New Deal Cafe Business Plan

THE NEW DEAL

CAFE, RESTAURANT, MUSIC and ART VENUE, WINE BAR

and MUCH MORE...

www.newdealcafe.com

New Deal Cafe Summary

Cafe and Community Particulars

· New Deal Cafe, Inc., a cooperative coffeehouse/restaurant in Greenbelt, MD.

· Opened in 1995; seven years at existing location; expanded in October, 2005.

· Located in 1930's era Historic Roosevelt Center.

· Features live entertainment, local art, and vegetarian, vegan and healthy fare.

· Center contains 25 stores including a Credit Union, COOP Grocery, Vintage Movie Theater, local arts center, a Deli, Chinese Restaurant, a Yoga Studio and office space.

· Adjacent to City community center, pool, ballfields, town hall, gas station.

· Incorporated with local City Council and an active community.

Restaurant Specifics

· Two dining rooms with seating for 60 persons plus outdoor dining with seating for 20.

· Approximately 3,000 sf of space.

· Attractive and sunny space with large window exposure on two sides of the Center with ample free parking.

· Includes kitchen, dry goods storage room, office, three bathrooms, equipment room.

· Community owned as a cooperative venture, serves as community meeting place.

· Volunteer board of directors and committees; 10-14 part time staff.

· Live music / entertainment offered up to 6 nights a week.

· Free Wi-Fi internet access provided to customers and all of Roosevelt Center.

· Art exhibits hung in both dining rooms, two artists changed monthly.

· Catering and private parties in separate room.

· Incorporated municipality provides excellent trash service and police.

· Wine and beer license recently extended to outdoor patio service.

Financials

· Gross sales increased continuously for four years from 2003 to 2006.

· First full time manager drove sales from $309K to $380K during same period.

· Outstanding loans totaling $92K.

· Increased costs of expansion not met by increasing business due to financial and physical infrastructure constraints.

· Capitalization needed to allow renovation phase of expansion, marketing, and accounting improvements.

Planned Improvements

· Installation of enlarged and relocated commercial kitchen

· Expansion of beer and wine license to covered outdoor seating area approved.

· Upgrading of furnishings with “art deco” new deal era theme, new floor coverings

· Table service to restaurant customers and during music events.

Future Potential

· Existing customers primarily from “Old Greenbelt”; secondary market is Greenbelt East and West; population within 1-mile radius over 21,000, median family income is $55, 671 (2000).

· Nearby high-rise office parks (Capital Office Park, Maryland Trade Center; NASA), Beltsville Agricultural Research Center, and University of Maryland provide potential for planned lunch and carry-out business.

· New planned kitchen will allow the realization of expanded catering and meeting space potential.

· Planned upscale improvements will attract a wider range of customers.

Table of Contents

1.0 Executive Summary

1.1 Objectives Page 2

1.2 Mission Statement Page 2

1.3 Keys to Success Page 2

1.4 Risks Page 3

2.0 Company Summary

2.1 Ownership Page 3

2.2 History Page 3

2.3 Location & Facilities Page 3

2.4 The New Deal Business Philosophy Page 4

2.5 Green Business Page 4

2.6 Services Page 4

2.7 Finances Page 6

3.0 Market Analysis Page 7

3.1 Emerging Green Economy Page 9

4.0 Vision/Proposal Page 9

5.0 Business Plan

5.1 Management & Organization Plan Page 10

5.2 Major Renovation / Financial Projections Page 10

5.3 Short Range Improvement Plan Page 14

5.4 Operational Plan Page 14

5.5 Security Plan Page 15

5.6 Marketing Plan Page 15

6.0 Appendices

Cafe Pro Forma 2006 / 2009

Board of Directors and Staff Resumes

By-Laws, New Deal Cafe, Inc.

Cafe Location and Kitchen Details, Current and Proposed Menus

Cafe Current Wine Selections

Website Excerpts

Music Schedule

Security Plan

Taxes (Past Three Years)

News Articles on Cafe

Cafe Promotional Flyers

1.0 Executive Summary

1.1 Objectives

The objective of the New Deal Cafe Cooperative in obtaining a loan is to capitalize a 12 year old community supported cooperative coffeehouse/cafe/music hall in Greenbelt's historic Roosevelt Center. Our primary goal is to renovate the Cafe's existing space and operate a significantly upgraded and financially successful restaurant serving health conscious meals, specialty coffees and teas, beer and wine while capitalizing on its unique niche as a venue for local art, music, catered meeting space and community events.

The cafe will continue to provide a community gathering place for all people and groups in Old Greenbelt, as well as reach out to the larger Greenbelt market, including greater Greenbelt, Berwyn Heights, College Park and the University of Maryland, Beltsville, Takoma Park and the employees of surrounding businesses, the USDA, USFWS and Greenbelt's largest employer NASA.

1.2 Mission Statement

The New Deal will provide a community gathering place for members, residents, and patrons to enjoy healthy food alternatives and a range of specialty beverages. The cafe is cooperatively owned and is committed to ecologically sound business practices and cooperative principles.

The cafe will support the visual and performing arts in order to provide a catalyst for creative expression and the enjoyment of patrons. In turn, the membership and patrons will support the cafe allowing it to thrive and enrich the life of the community.

The New Deal co-op members, board of directors, and employees are dedicated to the promotion of community orientated, socially, environmentally and fiscally sound business practices that help support a friendlier and more conscious society.

1.3 Keys to Success

It is reasonable that the cafe can continue to grow and improve its financial situation by taking several key steps. First, the cafe must renovate to replace/upgrade its equipment and improve its appearance. Second, the cafe must upgrade the cafe's financial operations including budgeting, book keeping, reporting, inventory tracking, and cash management while expanding cafe products and services. Third, the cafe must maximize the potential of its location and space. The potential of the cafe is considered high and significantly under-realized.

1.4 Risks

The New Deal is a business that has had some success in the past although it has experienced difficulties due to an expansion that doubled its size/rent/utilities, increases in energy and the costs of purchases and a recent management transition. The New Deal must breathe new life into the business, focus its business vision, and develop a plan for setting and achieving goals.

2.0 Company Summary

2.1 Ownership

The New Deal is a cooperatively-owned cafe and community meeting place located at the Roosevelt Center in the Historic Greenbelt town-center. The cafe is owned by over 500 lifetime members who joined the cafe over the years. At this time the cafe has about 100 active members.

2.2 History

The New Deal Cafe was conceived in 1994 as a coffeehouse where people would gather to meet friends, have great food, and hear live music. The cafe opened on December 30, 1995 in the Greenbelt Community Center. In its first location the cafe was open only on Friday and Saturday nights, although the vision was always to have a full service coffeehouse.

A space became available in the Roosevelt Center in October 1999 and the attempt to open a full time cafe began in earnest. With the grand opening on April 15, 2000, and after many hours of volunteer labor, the original dream became a reality. In November 2003, the cafe hired its first full time professional manager, which led to the creation of a five-year plan to enhance operations and consolidate the cafe's increasing success.

The cafe obtained a lease for the adjacent space, and after more volunteer work, doubled the size of the operation in October 2005. The new space provided more capacity and the option to expand into catering special events. The sunny orientation and quiet nature of the room was an instant hit with patrons.

2.3 Location and Facilities

The New Deal Cafe is located at 113 Centerway in Greenbelt, Md. The Roosevelt (Shopping) Center is part of the original 1937 planned community of Greenbelt constructed under the FDR Administration's Federal New Deal Program to make work for unemployed individuals and to create affordable homes for those affected by the depression. Greenbelt is an incorporated city in northern Prince George's County, outside Washington, D.C. Greenbelt has nearby access to the Capitol Beltway (I-495/95), the Baltimore-Washington Parkway (295), and Metrobus service to and from the Greenbelt Metro Station. City-owned and maintained parking lots provide free and ample parking for cafe patrons who arrive by car.

2.4 The New Deal Business Philosophy

The New Deal believes in supporting its own growth and prosperity by supporting and serving the people and organizations in our sphere of influence, OUR COMMUNITY. We will do this through socially, environmentally, and economically conscious business practices while providing a well run, unique community cafe experience for all to enjoy.

2.5 Green Business

The New Deal will become a “green” business that gets a significant percentage of its energy from renewable energy sources. We will invest in high efficiency HVAC, lighting, and upgraded kitchen equipment to replace our current failing infrastructure. Our facilities will be professionally cleaned by companies such as Green Clean Maid & Janitorial Services who use only environmentally friendly cleaning products. Our aged patio furniture will be replaced with sustainably harvested wood or high quality recycled plastic or metal. The patio roof will be converted to a green roof. Food waste will be minimized and collected nightly by a service for composting. Purchasing will be made with an effort to support local and sustainable businesses whenever possible and economical. Local in season food and vegetarian, vegan, and sustainable meat offerings will be available. Visiting the New Deal will become considered an education in “green” building materials and socially/ecologically conscious business practices.

2.6 Services

The New Deal Cafe provides a variety of products and services:

Organic Coffee and Tea House - The cafe provides a comfortable, quiet location for patrons to peruse the newspaper, to enjoy coffee and tea beverages, to eat breakfast, to utilize free wireless internet access (for checking email, movie schedules, etc.) to study, to read, to catch a late-night snack, and to socialize with friends and colleagues.

Cafe/Restaurant - The New Deal serves three meals a day with an emphasis on its traditional and vegetarian dishes as well as new organic offerings.

Counter Service - Seating for patrons to enjoy their meals is throughout the cafe with attractive tables, and a clean environment. Customers order at the front counter, with food delivered by staff, and patrons are encouraged to self-clean their tables.

Table Service - Service will be converted to table service on an experimental basis in the near future, especially during busy evenings when waits can discourage patrons.

Carryout Service - Statistics show that 3 out of 4 American households sit down to dinner on any given night, but two-thirds of these meals consist of restaurant carryout or supermarket ready-to-eat meals. The cafe will aggressively market its carryout service to Greenbelters to take advantage of this startling trend.

Music & Arts - The cafe continues to serve as a focal point for music and art in Greenbelt. Along with the Greenbelt Movie Theater and the Greenbelt Arts Center, the New Deal Cafe provides a base for customers seeking entertainment from both within and outside the Greenbelt area.

Performance Music Venue - The cafe's music venue, providing concert hall/club entertainment every evening, has been a driving force in the renaissance of the Roosevelt Center and the music scene in Greenbelt and Prince George's County. The cafe will gradually migrate to a higher level of weekend music acts requiring a cover charge, and the cafe's ability to fulfill higher expectations of customers who are starving for a real listening experience without having to drive to Montgomery County or Virginia.

Visual Art Gallery - The cafe will continue to exhibit art works by local guest artists throughout the cafe on a monthly basis. The art is hung on the last Sunday of the month with an opening reception of the first Sunday of the month. The music and art in the cafe is supported by the Friends of the New Deal Cafe (FONDCA).

Expanded Beer & Wine - The cafe has already begun the process to enable it to provide patrons with expanded beer and wine choices and locations for dining.

Outdoor Patio - An expansion of the cafe's wine and beer offerings is already underway with a new larger wine list as well as a continuation of its dedication to serving quality craft beers. The cafe will open a renovated outdoor seating area for “al fresco” dining but with a newly approved ability to serve beer and wine to patrons outside.

Wine Bar - The cafe will open a new wine bar to be constructed in the back room featuring the cafe manager's new unique wine selections. The wine bar will be an opportunity for the cafe to share the joy of wine and the exhilarating sense of discovering a unique vintage with the public in a setting that is relaxing and fun.

Catering/Special Events Service - The cafe will expand its service to customers who desire to hold special public or private events in the back room. The cafe will aggressively seek to fill its booking schedule with parties, reunions, office seminars, meetings, lectures, book signings, and the like during specially designated off-hour periods. The cafe will expand its ability to cater the refreshments and food for these functions. With a capacity to seat approximately 30 people, the cafe offers one of the few small to mid-size rooms available for special occasions in the Greenbelt area.

Environmental/Green Building Movement - The cafe already serves as a point of information for the emerging environmental movement in Greenbelt and environs. The Greening of Greenbelt, the Anacostia River society, the Beaverdam Creek Watershed Watch Group, and others consider the cafe the primary location to communicate their message and to provide education about the green scene to residents. The cafe will expand its support for environmental education and organizing. The cafe will migrate towards the gradual employment of green building renovations.

Mamas & Papas - The cafe will reactivate its role as a place for home schooled children and their parents to visit and get a snack during recess in the afternoon, especially on winter or rainy days. In turn, the Mamas and the Papas will provide a weekday afternoon customer base and have offered volunteer services to the cafe.

2.7 Finances

The corporation experienced four years of increasing sales, improvement, and expansion after hiring its first professional manager in 2002. During the 2003 - 2006 period, the cafe's gross revenues increased 23% from $310,000 in 2003, to $356,000 in 2004, to $371, 000 in 2005, to $382,000 in 2006.

The cafe faced problems over the years including an initial undercapitalization, unreliable used equipment and a lack of funds for improvements. As a result, the cafe has put most of its net income into infrastructure and expansion. The cafe has increasingly been hit with cash shortages during the slow business cycles in late summer and late winter. Without a cushion of savings, cash flow shortages create havoc with the cafe's ability to pay bills and make payroll.

Loans were obtained to make improvements over the last three years from Greenbelt Consumer Cooperative and Bank of America as well as to cover cash shortage problems. With the increase in oil prices in 2006, the cost of goods increased dramatically. Combined with the negative effect of higher gas prices on patrons' disposable income, the cafe was forced to use credit to make payments for operating costs.

Gross revenue for 2007 is forecast to be down 28% from 2006, extrapolated from year-to-date gross revenue, at $275,000, due to several debilitating situations. The cafe's poor showing in the Fall of 2006 was exacerbated in 2007 by a major management and staffing transition, payment of the final $4,500 owed to the IRS, $2,000 in costs of repairing aging equipment infrastructure, two thefts totaling over $7,000, monthly debt service on loans of over $2,500, and increased prices of goods.

The summer of 2007 was particularly slow for the cafe. The cafe needs an investment of $150,000 plus in renovation and equipment upgrades to allow it to be self-sufficient and successful. Economies of scale with added refrigeration and bulk purchases of perishable foods, the ability to cook on site and offer a wider range of food options, and a greater capacity for multiple ticket orders would help significantly. Upgrading failing inefficient HVAC, electrical, lighting, refrigeration, registers in both rooms, and investment in consistent decor have been long understood to be hindrances to Cafe success. Proper investment can significantly increase the cafe's traditional gross income, and its net profits.

The board called a membership meeting for September 16, 2007, 7:30pm to find a solution to the cafe's immediate cash flow problems. Members voted to stay open as a cooperative rather than changing the form of ownership to a share corporation or privately held company. Even though it seemed like a difficult situation, the membership meeting brought the membership together and created renewed volunteer assistance to the Board, the committees, and the cafe. As a result of the meeting, the cafe was able to fill two board positions with persons with a financial background, as well as another person with business acumen.

Members made over $15K in pledges at the membership meeting to help the cafe until a renovation loan is obtained. Members voted to reduce payroll costs by limiting cafe hours to 40 hours per week, subject to management discretion, and by supplying volunteers in four-hour shifts in order to assist the paid staff.

Individuals were encouraged to contribute tax-deductible donations to the Friends of the New Deal Cafe Arts (FONDCA) Arts & Music Sustaining Fund, which will be applied to cafe rent and utilities and free up monies for other cafe expenses. To date this year, over $25,000 in member pledges and donations have been collected to bridge the summer's cash shortages until a capital investment and debt consolidation loan can be arranged.

3.0 Market Analysis

The City of Greenbelt commissioned a Roosevelt Center Market Study prepared by Urban Information Associates, Inc., Baltimore, Maryland in January 2003. The study concluded that the Roosevelt Center isn't your typical highly visible roadside shopping center dominated by familiar chain stores and acres of asphalt parking space. Instead, it is in the center of the original Greenbelt New Town.

The community was built in the late 1930's as a demonstration of improved urban living possibilities. By being in the center of the original Greenbelt, the Roosevelt Center is not visible from Greenbelt Road which is the commercial backbone of the Prince George's County planning area comprised of Greenbelt, Langley Park, and College Park. That said, the study, parts of which are excerpted below, made these more specific points:

• The Roosevelt Center was opened 65 years ago as a "New Town" collection of small, independent stores. Today, it has its own community center character. Its atmosphere and layout are unique and evidently "comfortable" for those who visit the Roosevelt Center now.

• Roosevelt Center is the only shopping center in the Greenbelt planning area not located at an expressway interchange or on a major highway. It was meant to be off the beaten path as a community center.

• There are currently a negligible number of independently owned restaurants in the area. Most local restaurants are franchises like Ruby Tuesdays, and Chevys. Current local independently owned restaurants do not offer the high level of wine and beer knowledge, nor do they offer the quality of food that The New Deal does. Due to the New Deal's food quality standards, there is currently a high demand for our product.

• The New Deal being one of the few independently owned restaurants in the area adds to its niche market appeal. Its vegetarian and vegan meals are the only ones in the area, and attract patrons from far afield who also visit other successful cafes with vegan offerings such as Franklin's in Hyattsville, and the Berwyn Cafe in Berwyn Heights.

• Roosevelt Center is small and compact with about twenty stores, businesses, and community groups occupying its 54,000 square feet. The busy COOP supermarket is much smaller than today's anchor supermarkets.

• The Roosevelt Center Market Survey found that from 323 responses the COOP Grocery was the most visited store at 19% while the New Deal was the second most visited at 16%.

• Competition with large, supermarket-anchored community shopping centers, most notably Greenway Center and Beltway Plaza, draws trade from the Roosevelt Center market area. But Roosevelt Center is too small to draw much, if anything, from them.

• Competition with other small convenience centers hardly seems to exist. None of the centers initially selected as possible competitive convenience centers was mentioned in the on-site interviews with Roosevelt Center visitors, perhaps because none of them have comparable stores.

• Beer and Wine License - There are currently no local wine bars with which to compete. Local offerings for wine and beer are standard domestic beers and relatively cheap wines. The New Deal's advanced wine and beer selection, wine tasting events, and artistic atmosphere will also add to its niche market appeal.

• Roosevelt Center is nearly surrounded by several large institutional uses including the Beltsville Agricultural Research Center, the NASA Goddard Space Flight Center, and the University of Maryland at College Park. These institutional uses support thousands of employees that have not been marketed to and currently provide limited business for Roosevelt Center despite their proximity.

• An initial assumption was that Roosevelt Center competes with other small centers. But observation and interviews suggest this isn't so. Smaller centers near Roosevelt Center carry sharply differing goods. So they don't compete with Roosevelt Center.

• The center is on the National Register of Historic places. That means it is architecturally and historically significant. So it is, prospectively, eligible for federal and state tax credit incentives and other inducements that can ease the cost burden of renovation. The Roosevelt Center could continue to function as a localized community center and shopping area. But it might also identify some additional market potential warranting some expansion.

• In summary, the primary market area for the cafe is Old (or Central) Greenbelt, the portion of Greenbelt north of MD193 between the Baltimore Washington Parkway and Kenilworth Avenue. The cafe's secondary market area includes the remainder of Greenbelt as well as some areas beyond Greenbelt like Berwyn, Beltsville and College Park.

3.1 Emerging Green Economy

The New Deal becoming a fully “green” business is advantageous right now because of the growing awareness and support of businesses and industries that operate with a concern for the environment. Green businesses are being supported at increasing levels as are organic businesses like local organic farms. Currently the Cafe is a drop off center for over 80 CSA (Community Supported Agriculture) shares weekly from May through October bringing in customers and also providing free produce for the Cafe's cooking.

In becoming a green business, The New Deal may also make arrangement for their electrical power to be purchased from renewable sources like wind and solar. Witness MOMs (My Organic Market) marketing success in purchasing and advertising 100% wind power. Upgrading HVAC, lighting, and purchasing more efficient kitchen equipment will help offset some of the increases in power costs.

4.0 Vision/Proposal

With proper investment, the New Deal would have all the resources including location, to become a hugely successful business. There are four distinct sections that the business seems to currently have, that with a little cultivation will be able to pull the business out of the red and back in black.

The four sections that may comprise The New New Deal are:

1) A full-scale organic coffee and teahouse located in the front of the space;

2) A music club in the back great room that has a performance or event every night;

3) A wine bar located in the club that serves a great deal of quality organic wines; and,

4) An organic restaurant that services the whole floor.

The whole business may choose to create greater distinction for itself by employing green building renovations. With this new vision for The New Deal, the business will become more attractive to customers from outside the Greenbelt community, while maintaining the community atmosphere that so many people value.

5.0 Business Plan

5.1 Management & Organization Plan

The by-laws provide that the board of directors is elected by the members of the corporation (cooperative). The board hires the general manager, who hires and supervises the staff. The new Deal has learned that it is important to divide the management duties between several key staff to avoid overworking managers, and to provide for overlap and backup.

The organizational plan provides for a general cafe manager, head chef, kitchen manager, inventory manager, bookkeeper, and office manager. Professional services required include accounting service, pest management, and marketing services. A copy of the cafe leadership, including board members, key staff, and committee volunteers is included in the appendix.

5.2 Major Renovation - Financial Projections

The following chart details the proposed improvements, hard and soft costs, and anticipated additional sales for the cafe.

THIS CHART HAS BEEN LEFT OUT INTENTIONALLY

The projections on pages 10 to13 indicate that using a conservative estimate, the New Deal Cafe could realize over $95,000 in additional sales immediately after remodeling changes and marketing efforts. Based on a more liberal estimate, additional potential sales could be expected to be as high as $762,000. The attached Pro Forma in the appendices indicates a potential net income for the New Deal Cafe of approximately $55,000 by the second year of operation.

5.3 Short Range Improvement Plan

The short range strategy underway now includes those things that signify

“Immediate Change/Cafe Under New Management” including:

· Frosted Sign on Back (& Front) Window)

· Bathrooms - New flooring, ceiling, lighting

· Barista Machine - Exchange/Bolt to Work Counter

· Outdoor Patio - Design Plan, Proposed Furniture, City Approval

· Painting/Decorating - Add color on non-art walls & bathrooms, interior decorating of bathrooms.

· Open coffee bar at 6:30 am 7 days a week.

· Office Reorganization

· Storage of Festival Equipment Offsite to reduce clutter.

· Kitchen - New Exhaust Vent, Stoves (2), Front Counter, Wine Bar & Storage, POS Register System.

· Entertainment - Music at lunch & brunch; Pump Up Grade of Performers

5.4 Operational Plan

Management - The cafe will be managed by a general cafe manager, and four assistant managers for coffeehouse AM, food/kitchen, events/night scene, and facilities maintenance.

Staffing - The cafe will schedule three paid staff on duty during non-peak hours, including cook, register person, and dishwasher. Four to five staff will be scheduled for peak hours and special events. Volunteers will assist the paid staff as needed and available. Employees and managers are guided by the New Deal Cafe Personnel Policy. Payroll is paid on the 10^th and 24^th of the month.

Inventory - The new Deal Cafe must put an inventory tracking system in place, linked to the POS register system.

New Deal Cafe

Hours