MASTERS OF MANAGEMENT

ENTREPRENEURSHIP IN ORGANISATION

ASSIGNMENT: BUSINESS PLAN

Cinnamon's
FOR: MR. FRANKLIN STYNE IYADURAI
MBA, BSc, (Ph.D. Candidate)

BY: SHANTHI RAMAYAH

ASIA e UNIVERSITY
2017
TABLE OF CONTENTS

1.0 Executive Summary ...................................................................................... 4

1.1 Business Objectives......................................................................................................... 4
1.2 Mission Statement ........................................................................................................... 4
1.3 Keys to Success ............................................................................................................... 4
2.0 Company Summary ...................................................................................... 5
2.1 Ownership ....................................................................................................................... 5
2.2 Start-Up Plan ................................................................................................................... 5
2.3 Location and Facilities .................................................................................................... 5
3.0 Product and Services .................................................................................... 6
3.1 Product and Service Description ..................................................................................... 6
3.2 Competitive Comparison................................................................................................. 6
3.3 Sales Literature ................................................................................................................ 7
3.4 Sourcing and Fulfillment ................................................................................................. 8
3.5 Technology ...................................................................................................................... 8
3.6 Future Services ................................................................................................................ 9
4.0 Market Analysis Summary .......................................................................... 9
4.1 Industry Analysis............................................................................................................. 9
4.2 Market Segments ........................................................................................................... 10
4.2.1 Market Needs ...................................................................................................................................... 10
4.2.2 Market Trends ..................................................................................................................................... 10
4.2.3 Market Growth .................................................................................................................................... 11
4.3 Target Market Segment Strategy................................................................................... 11
4.3.1 Main Competitors ................................................................................................................................ 12
4.4 Positioning..................................................................................................................... 12
5.0 Marketing Strategy and Implementation ................................................. 12
5.1 Strategy Pyramid ........................................................................................................... 12
5.2 Value Proposition .......................................................................................................... 13
5.3 Competitive Edge .......................................................................................................... 13
5.4 Marketing Strategy ........................................................................................................ 13
5.4.1 Positioning Statement .......................................................................................................................... 13
5.4.2 Pricing Strategy ................................................................................................................................... 13
5.4.3 Promotion Strategy .............................................................................................................................. 14
5.4.4 Distribution Pattern ............................................................................................................................. 14
5.4.5 Marketing Programs ............................................................................................................................ 14
5.5 Sales Strategy ................................................................................................................ 14
5.5.1 Sales Forecast ...................................................................................................................................... 14
5.5.2 Sales Programs .................................................................................................................................... 15
5.6 Milestones ..................................................................................................................... 15
6.0 Management Summary .............................................................................. 16
6.1 Organizational Structure ............................................................................................... 17
6.2 Management Team ........................................................................................................ 17
6.3 Management Team Gaps ............................................................................................... 17
6.4 Personnel Plan ............................................................................................................... 17
7.0 Financial Plan .............................................................................................. 18
7.1 Important Assumptions ................................................................................................. 18
7.2 Start-Up Costs ............................................................................................................... 18
7.3 Source and Use of Funds ............................................................................................... 19

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 7.4 Break-Even Analysis ..................................................................................................... 21
7.5 Projected Profit and Loss .............................................................................................. 22
7.6 Projected Cash Flow...................................................................................................... 23
7.7 Projected Balance Sheet ................................................................................................ 24
7.8 Business Ratios ............................................................................................................. 25
8.0 References .................................................................................................... 26

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1.0 Executive Summary

Cinnamons Grill is a new eating establishment that will provide moderate entrees. Will be
a moderately priced 60 seat restaurant offering family style varieties of food and service. We
will offer wide range of delicious authentic Indian grilled cuisine. Our menu perfectly
combines the ancient traditions and authentic flavors of India and fuses it with a
contemporary ethnic edge as well as our signature lamp chops. The restaurant will be family
owned and operated by brothers Kishore and Gaurav. Together they have over 10 years
collective years experience in the restaurant and catering industry.

Sales projections assume 1700 customers per week resulting in weekly sales of just over
RM19, 777, or RM1, 028,000 annually. This equates to around RM302 per square foot in
sales annually which positions Cinnamons Grill as a highly desirable concept for ownership
in a table service market where RM200 to RM325 per square foot is considered moderately
profitable and therefore a good investment. Total startup costs will be RM363, 000, RM174,
000 of which will be contributed by the owners and the remainder will be secured by a
proposed bank loan.

1.1 Business Objectives

Main objectives of the business plan for Restaurant are below:
To be the premier Indian grill restaurant in Butterworth.
To provide quality meals at reasonable prices with exemplary service

1.2 Mission Statement

Provide with a unique combination of Indian tandoor/grilled food and relaxing dining
experience accompanied by soft number of Indian instrument music similar to dining
at home. Our mission is to strive to achieve this goal by:
by providing menu items incorporating quality ingredients at reasonable prices,
and
We will be mindful of the well-being of our customers and staff treating each
and every one with dignity and respect just like we would at our own home!

1.3 Keys to Success

The restaurants unique theme and contemporary there currently is not a
competitor with a similar theme and the closest competitor with a similar target
demographic is 20 km away.
Product quality - Not only great food but great service.
Location. - Convenience is essential to us; we need to be close to our market
because we are not trying to get people to travel to reach us.

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2.0 Company Summary
Cinnamons Grill will be located at The Pacific Mall, Butterworth. The restaurant will be
wholly owned and operated by Kishore and Kumar. The restaurant will serve a variety of
delicious authentic Indian grilled cuisine and grilled meat includes a long list of all kinds of
meat including chicken wings, lamb, chop, octopus, sausages, salmon, and many more. The
restaurant will be open 6 days a week with hours as follows:

Monday 11:00 am 11.30 pm

Tuesday 11:00 am 11.30 pm
Wednesday 11:00 am 11.30 pm
Thursday 11:00 am 11.30 pm
Friday Rest Day
Saturday 11:00 am Midnight
Sunday 11:00 am 11.30 pm

2.1 Ownership
Will be owned by Kishore Dev. Kishore began his restaurant career at the age of 15
working in a quick-service foodservice operation and earned his way at college as a
server and bartender. After earning his degree, he worked for a regional Grill chain
restaurant and an independent fine dining restaurant. In these organizations he held the
positions of F&B Assistant Manager and then Manager.

With the high turnover of help for startup restaurants, we will rely on family to fill in
where required until we are off the ground and making a profit.

2.2 Start-Up Plan

The cost to open the restaurant is RM363, 000. The majority of the expenses are in
furniture fixtures and equipment totally RM110, 000. The location requires some build-
out and renovation totally RM50, 000 and will require approximately 30 days to
complete. The Dev brothers will sub-contract the work themselves.

RM175, 000 of the start-up costs will be funded by the owners. The owners source of
funds is a combination of liquid assets and marketable securities, primarily from their
existing catering business.
2.3 Location and Facilities
The 2,500 square foot restaurant will be located in a The Pacific Mall, Prai, and the
restaurant will feature a comfortable and open concept design. The restaurant is located
in a major traffic area, at the intersection of Province Wellesley and Penang Bridge
highway. The market has been carefully selected and tested for the necessary
demographics and retail traffic necessary to meet the goals laid down for profitability.
The busy Midtown commercial/residential location has been chosen based upon a
successful demographic model and a traffic count

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 Province Wellesley has a population of over 99,804 according to Department of Statistic
of Malaysia projection census 2017. The residential population in the immediate area is
comprised of a mixture of single family and multi-family housing. The medium
household income is RM46, 532. The target demographic is both men and women
between the ages of 25 to 65 years old. Generally, these individuals have more
disposable income than younger individuals

Figure 2.3 Demographic Chart of Province Wellesley, Penang (Mainland)

Source: Department of Statistics, Malaysia

3.0 Product and Services

Cinnamons Grill will feature authentic Indian dishes, an eclectic ambiance, and superior
service. Our ingredients and spices will be of the finest quality and prepared with exotic flare.
We will change our menu every 4 months, but maintain the 'favorites' for loyal patrons.
3.1 Product and Service Description
Cinnamons Grill will be open 6 days a week for lunch and dinner requiring multiple
shifts. The schedules will be written in a manner that will allow the ability to increase or
decrease hourly labor according to sales volume in order to maintain a consistent labor
cost control.

The restaurant layout, including the dining room, kitchen and serving line, has been
designed for efficiency and flexibility to accommodate the fluctuation in customer traffic
and peak meal periods.

3.2 Competitive Comparison

The Malaysian food and beverage retail market are expected to grow by around 10
percent per annum. As such each and very restaurant is competing to grab the market
revenue
Local competitors within a 5 miles radius are as follows.

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 DTandoor - This is a full-service family restaurant established in 1997. Prices
seemed a little higher than Cinnamons Grill but the meal serving was excessive
and equal to the price point and range from RM30.00-RM50 per entry.
Ananda Bhavan - this is a chain restaurant offering standard fare. The food
quality is average. Entres range from RM6.99 - RM20
Overall both competitors dont have any signature grill menu nor a grill concept
restaurant.

3.3 Sales Literature
For an initial start, we will print flyers focusing on our menu, sales promotion. This
primarily will be an advertisement of the restaurant. The flyer will be distributed as per
following.

Give a way in-restaurant

Personally, hand out at shopping malls
Social media fan page and sharing as this medium plays a very prime role in
promoting the restaurant.

Following are samples of flyers.

Figure 3.3.1 (i) front page 1

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 Figure 3.3.1 (ii) back page 2

3.4 Sourcing and Fulfillment

From years of experience combined with their existing catering business, Kishore and
Kumar have established relationships with qualified suppliers. These suppliers can
provide reasonably priced products, delivered according to the schedule.

3.5 Technology
With an ample of technology, computerized information systems can improve and link
food preparation and serving operations. Touch screen ordering programs ensure
accurate communication of customer orders. Timing systems monitor meal progress and
can alert staff if an order is running behind schedule. Reservations programs maximize
traffic flow and seating. Inventory management systems track supply levels and can
help reduce waste due to spoilage. Cost accounting programs help companies determine
the profitability of individual menu items. Handheld point-of-sale (POS) devices allow
servers to place orders and print checks tableside, improving accuracy and reducing
ordering time. Some handhelds can also print customer checks and process credit card
payments.

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3.6 Future Services
Cinnamons Grill has future plans to provide catering services for family reunions,
weddings and other events desiring an authentic grill menu. This could potentially
become a large portion of gross sales. The Dev brothers are targeting Year 2 and at that
point, a sales agent would be hired to directly market the products for daily delivery or
catered functions.

4.0 Market Analysis Summary

The restaurant industry is a large and diverse business. Young adults have the potential of
providing large volume sales to the company during the peak hours of 11 a.m. to 2 p.m. The
lunch business is driven by individuals. People who working around nearest Sunway
Business Park, Prai Industrial area will be looking for walk-in good food and convenience
for lunch. Apart from working people.

4.1 Industry Analysis

Reasonable Prices for concept restaurant
The Dining Experience
Quick, healthy, authentic,
An appetite for change
Food away from home trend while outside eg. Office, leisure, college, family
function

The restaurant industry is highly competitive, companies may consider population

density, household income, competition, visibility, accessibility, and traffic.

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4.2 Market Segments
Cinnamons Grill will appeal to a consumer in both the residential and business
community. The location selected for Cinnamons Grill was chosen primarily to appeal
to the growing number of households in the area.

Butterworth is located in mainland of Penang, it has population of 99,804 according to

the 2017 Census Report of Department of Statistic of Malaysia. The residential
population in the immediate area is comprised of a mixture age group.

Figure 4.2 Population Chart of Province Wellesley, Penang (Mainland) as per age
group
Source: Department of Statistics, Malaysia

4.2.1 Market Needs

Growing preferences for healthier food options, concerns over environmental
sustainability, increased competition from this industry, heightened consumer
expectations, rapidly advancing technology are reinventing the traditional dining
experience and forcing change on how the industry operates.
Food away from home" trends
Demographic trends

4.2.2 Market Trends

Generation has changed and impacted the entire span of the whole consumer
mind-set, regardless of demographic. They are constantly connected and have
high expectations regarding quality, sustainability, convenience, quick, healthy,
authentic, and reviewed or suggested.
Inclination towards global cuisines - preferences for global/ethnic cuisines is
prompting restaurants to diversify their businesses.

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 Preferences for healthier food options - are inclined to consume healthier and less
processed foods.
Modification of menu - focusing on specialized menu to enhance quality
standards, speed, and service.
Increase in food service
Sustainable seafood
Technological advancements - adopting new technologies for ordering, payment,
and loyalty programs to offer convenient.
Generation Z strategy to attract on high-tech service, louder music, high-speed

4.2.3 Market Growth

Restaurants industry are looking for growth through increased market
penetration, innovative product development, new markets, diversified
businesses, and new business models. According to Department of Statistic
Malaysia in 2017, entrepreneur engaged in food and beverage services was
891,616 persons in 2015 compared to 645,743 persons in 2010 with annual
growth of 6.7 percent. This service recorded a total of 569,632 persons as paid
full-time employees with percentage share of 63.9 per cent in 2010 with annual
growth rate of 14.4 percent. The census results showed that there were 167,490
establishments operated in food and beverage services compared to 130,570
establishments in 2010 with annual growth rate of 5.1 percent.

Figure 4.3.3 Economy Chart on Restaurant Market Growth (Census 2016)

Source: Department of Statistics, Malaysia

4.3 Target Market Segment Strategy

Cinnamons Grill will provide locals a place to socialize and talk shop while enjoying
grilled cuisine and hearty food.

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 4.3.1 Main Competitors
The following restaurants are located within a 5 miles radius of Cinnamons Grill.

DTandoor - This is a full-service family restaurant established in 1977.

Prices are higher than Cinnamons Grill and range from RM20.00-RM500 per
entry.
Kumara Bhavan - this is a chain restaurant offering standard fare. The food
quality is average. Entres range from RM6.99 - RM20.

4.4 Positioning
Consumers believe that meals at home are healthier and higher quality than eating at
restaurants. At Cinnamons Grill we will position ourselves as the premier home-style
restaurant by preparing quality home cooked meals with simple wholesome ingredients.
Kishore and Kumar will also provide home cooked fare that appeals to the current trends
of healthier food and offer menu selections which will appeal to this group. Cinnamons
grill will be positioned as the premier traditional home-style restaurant.

5.0 Marketing Strategy and Implementation

Cinnamons Grill intend to succeed by giving people a combination of excellent and food in
an environment. We will focus on establishing a strong identity in our community with a
grand opening by creating an appealing and entertaining environment with unbeatable quality
at an exceptional price. We will place the catering and lunch service flyers strategically on
and near the industrial are and university campus, park events, with local businesses.

5.1 Strategy Pyramid

Strategy: Be Butterworth areas premier Grill Restaurant in Customer Satisfaction.

Tactics: First create awareness-- our signage on the front of restaurant will bring
customers to us and once inside, we will immediately acknowledge the
customer with and most sincere greeting and begin the service process
anticipating repeat customers.

Programs: Provide employee training on customer service and retention; offer

ongoing training programs for employees keeping them current on
industry trends and food safety. Keep track of Cinnamons Grill reviews
and offer employees incentives attracting and retailing customers. Employ
the use of surveys both at the table and online.

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5.2 Value Proposition
Cinnamons Grill will be able to offer signature grill menus for a reasonable price in a
comfortable home-like setting. The average check price is expected to be between
RM8-RM15 which appears in line with industry standards below RM25.00 this to hit
the customers. As this is a new concept restaurant, to attract the customers we will;

Market the benefit, not the product.

Ensure customer satisfaction.
Develop long relationships.
Market the company.

5.3 Competitive Edge

Cinnamons Grill competitive edge is in its people. We truly believe business is not only
as good as your products (meals) but the quality of your staff as well. Our food quality
is a reflection of us. The magic grill!
5.4 Marketing Strategy
We will create an "identity" oriented marketing strategy with executions particularly in
social media, mouth to mouth and event marketing strategies. We will utilize a marketing
plan to build customer traffic. We will achieve these goals by using the following:

Social Media Marketing Facebook, WhatsApp and Twitter offer a unique

opportunity growing up quickly.
Word of Mouth Marketing- Word of Mouth is one of the ancient ways people
learned about what to purchase
Event Marketing - Creating events is a great way to drive sales. Customers often
need a reason to celebrate dining out and events can often offer the perfect
reason e.g. Valentines Day, Mothers Day, Deepavali, Xmas.

5.4.1 Positioning Statement

Cinnamons Grill is a finest place in town to enhance your dining experience wide
range of delicious grill cuisine represents splendor, beauty, and elegance in every
dish. The only magic grill provides sumptuous feast menu that bursts with flavor.

5.4.2 Pricing Strategy

As a new start-up we can currently control employee cost by hiring family members
who will work for low and reduced wages.

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 5.4.3 Promotion Strategy
Location- The restaurant will be located in a strip center at the busy
intersection of Wellesley. With easy access from and to Penang Bridge and
located on the going home side of the intersection. We will have Signage
on The Pacific Mall as well as signage over our entrance.
Word of Mouth We already have a database of existing catering customers
and will rely heavily on this method to attract and grow new business.
Event Marketing -We plan on joining our local networking for our grand
opening
Social Media We will share with as much as friends on Facebook, Twitter,
WhatsApp

5.4.4 Distribution Pattern

Varieties of grill and Indian cuisine menus will be available at Cinnamons Grille only
location at LG 79, The Pacific Mall, Prai. Customers will have ample parking at Lowe
ground car park which per entry is RM1 only. Cinnamons Grill will use their website
as an advertising medium, offering coupons, information, and upcoming specials.
5.4.5 Marketing Programs
Our initial marketing campaign will consist of contacting our databases clients
and notifying them of our grand opening.
Loyalty and Birthday Club members will have notified of upcoming special
menu items and to alert them of our catering service.
5.5 Sales Strategy
Our sales strategy requires consistently high-quality food, service, speed and
atmosphere. We can accomplish this by hiring employees who genuinely enjoy their
jobs. Continually assessing the quality of all aspects mentioned above. Interacting with
our customers personally

5.5.1 Sales Forecast

We are expecting a conservative 5% increase in sales revenues annually over the next
3 years. The growth is adjusted for inflation. With the addition of catering revenues,
sales will increase by 12.93% in Year 2 and 6.02% in Year 3.

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 The following table shows expected Sales Forecast for the next 3 years:

Table 5.5.1 Annual Sales Forecast

Annual Sales Forecast 2017 2018 2019

Sales RM RM RM
Food and Beverage
1,028,422.00 1,079,843.00 1,133,835.00
Revenues
Additional Revenues 0.00 81,600.00 102,000.00
Total Sales 1,028,422.00 1,161,443.00 1,235,835.00
Controllable Costs
COGS 402,113.00 414,176.00 426,602.00
Payroll 269,987.00 323,057.00 340,027.00
Total Prime Cost 672,100.00 737,234.00 766,628.00
Subtotal Direct Cost of
356,322.00 424,209.00 469,207.00
Sales

Sales Forecast
1,400,000.00
1,200,000.00
1,000,000.00
800,000.00
600,000.00
400,000.00
200,000.00
0.00

2017 2018 2019

5.5.1 Bar Chart Sales Forecast

5.5.2 Sales Programs

We will encourage our employees to grow our customer base and provide incentives
and regular bonuses to employees for referrals and repeat customers. These
initiatives are still in the planning stages as we gear up to hire and staff. They will
play an active role in our employee culture.

5.6 Milestones
Our initial milestones are as follows:

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 Table 5.6 Milestones

Milestone Date
Sign Lease with The Pacific Mall, Prai 2/1/2017
Complete Interior Decor 3/1/2017
Complete Kitchen / Wait Station Needs 3/1/2017
Hire Back Staff 3/1/2017
Hire Front Staff 3/1/2017
Secure a Point of Sale System 4/1/2017
Secure Lending for Initial Start-Up, Working Capital and Cash Flow 4/1/2017

Chart 5.6 Milestone Chart

6.0 Management Summary

At the present time Kishore and Kumar runs all operations for Cinnamons Grill. Other key
personnel are the management at each location. Candidates have already been identified for
the first additional

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6.1 Organizational Structure
Cinnamons Grill expects to hire 19 employees. Together, Kishore and Kumar will
personally select each candidate. Theyve adopted an effective interview process
designed to staff the restaurant with highly qualified people for each position.

6.2 Management Team

The restaurant will be owned by Kishore Dev. Kishore began his restaurant career at
the age of 15 working in a quick-service foodservice operation. After earning his degree,
he worked for a regional restaurant and an independent fine dining restaurant. In these
organizations he held the positions of F & B Assistant Manager and then Manager.
Kumar Dev received his Culinary Degree from the KDU, Penang. After graduation she
was employed by a local chain restaurant and then at a Five Star Hotel in Penang. Kumar
will initially be employed as the Kitchen Manager.

6.3 Management Team Gaps

Initially brothers will fill in many of the management gaps. Over time, they have plans
to hire a Manager and a Kitchen manager. The Dev brothers will purchase have
considered a POS (point of sale system) that it simplifies communications between the
kitchen and the wait staff. Orders go Cinnamons Grill the computer, directly to the
kitchen printer. Another benefit of a restaurant POS programs is that it can track
everything from food usage, to the most popular menu items. Because the POS system
acts as a time clock, it can also help prepare payroll which will save some money in
the bookkeeping department. Along with the daily operations of running a restaurant, a
POS system can organize profit and loss statement and sales tax.

6.4 Personnel Plan

This operation is an independent full-service restaurant operating for both lunch and
dinner.

Table 6.4 Personnel Plan

Personal Plan 2017 2018 2019

Owner / General Manager 0 0 0
Asst. Manager / Cashier 25,872 26,648 27,448
Line Cooks 38,304 39,453 40,637
Prep Cooks 60,480 62,294 64,163
Servers / Cashiers 46,848 48,253 49,701
Kitchen Helper 24,024 24,745 25,487
Accounts Executive 8,640 8,899 9,166
Sales Agent 0 20,000 20,600
Catering Employees 0 18,432 23,731
Total 204,168 248,725 260,933

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7.0 Financial Plan
The over-all financial plan for growth allows for use of the significant cash flow generated
by operations. Every opportunity will be seized to accelerate expansion past the critical dates
in this plan if cash flow from new stores exceeds projections. Plan for the worst, but manage
for the Best.

The following sections outline our financial plan:

Cost of Start-Up
Profit and Loss
Cash Flow
Balance Sheet
Financial Ratios

7.1 Important Assumptions

Meal Price range from RM8.00 RM15.00
Average lunch price: 8.79
Average dinner price: 13.74
The restaurant is located in The Pacific Mall, Prai and is comprised of 2,500
square feet
The restaurant will employ 19 employees
RM860, 000 -1,200,000 revenue targets; Industry average for casual restaurant
average of RM860, 000.
Annual 3% increase for inflation and 5% annual increase in revenues
Year 2 Assumes Catering Business in Place. Assumes 4 parties monthly @
RM15 per plate and RM50 persons. Catering will escalate to 8 parties monthly
in month 20 and then 10 parties monthly thereafter. Also assumes additional
increase in staffing (4 persons to be hired at 6 hours @ RM8.00 per hour.
7.2 Start-Up Costs
Total startup costs will be RM363, 000, RM174, 000 of which will be contributed by the
owners and the remainder will be secured Cinnamons Grill a proposed bank loan.

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 Table 7.2 Start-Up Costs
Start-Up
Requirement

Start-Up Expenses

Graphic Logo and Name Creation 1,000.00

SSM Registration + Lease Deposit 1,200.00

Contingency 10,000.00

Outdoor Sign 3,000.00

Building Improvements 50,000.00

Working Capital 172,500.00

Pre-Opening Expenses 14,800.00

Total Start-Up Expenses 252,500.00

Start-Up Assets

Cash required (142,000.00)

Startup inventory 110,500.00

Other Current Asset -

Long term Asset -

Total Assets 110,500.00

Total requirement 363,000.00

7.3 Source and Use of Funds

Total start-up costs are estimated to be RM363, 000. The majority of the costs are
associated with the restaurant equipment, inventory and furniture and furnishings for the
dining room. Total costs for these items are reported to be RM110, 500. The costs are
associated with build out and renovation of the restaurant to provide updated plumbing
and creating additional space in the dining area by removing a non-supporting wall:
RM50, 000. Additional startup expenses are in the form of working capital and
contingency RM182, 500.
Kishore and Kumar will contribute RM174, 000 and are requesting an additional RM189,
000 in the of a bank loan.

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Table 7.3 Source and Use of Funds
Start-Up Funding

Start-up Expenses to Fund

252,500.00
Start-up Assets to Fund
110,500.00
Total Funding Required
363,000.00

Assets
Non-cash Assets from Start-up
-
Cash Requirements from Start-up
(142,000.00)
Additional Cash Raised
-
Cash Balance on Starting Date
(142,000.00)
Total Assets
(142,000.00)

Liabilities and Capital

Liabilities
Current Borrowing
189,000.00
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
189,000.00

Capital
Planned Investment
Kishore
87,000.00
Kumar
87,000.00
Other
Additional Investment Requirement
Total Planned Investment
174,000.00

Loss at Start-up (Start-up Expenses)

(252,500.00)
Total Capital
(78,500.00)

Total Capital and Liabilities

110,500.00

Total Funding
363,000.00

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7.4 Break-Even Analysis
Total fixed costs associated with the restaurant are RM669, 186 and represent the annual
expenses. The variable cost (overhead) is estimated to be RM4.51 per meal. Based on the
assumption of RM11.37 as the average meal price, the breakeven revenue then is RM1,
108,970 or 97,535 meals (units).

This is further depicted in the Table Below and the Graph that follow:

Table 7.4 Break-Even Analysis

Break-Even Analysis
Fixed Cost 669,186.01
Variable Cost 4.51
Number of Units 13,934
Avg. Unit Price 11.37
Net Units Sales Fixed Cost Variable Cost Total Cost Total Profit
- - - (669,186.00)
669,186.00 669,186.00
13,934.00 62,826.00 (573,588.00)
158,424.00 669,186.00 732,012.00
27,867.00 125,653.00 (477,990.00)
316,849.00 669,186.00 794,839.00
41,801.00 188,479.00 (382,392.00)
475,273.00 669,186.00 857,665.00
55,734.00 251,306.00 (286,794.00)
633,697.00 669,186.00 920,492.00
69,668.00 314,132.00 (191,196.00)
792,122.00 669,186.00 983,318.00
83,601.00 376,958.00 (95,598.00)
950,546.00 669,186.00 1,046,144.00
97,535.00 439,785.00 -
1,108,970.00 669,186.00 1,108,971.00
111,468.00 502,611.00 95,598.00
1,267,395.00 669,186.00 1,171,797.00
125,402.00 565,438.00 191,196.00
1,425,819.00 669,186.00 1,234,624.00
139,335.00 628,264.00 286,793.00
1,584,243.00 669,186.00 1,297,450.00
153,269.00 691,090.00 382,391.00
1,742,668.00 669,186.00 1,360,276.00
167,202.00 753,917.00 477,989.00
1,901,092.00 669,186.00 1,423,103.00
181,136.00 816,743.00 573,587.00
2,059,517.00 669,186.00 1,485,929.00
195,070.00 879,570.00 669,185.00
2,217,941.00 669,186.00 1,548,756.00
209,003.00 942,396.00 764,783.00
2,376,365.00 669,186.00 1,611,582.00
222,937.00 1,005,222.00 860,381.00
2,534,790.00 669,186.00 1,674,408.00

21
 Break-even Analysis
3,000,000.00

2,500,000.00

2,000,000.00

1,500,000.00

1,000,000.00

500,000.00

-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Sales Fixed Cost TotalCost

Chart 7.4 Break-even Analysis

7.5 Projected Profit and Loss

The profit and loss demonstrate modest increases in revenues over Cinnamons Grill are
expected years with adjustments for inflation.

Table 7.5. Pro Profit and Loss

Pro Forma Profit and Loss Year 1 Year 2 Year 3

Income
Sales 1,028,422 1,161,443 1,235,835
Cost of Goods Sold -402,113 -414,176 -426,602
Gross Profit 626,309 747,267 809,234

Expenses
Accounting / Legal 12,000 12,360 12,731
Bad Debts 25,711 26,482 27,276
Shrinkage 90,000 92,700 95,481
Credit Card Fees 20,568 21,185 21,821
Insurance 75,000 77,250 79,568
Miscellaneous 44,112 45,435 46,798
Payroll Taxes 0 0 0
Registration SSM and Licenses 7,356 7,577 7,804
Rent 68,000 70,040 72,141
Salaries 12,341 12,711 13,093
Wages 269,987 323,057 340,027
Total Expenses 625,075 688,798 716,739
Net Profit 1,234 58,469 92,494

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7.6 Projected Cash Flow
The statement of cash flow shows the incoming and outgoing cash of the business.

Table 7.5.2 Pro Cash Flow

Pro Forma Cash Flow Year 1 Year 2 Year 3

Cash Received

Cash from Operations 148,101 30,995 11,402

Cash Sales 1,028,422 1,161,443 1,235,835
Cash from Receivables 0 0
Subtotal Cash from Operations 1,176,523 1,192,438 1,247,237
Additional Cash Received 189,000

Sales Tax
Owners Investment 174,000
Subtotal Cash Received 1,539,523 1,192,438 1,247,237
Expenditures
Expenditures from Operations 765,113 414,176 426,602
Cash Spent 710,176 731,481 753,426
Bills Paid
Subtotal Spent on Operations 1,475,289 1,145,658 1,180,028

Additional Cash Spent

Sales Tax
Loan Payment 33,240 35,378 37,654
Subtotal Additional Cash Spent 33,240 35,378 37,654
Subtotal Expenditures 1,508,529 1,181,036 1,217,681
Net Cash Flow 30,994 11,402 29,556
Cash Balance 30,994 42,397 71,953

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7.7 Projected Balance Sheet

Table 7.7 Proforma Balance Sheet

Pro Forma Balance Sheet

2017 2018 2019
Assets

Current Assets
Cash 63,000 66,150 71,111
Accounts Receivable 25,000 26,250 28,219
Inventory 14,000 14,700 15,803
Other Current Assets 129,500 135,975 146,173
Total Current Assets 231,500 243,075 261,306

Long Term Assets

Long Term Assets 144,500 151,725 163,104
Accumulated Depreciation 0 0 0
Total Long Term Assets 268,500 281,925 303,069
Total Assets 500,000 525,000 564,375

Liabilities and Capital

Current Liabilities
Accounts Payable 29,000 30,450 32,734
Current Borrowing 1,500 1,575 1,693
Other Current Liabilities 28,500 29,925 32,169
Subtotal Current Liabilities 59,000 61,950 66,596
Long Term Liabilities 189,000 198,450 213,334
Total Liabilities 277,000 290,850 312,664
Paid In / Invested Capital 223,000 234,150 251,711

Retained Earnings
Earnings
Total Capital 223,000 234,150 251,711
Total Liabilities and Capital 500,000 525,000 564,375
Net Worth 223,000 234,150 251,711

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7.8 Business Ratios

These business ratios are future estimates based upon current assumptions.

Table 7.8 Ratio Analysis

Ratio Analysis
Industry
Year 1 Year 2 Year 3
Profile
Main Ratios
Quick Ratio 1.49 1.49 1.49 1.06
Current Ratio 3.92 3.92 3.92 1.46
Current Liabilities to Net
0.26 0.26 0.26 0.4
Worth
Current Liabilities to Inventory 4.21 4.21 4.21 5.85
Total Liabilities to Net Worth 1.24 1.24 1.24 1.24
Fixed Assets to Net Worth 1.2 1.2 1.2 1.11

Collection Period
Inventory Turnover 28.7 28.2 27 29.44
Assets to Sales 48.60% 45.20% 45.70% 49.10%
Working Capital to Sales 16.80% 15.60% 15.80% 14.00%
Accounts Payable to Sales 2.80% 2.60% 2.60% 2.80%
Return on Sales 0.10% 5.00% 7.50% 1.00%
Return on Assets 0.20% 11.10% 16.40% 2.10%
Return on Equity 0.60% 25.00% 36.70% 4.70%
Interest Coverage 0.8 7.6 15.5 1.66

Income Statement
Gross Sales 100.00% 100.00% 100.00% 100.00%
Gross Profit 60.90% 64.30% 65.50% 56.00%
Operating Income 0.10% 5.00% 7.50% 2.10%
Net Profit After Tax

Balance Sheet
Cash 12.60% 12.60% 12.60% 12.60%
Accounts Receivable 5.00% 5.00% 5.00% 5.00%
Inventory 2.80% 2.80% 2.80% 3.00%
Total Current Assets 46.30% 46.30% 46.30% 49.50%
Total Fixed Assets 28.90% 28.90% 28.90% 25.70%
Other Non-Current Assets 24.80% 24.80% 24.80% 24.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Accounts Payable 5.80% 5.80% 5.80% 5.80%
Total Current Liabilities 0.00% 0.00% 0.00% 17.60%
Total Long Liabilities 37.80% 37.80% 37.80% 37.80%
Net Worth 44.60% 44.60% 44.60% 44.60%

25
8.0 References

1. Mr.Franklin Styne Iyadurai, our module lecturer.

2. https://en.wikipedia.org/wiki/Nibong_Tebal

3. https://www.dosm.gov.my/v1/index.php?r=column/cthree&menu_id=UEg1NkpJUFYzRzBKclE
4V2JEb2I3QT09

4. https://www.penang.gov.my/images/penerbitan/sosioekonomi/Penang-in-Numbers-2014-
2015.pdf

1. 4. https://www.bloomberg.com/news/articles/2015-04-14/americans-spending-on-dining-out-
just-overtook-grocery-sales-for-the-first-time-ever

5. QSR magazine as of August 20, 2015, accessed on August 31, 2015; Franchise Help accessed on
September 1, 2015; Nerac accessed on September 1, 2015; PR Newswire as of August 10, 2015,
accessed on August 31, 2015

6. http://www.restaurant.org/Restaurant/media/Restaurant/SiteImages/News%20and%20Research/
Whats%20Hot/What-s_Hot_Concept_Trends_1.jpg

7. http://www.bplans.com/sports_bar_business_plan/financial_plan_fc.php

8. http://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1591&context=thesesdissertations

9. http://penanginstitute.org/v3/resources/articles/statistics/515-statistics-july-2013

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