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FEASIBILITY STUDY: STARTING A NEW INDIAN RESTAURANT Best Solution for Assignment Writing Problems in Australia
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Table of Contents Executive summary:................................................................................................................2 1. Introduction:.......................................................................................................................... 3 2. Product and service description:................................................................................... 3 3. The entrepreneurial team:...............................................................................................3 4. Market assessment:........................................................................................................... 4 5. Competition:..........................................................................................................................5 6. Marketing strategy:............................................................................................................ 6 7. Technical and production analysis:.............................................................................. 8 8. Management capability:................................................................................................... 9 9. Financial analysis:.............................................................................................................10 10. Required financing:........................................................................................................14 11. Economic impact:...........................................................................................................15 12. Conclusions and recommendations:....................................................................... 15 Reference list:......................................................................................................................... 17
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Executive summary: The current report deals with the feasibility analysis of a new restaurant in the UK that aims to serve Indian cuisines among the UK customers of the restaurant industry. The analysis has incorporated the assumptions and scope of business to gain profitability within the industry and target region. The business owner has targeted to locate the restaurant at the Barclaycard Arena as this is one of the commercial hubs at Birmingham, Alabama. However, the competition at this region is higher in presence of potential Indian restaurants. In that case, the increasing demand of the Indian recipes has allowed the market to incorporate further ventures in this region in the UK.
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1. Introduction: The current feasibility study will deliver the external feasibility of a new restaurant in the UK to gauge its acceptability among the target audience. Therefore, before the planning of a new venture is initiated, conduction of the feasibility study is necessary to understand whether the new idea of entrepreneurship is feasible enough to run the business in long run. In this context, Babin and Zikmund (2015) cited that detail market research and growth prospect of the company is important to understand whether the new venture would recover its initial investment and meet the primary goals of the company. Therefore, the current report will therefore deliver the probable market share and profitability that the new venture will acquire after execution of the business planning.
2. Product and service description: The business will be a restaurant of Indian Cuisines in the UK market to promote the products in the foreign market. Therefore, the key products and services in the new venture will be different flavours and essence of Indian culture and tradition through different types of dishes and food items. In that case, Krueger and Casey (2014) cited that product and service specification needs assurance of quality measure to offer value for money to the consumers. Therefore, the service attached to the Indian food items will be the communication, warm behaviour and care of the restaurant visitors with fulfilment of their needs immediately.
3. The entrepreneurial team: Name: “Indian Curry House� Address: The restaurant will be introduced in Birmingham, Alabama near the Barclaycard arena
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Telephone number and email address: The telephone number and the email address of the business will be of the owner of the restaurant. However, disclosure of the contact information will be after the approval of the business plan. Qualification: The minimum qualification of the owner of the restaurant needs to be masters in business management to develop an effective entrepreneurship planning and execute the same properly. However, qualification is not the barrier of an entrepreneurship development. Work history: The owner needs to have significant experience on a Indian restaurant to develop understanding on the requirements of the same. Moreover, in the opinion of Yeung (2013), an entrepreneur needs to have sufficient prior experience in that same area of responsibility to sketch a new ventures on the obstacles, faced by the individual. Therefore, the owner needs to have prior experience in the area of restaurant services to design the plan accordingly. Status: The current status of the owner of the restaurant is an individual and therefore, the business will be a sole trader.
4. Market assessment: Market demand: Demand of the Indian cuisine in the UK market has attained a steady growth during last decades due to the changing lifestyle of the residents of the same. The increasing number of restaurants in the UK has evidenced the same. The British restaurant is now facing lack of sufficient curry flavours to the target audience of the UK residents. In that case, the statistics of the Indian foods in Britain reveals that the number of customers, preferring Indian food items is phenomenal. As a reason, about 10000 Indian restaurants are serving the
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typical Indian flavour to the UK residents where the same serves more than 2 million meals in the UK every week (BBC Inside Out - Curry crisis. 2017). Market trend: According to the current statistics, the Indian restaurant industry is worth more than 2.5 billion every year. However, the section is facing a crisis of proper curry chef and other Indian cuisines in Britain. Use of Indian herbs and special spices has made the Indian recipes comparatively more popular than the local recipes and typical fast foods of the UK. In that case, the owners of the Indian restaurants in the UK are visiting India to find out potential chefs to deliver sufficient Indian flavour in Britain (Economic fears as Indian food prices soar. 2017). Thus, the Indian restaurants in the UK have a scope of gaining significant market share through introducing some unique Indian recipes. Changes: The price of Indian restaurant food has attained a steady growth of 18% in its price level more than a year in the UK. The economists have explained such hike in the price of Indian food in the UK as a significant hike in commodity price hitting the end product of the cuisines. In the opinion of Zhang et al. (2015), price hike reveals the lower purchasing power of the customers and therefore, lower sales volume during the financial years. However, crisis of efficient Indian chef has also contributed to create such situation. Therefore, recruitment of skilled chef would be another option to deliver diversified flavours at an affordable price range.
5. Competition: Competition is another factor in creating a new venture in the target market region as the level of competition reveals the level of market saturation and thus the further scope of the new venture to attain desired market share in Best Solution for Assignment Writing Problems in Australia
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the target market region. Following are some competitors in the UK serving Indian food. Competitors
Location
Prices
Products and Services
Lasan
3-4
Dakota £12.95
Building,
James
street,
Indian
cuisine,
specifically
the
sea foods
Birmingham B3 Raja Monkey
Itihaas
1355
Stratford £10
Speciality of this
Road,
restaurant is the
Birmingham B28
south Indian thali
Centre
Prawn
of £16.95
Dalkeith
related
recipes
are
special
with
Indian herbs Mughal e Azam
Stratford
Road, £7.45 - £24.95
Birmingham B11
The
restaurant
serves the typical Mughal
and
Pakistani cuisines
6. Marketing strategy: Based on the above information and analysis following is the marketing mix that the restaurant would follow in attaining the expected market share and profitability in future. Product: Being the restaurant serving Indian cuisines, the new entity will serve the typical Indian foods including south Indian foods, north Indian cuisines, Best Solution for Assignment Writing Problems in Australia
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Bengali dishes and traditional tastes of the typical food items. In that case, the number of products in the new restaurant needs to be relatively higher than the other restaurants so that the target audiences would find wider option in Indian cuisines. As cited by Sheth and Sisodia (2015), range of products
and
services
ensures
encounter
of
diversified
needs
and
requirements and thus, acquire a wider number of potential customers. Price: Pricing option reveals the value for money against the investments from customers to deliver equivalent value of the customers’ money. In that case, in presence of the other potential competitors at the same location, competitive pricing would be more potential option to offer the Indian cuisines at comparatively lower price range. Such pricing policy would attract comparatively more customers over its competitors due to availability of wider Indian cuisines at affordable price range. Place: As mentioned in the previous section, the location of the restaurant is at the Barclaycard Arena where the other restaurants are located. In regards of the location, Leonidou et al. (2013) commented that business would faster flourish at the commercial places due to high demand of the specified products. In context of the presence of other restaurants in this area, it is transparent that the place possesses higher demand of food items and thus, feasible place to open a new venture. On the contrary, Kumar et al. (2013) argued that location of a new venture needs to be at the needy places where the option of the same product and its availability is limited in nature. As mentioned in the competitors’ price range, the average price range of the entire product line needs to between £7 and £12 to attract customers for generating sales. However, the profit maximisation needs further increment in the pricing to retain greater margin in its profitability. Apart from price Best Solution for Assignment Writing Problems in Australia
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increment, the venture would further attempt for increasing the volume of the sales to attain profitability. Promotion: Promotion is another marketing strategy for the new venture to push the Indian cuisines among the UK residents and ensure the growth of the business at a certain rate of improving the revenue and profitability. In this context, Sheth and Sisodia (2015) stated that promotion would follow both the online and offline mode where selection of proper mode of promotional channel enforces to introduce the restaurant through hoarding initially. However, in the era of rapid growth of internet usage in the developed countries,
online
promotion
including
marketing,
social
media
marketing and mobile marketing would be potential enough to attain wider customer
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7. Technical and production analysis: Technical and production deal with the use of techniques and equipments in the production process. The technique is based on the typical cooking process of the Indian foods. However, the equipments of cooking would be quite improved to conduct faster preparation of the Indian cuisine. However, in case of Indian foods, the real flavour of the cuisine needs appropriate time for preparing the Indian recipes. In the words of Leonidou et al. (2013), quality of the products, specifically the food products relies on the preparation mechanisms and the required time of production. Therefore, preparation of Indian cuisine needs significant time in case of the Tandoor items. However, there are also mechanisms to prepare the ingredients so that the preparation of the final item needs minimal time. On the other hand, Sheth and Sisodia (2015) stated that representation of the end product matters in attracting customers through making the same an appetiser. Therefore, continuing the discussion, garnishing mechanism needs to be proper so that it would improve the representation without hampering the real flavour of the item. Moreover, the equipments in this context need to be high end electronic equipments with the user friendly interface of easily use the same. In case of quality, hygiene is a crucial element that needs to be assured through proper cleaning process of wastages, utilisation of fresh ingredients and the prevention of damages in case of the raw materials.
8. Management capability: At the initial phase, the restaurant needs one manager and one cashier to decide the menus and operate the entire process of production and distribution of dishes based on preferences and demands. The manager of the new restaurant needs to have sufficient knowledge on the business management and workforce handling to monitor both operation and staffs’ performance. In the opinion of DragiÄ?ević et al. (2014), managers are liable to motivate the workers including chefs and waiters to serve the food and Best Solution for Assignment Writing Problems in Australia
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behavioural treatment as well. On the other hand, the cahier needs sufficient knowledge on the accounting principles and practices to maintain accuracy in financial statement preparation and reporting of the same. Therefore, looking after the planning and goals of the new venture, a proper hierarchy in the company is needed to convey the instruction following top-down approach of management.
9. Financial analysis: Income statement: Particulars
Year 1
Year 2
Year 3
Amou
Amou
Amou
nt
nt
nt
(GBP)
(GBP)
(GBP)
7
9
10
3.15
3.31
2
2.1
2.21
production 2
2.2
2.42
7.45
7.9325
1. Selling price per dish Costs relating to the service Variable costs
Direct materials per 3 dish Direct labour per dish Variable overhead 2. Total variable cost 7 per unit 3. Contribution (1-2)
0
1.55
2.0675
4. P/V ratio
0%
17%
21%
33000
36300
51150
75050.
5. Number of dishes 30000 served 6.
Total
contribution 0
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(3*4)
25
Fixed
manufacturing
costs Production overhead Administration
2000
and 700
2000
2000
700
700
2700
2700
2700
2700
office cost 7.
Total
fixed 2700
manufacturing overhead 8.
Fixed
selling
overhead 9.
Total
fixed
costs 2700
(7+8) Profit / (Loss)
-2700
48450
72350
Profit Margin
-
16.31
19.93
1.29%
%
%
Cash flow statement: Projected cash flow statement Parrticulars
Year 1
Year 2
Year 3
Amou
Amou
Amou
nt
nt
nt
(GBP)
(GBP)
(GBP)
-2700
48450
72350
1000
1000
1000
Cash flow from operating activity Operating profit Add.
Non
cash
and
non
operating expenses Depreciation
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Amortisation
1000
1000
1000
Loss on sale of assets
500
600
700.00
22000
22000
73050
97050
14535
21705
58515
75345
-6000
63000
-5000
15000
Net cash used in investing -
-
78000
activity
11000
Adjustment for changes in 22000 working capitral Cash
generated
from 21800
operating activity before tax Less. Tax paid Net
cash
0 flow
from 21800
operating activity Cash
flow
from
investing
activity Purchase of land
75000
Purchase of oven
25000 10000 0
Cash
flow
from
financing
activity Introduction of capital
28762
25000
0 Cash
flow
activity
from
financing 28762
0
25000
47515
17834
0
Net cash increased during 20942
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the year
0
Add. Opening cash balance
10000
Closing
cash
and
cash 21942
equivalent
0
5 21942
26693
0
5
26693
44528
5
0
Balance sheet: Projected balance sheet LIABILITY Capital
28762
28762
31262
0
0
0
Loan from bank
10000
10000
10000
Creditors for goods
5000
6000
5600
Creditors for expenses
380
380
480
Total
30300
30400
32870
0
0
0
20000
20000
20000
0
0
0
10000
95000
10000
ASSETS Land Building
0
0
Ovens
1500
1000
6000
Cash
1500
8000
22700
Total
30300
30400
32870
0
0
0
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10. Required financing: Particulars
Amount (in £)
Legal
5000
Office supplies
5000
Insurance
2000
Land and building
75000
Security deposit
15000
Furniture and fixture
38000
Bathroom
14600
Mechanical
5890
Plumbing cost
12000
Floor and wall décor
22000
Electrical equipments
15640
Food licensing
30000
Kitchen equipments
35480
Music and screens
4550
Cleaning
1500
Promotional cost
5960
Total
287620
According to the above option of fund acquisition, it is clear that the total investment in the new venture of opening a new Indian restaurant chain is £287620. The amount needs significant external sources to acquire the fund for initial investment in venture development process. In that case, Dragičević et al. (2014) started that bank loan is most convenient option of funding to acquire the fund against a certain cost of borrowings in the form the interest rate. However, the source of finance would need the break even
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statement and profitability in future to ensure whether the lent amount would be further recovered within a certain time period.
11. Economic impact: Economic impact includes not only financial contribution but also the improvement of social status of the residents of the UK. Development of this venture would reduce the rate of unemployment in Birmingham and other regions indicating enriched economy through improved purchasing power. Therefore, creating the employment is also an economic impact delivering hike in individual and national income through generating flow of cash. On the other hand, tax payment would improve the treasure of government that in turn would be utilised in further development in infrastructural base of the region and other rural regions. Supporting to this statement, DragiÄ?ević et al. (2014) mentioned that improved purchasing power of residents further contributes
to
the
social
financial
enrichment
of
the
customers
in
Birmingham and poor economic regions while contributing to the national economy as well. As a result, frequent flow of fund through the new venture would therefore improve the economic value and thus, hike the value of currency over the international region.
12. Conclusions and recommendations: Based on the above discussions and analysis of the market analysis, it is clear that the new Indian restaurant in the UK is highly feasible in nature to execute the business idea in real. In the context of current trend and demand statistics of the UK restaurant chain, Indian cuisine has a comparatively higher demand and preference due to the ingredients, used in preparation of the recipes. Therefore, based on the demand of the Indian cuisine, specifically the curry items, the Indian restaurants in Britain are eager to hire the chefs from the India to add the real flavour of Indian Best Solution for Assignment Writing Problems in Australia
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tradition and culture. However, in order to plan the business in detail on this feasibility report following are the recommendations to be followed. Risk analysis and sensitivity index: The current feasibility report excluded the risk factors and its impact on the business and therefore, the business plan needs detailed information on the probable risk factors and the influence of the same on the business operation. In this regards, risks register matrix is a potential tool to analyse the risk factors along with the severity and trigger. Clear assumptions and deliverables: The business plan needs clear descriptions on the key assumptions and deliverables to set the goals on the same. Such assumption would therefore, incorporate the uncertain elements to make adjustment on time. Primary data collection: Before the planning and execution of the current business idea is conducted, the owner of the venture needs to accumulate primary data in terms of customers’ opinion to set the menu of the restaurants. Such opinion would assist the restaurant manager to prioritise the food items and proceed with the production process accordingly.
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Reference list: ● Babin, B.J. and Zikmund, W.G., (2015). Exploring marketing research. Cengage Learning. ● BBC Inside Out - Curry crisis. (2017). [online] Bbc.co.uk. Available at: http://www.bbc.co.uk/insideout/eastmidlands/series7/curry_chefs.shtml [Accessed 22 Feb. 2017]. ● Dragičević, T., Guerrero, J.M., Vasquez, J.C. and Škrlec, D., (2014). Supervisory control of an adaptive-droop regulated DC microgrid with battery
management
IEEE
capability.
Transactions
on
Power
Electronics, 29(2), pp.695-706. ● Economic fears as Indian food prices soar. (2017). [online] Ft.com. Available
at:
https://www.ft.com/content/66b88094-1976-11e0-a853-
00144feab49a [Accessed 22 Feb. 2017]. ● Krueger, R.A. and Casey, M.A., (2014). Focus groups: A practical guide for
applied research. Sage publications. ● Kumar, V., Bhaskaran, V., Mirchandani, R. and Shah, M., (2013). Practice prize winner—creating a measurable social media marketing strategy: increasing the value and ROI of intangibles and tangibles for hokey pokey. Marketing Science, 32(2), pp.194-212. ● Leonidou, L.C., Leonidou, C.N., Fotiadis, T.A. and Zeriti, A., (2013). Resources and capabilities as drivers of hotel environmental marketing strategy:
Implications
for
competitive
advantage
and
performance. Tourism Management, 35, pp.94-110. ● Sheth, J.N. and Sisodia, R.S., (2015). Does marketing need reform?: Fresh
perspectives on the future. Routledge. Best Solution for Assignment Writing Problems in Australia