Pasta Restaurant Marketing Plan

1.0 Executive Summary

Sigmund's Gourmet Pasta will be the leading gourmet pasta restaurant in Eugene, OR with a rapidly
developing consumer brand and growing customer base. The signature line of innovative, premium,
pasta dishes include pesto with smoked salmon, pancetta and peas linguini in an alfredo sauce, and
fresh mussels and clams in a marinara sauce. Sigmund's Gourmet Pasta also serves distinct salads,
desserts, and beverages.
Sigmund's Gourmet Pasta will reinvent the pasta experience for individuals, families, and take out
customers with discretionary income by selling high quality, innovative products at a reasonable price,
designing tasteful, convenient locations, and providing industry-benchmark customer service.
In order to grow at a rate consistent with our objectives, Sigmund's is offering an additional $500,000
in equity. Existing members will be given the first option to subscribe to the additional equity to allow
each of them to maintain their percentage of ownership. The portion not subscribed by existing
members will be available for prospective new investors.

2.0 Situation Analysis

Sigmund's Gourmet Pasta is close to entering their second year of operation. The restaurant has been
well received, and marketing is now critical to its continued success and future profitability. The store
offers an extensive offering of gourmet pastas. The basic market need is to offer individuals, families,
and take out customers fresh, creative, attractive, pasta dishes, salads and desserts. Sigmund's uses
homemade pasta, fresh vegetables, and premium meats and cheeses.

2.1 Market Summary

Sigmund's Gourmet Pasta possess good information about the market and knows a great deal about the
common attributes of our most prized and loyal customers. Sigmund's Gourmet Pasta will leverage this
information to better understand who is served, their specific needs, and how Sigmund's can better
communicate with them.
Target Markets

Market Analysis
Market Analysis
2001 2002 2003 2004 2005
Potential Customers Growth CAGR
Individuals 8% 12,457 13,454 14,530 15,692 16,947 8.00%
Families 9% 8,974 9,782 10,662 11,622 12,668 9.00%
Take out 10% 24,574 27,031 29,734 32,707 35,978 10.00%
Total 9.27% 46,005 50,267 54,926 60,021 65,593 9.27%
2.1.1 Market Demographics
The profile for Sigmund's Gourmet Pasta's customer consists of the following geographic,
demographic, and behavior factors:
Geographics
• Our immediate geographic target is the city of Eugene with a population of 130,00.
• A 15 mile geographic area is in need of our services.
• The total targeted population is estimated at 46,000.
Demographics
• Male and female.
• Ages 25-50, this is the segment that makes up 53% of the Eugene market according to the
Eugene Chamber of Commerce.
• Young professionals who work close to the location.
• Yuppies.
• Have attended college and/or graduate school.
• An income over $40,000.
• Eat out several times a week.
• Tend to patronize higher quality restaurants.
• Are cognizant about their health.
Behavior Factors
• Enjoy a high quality meal without the mess of making it themselves.
• When ordering, health concerns in regard to foods are taken into account.
• There is value attributed to the appearance or presentation of food.

2.1.2 Market Needs

Sigmund's Gourmet Pasta is providing its customers with a wide selection of high-quality pasta dishes
and salads that are unique and pleasing in presentation, offer a wide selection of health conscious
choices, and utilizes top-shelf ingredients. Sigmund's Gourmet Pasta seeks to fulfill the following
benefits that are important to their customers.
• Selection. A wide choice of pasta and salad options.
• Accessibility. The patron can gain access to the restaurant with minimal waits and can choose
the option of dine in or take out.
• Customer service. The patron will be impressed with the level of attention that they receive.
• Competitive pricing. All products/services will be competitively priced relative to comparable
high-end pasta/Italian restaurants.

2.1.3 Market Trends

The market trend for restaurants is headed toward a more sophisticated customer. The restaurant patron
today relative to yesterday is more sophisticated in a number of different ways.
• Food quality. The preference for high-quality ingredients is increasing as customers are
learning to appreciate the qualitative differences.
• Presentation/appearance. As presentation of an element of the culinary experience becomes
more pervasive, patrons are learning to appreciate this aspect of the industry.
• Health consciousness. As Americans in general are more cognizant of their health, evidenced
 by the increase in individuals exercising and health club memberships, patrons are requesting
more healthy alternatives when they eat out. They recognize that an entree can be quite tasty,
and reasonably good for you.
• Selection. People are demanding a larger selection of foods, they are no longer accepting a
limited menu.
The reason for this trend is that within the last couple of years the restaurant offerings have increased,
providing customers with new choices. Restaurant patrons no longer need to accept a limited number of
options. With more choices, patrons have become more sophisticated. This trend is intuitive as you can
observe a more sophisticated restaurant patron in larger city markets such as Seattle, Portland or New
York where there are more choices available.
Market Forecast

2.1.4 Market Growth

In 1999, the global pasta market reached $8 billion dollars. Pasta sales are estimated to grow by at least
10% for the next few years. This growth can be attributed to several different factors. The first factor is
an appreciation for health conscious food. While not all pasta is "good for you," particularly the cream
based sauces, pasta can be very tasty yet health conscious at the same time. Pasta is seen as a healthy
food because of its high percentage of carbohydrates relative to fat.
Another variable that is contributing to market growth is an increase in the number of hours our
demographic is working. Over the last five years the number of hours spent at work of our archetype
customer has significantly increased. As the number of work hours increases, there is a high correlation
of people that eat out at restaurants. This is intuitively explained by the fact that with a limited number
of hours available each day, people have less time to prepare their meals and eating out is one way to
maximize their time.
Target Market Growth
2.2 SWOT Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company, and
describes the opportunities and threats facing Sigmund's Gourmet Pasta.

2.2.1 Strengths
• Strong relationships with vendors that offer high-quality ingredients and fast/frequent delivery
schedules.
• Excellent staff who are highly trained and very customer attentive.
• Great retail space that is bright, hip, clean, and located in an upscale mall, suburban
neighborhood, or urban retail district.
• High customer loyalty among repeat customers.
• High-quality food offerings that exceed competitors offerings in quality, presentation, and price.

2.2.2 Weaknesses
• Sigmund's name lacks brand equity.
• A limited marketing budget to develop brand awareness.
• The struggle to continually appear to be cutting edge.

2.2.3 Opportunities
• Growing market with a significant percentage of the target market still not aware that Sigmund's
Gourmet Pasta exists.
• Increasing sales opportunities in take out business.
• The ability to spread overhead over multiple revenue centers. Sigmund's will be able to spread
the management overhead costs among the multiple stores, decreasing the fixed costs per store.
2.2.4 Threats
• Competition from local restaurants that respond to Sigmund's Gourmet Pasta's superior
offerings.
• Gourmet pasta restaurant chains found in other markets coming to Eugene.
• A slump in the economy reducing customer's disposable income spent on eating out.

2.3 Competition
National Competition
• Pastabilities: offers consumers their choice of noodles, sauces, and ingredients, allowing the
customer to assemble their dish as they wish. Food quality is average.
• PastaFresh: has a limited selection but the dishes are assembled with high-quality ingredients.
The price point is high, but the food is quite good.
• Pasta Works: offers pasta that is reasonably fresh, reasonably innovative and at a lower price
point. The company was sold a few years ago, and consequently the direction of management
has been stagnant lately and has resulted in excessive employee turnover.
• Perfect Pasta: has medium-priced pasta dishes that use average ingredients, no creativity, and
less than average store atmosphere. Sigmund's is not sure how this company has been able to
grow in size as their whole product is mediocre at best.
Local Competition
• Restaurant A: This is an upscale Italian restaurant that has a limited selection of pasta dishes.
Although the selection is limited and pricey, the dishes are quite good.
• Restaurant B: An Italian restaurant with a decent pasta selection, however quality is
inconsistent.
• Restaurant C: An upscale restaurant with a large wine selection and good salads. Everything
else is mediocre at best and over-priced. Service can often be poor.
Growth and Share Analysis
Growth and Share

Competitor Price Growth Rate Market Share

Restaurant A $16 7% 15%
Restaurant B $12 6% 11%
Restaurant C $14 7% 13%

Average $14.00 6.50% 13.00%

Total $42.00 19.50% 39.00%
Competitor by Growth and Share
2.4 Service Offering
Sigmund's has created gourmet pastas and salads that are differentiated and superior to competitors.
Customers can taste the quality and freshness of the product in every bite. The following are
characteristics of the product:
1. Sigmund's dough for the pasta is made with Italian semolina flour.
2. Cheeses are all imported.
3. Vegetables are organic and fresh with three shipments a week.
4. Meats are all top-shelf varieties, organic when possible.
At Sigmund's, food is not a product, the experience of dining is a service. Sigmund's prides themselves
on providing service that is on par with fine dining. This is accomplished through an extensive training
program and only hiring experienced employees.
At a Glance--The Protype Sigmund's Store:
• Location: an upscale mall, suburban neighborhood, or urban retail district.
• Design: bright, hip, and clean.
• Size: 1,200-1,700 square feet.
• Employees: six to seven full time.
• Seating: 35-45.
• Types of transactions: 80% dine in, 20% take out.

2.5 Keys to Success

Location, Location, Location.
Sigmund's site selection criteria are critical to success. Arthur Johnson, former VP Real Estate,
Starbucks, helped us identify the following site selection criteria:
• Daytime and evening populations.
 • Shopping patterns.
• Car counts.
• Household income levels.

2.6 Critical Issues

Sigmund's Gourmet Pasta is still in the speculative stage as a retail restaurant. Its critical issues are:
• Continue to take a modest fiscal approach; expand at a reasonable rate, not for the sake of
expansion in itself, but because it is economically wise to. Continue to build brand awareness
which will drive customers to existing stores as well as ease the marketing efforts of future
stores.

3.0 Marketing Strategy

Sigmund's advertising budget is very limited, so the advertising program is simple. Sigmund's will do
direct mail, banner ads, and inserts, with inserts in the Register Guard likely to be the most successful
of the campaigns.
Lastly, Sigmund's will leverage personal relationships to get an articles of Sigmund's in the Register
Guard. Previous friends who have had their restaurant featured in the Register Guard has seen a
dramatic increase of sales immediately after the article was published in the RG.

3.1 Mission
Sigmund's Gourmet Pasta's mission is to provide the customer the finest pasta meal and dining
experience. We exist to attract and maintain customers. When we adhere to this maxim, everything else
will fall into place. Our services will exceed the expectations of our customers.

3.2 Marketing Objectives

1. Maintain positive, steady, growth each month.
2. Generate at least $40,000 in sales per month.
3. Experience an increase in new customers who are turned into long-term customers.
4. Realize a growth strategy of one store per year.

3.3 Financial Objectives

1. A double-digit growth rate for each future year.
2. Reduce the overhead per store through disciplined growth.
3. Continue to decrease the variable costs associated with food production.

3.4 Target Marketing

The market can be segmented into three target populations:
• Individuals: people that dine in by themselves.
• Families: a group of people, either friends or a group of nuclear relatives dining together.
• Take out: people that prefer to eat Sigmund's food in their home or at a different location than
the actual restaurant.
The Sigmund's customer are hungry individuals between the ages of 25 and 50, making up 53% of
Eugene (Eugene Chamber of Commerce). Age is not the most defined demographic of this customer
base; all age groups enjoy pasta. The most defined characteristic of the target market is income.
Gourmet pasta stores have been very successful in high rent, mixed-use urban areas, such as Northwest
23rd in Portland. These areas have a large day and night population consisting of business people and
families who have household disposable incomes over $40,000.
Combining several key demographic factors, Sigmund's arrives at a profile of the primary customer as
follows:
• Sophisticated families who live nearby.
• Young professionals who work close to the location.
• Shoppers who patronize the high rent stores.

3.5 Positioning
Sigmund's Gourmet Pasta will position itself as a reasonably priced, upscale, gourmet pasta restaurant.
Eugene consumers who appreciate high-quality food will recognize the value and unique offerings of
Sigmund's Gourmet Pasta. Patrons will be both single as well as families, ages 25-50.
Sigmund's Gourmet Pasta positioning will leverage their competitive edge:
• Product. The product will have the freshest ingredients including homemade pasta, imported
cheeses, organic vegetables, and top-shelf meats. The product will also be developed to enhance
presentation, everything will be aesthetically pleasing.
• Service. Customer service will be the priority. All employees will ensure that the customers are
having the most pleasant dining experience. All employees will go through an extensive training
program and only experienced people will be hired.
By offering a superior product, coupled with superior service, Sigmund's will excel relative to the
competition.

3.6 Strategy Pyramids

The single objective is to position Sigmund's as the premier gourmet pasta restaurant in the Eugene,
OR area, commanding a majority of the market share within five years. The marketing strategy will
seek to first create customer awareness regarding their services offered, develop that customer base,
and work toward building customer loyalty and referrals.
The message that Sigmund's will seek to communicate is that Sigmund's offers the freshest, most
creative, health conscious, reasonably priced, gourmet pasta in Eugene. This message will be
communicated through a variety of methods. The first will be direct mail. The direct mail campaign
will be a way to communicate directly with the consumer. Sigmund's will also use banner ads and
inserts in the Register Guard. This will be particularly effective because the Register Guard is a popular
local paper that is consulted when people are looking for things to do in Eugene.
The last method for communicating Sigmund's message is through a grassroots PR campaign. This
campaign will leverage personal relationships with people on staff of the Register Guard to get a couple
of articles written about Sigmund's. One will be from the business point of view, talking about the
opening of the restaurant and the people behind the venture. This is likely to be run in the business
section. The second article will be a food review. In speaking with many different retailers and
restauranteurs, significant increases of traffic followed articles in the Register Guard. Because of this
level of effectiveness and low/zero cost, Sigmund's will work hard to get press in the Register Guard.
3.7 Marketing Mix
Sigmund's marketing mix is comprised of these following approaches to pricing, distribution,
advertising and promotion, and customer service.
• Pricing. Sigmund's pricing scheme is that the product cost is 45% of the total retail price.
• Distribution. Sigmund's food will be distributed through a take out model where customers can
call in their order and come to the restaurant to pick it up, come into the restaurant, place the
take out order and wait for it to be completed, or come in and dine at the restaurant.
• Advertising and Promotion. The most successful advertising will be banner ads and inserts in
the Register Guard as well as a PR campaign of informational articles and reviews also within
the Register Guard.
• Customer Service. Obsessive customer attention is the mantra. Sigmund's philosophy is that
whatever needs to be done to make the customer happy must occur, even at the expense of
short-term profits. In the long term, this investment will pay off with a fiercly loyal customer
base who is extremely vocal to their friends with referrals.

3.8 Marketing Research

During the initial phases of the marketing plan development, several focus groups were held to gain
insight into a variety of patrons of restaurants. These focus groups provided useful insight into the
decisions, and decision making processes, of consumers.
An additional source of market research that is dynamic is a feedback mechanism based on a
suggestion card system. The suggestion card system has several statements that patrons are asked to
rate in terms of a given scale. There are also several open ended questions that allow the customer to
freely offer constructive criticism or praise. Sigmund's will work hard to implement reasonable
suggestions in order to improve their service offerings as well as show their commitment to the
customer that their suggestions are valued.
The last source of market research is competitive analysis/appreciation. Sigmund's will continually
patronize local restaurants for two reasons. The first is for competitive analysis, providing Sigmund's
with timely information regarding other restaurant's service offering. The second reason is that local
business owners, particularly restaurant owners, are often part of an informal fraternal organization
where they support each other's business.

4.0 Financials, Budgets, and Forecasts

This section will offer a financial overview of Sigmund's Gourmet Pasta as it relates to the marketing
activities. Sigmund's will address Break-even Analysis, sales forecasts, expense forecasts, and how
those link to the marketing strategy.

4.1 Break-even Analysis

The Break-even Analysis indicates that $40,000 will be needed in monthly revenue to reach the break-
even point.
Break-even Analysis
Break-even Analysis
Break-even Analysis

Monthly Revenue Break-even $23,037

Assumptions:
Average Percent Variable Cost 45%
Estimated Monthly Fixed Cost $22,000

4.2 Sales Forecast

The first two months will be used to get the restaurant up and running. By month three things will get
busier. Sales will gradually increase with profitability being reached by by the beginning of year two.
Sales Monthly
Sales Forecast
Sales Forecast
2001 2002 2003
Sales
Individuals $103,710 $262,527 $327,424
Families $150,304 $380,474 $474,528
Total Sales $254,014 $643,001 $801,952

Direct Cost of Sales 2001 2002 2003

Individuals $46,669 $118,137 $147,341
Families $67,637 $171,213 $213,538
Subtotal Direct Cost of Sales $114,306 $289,350 $360,879

4.3 Expense Forecast

Marketing expenses are to be budgeted so that they are ramped up for months two through four and
then lower and plateau from month five to month 10. Restaurants typically have increased business in
the fall. This generally occurs because during the summer, when the weather is nice and it does not get
dark until late, people tend to eat out less. From months 10-12, the marketing costs will increase again.
Monthly Expense Budget
Marketing Expense Budget
Marketing Expense Budget
2001 2002 2003
Direct mail $5,267 $5,605 $5,421
Banner ads $11,704 $12,455 $12,047
Other $7,022 $7,473 $7,228
------------ ------------ ------------
Total Sales and Marketing Expenses $23,993 $25,533 $24,696
Percent of Sales 9.45% 3.97% 3.08%

5.0 Controls
The purpose of Sigmund's Gourmet Pasta's marketing plan is to serve as a guide for the organization.

5.1 Implementation Milestones

The following milestones identify the key marketing programs. It is important to accomplish each one
on time, and on budget.
Milestones
Milestones

Advertising Start Date End Date Budget Manager Department

Marketing plan completion 1/1/2001 2/1/2001 $0 Kevin Department
Banner ad campaign #1 2/1/2001 4/1/2001 $3,754 Kevin Department
 Banner ad campaign #2 10/1/2001 1/1/2002 $4,900 Kevin Department
Total Advertising Budget $8,654
PR Start Date End Date Budget Manager Department
Other $0
Other $0
Total PR Budget $0
Direct Marketing Start Date End Date Budget Manager Department
Direct mail campaign #1 2/1/2001 4/1/2001 $1,689 Kevin Department
Insert campaign #1 2/1/2001 4/1/2001 $2,252 Kevin Department
Direct mail campaign #2 10/1/2001 1/1/2002 $2,205 Kevin Department
Insert campaign #2 10/1/2001 1/1/2002 $2,940 Kevin Department
Total Direct Marketing Budget $9,086
Web Development Start Date End Date Budget Manager Department
Name me $0
Other $0
Total Web Development Budget $0
Other Start Date End Date Budget Manager Department
Name me $0
Other $0
Total Other Budget $0
Totals $17,740

5.2 Marketing Organization

Kevin Lewis, the owner, is primarily responsible for marketing activities. This is in addition to his
other responsibilities, and does depend on some outside resources for graphic design work, and
creativity.

5.3 Contingency Planning

Difficulties and risks:
• Problems generating visibility.
• Overly aggressive and debilitating actions by competitors.
• An entry into the Eugene market of an already existing, franchised gourmet pasta restaurant.
Worst case risks may include:
• Determining that the business cannot support itself on an ongoing basis.
• Having to liquidate equipment or intellectual property to cover liabilities.