BUSINESS PLAN FOR

Restaurant

Bar Lounge
Submitted to: Submitted by: Prof. Swapan Das Gupta Gaurav Gupta - 26

(Entrepreneurship) Joby Joseph - 30 Mrinal Rawal - 39 Nikhil Mahajan - 41 Piyush Kharbanda - 43 Tarun Kapila - 82

S.no. 1. 2.

Topic Executive Summary History

Page No. 3 5

3. 4. 5. 6. 7.

Future Trends & Strategic Opportunities Objectives Market Analysis Market Segmentation Strategy And Implementation Summary

7 7 8 9 12

8. 9. 10. 11.

Marketing Strategy Sales Strategy Sales Forecast Financial Plan

17 21 22 24
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12. 13. 14. 15.

Profit And Loss Balance Sheet Expansion, Payback & Exit Strategy Organizing And Management:

26-27 29-30 30 32

16.

HR Policy And Strategy Summary

32

17.

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1. EXECUTIVE SUMMARY
Our initial statement to Investors and Financial Lenders is a candid disclosure of the Elegance Restaurant & Lounge business proposal - our intent is to set realistic business expectations, and eliminate any questions about the profitability of this business venture. Entrepreneurs have a tendency to paint the business plan with a very optimistic brush, highlighting strengths and camouflaging the risks. We, as business owners, have a vested stake and financial commitment in the success of this restaurant. Our intent is to have a definitive business, financial, and marketing plan that not only serves our need for capital financing, but is utilized as our daily business roadmap. We have taken all precautions to validate our business and financial models, focusing on realistic projections. We have accomplished this as follows: 2. Our financial model is rooted in industry facts, not optimism. We have based costs on our vast industry and practical experience with similar ventures, validation against National Restaurant industry cost averages, and analysis against local South Delhi market averages. We have taken a collective look at all figures to make solid business estimates.

3. Our business concept was derived from detailed Market

Analyses. Instead of building a business around a preconceived concept, we

analysed the market findings and built a concept around our consumers. In other words, our business is built to service an unmet consumer 'want'.

4. A buffered financial plan that ensures adequate capitalization. A contingency buffer is included in the start-up cost to ensure the business in not under financed, as well as giving the business adequate funding to sustain it in the first six months of start-up. Our industry experience confirms a longer rampup stage for restaurants over other retail/service businesses. A common mistake for new entrepreneurs, but fully addressed in this business plan.

5. A solid Risk Mitigation Plan. We have evaluated traditional and nontraditional risks associated with Restaurant failure and accounted for them directly in the business plan. Instead of dismissing the risks, we have identified valid mitigation strategies for each. 6. Deep Management Experience. Our management team has 20 years combined experience, involved with over 86 restaurant openings, and deep involvement with the Indian restaurant industry. The total capital requirement to launch Elegance Restaurant & Lounge is INR 3,62,60,000, of which INR 3,15,07,000 is allocated to start-up capital, and INR 47,53,000 as business operations cash reserve. (PURPOSE) This Plan is being submitted in order to secure a Business loan for INR 2,10,70,000 The loan will be used towards Equipment purchase, Design, Construction, and Operational Start-Up expenses. Owners are investing INR 53,90,000 in personal capital. Private Investors, who will be part owners with a non-managerial interest in the business, will contribute the remaining INR 98,00,000. As owners, our commitment is to take personal accountability for all financial debt. We have taken the necessary precautions to ensure the business is fully capitalized, and have addressed all financial shortfalls to ensure a successful business start-up. Under a realistic scenario, the company should have over INR 41,16,000 in cash balance the third year. Even with the worst-case sales scenario, we reach a Net Worth break even

at the end of Year 5. On a linear projection, the entire financial debt will be retired by Year 7.

Highlights

"Change the way, food is served

2. HISTORY
Food catering establishments which may be described as restaurants were known since the 11th century in Kaifeng, China's northern capital during the first half of the Song Dynasty (9601279). With a population of over 1 million people, a culture of hospitality and a paper currency, Kaifeng was ripe for the development of restaurants. Probably growing out of the tea houses and taverns that catered to travelers, Kaifeng's restaurants blossomed into an industry catering to locals as well as people from other regions of China Restaurants catered to different styles of cuisine, price brackets, and religious requirements. Even within a single restaurant much choice was available, and people ordered the entree they wanted from written menus. In the West, while inns and taverns were known from antiquity, these were establishments aimed at travelers, and in general locals would rarely eat there. Restaurants, as businesses dedicated to the serving of food, and where specific dishes are ordered by the guest and generally
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prepared according to this order, emerged only in the 18th century. According to the Guinness Book of Records, the Sobrino de Botin in Madrid, Spain, is the oldest restaurant in existence today. It opened in 1725. Another claim to be the world's oldest restaurant is made by Stiftskeller St. Peter in Salzburg, which has been in existence since 803 AD, since the time of emperor Charlemagne. The term restaurant (from the French restaurer, to restore) first appeared in the 16th century, meaning "a food which restores", and referred specifically to a rich, highly flavored soup. It was first applied to an eating establishment in around 1765 founded by a Parisian soup-seller named Boulanger. The first restaurant in the form that became standard (customers sitting down with individual portions at individual tables, selecting food from menus, during fixed opening hours) was the Grand Taverne de Londres (the "Great Tavern of London"), founded in Paris in 1782 by a man named Antoine Beauvilliers, a leading culinary writer and gastronomic authority who achieved a reputation as a successful restaurateur. He later wrote what became a standard cookbook, L'Art du cuisinier (1814). Restaurants then became commonplace in France after the French Revolution broke up catering guilds and forced the aristocracy to flee, leaving a retinue of servants with the skills to cook excellent food; whilst at the same time numerous provincials arrived in Paris with no family to cook for them. Restaurants were the means by which these two could be brought together and the French tradition of dining out was born.

A leading restaurant of the Napoleonic era was the Vry, which was lavishly decorated and boasted a menu with extensive choices of soups, fish and meat dishes, and scores of side dishes. Balzac often dined there. Although absorbed by a neighboring business in 1869, the resulting establishment Le Grand Vfour is still in business.

Boris Kustodiev: Restaurant in Moscow (1916)

Restaurants then spread rapidly across the world, with the first in the United States (Jullien's Restarator) opening in Boston in 1794. Most however continued on the
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standard approach of providing a shared meal on the table to which customers would then help themselves (Service la franaise, commonly called "family style" restaurants), something which encouraged them to eat rather quickly. Another formal style of dining, where waiters carry platters of food around the table and diners serve themselves, is known as Service la russe, as it is said to have been introduced to France by the Russian Prince Kurakin in the 1810s, from where it spread rapidly to England and beyond. The familiar pattern of service where customers are given a plate with the food already arranged on it is called "American Service," though it surely did not originate in America.

THE RESTAURANT INDUSTRY TODAY

The food service business is one of the largest industries in the country. This number has been increasing for the past seven years. In the past five years the restaurant industry has out-performed the national GNP by 40%. The reasons given by the Folkney Report (November 1994) are 1) lifestyle changes, 2) economic climate, and 3) Increase of product variety. There are 600 new restaurants opening every month and over 200 more needed to keep pace with increasing demand.

3. FUTURE TRENDS & STRATEGIC OPPORTUNITIES

The predicated growth trend is very positive both in short and long-term projections. Folkney states that as modern living creates more demands, people will be compelled to eat more meals away from home. The DMR Industrial Report (April 1995) estimates this as high as 30% over the next five years. In 1988 The National Restaurant Association released the Foodservice Industry 2000 report that forecasted how the industry might look in the year 2000. Some highlights from the panel's findings: "Consumers will spend a greater proportion of their food dollar
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away from home. Independent operators and entrepreneurs will be the main source of new restaurant concepts. Nutritional concerns will be critical at all types of foodservice operations, and food flavours will be important. Environmental concerns will receive increased attention."

4. Objectives
Elegance Restaurant & Lounge's objectives have been divided on short term and long term basis for the first three years of operation. They include:
4.1.

Short Term:
Keeping food costs at less than 35% of revenue. Improving our Gross Margin from 65.41% in Year 1 to 67.10 in Year 2. These are attainable targets; stretch is to attain 70.73% by Year 3. Keeping employee labour cost between 37-39% of total sales. Remaining a small, unique restaurant with eclectic food and service. Averaging sales between $1,200,000 - 1,500,000 per year. Achieving a profitable investment return for investors for Years 2 6.

4.2.

Long Term:
Promoting and expanding the Elegance restaurant concept as a unique Midtown destination restaurant. Expanding our marketing and advertising in New Delhi and in the neighbouring suburbs to increase our customer base.

5. Market Analysis
Instead of building a business around a preconceived concept, we conducted market research and built a concept around our consumers. Our market analysis identified the

following key drivers as areas of opportunity to service New Delhi's restaurant customers: 1. Portion Selection: Nearly 95% of our surveyed focus group endorsed having a choice of different size portions.. Elegance's Tapas concept is built to offer different-sized portions. Our customers want the option to choose what satisfies their appetite.

2. Menu Variety: Ethnic restaurants are increasing in New Delhi. The proliferation of international cookbooks, food magazines, TV cooking shows and imported goods offers ample evidence that India, as a whole, is currently on an international tasting spree. Our research results do not identify any single ethnic style of restaurant as desired, but rather suggest that incorporating strong multiethnic influences in the menu selection will be popular. Again, variety is the underlying element for this concept.

3. The Dining Experience: Customer satisfaction with food and service has been and continues to be of utmost importance, but our findings indicate that the decor, lighting, bar, and other options to improve the dining experience are also factors in customer decisions. Elegance takes all these factors in consideration for the design of this cosmopolitan restaurant.

4. Reasonable Prices: This was no surprise given the economic tide. Although the restaurant industry as a whole has seen growth in 2002/2003, customers are demanding value for their dining dollar. Elegance's menu is priced at a mid-tier level, with no entrance over $20. In addition we have an extended Tapas and Appetizer selection priced between $3.50 - $9.50, allowing budget dining in a fullservice restaurant.

6. Market Segmentation
Elegance's Restaurant & Lounge intends to cater to a wide customer base. We want everyone to feel welcome and entertained. We have defined the following groups as targeted segments that contribute to our growth projections:

The Business Person Downtown New Delhi Couples

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The Destination Customer High-End Singles Tourists

These particular market segments are 25-45 years old, have disposable income, and are seeking upscale, trendy, and comfortable restaurant options. These are the types of people who frequent other restaurants and bars in the area. They are likely to spend more on experiences they perceive as unique, cosmopolitan, and sophisticated. They are also the most open to trying something new, foodies, and will embrace our international fusion cuisine.
6.2

Market Profile (Pie)

6.3

Target Market Segment Strategy

The Business Person: They work hard all day and often stay overnight in a strange
city. They need a competent establishment that helps impress clients and prospects. Afterward, they want to relax and use the money they are making (or are expensed by their company). They spend the most on drinks, food and tips. Elegance's cosmopolitan flair and comfortable atmosphere will be perfect for sophisticated business people, whether they live in and around New Delhi or are here for work.

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Downtown New Delhi Couples: The restaurant will have an intimate, romantic,
enticing adult atmosphere that suggests "date." Elegance's will be the best date location in town. These young Midtown couples are generally very successful working professionals. In most cases they are budgeting to eat out on a regular basis, as they don't have the time to prepare food nightly.

The Destination Customer: New Delhi is a very 'sectioned' city, and consumers
often look only in their own neighbourhoods for restaurant options. Elegance will break these habits, using marketing to draw customers from outside the main city limits. Elegance will be a destination restaurant. Our Destination Clients tend to be new suburbanites that miss the excitement of the inner city. They have disposable income, and will spend quite a bit on such outings. Elegance's will be especially appealing to married suburban couples indulging themselves with a "late night" downtown, away from the kids. Many of these consumers are new to New Delhi from cities, accustomed to dining within the city and at non-franchised restaurants.

High-end Singles: We will attract them with our eclectic atmosphere and layout. Our
international menu, striking decor, entertainment and events, excellent service and engaging clientele will confirm the feeling of being in "the in place" in New Delhi. These are the individuals that pride themselves on socializing and dining at the premier locations - The Image Seekers.

Tourists: New Delhi attracts many vacationers during the summer months of May
through September. Elegance's will be a destination dining locale, with its attractive atmosphere, international menu, and lounge. A large percentage of the tourist population are vacationing singles, here to socialize and be entertained. This is especially true for the tourist population that visit for sporting and social events - they are not interested in family establishments.
6.4

Service Business Analysis

The restaurant industry is highly competitive and risky. The owners know this through their many years of experience opening, running, and improving restaurants across India. Most new restaurants opened by inexperienced owners struggle or fail. However, those based on solid understandings of the market needs, and management of inventory and staff have a much higher chance of success, especially when combined with prior experience in the restaurant industry. Restaurants make money by taking inexpensive ingredients, combining them in creative ways, cooking them properly, and selling them at a much higher price. Any ingredients wasted in the kitchen are money thrown out. Any time wasted in seating customers,
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taking orders or preparing food is money walking away. While some entrepreneurs think that success is as simple as a good location and a trendy concept, we know the truth: To succeed in the restaurant industry, you need an understanding of the risks and financial conditions, the ability to handle enormous pressure, and the organizational skills to bring off what is essentially a giant catered party, two to three times a day.
6.5

Competition and Buying Patterns

In 2003, the top ten New Delhi restaurants shared two things: cosy, hip interiors and reasonably priced, regionally specialized menus. Our competitors are heading in the right direction, but only Elegance is based on sound market research in the local market. Major competitors are: Thank God Its Friday The Park Hotels QBA Restaurant And Bar Shalom Med Lounge Bar Urban Pind Moksha Lounge & Bar Storm Restaurant & Bar Lizard Lounge Kylin Lounge Aura Restaurant. Atrium Lounge Bar

New Delhi consumers are seeking variety and new experiences. Location is clearly important, but so is atmosphere and distinctiveness. Our marketing challenge is thus to stand out from our competitors, not only as the "new" restaurant, but as one that offers consistently high quality food, menu variety, and a unique atmosphere. Maintaining our edge will depend partly on marketing ourselves as an adult-only destination, and not a family restaurant.
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7. Strategy and Implementation Summary

Our strategy is simple. We intend to succeed by giving people a combination of excellent and interesting food in an environment that appeals to a wide and varied group of successful adults. We will focus on establishing a strong identity in our community with a grand opening. Our main focus in marketing thereafter will be to increase customer awareness in the surrounding communities. We will direct all of our tactics and programs toward the goal of explaining who we are and what we do. We will keep our standards high and execute the concept flawlessly, so that word-of-mouth will be our main marketing force. We will create an appealing and entertaining environment with unbeatable quality at an exceptional price. As an exciting and eclectic restaurant, we will be the talk of the town. Therefore, the execution of our concept is the most critical element of our plan. All menu items are moderately priced for the area. While we are not striving to be the lowest-priced restaurant, we are aiming to offer exceptional food at reasonable prices for the average restaurant diner.
7.1

Competitive Edge

Elegance's competitive edges are: 1. 2. 3. 4. 5. 6. 7. 8. The owners' thorough understandings of opening and running a restaurant An extraordinary contemporary restaurant design International menu with featured menu changes every 4 months Unique, 3-Tiered spatial layout Chef Co-op program to allow new entrants, trainee and featured chef Chef/Management Stock Incentive Program. Inner and Outer City Marketing campaign (i.e. "Come to Town" promotions) Employee Training, Incentive and Retention program

7.2

Elegance Menus

Elegance's varied international menu will feature Thai, Chinese, Spanish, and other regional flavors. The menu flows together to create complementary elements. Normal dining will have a reduced Tapas, Appetizer and Entre selection, while the Fusion Dim Sum menu will have special items featured only for after-hours dining. The final
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menu will be defined by the Executive Chef and paired with the wine menu. We have carefully selected a premium wine, beer, and alcohol listing, from which we will choose a modest rotating selection. Elegance's marketing will focus on our exotic foods, but our hours, target market, and location will produce significant alcoholic drinks sales. Tapas, in particular, are small dishes meant for sharing while drinking sangria, wine, or other mixed drinks, and the Tapas menu will play up this idea with drink suggestions. The list below offers a small selection of our opening menu offerings:

Elegance Tapas

Shrimp Baskets with sweet & sour peanut coulis Minced curry beef/chicken w/ onions in roti wrap (or spring roll) Mixed Seafood Ceviche with couscous siding Bamboo Chicken Satay with affirm lime and Sesame marmalade

Elegance Appetizers

Bread basket served with Olive oil, Black Pepper, and Goat Cheese dip Blue Crab Fritters with Mango-Tamarind sauce Crab Cake medallions w/ Shrimp & Lobster ??Elegance'

Salads

Mixed Greens with Spanish sherry wine vinaigrette Asian Pear and Endive Salad with Blue Cheese & Walnuts

Entrees

Tequila Scallops w/ a Spanish sherry reduction Thai Red Chili rubbed shrimp Voodoo Prince Curry Chicken and Bock Chow w/sticky rice in Banana Leaf Herb Roasted Chicken with ??Elegance' Coo-Chee (House) spices

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Desserts

Chocolate Chunk Bread Pudding w/ Bourbon Cherry sauce Elegance Chocolate Explosion - Milk, Dark and White chocolate Elegance Fruit Plate

Specialty Drinks & Coffees ($3.5 - 9.5)

A key source of revenue for the restaurant will be alcohol and bar sales. The restaurant will feature exotic drinks on a separate menu. Alcoholic drink specials will be featured, as well as a large non-alcoholic selection. After-hours bar service will feature selections of non-alcoholic drinks to increase bar sales during lunch and after regulatory hours. Bar pricing is competitive; prices range from $3.50 to 6.95. Non-alcoholic drinks will be in the higher price bracket due to preparation requirements. Prices will range from $4.75 to 9.50.

NUTRITION CALCULATOR
ELEGANCE serves a wide range of quality foods that can easily fit into individual diet needs based on the principles of balance, variety and moderation. Our varied menu and range of serving sizes make it easy to fit our food into a balanced diet and to create a range of meal combinations that fall within recommended guidelines for calories, fat and other nutrients. Concerned about fat content? Need a special order? With our cooking system, customers can special order various menu items to help meet their nutrition needs. Today, building on our Food Facts program, nutrition information is also included on our double-sided tray liners. Also, customers can get nutrition information online. Our goal is to provide you with the information you need to assist you in making sensible decisions about balance, variety and moderation in your diet.

FOOD QUALITY ASSURANCE

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The bedrock of all our socially responsible supply efforts is our commitment to ensuring that all the foods and beverages we serve our customers are safe. We do business only with suppliers that share this commitment and work with them to continuously monitor, test, and track our ingredients. We have stringent standards and checks in place in critical areas throughout the food supply chainfrom "fork to farm."

Purchasing High-Quality Safe Food Products

Companies that supply food products to the ELEGANCE must have a number of food safety programs in place. They include, among others, programs for sanitation, pest control, and microbiological control, and a hazard analysis critical control point (HACCP) plan and program. HACCP is widely recognized, worldwide, as an effective method of preventing food-borne illnesses.

ENSURING FOOD SAFETY AT THE RESTAURANT LEVEL

Food safety training begins the first day an employee arrives for work, with an orientation to our standards. It is reinforced and expanded in the curricula and materials that prepare restaurant employees for more advanced positions. Shift managers must successfully complete an entire course in food safety before being certified as capable of managing a shift alone. Our Operations and Training manual for restaurant managers includes a whole chapter on food safety, with requirements and guidance that cover all the critical control points at the restaurant levelfrom supply and delivery through storage, preparation, and holding. Food safety procedures are monitored by staff operations consultants, who regularly visit our restaurants to advise managers on operations. The consultants also conduct periodic restaurant operations reviews, which include assessments of food safety procedures. Managers are expected to correct any irregularities identified. Onsite assessments are also used to identify needs for expert assistance and for further development of our training programs. They are an important factor in evaluating company-operated restaurant managers and in deciding whether owner/operators are qualified for additional restaurants and for continuation within the System.

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Elegances suppliers play a pivotal role in our success, providing quality products at competitive prices.

Together, suppliers and the Company create new products, help reduce costs and ensure our customers receive the same great taste of Elegance in every community across the country. Elegance buys and serves the same wholesome foods our customers use at home, supplied by brand name companies which Indians know and trust.

RAW MATERIAL SURVEY

The adequate material will be available to support our project from local market suppliers like Agri Freeze Foods, Hak Agro Foods, Krishna Food Products, New Delhi, Daily Foods (India), New Delhi. Raw material used in our products belongs to the following categories Natural form ( chicken , vegetables, rice) Finished form ( oil, bread bun, butter cheese ,spices, beverages)

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8. Marketing Strategy
Elegance Restaurant & Lounge's Marketing strategy will be to promote our electric food, superior service, and exciting concepts to draw in the local repeat customers. Marketing initiatives will concentrate on the following:

Building and Signage:

The most important Marketing tool that we have is the exterior of our building, and our new sign. We budgeted a great deal into the renovations and decor to generate the aesthetic appeal of Elegance.

Customer Service:
In our years within the restaurant industry, customer service has always been the major draw for the dining clientele. Food and atmosphere is far out-shadowed by superior customer service that turns a new customer into a repeat customer. Management will demand the wait-staff provide the very best in quality services to the customer, making certain that they are content and satisfied with their dining experience. Wait-staff are thoroughly trained, and every 90 days they undergo a performance appraisal. This is part of our Employee Manual, and Operations Manual guide.

Advertising and Promotion:

Our Advertising Plan and media schedule call for targeting customers directly through local publications aimed at , respectively, singles, couples, and destination customers. Management recognizes the key to success at this time of initial opening is extensive media promotion. This must be done aggressively in order to accomplish our service goals. A healthy budget is allocated for the first year. A primary part of the budget is allocated to create the media and customer buzz for the month prior to opening and the next three months after the grand opening. The full Marketing program is as follows:. Media Objectives and Strategy: Establish our image as a unique Midtown restaurant with great service, value, and great
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food served in an eclectic atmosphere. We will maximize efficiency in the selection and scheduling of advertisements by:

Selecting primary business publications with high specific market penetration, using The Creative Loafing Dining Section, The Saket Journal Constitution, and Social Diva, which all reach our targeted demographics. Scheduling adequate frequency of ads to impact market with menu items and promotions. Where possible, positioning advertisements in or near entertainment/food related editorial. Redirecting customers to our website to register for upcoming functions, VIP lists, reservations, and flash media promotions. Maximizing ad life with monthly and weekly publications.

Working with The Reynolds Group Media Co. (Elegance Advisory Board), we will develop an advertising campaign built around our Elegance Diner theme, menu offering, location, and decor. We will support this plan with ads that reinforce the Elegance dining concept. Additionally, we will develop a consistent reach and frequency throughout the year, targeting each specific customer segment within a five-mile radius, and new 'suburbanites,' who still appreciate in-town dining.

Promotional Campaign:
The best way to reach our potential customers is to develop an intense advertising campaign promoting our Elegance concept of "Spice of Life." In addition to standard advertising practices, we will gain considerable recognition through newspapers, newsletters and public announcements. Consumers will be encouraged to visit our website to be greeted with a flash media intro that highlights the restaurant, past happenings, upcoming attractions and our dynamic menu. Our periodic customer surveys and weekly menu item sales evaluations will help us to understand what advertising is working and what is not; basically, who we are reaching. Our goal is to understand our customer, measure the success of our direct marketing and media activities, and redirect advertising as effectively as possible.

Publicity Strategy:
Elegance will focus on the following publicity strategies:

Develop a sustained public relations effort, with ongoing contact between key editors and top-level personnel at local dining publications. Develop a regular and consistent package update program for the major target media, keeping key editors abreast of all new promotions, and menu introductions.

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Establish contact with editorial staff for the purpose of being included in entertainment "round-ups"--product comparisons in dining publications and the local papers. Produce a complete Elegance Restaurant history and menu offering piece to be used as the primary public relations tool for all target media editorial contact. This will also be effective for inclusion in press kits.

Press Release/Grand Opening: Elegance Restaurant will release a series of press

releases on the Grand opening.

Editorial Visitation: Leading up to the Grand Opening, and over the first 6 months
of operations, we will invite the most influential reporters and editors from all local publications to Elegance Restaurant in order to evaluate our menu, service, and atmosphere.

Publicity Revenues: We anticipate at least 10% of our annual sales will be

generated directly from our publicity. A full media kit will be sent to all local publications, and releases on new menu items will be made monthly.

Community: Elegance will look for key opportunities to pair with local community
development organizations and radio stations to interface with our customers. We will continually look for local community programs in which we can participate, in order to better our community, and give something back.

8.1

Marketing Program

In line with our Marketing strategy, we will employ three different marketing tactics to increase customer awareness of Elegance: In-Restaurant Marketing, Public Relations Marketing, and Media Marketing. Our most important tactic will be word-of-mouth/inrestaurant marketing. This will be by far the cheapest and most effective of our marketing programs.

Word-of-mouth/In-Restaurant Marketing

Restaurant Night: Every first Monday of the quarter, we will have a special
evening for restaurant people. A perfect night for the local area's restaurant owners, chefs and staff to get together to discuss the market and food trends, and possible Co-op efforts to promote the Midtown district. This is not a conflict
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of interest, it is an effort to increase visibility and patronage across the Midtown district. We will also invite the Midtown Alliance committee for their participation.

Monthly Dating Connection: With the increasing appeal of Internet and

speed dating, the restaurant will offer a monthly dating night. In addition to food and beverages, customers can choose from an array of dating packages up for auction.

Wait Area Marketing: Wait staff will service appetizers to customers waiting
to be seated or on the wait list. Live Entertainment parties Special Events Valentine's Day Elegance Halloween Masquerade party Wine tasting weekend New Year's Eve party

8.2 Public

Relations Marketing

Georgia Hospitality & Tourism V.I.P. Party: We will host a V.I.P.

Dinner before the 'Grand Opening.' This will serve the dual purpose of training our staff and introducing ourselves to the community. The list of individuals we will invite comes from the Chamber of Commerce, Georgia Hospitality & Tourism, and Midtown Development group. We want their full committment to the restaurant to draw the tourist dollars.

Critics' Choice: Prior to the Grand Opening there will be two preliminary
parties catering to the Media and Critics community. We will encourage the media and restaurant critics to meet at the restaurant and review the decor, service and food. This will be a preliminary review, where we will consider constructive input to make minor revisions prior to the true Grand Opening. This initial review and input will give critics and media commentors a stake in Elegance's success, through their contributions to the final design.

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Brochures: Make a brochure for the in-town hotels and business

establishments to provide to their guests and staff, containing interior pictures of our restaurant, menus and prices.

Government Relations: There are several Government offices in the

Midtown/Downtown area. We will approach them to cater business luncheons and private functions. This will offer us higher visibility for future functions and community events. Word-of-mouth referral is very powerful and particularly amongst the business community.

Private Functions: Target marketing to businesses for regular business lunch

and dinner entertaining, and private functions.

8.3 Media Marketing

Newspaper campaign: A very targeted media campaign to obtain featured

articles about the restaurant in their Living, Entertainment and Dining segments. Notices of all live entertainment segments and special features will be posted to local newspapers' calendar announcements.

Restaurant and Special Events Website: We have contracted with local

design teams to deliver a high-quality, navigable, constantly updated website.

Media Relations: Several media relations teams will be utilized to market the
Restaurant. O&M , McKinsey are two media companies we will utilize for media relations. Both companies have an insightful presence and connection with our target market.

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Billboard Advertisement: One month prior to the opening, distinct billboard

ads will advertise the launch of the Restaurant.

Inner & Outer City Marketing: We will budget to attract customers from
the suburbs.

9. Sales Strategy
Our strategy is simple: we intend to succeed by giving our customers a combination of delicious and interesting food in an appealing environment, with excellent customer service, whether on their first visit or their hundredth. Our marketing strategies are designed to get critics and initial customers into our doors. Our sales strategies must take the next step and encourage customers to become repeat customers, and to tell all their friends and acquaintances about the great experiences they just had at Elegance. New restaurants often make one of two mistakes: they are unprepared or underprepared for opening, and initial poor service, speed, or quality discourages customers from returning, or they spend all of their efforts at opening, and are unable to maintain the initial quality customers expect on return visits, decreasing word of mouth advertising and leading to poor revenues. Elegance's sales strategy requires consistently high quality food, service, speed, and atmosphere. We can accomplish this by:

Hiring employees who genuinely enjoy their jobs and appreciate Elegance's unique offerings Continually assessing the quality of all aspects mentioned above, and immediately addressing any problems Interacting with our customers personally, so they know that their feedback goes directly to the owners Evaluating food choices for popularity, and keeping favorites on the menu as we rotate seasonal foods and specials

9.1

Sales Forecast

The following sales graph is based on first year start-up estimates only. We anticipate that the business will not be at full operating capacity until the sixth month of operations. This is due to the competitive nature of the market and existing customer loyalty. All
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factors governing our sales progress are outlined below in the Important Assumptions section. Our sales forecasts for years 3 through 5 are very conservative, compared to industry standard growth rates. (See Ratios table for comparisons.) Although we hope to do catering for local businesses and government offices with time, we will insist on payment at delivery - we will not sell on credit.

Sales Forecast
Sales Forecast FY 2006 Sales Total Sales Food Total Sales Bar/Beverages Other Total Sales Direct Cost of Sales Total Cost of Sales: Food Total Cost of Sales: Bar/Beverages Other Subtotal Direct Cost of Sales $853,595 $220,174 $0 $1,073,769 FY 2006 $298,758 $72,657 FY 2007 $959,047 $252,041 $0 $1,211,088 FY 2007 $322,240 $76,167 FY 2008 $1,006,999 $272,204 $0 $1,279,204 FY 2008 $329,289 $77,687 FY 2009 $1,047,279 $293,981 $0 $1,341,260 FY 2009 $336,048 $79,228 FY 2010 $1,089,170 $317,499 $0 $1,406,670 FY 2010 $342,762 $80,835

$0 $371,416

$0 $398,407

$0 $406,976

$0 $415,276

$0 $423,597

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Sales Monthly

Sales by Year

10.

Financial Plan

Elegance Restaurant & Lounge financial model is based on a business concept to "Plan for the Worst, but Manage for the Best." We have approached the financial plan as follows: The First Year projections anticipates a below average sales volume, below average seat turn, and above average food/beverage cost. This position will help us ensure sufficient financial planning to accommodate a reasonable ramp-up period, and business success, also ensuring that we do not enter this venture under-capitalized.
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Financial Pro Forma

In addition to the $110,000 of owner investment and $130,000 in grant monies, Elegance is seeking $300,000 in long-term loans and $200,000 in investment for renovations, furniture, kitchen equipment, liquor license, food & restaurant supplies, legal fees, working capital, marketing and personnel.

The Financial Plan includes:

Important Assumptions Risk Analysis & Mitigation Plan Sales Forecast (5.3.1, above) Break Even Analysis Profit and Loss Statement Cash Flow Statement Balance Sheet

10.1.

Investment Opportunities

The Elegance Investment Program allocates equity position of 20% for a total of $200,000 in investor capital. The Investment structure is as follows Investment Opportunity Total Investor Funding Opportunity: Minimum Investment Amount Investment Term (Investor Selection) Total Equity Offering (1% per $15,000 Investment) Starting Year 2 Silver: Projected Annual IRR on Investment of $15,000 - $49,000 Gold: Projected Annual IRR on Investment of $50,000 - $99,000 Platinum: Projected Annual IRR on Investment of $100,000 or more $200,000 $15,000 3-5 Years 20% Max 10% 11% 12% + Residuals

10.2 Investor Payback Program

Each Investor will receive equity shares as a part owner, with a non-managerial interest in the Restaurant. Based on financial estimates, the maximum annual IRR is 12%. Over and above the interest and principal repayment, Investors contributing $100,000 or more will receive residuals for the life of the business as a bonus incentive. As with our investors, our primary goal is to earn real profits and not ??Paper Profits'. As such we will focus on expediting returns to investors where possible. Our existing
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payback structure will begin paying dividend every quarter, starting in Year 2 of business operations. Investors will receive quarterly interest and annual principal reduction payments over the full term of the investment. Payback to Financial and Private investors will take priority over any profit shares to the owners, Alex Hunte and Peter Smith.

10.3 ImportantAssumptions
The financial plan depends on important assumptions, most of which are reflected in the financial statements that follow. We have been cautious with our projections, and incorporate a mitigation for all manageable risks. The key underlying assumptions are:

Economy
Slow Economic Recovery. We anticipate a slow-growth economy, recovering from an economic recession.

Business Growth Annual Growth Rate Percentage. We anticipate modest growth over the coming
years. The financials account for the following growth projections:
o o

Year 2: 6% Year 4: 4% Year 3: 5% Year 5: 4%

Weekly Sales Variance. Saturday will typically be our best sales for the week. The
sales volume for all other days is represented as a percentage relative to Saturday. Therefore our weekly sales will vary as follows: Monday: 55% Thursday: 95% Tuesday: 60% Friday: 90% Wednesday: 75% Saturday: 100%

Seasonal Sales Variance. In Saket, October through the late season is the most
productive sales period, while the summer months tend to be the slowest restaurant period. This trend is reflected in the financials though a seasonal variance as follows (where October is targeted to be our most successful sales month): June: 70% October: 100% February: 95%
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July: 75% November: 95% March: 85% August: 80% December: 95% April: 90% September: 85% January: 85% May: 90%

10.4 Profit and Loss Statement

The most important assumption in the Projected Profit and Loss statement is the gross margin. We show an adjustment increase in Year 2 as we exit our start-up phase of the business and move into our expected annual sales forecast. This transition shows the restaurant managing through its start-up period, and gaining efficiency and customer loyalty. In summary, the restaurant will develop its customer base and reputation and the growth will pick up more rapidly towards the second and third years of business. Month-by-month assumptions for Profit and Loss are included in the appendices.

Profit and Loss

Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % EXPENSES Payroll Marketing/Promotion Depreciation Leased Equipment Accounting/Payroll Processing Legal Retainer Fees Business Licenses & Permits Credit Card Expense Bank Fees FY 2007 $1,211,088 $398,407 $0 -----------$398,407 $812,681 67.10% FY 2008 $1,279,204 $406,976 $0 -----------$406,976 $872,228 68.19% FY 2009 $1,341,260 $415,276 $0 -----------$415,276 $925,984 69.04%

$400,788 $22,000 $6,500 $12,000 $6,600 $2,400 $6,000 $19,983 $1,200

$429,828 $25,000 $6,500 $12,000 $6,600 $2,400 $6,000 $21,107 $1,200

$431,128 $15,000 $6,500 $12,000 $6,600 $2,400 $6,000 $22,131 $1,200

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Music & Entertainment Training / Employee Retention Programs Repairs & Maintenance Utility Services (Gas/Electric/Water/Sewer) Telephone/Communication Expense Insurance: Fire/Theft/Liability/Liquor/Product Restaurant Occupancy Cost (Lease) Payroll Taxes (FICA/FUTA/SUTA) & Employee Benefits Exterminator/Trash Removal Dishware/Uniforms/Cleaning Supplies/Decor Printing/Paper/Postage/Subscriptions Facility (Exterior Cleaning/Grease Trap/Hood/Windows,etc.) R&D Meals General Business Comps Owner Comps Other Expenses (ComAreaMaint, etc.) Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

$3,744 $5,008 $9,000 $26,496 $1,800 $21,624 $77,250 $66,531 $4,800 $12,466 $9,500 $3,640 $2,400 $22,850 $2,124 $4,200 -----------$750,903 $61,778 $68,278 $15,984 $13,738 $32,056 2.65%

$3,744 $6,008 $9,000 $27,821 $1,800 $22,705 $79,568 $71,351 $4,800 $13,089 $9,500 $3,640 $2,400 $23,125 $2,124 $4,200 -----------$795,509 $76,718 $83,218 $12,640 $19,224 $44,855 3.51%

$3,744 $6,008 $9,000 $28,933 $1,800 $23,613 $81,955 $71,567 $4,800 $13,612 $9,500 $3,640 $2,400 $23,125 $2,124 $4,200 -----------$792,981 $133,004 $139,504 $9,296 $37,112 $86,595 6.46%

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Profit Monthly

Profit Yearly

Gross Margin Monthly

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Gross Margin Yearly

10.5 Balance Sheet Statement

The projected Balance Sheet is quite solid. We do not anticipate difficulty meeting our debt obligations based on achieving the specific goals outlined in this plan. On a linear projection, Elegance Restaurant & Lounge has a positive Net Worth beginning in Year 3.

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Balance Sheet
Pro Forma Balance Sheet FY 2006 ASSETS Current Assets Cash $117,067 Inventory $37,839 Other Current $73,311 Assets Total Current $228,217 Assets Long-term Assets Long-term $65,000 Assets Accumulated $6,500 Depreciation Total Long$58,500 term Assets Total Assets $286,717 LIABILITIES AND CAPITAL Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

$87,461 $40,589 $73,311 $201,361

$82,176 $41,462 $73,311 $196,949

$117,144 $43,473 $73,311 $233,929

$184,255 $45,594 $73,311 $303,160

$65,000 $13,000 $52,000 $253,361 FY 2007

$65,000 $19,500 $45,500 $242,449 FY 2008

$65,000 $26,000 $39,000 $272,929 FY 2009

$65,000 $32,500 $32,500 $335,660 FY 2010

$61,298 $0 $0 $61,298

$63,657 $0 $0 $63,657

$65,663 $0 $0 $65,663

$67,319 $0 $0 $67,319

$69,559 $0 $0 $69,559

$252,228 $313,526 $440,000 ($427,209)

$204,456 $268,113 $440,000 ($486,808)

$156,684 $222,347 $440,000 ($464,752)

$108,912 $176,231 $440,000 ($429,897)

$61,140 $130,699 $440,000 ($358,302)

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Earnings Total Capital Total Liabilities and Capital NET WORTH

($39,600) ($26,808) $286,717

$32,056 ($14,752) $253,361

$44,855 $20,103 $242,449

$86,595 $96,698 $272,929

$123,263 $204,961 $335,660

($26,808)

($14,752)

$20,103

$96,698

$204,961

10.6. Expansion, Payback & Exit Strategy

In addressing this question we look at the Exit Strategy as a definition of our business vision and goals, as well as a contingency in the event the business is unsuccessful. We have addressed this question at several levels:

Expansion as a Business Goal

We have set multiple financial goals to grow the success of the Elegance concept, and compound the profit return for Elegance Investors. 1. Expansion (Option 1): Our overall goal to maintain Elegance as a unique and eclectic concept. Based on projections, the business has captured market share by the end of the first year. In addition Year 2 brings an increased sales and profit margin to sustain the addition of a full-time General Manager. By second quarter of Year 2, the owners will look to launch a second restaurant concept. This is not a chain, but another unique restaurant concept with strong growth potential. Expansion will be considered with our financial backers and Investor partners.

2. Expansion (Option 2): Throughout our business plan we have stayed focus that Elegance would be successful as a larger venue, with greater sales capacity and revenue potential. Our objective with the site selection and lease negotiation is to have the opportunity to expand the restaurant as a logical growth and profit plan.

3. Private Sale: We are in the business of making money. At the close of Year 3, we see Elegance as meeting 80.4% of its optimum sales potential with the current seating and space allocation. At this stage the business debt is reduced, profit margins are increasing, and Elegance has established market share. We will look at the private sale of the majority interest via A) Leveraged Buyout, or B) A larger Restaurant consortium. In both cases, our interest is in delivering
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healthy profits to our Investors and Financial backers. Sales and profit margins will be based on the restaurant valuation in Year 3.

4. Financial Solvency: The financial projections indicate that exit will be achievable over 3 years for the operating capital line of credit. Under a realistic scenario the Company should have over $70,000 in cash in the bank after income taxes the second year. The entire financial debt would be retired by Year 7.

Exit Strategy to Retire the Business

We at Elegance are committed to our concept and its viability. We step into this venture with confidence and the success of our respective prior business efforts. No one attempts a business anticipating failure, however sometimes ventures do not fulfill their promise. In the event that our venture cannot achieve profitability and retire the encumbrances, we will first attempt to sell the operation and use the proceeds to clear all outstanding balances. If we are unable to sell the operation for sufficient proceeds we will forced to default whereby the SBA loan will be in senior standing. Any further outstanding balances will be borne by the investors on a weighted percentage basis of the total amounts due.

11. Organizing and Management: Location : Address 1 : Address 2 : State City Country
Shop no. 234, MGF Metropolitian Mall, Saket Shop no.66, The Great Indian Palace, Rajori Garden(w)

: : :

Delhi New Delhi India

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Form of Business :
Chain of Restaurant and Lounge.

11.2 Key Personnel :

Gaurav Gupta (51% share holder &CEO), Hotel Management Graduate from JIMS, and Master in Business from IIM(Mumbai), Experience of 15 years in Food & Hotel Industry. who started his career as a waiter. Piyush Kharbanda MD of Elegance, pass out from IIM(A) in year 1972 and have excellent knowledge of cooking, he started his career as a chef in Punjabi by nature Restaurant.

12.

HR policy and Strategy :

Elegance shall evaluate the jobs it provides, paying competitive remuneration packages against market benchmarks to employees for their agreed and set out tasks. Consonant with its efforts to create added value by employees, Elegance seeks to negotiate the provision of incentive pay delivery mechanisms against achievement of agreed targets relating to accomplishment in the areas of productivity enhancement, savings and other specific successes, that is, the implementation of an effective performance management system. Hence our human resources strategy will revolve around: Communicating openly and transparently; addressing strong and trusted: o Internal communication. o External communication. o Stakeholder inclusivity. Responding and promoting human rights issues, such as equity in the workplace and in community relations. Adoption of a good remuneration policy aimed at developing our people through employee benefits, training and group initiatives. Maintaining preventative health and safety structures for employees and support for surrounding communities.

Policies
Employees shall be entitled to a paid vacation in each fiscal year. Part-time employees will accrue
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vacation leave on a pro-rated basis with a pro-rated maximum carryover. Entitlement is earned in accordance with the following schedule based on full-time employment:

Length Of Employment Hours Accrued Each Month Carryover to Next Fiscal year
0 but less than 2 years 7 168 2 but less than 5 years 8 232 5 but less than 10 years 9 256 10 but less than 15 years 10 280 15 but less than 20 years 11 328 20 years and over 14 376 Vacation entitlement will begin on the first day of employment and terminate on the last day of employment based on the above chart. Based on the above chart, any unused leave time will becarried over each fiscal year. Unused accumulated vacation that exceeds the maximum carryover will be credited to the employee's sick leavebalance the first day of the next fiscal year. Credit for one month's accrual is given for each month (or fraction of a month) of employment and on the first of each succeeding month thereafter. Note: An employee cannot use vacation leave credits until he/she returns to work. Credit for a higher accrual rate is given on the first calendar day of the month, if the employee's anniversary date falls on the first calendar day of the month. Otherwise, the increase occurs on the first calendar day of the following month. Note: the first WORKDAY of a month = the first CALENDAR day of the month for the purpose of this subsection. Vacation with pay may not be granted until the employee has had continuous employment for six (6) months, although credit will be accrued during that period. Employees may take unearned vacation leave or borrow against future accruals.

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Employees are encouraged to take vacation in the fiscal year in which the entitlement is earned. Vacation leave should be scheduled in advance by the employee at a mutually agreeable time to both the employee and supervisor.

13.

Summary

The Design
Elegance Restaurant & Lounge is unique to South Delhi. The restaurant features 3 venues in one (a concept called as Multi-Branding'): Ruby Tuesday (Lounge), Cosmopolitan Bar, and Full Service Dining. This concept offers customers variety, offering multiple dining and entertainment options within a single establishment. The spatial and menu divisions will broaden our appeal and provide our customers with a different experience on each visit. The atmosphere caters to a young but mature adult crowd. This is not a family dining establishment. Total space requirements are 3,000 square feet. In total, the restaurant will provide seating for 110 patrons. Where possible, consideration will be given to incorporate a dining patio. Zoning, parking, and accessibility issues will be reviewed as key criteria. We will draw on our Advisory Board as part of the site selection and lease negotiation.

The Menu
Elegance is focused on servicing Saket's growing demand for an ethnic eating experience. For lack of a better term we are launching as multi-ethnic' cuisine restaurant - a restaurant concept that responds to Delhis need for selection and choice. Elegance is a complimentary mingling of international cuisine on a single menu. The Delhi demographics fit this concept perfectly.

The Management
Our management team has over 48 years combined experience in food, restaurant and hotel, business management, finance, and marketing arenas.We are currently negotiating a restaurant space of 3,000 sq. ft. in Saket, Rajori, and will open Elegance in October 2010.

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Our start-up costs are mostly expensed equipment, furniture, painting, reconstruction, rent, start-up labor, liquor license, and legal and consulting costs associated with opening our restaurant. At the start of business, 9cr will be allocated for business operations reserve. This is a solid start-up forecast based on our market analysis and our knowledge and experience in the industry. We will purchase the following 73,311 worth of current assets during start-up :

Fixtures and Lighting: Bar Equipment: Sound and Televisions: Office Equipment (2 Computers, Fax, Printer, Safe):

32,250 26,183 8,378 6,500

Long-term Assets in the amount of 65,000 include all kitchen equipment. We have budgeted for the services for a premier Restaurant Consultant familiar with the Saket Market. This is especially key during the site selection and start-up stage. This company will have an integral role in validating the final restaurant location and personnel selection, and participate on the Elegance Advisory Board. The two owners are personally committing 110,000 of capital, plus a 300,000 SBA 7(A) loan guaranty. In addition, we have obtained a 130,000 grant from the city towards restoration of our historical building, as part of the city's Midtown revitalization program, contingent upon locating in the proposed space. We are seeking $200,000 of equity investment to fully fund Elegance's startup costs.

Location & Operations Restaurant Location

Saket and Rajori Garden is the location selected for the Elegance concept. The outlook for the future of South Delhi district is exceptionally positive and the most progressive development area in the city. Developers are infusing over 50 million in Commercial, Residential, and Retail development. Elegances will benefit from Saket and Rajori desire to revamp the location with a 130,000cr renovation grant for restoring and renovating the 100 year old property we plan to lease. The market has been carefully selected and tested for the necessary demographics and retail traffic necessary to meet the goals laid down for profitability. The busy Saket and Rajori commercial/residential location has been chosen based upon a successful demographic model and a traffic count of more than 33,000 cars daily.

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Restaurant Design Single-Level Design Concept: The total space requirement is 3,000 square feet.
The restaurant will feature a comfortable and open concept design. The central dining area will allocate 76 seats, the lounge 22 seats, and the dining bar with 12 seats. In total, the restaurant will provide seating for 110 patrons. Where possible, consideration will be given to incorporate a dining patio. Zoning, parking, and accessibility issues will be reviewed as part of this analysis.

Optional Patio: During the busy summer months customers can also sit outside on
our patio and we will offer a special summer menu, featuring lighter fare, exotic drinks, as well as non-alcoholic offerings. The patio setting will be a fun and casual atmosphere for the summer crowd.

Operating Criteria
The restaurant will be located in New Delhi, Saket. The restaurant will service lunch, dinner, and after-hours dining during the week and weekends. The restaurant will operate during peak service time to take advantage of street traffic, and after-hour patronage from the entertainment facilities in the area. Service will be available during the following hours: Lunch: Monday to Saturday, 11 a.m. - 2:30 p.m. Dinner: Monday to Saturday, 5:30 p.m. - 12 midnight Sunday: 24hrs open

Services
Elegance Restaurant & Lounge will feature international dishes, an eclectic ambiance, and superior service. Our food will be of the finest quality and prepared with exotic flare. Customer satisfaction is the driving force behind our success. We will change our menu every 4 months, but maintain the 'favorites' for loyal patrons. Portions will be modestly sized, garnished with stunning presentation. Our wine list will be modest and primarily focused on wines from California, Spain, Portugal, and Argentina, Haryana. Approximately 25% will be available exclusively by the glass, and the remaining labels will be available by the bottle. We will also feature a moderate international beer selection on tap and in bottles. The Elegance bar features a comprehensive selection of local and international spirits.
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The kitchen staff will have the best in culinary education and work experience. Their creative talents will compliment one another. The lounge and restaurant staff will offer the finest service in an electric atmosphere and offer customers an extraordinary dining experience.

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