Business Plan Tuesday, March 14, 2006

Transcription

1 Business Plan Tuesday, March 14, 2006

2 Contact Jack Smith 123 Mainstreet Columbus, IN (555) Company Website: Slide 2

3 The Idea The idea for Chipotle (pronounced chi- POAT-lay) is simple: Offer a simple menu of great food prepared fresh each day, using many of the same cooking techniques as gourmet restaurants. Then serve the food quickly, in a cool atmosphere. Slide 3

4 The Sandbox: Fast-Casual We compete in a category of dining called fastcasual the fastest growing segment of the restaurant industry. The fast-casual market pulls together the finer qualities of multiple restaurant sectors. It takes the fast from fast-food, the quality and ambience of casual dining, and adds a focus on health and freshness, all at an average ticket price below $10. Because of these appealing characteristics, sales for the market have grown at an average of 12.5% per year since Slide 4

5 The Business Model Using higher-quality ingredients. We use a variety of ingredients that we purchase from carefully selected suppliers. We concentrate on where we obtain each ingredient. Some of the ingredients we use include naturally raised pork, beef and chicken, as well as organically grown produce, and we continue to investigate using even more naturally raised, organically grown ingredients, in light of pricing considerations. A few things, thousands of ways. We only serve a few things: burritos, burrito bols (a burrito without the tortilla), tacos and salads. We plan to keep a simple menu, but we'll always consider sensible additions. Slide 5

6 The Menu: Choose an Entrée Slide 6

7 And Finish Up A focused menu. You choose exactly what you want. We make it while you watch. That may mean a little more salsa, a little less sour cream, whatever you'd like. Build your version of the perfect burrito. Price of Desire: About 5 Bucks. Slide 7

8 The Customer: Market Analysis

9 The Customer The primary customer for Chipotle s is between the ages of 25 and 54. The customer is slightly older than the typical fastfood customer mainly due to their desire for a more healthy menu without sacrificing speed. These customers desire a Focus on freshness, with products made to order, and excluding the use of frozen ingredients and microwaves Focus on innovative flavors, including condiments that fuse elements from distinct cuisines Focus on consumer choice, sometimes provided through extensive selection of condiments, but frequently extended to complete control of product content Focus on health, including whole-grain, and organic, as well as trans-fat and MSG free ingredients Slide 9

10 Bartholomew County, Indiana Slide 10

11 Community Profile Population of Columbus is 40,000 County (Bartholomew) population is 70,000 Manufacturing is main industry. Two Fortune 500 companies Cummins Engine Co. (diesel engines) and ArvinMeritor (auto parts) Also, a regional hub for retail, educational and medical services In 1994, Columbus, Indiana was one of ten cities in the United States awarded All America City status Slide 11

12 Business Climate Columbus has the best business climate in Indiana: Ranked #1 of any city under 50,000 population in Indiana (Site Selection Magazine) Columbus has the 30 th best small community business climate in the United States Based on a February 2002 ranking by BizDemographics of 496 small U.S. cities Slide 12

13 A Growing Community Slide 13

14 An Educated Customer Base Slide 14

15 A Market of Wealth Slide 15

16 Targeted Customers Within Columbus, Indiana, Chipotle s will target three primary customer segments. These are as follows: The Local Market: Defined as customers within a seven mile radius of the store location. Commuting Workers and Tourists: Customers commuting into the city on a daily basis or for leisure travel. Commercial Events: Business customers within the county that require catering services. Slide 16

17 Target Market Descriptions Description Target Market #1 Target Market #2 Target Market #3 Name Local Market Commuting Workers & Tourists Commercial Events Description People and households within 7 miles of the restaurant People migrating into Bartholomew County for work or tourism Commercial business in Bartholomew County that need catering event services Demographics Consumers ages 25 to 54 / $54,000 average household income Workers and Tourists ages 21 to 54 Businesses from 20 to 300 employees Buying Behavior Frequent but small purchases (5 times per year at about $9.00 per patron) Infrequent but larger purchases (1 time but spends upward of $12.00 per patron) Infrequent but very large purchases (2 events per year spending $ per event) Size (numbers/dollars) 58,600 residents / 20,000 households / $58 million local market for restaurant sales 9,000 daily commuters / 28,000 annual tourists 400 businesses Projected Sales $400,000 $150,000 $100,000 Trends Slow to moderate growth / spending less on meals away from home on average Good growth / new arts theatre nearby should improve traffic Excellent growth in company numbers and employment trends

18 Target Market Strategy Strategy Target Market #1 Target Market #2 Target Market #3 Positioning Message The Gourmet Restaurant Where You Eat With Your Hands Gourmet Burritos Fast Big Burritos For Big Crowds Pricing Entrees between $4 and $6 Entrees between $4 and $16 Per head range from $8 to $12 Product Customization Lunch time drive-thru speed is largest consideration Banquet style service Distribution At retail location At retail location On-site catering set-up and service Promotions: -Contact Sphere Visitors center, community development, tourism bureau, hotel concierges Chamber of commerce, HR managers, event planners, public relations managers -Advertising Newspaper, yellow pages, specialty publications, website Hotel brochures, tourism directory, billboards, restaurant guide Direct mail, business section of newspaper -Public Relations Annual 5K charity run for diabetes assn. -Personal Selling Part-time banquet sales coordinator -Sales Promotions Discount coupons, samples Hotel referral fees 15% off first event promotion

19 Commuting Patterns More than 16% of Bartholomew County s workforce commutes into Columbus on a daily basis. This commuting inflow surges the daily workforce to over 39,000 employees. Almost 9,000 worker s commute into Bartholomew County every day. Slide 19

20 Customer Ring Study The proposed location for Chipotle is 500 Franklin Street in Columbus, IN Within a 7 mile radius of this location the market contains Description Population Households Average Household Income 7 Miles 58,600 20,000 $54,000 Source: Easidemographics.com Slide 20

21 The Size of the Market According to the 2002 Economic Census for Bartholomew County: Full Service Restaurants: 104 Total Restaurant Sales 02: $78 million Average Sales Per Rest: $750,000 Slide 21

22 Targeted Market Size in Dollars According to the Consumer Expenditure Survey in 2003, consumers spent an estimated $885 on Food away from home This would predict the 7 mile market radius to be worth approximately $52 million in restaurant and meal preparation services. ($885 times 58,600 consumers) and could support about 70 establishments. Slide 22

23 The Food Service Market in Columbus, IN X Future Site of Chipotle Source: Google Earth Slide 23

24 The Competition Qdoba, is a fresh-mex chain that offers more choices, like poblano pesto burritos, but less discipline in its execution. Its wider menu offerings sometimes compromise food quality. Nonetheless, Qdoba is a series competitor in all respects as it plays in the same sand box. In 2003, Qdoba was acquired by Jack in the Box Inc., a publicly traded (NYSE: JBX) restaurant company headquartered in San Diego. Bajio Mexican Grill is also a fresh-mex franchise chain that again offers more choices than Chipotle, but its franchising model puts a strain on store-to-store consistency. Slide 24

25 The Message Slide 25

26 The Sales Approach Chipotle will use a combination of the following media in creating its advertising and promotional campaign: Yellow Pages Newspaper Direct Mail Radio Website Slide 26

27 The Sales Approach Media Annual Cost Yellow Pages (South Central Edition) Category: Restaurants, Restaurant Guide $3, Newspaper (The Republic: Circulation 28,000) Ad Design Costs Media Costs (24 $328) $ $ Direct Mail (Brochures and Special Occasions) Distribution $.50 per $.27 postage) $3, Radio (QMIX 103 / Adult Contemporary & WTIU/NPR) Media Costs (600 :30 second $6.20 per spot) Total Annual Advertising and Media Costs $3, $19, Slide 27

28 The Inner Workings: The Line Slide 28

29 Two Things, Thousands of Ways We only serve a few things, so we can concentrate on doing them very well. And we use only the best ingredients. But they're simple. And that idea, taking something simple and elevating it to something special is what Chipotle is all about. It's all summed up in our name. A chipotle pepper is just a simple jalapeño pepper that's been smoked and dried elevating it from ordinary to something extraordinary. Tasting is believing. Slide 29

30 The Inner Workings Chipotle will be open six days a week from the hours of 10:00am to 9:00pm. To operate the location we require 8 full-time employees and 7 part-time staffers all of which work on a rotating schedule which avoids overtime scheduling. Wages are about $8.00 to $9.00 per hour. It is imperative that we keep food costs below 28% of sales and labor costs just under 40%. Slide 30

31 Location Design The design of Chipotle mirrors the idea behind our food: simple ingredients put together in creative, new ways, elevating them to a higher level. Each Chipotle uses the same basic materials wood, concrete, raw steel and metals but no two look the same. Slide 31

32 Location Interiors Slide 32

33 Location Exteriors Slide 33

34 The Management Team Jack Smith, Location Manager Mr. Smith will oversee the day-to-day operations and management of the location. He has over 14 years of experience in retail fast food and is one of the founding members of Chipotle. Loretta Johnson, Assistant Manager Ms. Johnson is an experienced chef with over 12 years of commercial cooking knowledge. She will oversee the all ingredient purchasing and grill staffing according to the philosophies of Chipotle as presented within this business plan. Slide 34

35 The Legal Structure Chipotle will be legally formed as an s corporation. This structure was selected for its pass through tax advantages, limited liability protection, and freedom from having to pay corporate income taxes. Ownership of shares will be broken down as follows: Owner Shares Percent Owned Jack Smith 1,000 50% Loretta Johnson % Equity Investors % Slide 35

36 Risk Management Chipotle will require the following types of insurance in its efforts to manage risk: General Liability (up to $2 Million in coverage) Worker s Compensation Policy Property Insurance (building & contents) In addition, it will also provide health care for its two member management team estimated at about $1,000 per month. Slide 36

37 Required Start-Up Funds Item Real Estate Building Equipment Furniture & Smallwares Initial Inventory Deposits Legal & Accounting Advertising Working Capital Totals Amount $220,000 $580,000 $68,000 $12,000 $4,500 $900 $2500 $5000 $15,000 $907,900 Slide 37

38 Capital Strategy Total Amount Required -4 Investors ($50,000 each will get 25% share of company) -Commercial Bank Loan (Real Estate & 80% Building) -Owners $907,900 $200,000 $684,000 $23,900 Debt Service Payments -Principal Amount Borrowed -Interest Rate -Term In Months Total Monthly Loan Payment $684, % 240 $5, Slide 38

39 The Milestones Present business plan to investors March 2006 Finish legal work around investments March April 2006 Request and review construction bids April 2006 Obtain building permits May 2006 Begin construction May 2006 Begin final fixturing of location July 2006 Conduct health department inspections August 2006 Begin hiring and grand opening marketing August 2006 Cold opening August 22 th, 2006 Grand opening September 1 st, 2006 Slide 39

40 Chipotle Required Start-Up Funds 5-Jul-06 Required Start-Up Funds Amount Totals Depreciation Notes Fixed Assets Real Estate $ 220,000 Buildings 580, years Leasehold Improvements years Equipment 68, years Furniture and Fixtures 12, years Vehicles years Other Fixed Assets years Total Fixed Assets 880,000 Operating Capital Pre-Opening Salaries and Wages - Prepaid Insurance Premiums - Beginning Inventory 4,500 Legal and Accounting Fees 2,500 Rent Deposits - Utility Deposits 900 Supplies - Advertising and Promotions 5,000 Licenses - Other Initial Start-Up Costs - Working Capital (Cash On Hand) 15,000 Total Operating Capital 27,900 Total Required Funds $ 907,900 Sources of Funding Amount Totals Loan Rate Term in Months Monthly Payments Owner's Cash Injection 24.66% 223,900 Outside Investors 0.00% - Additional Loans or Debt Commercial Loan 0.00% % $0.00 Commercial Mortgage 75.34% 684, % $5, Total Sources of Funding % $ 907,900 $5,721.25

41 Chipotle Salaries and Wages 5-Jul-06 Salaries and Related Expenses # Assumptions Wage Base Monthly Year One Year Two Year Three Percent Change 3.00% 3.00% Salaries and Wages Owner's Compensation 1 $ 4,167 50,000 51,500 53,045 Salaries 1 3,333 40,000 41,200 42,436 Wages Full-Time Employees 8 11, , , ,227 Estimated Hours Per Week Estimated Rate Per Hour $ 8.00 Part-Time Employees 7 4,550 54,600 56,238 57,925 Estimated Hours Per Week Estimated Rate Per Hour $ 7.50 Independent Contractors Total Salaries and Wages 17 23, , , ,633 Payroll Taxes and Benefits Social Security 6.20% $ 94,200 1,435 17,219 17,735 18,267 Medicare 1.45% 336 4,027 4,148 4,272 Federal Unemployment Tax (FUTA) 0.80% $ 7, State Unemployment Tax (SUTA) 2.70% $ 7, ,213 3,213 3,213 Employee Pension Programs 0.00% Worker's Compensation 750 9,000 9,270 9,548 Employee Health Insurance 1,200 14,400 14,832 15,277 Other Employee Benefit Programs Total Payroll Taxes and Benefits 4,068 48,811 50,150 51,529 Total Salaries and Related Expenses 27, , , ,163

42 Chipotle Fixed Operating Expenses 5-Jul-06 Fixed Operating Expenses Monthly Year One Year Two Year Three Notes Percent Change 3.00% 3.00% Expenses Advertising $ 1,667 20,000 20,600 21,218 Car and Truck Expenses Commissions and Fees Contract Labor Credit Card and Bank Charges 300 3,600 3,708 3,819 Customer Discounts and Refunds Dues and Subscriptions Entertainment Insurance (Liability and Property) 250 3,000 3,090 3,183 Internet 150 1,800 1,854 1,910 Legal and Professional Fees 200 2,400 2,472 2,546 Office Expenses 200 2,400 2,472 2,546 Postage and Delivery Rent (on business property) Rent of Vehicles and Equipment Repairs and Maintenance 500 6,000 6,180 6,365 Supplies 500 6,000 6,180 6,365 Telephone and Communications 200 2,400 2,472 2,546 Travel Utilities 600 7,200 7,416 7,638 Total Expenses 4,567 54,800 56,444 58,137 Other Expenses Depreciation 3,426 41,114 41,114 41,114 Interest Commercial Loan Commercial Mortgage 4,516 54,198 52,998 51,698 Line of Credit Total Other Expenses 7,943 95,312 94,112 92,812 Total Fixed Operating Expenses 12, , , ,950

43 Chipotle Projected Sales Forecast 5-Jul-06 Products and Services Assumptions % January February March April May June July August September October November December Totals Local Market Food Sales Price Per Unit $ % Variable Cost Per Unit $ % Gross Margin Per Unit $ % Projected Unit Sales Seasonality Factor 8.00% 7.00% 8.50% 8.75% 8.75% 8.75% 8.75% 7.50% 8.50% 8.50% 8.50% 8.50% % Year One 32,000 28,000 34,000 35,000 35,000 35,000 35,000 30,000 34,000 34,000 34,000 34, ,000 Year Two Growth 3.00% 32,960 28,840 35,020 36,050 36,050 36,050 36,050 30,900 35,020 35,020 35,020 35, ,000 Year Three Growth 2.00% 33,619 29,417 35,720 36,771 36,771 36,771 36,771 31,518 35,720 35,720 35,720 35, ,240 Fixed Expense Allocation 60.00% Projected Revenue $ 400,000 Variable Costs 112,000 Gross Margin 288,000 Fixed Expenses 90,067 Profit 197, % Breakeven Sales Revenue $ 125, Breakeven Sales Units 125,093 Commuter Food Sales Price Per Unit $ % Variable Cost Per Unit $ % Gross Margin Per Unit $ % Projected Unit Sales Seasonality Factor 6.67% 6.67% 9.33% 9.33% 9.33% 8.00% 6.67% 8.00% 8.00% 9.33% 9.33% 9.33% % Year One 10,000 10,000 14,000 14,000 14,000 12,000 10,000 12,000 12,000 14,000 14,000 14, ,000 Year Two Growth 3.00% 10,300 10,300 14,420 14,420 14,420 12,360 10,300 12,360 12,360 14,420 14,420 14, ,500 Year Three Growth 3.00% 10,609 10,609 14,853 14,853 14,853 12,731 10,609 12,731 12,731 14,853 14,853 14, ,135 Fixed Expense Allocation 15.00% Projected Revenue $ 150,000 Variable Costs 42,000 Gross Margin 108,000 Fixed Expenses 22,517 Profit 85, % Breakeven Sales Revenue 31, $ Breakeven Sales Units 31,273

44 Chipotle Projected Sales Forecast - Page 2 5-Jul-06 Products and Services Assumptions % January February March April May June July August September October November December Totals Catering Events Price Per Unit $ % Variable Cost Per Unit $ % Gross Margin Per Unit $ % Projected Unit Sales Seasonality Factor 5.00% 5.00% 5.00% 7.50% 7.50% 7.50% 10.00% 10.00% 10.00% 10.00% 10.00% 12.50% % Year One 5,000 5,000 5,000 7,500 7,500 7,500 10,000 10,000 10,000 10,000 10,000 12, ,000 Year Two Growth 4.00% 5,200 5,200 5,200 7,800 7,800 7,800 10,400 10,400 10,400 10,400 10,400 13, ,000 Year Three Growth 4.00% 5,408 5,408 5,408 8,112 8,112 8,112 10,816 10,816 10,816 10,816 10,816 13, ,160 Fixed Expense Allocation 15.00% Projected Revenue $ 100,000 Variable Costs 32,000 Gross Margin 68,000 Fixed Expenses 22,517 Profit 45, % Breakeven Sales Revenue $ 33, Breakeven Sales Units 33,113 Beverages Price Per Unit $ % Variable Cost Per Unit $ % Gross Margin Per Unit $ % Projected Unit Sales Seasonality Factor 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 9.00% 9.00% 9.00% 9.00% % Year One 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,500 4,500 4,500 4,500 50,000 Year Two Growth 3.00% 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,635 4,635 4,635 4,635 51,500 Year Three Growth 2.00% 4,202 4,202 4,202 4,202 4,202 4,202 4,202 4,202 4,728 4,728 4,728 4,728 52,530 Fixed Expense Allocation 10.00% Projected Revenue $ 50,000 Variable Costs 9,000 Gross Margin 41,000 Fixed Expenses 15,011 Profit 25, % Breakeven Sales Revenue 18, $ Breakeven Sales Units 18,306

45 Chipotle Cash Receipts and Disbursements 5-Jul-06 Accounts Receivable Collections Percent of Collections 0 to 30 days % 31 to 60 days 0.00% More than 60 days 0.00% Total Collections Percentage % Accounts Payable Disbursements Number of Days to Pay Suppliers 0 to 30 days % 31 to 60 days 0.00% More than 60 days 0.00% Total Disbursements Percentage % Line of Credit Assumptions Desired Minimum Cash Balance $ - Line of Credit Interest Rate 9.00% Income Tax Assumptions Effective Income Tax Rate 0.00% Amortization of Start-Up Expenses Amortization Period in Years -

46 Chipotle Projected Income Statement - Year One January February March April May June July August September October November December Totals Income Local Market Food Sales 32,000 28,000 34,000 35,000 35,000 35,000 35,000 30,000 34,000 34,000 34,000 34, ,000 Commuter Food Sales 10,000 10,000 14,000 14,000 14,000 12,000 10,000 12,000 12,000 14,000 14,000 14, ,000 Catering Events 5,000 5,000 5,000 7,500 7,500 7,500 10,000 10,000 10,000 10,000 10,000 12, ,000 Beverages 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,500 4,500 4,500 4,500 50,000 Total Income 51,000 47,000 57,000 60,500 60,500 58,500 59,000 56,000 60,500 62,500 62,500 65, ,000 Cost of Sales Local Market Food Sales 8,960 7,840 9,520 9,800 9,800 9,800 9,800 8,400 9,520 9,520 9,520 9, ,000 Commuter Food Sales 2,800 2,800 3,920 3,920 3,920 3,360 2,800 3,360 3,360 3,920 3,920 3,920 42,000 Catering Events 1,600 1,600 1,600 2,400 2,400 2,400 3,200 3,200 3,200 3,200 3,200 4,000 32,000 Beverages ,000 Total Cost of Sales 14,080 12,960 15,760 16,840 16,840 16,280 16,520 15,680 16,890 17,450 17,450 18, ,000 Gross Margin 36,920 34,040 41,240 43,660 43,660 42,220 42,480 40,320 43,610 45,050 45,050 46, ,000 Total Salary and Wages 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27, ,531 Fixed Business Expenses Advertising 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 1,667 20,000 Car and Truck Expenses Commissions and Fees Contract Labor Credit Card and Bank Charges ,600 Customer Discounts and Refunds Dues and Subscriptions Entertainment Insurance (Liability and Property) ,000 Internet ,800 Legal and Professional Fees ,400 Office Expenses ,400 Postage and Delivery Rent (on business property) Rent of Vehicles and Equipment Repairs and Maintenance ,000 Supplies ,000 Telephone and Communications ,400 Travel Utilities ,200 Total Fixed Business Expenses 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 54,800 Total Other Expenses 7,986 7,978 7,971 7,963 7,955 7,947 7,939 7,931 7,923 7,915 7,906 7,898 95,312 Net Income (2,844) (5,716) 1,492 3,920 3,928 2,495 2, ,910 5,358 5,366 7,074 28,358

47 Chipotle Projected Cash Flow Statement - Year One January February March April May June July August September October November December Totals Beginning Cash Balance 15,000 14,421 10,962 14,704 20,865 27,026 31,747 36,728 39,550 45,661 53,212 60,763 Cash Inflows Income from Sales 51,000 47,000 57,000 60,500 60,500 58,500 59,000 56,000 60,500 62,500 62,500 65, ,000 Accounts Receivable Total Cash Inflows 51,000 47,000 57,000 60,500 60,500 58,500 59,000 56,000 60,500 62,500 62,500 65, ,000 Cash Outflows Investing Activities New Capital Purchases Cost of Sales 14,080 12,960 15,760 16,840 16,840 16,280 16,520 15,680 16,890 17,450 17,450 18, ,000 Operating Activities Salaries and Wages 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27,211 27, ,531 Fixed Business Expenses 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 4,567 54,800 Taxes Financing Activities - Loan Payments 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 68,655 Line of Credit Interest Line of Credit Repayments Dividends Paid Total Cash Outflows 51,579 50,459 53,259 54,339 54,339 53,779 54,019 53,179 54,389 54,949 54,949 55, ,986 Cash Flow (579) (3,459) 3,741 6,161 6,161 4,721 4,981 2,821 6,111 7,551 7,551 9,251 55,014 Operating Cash Balance 14,421 10,962 14,704 20,865 27,026 31,747 36,728 39,550 45,661 53,212 60,763 70,014 Line of Credit Drawdowns Ending Cash Balance 14,421 10,962 14,704 20,865 27,026 31,747 36,728 39,550 45,661 53,212 60,763 70,014 Line of Credit Balance

48 Chipotle Balance Sheet - Year One Base Period End of Year One Assets Current Assets Cash 15,000 70,014 Accounts Receivable - - Inventory 4,500 4,500 Prepaid Expenses 8,400 8,400 Other Current - - Total Current Assets 27,900 82,914 Fixed Assets Real Estate 220, ,000 Buildings 580, ,000 Leasehold Improvements - - Equipment 68,000 68,000 Furniture and Fixtures 12,000 12,000 Vehicles - - Other Fixed Assets - - Total Fixed Assets 880, ,000 Less: Accumulated Depreciation - 41,114 Total Assets 907, ,800 Liabilities and Owner's Equity Liabilities Accounts Payable - - Notes Payable - - Mortgage Payable 684, ,543 Line of Credit Balance - - Total Liabilities 684, ,543 Owner's Equity Common Stock 223, ,900 Retained Earnings - 28,358 Dividends Dispersed - - Total Owner's Equity 223, ,258 Total Liabilities and Owner's Equity 907, ,800 Statement Balances Statement Balances

49 Chipotle Year End Summary Year One % Year Two % Year Three % Income Local Market Food Sales 400, , ,240 Commuter Food Sales 150, , ,135 Catering Events 100, , ,160 Beverages 50,000 51,500 52,530 Total Income 700, % 722, % 740, % Cost of Sales Local Market Food Sales 112, , ,667 Commuter Food Sales 42,000 43,260 44,558 Catering Events 32,000 33,280 34,611 Beverages 9,000 9,270 9,455 Total Cost of Sales 195, % 201, % 206, % Gross Margin 505, % 520, % 533, % Total Salary and Wages 326, % 336, % 346, % Fixed Business Expenses Advertising 20,000 20,600 21,218 Car and Truck Expenses Commissions and Fees Contract Labor Credit Card and Bank Charges 3,600 3,708 3,819 Customer Discounts and Refunds Dues and Subscriptions Entertainment Insurance (Liability and Property) 3,000 3,090 3,183 Internet 1,800 1,854 1,910 Legal and Professional Fees 2,400 2,472 2,546 Office Expenses 2,400 2,472 2,546 Postage and Delivery Rent (on business property) Rent of Vehicles and Equipment Repairs and Maintenance 6,000 6,180 6,365 Supplies 6,000 6,180 6,365 Telephone and Communications 2,400 2,472 2,546 Travel Utilities 7,200 7,416 7,638 Total Fixed Business Expenses 54, % 56, % 58, % Total Other Expenses 54, % 52, % 51, % Net Income 28, % 34, % 36, %

50 Chipotle Projected Income Statement - Year Two January February March April May June July August September October November December Totals Income Local Market Food Sales 32,960 28,840 35,020 36,050 36,050 36,050 36,050 30,900 35,020 35,020 35,020 35, ,000 Commuter Food Sales 10,300 10,300 14,420 14,420 14,420 12,360 10,300 12,360 12,360 14,420 14,420 14, ,500 Catering Events 5,200 5,200 5,200 7,800 7,800 7,800 10,400 10,400 10,400 10,400 10,400 13, ,000 Beverages 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,635 4,635 4,635 4,635 51,500 Total Income 52,580 48,460 58,760 62,390 62,390 60,330 60,870 57,780 62,415 64,475 64,475 67, ,000 Cost of Sales Local Market Food Sales 9,229 8,075 9,806 10,094 10,094 10,094 10,094 8,652 9,806 9,806 9,806 9, ,360 Commuter Food Sales 2,884 2,884 4,038 4,038 4,038 3,461 2,884 3,461 3,461 4,038 4,038 4,038 43,260 Catering Events 1,664 1,664 1,664 2,496 2,496 2,496 3,328 3,328 3,328 3,328 3,328 4,160 33,280 Beverages ,270 Total Cost of Sales 14,518 13,365 16,249 17,369 17,369 16,792 17,048 16,182 17,429 18,006 18,006 18, ,170 Gross Margin 38,062 35,095 42,511 45,021 45,021 43,538 43,822 41,598 44,986 46,470 46,470 48, ,830 Total Salary and Wages 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28, ,202 Fixed Business Expenses Advertising 1,717 1,717 1,717 1,717 1,717 1,717 1,717 1,717 1,717 1,717 1,717 1,717 20,600 Car and Truck Expenses Commissions and Fees Contract Labor Credit Card and Bank Charges ,708 Customer Discounts and Refunds Dues and Subscriptions Entertainment Insurance (Liability and Property) ,090 Internet ,854 Legal and Professional Fees ,472 Office Expenses ,472 Postage and Delivery Rent (on business property) Rent of Vehicles and Equipment Repairs and Maintenance ,180 Supplies ,180 Telephone and Communications ,472 Travel Utilities ,416 Total Fixed Business Expenses 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 56,444 Total Other Expenses 7,890 7,881 7,873 7,864 7,856 7,847 7,839 7,830 7,821 7,812 7,803 7,794 94,112 Net Income (2,549) (5,507) 1,918 4,436 4,444 2,970 3,263 1,047 4,445 5,937 5,946 7,723 34,073

51 Chipotle Projected Cash Flow Statement - Year Two January February March April May June July August September October November December Totals Beginning Cash Balance 70,014 69,634 66,288 70,357 76,936 83,515 88,611 93,992 97, , , ,748 Cash Inflows Income from Sales 52,580 48,460 58,760 62,390 62,390 60,330 60,870 57,780 62,415 64,475 64,475 67, ,000 Accounts Receivable Total Cash Inflows 52,580 48,460 58,760 62,390 62,390 60,330 60,870 57,780 62,415 64,475 64,475 67, ,000 Cash Outflows Investing Activities New Capital Purchases Cost of Sales 14,518 13,365 16,249 17,369 17,369 16,792 17,048 16,182 17,429 18,006 18,006 18, ,170 Operating Activities Salaries and Wages 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28,017 28, ,202 Fixed Business Expenses 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 4,704 56,444 Taxes Financing Activities - Loan Payments 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 68,655 Line of Credit Interest Line of Credit Repayments Dividends Paid Total Cash Outflows 52,960 51,807 54,691 55,811 55,811 55,234 55,489 54,624 55,870 56,447 56,447 57, ,471 Cash Flow (380) (3,347) 4,069 6,579 6,579 5,096 5,381 3,156 6,545 8,028 8,028 9,796 59,529 Operating Cash Balance 69,634 66,288 70,357 76,936 83,515 88,611 93,992 97, , , , ,544 Line of Credit Drawdowns Ending Cash Balance 69,634 66,288 70,357 76,936 83,515 88,611 93,992 97, , , , ,544 Line of Credit Balance

52 Chipotle Balance Sheet - Year Two End of Year One End of Year Two Assets Current Assets Cash 70, ,544 Accounts Receivable - - Inventory 4,500 4,500 Prepaid Expenses 8,400 8,400 Other Current - - Total Current Assets 82, ,444 Fixed Assets Real Estate 220, ,000 Buildings 580, ,000 Leasehold Improvements - - Equipment 68,000 68,000 Furniture and Fixtures 12,000 12,000 Vehicles - - Other Fixed Assets - - Total Fixed Assets 880, ,000 Less: Accumulated Depreciation 41,114 82,229 Total Assets 921, ,215 Liabilities and Owner's Equity Liabilities Accounts Payable - - Notes Payable - - Mortgage Payable 669, ,885 Line of Credit Balance - - Total Liabilities 669, ,885 Owner's Equity Common Stock 223, ,900 Retained Earnings 28,358 62,430 Dividends Dispersed - - Total Owner's Equity 252, ,330 Total Liabilities and Owner's Equity 921, ,215 Statement Balances Statement Balances

53 Chipotle Projected Income Statement - Year Three January February March April May June July August September October November December Totals Income Local Market Food Sales 33,619 29,417 35,720 36,771 36,771 36,771 36,771 31,518 35,720 35,720 35,720 35, ,240 Commuter Food Sales 10,609 10,609 14,853 14,853 14,853 12,731 10,609 12,731 12,731 14,853 14,853 14, ,135 Catering Events 5,408 5,408 5,408 8,112 8,112 8,112 10,816 10,816 10,816 10,816 10,816 13, ,160 Beverages 4,202 4,202 4,202 4,202 4,202 4,202 4,202 4,202 4,728 4,728 4,728 4,728 52,530 Total Income 53,839 49,636 60,183 63,938 63,938 61,816 62,398 59,267 63,995 66,117 66,117 68, ,065 Cost of Sales Local Market Food Sales 9,413 8,237 10,002 10,296 10,296 10,296 10,296 8,825 10,002 10,002 10,002 10, ,667 Commuter Food Sales 2,971 2,971 4,159 4,159 4,159 3,565 2,971 3,565 3,565 4,159 4,159 4,159 44,558 Catering Events 1,731 1,731 1,731 2,596 2,596 2,596 3,461 3,461 3,461 3,461 3,461 4,326 34,611 Beverages ,455 Total Cost of Sales 14,871 13,694 16,647 17,807 17,807 17,213 17,484 16,607 17,878 18,473 18,473 19, ,292 Gross Margin 38,968 35,942 43,536 46,131 46,131 44,603 44,914 42,660 46,116 47,644 47,644 49, ,773 Total Salary and Wages 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28, ,163 Fixed Business Expenses Advertising 1,768 1,768 1,768 1,768 1,768 1,768 1,768 1,768 1,768 1,768 1,768 1,768 21,218 Car and Truck Expenses Commissions and Fees Contract Labor Credit Card and Bank Charges ,819 Customer Discounts and Refunds Dues and Subscriptions Entertainment Insurance (Liability and Property) ,183 Internet ,910 Legal and Professional Fees ,546 Office Expenses ,546 Postage and Delivery Rent (on business property) Rent of Vehicles and Equipment Repairs and Maintenance ,365 Supplies ,365 Telephone and Communications ,546 Travel Utilities ,638 Total Fixed Business Expenses 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 58,137 Total Other Expenses 7,785 7,776 7,767 7,758 7,749 7,739 7,730 7,721 7,711 7,701 7,692 7,682 92,812 Net Income (2,509) (5,526) 2,077 4,681 4,691 3,172 3,493 1,248 4,714 6,251 6,261 8,109 36,661

54 Chipotle Projected Cash Flow Statement - Year Three January February March April May June July August September October November December Totals Beginning Cash Balance 129, , , , , , , , , , , ,292 Cash Inflows Income from Sales 53,839 49,636 60,183 63,938 63,938 61,816 62,398 59,267 63,995 66,117 66,117 68, ,065 Accounts Receivable Total Cash Inflows 53,839 49,636 60,183 63,938 63,938 61,816 62,398 59,267 63,995 66,117 66,117 68, ,065 Cash Outflows Investing Activities New Capital Purchases Cost of Sales 14,871 13,694 16,647 17,807 17,807 17,213 17,484 16,607 17,878 18,473 18,473 19, ,292 Operating Activities Salaries and Wages 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28,847 28, ,163 Fixed Business Expenses 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 4,845 58,137 Taxes Financing Activities - Loan Payments 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 5,721 68,655 Line of Credit Interest Line of Credit Repayments Dividends Paid Total Cash Outflows 54,284 53,107 56,060 57,220 57,220 56,626 56,897 56,020 57,291 57,885 57,885 58, ,247 Cash Flow (445) (3,471) 4,123 6,718 6,718 5,191 5,502 3,247 6,704 8,231 8,231 10,070 60,818 Operating Cash Balance 129, , , , , , , , , , , ,362 Line of Credit Drawdowns Ending Cash Balance 129, , , , , , , , , , , ,362 Line of Credit Balance

55 Chipotle Balance Sheet - Year Three End of Year Two End of Year Three Assets Current Assets Cash 129, ,362 Accounts Receivable - - Inventory 4,500 4,500 Prepaid Expenses 8,400 8,400 Other Current - - Total Current Assets 142, ,262 Fixed Assets Real Estate 220, ,000 Buildings 580, ,000 Leasehold Improvements - - Equipment 68,000 68,000 Furniture and Fixtures 12,000 12,000 Vehicles - - Other Fixed Assets - - Total Fixed Assets 880, ,000 Less: Accumulated Depreciation 82, ,343 Total Assets 940, ,919 Liabilities and Owner's Equity Liabilities Accounts Payable - - Notes Payable - - Mortgage Payable 653, ,928 Line of Credit Balance - - Total Liabilities 653, ,928 Owner's Equity Common Stock 223, ,900 Retained Earnings 62,430 99,091 Dividends Dispersed - - Total Owner's Equity 286, ,991 Total Liabilities and Owner's Equity 940, ,919 Statement Balances Statement Balances

56 Chipotle Financial Ratios 5-Jul-06 Ratio Year One Year Two Year Three Liquidity Current Ratio Quick Ratio Safety Debt to Equity Ratio Debt to Coverage Ratio Profitability Sales Growth COGS to Sales Gross Profit Margin SG&A to Sales Net Profit Margin Return on Equity Return on Assets Owner's Compensation to Sales Efficiency Days in Receivables Accounts Receivable Turnover Days in Inventory Inventory Turnover Sales to Total Assets

57 Chipotle Breakeven Analysis 5-Jul-06 Breakeven Analysis Dollars Percent Annual Sales Revenue $ 700, % Cost of Sales 195, % Gross Margin 505, % Salaries and Wages 326,531 Fixed Operating Expenses 150,112 Total Fixed Business Expenses 476,642 Breakeven Sales Calculation 476, % Breakeven Sales in Dollars $ 660,692

58 Chipotle Amortization Schedule Loan Type Assumptions January February March April May June July August September October November December Totals Commercial Loan Principal Amount $ - Interest Rate 9.00% Loan Term in Months Monthly Payment Amoun $0.00 Year One Interest Principal Loan Balance Year Two Interest Principal Loan Balance Year Three Interest Principal Loan Balance Commercial Mortgage Principal Amount $ 684, Interest Rate 8.00% Loan Term in Months Monthly Payment Amoun $5, Year One Interest 4,560 4,552 4,544 4,537 4,529 4,521 4,513 4,505 4,497 4,488 4,480 4,472 54,198 Principal 1,161 1,169 1,177 1,185 1,193 1,200 1,208 1,217 1,225 1,233 1,241 1,249 14,457 Loan Balance 682, , , , , , , , , , , ,543 Year Two Interest 4,464 4,455 4,447 4,438 4,430 4,421 4,412 4,404 4,395 4,386 4,377 4,368 52,998 Principal 1,258 1,266 1,274 1,283 1,292 1,300 1,309 1,318 1,326 1,335 1,344 1,353 15,657 Loan Balance 668, , , , , , , , , , , ,885 Year Three Interest 4,359 4,350 4,341 4,332 4,323 4,313 4,304 4,294 4,285 4,275 4,266 4,256 51,698 Principal 1,362 1,371 1,380 1,389 1,399 1,408 1,417 1,427 1,436 1,446 1,456 1,465 16,957 Loan Balance 652, , , , , , , , , , , ,928

59 Chipotle Financial Diagnostics This sheet performs a few tests on your numbers to see if they seem within certain reasonable ranges. Remember, no computer can tell whether your projections are truly well-constructed, only a human can do that. But these tests can at least look for values that are critically out of range. Financial Diagnostics Value Findings General Financing Assumptions Owner's Cash Injection into the Business 24.66% Owner's injection is reasonable Cash Request as percent of Total Required Funds 1.65% Cash request seems reasonable with respect to total request Loan Assumptions Commercial Loan Interest rate 9.00% Interest rate seems reasonable Commercial Loan Term in Months 84 Loan term seems within range for this type of loan Commercial Mortgage Interest rate 8.00% Interest rate seems reasonable Commercial Mortgage Term in Months Loan term seems within range for this type of loan Loan Payments as a Percent of Projected Sales 0.82% Calculated loan payments as a percent of sales seem resonable Income Statement Gross Margin as a Percent of Sales 72.14% Gross margin percentage seems reasonable Owner's Compensation Lower Limit Check $ 50,000 An owner's compensation amount has been established Owner's Compensation Upper Limit Check % Owner's compensation may be too high relative to profitability of business Advertising Expense Levels as a Percent of Sales 2.86% Advertising as a percent of sales may be too low Profitability Levels $ 28,358 The business is showing a profit Profitability as a Percent of Sales 4.05% The projection does not seem highly unreasonable Cash Flow Statement Desired Operating cash Flow Levels $ - The financial projection provides the desired level of cash flow Line of Credit Drawdowns $ - The business doesn't seem to require a line of credit Accounts Receivable Ratio to Sales 0.00% Accounts receivable amount as a percent of sales seems reasonable Balance Sheet Does the Base Period Balance Sheet Balance? - The balance sheet does balance Does the Final Balance Sheet Balance - The balance sheet does balance Debt to Equity Ratio % The debt to equity ratio seems reasonable Breakeven Analysis Breakeven Levels $ 39,308 The sales projection exceeds the projected break-even sales level