Table of Contents 2 1. Executive Summary About Applebees Situation Analysis Target Market Analysis Marketing Mix 2. Mission Statement Commitment to our team Commitment to the guest Commitment to profit 3. Objectives Team Objectives Customer Objectives Profit Objectives 4. Situation Analysis Strengths Weaknesses Opportunities External Threats 5. Environmental Analysis Competitor analysis Legal environment Economic environment Social environment 6. Target Market Analysis Target Market needs 7. Marketing Mix Product Distribution Promotion Price 8. Implementation and Control 9. Company Location Analysis Demographics 10. Finincial Plan Business outlook 11. Jobs and Duties 3 4 4 5 6 7 8 9 10 13 16 Executive Summary About Applebee’s Applebee’s, the leading restaurant in casual dining, is located in 49 states and eight foreign countries. The first Applebee’s opened up in 1986 in Kansas City, Missouri, and has since expanded to over 1,200 restaurants. Applebee’s has a strong customer base, serving over 20,000,000 guests every month. Applebee’s combines quality food with outstanding service and an inviting atmosphere, making them “America’s Favorite Neighbor.” Situation Analysis Bringing an Applebee’s into Vallejo would help to expand the restaurant business, while offering more employment opportunities for the area. Applebee’s would be an asset to Vallejo because it offers a fun environment, with reasonable prices, and good service. Applebee’s can capitalize on the market situation in Vallejo, being that they already have a well-established customer base, while bringing more customers in by sponsoring local events. Target Market Analysis Applebee’s average target consists of a core market including people between the ages of 3554 years old, and a secondary market of those between the ages of 25-34. In order to have a successful Applebee’s in Vallejo, the target market would be altered somewhat, due to the large numbers of young adults, who are under the age of 25. The new target market would have 18-34 year olds as the primary target, with 35-54 year olds as the secondary market. Marketing Mix Applebee’s is committed to offering a high-quality product with lots of variety to please everyone. Alongside the product is first-rate customer service, to insure an enjoyable experience while dining in a fun atmosphere. The product will be distributed in this environment, which is to include various local memorabilia, to fulfill the customer’s needs. Applebee’s is to be promoted in various ways, including radio, national television spots, and various happy hour specials. Another way is by utilizing the many different holidays the year has to offer, such as Mothers Day, Fathers Day, and Veterans Day. The average price for a meal is around $10.00, which is reasonable for college students and other Vallejo area residents. Mission Statement To contribute to the growth, joy and enrichment of all the lives we touch. COMMITMENT TO OUR TEAM We are committed to providing every member of the Applebee’s family with the opportunity for personal success. We will always provide the necessary fairness, training, coaching, feedback, high standards, growth, and stability for all members of our team to meet their full potential. COMMITMENT TO THE GUEST We are honored that our guests have selected our restaurant. Our commitment is to ensure that we wow our guests by meeting or exceeding their expectations. COMMITMENT TO PROFIT We are committed to responsible profit. We approach profit in a mature and creative way. This provides a stable and rewarding environment for our guests, team members, vendors and shareholders. OBJECTIVES TEAM OBJECTIVES We want to be able to offer a complete and all-inclusive training program so that all our employees will offer the same high-quality service to every one of our customers. CUSTOMER OBJECTIVES Our customers will always be our number one priority. The staff and management of our Applebee’s restaurant will be committed to making the dining experience of every one of our customers wonderful. PROFIT OBJECTIVES We will always be committed to making a reasonable profit so that we can serve our customers effectively and our employees will always have a stable and rewarding work environment. Situation Analysis APPLEBEE’S STRENGTHS In the Vallejo area, the strength of opening an Applebee’s restaurant is that there is a need for a new fresh restaurant where people can enjoy a good meal or a refreshing drink. The restaurants that will fall as competition for Applebee’s will be Chevy’s, Red Lobster, and Olive Garden. However, Applebee’s already has an established customer base. Most people here have been to an Applebee’s and would enjoy having an Applebee’s in the area. Applebee’s has very reasonable prices, which is a big issue for Vallejo residents. Our prices are comparable with those of the other restaurants in the area. It is also true that any industry that is brought into Solano County can only do well, we would be creating more jobs in a lower income area, and there is a good labor base existing with Vallejo residents always looking for employment. We have also included some basic facts about the Applebee’s Company: Applebee's Neighborhood Grill and Bar is the leader in the restaurant industry's casual dining segment, with over 1,200 restaurants in 49 states and eight foreign countries Applebee's serves nearly 20,000,000 guests per month, with a strong mix of day-and week-part visits Applebee's marketing messages-"You Belong at Applebee's" and "America's Favorite Neighbor"-reinforce the concept's inviting atmosphere, "World Class Service" operating philosophy and largely suburban development pattern. APPLEBEE’S WEAKNESSES Our main weakness is the fact that there are many other restaurants to choose from. We also realize that because of where Vallejo is located, we will not be reaching many travelers. However, we will be relying mainly on the students and local area residents as our source of revenue. EXTERNAL OPPORTUNITIES Applebee’s is a “Neighborhood Grill and Bar.” Incorporating local events and places as a part of our restaurant will be one of our biggest opportunities. We will be able to sponsor local sporting events. All Applebee’s restaurants décor includes local memorabilia from schools and Universities. The restaurant industry employs an estimated 11.6 million people, making it the nation's largest employer outside of government. Another opportunity that we have is to create more local jobs. The Vallejo area is growing at a very rapid pace. More and more industry is being brought into the area. EXTERNAL THREATS Our biggest and most obvious threat is the other restaurants that one would have to pass before getting to our restaurant. We will be located just across the street from Chevy’s and Olive Garden. ENVIRONMENTAL ANALYSIS COMPETITOR ANALYSIS Chevy’s o Similar atmosphere o Established customer base o Slightly higher prices o Increased visibility due to location Red Lobster Different atmosphere Competitive prices More prime location LEGAL ENVIRONMENT There are several requirements to open a restaurant in the state of California. The Department of Health has to be contacted to obtain a one-year Food Service License. Licenses issued by the city or general health districts will have to be issued after the restaurant is inspected and all codes are enforced. Liquor licenses also have to be obtained from the State. Our research shows that Applebee’s will need Class D-2, D-2x, D-3 and D-3x licenses. These permits will allow our restaurant to serve beer, wine and liquor on our premises until 1:00 a.m. ECONOMIC ENVIRONMENT According to restaurant.org, restaurant-industry sales are forecast to advance 3.9 percent in 20010 and equal 4 percent of the U.S. gross domestic product. This shows that there is a growing trend in the restaurant industry. As mentioned earlier, we will also be aiding the local economic situation by creating more local jobs and by bringing more industry into the local area. SOCIAL ENVIRONMENT The customers who frequent Applebee’s restaurant have a pre-set expectation of what their dining experience will be. We plan to continue to meet and exceed that expectation. Our restaurant will have the same look and feel as any other Applebee’s and continue to offer that “America’s Favorite Neighbor” atmosphere and reinforce the concept's inviting atmosphere. Target Market Analysis The average Applebee's demographic profile/target is as follows: o 35-54 year old core target, 25-34 secondary target o Average age: 39.5 o Approximately 55% female/45% male o Average HHI: 55K+ o 64% Married o 42% HH with children: o 50%+ college degreed At our location, these demographics will not fit. We have developed our own target market that will better suit our customers. Due to the fact that Vallejo is highly populated with young adults our primary market will target 18-34 and our secondary market will be 35-54. TARGET MARKET NEEDS Having spoken to local students and community members we have learned that there is a desire for more variety in the restaurant industry in Vallejo. We feel that we will be able to fulfill this need because we offer a different menu and atmosphere from the existing restaurants. MARKETING MIX PRODUCT What are the services that accompany Applebee’s product? Our restaurant offers not only food, but is a source of entertainment for most of our customers. After all our employees have gone through our rigorous training program, they will offer all customers a satisfying experience. We will also have a solid management crew, with one manager on the floor at all times. They will be responsible for walking the floor and making sure that all customers are happy and are enjoying their experience. Another one of their responsibilities will be making sure that all the food that comes out of our kitchen looks presentable. What are the benefits that Applebee’s product provides? Applebee’s offers it’s customers a fun, casual place to dine. We feel this is one of the major benefits we have to offer to this market because that is what a majority of our target market is looking for. We have good food, good prices, we have a bar and of course there will be televisions in all sections of the store. DISTRIBUTION How will customers get Applebee’s products? Most Applebee’s customers know what they are getting when the go to an Applebee’s to eat. There are many large booths available for larger groups of people as well as single tables available for 2 people or to be moved together for very large groups. A favorite part of Applebee’s for many diners are the high-top bar tables that circle the central bar area. The interior décor is also an important part to the Applebee’s atmosphere. Local Vallejo area and High School memorabilia will be on display on all the walls and in the waiting area. PROMOTION We have devised many different ways to advertise our new Applebee’s location. They include being included in all the local hotel guides and yellow page advertising (because we do offer carry-out service). We also plan on getting our restaurant on the state highway signs that offer food at local exits. Other promotional ideas that we have come up with include sponsoring local sports, offering Happy Hour specials, and being extremely active holiday events. During our grand opening, we plan on making everyone in the area aware of our new store through fliers, radio promotion, and nationally through television advertising. PRICE Our typical guest check will range from $9.50-$10.00. Appetizers range from as low as $2.00 during Happy Hour to approximately $7.00, entrees at Applebee’s range from $6.00 to around $18.00. We feel that these prices will be extremely competitive with those offered by other local restaurants. IMPLEMENATION AND CONTROL Now that we have decided to place an Applebee’s in Vallejo, California, and after looking at the Vallejo area, we feel that we will be able to continue to adapt our marketing plan to any changes that may occur in the market. We do want to be able to continue gaining the attention of passing travelers and local residents. We want to always be active in the community and sponsoring local sports teams is one way in which we feel we can get ourselves more exposure. Updating our local memorabilia is also an important part of keeping our restaurant new and fresh and keeping our customers wanting to come back. We want to continue to keep our advertising fresh. There are several local newspapers that are read by a diverse combination of those living in the Vallejo area. Through this medium, we can continue to reach the new members of the community as well as continuing our reputation with those customers will have all ready obtained. Company Location Analysis The location of the Applebee’s restaurant is in Vallejo, California right off of Columbus Parkway, near the shopping centers. We expect to get lots of business considering its location near the shopping centers, so shoppers with an appetite can conveniently stop in for a meal without a long wait. Judging by the type of stores in the area, we expect not only adults to be eating here, but teens as well, which is why our affordable meals is a plus. They will have a nice place to sit and enjoy their food because of the welcoming décor and fast and friendly service. Although there are competing restaurants yards from this establishment, we are confident that with Applebee’s low prices and great food, we will stand apart. Because we are mostly serving middle class citizens, we pride ourselves on giving them the best food and experience for their money. This commercial business is expected to welcome on average about 150 people per day. Applebee’s will be visible from the freeway, attracting more people who may be potential shoppers, or just looking for a bite to eat. The fact that there is a shopping center gives this restaurant a big advantage over most, because people who are already willing to spend money on themselves, will definitely indulge in a delicious snack or meal of convenience. Based on the statistics below, a variety of customers will be expected to be visiting this Applebee’s establishment. We serve a variety of foods, and even include a kids menu to conveniently assist parents in selecting meals for their kids. Demographics of Vallejo Vallejo City, California Statistics and Demographics 116760 100.00% Sex and Age Male Female 56553 60207 48.44% 51.56% Under 5 years 5 to 9 years 10 to 14 years 15 to 19 years 20 to 24 years 25 to 34 years 35 to 44 years 45 to 54 years 55 to 59 years 60 to 64 years 65 to 74 years 75 to 84 years 85 years and over 8399 9291 9243 8535 7203 15905 18625 17066 5359 4019 6567 4932 1616 7.19% 7.96% 7.92% 7.31% 6.17% 13.62% 15.95% 14.62% 4.59% 3.44% 5.62% 4.22% 1.38% Vallejo Population: Median age (years) 18 years and over Male Female 21 years and over 62 years and over 65 years and over Male Female Race One race White Black or African American American Indian and Alaska Native 34.9 84541 39980 44561 79864 15392 13115 5239 7876 72.41% 34.24% 38.16% 68.4% 13.18% 11.23% 4.49% 6.75% 109095 41996 27655 767 93.44% 35.97% 23.69% 0.66% Asian Asian Indian Chinese Filipino Japanese Korean Vietnamese Other Asian Native Hawaiian and Other Pacific Islander Native Hawaiian Guamanian or Chamorro Samoan Other Pacific Islander Some other race Two or more races 28205 1064 1032 24215 329 242 483 840 1276 159 537 268 312 9196 7665 24.16% 0.91% 0.88% 20.74% 0.28% 0.21% 0.41% 0.72% 1.09% 0.14% 0.46% 0.23% 0.27% 7.88% 6.56% Hispanic or Latino and race Total Population Hispanic or Latino(of any race) Mexican Puerto Rican Cuban Other Hispanic or Latino Not Hispanic or Latino White alone 116760 18591 12253 814 87 5437 98169 35533 100.00% 15.92% 10.49% 0.7% 0.07% 4.66% 84.08% 30.43% Relationship Total Population In households Householder Spouse Child Own child under 18 years Other relatives Under 18 years Nonrelatives Unmarried partner In group quarters Institutionalized population Non-Institutionalized population 116760 115015 39601 19452 37347 26893 11768 4391 6847 2624 1745 819 926 100.00% 98.51% 33.92% 16.66% 31.99% 23.03% 10.08% 3.76% 5.86% 2.25% 1.49% 0.7% 0.79% Households by Type Total Households Family households (families) With own children under 18 years Married-couple family With own children under 18 years Female householder, no husband present With own children under 18 years Non Family households Householder living alone Householder 65 years and over 39601 28245 14440 19452 9558 6550 3754 11356 8988 3161 100.0 % 71.32% 36.46% 49.12% 24.14% 16.54% 9.48% 28.68% 22.7% 7.98% Households with individuals under 18 years Households with individuals 65 years and over 16771 9384 42.35% 23.7% Average Household size Average family size 2.9 3.43 Housing Occupancy Total housing units Occupied housing units Vacant housing units For seasonal, recreational, or occasional use Homeowner vacancy rate (percent) Rental vacancy rate (percent) 41219 39601 1618 107 1.2 4.5 100.00% 96.07% 3.93% 0.26% Housing Tenure Occupied housing units Owner-occupied housing units. Renter-occupied housing units. 39601 25020 14581 100.00% 63.18% 36.82% Average household size of owner-occupied units Average household size of renter-occupied units 2.99 2.76 Financial Plan Start up Cost Low Initial Franchise Fee High 40,000.00 40,000.00 500.00 5,000.00 Real Estate 6,500.00 26,000.00 Architectural Fees 4,000.00 10,000.00 Leasehold Improvements 90,000.00 170,000.00 Exterior & Interior Signage 9,700.00 15,200.00 100,000.00 120,000.00 10,000.00 10,000.00 Employee Uniforms 800.00 1,000.00 Grand Opening 200.00 6,000.00 Insurance Premiums 500.00 2,500.00 2,000.00 3,000.00 250.00 1,000.00 3,000.00 3,500.00 100.00 250.00 35,000.00 35,000.00 Travel & Living Expenses While Training Equipment Initial Inventory Permits & Licenses Telephone & Utility Deposits and Hookups Miscellaneous Computer Training & Food Safety Certification Course Additional Funds/Working Capital-3 months Total 293,820.00 413,450.00 Based on the statistics of an already successful Applebee’s franchise, we do not expect to lose a lot of money within the first three years of business. With funding from one of the owners as well as bank investors we have complete confidence that this business will fluctuate within the first three years of operation. Below are some statistics that support this theory. Fiscal Year Ended December 31, 2006 Number of restaurants: Company: Beginning of year ................................................................. 486 Restaurant openings............................................................ 35 Restaurant closings...........................................………………… (4) Restaurants acquired from franchisees .............................. 4 End of year .......................................................................... 521 Franchise: Beginning of year ................................................................. 1,318 Restaurant openings.................................................... 108 Restaurant closings......................................................... (13) December 25, December 26, 2005 2004 424 52 (1) 11 486 383 32 (1) 10 424 1,247 92 (10) 1,202 77 (22) Restaurants acquired by franchisor.................. …………… (4) End of year ...................................................... ……………. 1,409 Total: Beginning of year ........................................................... 1,804 Restaurant openings....................................................... 143 Restaurant closings......................................................... (17) End of year ..................................................................... 1,930 Weighted average weekly sales per restaurant: Company ...................................................................... $ 44,637 Domestic franchise ....................................................... $ 49,521 Domestic total............................................................... $ 48,134 Change in comparable restaurant sales(1): Company ...................................................................... (1.0)% Domestic franchise ...................................................... (0.5)% Domestic total.............................................................. (0.6)% Total operating revenues (in thousands): Company restaurant sales(2) ..................................... $ 1,196,258 Franchise royalties and fees(3) ................................. 139,855 Other franchise income(4) ......................................... 1,808 Total ........................................................................... $ 1,337,921 (11) 1,318 (10) 1,247 1,671 144 (11) 1,804 1,585 109 (23) 1,671 $ 45,552 $ 49,564 $ 48,462 $ 46,536 $ 48,143 $ 47,737 (0.9)% 2.6 % 1.7 % 3.8% 5.0% 4.7% $ 1,082,641 128,813 5,196 $ 1,216,650 $ 976,798 121,221 13,615 $ 1,111,634 Business Outlook The company also provided guidance as to its business outlook for fiscal year 2005. Over 125 new restaurants are expected to open in 2005, including at least 40 company restaurants and at least 85 franchise restaurants. Approximately 25 company restaurants are currently expected to open in the first half of the year, with the balance opening in the second half of the year. Approximately 20 to 25 franchise restaurants are expected to open in the first half of the year, with the remainder opening in the second half of the year. System-wide comparable sales are expected to increase by at least 3 percent for the full year, with results expected to be lower during the first part of the year and accelerate throughout the year. Overall restaurant margins before pre-opening expense for the full year of 2005 are expected to be similar to fiscal year 2004 results. General and administrative expenses, as a percentage of operating revenues, are expected to be in the high-8 percent range. The effective income tax rate is expected to be 34.6 percent for the year. Excluding the cost of franchise acquisitions, capital expenditures are expected to be between $130 and $140 million in 2005. The company repurchased 3,993,670 shares of common stock during fiscal year 2004 at an average price of $24.97 for an aggregate cost of $99.7 million. As previously announced, the company's Board of Directors has authorized additional stock repurchases of up to $150,000,000 beginning in 2005 and has approved a written plan for repurchases of common stock in the open market in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. Based on the foregoing assumptions, diluted earnings per share for fiscal year 2005 are expected to be in the range of $1.48 to $1.51, with diluted earnings per share for the first quarter expected to be slightly less than the prior year. These earnings per share estimates exclude the potential impact of any adjustments to the company's accounting for rent and/or depreciation of leasehold improvements as discussed above as well as the impact of expensing stock options beginning in the third quarter of 2005. JOBS AND DUTIES SERVER Our idea is polite, professional, fast, and courteous service. The level of professionalism expected is high. As a server, your section is the entire restaurant—the bar, the phone, the food line, etc. This isn’t to say you will have every table to yourself, but if a job description were set for your restaurant people, its responsibilities would be innumerable—from polishing glasses, capping ashtrays, pouring water and wine, bussing tables and resetting tables, to lighting cigarettes, etc. All of these and more define our teamwork and attitude. Your ATTITUDE and how you fit into our team is essential. With that in mind, the restaurant is your house and the guests are your guests. Treat them with respect, and you will receive the same in return. While the responsibility of assuring great service to the entire restaurant is big, with teamwork it becomes easy and flowing HOST Take telephone reservations, greet customers, take their coats and other accessories to the coat check, Seat guests while being aware of server sections and guest to server ratios in order to ensure a smooth and enjoyable dining experience for guests Be able to answer questions and have thorough product knowledge of your menu and establishments policies and services Provide courteous & efficient customer service to guests. Support your food and beverage team efficiently complete team duties as assigned Manage dining reservations, cashier & cash reconciliation duties. Do your part to ensure a safe work environment for yourself and your co-workers by following the safety rules Adhere to sanitation standards as outlined by the Public Health Department BARTENDER Bartenders prepare standard mixed drinks and pour wine and beer. They also prepare mixed drinks to match the customers specific orders. Most bartenders know dozens of drink recipes. They must be able to prepare drinks quickly, accurately, and without waste. Some large restaurants use machines that create drinks. Bartenders that use these machines just push a button. However, they must know how to prepare drinks in case the machine breaks. In most bars and many restaurants, bartenders take orders directly from customers. However, in some places they receive drink orders from waiters and waitresses. In addition to serving drinks, bartenders collect payment and operate the cash register. They also clean up after customers and clean their work area. They often serve food to customers seated at the bar. Bartenders check identification of customers. Bartenders must be sure customers meet age requirements for the purchase of alcohol and tobacco products. An additional responsibility is to make sure customers do not drink too much alcohol. Bartenders are responsible for ordering and maintaining liquor and bar supplies. They often form attractive displays out of bottles and glassware. Bartenders wash the glassware and utensils after each use. RESTAURANT MANAGER / ASSISTANT MANAGER Food service managers are responsible for the daily operations of restaurants and other establishments that prepare and serve meals and beverages to customers. Besides coordinating activities among various departments, such as kitchen, dining room, and banquet operations, food service managers ensure Managers are generally responsible for all administrative and human-resource that customers are satisfied with their dining experience. In addition, they oversee the inventory and ordering of food, equipment, and supplies and arrange for the routine maintenance and upkeep of the restaurant's equipment and facilities. Functions of the business, including recruiting new employees and monitoring employee performance and training KITCHEN MANAGER They have knowledge of the methods of preparing meats and vegetables in quantity lots as well as a knowledge of the cooking time and temperatures of various foods and methods of preserving their flavor and food value. They must also know the principles of personal and food sanitation. Considerable knowledge of the dietary requirements for a variety of special diets and allowable substitutions for various food items found on diet menus. Must have considerable knowledge of the methods and materials used in the baking and meat cutting activities of an institutional kitchen. Ability to estimate food needs for a relatively large number of persons and to requisition needed food items and the ability to plan and manage food production activities to fulfill menu requirements. Ability to maintain routine records of food used and quantities needed for varying numbers of persons. Ability to establish and maintain standards of sanitation for all areas supervised. SERVICE MANAGER Food service managers oversee the day-to-day operations at restaurants and other places that serve and prepare food and beverages. In addition to overseeing operations, they are also responsible for each department in the establishment from kitchen to banquet operations. The biggest responsibility that food service managers have is to make sure each customer is satisfied with the dining experience. Catering management workers manage inventory, equipment, and the facility while also taking care of all the administrative and human resource tasks such as hiring, recruiting, and training employees. They even have to monitor each employee's work performance, which means they are also responsible for the dismissal or firing of employees. Other duties food service managers may perform include cooking, bussing tables, and possibly a multitude of other duties, depending on business needs. If the restaurant is really busy, then the manager takes on other roles as needed. LINE / PREP COOK A line cook is a cook who supervises a specific area of the kitchen, rather than the kitchen as a whole. The line cook reports to the head cook, who is in charge of overall quality control within the kitchen. The duties of a line cook vary, depending on the type of restaurant he or she is employed at. Levels of training are also variable, since different jobs demand different things from their line cooks. HEAD COOK Plans and writes nutritious menus for all meals; directs the preparation of food; prepares and serves food; arranges and directs the appropriate storage of food and supplies; maintains safety standards throughout all food preparation and storage areas; monitors and maintains the inventory of food and supplies and orders food and supplies in sufficient quantities for weekly meals; determines work schedule assignments for cafeteria staff; monitors and assists in daily clean-up of kitchen, service and dining areas; maintains a variety of records related to meals served, inventory, costs of cafeteria operation and federal/state reimbursement requirements; utilizes computerized nutrition analysis and menu planning software; schedules maintenance and repairs for kitchen equipment; lifts and carries cartons of food, milk bags, and serving containers.