BUSINESS
PLAN
MPAcc 809
Dan Jover
Holly Krall
Jamie Kubik
Laura Schwinghammer
07/03/2009
Executive Summary
The T-Bone’s franchising opportunity that is presented in the subsequent business
proposal is an exciting, profitable venture that fills a demand in Saskatoon,
Saskatchewan. The strong economic environment in Saskatoon has created an ideal
environment to start up a business. The proposed franchise will be located in the
Stonegate Shopping Center, which is an ideal location because of the heavy traffic
volumes it experiences from the two large anchor stores, Wal-Mart and Home Depot.
There are currently no other businesses in the centre to purchase any of the products
that T-Bone’s sells. The location is also directly off Circle Drive and only a five minute
drive from downtown Saskatoon. There are also several growing residential areas
surrounding the centre which will provide a solid customer base to T-Bone’s.
T-Bone’s began as a leading supplier of aged, grain fed Alberta Beef to individuals in
Kelowna who sought gourmet meat and food products. The business has been operating
since 2001 and is now expanding throughout Western Canada. T-Bone’s prides itself on
quality, which is the number one priority in everything that the company sells.
In addition to beef, T-Bone’s offers fresh chicken breast, hot dogs, kabobs, salmon,
buffalo burgers and specialty items such as stuffed leg of lamb, veal shanks, crown pork
roast and lamb shanks. For non-meat lovers T-Bone’s offers a mix of potato, macaroni,
coleslaw and other salads. All items are available fresh or frozen and can be purchased
in freezer packages to use for immediate or future use.
The T-Bone’s franchise is very beneficial as a business opportunity because most of the
product, pricing, and promotional decisions have been made by the franchise which is
paid for through an advertising royalty and a franchising royalty. The meat products are
prepared by the T-Bone’s head office group and would be shipped via refrigerated and
frozen shipping containers directly to T-Bone’s site in Saskatoon. There will be a general
and two assistant managers to monitor the day to day operations. Other staffing needs
are dependent upon anticipated heavy traffic times during each day, which are
anticipated to be 9am – 12pm, and after work hours from 3pm to 7pm on weekdays and
2
all day on weekends. Total workers needed during peak times include one manager and
two to three employees.
The financial analysis for T-Bone’s in Saskatoon was calculated over the next five years,
including three months of 2009 (October, November and December). The three months
of 2009 were included because after the franchise has been awarded, it takes
approximately ninety days until the store will be operating. The required rate of return
on this investment has been established at twenty percent for equity investors and after
performing a net present value analysis the actual return on the investment is 60.9%.
Equity investors will also receive annual dividends equal to fifty percent of net income
each year.
Saskatoon is a vibrant, cultural city with a rapidly growing population consisting of many
young families and professionals. The demographic of Saskatoon is a market that would
be an excellent target for T-Bone’s. The demand for T-Bone’s products, the positive
earnings potential, and the large potential return on investment makes this franchise a
highly profitable investment opportunity.
3
Index
Page
Executive Summary
2
1.0 Introduction
1.1 Industry Overview
1.2 Mission Statement
1.3 Goals and Objectives
1.4 Financing
6
7
8
8
8
2.0 Operations Plan
2.1 Location
2.2 Floor Plan
2.3 Quality Control Program
2.4 Average Business Day
10
10
11
12
13
3.0 Human Resources
3.1 Job Descriptions
3.2 Organizational Structure
3.3 Training
16
16
17
18
4.0 Marketing Plan
4.1 Competition
4.2 Place
4.3 Products and Pricing
4.4 Customers and Target Markets
4.5 Distribution
20
22
23
23
25
25
5.0 Financial Plan
5.1 Net Income Analysis
5.2 Net Present Value, Cash Flow and Ratio Analysis
27
27
28
6.0 Conclusion
28
4
Index
LIST OF TABLES
Table 1.1 Financial Results
Table 2.1 Shift Schedule by Hours
Table 4.0.1 Marketing Expenses
Table 4.0.2 Sample $99.99 Fundraising Meat Pack
Table 4.2.1 Location Relative to Competitors
Table 4.3.1 Freezer Pack Examples
LIST OF FIGURES
Figure 2.1 Proposed Location
Figure 2.2 Floor Plan
Figure 3.2 Organizational Structure
LIST OF APPENDICES
Appendix A – Income Statement
Appendix A.1 – Detailed Sales
Appendix B – Long Term Debt
Appendix C – Balance Sheet
Appendix D – Marketing Budget
Appendix E – Capital Budget
Appendix F – Cash Flows
Appendix G – Staff
Appendix H – Ratio
Appendix I – Base Case Scenario
Appendix J – Worst Case Scenario
Appendix K – Break Even Analysis
5
1.0 Introduction
The following information will provide a business proposal to open a T-Bone’s Fresh
Meal Market in Saskatoon, Saskatchewan. Opening this franchise presents a significant
opportunity to exploit the growth that Saskatchewan is experiencing as well as bring
“AAA” gourmet meat to Saskatoon. T-Bone’s will be located in the Stonegate Shopping
Center in one of Saskatoon’s newest communities, Stonebridge. Stonegate Shopping
Center is an ideal center to place T-Bone’s with the heavy traffic volumes it experiences.
It is privy to two large anchor stores that experience heavy daily traffic with Wal-Mart
and Home Depot, a Tony Roma’s, several other big box stores and a number of banking
centers already in existence.
Stonebridge is located between Preston Avenue and Clarence Avenue, south of Circle
Drive. A new overpass at Clarence and Circle Drive would give easy access to T-Bone’s
for those who do not live in the community.
T-Bone’s offers fresh “AAA” gourmet aged, grain fed Alberta beef, in all forms. In
addition to beef, T-Bone’s offers fresh chicken breast, hot dogs, kabobs, salmon, buffalo
burgers and specialty items such as stuffed lamb leg, veal shanks, crown pork roast and
lamb shanks. For non-meat lovers T-Bone’s offers a mix of potato, macaroni and cold
slaw salad. All items are available fresh or frozen and can be purchased in freezer
packages which are excellent for large parties at a later date.
Key Financial Highlights:

Total revenue for 2010 is projected to reach $1.4 million

The gross profit margin is estimated at 50% and to remain stable

Net income in 2010 is expected to be greater than $100,000 and by 2011 will be
over $180,000 with growth projected in the remaining years

The return on investment is 60.9%, for every $1 invested there is earnings of
$0.60 on the investment.

The Net Present Value is positive at $341,350.
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1.1 Industry Overview
T-Bone’s markets “the finest gourmet meat to connoisseurs who demand the best”, and
since 2004 they have become a “leading supplier of aged, grain fed Alberta Beef” to
individuals in Kelowna who seek gourmet meat and food products. The business has
been operating since 2001 and is now going to expand throughout Western Canada. TBone’s prides itself on quality, which is the number one priority in everything that the
company sells.
The strong economic environment in Saskatoon has created an ideal environment to
start up a business. Population growth is anticipated congruent to previous five year
rates and the commodity based economy is expected to remain in strong demand. This
precipitates success for entrepreneurs as citizens will have ample spending cash flow.
Healthy lifestyle trends will also generate business for T-Bone’s as consumers are now
more health conscious and actively choosing options with greater health benefits.
T-Bone’s will compete directly with larger players in the meat industry such as M&M
meat shops and Prairie Meats and other local businesses such as the Bulk Cheese
Warehouse and Boryski’s Butcher Block. T-Bone’s will be marketed as a higher end
gourmet meat and use the one-on-one customer/butcher relationship as its
differentiating factor in offering unique and fresh ideas for consumers.
Potential challenges that could be faced by T-Bone’s is the threat of industry wide
illnesses (such as mad-cow disease) that alter public perceptions of product safety, redmeat health concerns, the seasonality of decreased barbeque activity in winter months
and commodity price fluctuations affecting business profitability. The first two concerns
will be mitigated by offering other alternative products such as fish, chicken and
vegetarian meals. To combat seasonality T-Bone’s will also market home-cooked meat
and potatoes type meals to Saskatoon residents in the winter time. T-Bone’s is also well
positioned for economic downturns as the absence of middle men keeps product costs
relatively low.
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1.2 Mission Statement
“To make shopping anywhere else unacceptable for customers who value one on one
personal service, cleanliness, convenience and quality products”
1.3 Goals and Objectives

To achieve a minimum return on investment of 20%.

To provide an “extraordinary dining experience to customers every time.”
1.4 Financing
Holly, Laura, Dan and Jamie are prepared to commit $25,000 each to show their
commitment to the project. $150,000 has been financed through a bank loan and a
remaining $100,000 is required from another investor in return for an equity share. The
total equity investment in T-Bone’s will be $200,000.
Table 1.1 Financial Results
Year
2009
2010
2011
2012
2013
2014
(3 months)
Sales
212,682
1,430,495
1,644,852
1,891,374
1,988,002
2,089,807
Cost of Goods Sold
106,341
715,247
822,426
945,687
994,001
1,044,904
Gross Profit
106,341
715,247
822,426
945,687
944,001
1,044,904
Expenses
132,085
639,474
636,817
641,826
645,726
653,304
Net Income(Loss)
(25,745)
61,730
154,319
254,004
291,694
328,498
Net Present Value of Equity Investment
341,350
Internal Rate of Return on Equity Investment at 20%
60.9%
8
Operations Plan
9
2.0 Operations Plan
T-Bone’s is a high quality specialty meat shop serving the needs of meat connoisseurs,
families and corporate functions. The high quality meat is prepared and vacuum sealed
by the T-Bone’s head office group and is shipped via near freezing shipping containers
directly to T-Bone’s site in Saskatoon. The general and assistant managers will monitor
the day to day operations with one manager on shift at all times. Staffing needs will be
dependent upon anticipated heavy traffic times during each day. Peak traffic times are
anticipated to be 9AM – 12PM, and after work hours from 3PM – 7PM. Weekends are
anticipated to experience steady traffic. Total workers needed during peak times on
weekdays will include one manager and two employees. Weekend staffing will include
one manager and three employees. This staffing will allow one base level employee to
operate each of the cash registers and an employee and manager to service customers.
2.1 Location
The location chosen with consultation from T-Bone’s is the Stonebridge area. This
location is the centre of a newly developed community serving as a shopping focal
district with a Wal-Mart, Home Depot, The Brick, Tony Roma’s and more. This location
will provide significant traffic for T-Bone’s on a daily basis due to the strong consumer
drawings for its significant service centre. Circle Drive is a key commuter route in
Saskatoon that services the downtown centre from the south end of the city.
Communities east of Preston working in the downtown core will utilize this route on a
daily basis. The anchor store of Wal-Mart in the Southbridge location makes it a key
destination for the shopping community in Saskatoon located in one of the fastest
growing residential areas of Saskatoon. The adjacent communities of Lakeridge,
Lakeview, Eastview, Nutana Park and the Willows areas harbour an average family
income of $70,315 (Source: City of Saskatoon, Neighborhood profiles 2008 edition), and
a directly accessible population in these communities of approximately 60,000.
Rosewood and Brookside are further developing regions in the southeast portion of
Saskatoon that will service the Stonebridge location. Figure 2.1 is an aerial map of the
10
proposed location that will be situated adjacent to the Tony Roma’s restaurant in a
2,000 square foot open retail space. The positioning directly across from the Tony
Roma’s will serve as a strong factor for potential dinner goers and also grocery shoppers
at Wal Mart will be inclined to purchase a quality meat product to complete their
shopping experience.
Figure 2.1 – Proposed T-Bone’s Location
2.2 Floor Plan
The floor plan, seen in Figure 2.2, will mainly serve as a walk around area for customers
with cooled meats being located in display freezers to keep the meat and prepared food
fresh. The total floor space will accommodate deli display counters, a frozen goods
freezer for pre-packaged/prepared items from T-Bone’s, and fresh sample tables
including prepared goods for customers. The layout includes an office, staff washrooms,
11
a blast freezer, a day cooler, dry storage, and a staff room. This is the floor plan that was
provided by T-bone’s. The rough scaling used is approximate. This floor plan is basic
and allows customers free access to roam display items with two payment points
composed at two cash registers at each payment location. The sample tables are to be
set up during weekdays to offer customers some of T-Bone’s marquee items that have
been already prepared.
Figure 2.2 Floor Plan
2.3 Quality Control Program
All of the T-Bone’s goods to be sold come with full directions on preparation and
storage. The deli display counters include freshly prepared meats that are kept at a
temperature just above freezing during working hours to ensure maximum freshness of
the product per T-Bone’s policy. Ensuring that every meal is a quality experience is a
staple at T-Bone’s as their commitment to quality is second to none and their handling
of produce is done to ensure prolonged freshness of products through vacuum sealed
technology and never freezing fresh meats for maximum flavour. All of their goods are
12
prepared fresh and transported in a near freezing container to ensure products stay
fresh. Quality control tests are implemented on a monthly basis from T-Bone’s to
ensure that products are being displayed, stored and prepared properly. An assortment
of products will be included in the deli display counter and kept at a temperature just
above freezing. High demand products will include more stock in the display counters
while low demand products will only include three display goods. The general manager
will ensure that products are prepared and displayed to specifications to ensure optimal
quality and that customers receive repetitive high quality.
2.4 Average Business Day
The average business day requires preparing goods for set up in the display deli coolers
at 6AM. The goods provided from T-Bone’s for immediate display will need to be
removed from the cooler to the deli display coolers. The store will be open to
customers starting at 9AM and closing at 7PM daily. The store will be staffed with
different combinations of staff throughout the day based on duties and number of
customers.
The above components are explained further below as follows:

The general manager will start at 6AM in order to prepare goods for the deli
display coolers. These goods will be taken from the near zero cooler from
previous day stock or prepared according to T-Bone’s specifications in the
food preparation room. Only basic preparation skills are required to prepare
meats for display. The general manager will also be responsible for ensuring
adequate scheduling for staff members at T-Bone’s for the following week.

An additional base level employee will start at 6AM to help with the
preparations and work until 2PM. The second shift will start from 1:30 PM
and will be finished at 9:30 PM.

The assistant manager will start at 2PM and be at the store until
approximately 10PM. This manager will be responsible for measuring
13
inventory levels at the end of the day and placing weekly orders with TBone’s headquarters via the online ordering system in the T-Bone’s head
office. Display goods will be prepared in the food preparation room at 10AM
and at 4PM.

Sales figures are interfaced with the computer system in the main office and
the head office computer system. This is done by T-Bone’s management to
ensure an accurate monitoring of sales and inventory. It is also used to help
estimate demand and potential areas for product development.

A daily cash drop occurs after closing involving armored car transport to the
local banking facility. The tracking of sales from the cash registers to the
sales monitoring system automatically reconciles cash levels for deposit and
expected payment timelines from credit card payments.
To support these hours of operation, a time schedule has been determined to show how
this the shifts will be arranged and could be adjusted for part time employees on a
rotation for preferences of evenings or days or even after school for employees who are
students. The following Table 2.1 Shift Schedule by Hours illustrates how each employee
will be scheduled. Please refer to Appendix E for the capital budget.
Table 2.1 Shift Schedule by Hours
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
General
Manager
Assistant
Manager 1
6AM –
2PM
6AM –
2PM
2PM –
10PM
2PM –
10PM
10AM –
6PM
2PM –
10PM
2PM –
10PM
2PM –
10PM
6AM –
2PM
6AM –
1PM
Assistant
Manager 2
Meat
Expert
Shifts
6AM – 2PM
6AM – 2PM
6AM –
2PM
6AM –
2PM
6AM –
2PM
2PM –
10PM
1PM –
8PM
6AM – 2PM
Meat
Expert
Shifts
2PM –
10PM
2PM –
10PM
2PM –
10PM
Meat
Expert
Shifts
Meat Man
Expert
Shifts
6AM – 2PM
2PM –
10PM
2PM –
10PM
10 AM –
5PM
10 AM –
5PM
6AM – 2PM
6AM – 2PM
6AM – 1PM
2PM –
10PM
1PM – 8PM
10 AM –
5PM
10 AM –
5PM
14
Human Resources Plan
15
3.0 Human Resources Plan
Jamie’s knowledge of meat packing, love for meat and passion about the new business
will be leveraged to perform the duties of owner and general manager of the business.
The other three investors will act as silent investors and will not have input into the day
to day activities. The positions at T-Bone’s will consist of the following:

General Manager

Assistant Manager

Meat Experts
3.1 Job Descriptions
General Manager
Jamie will be the General Manager and will work full time during the week and will be
paid a salary of $60,000/year. Only one general manager will be required. His duties will
consist of:

Communicating with T-Bone’s head office

Overseeing operations to ensure compliance with franchise standards

Hiring and dismissal of employees

Employee training

Opening of store on weekdays

Weekly Scheduling

Cash deposits during close

Review/Approval of previous night cash-out

Helping with customer service during high demand periods
Assistant Manager
Two assistant managers will be required to work full time evenings and weekends. The
assistant manager will be paid a salary of $45,000/ year and will be responsible for:

Weekly Supply Order

Customer Service

Close store evenings and weekends
16

Nightly Cash-Out

Manage Fundraising campaigns

Weekly inventory counts
Meat Experts
There will be 10 part time meat expert positions available and 1-2 full time meat expert
positions. The part-time positions will be done in shifts and will be flexible depending on
the meat experts schedule as most will be students or have other part-time positions.
Full and Part Time Meat Experts will be paid $9.25/hour with the opportunity for an
increased wage depending on performance and length of employment. These
employee’s duties will include:

Customer service

Packaging meats for customers and taking orders

Cleaning display cases and refilling inventory
3.2 Organizational Structure
Owners
General Manager
Assistant Managers
Meat Experts
Full Time
Meat Experst
Part Time
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3.3 Training
T-Bone’s is a franchise and therefore the initial training and start up of the business will
be directed by T-Bone’s head franchise office. This will consist of a 12 day training
program in Kelowna, BC on location at the first T-Bone’s branch. The General Manager
will attend the 12 day training program and the assistant managers will join for the final
7 days. This will be followed by an on-site Saskatoon visit for 2 days prior to opening and
2 first days of operations. This will ensure that all operations are running smoothly and
in accordance with T-Bone’s standards. Additionally, head office staff will assist to
ensure all glitches can be easily smoothed and addressed. After the initial training, the
General Manager will train all full and part time meat experts to serve customers and
carry out their required duties. The head T-Bone’s office will communicate with the
general manager whenever there are:

New operations, products or procedures

New promotions

Annual weekend update training courses for management
All meat Experts hired will be required to:

Have work experience in the food industry

Read the T-Bone’s meat handbook and pass the T-Bone’s meat knowledge exam

Provide courteous and knowledgeable service to all customers
18
Marketing Plan
19
4.0 Marketing and Promotional Plan
Saskatoon is a vibrant, cultural city with a population in excess of 233,000. The city
continues to grow and is popular with young families and professionals. Saskatoon also
has a large University population and is often considered a University town. The
demographic of Saskatoon is a market that would be an excellent target for T-Bone’s.
One of the greatest challenges facing T-Bone’s Saskatoon is attracting customers to the
store and making it part of their grocery shopping routine. T-Bone’s does not necessarily
offer a new, innovative product but rather a product that residents have already
sourced in the city and already enjoy on a regular basis. T-Bone’s competitive advantage
however is in offering exceptional quality and unique, fresh ideas at an affordable price
which customers will realize as soon as they walk into T-Bone’s. In order to facilitate this
process, we plan to utilize both traditional and unconventional forms of marketing to
ensure that T-Bone’s is a success from inception.
Traditional marketing activities will include such things as print ads, radio ads and
weekly promotional flyers. T-Bone’s has already established a strong reputation in its
three first locations; Kelowna, Penticton and Westbank. T-Bone’s won a 2008 Best of the
Okanagan Readers’ Choice Awards. We will leverage this proven popularity in other
markets to instill confidence and peak interest in this new market through marketing
techniques from T-Bone’s headquarters. In addition to this, ads will highlight the
exceptional quality of the meats, specifically grain fed, naturally aged and completely
trimmed.
Weekly promotional flyers will be distributed as local newspaper inserts commonly used
by larger grocery stores and other retailers. These flyers will advertise weekly specials
and savings that will maintain interest in T-Bone’s product offerings. These specials will
also be featured in radio ads and various local print productions such as magazines and
in newspapers.
We will also plan to have in-house promotions and product samples and giveaways
which have been accounted for in Table 4.0.1.
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In addition to incurring expenses for the aforementioned marketing initiatives, there will
be a 2.5% of sales fee from the franchisor for promotion, development and advertising
as seen in Table 4.0.1 below.
In order to increase brand awareness, we will also use utilize non-traditional marketing
techniques such as viral marketing using pre-existing social networks such as Facebook.
Table 4.0.1 Marketing Expenses
Franchise adv
fees (2.5%)
2009
2010
2011
2012
2013
2014
$2,659
$17,881
$20,561
$23,642
$24,850
$26,123
Local advertising
Radio ads
$2,500
$10,000
$10,000
$10,000
$10,000
$10,000
Print ads
$2,500
$10,000
$10,000
$10,000
$10,000
$10,000
Non-traditional
marketing
$1,000
$3,000
$3,000
$3,000
$3,000
$3,000
Opening
promotions
$2,500
$2,000
$2,000
$2,000
$2,000
$2,000
Total
$11,159
$42,881
$45,561
$48,642
$49,850
$51,123
Finally, we also plan to rely on word of mouth advertising through repeat customers and
by offering an innovative fundraising program. The fundraising program will be offered
to local high schools, sports teams, Universities, Colleges and charities. The fundraising
program would involve the fundraiser selling various $99.99 meat packs. The fundraising
organization collects and keeps a $15 deposit, and the balance is paid at T-Bone’s upon
pick up of the order. This essentially provides T-Bone’s with extensive community
advertising with little effort. A sample $99.99 meat pack is shown in Table 4.0.2 below.
21
4.1 Competition
T-Bone’s main competitors include:

Large and medium sized grocery stores such as, Safeway, Sobeys and The
Real Canadian Superstore

Other specialty meat shops such as Prairie Meats and other specialty stores
selling high quality meats such as Bulk Cheese

Frozen food specialty stores such as M&M Meat shops
Table 4.0.2 Sample $99.99 Fundraising Meat Pack
2 pieces – Mesquite Top Sirloin Steaks 7oz
2 pieces – Teriyaki Top Sirloin Steaks 7oz
2 pieces – Southwestern Top Sirloin Steaks 7oz
2 pieces – Barbeque Flat Iron Grillers 5oz
2 pieces – Teriyaki Flat Iron Grillers 5oz
2 pieces – Mesquite Flat Iron Grillers 5oz
2 pieces – Teriyaki Steak Kabobs 4oz
2 pieces - Plain Steak Kabobs 4oz
2 pieces – Seasoned New York Steaks 7oz
2 pieces – Plain New York Steaks 7oz
2 pieces – Teriyaki New York Steaks 7oz
Indirect competitors include restaurants such as The Keg, The Granary and Tony Roma’s.
We see such restaurants as an indirect competitor since given recent health concerns
over the consumption of red meat, consumers may reduce their consumption at home
and rather consume only when at restaurants.
Although there are a variety of competitors in the area, we strongly feel that T-Bone’s
will be able to carve a niche market in Saskatoon based on the quality of the product
offering and also the proposed location discussed below.
22
4.2 Place
To mitigate the risk of competition, the proposed location for T-Bone’s was carefully
selected. The Stonebridge area of Saskatoon is a new community with a growing
population of middle-class families; one of T-Bone’s most important target markets. The
area also attracts residents from other areas of Saskatoon through big box retailers in
the area such as Home Depot and Wal-Mart. In general, Stonebridge is easily accessible
by major routes such as Circle Drive, Highway 16 and smaller routes including Clarence
and Preston Ave. Given how accessible the area is, consumers will not be deterred from
stopping in on the way home from work or simply coming by as needed.
What makes this area so attractive is the lack of competitors in the neighborhood. Table
4.2.1 below provides the location of nearest competitors and also an estimate of the
distance from the general proposed area. There are no competitors within 3 km of the
proposed site and all consumers coming to the area for the big box retailers will provide
a great deal of traffic with no other specialty meat options.
Table 4.2.1 Location Relative to Competitors
COMPETITORS
LOCATION
DISTANCE
Safeway
2325 Preston Ave
4.0 km
Sobeys
1550 8th St E
3.4 km
Superstore
2901 8th St E
3.5 km
Prairie Meats
2326 Millar Ave
8.0 km
M&M Meat Shop
3322 8th St E
4.1 km
Bulk Cheese
732 Broadway Ave
3.7 km
4.3 Products and Pricing
T-Bone’s offers a premium product at a relatively affordable price. This is possible since
the franchisor sources the meat in high volumes and then passes on the savings to
individual franchises which are in turned enjoyed by the customer. T-bone’s marbling,
23
maturity, and muscle texture ensures the highest level of tenderness, juiciness, and
flavour possible. T-Bone meats possess quality characteristics, such as:

grain fed

superior marbling for exceptional flavour

aged a minimum of 28 days for flavour and tenderness

steaks and roasts trimmed to less then an 1/8 of a inch
The quality of the certified AAA Alberta beef is certain to be popular with consumers
that demand the highest quality.
What also makes the product unique is the a la carte offering. Consumers are able to
purchase items by the piece or by weight rather than a pre-packaged amount.
T-Bone’s also offers numerous products in addition to red meat, such as chicken, pork,
lamb, seafood and fresh salads. This allows T-Bone’s to attract a wide range of
customers. In addition to fresh food products, T-Bone’s also offers freezer packs which
are a pre-packaged variety of meats which are frozen in order to conserve a larger
amount of meat. Two freezer pack examples are shown below in Table 4.3.1 which also
demonstrates the value in T-Bone’s product offerings.
Table 4.3.1 Freezer Pack Examples
Fire up the Grill Pack $139.99
Grill-A-Fill-A Pack $139.99
6 pcs New York Steaks (7oz)
2 lbs Marinated Chicken Breasts
6 pcs Rib Eye Steaks (7oz)
6 pcs Marinated New York Steaks (7oz)
2 lbs Pork Back Ribs
6 pcs Top Sirloin Steaks (7oz)
16 pcs Hamburger Patties (4oz)
3 lbs Sausage
3 lbs Boneless Chicken Breasts
3 lbs Country Style Pork Ribs
3 lbs Marinated Chicken Breasts
2 pcs Whole Frying Chicken
2 lbs Skinless Hotdogs
12 pcs Hamburger Patties
1 bottle Cattle Boyz Barbeque Sauce
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4.4 Customers and Target Markets
T-Bone’s target market is quite widespread as it encompasses all those who consume
red meat, poultry or pork. However the main target would be middle to upper-class
families who consume meat as part of their regular diet. We are also targeting those
who prefer to source the highest quality cuts of meats possible since this is what TBone’s provides. Families are also a target market given the constant need to save time.
T-Bone’s store layouts are efficient and they do not involve the hassle of a full grocery
store. Also, the products are all trimmed and ready to cook which cuts down on
preparation time. There is also a variety of freshly prepared salads and other products if
one wishes to only have to cook meat for a meal and serve.
We are also targeting individuals as well. Given the large selection of a la carte items
which are individually sealed, shopping for a meal for one is simplified.
Finally, with the fundraising program we will target a variety of organizations looking for
an innovative and easy way to raise money for whatever the cause may be.
4.5 Distribution
Distribution of food to the individual franchises is handled by T-Bone’s corporate and
therefore relatively easy. Orders are simply placed and delivered to the franchise
location as needed. This ensures that customers always receive the same quality
products and we would not have to source the huge variety of products offered.
In addition to this, it ensures that products are purchased with high volume savings and
therefore costs are minimized.
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Financial Plan
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5.0 Financial Plan
The key variable to financial success with T-Bone’s is the number of products sold.
There is a detailed analysis of product sales performed in Appendix A.1. Based on the
marketing analysis performed above, the expectations are reasonable and conservative
in nature. A sensitivity analysis was also performed using a plus/minus ten percent of
sales variable and in both cases the net present value is positive. The actual rates of
return are greater than the required rate of return of twenty percent. Please refer to
appendices I and J for further detail. The remaining key variables such as product costs,
staff wages (based hours the store is open), and distribution costs are already
determined by the franchise and therefore the amounts presented will be fairly
consistent with the actual costs.
5.1 Net Income Analysis
Total sales consist of walk in sales, corporate sales, and fundraising sales. The largest
portion (over 90%) is from walk in traffic. In the first three months of operations in 2009
total sales are expected to reach $212,682. In 2010, the first full year of operations,
sales are expected to reach $1,430,495 and net income will reach $61,730. For the next
two years, expected growth in sales is fifteen percent and then begins to level off in
2013 and 2014 to five percent.
As stated above product costs and distribution costs are already pre-determined by the
franchise and will be fifty percent of the selling price. Therefore the gross margins over
the next five years will be consistently fifty percent. The franchise also receives royalties
based on total sales of 2.5% for advertising and 2% for the use of the franchise. The
remaining operating costs are leasing costs, utilities, salaries and wages, interest, local
advertising, insurance and supplies. The net profit margin (see Appendix H) over the
next five years averages approximately 13%.
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5.2 Net Present Value, Cash Flow & Ratio Analysis
The net present value of the investment (see Appendix A) was calculated at $341,350
and has a return on investment of 60.9%. This return is much greater than the required
rate of return of 20% and thus, the investment presents itself as positive and desirable.
The total funds required to finance this investment is $350,000. The four current
investors previously mentioned are prepared to invest $100,000, debt financing is
secured at $150,000, and a remaining $100,000 is required from an outside investor.
The $350,000 will be used to finance the franchise fee of $25,000, capital expenditures
and leasehold improvements of $168,000, and the remaining will finance initial
operating expenses and inventory.
The financial information presented above and in the appendices detailed the potential
opportunity for investors to earn a high rate of return on the T-Bone’s franchise.
The cash flows of the operations are also positive in each of the five projected years
which also indicated financial success (Please refer to Appendix F). The positive cash
flows will also ensure that the dividend policy of 50% of net income is attainable. Cash
flows seem to be quite positive as well as having a substantial net income accompanying
it.
Ratio analysis for the investment was performed in Appendix H. After the first three
months of operations, all ratios demonstrate that the investment is profitable and
confirm that this is a positive investment with a potential for a high rate of return to be
earned by investors.
6.0 Conclusion
The expansion of T-Bone’s into Saskatoon has major potential for long term profitability. The
staffing requirements are minimal, royalty fees are minimal, the initial investment is reasonable
and the payback of the initial investment is rapid. The proven sales model and fully prepared
goods from T-Bone’s headquarters alleviates risk for investors. The T-Bone’s commitment to
quality, experience of the key investors involved and strong market demand will yield a strong
return with significant growth opportunities for the immediate future.
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