Business Plan
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Table of Contents
1.0 Executive Summary .................................................................................................... 1
2.0 Business Overview ...................................................................................................... 2
2.1 Introduction ......................................................................................................................... 2
2.2 Logo ...................................................................................................................................... 2
3.0 Operations & HR Plan ............................................................................................... 3
3.1 Location and Site Plan ........................................................................................................ 3
3.2 Operations/Hours ................................................................................................................ 4
3.3 Staffing ................................................................................................................................. 5
3.4 Ownership & Legal Structure............................................................................................ 5
3.5 Suppliers .............................................................................................................................. 5
3.6 Cost of Goods Sold .............................................................................................................. 6
3.7 Capital Budget ..................................................................................................................... 6
3.8 Operating Expenses ............................................................................................................ 6
4.0 Marketing Plan............................................................................................................ 8
4.1 Atmosphere .......................................................................................................................... 8
4.2 Target Demographic ........................................................................................................... 9
4.3 Product ................................................................................................................................. 9
4.4 Price .................................................................................................................................... 10
4.5 Promotion .......................................................................................................................... 10
4.6 Placement ........................................................................................................................... 11
4.7 Revenue Estimates ............................................................................................................ 11
5.0 Financial Model ......................................................................................................... 12
5.1 Investment.......................................................................................................................... 12
5.2 Return ................................................................................................................................ 12
5.3 Sensitivity Analysis ........................................................................................................... 12
5.4 Break Even Analysis ......................................................................................................... 13
6.0 Conclusion ................................................................................................................. 13
Figures & Tables
Figure 3.1 Saskatoon Downtown…………………………………………………………….…..3
Table 3.1 Operating Hours……………………………………………………………………....4
Table 3.2 Staffing Cost…………………………………………………………………………...5
Table 3.3 Capital Budget………………………………………………………………………...6
Table 3.4 Operating Expenses…………………………………………………………………...6
Table 4.1 Revenue Projections………………………………………………………………….10
Figure 5.2 Owners Compensation……………………………………………………………...11
Figure 5.2 Sensitivity Analysis………………………………………………………………….11
Table 5.1 Breakeven Net Income……………………………………………………………….12
1.0 Executive Summary
Saskatoon is currently experiencing a tremendous amount of growth due to a thriving
resource sector and renewed strength in agriculture. With this come jobs, high paying and
sustainable jobs, which are increasing the amount of household income per capita. With
an increase in individual wealth in the province comes an excess of disposable consumer
income to spend on goods and services such as food and entertainment via restaurants
and lounges. This is an opportune time for a niche establishment within the Saskatoon
marketplace to serve the unique needs of the modern gentleman.
This business plan has been prepared in order to seek a loan of $50,000.00 from a
financial institution in order to have the capital available to begin the venture. The plan is
divided into the following portions:





Business Overview
Operations
Human Resources
Marketing
Financials
Throughout the process of creating the financial model it has been found that The
Aristocrat will conceptually be able to turn a profit in year one of $52,167.00 and will be
distributing dividends to its two shareholders as early as year 2. With a Gross Profit
Margin of 58% The Aristocrat seems to be a viable business venture for a sole proprietor
however it does not present an opportunity for expansion or increased earnings as the
capacity of the desired location is capped at 32 customers at any given time. As well,
because The Aristocrat only offers scotch and other alcoholic beverages without
providing food options we are limited to a certain amount of profitable hours throughout
the day.
With these challenges also come opportunities that the business can exploit including a
niche market that currently does not have any substitutes or direct competition in regards
to a lounge that specializes in scotch and presents the same unique atmosphere that The
Aristocrat will have.
In summation this is a viable business opportunity and if pursued will render profitable
returns via Average Owners Compensation of dividends and managerial salary.
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2.0 Business Overview
2.1 Introduction
The Aristocrat is a Saskatoon based scotch lounge that specializes in creating an
individualistic experience for customers via Saskatoon’s largest selection of Scotch
whisky paired with a unique drinking experience. The concept of The Aristocrat is to
emulate the atmosphere of a traditional gentleman or member’s lounge that can often be
found in historic areas of countries such as Great Britain. Currently there is a niche in the
Saskatoon marketplace for a lounge that specializes in Scotch whisky and this is the niche
that the Aristocrat will fill.
2.2 Logo
The logo of The Aristocrat is quite indicative of what the establishment seeks to represent
and embody. As you can see within the four sectors of the coat of arms there is a scotch
decanter, deer catcher,
tobacco pipe, and wingback
chair, all of which are
elemental part of what it
means to be the modern
gentleman and Aristocrat. In
Latin on the sheath you can
see the inscription of which
the lounge stands for, which
in English translates to “In
Scotch whiskey we trust”.
Finally at the bottom you can
see our marketing slogan
which is “You are not
worthy” which challenges
our customers to be worthy
of the scotch they drink and
in essence be the modern
gentleman.
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3.0 Operations & HR Plan
3.1 Location and Site Plan
The location selected for The Aristocrat will be in the downtown area of Saskatoon
between the blocks of 1st and 3rd Avenue. This location is in the ideal geographical
location in regards to the customer demographic this lounge seeks to attract. At high
times such as lunch and afternoon tea, many of the lounges ideal customers are already
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located in the downtown area due to their workplace proximity, allowing The Aristocrat
to attract customers without the barrier of parking. With that said, in the evenings beyond
6:00 pm when the lounge will see its highest customer turnover parking is free of charge
downtown. In lieu of our desired customer base we are able to attract customers at both
high turnover hours without the issue of parking, which serves as a large determinant for
customers choosing to do business downtown Saskatoon in a retail or hospitality
environment.
Figure 3.1 Saskatoon Downtown
In lieu of the Aristocrat not serving food it was important that a substitute for that product
was offered party to SLGA’s (Saskatchewan Liquor and Gaming Authority) law
regarding serving alcohol in an establishment and available food requirements. With this
in mind the lounge will seek to find a location within the Downtown area as articulated
above that will serve as a speak easy. The concept of a speakeasy was formulated during
the prohibition days in the United States when alcohol was illegal and there was a large
demand for discrete means of consumption. Often times these rooms were hidden behind
established and legitimate restaurants with a hidden passage way in. The Aristocrat will
use this same concept however it will be doing so for a different purpose than to evade
law enforcement. By locating the lounge behind an existing and complimentary
restaurant the Aristocrat will be offering it customers the ability to get a meal before or
after there time at the lounge and can also capitalize on the existing clientele and foot
traffic of whichever restaurant it resides behind. As well, due to the fact that the lounge
will be in the back of the building there is a high likelihood that the monthly lease costs
will be substantially more cost effective rather than having a downtown storefront.
In regards to size, the Aristocrat is seeking a space approximately 1200 sq. feet that is
accessible through a complimentary established restaurant. One such location is above
the Bell and Whistle Downtown Saskatoon on 2nd Avenue.
3.2 Operations/Hours
The Aristocrat will be 6 days a week excluding Sundays with the hours articulated in the
table below:
Hours
Mon
Tues
Wed
Thur
Fri
Sat
Sun
Open
11:00
am
11:00
am
11:00
am
11:00
am
11:00
am
11:00
am
Closed
Close
10:00
pm
10:00
pm
10:00
pm
10:00
pm
2:00 am
2:00 am
Closed
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Table 3.1 Operating Hours
3.3 Staffing
The lounge operating staff will consist of one full time server/bartender as well as a
manager. With a maximum capacity of 35 people within the lounge at any given time it is
a reasonable estimate to say that this customer load can be bore by two employees when
taking into consideration that food is not an item on the menu and thus serving consists
entirely on a bartender. Many restaurants only employ 1 to 2 bartenders on any given
night of the week, as they are capable of serving a large breadth of customers due to the
short time it takes to prepare any such drink order.
Annual costs for both full time and part time employees can be seen in the table below:
Manager
50,000
51,250
52,531
53,845
55,191
Full time staff
25,480
26,117
26,770
27,439
28,125
Part time staff
19,037
18,446
24,075
29,689
34,484
Total Salaries and Wages
94,517
95,813
103,376
110,973
117,799
Table 3.2 Staffing Costs
3.4 Ownership & Legal Structure
The lounge will be owned and operated by myself as a sole proprietorship and will also
have a second equity shareholder at 5% of the company for services rendered in the
creation of a scotch application for mobile users which will be further elaborated upon in
the marketing section.
3.5 Suppliers
The main suppliers for The Aristocrat will be the Saskatchewan Liquor and Gaming
Authority as well as Little Bird Patisserie & Café for Scotch inventory as well as for
pastries and desserts served in the afternoon.
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3.6 Cost of Goods Sold
The expected COGS for the Aristocrat in year one of operations are $160,738.00, which
represents a Gross Profit Margin of 58%. See the attached excel document in the
appendix for a detailed breakdown.
3.7 Capital Budget
Below is a depiction of the initial estimated capital required for this startup operation.
These estimates are based on industry standards in regards to square footage and a more
in depth calculation can be found in the attached financial spreadsheet.
Table 3.3 Capital Budget
Software
$5,000.00
Lease Hold Improvements
$20,000.00
Furniture
$75,000.00
Total Capital Requirements
$100,000.00
3.8 Operating Expenses
Below is the total operating budget for the first year operations of The Aristocrat. As you
can see in the included expenses, the most costly portion of operations of the lounge is
staffing and leasing costs, which represent almost 81% of the total yearly operating
budget in year 1.
Operating Expenses 2015
2016
2017
2018
2019
Accounting and Legal
2,000
2,050
2,101
2,154
2,208
Advertising (Marketing)
8,250
1,750
1,750
1,750
1,750
General Supplies
1,000
1,025
1,051
1,077
1,104
Insurance
2,500
2,563
2,627
2,692
2,760
Lease
21,600
22,140
22,694
23,261
23,842
Telephone
1,200
1,230
1,261
1,292
1,325
Occupancy Cost
6,000
6,150
6,304
6,461
6,623
Repair and Maintenance
2,000
Wages
94,517
95,813
103,376
110,973
117,799
Employee Benefits (Salaries)
4,095
4,197
4,302
4,410
4,520
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Employee Benefits (Wages)
Misc Variable Costs % Sales
Capital Cost Allowance
Debt Interest
Total Operating Expenses
6,215
1,925
9,500
3,500
164,301
6,221
1,874
17,175
3,247
165,436
Table 3.4 Operating Expenses
7
7,098
2,113
13,879
2,976
171,531
7,975
2,340
12,221
2,686
179,291
8,740
2,518
10,877
2,375
186,441
4.0 Marketing Plan
4.1 Atmosphere
One of the most important parts of the Aristocrats marketing strategy is to create a unique
environment for customers to enjoy that will distinguish it from all other lounges and
pubs that have a similar feel and product offering. In order to achieve this the lounge
must have significant interior decorations and furnishing in order to create the desired
atmosphere. As indicated in Table 3.2 in the Operations portion of this business plan the
overall capital costs needed in order to make this space a reality is in the range of
$95,000.00. This is a significant investment however we are confident that it is necessary
in order to attract the customers and target markets that will be described in further detail
in the next section.
Below are two images that depict the ideal interior furnishings of the Aristocrat:
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4.2 Target Demographic
The Aristocrat will seek to target young males within the age ranges of 20-40. In order to
do so there will have to be a significant emphasis put on education of the consumer in
regards to knowledge of Scotch whisky. In Saskatchewan there is not a very long heritage
of scotch consumption and due to this and the changing tides of social behavior via social
media millennial’s simply do not know about scotch and therefore cannot appreciate its
unique flavor and taste. In order to do this The Aristocrat will be emphasizing the
empowerment of the customer through hosting various educational events such as scotch
seminars and having very detailed explanations of the origins of scotch and its
complexity within the menu and by way of the bartenders.
4.3 Product
One of the defining factors of this lounge is that it will have the most diverse and unique
selection of scotch available within Saskatoon. This will serve as both an asset and a
liability for the lounge as having such a large collection of scotch will mean that the
common customer may suffer from an excess of choice and therefore have difficulty
deciding which scotch they would like to drink. We will mitigate this issue by creating a
tier system that will allocate certain scotch’s based on their age and taste quality to a
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certain group and associate one flat price for that their. This will diminish the opportunity
for customer confusion and will empower the customer to learn about the product in a
comfortable environment.
4.4 Price
The prices of will be set up in a tier model allowing the common customer to select from
one of three price tiers within each of the different scotch flavor groups which range from
smoky to peaty and on to smooth and sharp. The tiers will be stacked based on the
categories price in the following format:



Tier 1: $9.00 per/ounce
Tier 2: $14.00 per/ounce
Tier 3: $19.00 per/ounce
This pricing system is unique to The Aristocrat and is not something that has been tried
or established in any other lounge in Saskatoon.
We will also be offering what is called a ‘slate’, which is a selection of 3 various scotches
offered in combination at a price point of around $25.00. This allows the common scotch
drinker the opportunity to try an assortment of scotch brands for a reasonable price and
varying in taste and quality.
4.5 Promotion
The Aristocrat will be giving 5% equity of the
company to a application developer in order to
create a app for the lounge. This app will be at
the core of The Aristocrats marketing
campaign as it will serve as a direct value
added for customers and involve them as
‘members’ of the lounge. This app will all
users to reserve a table, suggest future scotch
selections, as well as act as a ‘scotch
passport’. The concept of the passport is to
allow users to record their favorite scotch
selections and track which distillers they have
tried. By offering this application we can
engage our customers and ensure there
satisfaction which will lead to a loyal and
returning customer base.
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The application has been valued at $5,000.00 and has been recorded on both the Capital
Budget and Capital Cost Allowance schedules found in the appendix. The figure to the
right is an example of what this application may look like.
4.6 Placement
As iterated in the Operation section The Aristocrat will be located in a speakeasy room
behind a complimentary restaurant in the Downtown Saskatoon district between 1st and
3rd Avenue. Although the lounge will not have street front exposure we are confident that
the exclusivity marketing angle will act to our advantage as it will create a sense of
desirability for customers and the illusion of an ‘elite environment’.
4.7 Revenue Estimates
We estimate that in Year 1 of operations we will be able to attract on average 50
customers per day at an average purchase of $25.00 per customer. This is based on the
assumption that each customer will have been 2 and 3 ounces of the Tier 2 scotch on
average or a slate of scotch. As you can see, in Year 2 we have identified that we will
actually be diminishing in customer growth. This is based on the educated assumption
that customers in Saskatoon tend to flock to the newest restaurant or lounge
establishment, as it is the ‘new thing’ in town. By the second Year of operations for any
establishment in Saskatoon it is not unfair to assume that the growth will stagnate
however it will once again receive traction in Year 3 in lieu of a loyal customer base.
Number of Customers/day
Number of Days/year
Average Purchase/customer
Total Sales
50
308
$25.00
Growth Rate Number of
Customers
48
308
$25.63
52
308
$26.27
56
308
$26.92
59
308
$27.60
-5%
10%
8%
5%
Revenues
Scotch
60%
231,000
224,936
253,616
280,752
302,160
Coffee/Drinks
Food
25%
15%
100
%
96,250
57,750
93,723
56,234
105,673
63,404
116,980
70,188
125,900
75,540
385,000
374,894
422,693
467,921
503,600
Total Revenues
Table 4.1 Revenue Projections
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5.0 Financial Model
5.1 Investment
The Aristocrat needs a total of $100,000.00 in order to begin operations and as such will
be seeking a $50,000.00 loan from a banking institution which will be leveraged on
$50,000.00 that will be invested by myself into the company. The term of this loan will
be 10 years and in just 5 years of the 10-year term the loaner will receive $14,783.00,
which is at an estimated interest rate of 7%.
5.2 Return
Due to the low amount of which is being invested into the company the way in which we
value the investor’s (principle owner) return will not be through Net Present Value of
Internal Rate of Return but rather Average Owners Compensation which can be seen in
the table below:
Owners Salary
Dividends
Total
50,000
50,000
51,250
43,048
94,298
52,531
59,361
111,892
53,845
74,714
128,558
55,191
88,935
144,126
Figure 5.2 Owners Compensation
As you can see the return in year one for the owner is approximately $50,000.00 which is
purely the salary of the manager however taking into consideration growth into years 2-4,
by year 5 we estimate that the owner will earn approximately $145,000.00 including
dividends.
5.3 Sensitivity Analysis
As you can see in the sensitivity analysis below there is a great degree of variance
between profitability and bankruptcy on a margin of almost 10 customers per day.
Customers/day
30
35
40
45
50
55
60
Average 5 year Profit
(641)
16,449
33,457
50,464
67,472
84,479
101,487
Figure 5.2 Sensitivity Analysis
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Net Payback
(42,020)
95,834
239,764
383,694
527,624
671,554
815,484
IRR
-6.4%
12.5%
27.56%
40.5%
52.2%
63.2%
73.8%
5.4 Break Even Analysis
As you can see in the chart below the breakeven point from year is a margin of 17
customers per day however as the customer bass grows the margin also grows to an
estimated 28 customers per day.
Number of Customers per day
Net Income Breakeven
70
60
52
56
59
50
40
50
33
48
33
30
32
32
31
3
Year
4
5
20
10
0
1
2
Table 5.1 Breakeven Net Income
6.0 Conclusion
In summation it has been determined that this venture is quite profitable and although
there are significant risks in proceeding with this project the benefits outweigh them. The
Aristocrat will aim to provide Saskatoon with a luxury and exclusive scotch drinking
experience in the Downtown core of the city. It is our hope that in time this lounge will
prove to be a staple of the Saskatoon downtown experience and make a mark for the
resurgence of the speakeasy concept.
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