STUFFED
CHICKEN TAKE-OUT
Business Plan
Presented by:
Andrew Serwadda
April 2015
Business Plan
Contents
1.0 Executive Summary ................................................................................................................................. 4
2.0 Introduction ............................................................................................................................................ 5
2.1 Mission Statement .............................................................................................................................. 5
2.2 Corporate Goals .................................................................................................................................. 5
2.3 Industry Overview ............................................................................................................................... 5
2.3.1
Opportunities and Social Trends .................................................................................................. 5
2.3.2
Threats.......................................................................................................................................... 6
3.0 Operations Plan....................................................................................................................................... 6
3.1
3.1.1
3.2
Business Structure ........................................................................................................................... 6
Organizational Structure .............................................................................................................. 6
Location & Floor Plan ...................................................................................................................... 7
3.2.1 Location............................................................................................................................................ 7
3.2.2 Floor plan ......................................................................................................................................... 7
3.3 Operations .......................................................................................................................................... 8
3.3.1 Hours of Operation .......................................................................................................................... 8
3.3.2 Daily Operation ................................................................................................................................ 9
3.3.3 Weekly, Monthly & Annual Operations ......................................................................................... 10
3.4
Supply Analysis .............................................................................................................................. 10
3.5
Service Providers ........................................................................................................................... 11
3.6
Capacity Limits and Capital Budget ............................................................................................... 11
3.8
Operating Expenses ....................................................................................................................... 12
3.9
Working Capital Planning .............................................................................................................. 12
4.0 Human Resources Plan ......................................................................................................................... 12
4.1 Management Structure..................................................................................................................... 12
4.2 Scheduling ......................................................................................................................................... 13
4.3 Labour & Management Costs ........................................................................................................... 13
5.0 Marketing Plan ...................................................................................................................................... 13
5.1 Product .............................................................................................................................................. 13
5.2 Price .................................................................................................................................................. 13
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5.3 Place .................................................................................................................................................. 14
5.4 Promotion ......................................................................................................................................... 14
5.5 Targeting, Segmenting & Positioning................................................................................................ 14
5.5.1 Target & Segment .......................................................................................................................... 14
5.5.2 Market Share.................................................................................................................................. 15
5.6 Positioning Statement....................................................................................................................... 15
5.7 Sales and Profit Objectives................................................................................................................ 15
5.8 Marketing Budget ............................................................................................................................. 16
5.8.1 Projected Revenues ....................................................................................................................... 16
6.0 Financial Plan ........................................................................................................................................ 17
6.1 Major Shareholders .......................................................................................................................... 17
6.2 Financing Structure ........................................................................................................................... 17
6.3 Financial Analysis .............................................................................................................................. 18
6.3.1 Critical Variables ............................................................................................................................ 18
6.3.2 Break-even Analysis ....................................................................................................................... 20
6.3.3 Financial Feasibility ........................................................................................................................ 20
Bibliography ................................................................................................................................................ 21
9.0 Appendix ............................................................................................................................................... 22
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Business Plan
1.0 Executive Summary
The proposed business plan for Stuffed Chicken Takeout is for a healthy chicken takeout option
currently unavailable in Saskatoon. The mission of Stuffed Chicken Takeout is to provide customers with
a healthier stuffed chicken option. We want to be the first choice for a healthy, chicken takeout option
in Saskatoon; with chicken being Canada’s second most consumed protein, we will satisfy the masses.
Stuffed will be a corporation with one shareholder, who will also be employed full time. Stuffed will be
located on 716 2nd avenue North in downtown Saskatoon. The 1000 square foot rental property will
consist of a walk-in storefront and a production area for in-house preparation. The store will be open
from 10am – 8pm, Monday to Saturday and from 10am – 6 pm on a Sunday, with roasting commencing
at 9am daily. We plan to operate 360 days per year and can maintain a maximum capacity for
production of 100 whole chickens and 140 chicken breasts a day. Cooking supplies, packaging and other
service providers will be primarily sourced from local suppliers.
The capital budget will include costs for equipment, including production area, and product displays,
totalling approximately $95,000. The Stuffed plans to use $110,000, including debt and equity, towards
the working capital budget for the first year to ensure a positive cash flow. Therefore, the total
requirements for the capital budget are $205,000 at the onset of operations.
Andrew will be working for an annual wage of $40,000. The rest of the staff, which includes two cooks
and a front-end worker, will be part time and will be paid on an hourly basis.
The initial start-up is fairly average and will provide healthy dividends from the 4th year onwards. I
believe Stuffed Chicken Restaurant is a feasible business that will provide a unique, convenient and
healthier option of fast food.
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2.0 Introduction
2.1 Mission Statement
The mission of Stuffed Chicken Takeout is to provide customers with a healthier stuffed chicken option.
With a great taste and through memorable customer service, we will strive to be you number one
chicken stop and a household name. In the long run we will look to spreading the message of our
healthy stuffed option.
2.2 Corporate Goals
Short-run:

To provide Saskatoon with a healthy chicken takeout option

To provide memorable customer service

Become a household name in Saskatoon
Long-run:

Maintain the memorable customer service

Look to franchising after a successful 5 years and opening a second store in Regina
2.3 Industry Overview
2.3.1
Opportunities and Social Trends
There are three key opportunities that we have identified. These being:

The popularity of chicken among consumers

The increasing population of Saskatoon

A trend towards healthy living
Over the last 20 years chicken consumption in Canada has doubled. In 2009 it was the second most
consumed meat in Canada (Canadian Meat Council, 2009) and became Canada’s favourite protein in
2011, with a per capita consumption of 31.2 kg a year (Farm Credit Canada, 2012).
For the third consecutive year, Saskatoon has been one of the four fastest growing census metropolitan
areas in Canada with a growth rate of 3.2% between 2013 and 2014 (Davis, 2015). With Saskatchewan
having the lowest unemployment rate in Canada, there will be a steady increase in the growth rate over
time coupled with having the second highest median income in Canada (Bromstein, 2014)
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Canadian consumers are actively seeking lower calorie alternative, and this is shown in a 29% increase in
retail grocery dollar sales on sugar alternatives. Stuffed Chicken Takeout will provide this option with
quality, well prepared stuffed chicken.
2.3.2
Threats
There are a number of threats in starting a new business, which range from competing restaurants, rent
increases as property becomes more expensive and consumer taste. Fluctuating oil prices provide the
most threat as Saskatchewan is heavily invested in the oil industry and changes here can heavily affect
disposable income, population size and population growth.
3.0 Operations Plan
3.1
Business Structure
3.1.1
Organizational Structure
Manager
(Me)
Part-time
Cook
Staff #2
Part-time
Cook
Staff #1
Figure 3.1 – Organizational Structure
The organizational structure of Stuffed Chicken Takeout will be tiered, with myself as manager, two
cooks that report to me, and two front-store staff that report to myself and the cooks. It is a takeout
restaurant so no additional staff will be needed, but more staff could be added in future to reduce
individual work hours.
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Business Plan
3.2
Location & Floor Plan
3.2.1 Location
Stuffed Chicken Takeout will be located in downtown Saskatoon at 716 2nd avenue North. This 100
square foot location was chosen due to its high traffic volume and visibility of the store. This location is
seen as a common entry and exit route from the downtown area during the morning and evening rush
hours, as well as lunchtime.
Figure 3.2.1 – Location
3.2.2 Floor plan
The floor plan is divided into two areas, the storefront and the production area behind it. The storefront
has six high stools for customers to wait for their orders. Customers are separated from the front staff
by a store width counter where orders are collected. The production area is on the other side of a wall
that contains heating ovens for orders that are ready to be picked up. The production is fairly sized, with
a centred rotating spice and utensil rack to allow for easy mobility and access. A staff exit is located at
the back and will be used for inventory replenishing deliveries so as to not inconvenience customers.
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Figure 3.2.2 – Stuffed Chicken Takeout Floor Plan
3.3 Operations
3.3.1 Hours of Operation
Door will open at:
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Monday – Saturday:
11:00am – 8:00pm
Sunday:
11:00am – 6pm
These hours will cater to customers wanting lunch and/or dinner. However, customers will be allowed to
call make orders telephonically from 10 am to give us time to get the products ready.
3.3.2 Daily Operation
Table 3.3.1 – Work hours
Staff will be required to come report to work at 10am. At any given time there will be three people
working, one cook, one front staff and myself. Work hours are provided in Table 3.3.1.
Preparation of the next days inventory will begin 1 hour before the store closes. The manager and the
cook will season the first batch of chicken and prepare it for roasting in the morning. They will also
prepare the stuffing to be put in the bird on arrival the next day. These will be put in the cooler
overnight. In the last hour before close the will stop making and preparing food and begin to clean the
kitchen. At close, the front staff will do a count of the float and cash-out. The manager will take the float
and deposit the profits on a daily basis. An inventory count by the manager will be done for record
keeping. The manager will then close at 8:30pm.
The manager will open in the morning at 9:45am. Then next morning at 10am staff will arrive and begin
stuffing the already seasoned birds. The manager will return the float to the cash register and man the
incoming orders while setting up the storefront as well as take telephonic orders.
When the doors open at 11am it will be lunchtime and customers will be arriving to collect their orders.
The front staff will be focused on doing the sales and interacting with customers. The manager and the
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Business Plan
cook will be preparing the chicken. The manager will provide assistance when individuals are
overwhelmed.
At 3pm there will be a change in staff except for the manager. The float for the first front staff of the day
will be cashed out and given to the manager. The manager will give the second shift staff a new float
and tally the first. This second shift staff will be the ones to close for the following day. Dinnertime will
arrive with the manager constantly checking to see that the store is running smoothly. The operations
will repeat itself an hour before close.
3.3.3 Weekly, Monthly & Annual Operations
Weekly operations include inventory management, ordering of supplies, and staff scheduling. Monthly
operations include a review of the income statement and preparing for monthly expenses. Reviewing
short-term goals also takes place here. Annual operations include a review of the year’s financial report,
while comparing it to previous years reports. Revisiting long- term goals and changes to business plan
also take place annually. Annual activities will include a review of the year’s financial report in
comparison to the budget, and making any potential changes to the overall business plan for the
upcoming year.
3.4
Supply Analysis
Table 3.4.1 – Capital Budget
Denson, Superior Cabinets Costco and various others for furnishing and kitchen utensils will supply
capital budget requirements. These are all local service providers.
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Table 3.4.2 – Cost of Goods Sold
Initially, local farmers will supply our chicken but around the 2-month mark we will make a change to
Sysco, as local farmers will be unable to keep up with our capacity demands. Sysco requires large,
sustainable orders so these three months will be used to provide us with better estimates moving
forward. Costco will supply us with our produce requirements. These estimates are like to change due to
the unpredictability of the restaurant market and the fact that Stuffed provides a unique product.
3.5
Service Providers
Stuffed will have access to various service providers including the financial services of a accountant,
legal support and technological support for their website and social media platforms. We will also
outsource the services of local delivery companies to cater for customers who want to order in. The
legal costs would cover incorporation and other legal service like contractual agreements with various
service providers, and also provide for legal advice. Our Board of Directors will consist of myself (owner
and manager), my mentor and fellow Saskatoon business professional, Fred Khonje and legal counsel.
The bookkeeping will be handle by a local accounting firm.
3.6
Capacity Limits and Capital Budget
Stuffed has a maximum demand capacity of 100 whole chickens and 140 chicken breasts. This equates
to 240 customers/units per day. Taking into consideration industry averages and the location of Stuffed,
we decided upon a base case of 140 customers per day (40 whole chickens and 70 chicken breasts).
The capital budget can be viewed in section 3.4.
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Denson will provide Stuffed with a 2-year warranty on all appliances, but do not cover wear and tear. All
of their kitchen appliances have an 8 to 12 year life expectancy. Utensil and pots have a short life
expectancy, so should be replaced bi-annually.
3.8
Operating Expenses
Operating expenses for the Stuffed will include utilities, rent, wages, benefits, marketing costs,
insurance, interest, consulting services and CCA expense. These costs are outlined in the table below.
Table 3.8 - Operating Expenses
3.9
Working Capital Planning
To ensure a positive cash flow in the initial year Stuffed Chicken Takeout plans to use $120,000 including
debt and equity towards the working capital budget. This is included in a total investment is $160,000.
4.0 Human Resources Plan
4.1 Management Structure
The owner, who is also the manager, will be involved in the daily operations. They will manage and
oversee the restaurant, employees, and Stuffed’s daily activity. All employees will be hired on a parttime basis. All staff should have basic knowledge of the fast food industry and have past experience
working in the industry. As explained earlier, there will be no additions to the staff. Additions will only
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Business Plan
be made in order to divide up the daily hours per day and this will only be done if capacity cannot be
handled by current staff. Cooks will need to be recent graduates from a cooking school and have past
experience. Stuffed will be providing training to all staff into the production process. See figure 3.1 in
operations to view organizational structure.
4.2 Scheduling
The manager is responsible for opening and closing the store everyday. He will be the only full-time
employee and work from 9:45am to 8:15pm on Monday to Saturday. On Sunday he will work from
9:45am to 6:15pm. The other four employees are part-time. Cooks #1 and staff #1 will alternate with
their respective #2’s daily according to the shifts. There are two shifts, the first running from 10am to
3pm and the second from 3pm to 8pm. If more staff is needed then staff members will be required to
relinquish hour as to spread them out evenly.
4.3 Labour & Management Costs
The manager will be paid a salary of $40,000 a year. The other employees will be paid an hourly wage,
with the cooks getting $15 per hour and the front staff getting $11 per hour.
5.0 Marketing Plan
5.1 Product
Stuffed offers 10 different stuffed chicken options, and 10 chicken breast options. There is an option to
customize your own chicken upon ordering. Fresh side of vegetables is also on offer as a meal with the
inclusion of the whole chicken or the breasts. There will also be the option of ordering a quarter or
whole chicken. Stuffed will provide customers with fresh, high quality ingredients which will be
replenished weekly. We offer friendly, helpful customer service to guide you in making healthier the
healthier choice.
5.2 Price
Stuffed used competition based pricing and market averages to price its products. We are a unique
product, so we used averages of indirect competitors that also offer healthy meals. We did not want to
enter the market at a high price since we will need to create a market for this new product. Hence we
set our average purchase per customer at $14 for a base.
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Business Plan
5.3 Place
Our location on 2nd avenue provides us with an average of between 22,000 to 23,000 cars driving past
our establishment everyday. Although our product is geared towards everyone, we want to primarily
target working individuals on their way home from work.
5.4 Promotion
Stuffed will be running an intensive marketing campaign for the first 3 months that involves going to
downtown offices, the University of Saskatchewan and schools. There we will provide a number of free
products for people to try. This will create a buzz about our product and introduce potential customer to
our brand. We will be posting on billboards throughout the year and also make use of our own billboard
of the side of out building.
Figure 5.4.1 – Location
Other areas of promotion will include:




Print media (newspapers, flyers)
Social media (Facebook, Twitter, Pinterest and Instagram)
Radio
Word of mouth
5.5 Targeting, Segmenting & Positioning
5.5.1 Target & Segment
Since Stuffed is targeting everyone, our target market is anyone in and around downtown Saskatoon.
Individual between the ages of 20 and 35 will be a primary target as they are most likely to advertise
Stuffed on various social media platforms creating buzz. Kids below the age of 16 could also be seen as a
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primary target as they tend to drive the purchasing habits of their parents, hence the entire household.
People above the age of 35 are a target market as social trends show that Canadians are moving toward
a healthier lifestyle. Stuffed Chicken Takeout will be the option for all these groups.
5.5.2 Market Share
With a city population of around 240,000, our expected market share is 10%. This will be due to or
location and intensive marketing campaign. There are a lot of food options downtown, including a few
healthy options, but none as tasty and unique as Stuffed Chicken Takeout.
5.6 Positioning Statement
For those looking for a healthier lifestyle, Stuffed Chicken Takeout is a tasty chicken restaurant that
Unique
provides you with the healthy Stuffed option.
Healthy
Ordinary
Less Healthy
Figure 5.6.1 – Positioning Map
5.7 Sales and Profit Objectives
The Stuffed has the following sales and profit objectives, which are the selected bases in the financial
plan:

To sell 110 units per day in Year 1, and to increase to 174 by Year 4;

To achieve a profit margin of 36%; and

To sell at an average unit cost of $14 per unit selling price, increasing at the rate inflation.
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5.8 Marketing Budget
The table below is Stuffed’s marketing budget, comprised of all the promotional initiatives listed above:
Table 5.2 - Marketing Budget
5.8.1 Projected Revenues
The total revenue is calculated from the 360 days per year that the Stuffed will be open, times the
estimated volume sold per day, times the projected sale price. The total revenues are seen in the table
below.
Table 5.3 - Revenue
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6.0 Financial Plan
6.1 Major Shareholders
The major shareholder Andrew Serwadda of Stuffed is backing the bank financing with a personal
guarantee of cash in his savings account, coupled with a good and longstanding credit history. Please see
our estimated statement of net worth below; further detailed statements on net worth can be obtained
from me, Andrew Serwadda, Stuffed, Saskatoon, SK, andrew.serwadda@stuffed.com.
Table 6.1 – Estimated Statement of Net Worth
6.2 Financing Structure
Table 6.2 - Financing Structure
31%
Debt Financing
69%
Equity
Financing
Figure 6.1 - Financing Structure
The Stuffed will be financed 31% by equity and 69% by a bank loan.
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Business Plan
6.3 Financial Analysis
Table 6.3 - Summary Income Statement
The fixed expenses that are included in the income statement above are:

Legal and financial representation

Marketing costs

Insurance

Rent

Fixed utility charges

Equipment maintenance costs

Wages and benefits for staff

Capital cost allowance for equipment

Interest on the $110,000 bank loan
6.3.1 Critical Variables
Three critical variables analyzed were customers per day, sales price and the average cost of goods sold.
The sensitivity analyses below demonstrate the effects the variables have on the average annual profit
and owner’s compensation.

Changing customers per day: Holding all other critical variables constant, the analysis showed
significant sensitivity to changes in customers per day. The table below shows that these
changes impact the profitability of Stuffed.
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Business Plan
Table 6.4 – Sensitivity Analysis #1

Changing sales price: Holding all other critical variables constant, a 10% decline in sales price led
to a severely decreased average annual profit and halved owner’s compensation in year 5. The
table below shows that Stuffed will still be profitable and be able to provide dividends if the
sales price were to decrease within 10%.
Table 6.5 – Sensitivity Analysis #2

Changing the cost of goods sold: Holding all other critical variables constant, we analyzed the
cost of goods sold as a change in the gross profit margin (GPM). The changes again showed the
significant as shown below.
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Business Plan
Table 6.6 – Sensitivity Analysis #3
6.3.2 Break-even Analysis
A break-even analysis was performed to determine the number of customers required in order to break
even over the next 5 years:
Table 6.7 – Break Even Analysis
As the table shows, we start off well below the breakeven number in the first year and surpass it in the
preceding years. Then there is a steady increase in the gap between the base case and the breakeven to
44 customers in 2019. This provides some added security in case there is a reduction in the sales price or
the cost of goods sold.
6.3.3 Financial Feasibility
After an analysis of the critical variables, we believe that the strength of average 5-year profit and year 5
owner compensation after we breakeven is feasible. We would need to take into account the high risk of
failure in the first 2 years and put into place contingencies to prevent this. The contingencies would
need to maintain the average purchase per customer is steadily increasing further above the breakeven.
Potential contingencies:

This can be done with annual intense marketing campaigns to improve on market share

Searching for cheaper suppliers to improve on your gross profit margin

Adding seating to Stuffed to give customers the option of sitting down and increase your pool of
potential customers
Conclusion
Stuffed Chicken Restaurant has a bright future in Saskatoon and future success could pave the way for
franchising. As chicken sales continue to climb, like they have over the past 20 years, now is the time to
make a mark in the restaurant industry with the next big thing.
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References
Bromstein, E. (2014, December 10). How much do Canadians earn by province. Retrieved from
Workopolis Web site: http://www.workopolis.com/content/saskatchewan/article/how-muchcanadians-are-earning-by-province/
Canadian Meat Council. (2009). Industry Statistics. Retrieved from Canadian Meat Council website:
http://www.cmc-cvc.com/en/about-us/industry-statistics/industry-statistics
Davis, A. (2015, February 12). Regina and Saskatoon in top-four fastest growing cities. Retrieved from
Leader Post:
http://www.leaderpost.com/Regina+Saskatoon+four+fastest+growing+cities/10806110/story.html
Farm Credit Canada. (2012, June). Poultry Facts. Retrieved from Farm Credit Canada web site:
https://www.fcc-fac.ca/fcc/agKnowledge/publications/ag-sector-guides/pdfs/poultry-facts.pdf
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9.0 Appendix
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