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Q: I want to start a restaurant chain! ( Answered,   4 Comments )
Question  
Subject: I want to start a restaurant chain!
Category: Business and Money
Asked by: vla61-ga
List Price: $105.00
Posted: 12 Nov 2006 20:01 PST
Expires: 12 Dec 2006 20:01 PST
Question ID: 782237
I have a concept for a restaurant that could become something that's a
good franchise.  Fairly focused and narrow menus (think variations on
a theme), and a near fast-food like approach.  Possible and probable
delivery opportunities (like pizza) too, so consider that in the equation.

I'm looking for:

1.) Sample business plan, pro-forma, and anticipated expenses to start
something like this.  I know there are variables that influence the
numbers.  Something credible and with complete breakdowns to start
with is what's important.

2.) Somewhere to find "average" store sales and profits for fast-food
locations (pick a sample location in the midwest).  Cash flow
statement would help here.  I'm trying to figure out how McDonald's,
Chipotle, Taco Bell, etc. are profitable on a single-store basis.

3.) How are managers and franchise owners paid?  I've heard they can
make much $$, but how does the math work?

4.) A place to find the details of the lessons that should be learned
from the way-too-rapid expansion of Boston Chicken (Market) (and maybe
Krispy Kreme), which led to their near-collapse.

Lotsa stuff here, so a complete package will be well taken care of.
Thanks!

Request for Question Clarification by pafalafa-ga on 14 Nov 2006 08:50 PST
vla61-ga,

Thanks for your question...or should I say, questions!

Actually, it's unlikely that any researcher will attempt to answer all
four questions...there's just too much of a likliehood of not being
able to find all the information you requested.  Also, it would be a
heck of a lot of work, even for the nice fee you offered.

May I suggest you post these as four independent questions, each
priced according to what you think is reasonable.  That way, multiple
researchers can get to work, without the unnecessary complexity of a
multi-part question.

Just my two cents...

pafalafa-ga

Clarification of Question by vla61-ga on 18 Nov 2006 13:24 PST
Hi pafalafa - I understand your points and wondered if it would come
to this.  I will consider your advice.

Thanks.
Answer  
Subject: Re: I want to start a restaurant chain!
Answered By: umiat-ga on 06 Dec 2006 11:20 PST
 
Hello, vla61-ga! 

 The private financial details you desire are rarely found in a public
venue like the internet. Unlike publicly-owned entities, individual
franchises are private businesses that have no need to publish their
financials online. With this fact in mind, I have compiled some
information for you that should prove quite helpful as you analyze the
potential success of your restaurant idea.


************************
SAMPLE BUSINESS PLANS
************************

The following examples provide some excellent insight into the details
which should be included in a small restaurant or fast-food business
plan. Note that you will need to subscribe to the sites to read the
plans in full, but it is a small investment for a potential business!



Pasta Franchise Business Plan 
==============================
http://business.enotes.com/handbook-business-plans/pasta-franchise-business-plan

Executive Summary
http://business.enotes.com/handbook-business-plans/pasta-franchise-business-plan/executive-summary

  Also see Description Of Business, Market Analysis and Competitive Analysis 

Design and Development Plan
http://business.enotes.com/handbook-business-plans/pasta-franchise-business-plan/design-development-plans

Financial Components
http://business.enotes.com/handbook-business-plans/pasta-franchise-business-plan/financial-components
 
Statement of Assets and Liabilities
http://business.enotes.com/handbook-business-plans/pasta-franchise-business-plan/statement-assets-liabilities


====



The following two examples for a small cofeee shop and a restaurant
steak buffet offer much more detail. Though these ventures are
slightly different than the franchise you have described, they can
still offer some very good insight.
 

Daily Perk sample plan
=========================
http://www.bplans.com/spv/3269/7.cfm


 See the detailed Financial plan for this business
 http://www.bplans.com/spv/3269/7.cfm#1070000 
 
  7.0 Financial Plan

    7.1 Important Assumptions
        General Assumptions 

    7.2 Key Financial Indicators
        Benchmarks 

    7.3 Break-even Analysis
        Break-even Analysis 
        Break-even Analysis 

    7.4 Projected Profit and Loss
        Profit Monthly 
        Profit and Loss 

    7.5 Projected Cash Flow
        Cash 
        Cash Flow 

    7.6 Projected Balance Sheet
        Balance Sheet 

    7.7 Business Ratios
        Ratios 



Steak Buffet 
============
http://www.bplans.com/spv/3228/index.cfm?affiliate=wsmp




****************************
EXAMPLE OF START-UP COSTS
****************************

Dickeys Barbecue Pit - Initial investment
http://www.dickeys.com/initialinvestment.html


The Jimmy Johns Sub franchise 
Click on the tab for "Initial Investment"
http://www.jimmyjohns.com/why-franchise.html





********************************
FAST FOOD RESTAURANT FINANCIALS
********************************

As I stated earlier, individually-owned franchise restaurants are
private businesses. There is no reason for owners to display their
personal business financials online. Even if the franchise is for
sale, most of this information is available only to prospective
buyers. For this reason, the best way to analyze and compare financial
statements from operating franchises in the Midwest is to find sellers
of such businesses and contact them as a "prospective buyer." There
are several sites which post classified ads for buyers and sellers of
fast-food franchises. Merger Network, Business Nation and
BusinessesforSale are some good sites to explore, and you can select
by type of business and region.


BusinessesforSale 
==================
www.businessesforsale.com


Midwest
http://us.businessesforsale.com/us/browse/Food/Cafes-And-Restaurants/Fast-Food-Franchises-For-Sale.aspx?sort=&direction=asc&formName=browseForm&region=1508&country=235&checkAccommodation=&search=Refine+Search
 
 Asian Food Court - Cleveland
 http://us.businessesforsale.com/us/Chinese-Indian-and-Mediterranean-Cuisine-For-Sale.aspx

 Bagel Shop - Chicago
 http://us.businessesforsale.com/us/Bagel-and-Sandwich-Shop-For-Sale.aspx



Merger Network
================
www.mergernetwork.com

Fast Food restaurants for sale in the Midwes
http://www.mergernetwork.com/index.cfm?fuseaction=browseBFS.simplesearch&status=ACT&resetSearch=1&isSubmitted=true&indID=205&locID=10&salesID=&x=21&y=10


Business Nation
================
http://www.businessnation.com/Businesses_for_Sale/

Fast food and sub/deli franchises for sale:

http://www.businessnation.com/Businesses_for_Sale/Food-Restaurant/Quick_Service/Fast-Food_Restaurants/

http://www.businessnation.com/Businesses_for_Sale/Food-Restaurant/Quick_Service/Sandwich-Subs-Delis/



CALIFORNIA SANDWICH AND SALAD FRANCHISE
****************************************

 The following business is not located in the midwest, but it does
offer a more detailed financial disclosure than most business
classifieds found online!

Sandwich & Salad Franchise - Master Rights & 1 Store For Sale
http://www.bizben.com/listings/88274.php

Territory Highlights:

 Healthy, Internationally Flavored Gourmet Wraps, Salads & Sandwiches In Biz 
  10yrs +
 Highest Debut On The Fastest Growing Franchise List In Los Angeles Business 
  Journal.
 3 Established Stores Open In S.D. County - Estimated 2006 Sales Of 1.6 Million
 Master Franchisor Earns 3% Of Sales From Each Store
 Master Franchisor Earns 50% Of Franchise Fees Collected
 Over 20 Potential Store Locations Identified

Great Opportunity For Aggressive Entrepreneurs Looking For A High
Growth Franchise In San Diego County. Price Includes One Operating
Store, With Sales Expected To Reach 375K 1st Year. This Opportunity
Could Be Sold As A Complete Package Or Separately For 259K Each.

Store For Sale Highlights :

 Location, Location, Location W/Great Lease.
 Rare Opportunity In A High Traffic Student Center In The In Heart Of Campus!
 Captive Day-Time Population (10K-40K+ Per Day) W/Inside As Well As Outside 
  Seating

Sales :
 Sales Gross Of 205K & Operating Net Profit Of 19.2% 1st 6 Mons
 Classes Started Again & Sales, As Expected, Have Been Strong - @10K/Week.
 Big Upside Because Owner Absent & Currently Does No Marketing Or Catering.
 An Owner Operator Can Make All The Difference!
 Operating Net Profit Of 19.2% 1st 6 Mons
 Buy This Store Now And Receive All The School Year Profits!
 Can Increase Sales & Profits Significantly With Catering To Many Of The 
  Surrounding Buildings Facilities & Depts. On Campus!
 Other Franchise Stores In San Diego Area Do 20-35%+ Of Their Sales In Catering

Lease :
 Incredible Monthly Base Rent Of 2,348 Or 10% Of Net Sales (Whichever Higher)!
 Lease And Option Through 2015
 Extensive Training : 2 Weeks Corporate In L.A. + 1-2 Weeks Of Local In-Store 
  Training
 Virtually All Equipment Is New & Space Was Completely Rebuilt: New Ceilings, 
  Walls &  Floors!

Financial :
 Sales Gross 1st 6 Mons 205,000
 Operating Net Profit 1st 6 Mons Of 19.2%
 Price Is 259,000 (+Inventory & Transfer Fee)
 Buy This Store Now And Receive All The School Year Profits!
 Royalties And Advertising Are 7.5% With A 7,500 Franchise Transfer Fee. 
  Inventory @3K
 Financials Will Be Disclosed To Pre-Qualified Buyers Who Complete An 
  Application.

Price Is Based On The Cost Of Building The Unit And Goodwill. The
Startup Costs For These Units Can Run In The 300,000+ Range. Costs
Would Include Initial Franchise Fee, Equipment, Design Approval,
Location Approval, Lease Negotiation And Total Remodeling.



**********************************
INVESTING, OWNING, EARNINGS, ETC
**********************************

From "A Consumer Guide to Buying a Franchise."
http://www.ftc.gov/bcp/conline/pubs/invest/buyfran.htm

Earnings Potential:

"You may want to know how much money you can make if you invest in a
particular franchise system. Be careful. Earnings projections can be
misleading. Insist upon written substantiation for any earnings
projections or suggestions about your potential income or sales."

"Franchisors are not required to make earnings claims, but if they do,
the FTC's Franchise Rule requires franchisors to have a reasonable
basis for these claims and to provide you with a document that
substantiates them. This substantiation includes the bases and
assumptions upon which these claims are made. Make sure you get and
review the earnings claims document. Consider the following in
reviewing any earnings claims."

Sample Size:  "A franchisor may claim that franchisees in its system
earned, for example, $50,000 last year. This claim may be deceptive,
however, if only a few franchisees earned that income and it does not
represent the typical earnings of franchisees. Ask how many
franchisees were included in the number.

Average Incomes:  "A franchisor may claim that the franchisees in its
system earn an average income of, for example, $75,000 a year. Average
figures like this tell you very little about how each individual
franchisee performs. Remember, a few, very successful franchisees can
inflate the average. An average figure may make the overall franchise
system look more successful than it actually is.

Gross Sales:  "Some franchisors provide figures for the gross sales
revenues of their franchisees. These figures, however, do not tell you
anything about the franchisees' actual costs or profits. An outlet
with a high gross sales revenue on paper actually may be losing money
because of high overhead, rent, and other expenses."

Net Profits:  "Franchisors often do not have data on net profits of
their franchisees. If you do receive net profit statements, ask
whether they provide information about company-owned outlets.
Company-owned outlets might have lower costs because they can buy
equipment, inventory, and other items in larger quantities, or may
own, rather than lease their property."

Geographic Relevance:  "Earnings may vary in different parts of the
country. An ice cream store franchise in a southern state, such as
Florida, may expect to earn more income than a similar franchise in a
northern state, such as Minnesota. If you hear that a franchisee
earned a particular income, ask where that franchisee is located."

Franchisee's Background:  "Keep in mind that franchisees have varying
levels of skills and educational backgrounds. Franchisees with
advanced technical or business backgrounds can succeed in instances
where more typical franchisees cannot. The success of some franchisees
is no guarantee that you will be equally successful."


==


See "Buying a Restaurant Franchise," by Jeff Elgin
http://www.entrepreneur.com/franchises/buyingafranchise/franchisecolumnistjeffelgin/article78574.html



INDIVIDUAL FRANCHISE STORIES (AND LESSONS)
*******************************************

"McDonald's Hamburger Hell - The restaurant chain aims to save itself
by going back to basics. But the company needs more than a tastier
burger to solve its problems."
http://www.businessweek.com/magazine/content/03_09/b3822085_mz017.htm


"Fast-food shop owner takes off, employees take over," By Shirleen Holt
http://seattletimes.nwsource.com/html/localnews/2002170453_quiznos04.html




KRISPY CREME, BOSTON CHICKEN, ETC
************************************

"CEO Is Following Recipe to Remake Krispy Kreme." Los Angeles Times
http://www.paradigmshiftpr.com/remakekrispykreme.htm

"From its 2000 initial offering price of $21 a share, Krispy Kreme's
stock jumped to $105 in a matter of months before a pair of 2-for-1
stock splits. The company opened nearly 400 stores across the U.S. and
as far away as England and Australia. The ease of that success, Cooper
believes, was the problem. Instead of focusing on running an efficient
operation in an industry with razor-thin margins, he said, Krispy
Kreme executives were enjoying the glow of their rapid expansion and
rising stock price.

"You have to be able to make the transition from being a
word-of-mouth, kind of myth-driven marketing company into one that has
a much more structured, objective-driven sales marketing program,"
Cooper said.

Read full article....

==

"The dynamic duo of franchising - Ronald E. Taylor and Ardena Taylor -
B.E.'s 20 Best Franchises. Black Enterprise,  Sept, 1995
http://www.findarticles.com/p/articles/mi_m1365/is_n2_v26/ai_17210325


"A Chicken Autopsy - An Investment Opinion," by Louis Corrigan
http://www.fool.com/EveningNews/foth/1998/foth981007.htm


==========



 I hope the information I have collected is helpful as you move foward!


Sincerely,

umiat


Search Strategy

small food franchise sample business plan
cash flow statement for individual fast food franchise store
average cash flow individual franchise restaurant
McDonalds individual franchise
franchise restaurant for sale
payment structure for franchise restaurant
Boston Chicken Market
Comments  
Subject: Re: I want to start a restaurant chain!
From: daniel2d-ga on 12 Nov 2006 20:35 PST
 
First,  YOU need to be involved in delevoping the plan since you are
the only one that has the information that the plan should be based
on.  Second, you don't just start a chain.  You develop your food e.g.
a test kitchen. You build a prototype store and work out the kinks in
management, supply and production.  Once you can show that the concept
can make money and the infrastructure and support are in place then
you can consider franchising.
Subject: Re: I want to start a restaurant chain!
From: probonopublico-ga on 12 Nov 2006 22:18 PST
 
Also you need MONEY!

My guess is that, if you had any, you would have already put the show on the road.
Subject: Re: I want to start a restaurant chain!
From: frde-ga on 15 Nov 2006 03:58 PST
 
A few years ago, I heard from a confidential source, that McDonalds
franchisees do not always make money - even if they have a huge
turnover.

It got me wondering.

As daniel2d-ga said, you need to debug the operation first.

If you do not already have a business plan, then you only have the
germ of an idea, a real business plan is at most an A4 sheet of paper,
the one you show to a lender needs padding out or it will get lost in
their briefcase.
Subject: Re: I want to start a restaurant chain!
From: ask2yog-ga on 28 Nov 2006 06:25 PST
 
Hi
I think u need fullproof business plan along with plan of action for
which lot of things is to be considered and which can cost u more.
1) Please clearify about ur financial budget so that boundries of
initial business start can be made and plan of action and plan
expanssion can be sort out.
2) Define the work area first I mean to say to start with small
teritorry / town / city / state / Country etc. and this can be plan
only according on basis of ur financial budgets.
3) Big brands and chain of restaurants are not set up in one day so u
need expanssion plan depending upon ur rate of returns and break even
point.
4) Market survey / liking of peoples as well as habits and needs of
people/ advertising / manufacturing / distribution / centrally
controlled management / manpower / fixed investment in setting up
infrastructure / requirement of working capital / bulk supply to
corporates from ur branches etc... These are all factors and several
other factors can be taken into consideration and can be worked out
when u decide ur starting area as i have mentioned in my point no 2
Define all the factors first then only i can go for detail work if u
want and of course it's cost u .
Yogesh

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