COST STRUCTURE

Cost of goods sold. COGS is projected to be at 38%, giving a gross profit rate
of 62% based on sales.
Rent. Monthly rental rate is estimated to be at PHP1, 500 per square meter of
the total leased area. A common use service charge of PHP 125 per square
meter is also assumed.
Utilities. Given the kitchen equipment, storage facilities lighting and airconditioning units (see Capital Outlay), electricity is estimated to be at
PHP50,000 per month while water consumption charges is at PHP10,000 per
month. Monthly subscription rate for telecommunications and data is
assumed to be at PHP1, 599 plus a one-time installation fee of PHP 1,100.
Salaries, wages and employee benefits. The fixed monthly salary of a store
manager is expected to be at PHP 25,000 while kitchen staff, service and
janitorial crew earn a minimum wage (PHP 481) based on the prevailing
minimum wage rates for NCR. In addition to this, all employees shall receive
a 13th month pay. A cost of living allowance (COLA) of PHP15 per day is also
assumed for the daily wage earners. Employer contributions (SSS, PhilHealth,
and HDMF) is computed as provided by the statutory labour provisions.
Training costs. Training costs are estimated to be at PHP550, 000. This amount
includes materials needed as well as the travel expense, professional fees,
food and accommodation of trainer from Chipotle-main.
Start-up costs. Start-up costs is projected to be at PHP70, 000 for registration
fees, pre-operating promotions (e.g. flyers) and opening of establishment.
Depreciation and amortization. A straight line depreciation method is
employed with the following useful life: 5 years for both leasehold
improvements and major kitchen equipment and 1 year for kitchen and
dining utensils.
Promotions. Marketing expense is expected to be at 0.5% of projected gross
sales.
Repairs and maintenance. Costs related to repairs and maintenance is
projected to be at 2.5% of the fixed assets.
Supplies. Supplies expense is estimated to be at an annual fixed cost of PHP
30,000.
Royalty fees. An annual royalty fee of 2% based on gross sales is computed.
Insurance. Insurance is estimated to be at annual fixed cost of PHP 100,000.
Miscellaneous expense. A miscellaneous expense equivalent to 0.1% of
projected gross sales is provided.
Taxes. Sales tax of 2% is used. Value-added tax of 12% is charged to customers.
Income tax expense is computed using the prevailing income tax rates in the
Philippines.