c


  

Y

c
 
 
Our initial statement to Investors and Financial Lenders, this restaurant/ethnic food business plan, is a
candid disclosure of the Zara 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 restaurant 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:

1. M 


       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 Atlanta market averages. We have
taken a collective look at all figures to make solid business estimates.
2. M  

 





 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'.
3.  


 
 


 !  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 ramp-up stage for restaurants over other retail/service businesses.
A common mistake for new entrepreneurs , but fully addressed in this business plan.
4.   "  We have evaluated traditional and non-traditional 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.
5. #

"

 c


 Our management team has 20 years combined
experience, involved with over 86 restaurant openings, and deep involvement with the Atlanta
restaurant industry.

The total capital requirement to launch Zara Restaurant & Lounge is $740,000, of which $643,000 is
allocated to start-up capital, and $97,000 as business operations cash reserve.

This Plan is being submitted in order to secure a Business loan for $430,000. The loan will be used
towards Equipment purchase, Design, Construction, and Operational Start-Up expenses. Owners, Mr.
Alex Hunte and Mr. Peter Smith are investing $110,000 in personal capital. Private Investors, who will
be part owners with a non-managerial interest in the business, will contribute the remaining $200,000.

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 $84,000 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.Y


á Zara will be an inspiring restaurant, combining an eclectic atmosphere with excellent and
interesting food. The mission is to have not only a great food selection, but also efficient and
superior service - customer satisfaction is our paramount objective. Zara will be the restaurant of
choice for a mature and adult crowd, couples and singles, young and old, male or female.
á Employee welfare, participation, and training are equally important to our success. Everyone is
treated fairly and with the utmost respect. Our employees will feel a part of the success of Zara
Restaurant & Lounge.
á Our concept combines variety, ambiance, entertainment and a superior staff to create a sense of
'place' in order to reach our goal of overall value in the dining/entertainment experience.YWe offer
fair profits for the owners and investors, and a rewarding place to work for the employees.

*
  
 

1. $
% 
&'
( The creation of a unique and innovative fine dining
atmosphere will differentiate us from the competition. The restaurant will stand out from the other
restaurants in the area because of the unique design and decor. We will offer a fine dining
experience in an electric atmosphere.
2.     ( great food, great service and atmosphere.
3. )
*
+
 ( The menu will appeal to a wide and varied clientele. Our eclectic
menu features regional specialties around the globe, from Spanish ceviche, to Thai and Indian
curries, to local crabcakes.
4. c



  ( Employee retention and development programs will be a primary
focus and success platform for this business. Through these programs, we will be able to draw
seasoned and elite professionals and build a committed work force. We have budgeted for
a stock option program for Chef and Management positions to subsidize a lower salary base.
This lowers our immediate overhead and attracts quality staff.
5. ' '  ( We will control costs at all times, without exception. Cost Control will be an
integrated function of the restaurant from the onset. Cost control is about managing the numbers
- interpreting and comparing the numbers that impact the bottom line. 80 percent of the success
of a restaurant is determined before it opens. Our focus is to reduce the cost of goods sold to
meet our profit margin goals by managing the following crucial elements of cost: Purchasing,
Receiving, Storage, Issuing Inventory, Rough Preparation, Service Preparation, Portioning,
Order Taking, Cash Receipts, Bank Deposits and Accounts Payable. We will use of this
restaurant/ethnic food business plan to track actual costs against our forecasts in managing
the business.

M,
 

Zara Restaurant & Lounge's objectives for the first three years of operation include:

á Keeping food costs at less than 35% of revenue.

á Improving our Gross Margin from 65.41% in Year 1 to 67.10 in Year 2. These are attainable
targets; our µstretch' is to attain 70.73% by Year 3.

á Keeping employee labor cost between 37-39% of total sales.

á Remaining a small, unique restaurant with eclectic food and service.

 á Averaging sales between $1,200,000 - 1,500,000 per year.

á Promoting and expanding the Zara restaurant concept as a unique Midtown destination
restaurant.Y

á Expanding our marketing and advertising in Atlanta and in the neighboring suburbs to increase
our customer base.

á Achieving a profitable investment return for investors for Years 2 - 6.

' 

-

#
"
Zara Restaurant & Lounge is unique to Midtown Atlanta. The restaurant features 3 venues in one (aY

 Y Y
 ´: A Tapas 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 
 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.

-



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

-

"

 
Our management team has over 48 years combined experience in food, restaurant and hotel,
business management, finance, and marketing arenas.

M
 "'

The restaurant will be located in Midtown. 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:

* 
( Monday to Saturday, 11 a.m. - 2:30 p.m.

#
( Monday to Saturday, 5:30 p.m. - 12 midnight

 .
 
 
 



 
Zara 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. 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 Zara bar features a comprehensive selection of local and international spirits.

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.


 
Zara'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 Entrée selection, while the Fusion Dim Sum menu will have special items featured only
for after-hours dining. The final 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. Zara'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:

-

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


!


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



á Mixed Greens with Spanish sherry wine vinaigrette

á Asian Pear and Endive Salad with Blue Cheese & Walnuts

c 

á Tequila Scallops w/ a Spanish sherry reduction

á Thai Red Chili rubbed shrimp
á Voodoo Prince Curry Chicken and Bock Chow w/sticky rice in Banana Leaf
á Herb Roasted Chicken with µZara' Coo-Chee (House´ spices

#

 

á Chocolate Chunk Bread Pudding w/ Bourbon Cherry sauce

á Zara Chocolate Explosion ± Milk, Dark and White chocolate
 á Zara Fruit Plate


 #&'

/012.324
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.


  

Instead of building a business around a preconceived concept, we conducted market researchand

built a concept around our consumers. Our market analysis identified the following key drivers as
areas of opportunity to service Atlanta's restaurant customers:

1.  

 ( Nearly 95% of our surveyed focus group endorsed having a choice of
different size portions. This statistic is in line with findings reported by the D Y
Y
 Zara's Tapas concept is built to offer different-sized portions. Our customers want the
option to choose what satisfies their appetite.
2. 
 5
( Ethnic restaurants are increasing in Atlanta. The proliferation of international
cookbooks, food magazines, TV cooking shows and imported goods offers ample evidence that
America, as a whole, is currently on an international tasting spree. In fact, eating places that
identify themselves as ethnic establishments numbered nearly 78,000 in 1999 and recorded
sales of $30.5 billion. Our research results do not identify any single ethnic style of restaurant as
desired, but rather suggest that incorporating strong multi-ethnic influences in the menu selection
will be popular. Again, variety is the underlying element for this concept.
3. -

#"c


( Customer satisfaction with food and service has been and continues to
be of utmost importance, but our findings indicate that the décor, lighting, bar, and other options
to improve the dining experience are also factors in customer decisions. Zara takes all these
factors in consideration for the design of this cosmopolitan restaurant.
4.


( 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. Zara's menu is priced at a mid-tier level, with no entrée over $20. In addition we
have an extended Tapas and Appetizer selection priced between $3.50 - $9.50, allowing budget
dining in a full-service restaurant.



"
  
Zara'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:

á The Business Person

á Downtown Atlanta Couples
á The Destination Customer
á High-End Singles
á 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
          
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The restaurant industry is highly competitive and risky. The owners know this through their many
years of experience opening, running, and improving restaurants across North America. 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, 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:

- 




      

  
 "


 

  


 
 
 

"!  "

 

 " 

   


 


'
  "
 
In 2003, the top ten Atlanta restaurants shared two things: cozy, hip interiors and reasonably priced,
 
regionally specialized menus. Only one of them offered traditional southern cooking. And half of
them were located in Midtown. Our competitors are heading in the right direction, but only Zara is
based on sound market research in the local market.

Atlanta 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.

 
"%

    
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 
 striving to be the lowest-priced
restaurant, we are aiming to offer exceptional food at reasonable prices for the average restaurant
diner.

'
 
c"


Zara's competitive edges are:

1. The owners' thorough understandings of opening and running a restaurant

2. An extraordinary contemporary restaurant design
3. International menu with featured menu changes every 4 months
4. Unique, 3-Tiered spatial layout
 5. Chef Co-op program to allow new entrants, trainee and featured chef
6. Chef/Management Stock Incentive Program.
 
7. Inner and Outer City Marketing campaign (i.e. Come to Town promotions´
8. Employee Training, Incentive and Retention program


' (
At the end of the day, everyone that sells prepared meals in this district is a Zara competitor, because
we all compete for the same home meal replacement dollar. However, there are two segments of the
restaurant industry that are our main competition: the casual dining restaurant and the fine dining
value restaurant.

So, if the food and service is better at a fine dining restaurant than a casual restaurant, but price has
become a factor as a result of the economic turns, where is a customer more likely to go?

There is no absolute answer to the question, but the solution is to deliver the best food at the best
price with the highest level of service in one establishment. This is the very definition of value and the
concept at the heart of Zara's business model.


" 
"
Zara 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:

 """

(
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 Zara. See
attached Logo and Web design.

'  


(
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.


 " (
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 food served
in an eclectic atmosphere. We will maximize efficiency in the selection and scheduling of
advertisements by:
 á Selecting primary business publications with high specific market penetration, using The
Creative Loafing Dining Section, The Atlanta Journal Constitution, Atlanta City Search, and
Social Diva, which all reach our targeted demographics.
á Scheduling adequate frequency of ads to impact market with menu items and promotions.
á Where possible, positioning advertisements in or near entertainment/food related editorial.
á Redirecting customers to our website to register for upcoming functions, VIP lists, reservations,
and flash media promotions.
á Maximizing ad life with monthly and weekly publications.

Working with The Reynolds Group Media Co. (Zara Advisory Board´, we will develop an advertising
campaign built around our Zara Diner theme, menu offering, location, and decor. We will support this
plan with ads that reinforce the Zara 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.

 '"(

The best way to reach our potential customers is to develop an intense advertising campaign
promoting our Zara concept of  Y
Y 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.

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

6..
7%.
   
"

á
   8"
( 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 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.
á 
# "'
 ( 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.
á 6 

"( Wait staff will service appetizers to customers waiting to be seated or on
the wait list.
á Live Entertainment parties
á Special Events
á Valentine's Day
á Zara Halloween Masquerade party
á Wine tasting weekend
 á New Year's Eve party



Zara 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.

Financial Pro Forma

In addition to the $110,000 of owner investment and $130,000 in grant monies, Zara 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:

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

%
 
 M  
 
The Zara 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: $200,000

Minimum Investment Amount $15,000

Investment Term (Investor Selection´ 3-5 Years

Total Equity Offering (1% per $15,000 Investment´ 20% Max

Starting Year 2

Silver: Projected Annual IRR on Investment of $15,000 -

10%
$49,000

Gold: Projected Annual IRR on Investment of $50,000 - 11%

$99,000

Platinum: Projected Annual IRR on Investment of $100,000 12% +

or more Residuals

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 µPaper Profits'. As such we will
focus on expediting returns to investors where possible. Our existing 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.

%    
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:

c

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

recession.

%  &  .$

9
.: .  Our experience in the industry confirms a longer ramp-up stage for
restaurants over other retail/service businesses. Our Annual Sales Growth is based on attaining the
following seating capacity percentage per dining period:

á Year 1: After-Hours = 53%, Lunch = 70%, Dinner = 88%

á Year 2: After-Hours = 70%, Lunch = 82%, Dinner = 100% (implied wait period´
á Year 3: After-Hours = 80%, Lunch = 87%, Dinner = 100% (implied wait period´

.
  .$ "

 As a new restaurant entry to the Midtown market, the ramp-up in
customer draw is expected to extend over 6 months. This is reflected in a higher than average
monthly sales variance shown as follows (Worst-case / Expected-case´:

á Month 1: 32% / 51% Month 4: 64% / 75%

á Month 2: 41% / 58% Month 5: 80% / 90%
á Month 3: 52% / 66% Month 6: 90% / 92%

"
   We assume that there are no unforeseen changes in findings
outlined in the Market Analysis.

"&' ' 

Competitive Pricing Model. Revenue calculations are based upon competitive price comparisons and
established menu values in the current marketplace. The following are baseline assumptions on
Average Check Totals, and Average Seat Turns:

Daily average for lunch spending is $10.50 per person, dinner at $27.50 per person; and $17.50 per
person for After-Hours dining (All check totals include Beverages, but not Bar´. Seat Turn averages
are modestly estimated at:

á Year 1: After-Hours = 0.7, Lunch = 1.0, Dinner = 1.0

á Year 2: After-Hours = 0.7, Lunch = 1.0, Dinner = 1.0
á Year 3: After-Hours = 1.0, Lunch = 1.0, Dinner = 1.25

' '  Cost of goods sold have been calculated as a percentage of sales and will be
monitored on a daily basis in order to keep Cost of Food within the range of 31 - 33%, Bar Costs
within 28 - 31%, and Cost of Beverages (Non Alcohol´ below 9%. With a focus on Cost Control, we
anticipate 6 months to fine tune the restaurant operations and manage our costs within the defined
tolerance range.

%
  
  
 Accounts receivable turnover is calculated to be 0 days,
as payment is rendered with service. Inventory is turned on a 7 day cycle as inventory is used daily
within all categories, and accounts payable are projected to be 30 days.

7 "  

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Our financial plan is budgeted to support the Worst-Case business scenario. We addressed the
financial risk as follows:

á We looked at our monthly break-even.

á We calculated worst-case monthly financial shortfall based on the ramp-up sales
percentages outlined in our financial assumptions.
á We budgeted operational shortfall in an operational contingency budget that we will
utilize if the need arises.

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Owners Alex Hunte and Peter Smith have a combined 20 years of Restaurant Management,
Operations and Business Management Experience.

The Financial Plan incorporates a budget for an Atlanta Restaurant Consulting group. Their services
are budgeted for the business start-up analysis, rollout, and on retainer for 4 months of business
operations. The selected firm has experience with over 72 Restaurant launches, specializing in the
Atlanta Market.
We will be recruiting a seasoned chef (national search´ whose style is in accord with the Restaurant
concept and our market segment. We will be offering an equity interest to our select Chef to maintain
the industry knowledge.

Our Accounting service will be contracted to a firm specializing in Restaurant accounting.

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Our original effort was to open a restaurant twice the proposed size. As we are in the midst of an
economic recovery, we have scaled back the size to reduce business overhead, startup requirements,
and business operating capital.

Another mitigation has been our overall Restaurant concept. We have the menu priced at a mid-tier
level with no entrée over $20. In addition, we have an extended Tapas and Appetizer selection priced
between $3.50 - $9.50, allowing budget dining in a distinguished restaurant.

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Peter Smith has an extensive background in restaurant startup. He is currently an International

Consultant for various restaurant ventures, and we will use his expertise in past projects as a
comparative basis.

We have leveraged our membership with the National Restaurant Association to look at industry
averages for this market segment for Restaurant startup and Operations. Additionally, we included a
contingency buffer in the financial estimates to account for any potential cost variance.

We have worked with our Restaurant Consulting firm to validate our cost estimates to their industry
knowledge.

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Again we will draw on the Consulting group that has the expertise in site selection and lease
negotiation. In all, there are no guarantees with location, but we took a very objective approach with
our concept. Instead of going in with a predefined business concept, we let the Market Analysis define
the need. Based on the results, the Zara Restaurant concept was formed specific to Midtown Atlanta.
Site selection was based on space, visibility, and functionality; the city grant award confirmed our
decision.

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Our intent is to be a self-sufficient business far in advance of the 6-month probation period. But as we
are considering all contingencies, we have looked at this risk. We have accounted for an operational
contingency budget that will be used to supplement any slow periods. Our next step would be to
approach our private investors for capital by extending their return on investment. We would also look
to the partners' capital reserves as another source of funds.

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Monthly Revenue Break-even $83,630

Assumptions:

Average Percent Variable Cost 35%

Estimated Monthly Fixed Cost $54,703

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The cash flow depends on assumptions for inventory turnover and payment days. We have no sales
on credit, so our cash flow does not track accounts receivable. Our projected same-day collection is
critical, and is reasonable and customary in the restaurant industry. We do not expect to need any
additional financial support, even when we reach the less profitable months, as the downturns are
incorporated into the monthly revenue variance figures. Month-by-month assumptions for projected
cash flow are included in the appendices.

'


Year 1 Year 2 Year 3 Year 4 Year 5

Cash Received

Cash from Operations

Cash Sales $1,073,769 $1,211,088 $1,279,204 $1,341,260 $1,406,670

Subtotal Cash from Operations $1,073,769 $1,211,088 $1,279,204 $1,341,260 $1,406,670

Additional Cash Received

Sales Tax, VAT, HST/GST

$0 $0 $0 $0 $0
Received

New Current Borrowing $0 $0 $0 $0 $0

New Other Liabilities (interest-free´ $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0

Subtotal Cash Received $1,073,769 $1,211,088 $1,279,204 $1,341,260 $1,406,670

Expenditures Year 1 Year 2 Year 3 Year 4 Year 5

Expenditures from Operations

Cash Spending $399,588 $400,788 $429,828 $431,128 $432,728

Bill Payments $601,114 $724,989 $745,324 $765,976 $792,442

Subtotal Spent on Operations $1,000,702 $1,125,777 $1,175,152 $1,197,104 $1,225,170

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid

$0 $0 $0 $0 $0
Out

Principal Repayment of Current

$0 $0 $0 $0 $0
Borrowing

Other Liabilities Principal

$0 $0 $0 $0 $0
Repayment

Long-term Liabilities Principal

$47,772 $47,772 $47,772 $47,772 $47,772
Repayment
Purchase Other Current Assets $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0

Dividends $0 $20,000 $10,000 $10,000 $15,000

Subtotal Cash Spent $1,048,474 $1,193,549 $1,232,924 $1,254,876 $1,287,942

Net Cash Flow $25,295 $17,539 $46,280 $86,384 $118,727

Cash Balance $172,276 $189,815 $236,095 $322,479 $441,206




 

 
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, Zara Restaurant &
Lounge has a positive Net Worth beginning in Year 3.




Year 1 Year 2 Year 3 Year 4 Year 5

Assets

Current Assets

Cash $172,276 $189,815 $236,095 $322,479 $441,206

Inventory $37,839 $39,175 $38,109 $38,843 $39,608

Other Current Assets $73,311 $73,311 $73,311 $73,311 $73,311

Total Current Assets $283,426 $302,300 $347,514 $434,633 $554,125

Long-term Assets
Long-term Assets $65,000 $65,000 $65,000 $65,000 $65,000

Accumulated Depreciation $6,500 $13,000 $19,500 $26,000 $32,500

Total Long-term Assets $58,500 $52,000 $45,500 $39,000 $32,500

Total Assets $341,926 $354,300 $393,014 $473,633 $586,625

Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5

Current Liabilities

Accounts Payable $58,194 $59,713 $61,398 $63,097 $65,315

Current Borrowing $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0

Subtotal Current Liabilities $58,194 $59,713 $61,398 $63,097 $65,315

Long-term Liabilities $252,228 $204,456 $156,684 $108,912 $61,140

Total Liabilities $310,422 $264,169 $218,082 $172,009 $126,455

Paid-in Capital $440,000 $440,000 $440,000 $440,000 $440,000

Retained Earnings ($427,209´ ($428,496´ ($359,869´ ($275,068´ ($153,375´

Earnings $18,712 $78,628 $94,801 $136,692 $173,546

Total Capital $31,504 $90,131 $174,932 $301,625 $460,171

Total Liabilities and Capital $341,926 $354,300 $393,014 $473,633 $586,625

Net Worth $31,504 $90,131 $174,932 $301,625 $460,171

c&c  

" 
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 Zara concept, and compound the
profit return for Zara Investors.

1. Expansion (Option 1´: Our overall goal to maintain Zara 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 Zara 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 Zara 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 Zara 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 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 Zara 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.