eb-5 comprehensive business plan

GATEWAY
GLOBAL
STRATEGIES
EB-5 COMPREHENSIVE BUSINESS PLAN
TABLE OF CONTENTS:
1. Executive Summary………………………………………………………………………… 1
2. Description of Three Franchises Restaurants…………………………...…………………2

IHOP………………………………………………………………………………….2

Denny’s……………………………………………………………………………….7

Golden Corral…………………………………………………………………...…...9
3. Project Objectives…………………………………………………………………………..12

Business Model……………………………………………………………………...12

Additional Market Explained……………………………………………………...13

Proven Success of New Business Model…………………………………………...13

Franchise Standards, Processes, and Oversight Remain Same………………….14
4. Investment Strategy of the Project………………………………………………………...16
5. Market Analysis…………………………………………………………………………….19
6. Cost and Exit Plan……………..…………………………………………………………...23
7. Job Creation………………………………………………………………………………...25
8. Company Management Profile…………………………………………………………….26
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1. EXECUTIVE SUMMARY
Gateway Global Strategies, LLC (“Gateway”) specializes in establishing the highly recognized and
financially successful American family dining franchise restaurants, such as IHOP®, Denny’s®, and
Golden Corral®. In addition, the management team may consider other franchises when they believe it is
in the best interest of the investors. Gateway intends to open twenty (20) franchise Project companies - in
strategically selected malls and locations throughout New York State, commencing with locations in
Syracuse, NY; Albany, NY; Brooklyn, NY and Middletown, NY.
This comprehensive business plan has been prepared for the first mall-based franchise restaurant, an
IHOP®, which will be opened in Syracuse, NY. The projections contained in this document are based on
opening an IHOP® franchise for this location.
Gateway will serve as the Manager of each new commercial enterprise (“NCE”), limited liability
company (LLC). The NCE is being formed for the purpose of raising investment capital for each
restaurant franchise or job creating enterprise (hereinafter “JCE”/”the Project” or “Borrower”).
The NCE is seeking to raise $1 million USD in investor capital for the EB-5 Immigrant Investor Program
(hereinafter “EB-5”) for each JCE franchise restaurant Project. As pursuant to the EB-5 program,
Projects located in Targeted Unemployment Areas (hereinafter “TEAs”) shall have a minimum
investment requirement by each member of $500,000 USD. All selected locations will be in Targeted
Employment Areas (TEAs) in strategically selected malls throughout New York State which, pursuant to
8 CFR §204.6(f)(2), allows the qualifying investment amount per investor to be reduced to $500,000
USD. For the restaurants based inside an established Mall, the selected mall–based franchise restaurant
Projects will all benefit from the high traffic of both shoppers and mall employees.
Membership units in each mall-based restaurant franchise shall be sold at $545,000 USD, of which
$500,000 USD shall go towards the JCE/ Project, and $45,000 USD shall go towards an Administrative
Expense Fee. Monies raised shall be used in each JCE/ Project restaurant franchise towards the $1.7
million in costs estimated for the construction and operation of each JCE restaurant Project.
Of the $1.7 million estimated total development costs for each JCE franchise restaurant Project, $1
million USD shall come from the EB-5 Immigrant Investor Program and the balance will be capitalized
into the Project in the form of franchisee’ equity, franchisee personal assets and or loans; and/or funds
raised from an initial public offering.
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2. DESCRIPTION OF THREE RESTAURANT FRANCHISES
There are several casual family dining franchisors throughout the United States. The following are
examples of franchisors that offer causal family dining alternatives similar to the products and services
we will provide.
IHOP®, Denny’s®, and Golden Corral® are full-service franchises, which serve a broad range of
entrees, appetizers, deserts, and non-alcoholic beverages. They all feature full-table service and highquality, moderately priced food and beverages in attractive and comfortable restaurant surroundings.
Many of the restaurants are open 7 days a week and some are open 24 hours a day, depending upon
location. Restaurants located in shopping malls typically have long hours.
The IHOP®, Denny’s®, and Golden Corral® traditional restaurant business model has served each
franchise very well to date. The restaurants are all tremendously successful franchise businesses - they are
all highly recognized nationally and internationally and have continuously demonstrated robust financial
viability even during tough economic times. Specific details on each are located below.
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IHOP®: RESTAURANTS
The IHOP family restaurant chain has been in business for 54 years. The restaurant is well known for its
world famous pancakes and a wide variety of breakfast, lunch, and dinner items that are loved by
customers of all ages.
IHOP restaurants are very popular in the U.S. because they provide diners and their families with an
affordable, every day dining experience. As of September 30, 2012, there were 1,565 IHOPs in fifty (50)
states, the District of Columbia in the United States, in addition to Canada, Guatemala, Mexico, Dubai in
the United Arab Emirates (UAE), Puerto Rico, and the U.S Virgin Islands.
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An Overview of the Corporation:
For 54 years, the IHOP family restaurant chain has served their world famous pancakes and a wide
variety of breakfast, lunch and dinner items that are loved by people of all ages — offering an affordable,
everyday dining experience with warm and friendly service.

As of September 30, 2012, there were 1,565 IHOPs in 50 states and the District of Columbia, as well as in
Canada, Guatemala, Mexico, Puerto Rico and the U.S. Virgin Islands.

Under the licensed name IHOP at HOME® consumers can also enjoy a line of premium breakfast
products available at leading retailers.

IHOP restaurants are franchised and operated by Glendale, California-based International House of
Pancakes, LLC and its affiliates. International House of Pancakes, LLC is a wholly-owned subsidiary of
DineEquity, Inc. (NYSE: DIN).
The Journey from Breakfast Restaurant to American Icon:
International House of Pancakes® began making breakfast memorable in 1958 when it opened its doors in
the suburbs of Los Angeles. Fifteen years later, a new marketing campaign introduced the acronym
"IHOP", and since then it’s been the name people know as the place they can enjoy their favorite
breakfast experience – any time of day. In 1991, became a publicly traded company on the NASDAQ
Stock Market under the symbol “IHOP” through an initial public offering. A year later, in 1992, IHOP
opened its 500th restaurant and in 1993 the average sales per IHOP restaurant exceeded $1 million. By
1998, for the very first time, system-wide sales for the company exceeded $1 million. In 1999, IHOP
began trading on the New York Exchange (NYSE). A more detailed overview of IHOP’s® growth and
transitions throughout the years is as noted below:
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A BRIEF HISTORY:
1958: Founders Al and Jerry Lapin, along with early investors Al and Trudy Kallis, open the first International
House of Pancakes in the Los Angeles suburb of Toluca Lake, California.
1960: Company begins to expand through franchising.
1961: Company is publicly traded under the name International House of Pancakes.
1963: Company adopts the name International Industries after it acquires numerous franchised brands, which it
controls throughout the 60s. Brands include: International House of Pancakes, Orange Julius, Love's Wood Pit
Barbecue, Golden Cup Coffee Shops, The Original House of Pies, Wil Wright's Ice Cream Shoppes, among others.
1973: A marketing program introduces the acronym "IHOP" for the first time.
1985: Actor Cliff Bemis becomes an IHOP favorite, starring in commercials from the mid-80s thru the mid-90s.
1985: The Rooty Tooty Fresh ‘N Fruity® is introduced, and guests across the country have fun pronouncing the oneof-a-kind breakfast.
1991: IHOP moves its headquarters to Glendale, California and via an initial public offering becomes publicly
traded on the NASDAQ Stock Market under the symbol “IHP”.
1992: 500th IHOP restaurant opens.
1993: An average sale per IHOP restaurant exceeds $1 million.
1998: For the first time, system-wide sales of IHOP reach $1 billion
1999: IHOP begins trading on the New York Stock Exchange (NYSE) under the symbol “IHP”.
2001: The 1,000th IHOP opens in Layton, Utah.
2002: Julia A. Stewart is appointed President.
2003: The award-winning “Come hungry. Leave happy.” advertising campaign launches and IHOP introduces our
popular Stuffed French Toast.
2004: IHOP wins prestigious Advertising and Marketing Awareness award for “Come hungry. Leave happy.”
campaign.
2005: IHOP introduces Funnel Cakes as a Limited-Time Offer, and quickly becomes the country’s largest seller of
this favorite amusement park treat.
2006: New ICON building prototype is introduced as the look for IHOP in the new millennium.
2007: On November 29, 2007, IHOP Corp. successfully completes the acquisition of Applebee’s International, Inc.
With more than 3,300 restaurants, the combination brings together two leading restaurant brands and creates the
largest full-service restaurant company in the world.
2008: IHOP Celebrates 50! From our humble beginnings in Toluca Lake, California we have become one of
America’s favorite restaurants, with over 1,400 locations coast to coast.
2010: Introduces SIMPLE & FIT menu, now with more than 30 items under 600 calories plus tips to meet nutrition
goals located throughout the menu.
2011: IHOP celebrates its sixth National Pancake Day. In just six years, IHOP has raised $8 million in support of
the communities where we do business! IHOP also becomes inaugural leader in Kids Live Well initiative.
2012: IHOP launches the new “Everything You Love About Breakfasts” campaign, including our first brand anthem
TV spot and guest testimonials.
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DENNY’S ® Restaurants
Denny’s® is a full-service family restaurant chain, which operates over 1,600 restaurants in the United
States, Canada, Curacao, Costa Rico, Honduras, Japan, Mexico, New Zealand, Qatar, and the United
Arab Emirates. The restaurants are well known for always being open, serving breakfast, lunch, and
dessert 24 hours a day. Denny’s® started franchising in 1963 and most of their restaurants are franchiseeowned.
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A BRIEF HISTORY:
1991: Denny's headquarters moves from Irvine, California to Spartanburg, South Carolina
1994: Denny's becomes the largest corporate sponsor of the national charity, "Save the Children"
2002: Denny/s parent company, Advantica Restaurant Group, Inc., is re-named Denny's Corporation to
reflect the one brand focus
2006: Black Enterprise magazine ranks Denny's at the top of its list of "Best 40 Companies for Diversity"
in July 2006
2007: Denny's ends the year with system wide sales of $2.4 billion and $1.73 million average unit sales
for company-operated restaurants
2009: Denny's remains the largest family-service restaurant in America, with 21, 000 employees and
2,546 restaurants
2010: Opened 136 new units, the highest number of domestic opening in history, including 100 flying
J/Pilot Travel Center conversion sites and 6 units at university locations. Denny's completes $300 million
re-financing, delivering lower borrowing costs, extended maturities, and increased financial flexibility ro
re-pay debt and return cash to shareholders
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GOLDEN CORRAL® RESTAURANTS
Golden Corral®, which first opened in 1973, offers its diners real, wholesome foods in a family-friendly
atmosphere and at a great value. After nearly forty (40) years, the restaurant is well known for its leading
buffets and grills. Every Golden Corral® restaurant is filled with endless buffets; offer a wide variety of
familiar American favorites, and continuous new menu offerings for breakfast, lunch, and dinner. At
present, there are over four hundred (400) Golden Corral® restaurants in the U.S.A.
Store Hours: As a general rule all Golden Corral Restaurants are open 24 hours 7 days a week.
Golden Corral Restaurants are known for:
o
Real Homemade Fresh Food
o
Variety & Abundance
o
Value for the Money
o
Family Friendly Casual Atmosphere
The first Golden Corral® restaurant opened in Fayetteville, North Carolina in 1973 as a 175-seat,
4.800 square foot family steakhouse. The chain grew steadily during the next decade, principally in
small cities from Virginia to Texas. In the mid-1980s, guests' requests for additional entrees and an
expanded salad bar prompted Golden Corral to "reinvent" itself by introducing the 450-seat "Buffet
& Grill" 11,518-square-foot GC-10 Metro design, with food preparation performed in full view of
the dining area to emphasize freshness and quality. The focal point is the Golden Choice Buffet®
with 160 hot and cold items, a carving station for roast beef, roast pork, ham, sausage and turkey,
plus The Brass Bell Bakery® and Dessert Café that features rolls, muffins, cookies, pies and cakes
made from scratch every 15 minutes with strawberries hand-dipped in chocolate and other treats at
the Chocolate Fixation Station.
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Nearly 40 years later, Golden Corral ® is well known as America's #1 buffet and grill. Golden
Corral's legendary, endless buffet features an abundant variety of delicious familiar favorites and
continuous new menu offerings for breakfast, lunch and dinner. Golden Corral's legendary, endless
dinner buffet features an enormous variety with 15 proteins including USDA, grilled to order sirloin
steaks, pork, seafood, shrimp, and chicken. They proudly serve USDA sirloin, aged and hand-cut
daily by in-restaurant butchers. The endless lunch buffet features a wide variety of home-style
classics like our pot roast simmered for 12-hours, made-from-scratch meatloaf, crispy fried chicken,
creamy mac and cheese, made-from-scratch mashed potatoes, beloved Bourbon Street Chicken, so
many fresh salad choices and dozens of other items. The breakfast buffet features made-to-order
omelets, fluffy pancakes, hot-off-the griddle sausage and bacon, fruit, French toast, pastries and
much more. Our bakery and dessert buffet are filled with freshly baked breads, like our famous
yeast rolls, homemade cakes and pies, delicious cookies, brownies, pastries, and ice cream.
Golden Corral’s vision is to remain a leader in the family restaurant segment by making pleasurable
dining affordable for every guest, at every restaurant, every day.1
1
http://goldencorral.hodesiq.com/culture.asp?user_id.
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KEY MILESTONES:
1998: An independent marketing survey of franchisees conducted by Success magazine gave
Golden Corral® a perfect 5-star rating for franchisee satisfaction among the nation’s top 100
franchisors from all segments of business, tied with Mc. Donald’s in 1998.
2009: Restaurants & Institutions ranked Golden Corral® first (1st) place in Consumers’ Choice in
Cafeteria/Buffet Chains
2011:

The top one-third franchised restaurants recorded annual sales high-low range of $7,634,129
to $4,780,464

System sales at the end of the fiscal year amounted to $1.683 billion

177.2 million guests served throughout the year

System growth drastically increased with a new Golden Corral® opening on the average of
one every twelve (12) business days.

Entrepreneur magazine named Golden Corral® the number one franchisor in the U.S.
among family steakhouses for the 16th year.

Nation’s Restaurant News ranked Golden Corral® first (1st) place in the grill-buffer segment
for the 14th year.
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3. PROJECT OBJECTIVES:
As stated earlier, the traditional franchise restaurant business model such as that used by IHOP®,
Denny’s®, and Golden Corral®, has proved to be highly successful for franchises throughout the years.
The direct EB-5 projects will operate under a proven business model – the Mall Restaurant Business
Model. This model provides the traditional franchisors with an opportunity to build parallel businesses
without modifying or significantly affecting their respective traditional franchise locations.
BUSINESS MODEL
Through the direct EB-5 Project investments, the introduction of non-traditional mall locations offer a
new venue for each franchise’s continued success and significant advantages to boost store traffic. These
locations reduce the initial construction costs, capitalize on high foot traffic for increased revenue, and
utilize high quality venues to support the IHOP®, Denny’s®, and Golden Corral® brand recognition.
The Locations of the Initial Stores:
1. Mall based breakfast style franchise in Syracuse, New York - 9090 Carousel Center Drive,
Syracuse NY 13290
2. Mall based breakfast style franchise in Albany, New York - 1 Crossgates Mall Road, Albany NY
12203
3. Traditional diner/breakfast style franchise restaurant to be located in Harlem or Brooklyn, New
York ( will operate for 24 hours)
4. Traditional buffet style restaurant to be located on Long Island, New York
5. Mall based breakfast style franchise in Middletown New York - 1 Galleria Drive, Middletown
NY 10941
The Mall Restaurant Business Model allows for significant growth of the potential market within the
defined geographic area without negatively impacting the existing franchisees. This will be accomplished
by opening up an additional market for breakfast or diner style franchisors within their current franchise
development areas. The three franchise-based mall restaurants will continue to serve a broad range of
entrees, appetizers, deserts, and non-alcoholic beverages. Each franchise restaurant will feature full table
service and high-quality, moderately priced food and beverages in an attractive and comfortable
atmosphere.
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ADDITIONAL MARKET EXPLAINED
Consumers/shoppers at a mall who decide to enjoy a meal will almost always select one of the available
food options within the mall rather than leave the location. At present, with limited exceptions, mall
consumers, do not have the option of choosing a full service breakfast style franchise restaurant as their
preferred place(s) of dining.
The mall-based restaurant franchises should not compete heavily with the existing (traditional) ones,
primarily because malls are isolated markets. Simply put, consumers at malls (and even mall workers)
generally prefer to remain in the mall rather than have to interrupt their shopping trip or impinge upon
their allotted lunch breaks. Such consumers will instead patronize one of the existing mall choices, which
will now include our franchise brands.
The distinction between mall shoppers and destination diners: A destination diner is a patron who travels
to the restaurant based on reputation (brand recognition). Their visit to the mall is motivated by the intent
to dine at a specific restaurant rather than shopping. The mall location offers other benefits to these
diners such as ease of parking which can be an issue at some traditional franchise locations. These patrons
are often motivated based on national and local marketing campaigns.
Once these mall-based franchise restaurants commence their operations at strategically selected locations,
the well-recognized franchises will almost certainly attract mall traffic – inclusive of shoppers, mall
employees, and others within close proximity. Such a prediction can be made given their respective
national images, brand recognition, and established reputations for providing quality services at
affordable prices.
PROVEN SUCCESS OF NEW BUSINESS MODEL
The Mall Restaurant Business Model is an innovative, creative, and novel one. Once operational, these ®
mall-based restaurant franchises will be among the first of their kind.
The first test case has been an IHOP® located in the Palisades Mall,2 New York. It has been highly
successful and is currently exceeding its revenue objectives and is expected to average in excess of
$47,000 USD per week for 2013.
2
Palisades Center is the premier shopping, dining and entertainment destination located in West Nyack, just 20
miles North of New York City. It is conveniently positioned on the New York State Thruway (I87 & I287) with
direct access to Route 303, Route 59 and the Palisades Interstate Parkway. The Center is easily accessible by any
mode of transportation.
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Palisades Center is the premier shopping, dining and entertainment destination.
Located in West Nyack, just 20 miles North of New York City.
Particularly worthy of mention is the fact that the Project Managers for the proposed EB-5 direct
investment projects were directly involved in the successful planning, building, and execution of the
IHOP® in the Palisades Mall. As is the case with the IHOP® franchise located in the Palisades Mall,
each direct EB-5 restaurant project, will benefit from the following:

Experienced store management, plus a dedicated business management team of highly qualified
professionals;

Careful choice of mall locations based on demographics, those lacking breakfast dining options,
the absence of breakfast dining alternatives, limited full-service family dining alternatives, and
proximity of nearby attractions;

Quality and renown of the franchisors’ brands

Centralized expense control, planning and operations oversight.
Franchise Standards, Processes, and Oversight Remain Same
All franchised mall-based restaurants will continue to adhere to the very stringent and rigorous standards
developed under their regular/traditional oversight procedures. In other words, each franchise restaurant’s
development and operations, which includes quality control, employee training, store management, and
the like, will be strictly controlled to meet and even exceed all quality satisfaction objectives for the
traditional franchised stores.
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Service Business Analysis
Our mall based restaurants will be competing with other full service restaurants located within the mall as
well as the fast food environment of the food court. By locating the restaurants close to the main entrance
of the mall. The restaurants will stand apart from the fast food environment of the general food court. The
restaurant will provide an inexpensive, quiet respite from the shopping experience and an opportunity for
patrons to relax in a family friendly, full service restaurant.
The signature dishes and all day breakfast offering have broad appeal and differentiate these restaurants
from the other full service restaurants located in the mall. The national advertising and the franchisor’s
brand recognition, creates a demand for our menu offerings and the price point of our dishes makes the
restaurant a true value offering to patrons.
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4. INVESTMENT STRATEGY OF FRANCHISE RESTAURANT PROJECTS
The Investment Strategy objectives for each project are separated in two main segments. The first is the
creation of domestic jobs in each TEA restaurant franchise location pursuant to the USCIS EB-5 program.
The second is to generate interest income and the return of principal upon maturity from the investments into
the franchise restaurant.
A. PROPOSED PROJECT PHASES
The development of each franchised mall restaurant will occur in an orderly manner so as to ensure that
funds are always in place to construct, open, and operate each store from the initial stage of construction
and beyond. Thus, no franchise is expected to lack funds during either the construction process or
throughout ongoing operations. The cost of each franchise restaurant is estimated at $2.5 million USD.
This includes the construction and operation of each restaurant. The twenty (20) franchise restaurants are
expected to be constructed and fully operation within 12-36 months.
The JCE for each franchised mall restaurant plans to administer, oversee and manage all its investment
activities, primarily to engage and support due diligence screening of its investors’ lawful source(s) of
capital and the ability of the each investor to fully invest the requisite amount of capital for EB-5
purposes.
The JCE will make qualified investments in accordance with specific due diligence guidelines below:

Investments that will procure jobs in the TEA areas pursuant to the USCIS EB-5 program.

Investments that will provide positive cash flow that can be recapitalized to facilitate an exit
strategy for the NCE to return investor’s Initial Investment in four (4) to five (5) years.

Investments that are securitized by equity investment or credit agreements
B. RATIONALE FOR THE MALL LOCATIONS
The mall locations are selected based on the following factors:

Franchisor recommended areas for development,

Regional demographics as researched on the internet from various sources including government
and private studies,

Mall traffic statistic as presented by the property management agent for each location,

Competitive analysis,
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
Specific site availability for maximum foot traffic and immediate implementation,

Site visits for verification of the above.
Forecast of revenues based on prior store performance and projected mall traffic:
Mall
City, State
Revenue
Gross Profit
Destiny Mall
Syracuse, NY
Revenue $3,200,000
Gross Profit $480,000
Crossgates Mall
Albany, NY
Revenue $2,800,000
Gross Profits $420,000
Galleria Mall
Middletown, NY
Revenue $2,600,000
Gross Profits $390,000
Hampshire Mall
Hadley, MA
Revenue $2,400,000
Gross Profits $360,000
NOTE: All performance is subject to variables beyond Gateway’s control and these are only preliminary
estimates. Actual performance may vary from these projected values.
C. DEMAND GENERATORS
As stated earlier, the targeted franchisors were selected based on their long standing reputations.
American family dining restaurants are highly recognized nationally and internationally and have
continuously demonstrated strong financial performance even during tough economic times.
There are several reasons why frequent mall patrons are likely to choose one of the proposed franchise
restaurants over the traditional mall food service. Such reasons include:

Loyal consumers recognize and prefer the franchisors’ brands;

Hungry consumers may desire a breakfast-type or combination of breakfast meals and are faced
with “no breakfast” alternatives;

Wary consumers are faced with a choice of non-franchise restaurants and is unwilling to take a
chance:

Consumers have had bad experiences with other franchises; and/ or;

Consumers desire a wide range of food choices in a full-service environment, and at reasonable
prices not offered by other food service providers in the mall.
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D. ESSENTIAL COMPONENTS
Status of Leases:
The principals of Global Gateway Strategies, LLC have pre-negotiated very favorable terms with the
property agents and their attorney. These leases have been agreed upon but have not been executed at this
time. Leases will be executed as the funding becomes available to ensure that the restaurant operation
gets the full advantage of the rent concessions to reduce costs. Early execution of the leases would set a
pre-mature commencement date and consume the rent concessions before construction starts. The first 13
sites have been identified and additional sites will be vetted as construction begins at these locations.
Franchise Application:
The principals of Global Gateway Strategies, LLC have submitted confidential applications to the major
franchisors selected. The plan has been well received by the franchisors and we do not anticipate delays
in the approval process. The principals expect approval shortly of the first location and the principals are
prepared to proceed.
These applications are not attached because they are based on personal financials and contain significant
confidential information.
Required Permits & Licenses:
Global Gateway Strategies, LLC (GGS) will be responsible for obtaining all necessary permits and
licenses. Each location requires a building permit (for the interior construction and alterations) and a
health department license prior to commencing operations. The management companies, as the custodians
of these malls, have a vested interest in ensuring the success of their tenants for both continued revenue
and for the public image of their properties. They therefore assist tenants in expediting the necessary
construction permits for building, which are usually issued within 4-6 weeks. It should also be noted that
Mr. Rudolph Southwell, a Managing Member of GGS, has prior experience in developing similar
franchise restaurants. (Please see the resume section below). The health department licenses are granted
based on site inspections after construction. The typical turn-around time to obtain the license is between
2-3 weeks.
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5. MARKET ANALYSIS
Market analysis by the franchisors has identified the Carousel / Destiny Mall in Syracuse, in upstate
New York, as the initial location of the first scheduled of these franchised restaurants. The location is a
growth market for their franchise restaurant business. The demographics for the greater Syracuse and
surrounding area include 215,000 college students and a strong economic environment for new business
development.
According to the statistics released by the US Census Bureau3, as of 2011, Syracuse had a population is
145,151 persons. Twenty three percent (23%) of the population is under 18 years old and 10.6% is sixty
five (65) years old and over. As the franchises are family dining restaurants, the restaurants target every
age group. However, the primary target market for the mall-based franchise restaurant amounts to more
than 66.4% of Syracuse’s population.4
About Carousel / Destiny USA Mall
The Carousel/Destiny Mall is one of the largest shopping
malls in the United States with more than 2,400,000 square
feet of retail space. Located in Syracuse, New York, the
new 850,000 square foot expansion combines full-priced and
value retail and entertainment venues.
Image: Destiny USA outlet mall
3
The official site of the statistics dated 2011 Quick Facts of Syracuse, New York may be accessed at:
http://quickfacts.census.gov/qfd/states/00000.html
4
Syracuse (city), New York
Quick Facts
Population, 2011 estimate
Manufacturers’ shipments, 2007 ($1000)
Merchant wholesaler sales, 2007 ($1000)
Retail sales, 2007 ($1000)
Accommodation and food services sales, 2007 ($1000)
Land area in square miles, 2010
Persons per square mile, 2010
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Syracuse
145,151
1,558,748
1,109,177
1,654,482
250,973
25.04
5,796.8
New York
19,465,197
162,720,173
313,461,904
230,718,065
39,813,499
47,126.40
411.2
Based on a survey recently conducted by Oxford Economics, the mall’s central location in the
Northeastern United States extends its reach to 5.5. million people within a 2.5 hour drive of the facility.
Major target markets within this area include: Eastern Canadians, tourists, University students, and
regional residents (described earlier). At 2.4 million square feet, the Carousel/Destiny Mall will be the
sixth (6th) largest enclosed shopping center in the country.
It is projected that the mall will attract 29 million visitors annually, making it the second most visited
shopping destination in the United States according to a Travel & Leisure magazine article, which
highlighted the most visited shopping destinations.
Image: Celebration of the Carousel Mall becoming Destiny USA Mall
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The 2000 federal census documented that 75% of the local population is over the age of 18 and the
franchisors’ signature menus will have broad regional appeal to these demographics. This population of
young families and individuals with disposable income frequent the Destiny Mall and often dine while on
the premises. It is therefore, anticipated that there will be a strong demand for the restaurant's products
and services. In addition, since the selected franchisors offer strong value-based dining options, their
affordable price points are ideally suited for the described demographics.
Market Segmentation
The franchise restaurants utilize a standard menu offering, including nationally advertised signature
dishes. With a current average customer check of less than $10.00 per person (excluding buffet style
offerings), it is anticipated that this price point will appeal to customers with an average family income in
excess of $40,000. Since the average household income in the projected trade are averages $63,230.00,
not including the 215,000 college students residing in the local area, the target market for this restaurant
supports the financial projection contained in this plan.
Although unemployment in the Syracuse area is typically higher than the national average, this is more
than offset by the regional draw that the Destiny Mall has for the central New York area. In addition,
since many of the shoppers travel extended distances to frequent this mall, there is a greater likelihood
that they will dine on premises before leaving. The national and regional advertising support provided by
franchisors, supplemented by direct local advertising, should ensure that these restaurants enjoy a
significant share of this target market.
Table: Market Analysis
Market Analysis
Year 1
Potential Customers
Mall Shoppers6
Destination Diners7
Total
Growth
5%
5%
5.00%
250,000
20,000
270,000
Year 2
262,500
21,000
283,500
Year 3
275,625
22,050
297,675
Year 4
289,406
23,153
312,559
Year 5
303,876
24,311
328,187
CAGR5
5.00%
5.00%
5.00%
5
Compound Annual Growth Rate
Mall shoppers, often motivated by local and national marketing campaigns, are potential customers to the mallbased restaurant franchises who take advantage of dining services located in the mall due to benefits such as ease of
parking, which is often an issue at traditional franchise locations.
6
7
Destination diners are patrons who directly travel to a restaurant based on its reputation/brand recognition. Their
visits to the mall are largely motivated by the intent to dine at a specific restaurant rather than for shopping. is a
patron who travels to the restaurant based on reputation (brand recognition). Their visit to the mall is motivated by
the intent to dine at a specific restaurant rather than shopping.
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Target Market Segment Strategy
Each restaurant will employ a full time General Manager for their location. By strict adherence to the
franchise's operating guidelines and management support services from highly competent professionals,
Gateway Global Strategies, LLC has an established model for success. While the General Manager will
be responsible for the day-to-day operation of the restaurant, he will receive ongoing support in the areas
of financial control, quality of service, human resources, staffing and training of personnel, and
marketing. These support services are designed to maximize restaurant profitability and protect the
owners' investment.
Marketing Strategies:
As part of the franchise agreement, the restaurants participate in the franchisor’s nationwide marketing.
These campaigns are typically aimed at brand awareness and special limited time offerings to drive traffic
to the franchisees. Each franchise agreement requires the franchise to contribute to the franchisor’s
marketing fund, which pays for these advertising programs. The attraction of a franchise restaurant is
consistency throughout the chain. Each restaurant must strictly adhere to the standards and procedures
established by the franchisor. This way, a patron can anticipate the approximate cost and quality of
service they will receive for their dining experience. This provides a significant advantage to the franchise
restaurant in competing against independent restaurants.
In addition to the franchisor’s efforts, each location will have a local marketing plan developed by GGS.
This plan is focused on the individual restaurant and is designed to participate in community events, mall
activities, and other local initiatives. This combination of national advertising, brand recognition, and
local focus, has been very successful in driving traffic to the franchisor’s restaurants.
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Franchisors and GGS will work closely with the General Manager for each location to ensure that their
marketing efforts address the specific needs of each local market. In addition, GGS will be able to share
successful strategies from other locations on a “Best Practices” basis with each restaurant so that they will
benefit from each other’s success.
COMPETITORS:
At present, there are no breakfast-oriented restaurants at the Carousel/Destiny USA Mall. The only
breakfast alternatives are fast food sandwiches offered from chain restaurants such as Wendy’s, Panera
Bread, and Dunkin Donuts.
Other restaurants/dining options located in the mall along with their revenues are briefly discussed below:
1. Uno’s Chicago Grill
Uno’s is a pizza & Italian food restaurant, which generates $3,200,000 in revenue. The restaurant
does not offer breakfast options
2. Ruby Tuesday
Ruby Tuesday is a casual dining restaurant, which offers a general menu (burgers, full course meals,
and desserts). However, breakfast options are not provided. The restaurant generates $2,800,000 in
revenues.
3. Johnny Rocket’s
Johnny Rocket’s primarily serves hamburger, fries, milk shakes, and the like. The restaurant does not
provide breakfast menu options. The restaurant generates $1,500,000 in revenues
4. Panera Bread
Panera Bread offers sandwiches and salads. Although the chain offers breakfast sandwiches and
bagels, it does not offer traditional breakfast offerings such as eggs, waffles, pancakes, etc.
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6. COSTS AND EXIT PLAN
The total costs associated with the business venture are approximately $1.7 MM. The break down of these
costs are as follows:
o
Construction costs: This includes: carpentry & framing, sheetrock, electrical work, plumbing,
painting and wall coverings, HVAC, fixtures, etc.
o
Equipment costs:
include: the design and installation of a commercial kitchen with all
appliances, furnishings, signage, etc.
o
Other start-up costs:
This includes non-construction and non-equipment costs such as:
franchise fees, training fees, franchise marketing fund, construction management, architect fees,
building permits, health department licenses, legal fees, insurance, deposits and securities, initial
inventory, small wares, linen & supplies, POS, uniforms, recruiting costs, reserve for operating
capital, etc.
Analysis of Methods Used to Derive Costs:
The construction cost estimates are based on actual costs incurred for the construction and opening of an
identical franchise restaurant in a New York State mall within the last 18 months. The restaurant was an
IHOP® opened in a New York State Mall. This restaurant is currently exceeding the projected revenue
objectives and generates in excess of $2,300,000 per year. In addition, this restaurant is experiencing
approximately 15% gross profit from operations. It is therefore believed that those numbers represent
accurate projections of the anticipated costs that each restaurant will incur.
The malls presently selected are expected to exceed this level of performance. While each restaurant is an
independent business and individual performance will vary, it is believed that the statistics provided are
conservative estimates of the expected performance of each franchise restaurant.
Exit Plan:
The repayment of the Investors’ capital is expected to come from: (1) capital specifically set aside, of
approximately 70% of the gross profits during the term of the EB-5 loans. (2) In addition, the owners
retain the option of commercial refinancing as the exit plan.
The projected net income from the operation for five years is estimated at USD 2,309,355. 70% of the net
income constitutes USD 1,847,484, an amount sufficient to repay the EB-5 debt. Besides, recapitalization
is another option available for repayment to the EB-5 investors.
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7. JOB CREATION: FULL - TIME & DIRECT JOBS
Staffing Requirements:
Gateway Global Strategies uses a business partner with more than 17 years of staffing experience. These
services will manage the initial and ongoing staffing requirements for each location to ensure a stream of
qualified candidates are available. Initial interviews are held about 30 days prior to the opening to allow
sufficient time for training.
Typical restaurants require 40+ full-time employees and an additional staff of approximately 35-40 parttime employees. These part-time employees are often and excellent source for future full-time positions
because they have an excellent understanding of the procedures and responsibilities of each position. The
restaurants will promote from within whenever possible, which will therefore require an ongoing need to
maintain a pool of qualified candidates. The pool will ensure that job openings are quickly filled so as to
maintain the necessary number of full -time employees.
Historically, IHOP®, Denny’s®, and Golden Corral® franchise restaurant Project is expected to create
between at least forty two (42) to seventy three (73) direct, full-time jobs. Hiring for all Gateway
Project restaurant positions will be completed within the last 60-90 days of construction. An estimated
break-down of these jobs for each franchise mall restaurant are as tabulated below.
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Mall Based Full Service Breakfast Style Franchise Restaurants: Direct, Full-Time
Employment
Positions
Restaurant Manager
Crew Chief
Cooks
Host/Hostess
Servers
Combo (Dishwashers & General Cleaning)
Total
Jobs Created
2
2
8
4
20
6
42
Buffet Style Franchise Restaurants: Direct, Full-Time Employment
Position
Manager
Crew Chief
Cooks
Host/Hostess
Servers
Combos (Dishwasher & General Cleaning)
Total
Jobs Created
3
4
16
8
30
12
73
Excess Jobs Created
Under current U.S. immigration law, each foreign investor’s funds must create at least ten (10) direct,
full-time jobs. With two (2) investors needed per franchise, at least twenty (20) direct, full-time jobs
must be created. Based on the above charts, all three (3) franchise restaurant are expected to create excess
jobs. Specifically, the mall based full service breakfast style franchise restaurants are expected to create at
least twenty two (22) additional jobs and the Buffet Style franchise restaurants which require at least 2
investors should create at least fifty three (53) excess jobs.
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Become American Investor
[email protected]
http://www.becomeamericaninvestor.com
9. COMPANY MANAGEMENT PROFILE:
The
company
management
consists
of
two
partners
with
significant
experience:
Rudolph Southwell and James Flaherty.
Mr. Rudy Southwell has more than 15 years of financial management and real estate experience. This
experience includes real estate development, brokering and financing of large residential and commercial
projects. He has been the lead business advisor on major commercial and residential development
projects. Mr. Southwell has previous experience in establishing and successfully developing IHOP
franchise restaurants in a mall environment similar to the ones proposed in this business plan. He
personally managed the entire implementation from concept development to opening day. This included
his active involvement in every stage of the design, build out and staffing of this highly successful
restaurant.
James Flaherty is a NYS licensed attorney and possesses an MBA from Long Island University. (Jim was
admitted to the NYS Bar in 1988 and has practiced in the areas of Probate, Real Estate and Contract Law
He has managed large service organizations including a nationwide service organization with more than
900 employees and more than $58,000,000 in annual revenue. In addition he has more than 30 years of
experience in executive level management of both large and small businesses. As a consultant, he has
drawn upon his business expertise in the areas of business development, finance, customer service, human
resources, and technology.
The partners also have mid-level managers identified to run the day to day operations of the restaurants.
These individuals include experienced restaurant managers and a culinary arts graduate for the training
and development of our staff.
The project developers have gained substantial and invaluable experience with opening and operating the
first highly successful and lucrative mall-based IHOP®, franchise, located in the Palisades Mall, New
York. They possess substantial leasing experience, a complete understanding of the mall-based franchise
restaurant business (including quality control standards), as well as superb project management abilities.
The construction and operation of mall-based franchise restaurants will enhance community life in each
location in New York State and stimulate the local economy, which is the intent of the EB-5 investor
program.
27 | P a g e
Become American Investor
[email protected]
http://www.becomeamericaninvestor.com