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Taco Bell Saskatoon YUM! Brands Inc.

Prepared for: Development DepartmentYum! Restaurants International (Canada)

Prepared by: Chantel LaventureDave JohnsonAaron ForerMichael Milo

Saskatoon Taco BellYUM! Brands

Contents1.0 Executive Summary...............................................................................................................................6

2.0 Introduction...........................................................................................................................................7

2.1 Mission Statement.............................................................................................................................7

2.2 Our Market........................................................................................................................................8

2.3 Core Values (P.E.A.R.L.S.)...................................................................................................................8

2.4 Goals and Objectives.........................................................................................................................8

2.4.1 Short Term: (6 months)..............................................................................................................8

2.4.2 Medium: (18 months).................................................................................................................9

2.4.3 Long-Term: (5 years+).................................................................................................................9

2.5 Philosophy.........................................................................................................................................9

3.0 Industry Overview...............................................................................................................................11

4.0 Operations Plan...................................................................................................................................11

4.1 Organizational Structure..................................................................................................................11

4.2 Site Plan and Five Year Development Plan......................................................................................12

4.3 Building and Floor Plans...................................................................................................................13

4.4 Work Plan........................................................................................................................................13

4.5 Quality Control................................................................................................................................13

4.6 Average Business Day, Week, Month, Year.....................................................................................13

4.7 Supply Analysis................................................................................................................................14

4.8 Service Providers.............................................................................................................................14

4.9 Capacity Limits.................................................................................................................................14

4.10 Capital Budget...............................................................................................................................14

4.11 Environmental Considerations.......................................................................................................15

4.12 Cost of Sales...................................................................................................................................15

Chantel Laventure Dave JohnsonAaron Forer Michael Milo


4.13 Operating Expenses.......................................................................................................................15

4.13.1 Ongoing Expenses...................................................................................................................15

4.13.2 Franchise Expenses.................................................................................................................16

4.14 Working Capital Management.......................................................................................................16

4.14.1 Cash Management..................................................................................................................16

4.14.2 Inventories..............................................................................................................................17

4.14.3 Account Receivable.................................................................................................................17

4.14.4 Accounts Payable....................................................................................................................17

4.14.5 Cash Conversion Cycle............................................................................................................17

4.15 Summary........................................................................................................................................17

5.0 Human Resource Plan..........................................................................................................................17

5.1 Hours of Operations........................................................................................................................18

5.2 Scheduling.......................................................................................................................................18

5.3 Training............................................................................................................................................18

5.3.1 University..................................................................................................................................18

5.4 Job descriptions...............................................................................................................................19

5.5 Recruitment and Selection..............................................................................................................19

5.6 Discipline and Termination..............................................................................................................19

6.0 Marketing Plan....................................................................................................................................20

6.1 Products and Services......................................................................................................................20

6.2 Pricing..............................................................................................................................................20

6.3 Promotion........................................................................................................................................20

6.4 Place................................................................................................................................................20

6.5 Segmentation, Targeting, Positioning..............................................................................................21

6.6 Competitive Analysis........................................................................................................................22

6.6.1 Competition..............................................................................................................................22



6.6.2 Responding to Competitors......................................................................................................23

6.6.3 Sustainable Competitive Advantage.........................................................................................23

6.7 Projections of Revenues and Marketing Expenses..........................................................................23

6.8 Marketing Strategy..........................................................................................................................23

6.8.1 Yum! Value Network.....................................................................................................................24

6.9 Marketing Budget............................................................................................................................25

6.10 Summary of Marketing Plan..........................................................................................................26

7.0 Financial Plan.......................................................................................................................................26

7.1 Projected Financial Statements.......................................................................................................26

7.2 Cash Flow Analysis...........................................................................................................................26

7.3 Risk Analysis.....................................................................................................................................27

7.3.1 Food safety and food-borne illness...........................................................................................27

7.3.2 Cost Changes............................................................................................................................27

7.3.3 Shortages and Availability.........................................................................................................28

7.3.4 Financing...................................................................................................................................28

7.3.5 Economic Conditions................................................................................................................29

7.3.6 Changes in governmental regulations......................................................................................29

7.3.7 Competitive Industry................................................................................................................29

7.3.8 Franchisee/Franchisor Disputes................................................................................................30

7.4 Financing Plans................................................................................................................................30

7.5 Feasibility of the Plan.......................................................................................................................30

8.0 Summary of the Business Plan.............................................................................................................31

9.0 References...........................................................................................................................................32

10.0 Appendices........................................................................................................................................33

Appendix A: Organizational Chart..........................................................................................................33

Appendix B: Job Descriptions................................................................................................................34



Appendix C: S.W.O.T. Analysis...............................................................................................................36

Appendix D: Marketing Revenue Projections........................................................................................37

Appendix E: 5 Year Projected Financial Statements..............................................................................38

Appendix F: Best and Worst Case Scenario Analysis..............................................................................39

Appendix G: Sensitivity Analysis............................................................................................................40

Appendix H: Net-Worth Statements......................................................................................................41

Appendix I: Distribution of Expenses.....................................................................................................44

Appendix J: Break Even Analysis............................................................................................................45



1.0 Executive Summary

Taco Bell is one of five restaurant franchises under Yum! Brands, which is the largest restaurant

company in the world. Taco Bell is the most profitable Quick Service Restaurant QSR brand in Yum! Inc.,

beating out the other three big players: KFC, Pizza Hut, and Long John Silvers.

Our investing team finds Saskatoon to best suit the opening of a new Taco Bell. Saskatoon has a high

rate of growth in GDP and population along with the lowest unemployment rates in Canada. The

Saskatoon Taco Bell will be located in the Stonebridge Market Center, on Stonebridge Boulevard – a fast

growing newly developing neighbourhood of Saskatoon.

The Yum! Brand Inc. has many training and university courses which are mandatory before opening or

managing a franchise. This training will prepare our managerial staff in marketing, HR, operations

and other important aspects of the QSR industry.

Taco Bell’s operational activities fall under the regulations and supply chain management of Yum! Brand

International, where ready to prepare foods are delivered on a request basis. Inputs will be procured

directly through Yum! Restaurant International’s Unified Purchasing Group of Canada (UPGC), prepared

fresh on site, and served to customers in either cafeteria style seating or via drive thru.

Taco Bell’s marketing plan is directly linked to YRI Brand Inc, where 4.5% of gross sales are reintegrated

into local and national marketing campaigns. Out of the 4.5%, 1.5% is used for local advertising and

promotion. Our marketing campaign is centralized around the opportunity to be the first Taco Bell in

Saskatchewan. We will create awareness by a promotional campaign which focuses on Taco Bell’s

exclusive offering to Saskatoon and surrounding residents. Taco Bell Saskatoon thinks outside the bun!

Our Taco Bell will be privately owned by three investors: Michael Milo, Dave Johnson and Aaron Forer;

each contributing to a total investment of $1.35 Million. Another additional $1 050 000 is required for

initial start-up and building costs, details to be discussed with Bank of Montreal on repayment over 10

years.



2.0 Introduction

Our team of investors, Michael Milo, Chantel Laventure, Dave Johnson, and Aaron Forer are looking to

start up the first Taco Bell in Saskatchewan in Saskatoon. Saskatoon is one of the fastest growing cities in

Canada with a steady growth in gross domestic product even through the 2008/2009 recession. With a

population estimated at 257,300, Saskatoon is a great location to start a new Taco Bell franchise. The

growth potential of Saskatoon is a great opportunity and launching point for our team. We expect to the

grand opening of our Taco Bell franchise to be May 2011. This takes into account building time of three

months and the proper training and employment of staff to be finished December 1, 2010. The location

will be on Stonebridge Boulevard in the Stonebridge Market Center.

Not only is Taco Bell the most successful franchise in the Yum! Brand restaurant chain, but also is the

number one franchise in the QSR industry in the United States. We plan to continue this trend with in

Canada. Out of the 5,142 locations world-wide only 1% fails or closes due to bankruptcy. Yum! Brands

have recently gone global into Chinese markets and internationally only show a 2% closure rate.1 We

believe this is a great track record and gives our investors an exceptional reason to invest.

Leading our team is Chantel Laventure, who has a MBA from the University of Saskatchewan. She will

manage the Taco Bell location in Saskatoon and provide all training to employees. Michael Milo and

Dave Johnson are the primary shareholders who will control 75% of the shares. Both of these investors

have substantial wealth from the oil industry in Alberta. Michael brings a strong background in

marketing and Dave specializes in Operational Management. The other limited partner is Aaron Forer

who has contributed

the other 25% of financing. Total equity collected will be 56% of our financing, equalling 1.35 Million.

The remaining $1 050 000 will be financed through a commercial loan from the Bank of Montreal to

cover initial start-up costs.

2.1 Mission Statement

We take pride in making the best Mexican style fast food providing fast, friendly and accurate service.

We are the employer of choice offering team members opportunities for growth, advancement, and

rewarding careers in a fun, safe working environment. We are accountable for profitability in everything

we do, providing our shareholders with value growth.

1 Yum! Brand Inc. Annual Report. 2009.



2.2 Our Market

After performing market research, we have concluded that there are a number of reasons to go ahead

with this project in Saskatoon, including:

Taco Bell Brand: The Taco Bell Brand is distinct and attracts many consumers throughout the U.S. and Canada.

First Mover: As the Saskatoon Taco Bell will be the only Taco Bell in Saskatchewan, we will be a first mover by opening a restaurant under the largest restaurant chain in the world – Yum! Brands Inc.

Market Size and Characteristics: Saskatoon is a booming city with above average rates of employment and growth.

2.3 Core Values (P.E.A.R.L.S.)

The Taco Bell brands all follow the same core values in their daily operations. The Saskatoon Taco Bell

franchise will also follow these values to stay true to the Taco Bell brand, and to ensure utmost

employee and customer satisfaction:

Have a PASSION for excellence in everything we do.

EXECUTE with positive energy and urgency.

Be individually and collectively ACCOUNTABLE for growth in people, customer satisfaction and

profitability.

Find reasons to RECOGNIZE the achievement of others and have fun doing it.

LISTEN and more importantly, respond to the voice of the customer.

Think SAFETY first.

2.4 Goals and Objectives

To elevate the Saskatoon Taco Bell to ‘Best in Class’ among Mexican Quick Serve Restaurants in

Saskatoon.

To Pave the Way for future Taco Bell locations in Saskatoon and Saskatchewan.

To become a magnet location that customers seek out when choosing a QSR destination.

2.4.1 Short Term: (6 months)

We will:

1. Use radio, word of mouth, and print advertising (radio and print costs to be covered by Yum! Brands

Inc.) to make Saskatoon aware that our business is up and running, and encourage consumers to visit.



2. Maintain a steady cash flow by being consistently aware of purchasing and sales decisions, preparing

cash flow projections for the short and long terms, and preparing for shortfalls with back up methods

such as lines of credit and credit cards.2

3. Fully recover costs associated with start-up, with break even by the end of the first year of operations.

4. Ensure smooth daily operations in the critical opening months, while impressions of our business are

being formed, using extensive pre-opening staff training and constant floor management.

2.4.2 Medium: (18 months)

We will:

1. Develop and maintain a favourable reputation within our target market and the Saskatoon

community by supporting local teams and sports groups through sponsorship initiatives (in line with YRI

community development initiatives).

2. Continue to penetrate our target market through promotional campaigns (flyers and coupon /dollar

off offers) in order to expand our clientele.

4. Develop working relationships with local businesses through networking and developing contacts.

(i.e.: Saskatoon Chamber of Commerce, Canadian Franchise Association)

2.4.3 Long-Term: (5 years+)

We will:

1. Research and determine the feasibility of another Taco Bell location in Saskatoon, possibly in a mall

vendor location or another stand alone store.

2. Consider franchise opportunities in other markets (other cities in Saskatchewan) using market

research and investor interest.

2.5 Philosophy

The Saskatoon Taco Bell will follow the Yum! Brand Inc. corporate philosophy:

‘Our corporate values – what we call our How We Win Together Principles – are built around a "People

Capability First" philosophy and lay the groundwork for the way we team together every day’.3

2 How to Better Manage Your Cash Flow. Entrepreneur.com. http://www.entrepreneur.com/money/moneymanagement/managingcashflow/article66008.html 3 http://www.yum.com/company/default.asp


http://www.yum.com/company/default.asp

http://www.entrepreneur.com/money/moneymanagement/managingcashflow/article66008.html


Saskatoon Taco Bell and its employees will strive towards excellence in implementing the corporate

philosophy when dealing with customers, suppliers, employees, the Saskatoon community, and our

investors. We hope to establish our firm as a responsible and respected member of the community as a

whole.

Customers:

We are committed to:

1. Providing a fun and exciting atmosphere for the customer to enjoy quick, convenient, and delicious

food.

2. Providing excellent customer service, resetting the bar for other quick service restaurant

establishments by making customers our first priority.

Suppliers:


1. Developing positive, mutually beneficial relationships with all of our supplying companies to allow us

both to succeed.

2. Partnering and marketing with local and related businesses in order to provide the maximum

exposure in the market for both businesses.

Staff:


1. Providing flexible employment for young people while accommodating education through detailed

scheduling and being responsive to staff requests.

2. Allowing growth within the organization through practical experience and education when applicable

from Yum! University. Suggestions from staff will be considered in company decision making, as they

have the most contact with the customer.

Community:


1. Supporting the community through sponsorships, support for local groups and teams.

Shareholders and Other Financers:




1. Becoming responsible borrowers, using discretion and responsible decision making to maximize

shareholder returns.

2. Devoting ourselves to providing a return on shareholders investment within six years.

3. Keeping lenders involved and informed about the status of the business through quarterly

shareholders meetings and planning sessions.

3.0 Industry Overview

Taco Bell is one of five restaurant franchises under Yum! Brands, which is the largest restaurant

company in the world. The other four franchises are big names such as KFC, Pizza Hut, Long John Silver’s

and A&W. Taco Bell is the second most profitable Quick Service Restaurant QSR brand in the U.S., with

a 54% share of the Mexican QSR category.

Taco Bell Corporation is based out of Irvine, California, and is the leading Mexican-style QSR chain

serving tacos, burritos, signature quesadillas, Border Bowls, nachos and other specialty items. Taco Bell

serves more than 35 million consumers each week in approximately 5,600 restaurants in the U.S. Since

its founding by Glen Bell in 1962, the company's countless innovations have changed the very nature of

the QSR industry. "Think Outside the Bun®" is more than a company tagline; it's a way of life at Taco Bell.

4.0 Operations Plan

Saskatoon Taco Bell will operate under Yum! Restaurants International (YRI) Taco Bell franchise to

provide Saskatoon with a low cost quick service Mexican dining experience. Restaurants will be

strategically situated in high traffic and high population areas in order to maximize customer exposure

and convenience.

Inputs will be procured directly through YRIs’ Unified Purchasing Group of Canada (UPGC), prepared

fresh on site, and served to customers in either cafeteria style seating or via drive thru.

Through unparalleled standards of excellence and an ongoing commitment to customer satisfaction

Saskatoon Taco Bell will become a leader in the cities quick-serve food industry.

4.1 Organizational Structure

Saskatoon Taco Bell will be a privately held corporation with the three shareholders serving on the

board of directors. The board will serve as guidance to the business to direct it in achieving its mission

and vision.



Chantel Laventure, a manager with quick serve restaurant management experience will run the daily

operations of the business and manage the first restaurant. An assistant manager will be hired to

oversee operations when she is not present. The other staff will be part time cooks, and part time till

workers. A night cleaner will also be hired to do an overall clean once the store is closed. See Appendix A

for an Organizational Structure.

As more restaurants are added Chantel will move to a CEO position, and will shift to managing all of the

business locations. Individual restaurant managers for each restaurant will be added. As well, as more

restaurants are added, separate human resource and financial divisions will be created to efficiently

support the business.

4.2 Site Plan and Five Year Development Plan

Freestanding Taco Bell locations are to be 2600 ft2 facilities on a 25000 to 30000 ft2 lots in high traffic,

high profile corner locations. Each restaurant needs to have cafeteria style seating along with a drive

thru for customer convenience and quick service.

The Saskatoon Taco Bell will be located in the Stonebridge Market Center, adjacent to the SMART

Centres and Home Depot on Stonebridge Boulevard. This land is located in Saskatoon’s newest retail

area. There is high visibility to Circle Drive from north east corner of property. The Taco Bell will be

placed on Lot 4, the corner lot, to allow for easy drive thru access.4 We believe this is the optimal

location for Saskatoon’s first Taco Bell with a planned opening in May of 2011.

Saskatoon Taco Bell will engage in ongoing market research with plans of opening at least one more

freestanding restaurant and one food court style restaurant, possibly in the University or a Mall, by

2015. Further expansion may be considered based on reaction to initial stores.4 http://www.icrsaskatoon.com/SLInvestments.html


http://www.icrsaskatoon.com/SLInvestments.html


4.3 Building and Floor Plans

Saskatoon Taco Bell will conform its locations to the franchises current store configurations to maintain

brand unity and customer familiarity. We hope to be able to work with the Yum! Restaurants

International (YRI) in the future to help direct store design and to improve the overall customer

experience.

4.4 Work Plan

Inputs procured directly through the Unified Purchasing Group of Canada (UPGC) will be prepared to

order on site and served to customers in either cafeteria style seating or via drive thru.

4.5 Quality Control

Consistency is extremely important in a franchised restaurant and Saskatoon Taco Bell will strive to

meet or exceed all standards set by YRI. As a quick serve restaurant customers expect consistent

products at consistent prices, and ours are high quality quick serve meals at unbeatable prices. The

Saskatoon Taco Bell restaurant will always be clean, well maintained, and consistent with franchise

decor. Our kitchens will be visible to customer behind the counter; consistent with franchise store

design, so that customers can see the great care and pride we take in delivering high quality quick-serve

meals.

4.6 Average Business Day, Week, Month, Year

Saskatoon Taco Bell locations will open at 11am daily to take advantage of our lunch and supper menu

items. Stores will be cleaned daily prior to opening and a manager will be on site one hour before

opening to open the tills and inspect the store. At all times there will be either a store manager or

assistant manager on site with appropriate cooks and till staff to be determined based on location

demand. The Saskatoon Taco Bell will have a drive thru and will remain open until 3am for maximum

customer convenience. Possible future Saskatoon Taco Bell food court locations will conform to the

hours of their location. Ongoing market research will allow us to further tailor location hours to

maximize profitability and customer satisfaction.

Daily operations reports will be prepared and reviewed by store managers with weekly reports going to

the CEO and monthly reports to the board. The CEO and board will be made aware immediately of any

irregularities to the situation can be analyzed and dealt with appropriately.



4.7 Supply Analysis

Inputs will be delivered as per UPGC scheduling and pricing. As per franchise regulations Saskatoon Taco

Bell will not procure inputs from other sources. A unified purchasing group will allow for consistency in

products and competitive pricing.

4.8 Service Providers

General maintenance and repair work around the store will be contracted out to a full service provider

for convenience, quick service, and predictable pricing. Prior to the initial stores opening in May 2011

service providers will be researched and selected for maintenance and repair, tax preparation, and legal

counsel. As Saskatoon Taco Bell grows it may become more cost efficient to provide some or all of these

services internally.

4.9 Capacity Limits

A critical element in the success of any restaurant is to make the most efficient use of the operation's

capacity. The Saskatoon Taco Bell will have approximately 60 seats, as 61% of the patrons use the drive-

thru so only 39% of the patrons need to park and go inside. Of the expected patrons that will come into

current Taco Bell locations, approximately 21% eat onsite and 18% take their food on a carryout basis. 5

The capacity limit of a freestanding Taco Bell location is not expected to be a factor as capacity is

primarily a function of staff and input materials, both of which can be easily manipulated to match

demand. It is important to note that Saskatoon Taco Bell will never let quality suffer as a result of poor

forecasting or lack of staff.

5 http://sunnyvale.ca.gov/NR/rdonlyres/B013076A-5DA7-4506-A840-DFE53621786C/0/20070448Kifer1.pdf


http://sunnyvale.ca.gov/NR/rdonlyres/B013076A-5DA7-4506-A840-DFE53621786C/0/20070448Kifer1.pdf


4.10 Capital Budget

The capital budget requirements for the Saskatoon Taco Bell are outlined in Table 1.

Table 1

Name of Fee Low HighApplication & Background Check Fee $300 $500Training Varies VariesInitial Franchise Fee $45,000 $45,000Licences, Permits and Security Deposits $85,000 $150,000Real Property $300,000 $1,200,000Building/ Site Construction $505,000 $615,000Equipment/ Signage/ Decor/ POS $337,000 $380,000Initial Inventory $7,000 $10,000Promotional advertising $5,000 $5,000Additional Funds (3months) $40,000 $60,000TOTAL $1,324,300 $2,465,500

Financial projections were made using the high end estimates, to ensure proper resources are available

in the opening year.

4.11 Environmental Considerations

Saskatoon Taco Bell anticipates minimal environmental impact through its operations.

4.12 Cost of Sales

Variable costs include costs of goods sold (COGS) and direct labour. COGS are set by the UPGC and

Saskatoon Taco Bell has little or no control over this input cost. Direct labour is anticipated to be higher

for Saskatoon Taco Bell than other franchise operators due primarily to the low unemployment rate in

the area and demand for high quality employees. Despite this higher direct labour cost, Saskatoon Taco

Bell anticipates above average performance when compared to other franchises due to Saskatchewan’s

strong economy, our exclusive Taco Bell location in the province, and our unique placement in the quick

serve food industry. The gross profit margin is expected to meet or exceed the industry target of 60%

and easily cover operating expenses.



4.13 Operating Expenses

4.13.1 Ongoing Expenses

Property Taxes will be approximately $20,000 a year, based on the average small business tax rates for

Saskatoon. Utilities will be approximately $5,000 per year, which includes power, heat, and water.

Power will be supplied by Sask Power, energy by Sask Energy, and water by the City of Saskatoon.

Other fixed costs including insurance and repairs and maintenance will be approximately $20,000 per

year.

4.13.2 Franchise Expenses

The expenses associated with opening the Taco Bell franchise are outlined in Table 2. The major costs

associated with opening a Taco Bell franchise are the period franchise fee of 5.5% of gross sales, and the

period marketing fee of 4.5% of gross sales. Although a total of 10% of total gross sales will go to the

franchisor, the benefits associated with the strong and recognizable Taco Bell brand, and the high end

marketing that will come from YRI will outweigh these costs.

Table 2

Name of fee Amount

Grand Opening Expense $5,000 to be spent by the franchisee, but reimbursable by Taco Bell, for advertising and promoting the opening of the Unit

Period Franchise Fee 5.5% of the Unit's Gross Sales

Period Marketing Fee 4.5% of the Unit's Gross Sales, with 1.5% going to the local association and 3% going to the Universal Fund

Late charges The lesser of 18% per annum or the highest rate permitted by California law, plus the then customary administrative charge.

Training materials As established by Taco BellCost of audit of the franchisee’s books

Any and all costs incurred in connection with the inspection or audit including reasonable accounting and legal fees

Transfer Fee A transfer of all or a portion of the franchisees interest in any Unit is subject to a transfer fee. The transfer fee is currently $250/Unit plus any additional costs incurred by Taco Bell.

Reimbursement of insurance expense Actual cost of insurance

Extension Fee 1/20th of the then current initial fee for each year extendedDe-identification costs Actual cost of de-identifying unitFranchise for Existing Unit As mutually agreedAttorneys fees and liquidated damages

Prevailing party in any litigation is entitled to reasonable attorneys' fees and costs paid by the other party. If Franchise Agreement is terminated for certain specified reasons, the



franchisee must pay liquidated damages equal to the greater of 11 % of Unit's gross sales for last 12 months of operation or $100,000

4.14 Working Capital Management

4.14.1 Cash Management

Taco Bell is non seasonal in business and requires a steady cash balance to conduct business. Saskatoon

Taco Bell intends to secure a line of credit to cover daily cash needs until the optimal cash balance can

be determined and maintained. After year one of operations, we project to have a cash balance of

$83,059.

4.14.2 Inventories

Due to the limited shelf life of food inventories and to ensure the most consistent product is delivered to

the customer, inventories will be limited at Taco Bell. Inputs will be delivered as per UPGC scheduling

and the experienced recommendation of YRI. The inventory average is expected to be 5 days.

4.14.3 Account Receivable

The nature of the quick serve food business does not require Saskatoon Taco Bell to maintain accounts

receivable as payment is collected upon delivery, very shortly after an order is received. AR average 0

days.

4.14.4 Accounts Payable

Due to the limited shelf life of food inventories Accounts Payable to UPGC are expected to be of limited

length. AP average 6 days.

4.14.5 Cash Conversion Cycle

The CCC is determined to be -2 days. This is typical of a restaurant with quick inventory turnaround and

immediate payment from customers and should be monitored to detect any irregularities in the

operation of the business.

4.15 Summary

Saskatoon Taco Bell will work to become a leader in Saskatoon’s quick serve food industry with a

mission of customer satisfaction and a vision for expansion.



5.0 Human Resource Plan

Yum! Brand Inc., along with its franchises, strive to be one of the best managed companies world-wide,

by providing training and university courses that will assist managers and leaders of YRI Franchisees in

becoming successful. Our business will take full advantage of these offerings by completing the required

Management Team Training, Quick Service Restaurant Training (QSR), and University Courses necessary

for future success. In regards to University courses, we will continually monitor employees’ progress to

decide proper choice of education plans.

5.1 Hours of Operations

The Saskatoon Taco Bell will be open 365 days a year, from 11am to 3am. On Sundays and holidays, we

may choose to close early, or close altogether. However, financial projections have been based on being

open 365 days a year.

5.2 Scheduling

Scheduling will be done on a weekly basis, depending on forecasts for the week ahead. The assistant

manager or manger (whoever may be on duty) will be responsible for running the room at all times,

ensuring service is acceptable and problems are addressed, as well as performing routine tasks

associated with staff and clientele.

5.3 Training

YRI requires that each franchisee complete Management Team Training prior to opening a franchise.

The manager and assistant manager will complete this course as soon as possible. For this business, Yum

franchise require between six to eight weeks training. Our manager has 2 years in previous QSR

experience, and 8 years total in fine dining restaurant experience, so will require minimal training. Our

assistant manager will have to complete a 12 week QSR training course. This type of training will enable

our assistant manager and future managers to become educated in fast food industry management, all

conveniently covered by the franchise fee paid to YRI. Once all trainees demonstrate the skills of

"restaurant ready", they will be able to train future employees. The Yum franchise charges an initial

training fee which we are responsible for, and then we will take on the responsibility of training our own

employees.



5.3.1 University

Yum! University is the training and development arm of Yum! Brands, Inc. The University’s primary

mission is to provide global support for the education and institutionalization of key Yum! leadership

programs for both company leaders and franchisees. Select members of our board of directors will

become familiar with this program. Yum! University will offer our leaders courses in Human Resources,

Leading Change, Operations, Coaching Leaders, Multi-brand Operations, Development, and Finance. All

franchisees have the opportunity to attend any Yum! University courses they want, upon discretion of

the management and board of directors. A fee may be a charged for some courses they wish to take

beyond their normal job duties. Once our Taco Bell reaches profitability we will weigh our options,

evaluate our managers and select courses we believe are necessary for our managers to complete.

Training and University courses will cost the Saskatoon Taco Bell approximately $5,000 initially, and in

the future, training will be covered by the yearly franchise payments to YRI.

5.4 Job descriptions

See Appendix B for job descriptions.

5.5 Recruitment and Selection

The Manger, Chantel Laventure has already been selected based in her education and experience in the

hospitality industry and quick serve restaurants. The assistant manager, cooks, and till workers will be

recruited through newspaper and word of mouth advertising, and will be interviewed by Ms. Laventure.

Ms. Laventure has already completed First Aid, Food Safe, and Serve it Right Programs to promote a safe

work environment, complying with provincial legislation. Group based training programs will be in place

before opening to address menu, service standards, and staff training and evaluation. Employees will be

evaluated at one month, six months, and then annually using a written evaluation procedure completed

by Ms. Laventure and the Assistant Manager.

5.6 Discipline and Termination

The Saskatoon Taco Bell will have a ZERO tolerance policy will be in place for discrimination or abuse of

any kind. Individuals who do not respect the policy will be terminated immediately, and record will be

kept of the incident. Any problems that arise with employee behaviour will be documented, and a

general ‘3 strike’ policy will be in place:

First Offence:

Employee will receive a verbal warning, which will be documented in the employee’s file.



Second Offence:

Employee will receive a written warning which will be signed by both parties and documented in

employee’s file.

Third Offence:

Employee will receive another written warning, as well as suspension, or will be immediately

terminated, based on management’s discretion.

If suspension is put in place, employee will be immediately terminated following any subsequent

offence.

6.0 Marketing Plan

6.1 Products and Services

Due to its continued impressive high levels of growth, Saskatoon represents an unbeatable market for a

Taco Bell franchise. As such, time is of the essence in establishing the franchise, as our financial forecasts

are very positive. Furthermore, the quick service experience is very well suited to the high levels of

employment the city enjoys. A busy work force is in constant need of quick service restaurants.

Reasonable price, quality service, good food and efficient service truly meet the everyday practical

needs of a busy population. The familiarity and stability of the Taco Bell brand will aid tremendously in

the success of this business.

6.2 Pricing

The pricing policy is set by the franchisor. Pricing is determined through extensive market research,

(which has already been completed by the franchisor) and years of real sales data generated specifically

by the Taco Bell chain as well as by the other YRI brands. This unmatched level of market intelligence

makes the Taco Bell franchise pricing formula a guarantee of success both for the franchisee and

franchisor.

6.3 Promotion

The franchisor controls virtually all aspects of advertising and promotion. The Taco Bell Brand will sell

itself – it is well developed and well known in the eyes of the consumer. The intensity of its television,

radio, print and other media advertising campaigns are dependent upon regional sales volumes. The

province of Saskatchewan does not yet have a Taco Bell restaurant. Being a first mover to develop the



very successful Taco Bell franchise will allow YRI to penetrate a new market, and expand their

international market share. A special promotional budget is allowed by the franchisor for the franchisee

to promote their restaurant locally through sponsorship of community events, amateur sports teams,

and school promotions. Saskatoon Taco Bell will pay YRI 4.5% of gross sales for marketing initiatives.

6.4 Place

Taco Bell delivers its products and services directly to its customers through its retail outlets. Taco Bell

offers a low cost quick service dining experience, either cafeteria-style or through drive thru windows.

The Taco Bell experience provides the highest quality fast food at the lowest price point in the market.

Although there are already quick service Mexican chains in Saskatoon, such as Taco Time, Taco Bell’s

lower prices, comparable food, and catchy corporate brand and advertising will attract a greater share

of this market.

Location will play a critical role in the delivery of the Taco Bell experience to customers. The location in

Stonebridge Market Centre on Stonebridge Boulevard is a high traffic location in a newly developed

neighbourhood. It is conveniently located next to major brand name big box retailers including Wal-

Mart, Home Depot and the Brick, ensuring high levels of continuous traffic. Further expansions of the

city west of the location will also guarantee high growth rates in the next five years. High population

density, continued expansion of the city and proximity to other high traffic retailers makes this the

number one location for the franchise.

6.5 Segmentation, Targeting, Positioning

According to Statistics Canada, there are 341 Limited-Services Eating Places for Incorporated Businesses

such as Taco Bell in Saskatchewan.6 Limited-Service Eating Places includes establishments primarily

engaged in providing foodservices to patrons who order or select items at a counter, food bar or

cafeteria line (or order by telephone) and pay before eating. Food and drink are picked up for

consumption on the premises or for take-out, or delivered to the customer's location. These

establishments may offer a variety of food items or they may offer specialty snacks or non-alcoholic

beverages7

6 http://www.ic.gc.ca 7 http://stds.statcan.gc.ca/naics-scian/2002/cs-rc-eng.asp?criteria=722210


http://stds.statcan.gc.ca/naics-scian/2002/cs-rc-eng.asp?criteria=722210

http://www.ic.gc.ca/


The average yearly revenues for a business under the NAICS Code 722210 in Saskatchewan are

$727,200. The gross margins on such businesses average 59.5%, with a debt ratio of 0.7, a debt-equity

ratio of 2.7, and a return on assets of 11.7%.8

According to the latest numbers by Statistics Canada (2009), the population of Saskatoon is 257,300.

Taco Bell’s primary customers are adults from 18 – 55 years. A child’s menu caters to families as a

secondary market. Taco Bell franchises must meet locations standards to attract maximum vehicular

traffic. Target customers are those seeking convenient quick service meals at reasonable prices. The

quality of the menu items and reasonable price ensure return customers. We expect loyal customers to

return weekly and regular customers bi-monthly. Ongoing national marketing campaigns regularly

attract new customers. Franchise controlled customer loyalty programs and promotional incentives

ensure an ongoing customer base.

We are highly optimistic about customer volume in Saskatoon, as it is a lucrative QSR market. It is a

booming city with above average rates of employment and growth. According to Government of

Saskatchewan economic development agency Enterprise Saskatchewan (Economic Statistics, 2010), the

unemployment rate was 4.3% in December 2009 compared to the national average at 7.8%.

Saskatchewan enjoys the lowest unemployment rate in Canada (Economic Overview, 2010). The

province also enjoys the highest level of real GDP per person in Canada. The Saskatchewan population

had the highest level of growth in both personal income (12.4%) and disposable income (13.7%) in 2008.

Investment intentions in Saskatchewan in 2008 “are at a record level of $14.66 billion – an increase of

25% over 2007. New capital investment in 2010 is expected to exceed $15 billion for the first time ever.

Several mega-projects are underway in the province, including a $1.9-billion expansion of the

Consumers’ Co-operative Refinery in Regina and ten potash mine expansions scheduled over the next

several years at an estimated $9.3 billion.” (Capital Investment Intentions, 2010).

According to US National Restaurant Association “the restaurant industry now garners about 44 cents of

every dollar spent on food, the sales are projected to climb to a 53.2 percent share of the total food

dollar by 2010” (2010). The Canadian trend is not far off the US figures. We are confident that these

positive economic indicators will translate into high volume of sales and profits at Saskatoon’s only Taco

Bell.

8 http://www.ic.gc.ca


http://www.ic.gc.ca/


6.6 Competitive Analysis

6.6.1 Competition

The major competitors for Taco Bell are other fast food type restaurants including Burger King,

McDonalds, A&W, Wendy’s, and Dairy Queen. The closest competitor would be Taco Time , as it offers

very similar products and services. See Appendix C for a SWOT Analysis.

The retail food industry, in which the Taco Bell competes, is made up of supermarkets, supercenters,

warehouse stores, convenience stores, coffee shops, snack bars, and restaurants (including the QSR

segment), and is intensely competitive with respect to food quality, price, service, convenience, location

and concept. The industry is often affected by changes in consumer tastes; national, regional or local

economic conditions; currency fluctuations; demographic trends; traffic patterns; the type, number and

location of competing food retailers and products; and disposable purchasing power. Taco Bell will

compete with international, national and regional restaurant chains (Such as Burger King, McDonalds,

and A&W) as well as locally-owned restaurants, not only for customers, but also for management and

hourly personnel, and suitable real estate sites. Taco Bell is the best-positioned brand in this macro economic environment with the #1 value rating of

any other brand in the industry. Taco Bell is a leader in the industry through the use of a multi-layer

marketing approach throughout the year to help drive trial and build awareness. In 2008, the company

launched the hugely successful Frutista Freeze at Taco Bell and enhanced the brand’s Why Pay More

value menu. Consider this: Taco Bell’s 89-cent Cheesy Double Beef burrito has 38% more food and 30%

more beef than McDonald’s value-priced Double Cheeseburger. Now that’s a great value! Last year, too,

Taco Bell introduced its Volcano Taco, which opened a major area of innovation around our core

product of tacos; and we are aggressively going after the dinner day part with unique packaging and

bundled meals. The pipeline at Taco Bell is full and only getting fuller.

6.6.2 Responding to Competitors

In order to respond to the changes in our industry and competitors, the Saskatoon Taco Bell will

continue to uphold its image and maintain its reputation through focusing on customer needs and

consistent quick and convenient food service delivery. Customer satisfaction is key. By constantly

keeping in mind our philosophy, mission, and objectives we will provide the same level of service and

food quality each time, so customers come to know what to expect.



6.6.3 Sustainable Competitive Advantage

By being a first mover to bring the extremely successful Taco Bell franchise to Saskatchewan and

Saskatoon, we will jump on the opportunity to bring one of the world’s most successful QSR brands to

Canada’s fastest growing city.

6.7 Projections of Revenues and Marketing Expenses

The Saskatoon Taco Bell will target sales and profits equal to or greater than North American store

averages. 2008 annual sales at Taco Bell in the US were $1,241,000. Five year annual growth is 4%.

Therefore we expect sales of $1,342,762 in the first year of operations. See Appendix D for Marketing

Revenues and Projections.

6.8 Marketing Strategy

As of year end 2008, Taco Bell was the leader in the U.S. Mexican QSR segment, with a 54 percent

market share9 Average sales per Taco Bell store in 2008 were $1,241,000, with an average compounded

annual growth rate of 4%.

As of 2007, Taco Bell is the best performing brand of Yum! Brands having 1.8 Billion in sales for company

owned stores alone, and sales of $4.4 billion for franchisees and licensees in the United States. In 2005,

More than 35 million consumers visit a Taco Bell each week, and more than 80% of the restaurants were

owned and operated by individual franchisees. 10

Currently, there are 86 Canadian Taco Bell franchises, compared to over 4,200 in the United States. This

opportunity is one not to pass up, and our team plans to become a first mover in the Saskatchewan

market for Taco Bell. The company, (with restaurants in Canada, Guam, Aruba, Dominican Republic,

Chile, Costa Rica, Guatemala, Puerto Rico, Ecuador, Hawaii, Asia, and Europe), operates as a subsidiary

of YUM! Brands Inc., the largest restaurant company in the world.

6.8.1 Yum! Value Network

A new franchise needs a sustainable competitive advantage. We believe the Yum! Value Network

provides this for the Saskatoon Taco Bell. The Yum! Value Network provides:

Customer Attractiono Big, powerful, category leading brands o Over $600 million in annual system advertising

Competitive Advantage

9 http://www.yum.com/annualreport/docs/annualReport08.pdf 10 http://www.answers.com/topic/taco-bell


http://www.answers.com/topic/yum-abbreviation

http://www.answers.com/topic/taco-bell

http://www.yum.com/annualreport/docs/annualReport08.pdf


o Strong brand sales, documented in the franchise disclosure documento Steady stream of new product news reaches more customers

Franchisor / Franchisee Partnershipo 80% of stores are owned by franchisees – committed to the franchisee/franchisor pacto Franchisee input and feedback is actively pursued

Multi-unit growtho Actively encourage multi-unit developmento A 5 brand portfolio offers you many options

Economic Stabilityo Brands have withstood the test of time – through ups and downs of many business

cycleso Larges food purchasing cooperative in the industry to address all supply chain needs

Give Back to the Communityo Many innovative programs: Taco Bell Teen Supreme supports activities for at risk teenso Yum! Brands World Relief Week Hunger Awareness raised over $16 million in ‘07

Development Expertiseo Standard plans, website development, region architect as a partnero Franchise development director to assist with technical coachingo Yum! Development services

Access to Financingo Over 50 banks and lending institutions lend into the Yum! Systemo Yum! Provides a list of interested vendors, and you select the one that works for you

Solid Business Supporto Proven operating systems and ongoing trainingo Franchise business coaches and trainerso Peer network of over 1200 franchiseso Franchise associations with best practice sharingo Local marketing cooperatives

Quality Training and On-boardingo Perfect production/procedure training as you enter the systemo On Boarding coaches to teach you successful routines, and to help you run great

restaurants Reliable Supply Chain

o Unified Purchasing Co-op is a five billion dollar food and equipment purchasing co-op the largest in the industry

o No surcharges or kickbacks are realized by the franchisor Return on Investment

o The ultimate return will depend on the investment and operating decisions we make on a daily basis

o Long term tenure history indicates a tradition of investor satisfaction Brand Recognition

o Big Brands with over 18,000 U.S. units, all with significant street visibilityo Brand consumer awareness nearly 100% in the U.S.



6.9 Marketing Budget

The complete Marketing Plan Budget is attached in Appendix E, following the financial statement

projections. Significant features of the budget include:

1. There are no marketing staff required due to franchise regulations

2. A market researcher will be hired for a one month contract April 2010 to conduct in-depth

market study.

3. Social media sites developed to promote local franchise beginning July 2010 – social media sites

such as Twitter and Face book are free, and all other website marketing expenses are covered by

YUM! Brands Inc.

4. Monthly public relations budget for promotion of restaurant to investors, build local credibility,

etc

5. Grand opening of restaurant May 2011 with $5,000 promotional budget

6. Local channel promotions and incentives of $300 every second month budgeted at opening of

franchise. This will be for local coupon specials and customer loyalty programs.

7. Total combine general expenses for marketing include postage ($100 every second month to

coincide with the promotions) and telephone ($40 per month).

8. Travel budget of $6,000 per year for marketing related travel (conferences). It is expected that

there may be 3 trips per year.

6.10 Summary of Marketing Plan

Due to its continued impressive high levels of growth, Saskatoon represents an unbeatable market for a

Taco Bell franchise. The familiarity and stability of the Taco Bell brand will aid tremendously in the

success of this business. The Taco Bell Brand will sell itself – it is well developed and well known in the

eyes of the consumer. The unmatched level of market intelligence provided by YRI makes the Taco Bell

franchise pricing formula a guarantee of success both for the franchisee and franchisor. Although there

are already quick service Mexican chains in Saskatoon, such as Taco Time, Taco Bell’s lower prices,

comparable food, and catchy corporate brand and advertising will attract a greater share of this market.



7.0 Financial Plan

7.1 Projected Financial Statements

Five year estimates for the Saskatoon Taco Bell can be found in Appendix E. Five year projections for the

following have been made:

Five Year Projected Income Statements and Retained Earnings Five Year Projected Balance Sheets Five Year Projected Cash Flows Five Year Projected Revenues Five Year Projected Cost of Goods Sold Five Year Projected Operating Expenses Five Year Projected Working Capital Requirements Five Year Projected Financing Budget Five Year Debt Amortization Schedule Five Year Capital Cost Allowance Schedules Five Year Income Tax Schedule Investment Analysis – Net Present Value and Internal Rate of Return

See Appendix F for Best and Worst Case Scenario Analysis.

7.2 Cash Flow Analysis

With a first year injection of $1,350,000 in equity and $1,050,000 in debt we are able to maintain

positive cash flows throughout the first five years of operations. We anticipate this trend to continue

into the foreseeable future.

7.3 Risk Analysis

7.3.1 Food safety and food-borne illness

Food safety and food borne illness concerns may have an adverse effect on our business. Food safety is

a top priority, and YUM! Brands Inc. dedicate substantial resources to ensure that all customers enjoy

safe, quality food products. However, food-borne illnesses, such as E. coli, hepatitis A, trichinosis or

salmonella, and food safety issues have occurred in the past. Any report or publicity linking the

Saskatoon Taco Bell to instances of food-borne illness or other food safety issues, including food

tampering, could adversely affect the Taco Bell brand and reputation, as well as our revenues and

profits. If any customer becomes ill from food-borne illnesses, the business may be forced to

temporarily close its doors. In addition, instances of food-borne illness or food tampering occurring

solely at restaurants of competitors could adversely affect our sales as a result of negative publicity

about the foodservice industry generally. Food-borne illness or food tampering could also be caused by



food suppliers or distributors and, as a result, could be out of our control. The occurrence of food-borne

illnesses or food safety issues could also adversely affect the price and availability of affected

ingredients, which could result in disruptions in our supply chain and/or lower margins for us and our

franchisees. Furthermore, like other companies in the restaurant industry, some of our products may

contain genetically engineered food products, and the Taco Bell location will use the same suppliers as

the U.S. U. S. suppliers are currently not required to label their products as genetically engineered, and

increased regulation of and opposition to genetically engineered food products may in the future force

the use of alternative sources at increased costs and lower margins for us.

If the Saskatoon Taco Bell were to have to close its doors for three months, the affect on sales and net

income would be drastic. (See Appendix G for Sensitivity Analysis). Although important to point out this

is a low risk scenario that we have little or no control over.

7.3.2 Cost Changes

Changes in commodity and other operating costs could adversely affect our results of operations. Any

increase in certain commodity prices, such as food, energy and supply costs, could adversely affect our

operating results. Because we provide moderately priced food, our ability to pass along commodity price

increases to our customers may be limited. Significant increases in gasoline prices could also result in a

decrease of customer traffic at our restaurants or the imposition of fuel surcharges by our distributors,

each of which could adversely affect our business.

Our largest costs are the cost of goods sold and wages making Saskatoon Taco Bell most susceptible to

changes in these expenses, reflected in the sensitivity analysis.(Appendix G) COGS is set by YRI’s UPGC

and is out of our control as long as we operate a Taco Bell Restaurant, to mitigate cost risk we must

continually monitor our expenses and act quickly to remedy any irregularities.

Our operating expenses also include employee benefits and insurance costs (including workers’

compensation, general liability, and health) which may increase over time. This increase should not

substantially affect Taco Bell operations.

7.3.3 Shortages and Availability

Shortages or interruptions in the availability and delivery of food and other supplies may increase costs

or reduce revenues. The Taco Bell will be dependent upon third parties to make frequent deliveries of

food products and supplies that meet their specifications at competitive prices. Shortages or

interruptions in the supply of food items and other supplies to our restaurants could adversely affect the

availability, quality and cost of items bought, and the operations of the restaurant. Such shortages or



disruptions could be caused by inclement weather, natural disasters such as floods, drought and

hurricanes, increased demand, problems in production or distribution, the inability of our vendors to

obtain credit, food safety warnings, or other conditions beyond our control. A shortage or interruption

in the availability of certain food products or supplies could increase our costs and limit the availability

of products critical to our restaurant operations. In addition, if a principal distributor for us fails to meet

its service requirements for any reason, it could lead to a disruption of service or supply until a new

distributor is engaged, which could have an adverse effect on the business.

7.3.4 Financing

As the Saskatoon Taco Bell will be a franchise, it will depend upon financing from banks and other

financial institutions in order to construct and open new restaurants. Disruptions in credit markets may

make financing more difficult or expensive to obtain. If it becomes more difficult or expensive for our

franchisees to obtain financing to develop new restaurants, our planned growth could slow and our

future revenue and cash flows could be adversely impacted.

If proper financing is not secured for the Saskatoon Taco Bell, the opening would not be able to happen.

The Saskatoon Taco Bell relies on the bank loan of $1,050,000 in order to become operational. This

should be obtainable as the Taco Bell franchise has a proven track record of competitive returns and

minimal risk while 56% of the initial start up costs is being covered through equity financing.

7.3.5 Economic Conditions

Our business may be adversely impacted by economic conditions. The results of operations are

dependent upon discretionary spending by consumers, which may be affected by general economic

conditions and the current global financial crisis. Worldwide economic conditions and consumer

spending have recently deteriorated significantly and may remain depressed for some time. Some of the

factors that are having an impact on discretionary consumer spending include increased unemployment,

reductions in disposable income as a result of recent severe market declines and declines in residential

real estate values, credit availability and consumer confidence. These and other macroeconomic factors

could have an adverse effect on our sales and development plans, which could harm our financial

condition and operating results. In addition, the current financial crisis has resulted in diminished

liquidity and credit availability, and the recent or future turmoil in the financial markets could make it

more difficult for us to refinance our existing indebtedness (if necessary) or incur additional

indebtedness and could impact the ability of banks to honour draws on our existing credit facilities. The

current credit crisis is also having a significant negative impact on businesses around the world, and the



impact of this crisis on our suppliers cannot be predicted. The inability of suppliers to access financing,

or the insolvency of suppliers, could lead to disruptions in our supply chain which could adversely impact

our sales and financial condition.

7.3.6 Changes in governmental regulations

Changes in government regulations may adversely affect our business operations. We and our

franchisees are subject to various federal, state and local regulations. Each of our restaurants is subject

to state and local licensing and regulation by health, sanitation, food, workplace safety, fire and other

agencies. Requirements of local authorities with respect to zoning, land use, licensing, permitting and

environmental standards could delay or prevent development of new restaurants in particular locations.

In addition, we face risks arising from compliance with and enforcement of increasingly complex federal

and provincial immigration laws and regulations.Fo0-K

7.3.7 Competitive Industry

The retail food industry in which we operate is highly competitive. The retail food industry in which we

operate is highly competitive with respect to price and quality of food products, new product

development, price, advertising levels and promotional initiatives, customer service, reputation,

restaurant location, and attractiveness and maintenance of properties. If consumer preferences change,

or our restaurants are unable to compete successfully with other retail food outlets in new and existing

markets, our business could be adversely affected. In the retail food industry, labour is a primary

operating cost component. Competition for qualified employees could also require us to pay higher

wages to attract a sufficient number of employees, which could adversely impact our margins.

7.3.8 Franchisee/Franchisor Disputes

In the course of the franchise relationship, occasional disputes arise between the Company and its

Concepts’ franchisees relating to a broad range of subjects, including, without limitation, quality, service,

and cleanliness issues, contentions regarding grants, transfers or terminations of franchises, territorial

disputes and delinquent payments.

7.4 Financing Plans

The Saskatoon Taco bell will be financed with 44% debt and 56% equity. A total of $2,400,000 will be

needed in financing to open the business; $1,050,000 in debt and $1,350,000 in equity. The Bank of

Montreal will be providing the Saskatoon Taco Bell with a capital loan. The capital loan offered by the



BMO will allow the Saskatoon Taco Bell to access cash to buy and install equipment, furniture, fixtures

and leaseholds for the franchise, subject to meeting Bank of Montreal’s usual credit granting criteria.

The BMO capital loan will protect the business cash flow from interest rate fluctuations by providing a

fixed-interest-rate option (variable rate option available). The Saskatoon Taco Bell will be able to

manage the amount of each payment with varying repayment terms of up to 10 years. As well, the BMO

provides a greater security and peace of mind insuring the loan with the Optional Commercial Loan

Insurance.

The contact information is as follows:

BMO-Bank of MontrealContact: John Smith101 2nd Avenue North Saskatoon, SK S7K 2A9Phone: (306) 934-5600Fax: (306) 934-5628Branch Transit #: 34

The equity of $1,350,000 will be financed by Dave Johnson (37.5%), Michael Milo (37.5%), and Aaron Forer (25%). Their personal Net -Worth Statements can be found in Appendix H.

7.5 Feasibility of the Plan

The investors of the project have indicated that a 10% return is required to go ahead with this project

based on its relatively low risk and current low growth market conditions. The base case, which is

conservative in many aspects including sale price after five years, exceeds this and we are confident that

through proper management the gross profit margin and wages, which are the two most sensitive input

costs (See Appendix I) can be kept reasonable ensuring profitability and an acceptable return on

investment.

Break Even Analysis: The Saskatoon Taco Bell will break even at 645 meals per day in year one. See

Appendix J for projected Break Even quantities for the first five years of operation.

8.0 Summary of the Business Plan

Saskatoon Taco Bell represents an exciting and much needed addition to the QSR mix in the city of

Saskatoon. Saskatoon has one of the top performing economies throughout North America. Yet the city

does not have one of the world’s most popular and profitable franchise - Taco Bell! This presents an

opportunity that will surely be scooped if not acted upon immediately!


http://www.bmo.com/home/commercial/banking/loans-mortgages/commercial-loan-insurance

http://www.bmo.com/home/commercial/banking/loans-mortgages/commercial-loan-insurance


Saskatoon Taco Bell believes in the long-term viability of the franchise in Saskatoon. Our short-term plan

is for opening of one franchise. Our long-term plan sees the addition of a 2nd franchise and one mall

kiosk location. These opening will be determined based upon the success of the first location.

This business plan outlines some of the most impressive key performance indicators for the local

economy. As such we are convinced that a Taco Bell franchise will not only do well in the city but will

rather thrive and grow.

The Saskatoon Taco Bell team represents one of the brightest upcoming entrepreneur groups in the city.

All four members of the team are soon to be MBA graduates from the Edwards School of Business,

University of Saskatchewan. They have combined experience in the restaurant and hospitality industry

as well as years of experience in finance, operations, marketing and human resources in a variety of

other industries. The practical and academic knowledge of this team will ensure that the franchise is

operating at peak efficiency, building the foundation for its long-term success. The business plan

outlines all of the factors needed for the success of the business including an operations plan, a human

resources plan, a marketing plan and finally a finance plan that demonstrates the sound economic

feasibility of the venture. The business offers an 11.15% internal rate of return on a conservative base

case scenario. The IRR for a best case scenario is 27.36% (1000 meals per day at $6.41 per meal) and the

worst case scenario is -5.84% (400 meals per day at $4.41 per meal). We certainly believe these are

decent rates of return under current economic conditions.



9.0 References

Enterprise Saskatchewan. (2010). Economic Statistics. Retrieved from

http://www.enterprisesaskatchewan.ca/Default.aspx?DN=5e77755d-a746-44a7-bc37-402c3e347cd4

Enterprise Saskatchewan. (2010). Economic Overview. Retrieved from

http://www.enterprisesaskatchewan.ca/Default.aspx?DN=438f8842-6bc2-46f7-8d28-

54ae41b45183

Enterprise Saskatchewan. (2010). Capital Investment Intentions Retrieved from

http://www.enterprisesaskatchewan.ca/investmentintentions

National Restaurant Association. (2010). 2010 Restaurant Industry Forecast


http://www.enterprisesaskatchewan.ca/investmentintentions

http://www.enterprisesaskatchewan.ca/Default.aspx?DN=438f8842-6bc2-46f7-8d28-54ae41b45183

http://www.enterprisesaskatchewan.ca/Default.aspx?DN=438f8842-6bc2-46f7-8d28-54ae41b45183

http://www.enterprisesaskatchewan.ca/Default.aspx?DN=5e77755d-a746-44a7-bc37-402c3e347cd4

Manager

Assistant Manager

Part Time CooksPart Time Till Staff


10.0 Appendices

Appendix A: Organizational Chart



Appendix B: Job Descriptions

Manager

Skills Required Management Team Training 2 Years QSR Future University Courses Daily Activities Open the doors and set up tills Manage Operations front Manage Cash from previous day Order daily supplies Manage Customer disputes

Monthly Approve Work Schedule Order monthly supplies Work with suppliers Monthly Evaluations of staff Develop Marketing Strategies Evaluate HRM Strategy Hire New Employees Communicate Franchise Initiatives Yearly Put together financial statements Tax reporting Analyze customer trends, needs, wants Create new strategies from analysis Yearly/ 3 month Evaluations of staff Implement Marketing Strategies Assistant Manager

Daily Activities Open Doors set up tills Manage Customer Disputes Manage Employee Concerns Supervise and Help employees Daily Training Inspect Cleaning and Keep To Standards Monthly Implement Work Schedule Report Operational and Supply Needs Report Customer Concerns Report Employee Valuations Manage Customer Concern Box Monthly Training Yearly



Tax reporting Analyze customer trends, needs, wants Create new strategies from analysis Yearly Evaluations of staff Cooks Daily Activities Prepare Food Clean Food Areas Stock Supplies Trash Removal Monthly Provide Times for scheduling Report Efficiencies/Inefficiencies Till worker Daily Activities Service Customers and take orders Drive Threw Operations Clean Facility- windows, tables, till area Stock Supplies Trash Removal Monthly Provide Times for scheduling Report Efficiencies/Inefficiencies Till StaffDaily Activities Service Customers and take orders Drive through operations Clean Facility (windows, tables, till area) Stock Supplies Trash RemovalMonthly Provide times for scheduling Attend any training required Report efficiencies/inefficiencies (stock outages)



Appendix C: S.W.O.T. Analysis

Strengths Weaknesses

Management skills and education

4 MBA’s as owners/management

Combine 15 years of experience in the

restaurant and hospitality industry

Owner commitment and personal cash

investment in project

Excellent credit record

Popularity of brand

Proven success formula of the franchise

Lack of full financing

High entrance cost

High franchise fees

High labour costs due to low unemployment rates

Difficulty in retaining workers because of strong

economy

Opportunities Threats

No franchise exists in this market

Booming economy, key economic

indicators – best in the country

Low Unemployment

High demand for quick service food

Major housing developments under

construction in Saskatoon

Regional growth positive - best in the

country

Franchisor seeking international expansion

TB top performer in YUM brand portfolio

TB highest sales of all YUM brands

High labour costs due to low unemployment rates

Labour shortage and difficulty in retaining workers

because of strong economy

Last TB franchise in city failed

Local economy based largely on commodities,

drop in commodity prices may push region into

recession

Over saturation of quick service restaurants



Appendix D: Marketing Revenue ProjectionsSchedule 1: Average check size Schedule 2: Meals served

Meal Type PriceWeighted Average Average price Time of Day Number of Tills Customer count Period Total

1pm-3pm 3 20 240Lunch 240Full meal 6.99$ 45% 3.15Individual entrees 3.99$ 20% 0.80 DinnerSides 2.99$ 20% 0.60 3pm-5pm 2 13 52Child's menu 3.99$ 20% 0.80 5pm-7pm 3 30 180Beverages 1.50$ 10% 0.15 7pm-9pm 2 22 88Desserts 0.99$ 5% 0.05 320Average check size 5.54$ Late Night

9pm-11pm 2 12 48Dinner 11pm-1am 1 12 24Full meal 6.99$ 45% 3.15 1am-3am 1 20 48Individual entrees 3.99$ 20% 0.80 120Sides 2.99$ 20% 0.60Child's menu 3.99$ 20% 0.80 Total Meals Per Day 680Beverages 1.50$ 10% 0.15Desserts 0.99$ 5% 0.05 Schedule 3: RevenuesAverage check size 5.54$

Number of days 365

Late NightAverage # of meals / day 680

Full meal 6.99$ 45% 3.15 Avg. Price Per Meal 5.41$ Individual entrees 3.99$ 30% 1.20 Total Yearly Revenues 1,342,762.00$ Sides 2.99$ 20% 0.60Child's menu 3.99$ 0% 0.00Beverages 1.50$ 10% 0.15Desserts 0.99$ 5% 0.05Average check size 5.14$

Total Average Check Size 5.41$



Appendix E: 5 Year Projected Financial Statements

The spreadsheets that follow outline the projected 5 year estimates for the Saskatoon Taco Bell.



Appendix F: Best and Worst Case Scenario Analysis



Appendix G: Sensitivity Analysis



-$600,000

-$400,000

-$200,000

$0

$200,000

$400,000

$600,000

80% 90% 100% 110% 120%

NPV

(12%

Disc

ount

Rat

e)

% Variable Change

Sensitivity Analysis

Meal Price

Meals Sold

GPM

Interest Rate

% Debt Financing

Wages

Appendix H: Net-Worth Statements



Cash 75,000$

Mortgage Payable-Residence 500,000$

InvestmentsMortgage Payable - Other -

Asset Investments 300,000 Total Liabilities 500,000 Retirement Assets 450,000 Total InvestmentsReal Estate Net Worth 3,710,000 Personal Residence 3,100,000 Other Assets Vehicle (s) 60,000 Life Insurance (Cash Surrender Value) 300,000

Total Assets $ 4,210,000 Total Liabilties and Net Worth $ 4,210,000

Dave JohnsonStatement of Net Worth

15-Mar-10Assets Liabilities



Cash 50,000$

Mortgage Payable-Residence 750,000$


Asset Investments 200,000 Total Liabilities 750,000 Retirement Assets 300,000 Total InvestmentsReal Estate Net Worth 2,155,000 Personal Residence 2,100,000 Other Assets Vehicle (s) 55,000 Life Insurance (Cash Surrender Value) 250,000

Total Assets $ 2,905,000 Total Liabilties and Net Worth $ 2,905,000

Michael MiloStatement of Net Worth

15-Mar-10Assets Liabilities



Cash 25,000$ Mortgage Payable-Residence 250,000$


Asset Investments 90,000 Total Liabilities 250,000 Retirement Assets 125,000 Total InvestmentsReal Estate Net Worth 555,000 Personal Residence 450,000 Other Assets Vehicle (s) 40,000

Life Insurance (Cash Surrender Value) 100,000

Total Assets $ 805,000 Total Liabilties and

Net Worth $ 805,000

Assets

Aaron ForerStatement of Net Worth

15-Mar-10Liabilities



Appendix I: Distribution of Expenses



Utilities

Property Tax

Wages

Benefits

Marketing

Period Franchise Fee

Period Marketing Fee

CCAInterest

Other Variable

COGS

Other Fixed

Expenses

Appendix J: Break Even Analysis


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