DECA International Business Plan

This was the year I placed first in the state of Florida and third in the world for my 30-page international business plan and 15-minute oral presentation.

1. Jennifer Lyon
Spanish River DECA Chapter
Spanish River Community High School
5100 Jog Road Boca Raton, Florida 33496
April 26, 2015

2. I. EXECUTIVE SUMMARY …………………………………………………………………

II. INTRODUCTION ………………………………………………………………… ...........

III. ANALYSIS OF THE INTERNATIONAL BUSINESS SITUATION ………….............

A. Economic, political and legal analysis of the trading country ……………… ..….
1. Describe the trading country’s economic system…………………… ……....
2. Describe the trading country’s governmental structure and stability…….....
3. Describe laws and/or governmental agencies that affect your business…...

B. Trade area and cultural analysis……………………………………………… ..….
1. Geographic and demographic information ………………………………… ..…
2. Market segment analysis target market …………………………………… ..….
3. Analysis of the potential location ………………………………………..……….

IV. PLANNED OPERATION OF THE PROPOSED BUSINESS/PRODUCT/SERVICE

A. Proposed organization …………………………………………………………….
B. Proposed product/service ………………………………………………………...
1. Details of the products/services to be offered …………………………………
2. How the product/supplies will be transported to/from the home country……
C. Proposed strategies ……………………………………………………………….
1. Proposed pricing policies ………………………………………………………..
2. Proposed promotional program …………………………………………………

V. PLANNED FINANCING …………………………………………………………………

A. Projected income statements for first year’s operation..
B. Projected balance sheet for the end of the first year….
C. Brief narrative description of the planned growth ………

VI. BIBLIOGRAPHY ..................................................................

VII. APPENDIX .........................................................................



1

2

5

5
5
6
7

7
7
9
13

15

15
16
16
17
18
18
19

23

23
25
25

27

28

3. 1
I. EXECUTIVE SUMMARY





















INTRODUCTION
Einstein’s Bros. Bagels is a popular American chain of restaurant franchises. It was founded
in 1995 as a simple coffee shop and has expanded into a major corporation with more than
700 locations. By expanding this company to Toronto, Canada, we will access an entire new
economy and market of customers.
RESEARCH & ANALYSIS
In researching this project, I utilized both primary sources, such as observation and survey,
and secondary sources, such as facts from the U.S. Census Bureau and publications on the
Canadian economy, government, and trade. I also used first-hand sources, including the
Directors of Franchise Development for the Einstein’s corporation.
TRADE AREA
This new business will be located in the Hotel Le Germain in Maple Leaf Square in Toronto,
Canada. My rationale for selecting Canada is that the North American Free Trade Agreement
(NAFTA) and America’s $1.4 trillion bilateral trade relationship makes trade with this country
relatively simple. Also, the Canadian government and economy are close to those of America.
Panera Bread, Starbucks, and Bruegger’s Bagels, which are Einstein’s largest competitors,
have all expanded to Canada. Therefore, opening an international franchise for this company
is essential for its success and growth in this industry.

PRODUCTS & PRICING

The Einstein’s menu includes a wide variety of daytime meals. Their most popular menu items are
their hot, iced, and frozen coffee drinks, along with the wide selection of bagels. Recently, their
lunch menu consisting of foods such as sandwiches, salads, wraps, and more has gained
popularity for its healthy and low-calorie meals.
PROMOTION
This new franchise will be promoted through social media, discounts for hotel guests,
promotional events, and email coupons. During hockey games, Maple Leaf Square hosts block
parties at which people watch the games on a jumbotron. During this time, we will send out
Einstein’s mascots with coupons and free samples, encouraging people to post photos with our
mascots. We will create social media pages for this franchise, we will host a grand opening
event, and hotel guests will receive a coupon and menu when checking in.
ORGANIZATION
For this franchise, a Limited Liability Company (LLC) will be used.
With an LLC, there is no dual taxation, and owners are not held
personally responsible for the debts of the business. Overall, this
ownership style allows the most flexibility in the structure,
operation and management of the business.
FINANCING
In opening this new franchise, I will encounter a great amount of
start-up costs and fees to be paid to ENRG, which total to
$378,000. This will be paid for with both personal savings and a
bank loan. At the end of the first year of operation, we will have
earned $491,915 in net revenue. After subtracting bank loan
payments and all operating expenses, there will be $115,875 in net
income before taxes.

4. 2
II. INTRODUCTION
Einstein’s Bros. Bagels is a popular chain of restaurant franchises that was founded
in 1995. It began as a simple coffee shop in Ogden, Utah that specialized in baking fresh,
warm pastries. Since then, it has expanded into a major corporation with more than 700
locations throughout the United States. Einstein’s was originally created by the company
Boston Chicken, which is now known as Boston Market, and was later purchased by
Einstein Noah Restaurant Group (ENRG). While working with these shops, ENRG has
thrived in expansion and innovation. The menu has broadened to a wide variety of foods
perfect for any meal of the day. The bagels are freshly made in stores throughout the day
so that every customer gets a warm taste of their homemade Einstein’s dough. They are
also known for their coffee, which is made with genuine Arabica beans that are
handpicked from leading coffee regions of the world. But it’s not just about breakfast
anymore - customers love the made-to-order sandwiches, soups, and salads with fresh
meats and cheeses, and a variety of vegetables. Lastly, in an effort to create a menu that
most consumers can enjoy, they also prepare mouthwatering cookies, pastries, lattes,
smoothies, parfaits, and more.

Figure 2.1

5. 3
The business’s main goal is to provide the best possible food and service, which is
why every Einstein’s store has helpful, friendly, and well-informed employees. These
restaurants range from 2,200 to 2,500 square feet, and can comfortably seat 40 people in
a casual, modern atmosphere. Not only are they one of the top one hundred restaurant
chains in America, but they are also the leader in the quick, casual segment of the
restaurant industry. However, they are not bringing in nearly the amount of profit that they
could potentially earn; up until now, their success has been limited to only one country. My
plan for this company is to expand these friendly neighborhood cafés to a global scale and
make the opportunities for growth endless. By opening a franchise in Toronto, Canada, we
will reach an entire new economy and market to target.
Toronto is the most populated city in Canada, with over 5.5 million people. Canada
has a stable and reliable economy, which makes it a perfect target country for our
company’s first-ever international expansion. Its close proximity to the United States has
resulted in a substantial amount of franchising traffic between the two countries. The
United States and Canada share a $1.4 trillion bilateral trade and investment relationship,
and 34 of the U.S. states rely on Canada as their number one export market. In fact,
American exports to Canada
exceeded total U.S. exports to
China, Japan, South Korea, and
Singapore combined in 2013.
The North American Free
Trade Agreement (NAFTA) makes
0
50
100
150
200
250
300
350
CanadaChinaJapanSouthKoreaSingapore
U.S. Exports 2013 (in billion dollars)
Figure 2.2

6. 4
opening an American business in Canada relatively simple. However, there are a few
barriers we will have to overcome. Their currency is the Canadian dollar, whose value is
currently equal to $0.80 of an American dollar. Our restaurant will accept both Canadian
and American dollars. Other modifications we will need to make include adjusting to taxes
and adhering to laws in Canada. Fortunately, language will not be an issue because
English is the predominant language in Toronto. Although many Canadians are French-
speaking, less than 2% of the population in Toronto speaks French.
The franchise I am opening will be located in Hotel Le Germain in Toronto, Ontario.
Hotel Le Germain is a modern, four star hotel that just opened in 2010. The first Hotel Le
Germain was opened in Montreal, hence the French name. This one is located on Bremner
Boulevard in Maple Leaf Square. Maple Leaf Square is a very popular plaza filled with retail
stores and is a popular tourist destination.
By opening inside a hotel, we will create the
perfect location for guests to pick up their
morning coffee and breakfast, and provide
an all-day café for them to stop by and enjoy
a healthy meal. However, we will attract
much more than hotel guests, for our restaurant will also have a street entrance, which will
bring in many hungry people throughout the day. By placing this franchise in a popular
hotel within a busy plaza, we will get the regular sales an Einstein’s Bagels typically makes,
plus so much added revenue from the hotel’s guests.
In order to predict the potential success of this new franchise, I spoke many times
Figure 2.3

7. 5
with Julie Mitchell, Director of Franchise Development for the Einstein’s corporation, and
Mary Brooks, Head of Services for Einstein Noah Restaurant Group. They were able to
provide income statements, company information, and franchising requirements, as well
as the documents and steps to be taken in opening one. I also conducted surveys with
current Einstein’s customers within the target market to forecast the sales in Toronto.
III. ANALYSIS OF THE INTERNATIONAL BUSINESS SITUATION
A. Economic, political and legal analysis of the trading country
1. Describe the trading country’s economic system
Due to the fact that we are opening in a developed country with an economy very
similar to that of America’s, we should not encounter much difficulty when adjusting to this
market. Like the United States, the majority of Canadian jobs are within the tertiary sector,
which includes business services. About three-fourths of the employees in this country are
working in this sector, so there is a large pool of potential workers for us to hire. The
relationship between these two countries is substantial. The United States accounts for
73% of Canada’s exports and 63% of imports as of 2009. One of the major differences
between our economy and theirs is that we use the American dollar, while they use the
Canadian dollar ($0.80 to the American dollar). Their economic system is a mixed
economy, which means that economic resources are owned and controlled by both the
private and public sectors. In 2013 they were ranked sixth in the world in terms of
economic freedom. They currently have an unemployment rate of 7.0%, and have a GDP
of 1.825 trillion U.S. dollars. GDP (Gross Domestic Product) is important in determining a
country’s economic success because a higher GDP typically means that the country has

8. 6
higher living standards, incomes, levels of output, and demand for products. These factors
make Toronto the prime destination for a franchise of this newly multinational business.
2. Describe the trading country’s governmental structure and stability
The Canadian government can be classified as a federal monarchy, constitutional
monarchy, and parliamentary system. Elizabeth II, the Queen of Canada, is the current
monarch. She is responsible for appointing a Governor General, with the advice of the
Prime Minister, to represent her in the country and exercise the majority of her powers. The
Governor General is responsible for representing the queen and acting as a head in
governmental ceremonies, whereas the Prime Minister is the head of the executive branch
of government. The existing Prime Minister is Stephen Harper. His duties include directing
government policies, selecting members of the cabinet, which is the key decision-making
committee, and chairing cabinet meetings. The legislative branch consists of the House of
Commons, which votes on proposed laws for Canada, and the Senate, which consists of
senators who vote on laws after they have been passed by the House of Commons. The
judicial branch involves the court system that interprets and applies these laws in certain
scenarios. These begin at the provincial and territorial levels, and can move up to the
Supreme Court.





Figure 3.1
Canadian Governmental
Structure
Monarch
Governor General
Legislative Branch
House of CommonsSenate
Executive Branch
Prime Minister
Cabinet
Judicial Branch
Supreme CourtProvincial and Territorial Courts

9. 7
3. Describe laws and/or governmental agencies that affect your business
The North American Free Trade Agreement (NAFTA) was established on January 1,
1994, in an effort to limit tariffs and stimulate strong trade relationships between the United
States, Canada, and Mexico. According to the U.S. Chamber of Commerce,
approximately 8 million American jobs are dependent on this treaty in terms of Canada
alone. The United States and Canada have the largest trade relationship in the world,
which gives us a great opportunity to expand internationally without running into many
legal barriers. Many Canadian labor laws parallel those of America, including giving
employees vacation time for all major holidays, never unjustly dismissing employees,
showing equality when hiring and paying staff, and allowing leave for illness, injury,
maternity, etc. The standard working hours are 8 hours/day, and 40 hours/week; an
employee may not exceed 48 hours in one week. The labor laws in this country require
business owners to pay employees the minimum wage of $11.00 per hour. They also state
that managers must keep payroll and other employment records on file for at least 36
months.
B. Trade area and cultural analysis
1. Geographic and demographic information
Canada is made up of ten provinces and three territories. These territories are the
Yukon, Northwest, and Nunavut Territories. The provinces are British Colombia, Alberta,
Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward
Island, and Newfoundland. Toronto is located in the province of Ontario. It is surrounded
by rivers and lakes, including mainly the Don River and Humber River. These run on either

10. 8
side of the city and meet at Lake Ontario. There are hundreds of smaller creeks and
streams that run into these bodies and contribute to Toronto’s extensive waterway
system. Other important features of the city include its grid-layout of busy streets and
highways and well-run public transportation system. Lastly, Toronto contains many
popular tourist attractions with great historical background, such as the CN Tower, Royal
Ontario Museum, Toronto Zoo, Hockey Hall of Fame, the Rogers Centre, Air Canada
Centre, and more.
Toronto’s land area stretches for over 243 square miles. The climate is cooler than
in most places in America, which Einstein’s customers are accustomed to. During the
winter seasons, temperatures often drop below zero, and the summer months are
characterized by warmer temperatures ranging from 60 to 80 degrees Fahrenheit. These
conditions are perfect for our franchise because Einstein’s Bros. Bagels restaurants, with
hot coffees and soups and a variety of warm baked goods, are the perfect place to warm
up on a chilly day. In the summer months,
customers will enjoy our cold sandwich meals,
fresh salads, and refreshing beverages.
Therefore, this menu is perfect for any time of
the year and constantly meets the needs of
Canada’s frequently changing conditions.
As the largest city in Canada, Toronto is
flooded with multicultural people. It has the busiest Canadian port on the Great Lakes, and
is a major center for manufacturing, publishing, and banking. Toronto has a transit system
Figure 3.2

11. 9
that includes subways, buses, and streetcars, along with the
Scarborough RT train line and Lester B Pearson International
Airport. This gives people the opportunity to spread culture
and ideas rapidly throughout the country. The most common
ethnic backgrounds of residents included in Figure 3.3 are just
a few of the many different cultures that fill this city. The most
common religion in this city is Christianity, with over 50% of
the population adhering to this group. Other significant
religions include Islam, Hinduism, Judaism, and Buddhism.
2. Market segment analysis target market
The average household income in Toronto is $105,000, which is higher than many
other cities in this country and around the globe. Therefore, much like other businesses in
this area, we will be able to set high prices and receive great revenue. This can be
achieved through added value, which is the difference between the cost of raw materials
and the price for which the finished goods are sold. Einstein’s adds value to their products
by creating a brand name, providing quality customer service, and creating a professional
yet welcoming atmosphere. Since we will be located in a hotel with entrances from both
the street and hotel, we will be targeting mainly hotel residents, tourists, and shoppers.
Einstein’s Bagels has a target market of men and women between the ages of 25
and 50. This is because they reach out to people in need of grabbing a fast, healthy
breakfast on the way to work or looking for a friendly, quiet café to sit and eat lunch. The
atmosphere of this restaurant is perfect for customers that either work nearby or are
Most Common Ethnicities:
Caucasian
South Asian
Chinese
African American
Southeast Asian
Filipino
Latin American
Korean
Arab
Japanese
Figure 3.3

12. 10
visiting Toronto for a business trip. It is a great place to hang out and get work done
because of the free Wi-Fi and comfortable setting. However, the potential for customers
does not end there. Einstein’s is also very popular with teenagers, especially with their
refreshing lattes and coffee drinks. Because these franchises are popular with such a wide
variety of groups, not just the target market, we will also target children, young adults, and
seniors. Customers are able to either run in and grab their morning coffee and bagel or sit
down and enjoy a delicious, inexpensive meal. Families staying at the Hotel Le Germain
can eat at Einstein’s throughout the day without ever leaving the comfort of their hotel.
I conducted a survey with 50 people within the target market to receive feedback
about whether or not they eat at Einstein’s, if they enjoy it, and other various questions. I
used the contents of this survey to draw conclusions about the demographic I am
targeting. Because this is primary research, it is more up-to-date, confidential, and relevant
than other secondary sources. I included both qualitative research, which is research into
the in-depth motivations behind consumer buying behavior or opinions, and quantitative
research, which is research that leads to numerical results that can be statistically
analyzed. By using both types of research questions, I was able to get written opinions of
individuals along with numerical data. I also used a variety of questions, including both
open-ended questions and close-ended questions. The 50 people that I surveyed were
chosen through stratified sampling, which means that the population was broken down
into a certain demographic (the target market). Then people within this segment were
chosen randomly to be surveyed.

13. 11

Einstein’s Bros. Bagels Survey by Jennifer Lyon

1. How old are you?
A. 0-10
B. 10-20
C. 20-30
D. 30-40
E. 40-50
F. 50-60
G. 61+

2. Have you ever eaten at Einstein's Bros. Bagels?
yes
no

3. What is your favorite menu item?
______________________________________

4. How often do you visit this restaurant?
A. Daily
B. A few times a week
C. Weekly
D. A few times a month
E. Monthly
F. A few times a year
G. Rarely
H. Never

5. What is your average annual household income?
A. less than $25,000
B. $25,000-50,000
C. $50,000-100,000
D. $100,000-200,000
E. 200,000+

6. When traveling internationally, how likely are you to purchase from or eat at a restaurant
with a name you know versus one you have not heard of?
_________________________________________________________________________________
_________________________________________________________________________________

7. If you have eaten at Einstein's before, how did you feel about the experience?

Very
Dissatisfied Dissatisfied
Slightly
Dissatisfied
Slightly
Satisfied Satisfied
Very
Satisfied
Food
Price
Atmosphere
Service


8. When staying at a hotel, how likely are you to eat breakfast in that hotel?

Very
Unlikely Unlikely
Somewhat
Unlikely
Somewhat
Likely Likely
Very
Likely
Likeliness

14. 12
The results of this survey were as follows:
Eighteen people were between the ages of 20-30, thirty-two were 30-40, and
twenty were 40-50.
Forty-six of these random people had eaten at Einstein’s before (92%), and two
had not (8%).
The majority of people responded by saying that their favorite menu item was either
a bagel or a sandwich, but the results were varied and every person had a different bagel
flavor that they enjoyed most.
Ten people visit Einstein’s weekly, thirteen visit a few times a month, twelve visit
monthly, eight visit a few times a year, four visit rarely, and three have never been there.
An overwhelming majority of respondents agreed that when visiting a foreign
country, they often visit restaurants they recognize from their home country because they
already know the menu and what they like to order, but when visiting exotic places they
also enjoy trying new foods and exploring the culture of that country.
The annual incomes are shown in figure 3.4
On the last two questions, all customers replied that they were either satisfied or
very satisfied with all aspects of these restaurants, and were either likely or very likely to
eat breakfast in a hotel they are staying at.
Figure 3.4
Annual income of
Einstein’s Customers

15. 13
Based on the findings of this survey, I was able to conclude that nearly three-
fourths of our target market in this survey makes over $50,000 each year. Average
household income is important in determining where to locate a franchise because it must
be placed in a neighborhood or city that will be able to afford the products. Because
Toronto has an average income that greatly exceeds these standards, it meets the
Einstein’s requirements.
3. Analysis of the potential location
Along with average income, there are many other factors to consider in choosing an
optimal business location. Some of the factors I have considered in making this decision
include cost of land, labor costs, transportation costs, demographic analysis, available
resources, potential competition, and product demand.
For many American companies, when choosing to expand internationally, they start
with Canada. Other popular food chains that have successfully spread to Toronto include
Chipotle, Dunkin Donuts, Five Guys, McDonald’s, Panera Bread, Starbucks, Subway, and
many more. With Einstein’s, I plan to follow in the footsteps of these successful
corporations and bring this company to an entire new and international competitive level.
The Einstein’s company’s biggest competitors are Panera Bread, Starbucks, and
Bruegger’s Bagels. Panera Bread, our largest competitor, has over 1,800 cafes in the
U.S.A and Ontario, Canada. They followed the same route that I hope to follow with
Einstein’s, by beginning a trend of international stores and starting with the U.S.A.’s
biggest trading country. Starbucks is the largest coffee company in the world, with its
origins in Seattle, Washington. Bruegger’s Bagels is the second largest bagel company in

16. 14
the nation and was surpassed by Einstein’s in 1997. Since all three of these companies
have locations in Toronto, we will face major competition with these names.
Our biggest Canadian competition will be The Bagel House, Tim Horton’s, Gryfe’s
Bagels, and The Great Canadian Bagel. Einstein’s, however, will be set apart from these
other bagel bakeries because not only is it a recognizable American company, but it is also
less expensive. In addition, this franchise will be located in a plaza with no other bakeries
or even breakfast restaurants currently in existence. In the Hotel Le Germain, the only
restaurant available is the Azura restaurant, which is a five-star bar and lounge restaurant
open only for lunch and dinner. Therefore, because our restaurant focuses primarily on
breakfast foods, Azura will not be a large competitor. Demand for breakfast restaurants in
hotels is always very high, but if you also factor in the low temperatures, busy atmosphere,
and high disposable income of Toronto, it is clear that this franchise is a perfect fit.
To open a franchise in Canada, certain legal documents are required. These
include:
1) Confirmation of Sale: Required for all commercial importations of fresh fruit and
vegetables to prove that a sale transaction actually exists.
2) CCI (Canada Customs Invoice): Required for all commercial shipments to Canada.
3) NAFTA Exporter’s Certificate of Origin: Required for shipment valued $1600+
(Canadian dollars); must be completed and signed for tariff treatment of the NAFTA
for goods meeting the origin criteria from the U.S. or Mexico
4) Import Declaration Form: Required for all importations of dairy, processed fruit and
vegetables, honey, pesticides, seed, fertilizer and feed products.

17. 15
IV. PLANNED OPERATION OF THE PROPOSED BUSINESS/PRODUCT/SERVICE
A. Proposed organization
For this franchise, a Limited Liability Company (LLC) ownership will be used.
The LLC is a relatively new form of doing business that combines the best features of a
corporation and a sole proprietorship. This form of business can have any number of
owners, but I will be using a single-member LLC. Like a corporation, the business
owners are not held personally responsible for the debts of the business. This
protection is extremely important in cases of debts and lawsuits. Also, the LLC requires
less start-up costs and registration paperwork than a corporation would. The federal
government does not view an LLC as a separate entity for taxation. Therefore, there is
no dual taxation and the earnings of the business are taxed directly to the owners.
When expanding to other markets in the future, already having an LLC will be
advantageous for bringing in more capital. Overall, this ownership style allows the most
flexibility in the structure, operation, and management of the business.
When creating an Einstein’s Bros. Bagels franchise, certain steps must be taken:
The Franchisee candidate must submit an information request form through the
Einstein's website.
If he/she meets the initial qualifications, they will be contacted and asked to
complete a Detailed Evaluation Form. Einstein Noah Restaurant Group (ENRG) will
review this form and conduct credit history and background checks.
A representative from ENRG will meet with the Franchisee and present the
Franchise Disclosure Document (FDD). The candidate must then visit the ENRG
support center and meet with department heads.
Candidate will be notified that their application has been approved. They will then
sign the Franchise Development Agreement and pay the required fees.

18. 16
The Franchisee presents site for approval. The final Franchise Agreement is
signed and fees are paid.
Construction begins, and the Franchisee starts hiring and training staff. Once all of
the preparation is completed, a new Einstein’s location will open for business.
Each Einstein’s franchise employs a General Manager, a Shift Manager, a baker,
and 15 to 20 full-time and part-time crewmembers. These employees must be trained to
properly handle customer needs and represent the Einstein’s company name.

B. Proposed product/service
1. Details of the products/services to be offered
Einstein’s Bros. Bagels sells a wide variety of daytime foods. Their menu ranges
from breakfast bagels and coffees to lunchtime salads and smoothies. They are mostly
known for their breakfast menu, which includes many different types of bagel and egg
creations. Their coffee drinks are served hot, iced, or frozen, based on the customer’s
preference. The coffees are produced with 100% genuine Arabica beans that are
Position Description
General Manager
Responsible for overall operations, opening and closing procedures,
supervising skills, tracking inventory, cash handling procedures,
developing marketing strategies, and managing labor and wages.
Shift Manager
Responsible for overall shift operations, training, coaching, and
disciplining crew members, leading the store in absence of the general
manager, and assisting in the hiring of new crew members.
Baker
Responsible for baking and organizing all of the baked goods and
bagel products, making sure they are fresh, delicious, and cooked to
perfection every time.
Crew Member
Responsible for keeping the restaurant clean and organized, stocking
supplies, preparing and serving all Einstein’s products, operating a
cash register, and providing proper customer service.
Figure 4.1

19. 17
handpicked from the leading coffee-producing regions of the world. This, combined with
all-natural sweeteners and added flavors, creates the
famous Einstein’s taste.
With recent innovations to the menu, Einstein’s
now offers flavorful sandwiches, wraps, paninis, parfaits,
and more. One of the main goals they have strived to
achieve is providing a selection of food items with very
few calories. Classic Bagels, the most popular menu
items, are only 263 calories, and Bagel Thin Singles, which are lighter bagels, are only
158 calories. They have even created a designated section of the menu called “Smart
Choices” for items containing less than 385 calories and 15 grams of fat. Also, in
addition to the regular cream cheeses, each flavor now offers tubs with 25% reduced
fat. The diverse menu, made with all natural meats, real mozzarella cheese, and fresh
vegetables, is a healthy alternative to fast food.
They are constantly making changes to
meet consumer demands. In an attempt to reach
a wider market, Einstein’s has added pizza
bagels and bagel dogs to the list of options. They
also offer food products in bulk so that they may
be purchased for events or meetings.
2. How the product/supplies will be transported to/from the home country
Since Toronto is relatively close to America, the goods will be shipped to this
franchise the same way they are shipped to any of the other Einstein’s franchises in the
United States. Einstein’s Bros. Bagels currently uses two different dough-making facilities -
one in Whittier, California, and the other in Avon, Indiana. For this franchise, our goods will
Figure 4.2
Figure 4.3

20. 18
originate from the facility in Indiana because it is much closer to Toronto. This dough-
making facility is at the head of the channel of distribution. The channel of distribution
shows the intermediaries a product passes through until it reaches the consumer. A typical
channel of distribution starts with the producer who manufactures the products, which are
then sold to a wholesaler, who distributes products to the retailers, who then sell to
consumers. In the case of Einstein’s Bagels, Reinhart Foodservices is the wholesaler they
use for distribution from the manufacturing facilities to the individual franchises. All of the
resources that we will need to buy will come directly from this wholesaler and will be
transported by a semi-truck. We will use the Reinhart location closest to Toronto, which is
in Buffalo, New York. Trucking is the easiest and most cost-efficient method of
transportation in this instance because Buffalo is so close to Ontario.
C. Proposed strategies
1. Proposed pricing policies
The prices of food on the Einstein’s menu range from $1 to $15. Classic bagels are
$1.10, regular coffee is $1.95, and lattes cost between $2-4. Soups, salads, and
sandwiches cost around $6-8. These prices are the same for every franchise because they
are set by the Einstein Noah Restaurant Group corporation. Therefore, we will follow the
standard prices with the new international franchise. Because the same types of food are
popular in both Canada and the U.S.A., the menu will remain the same.
The currency in Canada is the Canadian dollar, whose value is currently equal to
$0.80 of an American dollar. Our restaurant will accept both Canadian and American
dollars in order to accommodate the whole population.

21. 19
2. Proposed promotional program
When this new Einstein’s location first opens, we will strive to get the word out as
much as possible. We will start by updating the company’s social media pages, such as
Facebook, Twitter, and the official Einstein’s website. By informing current customers of
the exciting news that their favorite bagel bakery is going international, we will greatly
increase the chances of them looking for our restaurants when they travel outside of the
U.S. Statistics show that over 9% of Canadian citizens live outside of Canada, with the
vast majority of them living in America. Because communication between the two
countries is so effective, releasing this information in America as well as Canada will enable
us to spark a streamline of word-of-mouth communication about our franchise.
The restaurant will open during the summer of 2015 because summer vacation is
when students and families are most likely to travel. This means that during the summer
season, the amount of American tourists in Toronto is at its peak. This will benefit us
because it is the perfect time to attract the non-residents as well as Canadian residents
and get our business booming. The majority of business failures occur during the first year
of operation, so this timing is essential to surviving the start-up stage of the business cycle.
Once the bakery has gained popularity and a good reputation, we will focus more on
specific market segmentation.
In order to begin forming our new customer base, we will host a grand opening
event, where we will have many discounts and giveaways, and create a fun atmosphere.
When the first-time customers enter the restaurant, we will encourage them to become a
frequent buyer by signing up for email alerts. These alerts will create repeat business and

22. 20
will include notifications such as when new products are
released, coupons, and more. As an incentive for joining our
email list, we will give away one free bagel with the purchase
of a coffee drink for all who sign up. We will also enter each
registered customer into a raffle for an Einstein’s sponsored
office party ($110 value). The raffle winner will be selected randomly and will receive what
is listed on our catering menu as “Breakfast for the Group.” This includes a large coffee
box, a box of mixed bagels and sweets, and a large fresh fruit salad. This will further
encourage consumers to attend the event and register for updates. Lastly, on the day of
this event, we will have two employees
dressed as the Einstein’s mascots give away
free samples of our famous “Bagel
Poppers.” We will advertise for this opening
day event by hanging flyers, such as the one in Figure 4.4, in the Hotel Le Germain, Maple
Leaf Square and other popular areas in Toronto.
Due to the fact that this franchise will be opened inside of a hotel, we will be able to
collaborate with the hotel for advertising. When guests check in to the Hotel Le Germain,
they will be given an Einstein’s Bros. Bagels menu, along with their room key and other
hotel brochures that the employees already distribute. Inside of this menu, guests will find
a list of our tempting selections as well as a 25% off coupon for their first purchase made
there. This will not only spread the word of our franchise to every hotel guest, but it will
also encourage them to save money by eating here, versus somewhere else. One way we
Figure 4.4
Figure 4.5

23. 21
can reach out to hotel guests staying here for business trips is by offering free Wi-Fi in
our restaurant, along with charging stations for personal laptops and cellular devices at
each table. Lastly, we will include children’s selections on our menu by offering smaller
portions at a discounted rate to encourage families staying here to eat at Einstein’s.
The greatest advantage to giving this restaurant a street-front entrance in Maple
Leaf Square is the popularity and the constant foot traffic of the area. One of the most
valued pastimes in Canada is hockey, and regardless of whom we are targeting, the
majority of them will be huge hockey fans. Fortunately, Maple Leaf Square is one of the
biggest hangout areas before, during, and
after hockey games. As portrayed in
Figure 4.6, this block uses a big screen
television and many sports-related retail
stores to attract Maple Leaf fans. Every
game day, the block hosts large events
right next to the Hotel Le Germain for fans
to hang out and watch the game on the big screen.
During these block parties, we will spread the word of our business to the
hundreds of people here by sending out Einstein’s employees dressed as the
company mascots, Melvyn and Elmo. These employees
will walk around the crowd handing out free warm bagel
samples on chilly game days and nights. We will also
encourage customers to take pictures with our mascots
and post them on social media by creating a hashtag
(Maple Leaf Einstein’s) for our franchise event photos.
Then, when consumers post these pictures on social media sites such as Facebook,
Instagram, or Twitter, using the hashtag, the photos will appear under
“#MapleLeafEinsteins.” This will allow people to search our franchise hashtag and find
Figure 4.6
Figure 4.7

24. 22
fun photos of their friends at our events and further spread the word of our business.
We will also create social media pages for this individual location, which we will use to
share customers’ photos and Einstein’s updates on discounts, events, and other
promotional activities. Because Facebook, Instagram, and Twitter are currently the
three most popular social media sites, these are the ones we will start with. Advertising
via the Internet is becoming increasingly popular each day as society becomes more
technologically connected, which makes it an essential step in the direction of this
franchise’s success. Promoting this business through social media is not only
completely free of cost, but it is also the fastest and easiest way to spread information.
Also, one of the advantages to opening a franchise is that the Einstein’s
corporation handles a large majority of advertising for the business. Because of this,
we will be required to pay an advertising fee of 5% of gross sales to ENRG.
Costs associated with the promotion of this business include:
Cost of printing flyers, coupons, and menus: $1,200
Cost of “Breakfast for the Group” raffle: $110
Cost of advertising on social media and email alerts: $0
Cost of free samples at block parties: $20/party








Figure 4.8: Einstein’s Franchise Layout

25. 23
V. PLANNED FINANCING
A. Projected income statements for first year’s operation

Bagels $82,493 $69,744 $78,744 $68,994 $299,975
Beverages $27,317 $23,095 $26,076 $22,847 $99,335
Soups/Salads $14,025 $11,857 $13,388 $11,730 $51,000
Breakfast Meals $11,441 $9,673 $10,921 $9,569 $41,604
Revenue $135,276 $114,369 $129,129 $113,141 $491,915
Total Net Revenue $135,276 $114,369 $129,129 $113,141 $491,915
Bagels $15,203 $12,853 $15,238 $12,715 $56,009
Packaging $3,594 $3,038 $3,602 $3,006 $13,240
Eggs & Bread $7,653 $6,470 $7,305 $6,400 $27,828
Vegetables $964 $815 $966 $806 $3,551
Other Supplies $4,590 $3,881 $4,601 $3,839 $16,911
Cost of Sold Goods $32,004 $27,057 $31,711 $26,766 $117,538
Employee Wages $29,459 $24,906 $28,120 $24,639 $107,124
Payroll Tax $4,191 $3,543 $4,001 $3,505 $15,240
Worker’s Comp Insurance $993 $840 $948 $831 $3,612
Health & Insurance $1,036 $876 $989 $867 $3,768
Labor Costs $35,679 $30,165 $34,058 $29,841 $129,743
Electric/Gas $1,630 $1,378 $1,556 $1,363 $5,927
Telephone & DSL $1,521 $1,286 $1,452 $1,272 $5,531
Utilities $3,151 $2,664 $3,008 $2,636 $11,459
Software & Hardware $1,323 $1,119 $1,263 $1,107 $4,812
Credit Card Fees $752 $636 $718 $629 $2,735
Contract Services $393 $332 $375 $328 $1,428
Loan Payments $4,746 $4,746 $4,746 $4,746 $18,984
Other Operating Costs $7,214 $6,833 $7,102 $6,810 $27,959
Cleaning Supplies $479 $405 $457 $400 $1,741
Promotions $635 $537 $606 $532 $2,310
Rent $13,025 $11,012 $12,433 $10,894 $47,364
Ovens & Cookers $2,003 $1,694 $1,912 $1,675 $7,284
Common Area
Maintenance
$2,831 $2,394 $2,703 $2,368 $10,296
Transportation Costs $5,596 $4,730 $5,341 $4,679 $20,346
Controllable Costs $24,569 $20,772 $23,452 $20,548 $89,341
Total Operating Expenses $102,617 $87,491 $99,331 $86,601 $376,040
Net Income Before Taxes $32,659 26,878 $29,798 $26,540 $115,875

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Total


Figure 5.1: Projected Yearly Income Statement

26. 24
In Figure 5.1, I have created an income statement for the first fiscal year’s sales, broken
down by quarter. To put this income statement together, I used one of the resources given
to me by Julie Mitchell, the Director of Franchise Development for the Einstein’s
corporation, which was an income statement of the entire Einstein’s company. It contained
the totaled revenues and expenses from every Einstein’s Bros. Bagels franchise in
America. To find the average income for one of these restaurants, I took each number and
divided it by the number of franchises. Then, to show seasonal fluctuations that will occur,
I made slight adjustments to each quarter based on my prediction of when sales will be
highest and lowest.
I predict that our busiest season will be during the summer months because this is
when the majority of tourists will be visiting Toronto. Tourism will increase the café’s sales
immensely because of the great number of people staying at hotels, such as the Hotel Le
Germain, during this time. Also, American tourists will recognize the Einstein’s brand
name, and according to the survey results, this makes customers more likely to eat
breakfast or lunch here, versus somewhere else. The second highest season of sales will
be during the winter months. This is due to the fact that cold weather attracts a great
amount of consumers to our menu, consisting of hot coffee, warm bagels, hot soup, warm
sandwiches, etc. The third greatest sales season is forecasted to be during the months of
fall because this is at the height of hockey season, which leads to a large flow of tourism.
The fourth quarter (spring) is predicted to bring in the least amount of sales and only
accounts for 17% of the year’s income. Since this franchise will hold its grand opening
during summer, the fiscal year will start and end in June. Therefore, the first quarter will

27. 25
bring in 35% of the year’s total income. Quarter 2 will account for 18% of income, and
quarter 3, which will be during the winter season, will account for 30%.
B. Projected balance sheet for the end of the first year
Assets
American
Dollar
Canadian
Dollar
Liabilities and
Owners’ Equity
American
Dollar
Canadian
Dollar
Cash $85,000 $92,650 Notes Payable $192,500 $209,825
Accounts Receivable $1,500 $1,635 Accounts Payable $4,200 $4,578
Inventory $4,000 $4,360 Total Liabilities $196,700 $214,403
Total Current Assets $90,500 $98,645
Property & Equipment

Owners’ Equity
Supplies $5,000 $5,450 Retained Earnings $39,080 $42,597
Furniture & Fixtures $60,000 $65,400
Total Owners’
Equity
$39,080 $42,597
Equipment $95,000 $103,550
Total Property &
Equipment
$160,000 $174,400
Less Accumulated
Depreciation & Amort.
$14,720 $16,044
Net Property &
Equipment
$145,280 $158,355
Total Assets $235,780 $257,000
Total Liability &
Equity
$235,780 $257,000


In opening this franchise I will encounter a great number of start-up costs and
operational costs. The Einstein Noah Restaurant Group charges a franchise fee of
$35,000 to open a franchise. I will also need to pay multiple start-up costs, including

2015-2016 2016-2017 2017-2018
Revenue $491,915 $516,511 $542,336
Total Net Revenue $491,915 $516,511 $542,336
Cost of Goods Sold $117,538 $123,415 $129,586
Labor Costs $129,743 $136,230 $143,042
Utilities $11,459 $12,032 $12,634
Other Operating Costs $10,511 $11,037 $11,588
Controllable Costs $89,341 $93,808 $98,498
Total Operating Expenses $358,592 $376,522 $395,348
Net Income Before Taxes $133,323 $139,989 $146,989
Figure 5.2
Figure 5.3
C. Brief narrative description of the planned growth
Figure 5.3

28. 26
the cost of equipment ($95,000), leasehold improvements ($138,000), furniture and
fixtures ($60,000), and other additional costs ($50,000). My initial investments total to
$378,000, including the franchise fee. I will also need to pay ENRG a royalty fee of 5%
of gross sales and an advertising fee of 5% of gross sales.
These start-up costs will be paid for with a bank loan over a fifteen-year time
period. I will borrow $200,000 from the bank with a 5% rate of interest and the rest will
come from personal savings. My monthly payments to the bank will be $1,582.
The other costs, those associated with the daily and monthly operations of the
business, are displayed in the income statement in Figure 5.1 and will be paid for
using revenue from sales. The chart in Figure 5.3 shows the projected income for the
first three years of business. When the franchise is opened in 2015, the net income will
total to $115,875, not including taxes or royalty and advertising fees to ENRG. In the
two years following that, I predict that income will increase by 5% as we develop a
loyal customer base and word spreads about this new franchise. Figure 5.4 contains
the breakdown of start-up costs payable to Einstein Noah Restaurant Group (ENRG).









Franchisee's Initial Investments
Franchise Fee
LeaseholdImprovements
Equipment
Furniture &Fixtures
Additional Funds
Leasehold Improvements$138,00037%Equipment$95,00025%
Furniture & Fixtures$60,00016%
AdditionalFunds$50,00013%
Franchise Fee$35,0009%
Figure 5.4

29. 27
VI. BIBLIOGRAPHY

• Canadian Franchise Association: http://www.cfa.ca/about-cfa/faq/

• Income/wage resources: http://www.glassdoor.com/Salary/Einstein-Bros-Bagels-
Salaries-E314934.htm

• The Canada Business Network: http://www.canadabusiness.ca/eng/blog/entry/ 4762/

• Official Website of Toronto: http://www.toronto.ca

• Bruegger’s Bagels: https://www.brueggers.com

• Panera Bread: https://www.panerabread.com/en-us/home.html

• Financing Canadian Businesses: http://www.bdc.ca/EN/advice_centre/articles
/Pages/start6d.aspx

• Canadian Governing Information: http://members.shaw.ca/kcic1/cangovt.html

• Canadian Trade Regulations:
http://export.gov/canada/doingbusinessincanada/traderegulationsandstandards/

• Canadian economy: http://www.heritage.org/index/country/canada

• Demographics: http://amcacanada.ca/en/market/toronto/default.omac

• Canada 2011 Census: http://www12.statcan.gc.ca/census-recensement/2011/as-
sa/fogs-spg/Facts-cma-eng.cfm?LANG=Eng&GK=CMA&GC=535

• Restaurants in Toronto/ competition: http://www.toronto.com/articles/american-
chain-restaurants-in-toronto-the-gta/

• Einstein’s website: http://www.einsteinbros.com

• Julie Mitchell, Director of Franchise Development for the Einstein’s corporation

• Mary Brooks, Einstein’s Noah Restaurant Group employee

• Manager of Einstein’s franchise in Boca Raton, Florida

• Cambridge AICE textbook

• Information gathered from surveys

30. 28
VII. APPENDIX


Dear Jenny,
Thank you so much for contacting Einstein Noah Restaurant Group! Our first store was
opened in 1995 in Ogden, UT. Currently, Einstein Bros. Bagels only operates in the
United States; however, we have wholesale products sold in Costco
internationally. Your idea to open in Canada is terrific, and that is just the
entrepreneurial spirit we look for here at ENRG.
As always, if you have any further questions, please let me know!

Sincerely,
Mary Brooks

Einstein Noah Restaurant Group, Inc.
P: 1-800-BAGELME (1-800-224-3563)
E: [email protected]



Jenny,

Thank you for selecting Einstein Bros Bagels for your project.

Since we are a publically traded company as well as a franchisor, I cannot
directly answer many of your questions. To fully understand why, I suggest you
visit a couple resources; firstly, U.S. Securities and Exchange Commission which
regulates publically traded companies and then the Federal Trade Commission
which regulates franchising. http://www.sec.gov/about.shtml and
http://www.ftc.gov/.

What I am able to share with you is our prospectus which we share with qualified
applicants who are interested in securing an Einstein Bros Bagel franchise. You
will find distribution information, development costs, operating costs, amongst
many other key information that should help you to complete your project and
your own assessment of how and why to expand the brand to Canada.

Lastly, I've attached our site criteria to help you understand the demographics
we look for when developing restaurants.
Good luck with your project.

Kindest regards,
Julie Mitchell
Director of Franchise Development
Figure 7.1: Emails from Mary Brooks and Julie Mitchell
with the headquarters of Einstein Noah Restaurant Group

31. 29

This one’s on us
Enter to win a free Einstein’s-catered breakfast party for your office
Plus a free bagel with the purchase of any coffee drink

Figure 7.2 Flyer for Grand Opening