Tonight’s Agenda

2. Tonight’s Agenda • Overview • Marketing and Sales - Amber Long • Development - Lindsay Strodl • Operations - David Wein • Financials - Jillian Doman

3. About Sweet Basil • Sweet Basil provides high quality Italian take-out meals • Meals are fully prepared but not cooked • Meals provide fresh out-of-the-oven taste and quality with a minimum of effort • “The Sweet Basil Experience”

4. Marketing and Sales Overview • Home Meal Replacement Industry • Sweet Basil’s Target Market • Boulder Demographics • Potential Competitors • Marketing Strategy • Test Marketing Results • Promotion and Advertising

5. Home Meal Replacement Industry • “Home Meal Replacement means total meal solutions, the kind of wholesome, nutritious food people would cook for themselves if they only had the time” • Restaurant Business August 1, 1997 • Fastest growing segment of food service industry • Projected sales for 1997 $80-$100 billion

6. Trends Driving Growth • Two trends • Consumer Time Poverty • Quest for a Nostalgic Dinner

7. Target Market • DINKS- Double Income No Kids • Families • Single Young People

8. Boulder Demographics • 63% of the Boulder population fits into one of our target markets

9. Competition • Specialty Stores • Supermarkets • Restaurants • Fast Food Restaurants • Compete on the basis of Quality and Convenience

10. Marketing Strategy • Build name recognition and equity • Obtain and maintain customer loyalty • Compete aggressively with other HMR alternatives • Utilize word of mouth advertising positively

11. Test Marketing • 50 Interviews • 75% interested in a Sweet Basil type store • 40% take out food on a weekly basis • Spend an average of $20 a week on take-out

12. Promotions and Advertising • Test Marketing • Sampling • Newspapers • Donations • Flyers

13. Development Overview • Overview • Schedule • Critical Areas of Development

14. Schedule • Phase 1: Current Development (1 month) • Phase 2: Preparation (3 months) • Phase 3: Finalizing (1 month) • Phase 4: Opening and growth • Phase 5: Expansion

15. Phase 1: Current Development • Secure location and lease • Obtain Boulder demographics • Survey potential customers • Develop marketing plan • Identify costs to open • Hire Attorney and Architect • Menu Development • File Articles of Incorporation

16. Phase 2: Preparation • Store remodeling and renovation • Identify and purchase equipment • Implement marketing plan • Identify and contract with suppliers

17. Phase 3: Finalizing • Obtain permits and licenses • Finalize menu design • Install and test equipment • Building Inspection • Private opening • Public opening

18. Phase 4: Opening and Growth • Build customer base • Track and understand customer buying habits • Establish Sweet Basil as HMR alternative

19. Phase 5: Expansion • Delivery • Catering • Second Location

20. Critical Areas of Development • Facility and Lease • Permits and Licenses • Menu Development • Remodeling and Renovation • Equipment • Attorney Services • Insurance • Marketing Plan

21. Operations Overview • Management and Employees • Customer Service • Purchasing and Inventory • Point-of-Sale System

22. Management and Employees • Staff of six • four owner-managers • two additional employees • Training / Responsibility • four owner-managers share training and responsibility • two employees skilled beyond the register

23. Management and Employees (con’t) • Profit Sharing • two employees each receive 5% of operating income as an incentive • builds commitment to Sweet Basil • Dividends • four owner-operators each receive 22.5% of net income as a dividend • this leaves 10% for reinvestment in Sweet Basil

24. Customer Service • Hours of Operation • 11:30 a.m. to 9:30 p.m. • 7 days a week • Full and Self Service • Actively seek customer feedback and input

25. Purchasing and Inventory • Just-In-Time system • Five basic categories • meats and poultry - 4 times / week • vegetables - 4 times / week • dairy - 3 times / week • non-perishables - once / month (as needed) • packaging - twice / month (as needed)

26. Point-Of-Sale System • Integrates operations • Tracks sales, buying patterns, inventory • Greatly reduces paper work / bookkeeping • Components • two cash register systems • one kitchen system • one server in office

27. Financial Overview • Pre-Opening Expenses • Monthly Expenses • Month One Sales Projection and Growth • Projected Profitability • Projected Cash Flows • Monthly Breakeven Analysis

28. Pre-Opening Expenses • Total pre-opening expenses= $49,348 • Assets expensed when purchased • Total assets= $27,200 • Kitchen Equipment and Supplies= $6,800 • Office Equipment and POS system= $10,400 • FOH Equipment and Outdoor sign= $10,000

29. Monthly Expenses • Owners’ Salaries $8,660 • Assistants’ Salaries $2,598 • Store Lease $3,844 • Utilities $588 • Office Supplies $100 • Repairs and Maintenance $300 • Miscellaneous $150 Total Expenses $16,240

30. Month One Sales Projections • Estimated average ticket price $12 • Expect 40 customers per day • Revenues = $14,148 • Average Cost of Goods Sold = 34.4% • Cost of Goods Sold = $4,867 • Gross Profit = $9,281 • Average of $480 per day

31. Growth Rates • 50% in July - total sales = $21,222 • 50% in August - total sales = $31,834 • 7% in September - December • 10% Quarterly in 1999 & 2000 • 10% Annually in 2001 & 2002 • Over $1 million in sales at end of 2002

32. Five Year Net Income Projection

33. Year One Cash Flow Projection

34. Five Year Cash Flow Projection

35. Monthly Breakeven Analysis