Business Plan for

Hooray-Hooray Food court

Marina Island
Lumut Perak

Prepared by
Azmi bin Murid
For
Koperasi Perpaduan Islam Perak Berhad
12/2/2017
 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

Table of Content
Executives Summary ................................................................................................... 3
1.0 Introduction ............................................................................................................ 4
2.0 Operation Plan ....................................................................................................... 5
2.1 Site Plan................................................................................................................ 5
2.2 Floor Plan ............................................................................................................. 5
2.3 Operation Hours ................................................................................................... 6
2.4 Daily Operation Flow ........................................................................................... 7
2.5 Quality Control and Supply Analysis ................................................................... 7
3.0 Human Resources Plan.......................................................................................... 8
3.1 Organizational Structure ...................................................................................... 8
3.2 Role and Responsibilities ..................................................................................... 8
3.3 Employee Shift/Schedules.................................................................................... 9
3.4 Wages and Benefits .............................................................................................. 9
3.5 Training ................................................................................................................ 9
4.0 Marketing Plan..................................................................................................... 10
4.1 Competition ........................................................................................................ 10
4.11 Direct Competition ........................................................................................ 10
4.12 Indirect Competition ..................................................................................... 10
4.2 Customer Source ................................................................................................ 11
4.3 Products and Services Features .......................................................................... 11
4.4 Pricing Strategy ................................................................................................ 11
4.5 Promotion Strategy ........................................................................................... 12
4.6 Marketing Budget ............................................................................................. 12
5.0 Financial Plan ....................................................................................................... 13
5.1 Capital Budget .................................................................................................... 13
5.2 Financial Structure ............................................................................................. 13
5.3 Revenue Analysis ............................................................................................... 14
5.4 Operating Expenses ............................................................................................ 15

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

5.5 Net Income and Profitability .............................................................................. 15

5.6 Sensitivity Analysis ............................................................................................ 16
5.7 Debt Amortization and Dividend Policy ............................................................ 16
5.8 Break-even Analysis .......................................................................................... 16
5.9 Ratio Analysis .................................................................................................... 17
5.10 Income Tax ....................................................................................................... 17
6.0 Conclusion ............................................................................................................ 18
Figure 2.1 Site Plan .................................................................................................... 5
Figure 2.1 Floor Plan .................................................................................................. 6
Figure 2.4 Daily Operations ..................................................................................... 7
Figure 3.1 Organizational Chart ................................................................................. 9
Table 3.3a Working Hours ....................................................................................... 10
Table 3.3b Working Shift/Schedule ......................................................................... 10
Table 4.12 List of Indirect Competitors ................................................................... 13
Table 5.1 Capital Budget .......................................................................................... 15
Table 5.2 Capital Structure....................................................................................... 15
Table 5.3 Total Annual Revenue .............................................................................. 16
Table 5.4 Operating Expenses .................................................................................. 15
Table 5.5 Net Income ............................................................................................... 17
Table 5.6a Changing in Net income ......................................................................... 18
Table 5.6b Changing in NPV and IRR ..................................................................... 18
Chart 5.8 Break-even Analysis ................................................................................. 16
Table 5.9 Ratio Analysis .......................................................................................... 17

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

Executive Summary

Koperasi Perpaduan Islam Perak Berhad are proposing a business project of open
concept food court in the Marina Island, Lumut Perak. This completed business plan
is composed of operation plan, human resources plan, marketing plan, and
financial/accounting plan. Each plan thoroughly addresses its related issues about this
business.

Considering the nature of the business and food courts location, the Hooray-Hoorays
operation process will be the most significant part to succeed. Specifically, how to
provide our customers quality and healthy foods within the shortest possible time will
be pivotal to survive and succeed. In terms of operation, two parts, quality and healthy
foods and quick services, should be the first priorities. As a player in food industry,
the Hooray-Hooray is the first company to join the Health Check Program through
Food Safety & Quality Division under Department of Public Health, Ministry of
Health Malaysia. This program indicates the Hooray-Hoorays commitment to caring
about healthy foods provided to our customers. On the other hand, we value
customers satisfaction so that we will pay our best efforts to save customers time by
increasing overall efficiency and maximizing business utilization.

Financially, the initial capital investment, RM100,,000 to start up this profitable

business will not be high. The capital, opening inventory, and kitchen equipments will
be three major components of initial capital budget. Thirty three percent of capital
requirement will be borrowed from a local financial institution. The rest of it will be
equity from investors, which will be Koperasi Perpaduan Islam Perak Berhad
members. In terms of profitability, the Hooray-Hooray will generate 106 percent
internal rate of return which is significantly larger than the 20 percent of required rate
of return. That means the invested capital will be paid back in only one year.
Furthermore, the Hooray-Hooray will start distributing dividends from the second
year. And the amount of dividends will be increasing year by year.

The market should not be an issue to worry about because the location already
provides a large customer base-more than 70,000 population, over Sitiawan, Pangkor
and Pasir Panjang constituents. The only issue to focus will be continuously offering
customers quality foods and premium and fast services.

As mentioned above and details followed below, the Hooray-Hooray is believed to be

a successful project.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

1.0 Introduction

The following business plan is for a Hooray-Hooray food court locating in the Marina
Island Lumut Perak. It will be formed as management based corporation by investors
Koperasi Perpaduan Islam Perak Berhad.

By observing Lumut Waterfront Bistro, one of direct competitors, the average daily
customers are over 200. An easy captured market is already provided to
Hooray-Hooray. Investors believe that the strengths of Hooray-Hooray, which are
taste, healthiness, variety, freshness, quickness, and cheapness, will satisfy all
consumers needs. Based on the financial analysis, it turns out that Hooray-Hooray is
feasible and positive to run. Some key financial factors are as follows:
Total capital budget is RM100,000
Average number of customer will be 175 per day in 2017, break-even point
will be 125 customer per day
Total revenue will be RM554,750 in 2017
Net income in 2017 will be RM56,941
Gross profit margin will be maintained at 70%, and will be consistent every
year
Net present value is RM294,349, internal rate of return is 106%

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

2.0 Operation Plan

2.1 Site Plan

Hooray-Hooray will be located in the Marina Island, Lumut Perak. The food court is
in the nearby Marina Jetty, surrounding by residential, shop lots, hotel and fun park. It
is easy for public to access from the main road. It also connects the ferry terminal so
that gives convenience to outsiders and visitors.

The total ground area of the Hooray-Hooray is approximately 4600 square feet. The
figure 2.2 will show the detailed location in the food court.

Figure 2.1 Site Plan

This area provides a casual, relax and comfortable environment where customers can
get food easily and spend meal time together. It is thoughtful and exciting to open a
Hooray-Hooray food court here to provide visitors and tourist with different types of
food. Food court is steadily offering a sufficient supply of customer. It could be
considered as a kind of guaranteed source of customers to the Hooray-Hooray.

2.2 Floor Plan

The floor plan, see Figure 2.2, leads kitchen to a fully functional work station. The
layout includes ordering and distributing spaces; beverages and side dishes display
areas, kitchen; and back storage room.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

Figure 2.2 Floor Plan

This floor design can maximize working efficiency and allow flowing effectively. The
empty space between the cooking stage and the front counter would minimize the
working distance, and delivers enough space for preparing ingredients and stocking.

2.3 Operation Hours

Since Hooray-Hooray will be opened for publics, the operating time basically will be
the after the office hour. The regular operating time will be from 4:30 pm to 1:30 am
through Tuesday to Sunday. However, we will have a probation period for three
months. Once the three months sales cannot meet our demands, we will consider
rescheduling operating hours.

Above predetermined operating hours will be only applied to the weekdays which are
from Tuesday to Sunday. Differing to regular terms, Hooray-Hooray will decrease
operating hours, and the schedule will be varied depending on actual demand. As
currently set schedule, the totalled opening days of the Hooray-Hooray will be 317
throughout one year.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

2.4 Daily Operation Flow

Figure 2.4 Daily Operations

Close the store

Opening of the Cleaning
store Preparing & Bookkeeping
Fresh goods cooking for the day by
on display Cashier & manager or
serving supervisor
Receive orders Finish the day

Manger will open the food court along with another full-time stall owner. The stall
owner will start to prepare all ingredients that needed for the day such as washing and
cleaning the area, precooking meat, displaying beverages and side orders. Manager
will also help stall owner prepare and make sure the food court will be ready to
receive orders at 5.00 pm from Tuesday to Sunday.

During the day, food court will be basically running as receiving orders, cooking, and
keeping floor clean. During the peak time, all personnel will be working together.

The store will stop receiving orders 15 minutes prior to the food court closing time.
During the non-order time, all stalls owner and their worker will clean the whole area,
organize all kitchen ware and food ingredients, and turn off the cooking devices.

2.5 Quality Control and Supply Analysis

Since Hooray-Hooray is a open food court bistro, everything regarding quality control
has to comply with standard operations procedure, which including cooking
procedure and methods, products and supplier selection, packaging, store decoration,
signage etc.

We currently decide to ensure stalls owner to keep foods fresh because we promise to
offer fresh and high quality food to our customers. Other supplies such as beverages
and packages will be ordered from contracted suppliers due to actual usage.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

3.0 Human Resources Plan

3.1 Organizational Structure

The Hooray-Hooray Bistro food court will be a corporation base on organized

structure. Capital budget and future fund will be provided by shareholders in equal
amount.

Figure 3.1: Organizational Chart

3.2 Roles and Responsibilities

As the organizational chart shows, the Hooray-Hooray will have one manager and one
supervisor. These two positions will be held by two shareholders. As being the food
court management, they have responsibility in store maintaining, supervising, and
operating. The specific roles are list as below:
1) Financially manage and monitor store
2) Control supply and product/service quality
3) Monitor stall owner performance
4) Monitor and direct daily operations

Besides management, one full-time worker and three part-time workers will be
needed. Qualified workers are required to undertake following responsibilities:

1) Maintain a clean and organized area

2) Wash, arrange, clean and prepare the tables
3) Receive orders and serve customers

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

3.3 Employee Shifts/Schedules

Since Hooray-Hooray is located in the Marina Island, number of staff will be varied
from peak hours to slow hours. Based on estimation, four people will be needed
during peak hours, including manager or supervisor, one full-time worker and two
part-time workers; on the other hand, manager or supervisor will stay in with an either
full-time worker or part-time worker during slack hours.

Basically, management level personnel will be around the store in most time. And two
working schedules for manager and supervisor will shift every another week. Full
time worker will be working 48 hours straightly per week. In terms of part-time
workers, they will be schedule to work during busy hours.

Any changes could be applied based on the actual situation.

3.4 Wages and Benefits

Hooray-Hooray will offer different level of wages to different job positions:

RM24,000/year for managers

RM50/day for full-time workers
RM5/hour for part-time workers

We also offer benefits to our staff. Each employee can get continental meals, discount
card and internal coupons as well as an employee-friendly working environment.

3.5 Training

Hooray-Hooray focuses on providing superior quick customer services and high

quality foods. Therefore, we will help employees and stall owner equip with
necessary cooking skills, customer service skills, and supply and inventory
management skills. The customer service skills will be the major part of training
which includes polite greetings, communications with appropriate eye contact and
smiling, etc. Since Hooray-Hooray is a food court bistro, safety issue will also be
incorporated as an important part in training program.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

4.0 Marketing Plan

By interviewing Board Members of the Koperasi Perpaduan Islam Perak Berhad, we

found Hooray-Hooray is becoming popular in quick service food industry.

With a lack of Asian & Western taste in food court, Hooray-Hooray should be a new
choice for both international tourist as well as Malaysian people.

4.1 Competition

A number of restaurants either on Marina Island or around the area are providing food
services. However, most of them provide Thai food without differentiation.

4.11 Direct competitors

In terms of the Hooray-Hoorays location, it is facing seven direct competitors. They

are:

Marina Jetty Restaurant

Restaurant Bako-Bako
DBatik Seafood Azmie Tomyam
Lumut Waterfront Bistro
Restoran DWarisan
Man Corner, Sitiawan
Restoran Lambaian Bonda

By considering the food type and the location, Lumut Waterfront Bistro will be the
most important direct competitor to Hooray-Hooray because it is solely offering
variety Asian & Western taste foods.

4.12 Indirect competition

With many other available cafes in each location, they are viewed as competitors as
well, but indirectly. Besides, there is also a list of other places offering food choices.
In addition, lots of people bring foods from homes. All of these foods providers are
Hooray-Hoorays indirect competitors.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

4.2 Customer Source

Statistics from website shows that over 20,000 visitors are visiting and over 50,000
employees are working in the local area. Moreover, this number is increasing due to
increasing population, booming economy, and immigration trend in Malaysia.

The new Hooray-Hoorays location has already captured market due to visitor traffic
on Marina Jetty. When visitors pass through the main road to get Marina Jetty, they
can naturally and easily see Hooray-Hooray. Therefore, the location provides the
Hooray-Hooray a stable source of customers.

By observing Lumut Waterfront Bistro in the food court, it serves about 60 to 80

customers per hour during peak hour (from 9:30pm to 1:00am), and 10 to 25
customers per hour during the slow time. This information helps us estimate the
number of customers per day and calculate the projected annual revenue, which will
be discussed in financial section.

4.3 Product and Service Features

The main type food from Hooray-Hooray will be Western delight and Asian flavor
pan fried noodles or rice dishes, combined with other side dishes. Hooray-Hooray will
promise to provide excellent-tasted and healthy meals with quick cooking time (only a
few minutes). The unique menu (attached on the appendix) consists of items that are
prepared daily using innovative and proprietary recipes with high quality and fresh
ingredients. In addition, the sauces used by Hooray-Hooray are proprietary, which
means the products are not replicated.

Nowadays, people are becoming more and more health conscious. In order to meet
consumers needs, Hooray-Hooray is the first quick service restaurant registered and
participated in the Health Check Program through Malaysia Ministry of Health. This
action shows that Hooray-Hooray assure giving the freshest and the most delicious
foods as well as nutritious choices to every customer.

4.4 Pricing Strategy

The pricing strategy will be remaining the same as all other restaurants across Lumut
Parliament. The specific prices will be shown on the attached menu. However,
negotiation will be pursued in order to get more discounts for customers and dinner
specials. We will assure offering reasonably priced premium products and services to
our customers.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

4.5 Promotion Strategy

Hooray-Hooray will set up an opening soon sign before the grand opening to give
out the first notice. On the main road, a sign with Hooray-Hooray logo will give
people another notification as well.

Besides, on the grand opening day, we will launch an event to boost a marketing
affection and get people try our products. In other regular days, some promotion
means, such as offering meal plan cards and distributing coupons, will be conducted
as well.

4.6 Marketing Budget

Our first year budget for local advertising will be RM5,000 (coupon and meal cards
printing expenses, etc). Once we get enough brand awareness and customer loyalty,
marketing budget will be decreasing.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

5.0 Financial Plan

5.1 Capital Budget

The total cost of this project will be RM100,000, including franchise fee, equipment
and leasehold improvements, and opening inventory. Table 5.1 shows the specific
proportion.

Table 5.1 Capital Budget

Capital Budget
Equipment 20,000
Opening Inventory 5,000
Franchise Fee 25,000
Leasehold Improvements 50,000
Total RM100,000

Equipment will be mostly composed of kitchen wares, including ovens, microwave,

fridge and freezers, and other tools. In order to keep low budget, we will purchase
most equipment on second hand condition. For leasehold improvement cost, along
with inquiring an Asian & Western restaurant owner, we decide to put RM50,000 as
the expenditure including store decoration and signage.

5.2 Financial Structure

67 percent of initial capital will be equity and 33 percent, as business loan, will be
from a bank. Since we do not have enough collateral to be approved from bank, we
will take co-sign. The equity will come from two owners equally (Dato Muhammad
Azhar bin Bani and Dato Paduka Mohd Azrien bin Mohd Salleh). Table 5.2 shows
details of capital structure.

Table 5.2 Capital Structure

Financing 2017
Debt 33% 30,000
Equity 70,000
Total RM100,000

There are two reasons to take debt from financial institution or Suruhanjaya Koperasi
Malaysia.
First, certain amount of debt could largely leverage our projected internal rate

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

of return (IRR). Meanwhile, we will not be under intense pressure of paying

back interests. In a word, we will benefit from leverage IRR while maintaining
the probability of insolvency at a low level.
Second, large capital involvement from owners guaranteed owners
commitments. And equal investment will assure equal commitment from each
investor.

5.3 Revenue Analysis

Based on an observation on the direct competitor (Lumut Waterfront Bistro), we

estimate 175 customers will be served per day in first year. Due to peoples curiosity
and nature of food industry, there will be more customers coming in the opening year.
However, customer number will decrease gradually and eventually remain at the level
of 165 customers a day in each year.

By deducting all breaks and holidays, Hooray-Hooray will operate 317 days a year.
And based on the menu price, the average purchase per customer will be
approximately RM10. However, the average purchase will be increasing under the
effect of 2.5% inflation rate. The total annual revenue in each year is listed in table
5.3.

Table 5.3 Total Annual Revenue

Revenue 2017 2018 2019 2020 2021

# of customer 175 170 165 165 165
per day
# of days per 317 317 317 317 317
year
Ave. purchase RM10 RM10.25 RM10.51 RM10.77 RM11.04
per customer
Total Revenue 554,750 568,619 583,042 597,466 612,444

5.4 Operation Expenses

Three major contributors in operation expenses will be rent, wages, and other variable
costs. A list of expenses will be list under.

Rent: RM0.76/sqf (totally RM3,500) with 10% of gross profit

Wages:
1. two managers with RM24,000 per year each,
2. one full-time worker with RM10 per hour
3. two part-time workers with RM5 per hour
Other variable costs:

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

1. Miscellaneous expenses at 2 percent of gross profit

Table 5.4 Operating Expenses

Operating 2017 2018 2019 2020 2021

Expenses
Utilities & 70,550 70,351 70,112 71,265 72,446
Rent
Wages 111,880 114,677 117,544 120,483 123,495
Employee 15.21% 17,017 17,442 17,878 18,325 18,784
Benefit
Repair & 1,000 1,025 1,051 1,077 1,104
Maintenance
Variable 11% 51,205 50,986 50,723 51,991 53,291
Costs
CCA 6,638 11,949 9,559 7,647 6,118
Interests 2,111 1,958 1,795 1,620 1,433
Total 260,401 268,387 268,662 272,408 276,669

5.5 Net Income and Profitability

By subtracting all costs, we get our net income figures present in Table 5.5. In specific
2017, a large increasing amount in CCA expense causes decrease in net income in that
year.

Table 5.5 Net Income

2017 2018 2019 2020 2021

Taxable 65,449 56,066 54,122 58,446 62,455
Income
Taxes 8,508 7,289 7,036 7,598 8,119

Net Income 56,941 48,778 47,086 50,848 54,336

Hooray-Hooray provides investors a significant potential profit. Based on 20%

required rate of return, Hooray-Hooray presents a projected net profit value (NPV) at
RM294,349. Besides this, projects IRR will be over 100%. Namely, Hooray-Hooray
will pay back all initial investments in one year.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

5.6 Sensitivity Analysis

Due to the nature of business, Hooray-Hooray is extremely sensitive to sales volumes.

Sales for Hooray-Hooray are jointly determined by three variables number of
customer per day, number of opening day per year, and average purchase per customer.
Any changes in any variable will result in a significant change in revenues.

We decide to change the most important factor, which is the numbers of customer per
day, to analyze the sensitivity in details. We adopt 10% change in customer numbers
to observe the corresponding change in net income. The figure 5.6a shows the
influence on net incomes by percentages and figure 5.6b indicates differences in NPV
and IRR.

Figure 5.6a Changing in Net Incomes

2017 2018 2019 2020 2021

% change of NI -34% -41% -40% -38% -37%
(Decreased)
% change of NI 36% 41% 43% 41% 39%
(Increased)

Figure 5.6b Changing in NPV and IRR

NPV IRR
Base 228,481 106%
Decreased 133,777 78.10%
Increased 284,317 142.40%

5.7 Debt Amortization and Dividend Policy

Debt amount, RM30,000, generates interest amount of RM2,100 at 7% interest rate.

And the interest and principle will be paid off during next five years. In order to
provide a certain level of safety in operations, we settle to keep RM50,000 cash on
hand each year. The surplus will be paid out as dividend to each shareholder starting
in the second year.

5.8 Break-even Analysis

As chart 5.8 presenting, the break-even point is around 125 customers per day per
year. Referring to the base case, which is at 170 customers, the gap will allow
absorbing negative effect such as decreasing in number of customers.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

Chart 5.8 Break-even Analysis

180
170
160
150
140
130
120
110
100
1 2 3 4 5 6
Base Case 175 170 165 165 165
Breakeven 125 128 126 124 122

5.9 Ratio Analysis

The following table demonstrates ratios from different financial indicators.

Table 5.9 Ratio Analysis

Ratios 2017 2018 2019 2020 2021

Gross Profit 70% 70% 70% 70% 70%
Margin
Net Profit 12% 11% 10% 11% 11%
Margin
ROA 37% 27% 28% 31% 34%
ROE 48% 33% 34% 38% 41%
D/E Ratio 30% 22% 22% 21% 19%
Current 1.95 3.34 3.47 3.85 4.33
Ratio

5.10 Income Tax

Since Hooray-Hooray is an incorporated entity, the income tax will be charged

straightforwardly at 13% by federal government. In total, Hooray-Hooray will pay 13%
in tax rate, and it may be varied by government policy.

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 Hooray-Hooray Business Plan, by Koperasi Perpaduan Islam Perak Berhad

6.0 Conclusion

As completely discussed through operation, human resources, marketing, and

financial area, the Hooray-Hooray is a feasible business project in terms of pursuing
large profit.

First, the Koperasi Perpaduan Islam Perak Berhad furnishes the Hooray-Hooray a
stable and predictable customer source. Locating there, the risk of customer
fluctuation could be minimized. Second, the required initial capital investment will
not be high. And the business loan is easily accessible from Suruhanjaya Koperasi
Malaysia. Due to the high internal rate of return, the capital investment will be paid
back in only one year.

Therefore, the Hooray-Hooray would be a worthwhile project that could provide

investors streams of cash in return.

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