Restaurant Business at Adelaide, in South Australia - Assignment Example

Restaurant Business Plan Name Institution Restaurant Business Plan Executive Summary The plan herein gives an in depth description of a restaurant to be set up at Adelaide, in South Australia. The restaurant has been designed to address the poorly served needs of the people of Southern Australia. These gaps have resulted from the fact that the region is served to a large extent by small scale operators. The hotel business will incorporate meals served within the premises; served on order to outside customers and fast foods sold inside the restaurant and surrounding retail malls. It is expected to record increased revenues with time. This is expected to be as a result of stable economic environment, continued growth in incomes of the population and favourable climatic conditions. The business will be financed from owner capitalization and long term loans. The business is poised to be faced with financial risk of unexpected price hikes for agricultural products due to unforeseen events that may crop up. The name of the business shall be Maverickie Restaurant. It will be registered as a middle level private company operating in the hospitality industry. Maverickie will offer specialized high quality services meant for the high and middle income class. Its fast food menu will own branded and will create categories for each nutrient requirement and other designs that are a combination of different nutrients. Maverickie will endevour to provide high quality products while adhering to all food policy guidelines and regulations. Concern for health of the consumers will be the main focus for all food products. 1. The Marketing Plan 1.1 Environmental Analysis Approximately 88% of the market share is taken up by small business operators. These are entities that employ 20 or less workers (PWC 2009). These operators are not connected in chain neither are they franchised by huge corporations. There is little emphasis for brand recognition wars. Small operators designate their services as budget hotels by offering prices that target the middle and to some extent the minority low income earners. The big operators target the wealthy and mostly urban population going by their location. Though the big businesses tend to benefit from economies of scale, these benefits are not passed over to the consumers in form of reduced prices; instead they differentiate themselves as luxurious hotels hence offer exaggerated prices. Maverickie will seek combination of gaming facilities, budget meals and luxury meals and fast food items to differentiate themselves fro, one the small operators who do not offer gaming facilities; and two, to differentiate from the big operators who do not serve budget meals. The own branded fast food items will also be enticing to the youth, since they like newness and thighs they feel have been specifically designed for their purpose. The running and operation framework of the hospitality industry is guided by the state laws and regulations. Most of the regulations relate to liquor licensing and gaming machines (PWC 2009). 1.2 Products/Services The products that will be offered are divided into three categories: On premises catering Services Off premises catering services Own branded snacks 1.3 Customer Demographics The most frequent visitors to hotels and restaurants are the people who work in the city centre. These include people who work in offices or owner managed businesses. There are growing trends in women population to make arrangements for packed lunch when they visit offices. Such trends are however not prevalent in men and youth. These two groups are the major target customers. Youth particularly love fast food items mostly snacks that they can carry around. They are reluctant to do the kitchen work so they prefer using the restaurants. Creating variety will be a compliment in winning their loyalty. Elderly men on the other hand, are more concerned about their health hence will be cautious with the nutritional content of what they take. They will generally prefer less-fatty food with standard levels of salt. 1.4 Competition and Competitive Advantage The major competitors in the hospitality industry are the three major operators who serve 12 percent of the market. These are Woolworths LTD serving 7.9%; Wesfarmers serving 3.3% and AEL Property Group taking the remaining 0.3% (PWC 2009). These major operators serve the wealthy class of the population who are looking for a complete combination of the various service/product packages (Graf 2009). Operators in hospitality industry create their competitive advantage by engaging on quality improvements for segments that have reported higher levels of customer subscription and enhanced net revenues. Gaming activities are on the front line in revenue generation hence many operators use the service to create competitive advantage. Maverickie will create own competitive advantage by offering more comprehensive packages over what is on offer by the small scale operators in the region. These will be the combination of own branded fast food items, normal restaurant meals, gaming facilities and travel services. The travel service will be offered through strategic alliances will partners in the field which ensures convenience for guests who want to travel and enhances sharing of customers. 1.5 Price Strategy Penetration pricing strategy will be employed. In this case, low prices are offered in the initial stages when the business is new and has not established itself in the market. These prices are strategically meant to invite customers as they seek to make a saving out of using Maverickie products and services. Finally, prices are raised gradually as the products gain acceptance and the business has gained some command in the market. The prices for each product will be arrived at by adding a significant mark-up to the cost of producing a unit item of a product. 1.6 Advertising and promotional Strategy Product promotion will be focused on instigating desire through creating massive consumer awareness. Due to the specific target of the urban population, both print media and audio-visual media will be applied as the group has access to both (Ozer, 2005). The other method will involve direct marketing by the marketing team who will physically meet with potential customers. A special branch within the public Relations section will be established specifically to deal with issues of the various products and services offered by the restaurant. 1.7 SWOT Analysis Strengths Spacious location for other recreational amenities Management with good understanding of Australian culture and market Weaknesses Young and inexperienced staff Lack brand name recognition Opportunities Strategic location in central business district. Growing population in Adelaide Threats Growing interest of multinational hospitality companies in the Asian region Supply shocks in agricultural inputs 1.8 Market Research This will entail a survey of the various wants of the customer groups. That will include gathering data on the tastes of various customer groups and their perceptions on coffee and associated beverages. The exercise will be a descriptive research through interviews conducted by direct sales representatives and interviewer guided questionnaires. 1.9 Market Targets The market structure and behavior tends to differ by states. South Australia and Tasmania are taunted to be the states with largest number of hotels compared to population size. The gaming business is not developed in these two regions with the guest bookings reflecting low level of attraction to the gaming facilities offered. The urban population, of middle and high class citizens will be targeted for the gaming facilities and luxury meals. The fast foods are specially designed and packaged to appeal to the youth. youthful population while the budget meals will target the low income earners. 2. The Operations Plan 2.1 Business Structure The business will be run as sole proprietorship. The structure will enhance easy decision making and has few bureaucracies and formal procedures to register and get certification. The start-up capital will combine owner generated funds and a long term loan to be services from the revenues of the business. Bank overdraft will also cover miscellaneous expenses. 2.2 Scope of Operation Maverickie will purpose to serve the needs of the people who work in and around the city of Adelaide as well as visitors who jet in and leave. The needs of those in offices or busy business premises will be met by meals delivery services. Initially the services will be designed to serve one thousand customers per day. The figures will go up as the business grows in size and scale of operations. The restaurant will employ seventy workers out of which forty will be directly handling customer orders. 2.3 Regulatory Issues The legal requirements include registering the business name and paying for the business license for a medium level private company. There will be the certification from the food and beverages regulatory authority and health clearance for the staff members. 2.4 Insurance Insurance cove will be sought for the major risks confronting the business and those that are insurable. The major risks to be insured against include fire to the premises. The rationale is that many systems in the premises will be high heat consumers and there high chances of over-heating and probably igniting fire. The movable valuables within the warehouse will be covered against theft and vandalism. 2.5 Business Premises The business will be operated on a half acre plot of land on a three storey building. The major components of the premises will be: The key supplies can be divided into three major categories as follows: (i)Table and catering Equipment Room service equipment Flatware and glassware Food and beverages equipment Catering equipment (ii)Housekeeping equipment and supplies Bedding and mattresses Cleaning, washing, laundry equipment and products Bedroom supplies Guest amenities Bathroom supplies and equipment Bed linen, table linen & towels (iii)Back of house and Maintenance, equipment supplies and services Building materials Laundry and hygiene equipment Fans and air conditioning Back of house machinery and equipment 2.6 Location The business will be located in the urban city of Adelaide in South Australia. A number of factors influenced the choice key among them being the growth prospects of the city in terms of population and income levels. The city being the largest in South Australia has vital intermediary facilities like banks as well as adequate infrastructure. The choice is also guided by the structure of hotel industry in the region – served mostly by small operators who have no comprehensive offers in single packages. 2.7 Product Arrangements All the products will be produced within the premises using the business systems and staff. The scale of production for the first twelve months is demonstrated herein: Units Time Snacks starchy Meals Pretentious Meals Special Diet meals 1st Month 1000 500 250 50 2nd 1500 750 375 75 3rd 1700 850 425 85 4th 1900 950 475 95 5th 2100 1050 525 105 6th 2200 1100 550 110 7th 3100 1550 775 150 8th 4000 2000 1000 200 9th 4500 2250 1150 230 10th 5000 2500 1225 305 11th 5400 2700 1350 270 12th 5900 2950 1475 590 Total 40000 20000 19575 2265 2.8 Trading hours The location of the business allows it to operate round the clock. This is enabled by ample security in the city of Adelaide and supported by the high population of workers in the city. There are prospects of having customers during the night just as there are in day time. 2.9 Commencement Date Operations of the restaurant are scheduled to start on 1st December 2012. The date has been strategically chosen to take advantage of boom period brought about by December holiday and Christmas festivities. 3. The Organization Plan 3.1 Organization Structure Director General Head of Operations Head of Marketing Head of Finance HRM Head of Promotions Head of Public Relations Accountants Waiters & Direct Public Relations Officers Cashier sales personnel 3.2 Skills Required The staff members who will have direct interaction will be required to possess the following skills: Communications skills – this is required to strike a good understanding with the customers. Can do attitude – they must be capable of doing things without supervision. Multitasking – being capable of doing a number of duties as circumstances may dictate. Technical skills – the ability to do the specifics of a job according to standards Flexibility – ability to adjust working hours according to circumstances Personal presentation – being able to put the best foot forward Passion – loving what you do and being happy to do it 3.3 Personnel Position Roles Director General Representing the company in outside forums Giving direction to Heads of Departments Chairing all meetings Human Resource Manager Managing all employee functions Head of Finance Head of all financial functions Advisor in investment decisions Head of Promotions Department Directing all promotional campaigns Handling all outsourcing all promotional activities Advising top management on promotional best practices Chairing all promotional strategy committees or sub-committees Head of Public Relations Department Giving direction to the public relations team Acting on information given by officers in the department Feeding the top management with information regarding customer feelings and perceptions. Direct Sales Personnel Doing direct marketing duties Collecting information on consumer desires Collecting data on sales volume Executing all other operational duties pertaining to direct marketing function. Public Relations Officers Sorting customer complains Handling customer desk duties Communicating with customers by all channels available Reporting to head of public Relations department on customer concerns Maintaining customer data on past concerns Carrying out all operational duties relating to Public Relations functions Cashiers Collecting cash from customers. Keying in all financial data. Waiters and other junior staff Serving the customers. 4. The Financial Plan 4.1 Financial Strategy The proposed capital will be $ 73, 300, 000. 25, 300,000 will be raised by owner contrition, while 48, 000, 000 be raised on a bank loan will be refunded at an interest of 15% per annum. The starting working capital for the first month will be $ 113 250,000, where the financial requirements for the whole year will be shown clearly on the budget projection statement. 4.2 Establishment Costs and Source of Funds Item Cost in $ ‘000’ Market research 2000 Fixed Assets 60000 Land & buildings 45000 Strategy formulation 500 Direct Marketing 1500 Adverts on print media 400 Adverts on social media 250 Adverts on audio-visual media 500 Distribution 1000 Salaries & wages 1000 Marketing Agency Services 800 Licenses and Government Authorization 150 Taxes and Tariffs 100 Miscellaneous Expenses 50 Total 113,250 4.3 Balance Sheet Projections Fixed Assets Machines equipment Furniture Current Assets Stock Debtors Cash Total current assets supplies Current liabilities Creditors Financed by: Employed capital Long-term loan ‘000’ $ 2000 ‘000’ $ 8000 5000 5900 18900 7500 1200 25,300 ‘000’ $ 7200 3000 21,000 31200 45300 3200 73,300 48,000 73,300 4.4 Profit and Loss Projections Net sales Less cost of sales Opening stock Purchases Add carry inwards Less purchases returns Cost of goods available for sale Less closing stock Gross profit Less expenses Salaries and wages Electricity Water Repair and maintenance Telephone and postage General expenses Net profit before tax Less 16% tax $ 240,000 50000 20000 $ 117,000 270,000 387000 80000 264,000 36,000 20,000 16,000 6,000 4,800 $ 1,086,000 307,000 729,000 364,800 382,200 61,152 Net profit after tax 321,048 4.5 Expected Cash Flow Projections Cash in flow Jan Feb Mar Apr May June July Aug. Sept. Oct. Nov Dec. Sales 25000 30000 35000 37000 40000 42000 45000 40000 35000 36000 38000 40000 Personal savings 70000 - - - - - - - - - - - Cash in hand 14000 15000 13000 11000 12000 11000 12000 11000 10000 13000 16000 16000 Cash at bank 18000 17000 20000 21000 20000 15000 19000 18000 17000 16000 16000 19000 Bal. b/d 92750 12050 150300 186250 183050 174400 173550 168500 161750 157800 Total inflow 127000 154750 189050 219300 218250 209050 205400 202550 195500 190750 189800 186100 Cash outflows Salaries 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 Purchases 14000 16000 21000 15000 17000 16000 14000 16000 16000 15000 21000 15000 Rent 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 Loan repayment - 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 Loan interest - 100 100 100 100 100 100 100 100 100 100 100 Electricity bill 300 150 200 150 250 200 300 200 100 200 200 100 Insurance 3,000 - - - - - - - - - - - Postage 50 100 150 200 250 50 100 150 200 250 50 150 Water bill 100 50 200 200 300 100 50 200 50 200 50 100 Advertisements 1,000 1,000 Telephone bills 200 300 100 200 300 200 300 200 300 200 300 200 Legal documents 600 Total outflows 34250 33700 38750 33050 35200 34650 31850 34050 33750 32950 38700 32850 BC/CF 92750 4.6 Break Even Cash Flow Projections Fixed Costs Amount ‘000’ Loan repayment Salary repayment 10,000 264,000 TOTAL 274,000 Variable costs Electricity 36,000 Water 20,000 Stock 15,000 Transport 10,000 Repairs and maintenance 16,000 Total 97,000 (i) Total contribution margin = total sales – variable cost = 1,136, 000- 97,000 = 1,039,000 (ii) Contribution margin % = contribution margin Total sales 1039000/113600 = 0. 91 (iii) Breakeven Point = Fixed cost/Contribution Margin = 274,000/0.91 = $ 301,098 References Aaker, DA 2003, Marketing research. Hoboken: Wiley. Australian Bureau of Statistics, 2010, ‘clubs, Pubs and Bars,’ Independent Survey. Bowman, JP & Branchaw, BP 1988, Business Report Writing, 2nd (ed.), The Dryden Press Chicago. Graf, N 2009, ‘Stock Market Reactions to Entry Mode Choices of Multinational Hotel Firms,’ International Journal of Hospitality Management, Vol. 28, no. 2, pp. 236-244. Goldenberg, J, Lehmann, DR & Mazursky, D 2001, ‘The Idea Itself and the Circumstances of Its Emergence as Predictors of New Product Success,’ Management Science 47, 69-84. Hall, CM & Hamon, C 2011, ‘Casinos and urban development in Australia. Journal of Travel Research, Vol. 34, no. 3, pp.30-3. Noone, B & Mattila, A 2009, ‘Hotel Revenue Management and the Internet: The Effect of Price Presentation Strategies on Customers’ International Journal of Hospitality Management, Vol. 28, no. 2, pp. 272-279. Ozer, M 2005, ‘Factors Which Influence Decision Marking in New Product Evaluation,’ European Journal of Operational Research, Vol. 163, pp. 784-801. PWC, 2009, ‘More than just a drink and a Flutter: An Overview of the Australian Hotels Industry’, Research Report, pp. 11-62. Available aha.org.au/wp-content/uploads/20/04/PWC-Hotel-Industry_report-20092.pdf. Retrieved 27th November 2012. Read More