This document proposes opening a Warcraft theme restaurant called REPUBLICOFWOWERS in China. It will feature food, music, and merchandise from the popular video game. The restaurant will be run as a partnership between Bill and Bob, who plan to obtain a loan and government subsidies to fund the business. A financial analysis projects that the restaurant will be profitable over 4 years based on expected sales, costs, and a 15% discount rate.

1. Financial Case
Warcraft theme restaurant
Xie Yuhao 6/10/16 2218030

2. 1FINANCIAL CASE WARCRAFT THEME RESTAURANT
Table of Contents
1. Business model ..........................................................................................................................................2
2. Legal structure of the business ...........................................................................................................3
3. Funding..........................................................................................................................................................3
4. Additional planning inputs ...................................................................................................................4
5. Bibliography................................................................................................................................................5

3. 2FINANCIAL CASE WARCRAFT THEME RESTAURANT
1. Business model
The time of fan economy is coming. There is a metaphor about the power of fans:” When
you have 100 fans, your influence as an internal publication; when you have more than
100 million fans, yourinfluencewillsame as national TV” (Ren,2011). InChina, thetheme
Warcrafthas innumerable fans,half of Worldof Warcraft’splayers are fromChina (Pulver,
2016). Nowadays, the influence of Warcraft is not only confined to the game, but extend
to a wider range. Since 2008 to 2013, Blizzard Entertainment, the productioncompany of
World of Warcraft, organized four World of Warcraft theme concerts in Shanghai and
Beijing. In 2016, Warcraft:The Beginning, film of Warcraftreceived more than 46 million
USD in China which only in the first 24 hours of release. The result ranked 2nd in the
history of this country (Pulver,2016).UntilJune15th,the boxofficeearnings of thismovie
are 156 million USD in China’s market (Wickline, 2016). In 2008, a restaurant in Beijing
tried to change their theme toWorld of Warcraft,butit wasillegal forthis restaurant does
not receive the permission from Blizzard Entertainment (Francisco, 2016). Only
McDonalds received the permission to re-skin three of their restaurants with World of
Warcraft theme decorations in 2014 (Custer, 2014). Therefore, Warcraft theme
restaurant has huge potential in China.
The most outstanding characteristic of this restaurant is not only the theme, but the food
and music willbe all from World of Warcraft. Meanwhile, this theme restaurant will also
sell some souvenir, for example, Warcraft themed cloth, model of the items in the game,
cookbook to teach consumers how to cook the food from this game, original soundtrack
of the game, etc. Therefore, the name of this restaurant willbe REPUBLICOFWOWERS.
Figure 1 The official cookbook of WOW Figure 2 Food from Worldof Warcraft

4. 3FINANCIAL CASE WARCRAFT THEME RESTAURANT
Figure 3 Original soundtrack of WOW Figure 4 Warcraft themed cloth
2. Legal structure of the business
In this case, the legal structure of this restaurant will be a partnership. The restaurant
comprises two departments which are supply chain department and operation
department. Supply chain department will focuson purchasing high quality raw material
for the cook and souvenirs for the fans shop. Bill will be head of the supply chain
department. Operation department will concentrate on improving the quality of food,
recruit and train employees and provide better service. Bob will be run the operation
department.
3. Funding
Nowadays, the framework of China’s job creation policies is including three parts: job
creation, subsidy and incentives and employment services (Feng, 2012). The central and
local governments of China provide funds and policies to support and help citizens
employed. The policies include special taxation policy for self-employment, encourage
medium/small enterprises. Furthermore, Chinese government provides loan with lower
interest rate and subsidies to support self-employed (DI,n.d.).
Therefore, the original fund of REPUBLICOF WOWERSwill be a loan from the bank. The
author assumes that Bill and Bob can receive100,000 EURfrombank, the paybackperiod
will be 10 years and the normal interest rate is 8%, but this project is self-employed so
the interest rate will be decreased to 3%. Meanwhile, REPUBLICOF WOWERScan apply
for subsidies from local government, the amount will be 2,000 EURper year.

5. 4FINANCIAL CASE WARCRAFT THEME RESTAURANT
4. Additional planning inputs
Products which are used for sell in REPUBLIC OF WOWERS have two different prices.
Each table will consume 10 EUR, the material cost is 2 EURand variable cost also 2 EUR.
Another product is souvenirof WOW,the average price willbe 20 EURand costis 10 EUR,
expectation annual sales are 1,000 units. The annual costof leasing this property is20,000
EUR with 40 tables, Bill and Bob expect the occupation rate can be 85% but the actual
occupation rate only 70%. The amount of fixed cost is 10,000 EUR and tax rate will be
30%. Fixed equipment will cost 60,000 EURand after 4 years, it does not have any scrap
value. A manager will be employed to manage the sales of souvenir with annual wage is
5,000 EUR.At the beginning, Bill and Bob cost10,000 EURtopromote this restaurant and
cost40,000 EURtopurchase the permission fromBlizzardEntertainment fornext4 years.
Based on these information, a cash flow table will be used to analyse this project.
All the number need * 1,000 EUR, WACC is 15%.
0 1 2 3 4
Fixed equipment (60)
Training (5)
Permission fee (40)
Sales (food) 102.2 102.2 102.2 102.2
Sales (souvenir) 20 20 20 20
Cost (food) (20.44) (20.44) (20.44) (20.44)
Cost (souvenir) (10) (10) (10) (10)
Salary (food) (20.44) (20.44) (20.44) (20.44)
Salary (souvenir) (5) (5) (5) (5)
Rent (20) (20) (20) (20)
Tax (30%) (5.2) (5.2) (5.2) (5.2)
After tax CF (105)
PV 35.8 31.1 27 23.5
The sum of NPV in the end of year 4 will be 12,400 EUR. Therefore, the result is shown
positive and the project is good.

6. 5FINANCIAL CASE WARCRAFT THEME RESTAURANT
5. Bibliography
1. Custer, C. (2014, September 24). Burgers of Azeroth:China gets World of
Warcraft-themedMcDonalds restaurants.RetrievedJune 16, 2016, from
TECHINASIA: https://www.techinasia.com/burgers-of-azeroth-china-gets-
world-of-warcraft-themed-mcdonalds-restaurants
2. DI, Y.(n.d.). China’sEmploymentPolicies andStrategies.Retrieved June 20, 2016,
from http://www.oecd.org/employment/emp/37865430.pdf
3. Feng, J.(2012). POLICIESFOR JOB CREATIONINCHINA. Fudan University,
Economics.Retrieved June 20, 2016, from
https://www.jointokyo.org/files/cms/news/pdf/Prof._Jin_Feng_(China).pdf
4. Francisco, E.(2016, May 11). Chinaloves 'worldofwarcraft' so much it has a
lavishknockoff film andmuseum.Retrieved June 16, 2016, fromInverse:
https://www.inverse.com/article/15506-china-loves-world-of-warcraft-so-
much-it-has-a-lavish-knockoff-film-and-museum
5. Pulver,A. (2016, June 9). Warcraft: The Beginningproves amonsterhitin China.
Retrieved June 15, 2016, from theguardian :
https://www.theguardian.com/film/2016/jun/09/warcraft-the-beginning-hit-
china-world-of
6. Ren, Z. (2011, September 22). Thetime offan economyis coming? Retrieved June
15, 2016, from China internet information center:
http://cul.china.com.cn/zt/2011-09/22/content_4499973.htm
7. Wickline,D. (2016, June 15). Will TheRisingChina Box Office MakeWarcraft A
Hit? Retrieved June 16, 2016, from Bleeding Cool:
http://www.bleedingcool.com/2016/06/15/will-the-rising-china-box-office-
make-warcraft-a-hit/