SECOND RUN PIZZA

Team Members

1 2 3
Ansh Mahajan Karan Salhotra Shivek saini
(Business Owner) (Business (Senior Manager)
Partner)
Table of Content
Executive Summary
Company History
Objectives
Mission
Keys to success
Company Summary
Services
Market Analysis
Strategy & Implementation
Financial Projections
EXECUTIVE SUMMARY
The number of movie theaters is decreasing as the major chains create megaplexes
that pile more people into smaller spaces.
This profit strategy has left once popular downtown theaters vacant.
Second Run Pizza is a theater/restaurant business that believes there is a
significant number of theater-goers that are craving a more satisfying and enjoyable
way to catch a movie and a bit to eat.
Second Run Pizza is renovating the downtown Montreal, Majestic Theater and
creating a medium-size restaurant that will show second-run movies that have
proven to still be popular to our target market.
We will offer a totally unique dining and movie experience at an affordable price that
will fill the theater space with repeat customers.
COMPANY HISTORY
The owners of Second Run Pizza, Ansh Mahajan and Karan Salhotra, stress two
factors that they believe assures the success of the business:
Ansh has 15 years experience as a manager of four of the city's most successful
restaurants and karans experience as manager of the Lighthouse Theater, a small
art house theater which has recently returned to profitability under Karans
stewardship.
Karans strong seven year working relationship with Premiere Film Distributors
which will provide the second run films for Second Run Pizza.
Our market and financial analyses indicate that with a start-up expenditure of
$300,000 we can generate $600,000 in sales by the end of year one, and produce
high net profits by the end of year three.
OBJECTIVES

Sales over $600K Profitable in first

Personnel costs
the first year, more year, with net
less than $300K
than a million by profits increasing
the first year.
the third. each year.
MISSION
Second Run's mission is to create a new theater experience for our customers that
will be so enjoyable and satisfying that they will return often and recommend
Second Run to their friends and family.
Our customers will be delighted with our level of service, the quality of the food, and
a theater environment that is second to none. When the film ends and the applause
die out, we believe that our customers will prefer to watch a new movie at Second
Run rather than to ever be squeezed into a Megaplex again.
KEYS TO SUCCESS
Selection of popular films that work best in the group viewing environment; i.e.
comedies, scary or adventure films.
Provide exceptional service that leaves an impression.
Consistent entertainment atmosphere and product quality.
Managing our internal finances and cash flow to enable upward capital growth.
Strict control of all costs, at all times, without exception.
COMPANY & START-UP SUMMARY
Second Run Pizza is a single-unit, medium-sized restaurant. We focus on pizza and a
few creative Italian dishes. The restaurant will be located downtown near the major
shopping centers and evening entertainment establishments.
The founders of the company are Karan Salhotra and Ansh Mahajan. Ansh focuses
on the financial issues and Karan on the personnel issues.
A lease for the location has been secured for $2,000 per month. The theater will
have to be equipped as a restaurant. It will be able to set up shop in time to begin
turning a profit by the end of month eleven and be profitable in the second year.
Both Karan and ansh are investing $150,000 each to start up the company.
 Start-up Funding
Start-up Expenses to Fund $140,800
Start-up Assets to Fund $159,200
Total Funding Required $300,000

Assets
Non-cash Assets from Start-up $10,000
Cash Requirements from Start-up $149,200
Additional Cash Raised $0
Cash Balance on Starting Date $149,200
Total Assets $159,200

Liabilities and Capital

START-UP CAPITAL
Liabilities
Current Borrowing $0
Long-term Liabilities $0
ANALYSIS Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
$0
$0
Total Liabilities $0

Capital
Planned Investment
Investor 1 $150,000
Investor 2 $150,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $300,000

Loss at Start-up (Start-up Expenses) ($140,800)

Total Capital $159,200

Total Capital and Liabilities $159,200

Total Funding $300,000

 Start-up
Requirements
Start-up Expenses
Legal $1,000
Stationery etc. $1,000
Insurance $1,800
Rent/Hydro $2,000
Projection Equipment $40,000
START-UP EXPENSES Kitchen
Initial Marketing
$40,000
$15,000
ANALYSIS Dining Products $5,000
Interior Refit $35,000
Total Start-up Expenses $140,800

Start-up Assets
Cash Required $149,200

Other Current Assets $10,000

Long-term Assets $0
Total Assets $159,200

Total Requirements $300,000

OUR SERVICES
Company Ownership
The restaurant will start out as a simple sole proprietorship, owned by its founders.

3.0 Services
The Menu: The menu is extremely simple. Pizza is the perfect finger food for watching a
movie. We will also include select Italian dishes that fit will in the viewing environment.
Movies: The films will be chosen with two target audiences in mind. The first is the families
that will come to Second Run Pizza to watch movies like Shrek and Spy Kids. These movies
will be shown three times during the afternoon. The second group is young adults who will
come to the evening shows to watch movies like Jeepers Creepers, the Fast and the Furious,
and Rush Hour 2. There will be three evening showings of these films. In addition, there will
be midnight movies for the college crowd on Friday and Saturday.
MARKET ANALYSIS SUMMARY

We believe that our unique dining environment will attract our target customers.
The central location of Second Run Pizza in the downtown shopping and entertainment
center makes the restaurant easily accessible.
Once inside, the customer will find watching a movie at comfortable table seating, while
enjoying great food, is an experience to repeat again and again with friends.
MARKET SEGMENTATION

Families:
We are focusing on parents with children who want to catch
a movie with a pizza in the afternoon or early evening, before
or after shopping at the downtown mall.
Young Adults:
The second group we are going to focus on is young adults
ages 18 - 26 for the evening shows. We believe that this
target group will enjoy this unique way to watch a film and
Second Run Pizza will become a common place for friends to
have an affordable evening's entertainment together.
STRATEGY & IMPLEMENTATION
SUMMARY
Our strategy is simple, we intend to succeed by giving our target customers a
combination of great food and a relaxed enjoyable environment that creates a
memorable experience.

Competitive Edge
Our competitive edge is two fold:
The experience of Karan and Ansh in managing Second Run Pizza.
The agreement with Premiere Film Distributors which have agreed to supply
Second Run Pizza with second run movies.
CONTINUED
Co-owner, Ansh Mahajan has been a fixture of the city's restaurant scene for the
past 15 years. He managed four successful restaurants and has received industry
accolades for his operational excellence.
Karan Salhotra has 20 years of experience in the movie theater industry. Karan was
the manager of the city's largest multiplex for seven years before taking a position
with Premiere Film Distributors where he served as a regional distribution
coordinator for six years.
The owners have negotiated an agreement with Premiere Film Distributors that will
assure that the Second Run will have best available second run films and will
receive 75% of the admission revenue.
This is a better return for the distributor who normally receive only 50% of admission
revenue for second run films. In exchange, Second Run will get the films most
popular with their target customers.
 Sales Strategy
Our initial sales strategy is to flood our target consumers with free movie coupons
for the first three months of operation. The $1.50 charge for the film will be waived
with the coupon. These coupons will be in the city's daily paper as well as the
student papers of Concordia University and Cegep College.
The film charge is really incidental. Second Run's profits will come from food sales.
Menu pricing will reflect this focus. Our prices will be higher than a traditional Pizza
restaurant but we believe the unique dining environment will justify those prices with
our customers.
On the traditional slow days (Monday and Tuesday) we will offer cheaper fare
(spaghetti) and market these days to college students as spaghetti movie night. In
addition, we will have two for one date nights, where couples will only be charged for
one admission.
 Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Movie Admissions 78,400 90,000 100,000
Meals 25,725 33,000 40,000
Other 12,000 13,000 14,000
Total Unit Sales 116,125 136,000 154,000

Unit Prices Year 1 Year 2 Year 3

Movie Admissions $1.50 $1.50 $2.00
Meals $20.00 $20.00 $22.00
Other $5.00 $5.00 $5.00
SALES FORECAST
Sales
Movie Admissions $117,600 $135,000 $200,000
This chart represents our Meals $514,500 $660,000 $880,000
forecast for income on a Other $60,000 $65,000 $70,000
Total Sales $692,100 $860,000 $1,150,000
monthly basis. The table
presents yearly expected Direct Unit Costs Year 1 Year 2 Year 3
sales. Movie Admissions $1.20 $1.20 $1.60
Meals $3.00 $3.00 $3.00
Other $0.50 $0.50 $0.50

Direct Cost of Sales

Movie Admissions $94,080 $108,000 $160,000
Meals $77,175 $99,000 $120,000
Other $6,000 $6,500 $7,000
Subtotal Direct Cost of Sales $177,255 $213,500 $287,000
Sales: Monthly & Yearly
MANAGEMENT SUMMARY

Ansh will be responsible for hiring, training and supervision of all restaurant staff. As
we stated previously, Ansh is the best in his field and will have no trouble in
assembling a team that will be eager to participate in the success of Second Run.
Karan's management focus will be marketing and responsibilities related to the
presentation of the film. It is widely acknowledged that Karan's marketing of the
Lighthouse Theater pulled it out of the red and into its current profitability.
Personnel Plan
As the personnel plan shows, we expect to invest in a good team, fairly
compensated. We think the planned staff is in good proportion to the size of the
restaurant and projected revenues.

Personnel Plan
Year 1 Year 2 Year 3
Manager $48,000 $53,000 $58,000
Hostess $36,000 $40,000 $44,000
Kitchen Staff $60,000 $64,000 $68,000
Cleaning $36,000 $38,000 $40,000
Servers $72,000 $72,000 $72,000
Projectionist $36,000 $40,000 $44,000
Total People 12 15 18

Total Payroll $288,000 $307,000 $326,000

BREAK-EVEN ANALYSIS
Our break-even analysis is based on the average of the first-year numbers for total
sales by meal served, total cost of sales, and all operating expenses. These are
presented as per-unit revenue, per-unit cost, and fixed costs. We realize that this is
not the same as fixed cost, but these conservative assumptions make for a better
estimate of real risk.

Break-even Analysis

Monthly Units Break-even 7,778

Monthly Revenue Break-even $46,356

Assumptions:

Average Per-Unit Revenue $5.96

Average Per-Unit Variable Cost $1.53
Estimated Monthly Fixed Cost $34,483
PROJECTED PROFIT AND LOSS
NET PROFITS
 Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $692,100 $860,000 $1,150,000
Direct Cost of Sales $177,255 $213,500 $287,000
Movie Screening Expenses $77,861 $96,750 $129,375
Total Cost of Sales $255,116 $310,250 $416,375

Gross Margin $436,984 $549,750 $733,625

Gross Margin % 63.14% 63.92% 63.79%

PROFIT & LOSS Expenses

Payroll $288,000 $307,000 $326,000

STATEMENT
Sales and Marketing and Other Expenses $22,600 $8,000 $8,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $14,400 $14,400 $14,400
Insurance $21,600 $21,600 $21,600
Rent $24,000 $24,000 $24,000
Payroll Taxes $43,200 $46,050 $48,900
Other $0 $0 $0

Total Operating Expenses $413,800 $421,050 $442,900

Profit Before Interest and Taxes $23,184 $128,700 $290,725

EBITDA $23,184 $128,700 $290,725
Interest Expense $0 $0 $0
Taxes Incurred $6,955 $38,610 $87,218

Net Profit $16,229 $90,090 $203,508

Net Profit/Sales 2.34% 10.48% 17.70%
 Pro Forma Profit and
Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $25,000 $30,800 $35,900 $46,000 $47,800 $53,800 $61,300 $68,500 $73,100 $75,400 $81,500 $93,000
Direct Cost of Sales
$3,500 $4,370 $5,135 $12,500 $12,770 $14,840 $16,940 $18,800 $19,880 $20,420 $22,700 $25,400
Movie Screening
$2,813 $3,465 $4,039 $5,175 $5,378 $6,053 $6,896 $7,706 $8,224 $8,483 $9,169 $10,463
Expenses
Total Cost of Sales $6,313 $7,835 $9,174 $17,675 $18,148 $20,893 $23,836 $26,506 $28,104 $28,903 $31,869 $35,863

Gross Margin $18,688 $22,965 $26,726 $28,325 $29,653 $32,908 $37,464 $41,994 $44,996 $46,498 $49,631 $57,138
Gross Margin % 74.75% 74.56% 74.45% 61.58% 62.03% 61.17% 61.12% 61.30% 61.55% 61.67% 60.90% 61.44%
MONTHLY
PROFIT & Expenses
Payroll $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000

LOSS
Sales and Marketing
and Other Expenses $5,000 $5,000 $5,000 $1,000 $1,000 $800 $800 $800 $800 $800 $800 $800

ANALYSIS Utilities
Insurance
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
$1,200
$1,800
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Payroll Taxes $3,600 $3,600 $3,600 $3,600 $3,600 $3,600 $3,600 $3,600 $3,600 $3,600 $3,600 $3,600
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating
$37,600 $37,600 $37,600 $33,600 $33,600 $33,400 $33,400 $33,400 $33,400 $33,400 $33,400 $33,400
Expenses

Profit Before Interest

and Taxes
($18,913) ($14,635) ($10,874) ($5,275) ($3,948) ($493) $4,064 $8,594 $11,596 $13,098 $16,231 $23,738
Interest Expense
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred ($5,674) ($4,391) ($3,262) ($1,583) ($1,184) ($148) $1,219 $2,578 $3,479 $3,929 $4,869 $7,121

Net Profit
($13,239) ($10,245) ($7,612) ($3,693) ($2,763) ($345) $2,845 $6,016 $8,117 $9,168 $11,362 $16,616
Net Profit/Sales -52.96% -33.26% -21.20% -8.03% -5.78% -0.64% 4.64% 8.78% 11.10% 12.16% 13.94% 17.87%
 Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received

Cash from Operations

PRO Cash Sales $692,100 $860,000 $1,150,000
Subtotal Cash from Operations $692,100 $860,000 $1,150,000
FORMA
Expenditures Year 1 Year 2 Year 3
CASH FLOW
Expenditures from Operations
ANALYSIS Cash Spending $288,000 $307,000 $326,000
Bill Payments $337,234 $475,500 $607,541
Subtotal Spent on Operations $625,234 $782,500 $933,541

Subtotal Cash Spent $625,234 $782,500 $933,541

Net Cash Flow $66,866 $77,500 $216,459

Cash Balance $216,066 $293,566 $510,026
 PRO FORMA CASH FLOW: MONTHLY
Pro Forma Cash
Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Received

Cash from
Operations
Cash Sales $25,000 $30,800 $35,900 $46,000 $47,800 $53,800 $61,300 $68,500 $73,100 $75,400 $81,500 $93,000
Subtotal Cash from
$25,000 $30,800 $35,900 $46,000 $47,800 $53,800 $61,300 $68,500 $73,100 $75,400 $81,500 $93,000
Operations

Subtotal Cash
$25,000 $30,800 $35,900 $46,000 $47,800 $53,800 $61,300 $68,500 $73,100 $75,400 $81,500 $93,000
Received

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from
Operations
Cash Spending $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000
Bill Payments $475 $14,332 $17,127 $19,718 $25,722 $26,683 $30,288 $34,590 $38,568 $41,024 $42,362 $46,346
Subtotal Spent on
$24,475 $38,332 $41,127 $43,718 $49,722 $50,683 $54,288 $58,590 $62,568 $65,024 $66,362 $70,346
Operations

Subtotal Cash Spent $24,475 $38,332 $41,127 $43,718 $49,722 $50,683 $54,288 $58,590 $62,568 $65,024 $66,362 $70,346

Net Cash Flow $525 ($7,532) ($5,227) $2,282 ($1,922) $3,117 $7,012 $9,910 $10,532 $10,376 $15,138 $22,654

Cash Balance $149,725 $142,193 $136,966 $139,249 $137,327 $140,445 $147,456 $157,366 $167,899 $178,275 $193,413 $216,066
Continued
Thank you