Feasibility report
Italian Pizza Hut
Prepared by: Muhammad Tanveer Reg#: 54813 Submitted to: Mr. Zia-ur-Rehman
I n t r o d u c t i o n “The pleasures of the table belong to all times and all ages, to every country and ever day, they go hand in hand with all other pleasures, outset them and remain
to console us for their loss.”
Restaurant business is one of the oldest known to man and to a large extent is still an art and will remain so in future. System and practices make the job of managing a hotel or restaurant much similar, but the human element is difficult to systemize. The field of restaurant business is interdisciplinary. It draws up economics, psychology, management, food technology, architecture and marketing clustered together. It is a business of hospitality.
Brief Description Of Proposed Project In this project we are introducing a Fast Food Restaurant in saeed abad KHI : Fast Food Restaurant ` Project : Italian Pizza Hut ` Name ` Project Site : Saeed Abad Karachi : 1 Canal ` Total Area : 12:00AM – 12:00PM ` Operating Time (Weekdays) 12:00AM – 1: 00PM (Sundays) 30 days a month, 12 months a year : 150 People at a time ` Project Capacity : Original Recipe Deep Fried Chicken, ` Main Utilities Italian Special Pizza, Zinger Burger, Fillet Burger, Soft drinks (produced by Pepsi), : Opening a number of more restaurants after success of ` End Project project.
O p e r a t i o n
S t r a t e g y
The operation strategy of our restaurant will be designed around the concepts of five senses. From our description research of the industry we found out that restaurant business is one of those rare services which touch all the five senses of human being. The food will cater to the sense of taste, music to the sense of sound, aroma of dishes to sense of smell, decor to the sense of sight and clean crockery, cutlery and environment in general to the sense of touch. Taking care of all five senses our customers would be the core of our strategy.
Structure of Management: Our business is a partnership which includes 6 partners investing capital. Once it is decided that we are getting into business the question arises that what is uncountable list of occupations the point is what kind of business to be done. The answer to this question may be found while considering following factors:
Government Policy: The factor of government policy plays a major role in the success of any business. Before deciding to get into the business. One must also keep in mind the advantages and disadvantages of any business for the country. Earning money by keeping the interest of the country at stake should not be even thought of. The business must be chosen considering its benefit to the country, in the shape of taxes, revenues and over coming unemployment.
Number of Consumers: This factor is also of vital importance. This business only flourishes when the demand of that product or number of consumers is more. Thus, while choosing any business we must see the field which provides maximum number of consumers, so that the invested capital is not blocked or wasted.
Demand Of The Product: Demand of the product by the user is also a key feature before choosing any business. If the chosen business in competition with others then one should not forget that profit is divided. However, by producing quality product, this factor could be dealt with properly and in our favor. One could fetch more business if demand of the product increases.
General Trend Of The Area: One cannot do any business if it is started at a place where the trend of the people is not favorable. Therefore, before choosing the trend of people must be created for it. Hasty decisions should be avoided. See to the fact, that business place is located where one could fetch the consumers. So the trend of consumer is also important before selecting the business.
Budget Of Partners: Before getting into business, the spirit should be high, but always keeping in mind that it should be planed within the available budget. It is an art to get maximum benefits by spending minimum resources. However, the element of risk and luck always becomes the major cause of success of business. Therefore, always plan business by keeping budget in mind.
Budget of Consumers: The purchasing power and the real income of the consumer should be kept in mind before choosing business. By giving thorough study and elaborate discussions on above-mentioned factors, we now have to choose business out of unlimited jobs one could get into. After loads of thinking and vast study, we all partners concluded that the business of opening an outlet of an International Franchise Restaurant could be the best for us. So we all decided to open a restaurant where the full range of eatables of international standard are provided on competitive rates. Since the occupants of the area, which is selected for this restaurant, have a lot of trend for hostelling, therefore, we sincerely hope and pray that this business would meet the required success.
The Scope Of The Project The outlets of Italian Pizza Hut all over the world and in Pakistan in cities like Karachi are meeting with unlimited success day-by-day, resulting in expansion all over the world. Since people have to eat, therefore, the business in eatables will not fail if properly looked after by a team of dedicated lot. In Karachi, there are number of hotels and restaurants, cheap and expensive, but all these places are always filled with people of different class. We have felt that if conducted properly, this project could bring us luck. We have also carried out surveys and have found that almost 60% of the occupants have a trend of eating out with families and friends. Moreover, this business also benefits the government policies of unemployment – also does not hinder the government polices. A lot of revenue is paid to the government in shape of excise duty and sales tax. As we have selected one of the best spots in Karachi therefore, we are sure that we will be able to compete with other restaurants in surrounding areas. We are young, energetic and honest. We want to stand on our feet; we want to bright in our future with respect and dignity. With our honest efforts, we are positive that this project will be able to meet the success. We strongly believe that if success has to be met, then we will have to put in our best and honest efforts to provide our food to the entire satisfaction of consumers. We believe that we can make a difference; we will demonstrate personal pride and commitment in everything we do. We have a passion for making things better and we have a positive outlook. We know working as team always gets the best results. We will by the grace of God work with all our zeal and enthusiasm. By considering all above-mentioned factors of our project, it is quite evident that we will compete in the market. The scope of our project is good and the results will be prolific. The location of business spot is already been mentioned which appears to be the best in Karachi. We intend covering our clients from all part of the city mainly from Mahajar Camp area.
M a r k e t
S u r v e y
The market survey was carried out with express intention of its being factual and maximum possible care has been exerted to use the best sources of information. There are many ways through which market survey can be conducted and the most popular method available entails about 80% of the facts considered and 20% of necromancy and judgment. It would be true to say that the luck of statistical data would make the study useless. There are different ways through which market survey can be conducted. It is only right, therefore to describe the various ways of the market research, there are eight different types of market research. These are:
In order to conduct our market survey we aimed at:
ason “why” survey. To conduct a proper and a good survey, we divided the city in to closes i.e. Upper Class and Middle Class.
Upper Class: It includes the elite class of the city. It includes people living in main city. The people living in these are mostly rich and can afford to have a good and expensive food.
Middle Class: It includes most people living in these areas belong to middle class. The survey report results are as follows: In order to provide our customers with pleasant atmosphere and good quality of food, we need different types of machinery and equipment.
T e c h n i c a l
A n a l y s i s
Types of Machinery The different machines, which we need, are:
Cooking Range : For cooking purpose, we need specially designed cooking range, which is systematically for cooking and baking at different requirement temperatures.
Deep Freezers: We need deep freezers to fulfill the requirements of our c ustomers. In this section total expenses for our Italian Pizza Hut are given. From this survey of markets, we have estimated the least price with good quality.
Air Conditioners: We also want to provide good and pleasant atmosphere so that people can enjoy food, therefore, we require 5 split units of air conditioners.
Separate Stoves: We also require a separate stove with eight terminals to cook different foods in large quantity.
Deep Frier: Deep frier is a basic necessary of fast food. It is needed for frying French fries, chicken, etc. French fries are liked by almost everyone, so we need a deep frier. Cost of these pieces of equipment and total expenditure on it is given in Financial Analysis.
F i n a n c i a l
A n a l y s i s
In these section total expenses for our Italian Pizza Hut from this survey of market we have estimated the least price with good quality. Ownership Of Business: Our business is on partnership basis and we have six partners, each one investing his/her own capital, which is near about Rs. 1000,000 as franchise will cost us Rs . 200,000,00. Fixed Cost: Following are the costs, which will incur only once. Commercialization Cost Of Land: As we are constructing restaurant in a residential area, so we go it commercialized at Rs. 8 lac /canal. Total estimated commercialization cost of 2 canal = Rs 1,600,000
Land: The total land is 1 canls and the cost of land is in that area is Rs. 180,000 per Marla. So the total land cost is Rs. 7,200,000. Construction: The basic aim to open a Italian Pizza hut is to given an ideal eating place with pleasant atmosphere. So we will construct our restaurant in a way that it would catch the attention of our customers. Specifications: Foundation P.C.C. (1:4:8) in base. Super Structure B.B. in cement Mortar (1:5) Walls 1 foot 1.5 inches thick, coated with hot bitumen, 2 coat and 2 sheets of polyethene to all external walls. Floors Marble floors with 4 inches marble skirting. Roof R.C.C. roof slab (1:2:4) as per design. Internal Finish Cement mortar (1:2) ceilings; Cement mortar (1:4) walls. Internal & External Paint Emulsion paints weather shield of off-white colour. Wash Room: Marble tiles for floors and glazed titles f or walls. Opening Whole front will be of glass and wire gauze windows on the inside.
Schedule of the Area Total area Total covered area Estimated cost
= =
10800 squares feet = 20 marlas 4000 square feet = 18.6 marlas
of construction
=
Total estimated cost of construction
=
Rs. 800/sq. foot
29.6 x 270 x 800 = Rs. 6393600 The total cost includes cost of construction of building, glass & lighting. Total sitting capacity = 150 persons
Air-conditioning Unit: Five air-conditioner units will be installed to keep our customers safe from the blazing heat of Shikarpur and give them a cool and relaxing atmosphere. Cost of 1 air-conditioning unit = Rs. 26000 Cost of 5 air-conditioning units = Rs. 130,0000 Furniture: We will place high quality furniture to match the standard of our restaurant. Tables: Several tables are required for proper sitting arrangements. Total 30 tables will be placed. Cost of 1 table = Rs. 2000 Cost of 30 tables = Rs. 60,000 Chairs: To make our customers comfortable, relaxed and easy, we will buy specially designed chairs. Total 150 chairs will be used. Cost of 1 chair = Rs. 800 Cost of 150 chairs (150x800) = Rs. 120000 Interior Decoration: We have decided to decorate our restaurant with beautiful scenery. Cost of one moving scenery = Rs. 15,000 Cost of 4 moving scenery = Rs. 60,000 Deep Frier: As French fries are the ever favorite of all people of all ages, so deep frier will be bought. Cost of 1 deep frier = Rs. 2500 Cost of 5 deep frier (2500 x 5 ) = Rs.12500 Cooking Range: We have decided to use a specially designed cooking range provided by KFC for convenient and easy cooking. Cost of 1 cooking range = Rs. 100,000 Fresh Pepsi Maker: Cost of 2 Fresh Pepsi Makers = Rs. 40,000 Stove: A special stove with eight terminals will be installed. Cost of one stove = Rs. 10,000 Cost of each (unit) Number of Utensils Number of units Total cost (Rs.) Dishes 200 50 Rs. 10000 Forks 300 8 Rs. 2400 Disposable Glasses (of KFC) 200/day 3 Rs. 600 Total Rs. 13000 Total fixed cost = Rs. 170,09,100
Variable Costs: These are the costs, which are subject to change, these costs are taken Salary of the Manager (Per month) = Salary of 5 Chefs (4000 x 5) = Salary of 3 receptionists = Salary of Waiters (10x1200) = Salary of Security Guard = Salary of 4 Sweepers(1200 x 4) = Charges of Waste Buster Van = Monthly Utilities Bill = Total = Total accrued cost of ingredients per month like buns, eggs, beef, chicken, spices assorted, vegetables, soft drinks, Monthly Tax
Rs. 18000 Rs. 20,000 Rs. 5,200 Rs. 12000 Rs. 2,000 Rs. 4800 Rs. 400 Rs.80,000 Rs. 14,2400
= Rs. 427,675 + 80,000 = Rs. 507,675 Total variable cost (142400 + 507,675) = Rs. 650075 Advertisement Expense: We are entering in the market with the large advertisements. So, for this reason, we would have a large advertisement expense.
Advertisement through Newspapers: Many daily and weekly newspapers are published in Karachi. The people of Karachi frequently read newspapers, that‟s why we advertise our restaurant by these newspapers. The main daily newspapers published in Karachi are: Daily Express Awam Jang Among English newspapers, important one is “This News” our ads. Will be given in Urdu newspapers, 10 days before the opening ceremony of Re staurant and then 30 days after it. Rates: Express
= Rs. 1,700 per ad on 2nd page = 3 col x 10 cm Awam = Rs. 1,200 per ad. nd Dimensions of ad. = 3 col x 10 cm on 2 page Expenditure of Express (1,700 x 40) Expenditure of Awam (1,700 x 40)
Size
=Rs.48,000 = Rs.68,000 = Rs.68,000 = Rs.184,000
Expenditure of Dawn (1,200 x 40) Total expenditure Ads. will be given in English Newspaper “The News”. We will advertise KFC Restaurant in “The News” for complete one month.
Rates: The News Dimension Expenditure
= = =
Rs. 1.800 per ad. nd 3 col x 10 cm on 2 page (1,800 x 30)
=
Rs. 54,000
Advertisement Through Television: In Pakistan, we have three TV channels that are „PTV‟, Channel -3 „PTV World‟GEO”. But we have chosen GEO for the advertisement of our Italian Pizza Hut, because it is the most popular TV channel in Karachi (Saeed abad). 3 ads. will be displayed during “Drama Hour” 2 ads. will be displayed after “Khabarnama”. These ads will start one week before the inauguration of our restaurant and will last till the end of next three weeks. Rates: During Drama Hour (7-9 PM), 3 ads of 10 sec @ 3,800 After Khabarnama (9PM – 12 AM), 2 ads of 10 sec. @ 3,300 Daily Cost (11,400 + 6.600) Total Adv. Exp. (8000 x 30)
= Rs. 11,400 = Rs. 6,600 = Rs. 18000 = Rs. 540000
Advertisement Through Printed Material: We will also advertise through printed material like banners, handbills, signboards, and stickers. This is important way of advertising because these printed materials almost cover the whole city. Those people who miss ads. on TV or those who cannot read newspaper, will certainly see this material. Cost: 30 banners @ Rs. 300 = Rs. 9,000 4 signboards @ Rs. 8,000 = Rs. 32,000 15,000 handbills @ Rs. I.5 = Rs. 22,500 15,000 stickers @ Rs. 1 = Rs. 15,000 = Rs. 78,500 Total Cost Total Advertising Expense: Newspapers = Rs 238,000 TV Media = Rs. 540000 Printed Media = Rs. 785,000 Total = Rs. 1563000
Revenues: We have found out our revenues on average basis per month. The name of items available in our restaurant, their prices and quantity sold will be given as follows:
CATEGORY NO. 1 BURGERS Name
Rate
Quantity Sold
Revenue
Italian Zinger
100
6000
600000
Fillet Burger
80
4500
360000
Masala Burger
50
6000
240000
Total Note: These Burgers are specialty of Italian Pizza hu t
1200000
CATEGORY NO. 2 SOFT DRINKS Name
Rate
Quantity Sold
Revenue
Pepsi
15
2000
30,000
Marinda
15
15000
22500
7 up
15
1000
15000
Total
Name family deal
67500
CATEGORY NO. 3 ITIALIAN PIZZA Rate Quantity Sold
Revenue
450
150
67500
400
250
100000
Double deal
325
400
130000
Single deal
250
500
125000
Single deal + burger
Total
422500
So the total revenue per month is Rs. 1690000 Break-even Point: The break-even point is the point where the total revenue is equal to the total cost. This point shows that after how much time we can get our profit. Break-even point : C(x) = R(x) Cost = Fixed Cost + Variable Cost = 18572100 + 650075 (x) where x = months 18572100 + 650075x = 1690000 (x) 1690000x – 650075x = 18572100 1039925x = 18572100 x = 17.9 So we can achieve our break-even point in 17 months and 28 days.
BALANCE SHEET
ASSETS Land Building Air condition Supplies Machinary Cash in hand Total assets
7200000 6393600 1300000 60000 151200 6000000 21284800
Liability Account payable interest Payable
1184800 100000
Owner's Equity Capital Total Liability and owner's equity
20000000 21284800
INCOME STATEMENT Revenue: Expected Revenue
1690000
Expenses: Salaries expense
142400
Tax expense
507675
Expenditure expense Advertize expense
128000 683000
Net income
228925
