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WORD COUNT: 14,243
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STATEMENT OF AUTHENTICITY
I have read the University Regulations relating to plagiarism and certify that this
project is all my own work and do not contain any unacknowledged work from any
other sources.
Signed: OLABOYE OLUWASEUN AJAYI
Date: 7th September 2009
WORD COUNT: 14,243
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PROJECT ABSTRACT
The aim of this project is to develop a business plan which will be used to secure
funding for the expansion plans for the company “Prashad Restaurant”.
“Prashad Restaurant” key objective is to become a key player in the vegetarian
segment of restaurant market by providing high quality vegetarian meals to customers
at affordable prices in a friendly environment.
Through the development of this project the following objectives are to be achieved:
a. Product description, business mission, vision and strategic objectives.
b. External analysis (macro and micro environment).
c. Internal analysis (Financial, Marketing and Operations).
d. Strategic growth plan for the medium term
e. Conclusion.
The literature review for this project will cover some of the most useful business-
oriented analytical frameworks such as:
a. PESTEL Analysis.
b. Porter’s Five Forces Model.
c. Boston Consulting Group Matrix.
d. SWOT Analysis.
e. Product Life Cycle
f. Financing and Business Plans
KEYWORDS
Business Plan External analysis Internal Analysis
Restaurant PESTEL Porter’s Five Forces
SWOT Financing
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PRASHAD RESTAURANT
A business plan for expansion.
By
OLABOYE AJAYI
Management Project submitted to the Bradford University School of Management
in partial fulfilment of the requirements
for the degree of
Master of Business Administration
2009
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PREFACE
While considering the subject to write my MBA dissertation, I found it difficult to
settle for just one subject. I wanted something that would allow me practise most of the
core subjects I learnt on the MBA course. After several consultations and advice with
my lecturers and peers, I decided on writing a business plan as my Dissertation topic.
My big break came when the management of Prashad Restaurant advertised their need
for a management student to develop a business plan for Prashad’s expansion. My
reason for choosing to write my dissertation on developing a business plan was
influenced by:
Firstly, I have had almost a year of taught courses. I wanted to do something outside
the classroom that would enable me put into practice the things I had learnt.
Secondly, writing a business plan allowed me combine knowledge from most of the
courses I had learnt during the duration of my MBA.
Thirdly, I hope to start my own consulting firm later in the future and I reasoned
getting experience developing a business plan now, will help me in actualising my
dream in the future.
This dissertation has enabled me experience firsthand the rigours and work behind
starting a new business or expanding a business while also allowing me apply the
knowledge I have acquired both on the MBA course and in my previous work
experience.
The Author
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DEDICATION
This work is dedicated to Ayodele Ajayi, Olayemi Ajayi, Olabode Ajayi, Omobolanle
Ajayi, Dayo Ogunsanwo and Ayoade Adeoye for making my dream a reality, for
always being there and for guiding me through the rough patches of life.
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TABLE OF CONTENTS
1 INTRODUCTION................................................................................................. 13
1.1 Prashad ........................................................................................................... 13
1.2 Scope/Rationale of Project ............................................................................. 13
1.3 Methodology................................................................................................... 13
2 COMPANY SUMMARY ..................................................................................... 15
2.1 Prashad Background ....................................................................................... 15
2.2 Motivation for Expansion ............................................................................... 16
2.3 Saltaire ............................................................................................................ 18
2.4 Why Saltaire ................................................................................................... 19
3 LITERATURE REVIEW ...................................................................................... 20
3.1 Strategic and Analytical Models .................................................................... 20
3.2 Financing and Business Planning ................................................................... 24
3.2.1 Theoretical aspects of a business plan .................................................... 24
3.2.2 Options in financing business plans ........................................................ 25
3.2.2.1 Traditional Financing Means ........................................................... 25
3.2.2.2 Grant Financing ............................................................................... 25
3.2.2.3 Venture Capital Financing ............................................................... 26
3.2.3 Financing and business plans .................................................................. 27
4 OVERVIEW OF RESTAURANT INDUSTRY IN BRITAIN ............................ 28
4.1 Indian Restaurant Industry in Britain ............................................................. 28
4.2 British Food Culture ....................................................................................... 28
4.3 Restaurant industry ......................................................................................... 29
4.3.1 Market sectors ......................................................................................... 29
4.3.1.1 British Restaurants ........................................................................... 30
4.3.1.2 Ethnic Restaurants ........................................................................... 30
4.3.1.3 European Restaurants ...................................................................... 30
4.3.2 Important Trends ..................................................................................... 31
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4.3.3 Market Size ............................................................................................. 31
4.4 Indian Restaurant Industry ............................................................................. 32
5 CONCEPTUAL FRAMEWORKS ....................................................................... 35
5.1 PESTEL .......................................................................................................... 35
5.1.1 Political Aspect ....................................................................................... 35
5.1.2 Economic Aspect .................................................................................... 35
5.1.3 Social Aspect ........................................................................................... 36
5.1.4 Technological Aspect .............................................................................. 36
5.1.5 Legal Aspect ............................................................................................ 37
5.2 Porter’s five forces Model and Restaurant industry ....................................... 37
5.2.1 Bargaining Power of buyer ..................................................................... 37
5.2.2 Bargaining power of supplier .................................................................. 38
5.2.3 Rivalry among existing competitors ....................................................... 38
5.2.4 Threat of new entrants ............................................................................. 38
5.2.5 Threat of substitutes ................................................................................ 38
5.3 Prashad Restaurant Life cycle ........................................................................ 40
5.3.1 Introduction ............................................................................................. 40
5.3.2 Growth..................................................................................................... 40
5.3.3 Maturity ................................................................................................... 40
5.3.4 Decline .................................................................................................... 41
5.4 Competitive Strategies.................................................................................... 42
5.4.1 Competitive advantage ............................................................................ 42
5.4.1.1 Cost Leadership ............................................................................... 42
5.4.1.2 Product Differentiation .................................................................... 43
5.4.2 Relationship between cost leadership and product differentiation ......... 43
5.4.3 Restaurant industry and Competitive strategies ...................................... 45
5.5 Prashad Restaurant SWOT Analysis .............................................................. 45
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6 OPERATIONAL PLAN ....................................................................................... 47
6.1 Restaurant Location ........................................................................................ 47
6.2 Restaurant Design ........................................................................................... 47
6.3 Operating Criteria ........................................................................................... 48
6.4 Products and Services ..................................................................................... 48
6.4.1 Product and Service Description ............................................................. 48
6.4.2 Prashad Menus ........................................................................................ 48
6.4.2.1 Specialty Drinks & Coffees ............................................................. 49
6.4.3 Competitive Comparison ........................................................................ 49
7 MARKET ANALYSIS ......................................................................................... 51
7.1 Market Segmentation...................................................................................... 52
7.2 Target Market Segment Strategy .................................................................... 53
7.3 Service Business Analysis .............................................................................. 54
7.3.1 Competition and Buying Patterns ........................................................... 55
8 STRATEGY AND IMPLEMENTATION ........................................................... 58
8.1 Competitive Edge ........................................................................................... 58
8.1.1 Competitor Analysis................................................................................ 59
8.1.2 Market Analysis Conclusion: .................................................................. 60
8.2 Marketing Strategy ......................................................................................... 60
8.2.1 Marketing Program ................................................................................. 62
8.3 Sales Strategy ................................................................................................. 64
9 MANAGEMENT SUMMARY ............................................................................ 65
9.1 Management Team ......................................................................................... 65
9.2 Personnel Plan ................................................................................................ 66
10 FINANCIAL PLAN .............................................................................................. 68
10.1 Important Assumptions ............................................................................... 69
10.2 Sales Forecast ............................................................................................. 70
10.3 Breakeven Analysis .................................................................................... 72
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10.4 Projected Profit and Loss ............................................................................ 73
10.5 Projected Cash Flow ................................................................................... 76
10.6 Projected Balance Sheet .............................................................................. 78
10.7 Business Ratios ........................................................................................... 79
10.8 Expansion, Payback & Exit Strategy .......................................................... 80
11 Conclusions and Recommendations ..................................................................... 82
I. Bibliography .................................................................................... 84
II. Appendix 1 ....................................................................................... 88
III. Appendix 2 ..................................................................................... 91
IV. Appendix 3 ..................................................................................... 92
V. Appendix 4 ...................................................................................... 93
VI. Appendix 5 ..................................................................................... 95
VII. Appendix 6 .................................................................................... 97
VIII. Appendix 7 .................................................................................. 99
IX. PROJECT PROPOSAL................................................................ 100
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LIST OF TABLES & FIGURES
Table 1 - Personnel Plan ............................................................................................... 67
Table 2 - Sales Forecast ................................................................................................ 71
Table 3- Breakeven Analysis ........................................................................................ 72
Table 4 - Projected Profit and Loss ............................................................................... 73
Table 5 - Projected Cash Flow ...................................................................................... 77
Table 6 - Projected Balance Sheet ................................................................................ 78
Table 7 - Ratio Ananlysis .............................................................................................. 79
Table 8 - Prashad Historic Performance ....................................................................... 89
Table 9 - Monthly Sales Forecast .................................................................................. 91
Table 10 - Personnel ...................................................................................................... 92
Table 11 - Monthly Profit and Loss .............................................................................. 93
Table 12 - Monthly Cash Flow ..................................................................................... 95
Table 13 - Monthly Balance Sheet ................................................................................ 97
Figure 1 - Prashad customers & sample of restaurant offering ..................................... 17
Figure 2- United reform Church ................................................................................... 18
Figure 3- Salt's mill ....................................................................................................... 18
Figure 4 - Sir Titus Salt ................................................................................................. 19
Figure 5 - SWOT Analysis Grid ................................................................................... 22
Figure 6 - SWOT Framework ....................................................................................... 23
Figure 7 - Origin of people granted settlement in the UK in 2004 ............................... 29
Figure 8 - The UK Restaurant market by segment ....................................................... 31
Figure 9 - UK restaurant market growth between 2000 and 2009 ................................ 32
Figure 10 - UK restaurant segments by market share ................................................... 33
Figure 11 – Percentage of customer by type of restaurants .......................................... 34
Figure 12 - Households in England by type, 2000-2021 .............................................. 36
Figure 13 - Porters 5 forces analysis of Indian restaurant Industry .............................. 39
Figure 14 - Product Life Cycle of Prashad Restaurant ................................................. 41
Figure 15 - Different level of product offering ............................................................. 44
Figure 16 - SWOT analysis of Prashad Restaurant ....................................................... 46
Figure 17 - Percentage of residents in Saltaire by age group ........................................ 52
Figure 18- Location of restaurants within 1 mile of Saltaire ........................................ 56
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Figure 19 - Location of restaurants within 1 mile of Saltaire ....................................... 57
Figure 20 - Monthly Sales forecast ............................................................................... 70
Figure 21 - Annual Sales forecast ................................................................................. 71
Figure 22 - Breakeven analysis ..................................................................................... 72
Figure 23- Forecasted yearly profit ............................................................................... 74
Figure 24 - Forecasted Yearly Gross Margin ................................................................ 75
Figure 25 - Gross Margin Monthly ............................................................................... 75
Figure 26 - Monthly Profit ............................................................................................ 76
Figure 27 - Cash flow .................................................................................................... 77
Figure 28 - Prashad Menu ............................................................................................. 99
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1 INTRODUCTION
1.1 Prashad
Prashad is a specialist Indian deli and vegetarian restaurant that specialises in bringing
Yorkshire original dishes as available in North India, South India and Punjab. The
company’s ethos is to never compromise on quality and to establish long relationships
with customers.
1.2 Scope/Rationale of Project
Prashad is a vegetarian deli & restaurant situated in Bradford that has been operating
since 1986. Current situation analysis shows that Prashad’s current location is
undermining the business’ potential. This is because over the years, the demographic
of the people living around the restaurant’s location has evolved to people who do not
appreciate the restaurants business. As a result, the company is looking to expanding
and opening a new outlet in a more favourable location.
This project will review the proposed location for the business expansion and develop
a business plan which will guide Prashad in its expansion plan and be used in securing
appropriate finance.
1.3 Methodology
The objective of the project is to provide a Business Plan to guide Prashad in its
expansion plans, measure its success and secure funding for its expansion. This will
involve identifying Prashad’s competitive advantage, analysing the restaurant market,
constructing a cash-flow and Profit and loss statement, then build a business plan
around it.
The literature review will cover the latest developments on market analysis, market
offering and marketing strategy. Historic analysis of the business will also be
reviewed. It will be important to discuss why Prashad is looking to expand and how it
has grown over the years.
Saltaire, the proposed location will be analysed. It’s history and especially analysis of
suitability of demographic of people there to Prashad’s business offering. An analysis
of the competition of Prashad in Saltaire will also be performed.
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An initial setup cost including step by step cost analysis will be prepared. A cash flow
analysis and Profit & Loss statement for one year will be prepared. Sources of
financing will also be researched.
The project will produce a business plan and make recommendations on the choice of
Saltaire as the location for Prashad’s expansion plans. This plan will guide Prashad in
its expansion plans and be used as a tool to review its performance and to secure
funding for the business.
Data Sources
• Interviews with Prashad staff and management.
Primary information
• Interview with other restaurant owners in Saltaire.
• Customer feedback on Prashad’s product and services.
• Publications on Vegetarian Restaurants
Secondary information
• Publications on Saltaire
• Publications on Customer Satisfaction
• Current thinking on Strategic Management
• Industry/market reports
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2 COMPANY SUMMARY
2.1 Prashad Background
Prashad is a family owned establishment that has been operating for over 15 years. It
operates as a specialist Indian vegetarian food business. Initially the company focussed
on the Indian market and supplied sweetmeats, dry snacks from a retail outlet and also
focussed on Asian wedding catering.
As Prashad’s reputation started to grow and vegetarian food became more popular the
company introduced a small eat-in menu with 8 covers and started to grow its non
Asian customer base.
The eat-in facility opened the doors to a new market and also a new industry. Prashad
was getting a reputation for excellent food and Kaushy the head chef at the time was
invited to compete in regional and national competitions.
She became:
• Yorkshire Forward’s chef of the year 2004 & 2005 (Prashad online 2009)
• SACC National Chef of the Year 2005 while competing against 3000 entrants
(SACC online 2009)
• Yorkshire Post’s Yorkshire Cooks MasterClass (Yorkshire post online 2009)
• UKTV Food Nominated Local Food Hero (UKTV online 2009)
• Consultant Chef for Bradford Council’s School Meals
• Which Good Food Guide 2007, 2008 & 2009 (only 1 of 2 Asian Restaurants in
Bradford)
These accolades along with the write ups in the Telegraph & Argus and Yorkshire
Post, and becoming Vegetarian Society approved substantially increased awareness
and customers.
“Richter needs to recalibrate his scale for the earth shattering effect of the Pethis
starter” Robert Cockcroft Yorkshire Post
Prashad re-organised its layout and introduced a 22 cover restaurant, this has been
running and growing customer base for 5 years. Currently the restaurant averages 250
covers per week and is very often turning customers away due to shortage of space.
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The restaurant has developed a very loyal customer base and a superior brand for
exceptional quality. (Sugarvine online 2009)
Prashad this year has also secured an exclusive supply contract with Sodexo, they are
the outsourced catering arm of Bradford University. Prashad has started to see
lucrative hospitality orders and expects this to grow.
Prashad has identified an ideal freehold property in Saltaire:
10-12 Commercial Street, Saltaire, Shipley, West Yorkshire, BD18 3SR
Moving to a more demographically suited location and moving away from a residential
area will allow the business to establish itself as a fully fledged licensed restaurant.
The business looks to maintain all its current product offerings namely : Deli,
Restaurant, Delivery, Catering and introduce further revenue streams like Alcohol,
Cooking Courses, Fresh Healthy Juices, Herbal Medication. The business fully expects
to see the delivery side of the business expand significantly. The new location presents
a larger more lucrative delivery market.
Prashad’s success has been organic and during the economic downturn the business is
growing its revenue. The business is looking for finance to buy the freehold and open
the new facility by November. Prashad’s future is very good and with a strong
customer base, moving to a larger more purpose built location will help the company
realise its true potential.
Prashad works hard to keep the dishes authentic and real, anything ordered from the
menu is widely available throughout India.
Prashad has been in the good food guide for over three years. For a long time, Prashad
was the only vegetarian restaurant in Bradford but in 2008 two other vegetarian
restaurants have been opened in the Bradford area.
2.2 Motivation for Expansion
Prashad’s main purpose for expansion is growing the business. Prashad currently
enjoys a high customer loyalty, good reputation in expertise for delivering exceptional
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food but the ambience around its current location is not allowing the business get
maximum return on its services.
• Employ more staff, increase size and scope of business which ultimately will
result in increased turnover.
• Management is currently all about personal passion. Expansion will allow for
implementing systems in the managing of the business.
• Move to location with proper ambience to allow for maximizing of resources
and getting more returns for services.
Figure 1 - Prashad customers & sample of restaurant offering
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2.3 Saltaire
Figure 2- United reform Church
Saltaire Village is near Bradford in West Yorkshire,
England. It is named after Sir Titus Salt who built a
textile mill and this village on the River Aire. In
December 2001, Saltaire was designated a World
Heritage Site by UNESCO. This status is owed to the
dedicated work of people from the local community.
Saltaire was a purpose-built "model" Victorian
industrial village, next to Shipley and just to the north
of the centre of Bradford in West Yorkshire's Bronte Country (Saltaire village, 2009).
The village itself was built in the nineteenth century by the Victorian philanthropist Sir
Titus Salt, to provide self-contained living space for the workers at his woollen mills, a
much needed substitute to the then "dark satanic mills" of Bradford and Leeds (from
the Jerusalem hymn) (Saltaire village, 2009).
The Salt’s mill was built in 1853 and
employed approximately 3000 workers. As
at then, it was among the most modern mills
in Europe and had many improved features
such as flues to get rid of dirt and dust,
improved smoke burners, and incorporating
noisy machinery in the lower levels to
suppress the noise. At full production capacity, the factory had 1,200 looms which
could produce over 30,000 yards of cloth a day (Haworth village, 2009).
Over the next 20 years Titus Salt created over 800 houses for the workers as well as
shops, schools and improved health prevision; clean water and bath houses and a
hospital. Gas was supplied for lighting and heating.
In the 1980's Salts mill was in decline, it was purchased in 1987 by Jonathen Silver
who converted it into office, shops and the 1853 Hockney art galleries (Haworth
village, 2009).
Figure 3- Salt's mill
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More recently Salt's Mill has been converted by the
late Jonathan Silver into shops and the "1853
Gallery" which houses a collection of the works of
the famous artist, David Hockney who was born in
Bradford.
Other buildings in the village have now been
similarly transformed into shops, licensed restaurants
and public houses (just a little touch of irony here -
as Sir Titus was a staunch abstainer)
Every year the village hosts the very popular Saltaire
Festival which is usually held in September (Saltaire village, 2009).
2.4 Why Saltaire
Prashad’s choice of Saltaire was based on a number of factors:
• It is centrally located, providing potential access to customers.
• The demographic of people in Saltaire is ideal for the business
• The ambience round Saltaire will provide good image for the business.
• Saltaire is known for restaurants providing exceptional service.
Figure 4 - Sir Titus Salt
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3 LITERATURE REVIEW
3.1 Strategic and Analytical Models
The objective of this project is to develop a business plan for expansion and investigate
likely sources of finance for Prashad restaurant. An analysis of the business
environment is critical to the development of an effective business plan. The external
analysis gives an understanding of the external business environment that Prashad will
be operating in while the internal analysis provides an assessment of the internal
resources which Prashad needs to ensure a successful business. This dissertation will
make use of the PESTEL and Porter’s five forces framework to analyse the external
environment. These analysis tools will help provide an understanding of the nature and
dynamic of the forces that drive or shape the external environment (Sanderson et al.,
2002) which Prashad will be operating in. The literature review will also look at the
latest developments in financing businesses, and will investigate the theories behind
the latest suggested funding sources.
PESTEL analysis looks at the external business environment, thus it is an effective
strategic tool for understanding the holistic picture of the environment in which a
business operates, allowing a business to take advantage of the opportunities and
minimize the threats faced by company’s business activities (Papers4You.Com, 2009).
It provides examinations of political, economical, social and technological,
environmental and legal forces externally (Oxford University press, 2007)
The purpose of the PESTEL Analysis framework is to examine the interaction of the
Political, Economical, Social, Technological, Environmental and Legal forces which
are particular to the environment in which Prashad will carry out its activities.
Although these elements constitute part of the uncontrollable environment, the use of
PESTEL framework provides a key analytical exercise that Prashad may use to
understand and minimise the risks and to maximise the positive effects associated with
some of these forces through the formulation of appropriate strategies. According to
Luffman et al. (1996), the ability to interpret the external environment is an important
facilitator for firms to formulate, accomplish and/or improve its strategic and business
objectives.
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Another tool used in understanding the external environment is Porter’s Five Forces
framework. It considers the interaction of the forces of competition in a firm’s given
external environment. Porter (1980) argues “understanding industry structure must be
the starting point for strategic analysis on identifying the basic underlying
characteristics of an industry”. These characteristics are responsible for defining the
competitive environment in the industry.
Porter suggests that the level of competition in an industry can be determined by the
analysis of the five competitive. The level of competition in an industry ultimately
determines its profit potential. These forces are:
• Rivalry among competitors
• Threat of entry
• Threat of substitution
• Bargaining power of buyers
• Bargaining power of suppliers
The Product-Life-Cycle (PLC) Framework will also be used to establish the stage of
the PLC the Restaurant service industry occupies.
The internal analysis will be used to complement the external analysis in order to
determine the key resources and capabilities which Prashad should possess in order to
succeed. Sanderson et al. (2002) defined these as;
• Tangible Resources: finance
• Intangible resources: brands, reputation, culture
• Human: skills, attitudes, knowledge.
Jobber (2007) defines the key resources and abilities needed by a company as:
• Operating Result (i.e. to know about services, customer etc. for the sale, profit
etc.)
• Strategic issue analysis (number of question such as current marketing
objective, the completive advantage of the organisation etc. this question will help to
analyse the strength and weakness)
• Services Marketing Mix Effectiveness (i.e. Services, Promotion, Price, Place,
People, Physical evidence and Process)
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• Marketing structure and system (Structure will include marketing organisation,
marketing training etc. and system will include marketing planning system, marketing
controlling system etc.)
A combination of the external and internal analysis will guide Prashad in the
development of the strategies needed to perform and survive as a business.
The SWOT model, which considers a company’s Strengths, Weaknesses,
Opportunities and Threats, will be used. This framework is used to assemble both
analysis and to highlight potential strategies to avoid weaknesses whilst maximising
opportunities. According to Stapleton et al. (1998), external opportunities and threats
can be considered through the internal strength and weakness in an integrated way
through the SWOT analysis framework. Luffman et al. (1996) argues that a firm’s
strategy should be built on strengths towards opportunities while avoiding threats and
correcting weaknesses.
Figure 5 - SWOT Analysis Grid
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Figure 6 - SWOT Framework
In 1980, Michael Porter developed a set of generic competitive strategies to be pursued
by firms depending on the competitive forces of the market they operate in. These
generic strategies are:
• Cost Leadership: Providing low cost products to customers
• Differentiation: Adding extra features to products valued by customers, for
which they are inclined to pay a premium
• Focus: Choosing to serve one segment or a small number of segments of the
market
When developing the internal analysis, and the Marketing Plan of Prashad, these
strategies will be explored and the most appropriate one will be developed in detail. A
combination of the Product Life Cycle framework and the Boston Consulting Group
Matrix, will help in establishing the product ranges with greater potential and provide
direction on where the firm’s available resources should be concentrated.
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3.2 Financing and Business Planning
This section considers the theoretical aspects of a business plan, it will move on to
discuss the traditional means of financing a business and will conclude by examining
the role of business plans in financing a business.
3.2.1 Theoretical aspects of a business plan
It has been argued that the most important step a firm can take in ensuring its future
growth is developing a business plan (Ames, 1989; Hindle, 1997; Kahrs, 1995;
Maitland, 1996). This is even more important in the start-up environment because they
cannot afford to be wasteful with their resources. Skripsky, (2002) argues that a firm
needs to plan the distribution of its scarce resources is to plan. Little wonder that
business planning is considered by experts as one of the most important factors that
can ensure the success or failure of a firm (Ames, 1989).
A business plan is a written document detailing how a business owner or manager will
organize and implement their activities to ensure the success of the venture. According
to Bracker et al. (1998) and Schwenk & Shraeder, (1993), planning helps the growth of
businesses. However, Sandberg et al., (2001) point out that some small businesses only
use the business plan to secure financing and dump it afterwards. Castrogiovanni,
(1996) argue that the positive effects of business plan are often taken for granted.
The business plan is not only useful at the start-up of a venture but also throughout the
lifecycle of the venture (Hormozi et al., 2002). The business plan assists in creating
competitive advantages and helps a firm’s survival through strategic planning
(Harrison et al., 1994). It is understandable then why so much importance is paid to
business plans.
The business plan explains to the financier the direction of the business and how it
hopes arrives at its destination (Hormozi et al., 2002). The correlation between
financing and business planning can thus be seen and understood (Ames, 1989, Mintz,
2004, Musey, 2000).
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3.2.2 Options in financing business plans
Financing is a crucial problem to every firm regardless of their size or location in the
world. Financing affects every aspect of the business including their life cycle and
profitability (Ulrich and Cassel, 1975; Witkin, 1997). Before now, a trip to the bank
was all it took to secure financing for a business but banks have become more stringent
in their lending. This has paved the way for various funding schemes.
3.2.2.1 Traditional Financing Means
According to Ulrich and Cassel (1975), trade credit and bank loans are two of the most
common external sources of funding for new ventures. Bank loan is important to new
ventures, but they are not easy to obtain. This is because banks tend to shy away from
high-risk endeavours and want assurance on the safety of their investment (Witkin,
1997). This is not good news especially for high-risk ventures, who face great
problems in securing bank loans which more often than not they do not get leading to
them facing Myers and Majluf (1984) pecking order theory which states that such
ventures will end up paying a higher rate of return compared to the norm.
3.2.2.2 Grant Financing
Grant financing are similar to loans in all respects except that they are not repaid to the
lender. According to Price (2003), grants are given to organisations with close views
and beliefs as the lending organisation. Most times, grants are given to organisations
whose operational methods benefit the society at large. It must be said that the
procedure for obtaining grants are very bureaucratic, time consuming and the granter
usually have very specific requirements for organisation to qualify (Vincent Denby,
2005). As such organisations seeking grants must plan early to ensure they meet all the
granter’s requirements.
The granting institution ensures that the money is used for the original purpose usually
through an overseer. According to Baliga (1995), grants between countries comes with
strings attached such as spending donated money on products or services from donor
country (tied aid) or demanding receiving country privatize some sectors
("conditionality").
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It is evident that grants financing are more difficult to obtain and control compared to
bank loans. They are mostly used in non-profit organisations (Sandra et al., 2006)
although some are given to profit oriented organisations but in small numbers. This
means that just because grants are free monies does not necessarily mean that they are
the best means of financing an organization.
The fact that grants are free monies does not mean they are the appropriate means of
financing an organisation especially because of the controlling and regulatory
restrictions attached which could limit the management’s ability in running an efficient
company (Vincent Denby, 2005).
3.2.2.3 Venture Capital Financing
Davila et al., 2003 describes Venture capital as external funding which includes
managerial and technical expertise for new, growing or struggling. Most common
sources of venture capital include: group of wealthy investors, investment banks and
other financial institutions (Wirbel and Wilson, 2005). Venture capital is common
among new or growing ventures with prospects for high growth but due to operating
history cannot raise funds through banks (Gupta and Poole, 1982; Terry and Dirk,
2006). Venture capitalists apart from owning equity in the company also have a say in
its operations and this may cause problems if the venture capitalist and management of
the company have vision (Carl, 2005; Karen and Robert, 2006). Venture capitalists
also insist on planned exit usually within three to seven years as part of their criteria
for investment (Karen, 2006).
Although venture capital seems to be answer to start-ups, the downside is the difficulty
in obtaining them because historic analysis shows that venture capitalists fund about
one in every four hundred opportunities (Keith, 2002). Venture capitalists have a
preference for opportunities in fast growing industries such as technology, life sciences
and biotechnology because they have very high growth potential and will allow for
quick return on investment and successful exit within the specified time frame (Terry
and Dirk, 2006).
This section has shown the different means of finance and difficulties that new
ventures such as Prashad may face in securing appropriate finance for its expansion
plans. These range from the problems of securing loans from banks; the difficulty in
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obtaining and managing funds obtained through grants, to the very high return on
investment required by venture capitalists. Care should be taken when choosing an
appropriate source of finance to consider the entrepreneurs vision and how the finance
procedure could affect the actualization of the business plan. New ventures could be
financed through various means but each method has different effect on the business
and the chosen method may either ensure success or failure of the new venture (Carl,
2005).
3.2.3 Financing and business plans
The creation of a business plan as a means to securing financing is arguably the most
important event in the life of the business. This is because the lender makes a decision
to either finance or discard a proposal based on the information contained in the
business plan. Trager (1993) argues that the true determinants of the direction a
business takes are the lenders because if there is no finance, the business idea never
becomes a reality (Greenfield, 1995). It is can be argued then that the ability of a
venture to obtain funding is as important as the business it plans to fund.
It is wise to realize that financing does not just make it possible to begin a planned
business, but the type of financing may affect how the business is run and ultimately
its success or failure (Vincent Denby, 2005). This is especially of great importance in
venture capitalist or grant funding where the lending organization exerts considerable
influence on the daily running of the business (Vincent Denby, 2005; Carl, 2005;
Karen and Roberts, 2006).
The business plan should be a dynamic document which is not only used to secure
finance but revised and updated throughout the lifecycle of the business to stay ahead
of market trends and demands (Brown, 1996). The business plans, not only shows
where you are, but where you want to get to and how to get there. Little wonder that
many researchers agree that the business planning and financing are the two most
important aspects of a new venture and determine the success or failure of such
ventures (Bracker et al. 1998; Schwenk & Shraeder, 1993; Hormozi, 2002; Rhyne,
1986).
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4 OVERVIEW OF RESTAURANT INDUSTRY IN BRITAIN
4.1 Indian Restaurant Industry in Britain
This chapter will introduce the Indian restaurant industry; explain ongoing trends and
market share. Finally, problems and challenges faced by Indian restaurant industry.
Clermont Marot in the 16th century used the term ‘restaurant’ to refer to a broth.
However it started being used in today’s context, in 1765 during Boulanger’s time
(Peter & Grove, 2006). The 20th century gave birth to the idea of Indian restaurants in
the United Kingdom.
In 1960, there were only about 500 Indian restaurants in the United Kingdom and
about 75percent were owned by Pakistanis. With the advent of Bangladesh’s
independence in 1971, Indian restaurants in the United Kingdom steadily grew to
8,000 by year 2000 (Peter and Grove, 2006). Indian restaurants are considered a major
industry in the United Kingdom with turnover of over £2 billion a year and employing
around 70,000 (Peter and Grove, 2000).
British people have ample range of Indian restaurants to choose from for out-of-home
eating. These are also complemented by other ethnic restaurants which can be found in
almost every city in the United Kingdom leading to increasing competition within the
industry.
4.2 British Food Culture
Since the 1950’s significant population of ethnic groups have been migrating into the
United Kingdom to look for work or in search of the “green land”, leading to an
increasingly ethnically diverse society. India, Pakistan and Bangladesh constitute a
large percentage of the migrants and each ethnic group migrated with its own culture,
religion, language and cuisine.
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Figure 7 - Origin of people granted settlement in the UK in 2004
Source: office for national statistics (2006) UK
Indian foods began to be popular in the United Kingdom around 1960. Today, a large
number of Indian, Pakistani and Bangladeshi restaurant are serve their local distinct
dishes. Birmingham was heart of this cultural transition and were followed in quick
succession by Manchester and Bradford. The Indian cuisine is now considered an
integral part of British food and a few Indian-origin dishes such as Chicken tikka
massala is now considered as one of England’s most popular.
4.3 Restaurant industry
The term restaurant refers to a place supplying food for consumption to customers on
the premises (Keynotes, 2005). The restaurant industry in the United Kingdom consists
of a mix of family owned, branded restaurants chains, individual and independent
outlets. The restaurant industry can be classified into different sectors based on type
and market share.
4.3.1 Market sectors
United Kingdom restaurant industry is classified into three major sectors as:
• British Restaurants
• Ethnic Restaurants
• European Restaurants
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These three classes can be further grouped into Asian, Chicken, Continental, Fast food,
Pizza/Pasta, Pubs and hotels, Roadside and other general menus restaurants.
4.3.1.1 British Restaurants
This sector is made up public houses, public houses-restaurant, and hotels and they
serve traditional English food. The typical British food sold as take-outs are Fish and
chips.
4.3.1.2 Ethnic Restaurants
The number of ethnic restaurants serving traditional Indian and Chinese cuisine is in
the thousands. Competition is also on the rise in this sector with the introduction of
newer concepts like the American, Japanese and Thai cuisines. (Keynotes, 2006).
4.3.1.3 European Restaurants
The formation of the European Union resulted in increased migration of thousands of
people into the United Kingdom especially from countries such as Poland & Hungary.
These migrants introduced the regional cuisines of their native countries.
According to keynote (2005) English city restaurant available to public are:
• 25 to 30% - Restaurants (pubs or hotels)
• 15 to 20% - Traditional English restaurant (cafes or tea places with domestic
theme)
• 15 to 20% - Traditional Indian restaurant (curry houses or Chinese restaurants)
• 15 to 20% - National chains (burgers, pizza, and fried chicken)
• 15 to 20% - Regional European restaurants (French, Italian)
• 5 to 10% - Other foreign cultures restaurants (Greek, Turkish and Thai).
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Figure 8 - The UK Restaurant market by segment
Soruce: Data from key notes (2005): UK Restaurant value by restaurant type 2002-
2006 in ₤ Million
The availability of restaurants depend at any place depend upon socio-economic
factors. Ethnic minority concentrated areas as Bradford and Birmingham likely to have
restaurant that are own an5d run by member of that minority. Another important factor
that influences availability of any restaurant is tourism.
4.3.2 Important Trends
• Rising trend of dual income household leading to reduced time for cooking and
increase rate of eating out which is supported by wide variety of restaurants.
• Increasing ethnic diverse society and the introduction of foreign cuisines to
British people leading to availability regional food in large cities.
• Restaurants forced to introduce healthy food choices due to rising level of
obesity and increase health awareness among consumers.
• Restaurant industry player affected by ban on smoking in public places and
legislation on the sale of alcohol.
4.3.3 Market Size
In 2007, the Indian restaurant industry was estimated at ₤13.25bn (Keynotes, 2008)
and is continuing to grow. Industry growth from 2000 to 2005 and then from 2005 to
2009 expected growth is:
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Figure 9 - UK restaurant market growth between 2000 and 2009
Year Market £m2000 10,7972001 11,1362002 11,6782003 12,0002004 12,0002005 12,2502006 13,0002007 13,6502008 14,4002009 15,000
Source: Data compiled from Keynotes (2005) Market Growth from 2000 to 2009
4.4 Indian Restaurant Industry
The increasing ethnic diversity of Britain also led to rapid growth of ethnic restaurants.
The 1950s and 1960s was a period of rapid growth of the Indian restaurant industry
especially in London and South East which are responsible for housing about 45% of
Indian restaurants. The concept of Indian restaurants spread from there to all over
Britain. (Peter and Colleen Grove, 2006).
02,0004,0006,0008,000
10,00012,00014,00016,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Market £m
Market £m
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Figure 10 - UK restaurant segments by market share
Source: Data compiled from Keynote (2007)
The growth in British fish and Chips takeaways and other ethnic restaurants (Chinese,
American and Thai) have increased the competition faced by Indian restaurants. The
Indian restaurants lost about 2% of their market share in 2003, while the Asian market
industry gained 7.8% market share. The Asian Business Federation in 2006, record
shows that more than 400 restaurants closed down between 2000 and 2004.
The Indian restaurant industry is the dominant ethnic restaurant. Figure below shows
that 31% of consumers visit public houses while 22% visit Indian restaurants. keynote
(2005).
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Figure 11 – Percentage of customer by type of restaurants
Source: Data compiled from keynotes 2005
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5 CONCEPTUAL FRAMEWORKS
5.1 PESTEL
The macro-environment has an effect on a firm’s decision making thus influencing its
operations. The PESTEL analysis will be used to examine the United Kingdom’s
restaurant market in the Political, Economic, Social, Technological, Environmental
and Legal aspects, and the effect on Prashad’s decision making.
5.1.1 Political Aspect
The Hospitality Training Foundation (HTF) was re-launched in May 2004, with focus
on People to mark its shift into the Sector Skills Council for the hospitality, leisure,
travel and tourism industries. (KeyNote, 2005)
The government have been advised by health advocates to use regulations in adjusting
the food industry in order to combat the increasing health problem of obesity and
excess weight gain among the British population. Examples of the advised
mechanisms include taxing soft drinks and restricting snack and food advertising to
children
5.1.2 Economic Aspect
The United kingdom economy commenced a slump after 14years of growth and the
growth in 2008 and 2009 forecasted at 1.6% and 1.8% respectively. Analysis show that
some external and environmental factors have weakened the industry especially within
Gastro pubs: the smoking bans and tax raise on alcohol dramatically affecting sales
(Guardian business, 23/05/08). The reduced level of tourists entering the country
which fell by 3.9 percent in 2008 also resulted in a decrease in the rate of eating out.
The rising cost of fuel has had an effect on the transportation cost of food leading to
increased cost price for food. This coupled with the increase cost of money has
reduced the demand for eating out and ultimately makes the situation harder for
restaurants to maintain their margin. The increase in the supply of restaurants leads to
fiercer competition with the result being a tough economic climate especially for
struggling restaurants.
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On a more positive side, the restaurant industry has been described as a safer
investment compared with the newer industries.
5.1.3 Social Aspect
The working hours of the British are longer compared to their European counterparts.
An average worker in the EU works for 40hours per week compared to British 44
hours per week. Also there is a high proportion of part-time jobs which are filled
mostly by women leading to increase in number of women working (Data monitor
2005). All these lead to less time at lunchtime and after work to prepare or cook meals
and preference for out-of-home eating in restaurants.
Also there is an increase in the proportion of single person house-holds in the UK and
since single adults are more unlikely to cook while the social lifestyle of young singles
does not leave much time for cooking, a viable option is eating out in restaurants.
Figure 12 - Households in England by type, 2000-2021
Source: from keynote 2005
5.1.4 Technological Aspect
Technology has not been seen as a key aspect of the restaurant industry but its
relevance has been increasing especially since its use as an effective marketing
channel. Most businesses also now have provision for customers to make reservations
and order for food online.
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5.1.5 Legal Aspect
There have been efforts by the government to improve the diet of the nation. To this
effect a lot of government legislation has impacted the restaurant industry over the
years. Thus Healthy Eating has become front page news, a factor surely contributing to
the rise of premium casual restaurants.
There has been increase in the duty on alcohol. This may encourage in-home drinking
or influence more people to spend more time in restaurants rather than public houses.
In 2007, the smoking ban was put into effect. This has made restaurants a more
attractive eating place for customers due to the separation between smoking and eating
The rise in national minimum wage did not reduce restaurant margins dramatically
because restaurants made up by using the tip system. The government has changed this
loophole and restaurants may feel the rise in minimum wage. (The Guardian, 2008)
In summary, there exist both opportunities and challenges from the United Kingdom
restaurant industry as identified using the PESTEL analysis. Prashad however has an
edge especially in its offering of healthy vegetarian food. The pressures of the
environment will undoubtedly lead to increased competition.
5.2 Porter’s five forces Model and Restaurant industry
There is already literature on competitive strategies for small businesses. Michael
Porter (1980, 1985) competitive model or five forces model is agreed as one of the best
tools for developing competitive strategies.
5.2.1 Bargaining Power of buyer
Bargaining power of buyer refers to buyer’s ability to force down prices, demand
better quality and service. In the restaurant industry, buyers are more concentrated than
sellers. This coupled with readily available sources of supply and no switching cost
gives buyers high bargaining power.
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5.2.2 Bargaining power of supplier
Bargaining power of Suppliers refers to supplier’s ability to augment raw material, and
increase product delivery prices while keeping its customers. Few substitutes for
ingredients coupled with geographical isolation, gives some power to supplier
(Bharath and Prema, 2004). In the Indian restaurant industry, supplier bargaining
power is on the decline due to increasing European and Chinese restaurants and
English fish and chips takeaways.
5.2.3 Rivalry among existing competitors
Rivalry among existing competitor refers a firm’s response to actions taken by their
competing or rival firm. Competitors are evenly balanced in the Indian restaurant
industry due to low growth, low product differentiation and high exit barriers which
are the hallmarks of a highly competitive industry. (Bharath and Prema, 2004)
5.2.4 Threat of new entrants
Threat of new entrants refers to possibility of new players into the industry. In the
restaurant business, there is low barrier to new player’s entry due to the relatively low
investments, availability of new and existing distribution channels and low
differentiation.
5.2.5 Threat of substitutes
Threat of substitutes refers to product and services which is not direct competition but
which consumers may use to satisfy similar needs. The rising number of other ethnic
restaurants (Chinese and Italian) and increasing interests poses a high level of threat to
Indian restaurants (Bharath and Prema, 2004).
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Figure 13 - Porters 5 forces analysis of Indian restaurant Industry
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5.3 Prashad Restaurant Life cycle
Jobber and Fahy (2003) argue that the product lifecycle (PLC) consist of four stages.
According to them, there is need to review marketing objectives and strategies at each
stage because changes there are changes in market and competitive forces at each
stage.
5.3.1 Introduction
The introductory stage is characterised by losses from development and promotional
cost and low sales growth. Management monitors the product and may terminate if it
proves disappointing. (Jobber and Fahy, 2003)
Introduction stage of Prashad was at its Bradford branch opening in 1986. This proved
successful because the demographics surrounding their location were favourable to the
business.
5.3.2 Growth
The Growth stage is characterised by faster sales and profit growth normally due to
market acceptance and repeat purchasing (Jobber and Fahy, 2003). Towards the latter
part of growth stage, profits decline due to entrants of new rivals. The objective during
this stage is building sales and market share.
Prashad restaurant enjoyed increase in sales and turnover within the first couple of
years of opening and began to build a loyal customer base.
5.3.3 Maturity
The maturity stage is characterised by stabilisation of sales due to saturation and
completion. There are few new users to win over. (Jobber and Fahy, 2003). The impact
of brand building and customer loyalty is most obvious at this stage and it is
businesses with good brands and loyal customers that retain their business at this stage.
Prashad restaurant is currently at its maturity stage and this is shown in figure 14. This
was brought about mainly due to change in demographics around its current location
hence Prashad’s effort at expanding to a more favourable location.
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5.3.4 Decline
The decline stage is characterised by reduced demand for product leading to fall in
sales and profit. This is mostly brought about by new technology introduction or
change in consumer taste. (Jobber and Fahy 2003). Businesses may respond by closing
out or reducing operational budgets and product offerings.
Prashad restaurant has not reached this stage.
Figure 14 - Product Life Cycle of Prashad Restaurant
As shown in (Figure 5) and mentioned above, Prashad’s current position with regards
to the PLC is at the maturity stage. The restaurant already has established customers at
the Bradford branch and is facing increasing difficulty in winning more people because
the demographics around its current location is not favourable to the business.
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5.4 Competitive Strategies
Developing efficient and effective strategies to gain and maintain competitive
advantage has always been and will continue to be the most important concern for
business leaders. The focus of competitive strategy used to be on large firms but the
decline of manufacturing companies has turned the focus towards how small
businesses can compete in this highly competitive environment. Porter (1980)
provided the foundation for most discussion on firm strategy.
Michael Porter (1980) defines competitive strategy as the search for and sustenance of
desirable and favourable competitive position within an industry. Porter (1980) argues
that the aim of a firm’s competitive strategy if to identify and keep a position within its
industry where it can defend itself against the five competitive forces or influences
them in its favour.
5.4.1 Competitive advantage
Porter (1980) defines firm competitive advantage as the value created by a firm for its
buyers which exceeds the cost of creating it. Porter identified two major routes to
gaining competitive advantage:
• Cost leadership
• Differentiation
5.4.1.1 Cost Leadership
To gain competitive advantage through cost leadership, a firm will focus on becoming
the lowest cost producer in the industry Porter (1985). Firms concentrate on
controlling production cost, maximizing capacity and minimizing all other cost
including promotional costs in order to pursue a cost leadership strategy. According to
Porter (1980), all firms would like to reduce operational cost so as to maintain a
desired profit margin and keep their customers. Firms can pursue a cost leadership
strategy if they have:
• Access to low-cost resources
• Well-organized delivery channels
• Efficient and effective production procedures
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When firms possess these resources and skills, they can reduce production, distribution
and marketing cost and pursue a cost leadership strategy.
5.4.1.2 Product Differentiation
Product is defined as “A complexity of tangible and intangible attributes including
functional, social, and psychological utilities or benefits, a product can be an idea,
service, a good or any combination of these.”
Differentiation strategy aims to augment product and services and deliver them to
customers, and for this customers are willing to pay a premium. According to Porter
(1985), differentiation strategy can be pursued by a firm when it seeks uniqueness in
an industry where these differentiating attributes are appreciated by consumers.
Differentiation can be in the product, delivery, services or other factors and it is
characterised by quality, innovation and customer service. Firms pursuing this strategy
aim to make the differentiated product valuable to the consumers. There are three
levels of product:
• Core product
• Expected product
• Augmented product
5.4.2 Relationship between cost leadership and product differentiation
A question that readily comes to mind is if it is possible to pursue both strategies
simultaneously. Porter (1985) initially argued that firms cannot pursue both strategies
simultaneously. However in 1991, Porter amended his earlier argument and stated that
firms can pursue either of these strategies or a combination of both in gaining
competitive advantage.
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Figure 15 - Different level of product offering
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5.4.3 Restaurant industry and Competitive strategies
Eating at restaurants is no longer considered as a luxury but as part of daily living.
Restaurants are facing increasing competition due to increased choice, augmented level
of services, and superior value for money. Also it is becoming increasingly difficult for
consumers to differentiate between products from different restaurant. It has become
vital that restaurants seek competitive advantage to survive and succeed. Due to the
difficulty in pursuing a differentiation strategy, the most common strategies pursued by
restaurants are:
• Cost leadership
• Customer loyalty through products services quality
These two strategies have been effective in gaining competitive advantage and
increasing market share. The adoption of price discounts is not a sustainable strategy
and will impact profitability in the long run. Gaining customer loyalty has become
fundamental in gaining competitive advantage in the restaurant industry.
5.5 Prashad Restaurant SWOT Analysis
SWOT analysis of Prashad restaurant is carried out to discover Prashad’s internal
weaknesses and strengths and the restaurant industry’s external opportunities and
threats.
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Figure 16 - SWOT analysis of Prashad Restaurant
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6 OPERATIONAL PLAN
6.1 Restaurant Location
Saltaire, Shipley is the location selected for the Prashad concept. The outlook for the
future of Saltaire district is exceptionally positive and known for its concentration of
restaurants providing quality service. Saltaire’s naming by UNESCO as a world
heritage site also brings a constant influx of tourists to Saltaire. Developments are still
ongoing in the area. Prashad will enjoy first mover advantage being the first and only
Indian restaurant and Deli in Saltaire.
The Saltaire market was carefully chosen for the demographics and the consumer
dining pattern which are needed to make the profitability goals of Prashad a reality.
The busy Saltaire commercial/residential location has been chosen based upon a
successful demographic model. The immediate neighbourhood of the restaurant
location has over 1541 residents and the whole Bradford local authority has over
493,108 residents as at 2006 population estimates. (Source: National office of
statistics).
Over 33% of the restaurants current clientele reside in Saltaire and these travel over 5
km to come and dine at the Prashad’s old location. In the Old location, Prashad
averages 250 covers per week in a 22 cover restaurant.
6.2 Restaurant Design
Double-Level Design Concept:
Prashad restaurant will have a friendly and welcoming
design concept. The dining area will seat 66 patrons, the dining bar 22 patrons, and an
extra conference or party enclosed area with 40 seats. The Prashad restaurant will cater
to a total of 128 seated customers. Consideration has also been given to incorporate a
parking space. Prashad will be the only restaurant in Saltaire with parking space for
customers.
Optional Patio: During the summer months, customers have the option of sitting
outside in the patio and Prashad will offer a special summer menu which will feature
lighter fare, exotic drinks, and non-alcoholic offerings. The summer crowd will enjoy
a free and fun atmosphere in the patio.
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6.3 Operating Criteria
The restaurant’s location will be at the centre of Saltaire with lunch and dinner
offerings during the weekdays and weekends except on Monday when it will be
closed throughout. The restaurant will capitalize on Saltaire’s busy street traffic and
entertainment establishments around by operating during the peak service time and
after hours. The restaurant doors will be open during:
Lunch: Thursday to Sunday, 11 a.m. -3:00 p.m.
Dinner: Tuesday to Sunday, 6:00 p.m. -12 midnights
Mondays – Closed all day.
6.4 Products and Services
6.4.1 Product and Service Description
Prashad restaurant product offerings include international vegetarian dishes, an eclectic
ambiance, and superior customer service. Food of the highest quality will be prepared
with exotic flare. Having satisfied customers has been the secret behind Prashad’s
success and this will be further developed. Food portions will be garnished to create
attractive presentations.
Prashad will present a modest wine list along with a moderate beer selection. The bar
will also contain a wide range of local and international spirits.
The kitchen staff will comprise of people with a love for cooking and prior work
experience in preparing dishes the “Prashad way”. Their creative talents will
complement one another. The restaurant staff will offer customers with extraordinary
and satisfying dining experience.
6.4.2 Prashad Menus
Prashad's menu will feature Indian vegetarian regional flavours. The menu items will
complementary each other. Normal eating will have an Appetizer selection. The menu
will also be coded to allow for customers on special diets such as diabetics. Prashad’s
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Chef will finalize the menu and pair it with the wine menu. Prashad have carefully
picked a excellent wine, beer, and alcohol product lists, and from these, modest
rotating selection will be chosen. Prashad's marketing will focus on vegetarian foods,
but the operating hours, target customers, and choice of location will yield a lot of
alcoholic beverage sales. See appendix 7 for current food list.
6.4.2.1 Specialty Drinks & Coffees
Sales from alcohol and from the bar will be a huge source of revenue for Prashad
restaurant. Prashad aims to provide healthy and exotic drinks to customers and this will
be presented on a different menu. The drinks menu will feature huge collection of both
alcoholic and non-alcoholic drinks. Past experience has shown that customers drink
more after work during dinner than at lunch. Prashad hope to capitalize on this with
their operation hours favouring the evening and after work hours. The prices of bar
offerings will be competitive ranging from £2.00 to 3.00 and non-alcoholic drinks will
cost between £0.90 and 2.00.
6.4.3 Competitive Comparison
Prashad’s casual friendly atmosphere, variety of product offerings and competitive
price ranges will increase their appeal to customers. Prashad will not only compete
with the vegetarian segment restaurants, but also with the meat restaurants.
In competing against the vegetarian and other theme restaurants, Prashad will have the
following advantages:
• Lower price point for a complete meal, compared to other theme restaurant.
• Customers will be served instantly and won’t have to wait long.
• Food will be in the right portions: not too small and not too big.
• Customers will have more variety to choose from compared to other
restaurants. This ensures that every customer will always find something that suits
them.
In competing against the meat restaurants, Prashad will have the following advantages:
• Prashad will serve high quality food.
• Prashad will offer products at competitive prices compared to competition.
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• The ambience and surrounding of Prashad restaurant will be more entertaining
compared to competition.
• Prashad prides itself on serving fresh food and its offerings will be fresher than
competition.
• Prashad customers will enjoy excellent service from Prashad staff.
Currently, there are no sales literature produced for Prashad restaurant, however three
different literatures will be produced at the new location. The literatures will be
designed internally with the use of desk-top publishing software. The sales literature
Prashad plans to produce includes:
Sales literature
1. Table Toppers --will provide information about job opportunities, operating
hours, and explain the Prashad concept.
2. Brochures/Handouts --will be a medium of informing potential customers
about extra services Prashad offers such as parties, banquets and catering services.
3. Direct Mail Piece --will inform customers about Prashad offerings, price list,
special offers, and provide pictorial representation of the Prashad experience.
Prashad already has a website which provides up to date information to customers.
Prashad will invest in a computer with efficient internet connection which will also
serve the cash registers. This computer will be used by customers to write comments
and feedback on restaurant industry websites such as ”sugarvine” after a thoroughly
satisfying Prashad experience. Prashad will also send out monthly electronic
newsletters to loyal customers.
Technology
Prashad conservative plan includes slow growth plan during the initial start-up phase.
After three years of successful operations, expansion plans will be considered. The
expansion plans will follow a clustered development where the first three units will be
within the Yorkshire area. These areas will be chosen based on future market trends.
Future Product and Services
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7 MARKET ANALYSIS
Over the years, Prashad has gathered valuable insight from its customer base. The
Prashad concept kept evolving in line with customer needs. As such, Prashad’s current
operations is very much in line with consumer needs, this has been a key factor to their
growth despite being located in an unfavourable location. It is because Prashad excels
at understanding consumer needs that over 30% of their customer base travel over 5km
to get to Prashad’s current location to enjoy their Prashad experience. Some the issues
considered by customers as important to an enjoyable dining experience include:
Consumer Insight
The Dining Experience: Customer satisfaction is especially dependent on the quality of
food and service they receive. Apart from these two basic factors, customers have also
identified decorations, lighting, bar and some other factors as a key determinant in
their choice of location for out-of-home dining. Prashad has already taken all these
factors into consideration in the development of its new site and plans to further
improve on its excellent the food quality and service rendered to customers.
Reasonable Prices: The current economic climate has made customers demand of
value for money more important. Prashad’s menu is competitively priced at a medium
level.
Parking Space
: Some customers commented that the lack of availability of parking
space discourages repeat patronisation of Prashad restaurant. This situation is common
in the United Kingdom where parking gives drivers problems. Prashad has taken care
of this in the new location with provision of parking spaces for customers. “Prashad
will be the only restaurant in Saltaire that offers parking space for customers”
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7.1 Market Segmentation
Figure 17 - Percentage of residents in Saltaire by age group
Prashad plans to serve a wide client base. Prashad wants everyone to feel welcome and
entertained. The following groups have been defined as targeted segments that
contribute to growth projections:
• The Business Person
• Saltaire and Bradford Couples
• The Destination Customer
• High-End Singles
• Tourists
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These market segments are aged between 25 to 45 years old (over 50% of the Saltaire
district population falls within this group see fig 17), they have disposable income, and
are always on the look for comfortable restaurant with good quality food and excellent
customer service. They are the description of typical diners at other restaurants in the
Saltaire district. As shown in earlier chapters, the British people have an open culture
to trying new foods, and this category fit that description because they are open to
trying new food and will undoubtedly embrace the Prashad cuisine.
Over 30% of Prashad’s current clientele reside in Saltaire and have been loyal over the
years. These existing customers who had usually found it difficult referring people to
Prashad because of the distance will find it very convenient to recommend people to
Prashad once it opens in their neighbourhood.
7.2 Target Market Segment Strategy
The Business Person: Business people work all day and are oftentimes on the lookout
for a friendly establishment with high quality food and excellent customer service to
dine at rather than go home to face the dreary job of cooking. Previous chapter that
analysed the environment showed that more people consider out-of-home eating a part
of normal life rather than a luxury. These classes of people have enough disposable
income to spend on after hour drinking and eating as a form of relaxation. Prashad’s
proposed location and concept will provide an ideal place for such people to indulge
themselves while ensuring that they are eating healthy meals.
Saltaire and Bradford Couples: Prashad’s proposed location will provide an intimate
setting for couples who want to have a special evening out. Prashad will be known as
the place to be to treat your date to a special night out. Also young couples fall into the
social group who favour eating out on a regular basis rather than cook at home.
Prashad will capitalize on this social trend by capturing these rising market segment
through its food, offering, excellent service and friendly atmosphere.
The Destination Customer: Prashad plans to create awareness in surrounding cities and
draw customers to visit Saltaire thus making Prashad a destination restaurant. This is
not a foreign task to Prashad since over 30% of their current clientele are destination
customer who have to travel a great distance to come and enjoy the ”Prashad
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experience”. Prashad's will position itself to be attractive to married couples seeking to
spend a night out away from the children.
High-end Singles: Prashad will be described as “the place to be” in Saltaire and
surrounding areas. This will be achieved through the restaurant layout, excellent
service, striking decor, excellent menu and entertainment. All these combined will give
the desired effect as the place to be and be attractive to the high end singles who pride
themselves on being in “the place to be” so as to socialize and create or maintain their
image.
Tourists
7.3 Service Business Analysis
: Saltaire attracts many tourists all year round. The naming of Saltaire by
UNESCO as a world heritage site is responsible for this. Telephone interview
conducted among restaurants in and around Saltaire confirm the positive impact the
naming by UNESCO has on their businesses. Most confirmed that most of their
customers are tourists. Prashad's will be the place to dine, with its attractive
atmosphere, and moderately priced menu. A huge section of tourist who visit Saltaire
are vacationing people who would like to socialize and be entertained.
The restaurant industry is high risk and very competitive. Gottlieb (2004) identified the
most important factors responsible for a restaurant’s success. These are location,
service quality, and management. A greater percentage of newly opened restaurants
fold up within the initial three years of opening due to inexperienced management, but
chances of success are higher with restaurants launched on an understanding of the
food industry, good management of food inventory and excellent staff. The chances of
success are even better when these qualities are complemented by experience in
running a restaurant.
Prashad has been operating since 1986 as a Deli and since 2003 as a restaurant. They
enjoy a high customer loyalty due to the high quality of service and grew due to good
management. Restaurants make profit by combining relatively cheap ingredients in
creative ways, cooking them properly, presenting them in attractive ways and selling
them at high price. Waste or loss occurs through wasting ingredients in the kitchen,
wasting time in seating customers and taking orders, or during food preparation.
Inexperienced entrepreneurial restaurateurs’ think a successful restaurant is based only
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on vibrant concept and good location, Prashad management with its years of operating
successful restaurant despite poor location knows that in addition to these, you need:
“an understanding of the risks and financial conditions, the ability to handle
enormous pressure, and the organizational skills to bring off what is essentially
a giant catered party, two to three times a day” (Paloalto 2007).
7.3.1 Competition and Buying Patterns
There are currently 16 restaurants within 1 mile of Saltaire. These range from public
houses to British restaurants to Ethnic themed Restaurants. They all enjoy a good
location which is currently what is benefitting their businesses. Prashad’s competitors
are moving in the correct direction, however only Prashad has a concept based on
objective market research in the local market, market consumer insight and well
planned strategy.
Bradford consumers are seeking value for money, parking space and new experiences.
As important as the location is, uniqueness and atmosphere are also important.
Prashad’s challenge is to make it unique and be distinct from its competitors. This is
not an easy task as pointed out in the five forces analysis of the restaurant industry
which showed that it is extremely difficult for restaurants to distinguish themselves
from one another which is the reason why most restaurants do not pursue a
differentiation strategy to gain competitive advantage. Prashad needs to be distinct not
only because it is the "new" restaurant, but though offering variety in food menu, gigh
quality food, great customer service and a thoroughly enjoyable atmosphere. Prashad
already has an edge because it is the only restaurant with parking space in Saltaire. For
Prashad to succeed in distinguishing itself, it requires great marketing strategies.
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Figure 18- Location of restaurants within 1 mile of Saltaire
1 Zaara's Authentic Indian cuisine2 Shama Restaurant3 The Cut Waterside restaurant4 Rajpoot Restaurant5 Zaara's Restaurant6 Shimla Spice7 The Old Tramshead8 Adaab Balti Restaurant9 Pan Choice Cantonese Buffet
10 Aagrah Restaurant
Figure 18 - Map of Restaurants within 1mile of Saltaire. Source (www.yell.co.uk)
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Figure 19 - Location of restaurants within 1 mile of Saltaire
1 La Rue Restaurant2 Yo yo Bar and Restaurant3 The Connection4 McDonald's Restaurant5 The Hockney6 Thai Fever
Figure 19- Map of Restaurants within 1mile of Saltaire. Source (www.yell.co.uk)
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8 STRATEGY AND IMPLEMENTATION
Prashad strategy borne from thorough environmental analysis and Prashad resources
and skills is to give customers a combination of high quality interesting food with
excellent customer service in an atmosphere which is attractive to various groups of
successful adults.
Prashad will focus on building on established strong identity in the Bradford
community with a grand opening in Saltaire. This will be preceded by an appearance at
the upcoming Saltaire festival in September by taking a stall and creating awareness
for the grand opening. After the grand opening, the marketing will focus on creating
and increasing customer awareness in Saltaire and surrounding neighbourhoods.
Prashad’s marketing tactics and programs will be aimed at explaining who Prashad is
and what Prashad does. Prashad will eventually be relying on word of mouth as the
major marketing force and will need to keep its excellent standards and creating and
enjoyable customer experience to sustain the word of mouth marketing force.
Execution of the Prashad concept is a critical factor of the plan as Prashad aims to be
the talk of Saltaire through its friendly environment, high quality food and competitive
pricing. Prashad’s aim is not to be the cheapest restaurant in the area, but to offer
exceptional experience at competitive prices, as such the menu items are averagely
priced for the Saltaire area.
8.1 Competitive Edge
Prashad’s competitive edges are:
1. Thorough understanding and experience opening and running restaurants
2. An exceptional contemporary design and layout of restaurant
3. Unique layout with optional patio and parking space
4. Saltaire and surrounding area marketing campaign to draw customers
5. Provision of healthy meals in a creative and attractive presentation
6. A thorough understanding of customer needs and excellent reputation resulting
in high customer loyalty
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8.1.1 Competitor Analysis
Below are selections from the competitive analysis study.
1. Aagrah (Direct Competitor):
Prashad concept and positioning was refined through some learning from
studying Aagrah restaurant. These are:
1) Offer high food quality at modest prices. Prashad plans to keep product
offering prices under £12
2) Saltaire is an ideal location for a restaurant.
3) Customers want after hours dining and are ready to travel to places which
satisfy their wants.
2. Mumtaz (Direct Competitor)
This popularity of this restaurant has been on the rise for a number of years.
Prashad has learnt that the bar is a considerable revenue stream and greatly
affects a restaurant’s profitability. The Mumtaz bar attracts a sizable
number of people and some customers come just to sit at the bar and
purchase drinks without dining at the restaurant.
Mumtaz has some elements which has contributed to its success. Prashad can
learn a few things from watching and studying Mumtaz.
3. McDonalds (Indirect Competitor):
Although McDonalds is not a direct competitor of Prashad and it’s not
located in Saltaire, the analysis of the success factors for McDonalds in
Shipley offered some learning which Prashad could adopt:
1) High quality food at moderate prices resulted in customer satisfaction.
2) Its location in a popular area for residential and business human traffic
allowed capitalization on the demographics.
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3) Excellent customer service
8.1.2 Market Analysis Conclusion:
Every establishment involved in the sale of prepared food in the Saltaire district is
either a direct or indirect competitor to Prashad. To be more specific however, the two
main competitions in the restaurant industry are the casual dining restaurant and
premium dining restaurant.
This provides a paradox, because the food quality is likely better at a premium
restaurant, but the economic downturn has made customers demand value for money.
So the question is where are customers going to turn to?
Although there is no straight answer to that question but the correct answer may fall
in the range of a combination of high quality food at competitive prices with an
excellent customer service which is the core of the Prashad business model.
8.2 Marketing Strategy
Prashad’s marketing strategy will focus on the promotion of its exciting concept,
excellent service and high quality food so as to attract and retain customers. The
marketing actions will be centred on:
Building and Signage: The new building exterior and newly designed signage are very
important marketing tools. A large part of the budget is towards renovations and decor
to create the artistic appeal of Prashad.
Customer Service
The waiting staffs are of the highest calibre and they are appraised every 90 days.
Customer comments constitute part of the appraisal
: Prashad has been able to build a loyal customer base through its
excellent customer service. It is this excellent service that converts one time customers
to repeat customers. As such Prashad demands that waiting staff ensure that customers
enjoy their Prashad dining experience.
Advertising and Promotion: Prashad’s advertising Plan involves direct targeting of
potential customers through local media aimed at singles, couples and destination
customers.
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Prashad management has identified media promotion as a key pillar of success at the
launch of the new restaurant. This will be embarked upon in an aggressive manner.
Prashad will build on established relationships with pressmen to publicize its move to
the new location. The marketing program is detailed below:
Media Objectives and Strategy
• The selection of publications with high market penetration which reach the
target customers such as Sugarvine and Bradford Telegraph.
: Establish Prashad image as a restaurant with distinct
excellent service, value for money, and high quality food presented in an attractive
manner in a friendly environment. The selection and scheduling of advertisement will
be made more efficient through:
• Place advertisements beside food related editorial.
• Directing customers to Prashad website for reservations, and media
promotions.
• Maximizing advert lifespan using monthly and weekly publications.
Prashad will also develop a consistent reach all year round which is targeted at specific
customer groups within Saltaire and surrounding neighbourhoods.
Promotional Campaign
Prashad has considerable newspaper presence and this will be further entrenched with
public announcements and newsletters. The Prashad website will also greet visistors
with media presentations of the restaurant highlights, Prashad news, upcoming events
and Prashad menu.
:
There will be customer surveys at regular intervals and weekly evaluations of the sales
to understand the most effective advertising medium. Prashad aims to better
understand its customers, evaluate its marketing activities and channel them into routes
to increase efficiency if necessary.
Prashad’s publicity strategy includes:
Publicity Strategy:
• Develop and maintain relations with local restaurant publications.
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• Develop an updated media package for major media houses to keep them
informed of new happenings and events at Prashad including menu updates.
• Cultivate relationship with industry publications editors so as to be included in
food comparisons among restaurants in the local area.
• Develop a publication of Prashad’s history and menu offering. This will be
included in press kits and also serve as the main public relation tools with press men.
Press Release/Grand Opening: Prashad restaurant management will make press
releases on the day of the launch.
Editorial Visitation: After the launch, Prashad will extend invitations to the most
influential editors to experience the Prashad concept and review the menu, service and
environment.
Publicity Revenues: Since a considerable amount of revenue will be attributable to
publicity, Prashad plans to send media packs to local publications on a periodic basis.
Saltaire Community
8.2.1 Marketing Program
: Prashad will partner with local community organizations and
continually seek out ways to participate in efforts which allow Prashad give back to the
local community. This will ensure a good rapport between Prashad and community
leaders and will ensure Prashad gets good publicity at the periodic Saltaire magazine.
Prashad plans to create awareness during the upcoming Saltaire festival in September.
To actualize Prashad marketing strategy, Prashad has selected three means of creating
and increasing awareness among customers: Word of mouth, Public Relations
Marketing, and Media Marketing. The word of mouth is the most important of this
since it is the most sustainable, effective and cheapest form of marketing.
•
Word-of-mouth
Restaurant Night: Prashad will meet with other restaurant owners in the
Saltaire district on a periodic basis to discuss market trends and together create a
concerted effort to promote the Saltaire district. This will have an overall effect of
increasing Saltaire visibility and patronage which will be beneficial to all restaurant
business and cheaper compared to individual efforts.
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• Wait Area Marketing: Waiting staff will be courteous and serve mild
refreshments to customers in the waiting area.
• Special Events
• Valentine's Day
• Wine tasting weekend
• New Year's Eve party
•
Public Relations Marketing
Brochures
•
: Prashad will make brochures which will be strategically placed at
the hotels, motels, and popular business establishments for them to give to their guests
and customers. These brochures will showcase Prashad pictures, foods offers and
prices.
Government Relations and Private functions: Prashad will approach the various
government and organisational businesses around to introduce its catering business for
their private parties and luncheons. Even if this does not yield immediate results, it will
offer Prashad visibility and when such occasions requiring catering arises, Prashad will
be easily remembered. This will also provide an opportunity to make them aware of
Prashad’s service offerings and they could refer this to other people because word of
mouth is an important means within the business environment. .
•
Media Marketing
Newspaper campaign
•
: A campaign to feature in newspaper in their living and
food columns.
Restaurant and Special Events Website
•
: Prashad have existing contract with
design teams to constantly update its website so that it is easy to navigate and provide
high quality vibrant and entertaining contents.
Media Relations
•
: Prashad will market the restaurant through the use of media
relations teams.
Saltaire and Neighbouring District Marketing
: Prashad plans to attract
customers from neighbouring districts.
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8.3 Sales Strategy
Prashad’s strategy is simply to offer customers high quality food, with excellent
customer service in a friendly and appealing environment. This is Prashad’s hallmark
and will be given to every customer whether on a first “Prashad experience” or on
his/her thousandth.
Prashad marketing strategies are targeted on getting potential customers into the
restaurant, and the sales strategy act as follow on to make first time customers into
repeat customers and turn them into ambassadors of Prashad by informing their friends
and acquaintances about their Prashad experience.
Prashad's sales strategy which needs a consistent presentation of high quality food and
excellent service to customers in a friendly and welcoming atmosphere will be
achieved through:
• Hiring dedicated employees with a love for food preparation.
• Continuous and constant assessment of the elements of the Prashad concept
and addressing any problems identified.
• Management interaction with customers to make them realize that their
comments get to the right people and that their custom is appreciated
• Evaluating the menu and identifying the popular food choices.
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9 MANAGEMENT SUMMARY
Prashad success is directly correlated to the strength of its management staff. Prashad
management team comprises of a team with experience and expertise in all areas
necessary to ensure the success of running a restaurant and marketing. The owners
Bobby Patel (Managing Partner) and Minal Patel (Executive Chef) have enormous
work experience running a restaurant. This Prashad Management team have been
steeped in restaurant management and have developed hands on experience to ensure
this new venture is an astounding success.
9.1 Management Team
Prashad Restaurant management have over 20 years of experience between the key
officers. Daily operational decisions and management will be handled by Bobby Patel
and Minal Patel, as hands on managers.
Together, Bobby Patel and Minal Patel contribute over two decades of experience in
the restaurant and food industry to Prashad’s new venture.
Ownership & Management
Bobby Patel: Managing Partner
(Operations, Marketing, Financial and Business Development)
Bobby with a degree in Business management was a high flying executive in London
up until 1995 when he resigned to join in the management of the Prashad restaurant
business. Under his leadership, he has seen the company grow and focussed the
business to concentrate on profitable products.
Minal Patel: Managing Partner
(Executive Chef and Restaurant Operations)
Wife of oldest son Bobby, Minal came to England in 2004 and got involved with the
business straight away. Whilst in India she dreamt of running her own restaurant one
day and is now living the dream. Minal loves to cook and never tires from creating
new dishes. She studied cooking in India and has continued to develop her skills.
Currently studying part time Professional Cookery at Bradford College. She has
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aspirations to push her academic qualifications as high as possible with the aim to
incorporate them into Prashad.
Including the management of daily restaurant operations, both managers will:
Managing Partner Responsibilities
• Manage working capital which includes inventory and cash.
• Develop financial forecasts and external financing requirements.
• Prepare financial analyses and reports which will serve as a guide for
operational decisions. These reports include Prashad's income, expenses, and earnings.
• Oversee budget preparations and financial forecasts. They will also arrange for
an audit of Prashad’s accounts.
9.2 Personnel Plan
The personnel plan is sufficient to manage and run the size of the new Prashad
restaurant and ensure the projected revenues are met. They will include 5 full-time
employees and 4 part-time employees.
Kitchen:
The Executive Chef will be assisted by:
• Assistant Chef (1).
• Cooks that work directly with Minal (2).
• Prep cooks/dishwasher (1).
Bobby will manage the Financial Management, Bookkeeping, PR/Media Advertising,
and Investor Services. Bobby Patel will also manage the daily Restaurant Operations.
Restaurant Operations:
• Servers that work part time (2).
• Full-time bartender (1).
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Table 1 - Personnel Plan
Personnel Plan
FY 2010 FY 2011 FY 2012
General Manager + Chef £38,928 £38,928 £38,928
Management £13,464 £13,464 £13,464 Other Staff £89,760 £89,760 £89,760 Total People 9 9 9
Total Payroll £142,152 £142,152 £142,152
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10 FINANCIAL PLAN
The Financial Plan includes:
• Important Assumptions
• Risk Analysis & Mitigation Plan
• Sales Forecast
• Break Even Analysis
• Profit and Loss Statement
• Cash Flow Statement
• Balance Sheet
Prashad’s financial model is based on "Planning for the Worst scenario, but Managing
for the Best scenario."
The First year projections plan for sales volume below average, low seat turn, and high
food and beverage cost. This will allow for a financial planning which accommodates
a worst case scenario.
Set Up cost for the new site is £160,500
Freehold Purchase price is £274,950
Total Project Cost £435450
Required Investment £435450
Annual interest repayment @ 7% £30,481.50
Prashad is seeking investment for purchasing the building, furniture, liquor license,
renovations, kitchen equipment, food & restaurant supplies, working capital, legal
fees, and marketing.
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10.1 Important Assumptions
The financial plan is based on some important assumptions which are detailed in the
following statements. The financial plans are very conservative. The key assumptions
include:
Assumptions
• Prashad Restaurant will increase its covers to 550 per week
• Deli and catering business in yr 1 is £1275 per week, a drop of £750 from
existing.
• Delivery Business generating £850 per week, approx 55 deliveries
• The financials presented are inclusive of value added tax (VAT). This is
because the price charged on the menu is VAT inclusive.
Economy: A slow economic recovery from the current economic recessionary climate
is expected.
Annual Growth Rate Percentage
• Year 2: 2%
: The financials take the following projections about
growth rate into consideration:
• Year 3: 2%
Weekly Sales Variance: In line with industry norms, Saturday will be the best sales
day of each week.
Pricing & Cost Control
Competitive Pricing Model
Average spend for a meal is £12 for food and £5 on drinks. Seat turn averages are
conservatively estimated at:
: Revenue estimations were arrived at taking into
consideration Prashad experience in running a restaurant and competitive price
comparisons which currently obtains in the restaurant industry in and around Saltaire.
Basic assumptions on average customer spend and average seat turn is given below:
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• Lunch: 0.50
• Dinner: 0.81
Cost Control: Cost of goods sold (COGS) have been estimated based on Prashad’s
experience at running a restaurant and have been estimated as a percentage of sales.
They will be closely monitored to ensure they are kept between 30 -35% for food and
28 -31% for drinks. Focusing on cost control will take about 6 months to be perfected.
Inventory turnover and Accounts Payable
10.2 Sales Forecast
. Prashad operates a cash only basis, as such
the turnover for accounts receivable is estimated to be 0days. The inventory takes 7
days to be turned and 30days was projected for accounts payable.
Although Prashad plans to cater for government and local businesses, payments will be
made on delivery.
Monthly forecasted sales of £44,479 split between restaurant sales, bar sales, deliveries
and Takeaway with the restaurant as the highest contributor to sales. Sales figures are
inclusive of VAT which are paid to the government and shown in the projected cash
flow statement.
Figure 20 - Monthly Sales forecast
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Figure 21 - Annual Sales forecast
Table 2 - Sales Forecast
Sales Forecast
FY 2010 FY 2011 FY 2012
Sales
Restaurant - Food £336,600 £343,332 £350,199 Restaurant - Bar £99,456 £101,445 £103,474 Deliveries £43,345 £44,211 £45,096 Takeaway & Catering £65,028 £66,328 £67,655 Total Sales £544,428 £555,316 £566,423
Direct Cost of Sales FY 2010 FY 2011 FY 2012 Food £155,740 £158,855 £162,032 Bar £29,837 £30,433 £31,042 Subtotal Direct Cost of Sales £185,577 £189,288 £193,074
Appendix 1 shows Prashad’s historical performance while appendix 2 shows weekly
sales forecast.
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10.3 Breakeven Analysis
Figure 22 - Breakeven analysis
Table 3- Breakeven Analysis
Break-even Analysis
Monthly Revenue Break-even £29,901
Assumptions:
Average Percent Variable Cost 34%
Estimated Monthly Fixed Cost £19,709
Prashad has an average running fixed costs of £19,709 per month which comprises of
full payroll, utilities, and projected estimate of other running costs. With the COGS at
35% of sales, the monthly break-even point is £29,901. Prashad breaks even each
month.
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As the business exits the start-up phase, focus will be on controlling costs so as to
force the Cost of Goods Sold (COGS) down resulting in a drop in the break-even value
and an increase in Gross Margin.
10.4 Projected Profit and Loss
The gross margin is the most important aspect of the projected profit and loss
statement. There is an adjusted increase in sales in year 2 onwards as the business exits
its start-up phase but we project the recessionary climate will not allow for much
growth.
Prashad restaurant will develop its customer base and reputation and although growth
is normal in the second and third year of business, this plans shows no growth in its
attempt at conservativeness due to the recessionary climate. Monthly assumptions for
Profit and Loss are included in the appendices.
Table 4 - Projected Profit and Loss
Pro Forma Profit and Loss
FY 2010 FY 2011 FY 2012
Sales £544,428 £555,316 £566,423 Direct Cost of Sales £185,577 £189,288 £193,074 Other Costs of Sales £0
Total Cost of Sales £185,577 £189,288 £193,074
Gross Margin £358,851 £366,028 £373,348 Gross Margin % 65.91% 65.91% 65.91%
Expenses
Payroll £142,152 £142,152 £142,152 Marketing/Promotion £10,500 £10,500 £10,500 Depreciation £0 £0 £0 Utilities £15,996 £15,996 £15,996 General Administrative £28,548 £46,068 £46,068 Repairs and Maintenance £3,504 £3,504 £3,504 Direct Operating Expenses £14,304 £14,304 £14,304 Occupancy Costs £11,004 £11,004 £11,004 Investment Repayments £10,500 £10,500 £10,500
Total Operating Expenses £236,508 £254,028 £254,028
Profit Before Interest and Taxes £122,343 £112,000 £119,320
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EBITDA £122,343 £112,000 £119,320 Interest Expense £44,162 £39,988 £35,634 Taxes Incurred £23,454 £21,603 £25,106
Net Profit £54,727 £50,408 £58,581 Net Profit/Sales 10.05% 9.08% 10.34%
Figure 23- Forecasted yearly profit
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Figure 24 - Forecasted Yearly Gross Margin
Figure 25 - Gross Margin Monthly
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Figure 26 - Monthly Profit
10.5 Projected Cash Flow
The cash flow is based on inventory turnover assumptions and payment days. The cash
flow shows no tracking of account receivable because Prashad does not offer credit
sales. In the restaurant industry, same day collection (no credit sales) is the norm and
critical to most restaurant operations. Apart from the initial investments, no additional
financial support is expected.
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Figure 27 - Cash flow
Table 5 - Projected Cash Flow
Pro Forma Cash Flow
FY 2010 FY 2011 FY 2012
Cash Received
Cash from Operations
Cash Sales £544,428 £555,316 £566,423 Subtotal Cash from Operations £544,428 £555,316 £566,423
Additional Cash Received Sales Tax, VAT, HST/GST Received £81,664 £83,297 £84,963 New Current Borrowing £0 £0 £0 New Other Liabilities (interest-free) £0 £0 £0 New Long-term Liabilities £435,450 £0 £0 Sales of Other Current Assets £0 £0 £0 Sales of Long-term Assets £0 £0 £0 New Investment Received £0 £0 £0 Subtotal Cash Received £1,061,542 £638,614 £651,386
Expenditures FY 2010 FY 2011 FY 2012
Expenditures from Operations Cash Spending £489,701 £504,908 £507,842 Subtotal Spent on Operations £489,701 £504,908 £507,842
Additional Cash Spent
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Sales Tax, VAT, HST/GST Paid Out £81,664 £83,297 £84,963 Principal Repayment of Current Borrowing £0 £0 £0 Other Liabilities Principal Repayment £0 £0 £0 Long-term Liabilities Principal Repayment £43,548 £43,548 £43,548 Purchase Other Current Assets £93,500 £0 £0 Purchase Long-term Assets £341,950 £0 £0 Dividends £0 £0 £0 Subtotal Cash Spent £1,050,363 £631,753 £636,353
Net Cash Flow £11,179 £6,860 £15,033 Cash Balance £12,745 £19,606 £34,639
10.6 Projected Balance Sheet
The projected balance sheet shows that Prashad does not foresee any problems in
meeting its financial obligations to fund lenders as long as the goals earlier outlined in
this plan are achieved. Prashad restaurant has a positive Net Worth beginning in Year
1.
Table 6 - Projected Balance Sheet
Pro Forma Balance Sheet
FY 2010 FY 2011 FY 2012
Assets
Current Assets Cash £12,745 £19,606 £34,639 Other Current Assets £98,749 £98,749 £98,749 Total Current Assets £111,494 £118,355 £133,388
Long-term Assets
Long-term Assets £423,280 £423,280 £423,280 Accumulated Depreciation £9,583 £9,583 £9,583 Total Long-term Assets £413,697 £413,697 £413,697 Total Assets £525,191 £532,052 £547,085
Liabilities and Capital FY 2010 FY 2011 FY 2012
Current Liabilities
Current Borrowing £29,756 £29,756 £29,756 Other Current Liabilities £21,958 £21,958 £21,959 Subtotal Current Liabilities £51,714 £51,714 £51,715
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Long-term Liabilities £391,902 £348,354 £304,806 Total Liabilities £443,616 £400,069 £356,521
Paid-in Capital £10 £10 £10 Retained Earnings £26,838 £81,565 £131,973 Earnings £54,727 £50,408 £58,581 Total Capital £81,575 £131,983 £190,564 Total Liabilities and Capital £525,191 £532,052 £547,085
Net Worth £81,575 £131,983 £190,564
10.7 Business Ratios
Business ratios for the years of this plan are shown below.
Table 7 - Ratio Ananlysis
Ratio Analysis
FY 2010 FY 2011 FY 2012
Sales Growth 196.47% 2.00% 2.00%
Percent of Total Assets Other Current Assets 18.80% 18.56% 18.05% Total Current Assets 21.23% 22.24% 24.38% Long-term Assets 78.77% 77.76% 75.62% Total Assets 100.00% 100.00% 100.00%
Current Liabilities 9.85% 9.72% 9.45% Long-term Liabilities 74.62% 65.47% 55.71% Total Liabilities 84.47% 75.19% 65.17% Net Worth 15.53% 24.81% 34.83%
Percent of Sales
Sales 100.00% 100.00% 100.00% Gross Margin 65.91% 65.91% 65.91% Selling, General & Administrative
Expenses 55.86% 56.84% 55.57%
Advertising Expenses 1.93% 1.89% 1.85% Profit Before Interest and Taxes 22.47% 20.17% 21.07%
Main Ratios
Current 2.16 2.29 2.58 Quick 2.16 2.29 2.58 Total Debt to Total Assets 84.47% 75.19% 65.17%
08009719 Page 80
Pre-tax Return on Net Worth 95.84% 54.56% 43.92% Pre-tax Return on Assets 14.89% 13.53% 15.30%
Additional Ratios FY 2010 FY 2011 FY 2012 Net Profit Margin 10.05% 9.08% 10.34% Return on Equity 67.09% 38.19% 30.74%
Activity Ratios
Accounts Payable Turnover 12.46 12.17 12.17 Total Asset Turnover 1.04 1.04 1.04
Debt Ratios
Debt to Net Worth 5.44 3.03 1.87 Current Liab. to Liab. 0.12 0.13 0.15
Liquidity Ratios
Net Working Capital £59,780 £66,640 £81,673 Interest Coverage 2.77 2.80 3.35
Additional Ratios
Assets to Sales 0.96 0.96 0.97 Current Debt/Total Assets 10% 10% 9% Acid Test 2.16 2.29 2.58 Sales/Net Worth 6.67 4.21 2.97 Dividend Payout 0.00 0.00 0.00
10.8 Expansion, Payback & Exit Strategy
The Exit Strategy is a definition of Prashad’s business vision and goals, and a plan in
event that the venture fails to meet profitability plans. This question has been dealt
with at several levels:
Expansion
1. Expansion (Option 1): The goal is to keep the Prashad concept a unique and
distinct offering. Projections show that in the first three years of operation, the
business captures a considerable share of the market. By the end of the third year,
Prashad management will look towards launching a second Prashad concept in the
Bradford area. This expansion plans will be discussed with financial partners and
lending entities.
: various financial goals to further increase the success of the Prashad
concept.
08009719 Page 81
2. Expansion (Option 2): It has been established throughout the plan that the
Prashad concept is expected to be a huge success whose growth can only be limited by
venue size and location. As such, a second expansion plan to be considered will be to
increase the size of the restaurant at Saltaire when it becomes too small to handle the
potential of the Prashad concept. This is why the site of this restaurant has an option to
expand the restaurant following a logical growth and profit plan.
Exit Strategy
: Prashad management is committed to the concept and its practicality.
Although no entrepreneur attempts a business thinking of failing, but sometimes
ventures fail due to one reason or another. In case the Prashad concept cannot fulfil its
financial obligations, in terms of profitability, attempts will be made to sell its
operations and use the proceeds realised to settle outstanding balances. In the proceeds
from the sales are insufficient to clear outstanding balances, Prashad will have no
choice but to default and outstanding balances will be borne by the investors on a
weighted percentage basis of the total amounts due.
08009719 Page 82
11 Conclusions and Recommendations
The project started with a brief description of Prashad restaurant, its background, and
motivation for expansion. This was followed by a description of Saltaire and the
reasons why Prashad chose Saltaire. It continued with a review of Literature on the
latest thinking on strategic and analytical tools and a review of literature on financing
new ventures and the importance of business planning to finance. The description of
the restaurant business in the UK including the trends and culture of British people was
followed with a description of the Indian restaurant business and most relevant trends
and growth rates within the Indian restaurant Industry.
The essay continued with the use of frameworks to analyse the external environment.
Frameworks used include the PESTLE, Porter’s five forces. Frameworks were also
used identify the internal resources and skills of Prashad. The external analysis showed
that the restaurant industry was strongly affected by the Economic; Social and Legal
factors. This analysis showed that the current economic recession could have a
negative impact on the restaurant industry while the current social trend tends to
encourage out-of-home eating. This analysis also showed that Prashad already has an
advantage in its offering of healthy foods. Analysis within the restaurant Industry
using Porter’s five forces framework also revealed that there is low bargaining power
of suppliers and buyers, but a high threat of substitutes and barrier to entry leading to
strong rivalry among restaurants. The essay went further to describe current means of
gaining competitive advantage within the restaurant business.
The essay then focussed on analysing Prashad restaurant. The frameworks used for the
internal analysis includes SWOT, PLC frameworks. The lifecycle stage of Prashad was
analysed and the SWOT framework was used to identify the strengths, weaknesses,
opportunities and threats in the environment that Prashad will operate in. The PLC
framework showed that Prashad was in its maturity stage.
Next, the essay focussed on the proposed business offering of the Prashad restaurant.
This section was composed of operational, marketing and financial assessments and
plans.
08009719 Page 83
The operations plan examined Saltaire as a location and showed that the potential in
terms of demographics was suitable. The operational plan also showed Prashad’s
human resources needs.
The marketing plan showed the segmentation, targeting and positioning plan of
Prashad in Saltaire. The marketing mix to be pursued was also described in detail. The
most attractive market segments to target were identified as young people between the
ages of 16 and 45years and these constituted over 50% of Saltaire’s population.
The financial plan examined the basic capital requirements needed by Prashad in its
expansion plan. The sales forecast for three years of the business, a forecasted profit
and loss account, projected balance sheet, projected cash flow and key financial ratios
were calculated to assess the financial viability of Prashad’s expansion into Saltaire.
After concluding on the financial viability of Prashad’s expansion, the final stage was
describing strategic plans for exit and expansion endeavours.
The document shows that Prashad’s endeavour to expand and its choice of Saltaire as
the proposed location is financially viable and will end up increasing Prashad’s
presence and dominance in the Indian restaurant industry. Hence it is finally conclude
that the project has fulfilled the entire objectives which were outline in the start of the
business plan.
08009719 Page 84
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08009719 Page 88
II. Appendix 1
08009719 Page 89
Table 8 - Prashad Historic Performance
Past Performance
FY 2007 FY 2008 FY 2009
Sales £0 £156,498 £183,638 Gross Margin £0 £95,786 £119,523 Gross Margin % 0.00% 61.21% 65.09% Operating Expenses £0 £81,318 £98,575
Balance Sheet
FY 2007 FY 2008 FY 2009
Current Assets
Cash £0 £2,975 £1,566 Other Current Assets £0 £5,000 £5,249 Total Current Assets £0 £7,975 £6,815
Long-term Assets
Long-term Assets £0 £79,019 £81,330 Accumulated Depreciation £0 £0 £9,583 Total Long-term Assets £0 £79,019 £71,747
Total Assets £0 £86,994 £78,562
Current Liabilities
Current Borrowing £0 £30,388 £29,756 Other Current Liabilities (interest free) £0 £24,989 £21,958 Total Current Liabilities £0 £55,377 £51,714
Long-term Liabilities £0 £0 £0 Total Liabilities £0 £55,377 £51,714
Paid-in Capital £0 £10 £10 Retained Earnings £0 £0 (£9,583) Earnings £0 £31,607 £36,421 Total Capital £0 £31,617 £26,848
Total Capital and Liabilities £0 £86,994 £78,562
08009719 Page 90
08009719 Page 91
III. Appendix 2 Table 9 - Monthly Sales Forecast
Sales
Forecast
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Sales Restaurant - Food
£28,050 £28,050 £28,050 £28,050 £28,050 £28,050 £28,050 £28,050 £28,050 £28,050 £28,050 £28,050
Restaurant
- Bar £8,288 £8,288 £8,288 £8,288 £8,288 £8,288 £8,288 £8,288 £8,288 £8,288 £8,288 £8,288
Deliveries £3,613 £3,612 £3,612 £3,612 £3,612 £3,612 £3,612 £3,612 £3,612 £3,612 £3,612 £3,612
Takeaway
& Catering £5,419 £5,419 £5,419 £5,419 £5,419 £5,419 £5,419 £5,419 £5,419 £5,419 £5,419 £5,419
Total Sales
£45,369 £45,369 £45,369 £45,369 £45,369 £45,369 £45,369 £45,369 £45,369 £45,369 £45,369 £45,369
Direct Cost of Sales
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Food £12,978 £12,978 £12,978 £12,978 £12,978 £12,978 £12,978 £12,978 £12,978 £12,978 £12,978 £12,978
Bar £2,486 £2,486 £2,486 £2,486 £2,486 £2,486 £2,486 £2,486 £2,486 £2,486 £2,486 £2,486
Subtotal Direct Cost of Sales
£15,465 £15,465 £15,465 £15,465 £15,465 £15,465 £15,465 £15,465 £15,465 £15,465 £15,465 £15,465
08009719 Page 92
IV. Appendix 3
Table 10 - Personnel
Personnel
Plan
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
General
Manager + Chef
£3,244 £3,244 £3,244 £3,244 £3,244 £3,244 £3,244 £3,244 £3,244 £3,244 £3,244 £3,244
Management
£1,122 £1,122 £1,122 £1,122 £1,122 £1,122 £1,122 £1,122 £1,122 £1,122 £1,122 £1,122
Other Staff £7,480 £7,480 £7,480 £7,480 £7,480 £7,480 £7,480 £7,480 £7,480 £7,480 £7,480 £7,480
Total People 9 9 9 9 9 9 9 9 9 9 9 9
Total Payroll
£11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6
08009719 Page 93
V. Appendix 4 Table 11 - Monthly Profit and Loss
Pro Forma Profit
and Loss
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Sales £45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
Direct Cost of
Sales £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 £15,46
5 Other Costs of
Sales
Total Cost of Sales
£15,465
£15,465
£15,465
£15,465
£15,465
£15,465
£15,465
£15,465
£15,465
£15,465
£15,465
£15,465
Gross Margin £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 £29,90
4 Gross Margin % 65.91
% 65.91
% 65.91
% 65.91
% 65.91
% 65.91
% 65.91
% 65.91
% 65.91
% 65.91
% 65.91
% 65.91
%
Expenses Payroll £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 £11,84
6 Marketing/Promotion
£875 £875 £875 £875 £875 £875 £875 £875 £875 £875 £875 £875
Depreciation £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Utilities £1,333 £1,333 £1,333 £1,333 £1,333 £1,333 £1,333 £1,333 £1,333 £1,333 £1,333 £1,333
General Administrative
15%
£2,379 £2,379 £2,379 £2,379 £2,379 £2,379 £2,379 £2,379 £2,379 £2,379 £2,379 £2,379
Repairs and
Mentenance 15
% £292 £292 £292 £292 £292 £292 £292 £292 £292 £292 £292 £292
Direct Operating
Expenses 15
% £1,192 £1,192 £1,192 £1,192 £1,192 £1,192 £1,192 £1,192 £1,192 £1,192 £1,192 £1,192
Occupancy Costs 15%
£917 £917 £917 £917 £917 £917 £917 £917 £917 £917 £917 £917
Investment Repayments
£875 £875 £875 £875 £875 £875 £875 £875 £875 £875 £875 £875
Total Operating Expenses
£19,709
£19,709
£19,709
£19,709
£19,709
£19,709
£19,709
£19,709
£19,709
£19,709
£19,709
£19,709
Profit Before
Interest and Taxes
£10,19
6 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5
EBITDA £10,19
6 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 £10,19
5 Interest Expense £3,846 £3,816 £3,786 £3,756 £3,726 £3,695 £3,665 £3,635 £3,605 £3,574 £3,544 £3,514
Taxes Incurred £1,905 £1,914 £1,923 £1,932 £1,941 £1,950 £1,959 £1,968 £1,977 £1,986 £1,995 £2,004
08009719 Page 94
Net Profit £4,444 £4,465 £4,486 £4,508 £4,529 £4,550 £4,571 £4,592 £4,613 £4,635 £4,656 £4,677
Net Profit/Sales 9.80% 9.84% 9.89% 9.94% 9.98% 10.03%
10.08%
10.12%
10.17%
10.22%
10.26%
10.31%
08009719 Page 95
VI. Appendix 5 Table 12 - Monthly Cash Flow
Pro Forma
Cash Flow
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Cash Received
Cash from
Operations
Cash Sales £45,369 £45,36
9 £45,36
9 £45,36
9 £45,36
9 £45,36
9 £45,36
9 £45,36
9 £45,36
9 £45,36
9 £45,36
9 £45,36
9 Subtotal Cash from Operations
£45,369 £45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
£45,369
Additional
Cash Received
Sales Tax,
VAT, HST/GST Received
15.00
% £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805
New Current Borrowing
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
New Other
Liabilities (interest-free)
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
New Long-term Liabilities
£435,450
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Sales of Other Current Assets
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Sales of Long-term Assets
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
New Investment Received
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Subtotal Cash Received
£487,624
£52,174
£52,174
£52,174
£52,174
£52,174
£52,174
£52,174
£52,174
£52,174
£52,174
£52,174
Expenditur
es Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Expenditures from Operations
08009719 Page 96
Cash Spending
£40,924 £40,904
£40,883
£40,861
£40,840
£40,819
£40,798
£40,777
£40,756
£40,734
£40,713
£40,692
Subtotal
Spent on Operations
£40,924 £40,90
4 £40,88
3 £40,86
1 £40,84
0 £40,81
9 £40,79
8 £40,77
7 £40,75
6 £40,73
4 £40,71
3 £40,69
2
Additional Cash Spent
Sales Tax,
VAT, HST/GST Paid Out
£6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805 £6,805
Principal Repayment of Current Borrowing
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Other
Liabilities Principal Repayment
£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Long-term Liabilities Principal Repayment
£3,629 £3,629 £3,629 £3,629 £3,629 £3,629 £3,629 £3,629 £3,629 £3,629 £3,629 £3,629
Purchase Other Current Assets
£93,500 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Purchase
Long-term Assets
£341,95
0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Dividends £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0
Subtotal
Cash Spent £486,80
8 £51,33
8 £51,31
7 £51,29
6 £51,27
5 £51,25
3 £51,23
2 £51,21
1 £51,19
0 £51,16
9 £51,14
8 £51,12
6
Net Cash
Flow £816 £836 £857 £879 £900 £921 £942 £963 £984 £1,006 £1,027 £1,048
Cash Balance
£2,382 £3,218 £4,075 £4,954 £5,854 £6,775 £7,717 £8,680 £9,665 £10,67
0 £11,69
7 £12,74
5
08009719 Page 97
VII. Appendix 6 Table 13 - Monthly Balance Sheet
Pro
Forma
Balance
Sheet
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Assets Startin
g Balances
Current Assets
Cash £1,566 £2,382 £3,218 £4,075 £4,954 £5,854 £6,775 £7,717 £8,680 £9,665 £10,670
£11,697
£12,745
Other Current Assets
£5,249 £98,749
£98,749
£98,749
£98,749
£98,749
£98,749
£98,749
£98,749
£98,749
£98,749
£98,749
£98,749
Total Current Assets
£6,815 £101,131
£101,967
£102,824
£103,703
£104,603
£105,524
£106,466
£107,429
£108,414
£109,419
£110,446
£111,494
Long-term Assets
Long-term Assets
£81,330
£423,280
£423,280
£423,280
£423,280
£423,280
£423,280
£423,280
£423,280
£423,280
£423,280
£423,280
£423,280
Accumulated Depreciation
£9,583 £9,583 £9,583 £9,583 £9,583 £9,583 £9,583 £9,583 £9,583 £9,583 £9,583 £9,583 £9,583
Total
Long-term Assets
£71,74
7 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97 £413,6
97
Total
Assets £78,56
2 £514,8
28 £515,6
64 £516,5
21 £517,4
00 £518,3
00 £519,2
21 £520,1
63 £521,1
26 £522,1
11 £523,1
16 £524,1
43 £525,1
91
Liabilities and Capital
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Current
Liabilities
Current Borrowing
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
£29,756
Other Current Liabilities
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
£21,958
Subtotal Current Liabilities
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
£51,714
08009719 Page 98
Long-term Liabilities
£0 £431,821
£428,192
£424,563
£420,934
£417,305
£413,676
£410,047
£406,418
£402,789
£399,160
£395,531
£391,902
Total
Liabilities £51,71
4 £483,5
35 £479,9
06 £476,2
77 £472,6
48 £469,0
19 £465,3
90 £461,7
61 £458,1
32 £454,5
03 £450,8
74 £447,2
45 £443,6
16
Paid-in Capital
£10 £10 £10 £10 £10 £10 £10 £10 £10 £10 £10 £10 £10
Retained Earnings
(£9,583)
£26,838
£26,838
£26,838
£26,838
£26,838
£26,838
£26,838
£26,838
£26,838
£26,838
£26,838
£26,838
Earnings £36,421
£4,444 £8,910 £13,396
£17,904
£22,433
£26,983
£31,554
£36,146
£40,760
£45,394
£50,050
£54,727
Total
Capital £26,84
8 £31,29
2 £35,75
8 £40,24
4 £44,75
2 £49,28
1 £53,83
1 £58,40
2 £62,99
4 £67,60
8 £72,24
2 £76,89
8 £81,57
5 Total
Liabilities and Capital
£78,56
2 £514,8
28 £515,6
64 £516,5
21 £517,4
00 £518,3
00 £519,2
21 £520,1
63 £521,1
26 £522,1
11 £523,1
16 £524,1
43 £525,1
91
Net Worth
£26,848
£31,292
£35,758
£40,244
£44,752
£49,281
£53,831
£58,402
£62,994
£67,608
£72,242
£76,898
£81,575
08009719 Page 99
VIII. Appendix 7 Figure 28 - Prashad Menu
•
08009719 Page 100
IX. PROJECT PROPOSAL
UB Number: 08009719
Project Title: Developing a Business Plan and Advice on Sources of Funding
for Prashad Restaurant
Supervisor: Alan Somerville
Company: Prashad Restaurant
Submission: September 2009
1
Scope/Rationale of Proiect
Prashad is a vegetarian deli & restaurant situated in Bradford that has been operating
since 1986. Current situation analysis shows that Prashad’s current location is
undermining the business’ potential. This is because over the years, the demographic
of the people living around the restaurant’s location has evolved to people who do not
appreciate the restaurants business. As a result, the company is looking to expanding
and opening a new outlet in a more favourable location. A good business plan will help
the company in its expansion plans and help in raising finance.
This project will review the proposed location for the business expansion and
investigate sources of finance with a view to making recommendations on the choice
of location and sources of finance. A business plan will be developed which guide
Prashad in its expansion plan and be used in securing appropriate finance.
2
The objective of the project is to provide a Business Plan to guide Prashad in its
expansion plans, measure its success and secure funding for its expansion. This will
involve identifying Prashad’s competitive advantage, analysing the restaurant market,
constructing a cash-flow and Profit and loss statement, then build a business plan
around it.
Methodology
08009719 Page 101
The literature review will cover the latest developments on market analysis, market
offering and marketing strategy. Historic analysis of the business will also be
reviewed. It will be important to discuss why Prashad is looking to expand and how it
has grown over the years.
Saltaire, the proposed location will be analysed. It’s history and especially analysis of
suitability of demographic of people there to Prashad’s business offering. Percentage
of restaurants that have failed or succeeded in Saltaire and the reason will also be
analysed. An analysis of the competition of Prashad in Saltaire will also be performed.
An initial setup cost including step by step cost analysis will be prepared. A cash flow
analysis and Profit & Loss statement for one year will be prepared. Sources of
financing will be investigated and best repayment methods will also be researched.
The project will produce a business plan and recommend appropriate source for
funding based on researches and analysis carried out. This plan will guide Prashad in
their expansion plans and be used as a tool to review its performance and to secure
funding for the business.
3 Data Sources
• Interviews with Prashad staff
Primary information
• Interview with other restaurant owners in Saltaire.
• Customer feedback on Prashad’s product and services.
• Publications on Vegetarian Restaurants
Secondary information
• Publications on Saltaire
• Publications on Customer Satisfaction
• Current thinking on Strategic Management
• Industry/market reports
08009719 Page 102
4
The project will involve aspects of the core courses in Finance, Marketing and
Strategic Management, and the elective in Project Management.
Aspects of MBA Syllabus Used
5
1. Introduction
Proposed Chapter Headings and Sub-Headings
1.1 Prashad
1.2 Project background
1.3 Terms of reference
1.4 Project methodology
2. Company Summary
2.1 Prashad Ownership
2.2 Prashad History
2.3 Prashad location and facilities
3. Products and Services
3.1 Product and Service Description
3.2 Competitive Comparison
3.3 Sales literature
3.4 Future Product and Services
4. Saltaire Market Analysis Summary
4.1 Saltaire History
4.2 Market Segmentation
4.3 Target Market Strategy
08009719 Page 103
4.3.1 Market Needs
4.3.2 Market Trends
4.3.3 Market Growth
4.4 Service Business Analysis
4.4.1 Competition and Buying Patterns
4.4.2 Main Competitors
4.4.3 Business Participants
5. Strategy and Implementation Summary
5.1 Marketing Strategy
5.1.1 Promotion Strategy
5.1.2 Positioning Statement
5.1.3 Pricing Strategy
5.2 Sales Strategy
5.2.1 Sales Forecast
5.3 Strategic Alliances
5.4 Competitive Edge
5.5 Milestones
6. Management Summary
6.1 Organisational Structure
6.2 Management Team
6.3 Management Team Gaps
6.4 Personnel Plan
08009719 Page 104
7. Financial Plan
7.1 Important Assumptions
7.2 Key Financial Indicators
7.3 Break-even Analysis
7.4 Projected Profit and Loss
7.5 Projected Cash Flow
7.6 Projected Balance Sheet
7.7 Business Ratios
7.8 Expansion and Payback Strategy
7.9 Long Term Plan and Investment Opportunities
8. Sources of Finance
9. Conclusions and Recommendations
9.1 Conclusions
9.2 Recommendations
12 Appendices and Bibliography
08009719 Page 105
6
Work Programme
Activity – week commencing
18 25 1 8 15 22 29 6 13 20 27 3 10 17 24 31 7 14 21 28Submit proposal XPrashad Induction XReview literature X X XRestaurant interviews X XGather Data on Soltaire X XAnalyse & Interprete data X X XMeetings with sponsor X X X XMeetings with supervisor X X X X X X XComplete first draft XWrite project X X X X XSubmit for copying/binding XPresentation to Prashad X
JUNE JULY AUGUST SEPTEMBERMAY
