KFC feasibility

FOODS & MOODS A fast Food
Restaurant
2014
Institute of Tourism & Hotel
Management Lahore
8/22/2014
FOODS & MOODS
A fast Food Restaurant

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Feasibility Report Prepared by Ghulam Mujtaba ,
M.Fiaz & Aamir Rohail, Abid & Mazhar
Pre-Feasibility Report
To open
FAST FOOD RESTAURANT
Presented to Presented By:
Sir ImranRasool Ghulam Mujtaba
Muhammad Fiaz
Aamir Rohail
Abid Ali
Mirza Mazhar Ali Baig

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Table of Contents
Topic Page No:
Disclaimer 3
Introduction 4
Brief description of proposed project 7
Project profile 8
Operation strategy 15
Market survey 18
Results of market research 20
Technical analysis of location 21
Technical analysis of building 23
Proposed product (menu) 27
Machinery& equipment 29
Dining furniture & general fixtures 30
Human resource requirement 32
Financial analysis 33
Advertisement Expense 37
Revenues 39
Break-even Point 40
Assumptions 41
Statistical data 42

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DISCLAIMER
The purpose and scope of this information memorandum is to introduce the
subject matter and provide a general idea and information on the said area. All
the material included in this document is based on data/information gathered
from various sources and is based on certain assumptions. Although, due care
and diligence has been taken to compile this document, the contained
information may vary due to any change in any of the concerned factors, and the
actual results may differ substantially from the presented information. We do not
assume any liability for any financial or other loss resulting from this
memorandum in consequence of undertaking this activity. Therefore, the content
of this memorandum should not be relied upon for making any decision,
investment or otherwise. The prospective user of this memorandum is
encouraged to carry out once own due diligence and gather any information
he/she considers necessary for making an informed decision.

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INTRODUCTION
“The pleasures of the table belong to all times and all ages, to
every country and every 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.
Lahore is one of the oldest cities of Pakistan and is expanding every day. The
trend of the people of Lahore is drifting extensively towards modern means of
socializing and relaxation. Therefore, while starting our business, we want to
introduce a revolution in the business of restaurant. We plan to introduce a
restaurant of international standard, “Foods & Moods”, as the name explains
itself require no explanation. Here, you can find all types of foods which your
moods demand. Therefore, while starting our business we have decided to open
a restaurant in the posh locality of Lahore, and then extended to other parts.
About Foods & Moods
Moods & Foods is an entity of Ali Group of Companies, An old
established and dynamic business group of Pakistan. Ali Group is
primarily engaged in providing homemade food in offices, canteens,
schools & colleges. This includes processing, cooking and delivery.

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Now, in 2014, the group expanded and diversified its business
activities to include the fast food sector by launching its own
restaurant in the fast food scene with its brand Moods & Foods
The company lived up to its name and quickly carved out a niche for
itself in the burgeoning fast food market in Pakistan.
It will rapidly acquired a huge customer base of institutional customers
includes some prestigious franchise restaurants and other ventures,
apart from institutional base Moods & Foods caught the eye, and will
win the hearts, minds and taste birds of a large number of upwardly
mobile Pakistani families. They will appreciate its superb quality,
extensive range and appealing pricing. In no times Moods &
Foods will become a brand to keep an eye on and not necessarily in
the fast food field alone.
Our Mission
 To deliver consistent taste and quality to our valued customers by
using the purest ingredients and technology.
 Be dedicated to a continuous improvement through alliance with
international companies.
 To promote professionalism at all levels through education, training &
development of human resources.
Our Vision
Times are changing and the modern man continuously struggles to
find more time for himself. People crave for convenience in life and the
only way to make more time is by cutting down on time consuming

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jobs like cooking, house cleaning etc. A company that believes in quick
food preparations gives its customers more quality time to enjoy life
and great tasting food.
 To serve locally and expand globally.
 To make our brands an essential part of life.
 To maintain the highest standards in fast food products and take
advantage of pioneer ship in the fast food market as well as
research and development.

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Brief Description of Proposed Project
(In this project we are introducing a Fast Food Restaurant)
Project: Fast Food Restaurant
Name: Foods & Moods
Project Site: Gulberg Locality, Garden town, Lahore
Total Area: 1 Canal
Operating Time: 12:00AM – 12:00PM (Weekdays)
12:00AM – 1: 00PM (Sundays)
30 days a month,
12 months a year
Project Capacity: 150 People at a time
Main Utilities: Fried Chicken, Chinese, Zinger Burger,
Fillet Burger, Soft drinks & many more
End Project: Opening a number of more restaurants after
success of project.

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PROJECT PROFILE
Purpose of the Documents
This document is developed to provide the entrepreneur with potential
investment opportunity in setting up and operating a medium sized fast food
restaurant offering a variety of food items to the general public. This pre-
feasibility gives an insight into various aspects of planning, setting up and
operating a fast food restaurant for the general populace. The document is
designed to provide relevant details (including technical) to facilitate the
entrepreneur in making the decision by providing various technological as well as
business alternatives. The document also allows flexibility to change various
project parameters to suit the needs of the entrepreneur.
ProjectBrief
Fast food is food which is prepared and served quickly at outlets called fast-food
Restaurants. It is a multi-billion dollar industry which continues to grow rapidly in
many countries. A fast-food restaurant is a restaurant characterized both by food
which is supplied quickly after ordering, and by minimal service. The food in
these restaurants is often cooked in bulk in advance and kept warm, or reheated
to order. Many fast-food restaurants are part of restaurant chains or franchise
operations, and standardized food stuffs are shipped to each restaurant from
central locations. There are also simpler fast-food outlets, such as stands or
kiosks, which may or may not provide shelter or chairs for customers. Because
the capital requirements to start a fast-food restaurant are relatively small,
particularly in areas with non-existent or medium income population, small
individually-owned fast-food restaurants have become common throughout
Pakistan. Generally restaurants, where the customers sit down and have their
food orders brought to them, are also considered fast food.

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Opportunity Rationale
The Fast Food Restaurant Market is a growing industry in Pakistan relying
heavily on the changing lifestyle patterns, population growth of the target age
group and the related increase in employment of women. With today's hectic
lifestyles, time-saving products are increasingly in demand the most obvious
being the fast food. The rate of growth in consumer expenditures on fast food
has led most other segments of the food-away-from home market for much of the
last one decade. Demand for convenience has driven expenditures where people
want quick and convenient meals; they do not want to spend a lot of time
preparing meals, traveling to pick up meals or waiting for meals in restaurants.
As a result, consumers rely on fast food. Knowing this, fast food providers are
coming up with new ways to market their products that save time for consumers.
Consumers want to combine meal-time with time engaged in other activities,
such as shopping, work, or travel, therefore allocating less time for food, hence
the growing need for fast food.
The FastFood Industry ofPakistan
The fast-food industry is popular in Pakistan, the source of most of its innovation,
and
Many major international chains are based there. The presence of multinational
fast food chains like McDonalds, KFC, Pizza Express, Pizza Hut, Subway etc.
have somewhat catered to the high income segment therefore developing a
niche as upscale fast food restaurants. Multinational corporations such as these
typically modify their menus to cater to local Pakistan tastes and most overseas
outlets are owned by native franchisees to ensure that cultural, ethnic, and
community values are taken care of additionally, multinational fast-food chains
are not the only or even the primary source of fast food in most cities of Pakistan.
Many regional and local chains have developed around the main cities of
Pakistan (for example Khan Broast in Karachi) to compete with

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International chains and provides menu items that appeal to the unique regional
tastes and habits at comparatively low costs. In Pakistan, multinational chains
are considerably more expensive; they usually are frequented because they are
considered chic and somewhat glamorous and because they usually are much
cleaner than local eateries. However much of the middle-income segment (which
forms a major chunk of fast-food goers) prefers visiting local outlets that offer low
cost fast food, hence more frequent visits.
Increasing Number ofFastFood Outlets
The rapid rate at which the fast food industry continues to add outlets is as much
a reflection of consumer demand for convenience as it is a reflection of demand
for fast food itself. Expanding the number of outlets increases accessibility, thus
making it more convenient for consumers to purchase fast food. Especially in
recent years, much of the expansion has been in the form of "satellite" outlets.
These tend to be smaller in size, with little or no seating capacity, and are often
in nontraditional locations, such as office buildings, department stores, airports,
and gasoline stations; locations chosen specifically to maximize convenience and
consumer accessibility.
Consumer Appeal
Fast-food outlets have become popular with consumers for several reasons. One
is that through economies of scale in purchasing and producing food, these
companies can deliver food to consumers at a very low cost. In addition,
although some people dislike fast food for its predictability, it can be reassuring to
a hungry person in a hurry or far from home Multinational Fast food chains like
McDonald's rapidly gained a reputation for their cleanliness, fast service and a
child-friendly atmosphere where families on the road could grab a quick meal, or
seek a break from the routine of home cooking. Prior to the rise of the fast food
chain restaurant, people generally had a choice between greasy-spoon diners
(kiosk) where the quality of the food was often questionable and service lacking,

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or high end restaurants that were expensive and impractical for families with
young children. Modern, stream-lined convenience of the fast food restaurant
provides a new alternative and appealed to consumers' instinct for ideas and
products associated with progress, technology and innovation. Fast food
restaurants have rapidly become the eatery "everyone can agree on", with many
featuring child-size menu combos, play areas and whimsical branding
campaigns, designed to appeal to younger customers. Parents can have a few
minutes of peace while children played or amused themselves with the toys
included in the premises. Many consumers see multinational fast food
restaurants as symbols of the wealth, progress and well-ordered openness of
Western society and therefore become trendy attractions in many cities around
Pakistan, particularly among younger people with more varied tastes.
Focusingon Consumer Convenience
Fast Food outlets tend to focus on the “work while you eat” philosophy similar to
the McDonald Outlet at Quaid e Azam International Airport (Karachi) wherein
seating space is also available for passengers in transition or the KFC outlets in
large shopping malls like the Millennium Shopping Mall in Karachi promoting the
concept of “Shop While You Eat.”
Increasing Marketfor Fast Food – The PopulationBoom
Pakistan, currently ranked as 6th in terms of total population, is characterized by
a high population growth rate of 1.9% (Pakistan Economic Survey 2005) and is
set to take the top three positions in terms of total population with already 153.4
Million people registered in 2005.1 With this, the per capita income has increased
to US$ 736 while the productive age group (15 to 64) years is said to take the
major chunk of population (67% of total population) by 2020. 2 The growth rate in
food consumption is also augmented by the rapid increase in the employment
rate for males / female population aging between 20 to 29 years (fast food goers)

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hence the greater income contribution to the overall income generated is
expected to be higher.
The Future of the Industry
The Pakistani economy is becoming increasingly service-oriented, and over the
past several decades, the foodservice industries that offer the highest levels of
convenience have been rewarded with strong sales growth. In the face of rising
population, incomes and increasingly hectic work schedules, a nearly insatiable
demand for convenience will continue to drive fast food sales. Fast Food Outlets
will strive to find ways to make their products even more accessible. Even if
incomes stagnate or attitudes change, consumers are unlikely to return to meal
preparation at home on a large scale. This suggests that even if consumers
choose to spend more time at home, for family or other reasons, much of the
meal preparation will still occur elsewhere. Many more table service restaurants,
which traditionally focus on full-service in house dining, will likely try to capture
part of this market by offering take-out, and possibly experimenting with home
delivery. The value of consumer time, as well as the demand for consistent, high-
quality food products, will continue to shape the fast food industry. Fast food,
once considered a novelty, has become an increasingly significant part of the
young generation’s diet. The role of convenience in this dietary shift cannot be
over-emphasized, and the future growth of the rest of the foodservice industry
will be driven in large part by its ability to find new ways to save consumers’ time.
Key SuccessFactors/ PracticalTips for Success
Whether we are opening a one-of-a-kind restaurant or trying to grow our existing
Restaurant into a multi-unit chain, there are winning principles that can help
shape our restaurant and improve its chances of succeeding.
i) Conceive the “Winning” Concept
A well-defined concept stands a much better chance of long term success than

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Some vague notion. To start, it is wise to first set specific goals and decide on
the
Ways you will measure your restaurants success.
ii) Longetivity
This can be described as the art of being able to maintain success over time
while adjusting to meet the changing demands and buying habits of the
customer. To open a restaurant successfully and become profitable is one thing,
but to maintain that success over a long period of time is “winning.”
iii) Consistency
To not simply open a restaurant, but to truly develop a winning concept requires
Implementing systems and procedures to ensure consistency of your operation.
iv) Market Appeal
All restaurants want to be busy but winning concepts seem to have a broad
appeal and well developed “points of difference” that enable them to dominate
their market niche. To be the first place the customer thinks of going when
choosing to dine out is the goal of the winning concept.
v) Expandability
Consistency of quality and service, and operating systems and management
Procedures established in the first unit can result in more expandable
opportunities where all systems are already developed and waiting to be
implemented.
vi) Menu Pricing
One of the most important factors in the strategic planning of a restaurant is in
the development of the menu. It involves designing an appealing selection of
menu items that are competitively priced in the marketplace. Menu pricing is a
very tricky task because you need to price items so that you can operate

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profitably and, just as important, offer your targeted guests a good price/value
relationship.
vii) Selecting Prime Location
The specific location within your target area also is critical. If you are situated in
an infrequently traveled area nowhere near complimentary businesses or at the
back of a mall, you limit your earning potential. Even if you are the only outlet in
town you must gauge the likelihood of outsiders visiting your restaurant. If the
restaurant is right off of a major freeway heavily traveled by truckers and road
trippers you may be highly successful despite a remote location.
viii) Market Research
This is probably the most critical factor for running a successful fast food
restaurant. You need to visit fast food outlets, franchises and other chains to see
how your ‘concept’ would fit into the neighborhood you are planning to target.
Talk to customers to know their preferences, some detailed meetings with
restaurant managers / owners over dinner would do the trick in obtaining best
practices and critical information that otherwise could have been overlooked.
Keep in mind that because a concept works in one area does not mean it will be
well-received by customers in your location. Tastes are subject to location
preference and more often target market. In high scale urban areas (like PECHS,
KDA etc.) you are more likely to be successful with a niche concept than in a
dense middle income areas (like Gulistan e Jauhar). Another thing to consider is
competition. If your market is saturated with similar restaurants and the
population may not be large enough to support more restaurants, you may want
to rethink your concept.
Proposed Business Legal Status
Although the legal status of business tends to play an important role in any setup,
the proposed fast food business is assumed to operate on a partnership basis

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which may extend to multi branches in case of addition of new products that
might add significant business to the existing setup.

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Operation Strategy
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 3 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 c hosen
considering its benefit to the country, in the shape of taxes, revenues and
overcoming unemployment.

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Number of Consumers:
This factor is also of vital importance. This business only
flourishes when the demand of that product or number of consumers i s
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

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major cause of success of business. Therefore, we planned 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 a fast food 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 hotelling, therefore, we sincerely hope and pray that this
business would meet the required success.
The Scope ofthe Project
The fast food restaurants all over the world and in Pakistan in cities
like Lahore and 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 Lahore, 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

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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 Lahore, 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 Lahore. We intend covering our
clients from all part of the city mainly from cantonment area. The rest from
Gulberg, Iqbal Town, Johar Town, Model town, Garden town. In future we plan to
introduce more outlets of Restaurants in different areas of Lahore.
MarketSurvey
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

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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:
 Consumer Research
 Product Research
 Market Research
 Dealer Research
 Price and Policy Research
 Selling and Advertising Research
 Ware Housing
 Inventory Research,
 Cost and Efficiency Studies
In order to conduct our market survey we aimed at:
 Factual survey
 The awareness information system
 The opinion survey
 The attitude survey
 The future inventory survey
 The reason “why” survey.
To conduct a proper and a good survey, we divided the city in to classes
i.e. Upper Class and Middle Class.

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Upper Class:
It includes the elite class of the city. It includes people living in cantonment
area, DHA, Model town, Garden Town & Johar Town, Officers Colony, and few
sprinkled here and there. The people living in these are mostly rich and can
afford to have a good and expensive food.
Middle Class:
It includes mostly the people living in areas such as Icchra, Saman
Abad Sabzazar, New Mozzang etc. Most people living in these areas belong to
middle class. The survey report results are as follows:
Results of Market Research
Q.No.1: How frequently in a month do you usually go out to a restaurant?
By this question we wanted to know that at which time we should be expecting
more customers and the result was that 76% people come out dinner, 19% at
lunch and 5% at other.
Q.No.2: Do you usually go out with your?
Friends 36%, Family 41%, Business Guests 23%
By this question we wanted to know what kind of entertainment and atmosphere
we should provide.
Q.No.3: How do you become aware of new restaurants?

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We wanted to know in which field we should advertise more. The results were
that 30% come to now from reviews of Mag. 29% TV, 21% Recommendation,
15% by banners and 5% by Personal discovery.
Q.No.4: Rate the following attributes according to their importance for a
restaurant?
We asked this question to know to focus more.
Quality of food = 40%
Quality of services = 10%
Location = 15%
Crowd = 05%
Price = 30%
Q.No.5: Would you like the new restaurant in:
Gulberg Locality = 46%
Cantt Locality = 35%
Johar Town = 19%
Survey Results
So we decided that we should start our restaurant in Gulberg because this is the
middle area and easily accessible from all areas of Lahore. There are a large
numbers of colleges and universities also. So by doing business here, we can
boost up our business by offering discounts and deals to students as well.
Technical Analysis of Location
Accessibility to potential customers.

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We consider how easy it will be for customers to get into our outlet. If we are
relying on strong pedestrian traffic, consider whether or not nearby businesses
will generate foot traffic for us.
The rent-paying capacity of your business.
If we done a sales-and-profit projection for your first year of operation, we will
know approximately how much revenue we can expect to generate, and we can
use that information to decide how much rent we can afford to pay.
Traffic density.
With careful examination of food traffic, we can determine the approximate sales
potential of each pedestrian passing a given location. Two factors are especially
important in this analysis: total pedestrian traffic during business hours and the
percentage of it that is likely to patronize your food service business.
Visibility
It is a location’s ability to be seen and recognized. Good visibility can create
opportunities for the impulse eating decision that is critical for fast food operators,
and it allows the exposure full-service restaurants require.
Customer parking facilities.
In case we allow for parking the site should provide convenient, adequate
parking as well as easy access for customers.
Proximity to other businesses.
Neighboring businesses may influence our sales volume, and their presence can
work for us or against us.
History of the site.
We will find out the recent history of each site under consideration before you
make a final selection. Who were the previous tenants, and why are they no
longer there?
Terms of the lease.

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We understand all the details of the lease, because it's possible that an excellent
site may have unacceptable leasing terms.
Future development.
We will check with the local planning board to see if anything is planned for the
future that could affect our business, such as additional buildings nearby or road
construction.
Technical Analysis of Building
Deciding on the Layout
Layout and design are major factors in restaurant's success. We'll need to take
into account the size and layout of the dining room, kitchen space, storage space
and counter. Typically, restaurants allot 40 to 60 percent of their space to the
dining area, approximately 30 percent to the kitchen and prep area, and the
remainder to storage and office space.
Dining area.
This is where we'll be making the bulk of our money, so we will not cut corners
when designing your dining room. We will Visit restaurants in our area and
analyze the décor. Watch the diners; do they react positively to the décor? Is it
comfortable or are people shifting in their seats throughout their meals? We will
Note what works well and what doesn't. Much of our dining room design will
depend on our concept. It will help us to know that 40 to 50 percent of all sit-
down customers arrive in pairs; 30 percent come alone or in parties of three; and
20 percent come in groups of four or more. To accommodate the different groups
of customers, we will use tables for four that can be pushed together in areas

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where there is ample floor space. This will give us flexibility in accommodating
both small and large parties. We will Place booths for four to six people along the
walls.
Production area.
Too often, the production area in a restaurant is inefficiently designed--the result
is a poorly organized kitchen and less than top-notch service. We will keep our
menu in mind as we determine each element in the production area. We’ll need
to include space for receiving, storage, food preparation, cooking, baking,
dishwashing, production aisles, trash storage, employee facilities and an area for
a small office where we can perform daily management duties. We will arrange
our food production area so that everything is just a few steps away from the
cook. Our design should also allow for two or more cooks to be able to work side
by side during our busiest hours.
Designing & Decor
Since customers ultimately drive restaurant design trends, many of our
restaurant design ideas will come from our clientele. Successful restaurant
design ideas are bred with an understanding of the types of experiences your
customers are looking for and the promise our brand has made to them. we may
know what types of menu items they crave, but do we know what kinds of
restaurant design ideas create an atmosphere that will welcome them time and
time again?
Step One:
The restaurant designer’s process begins with a thorough understanding of the
eatery’s menu, location, customers, architectural preferences and lighting
concerns. More than just a design powwow, the restaurant designer’s process

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includes budget considerations, timelines and coordination with city officials to
secure necessary building permits.
Step Two:
The most effective restaurant design considers the flow of waiter staff from the
kitchen to the dining area or from the dining area to the restrooms. The
restaurant designer’s process contemplates the overall circulation within the
restaurant for maximum efficiency
Step Three:
With the floor plan in hand and a concept in mind, the next stage in the
restaurant designer’s process is interior design. Sketches may depict color
schemes, furniture Placement, window treatments, artistic lighting and other
aspects of the ambiance. This is also the part of the restaurant designer’s
process where we consider paints, wallpapers, foliage and artwork.
Creating a Menu
Though menu variety has increased over the years, menus themselves are
growing shorter. Busy consumers don't want to read a lengthy menu before
dinner; dining out is a recreational activity, so they're in the restaurant to relax.
We should our number of items in check and menu descriptions simple and
straightforward, providing customers with a variety of choices in a concise format.
Our menu should also indicate what dishes can be prepared to meet special
dietary requirements. Items low in fat, sodium and cholesterol should also be
marked as such.
RestaurantSize
That depends to some extent on how we answered the fundamental question
mentioned above. For the sake of discussion, a restaurant can be understood in
two parts; the front house component and the back-house component, which we
will call the engine. The backhouse areas include, the cook-line, the food
preparation areas, refrigerated any dry storage areas, office and the dishwashing

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area. The front-house functions are typically dining areas (interior and exterior),
waiting area, to-go area, restroom, and private dining areas. The speed of
product delivery; the size of the engine, a casual or formal atmosphere, and
numbers of patrons we want to accommodate will all factor in to the amount of
space we need for our restaurant. The goal is trying to maximize the number of
patrons one can serve, out of the smallest most efficient back-house possible.
Hiring the Right Employees
Choosing employees who will do a good job is not only important to the success
of our business, but will also contribute to the image of our establishment,
provided they are properly trained. There are several categories of personnel in
the restaurant business: manager, cooks, servers, busboys, dishwashers and
cleaners. When our restaurant is still new, some employees' duties may cross
over from one category to another. For example, our servers may double as the
cleaners. We will hire people who are willing to be flexible in their duties.
Manager
The most important employee in most restaurants is the manager. The best
candidate is a person who has already managed a restaurant or restaurants in
the area and will be familiar with local buying sources, suppliers and methods.
The manager should have leadership skills and the ability to supervise personnel
while reflecting the style and character of the restaurant.
Chefs and cooks.
When we start out, we’ll probably need three cooks - two full time and one part
time. But one lead cook may need to arrive early in the morning begin preparing
soups, bread and other items to be served that day. One full-time cook should
work days, and the other evenings. The part-time cook will help during peak
hours, such as weekend rushes, and can work as a line cook during slower

29
periods, doing simple preparation. Cooking schools can provide us with leads to
the best in the business, but we look around and place newspaper ads before we
hire. Customers will become regulars only if they can expect the best every time
they dine at your restaurant. To provide that, we'll need top-notch cooks and
chefs.
Servers.
The servers will have the most interaction with customers, so they need to make
a favorable impression and work well under pressure, meeting the demands of
customers at several tables while maintaining a pleasant demeanor. There are
two times of day for wait staff: very slow and very busy. We will schedule our
employees accordingly. The lunch rush, for example, starts around 11:30 a.m.
and continues until 1:30 or 2 p.m. Restaurants are often slow again until the
dinner crowd arrives around 6:30 to 7 p.m.
Proposed Product Mix
The proposed project will assumed to provide customers with a variety of fast
food items as outlined in the following menu:
BroastPrice Chinese Price
Chicken Broast (Qtr.) 125 Hot & Sour Soup (2 Servings) 250
Chicken Broast (Half) 250 Hot & Sour Soup (4 Servings) 440
Chicken Broast (Full) 450 Chicken Corn Soup (2 Servings) 225
Chicken Corn Soup (4 Servings) 425
Plain Rice 70
Burgers Price Chicken Fried Rice 180
Chicken Burger 250 Vegetable Fried Rice 140
Chicken Cheese Burger 265 Egg Fried Rice 120
Beef Burger 200 Beef Fried Rice 130
Beef Cheese Burger 255 Beef Chili (w/o rice) 105

30
Zinger Burger 180 Chicken Chili (w/o rice) 85
Sandwiches Price
Chicken Sandwich 155 French Fries (per plate) 75
Egg Sandwich 140 Cole Slaw 55
Beef Sandwich 145 Soft Drinks (Large) 75
Club Sandwich 140 Soft Drinks (Regular) 30
Based on the above the fast food we can offer low cost combo meals to our
Customers for increased value. Following are the proposed combo deals that can
be further modified to meet increasing demand:
Combos Items Price
Combo Deal 1 Zinger Burger / French Fries / Reg. Drink 255
Combo Deal 2 Chicken Broast (Qtr.) / French Fries / Reg. Drink 180
Combo Deal 3 Chk Burger, Broast (Qtr.), Fries, Reg Drink 450
Combo Deal 4 Club Sandwich / French Fries / Reg. Drink 215
Family Deal 1 Full Broast / Zinger Burger / Club Sandwich /
French Fries (4) / Large Drink 999
Family Deal 2 Zinger Burger (2) / Club Sandwich (2) /
Broast (Half) / Large Drink / Fries (2) 1099
Jumbo Deal 10% discount on purchase above Rs. 1,000/-
It desirable to have a vast variety of food items to capture a larger target
audience but initially the we need to be careful in choosing the right product mix
that has the greatest acceptability such that the sales volume generated are able
to cover the initial setup costs and desired profit margins. Once the fast food
restaurant achieves a steady sales pattern further food items like Barbeque can

31
be added and similarly for desserts ice cream would be the best potential. In
case circumstances demand items other than the proposed menu the
entrepreneur should make immediate changes to the menu before we start losing
our customers. One important factor to consider here is that we must have the
requisite skills to decide on whether to introduce a new product line (like
Barbeque, Pizza) or add a new item to the existing product line both of which
might require the purchase of additional kitchen equipment. Hence the
experience of the entrepreneur will play an important role in determining the
course of action.
MACHINERY& EQUIPMENT
Understanding the customer’s individual needs and the capability to satisfy these
Completely is a vital part of the restaurant’s success. This is in turn dependent on
the machinery and equipment used to produce good quality fast food. Fast Food
Machines are easily available in the market wherein the owner has to choose
between expensive brands and cheaper ones depending on how much we can
afford to give quality to our customers. Secondhand equipment of world leading
brands such as SPINZER, FRYMASTER, HENNY PENNY, LINCOLN,
AYRKING, KEATING, MIRROR, CARPIGIANI, LINCAT, MORRETTI, ILSA,
ROUND-UP, SANYO, ELETTROBAR are available while cheaper Chinese
brands have gained popularity over the years. The machines can be ordered
through international vendors with a minimum delivery period of 3 months while
refurbished / reconditioned machines are also available. Some outlets closing
their business also tend to sell their machinery at low prices but the durability and
reliability factor must be taken into consideration while buying such machines.
We would require the following machine /equipment for its operations:
Item Details Quantity Unit Price Total Price
Freezer (16 CFT) 4 65,000 260,000
Broast Machine 1 750,000 750,000

32
Deep well frier (15 pound capacity) 2 65,000 130,000
Hot Plate for Burgers, Kebab,
Sandwiches (30” x 22”)
1 40,000 40,000
Bin Marry Soup Container (2 Valve
With Steel Cabinet)
1 50,000 50,000
Potato Cutter (8mm) 1 3,000 3,000
Pillar (4.5 Kg Potato Peeling Capacity) 1 6,000 6,000
Microwave 2 25,000 50,000
Working Tables 2 20,00 20,000
Keg Racks & Shelves 2 10,000 20,000
Total 1,329,000
* Available from Spinzer USA, Delivery Time Three Months, Reconditioned Available at
Rs. 200,000 with the same specs and Delivery Time
Machinery Maintenance
All machines require routine cleaning and maintenance after every three months
and an annual service which costs around 1% to 5% of the total cost depending
upon the use of the machine and operator's skill. We have assumed an average
of 2.5% of the depreciated cost as the annual maintenance cost.
Dining Furniture& General Fixtures
The restaurant is expected to entertain a minimum of 300 customers in a day,
which requires a good seating layout to avoid any confusion and problems during
rush hours. The following table gives the details of the dining tables and chairs
that would serve approximately 150 customers (maximum capacity) at a time:
Item Details Quantity Unit Price Total Price
Dining Table – Square
(2X2)
70 6,000 420,000
Chairs (Standard 14”) 200 1,500 300,000
Kitchen Cutlery Set 3 3,000 9,000
Dining Cutlery* (Plate,
Fork, Knife, Spoon, Glass)
150 200 30,000
Air Conditioner Split Units
(6 Ton)
2 80,000 160,000

33
Hot Water Geyser Large 1 25,000 25,000
Halogen Lights 25 350 8,750
Wall Lights (Large) 4 2,500 10,000
Portable Emergency Light 4 3,500 14,000
Generator (5 KVA) 1 200,000 200,000
Counter Chairs 2 2,500 5,000
Office Table & Chair Set 1 2,500 2,500
Waiting Chairs for Take
Away Customers
5 2,000 10,000
Misc. items, computers, office stationary etc 1 100,000 100,000
Total 1,294,250
Land Requirement
The land requirement is around 4,500 sq.ft. In densely populated area where all utilities
And facilities are properly available. It is recommended that the fast food outlet be
opened on the ground floor of flats or shopping mall wherein the consumer traffic will be
a maximum.
4.3 Recommended Mode
The proposed premises will be acquired on a rental basis with 6 month deposit
and 6 months advance rent after which rent will be payable on a monthly basis.
The monthly rent is approximately Rs. 50/ Sq Feet for the ground floor which
would amount to Rs. 225,000 per month for the proposed fast food outlet (4,500
Sq Ft.)
4.4 Reception & Owner Office
To allow for maximum space for dining and security concerns (Cash control) it is

34
Recommended that we should manage the reception counter as well as all cash
Handling emanating from the tables. Therefore a total of Rs. 50,000 would be
required to erect the reception and cash counter along with the take-away order
taking booth. The Office Furniture & Equipment will be depreciated at the rate of
10% per annum according to the diminishing balance method for the projected
period.
HUMAN RESOURCE REQUIREMENT
The human resource requirement for the general and management staff are as
follows:
Designation Type No’s Monthly
Salary
Total
Salary
Partners 3
Kitchen Supervisor 2 15,000 30,000
Shift Supervisor 2 15,000 30,000
Cook 3 10,000 30,000
Server 6 8,000 48,000
Take Away Cashier 1 12,000 12,000
Dishwasher 2 6,000 12,000
Cleaner 2 5,500 11,000
Guard 2 9,000 18,000
Total 191,000

35
Considering the size of the proposed establishment it is assumed that the partner
would be managing the overall affairs of the fast food setup. He will be required
to process and check bills, invoices, receivables management, maintain
accounts, etc. for record. He will also ensure safe custody of store keys. The
cashier will only be responsible for receiving payment and handing over change
while the partner would be managing the cash drawer for control purposes. It is
important to note that many food outlets tend to lose out due to inadequate cash
control by the owners especially during rush hours where the counter staff can
easily slip out one or two payments.

36
Financial Analysis
FINANCIALANALYSIS & KEYASSUMPTIONS
The project cost estimates for the proposed fast food outlet have been
formulated on the basis of discussions with relevant stakeholders and experts.
The cost projections cover the cost of land, building, inventory, equipment
including office furniture etc. The specific assumptions relating to individual cost
components are given as under:
6.1 Revenue & Cost Projections
The Sales are expected to increase by 25% every year while the cost of raw
materials is assumed to increase by 20%. The 25% annual increase in revenue
is expected to result from a part increase in population increase and part
increase in product price. The prices used to calculate the gross revenue earned
are based on the billing rate at which the entrepreneur will charge the customer.
The prices are also inclusive of the General Sales Tax. Furthermore it is
assumed that the following sales breakup will form the revenue streams for the
fast food outlet
Revenue Stream % of Total Sales
Dine In 60%
Take Away 15%
Home Delivery 25%
Total Revenue 100%
The minimum delivery order size is assumed to be Rs. 350/- per order with 3
delivery riders being employed at the charge out rate of Rs. 25 per delivery order
wherein no transportation fuel is provided by the fast food outlet. For Take Away
and Home Delivery another 1% of sales added cost due to packing is assumed.

37
Rent Cost
The rent for the assumed premises will be Rs. 225,000/- per month. It is
assumed that Rs. 2,700,000 will be given in advance before possession of
premises. This will include 6 months deposit and 6 month advance rent. The rent
would be payable on a monthly basis and is expected to increase at the rate of
10% per annum for the projected period.
Utilities Requirement
The following table presents the assumed breakup of utilities on a monthly basis:
Utility Monthly Charges (Rs.)
Electricity 65,000
Water 4,000
Gas 21,000
Telephone 10,000
Total 100,000
As depicted above the most of the fast food machines require considerable gas
during the preparation process. The preheating procedure of the equipment
before commencement of preparation also consumes considerable gas. It is
assumed that utilities expenses will be increased by 10% every year.
6.4 Depreciation on Building & Equipment
Depreciation on Equipment, Machinery and Fixtures is assumed to be at the rate
of 10% per annum based on the diminishing balance method for the projected
period.
6.5 Working Capital & Pre Operating Costs
It is estimated that an additional amount of approximately Rs. 2,664,000 will be
required as cash in hand to meet the working capital requirements / contingency
cash for the initial stages. The requirement is based on the rent, utilities and
salaries expenses for at least four months and 3 days raw material inventory.
The following table gives the break up.

38
Item 4 Months Cost (Rs.)
Utilities 400,000
Salaries 764,000
Raw Material Inventory 600,000
Rent 900,000
Total 2,664,000
The provision for pre operating costs is assumed to be Rs. 25,000 which will be
amortized equally over a 5 year period.
6.6 Account Receivables
All sales will be made strictly on cash basis. It is not advisable to operate a fast
food restaurant on credit basis.
6.7 Miscellaneous Outlet Expenses
A monthly figure of Rs. 15,000 (500 per day) is assumed to be incurred for
miscellaneous expenses which are expected to increase at the rate of 10% per
annum for the projected period.
6.9 Taxation
The tax rate applicable to sole proprietorship is the same as that of the salaried
individual. Therefore, we are assuming that the tax rate would be the same for
the proposed fast food setup.
Owner’s Withdrawal
It is assumed that the owner with withdraw from the business once the desired
profitability is reached from the start of operations. The amount would depend on
business sustainability and availability of funds for future growth.
Key Assumptions
Item Assumption(s)
Sales Increase 25 % per year
Increase in Cost of Raw Materials 15 % per year
Increase in Staff Salaries 10 % per year

39
Increase in Utilities (Electricity / Water /Gas) 10 % per year
Increase in Rent 10 % per year
Increase in Office Expenses 10 % per year
Depreciation
Shop Building & Fixtures 10 % per annum
Kitchenware & Machinery 10 % per annum
Furniture 10 % per annum
Equipment Annual Maintenance Cost 2.5%
Raw Food Inventory - Meat 3 Days
Raw Food Inventory – Spices & Sauce 7 Days
Lease Period 5 Years
Lease Installments Monthly
Financial Charges (Lease Rate) 15 % per
annum
In these section total expenses for our restaurant 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 three partners, each one
investing his own capital, which is near about Rs. 2,000,000 as franchise will cost
us Rs. 6,000,000.
Advertisement Expense:
We are entering in the market with the large advertisements. So, for this reason,
we would have a large advertisement expense.

40
Advertisement through Newspapers:
Many daily and weekly newspapers are published in Lahore. The people
of Lahore frequently read newspapers that are why we advertise our restaurant
by these newspapers.
The main daily newspapers published in Lahore are:
 Nawa-I-Waqt
 Din
 Khabrain
Among English newspapers, important one is “This News” our ads. Will be
given in Urdu newspapers, 10 days before the opening ceremony of Restaurant
and then 30 days after it.
News paper Quantity Unit Price Total Price
Nawa I Waqt
add on 2nd page
Size = 3 col x 10 cm
40 3700 148,000
Khabrain Newspaper
Add size = 3 col x 10 cm on 2nd page
40 2200 88,000
The News English
Ad Dimension = 3 col x 10 cm on
2nd page
40 1,800 72,000
Total 308,000

41
Advertisement through Television:
In Pakistan, we have three TV channels that are ‘PTV’, Channel-3 ‘PTV World’.
But we have chosen PTV for the advertisement of our KFC Restaurant, because
it is the most popular TV channel in Lahore.
TV Channel/ Time Quantity Unit Price Total Price
Drama Hour
3 ads. will be displayed during
“Drama Hour” During 7-9 P.M
3 5,000 15,000
Khabranama Hour
2 ads.will be displayed after
“Khabarnama”
2 3000 6,000
Advertisement Exp for one day 21,000
Advertisement Exp for one month = 21,000 x 30 630,000
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.
Medium of Add Quantity Unit Price Total Price
Hangers & Banners 30 1,000 30,000
Signboards 4 18,000 72,000
Hand Bills 50,000 1.5 75,000

42
Advertisement Exp for one day 177,000
Total Advertising Expense:
Medium of Add Quantity
News papers 308,000
Television 630,000
Hand Bills 177,000
Total Expenses 1,115,000
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:
Item Description
Unit Price Quantity
sold
Revenue
Amount
Chicken Broast (Qtr.) 125 500 62,500
Chicken Broast (Half) 250 500 125,000
Chicken Broast (Full) 450 500 225,000
Chicken Burger 250 300 75,000
Chicken Cheese Burger 265 500 132,500
Beef Burger 200 500 100,000
Beef Cheese Burger 255 500 127,500
Zinger Burger 180 500 90,000
Hot & Sour Soup (2 Servings) 250 100 25000

43
Hot & Sour Soup (4 Servings) 440 100 44,000
Chicken Corn Soup (2 Servings) 325 100 32,500
Chicken Corn Soup (4 Servings) 425 100 42,500
Plain Rice 70 100 7,000
Chicken Fried Rice 180 500 90,000
Vegetable Fried Rice 140 500 70,000
Egg Fried Rice 120 500 60,000
Beef Fried Rice 130 500 65,000
Chicken Sandwich 105 500 52,500
Egg Sandwich 85 1000 85,000
French Fries 75 500 37,500
Soft Drinks (Large) 75 500 37,500
Soft Drinks (Reg) 30 1000 30,000
Total Monthly Revenue 1,616,000
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 calculation Cost = Fixed Cost + Variable Cost
Fix cost = 1,329,000 Variable Cost = 291,000 =
Revenue = 1,616,000 (X) (As indicated above)
1,620,000(X) + 291,000 = 1,616,000 (X)
1,620,000(X) = 1,616,000 (X) - 291,000
1,620,000 = 1,325,000(x)

44
x = 1.222 Months (14 Months)
So we can achieve our break-even point in 14 months.
Assumptions
While considering our project, we have taken the following assumptions:
1. We have assumed that as our business moves towards success, we will
offer different discount packages for our customers and will give special
discount to the students. Eventually this will increase our sales.
2. We have assumed that we will try to compete all the existing restaurants
in this field.
3. Our restaurant will remain opened for the full week and also during
special holidays like Eid, 14thAugust, etc.
4. There may be a variation in the price of the ingredients, which we will be
using with respect to taxes.
5. We are assuming that no other international chain restaurant will be
opening in Lahore for two years.

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