198 Food Feasibility

Pre-Feasibility Study
FAST FOOD RESTAURANT
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756 helpdesk@smeda.org.pk
REGIONAL OFFICE PUNJAB Waheed Trade Complex, 1st Floor, 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore. Tel: (042) 111-111-456 Fax: (042) 5896619, 5899756 helpdesk@smeda.or g.pk REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpde sk -khi@smeda.org.pk REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 Helpdesk -pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk qta@ smeda.org.pk
st
December, 2006
Fast Food Restaurant
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form.
DOCUMENT CONTROL
Document No. Revision Prepared by Approved by Issue Date Issued by PREF-11 1 SMEDA-Sindh Provincial Chief Sindh December, 2006 Library Officer
PREF-11/December, 2006/
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1.1
PROJECT PROFILE
Purpose of the Documents Doc
This document is developed to provide the entrepreneur with potential investment opportunity in setting up and operating a medium sized fast food restaurant offering a variety of food items to the general public. This pre-feasibility gives an insight into various aspects of planning, setting up and operating a fast food restaurant for the general populace. The document is designed to provide relevant details (including technical) to facilitate the entrepreneur in making the decision by providing various technological as well as business alternatives. The document also allows flexibility to change various project parameters to suit the needs of the entrepreneur. 1.2 Project Brief ect
Fast food is food which is prepared and served quickly at outlets called fast-food restaurants. It is a multi-billion dollar industry which continues to grow rapidly in many countries. A fast-food restaurant is a restaurant characterized both by food which is supplied quickly after ordering, and by minimal service. The food in these restaurants is often cooked in bulk in advance and kept warm, or reheated to order. Many fast-food restaurants are part of restaurant chains or franchise operations, and standardized foodstuffs are shipped to each restaurant from central locations. There are also simpler fast-food outlets, such as stands or kiosks, which may or may not provide shelter or chairs for customers. Because the capital requirements to start a fast-food restaurant are relatively small, particularly in areas with non-existent or medium income population, small individually-owned fast-food restaurants have become common throughout Pakistan. Generally restaurants, where the customers sit down and have their food orders brought to them, are also considered fast food. 1.3 Opportunity Rationale Oppo unit Rat
The Fast Food Restaurant Market is a growing industry in Pakistan relying heavily on the changing lifestyle patterns, population growth of the target age group and the related increase in employment of women. With today's hectic lifestyles, time-saving products are increasingly in demand the most obvious being the fast food. The rate of growth in consumer expenditures on fast food has led most other segments of the food-away-fromhome market for much of the last one decade. Demand for convenience has driven expenditures where people want quick and convenient meals; they do not want to spend a lot of time preparing meals, traveling to pick up meals, or waiting for meals in restaurants. As a result, consumers rely on fast food. Knowing this, fast food providers are coming up with new ways to market their products that save time for consumers.
Consumers want to combine meal-time with time engaged in other activities, such as shopping, work, or travel, therefore allocating less time for food, hence the growing need for fast food. 1.4 The Fast Food Industry ndus
The fast-food industry is popular in Pakistan, the source of most of its innovation, and many major international chains are based there. The presence of multinational fast food chains like McDonalds, KFC, Pizza Express, Pizza Hut, Subway etc. have somewhat catered to the high income segment therefore developing a niche as upscale fastfood restaurants. Multinational corporations such as these typically modify their menus to cater to local Pakistan tastes and most overseas outlets are owned by native franchisees to ensure that cultural, ethnic, and community values are taken care of. Additionally, multinational fast-food chains are not the only or even the primary source of fast food in most cities of Pakistan. Many regional and local chains have developed around the main cities of Pakistan (for example Khan Broast in Karachi) to compete with international chains and provide menu items that appeal to the unique regional tastes and habits at comparatively low costs. In Pakistan, multinational chains are considerably more expensive; they usually are frequented because they are considered chic and somewhat glamorous and because they usually are much cleaner than local eateries. However much of the middle-income segment (which forms a major chunk of fastfood goers) prefers visiting local outlets that offer low cost fast food, hence more frequent visits. 1.4.1 Increasing Number of Fast Food Outlets umbe Outle The rapid rate at which the fast food industry continues to add outlets is as much a reflection of consumer demand for convenience as it is a reflection of demand for fast food itself. Expanding the number of outlets increases accessibility, thus making it more convenient for consumers to purchase fast food. Especially in recent years, much of the expansion has been in the form of "satellite" outlets. These tend to be smaller in size, with little or no seating capacity, and are often in nontraditional locations, such as office buildings, department stores, airports, and gasoline stations; locations chosen specifically to maximize convenience and consumer accessibility. 1.4.2 Consumer Appeal ons ume ppe Fast-food outlets have become popular with consumers for several reasons. One is that through economies of scale in purchasing and producing food, these companies can deliver food to consumers at a very low cost. In addition, although some people dislike fast food for its predictability, it can be reassuring to a hungry person in a hurry or far from home.
Multinational Fast food chains like McDonald's rapidly gained a reputation for their cleanliness, fast service and a child-friendly atmosphere where families on the road could grab a quick meal, or seek a break from the routine of home cooking. Prior to the rise of the fast food chain restaurant, people generally had a choice between greasy-spoon diners (kiosk) where the quality of the food was often questionable and service lacking, or highend restaurants that were expensive and impractical for families with young children. Modern, stream-lined convenience of the fast food restaurant provides a new alternative and appealed to consumers' instinct for ideas and products associated with progress, technology and innovation. Fast food restaurants have rapidly become the eatery "everyone can agree on", with many featuring child-size menu combos, play areas and whimsical branding campaigns, designed to appeal to younger customers. Parents can have a few minutes of peace while children played or amused themselves with the toys included in the premsises. Many consumers see multinational fast food restaurants as symbols of the wealth, progress and well-ordered openness of Western society and therefore become trendy attractions in many cities around Pakistan, particularly among younger people with more varied tastes. 1.4.3 Focusing on Consumer Convenience ons ume onven Fast Food outlets tend to focus on the work while you eat philosophy similar to the McDonald Outlet at Quaid e Azam Internation Aiport (Karachi) wherein seating space is also available for passengers in transition or the KFC outlets in large shopping malls like the Millenium Shopping Mall in Karachi promoting the concept of Shop While You Eat. 1.4.4 Increasing Market for Fast Food The Population Boom ket opul tion Pakistan, currently ranked as 6 in terms of total population, is characterized by a high population growth rate of 1.9% (Pakistan Economic Survey 2005) and is set to take the top three positions in terms of total population with already 153.4 Million people registered in 1 2005. With this, the per capita income has increased to US$ 736 while the productive age group (15 to 64) years is said to take the major chunk of population (67% of total 2 population) by 2020. The growth rate in food consumption is also augmented by the rapid increase in the employment rate for males / female population aging between 20 to 29 years (fast food goers) hence the greater income contribution to the overall income generated is expected to be higher.
th
1 2
2005 World Population Data Sheet, Population Reference Bureau, Washington; 2005 Population Projections 1998-2023, Planning Commission; NIPS
Population Pyramid 1998 & 2020*
*Population Census Organization; Population Projections 1998-2023, Planning Commission; NIPS
1.4.5 The Future of the Industry ndus The Pakistani economy is becoming increasingly service-oriented, and over the past several decades, the foodservice industries that offer the highest levels of convenience have been rewarded with strong sales growth. In the face of rising population, incomes and increasingly hectic work schedules, a nearly insatiable demand for convenience will continue to drive fast food sales. Fast Food Outlets will strive to find ways to make their products even more accessible. Even if incomes stagnate or attitudes change, consumers are unlikely to return to meal preparation at home on a large scale. This suggests that even if consumers choose to spend more time at home, for family or other reasons, much of the meal preparation will still occur elsewhere. Many more table service restaurants, which traditionally focus on full-service in house dining, will likely try to capture part of this market by offering take-out, and possibly experimenting with home delivery. The value of consumer time, as well as the demand for consistent, high-quality food products, will continue to shape the fast food industry. Fast food, once considered a novelty, has become an increasingly significant part of the young generations diet. The role of convenience in this dietary shift cannot be over-emphasized, and the future growth
of the rest of the foodservice industry will be driven in large part by its ability to find new ways to save consumers time. 1.5 Key Success Factors / Practical Tips for Success Succes ips Succes Whether you are opening a one-of-a-kind restaurant or trying to grow your existing restaurant into a multi-unit chain, there are winning principles that can help shape your restaurant and improve its chances of succeeding. i) Conceive the Winning Concept A well-defined concept stands a much better chance of long term success than some vague notion. To start, it is wise to first set specific goals and decide on the ways you will measure your restaurants success. ii) Longetivity This can be described as the art of being able to maintain success over time while adjusting to meet the changing demands and buying habits of the customer. To open a restaurant successfully and become profitable is one thing, but to maintain that success over a long period of time is winning. iii) Consistency To not simply open a restaurant, but to truly develop a winning concept requires implementing systems and procedures to ensure consistency of your operation. iv) Market Appeal All restaurants want to be busy but winning concepts seem to have a broad appeal and well developed points of difference that enable them to dominate their market niche. To be the first place the customer thinks of going when choosing to dine out is the goal of the winning concept. v) Expandability Consistency of quality and service, and operating systems and management procedures established in the first unit can result in more expandable opportunities where all systems are already developed and waiting to be implemented. vi) Menu Pricing One of the most important factors in the strategic planning of a restaurant is in the development of the menu. It involves designing an appealing selection of menu
items that are competitively priced in the marketplace. Menu pricing is a very tricky task because you need to price items so that you can operate profitably and, just as important, offer your targeted guests a good price/value relationship. vii) Selecting Prime Location The specific location within your target area also is critical. If you are situated in an infrequently traveled area no where near complimentary businesses or at the back of a mall, you limit your earning potential. Even if you are the only outlet in town you must gauge the likelihood of outsiders visiting your restaurant. If the restaurant is right off of a major freeway heavily traveled by truckers and road trippers you may be highly successful despite a remote location. viii) Market Research
This is probably the most critical factor for running a successful fast food restaurant. You need to visit fast food outlets, franchises and other chains to see how your concept would fit into the neighborhood you are planning to target. Talk to customers to know their preferences, some detailed meetings with restaurant managers / owners over dinner would do the trick in obtaining best practices and critical information that otherwise could have been overlooked. Keep in mind that because a concept works in one area does not mean it will be well-received by customers in your location. Tastes are subject to location preference and more often target market. In high scale urban areas (like PECHS, KDA etc.) you are more likely to be successful with a niche concept than in a dense middle income areas (like Gulistan e Jauhar). Another thing to consider is competition. If your market is saturated with similar restaurants and the population may not be large enough to support more restaurants, you may want to rethink your concept. 1.6 Proposed Business Legal Status ine
Although the legal status of business tends to play an important role in any setup, the proposed fast food business is assumed to operate on a sole proprietorship basis which may extend to partnership in case of addition of new products that might add significant business to the existing setup.
2 OP E N IN G RESTAURANT AURANT
SUCCESSFUL ESSF
From burger stands to barbeque steakhouses more and more restaurants are popping up in cities every day. Since restaurants are such a common business venture, people must enjoy running them. However, all of those advantages come at a price - building a restaurant from scratch is not an easy task. It is a hard and expensive process, and the reality is that many restaurants fail in their first year of business due to improper planning. But rest assured, there are ways to reduce the risk of becoming another statistic. Following are some of the handy tips that can help run a successful fast food establishment. 2.1 How to Start a Restaurant?
2.1.1 Work in a Restaurant aur One of the best ways to reduce the risk of owning a failed restaurant is to have some restaurant experience before you start. Many successful restaurateurs have said that the best way to prepare for owning a restaurant is by working in one, hopefully in an eatery similar to one you'd like to open. You'll learn more than just how to serve food with a smile; you can learn restaurant marketing, menu development, payroll, and other significant components of the restaurant world. Working in the restaurant industry and learning the basics is an important first step to becoming an owner. 2.1.2 Know Your Target Market ket Who do you see eating at your restaurant? Are you targeting the family crowd, teenagers or seniors? Knowing your target market before you start planning will not only help you solidify your menu; it will help determine your location, dcor and the overall atmosphere of your restaurant. A family-style restaurant, which caters to parents and their kids, may not appeal to seniors. On the other hand, an upscale, quiet restaurant offering a two-hour dining experience wouldn't be appealing to teenagers or families with small children. 2.1.3 Select a Service Style & Food Concept ect cept What type of restaurant do you see yourself owning? Typically, your service style will either be fast-food, which offers food types that range from burgers, fries, soups and sandwiches; mid-scale, which has full course meals at value prices; or upscale, offering full service meals with high-class ambiance and, in turn, higher prices. After narrowing your establishment to one of these three options, you can narrow your style of food choices. Is there a particular type of cuisine that you see yourself serving? Do you prefer pizza or soup? Sandwiches or Chinese? Choosing your food concept goes handin-hand with your choice in service style. 2.1.4 Develop a Business Plan evel Like any other type of company, a restaurant will need a concise business plan. This plan should include but is not limited to: the overall concept and goal of the restaurant; specific
financial information and projections; a description of the target market; the menu and pricing; equipment and employee details; advertising and marketing plan; and a potential exit strategy. 2.1.5 Create the Menu and not a menu Cre The menu can make or break a restaurant, and should be in accordance with the overall concept of the restaurant. Revisit the business plan to make sure the menu is attractive to the target market, is affordable within specified budget, and complements the restaurant's design concept. For example, if the restaurant is family-friendly, you will need a kids menu. If it is supposed to be an upscale establishment, a lot of thought will have to go into the dessert list. 2.1.6 Choose a Location & Layout hoos tion It is important to find a location that has a continuous stream of traffic, convenient parking, and is in proximity to other businesses (especially if you're catering to the lunch crowd). It is necessary to revisit the business plan to make sure you are close to your target market. If you are opening a fast food restaurant, it may not be the best idea to open it in the vicinity of upscale homes but preferably near flats. In addition, make sure that the monthly rent is in-line with the business plan's projected profit so that you do not become building-poor. Once you find your location, the layout and design of the interior should be taken into account. You should already have a concept of your restaurant in your business plan; bring this concept into the design of the dining room. When designing your kitchen area, think about what's on your menu in order to determine what is needed for the food preparation area. 2.1.7 Getting the Appropriate Funding tting ppr opr undi The business plan will help you recognize how much money you will need to start your restaurant. If you are unsure about how much money you will need upfront, talking to other restaurant owners can help you project your expected start-up costs. There are numerous ways restaurateurs raise capital to start their business, including taking advantage of government programs that cater to upstart small business owners; liquidating assets or using them as collateral for a loan; or encouraging a family or friend to become the creditor. 2.1.8 Be Familiar With Safety Regulations amiliar ith gul Restaurants are regulated and subject to inspection, and failing to be up to speed with these regulations could be detrimental to the fast food outlet. Therefore it is necessary to consult with old restaurateurs to become familiar with what one must do to meet the necessary legal requirements. 2.1.9 Hiring Employees mpl yees One of the biggest challenges restaurants face is a lack of qualified labor. In order to get and retain qualified employees, make sure your pay scales relate clearly to the job's duties
and responsibilities. In addition, find out what other restaurants are paying their employees so that you can be competitive in the job market, without spending too much on payroll. However try linking your payroll with the bottom line and see how much money can be squeezed out for the employees. 2.1.10 Advertise & Market ver tis ket Every business needs a comprehensive marketing plan, and restaurants are no exception. After determining your marketing budget, price out billboard advertising, flyers in newspapers, and local cable TV advertising. Ask your customers how they found out about you, so that you can record where your advertising and marketing money are best spent. Opening up food stalls and setting up tasting booths at local neighborhood events or having an event at the restaurant benefiting a students / event, can be an inexpensive way to achieve positive word-of-mouth. 2.2 Choosing a Location oos ing
Not every food-service operation needs to be in a retail location, but for those that do depend on retail traffic like fast food outlets, here are some factors to consider when deciding on a location:

Anticipated sales volume. How will the location contribute to your sales volume? Accessibility to potential customers. Consider how easy it will be for customers to get into your outlet. If you are relying on strong pedestrian traffic, consider whether or not nearby businesses will generate foot traffic for you. The rent-paying capacity of your business. If you've done a sales-and-profit projection for your first year of operation, you will know approximately how much revenue you can expect to generate, and you can use that information to decide how much rent you can afford to pay. Restrictive ordinances. You may encounter unusually restrictive ordinances that make an otherwise strong site less than ideal. Traffic density. With careful examination of food traffic, you can determine the approximate sales potential of each pedestrian passing a given location. Two factors are especially important in this analysis: total pedestrian traffic during business hours and the percentage of it that is likely to patronize your food service business. Visibility is a locations ability to be seen and recognized. Good visibility can create opportunities for the impulse eating decision that is critical for fast food operators, and it allows the exposure full-service restaurants require. Customer parking facilities. In case you allow for parking the site should provide convenient, adequate parking as well as easy access for customers. Proximity to other businesses. Neighboring businesses may influence your store's volume, and their presence can work for you or against you.
History of the site. Find out the recent history of each site under consideration before you make a final selection. Who were the previous tenants, and why are they no longer there? Terms of the lease. Be sure you understand all the details of the lease, because it's possible that an excellent site may have unacceptable leasing terms. Future development. Check with the local planning board to see if anything is planned for the future that could affect your business, such as additional buildings nearby or road construction. Deciding on the Layout eciding ayou
2.3
Layout and design are major factors in your restaurant's success. You'll need to take into account the size and layout of the dining room, kitchen space, storage space and counter. Typically, restaurants allot 40 to 60 percent of their space to the dining area, approximately 30 percent to the kitchen and prep area, and the remainder to storage and office space.
Dining area. This is where you'll be making the bulk of your money, so don't cut corners when designing your dining room. Visit restaurants in your area and analyze the dcor. Watch the diners; do they react positively to the dcor? Is it comfortable or are people shifting in their seats throughout their meals? Note what works well and what doesn't.
Much of your dining room design will depend on your concept. It will help you to know that 40 to 50 percent of all sit-down customers arrive in pairs; 30 percent come alone or in parties of three; and 20 percent come in groups of four or more. To accommodate the different groups of customers, use tables for four that can be pushed together in areas where there is ample floor space. This gives you flexibility in accommodating both small and large parties. Place booths for four to six people along the walls.
Production area. Too often, the production area in a restaurant is inefficiently designed--the result is a poorly organized kitchen and less than top-notch service. Keep your menu in mind as you determine each element in the production area. You'll need to include space for receiving, storage, food preparation, cooking, baking, dishwashing, production aisles, trash storage, employee facilities and an area for a small office where you can perform daily management duties.
Arrange your food production area so that everything is just a few steps away from the cook. Your design should also allow for two or more cooks to be able to work side by side during your busiest hours.
2.4
Designing & Decor ning ecor
Since customers ultimately drive restaurant design trends, many of your restaurant design ideas will come from your clientele. Successful restaurant design ideas are bred with an understanding of the types of experiences your customers are looking for and the promise your brand has made to them. You may know what types of menu items they crave, but do you know what kinds of restaurant design ideas create an atmosphere that will welcome them time and time again? Step One: The restaurant designers process begins with a thorough understanding of the eaterys menu, location, customers, architectural preferences and lighting concerns. More than just a design powwow, the restaurant designers process includes budget considerations, timelines and coordination with city officials to secure necessary building permits. Step Two: The most effective restaurant design considers the flow of waiter staff from the kitchen to the dining area or from the dining area to the restrooms. The restaurant designers process contemplates the overall circulation within the restaurant for maximum efficiency Step Three: With the floor plan in hand and a concept in mind, the next stage in the restaurant designers process is interior design. Sketches may depict color schemes, furniture placement, window treatments, artistic lighting and other aspects of the ambiance. This is also the part of the restaurant designers process where we consider paints, wallpapers, foliage and artwork. Creating a Menu ing
2.5
Though menu variety has increased over the years, menus themselves are growing shorter. Busy consumers don't want to read a lengthy menu before dinner; dining out is a recreational activity, so they're in the restaurant to relax. Keep your number of items in check and menu descriptions simple and straightforward, providing customers with a variety of choices in a concise format. Your menu should also indicate what dishes can be prepared to meet special dietary requirements. Items low in fat, sodium and cholesterol should also be marked as such. 2.6 Restaurant Size Siz
That depends to some extent on how you answered the fundamental question mentioned above. For the sake of discussion, a restaurant can be understood in two parts; the fronthouse component and the back-house component, which we will call the engine. The backhouse areas include, the cook-line, the food preparation areas, refrigerated any dry storage areas, office and the dishwashing area. The front-house functions are typically dining areas (interior and exterior), waiting area, to-go area, restroom, and private dining areas.
The speed of product delivery; the size of the engine, a casual or formal atmosphere, and numbers of patrons you want to accommodate will all factor in to the amount of space you need for your restaurant. The goal is trying to maximize the number of patrons one can serve, out of the smallest most efficient back-house possible. 2.7 Hiring the Right Employees Hir ing oye
Choosing employees who will do a good job is not only important to the success of your business, but will also contribute to the image of your establishment, provided they are properly trained. There are several categories of personnel in the restaurant business: manager, cooks, servers, busboys, dishwashers and cleaners. When your restaurant is still new, some employees' duties may cross over from one category to another. For example, your servers may double as the cleaners. Be sure to hire people who are willing to be flexible in their duties. Manager / Owner. The most important employee in most restaurants is the manager. The best candidate is you or a person who has already managed a restaurant or restaurants in the area and will be familiar with local buying sources, suppliers and methods. The manager should have leadership skills and the ability to supervise personnel while reflecting the style and character of the restaurant. Chefs and cooks. When you start out, you'll probably need three cooks - two full time and one part time. But one lead cook may need to arrive early in the morning to begin preparing soups, bread and other items to be served that day. One full-time cook should work days, and the other evenings. The part-time cook will help during peak hours, such as weekend rushes, and can work as a line cook during slower periods, doing simple preparation. Cooking schools can usually provide you with leads to the best in the business, but look around and place newspaper ads before you hire. Customers will become regulars only if they can expect the best every time they dine at your restaurant. To provide that, you'll need top-notch cooks and chefs. Servers. The servers will have the most interaction with customers, so they need to make a favorable impression and work well under pressure, meeting the demands of customers at several tables while maintaining a pleasant demeanor. There are two times of day for wait staff: very slow and very busy. Schedule your employees accordingly. The lunch rush, for example, starts around 11:30 a.m. and continues until 1:30 or 2 p.m. Restaurants are often slow again until the dinner crowd arrives around 6:30 to 7 p.m.
2.8
A Good Fast Food Restaurant Experience
Based on some surveys conducted with fast food goers following are some of the factors that contribute to a good fast food experience: Location Characteristics Welcome Food server Food. Environment (parking, restrooms, lighting). Dessert Variety Smile factor. Time factor. Profit factor (beverages offered, dessert menus presented).
Measuring good service is subjective, but generally what is expected from a server when reviewing restaurants. The server should greet diners within 3 minutes of their being seated. The server should neat and clean. The server should not be too chatty or familiar. The server should know the menu and be able to answer questions. The server should bring drinks within 3 minutes of being ordered. The appetizer (if any) should be served within 5 minutes of ordering. Entrees should be served within 20 minutes of ordering. Water or beverage glasses should be refilled regularly. The server should silently survey the table and assess our needs without constantly interrupting to ask, "Do you need anything else?" The bill should be brought promptly when requested, and change should be returned promptly. Plates should be removed at the proper time, and the table should be cleared of bread and butter before dessert is served. Legal Requirements qui
2.9
The Pakistan Hotels and Restaurant Acts Act 1976 is the law which requires the owners of all types of restaurants to register and obtain a license with the government. The restaurant owner is required to apply to the controller for registration of the restaurant.
Application for registration and determination of fair rates shall be made to the controller in Form G together with a certificate of medical fitness in Form I from a registered medical officer of the civil hospital in respect of the staff of the restaurant. For registration of a restaurant, the owner of the restaurant is required to conform to the standard of health, hygiene and comfort which standards have been set out in Schedule II of the act. On receipt of application, the controller will carryout inspection of the aforementioned premises and once satisfied will initiate the registration process. Once registered the owner of the restaurant will apply to the controller for license as per the Act which needs to be renewed on a yearly basis for the prescribed fee. 2.10 Project Investment ect
This section will provide the total cost of the project. Item Construction Cost (all inclusive) Dining & Office Furniture Equipment & Machinery Advance Rent Preliminary Expenses Working Capital Total Cost (Rs.) 1,307,000 542,250 967,000 1,200,000 50,000 1,036,000 5,102,250
2.11
Proposed Product Mix duc
The proposed project is assumed to provide customers with a variety of fast food items as outlined in the following menu:
Broast Chicken Broast (Qtr.) Chicken Broast (Half) Chicken Broast (Full) Burgers Chicken Burger Chicken Cheese Burger Beef Burger Beef Cheese Burger Zinger Burger Sandwiches Chicken Sandwich Egg Sandwich Beef Sandwich Club Sandwich Price 65 125 250 Price 50 55 40 45 80 Price 55 40 45 80 Chinese Hot & Sour Soup (2 Servings) Hot & Sour Soup (4 Servings) Chicken Corn Soup (2 Servings) Chicken Corn Soup (4 Servings) Plain Rice Chicken Fried Rice Vegetable Fried Rice Egg Fried Rice Beef Fried Rice Beef Chilli (w/o rice) Chicken Chilli (w/o rice) French Fries (per plate) Cole Slaw Soft Drinks (Large) Soft Drinks (Regular) Price 75 140 75 140 40 80 60 70 80 75 85 Price 25 15 50 15
Based on the above the fast food restaurant can offer low cost combo meals to its customers for increased value. Following are the proposed combo deals that can be further modified to meet increasing demand:
Combos Combo Deal 1 Combo Deal 2 Combo Deal 3 Combo Deal 4 Family Deal 1 Family Deal 2 Jumbo Deal Items Zinger Burger / French Fries / Regular Drink Chicken Broast (Qtr.) / French Fries / Regular Drink Chicken Burger, Broast (Qtr.), French Fries, Regular Drink Club Sandwich / French Fries / Regular Drink Full Broast / Zinger Burger / Club Sandwich / French Fries (4) / Large Drink Zinger Burger (2) / Club Sandwich (2) / Broast (Half) / Large Drink / Fries (2) 5% discount on purchase above Rs. 1,000/Price 105 90 135 105 535 515
It desirable to have a vast variety of food items to capture a larger target audience but initially the entrepreneur needs to be careful in choosing the right product mix that has the greatest acceptability such that the sales volume generated are able to cover the initial setup costs and desired profit margins. Once the fast food restaurant achieves a steady sales pattern further food items like Barbeque can be added and similarly for desserts ice cream would be the best potential. In case circumstances demand items other than the proposed menu the entrepreneur should make immediate changes to the menu before he starts loosing out customers.
One important factor to consider here is that the entrepreneur must have the requisite skills to decide on whether to introduce a new product line (like Barbeque, Pizza) or add a new item to the existing product line both of which might require the purchase of additional kitchen equipment. Hence the experience of the entrepreneur will play an important role in determining the course of action. 2.12 Recommended Project Parameters eco nde ect Capacity Human Resource 300 Customers per 21 day Project Cost Rs. 5,102,250 2.13 IRR 57% NPV Rs. 13,076,676
Equipment Local / American / Chinese Payback Period 2.5 Years
Location Middle Income Level Area Cost of Capital (WACC) 17.5%
Financial Summary
Proposed Location
The recommended area for the proposed business setup will be in a densely populated middle income area (for example Gulistan-e-Jauhar, Karachi). The main reason for such a location is the presence of target market and customer traffic which are the prerequisites for the success of the restaurant.
3 MACHINERY ACHIN E Q U IP ME N T
&
Understanding the customers individual needs and the capability to satisfy these completely is a vital part of the restaurants success. This is in turn dependent on the machinery and equipment used to produce good quality fast food. Fast Food Machines are easily available in the market wherein the owner has to choose between expensive brands and cheaper ones depending on how much he can afford to give quality to his customers. Secondhand equipment of world leading brands such as SPINZER, FRYMASTER, HENNY PENNY, LINCOLN, AYRKING, KEATING, MIRROR, CARPIGIANI, LINCAT, MORRETTI, ILSA, ROUND-UP, SANYO, ELETTROBAR are available while cheaper Chinese brands have gained popularity over the years. The machines can be ordered through international vendors with a minimum delivery period of 3 months while refurbished / reconditioned machines are also available. Some outlets closing their business also tend to sell their machinery at low prices but the durability and reliability factor must be taken into consideration while buying such machines. The typical fast food restaurant as outlined above would require the following machine / equipment for its operations:
Item Details Freezers (12 cf) New Broast Machine (15 Pound Capacity)* Deep Well Frier (Single Valve With 2 Baskets) Hot Plate for Burgers, Kebab, Sandwiches (30 x 22) Bin Marry Soup Container (2 Valve With Steel Cabinet) Potato Cutter (8mm) Pillar (4.5 Kg Potato Peeling Capacity) Microwave Working Tables Keg Racks & Shelves Total
Quantity 3 1 2 1 1 1 1 1 2 2 15
Unit Price (Rs.) 25,000 650,000 40,000 33,000 50,000 3,000 6,000 10,000 20,000 10,000 -
Total Price(Rs) 75,000 650,000 80,000 33,000 50,000 3,000 6,000 10,000 40,000 20,000 967,000
* Available from Spinzer USA, Delivery Time Three Months, Reconditioned Available at Rs. 200,000 with the same specs and Delivery Time
3.1
Machinery Maintenance hine
All machines require routine cleaning and maintenance after every three months and an annual service which costs around 1% to 5% of the total cost depending upon the use of the machine and operator's skill. We have assumed an average of 2.5% of the depreciated cost as the annual maintenance cost. 3.2 Dining Furniture & General Fixtures ining nit res
The restaurant is expected to entertain a minimum of 300 customers in a day, which requires a good seating layout to avoid any confusion and problems during rush hours. The following table gives the details of the dining tables and chairs that would serve approximately 100 customers (maximum capacity) at a time:
Item Details Dining Table Square (2X2) Chairs (Standard 14) Kitchen Cutlery Set Dining Cutlery* (Plate, Fork, Knife, Spoon, Glass) Air Conditioner Split Units (6 Ton) Hot Water Geyser Large Halogen Lights Wall Lights (Large) Portable Emergency Light Generator (1.5 KVA) Counter Chairs Office Table & Chair Set Waiting Chairs for Take Away Customers Total
Quantity 25 100 2 150 2 1 25 4 4 1 2 1 5 322
Unit Price (Rs.) 6,000 1,500 2,500 150 31,000 20,000 250 1,500 2,500 90,000 1,500 10,000 1,500 168,400
Total Price(Rs) 150,000 150,000 5,000 22,500 62,000 20,000 6,250 6,000 10,000 90,000 3,000 10,000 7,500 542,250
*Cutlery to be 1.5 times the maximum capacity (i.e. 100 customers)
4 LAND AND REQUIREMENT

4.1
&
BUILDING
Land Requirement quir
The land requirement is around 2,000 sq.ft. in densely populated area where all utilities and facilities are properly available. It is recommended that the fast food outlet be opened on the ground floor of flats or shopping mall wherein the consumer traffic will be a maximum. The more the shop is near the main road the better sales potential it will have.
4.2
Dedicated Area Requirement dic quir
The floor space needs to be carefully allocated to allow for maximum dining space for customers in rush hours. The allocation of space between different sections would be as follows:
Details Dining Waiting Kids Play Kitchen & Preparation Office Stores Total % (Sq. Feet) 63 % 4% 3% 25 % 1.5% 3% 100 % Size (Sq. Feet) 1,250 80 70 500 30 70 2,000 Civil Works & Dcor* (Cost in Rs / square feet) 700 700 800 450 450 450 3,550 Total Construction Cost (Rs) 875,000 56,000 56,000 225,000 13,500 31,500 1,257,000
* Includes interior decoration as well as fancy fittings, lightings, hangings etc.
4.3
Recommended Mode eco nde
The proposed premises will be acquired on a rental basis with 6 month deposit and 6 months advance rent after which rent will be payable on a monthly basis. The monthly rent is approximately Rs. 50/ Sq Feet for the ground floor which would amount to Rs. 100,000 per month for the proposed fast food outlet (2,000 Sq Ft.) 4.4 Reception & Owner Office ecep ffi
To allow for maximum space for dining and security concerns (Cash control) it is recommended that the owner should manage the reception counter as well as all cash handling emanating from the tables. Therefore a total of Rs. 50,000 would be required to erect the reception and cash counter along with the take-away order taking booth. The Office Furniture & Equipment will be depreciated at the rate of 10% per annum according to the diminishing balance method for the projected period.
5 HUMAN REQUIREMENT
RESOURCE ESO URCE
The human resource requirement for the general and management staff are as follows:
Designation / Type Owner Kitchen Supervisor Shift Supervisor (including reliever) Cook Servers Take Away Order Taker / Cashier Dishwasher Cleaner Guard (12 Hour) Total
Number 1 2 3 4 6 1 2 1 1 21
Monthly Salary (Rs.) 6,000 8,000 4,000 3,000 6,000 2,500 2,500 6,000 38,000
Total Salary (Rs.) 12,000 24,000 16,000 18,000 6,000 5,000 2,500 6,000 89,500
Considering the size of the proposed establishment it is assumed that the owner would be managing the overall affairs of the fast food setup. He will be required to process and check bills, invoices, receivables management, maintain accounts, etc. for record. The owner will also ensure safe custody of store keys. The cashier will only be responsible for receiving payment and handing over change while the owner would be managing the cash drawer for control purposes. It is important to note that many food outlets tend to lose out due to inadequate cash control by the owners especially during rush hours where the counter staff can easily slip out one or two payments.
6 FINANCIAL NANCI ASSUMPTIONS ION
ANALYSIS NAL
&
KE Y
The project cost estimates for the proposed fast food outlet have been formulated on the basis of discussions with relevant stakeholders and experts. The cost projections cover the cost of land, building, inventory, equipment including office furniture etc. The specific assumptions relating to individual cost components are given as under: 6.1 Revenue & Cost Projections nue Cos ect
The Sales are expected to increase by 15% every year while the cost of raw materials is assumed to increase by 10%. The 15% annual increase in revenue is expected to result from a part increase in population increase and part increase in product price.
The prices used to calculate the gross revenue earned are based on the billing rate at which the entrepreneur will charge the customer. The prices are also inclusive of the General Sales Tax. Furthermore it is assumed that the following sales breakup will form the revenue streams for the fast food outlet
Revenue Stream Dine In Take Away Home Delivery Total Revenue % of Total Sales 60% 20% 20% 100%
The minimum delivery order size is assumed to be Rs. 250/- per order with 3 delivery riders being employed at the charge out rate of Rs. 25 per delivery order wherein no transportation fuel is provided by the fast food outlet. For Take Away and Home Delivery another 1% of sales added cost due to packing is assumed. 6.2 Rent Cost Cos The rent for the assumed premises will be Rs. 100,000/- per month. It is assumed that Rs. 1,200,000 will be given in advance before possession of premises. This will include 6 months deposit and 6 month advance rent. The rent would be payable on a monthly basis and is expected to increase at the rate of 10% per annum for the projected period. 6.3 Utilities Requirement quir
The following table presents the assumed breakup of utilities on a monthly basis: Utility Electricity Water Gas Telephone Total Monthly Charges (Rs.) 25,000 2,000 15,000 10,000 52,000
As depicted above the most of the fast food machines require considerable gas during the preparation process. The preheating procedure of the equipment before commencement of preparation also consumes considerable gas. It is assumed that utilities expenses will be increased by 10% every year. 6.4 Depreciation on Building & Equipment uil ding qui
Depreciation on Shop, Equipment, Machinery and Fixtures is assumed to be at the rate of 10% per annum based on the diminishing balance method for the projected period. 6.5 Working Capital & Pre Operating Costs Wor ing Capit Ope ing Cos
It is estimated that an additional amount of approximately Rs. 1,036,000 will be required as cash in hand to meet the working capital requirements / contingency cash for the initial stages. The requirement is based on the rent, utilities and salaries expenses for at least four months and 3 days raw material inventory. The following table gives the break up. Item Utilities Salaries Raw Material Inventory Rent Total 4 Months Cost (Rs.) 208,000 358,000 70,000 400,000 1,036,000
The provision for pre operating costs is assumed to be Rs. 50,000 which will be amortized equally over a 5 year period. 6.6 Account Receivables cco unt ecei vab
All sales will be made strictly on cash basis. It is not advisable to operate a fast food restaurant on credit basis. 6.7 Miscellaneous Outlet Expenses cel Out
A monthly figure of Rs. 6,000 (200 per day) is assumed to be incurred for miscellaneous expenses which are expected to increase at the rate of 10% per annum for the projected period.
6.8
Financial Charges ina
It is assumed that long-term financing for 5 years will be obtained in order to finance the fast food setup which would mainly include construction & dcor of Building, Purchase of machinery & equipment, purchase of inventory etc. This facility would be required at a rate of 15% (including 1% insurance premium) per annum with 60 monthly installments over a period of five years. The installments are assumed to be paid at the end of every month. 6.9 Taxation
The tax rate applicable to sole proprietorship is the same as that of the salaried individual. Therefore, we are assuming that the tax rate would be the same for the proposed fast food setup. 6.10 Cost of Capital Cos Capit
The cost of capital is explained in the following table: Particulars Required return on equity Cost of finance Weighted average cost of capital Rate 20.0 % 15.0 % 17.5 %
The weighted average cost of capital is based on the debt/equity ratio of 50:50. 6.11 Owners Withdrawal hdr awa
It is assumed that the owner with withdraw from the business once the desired profitability is reached from the start of operations. The amount would depend on business sustainability and availability of funds for future growth.
6.12
Key Assumptions ssu Item Assumption(s) 15 % per year 10 % per year 10 % per year 10 % per year 10 % per year 10 % per year 50 : 50 10 % per annum (Diminishing Balance) 10 % per annum (Diminishing Balance) 10 % per annum (Diminishing Balance) 2.5% of Written Down Value 3 Days 7 Days 5 Years Monthly 15 % per annum Income Tax on Salaried Individuals
Sales Increase Increase in Cost of Raw Materials Increase in Staff Salaries Increase in Utilities (Electricity / Water / Gas) Increase in Rent Increase in Office Expenses Debt / Equity Ratio Depreciation o Shop Building & Fixtures o Kitchenware & Machinery o Furniture Equipment Annual Maintenance Cost Raw Food Inventory - Meat Raw Food Inventory Spices & Sauce Lease Period Lease Installments Financial Charges (Lease Rate) Tax Rate
INCOME STATEMENT:
Projected Income Statement (Rs.)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Revenue 35,232,235 NetRaw Material Cost Sales Labor & Salaries Utilities Cost of Sales Gross Profit General Administrative & Selling Expenses Rent Expense Office & MiscellaneousExpenses Amortization Expenses Depreciation Expense Maintenance Expense Subtotal Operating Income Financial Charges (15% Per Annum) Earnings Before Taxes Tax Net Profit Monthly Profit After Tax
10,015,200 11,517,480
13,245,102 15,231,867
17,516,647 20,144,145 23,165,766 26,640,631
30,636,726
10,015,200 11,517,480 5,941,270 4,910,141 5,401,155 13,245,102 1,074,000 1,181,400 1,299,540 624,000 686,400 755,040 6,608,141 7,268,955 7,995,850 3,407,059 4,248,525 5,249,252
15,231,867 6,535,397 1,429,494 830,544 8,795,435 6,436,432
17,516,647 20,144,145 23,165,766 26,640,631 30,636,726 7,188,937 7,907,831 8,698,614 9,568,475 10,525,323 11,577,855 1,572,443 1,729,688 1,902,657 2,092,922 2,302,214 2,532,436 913,598 1,004,958 1,105,454 1,215,999 1,337,599 1,471,359 9,674,979 10,642,477 11,706,725 12,877,397 14,165,137 15,581,650 7,841,668 9,501,668 11,459,042 13,763,234 16,471,589 19,650,584
1,200,000 72,000 10,000 281,625 21,758 1,585,383 1,821,677 357,889 1,463,788 365,947 1,097,841 91,487
1,320,000 79,200 10,000 253,463 19,582 1,682,244 2,566,281 298,344 2,267,936 566,984 1,700,952 141,746
1,452,000 1,597,200 1,756,920 1,932,612 87,120 95,832 105,415 115,957 10,000 10,000 10,000 0 228,116 205,305 184,774 166,297 17,624 15,861 14,275 12,848 1,794,860 1,924,198 2,071,384 2,227,713 3,454,392 4,512,234 5,770,284 7,273,955 229,228 3,225,164 806,291 2,418,873 201,573 149,001 4,363,233 1,090,808 3,272,425 272,702 55,878 5,714,406 1,428,602 4,285,805 357,150 0 7,273,955 1,818,489 5,455,466 454,622
2,125,873 2,338,461 2,572,307 2,829,537 127,552 140,308 154,338 169,772 0 0 0 0 149,667 134,700 121,230 109,107 11,563 10,407 9,366 8,429 2,414,655 2,623,875 2,857,241 3,116,846 9,044,386 11,139,359 13,614,348 16,533,738 0 0 0 0
9,044,386 11,139,359 13,614,348 16,533,738 2,261,097 2,784,840 3,403,587 4,133,435 6,783,290 8,354,519 10,210,761 12,400,304 565,274 696,210 850,897 1,033,359
BALANCE SHEET:
F A S TF OOD R E S T A R A N T U
Projected Balance S h ee t (Rs.) As s e ts Current A sse ts C a s h& B a n kB a la n c e P re p a id e n t R T o ta lC u rre nAssets t Fixed Ass e ts F a s tF o o dMach inery Shop Office Fixtures T o ta lF ix e dAssets Pre limin a ryExpens s e Total Assets Owner's Equity Long Term Liability Tota l E q u ity L ia b ili & ties
Y e a r0
Y e a r1
Yea r 2
Y e a r3
Y e a r4
Yea r 5
Y e a r6
Y e a r7
Yea r 8
Yea r 9
Y e a r1 0
1,03 6 ,0 0 0 1,20 0 ,0 0 0 2,23 6 ,0 0 0
2 ,0 5 5,0 6 2 3,589 ,52 8 1 ,2 0 0 ,0 0 0 1,200 ,0 0 0 3 ,2 5 5 ,0 6 2 4,789,5 2 8
5,74 7 ,42 5 1 ,2 0 0 ,00 0 6 ,94 7 ,42 5
8 ,6 5 5,8 8 9 1 2 ,4 6 4 ,0 53 1 8 ,0 8 5,8 1 6 2 5,0 1 8 ,77 2 3 3 ,50 7,9 9 2 4 3 ,8 3 9 ,9 8 3 56 ,3 4 9 ,3 9 4 1 ,2 0 0 ,00 0 1,20 0 ,0 0 0 1,200 ,0 0 0 1,2 0 0 ,0 0 0 1,2 0 0 ,0 0 0 1,20 0 ,0 0 0 1 ,2 0 0 ,0 00 9,8 5 5 ,8 8 9 1 3 ,6 6 4 ,0 5 3 1 9,2 8 5 ,8 1 6 2 6 ,2 1 8,7 7 2 3 4 ,7 0 7 ,9 92 4 5 ,0 3 9,98 3 5 7 ,5 4 9,3 94
967,000 870,300 783,270 1,30 7 ,0 0 0 1 ,1 76 ,3 0 0 1,058 ,6 70 542,250 488,025 439,223 2,81 6 ,2 5 0 2 ,5 3 4 ,6 2 5 2,281 ,1 6 3 50,000 5,10 2 ,2 5 0 40,000 30,000
704,943 952,803 395,300 2 ,0 5 3 ,06 4 20,000 9,020,4 8 9
634,449 571,004 857,523 771,770 355,770 320,193 1 ,8 4 7 ,7 4 2 1,66 2 ,96 7 10,000 11 ,7 1 3 ,6 31 -
513,903 694,593 288,174 1,496 ,6 71 -
462,513 625,134 259,356 1,3 4 7 ,0 0 4 -
416,262 562,621 233,421 1,2 1 2 ,3 0 3 -
3 74 ,6 3 6 50 6 ,3 5 9 2 1 0 ,0 79 1,091 ,0 7 3 -
3 3 7,1 7 2 4 55 ,7 2 3 1 8 9 ,0 71 98 1 ,96 6 -
5 ,8 2 9,6 8 7 7,100 ,6 90
1 5 ,3 2 7 ,0 2 0 2 0,7 8 2 ,4 8 6 2 7,5 6 5 ,7 7 6 3 5 ,92 0 ,2 95 4 6 ,1 3 1 ,0 5 6 5 8 ,5 3 1 ,3 6 0 2 7,5 6 5, 776 0 2 7 ,5 6 5 , 776 3 5 ,9 2 0 ,2 9 5 4 6,13 1 ,0 5 6 58 ,53 1 ,3 6 0 0 0 0
2,5 51 ,1 2 5 3,648,966 5,349 ,918 2,5 51 ,1 2 5 2,180,721 1,750 ,772 5,1 0 2 ,2 5 0 5,829,687 7,100 ,690
7,76 8 ,79 1 11,04 1 ,2 1 6 1 5 ,3 2 7,0 2 0 2 0 ,78 2 , 486 1,251 ,70 7 672,415 0 0
9,02 0,4 98 11,71 3 ,6 3 1 1 5 ,3 2 7 ,0 2 0 2 0 ,7 8 2 , 486
3 5 ,92 0 ,2 95 4 6 ,1 3 1 ,0 5 6 5 8 ,5 3 1 ,3 6 0
CASH FLOW STATEMENT:

ProjectedStatement of Cash Flows (Rs.)
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Net Profit Add: Depreciaton Expense i Amortization Expense Net Cash Flow From Operations Cash Flow From Financing Activities Receipt of Long Term Debt Repayment of Long Term Debt Owner's Equity Net Cash Flow From Financing Activities Cash Flow From Investing Activities Construction Cost Office Furniture Equip & M/C Advance Rent Preliminary Expenses Net Cash Flow From Investing Activities NET CASH FLOW
0 0 0 0
1,097,841 281,625 10,000 1,389,466
1,700,952 253,463 10,000 1,964,415
2,418,873 228,116 10,000 2,656,989
3,272,425 205,305 10,000 3,487,7 29
4,285,805 184,774 10,000 4,480,579
5,455,466 166,297 0 5,621,763
6,783,290 149,667 0 6,932,957
8,354,519 134,700 0 8,489,220
10,210,7 61 121,230 0 10,331, 91 9
12,400,304 109,107 0 12,509,411
2,551,125 (370,404) 2,551,125 5,102,250 (370,404) (429,949) (499,065) (579,292) (672,415) 0 0 0 0 0 (429,949) (499,065) (579,292) (672,415) 0 0 0 0 0
(1,307,000) (967,000) (542,250) (1,200,000) (50,000) (4,066,250) 1,036,000 0 1,019,062 0 1,534,466 0 2,157,924 0 2,908,437 0 3,808,164 0 5,621,763 0 6,932,957 0 8,489,220 0 10,331, 91 9 0 12,509,411
Cash at the Beginning of the Period
1,036,000
2,055,062
3,589,528
5,747,452
8,655,889
12,464,053
18,085,816
25,018,772
33,507,992
43,839,983
FAST FOOD RESTAURANT Cost & RevenueSheet

Broast Chicken Broast (Qtr.) Chicken Broast (Half) Chicken Broast (Full) Cost 35 70 140 Price 65 125 250 Price 50 55 40 45 80 Price 55 40 45 80 Unit Sales 36 18 6 Unit Sales 24 36 18 18 24 0.12 0.06 0.02 Total Cost 1260 1260 840 Total Cost 480 900 324 414 960 Total Sales 2340 2250 1500 Total Sales 1200 1980 720 810 1920 Total Sales 1155 240 135 2400 16650 Chinese Cost Price Unit Sales Hot & Sour Soup (2 Servings) 25 75 6 Hot & Sour Soup (4 Servings) 50 140 3 Chicken Corn Soup (2 Servings) 25 75 6 Chicken Corn Soup (4 Servings) 50 140 3 Plain Rice 12 40 3 Chicken Fried Rice 20 80 12 Vegetable Fried Rice 18 60 6 Egg Fried Rice 18 70 3 Beef Fried Rice 20 80 3 Beef Chilli (w/o rice) 30 75 6 Chicken Chilli (w/o rice) 35 85 9 Cost Price Unit Sales French Fries (per plate) 8 25 5 Cole Slaw 6 15 5 Soft Drinks (Large) 40 50 10 Soft Drinks (Regular 250ml) 9 15 375 TOTAL 0.02 0.01 0.02 0.01 0.01 0.04 0.02 0.01 0.01 0.02 0.03 Total Cost Total Sales 150 450 150 420 150 450 150 420 36 120 240 960 108 360 54 210 60 240 180 450 315 765 Total Cost Total Sales 40 125 30 75 400 500 3375 5625 5438 11170
Burgers Cost Chicken Burger 20 Chicken Cheese Burger 25 Beef Burger 18 Beef CheeseBurger 23 Zinger Burger 40 Sandwiches Chicken Sandwich Egg Sandwich Beef Sandwich Club Sandwich Cost 20 12 20 35
0.08 0.12 0.06 0.06 0.08
Unit Sales Total Cost 21 0.07 420 6 0.02 72 3 0.01 60 30 0.1 1050 TOTAL 8040
Total Sales (Rs) Total RM Cost (Rs.) Gross Profit (Rs.)
Daily 27,820 13,478 14,342
Monthly 834,600 404,340 430,260
Additional 4,838
Final 834,600 409,178 425,422
Sales Break Down Dine In (60%) Take Away (20%) Delivery(20%) Total
Orders Value Packing Cost 180 500,760 60 166,920 1,669 60 166,920 1,669 300 834,600 3,338
Delivery Cost 1,500 1,500
Add Cost 1,669 3,169 4,838

198 Food Feasibility

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198 Food Feasibility

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Pre-Feasibility Study

FAST FOOD RESTAURANT

Small and Medium Enterprise Development Authority

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Population Pyramid 1998 & 2020*

*Population Census Organization; Population Projections 1998-2023, Planning Commission; NIPS

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Designing & Decor ning ecor

Fast Food Restaurant

Fast Food Restaurant

A Good Fast Food Restaurant Experience

Fast Food Restaurant

Fast Food Restaurant

Proposed Product Mix duc

Fast Food Restaurant

Equipment Local / American / Chinese Payback Period 2.5 Years

Location Middle Income Level Area Cost of Capital (WACC) 17.5%

Fast Food Restaurant

Machinery Maintenance hine

Fast Food Restaurant

Quantity 25 100 2 150 2 1 25 4 4 1 2 1 5 322

*Cutlery to be 1.5 times the maximum capacity (i.e. 100 customers)

4 LAND AND REQUIREMENT

Land Requirement quir

Fast Food Restaurant

Dedicated Area Requirement dic quir

* Includes interior decoration as well as fancy fittings, lightings, hangings etc.

Recommended Mode eco nde

RESOURCE ESO URCE

Fast Food Restaurant

6 FINANCIAL NANCI ASSUMPTIONS ION

Fast Food Restaurant

Fast Food Restaurant

Fast Food Restaurant

Financial Charges ina

Fast Food Restaurant

Fast Food Restaurant

Projected Income Statement (Rs.)

17,516,647 20,144,145 23,165,766 26,640,631

15,231,867 6,535,397 1,429,494 830,544 8,795,435 6,436,432

Fast Food Restaurant

1,03 6 ,0 0 0 1,20 0 ,0 0 0 2,23 6 ,0 0 0

2 ,0 5 5,0 6 2 3,589 ,52 8 1 ,2 0 0 ,0 0 0 1,200 ,0 0 0 3 ,2 5 5 ,0 6 2 4,789,5 2 8

5,74 7 ,42 5 1 ,2 0 0 ,00 0 6 ,94 7 ,42 5

704,943 952,803 395,300 2 ,0 5 3 ,06 4 20,000 9,020,4 8 9

634,449 571,004 857,523 771,770 355,770 320,193 1 ,8 4 7 ,7 4 2 1,66 2 ,96 7 10,000 11 ,7 1 3 ,6 31 -

513,903 694,593 288,174 1,496 ,6 71 -

462,513 625,134 259,356 1,3 4 7 ,0 0 4 -

416,262 562,621 233,421 1,2 1 2 ,3 0 3 -

1 5 ,3 2 7 ,0 2 0 2 0,7 8 2 ,4 8 6 2 7,5 6 5 ,7 7 6 3 5 ,92 0 ,2 95 4 6 ,1 3 1 ,0 5 6 5 8 ,5 3 1 ,3 6 0 2 7,5 6 5, 776 0 2 7 ,5 6 5 , 776 3 5 ,9 2 0 ,2 9 5 4 6,13 1 ,0 5 6 58 ,53 1 ,3 6 0 0 0 0

7,76 8 ,79 1 11,04 1 ,2 1 6 1 5 ,3 2 7,0 2 0 2 0 ,78 2 , 486 1,251 ,70 7 672,415 0 0

9,02 0,4 98 11,71 3 ,6 3 1 1 5 ,3 2 7 ,0 2 0 2 0 ,7 8 2 , 486

Fast Food Restaurant