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Chapter Particulars Page

No. No.
Chapter 1 : About Industry 1
1.1 Industry-Overview 2
1.2 Industry Analysis 5
1.3 Assumptions 10
Chapter 2 : Background 11
2.1 Businees Concept 14
2.2 Business Overview 14
2.2.1 Registered name of Organization 14
2.2.2 Mission Statement 14
2.2.3 Vision Statement 14
2.2.4 Organizational Objectives 14
2.2.5 Organizational Values 14
Chapter 3 : Organizational Plan 15
3.1 Partners and Principal Shareholders 16
3.2 Projected Roles and Responsibilities 16
Chapter 4 : Marketing Plan 17
4.1 Marketing objectives 18
4.2 Marketing Strategy 18
4.2.1 Segmentation 18
4.2.2 Targeting 18
4.2.3 Positioning 19
4.5.3 Marketing Strategies 19
4.3.1 Products &/ or service 19
4.3.2 Price 20
4.3.3 Promotion 20
4.3.4 Distribution 22
Chapter 5 : Financial Plan 23
5.1 Statement Showing Projected Income Statement 24
5.2 Statement Showing Projected Cash Flow 25
5.3 Statement Showing Pro Forma Balance Sheet 26
5.4 Statement Showing Projected Capitalization 27
5.5 Statement Showing Projected Working Capital 27
5.6 Statement Showing Projected Break Even Point 27
5.7 Statement Showing Projected Ratios 28


Project Report


New entrepreneurship & Innovation



“Franchisee of Pizza Hut”

Submitted to,

Prof. Ritesh Patel

S.V institute of Management,

Kadi ( 2009-11)

Submitted by,
Nitesh Radadiya (F 04)
Juhi Dhawan (F 28)
Shefali G (H 11)
Richa Mistry (F 42)
Nimmi Saxena (H 01)

CH -1
Industry Overview

1.1 Industry Overview

Given the current straitened economic conditions the

restaurant industry is proving resilient. Eating out in
restaurants and the purchasing of take-out and delivery meals
is an essential part of the American lifestyle. The convenience
and value offered by the restaurant industry makes
management of consumers day to day living easier. Research
by the National Restaurant Association indicates that consumers, although worried about the
economy, intend to continue their patronage of restaurants. It is expected that quick service, take out
and delivery style restaurants will benefit at the expense of upscale and casual dining. It is predicted
also that moderating gas prices and other commodities will mean that consumers may have more
disposable income in 2009.

The US pizza market is a mature, developed market and highly competitive. Franchised pizza chains
account for around 60% of the market. It is estimated that there are around150 well known pizza
franchises in operation and an unknown number of local and regional pizza franchises. While the
pizza market experienced growth until 2007 when it reached a value of $34 billion, the financial
downturn resulted in flat sales in 2008, a trend which is expected to continue for 2009. As well as
moderating sales, franchise operators are facing a minimum wage increase from $6.55 to $7.25 per
hour effective July 24, 2009. On a more positive note, commodity prices are falling. The price of
cheese, wheat and most pizza toppings has fallen in 2009. Also, the trading down by cash strapped
consumers from casual and upscale dining to less expensive alternatives is expected to benefit pizza
franchise operators.

Top 10 Pizza Franchise Chains

Company Name Founded Units Service Type

1. Pizza Hut 1958 14,759 Family Style
2. Domino’s Pizza 1960 8,641 Take-out/Delivery
3. Papa John’s Pizza 1985 3,238 Take-out/Delivery
4. Little Caesars 1959 2,000 Take-out/Delivery
5. Noble Roman’s Pizza 1972 1,400 Take-out/Delivery
6. Papa Murphy’s Take ‘N’ Bake Pizza 1981 1,073 Take-out only
7. Sbarro’s Italian Eatery 1956 1,040 Quick Serve
8. Godfather’s Pizza 1973 656 Quick Serve
9. CiCi’s Pizza 1985 631 Buffet
10. Hungry Howie's Pizza 1973 575 Take-out/Delivery

• Trends

• Healthier Options
There is increasing demand among consumers for healthy meals
and healthy kids meals. Consumers are also more interested in
where their food comes from and how it is produced, with a
growing demand for locally produced and organic ingredients.
Pizzeria operators are responding by producing dough with
healthier fats, offering whole wheat pizza crusts, healthier
vegetable based toppings and salads.

• Value
As consumers increasingly look for value, pizzeria operators are expected to respond with lower
prices and promotions. Falling commodity prices will enable more aggressive pricing. Consumers
have less to spend, but they still want to dine out for convenience and enjoyment. By responding
with value pricing, specials and combo-deals, pizza franchises will meet this ongoing consumer
• Technology Trends

The major pizza players are offering online ordering and some are now offering text ordering from
mobile phones, PDAs and other web enabled mobile devices. Major pizza chains are using social
networking sites like Facebook and MySpace as platforms to build a loyal customer base and to
facilitate ordering directly from the sites.With an increased focus on green initiatives in the
restaurant industry as a whole, pizza operators are introducing energy efficient equipment such as
high speed ovens.

Pizza Franchise Fees and Costs

Given the current economic conditions, the franchise option as a route to market is considered to be
more attractive than entering the market with a stand-alone restaurant. The support offered by the
franchise system and its proven business model reduces the risk involved.

1.2 Industry Analysis

Pizza is very much part of the American way of life, with Americans eating approximately 100
acres of pizza each day, or 350 slices per second. Although the pizza industry experienced a
decrease in sales during the recession, the beginning of 2010 has seen an increase in sales. The
development and implementation of new technology and marketing strategies has enabled the pizza
industry to adapt to growing consumer demands for cheap, fast, and convenient products.

History of the Pizza Industry in the US

The Queen of Pizza

Around 1889, Italy’s Queen Margherita and her husband, Umberto I were touring the country, when she
saw peasants eating large, flat bread. The queen was curious and asked to try the pizza. She loved it so
much, she brought chef Rafaelle Esposito to the royal palace and ordered him to bake pizzas for her. To
honor the queen who was so beloved by her subjects, Rafaelle baked a pizza topped with tomatoes,
mozzarella cheese, and basil to represent the colors of the Italian flag. This became Queen Margherita's
favorite pizza and it was named in her honor, the Pizza Margherita.

 Pizza arrived to the inner cities of the United States, New York and Chicago most notably, in
the early 1900s, thanks to the large population of Italian immigrants. The popularity of pizza
then grew with the returning of GI’s to the US after being stationed in Italy during World
War II. They brought home a demand for the pizza they had enjoyed in Italy and thus began
the mainstreaming of pizza into American society. Between 1945 and 1960, pizzerias began
opening all over the country.
 At that time, pizza restaurants were individually-owned stores, but the proliferation of chains
changed this. Pizza Hut started in Wichita, Kansas, in 1958 and now has over 7,500 units in
the US; Little Caesars emerged in 1959 in Michigan and now has over 2,500 units. Domino's
started in 1960, also in Michigan, and now has over 5,000 units in the US; Papa John's
opened in 1989 in Indiana. It now has nearly 3,000 units in the US.
 Today there are nearly 68,000 pizza stores in the US.

• Pizza Market
Size and Value
The pizza segment of the food industry represents 11.7% of all restaurants and accounts for more
than 10% of all foodservice sales. Between June 2008 and June 2009 the US pizza industry recorded
nearly $37 billion in sales.
According to “Pizza Power”, PMQ magazine’s (Pizza Marketing Quarterly) Annual Industry
Analysis, of the 67,554 pizza stores in the US, 59% are independently-owned and control 51% of
total pizza sales. Franchises and chains account for 41% of the market and for nearly half the sales.
The following pie charts were sourced from PMQ’s 2009 annual industry analysis and depict the
breakdown of pizza stores in the US and a breakdown of US pizza sales.

Graph 1: Breakdown of Pizza Stores

Graph 2: Breakdown of U.S. Pizza Sales

• Market
The pizza industry experienced a loss of market share and sales during the recession as skyrocketing
cheese prices and an increase in the cost of wheat and other pizza essentials drove up the cost of
pizza. McDonald's and other hamburger purveyors gained market share by attracting penny-
pinching consumers with value meals, some with entrees
priced as low as $1 or less.
In an effort to revive sales, pizza businesses began to offer
promotions to customers through varied marketing channels
such as social media sites, the internet and direct mail. For
example, Pizza Hut launched a $10 promotion at the end of
2009 in Dallas which went nationwide earlier this year and
helped the country's largest pizza seller regain some of the
sales it had lost to lower-priced chains. The promotion offered consumers any pizza, any crust and
any toppings for $10. This trend towards offering targeted discounts has proved a successful
strategy as most pizza businesses have reported an increase in sales for the start of 2010.
Due to the recession-driven “eating in” trend, pizza businesses have experienced an increase in take-
out and delivery sales. Take-out and delivery has risen in popularity due to the fact that it is cheaper
than eating out, as there are no additional expenses like tips, drinks and gas. The increase of at-home

leisure activities has also been a key growth driver. With new technology that allows for easier and
faster ordering, the number of consumers ordering online or via text is forecasted to rise.

In the beginning, there was pizza

While debated, the word "pizza" is thought to have come from the Latin word pinsa, meaning flatbread.
Legend suggests Roman soldiers gained a taste for Jewish Matzoth while in Palestine and brought the recipe
home. However, a recent archeological discovery found a preserved Bronze Age pizza in the Veneto region.
Tomatoes were introduced to Italian cuisine by Neapolitan peasants in the 18th and early 19th centuries,
which led to the true modern Italian pizza. Once seen as poisonous, the tomato was used on many foods,
including early pizza. Despite initial reluctance, once members of the local aristocracy tried pizza, they were

Pizza is enjoyed by people from all walks of life and eating out at restaurants is an essential part of
the American lifestyle. According to the National Restaurant Association, 45% of adults say that
restaurants are still a major part of their lifestyle and that they will continue to frequent their
favourite restaurants7. According to a survey completed by Mintel8, 93% of Americans eat at least
one pizza per month and 21% of 18 – 24 year olds purchase pizza more than three times per month.
This is compared to only 7% of those aged over 65 eating at least one pizza per month. Pizza also
proved popular with parents. About 20% of the parents surveyed said that they purchase pizza more
than three times per month, compared to 12% of adults with no children.

Pizza Facts

Just hearing the word Pizza brings a smile to the face of just about every American. Whatever style
or variety -- from thick, Chicago-style deep-dish Pizza stuffed with gobs of cheese, sausage, and
pepperoni to a thin-as-a-cracker crust topped with veggies -- Pizza invariably makes it to the top of
"favorite food" lists.
Here, we've compiled a list of fun and interesting facts about this American food icon. See how
many you knew!

1. Since 1987, October has been officially designated National Pizza Month in the United States.

2. Approximately three billion Pizza are sold in the United States every year, plus an additional one
billion frozen Pizza.

3. Pizza is a $30 billion industry in the United States.

4. Pizzerias represent 17 percent of all U.S. restaurants.

5. Ninety-three percent of Americans eat Pizza at least once a month.

6. Women are twice as likely as men to order vegetarian toppings on their Pizza.

7. About 36 percent of all Pizza contain pepperoni, making it the most popular topping in the United

8. The first known Pizzeria, Antica Pizzeria, opened in Naples, Italy, in 1738.

9. More Pizza is consumed during the week of the Super Bowl than any other time of the year.

10. On average, each person in the United States eats around 23 pounds of Pizza every year.

11. The first Pizzeria in the United States was opened by Gennaro Lombardi in 1895 in New York

12. The record for the world's largest Pizza depends on how you slice it. According to Guinness
World Records, the record for the world's largest circular Pizza was set at Norwood Hypermarket in
South Africa in 1990. The gigantic pie measured 122 feet 8 inches across, weighed 26,883 pounds,
and contained 9,920 pounds of flour, 3,968 pounds of cheese, and 1,984 pounds of sauce. In 2005,
the record for the world's largest rectangular Pizza was set in Iowa Falls, Iowa. Pizza restaurant
owner Bill Bahr and a team of 200 helpers created the 129 X 98.6-foot Pizza from 4,000 pounds of
cheese, 700 pounds of sauce, and 9,500 sections of crust. The enormous pie was enough to feed the
town's 5,200 residents ten slices of Pizza each.

1.3 Assumptions

 No .of pizza piece sold on daily basis :- 270 pieces

 Variety of pizzas sold: - Vegetarian Pizzas

 Investment: - Rs.3700000

 Owners capital:-Rs. 2500000 (Rs. 500000 per partner)

 Loan from ICICI: - Rs. 1200000

 Cost of Capital :- 8.5%

CH - 2

2.1 Business concept

What is franchisee ?

Almost all of us have heard of booming franchise business. Every other day we witness increasing
number of franchise food chains or retail chains in malls or popular marketing hubs. So what is a
franchise business? The definition says, “A franchise is a right granted to an individual or group to
market a company's goods or services within a certain territory or location”. In other words, when a
company decides to distribute its products or services to independent third party operators on a
contract basis, it is known as franchise business.

One of the basic conditions of this contract is franchise using business methods, trademarks, name
recognition and goodwill of the franchiser and in return he has to pay certain sum in form of initial
payment and royalties. Franchisee is the independent third party operator using registered products
and services whereas the company that grants the rights to the franchisee to use its products and
techniques is called as franchiser.

Worldwide, there are plenty of popular franchises. Most of them belong to fast food chains. The
history of franchise business go a long way back to 1850s. Isaac Singer had first thought of selling
licenses of his sewing machine business to other entrepreneurs in order to enhance his business to
different territories.

The best contribution of franchises is in developing independent entrepreneurs who want to be their
own boss. There are plenty of franchise businesses available worldwide which are being operated by
self-driven individuals. However, before one decides to buy a franchise business, he must be aware
of all the pros and cons involved with it. He must have proper understanding of franchise business.
Franchise business is no doubt lucrative, but its success is very much dependent upon the strength of
the brand and how it is being operated.

There is no dearth of franchise opportunities in industries like health and fitness, pet related
business, automotive, financial services, maintenance and fast food chains etc. A franchisee needs to
understand how business works and should also be aware of fees involved. Rules and guidelines are
established by the franchiser and that need to be followed. Franchising is unquestionably one of the
most popular ways of operating business in today’s time. It is a mutually beneficial arrangement
between franchiser and franchise.

When an entrepreneur purchases franchise for sale, he is creating a huge potential of business for
himself. The fact that, franchiser has presence as an established name really helps in the success of a
franchise. It is far better to obtain a license of a franchise than opening a mom and pop business.
The business formula is proven and one does not need to establish the brand name from the scratch.
Everything about the venture from name, services, products and quality has already been established
so the job of franchisee becomes much easier.


Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell, A&W
and Long John Silver’s under its umbrella. Pizza Hut is the world’s largest pizza chain with over
12,500 restaurants across 91 countries
In India, Pizza Hut has 137 restaurants across 36 cities, including Delhi, Mumbai, Bangalore,
Chennai, Kolkata, Hyderabad, Pune, and Chandigarh amongst others. Yum! is in the process of
opening Pizza Hut restaurants at many more locations to service a larger customer base across the


 1958: The legacy of Pizza Hut began, when two college-aged brothers from Whichita,
Kansas, Frank and Dan Carney opens first Pizza Hut restaurant after borrowing $600 from
their mother.

 1959: Pizza Hut is incorporated in Kansas and the first franchise unit opens in Topeka,

 1968: International market entered with opening of Pizza Hut restaurant in Canada.

 1969:Red roof adopted for restaurants.

 1972:Pizza Hut, Inc. listed on New York Stock Exchange under the symbol PIZ.

 1977:Pizza Hut, Inc. stockholders overwhelmingly approve merger with PepsiCo, Inc. for an
undisclosed sum.

 1986:Delivery service, as a new concept, is initiated

 1996:Pizza hut comes to India with a dine in restaurant Banglore that has special vegetarian

 1997:Pizza hut opens a dine-in restaurant in Delhi.

 2007 Pizza hut brought out our Thick n Thin Pizza and began to re-franchise our dine-in

2.2 Business Overview

2.2.1. Registered name of Organization

Pizza Hut

2.2.2 Mission statement

 We take pride in making a perect pizza and providing couryeous and helpful
service on time all the time.
 Every customer says, ”I’ll be back ! ”
 We are trying to provide value growth to our shareholders.

2.2.3 Vision statement

 To improve well being of our customers, community and people connected to

our enterprise.
 Run great restaurants.

2.2.4 Organizational objectives

 To provide world-class facility and taste to its Indian customers in a cost

effective way.
 To maintain uniform taste across all its outlets.
 To present its products when and where the customer wants within committed
half an hour time.
 To delight the customer, ie more beyond satisfaction.

2.2.5 Organizational values


 Have a PASSION for excellence in everything we do.

 EXECUTE with positive energy and urgency.
 Be individually and collectively ACCOUNTABLE for growth in people, customer
satisfaction and profitability.
 Find reasons to RECOGNIZE the achievement of others and have fun doing it.
 LISTEN and more importantly, respond to the voice of the customer.
 Think SAFETY first.
Organizational Plan

3.1. Partners
1) Juhi Dhawan

2) Shefali Banodiya

3) Nitesh Radadiya

4) Richa Mistry

5) Nimmi Saxena

3.2. Projected Roles & Responsibilities

Position: Team Member (Nitesh)

Responsibility : Team Member plays a key role in the operation of our

Position : Shift Manager (Richa)

Responsibility : This is an entry level, hourly and management position.Shift
Managers help to manage the daily operations of the restaurants including customer
service, employee development and food production.

Position : Area Manager (Juhi)

Responsibility : Area Managers are responsible for 5-7 units within a specified
region. Among other things, they coach the restaurant management team, ensure
unit annual operating plans are established and met or exceeded, build sales,
achieve margin targets, ensure customer satisfaction.

Position : Restaurant General Manager/Asst. Restaurant General Manager (Nimmi)

Responsibility : Restaurant General Managers are responsible for all functions of the
restaurants. Among other things, they recruit, screen, hire, train, and develop employees; do
sales forecasting and manpower planning; conduct risk/safety inspections; manage inventory and
facility; order products; conduct P&L analysis; schedule crew members; and manage revenue

Position : Human Resource management (Shefali)

Responsibility: Recruiting Training & motivation

CH - 4
Marketing Plan

4.1 Marketing Objectives

 The perceived quality and service of the company will help to ensure a better than average
chance at a successful introduction of a new product

 Diversification of the products offered.

 To add something new to the menu.

 Diversification of pizzas.

 Always try to come up with some innovative way to make a pizza into something
slightly different - different enough that customers will think it’s a whole new product.

 To Value customer service and satisfaction.

4.2 Marketing Strategy


•Segmentation is: Identifying portions in market different from one another.

The Segments Pizza Hut is working on

• Higher Income
• Dual Career Families
• Age 12-30 Years

•Target market:
–Target market is X and Y generation
–Generation with a "spend now, pay later" attitude

•College graduates: Spending habits of college freshmen also indicates a high percentage of money
being spent on non-essential items.


•Pizza hut has done positioning in the target market by keeping in view two
basic factors:

•Worldwide Pizza Hut has come to become synonymous with the

‘Best pizzas under one roof‘

•Crew members 'customer mania‘which makes Customers Unique dining experience.

e.g. Service

4.3 Marketing Mix

4.3.1 Product

 Worldwide and in India, Pizza Hut has come to become synonymous with the ‘best pizzas
under one roof’. This is because at Pizza Hut the belief is that every pizza has its own magic,
thus making it a destination product – which everyone seeks. It is this belief that has ignited
the passion to create, innovate and serve the finest product the industry has to offer, while
setting standards for others to strive to replicate. Pizza Hut is committed to providing
uncompromising product quality, offering customers the highest value for money and giving
service that is warm, friendly and personal. A critical factor in Pizza Hut’s success has been
its unique dining experience. Crewmembers at Pizza Hut strive each day to provide
‘customer mania’ - the kind of service that ensures that every visit of the customer is a
memorable one.

 In fact, to ensure stringent international bench-marks in the quality of products and services
at all its restaurants across the world, Pizza Hut has a mystery shopper program in which an
unknown official visits a restaurant and evaluates it on certain defined parameters called
C.H.A.M.P.S. that stand for Cleanliness, Hospitality, Accuracy, Maintenance, Product
quality and Speed. Based on the report submitted by the official, the restaurants are rated and
in the rare case of finding under performers, they are kept under strict vigil

 A critical factor in Pizza Hut’s success has been a menu that has constantly evolved and
expanded to cater to the changing needs and specific preferences of customers in different
parts of the world. In having understood the pulse of the customers in India, Pizza Hut has
clearly established itself as a brand with an Indian heart. Besides offering an extensive range
of vegetarian pizzas, it was the first pizza chain to open a 100% vegetarian restaurant in
India in Surat and later in Ahmedabad and Chowpatty, where it offers a Jain menu sans all
root-based ingredients.

 Over the years Pizza Hut has also developed and successfully introduced a range of products
especially suited to the Indian palate. These products like Chicken Tikka, Spicy Korma,
Spicy Paneer and the Masala and Tandoori pizzas have been a tremendous success. What has
also given Pizza Hut a competitive edge is that in addition to an extensive range of
internationally renowned pizzas like The Italian, the proprietary Pan Pizza and Stuffed Crust,
in India the menu offers the option of a complete meal. It includes appetizers, a Salad Bar -
where the customers can make their own fresh salads, a range of soups, pastas and desserts

4.3.2 Price

 Pizza Hut will successfully use the high/low pricing strategy when setting the retail price of its

 The high/low retail pricing strategy allows Pizza Hut to charge a price that is above the
competition, but also promote frequent sales to lower the price below them.

 The high/low pricing strategy has several advantages.

 First, this pricing strategy will help segment the market. Different groups of customers are
willing to pay different prices for the same product. Pizza Hut can sell "The Extreme" to the
customers who will pay the higher price to be the first to buy and also to the bargain hunters.

 The high/low pricing strategy will also create excitement. Customers will be able to try
something new when they purchase "The Extreme" and this exciting experience may bring those
customers back to purchase other products.

 Finally, this strategy will emphasize product and service quality. Pizza Hut sets a high initial
price for its products to send a signal to customers that its products are quality and the service is

 Coupons worldwide and gift and cards in are also made available.

4.3.3 Promotion

 In India, eating out is perceived as a form of entertainment. Which is why Pizza Hut servers not
only serve our customers great food, they also sing and dance for them. And many of Pizza
Hut’s customers would, we are certain, love to participate in this process. Giving them an
opportunity to showcase their talent – they conceived the Jig n Jeeto contest. Organized in Delhi
for the first time, it received a phenomenal response with super star Fardeen Khan judging the
show. Pizza Hut hopes to continue this contest as a tradition for the years to follow.

 Pizza Hut’s communication has also always struck a chord with the Indian customer. Its very
first television commercial in India featured a boy and girl, who meet at a Pizza Hut restaurant in
a traditional arranged marriage setting. They lose their inhibitions when the pizza arrives. When
the sequel went on air featuring the same couple, now married, with the girl’s father consoling
her over a pizza as her bridegroom waits outside the restaurant to escort her after their wedding -
the customer’s involvement was so complete that several wrote in to inquire whether the couple
had children

 The more recent campaign that was launched with the introduction of the Tandoori pizzas
featured a typical Indian wedding procession abandoning the bridegroom when enticed by
delicious aromas from a Pizza Hut restaurant. While the famous ‘Good times start with great
pizzas’ slogan has been prominent in the communication ,the focus has remained on the best and
most distinct pizzas.

 Pizza Hut laid more emphasis on its “restaurant dining experience”.

 Pizza Hut localizes it menu to capture local Indian Market.

 In 2000 Pizza Hut launched its innovative Pizza Pooch menu and Pizza Pooch Birthday Party
package exclusively for kids in the 6-10 age groups.

 It positioned itself as family restaurant and also concentrated on wooing kids

Online promotional strategies

 Pizza hut provide many services online such as

 Birthday reminder service- here people can save the birthday date of their friends, relatives , and
pizza hut will remind you the birthday date and birthday parties discount and u can book online

 E-coupon and discount offer available to online customers

 Hot line number – pizza hut hot line number also provide at online which is 39883988

 Even customer can do online order of pizzas

⇒ a VIP (very into pizza) club made where people can register their email, mobile number
where pizza hut provide them latest pizza news, discounts and offers at email ,mobile
4.3.4 Distribution

 The type of distribution channel used will be direct channel.

 The direct channel is successful when there is an extremely large market that is geographically
dispersed. The direct channel is also useful when there are a large number of buyers, but a small
amount purchased by each.

 It will use three different methods of selling its products directly to the market. The first method
of distribution used is delivery. Customers can call Pizza Hut ahead of time, place an order, and
the order is delivered to the customer's home.

 Another method of distribution is for customers to dine-in. Customers can go to the nearest
Pizza Hut, place an order and either leave with the order or eat at the restaurant. One of Pizza
Hut's largest competitive advantages is its restaurant style facility. Pizza Hut offers a clean place
to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere.

 The third method of distribution is! online ordering. Customers can now go on the Internet and
place an order. This method is useful because it allows customers to view the entire menu,
download any special coupons, and order without having to disclose any credit card numbers.

CH- 5
Financial Plans

5.1 Statement Showing Projected Income Statement

Pro Forma Income statement

Particular Year 1 Year 2 Year 3 Year 4 Year 5

Sales 100% 16260750 19919419 24401288 29891578 36617183
Less: COGS 52.75% 8577546 10507493 12871679 15767807 19315564
Gross Profit 47.25% 7683204 9411925 11529609 14123770 17301619
Operating Expense:
Selling Expenses 10% 1626075 1991942 2440129 2989158 3661718
Advertising Expenses 17% 2764328 3386301 4148219 5081568 6224921
Salary, wages 22% 3577365 4382272 5368283 6576147 8055780
Office Supplies 1.50% 243911 298791 366019 448374 549258
8.75% Interest of Loan - 105000 105000 105000 - -
Depreciation - 63000 63000 63000 63000 63000
Rent 8.86% 1440000 1440000 1440000 1440000 1440000
Electricity Expenses 5.75% 934993 1145367 1403074 1718766 2105488
Utility Expenses 2% 325215 398388 488026 597832 732344
Other Expenses 5.75% 934993 1145367 1403074 1718766 2105488
Total Operating
Expenses 73% 12014880 14356428 17224824 20633610 24937997

Profit/loss before Tax 27% 4245870 5562991 7176464 9257968 11679186

Taxes 12.36% 524790 687585.7 887011 1144285 1443547
Net Profit(Loss) 14.78% 3721080 4875405 6289453 8113683 10235638

5.2 Statement Showing Projected Cash Flow

Particular 1 2 3 4 5
Net Income (P&L A/C) 4245870 5562991 7176464 9257968 11679186
Income from Operating
Depreciation 63000 63000 63000 63000 63000
Inc. Bank borrowing - - - - -
Total of Operating Act. 63000 63000 63000 63000 63000
Cash flow from Operation(A) 4308870 5625991 7239464 9320968 11742186
Investing Activity
Decrease a loan - - - 1200000 -
Total - - - 1200000 -
Financing activity
Interest of Loan 105000 105000 105000 - -
Taxation 524790 687545 887011 1144285 1443547
Total 629790 792545 992011 1144285 1443547
Cash flow from I.&F.Act.(B) 1154580 1480090 1879022 2344285 1443547
cash BOP - 3154290 7300191 12660633 19637316
Net surplus/deficit 3154290 4145901 5360442 6976683 10298639
Cash EOP 3154290 7300191 12660633 19637316 29935955

5.3 Statement Showing Pro Forma Balance Sheet

1 2 3 4 5
Owners capital 2500000 2500000 2500000 2500000 2500000
Retail earning 3721080 4875405 6289453 8113683 10235638
Reserve & surplus 372108 487540 628945 811368 1023563
8.5% bank loan 1200000 1200000 1200000 - -
Interest 105000 105000 105000 - -
Current Liability 193102 3006246 6748235 12960265 20861754
Total Liability 8091290 12174191 17471633 24385316 34620955
Furniture 1500000 1500000 1500000 1500000 1500000
Less: Accumulated
Depredation 63000 126000 189000 252000 315000
Net assets 1437000 1374000 1311000 1248000 1185000
current Assets 3500000 3500000 3500000 3500000 3500000
Cash 3154290 7300191 12660633 19637316 29935955
Total Assets 8091290 12174191 17471633 24385316 34620955

5.4 Statement Showing Projected Capitalization Requirements

1 2 3 4 5

629790 792545 992011 1144285 1443547

5.5 Statement Showing Projected Working Capital Requirement

1 2 3 4 5
Raw material
consumed 2807000 2900000 2500100 3200300 2880000
Book Debt 693000 510000 999900 299700 620000
Current Assets 3500000 3410000 3500000 3500000 3500000
Less:margine 25% 875000 852500 875000 875000 875000
Less:Trade credit for
RM 332500 323950 332500 332500 332500
Bank finance For WC 3155000 3065000 3155000 3155000 3155000

5.7 Statement Showing Projected Break Even Point

Selling price 165
Variable Cost 120.92
Contribution 44.08
FC 1608000


BEP = SP*Piece
= 6019056

5.7 Statement Showing Projected Rati0

Profitability Ratio

Gross profit margin= Gross Margin *100

Total sales

Net profit margin = Net Income * 1000

Total sales

ROI = Net Income

Total Assets

1 2 3 4 5
Gross Profit 16260750 19919419 24401288 29891578 36617183
Net Income 3721080 4875405 6289453 8113683 10235638
Total Assets 4937000 4874000 4811000 4748000 4685000
Total Sales 7683204 9411925 11529609 14123770 17301619
GP 2.12 2.12 2.12 2.12 2.12
NP% 48.43% 51.80% 54.55% 57.45% 59.16%
ROI 0.753713 1.000288 1.307307 1.708863 2.184768