Table of Contents
INTRODUCTION........................................................................................................... 4
Location of Restaurant................................................................................................ 5
EXECUTIVE SUMMARY................................................................................................. 6
Vision.......................................................................................................................... 7
Mission Statement..................................................................................................... 7
The Fast Food Industry............................................................................................... 8
Increasing Number of Fast Food Outlets..................................................................8
Consumer Appeal................................................................................................. 9
Rawaai SWOT Analysis............................................................................................. 12
Internal Analysis.................................................................................................... 12
External Analysis................................................................................................ 13
Competitor analysis.................................................................................................. 14
Mc Donalds........................................................................................................... 15
Pizza Hut............................................................................................................ 17
Dominos Pizza................................................................................................... 20
Operational Goals & Objectives................................................................................22
Description............................................................................................................ 22
Products & Services:.......................................................................................... 22
Marketing Strategy................................................................................................... 25
Market Survey....................................................................................................... 25
Frequency of going fast food restaurant............................................................29
Operation Strategy................................................................................................... 35
Structure of Management:..................................................................................... 35
Government Policy:............................................................................................ 36
Technical Analysis..................................................................................................... 38
Types of Machinery................................................................................................ 38
Financial Analysis..................................................................................................... 40
Ownership of Business:......................................................................................... 40
Project Financing................................................................................................ 40
Page 2
Revenue Generation................................................................................................. 45
RECOMMENDED PROJECT PARAMETERS .........................................................................46
Other Costs........................................................................................................... 46
Working Capital Requirements:..........................................................................47
CONTACTS DETAILS OF SUPPLIERS...........................................................................49
Bread for Burger and Shawarma...........................................................................49
Chicken supplier.................................................................................................... 49
ASSUMPTIONS.......................................................................................................... 50
Income Statement.................................................................................................... 51
Balance Sheet.......................................................................................................... 52
Joint Venture and Internation Trade .........................................................................52
Page 3
INTRODUCTION
Fast-food outlets have become very popular with consumers, especially McDonalds, Pizza Hut,
KFC, etc. 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.
Fast-food outlets will strive to find ways to make their products even more accessible all over the
world.
The business that we have started is a fast-food restaurant. We are focusing on the young
generation. RAWAAI provides its customers with uniqueness in providing healthy environment
for celebrations. For the youngsters who want to celebrate their special events with their friends,
our restaurant is the place that provides them with high quality and tasty food.
Page 4
Location of Restaurant
Page 5
EXECUTIVE SUMMARY
We are committed to provide taste and quality in healthy dining environment to make your
events more special. By healthy environment we mean that we are providing a safe atmosphere
especially for girls.
The founders of RAWAAI are:
Vision
To establish a position in fast growing market of fast food
industry to make a place of your choice.
Page 7
Mission Statement
We are committed to provide taste and quality in healthy
dinning environment to make your events more special.
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 fast food goers) prefers visiting local
outlets that offer low cost fast food, hence more frequent visits.
Consumer Appeal
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 high-end 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.
Page 9
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 premises.
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.
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.
Page 11
Strength
Uniqueness
in
providing
environment for celebrations.
healthy
Page 12
External Analysis
Opportunities
THREATS
Page 13
Rising inflation.
Competitive Strategy
Competitive strategy of our restaurant is Focused Strategy in which we are focusing on the
young generation that accompanies with the Differentiation Strategy for providing the focused
market with a healthy and safe environment to spend good time with their friends and for the
celebration of their special events.
Competitor analysis
The phrase current sellers are used to represent the current competitors in this context. In
running our business, there are many current competitors in our marketplace now because our
business idea and concept can be said not very new because there are already many fast food
restaurants running around us. We do face some competitors like McDonalds, Dominos Pizza,
and Pizza Hut having a good reputation globally. Normally, identifying competitors could be a
simple task. At the narrowest level, a company can define its competitors as other companies
Page 14
offering similar products and services to the same customer at similar prices.
Niche market is the subset of the market on which a specific product is focusing. So the market
niche defines the specific product features aimed at satisfying specific market needs. For
example, Dominoes and Pizza Hut all sell pizza. But the uniqueness of the customer experience
for each is different that is Dominoes delivers in 30 minutes or less or it's free and Pizza Hut has
Cheese in the crust. Each competitor has a mix of objectives and focus. Like McDonalds their
overarching goal of sustainability efforts is focused on continuous improvement through our five
focus areas thatis:
Our competitors target customer is all range of age as they provide and service variety of fast
food that everyone can enjoy. All students of University Malaya are included as their target
customer. Students, especially at their adolescence must be loving fast foods that our competitors
like McDonald, Pizza Hut and Dominos pizza serve. They also enjoy eating fast food while
studying
that
makes
them
order
delivery
fast
food
from
hostel.
Most of the strengths of our competitors are that their names and labels are well known as they
had run their business for a long time ago. Like McDonald for example it is considered as a
global brand that is available in most countries in the world and shares the same strategic
principles, positioning and marketing in every market throughout the world. This is why
McDonald is considered as one of the famous and loved brands in the world, in any industry.
Besides, their fast food is incredibly delicious and they serve their customer well. Their price is
also affordable that all people can buy their product. For example, Pizza Hut is the market leader
in providing different products of pizzas. There good image makes the organization more strong.
Pizza Hut is providing good taste, quality products with qualified staff, good atmosphere and
Page 15
hygienic environment .While, the weaknesses of our competitors are, the customers may feel
bored as they always eat the same product for a long time. As for now, they might want to
change their appetite and move on to other kind of fast food; new product like our company.
However, the fact that Pizza Hut does have a restaurant to run is also a weakness. Pizza Hut has
higher overhead costs and Pizza Hut is not the low cost producer. They rely on their quality pizza
and good service to account for their higher prices. As our company provides delicious fast food
with reasonable price, this might the customer to come to our place especially the students. As a
student have their own budget and they do not spend too much on food.
Some of the competitors analysis is shown below:
Mc Donalds
PRODUCT:
Fast food
SERVICES:
Delivery Services
PRODUCTION/QUALITY
McDonalds is known as a corporate responsible company as it responds to any social
change taking place in its environment. The company introduced healthier food with
growing awareness that added to its revenues.
UNIQUE FEATURES
Page 16
DISTRIBUTION SYSTEM
Ordering from the counter
Convenience drive-through
Delivering services
MARKETING OR ADVERTISING
Media television
Radio
Newspaper
Internet
Outdoor
Slogan
GEOGRAPHIC LOCATION
They are located almost everywhere in the city which is reachable by all people and is
quite convenient for students to reach there from their institutions
STRENGTHS
Strong brand
Customer intimacy
WEAKNESSES
Low depth and width of product
Page 17
MARKET SHARE
Serves 47 million customers each day, and employees are 1.5 million people.
McDonalds operates its own restaurants and franchises its brand to local business
people (about 70 percent of the worlds McDonalds are franchises). McDonalds is
well-established in Europe, Asia/Pacific islands, the Middle East and Africa.
Pizza Hut
PRODUCT:
Pizza and Fast food
SERVICES:
Delivery Services
PRODUCTION/QUALITY
Pizza hut can come up with the new products considering the Eastern taste of the
people as like McDonalds. Diversification of new products can increase their market
share. They can reduce their prices because of more resource. The company can come
up with innovative Pizzas, new flavors and recipes with different types of crusts and
sizes.
UNIQUE FEATURES
Garlic breads
Mushroom soups
Salads
DISTRIBUTION SYSTEM
Page 18
The first method of distribution used by Pizza Hut is home office delivery. Customers
can call Pizza Hut ahead of time, place an order, and the order is to delivered to the
customers home
Another method of distribution is for customers to dine-in
The third method of distribution is to order online
MARKETING/ADVERTISING
Media television
Radios
Newspaper
Internet
Advertising slogan
GEOGRAPHIC LOCATION
They are many branches and franchises of Pizza Hut globally and anyone can enjoy the
meal there.
STRENGTHS
1. Providing different products of pizzas
2. Huge popular brand name and high brand loyalty
3. Innovative range of pizzas under one roof
4. Hygienic food and quick service
5. Sound financial situation and international turnover.
6. Good advertising and marketing
Page 19
WEAKNESSES
1.
2.
3.
4.
5.
MARKET SHARE
As there are Dozens of Pizza Suppliers Globally Providing Services in different part of
the World, but Pizza Hut is the One who got the Bigger Market Share Globally. Pizza
Hut is having 48% of Overall Pizza Market in the World. After that Dominos is leading
with a percentage of 20% while the rest 32% is divided in the Remaining Pizza
Providers Globally.
Dominos Pizza
PRODUCT:
Pizza and Fast Food
SERVICES:
Delivery Services
PRODUCTION/QUALITY
Focus on delivering the pizza the most efficient way.
Page 20
UNIQUE FEATURES
Pasta, bread bowls and oven-baked sandwiches. The menu offers chicken side dishes,
breadsticks, as well as beverages and desserts.
DISTRIBUTION SYSTEM
Dominos delivery in 30 minutes
Take-out menu
Dine-in menu
MARKETING/ADVERTISING
Television
Social media
Online advertising
Mobile outdoor promotions
GEOGRAPHIC LOCATION
Its branches and franchises exist all over the world
STRENGTHS
Worldwide presence
Strong image
Food attracts people of various ranges from young to old
WEAKNESSES
There is lack of organic pizza, which will limit the target market
Price, expensive products compared to small competitors
Page 21
MARKET SHARE
Dominos Pizza is the market leader in the Australian chained pizza market with 46.1%
followed by Pizza Hut (29.8%), Eagle Boys Pizza (14%), Pizza Haven (3%) and other
(7%) Euro monitor 2008.
Page 22
Description
Products & Services:
Our product line will be:
Potato Fries
Seasonal Fresh Juices
Soft Drink
Zinger Burger
Fish Burger
Chicken Shawarma
Pizza (Small, Medium, Large)
o Chicken Tikka
o Fajita
o Cheese
Rawaai Special Deal
We are also providing the offers for party celebrations. Following are the special deals for party:
Deal No. 1: Fish Burger, Potato Fries, and Fresh Juice/Soft Drink.(Per Head)
Deal No. 2: Zinger Burger, Chicken Pakoras, and Fresh Juice/Soft Drink (Per Head)
Deal No. 3: Chicken Shawarma, Pizza (Small Size), and Fresh Juice/Soft Drink. (Per
Head)
DINNING:
We are providing a better dinning environment where you can order food according to your
choice and can have cheerful time with your friends.
Page 23
CUSTOMER BENEFITS:
Safe Environment
High Quality and Taste
Separate Dinning Services for Party Celebrations
Reasonable Prices
We are providing high quality food with lower prices as compare to other restaurants.
UNIQUE SELLING PRODUCT:
Our unique selling product is Rawaai Special Deal which is the combination of
traditional and junk foods. Moreover our customers will have a choice between Fresh
Juices of seasonal fruits and carbonated drinks for the sake of good health of our
customers.
Page 24
Marketing Strategy
Selecting marketing strategy is an important step for small business. And to select this first they
know what their target market is. The best way to pinpoint is to conduct market survey or market
research. By doing this, you get information about customer.
For our business we adopt niche marketing strategy. Our main aim is to focus the youth. But we
further elaborate the characteristics of market by conducting market research. How we conduct
market research? And what we find new? What to do to serve our target market in better way?
All these and many other things we find through the research are discussed below.
Market Survey
The market survey was carried out with express intention of its being factual and maximum
possible care has been exerted to use the best sources of information.
There are many ways through which market survey can be conducted and the most popular
method available entails about 80% of the facts considered and 20% of necromancy and
judgment. It would be true to say that the luck of statistical data would make the study useless.
Page 25
There are different ways through which market survey can be conducted. It is only right,
therefore to describe the various ways of the market research, there are eight different types of
market research.
These are:
1. Consumer Research
2. Product Research
3. Market Research
4. Dealer Research
5. Price and Policy Research
6. Selling and Advertising Research
7. Ware Housing
8. Inventory Research,
In order to conduct our market survey we aimed at:
Factual survey
The awareness information system
The opinion survey
The attitude survey
The future inventory survey
The reason why survey.
To conduct a proper and a good survey, we divided the city on the basis of age group. We mainly
focus on youth, so division of them is as follows
1.
2.
3.
4.
18-20
20-22
20-24
24-26
The purpose of dividing market in above age group is to know our real segment. We used niche
marketing strategy to be entered into the market. By conducting this survey, we enable to find
out our segment which needs to be focus. So it makes it easier for us to focus the group which is
more influenced with fast food. The following table helps us to understand it
Age
Page 26
Age
Frequency
Percent
18-20
110
40.0
20-22
105
38.2
22-24
43
15.6
24-26
17
6.2
Total
275
100.0
According to these result, we know the real segment of our market in youth who are more
influenced with it. According to our survey, we take sample of 275 respondent, from which 110
respondent, 40% of total respondent, of age group from 18-20 are show more tendency to
consume fast food. Then age group 2 show higher tendency for it. They are at 38% of total
respondent.
Figure 1
120
100
80
Frequency
Percent
60
40
20
0
18-20
20-22
22-24
24-26
After finding out the age group which we focused, we check the gender factor; this is the most
important factor in todays marketing. Now business focus more on this factor due to the reason
Page 27
that sex are also effect the decision making of purchases and their preference are different from
one another. Many researches are conducted are specifically to check the impact on decision
making of gender regarding purchase. And according to these researches, now marketers prepare
separate strategy for male and female. Now we also find this tendency in our research. We show
it with the help of table and graph.
Gender
Gender
Frequency
Percent
Male
105
38.2
Female
170
61.8
Total
275
100.0
Figure 2
180
160
140
120
100
Frequency
Percent
80
60
40
20
0
male
female
According to above chart, we find that in our target market, the tendency in females is higher
than males, for consumption of fast food. So in making marketing strategy we need to consider
these two important of aspects of our market.
Page 28
The target market which is mainly focused is youth, further divided on the basis of age. So we
focused on the age group of 18 years from 22 years old. And in this age group, mostly are
female. So we need to give importance to this factor of our market.
We ask the following questions from our respondent to become more aware from our market.
These questions are as:
Q.No.1:
Q.No.4:
Answers of these questions are in the form of tables. And respondent answer these question in
this format:
(1-Strongly disagree, 2-Disagree, 3-Neuteral,4-Agree, 5-strongly agree)
Responses
1
1.33333333333333
1.66666666666667
2
2.33333333333333
2.66666666666667
3
3.33333333333333
3.66666666666667
Percent
1.5
1.5
2.9
7.3
6.5
10.5
12.7
16.0
15.3
4
4.33333333333333
4.66666666666667
5
Total
37
19
9
6
275
13.5
6.9
3.3
2.2
100.0
Figure 3
50
45
40
35
30
25
20
Frequency
Percent
15
10
5
0
Awareness of restaurant
Reponses
1
1.5
2
2.5
3
3.5
4
4.5
Frequency
Percent
10
4
17
22
66
56
61
23
Page 30
3.6
1.5
6.2
8.0
24.0
20.4
22.2
8.4
5
Total
16
275
5.8
100.0
From the above table, 66% respondents are neutral about advertisement, that it might effects the decisions
for selecting fast food restaurant.
Figure 4
70
60
50
40
Frequency
Percent
30
20
10
0
1
1.5
2.5
3.5
4.5
TASTE
Page 31
Reponses
Frequency
Taste (Percent)
.7
1.5
1.8
2.2
2.5
2.9
28
10.2
3.5
28
10.2
84
30.5
4.5
51
18.5
63
22.9
275
100.0
Total
Above table show that 84% respondent agrees their decision for selecting fast food restaurant influenced
with taste. This impact is also show by the following graph:
Figure 5
90
80
70
60
50
Frequency
Taste (Percent)
40
30
20
10
0
1
1.5
2.5
3.5
4.5
PRICE
Responses
1
1.33333333333333
1.66666666666667
Frequency
Percent(Price)
3
6
7
Page 32
1.1
2.2
2.5
2
2.33333333333333
2.66666666666667
3
3.33333333333333
3.66666666666667
4
4.33333333333333
4.66666666666667
5
Total
12
17
22
43
47
48
36
19
8
7
275
4.4
6.2
8.0
15.6
17.1
17.5
13.1
6.9
2.9
2.5
100.0
Our survey shows a mixed tendency for effectiveness of price while making decision for
selecting restaurant. About 47% respondent neutral about this and 48% slightly effect from it. So
it show price not effects the selection of restaurant.
Figure 6
60
50
40
30
20
Frequency
10
Percent
Page 33
Responses
Frequency
Percent
1.5
1.33333333333333
1.5
1.66666666666667
1.5
10
3.6
2.33333333333333
12
4.4
2.66666666666667
11
4.0
38
13.8
3.33333333333333
36
13.1
3.66666666666667
40
14.5
57
20.7
4.33333333333333
30
10.9
4.66666666666667
19
6.9
10
3.6
275
100.0
Total
Now the bar graph given below help to understand the above table:
Page 34
Figure 7
60
50
40
30
20
Frequency
Percent
10
0
Operation Strategy
The operation strategy of our restaurant will be designed around the concepts of five senses.
From our description research of the industry we found out that restaurant business is one of
those rare services which touch all the five senses of human being.
The food will cater to the sense of taste, music to the sense of sound, aroma of dishes to sense of
smell, decor to the sense of sight and clean crockery, cutlery and environment in general to the
sense of touch. Taking care of all five senses our customers would be the core of our strategy.
Structure of Management:
Our business is a partnership which includes 6 partners investing capital. Each partner
has specialized in specific field and designate to a specific position according to their
specialization in business. They only receive share profit on equal ratio from Net profit.
All partner controlled the whole business as shown in the chart below:
Page 35
Accoun
ts
m anag
em
r er
c u s to
s e r ic e
re la t io n s
Hum an
R e s o u rc e
m anger
M
an
ag
m
en
t
Fin a n c
e
m ana
ger
Qu
a lit
y
M a rke ti
ng
m anag
er
Once it is decided that we are getting into business the question arises that what is
uncountable list of occupations the point is what kind of business to be done. The
answer to this question may be found while considering following factors:
Government Policy:
The factor of government policy plays a major role in the success of any business.
Before deciding to get into the business, one must also keep in mind the advantages and
disadvantages of any business for the country. Earning money by keeping the interest of
the country at stake should not be even thought of. The business must be chosen
considering its benefit to the country, in the shape of taxes, revenues and overcoming
unemployment.
Number of Consumers:
This factor is also of vital importance. This business only flourishes when the demand
of that product or number of consumers is more. Thus, while choosing any business we
Page 36
must see the field which provides maximum number of consumers, so that the invested
capital is not blocked or wasted.
Budget of Partners:
Before getting into business, the spirit should be high, but always keeping in mind that it should
be planed within the available budget. It is an art to get maximum benefits by spending minimum
resources. However, the element of risk and luck always becomes the major cause of success of
business. Therefore, always plan business by keeping budget in mind.
Budget of Consumers:
The purchasing power and the real income of the consumer should be kept in mind
before choosing business.
By giving thorough study and elaborate discussions on above-mentioned factors, we
now have to choose business out of unlimited jobs one could get into. After loads of
thinking and vast study, we all partners concluded that the business of opening a Fast
Food Restaurant. So we all decided to open a restaurant and the range of eatables are
Page 37
narrower. Since the occupants of the area, which is selected for this restaurant, have a
lot of trend for hoteling, therefore, we sincerely hope and pray that this business would
meet the required success.
Technical Analysis
Types of Machinery
The different machines, which we need, are:
COOKING RANGE:
For cooking purpose, we need specially designed cooking range, which is systematically for
cooking and baking at different requirement temperatures.
DEEP FREEZERS:
We need deep freezers to fulfill the requirements of our customers.
AIR CONDITIONERS:
We also want to provide good and pleasant atmosphere so that people can enjoy food, therefore,
we require 5 split units of air conditioners.
Page 38
SEPARATE STOVES:
We also require a separate stove with eight terminals to cook different foods in large quantity.
DEEP FRYER:
Deep fryer is a basic necessary of fast food. It is needed for frying French fries, chicken, etc.
French fries are liked by almost everyone, so we need a deep fryer.
JUICE MACHINE
As we offer fresh seasonal juices to our customer. So we need a plant for preparation of juice. We
use juicer machine of ken wood because it is easy to use and its parts are easily available in
Pakistan.
GENERATOR
For todays businesswe needto delivernecessary items on time. As different cutting machines and
oven require continuous electricity we need continuous source of electricity such as generator
CUTTING MACHINE
We offer fries and shawarma in our menu. Different types of salad are included in shawarma. So we need
separate cutting machines for both potatos and for salad. The potato cutter used is 8mm.
SHAWARMA GRILLED
To prepare chicken for shawarma we require grilled. Due to demand of shawarma we require two
machine for it.
Cost of these pieces of equipment and total expenditure on it is given in Financial Analysis.
Page 39
Financial Analysis
In this section the total expenses for our restaurant, we have estimated the least price with good
quality.
Ownership of Business:
Our business is on partnership basis and we have six partners, each partner contributing equal
amount of Rs. 425,188.
Project Financing
Following table provides details of the equity required and variables related to bank loan;
Details
Total Equity (50%)
2,551,125
Bank loan
2,551,125
Interest
15%
Tenure of loan
5 years
Grace period
Page 40
FINANCIAL CHARGES
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.
Capital investment
Amount(Rs.)
Renovation Cost
1,307,000
542,250
967,000
1,200,000
1,036,000
Total Project Cost
5,102,250
Page 41
Space Requirement
The land requirement is around 5400 sq ft. The proposed premise would be acquired on rental
basis with 4 months deposit and 8 months advance rent after which, rent will be payable every
month. The monthly rent is estimated at approximately Rs. 5000 / Marla amounting to Rs.
100,000 per month for the proposed fast food outlet (20 marla.). The premise renovation costs of
Rs. 1,257,000/- would be depreciated at the rate of 10% per annum using diminishing balance
method.
Distribution of space and renovation cost will be shown in the following table:
Space require
Area in Marla
Cost of renovation(Rs.)
400,000
Store
350,000
Reception
150,000
147,000
210,000
Total Area
20
1,257,000
Total cost
Freezer
Deep Well Fryer
62,375
124,750
40,000
40,000
Page 42
33,000
33,000
3,500
3,500
7,000
7,000
12,000
36000
500,000
500,000
10,000
20,000
70000
350,000
Shawarma grill
20000
60000
Juice maker
52000
104000
Total
542,250
Description
Quantity
Total cost
25
6,000
150,000
100
1,500
150,000
2,500
5,000
60
150
9,000
Glass)
Page 43
20,000
20,000
Lights / CFLs
15
250
3,750
750
4,500
2,500
10,000
Working tables/counter
7,000
15,000
Counter Chairs
1500
3,000
61,000
61,000
1,500
6,000
Total
542,250
Cost (Rs.)
18,324
19050
6,772
14,323
10,397
Packaging material
1,134
70000
Page 44
No. of Employees
Total monthly
(Rs.)
salary(Rs.)
Manager
Kitchen Supervisor
19,000
19,000
Cook
10,000
30,000
Servers
4000
20,000
3000
9000
Dishwasher
3,500
3,500
Cleaner
4,000
8,000
Total Staff
21
provider
89,500
Considering the size of the proposed establishment, it is assumed that the owner who are the
partners of business, act as a manager, would be managing the overall affairs of the fast food
setup. They dont take salary rather they only divide profit according to their purposed ratio. The
proposed project would need a total of 21 persons to handle the fast food operations. Salaries of
all employees are estimated to increase at the rate of 10% annually.
Revenue Generation
The Sales are expected to increase by 12% every year. The 12% annual increase in revenue is
expected to result from a part increase in customer traffic 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 customers.
Item description
Number of
Items
unit (Rs.)
sale (No.)
Page 45
Fries
150
1500
225000
Zinger Burger
225
1700
382000
Fish Burger
275
560
154000
120
1824
218920
Small
300
600
180000
Medium
610
600
366000
Large
890
350
311500
Small
350
700
245000
Medium
690
670
462300
Large
950
500
475000
Small
410
550
225500
Medium
770
450
346500
1050
400
439780
Burger
Shawarma
Pizza
Chicken Tikka
Chicken Fajita
Cheese
Large
Rawaai Special
Chicken Pakora
6 pieces
230
282
64800
Chicken Fries
12 pieces
300
300
90000
Finger Fish
6 pieces
910
200
182000
100
725
72,500
Soft drink(Large)
70
857
60000
20
4250
85000
495
2000
990000
Party Packages
Fish Burger+ Fries+ Juice
Page 46
555
3500
1942500
525
1500
787500
570
1500
855000
610
1500
915000
juice
Shawarma + Small Pizza(Chicken Fajita +
juice
Shawarma + Small Pizza(Cheese) + juice
Total
10,015,200
300 CUSTOMER
PROJECT COST
PER DAY
5,102,250`
21
PAYBACK PERIOD
2.5 YEARS
EQUIPMENT
LOCAL/CHINESE
COST OF CAPITAL
17.5%
Other Costs
MACHINERY MAINTENANCE:
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. The maintenance cost for machinery is assumed at 2.5% of the depreciated
cost of machinery and equipment.
UTILITIES REQUIREMENTS:
The following table presents the estimated breakup of utilities on a monthly basis:
Description
Electricity
25,000
Gas
15,000
Water
2,000
Telephone
10.000
Total
52,000
Days
Amount(Rs.)
Utilities
120
208,000
Salaries
120
358,000
Raw Material
70,000
Rent
120
400,000
Total
1,036,000
Page 48
PRELIMINARY EXPENSES:
The provision for preliminary expenses is assumed to be Rs. 50,000, which will be amortized
equally over a 5 year period.
MISCELLANEOUS EXPENSES:
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.
TAXATION:
The business is assumed to be run as a sole proprietorship. Therefore, tax rates applicable on the
income of a non salaried individual taxpayer are used for purpose income tax calculation.
Cost of Capital:
The cost of capital is explained in the following table:
Particulars
Rate
20.0 %
Cost of finance
08.0 %
09.2 %
Page 49
Chicken supplier
METRO-Habib Cash & Carry Pakistan (Pvt.) Ltd.
ThokarNiazBaig, Multan Road
Lahore 53700. Punjab
Pakistan
Fish supplier
Hyperstar
Fortress Stadium 5700, Lahore.
Phone: +92 (42) 3662 3346 / 3662 3357
Page 50
ASSUMPTIONS
Item
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
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
Page 51
Income Statement
Projected income statement
Year 1
Year2
Year 3
Year 4
Year 5
Revenue
10,015,200
11,517,480
13,245,102
15,231,867
17,516,647
Net sales
10,015,200
11,517,480
13,245,102
15,231,867
17,516,647
4,910,141
5,401,155
5,941,270
6,535,397
7,188,937
Wages &Salaries
1,074,000
1,181,400
1,299,540
1,429,494
1,572,443
Utilities
624,000
686,400
755,040
830,544
913,598
6,608,141
7,268,955
7,995,850
8,795,435
9,674,979
Gross profit
3,407,059
4,248,525
5,249,252
6,436,432
7,841,668
1,200,000
1,320,000
1,452,000
1,597,200
1,756,920
105,415
Expenses
72,000
79,200
87,120
95,832
Depreciation Expense
281,625
253,463
228,116
205,305
184,774
Amortization Expanse
10,000
10,000
10,000
10,000
10,000
Maintenance Expense
21,758
19,582
17,624
15,861
14,275
Page 52
Subtotal
1,585,383
1,682,244
1,794,860
1,924,198
2,071,384
Operating Income
1,821,677
2,566,281
3,454,392
4,512,234
5,770,284
55,878
annum)
357,889
298,344
229,228
149,001
1,463,788
2,267,936
3,225,164
4,363,233
5,714,406
Tax
365,947
566,984
806,291
1,090,808
1,428,602
Net Profit
1,097,841
1,700,952
2,418,873
3,272,425
4,285,805
Year 4
Year 5
Balance Sheet
Projected balance sheet
Year 0
Year 1
Year 2
Year3
2,055,062
3,589,528
5,747,452
8,655,889
12,464,053
1,200,000
1,200,000
1,200,000
1,200,000
1,200,000
3,255,062
4,789,528
6,947,452
9,855,889
13,664,053
870,300
783,270
704,943
634,449
571,004
1,176,300
1,058,670
952,803
857,523
771,770
488,025
439,223
395,300
355,770
320,193
2,534,625
2,281,163
2,053,046
1,847,742
1,662,967
Assets
Current assets
2,236,000
Fixed Assets
Fast Food Machinery 967,000
Shop 1,307,000
Office Fixtures 542,250
Total Fixed Assets
2,816,250
Page 53
Preliminary Expenses
50,000
40,000
30,000
20,000
10,000
Total Assets
5,102,250
5,829,687
7,100,690
9,020,498
11,713,631
15,327,020
Owner's Equity
2,551,125
3,648,966
5,349,918
7,768,791
11,041,216
15,327,020
Adil
425,188
608,161
891,653
1,294,799
1,840,203
2554503
Mubashar
425188
608,161
891,653
1,294,799
1,840,203
2554503
Shabaz
425188
608,161
891,653
1,294,799
1,840,203
2554503
Umer
425188
608,161
891,653
1,294,799
1,840,203
2554503
Tayyab
425187
608,161
891,653
1,294,798
1,840,202
2554504
Farhan
425187
608,161
891,653
1,294,798
1,840,202
2554504
Long-term liability
2,551,125
2,180,721
1,750,772
1,251,707
672,415
5,102,250
5,829,687
7,100,690
9,020,498
11,713,631
15327020
Page 54
International trade is the exchange of goods and services between countries. This type of trade
gives rise to a world economy, in which prices, or supply and demand, affect and are affected by
global events. There are two terms that are used in international trade that is import and export.
Import term is used by the buyer when he purchased goods from the other country and export
term is used by the seller when he sells goods to the other country.
International Trade Processes
1. Sales Contract process
2. Letter of Credit (L/C) process
3. Cargo Shipment process
Sales contract process
a. Promotion/Introduction letter
Expoters promote their goods through trade exhibition, newpapers, magazine, radio and
television ads both at home and abroad. Promotion can also be made through assistance
from the National Export Development Agency (Badan Pengembangan Ekspor Nasional BPEN), KADIN, Trade Attache of Indonesian Embassy abroad.
b. Letter of Inquiry
Interested importer can send a letter of inquiry to exporter. This letter of inquiry usually
contains inquiry for price quote, product specification, quantity of goods, delivery time
and destination port.
c. Offersheet
In response to the letter sent by interested importer, exporter will usually reply by sending
the importer an offersheet. Offersheet contains information as requested by the importer
product price, specification, quantity (1 container / 2 container), delivery time,
destination port, packaging method, brochure, and if necessary, sample product.
d. Ordersheet/Purchase Order
After reviewing the offersheet sent by the exporter, the importer will place an order in a
form called ordersheet or purchase order.
e. Sales Contract
Exporter will prepare a sales contract based on information specified in both the
offersheet and purchase order together with clauses on force majuere, claim, shipment
Page 55
date, transshipment, partial shipment, inspection, packing and marking, and marine cargo
insurance. Sales contract must signed by both the exporter and importer. The sales
contract is made in two copies, each having the same tenor.
f. Sales confirmation
Importer will review the sales contract and sign it if it approves and send the sales
contract back to the exporter.
b. L/C Opening process
a. Importer requests its forex bank to open a letter of credit (L/C) to provide some funds
to pay its liabilities to the exporter as much as agreed and specified in the sales contract
and pursuant to the provisions of The Uniform Customs and Practice of Documentary
Letter of Credit dari International Chamber of Commerce Paris No 500 or commonly
referred to as UCP-DC-500. The forex bank requested by the importer to open an L/C is
called an opening bank/issuing bank. This opening bank will be responsible for the L/C to
the exporter receiving the L/C. Importer requesting the opening of L/C is called
applicant.
b. Opening bank will issue an L/C through a correspondent bank of the country where the
exporter is from. Such L/C opening can be by letter, wire, telex, facsimile or other legal
electronic media. The correspondent bank requested by the opening bank to deliver L/C
opening mandate is referred to as advising bank
c. Advising bank notifies with a cover letter that there is an L/C opened for the interest of
the exporter. The cover letter is referred to as L/C advice. While the exporter receiving
the L/C is called beneficiary.
c. Cargo shipment process
a. After receiving L/C confirmation, the exporter prepares goods which are ready for
export, and files booking to the shipping company. The exporter then arranges export
formality, for example filling in PEB (Pemberitahuan Ekspor Barang) or Export Notice,
and applies certificate of origin.
b. After loading the goods to the ship, the shipping company submit receipt of goods
received, copy of forwarding contract and copy of goods ownership in the form of bill of
lading.
Page 56
I will discuss all these documents with a real life transaction that has taken place between
the two companies in that are situated in Pakistan and China.
In this case .
Exporter Bank
BANK OF CHINA SHANDONG BRANCH
Importer Bank
BANK OF PUNJAB, THE BANK SQUARE
BRANCH
LAHORE
Letter of credit
After the confirmation of the sales order for the exporter, the importer
goes to his bank and gives an application for LC opening. The importer provides with a
form that include all the information that is relevant to the import and importer. After
reading the whole application form the importer signs the application and bank proceeds
next for lc opening. The bank opening the lc and sent it to the exporter bank for giving
Page 57
assurity to the exporter. When the exporter bank received the LC he informs his customer
(exporter) that he has received the LC and now the Exporter can produce goods and make
the delievery.
LC is opened in SWIFT. It is a network that is used all around the world for LC opening.
SWIFT is used all around the world for LC opening. There are different swift codes that
are used for settling the terms and conditions and all other necessary information for the
trade.
Covering Letter
This letter is issued by the exporter bank to the importer bank after receiving the LC
from the Importer bank. This letter includes the name of collecting bank, exporter bank
ref. no, related export lc ref, LC no, Amount of Transaction, Tenor, Maturity Date,
Applicant Name. Furthur Draen amount, claim amount, bank charges and total claim
amount is also provided in this letter.
Invoice
A list of goods sent or services provided, with a statement of the sum due for these.
Invoice is also called demand for payment. In our case, performa invoice and commercial
invoices are provided. Commercial invoice is provided only when the transaction takes
place. An invoice contains the following information like
Name of Company
Bill to
Product name
Quantity
Per unit Price
Total Amount
And Signature
Bill Of Lading
A detailed list of a ship's cargo in the form of a receipt given by the master of the ship to
the person consigning the goods.
This document includes the following information:
Consignee
Notify Party
Ocean Vessel
Voy. No
Port of Loading
Port of Discharge
Page 58
Container
Place and Date of issue
Sender Name
Goods description
Weight etc
Bill of exchange
A written order to a person requiring them to make a specified payment to the signatory
or to a named payee This document includes the following information:
No.
Exchange For
Tenor
Amount
Reference of DC no
Drawee Name
Drawer Name Etc
Packing list
A packing list is a document that includes details about the contents of a package. The
packing list is intended to let transport agencies, government authorities, and customers
know the contents of the package. These details help each of these parties handle the
package accordingl
This document includes the following information:
Exporter Name
Importer Name
Invoice No.
Payment Terms
Incoterms
Currency
Product Name
Quantity
And also Other relative Information.
Shipping Advice by courier
In this document
Name of the exporter, date, Insurance co. name, product name, quantity, invoice value,
net weight, total gross weight, name of vessel, shipment date, port of loading, port of
discharging, shipment marks and B/L No. is mentioned.
Insurance Certificate
Certificate Of Insurance ' A document issued by an insurance company/broker that is used
to verify the existence of insurance coverage under specific conditions granted to listed
individuals
Page 59
This certificate includes the name of insurer, the subject of insurance, and all other
information that is necessary to make the contract valid.
Page 60