1.0 Executive Summary
Meals on Wheels will operate a quick service retail restaurant, Meals on Wheels Café, offering
good food fast at a reasonable price to the 3000+ employee base of Appomattox Industrial Park
in Colonial Heights, Virginia. The café will be part of a much larger food production facility,
which will use cook/chill technology to prepare meals for homebound seniors and disadvantaged
populations. The Meals on Wheels Cafe will take advantage of the efficiencies offered in a large
kitchen facility staffed with professional culinary staff.
Business Description
The Meals on Wheels Café is a 1,800 square foot quick service restaurant located at the front of
the 40,000 SF Meals on Wheels Central Kitchen Facility. The café faces the main artery, Ruffin
Mill Road, of the Appomattox Industrial Park, which currently employs more than 3,000 people.
Currently, two large plants are being built, and park developers project growth of the employee
base to more than 6,000 people within three years.
The closest competitors for employee breakfast and lunch business are McDonald’s, Subway,
and WaWa, about 1.5 miles away. Many other quick and full service restaurants are about 5
miles from the industrial park—a 10-15 minute drive in the midday traffic. Market survey results
strongly indicate the demand for a café within walking or short driving distance of neighboring
plants. Not only do the formal responses underscore the desire for alternative lunchtime choices,
but there were many anecdotal instances of employees telling Meals on Wheels staff to “hurry
and get here so we have somewhere good to eat!”
Based on market survey results, the café will serve take-out and eat-in breakfast and lunch meals
in addition to take-out dinners. Breakfast and lunch catering for company functions within the
industrial park will be offered beginning in month three of operations. Hours of operation will be
6 a.m.–4 p.m., Monday – Friday. Menu selections will include breakfast sandwiches, fruit,
bakery items, juices and coffee for breakfast, and sandwiches, soups, salads, blue plate specials,
sodas and desserts for lunch, and blue plate specials with desserts packaged in dinners for two
and four.
The management team will include an executive chef to start-up the central kitchen and café, setup the production processes, formulate and standardize recipes, and provide periodic business
audits and product development. Permanent full-time staff include a general manager to oversee
the kitchen and café and a sous chef to oversee all food production. The remainder of the staff is
comprised of two full-time and four part-time counter workers/sandwich preparers. A catering
manager will be hired in year two to grow the catering business. In year one, the marketing
manager will promote the catering services while the general manager oversees the catering
production. It is important that the café and kitchen integrate production processes as this
provides great efficiencies for the café and lessens the risk of food waste and spoilage. For this
reason, the general manager will oversee the entire facility rather than have separate management
functions. The executive chef has been hired and is providing leadership in the development of
the café and central kitchen.
The Meals on Wheels Café will be a separate profit center of the Meals on Wheels agency.
Shared staff will include the financial and human resources staff, the president, the marketing
coordinator, the staff dietitians and the kitchen production staff. Volunteers will be used heavily
1
in the kitchen packaging and traying area. This will be a cost savings regarding the blue plate
specials and the dinners for two and four especially. Volunteers will not be used in the café as
skilled labor, but as greeters and “consumer advocates” to regularly perform customer
satisfaction surveys and provide a warm feeling to each visit.
Financial Information
Year 1
Year 2
Year 3
# Transactions
240
373
517
(not including catering)
Weighted Average Transaction
$6.28
$6.66
$6.85
(not including catering)
Breakeven
150
192
268
(not including catering)
Profit Margin
10%
16%
18%
Revenue
$266,227 $449,376 $665,496
The greatest risk to the business is that sales will not be on target with projections and the café
will drain resources from the main kitchen facility. If the café does not make a profit (however
small) in eighteen months, management will look closely at the possibility of closing the café,
incorporating the equipment and staff into the central kitchen, converting the space for
office/training use and focusing on other parts of the business.
The structural and equipment/furnishing needs of the café will be financed as part of the central
kitchen development package of $8 million. This will be a combination of fundraising and taxexempt bond financing, with initial funding of $3 million in equity and $5 million in bond
financing. Construction of the central kitchen facility including the café is projected to be
completed in late fall of 2004. The café is slated to open in early 2005, approximately 60 days
after the production kitchen opens for business. Meals on Wheels will provide working capital to
the café, which will be paid back within the first year of operation. Once the café has paid this
back and has accumulated four months of working capital in the bank, the café will pay 50% of
all profits to Meals on Wheels, putting the remainder into growing the café business.
Additionally, the café will pay overhead and general/administrative fees to Meals on Wheels
based on industry standards.
The Meals on Wheels Café will succeed due to the following key factors:
• The location of the café is the true competitive advantage – it’s easily accessible, faces
the main road through the park, and there are no retail competitors within the isolated
industrial park
• The shared usage of the production kitchen keeps inventory and production costs low
• The reliability and consistency of the menu offerings due to the cook/chill process
• The staffing model supports “good food fast”
• The expertise and talent of the professional staff currently on board
• The Meals on Wheels branding and reputation in the community and the added value of
proceeds benefiting homebound neighbors: 69% of potential customers surveyed said
they would be more likely to eat at the café because the proceeds benefit Meals on
Wheels
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2.0 Description of the Business
“There can be no more noble, important, or fundamentally good purpose for any program. The
ever-increasing number of people being served by the organization is irrefutable evidence of
Meals on Wheels’ indispensability. We have an obligation to grow it; it is our duty to expand our
capabilities. This kitchen and the onsite café is the equivalent of a launching pad which will be a
foundation for propelling Meals on Wheels beyond the limits of its past dependencies and into a
new sphere of community service. That service is feeding people who need our help. It must be
done.” Peter Habenicht, Meals on Wheels Board Member
“Smart nonprofits are realizing that they must be more self-sustaining. They must creatively
stretch themselves in new directions while not abandoning their mission.” Carolyn Cuthrell,
Meals on Wheels Board Member
Meals on Wheels
The need for in-home services such as home delivered meals has grown dramatically over the
past decade as the number of seniors continues to escalate. With health care no longer providing
adequate recovery time in hospitals, families dispersed, and people living longer lives, many
seniors need help to remain independent and in their own homes. In the greater Richmond area
alone, demand for meals has tripled over the past eight years. To position itself to meet the
growing need and to eliminate the waiting list for financial sponsorship, Meals on Wheels is
building a central kitchen production facility. This will allow for a number of efficiencies as well
as add value to the service. Kitchen production will use cook/chill technology, which preserves
the freshness and nutrients of the food and produces very attractive, delicious meals. Cook/chill
will also provide efficiencies in labor because of the increased shelf life of the product. The
central kitchen will allow Meals on Wheels (now outsourcing food production to a for profit
vendor) to use donated food and volunteer labor to reduce the cost of each meal.
The board and staff are tremendously enthusiastic about launching the new café (appendix 6.1),
particularly because of the use of food production assets already existing, the diversification of
income generation, the creation of awareness of the Meals on Wheels mission, and the focus on a
sustainable business operation.
Vision and Mission
Café Mission:
To Serve Our Customers Good Food Fast in a Warm Friendly Environment
Café Vision:
• To generate income that will support home delivered meal service to needy seniors and
persons with disabilities
• To provide a warm and comfortable neighborhood café experience that also introduces
customers to the mission of Meals on Wheels
Primary Objectives:
• To create a profitable business entity that will allow Meals on Wheels to become more
financially self-sufficient and less reliant on outside sources to fund its programs
3
•
•
To develop awareness of the Meals on Wheels program in order to grow the volunteer
and donor base
To establish the Meals on Wheels Café as a retail success and an asset to the community
Business Summary
The Meals on Wheels Café is a start-up retail operation. The products sold will be breakfast
sandwiches, bakery goods, juice and coffee for breakfast; sandwiches, soups, salads, blue-plate
specials and sodas for lunch; and blue plate specials packaged as dinners for two or four, which
include dessert. Catering will be made available for functions within the industrial park
beginning in month three of year one (café and catering menus may be seen in appendix 3.1).
The primary market will be the 3,000+ employees currently working in the industrial park. With
the industrial development already taking place within the park, this market will grow to over
6,000 employees within three years.
The closest real competition is over a mile away and requires transportation. Beyond that,
driving five miles in any direction will take customers to a plethora of restaurant offerings. Two
of the existing plants have in-house cafeterias, but a recent market survey (survey results in
appendix 2.1) suggests that these cafeterias are underperforming and not popular with
employees. More than one-half of employees surveyed bring their lunch from home on occasion.
The location of the café in the industrial park is the true competitive advantage. The area is
sprawling with one story manufacturing plants dispersed throughout. Upon driving into the park,
the Meals on Wheels Café is immediately visible, positioned on the front corner of the main
intersection. As previously indicated, employees must drive outside of the park to get to any
restaurant or fast food facility. Anecdotally, a majority of people surveyed indicated they are
frustrated with the lack of close lunchtime options and they would wholeheartedly welcome a
new café.
The target market for the lunch meal is the 29% of park employees who currently spend between
$6 and $10 for lunch each day. These are primarily administrative and professional staff. The
average transaction is projected to be $6.50 for lunch, and it is anticipated that 75% of customers
will eat in and 25% will take out. Breakfast will be mostly take-out business from shift workers,
administrative staff and delivery drivers, with an average transaction of $3.00. 60% of potential
customers surveyed stated that they would take out breakfast on a regular basis. The dinners to
go program is the most closely tied to the kitchen production because it is the same menu used
for home delivered meal clients. Although starting small in projections, this is seen as a growth
area for the café, and marketing will be aggressive in the first few years. 42% surveyed indicated
that they would order dinners for two, and 25% stated that they would take out dinners for four.
Objectives
Focusing on quality, service and consistency, and aligning prices with the market’s willingness
to pay, the Meals on Wheels Café projects becoming profitable almost immediately, with net
profit margins beginning at 10% and growing to 18% in year 3. Sales are projected to be
$266,227 in year 1 with net profit of $25,497 growing to about $122,000 in year 3. Profitability
is due to two primary factors - the efficiencies provided by operating within a larger production
facility and the strong interest of the target market in purchasing food from the cafe. It is
4
anticipated that the café will pay unrelated business income taxes on its profits because of its
external focus.
The quality and consistency of the food will be a factor of the internal processes of the central
kitchen. Cook/chill technology delivers high quality food consistently and reliably. The general
manager and executive chef will ensure recipe adherence for quality and cost controls. The
volunteer greeters at the café will add value to the customer’s visit and will act as advocates for
the customer, ensuring that the visit is pleasant and eliciting feedback for future improvements.
Variety will be built into the menu with daily soup and blue plate specials and weekly
sandwich/salad specials to discourage boredom and encourage repeat business.
Expertise
Meals on Wheels’ core competencies lie in the efficient distribution of meals and the effective
use of diverse groups of volunteers. The organization has been touted as one of the most efficient
and most highly visible nonprofits in the central Virginia region. In fact, Meals on Wheels was
recently recognized as one of the top brands in the area.1
Because Meals on Wheels has grown so rapidly over the past few years and has strengthened its
infrastructure and fundraising ability as it grows, the agency’s management team has a reputation
for good management and entrepreneurial thinking. The governing board is known as a strong
visionary board. Although Meals on Wheels has formed an LLC, MOW Cooks, initially the café
will be operated as a profit center of the central kitchen facility, with oversight by the board of
directors. Fundraising equity from the central kitchen facility will be used to finance the
structural and equipment needs of the café. Meals on Wheels will infuse the café with $35,000 in
working capital (see attached cash flow statement), which will be paid back within the first year.
The venture team leader of the café and the kitchen is the president of the organization, who has
been a driving force for the need to build and expand the reach of the agency in the community.
To fill in the gaps of food production and restaurant management, Meals on Wheels has added to
its planning team two industry experts with many years of experience in start-up operations.
Short bios of the management and planning team follow:
Deborah L. Marsh, MBA, President
Ms. Marsh has over twenty years of nonprofit management experience. In the nine years of her
presidency at Meals on Wheels, she has raised funds to purchase the building where the agency
is now located; doubled the geographic serving area; established an endowment fund; enhanced
the agency’s income by instituting mass-mailing campaigns, municipal advocacy and creating
two prominent annual fundraising events; created numerous programs to address clients’ special
needs; and by coordinating with other nonprofits, has helped establish a more seamless structure
for supporting the homebound members of our population. By judiciously choosing professional
staff, outsourcing certain elements and expanding the scope of the Board of Directors, Ms.
Marsh has gathered a powerhouse of talent that poises Meals on Wheels on the threshold of a
new dimension of community service.
1
The Richmond Business Journal - Inside Business – Vol. 8 No. 18, April 29, 2002
5
Colleen T. Keller, R.D., Director of Nutrition Services
Colleen developed and implements the medical nutrition therapy program at Meals on Wheels
for homebound elderly, disabled and ill meal recipients at nutritional risk. She is responsible for
management of food service and distribution activities, and has oversight of all specialized
nutrition programs. She performs nutrition screening and assessment of meal recipients, creates
monthly menus to accommodate several diets, writes grant proposals and assesses outcomes of
the various nutrition programs. Colleen earned a Bachelor of Science in Dietetics from James
Madison University and completed her post-graduate dietetic internship with the Medical
College of Virginia. She is a respected adjunct faculty member at J. Sargeant Reynolds
Community College where she teaches nutrition classes for nursing students.
Morgen McElroy, Public Relations/Development Coordinator
Morgen is Meals on Wheels’ link with print and broadcast media outlets. She works closely with
the Meals on Wheels marketing agency to coordinate publicity for all special events and
fundraisers. She has single-handedly planned and executed Hunger Strike, one of the agency’s
leading fundraisers, and exceeded income expectations by acquiring sponsors and effectively
managing fifty teams of fundraisers. Morgen edits the quarterly newsletter, Table Talk, and
works closely with the agency’s president on grant applications and government advocacy
activities. Morgen graduated from the University of Georgia with a Bachelor’s degree in
Journalism.
Eric W. Theile, Executive Chef
Chef Theile is a highly sought-after advisor on process improvement and food quality at Chilled
Prepared Food plants throughout the United States. He is an innovative professional with indepth management experience in processing and packaging operations. He has a proven track
record of producing consistent positive results in operation start-ups, restructuring, and process
improvements. He has introduced and implemented concepts to companies such as the “Total
Cycle Time Concept” and “High Care, Low Care” process flow, reducing production time and
resulting in dramatic decreases in direct labor costs. Chef Theile earned a B. S. in Business
Administration from Leeds University in England and holds a diploma in Hotel Management
from the Swiss School of Hotel Management. He is an active member of the Research Chef’s
Association and dedicated supporter of the mission of Meals on Wheels.
Roger D. Neathawk, President, Neathawk Dubuque, Inc.
Mr. Neathawk’s early career path as a pharmacist and hospital administrator led him through a
number of increasingly responsible positions, culminating as Chief Executive Officer of Mary
Immaculate Hospital, Newport News, Virginia. His lifelong interest in marketing led him to
establish Neathawk Dubuque, Inc., a full-service marketing, advertising and public relations
agency. Mr. Neathawk is well-known in the Richmond community for his philanthropic
leadership supporting nonprofit and charitable organizations, most notably at Meals on Wheels
(twice serving as Board Chair) and as Executive Director of Virginians for the Arts. He is the
recipient of numerous honors, such as the Mid-Atlantic Marketer of the Year (1987), presented
by the American Marketing Association. His education includes a Bachelor of Science
(Pharmacy) from Medical College of Virginia and a Master of Science (Business) from Virginia
Commonwealth University in Richmond, Virginia.
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Christopher J. Ripp, Vice President, The Restaurant Company
Mr. Ripp is Vice President of The Restaurant Company, Richmond, Virginia, a local owner and
operator of casual full service and quick casual restaurants. These restaurants include several
Arby’s Restaurants and a Vie de France, which are some of the best regarded fast-food
restaurants in the Richmond metropolitan area due to their varied and healthful menu selections.
He holds a B.S. Double Concentration – Finance and Marketing from the University of
Richmond and also an A.O.S. degree from the Culinary Institute of America. Mr. Ripp has
extensive cooking experience at a variety of fine restaurants in New York and California. He has
recently joined the Board of Meals on Wheels.
Steve Ellison, MBA, Brooks Adams Research, LLC
Mr. Ellison serves as Director of Research and Business Development for Brooks Adams
Research and is responsible for the design, management, administration and implementation of
all marketing research projects. His 10-plus years in the market research field provides the
experience of well over 100 different research studies, to include market and product/service
feasibility studies, product/service improvement and customer satisfaction and tracking
programs. Mr. Ellison is a magna cum laude graduate of Southwest Missouri State University,
with a double major in Market Research and Marketing Management. He earned a Master’s in
Business Administration from Virginia Commonwealth University in Richmond, Virginia.
3.0 Industry and Market Analysis
Industry Overview
The “quick service” restaurant industry is experiencing explosive growth at present—this is the
12th consecutive year of real growth in the restaurant industry nationwide.2 More people are
eating out than ever before; over 54 billion meals were eaten in restaurants and school and work
cafeterias in 2002 and that number continues to grow.3 Quick service restaurants are filling a
variety of niches for consumers, offering ready to eat and ready to heat foods packaged for “on
the go” consumption. Three of the top ten trends in 2003 were heat and eat foods, retro nutrition
(no added sugar, low fat, more dietary fiber, low in calories), and casual indulgence—the sense
that everyday foods should be a little more gourmet; for example, new entrée salads featuring
nuts and fruits, and fancier sauces on sandwiches.4 Concern over the rise of obesity in America
accompanied by the need for good food quickly in today’s fast-paced society has changed what
consumers want from a quick service restaurant. 5 This is reflected in the rise of innovations such
as the “fresh” fully cooked, seasoned, ready-to-eat value added products offered by national
grocery stores, the rise of Subway chains, and newly added curbside service windows at
traditional full service restaurants like Applebee’s and Outback Steakhouse.
Locally, restaurant sales are expected to increase 5% this year in Virginia.6 The Meals on Wheels
Cafe will be positioned as a quick service “lifestyle friendly” restaurant targeting a specific niche
of captive customers in the industrial park area. Increasing media and regulatory scrutiny about
2
Quick service (fast food) sales are projected to increase 4.1% in 2003, with sales totaling $120.9 billion—up $4.8
billion from 2002 (National Restaurant Association 2003 Restaurant Industry Forecast)
3
Restaurant.com
4
Foodtechnology Sept 2003, vol 57, #9
5
A survey of “What America Eats” in Parade magazine reports that consumers want foods that are not merely
convenient, but “tastier, healthier, easier, and faster”
6
National Restaurant Association 2003 Restaurant Industry Forecast
7
portion sizes and fat content is swaying consumers away from fast food and toward alternative
choices that can be delivered quickly, including specials that aren’t fried and made-to-order
sandwiches that can be customized for the customer. The primary key to Meals on Wheels’
success will be producing great-tasting food rapidly with personable service. The second will be
that there is no comparable facility located within the industrial exchange.
Restaurant Industry Entry Barriers
• Typically low profit margins—8% or less
• High start-up and capital costs
• High employee turnover—restaurant hours can be grueling for the average person,
including long hours, late nights, and weekends
• High levels of competition both in number and variety
• Location is vital to customer traffic
Entry Success Factors for the Meals on Wheels Café
• Location. The Meals on Wheels Café will be the only restaurant of its type in the
industrial park, with a captive audience of 3,000 which will grow to 6,000 employees
in the first three years. Restrictive zoning requirements limit entry of competitors.7
• Capital costs low, no debt burden: Because the café is a small part of a large production
facility, capital costs are relatively minor and include only equipment and furnishings.
Fundraising equity will be used for structural costs and equipment, and Meals on Wheels
will provide the initial infusion of cash for operations.
• Higher margins due to cost advantages of larger production facility.
• Lower employee turnover than industry averages due to favorable hours—no weekend or
evening work—competitive pay, a positive work environment with the “feel good” aspect
of working for a nonprofit accompanied by high importance placed on employee
satisfaction.
• Targeted use of volunteer labor—volunteers working as “customer advocates” in the café
will serve as a cost-saving measure as well as a constant way to measure customer
satisfaction and elicit customer feedback.
• Target market is a large and captive audience with limited restaurant options within a
convenient travel distance; market research has indicated a high interest and likelihood to
purchase goods.
Environment
The Meals on Wheels Café will be located in south Richmond, 1.5 miles off of I-95S in the
Appomattox Industrial Park off Ruffin Mill Road, a major industrial exchange. The actual site
will be positioned at the entrance of Appomattox Industrial Park, easily accessible for all the
businesses present. This specific locale and the surrounding areas are primarily industrial and the
plant location of several national businesses (Hill Phoenix, Honeywell) and some smaller sales
offices (TechnoBrands, Physician Sales and Service). Growth of the park will double in the
7
Chesterfield County Code of Ordinance: “Retail sale of goods and articles manufactured or assembled by a
permitted use shall be permitted, provided the salesroom for any one establishment does not exceed a gross floor
area of 30% of the gross floor area of the establishment up to a maximum of 2,000 gross square feet per
establishment.”
8
next three years with the placement of new businesses and a Mitsubishi plant that will
become the largest employer in the park.
The industrial exchange employs a third of Colonial Heights’ civilian labor force—3,100
people out of 9,071.8 South Richmond, the city of Colonial Heights in particular, is expanding-becoming a good location for businesses because of an abundance of land and its close proximity
to the city. Restaurateur Chris Ripp, owner of 18 Arby’s franchises in Richmond and
surrounding counties, reports the store in Colonial Heights as having the lowest employee
turnover with the most productive staff.
Competitors
1) Competition--Bringing lunch from home:
60% of those surveyed reported bringing lunch from home on occasion. These same respondents
also indicated that they would be interested in frequenting the café as many as four times per
week.
Meals on Wheels Café competes by empowering people to vary their routine. Competitivelypriced food that accommodates most lifestyle diet needs within walking distance gives people a
choice of what to do for their meal while allowing for spontaneous decision making. Selling
Point: Lunch from home unappealing? No time to pack one in the morning? Let’s walk to the
café because we know we can all get something we like.
2) Competition--On-site cafeterias and vending machines:
The largest employers in the park, Hill Phoenix and Armkel, contain cafeterias within their
facilities. 1.3% of those surveyed reported using the cafeterias. Vending machines were common
within the other facilities surveyed.
Meals on Wheels Café competes by offering an assorted menu to please a wide range of
appetites. Aggressive menu rotation, usage of fresh ingredients, and made-to-order menu items
are distinct advantages over cafeteria food or vending machines. In a recent Hill Phoenix
conducted survey of the company’s cafeteria, employees reported being highly dissatisfied with
the food presented to them.9 Vending machines are common within the other facilities surveyed,
but offer limited selection and for the most part, unhealthy choices (processed snack foods,
sodas, pre-packaged sandwiches). The food offered at the Meals on Wheels Cafe will be better
quality than cafeteria fare or vending services can provide.
3) Competition--Fast food restaurants:
All three of the survey respondents most cited establishments are located 1.5 miles from the
industrial park, and are only accessible by car. Subway’s made-to-order freshness, low-fat
offerings, and reasonable cost have made it popular as the nation’s fastest growing chain.
McDonald’s inexpensive menu and quick service have made it a dependable and hearty option.
WaWa, with made to order sandwiches as well as pre-packaged fare, is quick and basically selfserve, offering a mix of fruit, vegetables, and heartier sandwiches.
8
9
Colonial Heights Chamber of Commerce, 1999
Verbally per Human Resources Manager at Hill Phoenix
9
Meals on Wheels Café competes by proximity and variety. A two-minute drive and convenient
walk from anywhere in the park (only two to five minutes for employees of Sun Chemical,
Timberland, and Armkel), the café is more accessible for all employees of the park and can offer
a variety of freshly made soups, salads, sandwiches and hot entrees, rather than pre-packaged or
high fat lunch items. Anecdotal evidence from speaking with employees at the companies
surveyed highlighted the notion that more choices are strongly desired and people have grown
tired of the surrounding eateries.
4) Competition--Full service restaurants:
A strip of restaurants located 5 miles from the park on Jefferson Davis Highway contains two
major grocery stores and a range of traditional full service restaurants in a medium-sized
thoroughfare.
Meals on Wheels Café competes by proximity, price, menu rotation, immediacy. Traveling the
two-lane road at lunch hour is a time-consuming hindrance for those visiting the full service
restaurants. The café is closer to those working in the industrial park and is priced lower than a
typical sit-down lunch from a full service restaurant. Retaining an on-site dietitian means that the
café can implement special menus immediately and make menu changes based on customer
feedback quickly. Because the café does not have to operate according to corporate guidelines as
many chain restaurants and franchises do, Atkins-friendly, heart-healthy, diabetic, low-fat, lowsodium offerings can be added or subtracted to the menu based on the market. The ability to be
creative and flexible and respond quickly to customer needs sets the Meals on Wheels Café apart.
Meals on Wheels has a solid reputation in the community based on the integrity of its mission
and the proven good work the agency performs on a regular basis. The café will offer good
meals quickly and at a reasonable cost, while offering customers the associated good feelings of
supporting the Meals on Wheels mission. Meals on Wheels will position itself as a caring
member of its new community and an advocate of good nutrition. A whopping 69% surveyed
responded that they would be more likely to use the café because it is associated with Meals on
Wheels.
3.1 Market Analysis
Customer proximity is a key success variable for the Meals on Wheels Café. Over three hundred
park workers must pass by the café entering and exiting work, and the café faces the main
thoroughfare of the industrial park. Drive time from anywhere in the park is less than two
minutes, and for those who must pass by (Sun Chemical, Armkel, Blueprint Automation, Marva
Maid, Linens of the Week, Timberland) it is a short five-minute walk to the café. Thirty-eight
spaces have been marked for café parking; however customers are able to park along the street if
necessary.
Survey Results
Meals on Wheels surveyed the employees of the major businesses located within the park to
determine their interest and potential use of the café. The survey was a four-page written
10
document (appendix 1.1) and was created by a team of experts from Neathawk-Dubuque
Advertising and Public Relations and Brooks Adams Research.10
One-on-one contact and the written responses (appendix 2.1) revealed that employees of the
park desire the same thing regardless of age, sex, income level, or job title: an assortment of
good food, multiple meal options, reasonably priced items served quickly, and convenience.
Meals on Wheels’ repeat business success will lie in the following
• Exceeding customer expectations
• Warm and friendly service
• Appropriate pricing
• Good presentation of product
• Variety and rotation of menu items
• General belief in the Meals on Wheels brand by the customer
Benefits
The Meals on Wheels Café will offer local employees an alternative venue for dining before,
during, and after work. Currently employees go to the nearby McDonald’s or Subway restaurant
on their lunch break, or bring their meal and eat in. The café will be close and it will be
affordable. The average price of a complete lunch with drink is $6.50, which is higher than a
Subway or McDonald’s meal but significantly less than restaurant or more gourmet fare. The
café will also offer a variety of menu items, providing a change from fast-food hamburgers and
sub sandwiches. The food options the café will serve fit in with any lifestyle—whether it is the
more calorie-conscious consumer or the hardworking laborer who wants something hot and
hearty. The café will also offer dinner carry-out services, which will provide employees the
additional option of taking prepared food home at the end of their workday.
Benefits of using the Meals on Wheels Café are not limited to food. As mentioned earlier, survey
respondents indicate that they were more likely to visit the café because it assists the Meals on
Wheels mission. This is an additional “feel-good factor” that benefits the consumer. The
diversity of the potential customer base also presents the opportunity for further volunteer
education and recruitment beginning at the café. This is an asset to café marketing activities and
the Meals on Wheels Café will aggressively position itself accordingly.
Primary Segments
Sixty percent of those surveyed are between the ages of 25-44, indicating most of the prime
market falls in this age range, which is important to note in terms of their likes and dislikes.
Their desire for fresh, healthful food at a reasonable cost correlates well with the projected menu
of the café.
The café has the following customer segments:
• Shift Workers
Shift workers desire good food fast for a price that fits their budget. Having only 20-30 minutes
for a lunch break and comprised of more males than females, shift workers will benefit from the
10
Meals on Wheels employees hand-delivered surveys to each company that was willing to participate, including a
return envelope for completed surveys. Surveys were distributed in-house and kept anonymous. One hundred sixty
completed surveys were returned from 475 distributed to 12 of the 16 companies Meals on Wheels collected data
from, a return rate of 34%, with an error margin of approximately +/- 7.7%.
11
speed and efficacy of the café and will be a prime market for breakfast and blue plate specials at
lunch.
• Administrative Staff
Administrative staff have indicted that they desire quality, atmosphere, and a break from their
desk. Typical arrival time of administrative workers is 7:30 a.m. (Armkel, Fiorucci),
corresponding with the shift schedule and “early to rise” mentality of the workforce of Colonial
Heights. These workers range from management to the administrative assistants, salaried
employees that remain on site for the entire day with an hour for lunch. “Brown-bagging it”
(60% surveyed) is common for this group, and often lunch is eaten at one’s desk.
• Delivery Drivers
Delivery drivers need speed. The businesses within the park are primarily distribution and
manufacturing companies, which means that outside suppliers and truck drivers will frequent the
park on a regular basis, as will service providers such as UPS, USPS, and FedEx. Twenty-five
providers are currently under contract with the park. These employees are likely prospects for the
café, as one or several will be inside the exchange every day. Having limited time for lunch
makes them excellent candidates for quick-serve goods able to be picked up and paid for quickly.
The convenience and quality of the café’s breakfast and lunch services will be the primary
benefit for delivery drivers, as well as the chance to leave their vehicle without disturbing a tight
schedule.
• Volunteers and Employees
Volunteers and employees want a good meal at a reasonable cost. The central kitchen facility
will utilize a volunteer base of more than 500 volunteers and will employ 30 workers onsite.
Volunteers and employees are a loyal and captive market that already have a tie-in to Meals on
Wheels and have little else to choose from at peak meal times when they are already hungry
during and after their work period.
Product (Meal) Options
Breakfast
Survey respondents indicated that if breakfast was served, they would be interested in either
ordering breakfast take-out items (60.6%) or eating in (30%). The average breakfast meal will
include a breakfast sandwich and beverage for $3.00—comparable to any other offering in or out
of the park. Primary customer base:
• Shift workers
• Administrative Staff
• Delivery Drivers
Lunch
Survey respondents indicated that 29% of those surveyed currently pay $6-$10 for lunch. In an
industrial park of 3,000, 29% translates into 870 people. Meals on Wheels will capture 10% of
the appropriate market, or 87 people per day. The goal of Meals on Wheels Café is to reach and
maintain 10% market penetration as the employee base of the park doubles in size. Primary
customer base:
• Administrative Staff
12
•
•
•
Delivery Drivers
Volunteers
Meals on Wheels Staff
Dinners to Go
Dinners to Go has proven to be a highly successful concept for local Ukrop’s supermarkets, a
hugely prominent local chain that uses cook/chill technology. The Dinners to Go concept blends
healthful fare with convenience, packaging a main dish with a side in a manageable Dinner for
Two or Dinner for Four size. The meal is not frozen, so freshness is evident yet preparation time
for the consumer is reduced.
Meals on Wheels will use this same concept with items produced at the kitchen. Cost of
production for Dinners to Go is extremely low, thanks to efficiencies in production—the meal
offered for the evening will be what was produced in the kitchen that day. Dinners can be
packaged in a cost-efficient way with no wasting of food, time, or energy, and special dishes can
be offered as well to reflect popular needs (high protein, low-fat, etc). 42% of those surveyed
indicated that they would purchase Dinners for Two and 25% indicated they would purchase
Dinners for Four. A major shift change at 3 p.m. provides the perfect opportunity for customers
to leave work and stop by the café to pick up a flavorful dinner for themselves and/or their
family.
Marketing efforts for Dinners to Go include providing front-desk operators at the top seven
companies with a free Dinner to Go at a specified time, offering delivery of a group of Dinners
to Go as incentive to purchase, special coupons offering discounts on Dinners to Go, and
emphasizing the ease and simplicity of purchasing Dinner to Go for the customer in all
marketing materials. Marketing will include 10%-15% of the marketing representative’s time
spent fostering relationships within the park and helping to drive sales of Dinners to Go. Primary
customer base:
• Shift workers
• Administrative staff
Corporate Catering
Catering for business functions within the industrial park will be available on or off site in month
three. Corporate catering will be an option for birthday parties, client meetings, group meetings,
and other gatherings of 10+ people. A great way to boost relationships with HR managers and
departments throughout the park, the café will work closely with targeted company
representatives to try the food and hear about the catering services available. Primary customer
base:
• Administrative staff
4.0 Marketing Plan
Primary Target Market
Three thousand people currently work within the exchange. In its first year of operation, Meals
on Wheels will have secured 10% of the lunch market, or 87 customers per day. Breakfast targets
are based on securing the 60% of the market that indicated they would take out items from the
café (30% also indicated they would eat in) to come to the café once per week (48 people per
13
day). Dinner goals are based on obtaining 5% of the 42% of those surveyed that indicated they
would purchase dinners for two and 5% of the 25% indicating they would purchase dinners for
four (65 and 40 people per week respectively). This will grow from 290 meals per week to 750
meals per week in year three. Additionally, catering will grow to 30% of sales by year three of
operation with the addition of a catering manager in year two who will market one-on-one to key
decision makers of companies in the industrial park.
Product Sales Estimation
Breakfast
Lunch
Catering
Dinners to Go
Value to Consumers:
• New dining option for workers in and around the industrial park
• Convenient location—will save time for time-sensitive workers on break who can either
dine in or take out
• More variety including healthier alternatives to traditional fast food
• Opportunity for food all day, including breakfast and dinner
• Opportunity to pick up prepared food on the way home from work without leaving park
• Prospect for Meals on Wheels to be “good neighbor” in community; advocating good
nutrition and unity within the industrial park
Pricing
The Meals on Wheels Café will price its menu to average $3.00 per meal for breakfast, $6.50 per
meal for lunch, $9.75 for dinners for two and $18.50 for dinners for four. These figures were
reached by examining what customers pay for their meals now, what they are willing to pay,
what the closest competitors charge, and projected food and labor costs to ensure adequate
margins.
Distribution
The main distribution method for the café will be onsite—serving food to the estimated 75% of
customers who will eat on the premises or the estimated 25% that will carry-out food to take
home or back to work. Meals on Wheels may also offer delivery within the park (after the first
year of operation) and will explore the feasibility of using a meal cart to move throughout the
park to reach a new market of customers in shift workers, laborers, and truck drivers that cannot
leave their sites.
Customer service is an integral part of building repeat business and increasing positive word of
mouth. The good name and warm feelings associated with Meals on Wheels as an agency are
imperative in the customer service consumers experience at the café. This means café workers
will be educated in the Meals on Wheels mission, and be able to answer questions and give
thoughtful comments regarding the agency. Friendliness, speed, and an ability to work well with
all types of people are of the utmost necessity. Volunteers will serve as customer advocates and
will be on the floor talking to customers, eliciting feedback, and taking care of customer needs.
Word of mouth will ultimately be the most effective communication tool for the café, and
14
customer service is a major component in receiving the positive person-to-person
communication Meals on Wheels desires.
Communication/PR Strategy
Pre-opening gala—VIP event
Meals on Wheels will hold a pre-opening event for board members, staff, media, local CEOs,
significant donors, local chefs and other special invitees. Free samples of specific items will be
offered. A media sponsor will be secured for the pre-opening event, and a member of local
broadcast media will serve as emcee. The VIP event will serve to drive interest in the café and
reward persons who have been crucial to the kitchen/café process. Visitors can begin spreading
good word-of-mouth throughout the community.
Soft Opening
Expert industry insiders advise starting slowly, wowing every customer and building rapport. 11
Critical mass is certainly present to enjoy the café before it is fully open to the public, and
employees of the park will be able to enjoy their dining experience while the café optimizes
performance and flow. Customers can have a VIP-type or “sneak preview” experience before the
grand opening, adding to the sense of being a valued customer, while the staff of the café works
to establish relationships with the target market. Invitations will be sent luring customers to the
preview opening, as well as emphasizing what is in store at the grand opening.
Public Grand Opening
Two weeks after the café is open, Meals on Wheels will hold a grand opening for the public.
Delay is due to the sense that the café must be operating smoothly in order to best serve the
entire population. A grand-opening coupon or discount to entice people to come try the café will
be offered again and on a wider scale—offering a “bring a friend” promotion or group discount
to help drive numbers higher. Opportunity for more fanfare surrounding the grand opening
exists, such as a radio remote or live television coverage. The grand opening will include a
formal ribbon-cutting ceremony and media campaign.
Announcing the café:
Plans for announcing the opening of the cafe include:
• Posting flyers at all the companies in park
• Flyers posted on vehicles in parking lots (if allowed) with coupon included
• Hanging a large banner on the building to show the café is open
• Announcement in company newsletters
• Media releases and public service announcements
Other communications efforts may include:
• Securing endorsements from clients or other influencers
• Developing a cause-related message to use in ongoing promotions
• Offering naming/sponsorship opportunities for menu items (the “Hill Phoenix club
sandwich”)
Word of mouth will be highly important in the marketing and communication of the café. Budget
for expensive print ads or broadcast media is limited, and considered unnecessary as the reach of
11
Christopher J. Ripp, Vice President, The Restaurant Company and Christina Wooldridge, MBA student, Yale
School of Management.
15
the café is initially small in scope (limited to industrial park). Meals on Wheels will rely on
person-to-person contact to issue the message that the food is good and affordable, which in turn
reinforces the grassroots “neighbor helping neighbor” motto the Richmond agency was based on
in 1967. Face-to-face sales and relationship marketing will be vital in retaining customers and
repeat business.
Research and Development
Boredom is lethal for sales in the restaurant industry. Keeping abreast of trends and popular
consumer culture is important to remain current and successful. Customer retention will be
maximized by offering variety, using a group of core items, daily soup specials, daily blue plate
special, weekly sandwich special, and a menu rotation that will counteract boredom—all of
which will be obtained by honed focus and measurement of customer feedback.
The executive chef in charge of start-up will return periodically to perform business audits and
product development. New products will be tested on the volunteer and client base with the
chance for feedback from both groups. Successful menu items will be retained and new ones
incorporated to find a balance between the two. A suggestion box and/or comment cards will be
posted in the café to give customers a chance to voice opinions on menu offerings. Volunteers
working as customer advocates will ask patrons for input, soliciting periodic feedback after
customers have finished their meal. This adds to the feeling that the Meals on Wheels Café is a
caring neighborhood establishment, respecting customer feedback, and enhancing the feeling of
ownership for everyone in the park.
The most important aspect of the Meals on Wheels Café research and development is the
recruitment of industrial park employees from the top seven companies to serve as a special
advisory council/panel that will meet regularly to evaluate new dishes, report on satisfaction with
food items and service, and make recommendations. Suggested offerings may be used as weekly
or daily specials in the café to register popularity of each item.
A customer tracking mechanism (being researched now) through the computerized cash register
will capture who is visiting from what company and how often. The results will be posted and
used to encourage friendly competition and communication among businesses, e.g. “Blueprint
Automation visited the café 55 times this month, providing 69 meals for client Sally Smith.
Thank you Blueprint Automation”.
Marketing Milestones
Following up with customers will be a constant. Quarterly meetings/tastings with the assembled
panel of park employees will be scheduled, as well as quarterly check-ins with MOW Café
employees and volunteers in order to obtain performance feedback.
16
5.0 Management Plan
Business Expertise
An executive chef, Eric Theile, with more than 25 years of experience in the food service
industry, has been hired to start-up the kitchen and set up the processes that support the café. The
general manager will be responsible for starting up the café business under the guidance of the
executive chef. Chef Theile’s resume may be seen in appendix 5.1. Chef Theile is an innovative,
results-oriented professional with in-depth management experience in processing and packaging
with a proven track record of producing consistent positive results in operation start-ups,
restructuring, and process improvements. Also assisting in the start-up (pro-bono) is Chris Ripp,
MOW Board Member and Vice President of The Restaurant Company.
Business Management
The general manager will be ultimately responsible for all functions of the Meals on Wheels
Café, to include guest relations, management, supervision of all staff and staffing levels, ordering
and fulfillment of supplies, quality of food and beverage, housekeeping safety and pace. The
general manager will have financial responsibility for food costs, labor costs and operating
expenses.
Three candidates are already under consideration for the general manager position. The ideal
candidate will be someone with retail experience and a proven track record of operating a large
production facility at a high standard of efficiency and profit. The ideal candidate will possess
management experience in cook-chill processes and the production/assembly of chilled prepared
food. He or she will have knowledge of nutrition and diet with menu planning experience. The
candidate must be computer literate and be able to calculate food and labor costs quickly and
accurately. He or she must have a good understanding of people and have the ability to motivate
employees to do their best.
A brief description of one of the potential candidates is as follows: Candidate A is from the
Richmond area and is in her mid to late thirties. She has an extremely good leadership manner
and would relate well with the proposed volunteer worker base. She has worked as a catering
manager for a downtown caterer and as a line and departmental supervisor for a locally owned
central kitchen, and was responsible for measuring labor productivity and setting the production
standards to be used in production programs. For the last three years, she has worked as an
assistant production manager with daily management control of equipment and labor scheduling.
The general manager will manage all central kitchen operations including supervision of the café
and will report directly to the Meals on Wheels president. He or she will be the “big picture”
thinker who will provide continuity between the kitchen and café staff. She will supervise and
coordinate activities concerning all kitchen/café operations and personnel, including food
preparation, kitchen and storeroom areas. She will hire, discharge, train, and evaluate kitchen
personnel. She will work with the Meals on Wheels marketing coordinator to develop marketing
strategy and to implement advertising and promotional campaigns to increase business. The
general manager will review financial transactions and monitor budgets and financial statements
to ensure efficient operations and to ensure expenditures stay within budget limitations.
17
The sous chef will be second in command to the general manager and will be responsible for the
physical aspects of the central kitchen operation, including supervision of food production and
kitchen personnel. The sous chef will coordinate with personnel from the café and catering team
to plan menus and related activities. The ideal candidate will be a professionally trained chef
with exceptional people skills due to the unique nature of the work and the high volume of
volunteers. A brief description of one of the potential candidates is as follows: Candidate A is a
Raleigh-based professionally trained chef with more than 10 years experience in quantity food
production. He has a strong work ethic and culinary skills. He has worked with a major airline
caterer and is very accustomed to bulk production of high quality meals, similar to the proposed
Meals on Wheels menu.
The catering manager will be responsible for all catered functions from origination to
execution, including the delegation of responsibilities. He or she will be generating new business
and will maintain contact with existing accounts. The catering manager’s time will be split
between overseeing the fulfillment of catering orders and marketing the business to optimize
profits and increase sales. The qualified applicant will possess knowledge of food production and
service and have a minimum of two years working in catering. Key traits include strong
customer service and communication skills, and a strong attention to detail.
Café management and staff will be part of Meals on Wheels and will have the same salary
ranges, benefits, and evaluation process as all other staff. Café staff will report to the general
manager who will report to the president of Meals on Wheels. The general manager is peer to
director level job positions, all of whom report to the president. Final decisions regarding the
café operations will be made by the president in conjunction with the general manager. Weekly
management meetings will keep the president abreast of business operations.
Meals on Wheels has a strong board comprised of community-minded persons representing a
wide cross-section of businesses and organizations in the area offering leadership and a checksand-balances system on the agency. The board does not make operating decisions but sets
policies and provides general oversight for the organization. Members of the governing board are
recruited for their expertise and corporate affiliation. Current members of the board include
foodservice industry experts and Meals on Wheels will continue to recruit experts to add depth in
this area. The current governing board will govern the café as well as the overall nonprofit
agency. Board and staff support for the café project is strong and may be seen in appendix 6.1.
In addition to competitive salaries and benefit packages, management will be provided
with continuing education opportunities such as conferences and seminars. Meals on
Wheels currently has an incentive/bonus system and will provide this in some form to
management of the café and kitchen.
18
Business Organizational Chart
Café Within Meals on Wheels Agency
Board of Directors
Executive
Chef
President
Director of
Development
PR/
Marketing
Manager
Director of
Client
Services
Catering Manager
Director of
Volunteer
Resources
General
Manager
Director of
Nutrition
Services
Sous Chef
Café Asst Manager
Chief Financial
Officer
Human
Resources
Manager
Lead Cook
Cook
Morning Supervisor
Receiving/Sanitation
PT Counter Workers
Packaging/Dispatch
Drivers (2)
Personnel
Labor hours and staff needed in years 1, 2 and 3 is as follows:
Staff
Year 1
Year 2
Hours/week
Hours/week
General Manager
6
6
Sous Chef
4
4
Packaging/Dispatch Manager
2
2
Catering Manager
40
Assistant Café Manager
40
40
Morning Supervisor
40
40
Counter Worker A
15
15
Counter Worker B
30
30
Counter Worker C
20
20
Counter Worker D
20
20
Counter Worker E
20
Counter Worker F
Counter Worker G
Greeter 1
10
10
Greeter 2
10
10
Total hrs/wk
197
257
19
Year 3
Hours/week
6
4
2
40
40
40
15
30
20
20
20
20
40
10
10
317
Personnel Job Functions
The assistant manager will arrive for work at 8:30 a.m. His or her primary responsibilities will
be to provide overall management duties, handling the cash drawer and balancing at end of
shifts, and closing the café at the end of business. The qualified applicant will have a high school
diploma and 3 years previous management experience working in a quick service food service
environment. This position requires strong customer service and communications skills, a
positive attitude and the ability to keep calm and handle fast paced business.
The morning supervisor will arrive for work at 5:30 a.m. to prepare the café for opening at 6:00
a.m. He/she will work in the front of the house and be in charge of running the cash register and
taking orders until their shift ends at 1:30. Responsibilities also include cleaning work areas and
equipment. The qualified applicant will have a high school diploma and previous experience
working in a quick service food service environment. Strong customer service and
communications skills will be required, as will a positive attitude and the ability to keep calm
and handle fast paced business.
Counter workers will be cross-trained. Front of the house responsibilities include greeting
customers, taking food and beverage orders, ringing orders into register, and collecting payment
and making change. Back of the house responsibilities include preparing & packaging food for
eat in or take out and cleaning work areas and equipment. Qualifications include a high school
diploma and previous experience working in a quick service food service environment. Strong
customer service and communications skills will be required, as will a positive attitude and the
ability to keep calm and handle fast paced business.
Café greeters will provide support in the overall upkeep of the Meals on Wheels Café. This will
include ensuring that all supplies are maintained and restocked, and keeping the café neat and
presentable to the public. Hospitality will be a key part of their job – as getting to know
customers and making them feel welcome will lead to a loyal customer base. Volunteers in this
position will be chosen based on their positive, upbeat attitude and desire to provide customer
service. Likely candidates for this position may include retired senior citizens, stay-at-home
parents, and local college students.
Employee Training
In addition to the orientation and training programs, all employees will receive proper foodsafety training. Experience serving vulnerable seniors has made Meals on Wheels very
conscientious about food safety. The staff dietitian is ServSafe certified by the National
Restaurant Association. She will attend a 'train-the-trainer' program to train the rest of the
staff. The assistant manager will train new employees on each job in the café and the foodsafety procedures that accompany them. Food safety will be written into the operations
procedures for every product, and will be an integral part of how employee performance is
evaluated. Management will use checklists to make sure employees are performing up to
standards in each position. The café will have a HACCP plan in place, and management is
responsible for making sure that employees follow policies and procedures and monitor critical
control points.
Personnel Benefits
Competitive salaries and benefits will be offered. Meals on Wheels provides full-time employees
with health insurance for which the company pays 75% of the premium, a 403B retirement plan
20
for which the company will match 50% for every dollar employees contribute up to 2% of salary,
life and disability insurance, optional dental insurance, paid vacation and six paid holidays. For
hourly rates by position, see chart below.
Position
Status
Rate
Benefits
Schedule
Paid hrs/day
Morning
Supervisor
FT
$8.50/hr
yes
5:30 - 1:30
7.5
Café
Worker A
PT
$7.50/hr
no
6:00-9:00
3
Café
Worker B
PT
$7.50/hr
no
6:30-1:00
6
Assistant
Manager
FT
$9.50/hr
yes
8:30-4:30
7.5
Café
Worker C
PT
$7.50/hr
no
11:00-3:00
4
Café
Worker D
PT
$7.50/hr
no
11:30-3:30
4
Recruitment and Compensation
Job openings for chefs, cooks and food preparation workers are expected to be plentiful through
2010, primarily reflecting substantial turnover in this occupation. Compensation rates are based
on the current rates in Colonial Heights. Unemployment is higher and wage standards are lower
in this area12. The employment turnover rate in Colonial Heights is expected to be much lower
than the industry average of 100% for hourly employees in Limited Service Restaurants13.
Discussions with the area manager for Arby’s Restaurant in Colonial Heights indicate that they
have more applicants than positions and offered to provide Meals on Wheels with their overflow
of qualified applicants if needed.
Retaining good employees is not expected to be significant due to the variety of benefits that
working in the café will offer including the following:
• Favorable hours (6 a.m.- 4 p.m.) excluding nights and weekends
• Market rate for salary or above
• Work under qualified managers who will regularly check-in on employee satisfaction
• Flexible hours
• Part of a larger entity with resources
• Employees will know that their work is making a difference in their community
6.0 Operations Plan
Facilities and Offices
The Meals on Wheels Café will be 1,800 square feet. It is located on the front corner of the
40,000 square foot central kitchen facility. The café will seat 42 customers inside and 16
customers outside. New equipment and dining room furnishings will be purchased and installed
by the general contractor. Parking consists of 82 spaces, 38 of which are parking spaces for the
retail café. Two to three of the café spaces will be designated for “Pick-Up” orders. A basic
drawing of the café layout is below. Refer to appendix 4.1 for an internal rendering of the Meals
on Wheels Café and an external rendering of the central kitchen facility and to appendix 8.1 for
floor plan scale and equipment layout.
12
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2002-03 Edition, Chefs,
Cooks, and Food Preparation Workers
13
2003Restaurant Industry Operations Report: National Restaurant Association
21
Café Illustration
Daily Employee Schedule Year 1*:
Schedule
5:30-6:00
6:00-6:30
6:30-7:00
7:00-7:30
7:30-8:00
8:00-8:30
8:30-9:00
9:00-9:30
9:30-10:00
10:00-10:30
10:30-11:00
11:00-11:30
11:30-12:00
12:00-12:30
12:30-1:00
1:00-1:30
1:30-2:00
2:00-2:30
2:30-3:00
3:00-3:30
3:30-4:00
4:00-4:30
Morning
Supervisor
open
order/cash
order/cash
order/cash
order/cash
order/cash
order/cash
order/cash
BREAK
order/cash
order/cash
order/cash
order/cash
order/cash
order/cash
order/cash
Counter
Worker A
fill orders
fill orders
fill orders
fill orders
fill orders
fill orders
Counter
Worker B
fill orders
fill orders
fill orders
fill orders
fill orders
lunch prep
lunch prep
lunch prep
BREAK
lunch prep
lunch prep
fill orders
fill orders
Assistant
Manager
prep/mgmt
prep/mgmt
prep/mgmt
prep/mgmt
prep/mgmt
BREAK
open reg 2
order/mgmt
order/mgmt
close reg 1
order/mgmt
order/mgmt
order/mgmt
order/mgmt
order/mgmt
close
Counter
Worker C
fill orders
fill orders
fill orders
fill orders
fill orders
b’fast prep
b’fast prep
b’fast prep
Counter
Worker D
fill orders
fill orders
fill orders
fill orders
b’fast prep
b’fast prep
b’fast prep
b’fast prep
*Additional Staff
Year 2: An additional part-time counter worker will be hired for lunch business
Year 3: An additional FT counter worker will be hired who will cover both the breakfast and
lunch peak shifts. An additional part-time counter worker will be hired to work the lunch shift.
22
Capacity
The total number of meals forecasted for the café by year three is approximately 93,925. The
total number of meals projected to be served by Meals on Wheels over the course of the same
year is 500,000. The Meals on Wheels Central Kitchen facility has a production capacity of three
million meals per year. Capacity at breakfast is limited to current staffing, based on 2.5 minutes
spent on each customer. If goal of 90 seconds to 2 minutes per customer is reached, more
customers could be served with the same staff. Seating is not expected to be a limiting factor at
breakfast due to an estimated take out rate of 85%. Capacity at lunch is limited to seating
availability. Parking and staffing allow for additional customers as take-out only.
Capacity Per Hour
Meal
Year 1
Year 2 Year 3
Projected # meals/day
48
53
58
Breakfast Peak
6:30-8:00
# of cashiers/order takers
1
1
2
85% take out
# food preparation personnel
2
2
2
a
Cashier Staffing utilization factor p
0.80
0.88
0.48*
Food Prep Staffinga utilization factor p
0.60
0.66
0.73
b
Seating bad weather
58
58
58
c
Seating warm weather
82
82
82
Parkinge (# customers)
210
210
210
Projected # meals/day
87
130
174
Lunch Peak
12:00-1:30
# of cashiers/order takers
2
2
3
25% take out
# food preparation personnel
3
4
5
a
Cashier Staffing utilization factor p
0.73
0.81
0.83**
Food Prep Staffinga utilization factor p
0.73
0.81
0.87
b
Seating bad weather
58
58
58
Seating warm weatherc
82
82
82
d
Parking (# customers)
96
96
96
Projected # dinners for two/day
13
26
39
Dinners to Go
2:30-4:00
Projected # dinners for four/day
8
12
18
Peak time
Projected # dinners/day
21
38
57
# Cashiers
1
1
2
Cashier Staffing utilization factor p
0.35
0.63
0.48
Assumptions:
a
Staffing: based on total service time of 2.5 minutes (i.e. cashier service time of 60 seconds and
food preparation time of 90 seconds).
bc
Seating: based on 70% utilization (i.e., a group of two will sit at a four-top) of 42 inside and 16
outside seats with a table turnover rate average of 30 minutes.
d
Lunch Parking (peak hrs): based on 38 parking spaces with a turnover rate of 30 min. and 25%
of cars occupying 2 people.
e
Breakfast Parking (peak hrs): based on 70 parking spaces with the assumption that office staff
will not arrive at work before 8:30am, and a turnover rate of 15 minutes.
*An additional cash register is available if necessary. A food preparation person could be
transferred to order taker/cashier as needed.
**If volume continues, another capital investment for an additional cash register will be needed
– this is not reflected in budget.
23
Production/Service Delivery
Customer Process
Place
order with
cashier
Cashier
fills out
order
form*
Pay for
meal
(cash or
charge)
Cashier
passes
copy to
food prep
Self-serve
beverage
Cashier
rings order
into register
& collects
payment
Meal
Assembly
begins
Wait for
name to
be called
Cashier
gives
customer
beverage
cup
Sit down
or take
meal to
go
Order
complete –
calls
customer’s
name
Employee Process
•
When customers enter the café, they will be greeted by a volunteer who will smile and say
hello. The menu will be posted in large print behind the counter. The menu will rotate
seasonally to take advantage of seasonal price swings and product availability. Daily or
weekly specials will be handwritten on a chalkboard and displayed.
• See illustration above for customer and employee order process. *Initially, a paper system
will be used for taking orders, but when affordable, a computerized system to relay orders to
the back of the house will be implemented.
• Sandwiches and salads will be made to order. Grilled sandwiches will be offered and will
require use of the grill or toaster oven. Side items will be pre-portioned in disposable cups.
• Blue plate specials and breakfast sandwich eggs will be held hot during peak breakfast and
lunch hours for ease and efficiency of service. During non-peak hours a pre-plated meal will
be microwaved in the back of the house. Pre-plating of these blue plate specials will be done
by Meals on Wheels volunteers as part of the same packaging process used for home
delivered meals.
Catering
• Catering orders will be faxed or called in at least 24 hours in advance. Catering orders will
be overseen by the general manager until sales reach 20% at which time, a full-time catering
manager will be hired (anticipated in year 2).
Dinners to Go
• Dinners to Go may be picked up any time that the café is open. The daily special will be
similar to the chilled meal prepared the previous day for Meals on Wheels clients (e.g.,
meatloaf, mashed potatoes, green peas with pearl onions, dinner roll, cherry cobbler).
All food ordering and batch cooking will be outsourced to the Meals on Wheels Central Kitchen.
This alleviates the need for large production equipment and staff in the café. Regular meetings
scheduled by the general manager will take place to discuss process changes needed between
kitchen and café. Work will be done ahead to compensate for “last-minute orders.” Food
production required in the café will consist primarily of heating up, grilling and toasting foods
and assembly of sandwiches and salads. Food preparation will be done in the central kitchen by
café staff during non-peak hours.
24
Equipment Requirements
The equipment requirements and costs are itemized below. Equipment has a depreciable life of
between 5 and 7 years. Because of the major production equipment in the central kitchen, which
will have significant excess capacity, equipment costs for the café are fairly low. The interior
design of the café was planned to accommodate this relationship and maximize the production
value.
Café Equipment List
Grill (small electric)
Reach-in refrigerator
Café Software Package
Exhaust hood
Soup warmer
Coffee maker provided by vendor
Beverage dispenser (lemonade, iced tea)
Toaster, conveyor style
Cash register
Microwave
Ice machine, 100 lbs/day
3-compartment sink
Deli case, refrigerated - display
Merchandizing refrigerator - vendor provided
Display unit for bakery items
Bar stools
Chairs
Tables for four (top + base)
Tables for two (top + base)
Patio tables
Patio chairs
Patio umbrellas
Fountain drink dispenser - vendor provided
Hand sink
Menu board
Ice cream reach in for novelty items
Cheese Melter
Refrigerated Sandwich Prep Table
Misc. support items
# needed
1
1
1
1
2
1
1
1
2
2
1
1
1
1
2
18
12
3
6
3
12
3
1
1
1
1
1
1
Prices/each
$1,500
$1,400
$1,150
$10,000
$350
$0
$685
$550
$200
$500
$1,500
$850
$3,000
$0
$275
$85
$50
$150
$125
$100
$75
$125
$0
$150
$70
$700
$750
$3,100
Total Cost
$1,500
$1,400
$1,150
$10,000
$700
$0
$685
$550
$400
$1,000
$1,500
$850
$3,000
$0
$550
$1,530
$600
$450
$750
$300
$900
$375
$0
$150
$70
$700
$750
$3,100
$7,000
$39,960
Purchasing
Purchasing for the café will be done in conjunction with purchasing for the central kitchen,
affording the café substantial buying power through volume ordering. Meals on Wheels is
currently working with PFG Virginia Foodservice as the prime vendor. However, more than one
vendor will be contracted so there is not a dependency on one source of goods. On an ongoing
25
basis a comparative cost analysis will be performed to obtain the highest quality food for the
lowest available price. Locally, Meals on Wheels has access to Baker Brothers Produce Co., one
of the leading providers of fresh, quality produce. Marva Maid has been targeted as the primary
dairy supplier due to their location within the industrial park, saving Meals on Wheels a
substantial amount of money in delivery fees.
Inventory Management
The Meals on Wheels Café will set par levels for inventory and will follow the First-In-First-Out
(FIFO) food rotation system. The risk of running out of product is diminished due to immediate
access to the central kitchen’s inventory and food banking system and the similarity in products
used by the kitchen and café. Depending on vendor schedules, orders will be placed daily,
weekly or monthly.
Withdrawals will be made from the central kitchen using a requisition system to maintain a
separate profit center. Food inventory is not charged to the café until production. Raw food and
chilled prepared inventory stays with production until it is used by the café. Dry goods inventory
used by the café is immediately charged to the café (seen as direct operating expenses in the
financials, this includes packaging, condiment packets, plasticware, etc.) A small percentage of
unavoidable waste has been factored into the food cost, but this will be mitigated by selling
excess food back to the kitchen to be incorporated into the home delivered meals program. A
small number of items that will be used or sold in the café will not be used by the central kitchen
such as premium coffee, ice cream and soda, most of which are not extremely perishable. Waste
of these items is accounted for in the cost of food.
Quality Controls
The Meals on Wheels kitchen centers around the cook-chill method of food production. This
process entails heating food to 165 degrees and then immediately chilling to 40 degrees to kill all
bacteria. No preservatives are needed to enable a 4-6 week shelf-life. Other advantages to this
system include higher quality, consistency and freshness. Quality and consistency will be
maintained by following standards put in place by the executive chef, registered dietitian and
others. For example, in order to assure food safety in the facility, a properly designed HACCP
(Hazardous Analysis Critical Control Points) system will be in place for all recipes produced in
the central kitchen and cafe. The general manager will do random detailed foodservice and
sanitation audits every two weeks. The inspections will focus on food storage, personal hygiene
of employees, cleanliness of equipment and facility, etc. In addition, volunteers will be recruited
to periodically act as “secret shoppers” to get specific feedback. The executive chef will conduct
a thorough efficiency audit every six months on the entire production facility including the café.
Controlling costs will be ensured by accurately estimating customer counts and production
quantities through the use of forecasting. Tight quality control measures will be in place for
incoming shipments of food and beverages. All products will be checked by the receiving clerk
to make sure that the proper items were delivered. Cases will be opened, counted or weighed and
checked for proper temperature, spoilage, inferior quality, or damage before the delivery slip is
signed by the receiving clerk. Production schedules will be utilized so that food preparation
occurs in sufficient quantities to serve all customers while minimizing leftover food to prevent
waste. Standardized recipes will be used to ensure consistency of quality and quantity. Portion
control will be a key element in preventing waste and preserving profits. Everything will be
standardized by weight (meat and cheese) and/or volume.
26
The Meals on Wheels Café will use a point-of-service (POS) system to key in a customer’s order.
The same system will total and print checks, function as a cash register, connect to credit card
authorizers, and track sales. Daily, the general manager will tally the cash and charge receipts
received and balance them against the record of sales. To obtain tight financial controls, postmeal data will also be collected such as customer counts; actual/register counts; portions served
vs. prepared vs. planned; product quality feedback/customer feedback; leftovers/waste and
weather conditions. Breakfast and lunch sales will be kept separate. The general manager will be
responsible for depositing the day’s receipts with the Meals on Wheels controller.
Accounting functions for the café will be provided by the Meals on Wheels finance department.
All café accounts will be separated from the parent organization and the café treated as a stand
alone profit center. The finance department, headed by a full-time controller, will perform all
cafe accounting functions: vendor payments, bank reconciliations, sales tax reports and filing,
financial statement preparation, etc.
7.0 Financial Plan
As stressed throughout the plan, the Meals on Wheels Café is a small part of a large production
facility and has a number of efficiencies allowing it to become profitable almost immediately.
Staff used in the kitchen will manage the café to ensure full integration of production and can be
allocated at a percentage of time instead of hiring additional full-time staff solely for the café.
Volunteers will be used in the production kitchen for meal assembly and packaging and in the
café as customer advocates and greeters. Inventory will not be charged to the café until the actual
production of goods to be sold except for items that will only used in the café such as “to go”
packaging and disposable paper products, and beverages such as sodas and coffee.
Key Financial Indicators
See following key indicator chart.
Important Assumptions
Based on survey research, industry standards14 and the advice of industry experts15, the
following assumptions have been used in the financial documents:
• Average transaction for breakfast: $3.00
• Average transaction for lunch: $6.50
• Average transaction for dinner: $9.75 & $18.50
• Sales for breakfast based on 60% of market who said they would take out breakfast items
coming once per week , growing 10% per year
• Sales for lunch based on 29% of market who currently spend $6-$10 for lunch with 10%
market penetration. 10% maintained as employee base grows to 6,000 within 3 years.
• Sales for dinner based on 42% of persons surveyed who said they would buy dinners for
two, 25% would buy dinners for four. Sales based on 5% of these buying once per week.
Growth is aggressive, from 290 meals/week in year one to 500 in year 2.
14
15
2003Restaurant Industry Operations Report: National Restaurant Association.
Chris Ripp, Eric Theile, and Will Doscher, CEO, 3rd & Eats.
27
•
•
•
Direct labor includes 2 full-time and 4 part-time, with 1 part-time added in year 2 and 1.5
persons in year 3. Indirect labor includes general manager @ 15%, sous chef @ 10%,
packaging manager @ 5%, and executive chef at $3,000/year.
Catering sales begin in month 3 of year 1. First year at 7% of sales, 2nd year at 20%, 3rd year
at 30%. Catering manager hired in year 2. Indirect labor for catering: kitchen prep @ 10%
Food cost: 28%; direct operating expenses (packaging, menus, utensils, etc.) @ 3.5%;
marketing @ 3.5% in yr 1, 2% in yr 2, 1% in yr 3 (1% is industry standard); overhead @
9%; general and administrative @ 3%; actual depreciation.
Sources and Uses of Financing
The café will be formed as a separate profit center and program of the agency. The structural
portion as well as equipment and furnishings of the café will be financed through fundraising
equity. Start-up working capital of $35,000 will be provided by the parent company, Meals on
Wheels, from its current operating budget. The café will begin to pay back the initial cash
infusion within the first year of operations—approximately month 8—and once paid, thereafter
provide Meals on Wheels with up to 50% of its profits. The remaining profits will be invested
back into the café to grow the business. (The cash back to owner is not shown on the following
financial statements.)
28
8.0 Risk Assessment and Contingency Plan
What could go wrong?
First, Meals on Wheels will do everything possible to mitigate possible risks by ensuring a strong
infrastructure and employee base. This begins with hiring a well qualified and experienced
management staff and crew and paying decent salaries with benefits for all full-time staff. Eric
Theile, the production chef already hired to start-up the production kitchen and the café, will be
of great benefit in ensuring a strong and profitable café emerges. Chef Theile and his crew will
develop and test recipes and set up the process flow and integration of the café and the
production area. He will also be involved on an ongoing basis to periodically audit the business
so that margins don’t slowly start to move because of creeping inefficiencies.
Cost controls will be in place as the café opens so that recipes and portion sizes are standardized,
and menu items are priced to sell and to obtain needed margins. Vendors are currently being
evaluated based on quality of goods and prices so that good consistent value will be realized by
consumers. Plenty of storage space is built into the kitchen so volume pricing can be obtained. A
strong volunteer recruitment plan has been formalized to recruit more than 500 volunteers for the
kitchen. Wonderware, a software system for manufacturing and retail facilities, will be used to
generate daily reports so that variances can be recognized and addressed immediately.
Having done everything possible to lower the risk of failure, certainly there is always some risk.
Because the contribution margin is fairly high in years 2 and 3, there is a lower than normal
breakeven point. At inception with a 10% margin (a little above industry standard), 150 meals
per day need to be sold to have expenses match sales revenue (not including catering sales).
Anything over that will contribute to the profitability of the bottom line.
1. What if sales are low?
Medium probability, medium costs
a) Why are they low? Are customers returning? If so, increase marketing to new customers.
Offer food samplings at work sites and/or have a series of “block parties” to invite
targeted company employees to try the food. There may be hidden perception that food is
low quality because it is Meals on Wheels (although the market survey did not indicate
this). This could be overcome with food tastings.
b) If customers are not returning, ensure quality of food is consistent and menu offerings are
in demand. Check prices – are they in line with competitors? Is service fast and friendly?
Does menu include enough variety? Use customer satisfaction survey and/or invite critics
in for specific feedback. Make adjustments quickly.
2.
What if volunteers won’t work in café or staff can’t be found?
Low probability, low cost for volunteers, medium to high cost for employees
a) Volunteers will only be used as greeters or “customer advocates”, low skilled, low stress
job that emphasizes customer interaction. Current volunteers have indicated that they
would gladly work in a retail café if proceeds benefit Meals on Wheels. Volunteers will
primarily be used in the central kitchen as part of kitchen prep; however, even this is
minimal in supporting the café. There is little risk of not finding appropriate staff as
unemployment in the Colonial Heights/Petersburg area is higher than in the Richmond
area, and the skill set of quick serve counter help is limited.
38
3. What if margins are low/operating expenses high?
Medium probability, high cost
a) Ensure that cost controls are in place. Recipes must be standardized with standardized
portions, standard yields, and purchase specifications. Food cost should be no higher than
30-35%.
b) Look at labor costs. Is there room for more volunteers rather than paid labor?
c) Are prices appropriate? Is there room for an increase without effecting sales?
4.
What if there are marketing problems due to barriers/costs?
Low to medium probability, low cost
a) The market is finite, which is of some benefit in that there is no need for high cost
advertising such as television or radio spots. Flyers distributed throughout the community
and good quality food with fast service and decent pricing should be enough to generate
business to start. If there is a problem, the Meals on Wheels Café can take the product to
the market through delivery of meals and/or through meal cart service in central
locations.
5. What if there are operational problems?
Medium probability, medium cost
a) Production problems will be addressed in the central kitchen facility. The volume of café
sales should not significantly impact the production processes of the kitchen. Kitchen
management is being hired at the level that they should be able to solve these type
problems relatively quickly by adjusting production schedules. The inventory and
management software will produce daily reports so that issues can be addressed
immediately.
b) Equipment will be serviced through a maintenance company so that it can be brought
back quickly. The entire production and refrigeration/freezer area will be on generator
power so that meal production will not be interrupted.
6. What if demand is too high?
Medium probability, medium cost
a) Short-term, until customer base is stabilized, kitchen can overproduce for the café to
ensure product quantity is adequate. These products can be integrated back into client
centered production for the following day if not sold. Labor can be added if sales are
high, delivery and meal carts can be introduced to sell onsite at companies if café is not
big enough.
b) Long-term, the café is situated so that the building can expand to accommodate growth.
7. What if a major catastrophe happened – foodborne illness, injury of volunteer, internal fraud?
Low probability, high costs
a) Besides having a registered dietitian on staff who is carefully trained in these matters, the
agency has a formalized comprehensive business continuity plan, the development of
which was sponsored through a national grant, which addresses crisis communications
and major disasters such as those listed.
8. What if another café opens in the industrial park?
Low probability, medium cost
39
a) This is unlikely because of zoning ordinances restricting stand alone restaurants from
developing property. Another manufacturing plant could open a small café onsite as long
as it was less than 30% of the total plant, but would have little incentive to do so. If one
did open, the Meals on Wheels Café will be able to compete by having a loyal customer
base, good food, fast service, and competitive pricing.
9. What if businesses close within the industrial park?
Low to medium probability, low cost
a) There is tremendous growth within the park of additional new businesses. Sales
projections, although increased each year, are based on the current market rather than the
future 6,000+ employee base. Because of this, there is room within projected figures for
current businesses to exit while new ones enter.
10. What if competitors launch aggressive action toward the Meals on Wheels Café?
Low probability, medium cost
a) It is not likely that major chains such as McDonald’s and Subway would start marketing
or developing new product offerings aggressively. However, if this did occur, the Meals
on Wheels Café has an advantage is its flexibility in responding to customer demands and
competitive action. Meals on Wheels will stand firm on its commitment to customer
service and good quality food at a reasonable cost, delivered in a convenient location.
The Meals on Wheels Café doesn’t plan on responding to or waging a competitive war
based solely on price.
11. What if the café totally flops?
Low probability, low cost
a) A major advantage of the café is that it is part of a larger project. Start-up and capital
costs are minimal. The space can easily be converted into office or training space for the
central kitchen and the equipment and staff incorporated into the larger production
facility. Financial and operational benchmarks are in place that will regularly track
performance to aggressively manage operations. In addition, the eighteenth month of
business operations will be a critical decision making point regarding business
sustainability.
40
Meals on Wheels Cafe
Balance Sheet
Year End
2005
2006
2007
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Total Current Assets
Fixed Assets
Equipment
Minus Accumulated Depreciation
Total Net Fixed Assets
Total Assets
$83,642
$2,032
$776
$86,450
$164,851
$6,553
$1,311
$172,715
$293,328
$13,438
$1,941
$308,707
$39,960
$7,712
$32,248
$118,699
$39,960
$15,423
$24,537
$197,252
$39,960
$23,135
$16,825
$325,532
Liabilities and Retained Earnings
Current Liabilities
Accounts Payable
Total Current Liabilities
Contributed Capital
Retained Earnings
Total Liabilities and Retained Earnings
$18,242
$18,242
$74,960
$25,497
$118,699
$23,907
$23,907
$74,960
$98,385
$197,252
$30,306
$30,306
$74,960
$220,266
$325,532
Assumptions:
1. Accounts receivable are month 12 catering (30 days collection) and 5% past due catering accounts.
2. Food inventory is not charged to the café until production. Raw food/chilled prepared inventory
stays with the production operations. Dry goods inventory used primarily by the café is charged
as inventory.
3. Accounts payable is 1 month COGS.
4. Contributed capital is cash and equipment provided by Meals on Wheels.
30
Meals on Wheels Cafe
Cash Flow Statement
Month 1
Operations:
Net Income
Add noncash expenses:
Depreciation
Add decreases in current assets:
Prepaid Insurance
Add increases in current liabilities:
Accounts Payable
Salaries Payable
Taxes Payable
Deduct increases in current assets:
Accounts Receivable
Inventories
Cash Flow from Operations
Cash Flow from Investing
Cash Flow from Financing
Change in cash
Beginning cash
Ending cash
Days of Cash on Hand
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10 Month 11 Month 12
-$4,729
$1,608
$1,608
$3,001
$3,001
$3,001
$3,001
$3,001
$3,001
$3,001
$3,001
$3,001
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$776
$6,450
$153
$12,798
$776
$2,516
$2,250
35,000
37,516
0
37,516
39
0
2,250
37,516
39,766
61
1,935
97
$2,250
$1,709
$1,709
$3,547
$3,644
$3,644
$3,644
$3,644
$3,644
$16,442
$2,250
39,766
42,017
64
$1,709
42,017
43,725
64
$1,709
43,725
45,434
67
$3,547
45,434
48,981
72
$3,644
48,981
52,625
78
$3,644
52,625
56,269
83
$3,644
56,269
59,913
88
$3,644
59,913
63,556
94
$3,644
63,556
67,200
99
$16,442
67,200
83,642
123
Assumptions:
1. Accounts receivable are month 12 catering (30 days collection) and 5% past due catering accounts.
All other accounts are cash and carry.
2. Food inventory is not charged to the café until production. Raw food/chilled prepared inventory
stays with the production operations. Dry goods inventory used primarily by the café is charged
as inventory.(Direct Operating Expenses)
3. Accounts payable is 1 month COGS
4. Initial working cash capital will be provided through MOW operating budget.
5. Salaries payable is direct labor for 2 weeks. Indirect labor is payed current.
6. Taxes are paid quarterly.
Meals on Wheels Cafe
Cash Flow Statement
Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24
Operations:
Net Income
Add noncash expenses:
Depreciation
Add decreases in current assets:
Prepaid Insurance
Add increases in current liabilities:
Accounts Payable
Salaries Payable
Taxes Payable
Deduct increases in current assets:
Accounts Receivable
Inventories
Cash Flow from Operations
Cash Flow from Investing
Cash Flow from Financing
Change in cash
Beginning cash
Ending cash
Days of Cash on Hand
$6,074
$6,074
$6,074
$6,074
$6,074
$6,074
$6,074
$6,074
$6,074
$6,074
$6,074
$6,074
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$535
$3,472
$1,442
4,306
$534
$11,632
$2,410
$6,717
$6,717
$6,717
$6,717
$6,717
$6,717
$6,717
$6,717
$6,717
$6,717
$11,632
83,642
95,274
88
$2,410
95,274
97,685
90
$6,717
97,685
104,401
96
$6,717
104,401
111,118
102
$6,717
111,118
117,834
109
$6,717
117,834
124,551
115
$6,717
124,551
131,268
121
$6,717
131,268
137,984
127
$6,717
137,984
144,701
133
$6,717
144,701
151,418
139
$6,717
151,418
158,134
146
$6,717
158,134
164,851
152
Meals on Wheels Cafe
Cash Flow Statement
Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36
Operations:
Net Income
Add noncash expenses:
Depreciation
Add decreases in current assets:
Prepaid Insurance
Add increases in current liabilities:
Accounts Payable
Salaries Payable
Taxes Payable
Deduct increases in current assets:
Accounts Receivable
Inventories
Cash Flow from Operations
Cash Flow from Investing
Cash Flow from Financing
Change in cash
Beginning cash
Ending cash
Days of Cash on Hand
$10,167
$10,167
$10,167
$10,167
$10,167
$10,167
$10,167
$10,167
$10,167
$10,167
$10,167
$10,167
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$643
$630
$2,914
$2,617
6,772
$630
$16,341
$4,038
$10,810
$10,810
$10,810
$10,810
$10,810
$10,810
$10,810
$10,810
$10,810
$10,810
$16,341
164,851
181,192
120
$4,038
181,192
185,230
122
$10,810
185,230
196,040
129
$10,810
196,040
206,850
137
$10,810
206,850
217,659
144
$10,810
217,659
228,469
151
$10,810
228,469
239,279
158
$10,810
239,279
250,089
165
$10,810
250,089
260,899
172
$10,810
260,899
271,709
179
$10,810
271,709
282,519
186
$10,810
282,519
293,328
194
Meals on Wheels Cafe
Monthly Income Statement
Month 1
Revenue
Breakfast
Lunch
Dinner
Catering
Total Revenue
Direct Costs
Food Cost of Breakfast
Food Cost of Lunch
Food Cost of Dinner
Food Cost of Catering
Direct Labor
Direct Operating
Start-up
Gross Margin
Operating Expenses
Indirect Labor
Marketing
Overhead
General Administrative
Depreciation
Taxes
Net Cash Flow
Month 2
Month 3
3,000
11,781
5,953
3,000
11,781
5,953
3,000
11,781
5,953
20,734
20,734
840
3,299
1,667
0
6,450
776
6,337
1,365
1,860
776
1,997
666
643
153
-4,729
30,271
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10 Month 11 Month 12
20,734
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
3,000
11,781
5,953
1,935
22,669
840
3,299
1,667
0
6,450
776
840
3,299
1,667
0
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
840
3,299
1,667
542
6,450
776
7,702
7,702
9,095
9,095
9,095
9,095
9,095
9,095
9,095
9,095
9,095
1,860
776
1,997
666
643
153
1,608
31,879
1,860
776
1,997
666
643
153
1,608
33,487
1,860
776
1,997
666
643
153
3,001
36,488
1,860
776
1,997
666
643
153
3,001
39,489
1,860
776
1,997
666
643
153
3,001
42,490
1,860
776
1,997
666
643
153
3,001
45,491
1,860
776
1,997
666
643
153
3,001
48,493
1,860
776
1,997
666
643
153
3,001
51,494
1,860
776
1,997
666
643
153
3,001
54,495
1,860
776
1,997
666
643
153
3,001
57,496
1,860
776
1,997
666
643
153
3,001
60,497
Meals on Wheels Cafe
Cash Flow Forecast
Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24
Revenue
Breakfast
Lunch
Dinner
Catering
Total Revenue
Direct Costs
Food Cost of Breakfast
Food Cost of Lunch
Food Cost of Dinner
Food Cost of Catering
Direct Labor
Direct Operating
Start-up
Gross Margin
Operating Expenses
Indirect Labor
Marketing
Overhead
General Administrative
Depreciation
Taxes
Net Cash Flow
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
3,300
17,604
10,303
6,241
37,448
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
924
4,929
2,885
1,748
9,922
1,311
15,729
15,729
15,729
15,729
15,729
15,729
15,729
15,729
15,729
15,729
15,729
15,729
2,175
749
3,370
1,123
643
1,595
6,074
66,571
2,175
749
3,370
1,123
643
1,595
6,074
72,645
2,175
749
3,370
1,123
643
1,595
6,074
78,719
2,175
749
3,370
1,123
643
1,595
6,074
84,793
2,175
749
3,370
1,123
643
1,595
6,074
90,867
2,175
749
3,370
1,123
643
1,595
6,074
96,941
2,175
749
3,370
1,123
643
1,595
6,074
103,015
2,175
749
3,370
1,123
643
1,595
6,074
109,089
2,175
749
3,370
1,123
643
1,595
6,074
115,163
2,175
749
3,370
1,123
643
1,595
6,074
121,237
2,175
749
3,370
1,123
643
1,595
6,074
127,311
2,175
749
3,370
1,123
643
1,595
6,074
133,385
Meals on Wheels Cafe
Cash Flow Forecast
Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36
Revenue
Breakfast
Lunch
Dinner
Catering
Total Revenue
Direct Costs
Food Cost of Breakfast
Food Cost of Lunch
Food Cost of Dinner
Food Cost of Catering
Direct Labor
Direct Operating
Start-up
Gross Margin
Operating Expenses
Indirect Labor
Marketing
Overhead
General Administrative
Depreciation
Taxes
Net Cash Flow
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
3,644
23,563
15,454
12,798
55,458
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
1,020
6,598
4,327
3,583
12,837
1,941
25,152
25,152
25,152
25,152
25,152
25,152
25,152
25,152
25,152
25,152
25,152
25,152
2,921
555
4,991
1,664
643
4,212
10,167
143,552
2,921
555
4,991
1,664
643
4,212
10,167
153,720
2,921
555
4,991
1,664
643
4,212
10,167
163,887
2,921
555
4,991
1,664
643
4,212
10,167
174,054
2,921
555
4,991
1,664
643
4,212
10,167
184,221
2,921
555
4,991
1,664
643
4,212
10,167
194,389
2,921
555
4,991
1,664
643
4,212
10,167
204,556
2,921
555
4,991
1,664
643
4,212
10,167
214,723
2,921
555
4,991
1,664
643
4,212
10,167
224,890
2,921
555
4,991
1,664
643
4,212
10,167
235,057
2,921
555
4,991
1,664
643
4,212
10,167
245,225
2,921
555
4,991
1,664
643
4,212
10,167
255,392
Meals on Wheels Cafe
Income Statement
2005
2006
2007
$36,000
$141,375
$71,435
$17,417
$266,227
$39,600
$211,250
$123,630
$74,896
$449,376
$43,725
$282,750
$185,445
$153,576
$665,496
$10,080
$39,585
$20,002
$4,877
$77,399
$9,318
$11,088
$59,150
$34,616
$20,971
$119,069
$15,728
$12,243
$79,170
$51,925
$43,001
$154,039
$23,292
$4,837
$1,000
$500
$167,598
$260,623
$363,670
Gross Margin
Gross Margin %
$98,628
37%
$188,753
42%
$301,826
45%
Operating Expenses
Indirect Labor
Marketing
Overhead
General & Administrative
Depreciation
Total Operating Expenses
$22,322
$9,318
$23,960
$7,987
$7,712
$71,299
$26,099
$8,988
$40,444
$13,481
$7,712
$96,724
$35,048
$6,655
$59,895
$19,965
$7,712
$129,274
Net Income Before Taxes
Taxes
Net Profit
Net Profit/Sales
Net Income/Sales
$27,329
$1,832
$25,497
10%
10%
$92,029
$19,141
$72,888
16%
20%
$172,552
$50,545
$122,007
18%
26%
Contribution to MOW
Overhead + Admin Costs
50% of profits with payout
beginning in month 4
$44,696
$31,947
$12,748
$90,369
$53,925
$36,444
$140,863
$79,860
$61,003
Sales
Breakfast Sales
Lunch Sales
Dinner Sales
Catering Sales
Gross Revenue on Sales
Cost of Goods Sold
Food Cost
Breakfast
Lunch
Dinner
Catering
Direct Labor
Direct Operating Expenses
Start-up
Training
Waste
Marketing
Total COGS
34
Not reflected
in financials
Meals on Wheels Cafe
Breakeven Analysis*
Weighted Average Transaction
Total Costs
Daily Unit Breakeven
Daily Breakeven Sales Level
2005
$6.28
$235,853
150
$943
2006
$6.66
$319,523
192
$1,278
2007
$6.85
$458,191
268
$1,833
Key Indicators
Sales per FTE employee
Total sales per square foot
Total cost of sales
Income before income taxes
Cost of Goods Sold
Average transaction
Benchmark*
$55,240
$291
30%
8.5%
60%
$7.00
2005
$61,913
$148
28%
10%
63%
$6.28
2006
$77,479
$250
28%
20%
58%
$6.66
2007
$85,320
$370
28%
26%
55%
$6.85
*2003 Restaurant Industry Operations Report - median for limited service restaurants
Note: Sales per square foot is low the first two years due to limited number of hours open. Inventory turn
is high because Meals on Wheels kitchen carries all food inventory, the kitchen inventory turn is 32x/year.
Sensitivity Analysis of Key Factors
Lunch Sales
Lunch Sales Year 1
Avg Transaction up 10%
Avg Transaction down 10%
Lunch Sales Year 2
Avg Transaction up 10%
Avg Transaction down 10%
Lunch Sales Year 3
Avg Transaction up 10%
Avg Transaction down 10%
Direct Labor
Year 1
Direct Labor up 15%
Year 2
Direct Labor up 15%
Year 3
Direct Labor up 15%
Food Cost
Year 1
Food Cost up 5%
Year 2
Food Cost up 5%
Year 3
Food Cost up 5%
Gross Revenue
Profit Margin
$155,513
$127,238
$281,354
$251,100
11%
9%
$232,375
$190,125
$474,726
$424,026
19%
19%
$311,025
$254,475
$702,254
$628,739
23%
21%
Direct Labor
Gross Margin
Profit Margin
$89,009
$91,856
8%
$127,960
$195,591
17%
$154,511
$324,646
20%
COGS
Gross Margin
Profit Margin
$176,072
$90,155
7%
$259,563
$189,813
16%
$336,447
$329,049
21%
29
Meals on Wheels Cafe
29
Financial Assumptions
Hours of Operation: 6 am - 4 pm
Staffing
Morning Shift Supervisor
Lead Supervisor
Counter Helper
Counter Helper
Counter Helper
Counter Helper
Greeter
Greeter
$8.50/hr + 20% benefits
$9.50/hr + 20% benefits
$7.50/hr
$7.50/hr
$7.50/hr
$7.50/hr
Volunteer
Volunteer
5:30 am - 1:30 pm
8:30 am - 4:30 pm
6 am - 9 am
6:30 am - 1:00 am
11 am - 3 pm
11:30 am - 3:30 pm
6:30 am - 8:30 am
11:30 am - 1:30 pm
$21,216
$24,008
$5,850
$10,725
$7,800
$7,800
$77,399
One part-time worker added in year 2, one full-time and one part-time person in year 3.
Indirect Labor
General Manager @ 15%/$34.6/hr
Sous Chef @ 10%/$26/hr
Packaging Manager @ 5%/13.20/hr
Executive Chef @ 40% of one month salary ($7500) - year one only
$10,800
$5,408
$1,373
$3,000
$20,581
Staff Turnover and yearly raises calculated into yearly increase of 7%
Average Transaction
Breakfast
Lunch
Dinner
Food Cost
$3.00
$6.50
$9.75 (dinner for two)
$18.50 (dinner for four)
28% (based on industry standards, advice of industry experts)*
Sales
(based on industry standards, advice of industry experts)*
1. Breakfast is based on the 60% of market who said they would take out breakfast items from the café
(30% also said they would eat in). If 60% of market came to café once per week, that would be 48 people per day.
Breakfast is projected to grow 10% per year.
2. The primary target for lunch are the 29% of persons surveyed in the industrial park who currently spend $6 - $10 each day.
If industrial park employs 3,000 people (6,000 by year 3), primary market is 870 in year one. Goal is to have 10% market penetration
and maintain as park grows (begin at 87 per day up to 174 per day in year 3).
3. 42% of persons surveyed said they would pick up dinners for two, 25% would choose dinners for four. Sales are based on 5%
of this market actually purchasing dinners once per week. (65 people per week buy dinners for two, 40 people per week buy
dinners for four.) Growth is aggressive - from 290 meals/week in year one (65*2+40*4) to 500 in year 2 to 750 in year 3.
Catering Sales
(based on industry standards, advice of industry experts)*
Beginning in month 3 of year 1. First year at 7% of sales, 2nd year at 20%, 3rd year at 30% of sales (industry experts).
Catering Manager hired in year 2.
Food Cost:
28%
Direct Labor: Catering manager @ $25,000/year plus 20% benefits (oversees catering in am, marketing in pm)
Indirect Labor: Kitchen prep staff @ 10%
Operating Expenses
(Industry Standards)
Direct Operating Expenses: includes packaging, menus, cleaning, utensils, waste @ 3.5%
Marketing: 3.5% in year one, 2% in year two, 1% in year three (1% is Industry Standard for limited service restaurants)
This decreases in year 2 due to hiring of catering manager who markets the catering program.
Overhead: 9%
General & Administrative: 3%
Depreciation: Actual based on equipment costs
Note: Industry Standard: 2003 Restaurant Industry Operations Report/Limited Service Restaurants
Industry Experts: Chris Ripp, Vice-President, The Restaurant Company, Owner of 22 quick serve and
casual dining restaurants; Eric Theile, Food Service Consultant & Executive Chef; Will Doscher, CEO, 3rd & Eats
The Meals on Wheels Cafe
Capital Equipment List
Café Equipment
Grill (small electric)
Reach-in refrigerator
Panini grill
Exhaust hood
Soup warmer
Coffee maker provided by vendor
Beverage dispenser (lemonade, iced tea)
Toaster, conveyor style
Cash register
Microwave
Ice machine, 100 lbs/day
3-compartment sink
Deli case, refrigerated - display
Merchandizing refrigerator - vendor provided
Display unit for bakery items
Bar stools
Chairs
Tables for four (top + base)
Tables for two (top + base)
Patio tables
Patio chairs
Patio umbrellas
Fountain drink dispenser - vendor provided
Hand sink
Menu board
Ice cream reach in for novelty items
Cheese Melter
Refrigerated Sandwich Prep Table
Misc. support items
Depreciable Life of 7 years
Depreciable Life of 5 years
Monthly Depreciation
# needed
1
1
2
1
2
1
1
1
1
2
1
1
1
1
2
18
12
3
6
3
12
3
1
1
1
1
1
1
$4,905
$35,055
Prices/each
$1,500
$1,400
$675
$10,000
$350
$0
$685
$550
$200
$500
$1,500
$850
$3,000
$0
$275
$85
$50
$150
$125
$100
$75
$125
$0
$150
$70
$700
$750
$3,100
$701
$7,011
$7,712
Total Cost
$1,500
$1,400
$1,350
$10,000
$700
$0
$685
$550
$200
$1,000
$1,500
$850
$3,000
$0
$550
$1,530
$600
$450
$750
$300
$900
$375
$0
$150
$70
$700
$750
$3,100
$7,000
$39,960
Meals on Wheels Cafe
Income Statement
Lunch sales avg transaction up 10%
2005
2006
2007
Sales
Breakfast Sales
Lunch Sales
Dinner Sales
Catering Sales
Gross Revenue on Sales
$36,000
$155,513
$71,435
$18,406
$281,354
$39,600
$232,375
$123,630
$79,121
$474,726
$43,725
$311,025
$185,445
$162,059
$702,254
Cost of Goods Sold
Food Cost
Breakfast
Lunch
Dinner
Catering
Direct Labor
Direct Operating Expenses
Start-up
Training
Waste
Marketing
Total COGS
$10,080
$43,544
$20,002
$5,154
$77,399
$9,847
$11,088
$65,065
$34,616
$22,154
$119,069
$16,615
$12,243
$87,087
$51,925
$45,376
$154,039
$24,579
$4,837
$1,000
$500
$172,363
$251,993
$350,670
Gross Margin
Gross Margin %
$108,991
39%
$222,733
47%
$351,584
50%
Operating Expenses
Indirect Labor
Marketing
Overhead
General & Administrative
Depreciation
Total Operating Expenses
$22,421
$9,847
$25,322
$8,441
$7,712
$73,743
$26,522
$9,495
$42,725
$14,242
$7,712
$100,695
$35,896
$7,023
$63,203
$21,068
$7,712
$134,901
Net Income Before Taxes
Taxes
Net Profit
Net Profit/Sales
Net Income/Sales
$35,248
$3,812
$31,436
11%
13%
$122,038
$30,845
$91,193
19%
26%
$216,683
$67,756
$148,927
21%
31%