Group1PROJECT-2PizzaCo (1)

Slide No. 1 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria
WAIVER
This Final Project presentation in MBA 104 Financial
Management subject may contain images of PIZZAS and
other foods. It might make you hungry. It is not our
intention.

FINAL GROUP PROJECT
Traditional Paulie’s
Pizza House Business
Versus
Domino’s Pizza
Group 1 Assignment:
Ms. Anawin Valenzuela
Ms. Shella May Domocmat
Mr. Oliver Sta. Maria
Presented to:
Mr. Larry Ryan Jeff Brual

GROUP PROJECT
Preview of Tasks:
• Choose two companies that operates in the same industry.
• One that is traditional and the other adapting to changes and new
technologies.
• Present their respective financial plan (CAPEX / OPEX).
• Include marketing, office setup, materials, etc.
• Present risks and contingency plans
• Present dividend policy
• Analyze both companies and explain the difference between the two
• Present the “chosen” company and explain why it is preferred

Industry Info
• While the operating
environment will remain
challenging, America’s
980,000 restaurants were
expected to post record
sales in the coming years.

Industry Info
• According to the National Restaurant Association, Restaurant Industry sales have
reached a record $660.5 billion in 2013 a 3.8 percent increase over 2012 and marking
the third consecutive year that industry sales will have topped $600 billion.

The Pizza Segment of the Industry
• According to InfoUSA, Inc. there are now just over 72,000 Pizza
Restaurants as of December 31, 2012.
• Growth will continue to be an issue as the slow economy continues to
force Families to become even more concerned with the weekly budget.
• Profitability will be the issue as competition continues to hold pricing
down for the consumer while the operator focuses on margins.
• The volatility in commodities prices combined with the Recession and
Competition holding menu prices down will continue to test Operators’
ability to squeeze the most out of the margins.
Industry Info

PIZZA INDUSTRY

Classifying Pizza Stores
Traditional Modern

Traditional Modern
Selected Pizza Company

Financial Plan: CAPEX
• The restaurant will cost an
estimated US$ 424,866 to
open.
• The minimum requirement for
investment is US$250,000
• Initial franchise fee of $60,000 plus
• Please note that these costs exclude
the real estate cost .
• A royalty fee of 7% of gross sales is
paid every month and each outlet
contributes a maximum of 6% of
sales towards national advertising.
Capitalization Requirement

CAPITAL: US$ 424,866
• Sources of funds:
• Equity – US$150,000
• Bank Loan – US$274,866
• TOTAL =
US$424,866
CAPITAL: US$310,000
• Sources of funds:
• Equity: US305,056
• Borrowings: US$122,912
• TOTAL =
US$427,968
Sources of Capital

CAPITAL: US$ 424,866 CAPITAL: US$427,968
Min Investment US$250,000
Initial franchise fee of $60,000
Liquid Capital Required US$75,000
Others US$42,968
Capital Budgeting
Open Paulie’s Pizza Business Plan
PDF for details of Capital Budget
Page 22

Financial Plan: OPEX

Marketing
• Already established
International Brand
• Management will endeavor to
create and maintain a positive,
appealing image for the
restaurant.
• This image will be consistently
portrayed throughout all
marketing channels and sales
promotions.

Marketing
• Customer Database
• Frequent Diner
• Email Campaign
• Mailer campaign
• Community/Charity Involvement
• Business Relationships
• 4 Walls Marketing
• Public Relations
• Direct Advertising
• Maximum of 6% of sales
towards national advertising
• Partnerships
• Brochures
• E-Marketing
• Mobile Advertisements
(delivery vans, etc)
The following exemplifies some of the tactics
these companies use to drive more sales.

Marketing

Setup
• Traditional Restaurant Setup
• Counter
• Kitchen
• Dining Hall
• Modern Setup
• Counter
• Kitchen

Setup
• Successful Domino's sites have very high exposure (and
signage) with high outbound traffic flow.
• Size around 100m2 with minimum shop frontage of 6m
• Ample public access car parking
• Good tenancy mix
• Three phase power, air conditioning, grease trap and
gas line preferable

Setup
• Ownership: Limited Liability Company
• Facility: A pre-existing lease space
approximately 1500 sq. feet with 10-
year lease agreement with Shopping
Center Landlords, Inc. which owns the
center.
• Sales Projection: Assume a modest
weekly sales projection of just under
US$18,000 or US$930,000/year. This
equates to around US$621 per sq. ft. in
sales annually.
• Ownership: Franchising rights
• Facility : A Pre-existing lease space of
approximately 100 sq. meter.
• Sales Projection: Same-store sales,
which exclude recently opened or
closed locations, grew 10.7% at
Domino's domestic franchise stores,
as company-owned domestic stores
logged 10% growth. Analysts had
anticipated 6.3% growth at franchised
stores and 5.7% at the stores
Domino's owns, according to
Consensus Metrix.

Materials

Materials
In terms of materials, both companies use almost the
same materials in making their products.

Risks
Possible risk/s
• Competition
• Franchisees
• Data and Security
• People
• Property
• Corporate Governance
• Food Production,
• Storage
• and Suppliers
Possible risk/s
• cross contamination,
• sanitation,
• thermometer maintenance,
kitchen equipment safety,
electrical hazards,
• and knife safety

Contingency Plans
Contingency
• continuous employee training
• create policy and procedure
guidelines on food handling,
• manufacturing practices,
• sanitation,
• and storage
Contingency
• continuous employee training
• create policy and procedure
guidelines on food handling,
• manufacturing practices,
• sanitation,
• and storage

Dividend Policy
• The owner gets 100% of profit. • Domino's Pizza Inc's dividend
payout ratio for the three months
ended in Dec. 2015 was 0.27.
• During the past 13 years, the
highest Dividend Payout Ratio of
Domino's Pizza Inc was 0.36. The
lowest was 0.08. And the median
was 0.31.
• As of Today, the Trailing Annual
Dividend Yield of Domino's Pizza
Inc is 1.00%.

Analysis: Current Situation
CURRENT RATIO 8.98
ACID TEST/ QUICK RATIO 8.83
DEBT TO EQUITY RATIO 0.32
DEBT TO TOTAL ASSETS RATIO 0.24
TOTAL CAPITALIZATION 0.10
RECEIVABLE TURNOVER Na
AVERAGE COLLECTION PERIOD Na
PAYABLE TURNOVER (Assuming all
purchases were on credit) 6.12
PAYABLE TURNOVER IN DAYS 59.66
INVENTORY TURNOVER 24.08
TOTAL ASSET TURNOVER 1.02
Financial Ratios
CURRENT RATIO 0.89
ACID TEST/ QUICK RATIO 0.66
DEBT TO EQUITY RATIO 1.07
DEBT TO TOTAL ASSETS RATIO 0.52
TOTAL CAPITALIZATION 0.65
RECEIVABLE TURNOVER (Assuming all
sales were on credit) 16.01
AVERAGE COLLECTION PERIOD 22.80
PAYABLE TURNOVER (Assuming all
purchases were on credit) 1.96
PAYABLE TURNOVER IN DAYS 185.93
INVENTORY TURNOVER 17.35
TOTAL ASSET TURNOVER 0.85

Analysis: Current Situation
Inventory Beginning 11,707
Purchases 213,634
Goods Available for Sale 225,341
Inventory, ending 12,282
Cost of Sales 213,059
Inventory, beginning 13,498
Purchases 332,026
Total Goods available 345,524
Inventory, ending 14,038
Cost of Sales 331,486
Cost of Sales

• puts franchisees and Company-
owned stores at the foundation of all
thinking and decisions;
• provides a strong infrastructure to
support stores;
• builds excellent store operations to
create loyal customers.
• putting people first;
• demanding integrity;
• delivering with smart hustle and
positive energy; and
• winning by improving results every
day.
Strategies
• Television advertisement
• Sponsorship
• Social Media Presence
• Price Discrimination
• Price Discounting
• Targeting core groups of
consumers
• Charity Joint Ventures
• Coupons
• Magnets
• Community Events

Analysis: Future of Business
• High demand, high
maintenance
• Limited capacity for expansion
• Agility issues
• High demand is supported by
online/offline sales
• Well established relationships
with clients and suppliers gives
assurance
• Great marketing schemes
• High Profitability

Best to Invest
Taking everything in to considerations, our group is
recommending to invest in :

Group 1 Members
Ms. Anawin Valenzuela
Currently in UAE
Ms. Shella May Domocmat
Currently in the Philippines
Mr. Oliver Sta. Maria
Currently in KSA

End of Presentation

Group1PROJECT-2PizzaCo (1)

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