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Group1PROJECT-2PizzaCo (1)

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Group1PROJECT-2PizzaCo (1)

  1. 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.
  2. 2. Slide No. 2 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  3. 3. Slide No. 3 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  4. 4. Slide No. 4 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Industry Info • While the operating environment will remain challenging, America’s 980,000 restaurants were expected to post record sales in the coming years.
  5. 5. Slide No. 5 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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 $600 billion.
  6. 6. Slide No. 6 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria The Pizza Segment of the Industry • According to InfoUSA, Inc. there are now just over 72,000 Pizza Restaurants as of December 31, 2012. • Growth will continue to be an issue as the slow economy continues to force Families to become even more concerned with the weekly budget. • Profitability will be the issue as competition continues to hold pricing down for the consumer while the operator focuses on margins. • The volatility in commodities prices combined with the Recession and Competition holding menu prices down will continue to test Operators’ ability to squeeze the most out of the margins. Industry Info
  7. 7. Slide No. 7 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria PIZZA INDUSTRY
  8. 8. Slide No. 8 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Classifying Pizza Stores Traditional Modern
  9. 9. Slide No. 9 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Traditional Modern Selected Pizza Company
  10. 10. Slide No. 10 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Financial Plan: CAPEX • The restaurant will cost an estimated US$ 424,866 to open. • The minimum requirement for investment is US$250,000 • Initial franchise fee of $60,000 plus • Please note that these costs exclude the real estate cost . • A royalty fee of 7% of gross sales is paid every month and each outlet contributes a maximum of 6% of sales towards national advertising. Capitalization Requirement
  11. 11. Slide No. 11 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Financial Plan: CAPEX CAPITAL: US$ 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$427,968 Sources of Capital
  12. 12. Slide No. 12 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Financial Plan: CAPEX
  13. 13. Slide No. 13 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Financial Plan: CAPEX CAPITAL: US$ 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
  14. 14. Slide No. 14 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Financial Plan: OPEX
  15. 15. Slide No. 15 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Financial Plan: OPEX
  16. 16. Slide No. 16 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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.
  17. 17. Slide No. 17 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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.
  18. 18. Slide No. 18 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Marketing
  19. 19. Slide No. 19 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Setup • Traditional Restaurant Setup • Counter • Kitchen • Dining Hall • Modern Setup • Counter • Kitchen
  20. 20. Slide No. 20 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  21. 21. Slide No. 21 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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.
  22. 22. Slide No. 22 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Materials
  23. 23. Slide No. 23 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Materials In terms of materials, both companies use almost the same materials in making their products.
  24. 24. Slide No. 24 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  25. 25. Slide No. 25 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  26. 26. Slide No. 26 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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%.
  27. 27. Slide No. 27 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  28. 28. Slide No. 28 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  29. 29. Slide No. 29 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria • 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
  30. 30. Slide No. 30 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria 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
  31. 31. Slide No. 31 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Best to Invest Taking everything in to considerations, our group is recommending to invest in :
  32. 32. Slide No. 32 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria Group 1 Members Ms. Anawin Valenzuela Currently in UAE Ms. Shella May Domocmat Currently in the Philippines Mr. Oliver Sta. Maria Currently in KSA
  33. 33. Slide No. 33 MBA104-Financial Management Anawin Valenzuela * Shella May Domocmat * Oliver Sta. Maria End of Presentation

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