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HomeMy WebLinkAboutLaughing Tree LLC-2/10/2014CITY OF WATERLOO Council Communication City Council Meeting: 2/10/14 Prepared: 1/20/14 6.4 Dept. Head Signature: Kent Shankle # of Attachments: 32 pages SUBJECT: Service Agreement for ArtHouse Cafe Submitted by: Kent Shankle, Cultural & Arts Director Recommended City Council Action: Approval of Service Agreement with Laughing Tree LLC to operate ArtHouse Cafe within the Waterloo Center for the Arts effective March 1, 2014 Summary Statement: The Waterloo Center for the Arts seeks to contract with Laughing Tree LLC to operate the ArtHouse Cafe. Expenditure Required: None Source of Funds: N/A Policy Issue Alternative Background Information: The ArtHouse Cafe, a restaurant space located within the Waterloo Center for the Arts, has been vacant since October 2012 after being occupied by a series of different contractors. Several potential contractors to take over operations were interviewed and considered. Laughing Tree LLC (Eliz & Jim Guyer) submitted the most comprehensive, and in our opinion, most viable proposal. Their proposal includes lunch service with vegetarian/vegan alternatives and children's menu items, specialty coffees and teas, catering services, and a retail component including packaged teas, fine chocolates and gift baskets. The Service Agreement will generate at least $400 per month in revenue and will provide additional amenities for visiting patrons and event rental groups. ART HOUSE CAFE SERVICE AGREEMENT Agreement made and entered into this ft day of I%"at-141 , 2014, by and between the Waterloo Center for the Arts/Waterloo Cultural and Arts Commission (WCA) and Laughing Tree LLC (herein referred to as Contractor). RECITALS: A. The City of Waterloo is the owner of the Art House Cafe (site map attached) in the Waterloo Center for the Arts, a facility located at 225 Commercial Street, Waterloo, Iowa. B. WCA desires to retain Contractor to operate the Art House Cafe and Contractor represents that it has the ability to, and is willing to operate the Art House Cafe, during the Term hereof. NOW THEREFORE, the parties agree as follows: 1. SERVICE. Contractor shall operate the Art House Cafe, serving food and beverage during the Term hereof. Except as set forth in Section 2. 2. EXCLUSIONS. Contractor shall be subject to the following exclusions unless otherwise arranged: a. Pre -arranged events hosted by WCA or the Friends of the Art Center. (i.e. Fundraising events, exhibit openings, etc.) WCA will have the use of the kitchen and Cafe facility. WCA may use outside caterer or may arrange with contractor for catering. b. Employees/Patrons of the WCA may bring in outside food for internal events/room rentals. c. WCA reserves the right to secure alternate providers of food and beverage service for WCA-sponsored fundraising or education events, which have limited budgets and require donated or discounted food and beverage service. 3. SCOPE OF SERVICES. Except as set forth in Section 4, Contractor shall, at their own expense, provide all food, beverages, materials, labor, licenses, insurance and equipment as needed to provide full food and beverage service at the Art House Cafe during the Term. Such service to be provided by Contractor will be consistent with the business plan submitted by the Contractor (Appendix A) and includes, but is not limited to, the following; a. Marketing and promotion (with the cooperation of WCA), menu planning, contracting, billing and collection. b. All additional serving and tableware, including but not limited to dishes, silverware, napkins, cups, glasses not originally provided by WCA. c. Fresh flowers or greens. d. All non -fixed beverage and food preparation and service equipment. e. Maintenance of the area in a clean manner. f. Acceptance and handling of all deliveries of materials for the Cafe. Deliveries must be delivered at receiving dock and stowed immediately to Cafe kitchen or storage closet. No supplies or equipment may be left or stored in areas other than those designated to the Cafe in this contract. g. All food and beverages to be served in the Cafe. h. Food preparation, service and cleanup staffing. i. Maintenance of equipment. Breakage of dishes, glassware, or other equipment will be the responsibility of Contractor. j. Cafe will be open as per agreement between Contractor and WCA Director. k. Providing outdoor lunch service, weather permitting as decided by Contractor, May through October. L For use of the Cafe space for private events, Contractor must complete a WCA facility rental agreement and pay applicable rental fees, security and custodial fees and operate within WCA open hours. m. Dishes, glassware, silverware provided by WCA may not be removed from the building for catered jobs. n. Any material items which impact the physical infrastructure or aesthetics of Cafe spaces must meet with the approval of the WCA Director. o. If Contractor chooses to provide ambient music it must be limited to the Cafe area and must be of a volume which does not impact staff and visitors in the adjacent Grand Foyer and gallery spaces. 4. WCA PROVIDED ITEMS: a. Use of the WCA's existing Cafe facilities as reasonably required by Contractor. b. Tables/chairs for 80, dishes, silverware, glassware, vases, major appliances (stove, dishwasher, freezer, refrigerator, ice machine), small storage closet (shelving provided by contractor) and trash disposal on site. Should Contractor choose to utilize supplies or equipment other than those provided by WCA, these will be provided by the Contractor at the Contractor's expense. Substitution of supplies or equipment for those provided must be approved by the WCA Director and WCA shall not be held responsible for maintenance or replacement of such supplies or equipment provided by Contractor. c. WCA will also provide: wireless connectivity, some promotion/marketing in WCA promotional materials, design for menus, table tents and signage. All design should be coordinated with WCA. Contractor will be responsible for providing content and a reasonable timeframe for completion of design services. d. Parking for customers. e. All utilities. f. Use and feasible control over the existing cafeteria location and kitchen area to operate the Cafe contemplated hereunder. g. Janitorial service will include periodic maintenance of floors in Cafe and Grand Foyer. Daily maintenance of these areas will be the responsibility of the Contractor. h. One telephone line to the Cafe will be provided as well as answering service and voicemail. i. Referral of all users of the WCA who desire catering service. This will not be an exclusive contract, but WCA will recommend Contractor as the preferred caterer. Outside caterers will not be allowed to use the Cafe kitchen for private rental events. Remodeling of facilities as required at WCA's discretion and subject to available funding. k. WCA will maintain the alcohol license. 5. LICENSES AND PERMITS. Contractor shall obtain and maintain all required licenses, permits and approvals required to operate the Cafe (except alcohol license), including, but not limited to, sales tax permits, food service permits, occupancy certificates, food inspection certificates as required by federal, state and local law. 6. ECONOMIC TERMS J. a. Contractor will assume all expenses of operation, including, but not limited to, inventory and labor. b. Contractor shall be solely responsible for collecting and remitting applicable taxes and to pay all of its own expenses of performance. c. WCA shall have no responsibility for default or non -collection of sums from users of services hereunder. d. Contractor shall pay WCA $400.00 rent on or before the first day of each month throughout the term of the Agreement set forth in Section 9. e. Contractor may serve alcohol acting as an agent for the RiverLoop Association Inc. (RAI) which holds permits for beer and wine sales on premises. Contractor must comply with all stipulations for service as specified by RAI. Contractor will tum alcohol sales receipts and cash over to RAI on a daily basis. On a quarterly basis, RAI will issue payment of a service fee to Contractor at a rate to be negotiated. 7. INSURANCE. During the Term, Contractor shall maintain at its own expense and provide WCA with a Certificate of Insurance indicating the following level of insurance coverage: a. General Liability: 1,000,000/2,000,000 minimum limits listing WCA as additional insured. The coverage provided under the additional insured status shall be primary to any other insurance that may be carried by WCA. Total limit can be satisfied with a combination of the primary liability and umbrella policy. b. Workers Compensation and Employers Liability: Coverage with Section A per State of Iowa Statutory Limits, Coverage B limits of 100,000/500,000/100,000. Policy to include waiver of subrogation. c. Automobile: 1,000,000 combined single limit applying to owned, non -owned and hired vehicles required only if and when contractor engages in outside catering. d. Umbrella: 1,000,000 limit excess of the General Liability, Auto and Employers Liability. e. All coverages shall be with a carrier admitted to do business in the State of Iowa. Minimum rating of A -VII by AM Best Company. All insurance coverage required by this contract shall provide coverage for all claims arising from activities occurring during the term of the policy regardless of the date the claim is filed or expiration of the policy (subject to the legal defenses that may be asserted, such as expiration of the statute of limitations). Insurance shall be maintained with insurance underwriters authorized to do business in the State of Iowa, satisfactory to WCA. WCA shall be listed as an additional insured on the policy. Certificate of Insurance shall provide that the policy cannot be canceled or materially changed except after giving a minimum of 30 days notice by certified mail, return receipt requested in accordance with the statute for providing notice of cancellation. Contractor shall furnish WCA a form Certificate with coverages and limits as required. Non-standard policy provisions and exclusions must be noted on the Certificate. 8. EMPLOYMENT a. Contractor shall furnish its own trained and qualified employees to perform the services hereunder. Contractor has sole responsibility for the direction and supervision of its employees. b. Employees dress should be consistent with WCA standards (i.e. no t -shirts, jeans, etc.) c. Contractor shall require its employees to comply with instructions pertaining to facility regulations. d. Contractor shall have one or more responsible, capable supervisor on site when services are performed. e. Contractor shall hire and pay its employees in accordance with all applicable laws and rules of the United States and the State of Iowa and shall provide Workers Compensation and other required benefits to comply with those laws. Contractor may also use independent contractors when appropriate and will comply with laws goveming those individuals. f. Contractor shall not discriminate against any employee or applicant for employment to be employed in the performance of this Agreement, with respect to hire, tenure, terms, conditions or privileges of employment because of any prohibited criteria such as race, sex, age, religion, national origin or disability. Contractor shall perform all its duties in compliance with all published rules, regulations, directions and orders of the federal, state and city civil rights agencies. Contractor and its employees shall be responsible to comply fully with all applicable laws in the performance of their duties. g. Contractor shall comply with all applicable employee health and safety standards. h. Contractor shall provide WCA with the names of all its employees. i. Keys shall be held by the Contractor only and copies may not be distributed to employees unless approved by WCA. WCA is an art museum and has stringent security requirements. 9. TERM OF AGREEMENT. This Agreement shall be for a term commencing on the date of signing ( +'42 3. I C) 7 ! iz/) and may be renewed upon mutual agreement of the parties unless terminated as provided herein. Ren will be reassessed on an annual basis. 10. EARLY TERMINATION. This Agreement may be terminated: a. By either party with 90 days' written notice for any reason, with or without cause. b. For breach of either party. The agreement may be terminated upon written notice for the breach of either party of any material term, condition or provision of this Agreement, if such breach is not cured within twenty (20) days of receipt of written notice of breach. c. Upon termination each party shall return to the other all property of the other. 11. FORCE MAJEURE. Neither party shall be liable for failure to perform its respective obligations under this Agreement when such failure is caused by fire, water, act of God, civil disorder or disturbance, strikes or other industrial disturbance, vandalism, war, riot, sabotage, or like causes, nor shall either party be liable in any way for the value of real or personal property belonging to the other or its employees that may be destroyed or damaged due to such causes. 12. WARRAN IT1hS AND REPRESENTATIONS. Contractor warrants and represents that: a. Contractor has the authority to enter into this Agreement and to perform all obligations hereunder; and b. Contractor will conduct the service with diligence, skill and attention. 13. INDEMNITIES. a. Contractor shall be liable for all damages incurred to WCA's equipment, public/private property or person(s) working at or utilizing the WCA Building, Cafe or Contractor's services. Contractor will use best efforts to insure that the users of all equipment or tools will use every precaution to protect all persons in the immediate vicinity. b. Contractor shall indemnify and hold WCA harmless against any loss or liability to person or property arising out of the performance of Contractor under this Agreement. c. WCA shall be liable for damages incurred by Contractor to public/private property, or person(s) utilizing the WCA Building Cafe or Contractor's services caused by WCA, its agents, employees or representatives arising out of WCA's operation of the building. 14. WCA AND BUILDING PROPERTY. If WCA supplies any item of property for Contractor's use, no title to such item shall pass to Contractor. All such items not consumed in the performance of work shall be returned to WCA upon termination of the Agreement. Contractor shall use items supplied, and its access to WCA's property and facilities with the same degree of care in their use as it does with its own similar items, but in no event less than reasonable care. Contractor shall be responsible for preventative maintenance on any of WCA's property it uses, including keeping such property clean and sanitary. Contractor shall notify WCA if any WCA-supplied property is in need of repair or replacement. WCA retains discretion in determining whether to repair or replace any property that is not properly functioning. 15. RIGHT OF INSPECTION. WCA shall at all times have the right to access space occupied by Contractor for inspection purposes to confirm that standards of quality, sanitation, health and safety are being maintained at a level satisfactory to WCA. WCA staff must, however, be accompanied on this inspection by Cafe personnel. WCA reserves the right to establish, from time to time, reasonable regulations with regard to such matters and WCA agrees to comply with such regulations. 16. NOTICES. Notices under this agreement shall be served as follows: a. If to WCA: Kent Shankle Executive Director Waterloo Center for the Arts 225 Commercial Street Waterloo, Iowa 50701 b. If to , Contractor: 17. COOPERATION OF PAR I'IhS. The parties agree that both parties must work cooperatively for the Agreement to be executed successfully. The parties shall each designate a representative for the purposes of conferring on a regular basis regarding performance of this Agreement. Each designated representative shall maintain an open line of communication with each other. 18. MUNICIPAL AND WCA REGULATIONS, STATE AND FEDERAL LAWS AND REGULATIONS. Contractor shall at all times observe and comply with all federal and state laws, local laws, ordinances, orders and regulations of the federal, state, county, or city governments, including but not limited to food safety laws and regulations. 19. INDEPENDENT CONTRACTOR. Notwithstanding any other provision hereof, for all purposes of this Agreement, Contractor hereby agrees that it is engaged as an independent contractor and not as any agent, employee or partner of, or join venture with WCA; that it has and retains the right to exercise control and supervisor of the work; it will be responsible for its own acts and those of its subordinates, employees and agents, if any; during the term of this Agreement. Contractor agrees that as an independent contractor, it is solely responsible for all federal, state and local taxes and that it shall not become an employee of WCA, nor become entitled _to -any_ employee benefit as a result of - the execution of the this Agreement, or performance of work hereunder. 20. ENTIRE AGREEMENT. This is a fully integrated agreement that supersedes all oral or written proposals and communications related to this Agreement between the parties. Contractor acknowledges that it has not been induced to enter into this Agreement by any representations or statements oral or written, not contained in this Agreement. This Agreement may only be amended by a written instrument signed by authorized representatives of both parties. 21. CHOICE OF LAW. This Agreement will be governed and construed pursuant to the laws of the State of Iowa. No action under this Agreement may be brought by either party more than one (1) year after the cause of action has accrued. Venue for any action hereunder shall be in the state or federal courts covering Black Hawk County, Iowa. Both parties consent to the jurisdiction of such courts and waive any objections regarding venue of such courts. 22. GENERAL. a. Neither party may assign any rights, duties, obligations or interest in this Agreement without the prior written consent of the other party. Any attempt to do so will be void. b. Headings herein are for convenience of reference only and shall in no way affect interpretation of the Agreement. c. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties hereto have hereunto subscribed their names on the date first written above. Buck Cl k, Ma or, City of Waterloo __:-/-;:4";e0/ Laughing Tree LLC, contractor Date: Date: Art House Cafe Business Plan Eliz Guyer James Guyer 220 Commercial Street Waterloo, IA 50701 1 TABLE OF CONTENTS Executive Summary 3 Business Description 4 Organizational Plan 5 Marketing Plan 7 Market Area 7 Target Market 7 Products and Services 8 Market Need 10 Competition Analysis 13 Location 13 Promotion Plan 15 Pricing and Sales 16 Financial Plan 17 Break -Even Analysis 17 Start Up Profit and Loss Projections 17 Revenue and Expense Projections 18 Cash Flow Projections 20 Appendix 21 2 EXECUTIVE SUMMARY Art House Cafe will be a LLC Partnership owned and operated by Eliz Guyer and James Guyer. The Art House Cafe will offer homemade soups, salads, and gourmet sandwiches, artesian teas, vegetarian/vegan options, delectable desserts and a creative kid's menu. Located inside the Waterloo Center for the Art's, the cafe will be a destination point for a unique tea & coffee shop, and artistic culinary tasting. The Art House will provide a comfortable gathering spot for enjoying delicious tea and food, with access to reliable complimentary Wi-Fi. Eliz Guyer, an experienced business manager and owner of Laughing Tree Tea will operate the cafe in partnership with Scharlene Shumpert an experienced kitchen manager and caterer. James Guyer will be a business consultant and silent partner. The business will operate inside the Waterloo Center for the Arts located at 225 Commercial Street Waterloo, IA 50701-1313. Operational hours for the business will be Tuesday through Friday, 08:00 am — 3:00 pm. Lunch will served be from 11:00 am — 2:00 pm. The business has a target start date of December 2013. By focusing on the customer's comfort and access to cafe's wide range of seating options, from single workspace to large table seating, the cafe will develop as gathering place for multiple group experiences where sharing tea, coffee, and a pastry enhances the social experience. The cafe will become a destination point for the local community. The addition of a branded tea for retail, gourmet coffee, healthy vegetarian, vegan choices, extended hours during evening events, and box lunch catering will generate multiple revenue streams for sustained profitability. The Cafe will target downtown businesses to provide a quick, convenient place to stop for a gourmet lunch. Laughing Tree Tea will draw in tea lovers from the Cedar Valley looking for specialty tea and socializers from the area looking for an artistic upscale location to meet with friends and enjoy a unique coffee and tea house experience. The Art House Cafe will also retail Laughing Tree Teas and other exclusive specialty food items and gift baskets. Catering would also be housed from this location and serve special events and customers at the arts center, downtown business and off-site events. These flexible revenue streams allow the Art House Cafe to create a successful business model with the potential for the cafe to become a destination point for customers outside the Cedar Valley area. 3 BUSINESS DESCRIPTION Business Concept Art House Cafe will be a LLC Partnership owned and operated by Eliz Guyer and James Guyer. The Art House Cafe will offer homemade soups, salads, and gourmet sandwiches, artesian teas, specialty coffees, vegetarian/vegan options, delectable deserts and a creative kid's menu. Located inside the Waterloo Center for the Art's, the cafe is will be destination point for a unique tea & coffee shop, and artistic culinary tasting. The Art House will provide a comfortable gathering spot for enjoying delicious tea and food, with access complimentary Wi-Fi. The business will operate inside the Waterloo Center for the Arts located at 225 Commercial Street Waterloo, IA 50701-1313. Operational hours for the business will be Tuesday through Friday, 08:00 am — 3:00 pm. Lunch will served be from 11:00 am — 2:00 pm. The cafe will serve as a tea and coffee house, lunch cafe, and catering service for downtown businesses, patrons of the arts center, and families from the Youth Pavilion. In addition, it would be a retail establishment for Laughing Tree Teas and serve as the Cedar Valley's only tea shop. Mission Statement "Providing a healthy delicious culinary, tea and coffee experience in a casual, comfortable atmosphere. We want to be your cup of tea!" Strategy We will leverage a customer focused, comfortable atmosphere; multiple revenue streams, low overhead, and lean, flexible processes to grow and maintain profitability in volatile market economy. The Cafe will target downtown businesses to provide a quick, convenient place to stop for a gourmet Iunch. Laughing Tree Tea will draw in tea lovers from the Cedar Valley looking for specialty tea and socializers from the area looking for an artistic upscale location to meet with friends and enjoy a unique tea experience. Ongoing sales of Laughing Tree Tea will be offered through the Laughing Tree Tea website and allow for additional revenue streams outside the Waterloo Cedar Falls Market area. The Art House Cafe will also retail Laughing Tree Teas and other exclusive specialty food items and gift baskets. Catering would also be housed from this location and serve special events and customers at the arts center, downtown business and off-site events. These multiple revenue streams allow the Art House Cafe to create a successful business model and make the Arts Center a destination point for the Cedar Valley. The second key to success will be increasing visibility and traffic flow to the Arts Center. Currently there is almost no foot traffic through the facility during the day. Increased signage and visibility from local thoroughfares and roads would direct traffic to the Cafe and allow us to draw customers from the two major highway's Highway 63 and 218. 4 ORGANIZATION PLAN Business Owners • Eliz Guyer 90% • James Guyer 10% Technical Skills & Leadership Eliz Guyer has over 12 years of leadership experience. In her most recent experience as an executive at Target she held a variety of positions that include Operations Manager, Human Resources Business Partner, Training Supervisor and Security Supervisor. This experience has helped her to understand multiple aspects of operating and managing people and understanding the complexities of business. Eliz also has experience coordinating and planning large events from a Kindergarten Safety Program to appreciation food events and has organized successful fundraising events at the Waterloo Center for the Arts. Her commitment to the community was recognized by her peers as she was nationally recognized and awarded the Best in Community Award for the Target Distribution Center in Cedar Falls Iowa. Eliz Guyer received her Bachelor's degree from the University of Northern Iowa. In preparation for starting a small business Eliz completed the ISED Ventures Small Business Training sponsored by the University of Northern Iowa. In addition to her corporate experience Eliz has operated a small tea business. Her hand blended artesian teas have been sold at a variety of retail outlets and at Farmer's Markets starting in 2010. She has studied the health benefits of herbs and teas and is knowledgeable in their use and preparation. As a registered Yoga Instructor and Laughing Yoga Instructor she has experience speaking and presenting in front of large and small audiences and sharing her passion for holistic health with others. Eliz will be responsible for co -managing the cafe. She will also train staff on the complexities of tea and their preparation to ensure each customer receives the knowledge to help them enjoy their tea experience to the fullest. Eliz will also be responsible for the business management of the operations, human resources, marketing and coordinating events. Throughout his 12 year career at John Deere Waterloo Works Jym has specialized at starting new programs and implementing business improvement solutions to complex process issues. By using a wide range of tools he will facilitate the monitoring daily revenues and expenses to determine how the focus of the marketing plans and control the expenses inherent in a start-up plan. Jym has had extensive experience building tools to monitor business processes. His expertise will be leveraged to bring cohesion to multiple revenue streams, and minimize overhead and capital costs through improved utilization of the resources. His MBA and experience at Deere will provide the business framework to monitor daily business needs and provide business strategy for the Art House Cafe, Laughing Tree Tea and Laughing Tree Coffee. 5 Business Advisors In developing a business plan for the Art House Cafe an Advisory Committee was developed. This Advisory Committee has held multiple meetings and guided the development of this business proposal as well as assisted in gathering information and determining strategy. This Advisory Board will continue to meet on a monthly basis for the first year of our operation. Advisory Board Members • Terry Rice- small business owner • David Goings — small business owner • Jan Gallager- accountant, programmer, • Diane Ingram — retired John Deere professional • Becky Wagner — Tourism and Marketing expert • Jason Forbes- IT specialist- small business owner • Bob Coyle- Restaurant Manager MARKETING PLAN Market Area According to the Greater Valley Alliance and Chamber Waterloo and Cedar Falls area has an approximate population of 167,819. Of the 28,756 households in just the City of Waterloo the average household spends around $600 a year on eating lunch away from home. An additional $134 is spent on snacks and non- alcoholic onalcoholic beverages. Combined consumer spending in the city of Waterloo on lunch, snacks and non-alcoholic beverages is $7,706,608. This amount does not include adjacent municipalities such as Cedar Falls, Waverly and Evansdale, which our marketing plan would also target. The average annual income for a Waterloo resident is $53,931 and the median household income is $41,159. According to U.S. Census Bureau information there are 2,774 households in Waterloo that earn over $100,000 a year. 6 Target Markets The main target markets for the business include: Downtown business The downtown Waterloo area has an abundance of professional offices that would be our primary focus for marketing the Art House Cafe. According to Main Street Waterloo there are over 250 businesses located in the down vicinity. They include the local TV station, regional newspaper several radio stations, the county courthouse, Waterloo city hall, regional council of governments, public library, and many more. A majority of the dining facilities for the downtown businessperson are concentrated on the East side. Art Center Patrons The Art Center draws in visitors through a variety of events. According to the Waterloo Center for the Arts there were 126,000 visitors to the building last year. The Waterloo Community Playhouse and Black Hawk Children's Theatre holds several plays throughout the year. Facility rentals also drive traffic through the building. These range from room rentals for community service organizations, business trainings to weddings. The Phelps Youth Pavilion, located in the Waterloo Center for the Arts had approximately 24,000 visitors last year. The traffic through the youth pavilion varies widely depending on seasonal factors such as school schedules, weather, and bus tours. A big draw for the Youth Pavilion is Dollar Days, which is held the third Thursday of each month and draws in families from throughout the community. One of the challenges of the cafe will be to increase awareness of the Cafe and entice visitors to stop for a cup of tea or sandwich. Socializers We will market to the middle and upper -middle class women of Waterloo and surrounding towns who currently have no place where they can go to be pampered at a moderate price outside of a full restaurant. Local coffee houses can be inconvenient, noisy, and overcrowded. Local restaurants can also be noisy, and require a large chunk of time and money for an outing. This market segment is seeking a cozy, comfortable, upscale/exclusive locale with a similar clientele, where they can meet friends, have some good food and beverages, and stay as long or as short as they want. Our challenge with the socializers is to create a buzz from the very beginning that we are exclusive, pleasant, and high-quality. Tea Drinkers Tea drinkers are looking for a pleasant, relaxing place in which to indulge their love of tea, share it with friends, and learn more about tea varieties, cultivation, and health properties. Committed tea drinkers will always choose quality over price or convenience, seeking out the freshest whole -leaf and specialty teas in the area. Our challenge with these consumers is getting out the word that we are here, and holding events to showcase our quality. 7 According to the Specialty Tea Institute Demographic Summary • 53% of tea drinkers are female • The average age of a tea consumer is between 20 and 39 (23.1% ages 30-39 and 19.4% ages 20-29. • Baby boomers are the most common specialty tea drinkers. • 77% of all households buy tea and 46.7% of those purchase tea bags • Households with income over 40K are willing to pay over $2 for an 8 oz serving of tea Products and Services Art House Cafe The Art House Cafe will offer a lunch menu of healthy delicious foods. For adults a variety of sandwiches, soups and desserts will be served. A vegetarian and vegan menu will cater to the selective meat free diners. A children's menu will offer healthy kid friendly food for patrons of the Youth Pavilion and families visiting the Arts Center. Parents can be assured that their children are eating a nutritional lunch or snack while enjoying the Youth Pavilion activities. Before and after lunch hours the cafe will be serving tea and coffee and an assortment of desserts and snacks. As a cafe and tea shop we will provide a variety of artesian teas for the areas local tea lovers. We will offer a wide selection of teas and most importantly the tools and knowledge to glean the most from the tea drinking experience. While primarily a tea shop we will also provide specialty coffee's to our guests. Catering Catering services will be available to cater events, conferences, banquets and board meetings in the Waterloo Center for the Arts. It will also offer catering services to the general public. Our initial focus will be to market these services to businesses in the downtown Waterloo area. In addition to catering cooking classes will be available at the cafe' after hours for youths and adults. The classes will be fun events where participants can learn how to make healthier grocery shopping choices, find alternative to unhealthy snacking and enjoy learning to make a new dish. Classes offered to children will focus on how to make healthy snacks and fun food. Laughing Tree Teas Specialty teas will be a focal point of the cafe. We will offer a variety of hot and cold teas featuring the Laughing Tree brand specializing in herbal, hand blended artesian teas. Traditional green, black, white and oolong will be a part of the tea menu as well. A part of the services provided will be education regarding teas, methods for steeping, health benefits and the inherent social aspects of sitting down alone or with a friend for a cup of tea. In order to enjoy the full benefit of the teas sold instructions on the correct water temperatures and steeping times will be explained and teas will be served in accordance with these specific requirements. These small details can make the difference between a bitter green tea experience or the earthy fullness of a oolong tea tasting. In addition to the traditional tea menu a "Tea of the Week" program will be utilized to bring in seasonal teas and help develop the current tea menu. A listing of the current Laughing Tree Teas can be located as an addendum to this business plan. 8 Tea paraphernalia Tea paraphernalia includes specialty teapots, teaballs, decorative tea tins, "art of tea" books, and various small, seasonal, tea -related items. Gift Baskets We offer a selection of pre -made gift baskets, and will work with customers to create custom baskets for any occasion. To reverberate with the creative setting of the Arts Center, gift baskets combining local artist's work and tea will also developed and sold in the Cafe. Examples include a hand crafted ceramic tea set paired with a sampling of various teas and hand woven tea towels. Coffee A selection of ethnic coffees will also be offered and will be served using a miniature French Press. Our plan is to offer a few varieties of international coffees originating from exotic locations across the globe. Our coffee's served in house will be offered using a French press, which allows the coffee drinker to control the temperature of the water, allows the grounds to steep to the customer's preference and prevents the coffee oils from being trapped in a filter. A variety of flavors and creams will also be available to enhance the coffee experience for our guests. Specials of the day or week will also be offered for variety. Market Need Art House Cafe In the downtown Waterloo area there are over 250 businesses. This number continues to increase due to revitalization efforts from the City of Waterloo, Main Street Waterloo and the Greater Cedar Valley Alliance and Chamber. Signs of this continued expansion are the recent addition of the Amphitheater and RiverLoop Expo Center adjacent to the Waterloo Center for the Arts as well as a 26 Million dollar Sports Complex being built within two blocks of the location of the Cafe. The Cedar Valley also continues to see Non Farm employment increasing especially in manufacturing where there was a 9.02% increase over the past year. Currently there continues to be a need for business diners who have limited time for a quick healthy meal. These businesses include John Deere employees from the Westfield site, TechWorks, Community National Bank, Waterloo Courier, Hawkeye Alarm and Mannats. All of these businesses are within a 2 mile radius of the Waterloo Center for the Arts. Currently many of these diners are traveling further east to visit the restaurants there such as the Broadway Deli, Sub City or Subway. The Art House Cafe would be able to provide an alternative to driving into the paid and often full parking areas on the east 4th street and allow them to sit for a quick meal or to go if needed. 9 The market need for business diners in the downtown Waterloo area would entail three types of diners 30 Minute Diners Those with limited time who need to be able to quickly grab a lunch and go. Parking and service time would be strong considerations for these diners. 60 Minute Social Diners With additional time these diners would be looking for a place to eat their lunch and enjoy a beverage in a relaxed environment, meet with others or socialize with friends. Business Meeting Diners The Art House Cafe would be able to support small business diners in the Cafe area and coordinate with the Arts Center to arrange room rentals for those needing additional resources. Catering — Market Need There are Five Key External Drivers for American spending on catering according to the IBIS World Industry Report. They are consumer spending, corporate profit, external competition demand from trade show and conference planning, and households that earn more than $100,000. Consumer Spending & Corporate Profit Improved business and consumer confidence are projected to increase spending on catering. Over the next five years, an expansion in customer's party and event budgets will result in higher demand for catering. Rising consumer spending rates and corporate profit will provide clients with more cash available for catered events. External Competition The catering industry is also experiencing competition from restaurants that establish dining rooms for small events. Competition is also experienced as companies look for ways to reduce their spending and choose to handle the catering and food service portions of their functions by purchasing items at supermarkets, delis and big box retailers. Demand from Trade Show & Conference Planning Trade show and event planners are heavy purchasers of catering services. Some trade shows opt to do their catering in-house, scale back on meals, or not serve food during their events. Despite these pressures, demand for catering from trade shows and conferences is expected to increase during 2013 and beyond. Households Earning More Than $100.000 This highest household income group's expenditure is also a key indicator of the catering market, as this group's time is most likely constrained making planning and preparing for an event more likely to be purchased. This income segment is also the most likely to have the disposable income to hire catering services. The number of households earning more than $100,000 is expected to increase during 2013 and beyond. In the city of Waterloo there are around 2774 households with income at or above $100,000. 10 Industry Outlook Market analysis done by the IBIS World Industry Report predicts that the catering industry revenue is expected to rise 2.9% to $8.5 billion in 2014. Over the next five years to 2018, revenue is forecasted to increase at an average annual rate of 2.3% to $9.3 billion. While the growth of the industry will not match that of the pre 2009 plummet, as businesses and consumers wait for sustained signs of growth in the broader economy. Despite steady demand, the industry is in flux as consumer preferences shift towards healthy foods. According to IBIS this presents an opportunity for enterprising caterers that adjust their menus and tout the health benefits of their foods. There is also significant opportunity for caterers that expand into full service catering. Laughing Tree Tea- Market Need Industry reports show that specialty tea offerings are booming as the second most -popular beverage globally after water. Sales of tea of all types and channels in the United States circa 1990 were about a billion dollars annually. Current estimates for tea sales run from $5 billion to $20 billion for total annual retail sales (all product types and distribution channels in the United States). Perhaps more significantly, savvy business market analysts such as and Mintel (mintel.com) forecast the entire U.S. tea marketplace will double in value by 2016. Multiple independent market intelligence data suppliers- Mintel, Pacaged Facts, Canadean and others' state similar growth forecasts and overall potential of the tea industry. Most impressive are the year -over -year compounded growth numbers. Specialty tea has enjoyed a 15 year growth run, estimated at an average of 10 percent per year (in all product formats and distribution channels, compound annual averages). Specialty tea not only survived the economic downturns of the last few years, but maintained its solid growth and expansion profile during this period. Tea Beverage Success Factors Tea and Heath- The tea -health connection remains one of the primary catalysts in getting consumers "hooked on tea." Consumption of tea promotes healthy well-being; may prevent multiple diseases; and is generally free from ingredient negatives, e.g. sugar, acids and artificial ingredients. Making it Fun- The tea industry continues to put forth a dazzling stream of creative, innovative teas and brewing accessories. Tea has become and outrageous, colorfull and diverse collection of styles, forms and shapes in its retail and branded products. Diversity- With the exception of wine, what other beverage literally has roots in dozens of countries and thousands of finished sensory profiles- flavor, color, aroma, mouthfeel and more based on varietal, processing and brewing methods. 11 Tea beverages will become the single -biggest beverage category in North America in their next phase, satisfying incredibly complex market niche requirements of aging baby boomers, the tech - savvy millennia's and everyone in between. Laughing Tree Tea is poised to take advantage of the potential of the booming market, specializing in whole leave and herbal infusions. Laughing Tree Tea is a family owned business derived from a passion for fresh teas. Many of the herbal ingredients are grown in our gardens. All ingredients of the teas are organic or grown in our own garden. Each whole leaf tea is hand blended and hand packaged in tea bags or packaged for retail as loose leaf teas. This limited processing allows the ingredients to keep more of their flavor and health benefits as well as making a more flavorful tea drinking experience. We offer a variety of blends to suit the herbal tea lover, green tea enthusiast and the black tea aficionado. Competition Analysis Art House Cafe competition for the lunchtime business diner would include eating establishments located in the downtown Waterloo area. They include: • Cottonwood Canyon is a coffee house that serves a lunch menu located on E 4th Street. • Full Monty located in a business development center which serves lunch daily during the week. • River Loop Coop is a member owned cooperative that has fresh produce and bakery items as well as an eating establishment. It is located two blocks away from the WCFA. • Newton's Paradise Cafe is a full service diner with a full breakfast, lunch and dinner menu located on E. 4th Street. Art House Cafe's competition based on location and price would be the Riverloop Market. Cottonwood Canyon would provide competition as a meeting and gathering spot and similar menu selection. Full Monty has a similar artistic feel to its dining and its menu items would be similar to the Art House Cafe with less selection. In order to be successful we will draw in businesses located near the WCFA, John Deere, TechWorks specifically and other nearby businesses on the west side of downtown waterloo. We will be providing a quick high quality lunch for those on limited time with easy access to parking. Teahouse competition is limited in the Cedar Valley area. While there is an abundance of coffee houses, Starbucks, Cottonwood Canyon, Cup of Joe and Cabin Coffee, only one is located in downtown waterloo and is on the east side of downtown. Of these coffee houses the selection 12 for teas is minimal with none of these establishments offer a variety of specialty teas, loose leaf teas or a knowledge of the temperature and steeping requirements for a variety of teas. Major competitors for catering services in the Waterloo market are Famous Daves, Randall's Meat and Catering, Newtons Paradise Cafe, HyVee and RiverLoop Public Market. Of these competitors Randall's and RiverLoop are primarily used by people renting the WCFA facilities. Both of these competitors offer low budget meals for less than $10 a plate. Our challenge in marketing our catering services would be competing with full service catering competitors and our significant higher price per plate. Our goal would be to differentiate our catering services from the low cost competitors based up on the health and flavor of our menu items. Location The Art House Cafe is located in the Waterloo Center for the Arts in downtown Waterloo. In close proximity to a variety of businesses and event venues this location allows us to draw from the patrons of the Arts Center. Traffic through the Arts Center includes people there to see the galleries, take arts classes, renting the facilities for special events and conferences or meetings, families visiting the Youth Pavilion, and school and group tours. In the immediate vicinity are several event venues and tourist attractions. These include Young Arena, Expo Center, RiverLoop Amphitheatre, Dan Gable Wrestling Museum, 5 Sullivan Brothers Convention Center. The current layout of the Cafe allows for seating of up to 80 customers in the cafe and grand foyer as well as additional overflow seating in the lobby area. In addition outdoor seating can be set up on the patio area overlooking the river. The facilities are already zoned for commercial use and the cafe has met all standards for a commercial kitchen. Free parking is available during business hours and the parking lot is monitored during large events, such as hockey games at night to allow parking for Arts Center facility users. Renovations needed to the facility would be minimal and would occur in conjunction with the Arts Center and the City of Waterloo. Proposed renovations would include: • Moving the counter area approximately 1.5 feet towards the kitchen area • Additional lighting behind the counter • Minor changes plumbing to allow for water in the seating & serving area • Alternate tables and chairs for inside the cafe area • Repainting of the Cafe • Modified seating in the following locations, inside the cafe, east lobby area outside/deck • Additional electrical outlets for customers utilizing cell phones and computers • Exterior signs located at the grand foyer entrance clearly marking the correct entrance for the Cafe and a large sign visible from Highway 63. These renovations would be provided by the Waterloo Center for the Arts in partnership with the City of Waterloo and their architectural consultants. 13 Budged leasing price for the Cafe is $400 a month with utilities included. The only exterior sign for the Art House Cafe is located on the exterior of the building near the Grand Foyer entrance. The electronic billboard for the Arts Center could also be used to advertise the cafe. There is also a sign hanging on the outside of the Cafe inside the grand foyer. Promotion Plan Recent marketing research by Anglesmith discovered that after half of survey respondents seek information from a trusted friend, 8 of 10 will do additional research after receiving a restraint recommendation. This research is primarily done online using consumer generated review sites, blogs and restraint websites. Review sites such as Yelp, and the restaurant's website were cited as the most important places consumers turn to research a dining facility after receiving a friend's recommendation. The promotion plan for the Art House Cafe will focus on our 4 primary target markets keeping in mind what drives customers to choose their dining experience. 14 printed 10/10/13 Ali Patrons. Customers..; Expected; 250 $ • ::150 FiversforGrand.9pening printed, 10/15/13 Downtown Businesses Brochures for catering Printed'_ 11/01/13 Downtowi Businesses : 0: Brochuresfortea'. : printed; 11/01/13. Socialltes/Tea Lovers 1 Postcards Printed: 12/15/13 Socialites dubs°&Oiganizations :. Loyal Printed .. 01/02/14 Socialites/Tea lover;/Busines 50 Website SC online 11/01/13 online 50 $ 50 Website LTT online 11/01/13 online 50 $ 150 Blog SC online 11/01/13 online 50 $ Blog LTT online 11/01/13 online 50 Facebook ArtHouse online 11/30/13 online 50 Review Yelp online ongoing online 50 Facebook LiT- tea of the week online ongoing online 50 Website ArtHouse online TBD online 50 Ai Radio Advertising multimedia ,dy ( 11/20/13 eitto: d rt►p , * --f.4rn afni-ni cane ark lie t iitfii Socializers/downtown businesses 00 200 $ 500 Newspaper multimedia 11/20/13 Celebrations Section -General Public 200 $ 50 Grand Opening Press Release multimedia 11/25/13 Newpaper/Radio/TV 200 WCABillboard ArtHouse Cafe: '11/20/7.3 General Public 2 Tea Classes ArtHouse Cafe: 12/01/13 An Center Pala 20 Free boxed iunchesto businesses' Art House Cafe` 12/01113: Downtown Businesses 50 Book ciuti it Art House Cafe. 01/01/14: Sodaliers/Tea,lovers 15 KidsthughingYoga Class. ArtHouse Cafe` ;01/01/14 Art.CenterPatrons 15 $; Youth Classes Art House Cato: .02/01/14: M Center Patrons '15 l,oca! musicians Art House Cat! 02/01/14 Open Art House Caf4: :02/01/14. Art Center Patrons( GenPub Art Center Patrons/ Geri Pub $ `:30 Tea Classes Ari House Cafe •<.angoing`: Tea lovers/Sodalizers 10 Pre Theatre:Tapas Bar Art House'Cafe T. Art Center Patrons/Theatre crowd 50 Target Markets • Downtown Businesses • Art Center Patrons & Visitors • Socializers • Tea Lovers • General Public 15 Pricing Pricing for the Cafe was within the average range for other cafe's cited in the competition matrix. Pricing for a sandwich will range from $6.00 to $8.00 and beverages will be priced similar to the coffee houses we visited, which is between $2.50 and $5.00. A full listing of pricing for the cafe can be found on the attached menu. A cup of tea will be slightly higher than tea available in coffee house prices due to the high quality of the tea and our ability to serve tea in the correct steeping conditions. • Hot Tea: We offer two sizes of sit-down hot tea: small pots, at $3.50 each, and large pots, at $5.25 each (for two people). For customers wishing to take tea with them, we offer a flat rate of $2.50 for a 16oz. cup or a customer's own mug. • Iced Tea: Iced Teas are served in 12oz. or 16oz. cups, at $2.00 and $3.00, respectively. Specialty teas and coffees will be individually priced. Distribution and Selling Methods • Direct Sales from the cafe • Catering- Onsite or Delivery • Teas- Retail in cafe or online 16 FINANCIAL PLAN Start Up Profit and Loss Projections The assumptions of the Monthly Start Up Profit -Loss Projections Chart are two employees covering 150 monthly Art House Cafe and Event Hours, and an increasing clientele base as the Cafe becomes more visible in the community and a regular destination point through the execution of the marketing strategies listed above. The multiple revenue streams and low overhead and inventory allow the break-even point to be 165 monthly customers, low compared to the overall monthly marketing projections. $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- Monthly Break -Even Chart ...mwoTotalRevenue dagraoTotal Expense 100 120 130 140 150 160 170 Number of Monthly Customers 180 190 200 Start Up Profit — Loss Projections A strong market entrance with the grand opening and ongoing, repeat customer focused marketing strategies will yield an immediate jump in customer traffic to between 1,000 and 1,500 after a partial month of shortened business hours. The initial six months of operations will yield between $500 and $1000 monthly profit, and be dependent on accurate overhead and variable labor projections as the flow of loyal customers increases. 17 Monthly Start Up Profit -Loss Projections Revenue and Expense Projections Revenue over the course of the first twelve months would range from $8,000 to $12,000 monthly, this would be heavily dependent on the success of the Destination Point start up campaign. Any revenue exceeding $12,000 would likely come from a higher than expected volume in the Laughing Tree Tea brand packaged teas, or a series of large events for the lunch box market. Although future marketing campaign will focus in these areas, the start-up has been designed and modeled for cafe counter traffic profitability. This is shown in the Revenue — Expense Chart below. Fixed Costs The fixed costs can be compared to variable costs and revenue in the Revenue — Expense Projections Chart below. Fixed Cost include two employees to run the Cafe, overhead, and inventory. Variable Costs Variable costs can be compared to the fixed costs and revenue in the Revenue — Expense Projections Chart below. The variable costs are the direct costs of food, tea, coffee, packaging and the additional counter support for increasing customer traffic. 18 Revenue - Expense Projections =uY Total Variable Expense _'_;Tota Axed Expense ---Total Revenue 1352 1416 1860 1565 1960 1568 2013.11 2013.12 2014.01 2014.02 2014.03 2014.04 2014.05 2014.06 2014.08 2014.09 2014.10 Number of Customers Year/Month 2014.11 2014.12 19 Cash Flow Projections The Cash Flow Projections are based on a soft start up in month one, where Start Up and Marketing Expenses will exceed initial receipts. In the second month the grand opening and "new cafe" buzz will give the receipts a jolt, and bring the cafe to near the Break -Even Point. The revenue increases after the first two months will rely on the efficient execution of the marketing strategy; to include build repeat clientele for the tea, coffee, and lunch menu items, increased visibility of the cafe's location just off Highway 63, and continued development of the Laughing Tree Tea brand as a retail product. As volumes increase it will also be important to focus on the use of part-time employees for high volume time periods, food prep support, and large catered events. 20 Cash Investment $ 15,000 Start Up Costs $ 8,000 Starting Cash $ 7,000 Month Total Receipts Total Expenses Balance 1 $ 600 $ 1,262 $ 6,338 2 $ 7,920 $ 7,383 $ 6,875 3 $ 7,200 $ 6,372 $ 7,703 4 $ 7,272 $ 6,563 $ 8,412 5 $ 9,600 $ 8,589 $ 9,423 6 $ 8,112 $ 7,050 $10,485 7 $ 8,496 $ 7,267 $11,714 8 $ 11,160 $ 9,273 $13,601 9 $ 9,408 $ 7,586 $15,423 10 $ 11,760 $ 9,483 $17,700 11 $ 9,408 $ 7,586 $19,521 12 $ 9,408 $ 7,586 $ 21,343 13 $ 9,408 $ 7,586 $ 23,164 20 APPENDICES Competitors' Strengths and Weaknesses Worksheet Critical Success Factors Location. Price Atmosphere Social Media Health Variety Hours... Art House Cafe Low pedestrian traffic, inside WCFA, event focused $6-8 sandwich Comfortable welcoming atmosphere, artistic flair, WCFA website, Vegi options, will persue Bluezone designation 6-8 sandwich options, soups, side dishes desserts, childrens menu Open 8:00 to 3:00 Lunch served 11 to 2:00 Cottonwood Canyon Pedestrian traffic, convenient access $6-8 sandwiches Comfortable seating, quiet atmosphere, urban feel Great yelp reviews, Facebook updated, No website Bluezone approved restraunt Similar menu items, slightly less selection Open for Breakfast & early morning & lunch Newtons Pedestrian traffic, close parking $6-8 sandwiches Retro 1950's Feel Website with menu, positive online reviews, Bluezone approved restraunt, limited vegi options Wide choices, breakfas t, lunch, dinner 6am to Spm Full Monty Pedistrian traffic $5-7 meals with sandwich Artistic, eclectic, hip feeling, limited seating No facebook or website- No online reviews Vegi options Limited daily choices, specials every day Open for lunch RiverLoop Adjacent to Expo Center, near WCFA Buffet pricing $7 Sandwiches under $7 Market/ grocery interior with industrial feel Website with hours- no menu Vegi options Wide selection Lunch Cafe & buffet & evening buffet Boardwalk Deli 4th Street Sandwiches $7 Deli No menu, limited reviews, empty FB One veggie burger 30 different sandwich es Lunch 21 Wia ea 4.,"W 0 4200 arthoTYseaf4 Chicken and wild rice soup $ 2.99 cup/$ 1-.99 bowl Feel like your at home when you have this soup. Fresh vegetables and freshly cooked wild rice, chicken in a delicious broth. Minestrone 50ul $ 2.99 cul/$ 4.99 bowl A fresh vegetable tomato based soup with delicious Italian seasoning and perfectly prepared pasta. Reuben 5oup $3.99 cup/$ 5.99 bowl This is everyone's favorite soup style. Corned beef, swiss cheese, celery, and sau- erkraut, topped with rye croutons 5AL5l L7 L.` s5erenac!e Ceasar5alaaci Festive Rice $ 2.99 Try ourrice with a kick. Wild rice, hot peppers, and onions. Dried Com $ 3.99 Ilere we have comfort food with an hint of Italian. 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'ne1 Letter of Reference October 20, 2013 RE: Letter of Recommendation for Eliz Guyer My name is Theresia Charley, and I am submitting a letter of recommendation for Eliz Guyer. I worked with Eliz for eight years at Target Distribution in Cedar Falls, IA. My position was the Human Resource Manager for the distribution center, and Eliz held the position of our Assets Protection Manager. Eliz and I began our executive careers at Target at the same time, and I had the privilege to work with her through different positions in which we worked on our development, our business goals, and our building's success. Eliz was successful as an executive in Human Resources, Operations, and in Assets Protection, and had a positive impact on our building in each of these positions. Eliz has an incredibly focused, methodical approach in which she sets a clear goal and takes action oriented steps to achieve her goal. I worked with Eliz through several disciplinary issues, criminal situations, and ethical situations in which I could always count on Eliz to investigate with passion to uncover details, ensuring she had the required information on the matter, and to execute the most accurate course of action. Eliz achieves results by ensuring she is prepared with an effective plan, she uses the resources available to her, and she monitors progress along the way to be successful in whatever she chooses to be involved in. Eliz is a highly respected professional and she was respected by peers and management for her integrity, executing abilities, and her compassion for others. I highly recommend Eliz for her pursuit of starting her own company and I know she will be successful, as I have always known her to be. If you have any further questions, please contact me at: Theresia.charley@gmail.com Sincerely, Theresia Charley 26