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Rutabaga Sweets
Executive Summary
Opportunity
Problem
The Business Improvement District in Washington DC is in need of a new niche business that combines high-end gourmet freshly-made pastries with the quick service needs on the way to work or after dinner
Solution
We are a a quick-service restaurant where customers sit around a bar and watch their desserts being made. The show, as well as the dessert, is our main selling point.
Market
Rutabaga Sweets focuses on local markets, with a special focus on restaurant and ice cream shop customers. Washington DC provides an excellent climate for our dessert bar as households there spend more money dining out than anywhere else in the country.
Competition
We have no specific direct competition, yet, but of course we also compete with everyone. Our competitive edge is our unique niche in an old market. Although restaurants, cafes, bakeries, ice cream shops, etc have an established position in the marketplace, none are quite like Rutabaga Sweets. We are offering the customers a completely new experience and far higher quality product. No where else will they find a professional chef preparing gourmet desserts right in front of them. The amazing popularity of the Food Network is proof of the public’s new-found interest in being a spectator in the kitchen.
Why Us?
Rutabaga Sweets is a hospitality company dedicated to providing high-quality desserts in a comfortable atmosphere for clients who seek a fun "gourmet" experience outside restaurants.
Expectations
Forecast
As shown in the chart below, we can become profitable by the second year. The heavy startup expenses create the loss for the first year.
Financial Highlights by Year
Financing Needed
We’re looking for $300K total investment, us and close friends and family. Re realize this is not an opportunity for outside arms-length investors.
Opportunity
Problem & Solution
Problem Worth Solving
The locals in the Business Improvement District in Washington DC are in need of a quick service place that serves high quality desserts as a way of spoiling themselves. Celebrations, successes, birthdays, and other occasions need high quality bakery goods. The community also needs a place to gather and learn how to bake. We can add something very unique since our owner is a Cordon Blue chef and can share secrets so mom’s can bake their kids favorite birthday cake at home.
Our Solution
Rutabaga Sweets will hold true to its vision of being a new concept with an old fashioned feel in order to become a favorite spot for DC natives. As the reported national leader in money spent in restaurants, Washington DC is an optimal location for launching a new restaurant concept. Rutabaga Sweets also hopes to become a destination for the thousands of tourists, both American and foreign, who visit DC every year.
Rutabaga Sweets sells gourmet desserts coupled with exceptional customer service in a comforting atmosphere. Customers can dine-in and watch the chef create their dessert. We also offer carry-out to prepare our desserts at home or have a special cake for a celebration. And every month customers can join in the fun and take a cooking class taught by a Cordon Bleu trained chef.
Target Market
Market Size & Segments
Market Segmentation
Our market is divided into four different psychographics: Comfort Creatures, Celebrators, Soccer Moms, and Gourmet Wanna-bes. They represent groups of people sharing similar behavior patterns and reasons for patronizing Rutabaga Sweets.
Comfort Creatures are mainly white collar workers who are driven by success and prestige yet miss homemade comfort foods of their childhood. They may stop in on their own or bring clients in for a gourmet dessert experience.
Celebrators are just that – people celebrating special occasions. Birthday, anniversary, graduation, valentine’s day, etc., families and loved ones will gather at Rutabaga Sweets over sumptuous desserts and a festive atmosphere.
Soccer Moms actually encompasses all family members. Rutabaga Sweets is a gathering place where families are welcome and feel comfortable. "Moms" can come in for after school milk and cookies with their children and relax while we pamper the little ones. Or they can meet up with friends for our Tea Time – a little civilized time stolen in the midst of a busy day.
Gourmet Wanna-bes watch the Food Network and easily spend $50 for the latest cookbook. They’ll be the adventuresome diners at Rutabaga Sweets, as well as the first to sign up for our cooking classes.
Target Market Segment Strategy
We have specifically targeted segments of people with an appreciation for delicious desserts and a need for comfort and relaxation. Rutabaga Sweets is a haven for the busy & successful who want to treat themselves to something soothing and a little sinful! It doesn’t take a lot of time, yet is so rewarding. These people will value the high quality product presented without pretension. Our customers will also appreciate the fun and fast service – whether celebrating a birthday or stopping in before a concert at the MCI Center.
Competition
Current Alternatives
Although Rutabaga Sweets is opening up a new niche in the restaurant industry, there is no doubt that we are competing with a variety of similar businesses. We need to compete against the ideas that dessert is something that only follows a special dinner and needn’t be any better than a frozen cake. We want every day to be a reason to celebrate. And being able to watch your gourmet dessert be prepared by a chef is a treat that appeals to everyone.
While price may be a factor when competing against Ice Cream and Coffee Shops, these same consumers who are willing to pay five dollars for a latte or a scoop of ice cream are already conscious of a better quality product. We believe they will be equally as willing to spend a little extra for an extraordinary dessert in a warm and friendly setting.
The comfort factor also plays an important role in consumer decisions about sweets. Both the atmosphere and staff of Rutabaga Sweets excel at warm & friendly. And the menu will reflect "comfort food" desserts as opposed to intimidating desserts that resemble architectural collosi. We will use the highest quality products; sometimes paring the ordinary with the exotic, but we will always present our desserts in a unintimidating manner.
Our Advantages
We have a very new niche take on a old idea, which means that we have no exact competition. We are the only ones doing this in the area. We have a Cordon Bleu trained chef that can share insights, give a show. Everyone loves the TV show "Iron Chef". We will give our customers a very quick show.
Our other advantages:
We are dedicated to using the highest quality ingredients and "the customer is always right" customer service. Our staff will be trained to help the customer get exactly what they want, a sinful delight. To encourage employees we will give recognition for outstanding service.
We will give baking lessons and be a place where the community can gather and learn and relax.
Keys to Success
Keys to Success
1.3 Keys to Success
- Dedication to the finest quality ingredients and "make it happen no matter what" customer service. We will measure this by reviews on Social Media as well as reviews on other media. We want our customers to reach out to us, we will listen.
- Ongoing employee education and recognition programs. This success will be measurable in tips and appreciation from the customers. They wouldn’t bring their friends back if they didn’t enjoy the experience.
- Give back to the community. People protect their places that love their community as much as their bottom line. We will teach lessons, and give the mom’s a place to gather and bond with their kid.
Execution
Marketing & Sales
Marketing Plan
Rutabaga Sweets’ marketing strategy will be education of the consumer and subsequent word-of-mouth. We will become known as a unique dining experience as well as a superior pastry shop. Customers will be reached through fliers, newspaper advertisements and special holiday promotions.
We will also reach our customers through social media. We will have a facebook page with our customer’s favorite desserts and recipes. Customers can send us their favorite deserts they made themselves on our instagram page. If our chef likes the idea she will make it, and bring the customer in to try our version free of charge. We will also talk to our customers and let our customers talk to us through twitter and linked in.
Location will also play a crucial role in marketing and promotion. The business will be located in high-traffic retail area in Washington, DC known as the BID. Washington DC’s Business Improvement District offers many incentives to businesses operating there. Additionally, there is the traffic that will come from being located near the MCI Center.
Rutabaga Sweets will target progressive and generally well-educated and affluent consumers who are interested in trying new products and experiences and are dissatisfied with the limited selection and lack of personal service found in grocery store bakeries, neighborhood cafes and ice cream shops and area restaurants.
Sales Plan
- We need to sell the company as well as the product. Just as Starbucks became synonymous with great coffee drinks, Rutabaga Sweets will come to be known as a gathering place with spectacular desserts.
- We have to sell not only an amazing "show" as the desserts are created, but also an above and beyond service team who are knowledgeable and friendly. People will always feel welcome and at home at Rutabaga Sweets.
Operations
Locations & Facilities
We will have a facility with a store front large enough to have baking ovens and state of the art equipment. We will have counter space as well as a few tables for the customers to wait for their orders and watch our chef bake. The whole space will be open so the customers can watch. We have enough space to run a cooking class of 12 people.
We plan to manipulate our location in the Business Improvement District to our utmost advantage. Both tax incentives and high traffic due to the MCI Center will give us an edge as a new business. As the BID fills up with new businesses over the next few years Rutabaga Sweets will receive an added boost of increased traffic. Therefore, we are aggressively planning for a 50% increase in sales the second year of business.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | |
|---|---|---|
|
Launch
|
Apr 01, 2020 | |
|
Summer promotion
|
June 15, 2020 | |
|
Plan vs actual review, first 3 months
|
July 14, 2020 | |
|
Fall menu
|
Sept 15, 2020 | |
|
Plan vs. actual review, summer
|
Sept 27, 2020 | |
|
Seasonal promotion
|
Nov 15, 2020 |
Key Metrics
Our Key Metrics are:
- Obviously sales, gross margin, net profits, and cash flow.
- Average monthly sales per customer
- Monthly new vs. repeat customers
- Units sold
- Average price per unit
- Social media: Facebook likes, Twitter follows, twitter mentions, Facebook impressions.
Company
Overview
Ownership & Structure
Rutabaga Sweets will be a sole proprietorship. Incorporation, probably a Chapter S closely held corporation, will be decided at a later date as revenue grows. Initial funding will come from owner’s resources and close friends and family.
Team
Management Team
Rutabaga Sweets will be slow to hire people in the first few years of operation, but very loyal to those who are hired. Initially all employees will be part-time as the majority of the work will be done by the chef-proprietor. As the company grows, new employees will be trained and supervised by original employees who have been promoted to a leadership position. It is our belief that employees who are dedicated to the success of Rutabaga Sweets should be rewarded. They will be leaders in our future store developments.
Personnel Table
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Chef | $43,200 | $45,000 | $50,000 |
| Baker (0.86) | $19,600 | $36,000 | $39,000 |
| Host | $24,000 | $24,960 | $25,958 |
| Dessert/ Bar Assistant | $21,600 | $22,464 | $23,363 |
| Dishwasher / Buser | $18,000 | $18,720 | $19,469 |
| Totals | $126,400 | $147,144 | $157,790 |
Financial Plan
Forecast
Key Assumptions
Our key underlying assumptions for this plan:
- We assume a slow-growth economy, without major recession. This means our customers will be able to purchase our gourmet desserts and enjoy our services.
- We assume that people will always want sinful desserts. We will keep up with the times, gluten free, egg free, do our research to make sure to give our clients yummy desserts that fit the trend.
- We assume we will find people who appreciate our business and our services and want to invest to keep us in business because we give back to our community and are a great place to be and to learn
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
Our start-up funds will be used for: kitchen equipment, store furnishings and construction, and starting inventory expenses associated with opening our first store.
Sources of Funds
We will ourselves and close friends and family invest $300K to start this business.
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $449,850 | $572,000 | $660,000 |
| Direct Costs | $181,260 | $230,550 | $266,200 |
| Gross Margin | $268,590 | $341,450 | $393,800 |
| Gross Margin % | 60% | 60% | 60% |
| Operating Expenses | |||
| Salaries & Wages | $126,400 | $147,144 | $157,790 |
| Employee Related Expenses | $25,280 | $29,429 | $31,558 |
| Rent | $60,000 | $60,000 | $60,000 |
| Utilities | $7,200 | $7,200 | $7,200 |
| Insurance | $3,600 | $3,600 | $3,600 |
| Marketing | $7,200 | $7,200 | $7,200 |
| Legal | $1,000 | ||
| Office Supplies | $2,000 | ||
| Sommelier Consulting | $500 | ||
| Menus | $1,000 | ||
| Insurance | $500 | ||
| Design and Construction | $30,000 | ||
| Research and Development | $1,000 | ||
| Dishes, Silverware, Glassware | $6,000 | ||
| Total Operating Expenses | $271,680 | $254,573 | $267,348 |
| Operating Income | ($3,090) | $86,877 | $126,452 |
| Interest Incurred | |||
| Depreciation and Amortization | $43,095 | $43,095 | $43,096 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $0 | $5,667 |
| Total Expenses | $496,035 | $528,218 | $582,311 |
| Net Profit | ($46,185) | $43,782 | $77,689 |
| Net Profit/Sales | (10%) | 8% | 12% |
Projected Balance Sheet
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Cash | $58,527 | $144,663 | $267,479 |
| Accounts Receivable | $6,575 | $7,722 | $8,910 |
| Inventory | $19,213 | $22,184 | $22,184 |
| Other Current Assets | |||
| Total Current Assets | $84,314 | $174,569 | $298,573 |
| Long-Term Assets | $135,000 | $135,000 | $135,000 |
| Accumulated Depreciation | ($43,095) | ($86,190) | ($129,286) |
| Total Long-Term Assets | $91,905 | $48,810 | $5,714 |
| Total Assets | $176,219 | $223,379 | $304,287 |
| Accounts Payable | $12,856 | $14,342 | $14,342 |
| Income Taxes Payable | $0 | $0 | $1,459 |
| Sales Taxes Payable | $9,548 | $11,440 | $13,200 |
| Short-Term Debt | |||
| Prepaid Revenue | |||
| Total Current Liabilities | $22,404 | $25,782 | $29,001 |
| Long-Term Debt | |||
| Long-Term Liabilities | |||
| Total Liabilities | $22,404 | $25,782 | $29,001 |
| Paid-In Capital | $200,000 | $200,000 | $200,000 |
| Retained Earnings | ($46,185) | ($2,403) | |
| Earnings | ($46,185) | $43,782 | $77,690 |
| Total Owner’s Equity | $153,815 | $197,597 | $275,286 |
| Total Liabilities & Equity | $176,219 | $223,379 | $304,287 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | ($46,185) | $43,782 | $77,689 |
| Depreciation & Amortization | $43,095 | $43,095 | $43,095 |
| Change in Accounts Receivable | ($6,575) | ($1,148) | ($1,188) |
| Change in Inventory | ($19,213) | ($2,971) | $0 |
| Change in Accounts Payable | $12,856 | $1,486 | $0 |
| Change in Income Tax Payable | $0 | $0 | $1,459 |
| Change in Sales Tax Payable | $9,548 | $1,892 | $1,760 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | ($6,473) | $86,136 | $122,816 |
| Investing & Financing | |||
| Assets Purchased or Sold | ($135,000) | ||
| Net Cash from Investing | ($135,000) | ||
| Investments Received | $200,000 | ||
| Dividends & Distributions | |||
| Change in Short-Term Debt | |||
| Change in Long-Term Debt | |||
| Net Cash from Financing | $200,000 | ||
| Cash at Beginning of Period | $0 | $58,527 | $144,663 |
| Net Change in Cash | $58,527 | $86,136 | $122,816 |
| Cash at End of Period | $58,527 | $144,663 | $267,479 |
