Tonight’s Agenda

OverviewMarketing and Sales - Amber LongDevelopment - Lindsay StrodlOperations - David WeinFinancials - Jillian Doman

About Sweet Basil

Sweet Basil provides high quality Italian take-out meals

Meals are fully prepared but not cooked

Meals provide fresh out-of-the-oven taste and quality with a minimum of effort

“The Sweet Basil Experience”

Marketing and Sales Overview

Home Meal Replacement IndustrySweet Basil’s Target MarketBoulder DemographicsPotential CompetitorsMarketing StrategyTest Marketing ResultsPromotion and Advertising

Home Meal Replacement Industry

“Home Meal Replacement means total meal solutions, the kind of wholesome, nutritious food people would cook for themselves if they only had the time” Restaurant Business August 1, 1997

Fastest growing segment of food service industry

Projected sales for 1997 $80-$100 billion

Trends Driving Growth

Two trends Consumer Time Poverty Quest for a Nostalgic Dinner

Target Market

DINKS- Double Income No KidsFamiliesSingle Young People

Boulder Demographics

63% of the Boulder population fits into one of our target markets

Boulder Population by Category

23.30%

19.50%

18.10%

39.10%

Families Off-Campus Students DINKS Other

Competition

Specialty StoresSupermarketsRestaurantsFast Food RestaurantsCompete on the basis of Quality and

Convenience

Marketing Strategy

Build name recognition and equityObtain and maintain customer

loyaltyCompete aggressively with other

HMR alternativesUtilize word of mouth advertising

positively

Test Marketing

50 Interviews75% interested in a Sweet Basil type

store40% take out food on a weekly basisSpend an average of $20 a week on

take-out

Promotions and Advertising

Test MarketingSamplingNewspapersDonationsFlyers

Development Overview

OverviewScheduleCritical Areas of Development

Schedule

Phase 1: Current Development (1 month)

Phase 2: Preparation (3 months)Phase 3: Finalizing (1 month)Phase 4: Opening and growthPhase 5: Expansion

Phase 1: Current Development

Secure location and leaseObtain Boulder demographicsSurvey potential customersDevelop marketing planIdentify costs to openHire Attorney and ArchitectMenu DevelopmentFile Articles of Incorporation

Phase 2: Preparation

Store remodeling and renovationIdentify and purchase equipmentImplement marketing planIdentify and contract with suppliers

Phase 3: Finalizing

Obtain permits and licensesFinalize menu designInstall and test equipmentBuilding InspectionPrivate openingPublic opening

Phase 4: Opening and Growth

Build customer baseTrack and understand customer

buying habitsEstablish Sweet Basil as HMR

alternative

Phase 5: Expansion

DeliveryCateringSecond Location

Critical Areas of Development

Facility and LeasePermits and LicensesMenu DevelopmentRemodeling and RenovationEquipmentAttorney ServicesInsuranceMarketing Plan

Operations Overview

Management and EmployeesCustomer ServicePurchasing and InventoryPoint-of-Sale System

Management and Employees

Staff of six four owner-managers two additional employees

Training / Responsibility four owner-managers share training and

responsibility two employees skilled beyond the

register

Management and Employees (con’t)

Profit Sharing two employees each receive 5% of

operating income as an incentive builds commitment to Sweet Basil

Dividends four owner-operators each receive 22.5%

of net income as a dividend this leaves 10% for reinvestment in Sweet

Basil

Customer Service

Hours of Operation 11:30 a.m. to 9:30 p.m. 7 days a week

Full and Self ServiceActively seek customer feedback and

input

Purchasing and Inventory

Just-In-Time systemFive basic categories

meats and poultry - 4 times / week vegetables - 4 times / week dairy - 3 times / week non-perishables - once / month (as

needed) packaging - twice / month (as needed)

Point-Of-Sale System

Integrates operationsTracks sales, buying patterns, inventoryGreatly reduces paper work /

bookkeepingComponents

two cash register systems one kitchen system one server in office

Financial Overview

Pre-Opening ExpensesMonthly ExpensesMonth One Sales Projection and

GrowthProjected ProfitabilityProjected Cash FlowsMonthly Breakeven Analysis

Pre-Opening Expenses

Total pre-opening expenses= $49,348Assets expensed when purchasedTotal assets= $27,200

Kitchen Equipment and Supplies= $6,800 Office Equipment and POS system= $10,400 FOH Equipment and Outdoor sign= $10,000

Monthly Expenses

Owners’ Salaries $8,660Assistants’ Salaries $2,598Store Lease $3,844Utilities $588Office Supplies $100Repairs and Maintenance $300Miscellaneous $150Total Expenses $16,240

Month One Sales Projections

Estimated average ticket price $12Expect 40 customers per dayRevenues = $14,148Average Cost of Goods Sold = 34.4% Cost of Goods Sold = $4,867Gross Profit = $9,281Average of $480 per day

Growth Rates

50% in July - total sales = $21,222 50% in August - total sales = $31,834 7% in September - December10% Quarterly in 1999 & 200010% Annually in 2001 & 2002Over $1 million in sales at end of 2002

Five Year Net Income Projection

(100,000)

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Year1998

Q11999

Q2 Q3 Q4 Q12000

Q2 Q3 Q4 Year2001

Year2002

Period

Cumulative

Year One Cash Flow Projection

(10,000)

(5,000)

-

5,000

10,000

15,000

20,000

25,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Period

Cumulative

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Year1998

Q11999

Q2 Q3 Q4 Q12000

Q2 Q3 Q4 Year2001

Year2002

Period

Cumulative

Five Year Cash Flow Projection

Monthly Breakeven Analysis

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

40 45 50 55 60 65 70 75 80 85 90 95 100

Average Customers per Day

$10 Ticket Price $12 Ticket Price

$14 Ticket Price $16 Ticket Price

Breakeven Point = $28,287