Simulated Business Plan -- page 3

Pierre's Berkshire Bistro

Supplies

The same demographic changes that have created a market for the proposed restaurant have already affected the food industry. A number of purveyors of gourmet foods have opened in the region in the last five years.

In addition, supermarkets in the area all have substantial gourmet foods sections. As a result, there are already well developed supply lines for the kinds of foods the restaurant would require. There also are established high-quality bakeries that could supply bread and pastries, and a number of farm stands that would provide home grown produce that would be sought by customers during the summer months.

These resources could be well orchestrated because of the experienced team that would manage the restaurant.

Pierre Chappeau is a graduate of the Culinary Institute of America who later apprenticed at Chanticler, a distinguished French restaurant located in the landmark Hotel Negresco in Nice, France. He has had 10 years of experience as a chef in two major French restaurants in the New York metropolitan area: He spent three years as sous chef at La Cote Bleu in Manhattan and six years as chef at LaPoulet Rouge in Teaneck, New Jersey. Mr. Chappeau acquired La Poulet Rouge in 1989 together with a group of investors. Mr. Chappeau, who owns 25 percent of La Poulet Rouge, has reached an agreement with the other owners to sell that restaurant. For lifestyle reasons, he wishes to relocate to Berkshire County.

While he would run the kitchen in the proposed new restaurant, his wife would run the front of the house. Bernice Chappeau graduated from the University of Wisconsin in 1978 with a degree in French literature, and she earned an MBA degree from the Wharton School of Finance. She worked for three years for General Foods as a brand manager and later joined her husband in managing Le Grand Bistro in Teaneck, New Jersey, for six years. She would perform the same functions at Pierre's.

Financing the Business

As shown in Attachment A the costs of opening Pierre's would be $320,000. The Chappeau's plan to invest

$70,000 of their own funds in the new business. The remainder will be sought from three sources:

$150,000 will be in the form of bank credit.

$50,000 will come from equity capital to be provided by private investors who would own a minority interest in the new venture.

$50,000 will be provided in the form of a low-interest economic development loan from the City of Pittsfield Economic Development Agency.

The initial capital should be sufficient to launch the business and carry it through the first six months of operation even if the restaurant failed to generate any revenues. Assuming that the restaurant operates at 50 percent of capacity, and that average revenues are $20 a head, this will generate a loss of $25,000 for the first year. However, Pierre's would be profitable during its second year of operation. (See Attachment C: pro forma statement of income.)

Preparing for the Next Stage

Once the business has established itself as an institution in the Berkshires, the management intends to capitalize on its franchise in several ways. It would expand its size by building an addition to the restaurant. The size of the property at the proposed site and the zoning laws would permit such an expansion.

In addition to expanding the restaurant, the management anticipates opportunities to sell carryout products bearing the restaurant's name. These gourmet products could either be prepared at the restaurant or produced on a private label basis by local vendors. These products would include marmalades and jams as well as pastries and bread. They would not only be consumed by purchasers but given as gifts. Because of the cachet the restaurant's name is likely to achieve in the area, they could be sold at premium prices providing highly attractive margins.

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