Morning Kryptonite

“The Morning Kryptonite”

Executive Summary

The Morning Kryptonite (MK) is a specialty beverage retailer. MK uses a system that is new to the beverage and food service industry to provide hot and cold beverages in a convenient and time-efficient way. MK provides its customers the ability to drive up and order (from a trained Barista) their choice of a custom-blended espresso drink, freshly brewed coffee, or other beverage. MK is offering a high-quality option to the fast-food, gas station, or institutional coffee.

The Morning Kryptonite offers its patrons the finest hot and cold beverages, specializing in specialty coffees, blended teas, and other custom drinks. In addition, MK will offer soft drinks, fresh-baked pastries and other confections. Seasonally, MK will add beverages such as hot apple cider, hot chocolate, frozen coffees, and more.

The Morning Kryptonite will focus on two markets:

The Daily Commuter- someone traveling to/from work, out shopping, delivering goods or services, or just out for a drive.

The Captive Consumer- someone who is in a restricted environment that does not allow convenient departure and return while searching for refreshments, or where refreshments stands are an integral part of the environment.

The Morning Kryptonite will penetrate the commuter and captive consumer markets by deploying Drive-thru facilities and Mobile Cafes in the most logical and accessible locations. The Drive-thru facilities are designed to handle two-sided traffic and dispense customer-designed, specially ordered cups of premium coffees in less time than required for a visit to the locally owned cafe or one of the national chains.

In addition to providing a quality product and an extensive menu of delicious items, to ensure customer awareness and loyalty, as well as good publicity coverage and media support, we will be donating up to 7.5% of revenue to local charities based upon customer choices.

The Morning Kryptonite’s financial picture is quite promising. Since MK is operating a cash business, the initial cost is significantly less than many start-ups these days. The process is labor intensive and MK recognizes that a higher level of talent is required. The financial investment in its employees will be one of the greatest differentiators between it and MK's competition. For the purpose of this pro-forma plan, the capital expenditures of facilities and equipment are financed. There will be minimum inventory on hand so as to keep the product fresh and to take advantage of price drops, when and if they should occur.

The Morning Kryptonite anticipates the initial combination of investments and long term financing of $425,000 to carry it without the need for any additional equity or debt investment, beyond the purchase of equipment or facilities. This will mean growing a bit more slowly than might be otherwise possible, but it will be a solid, financially-sound growth based on customer request and product demand.

The Morning Kryptonite chooses to become the Drive-thru version of Starbucks between the mountains, obtaining several million dollars through an initial public or private offering that would allow the company to open twenty to thirty facilities per year in all metropolitan communities in the North, Midwest, and South with a population of over 150,000. This is the preferred Exit Strategy of the Management Team. The danger in this is that competitors would rise up and establish a foothold on a community before--or in the midst of--the arrival of The Morning Kryptonite, causing a potential for a drain on revenues and a dramatic increase in advertising expenditures to maintain market share. Knowing these risks--and planning for them--give MK the edge needed to make this scenario work.

The balance sheet estimates a Net Worth of $1,075,969 for the third year, cash balances of $773,623 and earnings of $860,428, based on 13 Drive-thrus and four Mobile Cafes, it is not unrealistic to put a market value of between $4 and $9 million on the company. At present, such companies are trading in multiples of four to 10 times earnings, and it is simple mathematics to multiply the success of MK by the number of major and smaller metropolitan areas between the mountain ranges of the United States.

Objectives

The Morning Kryptonite has established three firm objectives it wishes to achieve in the next three years:

1. Thirteen Drive-thru locations and four fully booked Mobile Cafes by the end of the third year.

2. Gross