198 foodfeasibility

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198 foodfeasibility

  1. 1. Pre-Feasibility Study FAST FOOD RESTAURANT Small and Medium Enterprise Development Authority Government of Pakistan www.smeda.org.pk HEAD OFFICE st Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756 helpdesk@smeda.org.pk REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE PUNJAB SINDH NWFP BALOCHISTAN Waheed Trade Complex, 1st Floor, 36-Commercial Zone, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A Phase III, Sector XX, Complex II, M.T. Khan Road, State Life Building Chaman Housing SchemeKhayaban-e-Iqbal, DHA Lahore. Karachi. The Mall, Peshawar. Airport Road, Quetta. Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702 Fax: (042) 5896619, 5899756 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922 helpdesk@smeda.org.pk helpdesk-khi@smeda.org.pk Helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk December, 2006
  2. 2. Pre-Feasibility Study Fast Food RestaurantDISCLAIMERThe purpose and scope of this information memorandum is to introduce the subject matterand provide a general idea and information on the said area. All the material included inthis document is based on data/information gathered from various sources and is based oncertain assumptions. Although, due care and diligence has been taken to compile thisdocument, the contained information may vary due to any change in any of the concernedfactors, and the actual results may differ substantially from the presented information.SMEDA does not assume any liability for any financial or other loss resulting from thismemorandum in consequence of undertaking this activity. Therefore, the content of thismemorandum should not be relied upon for making any decision, investment or otherwise.The prospective user of this memorandum is encouraged to carry out his/her own duediligence and gather any information he/she considers necessary for making an informeddecision.The content of the information memorandum does not bind SMEDA in any legal or otherform.DOCUMENT CONTROL Document No. PREF-11 Revision 1 Prepared by SMEDA-Sindh Approved by Provincial Chief – Sindh Issue Date December, 2006 Issued by Library OfficerPREF-11/December, 2006/
  3. 3. Pre-Feasibility Study Fast Food Restaurant1 PROJECT PROFILE1. 1 Purpose of the DocumentsThis document is developed to provide the entrepreneur with potential investmentopportunity in setting up and operating a medium sized fast food restaurant offering avariety of food items to the general public. This pre-feasibility gives an insight into variousaspects of planning, setting up and operating a fast food restaurant for the generalpopulace. The document is designed to provide relevant details (including technical) tofacilitate the entrepreneur in making the decision by providing various technological aswell as business alternatives. The document also allows flexibility to change variousproject parameters to suit the needs of the entrepreneur.1. 2 Project BriefFast food is food which is prepared and served quickly at outlets called fast-foodrestaurants. It is a multi-billion dollar industry which continues to grow rapidly in manycountries. A fast-food restaurant is a restaurant characterized both by food which issupplied quickly after ordering, and by minimal service. The food in these restaurants isoften cooked in bulk in advance and kept warm, or reheated to order. Many fast-foodrestaurants are part of restaurant chains or franchise operations, and standardizedfoodstuffs are shipped to each restaurant from central locations. There are also simplerfast-food outlets, such as stands or kiosks, which may or may not provide shelter or chairsfor customers. Because the capital requirements to start a fast-food restaurant are relativelysmall, particularly in areas with non-existent or medium income population, smallindividually-owned fast-food restaurants have become common throughout Pakistan.Generally restaurants, where the customers sit down and have their food orders brought tothem, are also considered fast food.1. 3 Opportunity RationaleThe Fast Food Restaurant Market is a growing industry in Pakistan relying heavily on thechanging lifestyle patterns, population growth of the target age group and the relatedincrease in employment of women. With todays hectic lifestyles, time-saving products areincreasingly in demand the most obvious being the fast food. The rate of growth inconsumer 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 convenientmeals; 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 timefor consumers.PREF-11/December, 2006/
  4. 4. Pre-Feasibility Study Fast Food RestaurantConsumers want to combine meal-time with time engaged in other activities, such asshopping, work, or travel, therefore allocating less time for food, hence the growing needfor fast food.1. 4 The Fast Food IndustryThe fast-food industry is popular in Pakistan, the source of most of its innovation, andmany major international chains are based there. The presence of multinational fast foodchains like McDonalds, KFC, Pizza Express, Pizza Hut, Subway etc. have somewhatcatered to the high income segment therefore developing a niche as upscale fastfoodrestaurants. Multinational corporations such as these typically modify their menus to caterto local Pakistan tastes and most overseas outlets are owned by native franchisees to ensurethat cultural, ethnic, and community values are taken care of.Additionally, multinational fast-food chains are not the only or even the primary source offast food in most cities of Pakistan. Many regional and local chains have developed aroundthe main cities of Pakistan (for example Khan Broast in Karachi) to compete withinternational chains and provide menu items that appeal to the unique regional tastes andhabits at comparatively low costs. In Pakistan, multinational chains are considerably moreexpensive; they usually are frequented because they are considered chic and somewhatglamorous and because they usually are much cleaner than local eateries. However muchof the middle-income segment (which forms a major chunk of fastfood goers) prefersvisiting local outlets that offer low cost fast food, hence more frequent visits.1.4.1 Increasing Number of Fast Food OutletsThe rapid rate at which the fast food industry continues to add outlets is as much areflection of consumer demand for convenience as it is a reflection of demand for fast fooditself. Expanding the number of outlets increases accessibility, thus making it moreconvenient for consumers to purchase fast food. Especially in recent years, much of theexpansion has been in the form of "satellite" outlets. These tend to be smaller in size, withlittle or no seating capacity, and are often in nontraditional locations, such as officebuildings, department stores, airports, and gasoline stations; locations chosen specificallyto maximize convenience and consumer accessibility.1.4.2 Consumer AppealFast-food outlets have become popular with consumers for several reasons. One is thatthrough economies of scale in purchasing and producing food, these companies can deliverfood to consumers at a very low cost. In addition, although some people dislike fast foodfor its predictability, it can be reassuring to a hungry person in a hurry or far from home.PREF-11/December, 2006/
  5. 5. Pre-Feasibility Study Fast Food RestaurantMultinational Fast food chains like McDonalds rapidly gained a reputation for theircleanliness, fast service and a child-friendly atmosphere where families on the road couldgrab a quick meal, or seek a break from the routine of home cooking. Prior to the rise ofthe 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, 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 alternativeand 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 manyfeaturing child-size menu combos, play areas and whimsical branding campaigns, designedto appeal to younger customers. Parents can have a few minutes of peace while childrenplayed or amused themselves with the toys included in the premsises.Many consumers see multinational fast food restaurants as symbols of the wealth, progressand well-ordered openness of Western society and therefore become trendy attractions inmany cities around Pakistan, particularly among younger people with more varied tastes.1.4.3 Focusing on Consumer ConvenienceFast Food outlets tend to focus on the “work while you eat” philosophy similar to theMcDonald Outlet at Quaid e Azam Internation Aiport (Karachi) wherein seating space isalso available for passengers in transition or the KFC outlets in large shopping malls likethe Millenium Shopping Mall in Karachi promoting the concept of “Shop While You Eat.”1.4.4 Increasing Market for Fast Food – The Population BoomPakistan, currently ranked as 6th in terms of total population, is characterized by a highpopulation growth rate of 1.9% (Pakistan Economic Survey 2005) and is set to take the topthree positions in terms of total population with already 153.4 Million people registered in2005.1 With this, the per capita income has increased to US$ 736 while the productive agegroup (15 to 64) years is said to take the major chunk of population (67% of totalpopulation) by 2020. 2The growth rate in food consumption is also augmented by the rapid increase in theemployment rate for males / female population aging between 20 to 29 years (fast foodgoers) hence the greater income contribution to the overall income generated is expected tobe higher.1 2005 World Population Data Sheet, Population Reference Bureau, Washington; 20052 Population Projections 1998-2023, Planning Commission; NIPSPREF-11/December, 2006/
  6. 6. Pre-Feasibility Study Fast Food Restaurant Population Pyramid 1998 & 2020* *Population Census Organization; Population Projections 1998-2023, Planning Commission; NIPS1.4.5 The Future of the IndustryThe Pakistani economy is becoming increasingly service-oriented, and over the pastseveral decades, the foodservice industries that offer the highest levels of conveniencehave been rewarded with strong sales growth. In the face of rising population, incomes andincreasingly hectic work schedules, a nearly insatiable demand for convenience willcontinue to drive fast food sales. Fast Food Outlets will strive to find ways to make theirproducts even more accessible.Even if incomes stagnate or attitudes change, consumers are unlikely to return to mealpreparation at home on a large scale. This suggests that even if consumers choose to spendmore time at home, for family or other reasons, much of the meal preparation will stilloccur elsewhere.Many more table service restaurants, which traditionally focus on full-service in housedining, will likely try to capture part of this market by offering take-out, and possiblyexperimenting with home delivery.The value of consumer time, as well as the demand for consistent, high-quality foodproducts, will continue to shape the fast food industry. Fast food, once considered anovelty, has become an increasingly significant part of the young generation’s diet. Therole of convenience in this dietary shift cannot be over-emphasized, and the future growthPREF-11/December, 2006/
  7. 7. Pre-Feasibility Study Fast Food Restaurantof the rest of the foodservice industry will be driven in large part by its ability to find newways to save consumers’ time.1. 5 Key Success Factors / Practical Tips for SuccessWhether you are opening a one-of-a-kind restaurant or trying to grow your existingrestaurant into a multi-unit chain, there are winning principles that can help shape yourrestaurant 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 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 menuPREF-11/December, 2006/
  8. 8. Pre-Feasibility Study Fast Food Restaurant 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 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 no where 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.1. 6 Proposed Business Legal StatusAlthough the legal status of business tends to play an important role in any setup, theproposed fast food business is assumed to operate on a sole proprietorship basis which mayextend to partnership in case of addition of new products that might add significantbusiness to the existing setup.PREF-11/December, 2006/
  9. 9. Pre-Feasibility Study Fast Food Restaurant2 OPENING A SUCCESSFUL RESTAURANTFrom burger stands to barbeque steakhouses more and more restaurants are popping up incities every day. Since restaurants are such a common business venture, people must enjoyrunning them. However, all of those advantages come at a price - building a restaurantfrom scratch is not an easy task. It is a hard and expensive process, and the reality is thatmany restaurants fail in their first year of business due to improper planning. But restassured, there are ways to reduce the risk of becoming another statistic. Following aresome of the handy tips that can help run a successful fast food establishment.2. 1 How to Start a Restaurant?2.1.1 Work in a RestaurantOne of the best ways to reduce the risk of owning a failed restaurant is to have somerestaurant experience before you start. Many successful restaurateurs have said that thebest way to prepare for owning a restaurant is by working in one, hopefully in an eaterysimilar to one youd like to open. Youll learn more than just how to serve food with asmile; you can learn restaurant marketing, menu development, payroll, and othersignificant components of the restaurant world. Working in the restaurant industry andlearning the basics is an important first step to becoming an owner.2.1.2 Know Your Target MarketWho do you see eating at your restaurant? Are you targeting the family crowd, teenagers orseniors? Knowing your target market before you start planning will not only help yousolidify your menu; it will help determine your location, décor and the overall atmosphereof your restaurant. A family-style restaurant, which caters to parents and their kids, maynot appeal to seniors. On the other hand, an upscale, quiet restaurant offering a two-hourdining experience wouldnt be appealing to teenagers or families with small children.2.1.3 Select a Service Style & Food ConceptWhat type of restaurant do you see yourself owning? Typically, your service style willeither be fast-food, which offers food types that range from burgers, fries, soups andsandwiches; mid-scale, which has full course meals at value prices; or upscale, offeringfull service meals with high-class ambiance and, in turn, higher prices.After narrowing your establishment to one of these three options, you can narrow yourstyle of food choices. Is there a particular type of cuisine that you see yourself serving? Doyou prefer pizza or soup? Sandwiches or Chinese? Choosing your food concept goes hand-in-hand with your choice in service style.2.1.4 Develop a Business PlanLike any other type of company, a restaurant will need a concise business plan. This planshould include but is not limited to: the overall concept and goal of the restaurant; specificPREF-11/December, 2006/
  10. 10. Pre-Feasibility Study Fast Food Restaurantfinancial information and projections; a description of the target market; the menu andpricing; equipment and employee details; advertising and marketing plan; and a potentialexit strategy.2.1.5 Create ‘the Menu” and not “a menu”The menu can make or break a restaurant, and should be in accordance with the overallconcept of the restaurant. Revisit the business plan to make sure the menu is attractive tothe target market, is affordable within specified budget, and complements the restaurantsdesign concept. For example, if the restaurant is family-friendly, you will need a kidsmenu. If it is supposed to be an upscale establishment, a lot of thought will have to go intothe dessert list.2.1.6 Choose a Location & LayoutIt is important to find a location that has a continuous stream of traffic, convenient parking,and is in proximity to other businesses (especially if youre catering to the lunch crowd). Itis necessary to revisit the business plan to make sure you are close to your target market. Ifyou are opening a fast food restaurant, it may not be the best idea to open it in the vicinityof upscale homes but preferably near flats. In addition, make sure that the monthly rent isin-line with the business plans projected profit so that you do not become building-poor.Once you find your location, the layout and design of the interior should be taken intoaccount. You should already have a concept of your restaurant in your business plan; bringthis concept into the design of the dining room. When designing your kitchen area, thinkabout whats on your menu in order to determine what is needed for the food preparationarea.2.1.7 Getting the Appropriate FundingThe business plan will help you recognize how much money you will need to start yourrestaurant. If you are unsure about how much money you will need upfront, talking toother restaurant owners can help you project your expected start-up costs. There arenumerous ways restaurateurs raise capital to start their business, including takingadvantage of government programs that cater to upstart small business owners; liquidatingassets or using them as collateral for a loan; or encouraging a family or friend to becomethe creditor.2.1.8 Be Familiar With Safety RegulationsRestaurants are regulated and subject to inspection, and failing to be up to speed with theseregulations could be detrimental to the fast food outlet. Therefore it is necessary to consultwith old restaurateurs to become familiar with what one must do to meet the necessarylegal requirements.2.1.9 Hiring EmployeesOne of the biggest challenges restaurants face is a lack of qualified labor. In order to getand retain qualified employees, make sure your pay scales relate clearly to the jobs dutiesPREF-11/December, 2006/
  11. 11. Pre-Feasibility Study Fast Food Restaurantand responsibilities. In addition, find out what other restaurants are paying their employeesso that you can be competitive in the job market, without spending too much on payroll.However try linking your payroll with the bottom line and see how much money can besqueezed out for the employees.2.1.10 Advertise & MarketEvery business needs a comprehensive marketing plan, and restaurants are no exception.After determining your marketing budget, price out billboard advertising, flyers innewspapers, and local cable TV advertising. Ask your customers how they found out aboutyou, so that you can record where your advertising and marketing money are best spent.Opening up food stalls and setting up tasting booths at local neighborhood events orhaving an event at the restaurant benefiting a students / event, can be an inexpensive wayto achieve positive word-of-mouth.2. 2 Choosing a LocationNot every food-service operation needs to be in a retail location, but for those that dodepend on retail traffic like fast food outlets, here are some factors to consider whendeciding on a location:  Anticipated sales volume. How will the location contribute to your sales volume?  Accessibility to potential customers. Consider how easy it will be for customers to get into your outlet. If you are relying on strong pedestrian traffic, consider whether or not nearby businesses will generate foot traffic for you.  The rent-paying capacity of your business. If youve done a sales-and-profit projection for your first year of operation, you will know approximately how much revenue you can expect to generate, and you can use that information to decide how much rent you can afford to pay.  Restrictive ordinances. You may encounter unusually restrictive ordinances that make an otherwise strong site less than ideal.  Traffic density. With careful examination of food traffic, you 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 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 you 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 your stores volume, and their presence can work for you or against you.PREF-11/December, 2006/
  12. 12. Pre-Feasibility Study Fast Food Restaurant  History of the site. 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. Be sure you understand all the details of the lease, because its possible that an excellent site may have unacceptable leasing terms.  Future development. Check with the local planning board to see if anything is planned for the future that could affect your business, such as additional buildings nearby or road construction.2. 3 Deciding on the LayoutLayout and design are major factors in your restaurants success. Youll need to take intoaccount 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, approximately30 percent to the kitchen and prep area, and the remainder to storage and office space.  Dining area. This is where youll be making the bulk of your money, so dont cut corners when designing your dining room. Visit restaurants in your 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? Note what works well and what doesnt.Much of your dining room design will depend on your concept. It will help you to knowthat 40 to 50 percent of all sit-down customers arrive in pairs; 30 percent come alone or inparties of three; and 20 percent come in groups of four or more.To accommodate the different groups of customers, use tables for four that can be pushedtogether in areas where there is ample floor space. This gives you flexibility inaccommodating both small and large parties. Place booths for four to six people along thewalls.  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. Keep your menu in mind as you determine each element in the production area. Youll 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 you can perform daily management duties.Arrange your food production area so that everything is just a few steps away from thecook. Your design should also allow for two or more cooks to be able to work side by sideduring your busiest hours.PREF-11/December, 2006/
  13. 13. Pre-Feasibility Study Fast Food Restaurant2. 4 Designing & DecorSince customers ultimately drive restaurant design trends, many of your restaurant designideas will come from your clientele. Successful restaurant design ideas are bred with anunderstanding of the types of experiences your customers are looking for and the promiseyour brand has made to them. You may know what types of menu items they crave, but doyou know what kinds of restaurant design ideas create an atmosphere that will welcomethem 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 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.2. 5 Creating a MenuThough menu variety has increased over the years, menus themselves are growing shorter.Busy consumers dont want to read a lengthy menu before dinner; dining out is arecreational activity, so theyre in the restaurant to relax. Keep your number of items incheck and menu descriptions simple and straightforward, providing customers with avariety of choices in a concise format. Your menu should also indicate what dishes can beprepared to meet special dietary requirements. Items low in fat, sodium and cholesterolshould also be marked as such.2. 6 Restaurant SizeThat depends to some extent on how you answered the fundamental question mentionedabove. 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 back-house areas include, the cook-line, the food preparation areas, refrigerated any dry storageareas, office and the dishwashing area. The front-house functions are typically diningareas (interior and exterior), waiting area, to-go area, restroom, and private dining areas.PREF-11/December, 2006/
  14. 14. Pre-Feasibility Study Fast Food RestaurantThe speed of product delivery; the size of the engine, a casual or formal atmosphere, andnumbers of patrons you want to accommodate will all factor in to the amount of space youneed for your restaurant. The goal is trying to maximize the number of patrons one canserve, out of the smallest most efficient back-house possible.2. 7 Hiring the Right EmployeesChoosing employees who will do a good job is not only important to the success of yourbusiness, but will also contribute to the image of your establishment, provided they areproperly trained.There are several categories of personnel in the restaurant business: manager, cooks,servers, busboys, dishwashers and cleaners. When your restaurant is still new, someemployees duties may cross over from one category to another. For example, your serversmay double as the cleaners. Be sure to hire people who are willing to be flexible in theirduties.  Manager / Owner. The most important employee in most restaurants is the manager. The best candidate is you or 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 you start out, youll probably need three cooks - two full time and one part time. But one lead cook may need to arrive early in the morning to 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 periods, doing simple preparation. Cooking schools can usually provide you with leads to the best in the business, but look around and place newspaper ads before you hire. Customers will become regulars only if they can expect the best every time they dine at your restaurant. To provide that, youll 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. Schedule your 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.PREF-11/December, 2006/
  15. 15. Pre-Feasibility Study Fast Food Restaurant2. 8 A Good Fast Food Restaurant ExperienceBased on some surveys conducted with fast food goers following are some of the factorsthat contribute to a good fast food experience:  Location  Characteristics  Welcome  Food server  Food.  Environment (parking, restrooms, lighting).  Dessert Variety  Smile factor.  Time factor.  Profit factor (beverages offered, dessert menus presented).Measuring good service is subjective, but generally what is expected from a server whenreviewing restaurants.  The server should greet diners within 3 minutes of their being seated.  The server should neat and clean.  The server should not be too chatty or familiar.  The server should know the menu and be able to answer questions.  The server should bring drinks within 3 minutes of being ordered.  The appetizer (if any) should be served within 5 minutes of ordering.  Entrees should be served within 20 minutes of ordering.  Water or beverage glasses should be refilled regularly.  The server should silently survey the table and assess our needs without constantly interrupting to ask, "Do you need anything else?"  The bill should be brought promptly when requested, and change should be returned promptly.  Plates should be removed at the proper time, and the table should be cleared of bread and butter before dessert is served.2. 9 Legal RequirementsThe Pakistan Hotels and Restaurant Acts Act 1976 is the law which requires the owners ofall types of restaurants to register and obtain a license with the government. The restaurantowner is required to apply to the controller for registration of the restaurant.PREF-11/December, 2006/
  16. 16. Pre-Feasibility Study Fast Food RestaurantApplication for registration and determination of fair rates shall be made to the controllerin Form “G” together with a certificate of medical fitness in Form “I” from a registeredmedical officer of the civil hospital in respect of the staff of the restaurant.For registration of a restaurant, the owner of the restaurant is required to conform to thestandard of health, hygiene and comfort which standards have been set out in Schedule IIof the act.On receipt of application, the controller will carryout inspection of the aforementionedpremises and once satisfied will initiate the registration process. Once registered the ownerof the restaurant will apply to the controller for license as per the Act which needs to berenewed on a yearly basis for the prescribed fee.2. 10 Project InvestmentThis section will provide the total cost of the project. Item Cost (Rs.) Construction Cost (all inclusive) 1,307,000 Dining & Office Furniture 542,250 Equipment & Machinery 967,000 Advance Rent 1,200,000 Preliminary Expenses 50,000 Working Capital 1,036,000 Total 5,102,250PREF-11/December, 2006/
  17. 17. Pre-Feasibility Study Fast Food Restaurant2. 11 Proposed Product MixThe proposed project is assumed to provide customers with a variety of fast food items asoutlined in the following menu:Broast Price Chinese PriceChicken Broast (Qtr.) 65 Hot & Sour Soup (2 Servings) 75Chicken Broast (Half) 125 Hot & Sour Soup (4 Servings) 140Chicken Broast (Full) 250 Chicken Corn Soup (2 Servings) 75 Chicken Corn Soup (4 Servings) 140Burgers Price Plain Rice 40Chicken Burger 50 Chicken Fried Rice 80Chicken Cheese Burger 55 Vegetable Fried Rice 60Beef Burger 40 Egg Fried Rice 70Beef Cheese Burger 45 Beef Fried Rice 80Zinger Burger 80 Beef Chilli (w/o rice) 75 Chicken Chilli (w/o rice) 85Sandwiches Price PriceChicken Sandwich 55 French Fries (per plate) 25Egg Sandwich 40 Cole Slaw 15Beef Sandwich 45 Soft Drinks (Large) 50Club Sandwich 80 Soft Drinks (Regular) 15Based on the above the fast food restaurant can offer low cost combo meals to itscustomers for increased value. Following are the proposed combo deals that can be furthermodified to meet increasing demand:Combos Items PriceCombo Deal 1 Zinger Burger / French Fries / Regular Drink 105Combo Deal 2 Chicken Broast (Qtr.) / French Fries / Regular Drink 90Combo Deal 3 Chicken Burger, Broast (Qtr.), French Fries, Regular Drink 135Combo Deal 4 Club Sandwich / French Fries / Regular Drink 105Family Deal 1 Full Broast / Zinger Burger / Club Sandwich / French Fries (4) / Large Drink 535Family Deal 2 Zinger Burger (2) / Club Sandwich (2) / Broast (Half) / Large Drink / Fries (2) 515Jumbo Deal 5% discount on purchase above Rs. 1,000/-It desirable to have a vast variety of food items to capture a larger target audience butinitially the entrepreneur needs to be careful in choosing the right product mix that has thegreatest acceptability such that the sales volume generated are able to cover the initialsetup costs and desired profit margins. Once the fast food restaurant achieves a steady salespattern further food items like Barbeque can be added and similarly for desserts ice creamwould be the best potential. In case circumstances demand items other than the proposedmenu the entrepreneur should make immediate changes to the menu before he startsloosing out customers.PREF-11/December, 2006/
  18. 18. Pre-Feasibility Study Fast Food Restaurant One important factor to consider here is that the entrepreneur 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. 2. 12 Recommended Project Parameters Capacity Human Resource Equipment Location300 Customers per Local / American / Middle Income 21 day Chinese Level Area Financial Summary Cost of Capital Project Cost IRR NPV Payback Period (WACC) Rs. 5,102,250 57% Rs. 13,076,676 2.5 Years 17.5% 2. 13 Proposed Location The recommended area for the proposed business setup will be in a densely populated middle income area (for example Gulistan-e-Jauhar, Karachi). The main reason for such a location is the presence of target market and customer traffic which are the prerequisites for the success of the restaurant. 3 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 he can afford to give quality to his 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. The typical fast food restaurant as outlined above would require the following machine / equipment for its operations: PREF-11/December, 2006/
  19. 19. Pre-Feasibility Study Fast Food Restaurant Item Details Quantity Unit Price (Rs.) Total Price(Rs) Freezers (12 cf) 3 25,000 75,000 New Broast Machine (15 Pound 1 650,000 650,000 Capacity)* Deep Well Frier (Single Valve With 2 2 40,000 80,000 Baskets) Hot Plate for Burgers, Kebab, Sandwiches 1 33,000 33,000 (30” x 22”) Bin Marry Soup Container (2 Valve With 1 50,000 50,000 Steel Cabinet) Potato Cutter (8mm) 1 3,000 3,000 Pillar (4.5 Kg Potato Peeling Capacity) 1 6,000 6,000 Microwave 1 10,000 10,000 Working Tables 2 20,000 40,000 Keg Racks & Shelves 2 10,000 20,000 Total 15 - 967,000* Available from Spinzer USA, Delivery Time Three Months, Reconditioned Available at Rs. 200,000 withthe same specs and Delivery Time3. 1 Machinery MaintenanceAll machines require routine cleaning and maintenance after every three months and anannual service which costs around 1% to 5% of the total cost depending upon the use ofthe machine and operators skill. We have assumed an average of 2.5% of the depreciatedcost as the annual maintenance cost.3. 2 Dining Furniture & General FixturesThe restaurant is expected to entertain a minimum of 300 customers in a day, whichrequires a good seating layout to avoid any confusion and problems during rush hours. Thefollowing table gives the details of the dining tables and chairs that would serveapproximately 100 customers (maximum capacity) at a time:PREF-11/December, 2006/
  20. 20. Pre-Feasibility Study Fast Food Restaurant Item Details Quantity Unit Price (Rs.) Total Price(Rs) Dining Table – Square 25 6,000 150,000 (2X2) Chairs (Standard 14”) 100 1,500 150,000 Kitchen Cutlery Set 2 2,500 5,000 Dining Cutlery* (Plate, 150 150 22,500 Fork, Knife, Spoon, Glass) Air Conditioner Split Units 2 31,000 62,000 (6 Ton) Hot Water Geyser Large 1 20,000 20,000 Halogen Lights 25 250 6,250 Wall Lights (Large) 4 1,500 6,000 Portable Emergency Light 4 2,500 10,000 Generator (1.5 KVA) 1 90,000 90,000 Counter Chairs 2 1,500 3,000 Office Table & Chair Set 1 10,000 10,000 Waiting Chairs for Take 5 1,500 7,500 Away Customers Total 322 168,400 542,250*Cutlery to be 1.5 times the maximum capacity (i.e. 100 customers)4 LAND & BUILDING REQUIREMENT4. 1 Land RequirementThe land requirement is around 2,000 sq.ft. in densely populated area where all utilitiesand facilities are properly available. It is recommended that the fast food outlet be openedon the ground floor of flats or shopping mall wherein the consumer traffic will be amaximum. The more the shop is near the main road the better sales potential it will have.PREF-11/December, 2006/
  21. 21. Pre-Feasibility Study Fast Food Restaurant4. 2 Dedicated Area RequirementThe floor space needs to be carefully allocated to allow for maximum dining space forcustomers in rush hours. The allocation of space between different sections would be asfollows: Civil Works & Décor* % Size Total Construction Details (Cost in Rs / square (Sq. Feet) (Sq. Feet) Cost (Rs) feet) Dining 63 % 1,250 700 875,000 Waiting 4% 80 700 56,000 Kids Play 3% 70 800 56,000 Kitchen & 25 % 500 450 225,000 Preparation Office 1.5% 30 450 13,500 Stores 3% 70 450 31,500 Total 100 % 2,000 3,550 1,257,000* Includes interior decoration as well as fancy fittings, lightings, hangings etc.4. 3 Recommended ModeThe proposed premises will be acquired on a rental basis with 6 month deposit and 6months advance rent after which rent will be payable on a monthly basis. The monthly rentis approximately Rs. 50/ Sq Feet for the ground floor which would amount to Rs. 100,000per month for the proposed fast food outlet (2,000 Sq Ft.)4. 4 Reception & Owner OfficeTo allow for maximum space for dining and security concerns (Cash control) it isrecommended that the owner should manage the reception counter as well as all cashhandling emanating from the tables. Therefore a total of Rs. 50,000 would be required toerect 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 annumaccording to the diminishing balance method for the projected period.5 HUMAN RESOURCE REQUIREMENTThe human resource requirement for the general and management staff are as follows:PREF-11/December, 2006/
  22. 22. Pre-Feasibility Study Fast Food Restaurant Monthly Salary Total Salary Designation / Type Number (Rs.) (Rs.) Owner 1 - - Kitchen Supervisor 2 6,000 12,000 Shift Supervisor 3 8,000 24,000 (including reliever) Cook 4 4,000 16,000 Servers 6 3,000 18,000 Take Away Order Taker 1 6,000 6,000 / Cashier Dishwasher 2 2,500 5,000 Cleaner 1 2,500 2,500 Guard (12 Hour) 1 6,000 6,000 Total 21 38,000 89,500Considering the size of the proposed establishment it is assumed that the owner would bemanaging the overall affairs of the fast food setup. He will be required to process andcheck bills, invoices, receivables management, maintain accounts, etc. for record. Theowner will also ensure safe custody of store keys.The cashier will only be responsible for receiving payment and handing over change whilethe owner would be managing the cash drawer for control purposes. It is important to notethat many food outlets tend to lose out due to inadequate cash control by the ownersespecially during rush hours where the counter staff can easily slip out one or twopayments.6 FINANCIAL ANALYSIS & KEY ASSUMPTIONSThe project cost estimates for the proposed fast food outlet have been formulated on thebasis of discussions with relevant stakeholders and experts. The cost projections cover thecost of land, building, inventory, equipment including office furniture etc. The specificassumptions relating to individual cost components are given as under:6. 1 Revenue & Cost ProjectionsThe Sales are expected to increase by 15% every year while the cost of raw materials isassumed to increase by 10%. The 15% annual increase in revenue is expected to resultfrom a part increase in population increase and part increase in product price.PREF-11/December, 2006/
  23. 23. Pre-Feasibility Study Fast Food RestaurantThe prices used to calculate the gross revenue earned are based on the billing rate at whichthe entrepreneur will charge the customer. The prices are also inclusive of the GeneralSales Tax.Furthermore it is assumed that the following sales breakup will form the revenue streamsfor the fast food outlet Revenue Stream % of Total Sales Dine In 60% Take Away 20% Home Delivery 20% Total Revenue 100%The minimum delivery order size is assumed to be Rs. 250/- per order with 3 deliveryriders being employed at the charge out rate of Rs. 25 per delivery order wherein notransportation fuel is provided by the fast food outlet. For Take Away and Home Deliveryanother 1% of sales added cost due to packing is assumed.6. 2 Rent CostThe rent for the assumed premises will be Rs. 100,000/- per month. It is assumed that Rs.1,200,000 will be given in advance before possession of premises. This will include 6months deposit and 6 month advance rent. The rent would be payable on a monthly basisand is expected to increase at the rate of 10% per annum for the projected period.6. 3 Utilities RequirementThe following table presents the assumed breakup of utilities on a monthly basis: Utility Monthly Charges (Rs.) Electricity 25,000 Water 2,000 Gas 15,000 Telephone 10,000 Total 52,000PREF-11/December, 2006/
  24. 24. Pre-Feasibility Study Fast Food RestaurantAs depicted above the most of the fast food machines require considerable gas during thepreparation process. The preheating procedure of the equipment before commencement ofpreparation also consumes considerable gas. It is assumed that utilities expenses will beincreased by 10% every year.6. 4 Depreciation on Building & EquipmentDepreciation on Shop, Equipment, Machinery and Fixtures is assumed to be at the rate of10% per annum based on the diminishing balance method for the projected period.6. 5 Working Capital & Pre Operating CostsIt is estimated that an additional amount of approximately Rs. 1,036,000 will be requiredas cash in hand to meet the working capital requirements / contingency cash for the initialstages. The requirement is based on the rent, utilities and salaries expenses for at least fourmonths and 3 days raw material inventory. The following table gives the break up. Item 4 Months Cost (Rs.) Utilities 208,000 Salaries 358,000 Raw Material Inventory 70,000 Rent 400,000 Total 1,036,000The provision for pre operating costs is assumed to be Rs. 50,000 which will be amortizedequally over a 5 year period.6. 6 Account ReceivablesAll sales will be made strictly on cash basis. It is not advisable to operate a fast foodrestaurant on credit basis.6. 7 Miscellaneous Outlet ExpensesA monthly figure of Rs. 6,000 (200 per day) is assumed to be incurred for miscellaneousexpenses which are expected to increase at the rate of 10% per annum for the projectedperiod.PREF-11/December, 2006/
  25. 25. Pre-Feasibility Study Fast Food Restaurant6. 8 Financial ChargesIt is assumed that long-term financing for 5 years will be obtained in order to finance thefast food setup which would mainly include construction & décor of Building, Purchase ofmachinery & equipment, purchase of inventory etc. This facility would be required at arate of 15% (including 1% insurance premium) per annum with 60 monthly installmentsover a period of five years. The installments are assumed to be paid at the end of everymonth.6. 9 TaxationThe 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 foodsetup.6. 10 Cost of CapitalThe cost of capital is explained in the following table: Particulars Rate Required return on equity 20.0 % Cost of finance 15.0 % Weighted average cost of capital 17.5 %The weighted average cost of capital is based on the debt/equity ratio of 50:50.6. 11 Owner’s WithdrawalIt is assumed that the owner with withdraw from the business once the desired profitabilityis reached from the start of operations. The amount would depend on businesssustainability and availability of funds for future growth.PREF-11/December, 2006/
  26. 26. Pre-Feasibility Study Fast Food Restaurant6. 12 Key Assumptions Item Assumption(s)Sales Increase 15 % per yearIncrease in Cost of Raw Materials 10 % per yearIncrease in Staff Salaries 10 % per yearIncrease in Utilities (Electricity / Water / 10 % per yearGas)Increase in Rent 10 % per yearIncrease in Office Expenses 10 % per yearDebt / Equity Ratio 50 : 50Depreciation o Shop Building & Fixtures 10 % per annum (Diminishing Balance) o Kitchenware & Machinery 10 % per annum (Diminishing Balance) o Furniture 10 % per annum (Diminishing Balance)Equipment Annual Maintenance Cost 2.5% of Written Down ValueRaw Food Inventory - Meat 3 DaysRaw Food Inventory – Spices & Sauce 7 DaysLease Period 5 YearsLease Installments MonthlyFinancial Charges (Lease Rate) 15 % per annumTax Rate Income Tax on Salaried IndividualsPREF-11/December, 2006/
  27. 27. Pre-Feasibility Study Fast Food RestaurantINCOME STATEMENT: FAST FOOD RESTAURANTProjected Income Statement (Rs.) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Revenue 10,015,200 11,517,480 13,245,102 15,231,867 17,516,647 20,144,145 23,165,766 26,640,631 30,636,726 35,232,235Net Sales 10,015,200 11,517,480 13,245,102 15,231,867 17,516,647 20,144,145 23,165,766 26,640,631 30,636,726 35,232,235 Raw Material Cost 4,910,141 5,401,155 5,941,270 6,535,397 7,188,937 7,907,831 8,698,614 9,568,475 10,525,323 11,577,855 Labor & Salaries 1,074,000 1,181,400 1,299,540 1,429,494 1,572,443 1,729,688 1,902,657 2,092,922 2,302,214 2,532,436 Utilities 624,000 686,400 755,040 830,544 913,598 1,004,958 1,105,454 1,215,999 1,337,599 1,471,359Cost of Sales 6,608,141 7,268,955 7,995,850 8,795,435 9,674,979 10,642,477 11,706,725 12,877,397 14,165,137 15,581,650Gross Profit 3,407,059 4,248,525 5,249,252 6,436,432 7,841,668 9,501,668 11,459,042 13,763,234 16,471,589 19,650,584General Administrative & Selling Expenses Rent Expense 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920 1,932,612 2,125,873 2,338,461 2,572,307 2,829,537 Office & Miscellaneous Expenses 72,000 79,200 87,120 95,832 105,415 115,957 127,552 140,308 154,338 169,772Amortization Expenses 10,000 10,000 10,000 10,000 10,000 0 0 0 0 0Depreciation Expense 281,625 253,463 228,116 205,305 184,774 166,297 149,667 134,700 121,230 109,107Maintenance Expense 21,758 19,582 17,624 15,861 14,275 12,848 11,563 10,407 9,366 8,429Subtotal 1,585,383 1,682,244 1,794,860 1,924,198 2,071,384 2,227,713 2,414,655 2,623,875 2,857,241 3,116,846Operating Income 1,821,677 2,566,281 3,454,392 4,512,234 5,770,284 7,273,955 9,044,386 11,139,359 13,614,348 16,533,738Financial Charges (15% Per Annum) 357,889 298,344 229,228 149,001 55,878 0 0 0 0 0Earnings Before Taxes 1,463,788 2,267,936 3,225,164 4,363,233 5,714,406 7,273,955 9,044,386 11,139,359 13,614,348 16,533,738Tax 365,947 566,984 806,291 1,090,808 1,428,602 1,818,489 2,261,097 2,784,840 3,403,587 4,133,435Net Profit 1,097,841 1,700,952 2,418,873 3,272,425 4,285,805 5,455,466 6,783,290 8,354,519 10,210,761 12,400,304Monthly Profit After Tax 91,487 141,746 201,573 272,702 357,150 454,622 565,274 696,210 850,897 1,033,359PREF-11/December, 2006/
  28. 28. Pre-Feasibility Study Fast Food RestaurantBALANCE SHEET: FAST FOOD RESTAURANTProjected Balance Sheet (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Assets Current Assets Cash & Bank Balance 1,036,000 2,055,062 3,589,528 5,747,452 8,655,889 12,464,053 18,085,816 25,018,772 33,507,992 43,839,983 56,349,394 Prepaid Rent 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 Total Current Assets 2,236,000 3,255,062 4,789,528 6,947,452 9,855,889 13,664,053 19,285,816 26,218,772 34,707,992 45,039,983 57,549,394 Fixed Assets Fast Food Machinery 967,000 870,300 783,270 704,943 634,449 571,004 513,903 462,513 416,262 374,636 337,172 Shop 1,307,000 1,176,300 1,058,670 952,803 857,523 771,770 694,593 625,134 562,621 506,359 455,723 Office Fixtures 542,250 488,025 439,223 395,300 355,770 320,193 288,174 259,356 233,421 210,079 189,071 Total Fixed Assets 2,816,250 2,534,625 2,281,163 2,053,046 1,847,742 1,662,967 1,496,671 1,347,004 1,212,303 1,091,073 981,966 Preliminary Expenses 50,000 40,000 30,000 20,000 10,000 - - - - - -Total Assets 5,102,250 5,829,687 7,100,690 9,020,498 11,713,631 15,327,020 20,782,486 27,565,776 35,920,295 46,131,056 58,531,360Owners Equity 2,551,125 3,648,966 5,349,918 7,768,791 11,041,216 15,327,020 20,782,486 27,565,776 35,920,295 46,131,056 58,531,360Long Term Liability 2,551,125 2,180,721 1,750,772 1,251,707 672,415 0 0 0 0 0 0Total Equity & Liabilities 5,102,250 5,829,687 7,100,690 9,020,498 11,713,631 15,327,020 20,782,486 27,565,776 35,920,295 46,131,056 58,531,360PREF-11/December, 2006/
  29. 29. Pre-Feasibility Study Fast Food RestaurantCASH FLOW STATEMENT: FAST FOOD RESTAURANTProjected Statement of Cash Flows (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Cash Flow From Operating Activities Net Profit 0 1,097,841 1,700,952 2,418,873 3,272,425 4,285,805 5,455,466 6,783,290 8,354,519 10,210,761 12,400,304 Add: Depreciation Expense 0 281,625 253,463 228,116 205,305 184,774 166,297 149,667 134,700 121,230 109,107 Amortization Expense 0 10,000 10,000 10,000 10,000 10,000 0 0 0 0 0Net Cash Flow From Operations 0 1,389,466 1,964,415 2,656,989 3,487,729 4,480,579 5,621,763 6,932,957 8,489,220 10,331,991 12,509,411Cash Flow From Financing ActivitiesReceipt of Long Term Debt 2,551,125Repayment of Long Term Debt (370,404) (429,949) (499,065) (579,292) (672,415) 0 0 0 0 0Owners Equity 2,551,125Net Cash Flow From Financing Activities 5,102,250 (370,404) (429,949) (499,065) (579,292) (672,415) 0 0 0 0 0Cash Flow From Investing ActivitiesConstruction Cost (1,307,000)Office Furniture (967,000)Equip & M/C (542,250)Advance Rent (1,200,000)Preliminary Expenses (50,000)Net Cash Flow From Investing Activities (4,066,250) 0 0 0 0 0 0 0 0 0 0NET CASH FLOW 1,036,000 1,019,062 1,534,466 2,157,924 2,908,437 3,808,164 5,621,763 6,932,957 8,489,220 10,331,991 12,509,411Cash at the Beginning of the Period 0 1,036,000 2,055,062 3,589,528 5,747,452 8,655,889 12,464,053 18,085,816 25,018,772 33,507,992 43,839,983PREF-11/December, 2006/
  30. 30. Pre-Feasibility Study Fast Food Restaurant FAST FOOD RESTAURANT Cost & Revenue Sheet 300Broast Cost Price Unit Sales Total Cost Total Sales Chinese Cost Price Unit Sales Total Cost Total SalesChicken Broast (Qtr.) 35 65 36 0.12 1260 2340 Hot & Sour Soup (2 Servings) 25 75 6 0.02 150 450Chicken Broast (Half) 70 125 18 0.06 1260 2250 Hot & Sour Soup (4 Servings) 50 140 3 0.01 150 420Chicken Broast (Full) 140 250 6 0.02 840 1500 Chicken Corn Soup (2 Servings) 25 75 6 0.02 150 450 Chicken Corn Soup (4 Servings) 50 140 3 0.01 150 420Burgers Cost Price Unit Sales Total Cost Total Sales Plain Rice 12 40 3 0.01 36 120Chicken Burger 20 50 24 0.08 480 1200 Chicken Fried Rice 20 80 12 0.04 240 960Chicken Cheese Burger 25 55 36 0.12 900 1980 Vegetable Fried Rice 18 60 6 0.02 108 360Beef Burger 18 40 18 0.06 324 720 Egg Fried Rice 18 70 3 0.01 54 210Beef Cheese Burger 23 45 18 0.06 414 810 Beef Fried Rice 20 80 3 0.01 60 240Zinger Burger 40 80 24 0.08 960 1920 Beef Chilli (w/o rice) 30 75 6 0.02 180 450 Chicken Chilli (w/o rice) 35 85 9 0.03 315 765Sandwiches Cost Price Unit Sales Total Cost Total Sales Cost Price Unit Sales Total Cost Total SalesChicken Sandwich 20 55 21 0.07 420 1155 French Fries (per plate) 8 25 5 40 125Egg Sandwich 12 40 6 0.02 72 240 Cole Slaw 6 15 5 30 75Beef Sandwich 20 45 3 0.01 60 135 Soft Drinks (Large) 40 50 10 400 500Club Sandwich 35 80 30 0.1 1050 2400 Soft Drinks (Regular 250ml) 9 15 375 3375 5625 TOTAL 8040 16650 TOTAL 5438 11170 Daily Monthly Additional FinalTotal Sales (Rs) 27,820 834,600 - 834,600Total RM Cost (Rs.) 13,478 404,340 4,838 409,178Gross Profit (Rs.) 14,342 430,260 425,422 0.509731129Sales Break Down Orders Value (Rs) Packing Cost Delivery Cost Add CostDaily Basis 1% of Sales 25 / OrderDine In (60%) 180 500,760 - -Take Away (20%) 60 166,920 1,669 - 1,669Delivery (20%) 60 166,920 1,669 1,500 3,169Total 300 834,600 3,338 1,500 4,838PREF-11/December, 2006/

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