Meal Facilitation and Preparation Company

BUSINESS OVERVIEW

OBJECTIVES

COMPANY HISTORY

INDUSTRY ANALYSIS

MANAGEMENT SUMMARY

PRODUCTS & SERVICES

MARKET ANALYSIS

MARKETING & SALES

OPERATIONS

FINANCIAL ANALYSIS

Kitchen Helper, LLC

3141 Traunter St.
Effingham, IL 62401

Tracey C. McCurrach and Elizabeth Timm

Kitchen Helper, LLC was formed as a Limited Liability Corporation in the State of Illinois in May of 2005. The company is a new entrant into an emerging segment of the restaurant industry called Meal Facilitation and Preparation (MFP). Meal prep businesses represent a high growth market segment that offers a new choice to consumers. In a society where people value healthy, delicious meals yet feel constantly pressed for time, meal prep businesses offer a positive alternative.

BUSINESS OVERVIEW

The process of meal prep begins when a customer signs up to attend a session at a MFP store. The customer selects menu items to make from a list of recipes that are offered that month. Generally, 12 menu selections, each serving four to six people, can be prepared during a 2–hour session. When the customer arrives at the store, all of the preparation for the dishes has already been done. Stations are set up with the equipment, ingredients and step–by–step instructions for making each recipe. The customer moves from station to station, assembling the recipes. All recipes are put in a Ziploc bag or an aluminum pan, which the customer takes home and freezes. Thawing and cooking instructions are affixed to each dish.

The two primary business models for MFP businesses are franchise operations and independent stores. Currently, 156 MFP companies with 372 store locations are in operation. The largest players are franchises, specifically Cooking with Friends with 76 stores and Minute Meals with 68 locations. Several other companies have a handful of stores clustered in certain geographic areas. The remainder of the locations are independent businesses. In Illinois, Minute Meals currently has locations in metro Chicago, Springfield, and Bloomington. Cooking with Friends is located in Chicago and is expected to open in Arlington Heights. Spices and Stuff opened in July, 2005 in Evanston. Jane and Mitzy is open in Decatur and just announced their first franchise expansion in the same area.

The key to success for Kitchen Helper is to differentiate itself from the competition through product and service offerings, while delivering on its promise of providing delicious, nutritious meals quickly and easily. The company’s strategy is to focus on the customer experience. This premise drives every decision. Kitchen Helper is positioned as a high quality, cost–effective and fun solution for family meals. The benefits to the consumer include saving time and money, healthier meals, delicious recipes, nutritional information, simple preparation, and putting fun back into meal preparation.

The primary target market for Kitchen Helper consists of families, with the female head of household as the primary purchaser. Demographically, these families are represented by adults between the ages of 35 and 54 with children in the home. The household income of the target market is in excess of $30,000 or more. This target customer values convenience, and is more and more “time–challenged”. She is also aware of the importance of good nutrition for herself and her family but finds providing those meals increasingly difficult.

Kitchen Helper primary product/service is a solution to the customer’s dilemma of preparing high–quality, nutritious, and cost–effective meals with a minimum of time and expense. Our primary service is giving our customers the ability to come to our store and quickly assemble a variety of delicious menu selections. This service results in a physical product for the customer. In addition, the company offers meal assembly, delivery, packaged meals, private parties, and gift certificates.

Operationally, the company website is one of the key elements to success. It is designed to be very simple to understand and easy to navigate. Kitchen Helper is also purchasing a web-based software package for handling the back–end processes specific to a MFP business. The system will manage order processing, purchasing and inventory control functions. Since inventory is purchased to order, very little waste is anticipated.

Kitchen Helper is currently negotiating for space for an anchor store in the Effingham area. Estimates of local market size total 1450 consumers in the immediate area and approximately 5200 in the larger demographic area. Our growth strategy calls for opening additional stores. The following areas are targeted for expansion in the next 2 to 5 years: Chicago, Carbondale, Cicero, and Naperville.

Conservative estimates and assumptions have been used in the preparation of projected start–up and 2nd and 3rd year financials for the company. These projections indicate that the company will approach break–even near the end of the first year of operation. We anticipate investing again in the company by opening a second location early in 2007. Careful attention to actual operating results will influence the company’s ability to expand quicker or more slowly than anticipated.

Kitchen Helper is owned by Anne Relitz and Susan Stiliz. Ms. Relitz is the company’s Chief Management Officer, while Ms. Stiliz is the company’s Chief Operating Officer. Ms. Relitz has worked with numerous small businesses in the areas of strategic and marketing planning. Ms. Stiliz has a systems background and is adept at designing and implementing processes. Both women have extensive experiences in a wide range of businesses. Their skills, however, are varied and complementary. The company is currently funded by equal participation of the two partners, with $50,000 on deposit with Stone Bank. We are seeking a loan of $75,000 to finance the purchase of equipment and supplies and to provide working capital. At present, these are the only sources of funds being considered.

OBJECTIVES

Mission

Kitchen Helper, LLC is in the business of providing high quality, cost–effective meal solutions for families and organizations. We provide a combined product and service that enables time–challenged families to create their own nutritious and delicious meals.

Our philosophy of business:

• Kitchen Helper operates with the highest level of integrity and business ethics.
• We establish relationships with our customers, suppliers, employees and other professionals without regard to an individual’s race, religion, sex or personal choices.
• Our customers are the reason that we are in business.
• Kitchen Helper conducts all of its business activities in anticipation of mutual benefit.
• Our stores offer a safe, comfortable and supportive atmosphere where customers and employees truly benefit from and enjoy the time they spend with us.
• Kitchen Helper is a responsible, environmentally sensitive corporate citizen and an active member of its local communities.

Goals for the first year

• Launch the Kitchen Helper concept in the Effingham area in 2005.
• Educate the local marketplace about the concept of meal assembly.
• Provide high quality, effective meal solutions that provide a genuine alternative to today’s food choices and a positive experience for our customers.
• Achieve breakeven, profitability and other financial milestones as outlined in the financial projections of this business plan.

Growth Strategy

• Expand the Kitchen Helper concept within the state of Illinois by opening five to eight additional stores and satellite operations over the next three to five years.
• Be recognized as having a positive presence in our local business communities.
• Assume an active leadership role in the industry association.
• Establish the Kitchen Helper brand as the leader in meal assembly businesses in this region.

Measures of Success

First Year of Operations

• Secure additional funding of $75,000 via bank loan
• Complete operational training of partners
• Launch company website, including corporate identity, concept, initial calendar and recipes
• Complete store design
• Open anchor store
• Initiate word of mouth and concept understanding in local area
• Fill customer sessions as scheduled in financial projections; operate at capacity by month 3
• Reach operating break–even within first 6 months
• Introduce assembly, delivery, and special package products; develop and introduce signature dessert
• Implement customer satisfaction surveys and referral tracking; generate positive customer satisfaction as measured by survey results, referrals, orders and testimonials
• Receive positive review(s) in local media
• Attract, hire and train two store managers and six session assistants
• Manage cost and revenue projections according to financial plan
• Add limited retail items to store
• Conduct a local fund-raiser and/or community sponsorship
• Participate in inaugural industry association meeting (Fall, 2005)
• Invite advisory board members
• Review and update business plan by yearend

Second Year of Operations

• Expand computer capabilities to handle multiple locations
• Expand recipe catalog to 100+ selections
• Hire and train an additional store manager and three session assistants
• Evaluate location demographics and competitors for second location
• Open second store
• Prototype university-demographic store
• Introduce thematic private parties
• Evaluate and expand retail product selections
• Conduct two fund-raisers and/or community sponsorships
• Actively participate in expansion and promotion of industry association
• Manage cost and revenue projections according to financial plan
• Update competitive analysis with focus on northeast Illinois businesses
• Review and update business plan by year–end

Third—Fifth Year of Operations

• Evaluate location demographics and competitors for additional locations
• Hire and retain three additional store managers and nine session assistants
• Expand recipe selections to 150+
• Open locations three, four and five
• Conduct two fund–raisers and/or community sponsorships per store
• Manage cost and revenue projections according to financial plan
• Review and update business plan by year end

COMPANY HISTORY

Kitchen Helper, LLC, is a new entrant into an emerging segment of the restaurant industry called Meal Facilitation and Preparation (MFP). Meal preparation or meal assembly businesses represent a high growth market segment that offers new choices to consumers. In a society where people feel constantly pressed for time, yet value healthy, delicious meals and family meal times, meal prep businesses offer a new alternative.

Under this concept, the customer selects, via a calendar posted on the company’s website, a session scheduled at the meal prep store. The customer also selects from a limited number of dishes that are offered by the company that month. Generally, 12 menu selections can be prepared during a two–hour session. When the customer arrives at the store, all of the preparation for the dishes has already been done. For the customer, this eliminates recipe development and selection, grocery shopping, and preparing any of the ingredients. In the store, stations are set up with all of the equipment and ingredients needed to make each recipe. In addition, step–by–step assembly instructions are posted at the station.

The customer is given brief instructions if they are new to the store and provided with a printed list of the items they have selected. They then move from station to station, assembling the recipes they have selected. During this step, the customer is able to adapt the recipe to the needs and tastes of her family. For example, if her children do not like onions, she can leave them out; if she loves spicy food, she can double the amount of pepper. All recipes end up in either a Ziploc bag or an aluminum pan, which the customer takes home and freezes. Thawing and cooking instructions are affixed to each dish; therefore, all the customer needs to do is reach into their freezer and pull out their selection for their next meal. And another prime benefit—the cleanup is done by the store staff!

Through this concept, the customer is given the tools necessary to create delicious, high–quality, nutritious meals customized to their particular tastes, at a fraction of the time and hassle of homemade meals. And, at a per–serving cost of $3.00 or less, meal assembly is also a very cost–effective solution for the customer.

INDUSTRY ANALYSIS

The overall restaurant industry is forecasted to produce $476 billion dollars in direct sales, or roughly 4 percent of the U.S. gross domestic product, by the close of 2005. With 12.2 million employees, the industry is the largest private–sector employer. Over 900,000 locations serve more than 70 billion meal and snack occasions nationwide per year. Although new, the Meal Facilitation and Preparation segment of the industry is expected to grow exponentially in coming years.

In the state of Illinois, restaurants will add $14 billion in sales to the economy this year. The industry will employee an estimated 543,000 residents of Illinois, a figure that is projected to top 600,000 by 2015. Restaurant and foodservice employment today represents 10 percent of the total employment in Illinois and is expected to continue to add a total of almost 60,000 new jobs by 2015.

The Meal Facilitation and Preparation (MFP) market is no more that 3 years old. Services that offered convenience and assistance in preparing meals started as home–based businesses in the 1980s. But it was not until the publication of an article by Working Mother magazine in February of 2003 that the industry began to see formal and explosive growth. In fact, data on this segment is limited, and the numbers that are available are very fluid. Most tracking considers MFP as a sub segment of the personal chef market, which is itself a segment of the restaurant industry. According to the United States Professional Chef Association (USPCA), this industry now includes about 6,000 personal–chef service businesses. Estimated at about $100 million, this segment is expected to grow to $2 to $3 million in the next 5 years.

MFPs are a result of a further refinement of the personal chef market. Consumers continue to demand convenience, but they also want meals that are both tasty and nutritious. Moreover, the marketplace is now demanding an affordable alternative to hiring a personal chef. MFPs responded to this demand by enabling customers to prepare meals themselves, with none of the hassles of developing recipes, grocery shopping, or even chopping their own vegetables. The meals are made according to the customers’s tastes, and then taken home to be stored in the freezer, ready when needed. This allows customers to control their meals while at the same time saving time and money.

As an emerging market, MFPs today are located in over 40 states and Canada. The concept has caught on quickly in the regions where entrepreneurs have capitalized on the demand and launched stores. As of July, 2005, the Easy Meal Preparation Association (EMPA) had identified 156 MRP companies with 372 store locations. The largest players are Cooking with Friends out of Saginaw, Michigan with 76 stores and Minute Meals of San Diego, California with 68 locations. More information on these companies is included in the Competitive Analysis.

Industry Statistics

• According to the U.S. Personal Chef Association, more than 60 percent of Americans don’t think about what’s for dinner until after 4 p.m.
• The typical American household spent an average of $2,276 on food away from home in 2002, and 90 percent of all take–home meals came from a fast–food restaurant.
• One out of three consumers has used curbside takeout at a table service restaurant.
• Households in metropolitan areas tend to spend more on food away from home than non–metropolitan households.
• Household spending on food away from home is heavily influenced by household income, with expenditures rising dramatically for households with income of $30,000 or more.
• Families, represented by households with adults between the ages of 35 and 44 and an average size of 3.2 spent the largest total amount on food away from home. (2002)
• Households headed by 35–44 year olds allocated the greatest amount—an average of $2,712—to food away from home, followed by households headed by persons between the ages of 45 and 54.
• Total spending on food away from home posted by households composed of a husband, wife and children was 43 percent higher than the national average at $3,257.
• Americans are cooking less often at home. Data from the Department of Energy’s Residential Energy Consumption Survey (RECS), which collect data on household characteristics as well as energy consumption, indicates that Americans are cooking less at home (2003) than previously (1993). The percentage of households cooking, on average, “two or more times a day” as well as “once a day” declined for all sizes of households.
• The trend toward less and less preparation of food while still eating at home continues to drive the development of new products and services.
• Convenience continues to be a primary factor in consumer purchase decisions.

MANAGEMENT SUMMARY

Kitchen Helper, LLC was formed as a Limited Liability Corporation in the State of Illinois in May of 2005. The company is owned entirely by Anne Relitz and Susan Stiliz as equal partners. We believe this is the appropriate structure for maximum flexibility and lowest cost during the start–up of the business. We are currently in the process of approving an operating agreement between the partners that clarifies the agreement between the parties and provides for the continuation of the business.

Anne Relitz is the company’s Chief Management Officer, while Susan Stiliz is the company’s Chief Operating Officer. Under these designations, Anne is primarily responsible for the overall strategy and business management of Kitchen Helper, including business planning, marketing and public relations, financing, and human resources. Susan’s priorities focus on the operations of the business, including physical space and equipment, recipe development and evaluation, technology acquisition and maintenance, and regulatory compliance.

Strengths of the Management Team

Anne Relitz’s credentials include a Bachelor’s degree in Business Administration from Indiana University, as well as a Masters in Business Administration in Marketing and Organizational Behavior from the J.L. Kellogg Graduate School of Management at Northwestern University. Her work experience includes software consulting, marketing at General Electric, managing an interdisciplinary educational research institute at Northwestern University, and teaching at a variety of colleges and universities. She owned her own consulting firm, specializing in business and market planning and execution for start–up and high–growth organizations and was a counselor for the Small Business Administration.

Susan Stiliz graduated from Depauw University with a degree in Psychology and completed Penn State’s Computer Career program. She has been employed at several firms, where her emphasis was on systems consulting, design and implementation. Susan is also an active church member, PTA vice–president and Scout leader. Susan’s background in systems analysis and computer technology give her a strong expertise in understanding the operational flow of the operation and systemic requirements of the business. She is also adept at handling the technologies involved in Kitchen Helper, particularly the management of the website and back end systems. More complete resumes of the partners are included in Appendices B and C.

Both partners have accumulated decades of experience working in a variety of businesses. Our experiences cover all of the major functional areas of business; however, each brings different talents and strengths to bear on the challenges of this business. Anne’s strength is in strategy, planning, marketing and creativity. Susan has a solid reputation for getting things done, and blends her systems thinking with a keen attention to detail. Together, they recognize what they bring to the table, and where they need help. Both are willing to commit their personal, professional, and financial resources to creating and building Kitchen Helper. An added benefit is that the partners are also members of the primary demographic group that Kitchen Helper is targeting—busy women with families who value their time and seek cost–effective solutions to the issues they face in managing their homes and families.

Weaknesses of the Management Team

The owners recognize that the partnership is lacking in expertise in some of the primary functional areas required by this business. The most critical weakness—and a key to the success of this business— is the lack of hands–on operating experience. While both partners have worked in restaurants and food service, the operating needs of the meal assembly business are unique. Particularly since this is an evolving business, we need to acquire this operating knowledge as efficiently and quickly as possible.

To address one major weakness in the food operations area, both Susan and Anne passed the ServeSafe course on safe food handling offered by the National Restaurant Association Educational Foundation. This enables them both to manage a food operation as certified by the State of Illinois Department of Health.

Additionally, Kitchen Helper has entered into an agreement with Smith and Thompson LLC of Chicago, Illinois. Kitchen Helper has agreed to purchase the operations manual and training package offered by this company. Smith and Thompson operates the Cooking with Friends MFP business, a company that is one of the most successful operations to emerge. The Kitchen Helper partners are scheduled to attend training onsite at a Cooking with Friends facility on August 12 and 13, 2005. As a result of this training, we expect our understanding of the operations of the business to be greatly enhanced.

The partners also recognize the value of retaining experts in certain areas that are critical to the success of the company. While we possess a general understanding of law, accounting and finance, graphic and store design, computer and web support and human resources, we have retained firms with specialized expertise in these areas. Additionally, as members of the recently organized Easy Meal Prep Association (EMPA), the company taps into the many resources provided by this industry group.

Human Resources and Advisory Board

Kitchen Helper will be staffed with primarily the two partners, supported by permanent part–time employees and consulting professionals in the specialties mentioned earlier. The partners do not intend to take any compensation for the first year of the business. After that, the possibility of compensation will be evaluated in light of opportunities to expand the business.

Primary hires over the first year of operation include two store managers and six service personnel. These people will be trained in the business, as well as ServeSafe safe food handling, and will gain experience at the anchor store. Hiring will continue as each new store location is opened. Prior to moving ahead with a new store, one new store manager and three service reps must be hired and trained.

Kitchen Helper anticipates hiring from the local employment pool, which includes a diverse group of people who prefer part–time employment. These include a large number of stay–at–home parents, as well as students and recent graduates. Our wage rate for service reps will be approximately 50 percent above the minimum wage rate. Store managers will be offered opportunities for advancement and compensation aligned with the skills and experiences they bring to the company. In addition, employees will be offered meals at discounted rates. It is anticipated that we will be able to satisfy our personnel requirements.

Kitchen Helper is in the process of inviting a number of individuals to join our effort in an advisory role. We intend to fashion an advisory board of about 7 individuals who will offer both insight and tough questions for our business. As of this writing, we do not have firm commitments from any individuals and therefore do not feel we can publish any names. As an example of the type of advisor we are seeking, we are inviting a local specialty food and wine entrepreneur, a representative from a major retail kitchen business, and a retired executive from a major international bank.

Records Management, Reporting, and Management Controls

Data collection and reporting for Kitchen Helper will cover three main areas: management control, financial systems, and regulatory compliance. The software management system that is being purchased by the business provides much of the necessary data capture and reporting capabilities for management control. Financial data will be relayed into the QuickBooks system, which is also utilized by our accounting firm. Regulatory reporting as required by the Health Department requires the retention of numerous forms. Most of this information is captured manually on specific forms and filed for the requisite time period. These information reporting requirements are spelled out in the Kitchen Helper Operating Manual.

Legal

The business is currently in the process of putting into place several legal documents. Primary among these is the Kitchen Helper Operating Agreement between the partners, which describes the business relationship. This document also considers appropriate contingencies in the event of different scenarios that may affect one or both partners and provides for the continuation of the business. Secondly, Kitchen Helper is entering into a Software License Agreement with Smith and Thompson, LLC, to purchase their back–end software system, designed specifically for MFP, and a protected territory. The operations training that is being provided by Cooking with Friends also necessitates an agreement between the two companies. It is anticipated that these agreements, and the company’s real estate obligations, will be the bulk of the early legal expenses for the business.

PRODUCTS & SERVICES

In keeping with our strategic focus on the customer, Kitchen Helper views its primary product/service as providing a solution to the customer’s dilemma of providing tasty, nutritious meals with a minimum of time and expense. Our primary service is giving our customers the ability to come to our store and quickly assemble a variety of proven menu selections. This service results in a physical product for the customer of up to 12 dishes of 4 to 6 servings each. These meals are taken home and frozen, then prepared according to the provided instructions when the customer chooses. Kitchen Helper also offers meal assembly, delivery within a limited area, packaged meals for new mothers, private parties, and gift certificates. In the future, we plan to offer limited kitchen and cooking items for sale.

The key to Kitchen Helper’s long–term success is to differentiate itself from the competition while delivering on its promise to the consumer of providing delicious, nutritious meals quickly and easily. While the needs of the customer drive our service, the resulting food products are driven by our recipes. All of our recipes are developed by professional chefs and family tested specifically for this type of preparation and storage. The end result is nutritious and tasty foods that are enjoyed by both adults and children.

Kitchen Helper uses superior ingredients, such as restaurant–quality meats, poultry and seafood, which are a grade above that which the customers can buy in the grocery store. We use real flavorings, juices, and extracts, and often choose fresh herbs over dried. Fresh fruits and vegetables are utilized whenever possible, and we add no preservatives during meal assembly. This results in food products that are superior in taste and more nutritionally balanced than those offered by many of our competitors. Nutritional information for each recipe is available on our website.

The Kitchen Helper calendar offers seasonal menus with wide appeal, with at least 14 different choices per month. The company also monitors consumer response to our recipes, and will continue to develop and test new offerings. Popular recipes will be repeated based on customer demand.

Another aspect of the Kitchen Helper experience is the social opportunity for people to gather together. Kitchen Helper does not promote this aspect as the primary benefit like some competitors do, but we intend to make the customer’s time in our stores a fun and productive experience. Kitchen Helper sessions are an opportunity for customers to meet with new and old friends, to share their cooking experience, and simply enjoy time with others. In many ways, this aspect of the experience harkens back in time, particularly for women, where it was common to gather together to complete household and family duties.

MARKET ANALYSIS

Target Market

The primary target market for Kitchen Helper consists of families, with the female head of household as the primary purchaser. Demographically, these families are represented by adults between the ages of 35 and 54 with children in the home. The household income of the target market is in excess of $30,000 or more.

This target customer values convenience, yet finds herself more and more “time–challenged”. She is also aware of the importance of good nutrition for herself and her family, but finds providing those meals increasingly difficult. Also, parents know that time spent together as a family can have a significant positive impact on themselves and their children. Yet these shared times, particularly meal times, are falling victim to numerous activities and conflicting schedules. Many parents opt for the convenience of fast food or restaurant take–out at the expense of proper nutrition and family time, with a significant impact on the family budget.

These consumers have the financial means to try new products and will spend on services that they feel will simplify their life or benefit themselves or their families in some way. Once convinced of the value of a product, these consumers tend to be brand–loyal. Women tend to rely on word–of–mouth and the opinions of their friends, co–workers and neighbors, especially with regard to family issues.

Kitchen Helper’s anchor store is located in the Effingham area in Effingham County, Illinois. The 2000 census estimated the population of Effingham at 13,641, while statistics on the City of Teutopolis indicated a population of 7,307 people living in 2,986 households. Of these households, 66 percent are families, and nearly one third have children under the age of 18 living with them. The average family size is 2.85. The median income for Teutopolis households is $62,180, with families earning $78,947. The racial makeup of the city is primarily white (88 percent), with the next largest group being African– American.

Effingham encompasses an area of over nine miles and houses the major shopping areas in Effingham County. The population of this area adds an additional 5,261 individuals, with a median household income of $98,186. Seventy percent of the residents are married, and 90 percent have attained a high school education or better. The population is relatively even with respect to gender. Estimates of local market size total 1,450 consumers in the immediate area and approximately 5,200 in the larger demographic area of Teutopolis.

The facility under consideration for Kitchen Helper’s anchor store is centrally located among these communities. It is along one of the busiest commercial and retail thoroughfares, Main Street. This high–traffic area is easily accessible for customers, employees, and visitors. 7,051 people of an average age of 46 live within 1 mile of this location, and almost 40,000 individuals (median age 42) are within three miles. The median household income within this radius approaches $ 70,000. The proximity and customer profile of the residents of this area provide a rich market opportunity for Kitchen Helper.

Competition

In a broad sense, Kitchen Helper and other MFP businesses compete with all of the other options that a consumer has for meals. These options range from traditional home meal preparation to formal table service restaurants and everything in between. Due to the emphasis with MFP companies on the convenience of this option, competition comes mainly from fast–food companies and take–out service to full service restaurants, as well as prepared foods that can be purchased in local grocers.

For the MFP market specifically, the two primary business models are franchise operations and independent stores. As of July, 2005, the Easy Meal Preparation Association (EMPA) has identified 156 MRP companies with 372 store locations. The largest players in the franchise group are Cooking with Friends out of Madison, Wisconsin with 76 stores and Minute Meals of Seattle, Washington with 68 locations. Several other companies, including Spices and Stuff (IL) and Jane and Mitzy (IL) have five to 10 stores clustered in a specific geographic area. Several of these companies are now offering franchises in an effort to expand. The rest of the locations are comprised of independent businesses operating generally a single location.

In Illinois, the Minute Meals franchise currently has locations in Bloomington, Chicago, and Springfield. Cooking with Friends is located in Chicago and is expected to open this year in Arlington Heights. Spices and Stuff (eight locations nationwide) opened in July, 2005 in Evanston. An independent business, Jane and Mitzy, is open in Decatur and just announced their first franchise expansion in the same area.

In order to get a true understanding of some of these competitors, we have “mystery shopped” four different locations, including Cooking with Friends (Chicago), Minute Meals (Springfield, IL), Spices and Stuff (Evanston), and Jane and Mitzy (Decatur, IL). We also visited most of the available websites, gathered information from industry association members, and conducted phone interviews. We have evaluated each of the major franchise operations. In fact, several of the franchises are aggressively seeking buyers in this area. Our analysis shows that, in the long run, each of the franchises is vulnerable in a significant way. For example, Jane and Mitzy is built on a retro, “party girl” type of atmosphere, and the food products are mediocre. Minute Meals has been dubbed “the future McDonald’s of the industry” by one association member, reflecting their strategy of high volume without much service or product quality. (Their operations use processed canned and prepared foods in very basic recipes). Cooking with Friends has built its reputation on its association with the Culinary School of Chicago, but is lacking in clear marketing and branding.

We believe that an independent business provides the best model for long–term success, particularly in light of the expense of acquiring and maintaining a franchise. Being independent, coupled with Kitchen Helper’s differentiation and positioning in the local market, will allow us to adapt to the changing business environment as the market grows and eventually matures. We do expect this to be a highly competitive business, however, and we are prepared to respond to various competitors as necessary. Due to the early stage of development of this market, we believe there is room and time to establish our concept and brand before head–to–head competition becomes a major issue.

As an independent business, Kitchen Helper also benefits from its membership in the EMPA. This association allows us to collaborate with a wide variety of similar businesses across the country. In this way, Kitchen Helper can assess the best practices of these companies and implement them, if appropriate, in our area. The communication afforded through this organization has already been extremely beneficial to our research, understanding, and business plan development.

Risk Factors

Barriers to entry in this market are fairly low, although a capital contribution of approximately $100,000 is required to launch a store operation. General operating knowledge of restaurants or food service is beneficial. However, the operations of MFPs are relatively straight forward and do not require any particular technical expertise. Compliance issues, particularly health, safety and zoning issues, must be addressed. Technologies, including website and software support, are central to the business, but there are no proprietary or complex technological requirements.

Due to the attractiveness of this market segment and the limited barriers to entry, we believe that a proliferation of companies will enter this new market niche. Our focus is on not only launching Kitchen Helper successfully, but providing the necessary foundation to carry the company through the competitive years ahead.

MARKETING & SALES

At Kitchen Helper, our customers are the reason we are in business. This premise drives everything about the business and is the foundation of our strategy. Analysis of the competition indicates that most MFP companies are employing a narrowly defined strategy that focuses on the physical product (entrees, dinners, suppers) or facilities (kitchen). Kitchen Helper focuses on the customer experience. This customer–centered strategy will allow us greater flexibility and broader appeal as the Kitchen Helper concept and the overall market develop.

In order to succeed, Kitchen Helper must effectively position its product/service and clearly differentiate this brand from the competition. Then, Kitchen Helper must deliver on the customer promise of providing delicious, nutritious meals quickly and easily. That customer promise is a potent value proposition: Kitchen Helper provides high quality, cost–effective, nutritious and delicious meal solutions. For the customer, this means less time, less work, no waste, no cleanup, and at a price that beats other alternatives. And, we accomplish all this in a supportive, comfortable, and fun environment.

Kitchen Helper is positioned as a high quality, cost–effective solution for family meals. The benefits to the consumer are numerous. They include: less time spent on finding recipes and preparing menus, grocery shopping, preparation and cooking; less money (consumers are challenged to add their grocery, fast food and take–out costs and compare to Kitchen Helper); healthier meals made with high quality ingredients; delicious, seasonal, proven recipes, reduced stress on the cook and the family; nutritional information available for each menu item; great taste and broad appeal of recipes; ability to bring meal time back for the family; selections can be frozen for up to six months; simple preparation, since dishes can be cooked in 30 minutes or less; good leftovers; putting fun back into meal preparation; a comfortable, inviting yet highly functional environment. This positioning, and the benefits it offers, links back to the fundamental strategy of keeping the customer at the center of our business.

Kitchen Helper has implemented this focus on the customer from the very beginning, starting with the selection of the company name. Instead of following the lead of competitors such as Minute Meals, Spices and Stuff, Jane and Mitzy, the Kitchen Helper name combines a customer focus with a sense of excitement and anticipation. The “Kitchen” links the name to cooking, yet at the same time is not explicit in its promise. It creates interest and draws the customer in. This name also allows the flexibility to offer expanded product and services in the future.

In a similar fashion, we believe that attention to detail, from the customer’s perspective, will enhance our in–store experience. For example, many local ordinances require people with long hair who handle food to pull their hair back. The solution offered by some competitors has been to advise clients to pull their hair back before attending a session, or providing them with a bandana when they arrive. Most women would agree that tying a bandana on their head is cumbersome at best, and not something they would like to “be seen” in. Kitchen Helper is fashioning a custom, color–coordinated bandana–band, which is a bandana in front and an elastic headband in the back. This headgear holds the hair back effectively, yet is comfortable and easy to wear. (We have even been complimented on the look of this piece of equipment!)

Kitchen Helper is also implementing a number of programs that will support communication with the customer. On our website, we invite customers to contact us with their questions, comments, and suggestions. Following attendance at any session, customers will be invited to provide feedback on their experience as well as the recipes. Our customer database also includes opportunities for special reminders, such as birthdays, and incentives such as private parties and referral recognition.

Pricing

In keeping with an image that connotes higher quality and better taste, Kitchen Helper is adopting a pricing policy that positions the company slightly above, but competitive with, similar offerings. In this way, we have greater flexibility to offer alternative and short–term pricing actions, such as offering coupons or specials, on a controlled basis. This will allow us to implement specific programs in response to competitive situations as well.

Current prices for competitors have hovered just under $200 for 12 menu selections. In northeast Illinois, current competitors are priced at $189 for Cooking with Friends and $197 for Minute Meals. A current industry benchmark is to keep costs at or below 50 percent of the retail food cost. We will hold our price per serving for the customer under $3.00 and have set our cost per dish at $7.50, including packaging. Pricing for ancillary products and services will be slightly above similar offerings by our competitors. For the first store, our pricing will be set at $197 for 12 selections and $149 for eight:

OPERATIONS

Location

In any retail business, particularly food related, location is a key factor in success. Meal assembly businesses are somewhat more of a “drive to” location than many restaurants or retail operations; however, it is still important to be located in a well–traveled commercial area. Kitchen Helper is currently negotiating for space in the Main Street area of Effingham, Illinois. This location will be our anchor store.

Our growth strategy for Kitchen Helper centers around this initial location and adds to the company’s capacity by opening several ‘satellite’ locations. These locations will have about the same customer space and function as the anchor store, but will be more limited in back–end kitchen capabilities. Special preparation requiring a full kitchen will be done at the central location. Utilizing this type of “hub and spoke” system will enable the company to more rapidly expand the Kitchen Helper brand. This strategy will also reduce the expensive overhead of kitchen facilities in each store.

Given the first location in the Effingham area, the following areas are targeted for expansion in the next two to five years: Chicago, Carbondale, Cicero, and Naperville. Each of these areas is demographically attractive. The order of store openings has not been finalized and will be determined in part by demand and the availability of space.

Following the expansion of the initial area through the addition of five to seven satellite locations, Kitchen Helper will consider the possibility of repeating this growth pattern in another area. Detailed plans for this growth stage have not been included in this plan, since we envision that opportunity to be at least five years in the future.

Store Design

The interior of the store is critical to the customer experience. Many of our competitors’ stores look and feel similar to a commercial kitchen. Again, our goal is to focus on the customer and make her feel welcome and comfortable. The interior design and furnishings will need to be highly functional and practical, but the same time, we want the customer to feel ‘at home’ in our location. Therefore, our interior design is focused on making the store environment more similar to an upscale home kitchen than the industrial kitchens of some of our competitors. Elements such as lighting, music, and a ‘gathering area’ are all being taken into account in order to make the customer feel welcome. This will again help to differentiate us from the competition and strengthen our customer relationship. An interior designer has been retained to implement our design ideas.

Promotion

As a young business, Kitchen Helper relies on word–of–mouth and referrals to build its customer base. Programs are being planned to capture attention and target specific consumer groups. We will also reward customers for referrals and provide an incentive for people who organize groups for a private party.

Several pre–opening sessions are planned for invited opinion leaders in our community. We are adopting a ‘secretive’ theme for these sessions and are asking customers to help us fine–tune our concept as well as try out some recipes. Press releases announcing the business will be sent to local business, community, and cooking–related media. The initial release will be followed with additional news releases on at least a quarterly basis. The company website will also be used to promote our services.

Highly target direct mail will be used to introduce Kitchen Helper to households in the immediate area. In addition, Kitchen Helper will promote its business through the local school system by conducting a fund–raiser and supporting school activities. Family–oriented organizations, including local churches, synagogues, and community organizations, will receive our news and be invited to attend appropriate events.

The location of our anchor store also provides opportunities for cross–marketing with other tenants. Several of these businesses cater to the same demographic group that we are trying to reach. Creative, cost–effective promotions will be developed with a few of these organizations.

Marketing Timeline and Budget

The focus of Kitchen Helper marketing activities in the first six months of operation will be to introduce the Kitchen Helper concept to the local community through word–of–mouth and public relations activities. These include the pre–parties, announcements and press activities mentioned earlier. A Grand Opening celebration is also scheduled for Month three of operation. In the second six months of the first year, limited direct mail, cross–marketing promotions with local vendors, and school promotions will be key. These activities will be supported by repeat announcements to local media.

In the second year of operation, marketing activities will be expanded to include additional direct mail, limited print advertising, additional community/school activities, and media activities surrounding the opening of a second location. In addition, both partner will be active in association, commerce, and women’s business organizations and will be available to speak about the company and related topics.

The marketing budget is initially very limited in the first year of operation, with the initial $1,500 being dedicated to the design of the company’s logo and colors, print production of business cards, stationary, and initial brochures, and website design and implementation. Thereafter, $250 per month is allocated to cover the scheduled activities, with an additional $250 for extra expenses associated with the grand opening. In the second year, this figure is increased, with extra resources surrounding the grand opening of a second location. This level stays constant for the third year of operation, although marketing is one of the top priorities for additional funding if finances allow.

Services

As a meal facilitation and preparation facility, Kitchen Helper enables the customer to prepare a large number of dishes quickly and easily, while enjoying the comfortable, fun environment at the store. In order to begin the process, customers may be directed to our website, or they can call the store to initiate their order. The customer order and fulfillment process includes the following steps:

1. Customers register online via our secure website, in person at the store or via phone for a session date and time. Sessions are generally scheduled in 2–hour blocks and the calendar is posted by month. A customer can assemble up to 12 meals per 2–hour session, or may choose to bring a friend and split the meals with that person. Kitchen Helper also offers an 8–recipe option.
2. Recipes are selected by the customer from our monthly menu. The customer chooses 12 out of approximately 14 options. She may choose to make double quantities of the same recipe if desired. Menu selections change monthly and are seasonally appropriate.
3. Sessions are booked using a credit card, but the customer is given the option to pay by cash or check once they have arrived at the store. New customers also sign an agreement outlining their responsibilities and the company’s limits of liability. If a customer signs up for a session, but is unable to attend, Kitchen Helper offers to assemble the meals for pick up at the store or delivery. (These services incur extra charges). No–shows are charged 60 percent of their session fee, unless they can be rescheduled within a reasonable time period. Any excess inventory or extra meals are assembled by the Kitchen Helper staff, frozen, and placed in our cooler. These meals are then made available for purchase by session or walk–in customers.
4. The website provides a wealth of information for the customer, including information on how the Kitchen Helper concept works, a map to the store and answers to common questions. Customers can also contact the store for help. When the customer attends a session, she is asked to bring a cooler or basket with her in order to carry the finished meals home.
5. When the customer arrives at the store, she is greeted and given brief instructions on the Kitchen Helper process if this is her first visit. She then grabs her apron, pulls back her hair, washes her hands, and receives a printed list of the recipes she has selected.
6. The customer begins to assemble the meals on her list by moving to a workstation that has been set up specifically for one of the recipes she has selected. Each station is equipped and stocked with all the necessary ingredients, as well as step–by–step instructions for making that recipe. Appropriate measuring spoons, cups, and mixing tools are also right at the station. The customer simply measures out the proper amount of each ingredient and mixes according to directions. At this point, she also has the option to vary the recipe according to her tastes. For example, if her family does not like onions, she merely leaves that out of her dish. If she loves hot pepper, she can simply add more.
7. All assembled meals are packaged in either a Ziploc freezer bag or an aluminum pan with a lid. Thawing and cooking instructions are affixed to each dish. When the customer finishes making the dish, she places it in her designated holding area and moves on to the next station. Customers are asked to wash their hands or replace their gloves before moving to the next station.
8. This process continues until the customer finishes her whole order, at which time she takes her cooler full of meals home to be frozen for up to six months. From that point, all the customer needs to do is reach into her freezer and pull out her choice for her next meal. She simply follows the defrosting and cooking instructions on the label.
9. Work surfaces are wiped after each customer use, and the Kitchen Helper staff insures that everything the next customer needs is available and all utensils are clean. Workstations are restocked and cleaned between each session.

Website and Back–End Processes

The Kitchen Helper website is the portal into the company for our customers. It is designed to be very simple to understand and easy to navigate. In developing the website, particular attention is being paid to its impact on the consumer, including ease of use, attractiveness, presentation of the corporate identity, and accuracy and completeness of information. The website provides the customer with value–added services, including an interactive session calendar, a customer shopping cart, secure log–in with password encryption, and integrated credit card processing.

Kitchen Helper is also purchasing a web–based software package which provides the back–office processes necessary to run our MFP operation. We selected this vendor due to the experience of the firm and the design of the software, which is specific to an MFP business and stems from the firm’s own MFP operation. The back–end software hooks to and shares information with the company’s website. The website captures information for back–office management. Both the website and back–end systems will be hosted 24 hours a day, seven days per week.

Purchasing and inventory control are directly related to the number of customers scheduled for each session and the recipes they choose to make. This information drives the ordering of grocery items, ingredients, and package materials. The orders flow through the company’s back–end system, where they are combined with vendor information, inventory control, and costing data. Once a customer order is submitted, the recipe selections are processed in the order tracking software. The system breaks down the individual ingredients and amounts needed for those recipes and combines it with other orders. A product purchasing list is generated. Non–perishable foods (canned goods, spices, etc) are entered into the inventory control sheet and automatically reduced when orders are placed. The software tracks when ‘on hand’ ingredients are low and adds them to the weekly purchasing list. The system also creates prep instructions, customer lists, and the required assembly and cooking instructions. Since inventory is purchased to order, very little waste is anticipated and inventory losses are minimal.

Reporting and Management

In addition to the functions necessary for operations, the software system also provides reporting and management tools for the business. Some of the functions included are:

• Control Panel and Summary—displays current activity on revenue, payments, session counts, service counts and individual customer orders
• Grocery Report—evaluates current ingredient order needs by timeframe
• Entree Count Report—prepares for sessions by retrieving specific entree counts within a specific timeframe
• Sales Tax Report—generates sales data for any timeframe and distinguishes between taxable and non–taxable sales for tax reporting purposes
• Custom Reports on Order History/Trends
• Calendar Manager—adds and updates calendar events and session schedules
• Order Manager—interactively adds and updates orders as needed
• Customer Manager—manages customer information (name, address, phone, etc)
• Recipe Catalog Manager—creates, adds and maintains recipes (integrates with Ingredient Manager)
• Menu Manager—manages monthly menu offerings, which allows selections from the Recipe Catalog to build menus
• Ingredient Manager—adds, updates and manages ingredients, including packaging

Food Handling and Safety

A major component of the operations of this business involve safe food handling and preparation. This is an area that is generally taken for granted by the consuming public, but which has a tremendous downside to any establishment that does not plan and manage food processes appropriately. Realizing that this was a critical gap in knowledge, both Susan and Anne have taken and passed the ServeSafe class, which certifies them in food handling and safety. It is the company’s policy that all employees receive appropriate food safety training.

Business Rollout

To roll out the Kitchen Helper concept, the management team has developed a plan that will allow us to test our business model and still be aggressive with plans to open our stores and stay ahead of the competition. Several private parties with invited guests are intended to test the products and procedures that are in place. Customers will be given the opportunity to experience the Kitchen Helper concept firsthand in exchange for their feedback, comments and suggestions. Secondly, temporary space in a local church is being secured, so that the company can begin operations on a limited basis while the build–out of the retail space is completed. The lease and build–out of approximately 2000 square feet of retail space is in the early stages of development.

Exit Strategies

At this point in time, the partners do not anticipate exiting the company until at least five years, and more likely a decade, of business experience has been acquired. However, at any time, we recognize that an exit might be offered or become necessary. The operating agreement between the partners addresses the potential of one partner buying out the business and continuing to operate. In the event that an outside offer for purchase is received, the partners will give careful consideration to the offer at that time.

At some point between the company’s fifth and tenth year of operation, it is likely that the partners will pursue the sale of the company. It is highly unlikely, unless the economic environment changes significantly, that an Initial Public Offering (IPO) would be feasible. It is more likely that the owners would pursue the private sale of Kitchen Helper, either to an individual, a group of investors, or another company seeking to enter the industry.

Business Ethics and Standards

Kitchen Helper operates, at all times, with the highest sense of business and ethical standards. It is the company’s policy to be honest and forthright in all of its business practices and to treat customers, suppliers and employees with respect and fairness without regard to race, religion, sex, age, or personal lifestyle choices. The company’s Operations and Training Manuals reflect this policy, and the management team leads by example. Additionally, under the guidance of a professional accounting firm, Kitchen Helper adheres to standard accounting and financial practices. We do not tolerate false or misleading advertising or any use of our company name, image, or operations in a way that compromises the integrity of the firm.

FINANCIAL ANALYSIS

The financial information included here is the management team’s best estimate of first year start–up and ongoing costs for Kitchen Helper. The projections for the first year have been shared with the financial consultant for the industry association and have passed the ‘test of reasonableness’ for this industry. With the implementation of the QuickBooks accounting system, as well as the back–end software system described earlier, the assumptions and projections will be constantly scrutinized and updated as actual data becomes available.

Kitchen Helper is currently funded by equal participation on the part of the two partners. The company has deposited $50,000 with Stone Bank to fund the business start–up. The company is seeking a loan of $75,000 to fund the purchase of equipment and supplies, and to provide working capital. At present, these are the only sources of funds being considered. As the business reaches break–even and begins to be profitable, the owners expect to use the proceeds to pay off the loan and to subsidize future growth.

In light of the emerging nature of this industry, several keys to the financial success of the company are evident. These include: cost containment, especially on food costs; minimizing preparation and cleanup time, thereby making efficient use of direct labor; careful management of the business’s cash flow; committing to as minimal amount of overhead as possible without sacrificing the business concept; and negotiating favorable terms on all agreements.

Assumptions

The following assumptions have been utilized in constructing the estimates of the first year start–up and operating costs:

• The first year begins in July, 2005 and continues through June of 2006.
• Pre–operating expenses include primarily marketing (company identity design and implementation), legal (partner agreement, software license agreement, operations training purchase agreement, real estate lease, and construction agreement), and website and software purchase and development.
• Limited operations begin in temporary facility in October 2005.
• One focus group per month in September and October 2005.
• Retail space is leased and expenses occurred beginning in November 2005. Rent is estimated at $20 per square foot (triple net) for 1,800 square feet of space ($3,000 per month).
• Improvements required for retail space total $12,000 spread over four months.
• Number of sessions per month builds slowly during the first few months of operation and reaches a maximum of 12 after six months.
• Average number of customers per session is conservatively estimated at eight, while our goal is 12 and the maximum allowed is 14.
• Number of dishes per session is estimated at 10 to account for customers who may order only eight selections instead of the traditional 12.
• Revenue per customer is estimated at $175, which assumes two-thirds of the customers buy 12 selections and one-three buy eight selections.
• Bank charges are estimated at two percent.
• Cost per selection is held at $7.50 including packaging.
• Grand opening is held in January, 2006.
• Computer expenses include purchase of the software back–end as well as website design plus ongoing support and hosting fees. Where possible, installment payment options are taken. The ‘lite’ version of the software system reaches capacity as 12 sessions per month for the first location. An upgrade is planned in the second year.
• Direct labor is estimated at two people earning $10 per hour for three hours per session. The partners take no salary during this period.
• Equipment purchase is estimated at $25,500 and is spread out over 10 months.
• Training and Development includes the initial operations training for the partners and ongoing food safety courses for employees.

These assumptions were used to construct the second and third year quarterly projections:

• Software upgraded for more capacity and multiple locations—final quarter of 2006
• Retail location requires less improvement
• Second location is opened in January, 2007
• Retail kitchen products contribute to revenue
• Two store managers are in place in addition to session assistants
• Owners continue to defer salary in lieu of new store
• Professional services are increased with second store
• Other revenue and cost assumptions remain basically unchanged

These financial projections indicate that the company will operate at a slight loss at the conclusion of the first year of operation. In year two, we continue to invest by opening a second location and show a profit by year end. Year three projections indicate the company will generate a net income of over $100,000.

Break-even analysis

The following is the revenue required in Year 1 to breakeven at net income before taxes, including all start-up expenses:

Balance sheet