1.0.

EXECUTIVE SUMMARY

The Wokil and DSTV restaurant will be a moderately priced 150 seat restaurant and DSTV
offering family style food and service. . The meal offering are shiro fesas, Atkilt wot, Azifa (a
green lentil salad that's perfect on its own or mixed with injera), Gomen ( made of collard greens
and spices cooked to tasty perfection), Mesir wot, Beet salad, shiro firfir, Timatim salata, pasta
batekilt, and rice are all on the menu. We will offer specialty selections including a lighter
options and smaller portions for a children’s menu.

The restaurant and DSTV will be family owned and operated by Mrs. Rehima and Mr. Hashim.
Together they have over 10+ collective years’ experience in the restaurant and DSTV service.
They will be rent a 1,800 square foot space located at Arba Minch city, in front of Chamo
Campus.
Sales projections assume 800 customers per week resulting in weekly sales of just over
Br.57, 600 or Br.691, 200. Total startup costs will be Br.475, 980, of which will be contributed
by the owners equally.

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2.0. BUSINESS DESCRIPTION

Wokil Restaurant and DSTV is a modern style freshman fast food restaurant and DSTV located
in Arba Minch town, Secha sub city Chamo Kebele in front of Chamo Campus. The type of the
business is service giving business. It provides restaurant and DSTV services. This is an
excellent position as there are no competitors nearby that means there is no such businesses are
available there. It is also a short distance from the Campus. The forms of the business are
partnership form of business organization. The business owners weren’t run any business before.
Therefore, the states of the businesses are also new because the owners were combined for the
first time and they are not involved to any business activities. As it explained above the location
of the business is in front of chamo campus. The owners need to setup their business near to the
campus because of selection of this area is based on the needs of chamo campus students. As
known that many of the students’ needs DSTV service out of campus and, to fulfill their need of
the customers.

2.1.Ownership

The Wokil Restaurant and DSTV owned by the Rehima Ousman and Hashim Kesim. Mrs.
Rehima was graduated from Addis Ababa University has an undergraduate degree in Bachelor of
Art in Accounting and Finance. During preparatory school she worked with her mother in Bahir
Dar city at her mother restaurant as a cashier. During that time she was think for her future to
establish her restaurant and to fill the weakness of her mothers’ restaurant. She also not serve as
the cashier but she serve as quality controllers and purchasing of input for her mothers’
restaurant. Therefore this job allowed her to choose the department of accounting and finance in
order to improve their cashier position and to generate the appropriate business ideas. In the
university, she serve as a cashier for Muslim student groups. Following her graduations she
served as cashier in the different organizations. In additions she also served as purchasing
department for the Chilalo Hotel in Shashemene town.

Mr. Hashim Kesim was graduated from Wolaita Soddo University has an undergraduate degree
of Business Administration. After graduated he served as manager of the Shalla Hotel in
Shashemene tow for two years. During manager of the Shalla hotel he attended its master’s
degree in Business Administration and he was graduated from Hawassa University.

2
2.2.Legal form

Wokil restaurant and DSTV will formed as a partnership and owned by Rehima Ousman and
Hashim Kesim.

2.3.Startup summary

Wokil restaurant and DSTV will have seating for 150 customers. The rent for this business is Br.
5000 per month. The site consists of 1800 square feet consisting of the dining room, a coffee and
tea bar, DSTV room with 80 seats, one office and one rest room, and a storage room in back. In
additions there is a toilet and a kitchen. The DSTV house equipment’s are LG 43 inches and
DSTV receivers and dish, LG 24 inches for restaurant room, computers, table and chairs and
others. The inventory item are perishable good, teff and others. Therefore, the startup cost I
estimated to be Br. 475,980. The business source of fund is Mr. Hashim and Mrs. Rehima
individual’s sources. Both are shares 50% of startup costs.

Name Shared amount

Mr. Hashim Br. 237,990
Mrs. Rehima 237,990

2.4.Location and site

The Wokil restaurant and DSTV is located in the highly desirable areas at Arba Minch Secha sub
city, Chamo Kebele in front of Chamo campus. The location compromises of campus student
especially non-café students and sport followers/lover such as teachers and students in the areas.

3.0.Products/service
3.1.Products descriptions

The Wokil restaurant and DSTV offering both restaurant and DSTV services. The meal offering
are shiro fesas, Atkilt wot, Azifa (a green lentil salad that's perfect on its own or mixed with
injera), Gomen ( made of collard greens and spices cooked to tasty perfection), Mesir wot, Beet
salad, shiro firfir, Timatim salata, pasta batekilt, and rice.

3
3.2.Daily Operations and Production

The Wokil restaurant and DSTV will be open full week without closing for breakfast, lunch and
dinner. Hashim Kesim will written the weekly plan/schedules for labor. The schedules will be
written in a manner that will allow the ability to increase or decrease hourly labor according to
sales volume in order to maintain a consistent labor cost control. Proper labeling and rotation
techniques, accompanied by ample storage facilities will ensure that high quality prepared
product smooth service regarding DSTV will be sufficiently available to meet the demands
during peak business hours. Replenishment and ongoing preparation will continue during off
peak business hours.

Hashim Kesim will be responsible for ordering, receiving and maintaining sufficient inventory to
meet production demands. Ordering schedules will be staggered with perishable products being
ordered multiple times per week to preserve freshness. In case of the perishable product Hashim
bind contract with contractors that use Just in time (JIT) inventory providing techniques.
Standard grocery and supply orders will be ordered less often, according to a predetermined
schedule and storage capacity. Rehima is responsible for paying the cash for the order received
by Hashim.

Mr. Hashim will rely on operational checklists to verify that each work shift has been properly
prepared for and to insure the operational standards are followed before, during and after work
shifts. The restaurant and DSTV layout, including the dining room, DSTV room, and kitchen and
serving line, has been designed for efficiency and flexibility to accommodate the fluctuation in
customer traffic and peak meal periods. During the events of world league football the attention
will be paid for DSTV rooms and Restaurant rooms simultaneously.

Upon arrival, the customers in the restaurant room will be greeted immediately by either the
assistant manager or a server and asked for the seating preference. Drink orders will be taken and
customers can munch on our complimentary rolls. Once the customer’s order is taken, the order
will automatically send to the kitchen room servers with order numbers on the ticket. The
kitchen cook will use the ticket to keep track of orders and place the meal under the heating
lamps until the order is complete. The kitchen preparation line has been designed to be operated
by a minimum staff of one line cook and a maximum of 5 cooks. This design allows line staffing

4
to be adjusted to the business volume. Shift changes for all staff will involve cleanup, restocking
and preparation. All monies will be settled at the end of each shift. The closing shift will involve
designated closing duties that will leave the restaurant clean and fully prepared for the next day.

3.3.Competitive Comparison

In Arba Minch around Secha sub city Chamo Kebele near to the campus there are 10 restaurants
and 2 DSTV out of campus. Among them the major restaurant includes: Dibora restaurant, Gani
restaurant, Meaza restaurant, Tefetiro bar and restaurant and Mesi restaurant. The major DSTV
service available in the area is center DSTV and cinema house.

 Dibora restaurant: The restaurant lacks well-disciplined server including the owners. The
restaurant selling price averagely Br. 16-20 and there is no DSTV service and the food
lacks quality, and there is only a limited types of foods.
 Tefetiro bar and restaurant: It’s far from campus and not sufficiently enough seats for its
customers. Again the price too high as compared to the around restaurants and its price an
average Br. 25-40. Similar with Dibora restaurant it lacks DSTV service for its
customers.
 Mesi restaurant: Mesi restaurant is new in the areas but it prepare the required foods by
its customers but the price id high. It’s selling price at an average of 20-25. Therefore, its
price is higher than Wokil restaurant and it lacks DSTV service
 Meaza restaurant: It’s again far from the campus and the oldest restaurant among the
existing restaurants. The selling price is higher than Wokil restaurant and it lacks DSTV
service.
 Ganni restaurant also lacks quality and limited number of seats
 Smart DSTV and cinema house: This DSTV is located at 1.5 km from the campus. The
DSTV has a limited number of seats and high price which is range from 6-10.

5
3.4.Suppliers

The supplier for Wokil restaurant and DSTV will be the local suppliers. Mr. Hashim has strong
relationship with the supplier during his managers in different hotels. In addition Mrs. Rehima
also establish smooth relationship with local suppliers Mr. Endale W/Tsadik. The stated supplier
are well qualified and can provide reasonably priced products, delivered according to the
schedule.

3.5.Management Controls

The Wokil restaurant and DSTV service will practice sound management procedures in order to
control costs, insure quality of product and provide friendly customer service. The following
systems will be used by management:

Order Guide: The restaurant and DSTV will use a manual order guide to track order history and
maintain designated levels of product in inventory.

Weekly Inventory: Management will conduct a weekly inventory to determine valuation

for use in the preparation of weekly profit and loss reports.

Daily Inventory Tracking: Daily inventory will be taken on specific items from the inventory.
Movement will be compared to sales data to ensure designated products have been properly
accounted for.

3.6.Administrative Systems

With a limited staff, it is crucial that the Wokil restaurant and DSTV remain current with daily
cash outlay. In order to control daily cash outlay the business uses manual tickets by counting
morning and distributing to the servers. The daily administrative reports:

Daily Cash Control. Sales and receipts recorded by the Peachtree accounting software system
will be compared to actual cash and credit on a daily basis. Acceptable over/short amounts will
be limited to Br. 105.00 per day. Discrepancies greater than Br. 105.00 will prompt management
to conduct an immediate audit to account for the difference. Monthly totals will be compared to
actual P&L statements for accuracy. Cash, debit and credit receipts will be recorded in a
Peachtree as a deposit.

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Weekly Prime Cost Report. Mrs. Rehima will prepare a weekly report that shows the gross
profit margin after cost of goods sold and labor cost has been deducted from the sales revenue.
The prime cost for this type of restaurant is expected to range from 50% to 55%. Proper control
of the prime cost is the single most effective measure of management’s ability to operate the
restaurant.
Purchasing Records/Payables. Mrs. Rehima Ousman will process and record invoices and
credits daily. Reports detailing cash expenditures, payments by check, and accounts payable
transactions will be readily available. Check disbursements will be prepared by the accountant.
Check signing authority for the general operating account will be given to the general manager.

Payroll Processing. Payroll checks will be issued bi-monthly. Mr. Hashim will run reports
from the time & attendance system, make necessary adjustments, and prepare for transfer to the
payroll system. Payroll will be processed by a Mrs. Rehima and other payroll processing service.

3.7.Future Services

Wokil restaurant and DSTV has future plans to provide catering services for family, and other
events desiring a “home-style” menu. This could potentially become a large portion of gross
sales. The restaurant will be targeted at year two to familiar with its customers and at year four it
will be targeted to be shifted to a modern hotel.

4.0.Marketing Analysis

As the observation of the owners there is greater demand around the chamo campus. Many of the
customers especially the students are need DSTV to follow different supper sport channel. In
addition to this the restaurant exist inside of the campus is not have required quality in food
preparation. Also the restaurant lacks line of balancing in delivering the ordered meal. After
ordering the meal customers wait for a minimum of 15 minutes in order to get back the ordered
meal by servers. Therefore the customers/students which are not use university/campus cafeteria
need to seek qualified and fast foods outside of the campus. Most of meal/food prepared by the
existing restaurant were pasta, injera firfir, beet salad and mesir wot. Therefore, Wokil restaurant
and DSTV service will going to prepare the stated meal and overcome the existing industry. Not
only these the food prepared by restaurant outside of campus also lack quality, and high price,
and there is no DSTV service around the campus. Also the food in the existing restaurant outside

7
of the campus are not opened at the required times, there is no enough seats, the servers are not
well disciplined and have no experience. There is one DSTV around the campus but it’s far from
the campus and it has limited number of seat. During the match of different world club leagues at
the night many of them were worried including the teachers leave in there because there is no
DSTV service near to them. Therefore we motivated to serve both the demand of DSTV and
restaurant at one place/cafeteria.

4.1.Industry Analysis

Wages form a significant proportion of operating costs. The existence of a statutory minimum
wage in most states increases the need for players to keep other costs as lean as possible, which
in turn increases the importance of suppliers. A slight complication is that in some states, food
service employers are able to treat tips received by their staff as contributing to their wages; in
such states, this policy reduces the impact of the minimum wage from the employers'
perspective. (Observational studies by owners)

Annual revenue per worker is less than Br.10, 000

Restaurants compete with companies that serve meals or prepared foods and DSTV, including
grocery stores, warehouse clubs, delis, and convenience stores. In addition, restaurants compete
with home cooking. In Wokil’s, waiters take orders, serve beverages and meals, present the
ticket, and process payment.

A Wokil’s square footage and the number of seats and tables dictate how many patrons it
can serve (also known as table turns or covers) directly affects sales. Because the restaurant
industry is highly competitive, site selection is critical: companies may consider population
density, household income, competition, visibility, accessibility, customer preference, and traffic.
Companies carefully manage inventory of perishable food products, such as fresh seafood and
dairy goods, to reduce losses due to spoilage. Timing systems monitor meal progress and can
alert staff if an order is running behind schedule. Reservations programs maximize traffic flow
and seating. Inventory management systems track supply levels and can help reduce waste due to
spoilage. Cost accounting programs help companies determine the profitability of individual
menu items. Handheld ticket devices allow servers to place orders and return back to the
manager tableside, improving accuracy and reducing ordering time.

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4.2.Market Segments

Wokil restaurant and DSTV service will appeal to a broad base of consumers in both the
residential and business community. The location selected for Wokil was chosen primarily to
appeal to the growing number of non-café students, teachers and households in the area. The
Chamo Kebele located in Arba Minch, Secha sub city, the Kebele has a population of over 2,550
according to the Chamo Kebele (2009) Census Report. The residential population in the
immediate area is comprised of a mixture of single family and multi-family housing. The median
household income is estimated to be Br. 12,000. The student income is estimated to be Br. 750
per month.

4.3.Market Size

The market size in Chamo kebele is 25 restaurant and 5 hotels and 4 lodges with estimating
annual revenues of Br. 5, 000, 0000.

4.4.Industry Participants

The major participants in the industries are Zebib pension, Arba Minch forty spring hotel, Ezana
Arba Minch hotel, Mora height, Swayne’s hotel, Bekele molla hotel, Dibora restaurant and etc.

Main Competitors

The main competitor around the area are as follows:

 Dibora restaurant: The restaurant lacks well-disciplined server including the owners. The
restaurant selling price averagely Br. 16-20 and there is no DSTV service and the food
lacks quality, and there is only a limited types of foods.
 Tefetiro bar and restaurant: It’s far from campus and not sufficiently enough seats for its
customers. Again the price too high as compared to the around restaurants and its price an
average Br. 25-40. Similar with Dibora restaurant it lacks DSTV service for its
customers.
 Mesi restaurant: Mesi restaurant is new in the areas but it prepare the required foods by
its customers but the price id high. It’s selling price at an average of 20-25. Therefore, its
price is higher than Wokil restaurant and it lacks DSTV service

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  Meaza restaurant: It’s again far from the campus and the oldest restaurant among the
existing restaurants. The selling price is higher than Wokil restaurant and it lacks DSTV
service.
4.5.Market Tests

For the past 5 years, Mrs. Rehima and Mr. Hashim have been catering part-time. Their home-
style menu is very popular with family and neighbors. Their DSTV in the home was also very
popular with neighbor’s family, teachers and students. More often than not, the couple, teachers
reside there and student of the campus gets asked to open a restaurant full-time and DSTV
service so that patrons can return again and again. Through Constant Contact (manual system)
the couple and student have stayed in touch with their host and hostesses, and has been asked to
return to provide catering services to several repeat events. Home-Style Catering as also grown
by word of mouth. Both of them after home-style comfort recipes, and went to identifying
current trends, for example, providing expanded menus for children and for those with food
allergies. The Wokil already have a customer base through their catering business and local blog
visitors. These customers will be the first to be contacted when they announce the grand opening
of the DSTV and restaurant.

4.6.Target Market Segment Strategy

Mr. Hashim and Mrs. Rehima selected the subject area for its restaurant and DSTV service
primarily because of its location to the very near to the campus. The restaurant located in a retail
customer center is located on “going home” in front of campus. This will encourage families
tired, the campus worker and students to take a rest and eat the meal and enjoy the DSTV service
(highlight) for free.

4.6.1. Market Needs

The Chamo Campus area is in great need of a family style restaurant, students and teachers
including the campus worker. This section of Campus is commonly referred to as “fast food
alley” The selection of fast food is vast however; the area is limited on its family restaurant ,
students and teachers including the campus worker choices. The Wokil nearest competitor, the
Dibora and Ganni Restaurant is located over 0.5 km away from the location. The Smart
competitors DSTV is located 2 km away from the location. Further, they are established in the

10
2006 the Ganni Restaurant’s customers are older than the targeted family group Wokil focuses
on.

4.6.2. Market growth

From period to period the markets increased over time. When we see the campus student,
teachers and workers it is increased. In 2006 E.C the Chamo campus student were 2678 but
currently the number of the student are 4505 which show an increase in 40%. The number of
teachers and workers are also increases in the area.

4.6.3. Positioning

Most of the consumers believe that meals at home are healthier and higher quality than eating at
restaurants. At Wokil, we will position ourselves as the premier home-style restaurant by
preparing quality home cooked meals with simple wholesome ingredients. Mr. Hashim and Mrs.
Rehima will also provide home cooked fare that appeals to the current trends of healthier
food and offer menu selections which will appeal to this group. Wokil will be positioned as
the premier traditional and modern home-style restaurant. In case of the DSTV service, Wokil
positioning as the premier HD quality service for the demand.

4.7.Marketing Strategy and Implementation

Wokil will position itself as the premier traditional and modern home-style restaurant and HD
high quality DSTV service in the Chamo Kebele. We will do this by providing quality home
style meals, prepared with quality ingredients at a reasonable prices. Customers will enjoy the
quaint surroundings inside with the plastic tables and checkered table cloths. Our restaurant will
provide a relaxed atmosphere which, means we will provide a modern ventilator in both
restaurant room and DSTV rooms.

Our customers will enjoy our standard menu fare, along with seasonal menus so that we can
better take advantage of cost savings and stay current with some of the food industry trends.
At Wokil we plan to be the premier restaurant and DSTV to work for as well. We believe that the
restaurant and DSTV industry is a great place to begin one’s career or pursue full-time.

11
At Wokil we believe that our restaurant and DSTV service will provide job opportunities both
for the entry level applicant was well as for the part-time worker searching for flexibly in job
hours. We will pay our employees a competitive salary and believe we can do so by meticulously
keeping our records, including daily review of the Prime Cost Report, and utilize Cost
Accounting Systems, to prevent inventory shortfalls. We will be proactive with our employees
by scheduling regular performance reviews, and provide bonuses and other incentives to
motivate our staff. We will also provide our employees with the most current training programs
regarding safe food handling, and worker protection.

5.0.SWOT analysis

The SWOT analysis examines the restaurant and DSTV service strengths and weaknesses that
need to be addressed. Further, this section examines the opportunities presented to Wokil as well
as potential threats.

5.1.1. Strengths
 Prime location with easy access for the customers
 Both owner were have experience regarding managing and cost controlling.
 Due to our small size, we believe we can provide exceptional quality by hand selecting
our market specials when compared to our larger corporate competitors
 The same concept holds true in our staffing requirements, by hand selecting our
employees we will strive to offer unsurpassed service when compared to our larger
competitors
5.1.2. Weaknesses
 Lacks of website for customers
 Lacks of POS machines
 Recruiting and retaining quality employees
5.1.3. Opportunities
 Barrier to entries is low
 Offering both of the traditional and modern food style
 Preparing the food that are not yet prepared in the existing restaurants
 Existence of the generator with operators during unavailability of light especially for
DSTV service

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 5.1.4. Threats
 Entry of the competitors
 Consumers that believe that meals at home are healthier than those prepared in
restaurants
 High rental costs
 Software failures that record financial transactions
5.2. Strategy Pyramid
 Strategy: Be the Chamo campus area’s premier Home-Style Food Restaurant and HD
quality DSTV service in Customer Satisfaction
 Tactics: First create awareness, we will immediately acknowledge the customer with the
warmest and most sincere greeting and begin the service process anticipating repeat
customers.
 Programs: Provide employee training on customer service and retention; offer ongoing
training programs for employees keeping them current on industry trends and food safety.
Keep track of employee’s progress through performance reviews by management and
offer employees incentives attracting and retailing customers.

5.3. Unique Selling Proposition (USP)

Wokil will be able to offer home-style meals for a reasonable price in a comfortable ‘home-like’
setting. The average check price is expected to be between Br. 15-20 which appears in line with
industry standards. And the DSTV entering price is expected to be between Br.4-7. Because of
our current expertise with vendors, and our excellent credit, we can negotiate better credit terms
than say someone brand new starting a restaurant. We will also be able to keep our menu
reasonably priced by offering menu items that take advantage of seasonal produce
further reducing price. Finally we will keep our prices in check by meticulous monitoring of our
controllable expenses – keeping close eye on our Prime Cost Report and Inventory. By initially
employing family members who will work for lower and reduced wagers, for example, we can
further reduce our controllable expenses.

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 5.4. Competitive Edge

Wokil’s competitive edge is in its people. We truly believe that your business is not only as good
as your products (meals) but the quality of your staff as well. Our staff is a reflection of us.
Initially, we intend to employ our family members who will work for lower and reduced wages.
Our long term goal is to hire team members that are truly hand selected and have the same honest
to goodness family values we do.

5.5. Market strategy and positioning

5.5.1. Pricing Strategy

At Wokil, cost accounting is important, since the profitability of individual dishes and DSTV can
vary significantly and will initially determine the cost of the menu items and DSTV. We will
take advantage of our excellent credit terms with our suppliers and will also update
our menu to take advantage of seasonality for example in local produce items. We will also
closely monitor the Prime Cost Report which focuses on the controllable expenses of Cost of
Goods Sold and Labor. As a new start-up we can currently control employee cost by hiring
family members who will work for low and reduced wages and engaging in ourselves.

5.5.2. Promotion and Advertising Strategy

Location- The restaurant will be located in front of Chamo campus. With easy access to the
areas and located on the “going home side”.

Word of Mouth – We will use in our grandfather languages to understand and to be understand
by customers.

5.6. Sales Strategy

Customer service is of the utmost importance. The observation of the owners in a different
restaurant reflects customers have a problem in an existing restaurant. It will be our goal to
provide a wonderful home-style meal combined with superior customer service. Training
programs will include teaching materials to train our employees about service attitudes, customer
perception and how to handle customer’s complaints. Mr. Hashim and Mrs. Rehima will conduct
periodic staff meetings intended to review policy, increase customers satisfaction and to keep a

14
general line of communication between staff and management. All customer complaints will be
acknowledged by the staff and referred to management. Programs will be in place for all types of
customer’s complaints. More serious complaints will be documented and kept on file. Customer
feedback will be accomplished by customer surveys.

5.6.1. Sales Forecast

We are expecting a conservative 10% increase in sales revenues annually over the next 2 years.
The growth is adjusted for inflation. With the addition of DSTV revenues, sales will increase by
15.93% in Year 3, 8.02% in Year 4 and 16.4% in Year 5. The cost of goods sold increases with
sale by 10%.

The following table shows expected Sales Forecast for the next 5 years:

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Sales
Food and Br.648,000 Br.712,000 Br.826,350 Br.894,110 Br.1,040,743 Br.4,121,203
beverage
DSTV Br.45,000 49,500 57,880 62,522 72,776 287,678
revenue
Total sales Br.693,000 761,500 884,230 956,632 1,113,519 4,408,881
Controllable costs:
CGS Br.300,560 330,616 363,677.6 400,045.36 440,050 Br. 1,834,949
Payroll Br.84,000 84,000 84,000 84,000 84,000 Br.420,000
Total prime Br.384,560 414,616 447,678 484,045 524,050 Br. 2,254,949
cost
Controllable Br.308,440 Br.346,884 Br.436,552 Br.472,587 Br.589,469 Br.2,153,932
profit

15
 5.6.2. Sales Programs

We will encourage our employees to grow our customer base and provide incentives and regular
bonuses to employees for referrals and repeat customers. These initiatives are still in the planning
stages as we gear up to hire and staff. They will play an active role in our employee culture. It is
also anticipated that as we grow our catering business, along with our lunch business group, we
will hire a sales director to facilitate this portion of the business. The sales director will be
compensated similarly to their national peers.

5.7. Legal

Initially we will be formed as partnership: Wokil restaurant and DSTV. The State of Texas is a
community property state. Over time, we will establish the corporation.

5.8. Milestone

Our milestone are provided as follows:

Milestone Date
Sign contract with renters 05/01/2010 E.C
Sign contract with suppliers 25/01/2010 E.C
Hire kitchen servers 26/01/2010 E.C

Hire Dishwashers and meal servers 27/01/2010 E.C

Start operation 01/02/2010 E.C

5.9. Exit Strategy

Disposal of kitchen equipment, and restaurant furniture, and fixtures would occur at contract.
The additional assets such as the staff’s uniforms, table cloths, and cutlery could be sold at price
in the market. Food inventory because of its quick perishable time would be considered a write-
off.

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6.0.Organization and Management
6.1.Organizational Structure

Wokil restaurant and DSTV expects to hire 12 employees. Together, Mr. Hashim and Mrs.
Rehima will personally select each candidate. They’ve adopted an effective interview process
designed to staff the restaurant with highly qualified people for each position. Each applicant will
be rated and evaluated according to a pre-defined set of standards designed for each position.
Background checks will be utilized for designated positions. Recruiting efforts will always center
on referrals.

6.2.Management Team

The Wokil Restaurant and DSTV owned by the Rehima Ousman and Hashim Kesim. Mrs.
Rehima was graduated from Addis Ababa University has an undergraduate degree in Bachelor of
Art in Accounting and Finance. During preparatory school she worked with her mother in Bahir
Dar city at her mother restaurant as a cashier. During that time she was think for her future to
establish her restaurant and to fill the weakness of her mothers’ restaurant. She also not serve as
the cashier but she serve as quality controllers and purchasing of input for her mothers’
restaurant. Therefore this job allowed her to choose the department of accounting and finance in
order to improve their cashier position and to generate the appropriate business ideas. In the
university, she serve as a cashier for Muslim student groups. Following her graduations she
served as cashier in the different organizations. In additions she also served as purchasing
department for the Chilalo Hotel in Shashemene town.

Mr. Hashim Kesim was graduated from Wolaita Soddo University has an undergraduate degree
of Business Administration. After graduated he served as manager of the Shalla Hotel in
Shashemene tow for two years. During manager of the Shalla hotel he attended its master’s
degree in Business Administration and he was graduated from Hawassa University.

6.3.Management Team Gaps

Initially Mr. Hashim and Mrs. Rehima will fill in many of the management gaps. Over time, they
have plans to hire a sales director, a general manager, and a kitchen manager.

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7.0.Financial Plan

The following sections outline our financial plan:

 Required Cost of Start-Up

 Profit and Loss
 Cash Flow
 Balance Sheet
 Financial Ratios
 Hourly Labor Costs
 Weekly Sales Projections
7.1.Important Assumptions
 Meal Price range from Br.16.00 - 20.00
 DSTV price range from Br. 4.00-7.00
 The restaurant is located in the Arba Minch secha sub city, Chamo Kebele in front of
Chamo campus at 200m from campus.
 The dining room will be comprised of 20 tables with a seating capacity of 70 seats and 80
available in the DSTV room.
 The restaurant will employ 10 employees
 Annual 5% increase for inflation and 12% annual increase in revenues
7.2.Start-Up Costs

Total startup costs will be Br.475, 980 which will be contributed by owner equally.

No Item Quantity Unit price Total cost

1 Computers 1 Br. 10,500 Br.10,500
2 LG Television 43 inches 1 15,000 15,000
3 LG Television 24 inches 1 5,500 5,500
4 Receivers 2 1200 2,400
5 Chairs plastic 150 200 30,000
6 Tables plastic 25 250 6,250
7 Perishable good including onion 600 kg 10 6000
8 Non-perishables kitchen good 400 kg 40 16,000
9 Large pot 7 200 1400
10 Onion cutting machines 1 600 600
11 Pasta 6 pack/day 12 25,920

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12 Rice 20 /weak 20 19,200
13 Teff 100 kg /2 week 22 52,800
14 Water tanker small 5 300 1,500
15 Oil 20 kg/week 25 24,000
16 Stove 4 300 1200
17 Metal glass 100 6 600
18 Plate 24 20 480
19 Payroll server 5 600*12 36,000
20 Payroll kitchen 5 800*12 48,000
21 Rent - 4000*12 48,000
22 Cash 77,000
22 Dish per month 1500/month 1500*12 18,000
23 Others expense 7,630
24 Contingency 20,000
25 Graphic logo and name creation 2,000

Total Br.475,980

7.3.Source and Use of Funds

Total start-up costs are estimated to be Br. 475,980. The majority of the costs are associated with
the restaurant equipment, inventory and furniture and furnishings for the dining room and DSTV
room. Total costs for these items are reported to be Br.221, 350. The costs are associated with
payroll and rent per year will be Br. 132,000. Additional startup expenses are in the form of
working capital and contingency Br.122, 630. Mr. Hashim and Mrs. Rehima will contribute all of
the cost equally.

Source and uses of funds

Owners contribution:
Mrs. Rehima Br.237,990
Mr. Hashim 237,990
Total sources of funds Br.475,980
Uses of funds:
Capital equipment Br.221,350
Rent and administration expenses 132,000
Opening inventory -

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Advertising and promotional expense 2000
Other expense 7,630
Contingence fund 20,000
Working capital 93,000
Total uses of fund Br.475,980

7.4.Projections
7.4.1. Projected Profit and Loss

The profit and loss demonstrates modest increases in revenues over the three expected years with
adjustments for inflation. From sales 80% made on cash and 20% made on cash. The amount of
bad debt estimated to be 2.165%. Sales made on credit will be collected in the subsequent years
of sales.

Pro forma profit and loss statement

Revenue Year 1 Year 2 Year 3 Year 4 Year 5

Sales Br.693,000 761,500 884,230 956,632 1,113,519
Cost of goods sold Br.300,560 330,616 363,677.6 400,045.36 440,050
Gross profit 392,440 430,884 520,552 556,587 673,469
Expenses:
Legal fee Br.15,000 16,600 19,128 20,697 24,091
Insurance 50,000 55,000 63,762 68,990 80,304
Bad debt 3,000 3,300 3,826 4,139 4,819
Shrinkage 25,000 27,500 31,880 34,495 40,152

Miscellaneous
60,000 66,000 76,514 82,788 96,365
Permits and licenses 10,000 11,000 12,753 13,798 16,061
Rent 48,000 48,000 48,000 48,000 48,000
Salaries 30,000 33,000 38,257 41,394 48,193
Wages 84,000 84,000 84,000 84,000 84,000
Total expense 392,440 430,884 520,552 556,587 673,469
Net profit Br.67,440 Br.86,484 Br.142,432 Br.158,286 Br.231,484

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 7.4.2. Projected cash flows

Pro forma cash flow Year 1 Year 2 Year 3 Year 4 Year 5

Cash received
Cash from operations Br.50,000 Br.42,000 Br.70,000 Br.15,000 Br.20,000
cash sales 693,000 761,500 884,230 956,632 1,113,519
cash from receivables 0 0 0 0 0
Subtotal Cash from operations 743,000 803,500 954,230 971,632 1,133,519
Owners investment 475,980
Subtotal cash received Br.1,218,980 803,500 954,230 971,632 1,133,519
Expenditures:
Expenditures from operation Br.614,228 174,110 351,871 334,905 405,356
Cash spent 562,752 559,390 587,359 616,727 647,563
Subtotal expenditures 1,178,980 733,500 939,230 951,632 1,052,919
Net cash flow 40,000 70,000 15,000 20,000 80,600
Cash balance 40,000 110,000 125,000 145,000 225,600

7.4.3. Projected balance

The preparation of the projected balance sheet there will an assumption:

Cash for the first year is that cash that stated in the startup costs

Account receivables will based on 20% credit sales of the first year

Sales and balance sheet item will be increases together by 10% in the first and second year, 15.93% in the
third year, 8.2% in the fourth years and 16.4% in the fifth years.

Pro forma balance sheet Year 1 Year 2 Year 3 Year 4 Year 5

Assets
Current asset
Cash Br.77,000 84,700 98,108 106,153 123,562
Account receivable 138,600 152,460 176,747 191,240 222,604
Inventory 143,920 158,312 183,531 198,581 231,149
Other current asset 27,630 30,393 35,204 38,091 44,338
Total current asset 387,150 425,865 493,590 335,484 621,653
Long-Term asset
Long-Term asset 71,730 78,903 91,393 98,888 115,105
Accumulated depc. 0 0 0 0 0
Total asset Br.458,880 Br.504,768 Br.584,984 Br.632,952 Br.736,758
Liabilities and capital
Current liabilities
Account payable Br.100,000 110,000 127,413 137,861 160,470
Capital 358,880 394,768 457,571 495,091 576,288
Total liabilities & capital Br.458,880 Br.504,768 Br.584,984 Br.632.952 Br.736,758

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 7.4.4. Ratio analysis

Ratio analysis
Liquidity ratio
Current ratio 4.5888 4.5888 4.591239 4.591236 4.591251
Quick ratio 2.156 2.156 2.157198 2.157194 2.1572
Cash ratio 0.77 0.77 0.77 0.769999 0.77
Asset management ratio
Receivables turnover 6.93 6.922727 6.939873 6.939105 6.93911
Inventory turnover 2.0883824 2.088382 1.98155952 2.01451982 1.90375
Fixed asset turnover 9.6612296 9.651091 9.67502982 9.6738937 9.673941
Total asset turnover 1.5101987 1.508614 1.51154675 1.51138058 1.511377
Leverage ratio
Debt to asset ratio 0.2179219 0.217922 0.21780612 0.21780626 0.217806
Debt to equity ratio 0.2786447 0.278645 0.27845541 0.27845564 0.278455
Profitability ratio
Gross profit margin 0.5662915 0.565836 0.58870656 0.58181934 0.604811
Net profit margin 0.097316 0.113571 0.16108026 0.16546174 0.207885
Return on investment 0.1469665 0.171334 0.24348035 0.25007567 0.314193
Return on equity 0.187918 0.219076 0.31127877 0.31971065 0.401681

8.0.Capital budgeting

The capital budgeting techniques a techniques that determine the acceptance of ignorance of the
project proposals.

8.1.Net present value

In this case the net present value assumed to be calculated based on controllable profit not actual
sales. In order to compute the net present value the investor rate of return will be 15% and the
expected inflation will be 5%. Therefore, the nominal rate of return is 20%.

308,440 346,884 436,552 472,587 589,469 2,153,932 Cash

inflow
257,033.33 289,070 363,793.33 393,822.50 491,224.17 1,537,910 PV
475,980 Cash
outflow
1,061,930 NPV

The criteria for NPV method are:

If NPV is greater than 0 the project is accepted

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8.2.Payback period

PCB = 1+129,096/346,884

= 1.37

8.3.profitability index

PI = 1,537,910/475,980

PI = 3.23

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