1.0 Executive Summary
The purpose of this business plan is to outline the development of a daiquiri bar based in the greater Philadelphia metropolitan area. Daiquiri Bar, LLC (“the Company”) will provide patrons with a broad array of daiquiris, wines, and other mixed drinks and a comfortable atmosphere. The Company intends to model its interior as a lounge style bar. At this time, the founder – Peter Smith – is seeking to acquire $100,000 of debt capital in order to commence revenue-generating operations. The Company was founded in 2019. At this time, the owner is in the process of acquiring the liquor license and securing the lease for the facility.
As stated above, the business will be actively engaged in providing small food plates coupled with a broad selection of daiquiris, beer, wine, and other spirits. The primary focus of all alcohol sales will be on daiquiris that feature a number of different flavors. The location will also serve piña colada’s.
As it relates to food operations, the business will have a number of small plates similar to top us that will be served to the general public. The business will maintain a small sized kitchen in order to prepare freshly made small plates for guests.
The second section of the business plan will further document the operations of the daiquiri bar.
At this time, Mr. Smith is seeking $100,000 of debt capital either through a commercial business loan or SBA backed loan. The terms of this debt are to be determined during negotiation. However, this business plan assumes that the business will receive a seven year term loan that carries a 7% interest rate. These funds will be exclusively the we used for the build out of the facility, acquisition of furniture, fixtures, and equipment as well as for inventory. Mr. Smith will contribute $10,000 towards the venture which will be primarily used for working capital.
The third section of the business plan will further document the usage of funds.
Over the next three years, Mr. Smith intends to develop the daiquiri bar into one of the premier lounge styled locations within the greater Philadelphia market. Depending on the success of this location, Mr. Smith may seek to develop subsequent locations within the same metropolitan area market. The Philadelphia area is an expansive population center, and there is a substantial opportunity to develop numerous locations.
2.0 Daiquiri Bar Operations
As stated in the executive summary, the daiquiri bar will provide its patrons with a broad array of specialty mixed drinks with a focus on daiquiris and other rum related beverages. Of course, the business will maintain a full menu of other cocktails, beer, and wine. Mr. Smith is currently in the process of securing the liquor license so that alcohol can be sold on the premises.
It should be noted, that at all times, the business will comply with all Pennsylvania and Philadelphia laws pertaining to the sale of alcohol. The Company will have proper employee training so that liabilities resulting from improper serving of alcohol are kept to an absolute minimum.
The small plates of food that will be provided to customers include top a style small plates that will feature a number of fusion style recipes developed by the to be hired chef. Approximately 30% of revenues are expected to come from the sale of food.
3.0 The Financing
3.1 Usage of Funds
3.2 Investor Equity
At this time, the Company is not seeking an equity investment from a third-party investor.
3.3 Management Equity
Peter Smith will retain a 100% ownership in daiquiri bar LLC.
3.4 Exit Strategies
Based on historical sales figures, most specialty bars typically carry a price to earnings sales multiple of 2 to 3 times the previous year’s earnings. Mr. Smith intends to operate this business for a substantial period of time, but in the event he wishes to sell the business to a third-party a qualified business broker will be hired. This business broker would most likely take a 10% commission for the successful sale of the business.
4.0 Market Analysis
4.1 Economic Analysis
Currently, the economic climate within the United States is moderate. Unemployment have reached all-time lows while asset prices have reached all-time highs. Interest rates have remained moderately stable despite substantial improvements in the economy since the end of the recession in 2011. The stock market has reached all-time highs, and the housing market has corrected itself substantially. As such, now is a strong time to start a new bar. It should be noted that the high gross margins generated from the sale of alcohol as well as food products will ensure that the daiquiri bar is able to remain profitable and cash flow positive at all times.
It should also be noted that bars actually tend to see moderate increases in revenues during times of economic recession as people seek lower-cost forms of nighttime entertainment. There are very few economic risks that most bars have once they establish a strong brand name in their local market.
4.2 Industry Analysis
Within the United States, there are approximately 70,000 establishments that provide nighttime entertainment and a bar atmosphere. Each year these businesses generate approximately $30 billion in revenue and provide jobs for 400,000 people. The growth of this industry typically mirrors that of the US economy although the rate in which new bars are being established does exceed the current economic growth rate.
This boost in industry growth is primarily attributed to the fact that people are frequently wanting to have lower-cost forms of nighttime entertainment in lieu of more expensive vacations.
43 Customer Profile
Management has developed the following demographic profile that will be used in conjunction with marketing operations:
- Between the age of 25 to 40
- Lives within 5 miles of the Company’s Philadelphia location
- Will spend $20 to $30 per visits the location
Given the ubiquitous nature of nighttime entertainment venues, the daiquiri bar will face competition from a number of different sources. Philadelphia area nightclubs, sports bars, and restaurants that operate in a lounge capacity will be primary competitors to the daiquiri bar. However, the founder intends to maintain a strong competitive advantage over other competitors by exclusively focusing its marketing efforts on the expansive number of daiquiris offered at the facility. This will create a very strong differentiating factor for the business as it progresses through its operations.
5.0 Personnel Summary
6.0 Marketing Plan
6.1 Marketing Objectives
- Develop and maintain an expansive online presence so that people can find the business when they conduct searches via search engines or social media platforms.
- Maintain an expansive presence on FaceBook, Twitter, and Instagram in order to make people aware of the location and specialty discounts.
- Hire a bar promoter at the onset of operations in order to drive traffic to the location once the grand opening. Begins.
6.2 Marketing Strategies
Foremost, the Company will distribute a number of print advertisements within a 5 mile radius of the planned location. This includes discounts on food and beverages in order to have people within the market familiarized with the daiquiri bar location. The Company will also hire a bar promoter, for a period of two months, during the grand opening marketing campaign. This bar promoter will be tasked with handing out flyers and other print advertisements to people on the street and engaging in a guerrilla style marketing campaign.
The daiquiri bar will also maintain an expansive presence on social media platforms, including FaceBook, that will allow the business to immediately develop a following within the target market. Specialized discounted offers will be regularly shown on these platforms once the business has an ongoing following. This is one of the foremost ways in which these businesses are able to communicate with customers. The Company will frequently post advertisements on it social media platforms as well as images.
Beyond social media and print advertising, the daiquiri bar will maintain and expansive website that showcase the location, hours of operation, specialty events, and other information regarding the location. Mr. Smith is currently hiring a web developer that will produce a mobile friendly website that can be very quickly found among the search engines.
The Company will also maintain relationships with Philadelphia area event planners that will have their clients host large-scale offense at the facility. This is important because it will not only produce substantial secondary income for the business, but will also increase visibility among residents of the area.
7.0 Financial Plan
7.1 Financial Assumptions
- The Company will receive a $100,000 loan carrying a 7% interest rate over a period of seven years.
- The founder will pay most short-term payables on a monthly basis, and the Company will not carry any accounts receivable.
- Mr. Smith will inject $10,000 into the business.
7.2 Sensitivity Analysis
The daiquiri bar is revenues are only modestly sensitive to negative changes in the economic climate. Bars, nightclubs, and lounges tend to remain economically stable during negative economic times. This coupled with the high gross margins from both food and alcohol sales, will ensure that the business is able to remain profitable and cash flow positive at all times. Only a major and sustained economic recession would impact the revenues of the business. Additionally, revenues would need to decline by more than 40% before the business is unable to satisfy its underlying financial obligations.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis and Business Ratios