0

Table of Contents:

Executive Summary 1 -Business Description 1 -Mission Statement 1 -Products And Services 1 -Competitive Position 2 -Target Market 2 -Marketing Strategy 2 -Operations 2 -Management 2 -Financials 3 Club Design 4 Mission 4 Objectives 4 Future Growth 4 Site Analysis 5 Industry Analysis 6 Industry Maturity 10 Area Analysis 11 Target Market 12 Competition 15 Management 19 Personnel Plan 19 Organizational Structure 20 Marketing 21 SWOT Analysis 22 Loan Funds Dispersal Statement 23 Financials 24 Appendix A: Financial Assumptions 25 Appendix B: Loan Calculations 27 Appendix C: Pro Forma Financial Statements 29 References 36

1

Executive Summary

Company Description:

La Cantina will be the premier, high-energy, Mexican nightclub that will not only bring you the best Mexican music but music of all popular genres such as Rap, R&B, Hip-Hop, Techno, and more. Our goal is to provide innovative entertainment of the highest standard, which anticipates the needs, and exceeds the expectations of our clientele and community. The goal of La Cantina is to bring fun, safe, and controlled events such as live entertainment to the valley that cater to our target market of everybody 18 and older that are social and looking to meet new people.

One of the main advantages that La Cantina has to offer is that the nightclub will be open to everybody that is older than 18. Instead of just focusing on the 21 and over market, this is what many of the nightclubs around the valley do. La Cantina will include the 18-20 market as well by including them in the special events that the nightclub has to offer. There will also be a specific night of the week where La Cantina will allow people 18 and over, such as every Friday of the month or so.

Mission Statement:

“Our mission is to have La Cantina become one of the premier Night-time entertainment

locations in the valley. To achieve this goal, we will offer a fun, friendly, unique nightclub

atmosphere with the best in customer service, satisfaction, and live music entertainment that

keeps up to date with the changing taste and expectations of our core customers.”

Products and Services:

La Cantina will represent a unique opportunity to create a high energy, dance-theme venue that will feature multiple music genres, specializing in Mexican music, Hip-Hop, R&B, Techno, and more. The nightclub will cater to people over the age of 18, college students, young professionals, tourists, as well as singles and couples. The new venue will offer beer, an array of liquors and mixed drinks. In addition, the venue will sell nonalcoholic beverages such as soft drinks, juices, and bottled water. A casual bar menu consisting of appetizers and small entrees ranging anywhere from five to thirteen dollars will be available. The initial hours of operation will be 9:00pm to 2:00am and will vary depending on how the night is looking like and the event, two nights a week. The nightclub will feature a dance floor, 2 VIP Luxury rooms, 1 restaurant seating about 100-200 people, and a bar area.

1

Competitive Position:

La Cantina will be the only Mexican nightclub to provide multiple types of music genres such as Banda, Norteña, Corridos, Rap, Hip-Hop, R&B, Salsa, and other popular music genres, all while appealing and attracting to everybody from age 18 and up. It will be the first nightclub that will target older teens and students from age 18 and over. There are other nightclubs in the Valley that allow people 18 and over, however only on certain special events. These nightclubs can be viewed as competitors to La Cantina.

Target Market:

I see the Nightclub “La Cantina” as appealing to about 4 major market segments, the young professionals, college students, high school students age 18 & up, as well as tourists and business travelers. The long day and late night hours of operation will help to multiple segment appeal. The market segmentation scheme allows some room for estimates and nonspecific definitions.

Marketing Strategy:

Many new residents as well as existing residents are members of clubs in other markets. La Cantina will be a place for all, and the enabling technology will be a key part of the nightclub’s image. Advertising budgets and event promotion are ongoing processes of management geared to promote the brand name and keep La Cantina at the front of dance theme nightclubs in the valley. Radio and Social Media advertising will be our main ways of reaching out to new customers. In terms of advertising we will be developing a core positioning message; we will concentrate a good amount and use a substantial portion of our daily ad budget towards the “Grand Opening Event”. La Cantina will also be marketing to local hotels and airport in order to try and lure the tourists in, along with ads in the college newspapers nearby for the local campuses of Rogue Community College and Southern Oregon University.

Operations:

The kitchen will be open from 9:00pm to 12:00pm two days a week. The bar will be open from 9:00pm to 2:00 am, both on Friday and Saturday night. La Cantina Nightclub will employ 21 people to fill various positions of the nightclub.

Management:

La Cantina will be a general partnership with two other potential clients. As of now the management team consists of only one person which is myself, along with two other friends who are potentially going to be involved as well. Together we share a single vision: to provide a unique and entertaining experience through exceptional service. Since none of the owners have experience in the Bar/Nightclub setting, there will be Assistant Managers hired who will have a good amount of experience in the Bar/Nightclub setting and will be in charge of managing the

2

floor, as well as the bar.

Juan Sauceda, President. Juan is pursuing a bachelor’s degree in business management, and looks to work his way up in the Nightclub Industry in order to gain experience along the way and pursue the ambition of opening a nightclub. He has a good taste in music and knows ‘what’s in’ at the moment. He has a good music contact list that involves different music genres and entertainers, ranging from groups, solo artists, and DJs as well. These entertainers will be looked at first in order to get the Nightclub going, and work its way to bringing in the bigger groups and artists. Juan’s responsibilities will lie primarily with the coordination of events, and oversight of the operations, and evening activities of the restaurant and bar.

Financials:

La Cantina Nightclub is expected to earn a net income of $261,247 in 2015, $612,060 in 2016, and $1,210,850 in 2017. La Cantina will be keeping the retained earnings in order to attracter bigger performers for live entertainment.

La Cantina Nightclub will be financed by a 15-year long-term loan at a six percent interest rate in the amount of $300,000. La Cantina Nightclub will incur interest payments of $17, 653.84 and a principle payment of $12,732.01 in 2015. Interest payments of $16,868.99 and principle payments of $13,509.85 will be incurred for 2016.

3

Club Design:

La Cantina nightclub will be set up in the way that encourages the people to go out on to the dance floor and have a good time. There will be tables set up outside the dance floor but to a limited amount since the idea is to get the people dancing. La Cantina will also be serving small appetizers as well as a full bar that will be close to the entertainment area. The menu will consist of traditional bar appetizers with a Mexican taste to it, serving appetizers such as chips and salsa, quesadillas, tacos, burritos, and more. La Cantina will not stick to one general theme; instead it will consist of a variety of themes throughout the month with matching interior decorations. We will be employing multiple DJs in order to stay true to the idea of providing a variety of music to the people, which is one main area of focus for La Cantina nightclub. We will also be providing a variety of live entertainment as well. DJs and live entertainment will be the two main sources of entertainment.

Mission: “Our mission is to have La Cantina become one of the premier Night-time entertainment

locations in the valley. To achieve this goal, we will offer a fun, friendly, unique nightclub atmosphere with the best in customer service, satisfaction, and live music entertainment that

keeps up to date with the changing taste and expectations of our core customers.”

Objectives:

Capitalize on opportunity to become the premier nightclub in the valley Open the venue sometime in the next 10-15 years Pay back long term loan by year 5 Provide guests with quality foods, beverages, and entertainment atmosphere Maintain tight control of costs, operations, and cash flow through diligent management and automated

computer control Control food cost below 30% of food revenue Control total beverage cost below 25% of beverage revenue

Future Growth:

La Cantina Nightclub after three years of successful business will have established a good reputation among its target market and will be considered as the premier nightclub of the Rogue Valley. After the three years, we will continue to strive to guarantee the best quality of live entertainment and focus on the customers wants, as to which groups, bands, or artists they want to see. An idea of adding another floor to La Cantina Nightclub will be looked at in the future as well, a floor used to play different music than the first floor. After five years, the reputation of La Cantina Nightclub will have grown to a size where big names of multiple music genres will be playing at the nightclub on a consistent basis, as well as special events and holidays. Guest DJs will also be available for special events, popular nights, and holidays.

4

Site Analysis:

La Cantina Nightclub will be located at 40 East Tenth Street Medford, OR. This is a perfect location because it is in downtown Medford, where all the other bars and nightclubs are located as well. The RVTD (Rogue Valley Transportation District) is within walking distance, as well as public parking, parking garages, and taxis driving around all the time looking for customers. La Cantina Nightclub will be located in the old Medford Grocery Company Warehouse, which also used to be a teen nightclub called “Fat City” in the late 1970s and early 1980s and a tavern before then. The old Medford Grocery Company Warehouse is a two-story brick building with a basement, built in 1910 (Medford Grocery Company Warehouse- Medford, Oregon – U.S. National Register of Historic Places). According to an article the Mail Tribune wrote about the warehouse “….For those 20 or so years, either as a discotheque or tavern, it was having a lot of fun. People were dancing, listening to music and sometimes downing a few drinks” (Miller "In the walls of the old brick warehouse"). But due to legal and building code issues in the early 1990s, the building became vacant and has been ever since.

The building has been vacant for at least the past twenty years now, so a rough estimate of over $800,000 of renovations will need to take place. Since the warehouse used to be a tavern and nightclub back then, that means the building already has a nightclub type setup in the inside, including a dance floor already. The renovations will include of adding a kitchen if it doesn’t already have one, bringing the building up to codes and regulations, and making the building look more like an attractive nightclub people want to go to.

Industry Analysis:

5

The United States Bar & Night-club Industry includes about 45,000 establishments with combined annual revenue of about $20 billion. There is no major company that is dominating the market; varying state liquor laws complicates the ability to be able and form large chains in the industry. The Bar & Nightclub Industry is considered to be highly fragmented, the 50 largest companies in the market account for only about 5% of the total revenue.

Bar & Night-club owners will earn the reward of increasing incomes and consumer spending over the next five years. Revenue is expected to grow at a rate of 2.1 % to $26.1 billion by 2019. The industry will benefit from an improving economy, lower unemployment rates, and discretionary spending. Over the next five years to 2019, consumer spending is expected to grow at a rate of 3%.

Beer, Wine, and Premiumization

In the five years to 2019, alcohol consumption is expected to increase at a minimum level as moderate alcohol consumption continues to be a part of the American lifestyle. The shift towards premium beverage consumption will keep on increasing as the economic recovery supports the average disposable income, leading to consumption rising in the next five years to 2019. Because of this shift, beer is expected to attract a larger share of the demand for alcoholic beverages in the next five years.

The interest in local and imported wines is expected to grow as well. The growing interest among “millenials” (those born in the 80’s and 90’s) who represent a large portion of demand than baby boomers will also divide growth in the market. The future wine drinkers will certainly benefit the wine bars and wine sales at drinking locations.

Liquor and spirit demand is expected to grow in the next five years, mainly due to premiumization and a cocktail culture. In order to be successful, businesses will need to pick up and respond fast to the cocktail trends during this time. The bars and nightclubs that identify their niches and adapt to the drink menus to meet the changing customer demand, will be the most successful.

Competitiveness

Personal income and Entertainment Needs are two factors that drive the demand in the Bar & Night-club Industry Analysis. Each company’s revenue depends on the ability to drive traffic to the location and the ability to develop a loyal local clientele. The large companies can offer a wide variety of food, drinks, and entertainment, and because of this they hold advantages in purchasing, financing, and marketing. The smaller company’s only way to compete is by being able to serve the local market at an effective level by offering unique products or entertainment, or providing exceptional customer service. The Bar & Night-club Industry is also considered to

6

be labor intensive, which means needing a large workforce or large amount of work in relation in order to output. The average annual salary per worker is about $60,000.

Bars and nightclubs compete with any other venue or company that offer alcoholic drinks or entertainment such as restaurants, hotels, and casinos. Drinking establishments also compete with the home consumption of alcohol.

Market Industry and Trends

According to IBISWorld, the Bar & Night-club business revenues grew by 3.5% in 2011 and is projected to increase some more by 3.2% to $22.7 billion in 2012. This has been looked at something promising in the industry since the markets growth rate before has been reasonably flat since 2007. Even with the 3.2% increase in 2012, the 5 year average annual revenue growth was still negative at 0.7% through 2012. The large decline in bar and nightclub revenues in 2009, when the industry revenue fell 9.3% because of a big contraction in consumer spending and adjusting the alcohol consumption patterns can be looked at factors that play in the market growth rate trend. The year after in 2010, the Bar & Night-club industry began to recover with a revenue growth of 1.1% throughout the year.

Consumer spending in the Bar & Night-club Industry is considered to be a luxury spending, which is true because people usually spend their extra change of their income to go out for a beer and entertainment at a Bar or Night-club. The Great Recession which affected a lot of the industries in the US and the high unemployment years caused a lower consumer spending in 2009, down by 1.9%, which lead to a decrease in luxury spending for consumers that included their trip out for a beer or entertainment at a Bar or Night-club. A societal shift away from alcohol in order to pursue a healthier lifestyle also contributed to a decline in the amount of trips to bars and nightclubs. However, with consumer spending increasing the next couple years, it has brought many consumers back to the bars and nightclubs for their beer and entertainment. Consumer spending in the Bar & Nightclub industry is projected to keep on growing within the next couple years, which is good news for the bars and nightclubs because it will help continue to improve their revenues.

IBISWorld also notes another emerging trend in the Bar & Night-club industry, the increase in the number of customers choosing to purchase packages beverages for home consumption rather than buying beverages at bars and nightclubs. This trend is supposed to have big impacts on the Bar & Night-club business. Because of this trend, the number of bar and nightclub establishments is forecasted to decrease slightly, an average of 1% to 66,602 in 2017, while the employment levels are also expected to decrease slightly at an average of 1.2% per year to 345,253 in 2017. Even with these bar and nightclub trends happening, the revenues are expected to grow as the economy gets back up and running and consumer spending increase. The industry revenue is projected to increase about 2.5% per year over the next 3 years, reaching about $25.7 billion in 2017.

7

Customer Demographics

The following are two data sets that provide facts about the customer demographics in the Bar & Night-club industry. One data set has to do with the spending regarding beer and ale in bars and nightclubs and the second data set consists of spending regarding liquor in bars and nightclubs, besides beer and wine.

Beer and Ale spending in Bars and Nightclubs:Target Customers: Householders under the age of 35 spend about 51% to 58% above the

average household expenditure of about $71.98 on beer and ale at restaurants and bars. The people who live by themselves and spend less than average on typical consumer staples, tend to spend about the same as the rest of the population on beer at bars and restaurants.

Ethnicity: Non-Hispanic whites spend about 16% higher on beer and ale than the national household average, they also compromise for almost 88% of the market. Other ethnic groups spend lower than the national average. Hispanics spend about 33% less, Blacks about 73% less, and Asians about 50% less than the market.

Income Levels: The Households earning $100,000 or more spend about 84% more than the average household on beer and ales. Households earning $70,000- $100,000 spend 21% more than average. Households earning between $40,000- $70,000 spend about 15% more than the national household average, while households earning less than $40,000 spend about 50% less than the national average.

Liqour spending in Bars and Nightclubs (except beer and wine): Target Customers: Householders in the ages between 25 and 34 spend about 66%

($83.25) above the national average household. Householders in the ages below 25 spend 30% ($65.50) more than the average household, and householders aged 45-54 spend about 11% ($55.62) above the national average.

Ethnicity: Non-Hispanic whites spend 13% more than the national household average on liquor and also compromise 87% of the market. Other ethnic groups such as Hispanics spend about 38% less, Blacks about 51% less, and Asians about 8% more than the market.

Income Levels: Households earning $100,000 or more spend 82% more than the average household on liquor. Households earning $70,000-$100,000 spend 20% more than the average household. Households earning $40,000- $70,000 spend about 8% more than the average household, while households earning less than $40,000-$70,000 spend about 46% less than the national average household.

Key Success Factors in the Bar & Night-club Industry

8

According to IBISWorld, there are 250 success key factors for a business. The most important factors for this particular are having a loyal customer base. It’s important to be able to ensure a high amount of regular customers who spread their word to their friends, the more regulars the better. The ability to adapt to new technology is another key factor because it helps you keep track of areas such as stock control, which is another key factor. Effective cost controls, having these costs in place is essential in this low profit margin industry. Always having the appropriate licenses is a big factor because if you don’t always meet the conditions of the licenses, your business could be in trouble. The last key success factor according to IBISWorld is access to niche markets because it’s important to keep track and have a very good understanding of the markets and the consumers changing needs.

Barriers to Entry

The barriers to entry in the Bar & Nightclub Industry are low and steady, given that an operator can sometimes lease the premises, equipment, furniture and fittings, can be beneficial because it lowers the initial capital costs, outlays, and borrowings.

The majority of the businesses in the industry are small businesses who have only a small number of employees, which is an indicator of the fragmented nature in the industry, like I mentioned before. The main barrier to entry is obtaining a suitable liquor license. The entry costs can be lowered by leasing or managing an establishment already on behalf of the owner. There are some local government planning regulations which a business has to comply with, such as zoning and location of the business as well as parking and access by patrons. This planning approval includes aspects such as noise, security measures, and operating hours.

Future Risks

Concerns over a potential rise in binge drinking rates, mainly among young adults, could place the Bar & Night-club Industry under increased government scrutiny. According to the US Department of Health, the highest prevalence of binge and heavy drinking occur among young adults in the ages of 18 to 25, with the rates peaking at 21. A total of 38.7% of young adults are classified as binge drinkers. As a result of all this, future restrictions may arise in order to fight with binge drinking. The restrictions could include control over sale of kegs, happy hour specials, beer sales of pitchers and large containers, alcohol advertising, limiting the potential revenue growth.

Industry Maturity:

9

The Bars and Nightclubs Industry is a very mature industry that has been around for a very long time, little changes have been made in this industry during its time of existence. It is not an industry that relies on technological advances and has very low barriers of entry, which can be a good but yet, a bad thing. Low barriers of entry can lead to a highly competitive market, which is exactly what the Bars and Nightclubs industry is, along with very high regulations. Unlike other industries, the bar and nightclub industry does not have any major players and the majority of revenue is not controlled by a small number of businesses. This industry is highly affected by consumer spending. If consumer spending decreases, then the number of people going out to a bar or nightclub also declines. During the 2008 recession, dramatic drops in revenue and consumer spending led to many businesses closing because they weren’t able to survive the recession. Over the five years to 2019, the industry is projected to continue facing competition from the rise of in-home alcohol consumption and non-industry establishments that also serve alcohol, restaurants for example. Even with these factors affecting the industry, the industry’s financial performance is forecast to strengthen as the economy improves and consumer spending increases. Again, in the five years to 2019, the industry is forecast to moderately increase at an annualized rate of 2.1% to $26.1 billion.

10

Area Analysis:

La Cantina Nightclub will be located in Medford, OR, which is the largest city in the Jackson County, and as of July 1 2012, has a population of 76,462. Medford is located in Jackson County, which has a population of 207,010, making the Medford MSA the 4th largest metro area in Oregon ("Medford, Oregon"). The fastest growing cities in the Jackson County are Central Point and Eagle Point, with Medford and Phoenix not far behind ("Housing Costs"). This can be seen as a positive because they are within a 15-minute drive range from the location of La Cantina Nightclub.

Persons of Hispanic or Latino origins, which will be one of the main target audiences for the nightclub, compromise the largest ethnic group in the Rogue Valley. In the last two years, the number of Hispanic or Latino persons increased from 6.7% to 8.3% of the population ("Housing Costs"). An area where the Hispanic and Latino population is increasing needs entertainment options such as a Hispanic nightclub that can cater to the population.

From 2000 to 2010, the Latino population in Jackson County grew by almost 80% to about 22,000, and the number of Hispanic-owned firms grew from about 350 to 1000. At the forefront of this is a new, highly motivated and educated group of Latino Entrepreneurs like myself who are trying to find ways to reach out to the Hispanic community (Doussard "Latino business grows in south").

Medford is world renowned for its pears and other agricultural products. However, in recent years, Medford has gone through somewhat of a transformation from agricultural to a tourist center. It is still an agricultural base, but this just means Medford has gotten enough tourists in order to make changes. It has added malls, began restoring historic downtown and other attractions for the tourist so that it is more attractive to the visitor ("Oregon").

11

Target Market:

I see the Nightclub “La Cantina” as appealing to about 4 major market segments, the young professionals, college students, high school students age 18 & up, as well as tourists and business travelers. The long day and late night hours of operation will help to multiple segment appeal. The market segmentation scheme allows some room for estimates and nonspecific definitions.

1. Young Professionals- Due to a great number of businesses that relate to single adults and young couples, such as theaters, other bars & nightclubs, and restaurants, it is only smart to appeal to this type of market. Whether it is a group of friends, or a couple out to see a movie together, these people need a place to eat/drink before and/or after their movie. These customers range from 26-40. The nightclub will appeal to this category by switching the tempo and entertainment to their taste as it gets later in the evening on the weekdays.

2. College Students- By creating an environment that is appealing to college students, we secure a strong progression between the high school student and young professional. Through word of mouth between the local college and universities, La Cantina expects this segment to keep in increasing.

3. High School Students age 18 & Up- Many popular nightclubs have their age limit set at 18 and La Cantina will be one of these nightclubs. Even though the legal drinking age in the Jackson County is 21, La Cantina will still appeal to the 18 and over crowd. With a large number of High Schools in the valley, there is a big amount of students who are 18 and over that my nightclub can appeal to.

4. Tourists and Business Travelers- With Ashland close by and being one of the biggest touring destinations in the valley, I believe I can attract people from that area because there is no nightclub like La Cantina in Ashland. Not only in Ashland, but more and more businesses and travelers and tourists are finding themselves in the Jackson County, I believe my nightclub can grab many of the people in this segment. I plan to reach these people as well as the other people from other segments by word of mouth, direct marketing, online marketing, and other techniques.

Geographic Description

The main target markets are locals and visitors of Medford, and the surrounding cities nearby, however; all of the Jackson County will be also be targeted as well. There is a Community College nearby as well as a University in a town nearby, which will be greatly targeted since La Cantina will have the atmosphere for this type of segment. Direct Marketing, Word of Mouth, Online Marketing, and Social Media, as well as any other business partnerships will help target and reach the rest of the county as well as the wider geographical area beyond Jackson County.

12

Lifestyle and Psychographic Description

College students are usually part time workers with a low budget and high need for entertainment and leisure activities, mainly because they need something to get their mind off of school for a while. Budget restrictions and high gas prices are some of the barriers La Cantina will need to take on in order to attract students from the bigger university in the valley, which is in Ashland, but won’t be as much of a problem for the students who attend the Community College nearby in Medford. However, carpooling is known to be a popular strategy among college students because it is a cheaper form of transportation and saves everybody money, so there are some ways around these barriers that could help attract the university students. They frequently use the web and social networks such as “Facebook”, and “Twitter” to find out about the latest events going on in the area. The students targeted are in the age of 18 to 25, fun seeking, outgoing, people who are looking for a good time. It is therefore important to keep up with the latest and hottest music in order to appeal and attract.

Tourists and business travelers visit the city of Medford on the way through the Jackson County after they have visited some of the biggest attractions around such as the Oregon Shakespeare Festival in Ashland, or the big wineries in Medford and surrounding areas. These aspects will be considered in the choice of marketing channels and business partners. After a long day of sightseeing, tourists want to be able to eat, have a drink, and dance to top off their evening. La Cantina will meet this demand by offering a unique experience that they won’t be able to get at any other nightclub. Tourists also want to take pride in telling friends about their vacation experience. La Cantina is a unique nightclub that will offer a variety of music to get you moving.

High School students age 18 & up are similar to those of college students, except at an earlier stage. They are usually part time workers with low budget and high need for entertainment and leisure activities. The difference with this group is that they are not at the drinking age limit so they won’t be able to enjoy all the features that La Cantina will have to offer; only some that are appropriate for their age. The same marketing techniques that will be used to appeal and attract the college students will be the same used to attract the older high school students age 18 and over, around the valley.

Young Professionals have similar needs as tourists and business travelers, and look to have a unique experience when visiting a nightclub. They are all about having some fun and looking forward to the nightlife after a long day of hard work. This type of segment will usually take advantage of the entertainment opportunities the surrounding area has to offer. Whether it is watching a movie first or grabbing a bite to eat, they usually end up at a nightclub at the end of the night for drinks and some dancing to cap off their night.

13

Purchasing Patterns Description

College and High School students have restricted budgets, which will allow them to be able to enjoy the nightlife only when they have enough cash, or during hard and stressful times that school puts on them, such as midterm or finals week, that is why students will usually not be known as regulars but those who come several times when they have a chance.

Tourists, business travelers, and young professionals usually search on the internet for offers or hear about specific destinations through word of mouth. If the experience was good and unique enough, they will let their friends know about the good time they had and will also usually come back for a second time. Because tourists and business travelers come only on certain times of the year, young professionals are usually the ones known as regulars because of the constant nightlife they maintain, going out almost every weekend or after a long day at work.

Buying Sensitivity Description

Students are especially known to be sensitive to prices but can be attracted and grabbed through special offers and advertising. Image and looks is very important when it comes to attracting a younger age group segment.

Tourists, business travelers, and young professions look more for the experience rather than being price sensitive, this is why they will be attracted to the main features that La Cantina has to offer such as special events, special deals, VIP seating, and more.

14

Competition:

Competitive Position

La Cantina will be the only Mexican nightclub to provide multiple types of music genres such as Banda, Norteña, Corridos, Rap, Hip-Hop, R&B, Salsa, and other popular music genres, all while appealing and attracting to everybody from age 18 and up. It will be the first nightclub that will target older teens and students from age 18 and over. There are other nightclubs in the Valley that allow people 18 and over, however only on certain special events. These nightclubs can be viewed as competitors to La Cantina.

Nightclubs with competing features are:

1.Tequila Nightclub- allows people 18 and over, provides similar music genres, similar target market. Known to be small and dirty.

2.Guadalajara Nightclub- Only allows people 21 and over, similar target market. Has good reputation as a Mexican Nightclub in the Medford area.

3.Si Casa Tequila Bar & Grill- New bar in town has occasional “Latin Nights” that play similar music genres to La Cantina.

Although there are a numerous amount of Mexican restaurants in the valley that offer occasional music events such as “Latin Nights” or bring in groups for live entertainment, they don’t offer these services at a consistent level because they are restaurants and not nightclubs. The main competitors would be Tequila Nightclub and Guadalajara Nightclub because they offer these types of services and special events at a consistent level, while providing much of the similar music genres as La Cantina.

Competitive Edge

La Cantina’s competitive edge is reaching out to a younger target market that includes people with the age 18 and over, which is not fulfilled to its potential at the moment, and providing excellent customer service along with a friendly and clean environment where everybody who comes to La Cantina will have a unique experience and a good time.

There is a good amount of High Schools in the valley, which means there are a lot of students who are at the age of 18 that can be targeted. Having events such as 18 and over nights, as well as including them with other special events that La Cantina has to offer, will be a good way to reach out to this market. Not many nightclubs in the area reach out to an 18 and over target market and if they do, then they include them on special events only that happen every now and then. La Cantina will win a competitive advantage by offering an 18 and over-night on the

15

weekend, couple times a month, as well as including them in other events that La Cantina offers, as I stated before.

Currently, Tequila Nightclub brings in groups for live entertainment on a constant basis, as well as DJ’s to play on the weekends. Guadalajara Nightclub also brings in groups for live entertainment but not as consistent as Tequila, and not how they did before. However, both of these venues are sometimes small for the big names that come every now and then. La Cantina will be in a bigger venue where it will be able to support big name groups on a constant basis and where the customers will also feel more comfortable.

Market Share Distribution

There are currently only two Mexican nightclubs that can be identified as direct competitors and offer the same services and features as La Cantina. Only Tequila Nightclub brings in groups on a consistent level for live entertainment which will be a key feature for La Cantina. The market for Mexican nightclubs in the Medford area is not very competitive at the moment with none of the direct competitors really dominating the market. This means it’s a good time of joining the market and making a name for La Cantina, in order to dominate the market and be known as the best Mexican nightclub in the valley.

Future Competition and Barriers of Entry

Keeping up with the special permits that are required in order to run a nightclub in the valley is a reason why many of the new nightclubs that open, fail within a couple of months, which is why many people are hesitant of opening a nightclub because it can be a lot of work to maintain and run the business. By establishing strong business partnerships with other businesses who can help benefit La Cantina in their special events and by developing a strong presence and popularity as a Mexican nightclub in the valley, the market will appear unattractive for future competitors.

The barriers to entry in the Bar & Nightclub Industry are low and steady, given that an operator can sometimes lease the premises, equipment, furniture and fittings, can be beneficial because it lowers the initial capital costs, outlays, and borrowings.

The majority of the businesses in the industry are small businesses who have only a small number of employees, which is an indicator of the fragmented nature in the industry, like I mentioned before. The main barrier to entry is obtaining a suitable liquor license. The entry costs can be lowered by leasing or managing an establishment already on behalf of the owner. There are some local government planning regulations which a business has to comply with, such as zoning and location of the business as well as parking and access by patrons. This planning approval includes aspects such as noise, security measures, and operating hours.

Strategic Position & Risk Assessment

16

La Cantina’s main objective is to become the most popular Mexican nightclub in the Medford area as well as the surrounding communities for providing a unique nightclub experience to the city, as well as the locals and regulars. La Cantina will capitalize on the following core competencies to become the main nightclub destination in the valley:

-Exceptional Customer Service-Unique experience -Big Name Groups-Friendly Environment-Special Events/Features

La Cantina’s strategic position is based on evaluating the following factors:

1. Industry Trends and Opportunities2. Customer Needs3. Competitive Environment4. Strengths5. Risks

Customer Needs

La Cantina’s target markets are young professionals, High School students age 18 and over, College Students, as well as tourists and business travelers. Regardless to the differences between the four target markets, all of them have one similarity when it comes to visiting La Cantina, and that is to have a good time after a long day of hard work, school, studying, or whatever the reason may be. This is where La Cantina steps in to offer the people a nice, clean, and friendly environment as well as the hottest and latest music around to fulfill that need.

Personal income and entertainment needs drive demand. The profitability of individual nightclubs depends on the ability to drive traffic and develop a loyal clientele. Large companies can offer a wide variety of food, drinks, and entertainment, which is what La Cantina is aiming to be. Small companies can compete effectively by serving a local market, offering unique products or entertainment, or providing superior customer service.

Competitive Environment

There is no comparable Mexican nightclub such as La Cantina in the Medford area yet. Although, many different nightclubs provide some of the same features and events as La Cantina, the business concept of La Cantina will be unique. As a first mover into the market, the management team and staff will work hard to make La Cantina appropriate and suitable for people of all ages over 18, instead of just focusing on the 21 and over market which most of the nightclubs in the area do. I have seen and been to nightclubs that are 18 and over, and the turnout they have achieved has been great. I hope to bring the same concept to La Cantina.

17

Strengths

Compared to the smaller venues that Guadalajara and Tequila Nightclub, our direct competitors have, one of our strengths will be the size of our venue because it will allow for a more relaxed and comfortable environment, instead of a small venue where people are constantly squished together. The idea to reach out to the 18 and older market is also another one of our strengths. Because of the big number of high schools in the valley, there is a big market of people 18 and over who are not targeted by nightclubs. As being one of the first nightclubs in the valley to do this, I believe there could be potential in this market that could benefit La Cantina. As I stated before, the goal of La Cantina is to become the main destination for nightclubs while being suitable and appropriate for people 18 and over.

Risks

Concerns over a potential rise in binge drinking rates, mainly among young adults, could place the Bar & Night-club Industry under increased government scrutiny. According to the US Department of Health, the highest prevalence of binge and heavy drinking occur among young adults in the ages of 18 to 25, with the rates peaking at 21. A total of 38.7% of young adults are classified as binge drinkers. As a result of all this, future restrictions may arise in order to fight with binge drinking. The restrictions could include control over sale of kegs, happy hour specials, beer sales of pitchers and large containers, alcohol advertising, limiting the potential revenue growth.

Another risk that can potentially happen is by allowing people 18 and over, they aren’t at the drinking age limit in Oregon yet, so some alcohol problems could come up in regards to serving. One way to resolve this is by giving those who are 21 and over wristbands to be able to identify who’s at the legal age and who is not. This is just one of the many ways we can be able to work with this risk and potentially stop it from being a big problem for La Cantina.

Strategic Position

After assessing the risks, we realize that the biggest threat to La Cantina is the availability of alcohol while there are people who are not at the drinking age limit yet. This is our biggest threat because it could involve some serious legal problems and could potentially run the nightclub out of business. There have been many nightclubs in the valley that have been faced with this problem and couldn’t find a way to overcome it, so they had to shut down. Obviously, I don’t want this for La Cantina, so as long as we come up with working strategies in order to fight this threat, the nightclub will be in good position. The ability to provide solutions to these types of threats and everyday problems that occur in the nightclub business, as well as being able to react quickly to changes in demand will reduce the risk of failure and help the company achieve the goal of being the main destination for clubbing in the Medford area.

18

Management: La Cantina will be a general partnership with two other potential clients. As of now the

management team consists of only one person which is myself, along with two other friends who are potentially going to be involved as well. Together we share a single vision: to provide a

unique and entertaining experience through exceptional service. Since none of the owners have experience in the Bar/Nightclub setting, there will be Assistant Managers hired who will have a good amount of experience in the Bar/Nightclub setting and will be in charge of managing the

floor, as well as the bar.

Juan Sauceda, President. Juan is pursuing a bachelor’s degree in business management, and looks to work his way up in the Nightclub Industry in order to gain experience along the way and pursue the ambition of opening a nightclub. He has a good taste in music and knows ‘what’s in’ at the moment. He has a good music contact list that involves different music genres and entertainers, ranging from groups, solo artists, and DJs as well. These entertainers will be looked at first in order to get the Nightclub going, and work its way to bringing in the bigger groups and artists. Juan’s responsibilities will lie primarily with the coordination of events, and oversight of the operations, and evening activities of the restaurant and bar.

The other two friends who might be potentially involved in this nightclub will cover the responsibilities of administrative management such as inventory, accounts payable, purchasing, payroll, and public relations with limited marketing involvement. Other responsibilities include the main marketing scheme to radios and newspaper, as well as personnel to manage the bar. The positions of office, kitchen and dining room managers, as well as bartenders, have yet to be filled at this time and will be hiring employees on the way before the opening day.

Personnel Plan:

We will be looking to find a security agency to work with in order to acquire security guards and ensure that top quality service will be a priority at La Cantina Nightclub. Bartenders

who will be hired will have at least 3 years’ experience and ensure that the drinks are served with the best quality, and are capable of handling customer rushes when they occur. Hiring for lower positions such as bartenders and servers will be mainly conducted by the managers, but the final

decision will lie within the owners.

19

Organizational Structure:

The main areas of focus at “La Cantina Nightclub” are the entertainment, bar, and kitchen. The managers will have most of the responsibilities in these areas since the security will be from an outside source potentially, and the cleaning crew will have a cleaning supervisor. The security will be there in order for back up for any emergency situations and if there is a need for the manager at the front door, he will be equipped with an ear piece to be in touch with everyone.

Illustrated below is the organizational structure for “La Cantina Nightclub”.

20

Marketing:

Many new residents as well as existing residents are members of clubs in other markets. La Cantina will be a place for all, and the enabling technology will be a key part of the nightclub’s image. Advertising budgets and event promotion are ongoing processes of management geared to promote the brand name and keep La Cantina at the front of dance theme nightclubs in the valley. Radio and Social Media advertising will be our main ways of reaching out to new customers. In terms of advertising we will be developing a core positioning message; we will concentrate a good amount and use a substantial portion of our daily ad budget towards the “Grand Opening Event”. La Cantina will also be marketing to local hotels and airport in order to try and lure the tourist’s in.

With a large number of people on social networking platforms, including Facebook and Twitter, Social media advertising will be a big part of the marketing strategy. We will be able to stay in touch with customers and have a direct line with them. Specials, deals, and other ideas can be possible through these outlets. One example is offering people who “check in” deals to buy one and get the second free, restricted to a specific amount of people. We will also be able to promote performers on these social networks and be able to provide people with short clips of performers, so future customers can have a taste of what La Cantina provides.

La Cantina will create an identity orientated marketing strategy specializing mainly in radio media, social media, print ads, and in store promotions. We will be running regular local radio and newspaper ads to create brand awareness, as well as local hotel guests and airport, like I said before, in order to attract business travelers and tourists with little knowledge of where to go in the evening. Ads will also go into the college newspapers for the local campuses of Rogue Community College and Southern Oregon University.

Marketing will also be heavily utilized for the opening of La Cantina Nightclub. Local radio will be heavily utilized for promoting the opening of La Cantina Nightclub with prizes and tickets. This advertisement will be mostly focused in February and March of 2015 spending about $2,125.000 a month and after the opening the marketing will be reduced to around $750, eliminating the billboard.

(Gaebler, 2011)

21

SWOT Analysis:

Strengths-La Cantina will be providing multiple popular music genres such as Banda, Corridos, Nortena, Rap, Hip-Hop, and more, instead of just focusing on a few-Customers have a say in the live entertainment we provide-Target Market is wide, includes a lot of potential customers-Great location and size-Affordable drinks and quality food

Weaknesses-Not a lot of experience in Bar/Nightclub business-There are a couple of well-established businesses in area-Finances the first couple months, since we will be a new business-Long work hours

Opportunities-Low barriers of entry-No major players dominating the market share in the area-Easy entry-If opportunity is there, add another floor depending if business is successful or not-Become the premiere nightclub in the Rogue Valley

Threats-Competition nearby have established there loyal customers already-Economic downturn will cause for a reduction in consumer spending-Increased competition-Liabilities can be a big problem

22

Loan Funds Dispersal Statement:

-A loan total of 300,000 will be required for the start of La Cantina Nightclub.-Paid-In Capital will total $120,000

Paid-In Capital:Self $20,000Parents $50,000Grand Parents $20,000Spouse $10,000Sister $10,000Brother $10,000 Total: $120,000

Capital Expenditures CostMarketing $2,875.00Permits $45,000.00Renovations $168,000.00Audio Systems $ Lighting $40,000.00Office Equipment $1,000.00Furniture, Carpet, Tables, etc. $40,000.00POS System $1,300.00Bathroom/Cleaning Supplies $500.00Bar Equipment $15,000.00 Total: $313,675.00

23

Financials:

La Cantina Nightclub is expected to earn a net income of $261,247 in 2015, $612,060 in 2016, and $1,210,850 in 2017. La Cantina will be keeping the retained earnings in order to attracter bigger performers for live entertainment.

2015 2016 2017$0

$200,000 $400,000 $600,000 $800,000

$1,000,000 $1,200,000 $1,400,000

Net Income

Year

Amou

nt $

La Cantina Nightclub will be financed by a 15-year long-term loan at a six percent interest rate in the amount of $300,000. La Cantina Nightclub will incur interest payments of $17, 653.84 and a principle payment of $12,732.01 in 2015. Interest payments of $16,868.99 and principle payments of $13,509.85 will be incurred for 2016.

La Cantina Nightclub will also have positive cash flows for the projected three years. We plan on paying off the long-term loan after five years.

2015 2016 2017$0

$200,000$400,000$600,000$800,000

$1,000,000$1,200,000$1,400,000$1,600,000$1,800,000$2,000,000

Cash Flows

Year

Amou

nt $

The profit margin for La Cantina Nightclub will be 12.60% in 2015, 14.28% in 2016, and 14.44% in 2017. These numbers are a bit off from the industry norms, which is usually around 20-25 percent of sales.

24

Appendix’s

Appendix A: Financial Assumptions

-Occupancy levels for La Cantina Nightclub based on days of the week are as follows:-Occupancy levels by day:

Friday 40.00% 600Saturday 60.00% 900

-La Cantina Nightclub will start operations in January of 2015 and are projected for three years.-La Cantina Nightclub will start the lease for the property at 40 E 10th St in January of 2015 and will -Immediately start with renovations as well as installation of kitchen, lighting, stage, sound system, and more if it doesn’t already have some. -Grand Opening of La Cantina Nightclub is scheduled for January, 2015-Renovation Cost will be about $100-$120 per square foot.

Sales:

-Cover charge will vary depending on the event and time, but will be every Saturday. Cover charge will be between $10 and $20, averaging out to be $15. -Sales of drinks are distributed as follows: Beer/Ale 30%, Distilled Liquor/Cocktails 60%, Non-alcoholic 10%. Food cost will be monitored to be around 25%. -Capacity for La Cantina Nightclub is about 1,500 people. -Each person will order one plate of food and two drinks while watching a performance and one in four people will order a plate of food and each person will order three drinks throughout the night after 11pm, in the nightclub.

Sales Prices Price Range Average PriceBeverage Beer/Ale $3.5-$6 $4.75

Distilled $8-$12 $10.00Non-Alcoholic $2.5-$4 $3.25

Capacity:

http://www.banquettables.pro/space-and-capacity-calculator

25

Expenses:-Expenses are based off of a “How to start your own nightclub” book. The example is a 1,500 person capacity nightclub with a full service bar, located in the downtown area of a metropolitan city.

Salaries: -Salaries are distributed as follows:

Salaries # Needed # of Hours Wage $/hr Total per night Total per week Total by Month Total by position

Position:Bartender 3 5 $9.75 $146 $584 $1,170 $1,170 BartenderHost 1 3 $10.01 $30 $120 $240 $240 HostSecurity 3 5 $12.04 $240 $960 $1,920 $1,920 SecurityPerformers 3 4 $29.14 $349 $1,396 $2,792 $2,792 PerformersCleaning Crew 3 3 $10.24 $200 $800 $1,600 $1,600 Cleaning CrewKitchen Staff 3 3 $20.39 $280 $1,120 $2,240 $2,240 Kitchen StaffDJ 1 $200 $800 $1,600 $1,600 DJ

Owner 2 7 $36 $504 $2,016 $4,032 $4,032 OwnerBar Manager 1 5 $26.40 $132 $528 $1,056 $1,056 Bar ManagerKitchen Manager 1 5 $15.41 $77 $308 $616 $616 Kitchen ManagerOperations Manager 1 7 $31.68 $222 $888 $1,776 $1,776 Operations Manager

26

Appendix B: Loan Calculations

Purchase & Financing Information

Sales Price: $300,000Percentage Down: 0%Length of the Loan: 15 YearsAnnual Interest Rate: 6%

Loan Payment Information

Down Payment: $0.00Amount Financed: $300,000Monthly Payment: $2,531.57

Payment Principal Interest Balance1 ($2,531.57) $1,031.57 $1,500.00 $298,968.43

2 ($2,531.57) $1,036.73 $1,494.84 $297,931.70

3 ($2,531.57) $1,041.91 $1,489.66 $296,889.79

4 ($2,531.57) $1,047.12 $1,484.45 $295,842.67

5 ($2,531.57) $1,052.36 $1,479.21 $294,790.31

6 ($2,531.57) $1,057.62 $1,473.95 $293,732.69

7 ($2,531.57) $1,062.91 $1,468.66 $292,669.78

8 ($2,531.57) $1,068.22 $1,463.35 $291,601.56

9 ($2,531.57) $1,073.56 $1,458.01 $290,528.00

10 ($2,531.57) $1,078.93 $1,452.64 $289,449.07

11 ($2,531.57) $1,084.33 $1,447.25 $288,364.74

12 ($2,531.57) $1,089.75 $1,441.82 $287,275.00

Totals for year 1:

I will spend $30,385.85 on my loan in year 1.

$17,653.84 will go towards Interest.

$12,732.01 will go towards Principal.

27

13 ($2,531.57) $1,095.20 $1,436.37 $286,179.80

14 ($2,531.57) $1,100.67 $1,430.90 $285,079.13

15 ($2,531.57) $1,106.17 $1,425.40 $283,972.96

16 ($2,531.57) $1,111.71 $1,419.86 $282,861.25

17 ($2,531.57) $1,117.26 $1,414.31 $281,743.99

18 ($2,531.57) $1,122.85 $1,408.72 $280,621.14

19 ($2,531.57) $1,128.46 $1,403.11 $279,492.67

20 ($2,531.57) $1,134.11 $1,397.46 $278,358.56

21 ($2,531.57) $1,139.78 $1,391.79 $277,218.79

22 ($2,531.57) $1,145.48 $1,386.09 $276,073.31

23 ($2,531.57) $1,151.20 $1,380.37 $274,922.11

24 ($2,531.57) $1,156.96 $1,374.61 $273,765.15

Totals for Year 2:

I will spend $30,378.84 on my loan in Year 2.

$16,868.99 will go towards Interest.

$13,509.85 will go towards Principal.

28

Appendix C: Pro Forma Financial Statements

29

30

31

32

33

34

35

36

References:

1. Brennen, Andy. "Bar & Nightclubs in the US." IBISWorld. N.p., Jan. 2014. Web. 2 Feb. 2014.

2. "Bar Business 2012." SBDCNet SBDC Clearinghouse. N.p., n.d. Web. 07 Feb. 2014.

3. New Strategist Publications: New Strategist Publications. N.p., n.d. Web. 10 Feb. 2014.

4. Doussard, Robin. "Latino business grows in south." Latino business grows in south. N.p., n.d. Web. 1 June 2014. <http://www.oregonbusiness.com/articles/111-january-2012/6534-latino-business-grows-in-south>.

5. "Housing Costs." Area Information for the Rogue Valley. N.p., n.d. Web. 1 June 2014. <http://www.melodystevens.com/default.asp?pg=area>.

6. "Medford, Oregon." Wikipedia. Wikimedia Foundation, 25 May 2014. Web. 1 June 2014. <http://en.wikipedia.org/wiki/Medford,_Oregon>.

7. "Oregon." Visitor information about the Rogue Valley in southwest .. N.p., n.d. Web. 1 June 2014. <http://www.northwestplaces.com/trips102/A-OR-RogueValley.htm>.

8. "Billboard Advertising in 300 Cities - Billboard Ads Company." Billboard Advertising in 300 Cities - Billboard Ads Company. N.p., n.d. Web. 5 June 2014. <http://www.bluelinemedia.com/billboard-advertising>.

9. "Cost of Radio Advertising in Medford, OR." Resources for Entrepreneurs at Gaebler Ventures RSS. N.p., n.d. Web. 6 June 2014. <http://www.gaebler.com/Cost-of-Radio-Advertising-In-Medford---OR>.

10. "In the walls of the old brick warehouse." mailtribune.com. N.p., n.d. Web. 6 June 2014. <http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20110227/NEWS/102270332/-

37

1/rss01

11. "Loan Amortization Table Calculator." Loan Amortization Table Calculator. N.p., n.d. Web. 6 June 2014. <http://www.amortizationtable.org/>.

12. "Medford Grocery Company Warehouse – Medford, Oregon - U.S. National Register of Historic Places on Waymarking.com." Medford Grocery Company Warehouse – Medford, Oregon - U.S. National Register of Historic Places on Waymarking.com. N.p., n.d. Web. 6 June 2014. <http://www.waymarking.com/waymarks/

13. http://commons.wikimedia.org/wiki/File:Medford_Grocery_Company_Warehouse_-_Medford_Oregon.jpg

14. http://clients.ibisworld.com/reports/us/industry/ataglance.aspx?entid=1685

38