Establish the Viability of Restaurant Business Presented to My Bank Manager - Essay Example

Establish the Viability of Restaurant Business Presented to My Bank Manager Abstract A survey was conducted to establish a viable service business that shall be in operation for the duration of London Olympic 2012. The findings shall then be used to obtain sales, purchase, labor, expense and cash budgets which shall be presented to the bank manager for the purpose of securing business funding. Introduction In anticipation to London Olympic 2012, I conducted a feasibility study to determine a viable service business that would cater for the expected visitors.

A new venture needs a careful scrutiny of the state of the market. The study revealed that restaurant was more promising than any other service proving businesses. Traditionally, in situations like this, where a large number of people gather in a given city for a short time event, businesses come up and cease operations after the event. As a result, a wise investor has to choose a business that shall have low capital as a requirement for investment, thus a restaurant is the most convenient. In London, most hotels deal in fast moving snacks.

According to regular city business journals, for instance the Wall Street Journal, suggests that pricing in city restaurant are least regulated and mostly depend on market forces. Businessmen in this field converge to an agreement that the main determinant of pricing in this industry is cost of production which is made of labor, raw materials such as wheat, milk, beef, potatoes and vegetables. Urban planners, not only in London, but also in other neighboring cities such as Scotland, Manchester, Liverpool, among others opine that prices of fast moving foods are likely to get escalated due to the London Olympic event.

It is therefore necessary that planning or budgeting takes in to consideration this likelihood. Nevertheless, pricing of food shall solely depend on the class of the restaurant to be opened and the kind of customers being targeted. Survey The objective of the market study was to establish the most preferred fast moving foods and the corresponding prices that the customers were willing to pay. Secondly, I needed to ascertain the availability of the business premises in a prime location. Moreover, it was necessary for me to find out the availability of the supplies that are essential for the undertaking.

After a careful review on a variety of market research techniques, I decided to use the questionnaires, interviews and information from media for my study. I launched a research on various streets of London to establish the views people had in regard to the services offered in restaurants. Since London is a cosmopolitan city, I strategically organised my survey in a way that ensured the views from individuals of different backgrounds were collected. I sampled a number of streets of London including Downing, Oxford, Heddon, Bond, Jermyn and Regent Streets.

In each of the streets I gave out twenty five questionnaires. As expected, a range of food was mentioned. Considering that such events usually attract people of diverse age, culture, religion and financial backgrounds, it was obvious that their taste and preference would also vary. Thus, I projected my assessment to universal foods that would fairly represent different market segments. These included the steak, pork and kidney pies, pancakes, roast lamb or beef, pizza, rice, fish and chips, vegetables, sandwiches, and English breakfast consisting of the sausages, grilled or fried tomatoes that go together with toast coated with jam or marmalade, bacon, eggs.

Additionally, some people indicated that they enjoyed breakfast that only has fruit, coffee or yoghurt. From the opinion of the public it was clear that they were willing to pay either high or low prices depending on the quality and type of food served as well as the location of the restaurant. Up market restaurants tends to have higher food prices as opposed to other localities. In order to acquire the necessary information concerning the availability and the cost of the supplies including the ingredients for this venture, I interviewed a few potential suppliers in London.

From the response I got from the suppliers, I noted that on average, the cost of the rice cooker was going at about £170, microwave oven at £250, a 410L refrigerator at £500, commercial oven at £670, plate and cutlery at £15. In completion of my survey, I made an enquiry on the tentative rental fee for an average size premise that was located in a prime area. I specifically looked for a premise that would accommodate an average capacity of fifty visitors at a sitting. I engaged the services of a few estate agents and was able to get one that went at approximately £1800.

From the findings, I prepared the following budget estimates: OLYMPIC RESTAURANT Sales Budget For The Period Ending September 9, 2012       Week       1 2 3 4 5 6 Budgeted sales in cases 3000 3200 3200 3100 2900 2000 Selling Price per case £5 £6 £6 £5 £4 £2.5 Total Sales £15000 £19200 £19200 £15500 £11600 £5000 Purchases Budget For the Period Ending September 9, 2012       Week     Particulars 1 2 3 4 5 6 Totals               Food(£) 1000 1200 1200 1100 950 550 6000                 Equipment(£) 7000           7000                 Stationer and cutlery(£) 1500 100 100 100 100 100 2000                 Total Purchases(£) 9500 1300 1300 1200 1050 650 15000 Labor Budget For The Period Ending September 9, 2012     Week         1 2 3 4 5 6 Required Food Serving 3000 3200 3200 3100 2900 2000               Labor Hours Per Serving 0.4 0.4 0.4 0.4 0.4 0.4               Total Labor Hours Required 1200 1280 1280 1240 1160 800               Labor Cost Per Hour £1.293 £1.293 £1.293 £1.293 £1.293 £1.293               Total Labor Cost £1551.

724 £1655.172 £1655.172 £1603.448 £1500 £1034.4827 Expense Budget For the Period ending September 9, 2012       Week     Particulars Cost Behavior 1 2 3 4 5 6 Rent(£) Fixed 300 300 300 300 300 300 Administration (£) Fixed 400 400 400 400 400 400 Supplies(£) Variable 800 820 820 810 790 600 Wages(£) variable 1750 1800 1800 1700 1650 1500 Sales (£) Variable 450 500 500 430 400 300 Water(£) Semi-variable 150 180 180 160 120 100 Power(£) Semi-variable 160 190 200 250 120 100 Supervision(£) Semi-variable 60 65 70 60 40 40 Total Cost(£)   4070 4255 4270 4110 3820 3340 Cash Budget For The Period Ending September 9, 2012 Particulars 1 2 3 4 5 6 Receipts(£):             Sales 15000 19200 19200 15500 11600 5000               Payments(£):             Wages 1750 1800 1700 1500 1650 1800 Rent 300 300 300 300 300 300 Administration 400 400 400 400 400 400 Supplies 800 820 820 810 790 600 Sales 450 500 500 430 400 300 Water 150 180 180 160 120 100 Power 160 190 200 250 120 100 Supervision 60 65 70 60 40 40 Purchases 9500 1300 1300 1200 1050 650 Total Payments 13570 5555 5470 5110 4870 4290 Conclusion This report has revealed that a restaurant business, if operated during the forthcoming London Olympic, can yield considerable profits.

Though competition is quite intense in food industry, high profit margins can still be realized especially if the right choice of food is offered and the business strategically located. Recommendations Because of the customer dissatisfaction that emanates from the services offered by poorly trained staff, it was felt that freshly employed staffs needed adequate supervision, customers who have made genuine complaints be properly compensated and that before the staff embarked on serving the customers they should first ensure that they complete the entire product and service trainings.

Assumptions One of the assumptions that were made is that the quoted price for the materials shall remain the same within the business period, that is, there inflation will not occur. Furthermore, it was assumed that the food servings shall all have equal prices. Finally, it was presumed that the business shall be conducted without involving credit sales and purchases. References Rey F.J., Martín-Gil J., Velasco E. et al.(2004) Life Cycle Assessment and external environmental cost analysis of heat pumps, Environmental Engineering Science, vol 21, September 2004, pp 591–605 Day, G. (1981) The product life cycle: Analysis and applications issues, Journal of Marketing, vol 45, Autumn 1981, pp 60–67.

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