Develop a business plan for this restaurant.
Tram Jam will be a moderately priced restaurant offering a wide variety of food and drinks. The restaurant will serve both local and international drinks and dishes from across the world. The restaurant will have music from a live band and a number of artists will be invites from regularly perform. The restaurant will also hold a salsa concert every last Friday of the month as a tradition of the restaurant (Noone and Maier, 2015, p.242). Market research has shown that Tram Jazz is ideally located to satisfy the unreached needs of the Geneva. The availability of a sound operational plan allows management to focus on building sales and lesser focus on profit generation. The managing partners have confidence that the business plan will aid in building a brand in the long run and not just a single restaurant.
Tram Jazz will be owned and operated by the partners, Mr. Garry and Mrs. Jones. Tram Jazz will be located in Tram at 5th street Saitour building 2nd floor, Geneva. It will maintain a corporate office at the same building as its location of operation, 5th street Saitour building 13th floor. The restaurant will be co-owned by two partners Stephen Garry and Mellissa Jones who have a collective 15+ experience in the restaurant industry. The partners possess expertise and marketing strategies that will contribute ideally in ensuring success of Tram Jazz. In terms of capitalization, the proposed restaurant will have an initial cost of $1,058,618. A detailed cost breakdown is provides in the financial projections section of this business plan. Funding for the business will be provided by $400,000 from the partners and $658,618 from a bank loan. Therefore, Tram Jazz represents a realistic expectation of success for all stake holders. Tram Jazz will also be beneficial to the community by providing a great product and secure jobs to residents.
According to the National Restaurant Association (2012, p.21), the industry sales for 2016 are expected to rise above the $620 billion dollars attained in 2015. The figure is a 3.2% increase on the 2014 sales. Restaurant industry sales account for 4% of the GNP for United States. Positive economic growth indicators and the expected increases in consumer income show that 2016 will be a growth year for the restaurant industry. Full service restaurants sales for 2016 are expected to increase by a 2.5% from the 2015 sales (National Restaurant Association, 2012, p.22). The restaurant industry is the nation’s largest private-sector employer according to the National Restaurant Association. The industry has created approximately 250,000 jobs per year for the last 15 years and is expected to add 2 million new jobs in the next 5 years (Hua and Lee, 2014, p.139).
The rising wholesale costs, energy, and healthcare insurance have negative effect on the progress of businesses in the restaurant industry. The NRA has pledged in being involved actively to maintain manageable commodity prices and support the health care reforms proposed (Chen and Elston, 2013, p.297). They also support the legal reform to reduce law suits against the industry.
According to research by National Restaurant Association (2012, p.24), approximately 48% of all spending on food is spent in in restaurants. The figure has been rising fast in the previous years and the trend is predicted to persist. 43% of adults presume that eating out is more cost effective than cooking at home (National Restaurant Association, 2012, p.25). Expenditure for households on food in restaurants increases rapidly and will continue to rise. Households in metropolitan areas tend to spent more than house-hold in non-metropolitan areas. Flourishing economic growth and changing lifestyles have contributed greatly, as families eat out more these days compared to the statistics collected in the last five years. The need for takeout food is also increasing in this particular area that we’ve selected due to the rapidly growing corporate business industry in the area.
The proposed location of Tram Jam has minimum competition that creates an advantage because the existing restaurants serve local foods and drinks. The competitive restaurants in this area have poor customer service, which provides competitive advantage to the restaurant. Jam restaurant will be able to offer quality customer service which provides a strong competitive edge compared to the other restaurants in the market.
Tram Jazz restaurant seeks to appeal to a wide range of customers. The concept is suited to specific geographic and market conditions for the people of Geneva. Despite of this, the restaurant anticipates to be frequented by customers in both residential and business community and thus, it will be designed to accommodate all kinds of people. The restaurant is situated in a location where it will serve a majority of the residential families and the business persons. The menu has been designed to appeal to people of all kinds. The restaurant has also developed a more appealing service style and environment which attracts visitors in the market. It adopts a value oriented pricing model which makes the drinks and food products more affordable to all social status individuals in the society. The medium income earners are greatly favored by the pricing at Tram Jazz. The live band will attract customers of all kinds majorly the middle-aged working class who love this kind of music. Salsa concerts are expected to attract customers from neighboring towns and neighborhoods.
The success of Tram Jazz will be achieved through excellent customer service and serving great food. Being proactive to market forces will also contribute to the success of the venture. The management will work to ensure the image of the restaurant is maintained through sales promotions and involving marketing channels. The marketing team will also design a program to reward loyal customers and frequenters to the restaurant. There will be other programs aimed at making Tram Jazz a successful venture. The management also intends to involve itself in charity programs for the community. It will be done through donations and sponsorship in order to market itself to the immediate community.
Additionally, it anticipates to carryout catering business for events for the benefit of the venture. Email marketing campaign will also be adopted by the restaurant. It will capitalize on the customer database to develop an effective email marketing approach (DiPietro, Crews, Gustafson and Strick, 2012, p. 267)The customers will be given a choice to receive email communication about the product offerings from the restaurant. The email marketing strategy will comprise an awareness of the product offerings. The content for promotion will also create a higher level of excitement for the customers.
The management of Tram Jazz will develop sound operating strategies to conduct their daily operations. Policies and procedures will be documented through integrated resources and experienced management persons. Tram Jazz is expected to hire around 40 employees. The management will conduct interviews in ensuring that all employees selected are highly qualified. The restaurants will mainly rely on referrals and direct recruiting strategies to obtain the most qualified personnel for the organization. The restaurant intends to develop a comprehensive training program. Highly qualified trainers will be employed to train the employees using offered training tools and instructions. The employees will understand the Tram Jazz approach to operating the restaurant successfully. The new employees will be recorded including safety, customer service, and health regulations.
The management will be held responsible towards ordering as well as maintaining adequate inventory to align with the production requirements. The adoption of operational checklists will help in the verification of the work shifts which have been develop for ensuring improved operational standards and regulation. For example, the table service approach of Tram Jazz is developed to complement the perception of the customers creating a desired guest experience. Tram Jazz will prioritize customer service during its entire operations. For instance, it will conduct customer surveys aimed at improving the overall customer service.
Funding for the business will be provided by contributions from the partners and a bank loan. The owners are expected to contribute each $200,000 and thus own the equity of the partnership equally.
The proposed sources of funding are as follows:
Source of Funds Amount
Stephen Garry $ 200,000
Mellissa Jones $200,000
Bank loan $658,618
Expansion plans includes the services, affordability, and great food offered by Tram Jazz will position the venture at a great advantage of exploring wider markets. The partners will focus first and foremost on achieving return on their investment before considering expansion. However, because of the great appeal of the business, the venture will eventually get expansion opportunities. In terms of the exit option, each partner has the right to sell their interest in the venture to the other at their option. Details of the buy/sell are stated in the Operating Agreement.
The sales projections for Tram Jazz assume approximately 2000 customers per week resulting to weekly sales of about $35 000 or $ 1,950,000 per year. Expectations are that the restaurant will yield a net cash flow of 5.5% – 7.2% of sales, after debt payment.
Projected Uses of Cash
Leasehold $ 480,000
Equipment $ 185,000
Professional services $ 32,000
Interior and finishing $ 53,000
Pre-opening expenses $ 108,168
Working capital and contingency $ 200,000
Total $ 1,058,168
Chen, S.C. and Elston, J.A., 2013. Entrepreneurial motives and characteristics: An analysis of small restaurant owners. International Journal of Hospitality Management, 35, pp.294-305.
DiPietro, R.B., Crews, T.B., Gustafson, C. and Strick, S., 2012. The use of social networking sites in the restaurant industry: best practices. Journal of Foodservice Business Research, 15(3), pp.265-284.
Hua, N. and Lee, S., 2014. Benchmarking firm capabilities for sustained financial performance in the US restaurant industry. International Journal of Hospitality Management, 36, pp.137-144.
National Restaurant Association, 2012. Restaurant Industry Pocket Factbook Retrieved February 8, 2012.
Noone, B.M. and Maier, T.A., 2015. A decision framework for restaurant revenue management. Journal of Revenue & Pricing Management, 14(4), pp.231-244.