Sino-Italy Fries Restaurant Development Plan - Example

Restaurant Business Plan Name Tutor Institution Course Date Executive summary The business involves a restaurant that will be specialized in Italian, Chinese and Australian Cuisine. The market environment is conducive for the business and it is less likely to experience a high level of competition. It is estimated that the restaurant will be serving up to 1000 customers everyday with each unit costing about $ 30. The business is expected to generate huge returns with about $ 900,000 a month. The capital required to start the business is estimated at $ 940,000. Part of the capital will be raised through borrowing from friends and the rest of the amount will be obtained from personal saving and sale of properties. The recruitment of employees will be carried out using recruitment agencies. A hierarchical organization a structure will be adopted. The company expects to recruit high qualified staff members from China, Italy and Australia. Restaurant Business Plan Introduction The number of Chinese and Italian nationals visiting Australia is on the increase. Business people from China are also investing in Australia (Smith, 2011). However, the number of restaurants serving the Chinese and Italian Cuisines are few. The business has identified this opportunity and intends to set up a restaurant serving the Chinese, Australian, and Italian Cuisines. Entrepreneurship is about capitalizing an opportunity and commercializing it (Doh, et al., 2013). The business will be set up in Melbourne where the number of Chinese and Italian customers is high. The business opportunity requires the involvement of experts in order to achieve its goals and objectives. In Australia, the business environment is friendly for the investors (Doh, et al., 2013). However, all the rules and regulations must be followed. The industry is undergoing a lot of growth and development due to the increasing number of tourist as well a high number of festivals that are held every year. The paper thus discuses the business plan of the restaurant which will be named Sino-Italy Fries. Market Feasibility Hospitality industry in Australia is undergoing a lot of growth and development. This can be attributed to the market potential and the thriving tourism industry. The business will be a restaurant serving the local Australian dishes as well as Italian and Chinese Cuisines. The restaurant will mainly target Chinese and Italian Tourists or nationals who want enjoy their local cuisines while in the country. The market is quite huge with over a million Chinese and Italians visiting the county every year (Smith, 2011). Hospitality industry is growing at a fast rate. It is among the few industries that have been able to achieve double digit growth every year. The market has high and low and high seasons depending on the time of the year. Full capacity is usually achieved during high seasons when the number of tourists is high in the country. Currently, there are only a few restaurants offering the Chinese and Italian Cuisines as most of the restaurants specialize in the local dishes. Most customers have to visit the large restaurants and hotels including Hilton in order to obtain their favourite dishes. The business mainly targets the Chinese and Italian customers although the local people are also expected to visit the restaurant. The sitting capacity of the restaurant will be 200. The restaurant therefore targets about 1000 customers on a daily basis. The external factor that may affect the business includes the laws and regulations set by the government. In Australia, the laws and regulations in the industry are strict so as to protect the customers. Little competition is expected due to the uniqueness of the products of the business. The barriers to entry involve the unique requirements in terms of the human resources and ingredients. Most of the Ingredients have to be exported from China and Italy. Expert chefs from Italy and China are also required in order to prepare the cuisines. This may be costly and hence creating the barrier to entry. The barriers to entry determine the levels of competition that a business is likely to face (Magner, 2015). Technical feasibility Technology is increasingly becoming a vital aspect the industry. It is required in order to enhance the process of interacting with the customers (Brooks, 2014). An app that enables the customers to book their meals in advance is required. The websites of the business as well as its social media pages should also facilitate the provision of the service. The requirements for the technology are complex and it requires a lot of expertise. This means that the subcontractor has to be contracted to carry out the process. The subcontractor is also required in the maintenance of the system. The products of the company are quite unique and the only production option is in house. The chefs from China, Italy and Australia will be responsible for the preparation of the dishes. The food has to be produced in house and only after it has been ordered by the customer. A sense of originality is required among the customers and hence the need for in house production (Brooks, 2014). Some of the dishes also require preparation where the customers can see the whole process. The hospitality industry is quite sensitive and any product prepared elsewhere may not be safe or it may fail to meet the needs of the customers. Sale and distribution of the product will be carried out in house. This means that the customers will have to physically visit the restaurant in order to purchase their required products. However, bookings can be made in advance through the online method. Visiting the restaurant will also give the customers an opportunity to enjoy other services and also meet other people. In the hospitality industry, establishing a good relationship with the customers is useful in ensuring that they are retained (Smith, 2011). This can be achieved through the in house sale and distribution which enables the customers to confirm that the product has been prepared at the restaurant. The resources required mainly include the ingredients as well as the ordinary kitchen equipment. Most of the ingredients for the Chinese and Italian Cuisines have to be imported from China and Australia. This means that the suppliers of the restaurant will be from Italy and China. Qualified Chefs from the Italy and Australia will have to be recruited. The company will rent a facility locally for a period of three years before purchasing its own building. Most of the production equipment are however found locally and will not be imported. In Australia, various laws and regulations governs the industry as well as businesses in general (Armstrong & Taylor, 2014). The restaurant will have to obtain licenses and permits before the start of its operations. All the expatriates who will be working at the restaurant will be required to have work permits and valid visas. Each of the chefs must be certified and should also have the required qualifications from a recognized institute. In order to protect the business from intellectual property infringement, patents, copyrights and trademarks will be obtained. Any new and unique recipe will be patented to avoid any exploitation. The restaurant will comply with all the laws and regulations including those related to environmental protection. A local waste management company will be contracted to handle all the wastes generated from the restaurant. Research has not discovered any ethical issue in relation to the business. However, high standards of ethics will be maintained in the course of carrying out the business activities. The restaurant will ensure that any issue that affects the customers is dealt with immediately. The notion that the customer is always right will be part and parcel of the business. A code of ethics will be developed internally so as to govern the conduct of the employees. Business ethics is increasingly becoming relevant in the modern business environment. In the modern environment, the customers rarely associate themselves with businesses engaged in unethical activities (Doh, et al., 2013). Emerging technological changes that may affect the industry involves the introduction of robots for carrying out tasks that were initially carried out by humans. These technologies are quite expensive and are increasingly becoming popular. The use of cash at the restaurants is on the decline and most of the customers have to pay using their credit cards. This therefore requires the restaurant to b equipped with the technology. The traditional role of waiters and waitress is changing due to technological advancement (Armstrong & Taylor, 2014). The company will therefore be required to develop an infrastructure that supports the use of modern technology. Financial feasibility Projected revenues In the hospitality industry, the units mainly involve the number of meals served. The price of the meals may vary depending on the type and quality. However, on average a unit may cost about $ 30 for a full course meal which is inclusive of drinks (Smith, 2011). It is projected that the restaurant will be able to generate revenue of about $ 1 million per month. It is expected that the restaurant will be in a position to sell about 1,000 units per day. The expected revenue is thus a product of number of expected units and the price the unit which amounts to $ 900,000 per month. Financial dynamics and opportunities Price per unit ($) 360,000 produced per year Variable costs per unit Gross margin per unit Fixed cost per unit Net margin per unit 30 Labour costs = 2,000,000 Raw materials = 3,000,000 Sales costs = 1,000,000 Other costs 500,000 Total variable costs = (2,000,000 + 3,000,000 +1,000,000 + 500,000) = $ 6,500,000/360,000 $ 18.05 Per unit (Revenue- cost of goods sold)/ revenue = (10,800,000-6,500,000)/ 10,800,000 = 0.4 Total fixed cost = Labour + rental cost 2,000,000 + 1,200,000 = $ 3,200,000 Per unit = 3,200,000/360,000 = 8.89 = Net profit/ Revenue = 10,800,000- 7,700,000 = 3,100,000/10,800,000 = 0.29 Required investments Item Amount ($) One Time Assets and Startup Expenses Plant & Equipment 200,000 Leasehold Improvements 50,000 Initial Inventories 100,000 Research & Development 10,000 Legal 5,000 Experts 30,000 Others 100,000 Operating expenses prior to break even 360,000 Total 855,000 Factor of safety 85,000 Total 940,000 Financial risks Every business is subject to financial risks due to the unpredictable nature of the activities (Kehoe & Wright, 2013). One of the risks is associated with payback which involves the inability of the business to obtain the capital and other finances used to start the business. This may happen if the business is not able to attract the customers and it may end up collapsing. However, based on the financial calculations, the benefits outweigh the risks. The business if successful is likely to recover the amount within a period of less than a year which is an indication of its attractiveness. In terms of opportunity cost, it is not possible to get better returns elsewhere. The business is likely to generate millions of dollars within a shorter period of time as compared to any other business. Starting the business also poses some personal financial risks. All the savings have to be injected into the businesses and a few properties will also have to be sold. This therefore indicates that there will be loss of savings as well as properties. Possible sources of financing There are a number of funding sources that are available to new businesses (Ulrich, 2013). The most appropriate source of funding for the businesses is borrowing from family members and friend. This may include a sum of $ 500,000. Borrowings from friends and family members are much flexible in terms of repayment as compared to the bank loans. The rest of the amount will be obtained through personal savings and sale of personal properties. The properties that will have to be given up include a car and a house. General financial numbers Pro forma profit and loss Year 1 Year 2 Year 3 Sales 10,800,000 12,000,000 14,000,000 Direct cost of sales 3,000,000 3,500,000 4,000,000 Other cost of goods 500,000 500,000 0 TOTAL COST OF SALES 3,500,000 4,000,000 4,000,000 Gross margin 7,300,000 8,000,000 10,000,000 Gross margin % 67.59 66.67 71.43 Expenses Payroll 100,0000 200,000 200,0000 Marketing 50,000 100,000 150,000 Depreciation 10,000 20,000 30,000 Rent 1,200,000 1,200,000 0 Utilities 50,000 100,000 150,000 Insurance 20,000 30,000 40,000 Payroll taxes 5,000 10,000 10,000 Other expenses 50,000 100,000 150,000 Total operating expenses 1,485,000 1,760,000 730,000 Profit before taxes 5,815,000 6,240,000 9,270,000 Taxes 100,000 150,000 200,000 Net profit 5,715,000 6,090,000 9,070,000 Return on investment =5,715,000/4,985,000 =1.15 A value above 1 indicates that the investment is good and the benefits outweigh the costs. The break even as well as the payback will be less than 3 years. Human resource feasibility The technical and managerial skills are required in order to meet the needs of the business (Ulrich, 2013). The owner of the business will double up as the CEO. The business will also have department heads that will form part of the management team. This will involve a senior chef, finance manager, human resource manager, information technology manager, marketing manager and hygiene manager. Each of the departments will also have supervisors who will be charge of the employees. Employees will be deployed I each of the department depending on the work and expertise that is required. All the department heads except for the chef must be in possession of A Masters Degree. The supervisors should posses a degree of diploma. All the employees must have undergone training in the areas of expertise for at least one year. The hierarchical structure is best suited for the businesses. The coordination of activities is dependent on the organizational structure. The recruitment of the employees is an important process to any organization. It determines the ability of the organization to have the workforce that it requires in order to meet its goals and objectives. Different methods can be used in the recruitment of the employees. The company will recruit the employees through employment agencies. Outsourcing the recruitment process is a common practice across the world (Dessler, 2011). International organizations will be contracted to recruit the chefs and other employees from China and Italy. A local company will be contracted to recruit the Australian the locals in Australia. All the employees from China and Italy must have valid visa and work permits. They should be fluent in English and must not have any criminal record. The payment of the employees will be based on their qualification and experience. Each job will be categorized into different job groups. The job groups will have a fixed salary scale based on the local rates. The motivation of the employees is an important aspect that plays an essential role in motivating them (Snell, S. et al., 2015). The employees will be provided with financial as well as non-financial rewards in order to motivate them. Performance appraisals will be carried out every year in order to determine the employees who should be rewarded. Training of the employees will be carried out on a continuous basis. All the employees from China and Italy will have to undergo a mandatory training about the customer service as well as dealing the members of public in Australia. Continuous training will also be conducted to ensure that the knowledge and skills of the employees is improved. The continuous training ill mainly focus on customer care issues as well as new trends in the industry. The growth strategy of the company will mainly focus on conquering the market. This is by ensuring that it is able to attract a high number of tourists as well as the local people. The marketing campaigns will be carried out both locally and internationally. At the international level, the marketing campaign will be through a close collaboration with airline companies as well as the tour companies. The company has to merge the market leader in order to solidify its position in the market. The strategy selected plays an important role in determining the growth and development (Dessler, 2011). The growth of the company will lead to expansion it its activities. This means that more employees will have to be recruited and new departments will also be required. The business will also open new branches in different parts of the country as it continues to expand. Depending on the levels of profits, the company has an international of venturing in other countries throughout the world. Globalization has made it easy for the business organization to operate in different countries (Dessler, 2011). The employees will also be provided with an opportunity to build their career at the organization. The organization will pay for the employees to be enrolled at the local colleges and universities. This will enable them to pursue the careers of their choice. Such employees will also be promoted so as to ensure their newly acquired skills are effectively utilized. Bibliography Smith, P., 2011. China biggest Source of migrants to Australia. Financial Times Australia. Magner, L., 2015, IBIS World Industry Report H4512 Fast Food Services In Australia, IBIS World. Brooks, W., 2014. The International Business Environment. Prentice Hall, New Jersey. Doh, J. et al., 2013. Ethics, Corporate Social Responsibility, and Developing Country Multinationals, Business Ethics Quarterly, 23(04), 638-639. Armstrong, M., & Taylor, S., 2014. Armstrong's handbook of human resource management practice, Kogan Page Publishers, NY. Kehoe, R. R., & Wright, P. M., 2013. The impact of high-performance human resource practices on employees’ attitudes and behaviors. Journal of Management, 39(2), 366-391. Ulrich, D., 2013. Human resource champions: The next agenda for adding value and delivering results, Harvard Business Press, Harvard. Dessler, G., 2011. Fundamentals of human resource management, Pearson Higher Ed., London. Snell, S. et al., 2015. Managing human resources, Cengage Learning, London. Appendix A Start-up Expenditures and Expenses Worksheet Item Total Cost Cash Required Land __________ ___$ 50, 000_______ Capital Equipment _____$ 200,000_____ __________ Computer _______$ 20,000___ __________ ___________ __________ __________ ___________ __________ __________ Beginning Inventory ___$ 100,000_______ __________ Start up Supplies _______$ 50,000___ __________ Licenses and Permits _______$ 5,000___ __________ Leasehold Improvements ______$ 50,000____ __________ Utility hookups & Installation _______$ 2,000___ __________ Advertising (Preopening) _______$ 5000___ __________ Insurance _______$ 10,000___ __________ Other _______$ 2,000___ __________ _______________ __________ __________ Total Estimated One-Time Cash Requirements ___$ 495,000_______ __________ Start-up Operating Expenses Estimate No. of Months Total Cash Item Monthly Expense X Before Break even = Required Owners Salary ________$ 100,000__ __________ __________ Employee’s salary, wages, benefits ____$ 100,000______ __________ __________ Rent __________ ____$ 100,000______ __________ Promotion expenses _____$ 4,000_____ __________ __________ Supplies and postage ______$ 10,000____ __________ __________ Vehicle Expenses ___$ 10,000_______ __________ __________ Telephone ___$ 1,000_______ __________ __________ Travel ____$ 5,000______ __________ __________ Interest ______$ 10,000____ __________ __________ Maintenance ___$ 10,000_______ __________ __________ Other __________ $ 10,000__________ __________ ____________ __________ __________ __________ Total Cash Required to Cover Operating Expenses __$ 360,000_______ Plus: Total One-Time Cash Requirements (Previous Table) ___$ 855,000_______ Add 10% Safety Factor _____85,000_____ Total Cash Required for Start-up 940,000_________ Read More