides this entertainment, similar to pool and darts. Foosball offers the same challenge in terms of strategy and skill as pool and darts but makes the experience more fun and action oriented. So foosball can be said to be the best of both worlds, requiring skill and thought but at the same time being fun,  fast paced action.

Market Analysis Summary

Foosball Hall has identified two target customer segments which are particularly attractive. The first segment customers are the more casual players who are looking for some sort of activity (such as foosball, pool, darts) to occupy their time as they socialize and drink. The second group comprises the competitive foosball players. This group travels to where ever there are tables.

While the two groups share the same interest in foosball, they are distinct groups and each one will need to be reached via different methods. Foosball Hall participates within the general pool hall industry, businesses that offer beer and pool typically. The foosball parlor industry is too small and new to have its own industry classification. While foosball is a very popular table game, there are just not enough foosball dedicated halls to have its own industry. Here lies the attractiveness of the industry, most of the foosball playing occurs on college campuses, there are few outside establishments that offer a pool-like foosball hall.

4.1 Market Segmentation

Foosball Hall has identified two distinct customer segments that they will target:

Casual players

This segment is typically made up of  college men who enjoy playing foosball with their colleagues. This group of individuals typically plays to pass time and have fun as opposed to playing at a competitive level in tournaments Characteristics of the individuals that make up this group are:

  • Gender 85% male.
  • Ages 17- 28.
  • College students- 74% of the participants are in college or recently graduated from college.
  • 69% play pool but prefer foosball because it combines similar levels of skill but at a much faster, exciting pace.

Competitive players
This group plays to win. Foosball is not about a fun way to pass time but a serious game at which they work hard, developing competitive skills. This group is far smaller but the individuals are active participants. There are two different manufacturer based associations for foosball and numerous different player based associations. In fact, as a testament to the level of seriousness, size and participation levels of these players, almost all states in the U.S. have their own associations. It is this group of people that will be the most active participants in the offered tournaments.

  • Generally male- 89%.
  • Ages 25-48.

The bulk of Foosball Hall’s customers are casual recreational players.

4.2 Target Market Segment Strategy

Foosball Hall will successfully target two distinct segments of the market. While both groups play foosball, the reasons that they play are different. Understanding this will help Foosball Hall accurately target the specific group. The first group while smaller in size is far more organized and will therefore be much easier to reach. Although seriously competitive players are growing in number, it is a select group of people that compete in foosball. With the advent of the Internet, this group has become quite organized in terms of associations, tournaments, and general awareness of each other. This being said, it is easy to reach this group through advertisements and networking with the different associations. The competitive players are always looking for new places to play, there are generally not enough tables to accommodate them. This will be the easiest group to reach. This group is talkative amongst themselves and always looking for new places and new tournaments.

The casual players will be more difficult to target. This group of people comes from a fairly large cross section of the population, people that like some sort of table game while they hang out with friends and drink beer. The obvious group to try to reach are college students. Madison was chosen in part because of its population of foosball players as well as the huge student population to draw off of. Students are the perfect segment of the population that likes to drink, play games, has disposable income, and has extra time for leisure activities. Additionally, foosball is a social game that requires two- four players. Even beyond the requirement for multiple players, when people play foosball it is typically in a social setting with socializing occurring during play. While there are some other casual players, most are or recently were college students.

4.3 Industry Analysis

Foosball is an untapped game market. While it is not uncommon to have a foosball table in a fraternity house, it is far less common to have one in a public place such as a bar. Most bar owners rationalize that not a lot of people really know how or care to play, therefore if they have to come up with a large capital expense of several thousand dollars, they would rather spend it on something that will appeal to a larger population. It is this mentality that has created the current state where there are many active players that play in one or two places all the time, and generally do not have other options of playing venues. The situation can be seen from a microlevel if you observe party goers at a party that has a foosball table. With one table at the entire party, the table is always in use. There are always more people that want to play than can play. It is a popular, fun game and there are never enough tables available.

There are few commercial playing areas for foosball. Most foosball tables reside in private settings, either a home, fraternity house, etc. The real competitor in terms of industry are pool halls. While the games themselves are not similar, the reason people play and the type of people that play are quite similar. As mentioned previously, people play either as a source of game competition, or they play as a way to have fun and socialize. The users are quite similar as well, however, pool tends to attract an older crowd, or at least some older people. The pool hall/ table game hall industry operates primarily by selling  beer and alcoholic beverages. Food and fountain drinks generate supplemental income. Most business occurs in the evening/ night time, as people use the occasions as a way to relax.

4.3.1 Competition and Buying Patterns

Competition is predominantly from pool halls and foosball tournaments.

Pool Halls
The pool halls are the alternative places, other than typical bars, that people go to to socialize and play games to pass the time. There are many different pool halls that serve the Madison student population. They are typically grouped by some sort of theme, maybe concentrating on the lower price point beer selection, maybe on the music, sometimes on the quality of the pool and billiards tables (typically a function of the skill level of the players and the use of the tables for tournaments). The pool halls are competitors for the casual players, people that are playing as a way to socialize, have fun, and pass the time.

Foosball Tournaments
Currently, the several tournaments that are held for the Madison area players take place in a community center recreation room that has six tables. There are no other public or semi-public areas that have more than a couple of tables available for play. So while the community center will still have tournaments, the facilities at Foosball Hall will be nicer and have more things to offer such as food and beer. By virtue of more and better tables, Foosball Hall will be able to attract plenty of people for the tournaments.

Indirect competition comes from other evening recreation activities, such as bars, movies, theatres, bowling alleys, etc.

Click here to view this full business plan

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