STARTING UP RESTAURANT BUSINESS

Starting up Restaurant Business

Starting up Restaurant Business

XYZ Restaurant is a new Restaurant in its formative stages. It is being organized to take advantage of a specific gap in the short-haul domestic travel market. The gap exists in low cost service out of Anytown, U.S.A. The gap in the availability of low cost service in and out of the Anytown hub coupled with the demand for passenger travel on selected routes from Anytown indicates that a new entrant airline could be expected to capture a significant portion of current hospitality business at that hub.

These sales levels will produce respectable net profit in the first operational year and exponential growth in year two. Profits in year one will be a modest percent of sales and will improve steadily with the economies gained in year two. The over-all operational long term profit target will be 16% of sales as net profit in years four and five. The company's long term plan is part of the due diligence package. The first operational year is actually fiscal year two in this plan.

Objectives

The Company has the following objectives:

To obtain required D.O.T. and F.A.A. certifications on or before month eight.

To commence revenue service on or before the end of year one.

To raise sufficient "seed" and "bridge" capital in a timely fashion to financially enable these objectives.

To commence operations with two McDonnell-Douglas MD-80 series aircraft in month one, four by end of month four, and six by end of month six of flight operations.

To add one aircraft per month during year two for a total of 18 at year two end.

Mission

XYZ Restaurant. has a mission to provide safe, efficient, low-cost consumer hospitality service. Our service will emphasize safety as its highest priority. We will operate the newest and best maintained aircraft available. We will never skimp on maintenance in any fashion whatsoever. We will strive to operate our flights on time.



Keys to Success

The keys to success are:

Obtaining the required governmental approvals.

Securing financing.

Experienced management. (Already in place).

Marketing; either dealing with channel problems and barriers to entry; or solving problems with major advertising and promotion budgets. Targeted market share must be achieved even amidst expected competition.

Product quality. Always with safety foremost.

Services delivered on time, costs controlled, marketing budgets managed. There is a temptation to fix on growth at the expense of profits. Also, rapid growth will be curtailed in order to keep maintenance standards both strict and measurable.

Cost control. The over-all cost per ASM (available seat mile) is pegged at 7.0 cents or less in 1996 dollars.

This ASM factor places XYZ Restaurant in a grouping of the lowest four in the airline industry within the short-haul market. (US Air, the dominate carrier in the Anytown market, averages 12.0 cents per ASM by comparison). The only three airlines with lower operating costs also operate older and less reliable equipment, and even then the lowest short-haul cost in the airline industry is currently Southwest at 6.43 cents per ...