Business Plan for Agustos Restaurant in the Headingley Area of Leeds - Case Study Example

BUSINESS PLAN Agusto’s Eat-in & Take-away 20/04 Strictly Confidential Contents BUSINESS DETAILS INTRODUCTION/EXECUTIVE SUMMARY 2 Personal and Business Objectives Yr. 1-5 2 Key People 3 Support Network 4 SWOT Analysis Personal & Business 5 Business Premises 6 Legal Aspects 6 Marketing Plan 7 Market Research 8 Unique Selling Points 8 Customers & Consumers 8 Suppliers 9 Competition 10 Competitor SWOT 11 Pricing Strategy 12 Personal Budget 13 Financial Requirements 14 Sales Forecasts 15 Profit (Loss) Projection 16 Balance Sheet 17 Cash Flow Forecast 18 Calculating Break-Even 19 Contingency Planning 20 Training Plan 20 BUSINESS DETAILS Business Name Agusto’s Eat-in & Take-away Names of Owners, Partners or Directors Manish Patel (Master in Hotel Management) Sameer Shah (Master in Hospitality Management) Outline Business Description Trading Status Mexican Restaurant in Leeds, near Leeds Metropolitan University’s Headingley Campus. Retail Restaurant. Business Address Post Code Headingley, Leeds, LS6 Home Address Post Code 62, Foxcroft Way Beckett Park, Leeds, LS6 3LQ Telephone (Business) Telephone (Mobile) 07771972526 Fax NA - Email Address Manish.patel@agusto.com Accountant Rebecca English Bank HSBC Bank Plc Date of Plan 18/04/2013 INTRODUCTION/EXECUTIVE SUMMARY Agusto’s Restaurant is a Mexican restaurant located in the Headingley area of Leeds. It is a start-up of 2 hotel management graduates. The overall cost of opening Agusto’s is £ 600000 of which we are seeking a bank loan to the tune of £ 25000 and £ 100000 from family and friends. We intend to start operations on 5th of June 2013. We intend to offer variety of nutritiously high value Mexican meals at cost-effective rates to our targeted clientele. Who is involved: Partners, Mr Manish Patel & Mr Sameer Shah Legal Status: We have registered our Partnership as a Limited Liability Partnership. Personal and Business Objectives Yr. 1-5 Personal: Help me introduce the real Mexican culture in Leeds. Develop myself to an extent to start 2 more branches of the same or 1 new restaurant Be a recognized business owner in the society and help others achieve the feat by providing training Business: Open the business by 5th June 2013 Secure over 30 % of the market share by end of 3rd year. Provide nutritious food at low cost. Filling all the seats of the restaurant within 2 hours of opening by end of the first year. Meet or exceed the projected 1st year sales while keeping a close eye on cash flow, monitor food usage & spoilage. Provide Flawless excellent customer service Teamwork & employee development Key People Name, job title and responsibilities for each of your key people Management Summary: Sameer Shah is the Manager Operations of Agusto’s. He will be supported by Floor Manager Mr Alec Smart and Kitchen Manager Mr Paul Lee. The Floor Manager and Kitchen Manager will be assisted by Purchase Officer, Head Server, Head-chef and his team, Hostess and Cashier. Their main tasks will be to ensure smooth running of their respective jobs and ensure the best quality service to all customers Floor Manager: Primary role to accommodate customer needs and overlook the Head Server, Hostess and Casher and their respective teams. Kitchen Manager: Ensure all the orders that come to the kitchen are carried out in time and with utmost precision, handle inventory control. Ensure compliance of all the FSA guidelines. Support Network External support: We intend to bring in £ 875000.00 from our own savings and immediate families. We intend to bring equal amount of equity and will be sharing our profits and losses equally. We also intend to borrow unsecured loans to the tune of £ 100000 from friends and family and borrow Medium Term Loan of £ 25000 from HSBC. HSBC is a leading bank in the United Kingdom which offers start-up loans to the tune of £ 25000.00 for young self-employed people who intend to start a business. We have applied for the same and are eligible for the loan. We shall be using these funds for initial start-up expense as well as carrying out day-to-day expenses. This loan will be for the period of 1 year after which we intend to request the bank for an overdraft facility1 (HSBC.co.uk, 2013) SWOT Analysis Personal & Business PERSONAL STRENGTHS PERSONAL WEEKNESSES Calm, cool & Content, Enthusiastic, fun loving, good sense of humor High level of self awareness, self belief & self esteem Good Communication skills Good Leadership skills High I.Q. & E.Q Tech & Internet savvy Flexible: Able to adapt to changing situations naturally without much discomfort. Love for learning Sometimes Judgemental and critical of others resulting in wasting my time and energy outside the circle of Influence Sometimes Egoistic & need to be regarded & acknowledged ‘The Best’. Get distracted by too many things Disorganized & cluttered personal space Procrastination especially once hooked online PERSONAL OPPORTUNITIES PERSONAL THREATS Loads of Free Time to pursue my interests in hobbies of music and dance No responsibility for others-Parents & spouse self sufficient, no kids or dependent in laws; Free to do my own thing I like to believe that I’ve reached a stage where I can’t let ANYTHING outside my own self responsible for my negative states. Nothing in the external environment is 100% negative. Every situation, however bad, has it’s lessons n gifts. It’s up to me to make use of any circumstance in a beneficial way BUSINESS STRENGTHS BUSINESS WEAKNESSES Ease of accessibility for students of both the universities in Leeds Lack of an exclusive Mexican Restaurant within 5 mile radius of the location A Home-delivery option for customers All You can eat Dinner at £ 10 Health conscious clientele Profound training required Limited amount of capital Existence of small Mexican food-joints around. BUSINESS OPPORTUNITIES BUSINESS THREATS Key Location, near Headingley Stadium A Student city, financially always dependent, may cause hindrance in achieving sales targets Lack of time to make profit Highest attrition rate of 34.2 % in the UK2. Business Premises We are under negotiations for the purchase of a commercial property located at 12, Regent Street, Leeds, LS6 (RIGHTMOVE.co.uk, 2013). This property will cost us £ 4,50,000. We intend to carry out further renovation and interiors to the tune of £ 2,50,000. The property is located is front-facing to the main road leading to Headingley Stadium and has immense potential for a restaurant business. Legal Aspects Regulatory Requirements Your Actions Business Structure 1. For the purpose of Self Assessment Partnership firm has to be registered (GOV.uk, 2013). We have registered our partnership firm as a Limited Liability Partnership under the name “Patel & Shah Brothers” Financial Issues e.g. Tax, NI, VAT VAT Registration is compulsory for businesses if their annual sales are expected to be above £ 79,000 otherwise registration is voluntary (HMRC.gov.uk, 2013). We are undergoing the registration procedure with the HM Revenues and Customs, the formalities are expected to be fulfilled by end of April Environmental Issues Organise waste & recycling collection We have put proper systems in place and ensure waste is disposed of properly Employees The business should ensure that all the health and safety procedures are followed with regard to all employees Registration with National Insurance Funds We have put in place proper health and safety measures to comply with the regulatory authorities. Premises Ensure the building is classified under class A3 category which involves use of sale of food or drink for consumption on the premises (UK Statutory Instrument 1987 No. 764, Town & Country Planning Order 1987). We have checked with the local authorities and ensured that the property lies under the category mentioned. Disabled Customers Ensure easy access to disabled customers As our restaurant is located at floor level we have easy access to all our facilities in the restaurant. Licences Food Premises License from Local Authority Environment Health Department Registration of Premises with the environmental health services at least 28 days before opening (FOOD.gov.uk, 2013) We have completed the registration procedure with the Leeds City Council. Marketing Plan Marketing Strategy Agusto’s is planned to be a casual restaurant-cum-lounge targeting the varied class of people staying in Leeds. Leeds also happens to be a student city; From our research we found that people aged between 17 to 25 visits a restaurant every weekend. One of our main objectives is to provide nutritiously high-value meal at a comparatively low cost. Marketing Budget: We intend to allocate about 2 % of the start-up cost for the purpose of marketing. We mostly intend to depend on word-of-mouth publicity. We will be spending most of our budget on print media and discount coupons. We intend to do our advertising in the highly specific publications which have the deepest market penetration using the “Metro” newspapers for our marketing purpose. We also intend to schedule our advertisements at a regular frequency for displaying our promotional offers and menus. Metro is a leading free newspaper distributed in Leeds and many other cities. The market penetration of the news paper is over 1.3 Million. This penetration would surely help us make a mark in doing successful business in the city. The most happening trend in the university goers is the take-out and home-delivery menu. We intend to introduce home-delivery and take-out along with the date of our official opening. This will surely prove to be a big hit with university students. Market Research We conducted a market research of 2000 people from the age group of 17 to 49. We came to know that 57 % of the people aged 17 to 25 ate out once every week. Of these 25% preferred to try out different cuisines. We also found that Mexican cuisine was the favourite among the youth with a whopping 83 % opting for a Mexican dish. We also found that Mexican take-away were more popular than any other take-away menus. Unique Selling Points Full-variety of authentic Mexican Cuisines Our head chef specially brought in from Mexico Highly nutritious Mexican specialities on the menu Great Deals Customers & Consumers Leeds has 2 universities and several colleges. Leeds Metropolitan University is home to many international students. Most of who live near the Headingley campus. An authentic Mexican cuisine restaurant is something that is very much needed as students have to go a few miles for the same. When we conducted our research, we found that customers are ready to spend up to £ 15 on a decent meal. Our meals start from £ 10 which is fairly cheap. Considering our menu is 100 % authentic and nutritious without compromising on the taste. We are sure to attract many customers. Suppliers MexGrocer Limited is a company founded in 2006 and supply a special range of authentic Mexican food products in UK. The company also offers consultancy services to business start-ups in England. They do not have a minimum order quantity, and payments can be made by Credit Card or PayPal. They deliver at the cost of normal courier delivery or royal mail dispatch, or one can even collect the products from store. We are under negotiations to get better credit terms as we intend to become their regular partners. As a backup supplier we are also tied up with MX Food Company for ordering necessary supplies in times of contingency. Competition There are 2 Mexican cafes in the Headingley area of Leeds, Dare Cafe and Caliente Cafe. While Caliente cafe only caters to takeaways. Dare Cafe is not an exclusive Mexican restaurant as it also caters to Italian varieties (YELL.com, 2013). The most competitive advantage the Dare Cafe has is that it offers a meal for 2 at under £ 15.00 in their early bird menu during the week (YELL.com, 2013). Also due to the existence of the shop for many years they have developed a good customer base, which will be difficult to break. Competitor SWOT STRENGTHS 1. Reasonable cost 2. Take-away, eat-in menu 3. Good Location 4. Good reviews to back their business 5. Good customer base WEAKNESSES 1. Small size, not enough space around to develop their business 2. Lack of resources 3. Delayed delivery times 4. Lack of flexibility OPPORTUNITIES 1. An ever growing market 2. Has competitive advantage due to history of doing business in the said location for past many years. THREATS 1. Will be in Price war with us and other competitors. 2. Innovative products of ours will prove to be difficult for their continuation of the market share Using The Competitor’s SWOT analysis for your benefit The biggest weakness of our competitors is the size of their restaurants, as they are located in a busy street with many other businesses around. They do not have much space to grow from their existing size. Other strength that they have is they offer food at a very reasonable cost. While such a competitive pricing is difficult, we believe offering highly nutritious meal is more important than offering a cheap meal. While their early bird menu starts at £ 15 for 2 people. We have designed a special menu in which we offer all you can eat dinner at £ 10 per person, apart from various other deals we will plan to bring at various occasions. Pricing Strategy While analysing our survey we carried out in the vicinity of Headingley, we noticed that on an average people spend up to 10-20 pounds behind eating out at a restaurant and they spend around the same while ordering a take-away. As we have mentioned our competitor’s price is fixed at £ 15.00 per person for early bird menu. Hence, to beat the competition, we have fixed our All-day menu at £10.00 per person and kept the pricing of other meals and dishes as under. As all the non alcoholic beverages will be branded we intend to sell them at the fixed cost of £2.5 per order Our menu’s main dishes and their prices are expected to be as under. Ensalada de Pollo – Chicken Salad (£ 5.00) Ensalada de Camarones – Shrimp Salad (£ 6.00) Huevos Rancheros – Eggs Mexican Style (£ 6.00) Sopes de Colima – Grilled Corn Patties – (£ 7.00) Cold Shrimp Tacos – (£ 8.00) Choice of Fajitas – Sizzling hot Pans – starting from £ 6.00 All non-Alcoholic Beverages – starting from under £ 2.5 Personal Budget ESTIMATED EXPENDITURE for the year12 (NUMBEO.com, 2013) £ Mortgage/rent 10000 Council tax/water rates 4000 Gas, electricity and oil 1800 All personal and property insurance 0 Food, general housekeeping expenses 1200 Clothing 575 Telephone 1500 Hire charges 0 Entertainment (meals, drinks, etc.) 940 Subscriptions to associations, journals, etc. 1000 *Car tax and insurance 2000 *Car running expenses 2000 *Car service and maintenance 1000 expenditure for presents 500 Savings plans 3600 HP repayments 0 Household Maintenance 3000 Holiday 5000 Other (please state) 0 Class 2 NIC’s and set aside for tax currently 22%11 (HMRC.gov.uk, 2013) 130.00 EXPENDITURE in the year Sub-total (A) 38845 ESTIMATED INCOME for the year (OTHER THAN FROM THE BUSINESS) - Consultation 20000 Benefits e.g. child benefit or disability benefit 0 Pensions 0 Other income 10000 INCOME in the year Sub-total (B) 30000 INCOME NEEDED (estimated expenditure less estimated income – A-B) 8845 * include only private mileage if the same vehicle is also used in the business Financial Requirements Summary of your start up costs (support this with a detailed list) Office space Business rates Computers Accountancy Materials Marketing and materials Stationery Transport Research NI and Insurance Own resources Other sources of funding Sales Forecasts For the Sales forecast, we have assumed that the customer roughly orders for drinks along with his early bird menu. Profit (Loss) Projection Balance Sheet Cash Flow Forecast Calculating Break-Even Calculation of Breakeven sales for our Restaurant, Explanation and Calculation To calculate the breakeven of a restaurant we need to determine the restaurant’s Fixed Cost such as Property Tax, Insurance, Lease, Mortgage Payments and Salary Payments. Then we need to calculate the restaurant’s Variable Cost such as wages, advertising, cost of food sold. Based on the Fixed Cost and Variable Cost so obtained, we shall use the formula for Breakeven which would be BE=FC/(1-VC%) Fixed Cost = 200000+10000+5000+=215000 Variable Cost = (200000+8000+1600)/480000= 0.43 = 43 % Breakeven (BE) = 215000/(1-0.43)= 377192 Thus, from the above we can infer that, when our total Sales Turnover would be £ 377192.00, our restaurant would have met a Breakeven Point. Contingency Planning The main purpose to put a Contingency plan in place is to ensure smooth recovery of business during critical times. The plan details procedures to be followed during an emergency situation arising out of sudden business or other factors to ensure smooth delivery of services to our customers. 1. Vendor Readiness Plan: We mainly order our supplies from MexGrocer Limited. But we also have contingency planning with MX Foods Company which is also a leading wholesale grocer for Mexican food supplies. 2. Temporary Facilities: A predetermined offsite location has been selected for various members of the contingency teams to gather for immediate action. 3. Fire Hazards: The business being associated with handling naked flame, fire safety information is distributed to each employee upon induction, and proper training is provided to contain a fire and evacuate the facility. Smoke detectors will be strategically installed during the interior designing of the restaurant. 4. Insurance: All the business property will properly be insured from time to time. Training Plan Each employee will handle a certain amount of jobs and training will be provided as per their job roles. The main tasks with respect to their job duties will be as follows Head Server/Host: They will be the first person the client will see when they walk into the restaurant. Their main task will be to greet the customer and feel them welcome. As he will be the first person to meet the customer, he will be expected to carry out all the duties expected by the customer and ensure utmost customer satisfaction. When orders are taken they should clearly understand what the guest is requesting. Also, inform the chefs about any food allergies mentioned by them. Every employee: It will be the foremost duty of every employee to treat each and every customer equally and the value of food should not be taken into consideration while providing the service References Catering Mentor, Restaurant Start-up Guide (2012) Page.4 Food Standards Agency, Catering start=up business (2013) [Online] Available: http://www.food.gov.uk/business-industry/caterers/startingup/ [Accessed 20th April, 2013] Government Digital Service, Registration for self Assesment (2013) [Online] Available: https://www.gov.uk/register-for-self-assessment [Accessed 19th April, 2013] HM Revenues and Customs Department, VAT registration (2013) [Online] Available: http://www.hmrc.gov.uk/vat/start/register/ [Accessed 20th April, 2013] HSBC (UK), Business Loans and Finances [Online]. Avaiable: http://www.business.hsbc.co.uk/1/2/start-up-business/business-loans-and-finance [Accessed 20th April, 2013] Mex Grocers Limited, [Online] Available: http://www.mexgrocer.co.uk [Accessed 20th April, 2013] Statutory Instrument, 1987, UK Town & Country Planning Order UK Commercial Property for sale guide [Online] Available: http://www.rightmove.co.uk/commercial-property-for-sale/property-40512323.html [Accessed 16th April, 2013] Web Directory, Yell, (2012) [Online] Available: http://www.yell.com/b/Dare+Cafe-Mexican+Restaurants-Leeds-LS63AB-1099631/ [Accessed 20th April, 2013] Read More