Brag Caf̩ And Restaurant Р5 Year Business Plan
Business environment
The report is a business plan that includes the new venture of a restaurant named, Brag café and restaurant. The vision of the venture is to set up a good café and restaurant that would have an ideal environment to spend time with friends and family. The venture is a joint venture and the aim of the venture is to create a place of hang out that will have quality environment as well as quality food.
The venture would include the mission to have huge amount of patent customers and the company intends to serve the customers with best food and best service. The mission of the company is make the venture a successful one and to make maximum amount of revenue.
The goal of the company is to become a leading and most famous restaurant and café in UK. The venture is initially launched in the suburb area of UK. The goal of the company is to launch the restaurant in other parts of the country.
The products of the venture are good food and good environment. The food includes various cuisines; more concentration is laid on the cuisine of UK. The restaurant plans to have a stage that will be utilized to have regular performances by the artists. It would have also had different sports activity like pool, billiards where the clients would feel relaxed.
The business requires a little high investment in the beginning. It requires huge investment to set up one branch. The area in which the investment is required is the investment in setting up the shop that is in the place where the shop is intended to launch. The other investment are planned for the equipments that are required for the venture that is the tables, chairs, the maintenance of the staffs, the annual tax, the investment required to purchase the raw materials and similar other requirements (Krishna, 2014).
The strength of the company is that it has the unique concept of having restaurant as well as the café. It has a place that is made for the amusement of the customers which is a unique idea.
The weakness of the company is that it is located in the highway near the suburb. The company has no branch for which it might not have huge profit in the beginning.
The company is located in the highway which has the opportunity to attract many flying customers.
Vision, mission and goal
The biggest threat of the company is it has many competitors. There are many restaurants and cafés in the same area (Truc, 2017).
The restaurant has planned to recruit highly skilled chef, the executive manager and it has planned to equip the restaurant with well designed interior. The restaurant has planned to have peaceful premises having the facility of different forms of entertainment like sports and music.
The restaurant has planned to register itself in different food apps where the customers can book the table or order online food from the restaurant through the app. It plans for a digital progress.
The restaurant would have trade license that would enable the company to do business in a legal way. The logo of the company should be registered under the trademark so that it cannot be copied by other company. It should be renewed every year (Ketchum, 2016).
The company aims at bringing a new and innovative concept of café and restaurant. The goal of the company is to attract maximum crowd and make the concept famous. The ultimate goal of the company is to make huge profit from the new venture and create milestones.
The company intends to have an effective advertisement plan. The advertisement would include the advertisement would be done in the social media, newspapers and hoardings. Apart from this it would include the promotional offers that the clients would enjoy. These are the marketing strategies that would attract maximum amount of clients to the restaurant (Hermann, 2015).
In order to increase the sales of the company, it has to promote the products more and it has to concentrate on the quality of the product. Apart from this it has to plan for additional discounts to the customers (Sharafutdinova, 2016).
In order to manage the customers the company should customize their product. They plan to offer variety of choice in the cuisines. The café would have attractive choice of beverages that would majorly attract the college students. The usual cuisine would not attract customers. This is the reason the restaurant and the café plans to have cuisine of different choices.
The restaurant plans to keep the cost of the food low and medium so that it can be afforded by all types of people. It can be afforded by the people who are working and as well as by the students (Roundy, 2017).
The business strategy would include strategic market entry into this industry by bringing an innovative plan of café and restaurant. The company plans to have a different area of café and a different area of restaurant within the same premises. The business strategy of the restaurant includes having variety of cuisine at affordable price. It would include a planned pricing strategy, product strategy and innovative strategies that would make the company popular (Burns, 2016).
Products and services
Restaurant and café industry has remained a popular industry. This has become a trendy industry and it intends to be more famous and popular with the passing years. In the busy world every individual intends to spend some quality time with their family. There has been an increase in the number of working women as a result they don’t get time to cook food at their homes. This is the reason the restaurants are in great demand. Brag restaurant and café plans to make every evening of their clients special and memorable (Lee, Sardeshmukh & Hallak, 2016).
The restaurant intends to target the working people, the entire family and the students. In the busy world the family members do not get enough time to spend with each other this is the reason they intend to go to restaurant and intend to spend quality time with their family. The students find for some places to hang out. The restaurant intends to target them (Burns, 2017).
The restaurant plans to open the first branch in the Dudley area of Midland town. There are many such cafes and restaurant that has the same concept. In order to face the competition, the company has to maintain the quality and the service (Miles et al. 2016).
There are five forces that can be included in the analysis of the restaurant:
a). competitive rivalry
There is a chance that the company will face high competition as there are many restaurants and cafés in the nearby area as it is one of the most growing and the trendiest industry.
b). bargaining power of the customers
The buyers have many choices of restaurant and cafes therefore if they do not get good offers and good quality and service they can shift their choice to some other restaurants.
c). bargaining power of the suppliers
the weak bargaining of the suppliers are based on the large number of suppliers, low forward vertical integration and high overall supply.
d). threat of substitution
this includes the substitute choice that the clients can have. There are many restaurants who have fine dining, fine café area with some good music and place to have fun and enjoy with friends and family (ollins et al., 2016).
e). threat of new entrants
the new entry can impact the market share of brag restaurant and café. The restaurant with similar concept and better service can take away the potential customers of the company (Lee, Hallak & Sardeshmukh, 2016).
|
Particulars |
Amount |
Residual Value |
|
Non-Current Assets: |
||
|
Trademark |
500000 |
0 |
|
Patent |
750000 |
0 |
|
Property,Plant & Equipment |
1500000 |
450000 |
|
Furniture & Fittings |
100000 |
15000 |
|
Motor Vehicle |
1500000 |
600000 |
|
Computer Equipment |
1500000 |
0 |
|
Preliminary Expenses: |
||
|
Business Registration |
100000 |
|
|
License Fees |
150000 |
|
|
Deposit for Electricity |
100000 |
100000 |
|
Deposit for Telephone & Internet |
50000 |
50000 |
|
Recruitment Cost |
30000 |
|
|
Share Issuance Cost |
35000 |
|
|
Bond Issuance Cost |
20000 |
|
|
Other Miscellaneous Expenses |
75000 |
|
|
Working Capital: |
||
|
Purchase of Raw Material |
30000000 |
|
|
Wages & Salaries |
20000000 |
|
|
Manufacturing Overhead |
13000000 |
|
|
Selling & Marketing Expenses |
690000 |
|
|
General Administrative Expenses |
293250 |
63983250 |
|
TOTAL START UP COST |
70393250 |
|
|
Capital Funding: |
||
|
Equity Capital |
31676963 |
|
|
5 yrs. Bond |
23229773 |
|
|
Loan From Bank |
15486515 |
|
|
TOTAL CAPITAL EMPLOYED |
70393250 |
Figure 1: estimated budget for start-up
Source: created by author
The total start-up cost is expected to be 8,48,38,250, which can be considered as huge amount for the business.
|
Net Profit before Tax |
$6,110,617 |
$7,409,317 |
$8,822,867 |
$10,363,712 |
$12,045,348 |
|
Income Tax Expenses |
($1,833,185) |
($2,222,795) |
($2,646,860) |
($3,109,114) |
($3,613,605) |
|
Net Profit after Tax |
$4,277,432 |
$5,186,522 |
$6,176,007 |
$7,254,599 |
$8,431,744 |
|
Gross Profit Margin |
28.57% |
28.57% |
28.57% |
28.57% |
28.57% |
|
Net Profit Margin |
3.06% |
3.38% |
3.67% |
3.93% |
4.16% |
|
Return on Equity |
11.20% |
13.59% |
16.18% |
19.00% |
22.09% |
Figure 2: profit and loss forecast
Source: created by author
The net profit and equity is higher as shown in the table. Therefore the start up is expected to have good amount of profit from the business.
|
Particulars |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Cash Flow from Operating Activities: |
|||||
|
Cash Sales |
$56,000,000 |
$59,983,000 |
$64,249,291 |
$68,819,022 |
$73,713,775 |
|
Collection from Debtors |
$77,000,000 |
$89,476,625 |
$95,840,650 |
$102,657,316 |
$109,958,818 |
|
Cash Purchase |
($24,000,000) |
($25,707,000) |
($27,535,410) |
($29,493,866) |
($31,591,618) |
|
Payment to Suppliers |
($30,000,000) |
($38,133,750) |
($40,846,013) |
($43,751,186) |
($46,862,989) |
|
Direct Labor Cost |
($36,666,667) |
($42,607,917) |
($45,638,405) |
($48,884,436) |
($52,361,342) |
|
Manufacturing Expenses |
($26,000,000) |
($27,849,250) |
($29,830,028) |
($31,951,689) |
($34,224,252) |
|
Insurance |
($12,000) |
($12,300) |
($12,608) |
($12,923) |
($13,246) |
|
Rates & Taxes |
($6,500) |
($6,663) |
($6,829) |
($7,000) |
($7,175) |
|
Salary of Office Staffs |
($91,667) |
($102,292) |
($104,849) |
($107,470) |
($110,157) |
|
Cleaning Charges |
($5,000) |
($5,125) |
($5,253) |
($5,384) |
($5,519) |
|
Electricity for Office |
($13,750) |
($15,344) |
($15,727) |
($16,121) |
($16,524) |
|
Telephone & Internet |
($7,333) |
($8,183) |
($8,388) |
($8,598) |
($8,813) |
|
Salary of Marketing Staffs |
($137,500) |
($153,438) |
($157,273) |
($161,205) |
($165,235) |
|
Sales Commissions @1.5% on Sales |
($700,000) |
($749,788) |
($803,116) |
($860,238) |
($921,422) |
|
Travelling charges @2% on Sales |
($350,000) |
($374,894) |
($401,558) |
($430,119) |
($460,711) |
|
Income Tax Expenses |
($2,617,859) |
($2,905,216) |
($3,210,585) |
($3,535,553) |
($3,881,783) |
|
Cash Inflow/(Outflow) from Operating Activities |
$12,391,724 |
$10,828,467 |
$11,513,898 |
$12,250,550 |
$13,041,808 |
|
Cash Flow from Investing Activities: |
|||||
|
Purchase of Non-Current Assets |
($5,850,000) |
||||
|
Preliminary Expenses |
($560,000) |
||||
|
Sale of Assets |
$1,065,000 |
||||
|
Return on Deposits |
$150,000 |
||||
|
Cash Inflow/(Outflow) from Investing Activities |
($6,410,000) |
$0 |
$0 |
$0 |
$1,215,000 |
|
Cash Flow from Financing Activities: |
|||||
|
Share Issue |
$31,676,963 |
||||
|
Bonds Issue |
$23,229,773 |
||||
|
Loan From Bank |
$15,486,515 |
||||
|
Interest Payment |
($3,097,303) |
($3,097,303) |
($3,097,303) |
($3,097,303) |
($3,097,303) |
|
Dividend Payment |
($2,137,918) |
($2,372,593) |
($2,621,978) |
($2,887,369) |
($3,170,123) |
|
Repayment of Bond |
($23,229,773) |
||||
|
Repayment of Loan from Bank |
($15,486,515) |
||||
|
Cash Inflow/(Outflow) from Financing Activities |
$65,158,029 |
($5,469,896) |
($5,719,281) |
($5,984,672) |
($44,983,713) |
|
Net Cash Increase/(Decrease) for the period |
$71,139,753 |
$5,358,571 |
$5,794,617 |
$6,265,879 |
($30,726,905) |
|
Add: Opening Cash Balance |
$0 |
$71,139,753 |
$76,498,324 |
$82,292,941 |
$88,558,820 |
|
Closing Cash Balance |
$71,139,753 |
$76,498,324 |
$82,292,941 |
$88,558,820 |
$57,831,915 |
Figure 3: cash-flow statement
Source: created by author
|
Particulars |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Selling Price per unit |
$3,500 |
$3,588 |
$3,677 |
$3,769 |
$3,863 |
|
Variable Expenses per unit: |
|||||
|
Raw Material |
($1,500) |
($1,538) |
($1,576) |
($1,615) |
($1,656) |
|
Direct Labor Cost |
($1,000) |
($1,025) |
($1,051) |
($1,077) |
($1,104) |
|
Variable Manufacturing Overhead |
($650) |
($666) |
($683) |
($700) |
($717) |
|
Sales Commission |
($18) |
($18) |
($18) |
($19) |
($19) |
|
Travelling Expenses |
($26) |
($27) |
($28) |
($28) |
($29) |
|
Toatl Variable Costs per Unit |
($3,194) |
($3,274) |
($3,355) |
($3,439) |
($3,525) |
|
Contribution Margin |
$306 |
$314 |
$322 |
$330 |
$338 |
|
Fixed Costs: |
|||||
|
Depreciation on Property,Plant & Equipment |
$210,000 |
$210,000 |
$210,000 |
$210,000 |
$210,000 |
|
Depreciation on Furniture & Fixtures |
$10,000 |
$9,000 |
$8,100 |
$7,290 |
$6,561 |
|
Depreciation on Computer Equipment |
$180,000 |
$158,400 |
$139,392 |
$122,665 |
$107,945 |
|
Amortization of Patent |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
|
Amortization of Trademark |
$150,000 |
$150,000 |
$150,000 |
$150,000 |
$150,000 |
|
Insurance |
$12,000 |
$12,300 |
$12,608 |
$12,923 |
$13,246 |
|
Rates & Taxes |
$6,500 |
$6,663 |
$6,829 |
$7,000 |
$7,175 |
|
Salary of Office Staffs |
$100,000 |
$102,500 |
$105,063 |
$107,689 |
$110,381 |
|
Cleaning Charges |
$5,000 |
$5,125 |
$5,253 |
$5,384 |
$5,519 |
|
Electricity for Office |
$15,000 |
$15,375 |
$15,759 |
$16,153 |
$16,557 |
|
Telephone & Internet |
$8,000 |
$8,200 |
$8,405 |
$8,615 |
$8,831 |
|
Interest on Bond |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
|
Interest on Loan From Bank |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
|
Depreciation on Motor Vehicle |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
|
Salary of Marketing Staffs |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
|
Total Fixed Costs |
$6,991,106 |
$6,972,169 |
$6,956,015 |
$6,942,325 |
$6,930,821 |
|
Break-Even in Units |
22828 |
22211 |
21619 |
21050 |
20503 |
|
Break-Even in Dollars |
$79,898,354 |
$79,681,926 |
$79,497,309 |
$79,340,862 |
$79,209,380 |
Figure 4: balance sheet forecast
Source: created by author
|
Particulars |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Selling Price per unit |
$3,500 |
$3,588 |
$3,677 |
$3,769 |
$3,863 |
|
Variable Expenses per unit: |
|||||
|
Raw Material |
($1,500) |
($1,538) |
($1,576) |
($1,615) |
($1,656) |
|
Direct Labor Cost |
($1,000) |
($1,025) |
($1,051) |
($1,077) |
($1,104) |
|
Variable Manufacturing Overhead |
($650) |
($666) |
($683) |
($700) |
($717) |
|
Sales Commission |
($18) |
($18) |
($18) |
($19) |
($19) |
|
Travelling Expenses |
($26) |
($27) |
($28) |
($28) |
($29) |
|
Toatl Variable Costs per Unit |
($3,194) |
($3,274) |
($3,355) |
($3,439) |
($3,525) |
|
Contribution Margin |
$306 |
$314 |
$322 |
$330 |
$338 |
|
Fixed Costs: |
|||||
|
Depreciation on Property,Plant & Equipment |
$210,000 |
$210,000 |
$210,000 |
$210,000 |
$210,000 |
|
Depreciation on Furniture & Fixtures |
$10,000 |
$9,000 |
$8,100 |
$7,290 |
$6,561 |
|
Depreciation on Computer Equipment |
$180,000 |
$158,400 |
$139,392 |
$122,665 |
$107,945 |
|
Amortization of Patent |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
|
Amortization of Trademark |
$150,000 |
$150,000 |
$150,000 |
$150,000 |
$150,000 |
|
Insurance |
$12,000 |
$12,300 |
$12,608 |
$12,923 |
$13,246 |
|
Rates & Taxes |
$6,500 |
$6,663 |
$6,829 |
$7,000 |
$7,175 |
|
Salary of Office Staffs |
$100,000 |
$102,500 |
$105,063 |
$107,689 |
$110,381 |
|
Cleaning Charges |
$5,000 |
$5,125 |
$5,253 |
$5,384 |
$5,519 |
|
Electricity for Office |
$15,000 |
$15,375 |
$15,759 |
$16,153 |
$16,557 |
|
Telephone & Internet |
$8,000 |
$8,200 |
$8,405 |
$8,615 |
$8,831 |
|
Interest on Bond |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
|
Interest on Loan From Bank |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
|
Depreciation on Motor Vehicle |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
$1,626,084 |
|
Salary of Marketing Staffs |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
$1,471,219 |
|
Total Fixed Costs |
$6,991,106 |
$6,972,169 |
$6,956,015 |
$6,942,325 |
$6,930,821 |
|
Break-Even in Units |
22828 |
22211 |
21619 |
21050 |
20503 |
|
Break-Even in Dollars |
$79,898,354 |
$79,681,926 |
$79,497,309 |
$79,340,862 |
$79,209,380 |
Table 5: break-even analysis
Source: created by author
References
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Miles, M. P., Lewis, G. K., Hall-Phillips, A., Morrish, S. C., Gilmore, A., & Kasouf, C. J. (2016). The influence of entrepreneurial marketing processes and entrepreneurial self-efficacy on community vulnerability, risk, and resilience. Journal of Strategic Marketing, 24(1), 34-46.
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Burns, P. (2017). New venture creation: a framework for entrepreneurial start-ups. Palgrave.
Lee, C., Sardeshmukh, S. R., & Hallak, R. (2016). A qualitative study of innovation in the restaurant industry. Anatolia, 27(3), 367-376.
Hermann, T. (2015). Pricing strategy for products in the healthy fast food sector in Stockholm.
Roundy, P. T. (2017). “Doing good” while serving customers: Charting the social entrepreneurship and marketing interface. Journal of Research in Marketing and Entrepreneurship, 19(2), 105-124.
ollins, E., Kearins, K., Tregidga, H., & Bowden, S. (2016). Selling all good: how small new entrants can compete. The CASE Journal, 12(3), 374-398.
Ketchum, A. (2016). Counter Culture: The Making of Feminist Food in Feminist Restaurants, Cafes, and Coffeehouses. Cuizine: The Journal of Canadian Food Cultures/Cuizine: Revue des cultures culinaires au Canada, 7(2).
Truc, N. (2017). Business Plan for Existing Venture: Papu Cafe.
Sharafutdinova, A. (2016). Start-up business plan: organic food restaurant in Bilbao.
Krishna, K. (2014). Analysing Competition in the Quick Service Restaurant Industry.
