Project finance
On
Tempta tion
(Multi-cuisine restaurant)
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CERTIFICATE
This is to certify that Mr. Vatsal Pandya and Ms. Yesha Shah, students of the MBA Programme (Finance) of the Som-Lalit Institute of Business Management (SLIBM), have successfully completed their Grand Project on the subject Project Finance for Starting up a New Restaurant TEMPTATION for the academic year 2008-09 and have dully submitted the report to the institute.
Project Guide: -
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ACKNOWLEDGEMENT
First, and foremost we would like to thank for giving us an opportunity of making a business plan which would enhanced our skills and giving us a concrete path to work on such project. Through this acknowledgement we would like to express our sincere gratitude towards all those people who have been inspirational and instrumental in drafting this project. We would like to express our heartfelt thanks to Mr. A. K. JAIN (Vice president, VIVRO) and DR. JAGDISH JOSHIPURA for his unstinted support, which he offered right from the conception to the completion of this project report.
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We would also like to thank MR. RAJ MONDAL (General Manager, OPERATIONS) MR. ASHWIN MEHTA (Manager, F&B) HOTEL HAVELI Gandhinagar and MR. PURAV DOSHI (ARCHITECT) for their valuable suggestions and their time and helping where we were wrong and couldnt find the way out. We would also like to thank Som Lalit Institute of Business Management to give an opportunity to do a project on such topic.
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TABLE OF CONTENTS
SR.NO
1 2 2.1 2.2 2.3 3 3.1 3.2 3.2.1 3.3 3.4 3.5 4 5 5.1 5.1 5.2 5.2.1 5.2.2 5.2.3 5.2.4 5.3 5.4 6
PARTICULARS
PAGE NO
4
EXECUTIVE SUMMARY MISION AND VISION STATEMENT Mission & Vision Idea & Core Activities Product Offering INDUSTRY oVeRVIEW Description of primary industry Restaurant Sector Lifestyle Restaurant sector in Gujarat Hospitality Industry After 5 Years TARGET CUSTOMERS MARKETING PLAN Penetration strategy Marketing Communication Mix Advertising Advertising in Magazines Leaflets in Newspaper Advertising in Radio Creating Temptations Website Word of Mouth Publicity Publicity COMPETITIVE ANALYSIS
6 7 8 10 10 10 11 11 13 15
24 25 26 28 29 29 30 31
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6.1 6.2 6.3 7 7.1 8 8.1 9 10 11 12 13 14 14.1 14.2 14.3 14.4 14.5 15 16 17
Product Life Cycle Porters 5 forces SWOT analysis Layout Layout of restaurant ORGANISATIONAL STRUCTURE Organisation Structure Competitors advantages, advantages, barriers OPERATIONAL PLAN Training Miscellaneous issues risk factors FINANCIAL PLAN Profit & loss a/c Balance sheet Cash flow statement NPV & IRR statement Break even analysis EXIT STRATEGY Conclusion BIBLIOGRAPHY
35 37 40
42
47
dis-
50 54 58 61 63
65 68 69 70 71 73 75
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EXECUTIVE SUMMARY
TEMPTATION Restaurant offers a trendy, fun place to have great food in a heritage environment. The restaurant offers a nice interior and a perfect place to have food. The restaurant provides the food along with entertainment. It provides customer a unique experience and unique difference than the other restaurants in city. The emphasis is on providing people a new concept of LIVE COUNTERS. The TEMPTATION Restaurant would sell the experience of difference along with food. It would have a Magician and a Tarot Card reader which would add value to the Restaurant. It would provide the customer what they require and would focus on satisfying the customers needs. The restaurant would have a great benefit of its location as it would be in the hub area of the city. The people can enjoy the food in the atmosphere where they can get relaxed and feel comfort. The restaurant would provide the unique experience to the people which they have never experienced. The restaurant would also concentrate on the entertainment part which would see that people not only feel the new experience but also enjoy the place. The restaurant would try to make their customers feel comfortable at their best. The place and the experience of the customers would be such that the customer will recommend their friends and that would be indirect publicity of the restaurant. TEMPTATION would be hiring the best chefs so that there is some differences in the food from the others are serving. The customer would also enjoy the ambience of the restaurant.
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MISSION STATEMENT
TEMPTATION is a trendy and healthy place to eat, combining an intriguing atmosphere with excellent, interesting food that is also good for the people who eat there. A rewarding place for employees, which is reflected in their service delivery.
VISION STATEMENT
TEMPTATION will be a global, restaurant offering consistent products and services in key business and leisure destinations. Our growth will be achieved through hotel ownership, management and selective franchising. We will be known for our innovation, exemplary service and superior hospitality. TEMPTATION is committed to being the employer of choice in the hospitality industry. We have a synergistic relationship with our customers.
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Idea
My idea is to open a Multi-Cuisine restaurant TEMPTATION catering into Healty and Hygienic Quality food and Services especially concentrating on Hospitality of customers. The scope of the idea of Temptation Restaurant is not just limited to To the taste of food but also to experience the difference and uniqueness.
CORE TO
ACIVITES
PROPOSED BUSINESS
The core activities of Temptation restaurant would be to satisfy the market place and customers demand. The restaurant requires to satisfying the basic need of the consumer of serving the best quality food with unique experience. It would have a consumer friendly atmosphere where proper care of consumer would be taken. It would provide consumer a different experience in hospitality and service. The Temptation restaurant would create an atmosphere of entertainment by having a Magician and a Tarot card reader which would entertain the consumers.
SALIENT FEATURES
The offering at Madhuban Resort would mainly include:
Cottage facility
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The resort provides exclusive village theme based cottage facility for customers. The cottages have unique facilities for residing.
Restaurant
The speciality of the restaurant is that it provides authentic village food of different cultures.
INDOOR GAMES
The resort provides indoor games facility like Pool Table, Table Tennis, Snooker, Carrom, Chess. This facility is available throughout the day.
HORSE & CAMEL RIDING Horse riding facility is provided at the resort.
LAWN AREA/PARTY AREA The resort provides a very wide lawn area for customers to enjoy their day. The lawn area can also be used for parties, wedding, receptions.
MOVIE SCREENING Special movie screening is also provided after sunset in the lawn area.
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CHILDREN PLAY AREA A special play area is designed for kids entertainment.
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Resort sector
The Indian restaurant services sector is estimated to be worth Rs. 57,000 crore, out of which only Rs. 3,940 core or 6.9 percent is accounted for by the organized sector. The vast unorganized segment mainly comprises street-side stalls/kiosks constituting the majority of consumer food-service units and is characterized by intense fragmentation and a virtual absence of standardization of operations. This segment was Rs. 35,000 crore in 2004, which grew by about 18 per cent to Rs. 41,400 crore in 2005 and in 2006 the segment recorded a growth of nearly 19% over previous year and stood at Rs. 49,200 Crore. It is growing continuously, in the last year it was worth Rs. 49,200 crore an increase of 15.85%. The future of this industry is very bright due to overall development in all the related sectors and industries.
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Life Style
The life style of the people depends on the disposable income they are having. People with a high disposable income will have a high standard of living while people having low disposable income will have low standard of living. During the past five years, average monthly income has increased almost by 43 percent and disposable income of individuals has increased nearly to 45 percent. This growth in income will help the Resort service sector to grow further.
Hospitality
The hospitality industry in India is growing at the rate of 15 per cent annually. Hospitality Industry just like many other segments in India is booming at an unprecedented pace. India faces a huge challenge of being "under roomed" while the economy is growing rapidly. This provides for a huge opportunity for hospitality industry. Innovations are very important in the services sector, especially in the hospitality sector. The restaurant business requires entrepreneurs to continuously come up with new dishes; new ways to present or serve existing dishes, new services or schemes to satisfy customers, new ways of enhancing their ambience and new processes to economize operations. Without innovation, restaurants face the threat of becoming obsolete- leading to sickness and ultimately driving them out of business or forcing them to hand the business over to a more efficient and innovative entrepreneurs.
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TARGET CUSTOMERS
The market segment for Madhuban Resort will be mainly middle class and upper middle class. It would be such a place where people would have a new experience of enjoyment & leisure. People would be enjoying their time with family & friends near the city. The target market for Madhuban Resort would be for all the people who seek entertainment, leisure and interested in some uniqueness. There are many Resorts in Ahmedabad and many more are upcoming, but all these resorts focus just on the higher class and does not focus on providing a new experience. People are tired up of experiencing the same continental, Punjabi food and want something new and unique. Very few resorts are providing customer wants, and thus there is the large gap between the critical need of the people and the availability at our resort to fulfil their needs. In Ahmedabad there are hardly few resorts that fulfil the need of the people. Thus the market is well open if the Madhuban Resort is able to produce and provide the people what they need. Madhuban Resort also offers its 6000 sq yard lawn area for party purposes for any occasion. Today in Ahmedabad party area rent is highly priced but Madhuban Resort provides this facility at competitive prices. There is very need of market penetration and differentiation in the Resort Sector. The Resort would focus on the need of the people what they want. The Resort would use radio & newspaper advertisements to directly communicate to people. It would help it to create awareness of its presence and will also be easy for it to reach to customers. People are now seeking for change and want to have a new experience. It has become trend for experiencing something new. The target market also wants a unique and a new experience of the faciilities which will be provided by the Resort. People want everything at one place they want entertainment, leisure, food. Thus Madhuban Resort would provide the same.
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MARKETING STRATEGIES
MARKETING STRATEGIES
Penetration Strategy:
The market for the restaurant is very wide. There are both organized and unorganized players in the market which serve the different types of customers. Unorganized sector covers a huge share in the market. The Temptation Restaurant by implementing penetration strategy can increase the customer base of the organised market. Many Higher Middle class and upper class people constitutes the market share for the unorganised sector, the Temptation Restaurant can concentrate on these customers by providing them the better taste, ambience and uniqueness.
Growth Strategy:
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Franchise:
The Temptation Restaurant can think of franchising in different cities. It can think of it in future once it achieves success in Ahmedabad. Franchise would help Temptation Restaurant to tackle more market and would help in building brand name. It is the second step for the restaurant to franchise itself.
Horizontal:
Horizontal growth strategy would add to the franchise growth strategy. It can establish a branch in the Ahmedabad if the Temptation Restaurant proves to be successful. It would help it to cater the more customers in the same market.
Interactive:
Promotion:
A promotional strategy is the distributed communication methods used to communicate a product or service to its intended market in a controlled and monitored format. The promotional strategy includes every marketing initiative that will impact the customers' purchase decision.
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The primary data collection would be through a small survey. The questionnaire for the survey would be as under: (1) What are the purposes for which you generally go out to an eating outlet/joint? 1. Business Meeting 2. Planned Dinner 3. Family Outing 4. Get Together 5. Kitty Parties 6. Treat 7. Entertaining Guests 8. Walk-ins 9. Other, specify
(2) Please specify the types of cuisines you would like to have: 1. Lebanese 2. Mexican 3. Japanese 4. Mediterranean 5. Italian 6. Thai 7. Indian 8. Chinese 9. Continental 10. Other, specify
(3) Please specify the type of restaurants that you generally prefer: 1. Fast Food Outlet 2. Fine Dining Restaurant 3. Multi Cuisine Restaurants 4. Theme Bases Restaurant 5. Food Courts 6. Other, specify
(4) Please specify the probable reasons for your selection of a particular type of restaurant: -
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1. Opinion of Group 2. Popularity 3. Hygiene 4. Convenience and Location 5. Choice of Food (5) Imagine a new fine dining restaurant cum lounge is opening in the city. Which out of the following add-ons would you prefer to have? 1. Streaming Videos 2. Valet Parking 3. Wi-Fi Zones 5. Book/Magazines Racks 6. Pick up and Drop facility 7. Other, specify 6. Service Quality 7. Facilities 8. Ambience 9. Other, specify..
(6) Would you like to have a Transparent Kitchen in the restaurant? 1. Yes 2. No
If No, please specify the reason. (7) Which newspapers do you generally read? 1. Gujarat Samachar 2. Divya Bhasker 3. Sandesh 4. Times of India 5. Indian Express 6. DNA 7. Economic Times 8. Other, specify
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If Yes, please name them (9) Do you listen to Radio? 1. Yes 2. No
If Yes, how many hours a day do you listen to Radio? (1) Less than 1 hour (2) 1 hour 3 hours (3) More than 3 hours (10) Do you prefer non-vegetarian food? 1. Yes 2. No
If No, would you mind vegetarian and non-vegetarian food being served from the same kitchen? 1. Yes 2. No
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(11) From where do you normally get the information about a new restaurant opening in the city? 1. Newspapers 2. Radio 3. Cable TV 4. Friends & Colleagues 5. Family & Relatives 6. Other, specify..
(12) Would you like to visit such a restaurant cum lounge if it opens in the city? 1. Yes 2. No
If No, please specify the reason. (13) Would you like to visit it if it opens in the areas like Ambawadi, Parimal Garden, and C. G. Road or nearby? 1. Yes 2. No
If No, please specify the reason. (14) Would you mind if it opens up in a Mall? 1. Yes 2. No
(15) Please tell us something about yourself for the following information: Name: -. Age (years): - Gender: Male Female
Area of Residence: -.
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Area of Office/College: -......
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TEMPTATION RESTURANT
The strategic development of the Marketing Communication (MC) plan generally goes through two phases: The first phase is determining which MC functions and which media to use The second, which is more creatively challenging, is the phase where ideas would be created for how each MC function and medium will be used.
Various MC functions and their mix called the Marketing Communication Mix would be used to achieve the above stated MC objectives. A Marketing Communication Mix is the selection of MC functions used at a given time as part of Marketing Program. The Marketing Communication Mix for TEMPTATION resturant would include: Advertising Word of Mouth Publicity
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ADVERTISNG
Temptation initially to make the target audience aware and to attract them would focus on Advertising and Publicity but its main emphasis would be on Advertising. Here the main emphasis is to inform customers of opening a new restaurant in city with different experience. The various media that Temptation restaurant would resort on for marketing and advertising restaurant would be:
Advertisements in local newspapers Leaflets placed in newspapers Advertisements in Radio Stations Creating Temptations website
Advertisements in Magazines:
Two different advertisements each 3column X 5 Cm long in Magazines of Ahmedabad, Rajkot, Bhavnagar, Baroda as also either of Times of India or Business Standard would be required to make people aware of the establishment of TEMPTATION restaurant. One would be to invite the target audience to the new opening restaurant and the other would be for attracting people to experience the difference and uniqueness. This advertisement would be floated on Friday, Saturday and Sunday editorials of magazines like Today, Sputnik, Stardust and many more relevant magazines which would reach to the targeted audience. These magazines would also
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attract corporate to come and enjoy the executive lunch that are also being offered.
Advertisement featuring to invite the target audience to the new restaurant- TEMPTATION which is opening shortly:
Opening Shortly Temptation is the restaurant where you can find uniqueness then other restaurants. We will be known for our innovation, service and hospitality. Temptation is the place where we will exceed your expectations.
WE WILL OFFER YOU THE DIFFRENCE THAT YOU CAN REALISE AND WILL ALSO TRY AND ACHIVE THE EXPECTATIONS OF OUR CUSTOMERS.
Advertisement featuring attractive the customer for experiencing the diffrence and uniquueness at TEMPTATION along with membership benefit.
Temptation- Multi cuisine restaurant
A Restaurant specializing in your needs COME AND EXPERIENCE THE DIFFRENCE
Temptation is the restaurant where we will try to satisfy the customer needs and demands. The customers would experience the innovation, great service and the best hospitality. We would be known for our hospitality to the customers. We would also provide with membership discounts.
WE WOULD PROVIDE WITH THE MEMBERSHIP BENIFITS TO OUR SPECIAL AND REGULAR CUSTOMERS. WE WOULD ENSURE YOU THE UNIQUENESS THAT YOU CAN EXPERIENCE.
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Product OFFERING
The offering would broadly include the following 4 categories. - Hygenine and Quality food - Recuiting and training - Live counters
- Customer is KING
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The other advertisements in radio stations of other states would also invite orders from outside and expand the operations of Temptation.
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This method is a cheap source of attracting new customers though retaining and satisfying the current customers sounds a bit costly.
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Public Relation:
The restaurant should develop good personal relation with the local or national media. The restaurant should develop a list of media which can impact consumer opinion for the restaurants. The restaurant should maintain positive relation with them which would help the restaurant in the long run.
Packaging:
The packaging of a product and or service is the appearance which creates first impression in the mind of a potential customer has. In the restaurant industry it is the menu, the staff uniforms and the interior decor. These are the packaging for the restaurant.
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COMPETITIVE ANALYSIS
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COMPETITIVE ANALYSIS
INTRODUCTION STAGE:
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The Temptation would not be having introduction stage as the industry have pass this stage and is now in the Growth Stage. The industry is growing and thus it is the best time for the Temptation Restaurant to enter.
GROWTH STAGE:
The Restaurant industry is now in the Growth stage. The Temptation would directly enter in this stage as seen in the above figure. The restaurant would take the maximum benefit in this stage.
MATURITY:
This is the stage in which the growth of the industry slows down. In this stage Temptation Restaurant would diversify into other business which would again start from the growth stage.
DECLINE:
The Temptation would close down it Restaurant and would focus on the new business in which it had diversify
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Porters five forces helps the company to understand both the strength of the companys current competitive position, and the strength of a position that the company is looking to move into, Porters five forces are as follow : 1. Suppliers Power 2. Buyers Power 3. Competitive Rivalry 4. Threat of Substitute 5. Threat of New Entrants
Suppliers Power:
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Company is not at all affected by the suppliers because the suppliers for the Temptation Restaurant are many. There are many suppliers in the market and the raw materials required by the restaurant also does not needed and specialization , it purchase its raw material from the market where there are many suppliers. Company has to purchase the raw material of different varieties. There are many option for the company to purchase the raw material and the cost of switching is also very less. Thus the bargaining power of the suppliers is less because of easily availability, general product and cost of switching is very low.
Buyer Power:
The Temptation Restaurant would sell its product to the general people. The Temptation Restaurant would have the more bargaining power because the customer segment is very large, there are huge numbers of customers and the Temptation Restaurant not only sells the food but also sells the experience with it. Customers who approached to the restaurant come to that particular restaurant once or twice thus they have less bargaining power.
Competitive Rivalry:
Temptation Restaurant is having many competitors in the market. In Ahmadabad there is more than 200 Restaurant and it will receive competition from each of them. It will mainly face the competition from the Restaurant Flavours and newly opened Gloria because it the restaurant that provides a new experience of having food. The Temptation will also face the competition from other restaurants also who have already set a brand image in the eyes of the people. All these restaurants are known for their ambience and the quality
of the food which they serve thus the Temptation would have to compete from each of the restaurants. The Restaurant would also be facing an indirect
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competition from the unorganized sector. It would face the competition from the local hawkers and stalls providing food.
Threat of Substitution:
Threat of Substitution is not a problem for the Temptation Restaurant. In Ahmedabad all the restaurants are pack on Saturday and Sundays. The restaurants do have any direct substitution but it have the indirect substitution. In Ahmedabad there are not much places for freak out so people opt for going out for dinner on Saturdays and Sundays thus if the city gets some good places for that customers would look at hospitality and service provided by the restaurants. Thus at present the Temptation Restaurant does not have threat of substitution but in future it might have.
Threat of new entrant is always there in the Restaurant business. There are very less barriers for the new entrant to enter into the Restaurant Sector. The investment requires starting a restaurant is less and it can also be establish in a short span of time. There is no specific technology are know how is needed to start the restaurant. The Brand Loyalty is very less in this sector because the people always seeks for the new place and also wants to have different varieties of food. Thus the threat of new entrants is always their in this industry. The Hayate is also planning to open a Hotel in the Ahmedabad. Thus any new comer can enter into the market and can create a lot of problem for the company.
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SWOT Analysis
Strengths:
Location.
The chef and staff of the restaurant will be experienced and proficient.
Its focus on providing a new experience.
Its punches and other Entertainment Facilities. The menu which includes variety and multicuisine is not offered by many other restaurants in the city. It will be an exclusive place for organizing theme parties which will be an added strength.
Weakness:
It would be providing limited varieties. Dependency on other sector like service and lifestyle. Economic situation.
Opportunity:
The Restaurant would focus on providing a new experience along with food. The Restaurant Industry is growing continuously.
Huge share of the market is cater by unorganized sector. Starting the concept of franchise.
Threats:
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Last year New Entrant in the Restaurant Service sector increase by 70%. Large players in the market. Resistance of the people to accept the new idea.
MANAGEMET STRUCTURE
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Layout
The total area that would be required to be managed in different areas of restaurant is shown in the figure below. Total area allocated for each activity of restaurant that is required to be carried on also shown in the figure below:
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ORGANISATION AL STRUCTURE
ORGANISATIOAL STRUCTURE
The organisation structure for the TEMPTATION Restaurant would consist of over all 37 persons including all. The list for the different persons in the restaurant can be listed as under:
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Front Office
They would be responsible for the activities related to the administration of the Restaurant. The qualification of the Restaurant Manager: Post Graduation/ Diploma in Hotel Management & an experience of atleast 3 years in the Hospitality Industry Assistant Restaurant Manager would assist wherever the Manager would require & his qualification would be the same but an experience of 1 year in the Hospitality Industry. Cashier would be responsible for all the dealings with the give and take of the cash & would also do all the billings procedure.
Kitchen Department
The senior chef would act as a leader and would assist all the other members of the department.
There would also be the captains would be responsible for all the workings of the restaurant & they would be the assisting the chefs, cooks & the stewards.
The cooks would be an epicure &should have a complete knowledge of the making of the same.
The stewards would be an attendant and also would act as an helping hand to the cooks.
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There would be a F&B Manager who would only look after the F&B Department. The management of the banquet hall would also come under his shoulders. While the stewards & the assistant stewards would have the same responsibility as the Kitchen Department.
Purchase Department
There would be a store in charge would look after all the things in the store room including the inventory. The store register would also be maintained by him. There would be a helper who would assist in the carriage of the stock from one department to the other. Also he would assist the F&B Manager as and when required. The house keeping boys would take care of the stock remaining as the inventory & would do all the activities that the Purchase Head tells him to do. The guard would take care of the restaurant as a whole.
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COMPETITORS
It is having a lot of competitors in the market. In Ahmadabad there is more than 200 Restaurant and it will receive competition from each of them. The restaurant will be targeting mainly the higher middle class and Upper class, thus the restaurants serving the same target consumer are more. It will mainly face the competition from the Restaurant Flavors and Gloria because it the restaurant that provides a new experience of having food. The Temptation will also face the competition from other restaurants also who have already set a brand image in the eyes of the people. All these restaurants are known for their ambience and the quality of the food which they serve thus the Temptation would have to compete from each of the restaurants. The Restaurant would also be facing an indirect competition from the unorganized sector. It would face the competition from the local hawkers and stalls providing food. There is a huge market in the unorganized sector which the company needs to cater.. It would also have a magician and Tarot Card readers which would add value. The concepts which the restaurant would be going to introduce are very easy to apply and thus competitors can very easily adapt the same.
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COMPETITIVE ADVANTAGE
The Temptation Restaurant would focus on providing people a new and a unique experience. The people are tired up by experiencing the same, and thus it would very well serve the needs of the customer. People are now seeking a place where they can get not only have food but can have also has some entertainment and the Temptation would provide the same. The Restaurant is unique in its application. It would also be different from other restaurant in many ways which will provide it a competitive advantage over the other Restaurant. The Temptation Restaurant would also get the competitive advantage from is design. It would also have to face competition from other restaurant which already have established themselves and have a great brand name. Its unique design, different experience of having food would help it to gain a competitive edge over the other restaurants. It would also be providing a Tarot Card Reader which would tell the peoples fortune and would guide them in making their life good. It would also have a Magician which would add more value to its entertaining part. The Temptation Restaurant would opt for penetration strategy; it has a huge unorganized market. It can even target the customers which are opting for stalls and hawkers food. The people are ready to compromise with their hygiene factor but are not ready to compromise with the taste.
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Competitive DISADVANTAGE
The Temptation Restaurants disadvantage would be its lack of Brand awareness among the people. It has to do lots of marketing for getting out of this competitive disadvantage. The competitors are already in this field and know the consumer behavior and thus it will a competitive disadvantage for the Temptation Restaurant.
BARRIERS
There are very less barriers for the new entrant to enter into the Restaurant Sector. The investment requires starting a restaurant is less and it can also be establish in a short span of time. There is no specific technology are know how is needed to start the restaurant. The Brand Loyalty is very less in this sector because the people always seeks for the new place and also wants to have different varieties of food. Thus the threat of new entrants is always there in this industry. The Hayate is also planning to open a Hotel in the Ahmadabad in the next year.
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OPERATIONAL PLAN
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OPERATIONAL STRATEGY
Following Points Would Help Restaurant to Achieve Operational Efficiency 1. The restaurant would hold its individual accountable for their own work. It would conduct inspections of facility on randomly basis. 2. It would also provide incentives to employees for offering solutions to problems and increase sales and reduce expenses. 3. It would set performance standards for cost control for both management and employees. 4. It would provide rewards for perfect attendance.
5. It would use proper scoops and ladles to portion food. .
6. Train and retrain employees. 7. Label or place signs over scales and slicers for standard measurements.
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Recruiting
The restaurant would focus more on its recruiting procedures. It is important to place the right people on the right job. The entire performance of the restaurant service would be depended on the people it would hire. It would not appoint the employees hastily but would invest the require time and effort to get the right person. Good people may not always find you. Sometimes, you have to find them. Filling out your service staff with people who can star in their roles is the key to success. Some of the potential for good employees are mentioned as under:
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People Orientated individuals would enjoy entertaining guests and orchestrating everything, from a simple meal among friends, to an extravagant celebration. On this stage the applause might not just come from the tip, but the appreciation and gratitude guests express as they depart. The employees should be outgoing and enthusiastic individuals. On this stage, for them each night is a performance. Like actors, the cast play many roles and wear many hats. In the same night, the cast act as informal hosts, masters of ceremonies, food guides and salespersons. Confidence is the result of many things. Star performers feel good about themselves and their ability to perform their role well.
Restaurant
Success
by
Maintaining
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a great experience, and they deserve it. Maintaining food and service will turn the customers into regulars. In turn the regulars show up consistently because
they are comfortable with the food, beverage and service that they get on each repeat visit to the restaurant. Increasingly intense competition, high customer expectations and retaining quality employees are challenges almost every restaurateur faces. One of the best ways to address these challenges is through consistent delivery and assessment of an employee training program.
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TRAINING
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Training
Employees never just happen - it is the result of a conscious effort on the part of the trainer and the trainee. Job training is the processes of helping an employee acquire the necessary knowledge, skill, and work habits to perform a specific job. Failure to help employees get started properly results in needless expense, high levels of employee frustration, and increased turnover rates. Planned training saves time and cost much less than letting people learn "the hard way". It reduces waste. It helps to insure safe work habits. It reduces employee frustration. It prevents the learning of incorrect work habits, which will have to be unlearned later. It helps to insure guest satisfaction. These are some points, which would aid in accomplishing task of training crew members.
People learn best when fresh. People learn best in a non-threatening climate. People learn better when the purpose of the skill or task is known People learn better when the "why's" are explained along with the "what's" and "how's". People learn faster when they are provided "feedback". Employees never just happen - it is the result of a conscious effort on the part of the trainer and the trainee. Stress the "do's" rather than the "don'ts". Work from the known to the unknown. Don't talk a "foreign" language. Break down complex tasks into basic tasks Doing tasks are learned by doing.
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Participate in teamwork:
The Temptation Restaurant would make people work together as a team as they can accomplish more in less time. This cuts labour costs. It would create a culture of understanding among the employees.
Empower:
The Temptation Restaurant would provide empowerment to there employees. It is not always possible for employees to go through the chain of command. A few employees would fell comfortable in this position, while others may not.
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MISCELLANEOU S ISSUES
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MISCELLANEOUS ISSUES
Some of these issues and challenges are given below: The nature of the customer varies from that in other businesses by their expectation; they do not only buy food, they expect to buy it appetizingly prepared and pleasantly served. They expect good value, comfort provided by compatible decor, good comfortable seating, lighting, heating, cooling, cleanliness, courtesy, and with the absence of noise, odors and long waits. Crockery, exhaust fans, ovens, refrigerators, slicers, toasters, food processors, fryers, and broilers are delicate and sometimes dangerous. The loss of silverware, the breakage of china and glassware.
Well-trained help is hard to find because wages are often less than in other industries, the stress is high, and the work is hard. There is high attrition rate and by the time restaurants have put in great effort and trained a person it is often found that he switches over to another job and one has to start all over again. The working hours are invariably long almost 12 to 15 hours. The employees are less educationally qualified and yet are expected to be good at mathematics and memory power.
Business volume is limited by seating capacity. The responsibility for the safety and security of customers and workers is huge. The profit margin is low and the hazards / risks are high. The restaurants survive mainly on account of volume.
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Experience is the most important factor for success. Management skills, courtesy and good manners, entrepreneurial ambition, willingness to work hard and under pressure, attention to detail and effective controls are vital.
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Risk factor
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Risk factor
The reasons for sickness in the restaurant business: Mismanagement Insensitivity to external factors Inability to update the business Losing sight of the basics The steps that can be adopted for successful turnaround can be listed as follows: By doing proper introspection and strategic analysis. Doing a detailed survey of the prevailing business environment. Analyzing the influence of the changes at the macro level on the business. Writing down the business sales marketing and operations plans. Meeting key personnel and employees. Revising plans. Having discussions with vendors and customers. Contacting the bank, tax authorities, and accountant. Keeping only essential employees. Cutting unnecessary cost. By Renovating and Innovating. Implementing plans. By revising and reassessing.
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FINANCIAL PLAN
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Financial data
FINANCIAL ASSUMPTIONS
Food Sales Food Purchase Income from Banquet Hall Food Costs on Banquet Transportation Costs Inventory Maintainence Costs Sale Of Beverages Income from banquet hall Beverages Consumed Salaries Staff Meal Expenses A/c Telephone Expense Stationary Expenses Cleaning Agents Gas Interest on loan Advt. & Promo. Expenses Fire Fighting Expenses Misc Expenses Corporate Taxes Interest on Capital Dep on F&B Dep on Kitchen equip Dep on Electronic equip Dep on Computer Dep on Equip in res & banquet Dep on Fire fighting equip Dep on Furniture Breakeven Point (per day) Lease Rental
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(125*180*5)+(125*200*2); Rs.125 is the APC, 180 & 200 is the capacity, 2 & 5 are the number of days 30% of Food Sales (50*300*120),50 guests,Rs300 APC, 120 days in a year 30% of Income of Banquet NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 12.75% per year NIL NIL 1% of Total Costs 33% of Net Profit 6.00% 20.00% 10.00% 40.00% 60.00% 10.00% 15.00% 10.00% (VC+FC)/365 NIL
5%-1st Year, 7% next 3 years NIL 5% growth every year NIL 2% increase every year 5% increase every year 5% increase every year 5% increase every year 60% of sale of beverages 5% increase every year 5% increase every year 2% increase every year 5% increase every year 5% increase every year 5% increase every year NIL 10% increase every year 5% increase every year NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 10% increase every
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INCOME FROM OTHER SOURCES Interest on Deposits @8% Income on Investment @ 8% TOTAL INCOME EXPENDITURE Corporation Tax Beverages Consumed Salaries Staff Meal Expenses Electricity Expenses Telephone Expense Stationary Expenses Cleaning Agents Maintenance & Repairs Gas Newspaper Expenses Decoration Expenses Interest on loan (12.75%) Trial Costs Uniform Expenses Advertisement & Promotional Expenses Fire Fighting A/c Misc Expenses (1% of Total Cost) Lease Rentals Business Plan Page 71 Corporate Taxes @ 33% on Total Income Discount (2% of total sales)
0.08 4.20 23.88 3.00 3.00 0.50 0.40 0.18 0.93 2.00 0.02 0.65 2.55 0.12 0.50 3.00 0.16 0.70 13.20 2.30 1.03
0.08 4.41 25.07 3.15 3.00 0.51 0.42 0.19 0.95 2.10 0.02 0.65 2.15 0.00 0.50 3.30 0.17 0.72 14.52 2.87 1.08
0.08 4.63 26.33 3.31 3.00 0.52 0.44 0.20 0.95 2.21 0.02 0.65 1.71 0.00 0.50 3.63 0.18 0.74 15.97 3.86 1.15
0.08 4.86 27.64 3.47 3.00 0.53 0.46 0.21 0.95 2.32 0.02 0.65 1.21 0.00 0.50 3.92 0.19 0.76 17.57 4.76 1.23
0.08 5.11 29.03 3.65 3.00 0.54 0.49 0.22 0.95 2.43 0.02 0.65 0.64 0.00 0.50 4.23 0.20 0.78 19.33 5.70 1.31
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BALANCE SHEET
2009 ASSETS Food & Beverages Equipment Kitchen Equipment Gas connections Telephone connections Computers Furniture & Interiors Electronic equipment Equipment in restaurant and banquets hall Fire Fighting equipment Current Assets Inventory F&B spares Banquet Spares Cash & Bank Bal Deposits Investments Other Current Assets TOTAL ASSETS LIABILITIES Capital Account Vatsal 15 Yesha 15 Net Profit Loan from SBI
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2010 0.52 5.99 2.09 0.05 0.10 22.19 1.15 2.40 0.18 1.84 2.50 1.60 5.87 3.00 2.00 3.85 55.33
2011 0.42 5.39 2.09 0.05 0.04 19.97 0.46 2.16 0.15 1.50 2.15 1.42 7.93 3.00 7.00 3.03 56.77
2012 0.34 4.85 2.09 0.05 0.02 17.97 0.18 1.94 0.13 1.15 2.10 1.16 11.19 3.00 10.00 1.77 57.94
2013 0.27 4.37 2.09 0.05 0.006 16.17 0.07 1.95 0.11 1.24 1.95 1.05 11.58 3.00 15.00 0.43 59.14
0.66 6.65 2.09 0.05 0.25 24.65 1.92 2.67 0.21 2.00 2.50 1.10 5.90 4.02 54.68
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TOATAL 54.68 55.33 56.77 57.94 59.14
2010
2011
2012
2013
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Stationary Expenses Cleaning Agents Maintenance & Repairs A/C Gas A/c Newspaper Expenses A/c Decoration Expenses A/c Interest on loan (12.75%) Trial Costs Uniform Expenses Advertisement & Promotional Expenses Fire Fighting A/c Misc Expenses (1% of Total Cost) Lease Rentals Corporate Taxes @ 4% Auditor's Fees Depriciation F&B Equipment Kitchen Equipment Computer Electronic equipment Equipment in restaurant and banquets hall fire fighting equipment Furniture To Interest On Capital Vatsal Yesha EBIT (-)Taxes EAT (+)Depreciation Cash Flow 0.40 0.18 0.93 2.00 0.02 0.65 2.55 0.12 0.50 3.00 0.16 0.70 13.20 4.12 0.20 0.07 0.33 0.15 0.77 0.27 0.03 2.47 0.90 0.90 5.56 2.30 3.26 4.48 7.73 0.42 0.19 0.95 2.10 0.02 0.65 2.49 0.00 0.50 3.30 0.17 0.72 13.20 4.33 0.20 0.06 0.63 0.06 0.69 0.24 0.03 2.22 0.90 0.90 8.10 2.87 5.22 3.94 9.16 0.44 0.20 0.95 2.21 0.02 0.65 2.41 0.00 0.50 3.63 0.18 0.74 13.20 4.61 0.20 0.05 0.57 0.02 0.28 0.22 0.02 2.00 0.90 0.90 12.46 3.86 8.60 3.16 11.76 0.46 0.21 0.95 2.32 0.02 0.65 2.33 0.00 0.50 3.92 0.19 0.76 13.20 4.91 0.20 0.05 0.51 0.01 0.11 0.19 0.02 1.80 0.90 0.90 16.70 4.76 11.94 2.68 14.63 0.49 0.22 0.95 2.43 0.02 0.65 2.24 0.00 0.50 4.23 0.20 0.78 13.20 5.23 0.20 0.04 0.46 0.00 0.04 0.18 0.02 1.62 0.90 0.90 21.07 5.70 15.37 2.35 17.71
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BREAKEVEN ANALYSIS
2009 Variable Cost Beverages consumed Misc Expenses (1% of Total Cost) Fire Fighting A/c Maintenance & Repairs A/C Food Purchase (30% of Food Sales) Inventory Maintenance Cost Gas A/c Food Costs on Banquet (30%) Total Variable Expenses Fixed Costs F&B Equipment Computer Kitchen Equipment Equipment in restaurant and banquets hall fire fighting equipment Furniture Electronic Equipment Newspaper Decoration
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2010 4.41 0.72 0.17 0.95 0.22 0.26 2.10 0.22 9.05 0.06 0.06 0.63 0.24 0.03 2.22 0.69 0.02 0.65
2011 4.63 0.74 0.18 0.95 0.22 0.27 2.21 0.22 9.42 0.05 0.02 0.57 0.22 0.02 2.00 0.28 0.02 0.65
2012 4.86 0.76 0.19 0.95 0.23 0.28 2.32 0.23 9.82 0.05 0.01 0.51 0.19 0.02 1.80 0.11 0.02 0.65
2013 5.11 0.78 0.20 0.95 0.23 0.30 2.43 0.23 10.23 0.04 0.00 0.46 0.18 0.01 1.62 0.04 0.02 0.65
4.20 0.70 0.16 0.93 23.40 0.25 2.00 0.21 31.85 0.07 0.15 0.33 0.27 0.03 2.47 0.77 0.02 0.65
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Trial Costs Uniform Expenses Advertisement & Promotional Expenses Lease Rentals Interest on loan (12.75%) Auditor's Fees Salaries Transportation Cost Staff Meal Expenses A/c Electricity Expenses Telephone Expense Stationary Expenses Cleaning Agents Total Fixed Costs TOTAL COST (VC+FC) BEP/Month (TC/12) BEP/Day 0.12 0.50 3.00 13.20 2.55 0.20 23.88 0.40 0.28 3.00 0.50 0.40 0.18 52.96 84.81 7.07 0.23 0.00 0.50 3.30 13.20 2.49 0.20 25.07 0.41 0.30 3.00 0.51 0.42 0.19 54.18 87.58 7.30 0.24 0.00 0.50 3.63 13.20 2.41 0.20 26.33 0.42 0.31 3.00 0.52 0.44 0.20 54.98 90.47 7.54 0.25 0.00 0.50 3.92 13.20 2.33 0.20 27.64 0.42 0.33 3.00 0.53 0.46 0.21 56.11 93.83 7.82 0.26 0.00 0.50 4.23 13.20 2.24 0.20 29.03 0.43 0.34 3.00 0.54 0.49 0.22 57.44 97.54 8.13 0.27
LOAN AMORTIZATION
Year 2009 2010 2011 2012 2013 Beginning Annual Inst Amount 20.00 5.65 16.90 5.65 13.40 5.65 9.46 5.65 5.01 5.65 Interes t 2.55 2.15 1.71 1.21 0.64 Prin Rep Rem Bal 3.10 3.50 3.94 4.45 5.01 16.90 13.40 9.46 5.01 0.00
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NPV IRR
41.09 20%
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EXIT STRATEGY
EXIT STRATEGY
It is very uncomfortable for an entrepreneur to think about the closure of the unit at the very start up stage. But exiting a business, according to me, is a very important art. You may exit the business and also make a fruitful exit for yourself and the person in charge for the further operations.
The following can be some of the risks and reasons as to why the firm might not be useful in carrying forward:
If the concept does not works out, and cost is not recovered than its better to invest somewhere else and recover the money. The management does not have the skills and competencies to further run the business. The business might be run better by someone more competent.
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The management is not able to fight with the competition. The business is growing fast but the management is not competent enough to sustain the growth. Under any of the above mentioned condition it is in the best interest of the firm to exit.
The assets will be sold of and loan will be paid by taking money from either family, friends or relatives or earning money from some other business.
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Conclusion
Conclusion
Entrepreneurship is by far the most important tool in the hands of an entrepreneur to bring about successful turnaround in the hospitality business. Innovative ideas and ongoing innovation is what will facilitate entrepreneurs to bring about successful turnaround in ailing businesses.
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SOURCES OF DATA
SOURCES OF DATA
CMIE AIS ISI Emerging Market
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EBSCO Database EMRALD Google.co.in Indiastat.com Research Publication Secondary Data
www.restaurantvoice.com Prasanna Chandra (7th edition)
www.smetoolkit.com
www.moneycontrol.com
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