Business Plan of sunny cup coffee

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Senior (College 4th year) ・Business ・APA ・2 Sources

Introduction: Business Description and Location

Sunny Cup Coffee Restaurant will be a coffee and snack shop located in Chicago Ridge Mall, previously known as Westfield Chicago Ridge. The cozy restaurant offers a range of drinks, the main offering being coffee. Some of them include espresso, gourmet chocolate, lattes, smoothies and drip coffee. Many interested in something to eat will be served sandwiches, often pastry, which will change with the seasons. The key dishes, though, would contain cakes, pies, scones, bread and muffins. The restaurant will ensure that the pastry suppliers are local bakeries, while others will be baked in-house to ensure fresh supplies all the time. Sunny Cup Coffee Restaurant operating hours will be Monday-Thursday 0630-2200hrs and Fridays and Saturdays 0700-2300hrs. The restaurant will also be opened on Sunday afternoons and evenings from 1400-2300hrs.  

Legal Form of Sunny Cup Coffee Restaurant

The legal form of business assumed by Sunny Cup Coffee Restaurant will be that of a limited liability company (LLC). An LLC is a business structure through which the members are exempted from personal responsibility for the enterprise obligations or debts (). The legal business structure combines both the attributes of a corporation with those of a sole proprietorship or partnership. Miller and Jentz (2010) advance that LLCs provide an ideal business structure for investors and entrepreneurs. The structure combines the tax advantages of partnership business structures with the limited liability of corporate enterprises. Primarily, LLCs offer investors and entrepreneurs more benefits while shielding them from greater market risks.

The choice of LLC form of business for Sunny Cup Coffee Restaurant is informed by the advantages of this structure over other in restaurant form of enterprise. Sunny Cup Coffee Restaurant will start out as a small business, which does not warrant raising much capital or making the plan a corporation. Under an LLC structure, an entrepreneur is protected from personal liability. For instance, if customers experience side effects due to coffee is taken at the restaurant and sue the business, individual properties of the investors or entrepreneurs cannot be seized to pay the complainant. Legal business structures such as partnerships and sole proprietorships fully expose owners to such risks. LLCs, are however similar to corporations and partnerships in that they allow taxation to flow through to their members.

Despite their attractiveness, LLCs pose one major disadvantage in their structure. In the consequence that one of the members declares bankruptcy or dies, the organization has to be dissolved. Also, the suitability of LLCs is questionable if an entrepreneurs or investors intend to list the company publicly in the long-run. However, this delinquent can be overawed through a business continuation agreement, which stipulates how things should be done in case a partner declares bankruptcy or dies. Another disadvantage of LLCs is the lack of uniformity regarding laws governing the structure and operations of these types of business organizations.

According to Miller and Jentz (2010), an LLC operating in one state is forced to refer to the regulations in other countries before embarking in business to ensure retention of limited liability. Majority of US states, however, apply to the laws where the particular foreign LLC was formed. Due to the relatively new nature of LLCs in the US, there is inadequate case legislation to address legal challenges associated with these entities (Miller & Jentz, 2010). Courts are therefore left grappling with how to handle emerging issues related to LLCs.  

Legal Requirements, Officers, and Duties

Like other legal business forms such as partnerships and corporations, the LLC Sunny Cup Coffee Restaurant will be designed and operated by Illinois business and corporate law. Majority of US states require LLCs to have two or more owners or members. However, in Illinois, the state does not make that requirement a must. The state of Illinois allows for either single or multiple ownership of an LLC. However, if Sunny Cup Coffee Restaurant is registered as a single-member LLC, then the business will be taxed as a sole proprietorship. On the other hand, the enterprise shall be taxed as a partnership if there is more than one member (Illinois Secretary of State, 2013). The latter method of taxation will apply to Sunny Cup Coffee Restaurant since the enterprise will be a multiple-member LLC.

Formation of Sunny Cup Coffee Restaurant will require filling the state’s articles of organization relating to LLCs. Apart from filing the business name Sunny Cup Coffee Restaurant, it is mandatory to provide other relevant details about the company to the authorities. The articles of organization expound information such as the firm name, principal address of the enterprise, owner/owners names, and management method that will be applied in the industry. Sunny Cup Coffee Restaurant will require a registered agent since the state’s law stipulates that as a requirement for any business entity operating in the state. The registered agent will be a local business entity or resident having a local street address, and one who accepts to receive the legal papers and other relevant information on behalf of Sunny Cup Coffee Restaurant (Illinois Secretary of State, 2013).

Illinois Limited Liability Company Act also requires information such as a unique company name, principal place of the enterprise, business inception date, and duration among others (Illinois Secretary of State, 2013). Unless otherwise indicated, Illinois allows a business to have a perpetual duration, meaning the enterprise can exist forever. The option will be considered for Sunny Cup Coffee Restaurant. The principal location of the business will be 444 Chicago Ridge Mall, Chicago Ridge, IL 60415. The business inception date will be the date the Articles of Organization are formally accepted and registered with the Illinois Secretary of State.

The articles of the organization also request for the purpose and management structure of an LLC. The requirement is however optional and allows the provision of even a single particular enterprise use. All LLCs should, however, report on their type of management structure. LLCs have only two options about governance structure. The business can assume a member-managed or a manager-managed structure. The member-managed structure incorporates all the members in the firm managing process, in a similar way to partners running a partnership. The manager-managed enterprise structure correctly selects one or more members or non-members to execute the company, similar to how corporations are managed. Sunny Cup Coffee Restaurant will start with a member-management structure since the model would allow members to influence and focus on the growth of the enterprise directly. Also, since the business has more than a single member, then the operation will require a federal Employer Identification Number (EIN), whether it has employees or not (Illinois Secretary of State, 2013).

The members of Sunny Cup Coffee Restaurant need to agree on various aspects of the enterprise operations. Consequently, Illinois articles of organization demand for an operating agreement for every LLC formed (Illinois Secretary of State, 2013). An operating agreement should assist the members of Sunny Cup Coffee Restaurant on various management aspects of the business. The agreement contains information on profit-sharing, dissolution of an LLC, and transference of membership interests in case a member dies or declares bankruptcy.    

The Illinois Limited Liability Company Act advances that the Secretary of State is mandated to charge and collect various forms of fees which to the costs of starting an LLC like Sunny Cup Coffee Restaurant. The costs include fees for processing and filing the various documents, the sale of lists of filings, filing the articles of organization, and miscellaneous charges. Examples of these fees currently include registering a company’s name ($300), filing an application to reserve a name ($300), filing domestic articles of organization ($500), and filing different articles of organization ($750). Other costs include filing for a merger ($100) and filing for any other documents ($100) (Illinois General Assembly, 2017). Other expenses incurred in forming an LLC in Illinois are listed in the State’s Limited Liability Company Act.

Typically, the period taken to file and form an LLC in Illinois is about two weeks. The state also allows for expedited filings, although at an additional fee, which typically takes about 24 hours. The process might, however, take several days to complete. Sunny Cup Coffee Restaurant can utilize an agent or corporate law organization to handle all the filing requirements, including calculating franchise tax in case that method is chosen to expand, and also compute the whole price that would be incurred in getting the business running in the state of Illinois.

Sunny Cup Coffee Restaurant will also require registration with the Illinois Department of revenue. The Illinois Department of Revenue requires that all businesses complete a REG-1 Illinois Business Registration Application before embarking on any purchases, hiring of employees or sales (Illinois General Assembly, 2017). After filing the registration, the Illinois Department of Revenue issues a Certificate of Registration that must be prominently displayed at the business location. The REG-1 form collects comprehensive information concerning the company and its operations, including schedules indicating particular business activities such as tobacco, cigarette, and liquor products information. Sunny Cup Coffee registration will show the various products offered by the firm, particularly the different coffee varieties and pastry.

The company will also be expected to furnish the Illinois Secretary of State with an annual report before the day that marks its anniversary from the initial registration filing. For instance, if Sunny Cup Coffee Restaurant is registered on October 30th, then its annual report should be due on September 30th. The state charges a fee of $250 to file an annual report. Also, only managers or members of the company have the authority to sign the LLC’s annual reports. The state of Illinois also allows LLC startups to file for an extended period regarding their annual reports. Once granted, the date that the company files the annual report will become its official anniversary since registration within the state.

The municipal of Illinois and the City of Chicago in particular exercises various regulatory power about the licensing, permitting and inspecting businesses operating in their jurisdiction. According to Miller and Jentz (2010), the authorities derive their power from the Tenth Amendment to the US Constitution. The amendment allows all states to exercise powers not assigned to the national government. The authorities allow the states to regulate private activities so that they can promote and protect the public order, safety, morals, health, and general welfare in addition to enforcing criminal law. Consequently, the state of Illinois exercises powers in areas such as building and fire codes, zoning restrictions, licensing, parking regulations, and antidiscrimination among others.  

The City of Chicago, just like many other cities in Illinois is divided into diverse zoning districts reflecting the diversity of neighborhood and business uses. The individual areas have different regulations concerning the type of business permitted ( the City of Chicago, n.d.). A background check on the zoning requirements for the location of Sunny Cup Coffee Restaurant in Chicago Ridge Mall located in Cook County did not reveal any restrictions to the proposed type of business. A home-based approach to the enterprise did not indicate much viability, considering that the location is moderately urban and suburban. Also, there are no location restrictions and opening a Coffee Restaurant in the area does not violate the Chicago Municipal Code.

Sunny Cup Coffee Restaurant License Research and Costs

Application and registration for licenses in the State of Illinois are handled by local and county governments. Various types of licenses will be issued to Sunny Cup Coffee Restaurant once different inspections have been carried out and the enterprise found in conformance with all requirements, especially those ascertained by Business Affairs and Consumer Protection (BACP). Sunny Cup Coffee Restaurant will require a floor and site plan, coupled with an application for occupancy levels signs for purposes of zoning approval by BACP ( the City of Chicago, n.d.). The business will also require a building permit from the Department of Buildings since some alterations will be made in the mall to accommodate the restaurant plans, and kitchen menus and equipment.

Once the zoning authorities approve the plans, a retail food business license application should be made to BACP. Accompanying documents to get the license include Chicago Food Sanitation Certificate, proof of ownership or lease of the property, and a Business Information Sheet (BIS). Sunny Cup Coffee Restaurant will not require a liquor license since no alcohol will be sold in the restaurant. Also, there will be no need for a Public Place of Amusement (PPA) license since the restaurant will not have elements like karaoke, pool tables, and a dance clubs among others. Sunny Cup Coffee Restaurant will also not require a permit for Public Way Use since these are already covered by the mall management. A non-mandatory on-site food consultation should be carried out to ascertain that the kitchen meets all the City’s relevant health codes. Before the company schedules for a restaurant license, a license taskforce unit inspection, arranged through BACP should help in the company’s preparedness and increase the likelihood of qualifying. The investigation taskforce includes the Department of Buildings, the Department of Public Health, the Department of Fire, and inspectors from the BACP. An on-site food consultation would also help ensure that the kitchen construction qualifies for a license by meeting essential health codes.

All businesses incur a particular degree of risk. However, insurance gives business owners peace of mind by covering some of these risks. In Illinois, opening an LLC like Sunny Cup Coffee Restaurant requires that the firm cover some aspects of their operations in order to be licensed. Some areas where coverage is mandatory to operate such a business relates to employees. The State of Illinois has made it necessary for businesses to carry workers compensation insurance if they have more than one employee. Employers are also supposed to offer employee disability coverage and minimum automobile coverage for all drivers. Other areas that require insurance, although they are optional include product liability, commercial property insurance, business owner’s package, employment practices liability insurance, professional liability, and errors and omissions among others.

Although commercial insurance is not mandatory in Illinois, it is essential to have the coverage in place for Sunny Cup Coffee Restaurant. The coverage is essential especially considering the high-risk nature of the business resulting from high volume interactions with clients. Bonding is not required in this type of business. Sunny Cup Coffee Restaurant might also develop intellectual property that will need legal protection in the long run. Examples of intellectual property the company might develop new recipes and inventions to ease business operations such as a customized point of sale system and special can openers. The company’s trade secret will include recipes, customers’ lists, know-how, and processes among others. Sunny Cup Coffee Restaurant will also need to protect the business’s name and brand.

In response to these intellectual property challenges, Sunny Cup Coffee Restaurant will use copyrights and patents to protect recipes/menus and restaurant inventions respectively. The company will rely on both the federal and state laws on trade secrets, including the Uniform Trade Secrets Act and the Economic Espionage Act (Miller & Jentz, 2010). The company will further use the TRIPS Agreement to protect all intellectual properties associated with Sunny Cup Coffee Restaurant. The TRIPS Agreement is particularly useful to the company since its mandate spans most countries across the globe. Sunny Cup Coffee Restaurant will not hire any independent contractors. The nature and magnitude of the restaurant operations do not necessitate this type of agency relationship. However, the company will employ part-time employees, especially during the high business seasons.      

Sunny Cup Coffee Restaurant Property and Requirements

Apart from the licenses, permits, and insurance, Sunny Cup Coffee Restaurant wills equipment among other property to operate efficiently. The company will require equipment such as refrigerators, ranges, ovens, and dryers among others. Technological requirements will include point-of-sale (POS) systems, prep cooks, ticket printers, and computers among others. Building fixtures such as chairs, bars, tables, and bathroom and lighting fixtures will heavily weigh on the company. Although some of the equipment will be bought, major requirements like real estate and equipment like computer systems, ovens, and refrigerators will be leased. The company will further avoid issues that might arise from both sales and lease contracts by using the Uniform Commercial Code (UCC) while agreeing with the sellers and leasers.

Conclusion

Sunny Cup Coffee Restaurant will be a cozy café located in one of the best malls in the City of Chicago, Illinois. The enterprise will be modeled as a limited liability company and governed by business laws applying in the state and at the federal level. The decision to model the business as an LLC is to reduce the owner's liabilities tied to the company while enjoying associated tax benefits. Also, the legal business structure will be able to keep owners close, or even in the management of the enterprise. The decision to locate the Coffee Restaurant in Chicago Ridge Mall is due to the huge potential of the place and the entire locale in general. The laws of opening and running an LLC company in the state of Illinois are also generally straightforward and less restrictive.

Establishing an LLC company in Illinois requires filing articles of organization, which cover almost all elements of this business structure. Although the fees charged to register the business are relatively high, the process takes a relatively short duration. Also, all aspects of the firm are covered by the State’s Limited Liability Act. The partial business plan presented offers the management of Sunny Cup Coffee Restaurant a blueprint with legal recourses on various matters concerning forming and running an LLC in Illinois.

References

City of Chicago (n.d). Licensing, permitting and inspections: Restaurant startup guide. Retrieved from https://www.cityofchicago.org/content/dam/city/depts/cdph/food_env/general/Food_Protection/FoodProtectionQuickGuide7272012b.pdf

Illinois General Assembly (2017). Illinois compiled statutes: Business organizations
(805 ILCS 180/) Limited Liability Company Act. Retrieved from http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=080501800HArt%2E+50&ActID=2290&ChapterID=65&SeqStart=14300000&SeqEnd=15500000

Illinois Secretary of State (2013). Instructions: Forming an Illinois Limited Liability Company. Retrieved from http://www.reference180.net/forms/llc/il-LLC-instructions.pdf

Miller, R.L., & Jentz, G.A. (2010).Fundamentals of business law: Summarized cases (8th Ed.). Mason, OH: Cengage Learning.

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