Draft Report Rational
behind choosing the Project:Food is one of the basic necessities for all human. Being away from home good quality food has become dream for all students and working people. As we are students and away from home we crave for it too. There are lot of hotels who provide food in Bhubaneswar but there food quality is not up to the mark. Thus the first idea that came in our mind while confronted of making a project was food business. Later we analyzed it to be profitable and social welfare activity also because if we provide good quality food at a reasonable rate it will decrease health deases also. Starting Date and End Date:We started the project on 12th February,2010 on which project groups were formed. The second step was selecting three projects and planning to do one of them as allotted by our respective faculty. Final project report submission is on 14th April, 2010. But as per our enhanced interest in this project we plan to transform it into reality irrespective of the time it may require. Define the Project title:''SPECIAL PAKWAN'' Services Ltd. Particular Geographical Location of the Project and justification for the same:We choose the ''Patia'' and its surrounding area for implementation implementation of catering service. As this is the place we acquainted with and has brighter prospect of catering business pertaining to various educational and professional organizations organizations in the vicinity we have chosen this place as our target market. Marketing Feasibility and Marketing Plan:a. Product Planning:''Special Pakwan'' Service Ltd. Is a hypothetical start-up. It is set up by five management graduates who found opportunity in catering services in Bhubaneswar. Bhubaneswar. The company decided to focus on providing providing nutritious quality food. Its make-to-order plan with effective home delivery approach. It plans to enter and sustain in the local market of Bhubaneswar. It provides breakfast, breakfast, lunch, snacks and dinner also. Social gathering and special celebrations are the major work options. b. Pricing Strategy:1. Penetrative Pricing- Our potential customers are students and working people who want daily meals. Hence we would enter the market at penetrative price to compete with the existing service provider. 2.Differentiating Pricing-As market strategy is push type differentiating pricing needs to be adopted. 3.Going rate Pricing- We will fix our price of meal after analyzing competitor market. 4.Value Pricing- We will charge a fairly low pricing for a high quality offer. We offer discounts for regular customers,bulk orders,seasonal and festivals discount, price reduction for initial customer. c. Distribution Channel or Strategy:We will recruit five delivery boys and provide them with vehicles and mobile phones and allocate them different locations near by Patia. For Sundays or any holidays to fulfill excess demand of our service we recruit two additional delivery boys on part time basis.
d. Promotional Strategy:1.We will distribute leaflets in area of operations. 2.Advertise in local news paper like Sambad, Twin City etc. 3.Contact all available authorities of local institutions 4.Offer discount for membership. membership. e. Competitor’s Analysis w.r.t. above points:''Dimples kitchen''1.Price- High price and medium quality. 2.Place- In and around Bhubaneswar. 3.Product-North 3.Product-North Indian, Chinese , south Indian and confectionery. 4. Promotion-Advertising through Internet. f. Industry Analysis:1.PESTEL Analysis: 2.SWOT Analysis: g. Demand Forecast:After analyzing competitor’s market we assume that our market demand will be 500 meals per day initially. And in Sundays and holidays it will be around 750 meals. h. Sales Target:our sales target would be 600 meals per day for first six months. By the end of first year we will target 1000 meals per day. On special occasions target would be set of 1500 meals on an average. i. Sales Team Structure:Sales team will consist of regular five boys and part time seven boys for delivery j. Potential Buyers:All students who stayed in mess and working people who are away from home. k. Potential suppliers:We will connected with some milk and milk product provider,meat provider and vegetables provider. We also keep contact with general stores from where we can get
Costing
of each product and services:-
Process & Sequence PURCHASE
RECEIPT/DELIVERY
AMBIENT/CHILLED/FROZEN STORAGE
PREPARATION
COOKING
CHILLING
HOT HOLDING
REGENERATION
SERVICE
Technical Feasibility
Technical Assumptions: Technical equipments what we have are best available in the market market . And And In future we have have technical advantage on our competitors. 1. Facilities and Major Equipment 1.1 Kitchen facilities 1.2 Refrigerators Refrigerators and freezers 1.3 Ranges and hot plates
price(in Rs) (23,000) (12,000)
1.4 Ovens 1.7 Transportation ransport ation equipment 1.8 Washer and dryer 2. Kitchen Furnishings 3.Smaller Equipment 3.1 Food processors 3.2 Mixers 4. Miscellaneous Electric Equipment 4.1 Coffeemakers 4.2 Electric kettles, heating trays, and crock pots
(15,000) (15,000) (7,000) (20,000)
(5,000) (3,000) (2,000) (7,000)
5. Kitchen Equipment 5.1 Knives 5.2 Cutting boards 5.3 Scales, pots and pans, and strainers 6. Serving Equipment 6.1 Serving ware 6.2 China, glassware, and linen 6.3 Baskets and other decorative items 7. Nonessentials and Other Small Tools Tools and Equipment
(5,00) (3,00) (2,500) (1,500) (4,000) (7,000)
Administrative Equipment chair. Desk and chair. (4,000)
Computer with printer, CD-RW, Microsoft Office, and QuickBooks Pro. (17,000) Copier and fax machine. (4,000)
Stationary.
(1,000) Methods of Production
Food production and assembly will take place in the kitchen. Fresh vegetables, meat and dairy products will be used to create most of the dishes from scratch. The chef will exercise strict standards of sanitation, quality production, and presentation or packaging over the kitchen and service staff.
The four main things to processed for good hygiene, they are:
1.
Cross-contamination: Cross-contamination is one of the most common causes of food poisoning. So,to avoid it clean work surfaces, chopping boards and equipment are used before start preparing food.
2.
Cleaning: Effective cleaning gets rid of bacteria on hands, equipment and surfaces. So it helps to stop harmful bacteria from spreading onto food.
3.
Chilling: Chilling food properly helps to stop harmful bacteria from growing. Some foods need to be kept chilled to keep them safe.
4.
Cooking: Thorough cooking kills harmful bacteria in food. So it is extremely important to make sure that food is cooked properly. When cooking or
reheating food, always check that it is piping hot all the way through
These are known as the 4 Cs. They will help us to prevent the most common food safety problems.
Ecological Issue
Electricity, gas and others, is wasted due to energy inefficient appliances and human activated waste.So, we are giving too much emphasizing on this. Because wastage wastage of energy cause harm to to environment. environment. We are using kitchen appliances that carry the Energy Star logo. Waste management system. Educating our employee employees about the various environment friendly and energy efficient alternatives available today.
Legal requirements
Food Safety Act 1990
Under the Food Safety Act, we must not: 1. sell (or keep for sale) food that is unfit for people to eat 2. cause food to be dangerous to health 3. sell food that is not what the customer is entitled to expect, in terms of content or quality 4. describe or present food in a way that is false or misleading . Food Premises (Registration) Regulations 1991 If we are planning to start a new food business, we must register register our premises 28 days before opening. Food Safety (General Food Food Hygiene) Regulations R egulations 1995 These Regulations Regulations set out the basic hygiene rules that food businesses must follow in relation to staff, premises and food handling. (Temperature Control) Regulations 1995 Food Safety (Temperature The regulations cover the following issues: 1. the temperature at which certain foods must be kept 2. which foods are exempt from specific temperature control 3. when the regulations allow flexibility
Fire safety must always be ensured
Tax considerations are essential during the formation of a new business and during its entire life. When a business is just starting out, it may have little or no income or assets and the choice of structure structure may not seriously affect its tax liability. However, as the business grows, the tax implications become more significant.
Insurance is a necessary expense. This includes product and personal liability, as well as coverage on the space used for the business, equipment, vehicle used for the business, and worker's compensation compensation for any employees.
The
sale of liquor, wine or beer requires requires a license. VAT registration number.
Layout of the business unit
Financial Plan Project Budget At this time, the Catering Business requires 100,000 100,000 of debt funds. Below is a breakdown of how these funds will be used:
Projected Startup Costs Business Startup Year
2010
Initial Lease Payment And Deposits
25,000
Working Capital
65,000
FF & E
25,000
Leasehold Improvements
10,000
Security Deposits
2,500
Opening Supplies
10,000
Company Vechiles and Lease Deposits
20,000
Marketing Budget
10,000
Miscellaneous and Unforseen Costs
7,500
Total Startup Costs
175,000
Sales Forecasts Year
2010
2011
2012
2013
2014
Sales
655,290 741,26 655 ,266 778,550 788,650 809,98 ,980
Operating costs
377,526 391,666 424,768 435,654 450,456
EBITDA
212,235 251,173 275,927 280,345 290,876
Taxes,Interest,And Depreciation 99,649 Net profi ofit
108,901 117,691 121,536 130,987
112, 11 2,58 586 6 14 148 8,165 ,165 16 164, 4,12 129 9 18 184, 4,64 645 5 207 07,4 ,453 53
Organizational Budget Personnel Plan - Yearly Year
2010
2011
2012
2013
2014
Owners
65,000
66,950
68,959
71,957
73,576
Manager
50,000
51,500
53,045
55,546
57,890
Customer Service
58,000
59,740
61,532
63,745
65,598
Seasonsl Staff
45,000
46,350
63,654
73,786
77,548
Administrative Staff
25,000
25,750
26,523
26,955
27,990
243,000
250,290
273,712
291,989
302,602
Total Numbers of personnel Year
2010
2011
2012
2013
2014
Owners
5
5
5
5
5
Manager
1
1
1
2
2
Customer Service
6
6
7
9
10
Seasonsl Staff
3
3
4
5
5
Administrative Staff
1
1
1
2
2
16
16
18
23
24
Totals
General Assumptions • The Catering Business will have an annual revenue growth rate of 16% per year.
• The loan will have a 10 year term with a 9% interest rate. • The Owner will acquire 100,000 of debt funds to develop the business. Project financing:Sources of Funds a. Equity Capital b. Long term loan from Small Industries Development Bank Source of Funds FINANCING Equity contribution Management In Investments
25,000.00
Total Equity Financing
25,000.00
Banks And Lenders Banks And Lenders
150,000.00
Total debt financing
150,000.00
Total financing
175,000.00
General Assumptions: Year
2010
2011
2012
2013
2014
Short Term Intereste Rate
09.05%
09.05%
09.05%
09.05%
09.05%
Long Term Intereste Rate
10.00%
10.00%
10.00%
10.00%
10.00%
Centeral Govt. Tax Rate
33.00%
33.00%
33.00%
33.00%
33.00%
State Tax Rate
05.00%
05.00%
05.00%
05.00%
05.00%
Personnel Tax
15.00%
15.00%
15.00%
15.00%
15.00%
Projected Profit and Loss account Profit and Loss Statements: Year 2010 2011 2012 2013 2014 Sales 655,290 714,266 778,550 889,56 909.50 7 9 Cost of Goods Sold 65,529 71,427 78,855 84,532 86,309 Gross Margin 90.00% 90.00% 90.00% 90.00 90.00% % Operating income
Expenses Payroll
Central Govt. Tax State Govt. G ovt. Tax Tax Interest Expenses Depreciation Expenses
Profit Margin
642,839
700,69 5
243,000
250,290
273,712
70,038 10,612 13,107 5893
78,862 11,949 12,197 5893
87,359 13,236 11,202 5893
112,586
148,165
164,129
17.18%
20.74%
21.08%
75,74 79,459 6
281,72 283,89 3 4 14,400 14,976 15,575 16,598 17,345 13,761 15,000 16,350 17,578 19,624 25,000 25,750 26,523 27,642 29,432 7,500 7,875 8,269 9,465 9,978 15,000 16,500 18,150 18,890 20,890 17,500 18,375 19,294 21,732 23,845 4,915 5,357 5,839 6,767 7,354 36,450 37,544 41,057 42,132 43,785 377,526 391,666 424,76 427,8 435,25 8 34 7
General administrative Marketing Ex Expenses Professional Fees Insurance Cost Travel and Vehicle Cost Rent and Utility Miscellaneous Cost Payroll Taxes Total Op Operating Co Cost
Net Profit
589,761
91,567 15,486 13,890 5893
99,784 18,656 15,468 5893
174,70 180,78 9 6 24.75 29.86% %
Cash Flow Analysis: Year
2010
2011
2012
2013
2014
Cash From Operations Cash From Receivable Operating Cash Inflow
118,479 0 118,479
154,058 0 154,058
170,022 0 170,022
185,068 0 185,068
196,785 0 196,785
Other Cash Inflows Equity Investment Increased Borrowing Sales and Business Assets A/P Increases
25,000 150,000 0 37,902
0 0 0 43,586
0 0 0 50,125
0 0 0 52,739
0 0 0 54,983
Total Other Cash Inflows
212,902
43,587
50,125
52,739
54,983
Total Cash Inflow
331,381
197,645
220,148
237,807
251,768
Cash Outflow Payment of Principle A/P decreases A/P Increases Assets Purchases Dividends Total Other Cash outflows Net Cash Flow
9695 24,897 0 82500 94,783 211,876 119,506
10,605 29,876 0 15,406 123,247 179,133 18,512
11,599 35,852 0 17,002 136,018 200,471 19,677
14,537 37,734 0 19,743 140,573 234,725 21,836
16,485 39,539 0 21,654 146,754 140,673 23,231
Cash Blance
119,506
138,018
157,695
196,786
256,823
Balance Sheet Performa Balance Sheet Yearly Year
2010
2011
2012
2013
2014
Assets Cash
119,506
138,018
157,695
159,674
163,723
45,000
46,541
48,241
59,689
62,396
2,500
5,581
8,982
9,067
12,648
Furniture & Equipment
15,000
18,851
23,102
26,546
27,495
Company Vechile & Lease Deposits
20,000
28,473
37,824
39,637
42,539
Accumulated Depreciation
(5,893)
(11,786)
(17,679)
(18,456)
(24,625)
196,113
225,679
258,165
13,005
26,716
40,990
42,839
44,789
140,305
129,700
119,096
109,867
105,736
0
0
0
0
0
153,310
156,416
160,085
152,706 150,525
42,803
69,262
98,079
102,835 120,674
196,113
225,679
258,165
294,613 308,801
Amortized Expansion Cost Opening Supplies
Total Assets
294,613 308,801
Liabilities & Equity Accountant Payable Long Term Liabilities Other Liabilities Total Liabilities
Net Worth Total Liabilities & Equity
Break even Analysis Our break-even analysis analysis is based on the ongoing ongoing costs we incur to keep keep Catering For For running. Fixed Fixed costs including the overhead for use of the commercial commercial kitchen, utilities/contract services, payroll, and marketing costs. The payroll cost includes the salary for one permanent part-time staff person who will manage the operation of the catering business as well as instruct the student workers for the entrepreneurship portion of the curriculum. Marketing expenses will be kept kept to a minimum, minimum, primarily primarily employing word-of-mo word-of-mouth uth and other inexpensive inexpensive means. Our assumptions on the average unit revenue are based on the average price we will charge for our corporate boxed lunch, however this is not the only product that will be offered by Catering For Kids. The result of this analysis offers general insight regarding the number of boxed lunches we must sell in order to maintain uninterrupted operation of the catering business each month.
Break Even: Break even point = Fixed cost/ Contribution per unit Contribution per unit = Selling price per unit – variable cost per unit General Assumptions Monthly Break Even Analysis Year
2010
2011
2012
2013
2014
Monthly Revenue
34,956
36,265
39,330
40,471
45,963
Yearly Revenue
419,473
435,185
471,964
504,543
542,78
Social
cost benefit analysis:a. Health benefit b. Environmental Environmental benefit (no use of polythene bags) c. Income of the local vendors gets benefited d. Employment benefits to the skilled and unskilled labour
Business Ratios Business Ratio - Yearly Year
2010
2011
2012
2013
2014
Sales Growth
0.0%
9.0%
9.0%
10.00%
11.00%
Gross Margin
90.0%
90.0%
90.0%
90.0%
90.0%
17.18%
20.74%
21.08%
23.09%
24.86%
Assets to Liabilities 1.28
1.44
1.61
1.61
1.63
Equity to Liabilities 0.28
0.44
1.61
1.65
1.68
Assets to Equity
3.25
2.63
2.71
2.87
Sales
Financials Profit margin
4.58
Liquidify Acid test
0.78
0.88
0.99
0.99
0.99
Cash to Assets
0.61
0.61
0.61
0.61
0.61
CATERING LAY OUT:
HDF
SCHO SCHOO OL OF MANA MANAGE GEME MENT NT PROJ PROJEC ECT T MANA MANAGEM GEMEN ENT T
for PGDM 2009-11 PROJECT REPORT ON CATERING BUSINESS
SUBMITTED BYANANYA ANANYA GHOSH, PGDM0900 P GDM09002 2 SATISH KUMAR JHA, PGDM09005 SUBHASHIS SINHA, PGDM09008 K.CANDAN KUMAR,PGDM09021 AANSHU SONALI RATH, PGDM09031
SUBMITTED TOProf P.K.RATH
