Business Plan

Nick's Pizza

April 20th, 2016

Authors Note

This document was prepared for Entrepreneurial Management 378, Section 1, taught by

Professor Maryann Conrad.

 Table Of Contents

Section I: Executive Summary.3

Section II: Company and Industry Description5

Section III: Description of Product or Service.8

Section IV: Market Research and Evaluation..10

Section V: Marketing Plan...13

Section VI: Operations Plan14

Section VII: The Management Team..16

Section VIII: Timeline.17

Section IX: Critical Risks/ Assumptions.18

Section X: Financial Plan and Financial Projections...20

Section XI:

Appendices

22

References

......24
 Section I: Executive Summary

Nick's Pizza will be a place where customers can come in, sit down, and enjoy

fresh food, or can order food on the go/ for delivery. This type of business is very popular

in the United States. However, Nick's Pizza will offer things that similar businesses

simply can't produce, such as a healthier brand of pizza, fast delivery, and high quality

service.

The ideal location for Nick's Pizza would be my hometown, Leominster,

Massachusetts. Currently, the population of this city is approximately 41,000 people (3),

which is a relatively huge market to enter into, especially for a pizza shop. Everyone

needs food, and what could possibly be better to fulfill this hunger than fresh pizza? In

terms of competition, there are few businesses that pose as direct competition to Nick's

Pizza, one two of them being an independently owned pizza restaurant. Chains dominate

the Leominster market for pizza. This makes the barriers of entry for our business

relatively reasonable in Leominster.

As a business we would like to accomplish a numerous amount of goals.

Primarily, we want to give people the option of eating enjoyable food, while at the same

time, providing healthier ingredients that dont antagonize a customer who wants to be

healthy. Further on in this business plan, I will explain how this is accomplished. We also
want to ensure that our customers get a quality experience when consuming Nick's Pizza

products. To ensure this, there are a couple of things we will do. For people interested in

dining- in, we will offer the best service we can, and create an open kitchen style where

customers can watch their food being made. For customers looking to eat at home, we

will have multiple drivers, to ensure that nobody is waiting an extended period of time for

their food, and to ensure their food is still warm.

Objectively speaking, Nicks Pizza is intended to generate a profit. Each

year, this business must grow and produce even more profit than the year before. The

complete objective is to pay off the loan that we receive and become a full profit

business. Based on the financial projections displayed towards the appendices, it will

realistically take over five years to do so. Nicks is not expected to make a profit till year

two, and projected to have a net income of over $133,000 year five.

Our target audience is anyone who desires quality food, primarily pizza, generally

ranging from consumers ages twenty- five to mid fifties. This age range is generally the

age when people begin maintaining a solid income, and can afford to spend some of their

earned money on our product. As of November 2014, approximately 40% of people that

fall in this age group felt that take-out food was essential to their way of life, as well (5).

Our target audience stops for consumers after their mid- fifties because this is generally

where people begin to diet more for health purposes.

In order for this tremendous idea to come to life, however, Nicks will need some

financial assistance. Nicks will be applying for a loan of $350,000. The way this money

will make this business more profitable is by giving us a chance to introduce our product

to the market. This money will not related to operating capital, but will relate to the
purchasing of equipment, purchasing the optimal building for Nicks Pizza, remodeling,

and other set- up costs. Nicks Pizza is not expected to make a profit during its first year

of operation, so repayment of the loan can expect to be paid back in year two.

Section II: Company and Industry description

Mission Statement

To serve and deliver high quality, healthy pizza and other food products at an

effective and efficient rate, while giving our customers an experience that will make them

want to come back and try it again.

Company Profile

Even though this will be a start- up company, there is still some history to it.

Personally, pizza is my favorite type of food. I also am friends with someone whose

family owns a pizza shop outside of Leominster, and have learned a little about pizza

making through this connection. That is why my business plan is to open up a local pizza

shop, Nick's Pizza, with the main goal of bringing healthier and delicious pizza to

Leominster.

This business will be a sole proprietorship, with the help of the loan that I am

seeking. The reason why I have selected this form is three- fold. First, as seen in my

resume in the appendices section of this plan, I have a lot of experience working in the

restaurant capacity. I have learned many different roles in my several years in this

industry, from dish washing to watering to cooking. So, I understand the roles of each

employee necessary to make this a fully functional company. To go along with that, the

connection I have with a separate pizza owner, outside of our location, can serve almost
as an internship role. This is a resource that can become very important when entering a

market that this owner has already successfully entered. I also am going to be graduating

Nichols College with a BBA in Finance, and a minor in Accounting. So, I have a very

good general understanding of the key financial aspects that apply to owning and

operating a business. All of this is why Nicks will be able to accomplish the objectives

and goals needed to succeed.

Industry

Consumer spending on pizza in the United States is astronomical. Each year,

consumers spend roughly $33 Billion in quick- service pizza restaurants (5). To break

down that statistic even further, about $15 Billion of that is spent on take- out, and about

$10 Billion is spent on pizza delivery, and dining- in account for the rest of this massive

consumer spending (5). It may sound surprising that dining- in accounts for the least

amount of consumer spending, but about 20% of U.S. consumers eat take- out or

delivered meals at least once a week (2). However, Nielson Scarborough conducted a

nationwide survey in the spring of 2014, and discovered that almost 77 million

Americans had visited a pizza restaurant within the past month. Of these sales, the

independent sector of the pizza industry accounted for roughly half of them (5).

Independents also account for more than half of pizza stores located in the United States.

The pizza industry has been steadily rising over the past five years. Statistically,

the sales generated in 2014 showed a 3% increase from the year before (2). Since the

economy has become a little better over the recent years, I believe that more of the
population will generate a higher income, thus, have more money to spend. So, seeing

that the pizza industry has been growing over time, I think that it will continue to grow.

Over time, there will definitely be some changes in the industry. One of these changes is

the health concern that chain restaurants have. They serve cheap pizza, but it is not the

best pizza to consume when on a diet. More and more information is released every year

on ways to keep the body healthy, which has begun to spark a health trend in the United

States, seeing that as a country, we are one of the most obese countries in the world.

Therefore, consumer spending on pizza could drop considerably because it is not the

healthiest food option. Nicks, however, would be poised to take advantage of this long-

term possibility, because we already strive to make our pizza as healthy as possible, with

local farm- grown ingredients.

SWOT/ Environmental Analysis:

With every new business, an environmental analysis is something that can display

how a business can succeed in a market. A strength that Nicks has is that we offer more

items than just pizza, so we can appeal to a more diverse crowd. Another strength is the

service and atmosphere that we are able to provide our customers when they decide to

come in for some food. Our weaknesses include the higher price pizza that we offer. The

price needs to be high in order to create the healthier pizza we aim for, so restaurants with

cheaper prices could hurt Nicks. Also, the cost of equipment and set-up in the early

stages could be considered a weakness. As for opportunities, Nicks is looking to enter a

huge market. Leominster provides a wide consumer base, and the pizza industry as a

whole has a huge demand. Threats of our business include any legal issues that occur

from sanitary issues, such as undercooked food. Also, a new restaurant could enter the
market and create direct competition to Nicks Pizza, even though our competitive

advantages can withstand new entries.

Section III: Description of Product or Service

We will be offering different brands of food. Our primary product is different

types and flavors of pizza. The difference between our pizza and our competitors' pizza is

that we will seek high quality and fresh ingredients, in order to create the healthiest pizza

we can. Gove Farm is located in Leominster, and produces all the necessary components

for our pizza, such as tomatoes for the pizza sauce and other vegetables for toppings. This

is a pricey way to gather these ingredients, but the customers will get the quality they

desire by us doing so. As for the dough, Union Square Bakery can provide us with as

much as we need to produce in our dough maker. For meat- loving customers, all our

meat will be delivered form Central Street Deli, a local deli where fresh meat is cut daily.

The goal is to stay away from large food distributors who sell products that contain

GMOs or any non-natural produce.

To go along with pizza, we will offer different options. We can sell salads, hot and

cold sandwiches, boneless and bone- in wings, and different types of pasta offerings. We

will only have marinara sauce for all the different forms of past we offer, which is

because it is the only sauce that we can produce homemade. The meat that will be used

for our sandwiches will still come from Central Street Deli, so they will be fresh and

healthy. However, the wings will have to come from a distributor. The preferable

distributor would be Gordon Food Service, because they are able to deliver non-frozen
wings (1). Generally, frozen foods are unhealthy because of the ingredients used in them.

They generally consist of a high level of sodium. The maximum dosage of sodium a

human should have per day is about 2,300 mg. Frozen foods consists of about 700 to

1800 mg of sodium, making it hard for someone to stay within 2,300 mg throughout a

whole day. Also, frozen foods consist of hidden and dangerous trans fats (6).

The main competitive advantage Nicks Pizza will have is the fresh and healthy

options that we can provide, that others cannot. Chains offer frozen food that can leave

you feeling bloated after you eat it. Nicks can offer fresh food that leaves you wanting

another slice. Unfortunately, the price will be more expensive, but the customers will get

the quality that they pay for. The consistency that will stem from the training our

employees go through will ensure our customers get the same quality pizza every time

they walk in or pick up the phone. That is how our product can meet the needs of our

target market.

The other competitive advantages that Nicks Pizza has are our service and quick

delivery. Our employees are trained to ensure that no customer leaves our business

dissatisfied with the service they received. We offer a friendly and enjoyable atmosphere

that keeps people happy while eating our delicious food. Our delivery service is also as

fast as can be. This is because we always have two drivers ready to deliver your food

wherever it needs to go.

The product that we can offer is in the growth stage of the product life cycle.

Pizza has been around for decades, but the industry is still exhibiting continuous growth.

Also, Nicks is offering a product that at least half the industry is not doing, seeing that
chains dominate half the industry. Therefore, Nicks can expect a continuous growth of

our business throughout the duration of its life cycle.

Section IV: Market Research and Evaluation

Markets:

As stated earlier in the business plan, our target audience ranges from ages 25-

mid fifties. We will also be appealing to the city of Leominster, because that is where we

are located. Also, we are looking for consumers who make roughly $30,000 per year,

because our pizza will be more expensive than others. The freshness of our products will

also appeal to the health conscious consumers within this demographic.

In Leominster, the estimated median household income was a little over $56,000,

about a $12,000 increase since 2000. The estimated percentage of households who

generate over $30,000 per year is a little over 84%. Income wise, Leominster can

definitely withstand the higher- priced products that we will offer. The median

Leominster resident age is also 42 years old, which falls right into our target market (3).

Judging by these statistics, our target audience consumes a relatively high percentage of

citizens in Leominster. The trick is getting these consumers to buy.

When it comes to food, there is definitely a balance of primary purchase criteria.

That is why our target audience is what it is. Our pizza might not appeal to the younger

generation, such as college students, because they might not be able to afford a more

expensive product. Their purchase criteria tends to lean towards price, not quality. As

people grow older, and create a solid form of income, that criteria changes from price to
quality. Once consumers are able to see the quality that Nicks can consistently provide,

they will continue to come back when they desire the product we are offering.

Market Trends:

As technology continues to evolve, the pizza industry is moving with the new

trends. The industry is recently taking on a new personality. Fast and casual pizza

shops are on the rise, as new pizzerias are being designed to deliver high quality pizzas in

an extremely small amount of time (2). For example, Little Caesars new slogan is hot

and ready pizza. To go along with fast and casual, mobile pizzerias and online ordering

are becoming a new trend, as new technology always the customer to get their pizza this

way. Dominos allows their customers to go online and order the precise item they want

and have it made at the closest Dominos. Frozen pizza sales have also been on the rise,

with roughly $5.5 Billion frozen pizzas being sold in 2014 (2).

Economic trends could impact sales as well. Even though the United States has a

rough economy, there has been some growth over the past few years. If the economy can

continue to grow, and the unemployment rate continues to lower, then more people will

have some form of income, and more money to spend on our food. A social tend that has

occurred recently is more women entering the workforce. Women in the workforce can

provide homes with a more stable income. This also could mean that if both parents are

working in a household, there might not be enough time in the day for them to cook a

meal for their families. A rise in take- out and delivery options to feed these families

could rise from this.

Competition

The main reason why Nicks Pizza will be located in Leominster, Massachusetts

is because there is a very small amount of competition. This means that the barriers of

entry arent necessarily as high as they would be in other locations. Among the local

competition, only two of them are independently owned. The rest our local chains, such

as Dominos and Pizza Hut. These competitors have strengths and weaknesses compared

to Nicks Pizza

Nicks Pizza would be the only pizza restaurant in Leominster that can offer a

healthy- style pizza made with fresh ingredients. Out of the other competitors, the

independent owners use distributors that deliver their ingredients, and chains primarily

uses frozen food that arent natural. These places have all also been around for numerous

years, and have been able to generate a brand for themselves. Also, these restaurants are

also a cheaper option than Nicks, because they are not providing the same amount of

quality.
 Section V: Marketing Plan

Market Strategy:

We want to penetrate the market. We do this by gaining our competitors

customers via advertising. To get people in the door, we can advertise our product

through paper ads and local radio broadcasts. For example, the Sentinel and Enterprise is

a local newspaper that represents Leominster and the neighboring town Fitchburg.

Citizens receive a newspaper daily, so they can see our new business and decide whether

or not they want to try something new. Nicks can also sponsor the local high school

sports teams. Leominster is a huge sports town, and most of the community seems to get

involved by either playing sports, having a kid on a team, or reliving old memories.

These are affordable ways to create our brand. The strategy is to put $10,000 into

advertising, and continually put less money in as the business begins to grow over time.

Customer Needs and Service Characteristics:

As stated before, our customers want a high quality product that is worth the

money that they spend. On top of that, our customer is going to expect that our pizza is a

healthier option than our competitors, which is something that we can definitely deliver.

As for service, we expect nothing but the best from our staff. Part of the advantage we

will have stems from this. This includes ensuring the customer gets what they desire,

receives positive feedback, and gets their food as quickly as possible, without

decrementing the product. This is how we develop a form of customer intimacy with our
customers. We want them to come back as much as possible, which is where our service

and atmosphere kicks in.

Section VI: Operations Plan

Geographic Location

Nicks Pizza will be located in downtown Leominster. There is currently a local

restaurant that went out of business that Nicks plans to buy. The building is rather small

and inexpensive, which is good for Nicks because some remodeling will probably need

to be done to create the open kitchen atmosphere that we desire. Being in downtown

Leominster, there will be a good amount of traffic that goes by daily, so plenty of people

will be able to spot Nicks Pizza. The parking lot can fit up to 20 cars, so parking wont

be an issue.

Facilities and Layout

The goal of Nicks is to give our customers a high quality experience that will

make them want to come back for more. One way we will accomplish this is by

implementing an open- kitchen style restaurant. This means that customers will be able to

see the kitchen from the dining area. This way, they can watch their order come too life

while they wait. In terms of the dining area, it will not be very large like most restaurants.

This will be because Nicks will also take delivery orders, so a large dining area is not

required.

Labor Force, Training, and Staffing

We will need a decent size labor force to operate. Part of our competitive

advantage is having two drivers on call for deliveries, so we will need multiple drivers.

We will also need multiple experienced cooks making the food, workers to take orders,
and workers who can wash dishes and clean the kitchen equipment. All of these workers

will require some form of training in order to create the product and experience that we

consistently want to achieve. Types of training for cooks will include how to operate the

equipment we will need. This includes the making of the dough and using the ovens to

correctly cook the pizza that our customers desire. As for our service employees, our

drivers will need to have some knowledge of the region. Most people have smart phones

with GPS equipped in them, so that will deter some problem with that. People working

behind the counter and serving customers will need to know how to work the cash

register and the proper way to serve our customers as well. Our employees will make a

smaller wage while they are in training then they would afterwards, so paying for training

wont cause Nicks Pizza to lose our competitiveness.

Being a pizza restaurant, we wont require a large amount of skilled workers.

Therefore, finding enough employees to keep Nicks operating on a day- to- day business

wont be hard to find. Nicks will also strive to create a friendly atmosphere with our

customers, so our employees will have to build working relationships. Being an open-

kitchen, cooks need to not yell at employees and learn to enjoy their time at work, which

is a role the manger will play in ensuring empathy in the workplace.

 Section VII: The Management Team

Key Members

This will be a sole proprietorship. However, there are still key people that are

required to ensure smooth operations. One thing that Nicks is going to try to do is hire

two managers. The reason for two managers is because we cant have one person cover

every shift, every day. The role of the manager is to make sure the workers are actually

working, the food and service is held to appropriate standards, and ensure the customers

are happy and listen to their concerns. Feedback is important in order to keep Nicks a

step above our competitors, by ensuring the customer is getting what they are asking for.

Qualifications

It is a pizza restaurant, so the qualification for most of the workers wont be very

high. For the most part, workers wont need a college degree. However, Nicks would

like managers to have either a management degree or have taken some form of a

management course. Also, cooks will need to have some form of experience in a cooking

capacity, to ensure that they are qualified and know what they are doing. Customer health

is very important, so we cant serve raw food or anything that will cause sickness.

Operational Structure- (See appendix 2 for more details)

The operational structure will be similar to the structure of most restaurants.

Managers will be at the top of the list, with all the other workers communicating with

them. Managers will report to the owner to report how the restaurant is doing and make

changes, if necessary. Other than that, each worker will be given an assigned task to
complete throughout the shift. For example, in the kitchen someone will be required to

make the dough, while another will make sure the toppings are cooked and ready to go.

Section VIII: Timeline

Realistically, Nicks Pizza will need some time to develop before we can begin

serving the community the pizza that they never knew they wanted. First, we would need

to secure the building that would put Nicks in the best spot possible. Since Nicks Pizza

is operating under an open- kitchen style floor plan, some remodeling will probably need

to be done also. Expectations for the remodeling are small, so that not a very big set back.

After that is complete to Nicks standards, that is when the true restaurant operations will

finally begin. Equipment setup will begin, as well as setting up the dining area and

window (place where people will order their food). This, of course, will take time to get

fully functional and optimally placed. We also have to go through the process of training

all of our employees. So, the realistic expectation for Nicks Pizza to open would be in

the fall, probably October.

Since we will require a pretty hefty loan, Nicks Pizza probably wont be

profitable year one. It will take time for the restaurant to recover form the costs of

starting up the business, such as equipment purchases and buying the building. The most

reasonable expectation of Nicks creating a profit is in year two. Over time, as Nicks

continues to solidify itself as a high quality restaurant, the amount of units sold per day

and average sale price per unit will increase. This will bring in the profit that Nicks is

capable of generating. Nicks will also plan on diversifying our menu as the restaurant

continues to grow.
 Section IX: Critical Risks/ Assumptions

Industry

One possible risk that can occur is if the industry takes a downturn, and the

demand for this product is drastically affected. There are a couple things that Nicks can

do to respond to this. First of all, we offer a variety of food options at Nicks, not just

pizza. All of our food is all made to ensure that the customer is getting exactly what they

want and pay for. Therefore, if the market for pizza crashes, we have alternatives to

counter- act that, seeing that everybody needs food and the market cant crash

completely. Nicks can also take some of its profits and put that money into

advertisement. This way, we can let people know we are still around and consistently

serving terrific food.

Market

Of course competition plays a huge role in the market. What if the competitors

under price us? Well, they probably are going to do so. Since our pizza is made to be

healthier than others, that is going to require us to use better ingredients, which come at a

higher cost. Therefore, our pizza will probably be more expensive then others. However,

none of our competitors can match the quality of pizza that is offered at Nicks, or the

standard of service that Nicks will hold. That is the competitive advantage that will

overcome that risk.

Company
 As stated, most of our food is coming from Gove Farm and Central Street Deli.

So, there are distributary risks that can occur. If either of these places does not have what

we need, that can create an issue. In order to minimize this being a huge issue, a manager

will have to go to the nearest store and purchase what we were not able to get that day. It

will take away some of the natural food we use, but we must give our customer the ability

to order anything on the menu that they want, at any time.

Of course, with any restaurant, there are regulatory risks. Those have to do with

making sure our customers arent consuming raw or undercooked food, and other

sanitation risks. This is why all of our employees are trained, to ensure that everything is

done correctly and held up to code.

Personnel

Labor issues are becoming an even bigger issue on the United States.

Massachusetts just raised the minimum wage in the state to $10. What if skilled labor is

unavailable or insufficient to meet Nicks needs? Well, as stated before, we dont need a

lot of skilled labor. The only positions that would require skilled labor are our manager

positions, where some sort of management degree is appreciated. If there arent enough

skilled laborers to fill these positions, then Nicks could search for people that have at

least some form of managerial experience, preferably in a restaurant capacity.

Exit Strategy

If Nicks Pizza doesnt reach expectations and goals, there needs to be an exit

strategy. My exit strategy would be to sell all of our assets. This includes the building and
equipment. This way, I can recover some of the money lost and try to break as close to

even as possible.

Section X: Financial Plan and Financial Projections

Based on the projections in the financial spreadsheet below, Nicks Pizza is not

expected to be profitable until year two. This is because of all the capital that needs to be

put forward into early production. Approximately $65,000 is needed to purchase

equipment (4) and another $75,000 is the cost to buy the building that puts the business is

an optimal situation. We also need to cover early expenses, such as rent and materials.

Due to these start up costs, we will be asking for a loan of roughly $350,000. The money

used from this loan would be put directly into these costs. Seeing that we are projected to

be profitable in year two, the repayment of the loan can begin then.

Nicks has its smallest sale per unit in year one at roughly $30. This is because the

average check will generally consist of multiple consumers. This will increase throughout

the duration of the five years. Our profit margin is only at 40% year one in effort to make

our prices as low as possible, so people dont turn our price down right away. That

increases by 5% over the next four years. As far as advertising, less money will be put

into that sector each year, as our brand will begin to grow over time.
 Section XI: Appendices

Resume

Nicholas Xarras
66 Independence Drive, Leominster, MA 01453
(978) 870-4159 | Nicholas.xarras@nichols.edu

OBJECTIVE

To acquire a well-developed position as a Director for a well-known, successful

business

EDUCATION

Nichols College Dudley, Ma

Bachelor of Science and Business Administration 2014-2018
Major: General Business
Relevant Course Work

Financial & Managerial Accounting

Advanced Placement Statistics
Leadership 101

EXPERIENCE

Fat Boys Diner Leominster, Ma

Dish Washer 2009 Present

Sweep and scrubbed floors

Prepared clean dishes, utensils, and cooking equipment for storage

Sorting and removing trash waste into pick-up areas

Wash dishes, glassware, utensils with dishwasher or/and by hand

DeCarolis Landscaping Leominster, MA

Landscaper Helper 2010-Present

Pick weeds and install and turn bark mulch

Paint housing complexes and offices
Organizational Chart
1) Owner (me)-
a) Oversee all financial aspects of the business
b) Order Produce as needed
c) Fix any equipment problems
d) Fire/ Hire employees when needed
2) Managers
a) Oversee all day- to- day activities
b) Settle conflicts between workers
c) Ensure customer satisfaction
d) Ensure customers receive food in a timely manner
3) Staff
a) Cooks
i) Ensure food is properly cooked
ii) Clean kitchen
iii) Make sure customers receive what they pay for
iv) Make sure food is presentable
b) Service Workers
i) Deliver food to customers when ready
ii) Cater to customer needs
iii) Use cash register correctly
iv) Clean dining are (i.e. clean floors if customer spills drink)
c) Delivery Workers
i) Deliver food as quickly as possible
ii) Drive carefully to designated locations
iii) Receive correct amount of cash from Customers
iv) Keep food from sliding around while driving to avoid misrepresentation of
food
 References

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Power-Report/
3. Leominster, Massachusetts. (n.d.). Retrieved April 20, 2016, from
http://www.city-data.com/city/Leominster-Massachusetts.html
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20, 2016, from http://www.zesco.com/Pizza-Dough-Mixers-sz2812.htm
5. Topic: Pizza Restaurant / Delivery Industry. (n.d.). Retrieved April 20, 2016, from
http://www.statista.com/topics/1610/pizza-delivery-market/
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& Updates at Daily News & Analysis. Retrieved April 24, 2016, from
http://www.dnaindia.com/health/report-frozen-foods-healthy-or-unhealthy-
1876748