IMPLIMENTATION PLAN GoGo Foods is committed to developing restaurants that your team will be proud to be partnered with, and where your guests continue to patronize for years to come. Creating a new restaurant line as a joint venture allows for your continued input and approval of all facets of the final product. To set up shop in 17 locations, many factors must be considered. Some of these locations will require full buildouts to accommodate a quick service restaurant, while others may only need upgrades and new equipment. Our proposal will operate on the assumption that a full buildout is necessary to meet the requirements of our menu and to meet health and life safety codes. We will also utilize current industry data to develop operating budgets and forecasting models that will help in your decision. Below, we outline the proposed budgets and proposed timelines and responsibilities. Proposed Budget The proposed budgets will be based on industry data and facts that will give us both a greater understanding of the financial costs for developing and operating the GoGo Foods restaurants. Majority of the figures below will utilize a conservative approach and assume expenses to be a higher percentage over lower revenue percentage. We use this approach with the intent that as both FasTracks and GoGo Foods brands become more popular, the expenses and revenues will begin to reflect our goals before the end of the 12-month operating period. Construction Costs As previously mentioned, we are assuming that the 17 FasTracks locations described on the RFP will require a full buildout to be operational. From the RFP, each store accommodates 2500-3000 square feet of store space. Unless a part of the proposed QSR space is already accounted for, we propose the utilization of 700 square feet for the kitchen and seating area. It is suggested in Total Food Service Magazine (TFS) that According to a common industry standard, restaurants use the 40/60 rule when determining the size of the kitchen and seating area respectively. (Total Food Service, 2013) However, with our QSR concept of offering easy to eat to-go meals, we are going to reduce the kitchen and seating ratio to 20/80. For our proposed utilization of space, our restaurants will have a 560 square foot kitchen, with a 140 square foot seating area. TFS also recommends that Each potential seating customer is given, by industry standards, 11-14 square feet within the seating area. (Total Food Service, 2013) Utilizing 14 square feet per customer will give us seating for 14 customers. For a QSR within a convenience store, we are confident this is enough customer accommodations. The seating areas will most likely only require minimal changes, since the convenience store section will already be buildout, and we can take advantage of the current space. The kitchens will require full buildouts with the following factors (Latysheva, 2019): Professional Fees (Architect/Design, Permitting, Structural, etc.) Shell (Walls, Floors, Ceilings, etc.) MEP Services (Mechanical, Electrical, Plumbing, etc.) Joinery/Furniture (Built in counter tops, bars, sinks, etc.) 1 Contingency For a 560 square foot kitchen, we will utilize a $113 per square foot factor for buildout. (Independent Restaurant Cost to Open Survey, (Author, 2019). That’s an estimated cost of $63,280. As the lessor of the property, FasTracks will absorb buildout costs. Startup Costs It is very important that all anticipated startup costs are accounted for and identify where cash is allocated. Table 1 describes the kitchen startup equipment and supplies that will be required to open each GoGo Foods. The anticipated equipment needs of each restaurant have been determined by the square footage available and the menu type. (Walters, 2018). Table 1: Kitchen Startup Equipment/Supplies Cost List Items Range/Oven Combo Char broiler Deep-fryer Triple Sink Reach-in cooler/Freezer Sauté pans Saucepans Baking sheets (full size) Baking pans Food pans Tongs Turners Spatulas Ladles 2oz./4oz Solid Food Portioner 6oz. Chef’s knives 10” Whisks Mixing bowls 5qt Steam table Metal or plastic shelves for walk-in cooler Quantity Price Each Est. Cost 1 $5,795.00 $5,795.00 1 $3,210.35 $3,210.35 1 $2,144.45 $2,144.45 1 $1,141.37 $1,141.37 1 $5,062.00 $5,062.00 4 $49.42 $197.68 2 $34.45 $68.90 20 $17.72 $354.40 8 $8.02 $64.16 20 $24.26 $485.20 10 $11.46 $114.60 4 $7.55 $30.20 4 $7.52 $30.08 10 $4.04 $40.40 10 $2.25 $22.50 6 $24.85 $149.10 4 $12.88 $51.52 6 $6.86 $41.16 1 $2,670 $2,670.00 8 $356.40 $2,851.20 $24,524.27 Total Kitchen Equipment Cost Source: suppliesonthfly.com For the business end startup costs, each restaurant location will be registered under individual LLCs and a separate bank account will be established. The bank account has a minimum $3000 per day balance and a $20 opening fee. The website designing will be completed by the service provider at a flat rate. Additional changes may be conducted during the operating year. Advertising and marketing will be shared by FasTracks and GoGo Foods, with most of the marketing conducted online with use of social media. Training costs include pre-opening 2 certification trainings for managers and employees. Starting inventories are based on one weeks supplies and food products. The point of sale software and hardware will be leased, and the kitchen display system will also be leased. The starting costs include on site setup and training. Legal and accounting costs include state limited liability company filing fees and other local legal fees. The last month’s rent is based on the highest market rates of $5.00/square foot. Monthly rent will be based on 4% of monthly revenues. (Chase, 2014). Utility deposits are budgeted for $500 each electrical, gas and water/sewer. Table 2: Business Startup Costs Account Business Set-up: Bank Charges (Bank of America) Website Design and Development (Squarespace) Advertising and Marketing Training Cost Starting Inventories POS (Shared pos)/KDS Legal & Accounting (Legalzoom) Rent ($4.00/sq.ft.) Utility Deposits Kitchen Equipment and Small Wares Kitchen Total Expenses Working Capital Total Amount $3,020.00 $1,000.00 $1,200.00 $3000.00 $15,000.00 $2,200.00 $900.00 $2,240.00 $1,500.00 $24,524.00 $52,584.00 $5,000.00 $59,584.00 Operating Costs To determine dollar figures for operating cost percentages, industry data will be used to estimate annual revenue. According to a 2019 report from the National Association of Convenience Stores (2019), the average convenience store has about 1,400 transactions per day. If we capture 250 of those transactions at an average of $11.00 per transaction, that’s a daily revenue of $2,750. If captured transactions double for weekend days and holidays, daily revenue is now $5,500. Using these figures, we can estimate that annual gross revenue for an individual GoGo Foods restaurant is $1,287,000. For operating cost, GoGo Foods utilizes industry averages and standards to determine monthly costs. The industry standard for food costs is typically in the 28% to 32% range of total revenue and will be referred to as cost of goods sold (COGS). (Laube, 2013). Our restaurants will operate on a 31% COGS rate. For beverages, our restaurants will utilize 11% COGS to account for syrup 3 and CO2 costs. A lease payment of 4% monthly gross revenue will be paid directly to FasTracks. This annual lease payment will be capped at $95,000, however, a minimum of $33,600 will paid directly to FasTracks, which is the $5.00/square foot market rate. (Chase, 2014) Advertising and promotions will account for 10% of gross revenue. Paper products for customers and kitchen supplies account for 3% and 2% of gross revenue respectively. (Laube, 2013). Labor Costs The proposal is for the restaurants to offer breakfast lunch and snacks with operating times of 5:00am to 7:00pm daily. This is a fourteen-hour operating day which includes a one-hour preopening prep and a one hour after close clean up. For our estimated annual gross revenue, industry data suggests 30% is allocated to labor to including benefits and workers compensation insurance. For each operating day, each restaurant will employ one lead or manager, two front line servers and two line cooks. To reduce turnover and increase employee loyalty and morale, GoGo Foods offers higher starting wages for employees and a benefits package. Leads or managers will start at $15.00/hour, white line cooks and front-line servers will start at $12.00 hour. Payroll alone will account for 30% of total revenue. An additional 6% will be allocated to benefits and workers compensation insurance. Table 3 shows estimated revenues, COGS and labor for the fiscal year. Table 3: Revenue/COGS/Labor Food Beverage Total Revenue Cost of Goods Sold Food Beverage Cost of Goods Sold $ Food Beverage Total Cost of Goods Sold as a % Gross Profit Labor Costs % Management Kitchen Front of House Labor as a $ Kitchen Front of House 1,184,040 102,960 $1,287,000 31% 10% 367,052 10,296 377,348 29.3% $909,652 Fixed 15% 15% Sub Total Statutory Benefits @ 7% 4 193,050 193,050 386,100 23,166 Total Labor as a % $409,266 31.8 Operational Profit as a % $500,386 38.9% Table 4 below shows the proposed annual expense budget, utilizing the facts and figure from the report above along with estimated revenues from Table 3. Table 4: Proposed Annual Expense Budget Total Revenue $1,287,000 Gross Profit $909,652 Operating Profit as a % Expenses $436,710 33.9% Monthly Advertising and Promotion Supplies Kitchen Supplies Restaurant Bank Charges Credit Card Charges Insurance Legal & Accounting Maintenance Office Expense Rent Telecommunications Utilities Web Maintenance Annually 10.00% 2.00% 3.00% $3,000 1.2% $1,500 $500 $500 $100 4% $200 $1,500 $500 128,700 25,740 38,610 36,000 15,444 18,000 6,000 6,000 1,200 51,480 2,400 18,000 6,000 Total Expenses $353,574 Income as a % $146,812 11.4% Proposed Timeline and Responsibilities The proposed timeline will be based on a 12-week schedule immediately following the execution of the agreement. The 12-week schedule is aggressive, however, with majority of the buildouts 5 required reside inside of operating convenience stores, we want to reduce interruptions of all current operations. Execution of Agreement The agreement will be for GoGo Foods to operate and manage 17 QSRs within selected FasTracks locations in the South Texas region. Legal representation is recommended for review and approval of final contract prior to execution. Agreement will be executed on day one of week 0 of the project, allowing for 4 working days for location measurement and design. Week 1 will begin the project schedule. Startup Activities Startup activities begin immediately after execution of the agreement and are not affected by construction. These include: Legal Registration/Insurance Website Design and Launch Menu Development/Testing Utility Signup and Deposit Local Health Permit Application Back of House Equipment Sourcing and Purchasing Small Wares Sourcing and Purchasing Marketing Hiring/Training/Uniforms Initial Inventory Final Cleaning Soft Opening Construction Schedule Pre-construction activities will begin immediately after the execution of agreement and include site visits, architecture and design, along with permitting. Beginning in Week 1, and assuming permitting has been approved through the local authority having jurisdiction (AJH), buildout construction will begin on the predetermined restaurants. Substantial completion of construction should be completed by end of week 6. Beginning on week 7, the restaurant should be ready to obtain a certificate of occupancy from the AJH. GoGo Foods Staff Responsibilities Below, Table 5 identifies the positions and tasks assigned to each staff member of GoGo Foods. Table 5: GoGo Foods Staff Responsibilities Officer Jesse Benavidez Position Chief Executive Officer Rauf Adeoye Chief Financial Officer Tasks Local Health Permit Application Soft Opening Final Cleaning Meet with Architects and General Contractor Legal Registration/Insurance 6 Ryan Austin Chief Communication Officer Chief Operating Officer Megan Albrecht Charmaine Blake Chief Marketing Officer Chief Personnel Officer Celeste Amaya Website Design and Launch Initial Inventory Back of House Equipment Sourcing and Purchasing Small Wares Sourcing and Purchasing Marketing Collaboration with FasTracks Hiring/Training/Uniforms FasTracks Staff Responsibilities Below, Table 6 identifies the positions and tasks assigned to each staff member of GoGo Foods. Table 6: FasTracks Staff Responsibilities Position Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Marketing Officer Facilities/Construction Manager Tasks Execute Agreement Secure financing for construction Coordinate construction zones onsite Collaborate with GoGo Foods Marketing officer on marketing strategies Coordinate with Architect and General contractor on site specific needs Figure 1 Proposed Project Timeline 7 Proposed Project Timeline 26-Jun 16-Jul 5-Aug 25-Aug 14-Sep 4-Oct Execution of Agreement Site Walkthrough Architect and Design Permitting Construction Substantial Completion Legal Registration/Insurance Website Design and Launch Menu Development/Testing Utility Signup and Deposit Local Health Permit Application Back of House Equipment Sourcing and Purchasing Small Wares Sourcing and Purchasing Marketing Load in Hiring/Training/Uniforms Kitchen Run Throughs Final Cleaning Soft Opening Grand Opening Start Date Duration The project start date in the timeline above is for reference only and will be adjusted according to the date of agreement execution. REFERENCES Chase, M. (2019, May 19). Rent for restaurants—How to determine the right rent for restaurants. Retrieved from https://restaurantrealestateadvisors.com/rent-for-restaurant/ NACS. National Association of Convenience Stores (2019). Convenience stores and their communities. Retrieved from [URL]. Alexandria, VA. Latysheva, S. (2019, April 9). Here is how much it costs to build a restaurant (infographic). Retrieved from https://www.entrepreneur.com/article/331977 Laube, J. (2013, August 22). Restaurant rules of thumb: How does your operation measure up to industry averages & standards? Restaurant Owner. Retrieved from https://www.restaurantowner.com/public/Restaurant-Rules-of-Thumb-IndustryAverages-Standards.cfm 8 Staff Writer. Total Food Service (2019, November 4). How to create a restaurant floor plan. Retrieved from https://totalfood.com/how-to-create-a-restaurant-floor-plan/ Walters, N. (2019, June 18). Restaurant start-up costs: A breakdown for new restaurateurs. ShopKeep. Retrieved from https://www.shopkeep.com/blog/restaurant-startup-costsbreakdown#step-1 9
