Business plan

Strategy and major stages of projects fruition. Production of Korean cuisine dishes. Analysis of the industry sector, of produces market, of business rivals. Marketing plan, volume of sales, personnel and company management. Cost of the project.

,
17.02.2013

1. RESUME OF THE PROJECT

1.1 Title of the project

Caf- restaurant Korean BBQ

1.2 Initiator of the project

The project introduces establishment of a new enterprise Korean BBQ that will be registered in the name of private entrepreneur PE Serdyukova with an authorized capital of 300 000 (three hundred thousand) rubles.

1.3 Objectives

Goal of the project: launching of a unique Korean cuisine caf- restaurant based on a self - cooking barbecue scheme in Blagoveshchensk (Amur region, Russia); caf- restaurant is primarily targeted at servicing during lunch time and evenings.

1.4 Strategy and major stages of project's fruition

Devising of project documentation, acquiring of necessary permits for business dealing in the sphere of public catering;

Purchase and refurbishment of the premises;

Installation of the equipment;

Conducting of advertisement campaign and personnel hiring;

Launching and maintaining of the project.

Stages of project's implementation and the time frames are outlined in Table 1.

Table 1

Actions

Time frames

Jan `11

Feb `11

March '11

April `11

1-10

10 - 20

20- 30

1 - 10

10 - 20

20 - 30

1 - 10

10- 20

20 - 30

1

Devising of project documentation, acquiring of necessary permits

2

Signing of contracts for equipment supply

3

Purchase of the premise

4

Preparation and refurbishment of production space and storeroom

5

Personnel hiring

6

Delivery and installation of the equipment

7

Purchase and delivery of raw produce

8

Conducting of advertisement campaign

9

Restaurant's opening

10

Start of production

1.5 Product

Production of Korean cuisine dishes, high service level and providing of community with recreation area.

2. MARKET ANALYSIS

2.1 Analysis of the industry sector

Modern restaurant market emerged in Russia recently; nevertheless, it is rapidly developing. According to the all-Union State Standard 50762-95, there are three groups of restaurants: luxe, prime and the first, that imply certain sets of requirements to the restaurants. There is also a common classification of restaurants with regard to price level:

- fine dining (minimal bill 50 USD);

- casual dining (average bill - 10-50 USD);

- fast-food (average bill - 5-10 USD);

- cafes, coffee hause (average bill - 5-15 USD);

- clubs, canteens.

Experts' reports reveal that medium cost restaurants present the most opportune sector of the market. For instance, fast - food branch is only 15-20 % occupied and its filling will take at least 5 years.

Sphere of public catering in the Amur region comprises 1200 companies, approximately 54 % out of which are generally accessible. More than 200 of generally accessible public catering businesses are situated in Blagoveshchensk. The majority of them (110 units) has a status of a caf and specializes chiefly in Chinese cuisine (56 cafes).

Financial turnover of public catering sector in the Amur region in actual prices has increased by 7.5 times and in physical quantity by more than 3 times since 2003. Level of citizens' provision with generally accessible public catering seats equals 74 %. The norm of 40 seats per 1000 capita is fulfilled only in Blagoveshchensk (44 seats), Tynda and Uglegorsk.

Despite augmentation of public catering services' quantity, the number of businesses in the sector has not extended conformably. In 2005 the market included 578 restaurants, in 2006 - 630, and in 2007 - 600. Even though 23 % of them have a foreign cuisine specialization, just a few have a corresponding decoration and specific traditions. Nonetheless, average seat turnover comprises 2,5 and 0,5 people per day in Chinese restaurants and other ones respectively.

Table 2- Forecast of public catering market capacity

Data

2010

2011

2012

2013

2014

Monthly average accrued wages in the Amur region

17338,30

Monthly average accrued wages in Blagoveshchensk

18118,50

Year average market accession rate

0,20

Market size of the Amur region (mln. rubles)

2835,9

3403,08

4083,70

4900,44

5880,52

Market size of Blagoveshchensk (mln. rubles)

697,55

837,06

1004,47

1205,37

1446,44

Population size of the Amur region (thousands of people)

903,00

Population size of Blagoveshchensk (thousands of people)

212,55

Portion of Blagoveshchensk population in the population of the Amur region

0,24

All in all, the market is attractive albeit being saturated with multiple homogeneous cafes and restaurants.

2.2 Analysis of produce's market

Company's location

The restaurant will be situated in the city center among business centers, malls and office buildings. Therefore, a processing area located in the building of a business center will be purchased for 7050 thousand rubles. Overall area is 111 square meters, including 81 square meters of dining room. It is scheduled to acquire additional office area in 2013, thus the dining area will be expanded to 91 square meters.

Product description

Korean cuisine is considered to be one of the most peculiar among Asian cuisines. Since it has been evolving separately from neighboring Chinese and Japanese cuisines, it formed a unique blend of tastes and recipes. Bearing in mind that people living in the Russian Far East show preference to Asian cuisines, Korean cuisine has all necessary prerequisites for becoming a favorite. Likewise, a new format of each table's equipment with mini oven and self-cooking of traditional dishes within 15 minutes will be attractive for perspective customers.

Initial intended menu will include:

-pork (frozen and thinly sliced, it will be cooked by the clients; seasoning, sauce and lettuce will be available unrestrictedly);

- beef (frozen and thinly sliced, it will be cooked by the clients; seasoning, sauce and lettuce will be available unrestrictedly);

- soup 1 (ghuk i tkhan);

- soup 2 (yukkedyan);

- 3 types of various salads;

- selection of vegetables;

- boiled rice (bap);

- fried rice with vegetables;

- beverages (coffee, tea, beer, juice, Coca Cola, Sprite, Fanta).

Description of clients

Intended target group of the Korean BBQ caf-restaurant lives in Blagoveshchensk and has an income exceeding subsistence level. Presumably, customers of the caf- restaurant will comprise of young people and other employed working-age population. Specifically, Korean BBQ will be popular with middle-aged males (30-60 years old) since they possess highest incomes and prefer suggested produce (especially beer and meat).

2.3 Analysis of business rivals

There are no direct business rivals who would introduce the same commodities and services to the market, however indirect business rivals are presented by multifarious Chinese restaurants situated in the city center. Nevertheless, creation of unique Korean culture ambience and an opportunity to make customized traditional Korean dishes will single the caf-restaurant out of them.

2.4 Marketing plan

Marketing strategy

The major goal of the project at the current stage is entering the market and subsequent promotion of its market position. Consequently, marketing strategy will contain augmenting of demand through increasing of sales volume, price policy, nonprice competition, and creation of enviable reputation. It will the following measures:

1. Printing and distribution of advertising leaflets in offices, business and trade centers;

2. TV and radio commercials.

Dynamics of approximate advertisement expenditures for the first 4 years of the caf-restaurant's operation is presented below.

The outline of advertisement expenditures is provided below.

During the first year of company's operation the expenditures on marketing measures will require 7 % of the gains, in the posterior periods this number will not transcend 3 %.

In addition a signboard will be ordered for the caf-restaurant entrance, its price is 3160 rubles.

Pricing

Korean BBQ will be a medium price restaurant; production cost and intended profit constitute a base for the pricing.

Table 3- Structure of production prime cost

Portion of the sale price

Expenditures

2011

2012

2013

2014

raw materials

29,5%

27,1%

25,8%

25,6%

labor expenditures

3,2%

2,5%

2,2%

2,1%

operating expenditure

11,4%

8,2%

5,7%

5,4%

managerial expenditure

29,0%

15,7%

14,5%

14,8%

depreciation

3,5%

2,2%

1,5%

1,8%

commercial expenditure

7,2%

2,2%

1,7%

1,9%

taxes

2,4%

1,1%

0,8%

0,8%

profits

13,7%

40,9%

47,8%

47,5%

3. PRODUCTION PLAN

3.1 Volume of sales

The forecast was elaborated with a reference to public catering market's capacity and the size of Korean BBQ (44 seats, distributed among 4 tables for 6 persons and 5 tables for 4 persons).Volume of sales is estimated according to loading of the restaurant, average bill and seasonality. Monthly volume of sales forecast is presented on the graphs below:

The sales volume increases disproportionally due to commodities' ciclicity laws.

3.2 Prime cost of the output

The estimation was conducted proceeding from average commodities prices set by prospective suppliers.

Table 4 - Prime cost output

Prime cost (sum of variable costs)

pork, 100 g (with seasoning and lettuce)

beef, 100 g (with seasoning and lettuce)

soup 1 (ghuk i tkhan)

soup 2 (yukkedyan)

Salad 1 (kimchi)

Salad 2 (carrot)

Salad 3(soy-bean meat and champignons)

selection of vegetables

boiled rice (bap)

fried rice with vegetables

2011

63,117

55,538

37,37

46,808

39,7

28,228

47,005

38,35

31,02

36,90

2012

57,239

51,499

30,52

42,55

36,3

24,155

43,11

35,56

25,29

32,22

2013

53,092

48,649

25,68

39,65

33,9

21,382

40,45

33,66

21,4

29,04

2014

55,161

50,389

27,03

40,528

35,4

21,839

41,09

34,01

22,04

29,9

As a result of sales volume accretion prime cost is gradually decreasing.

3.3 Personnel and company management

Korean BBQ will be registered in the form of private entrepreneur (PE) in order to simplify registration process and taxation system.

Director- the chief manager will be responsible for:

- Organization and control of the restaurant's work;

- Its condition, and personnel's condition;

- Representation of the enterprise;

- Being in command of company's property;

- Signing of contracts;

- Opening of enterprise's bank accounts;

- Search of suppliers;

- Issuing orders, hiring and firing of personnel.

Accountant will be in charge of financial matters and occupy the position of vice-director. Overall, Korean BBQ will employ 9 staff members. Personnel arrangements are displayed in table 5.

Table 5 - Personnel arrangements at Korean BBQ caf-restaurant

Position

Number of employees

Salary, in rubles (monthly average accrued)

2011

2012

2013

2014

Director

1

35000

35000

40000

45000

Accountant

1

25000

25000

30000

35000

Manager

1

17000

17000

20000

25000

Waiter

2 (3-since 2012)

10500

10500

11500

11500

Cook

1

8792,02

11 163,55

13670,79

14 899,14

Cook's assistant

1

6605,87

8390,395

10777,03

10 948,86

Cleaner

2

6000

6000

6000

6500

Self-cooking scheme practiced in the restaurant will contribute to retrenchment of personnel expenditures.

4. FINANCE

4.1 Cost of the project

The cost of the project is estimated as 8300 thousand rubles, comprising 8000 thousand rubles loan and 300 thousand rubles of equity. 7050 thousand rubles will be spent on purchasing and refurbishing of the premises, 385.6 thousand on manufacturing equipment, 82.08 thousand on other equipment, and 358 thousand of rubles on raw materials.

4.2 Sources of finance

A loan will be acquired for the purpose of project's fruition, minimum preparatory period will take 1 month and the interest rate set by the bank-loaner is 18 %. Disbursement of the major debt will be launched after two years. Ultimate loan payment period is 36 month since its receiving.

4.3 Internal rate of return analysis

IRR

85%

90%

95%

100%

105%

110%

115%

IRR and changes in volume of sales

0,00%

2,26%

2,82%

3,33%

3,81%

3,30%

4,68%

IRR and changes in expenditures for raw materials

3,74%

3,60%

3,47%

3,33%

3,19%

3,04%

2,90%

IRR and changes in labor expenditures (operational personnel)

3,37%

3,35%

3,34%

3,33%

3,29%

3,30%

3,22%

IRR and changes in operating expenditure

3,44%

3,40%

3,37%

3,33%

3,29%

3,25%

3,22%

4.4 Net present value analysis (in rubles)

NPV

85%

90%

95%

100%

105%

110%

115%

To changes in volume of sales

947891,0

2570802,6

4193714,3

5816625,9

7439537,6

9062449,3

10685360,9

To changes in expenditures for raw materials

7180788,5

6726067,6

6271346,8

5816625,9

5361905,1

4907184,3

4452463,4

To and changes in labor expenditures (operational personnel)

5935353,6

5895777,7

5856201,8

5816625,9

5777050,0

5737474,1

5697898,2

To changes in operating expenditure

6164753,5

6048711,0

5932668,5

5816625,9

5700583,4

5584540,9

5468498,4

The project is steadfast to fluctuation of expenditures and decline in sales volume. The major threat to project's fruition is presented by augmenting expenditures for raw materials, however the risk is not critical.

5. FINANCE PLAN

5.1 Investments

The greatest portion of investments (7549323,31 rubles) will be directed to fixed assets and repairing works.

Table 6 -Structure of fixed assets

Item

quantity, pieces

Price per unit

Cost without VAT

longevity

Items with longevity of 1-2 years

plates (set, 10 pieces.)

14

600

8400

1

Cutlery set

5

450

2250

1

Tea cups

60

50

3000

1

Glasses (set, 10 pieces.)

6

300

1800

1

Beer glasses (set, 10 pieces.)

5

500

2500

1

Garbage can

2

200

400

1

Small kitchen stock

1

3500

3500

1

ashtray

5

100

500

1

carafe

10

200

2000

1

Napking holder with seasoning parisons

9

50

450

1

Soap dish

2

90

180

1

Total for group 1

24980

Items with longevity of 2-3 years

cash register and its installation

1

13000,00

13000,00

3

kettle

2

1500,00

3000,00

3

rice cooker, Panasonic SR-42GHXN, for 20 portions

2

2150,00

4300,00

3

signboard

1

3120

3120

3

mirror

2

300

600

3

Toilet paper holder

2

200

400

3

Dispensable towels holder

2

350

700

3

hangers

2

1800

3600

3

Air-conditioner

2

28000

56000

curtains

2

2000,00

4000,00

3

Total for group 2

88720,00

Items with longevity of 3-5years

chair

47

855,00

40185,00

5

Working surface PN35C7 with case GN 1/1

1

9320,00

9320,00

5

computer

2

23200

46400

5

phone

1

700

700

5

Set of office furniture

1

20000

20000

5

Total for group 3

116605,00

Items with longevity of 5-7 years

Table with inbuilt oven imported from China

9

12368,75

111318,75

6

Audio system

1

5000

5000

6

Total for group 4

116318,75

Items with longevity of 7-10 years

Fridge Biryusa 199K

2

14528,78

29057,56

10

freezer L-22

2

12587,00

25174,00

10

bar counter

1

28300,00

28300,00

10

oven 74/02TCG

1

32000,00

32000,00

10

Professional dishwasher 50

1

26828,00

26828,00

10

WC pan with installation

2

2550

5100

10

Sink with installation

2

3120

6240

10

Total for group 5

152699,56

Items with longevity of 25-30 years

Premises and their refurbishing

1

7050000,00

7050000,00

30

Total for group 9

7050000,00

Total

7549323,31

5.2 Taxes

In concordance with chapter 26 TC RF, the company will utilize a simplified taxation scheme - unified tax on imputed income of individual entrepreneurs that accounts for 15 % of basic profitability. The enterprise will pay 29160 rubles quarterly until 2013, after acquiring of new premises - 32760 rubles in 2013 and 2014. It will also transfer 14 % of accrued wages as insurance installments.

5.3 Extinguishment of the debt

business strategy management marketing

Extinguishment of the debt is presented in Table 7.

Table 7

Year

Month

Major debt before the beginning of month

Extinguishment of the major debt

Extinguishment of interest rate

Loan service

Total loan payments

Major debt in the end of month

2011

1

8 000 000

2

8 000 000

0

120 000

40 000

160 000

8 000 000

3

8 000 000

0

120 000

120 000

8 000 000

4

8 000 000

0

120 000

120 000

8 000 000

5

8 000 000

0

120 000

120 000

8 000 000

6

8 000 000

0

120 000

120 000

8 000 000

7

8 000 000

0

120 000

120 000

8 000 000

8

8 000 000

0

120 000

120 000

8 000 000

9

8 000 000

0

120 000

120 000

8 000 000

10

8 000 000

0

120 000

120 000

8 000 000

11

8 000 000

0

120 000

120 000

8 000 000

12

8 000 000

0

120 000

120 000

8 000 000

2012

1

8 000 000

0

120 000

120 000

8 000 000

2

8 000 000

0

120 000

40 000

160 000

8 000 000

3

8 000 000

0

120 000

120 000

8 000 000

4

8 000 000

0

120 000

120 000

8 000 000

5

8 000 000

0

120 000

120 000

8 000 000

6

8 000 000

0

120 000

120 000

8 000 000

7

8 000 000

0

120 000

120 000

8 000 000

8

8 000 000

0

120 000

120 000

8 000 000

9

8 000 000

0

120 000

120 000

8 000 000

10

8 000 000

0

120 000

120 000

8 000 000

11

8 000 000

0

120 000

120 000

8 000 000

12

8 000 000

0

120 000

120 000

8 000 000

2013

1

8 000 000

500 000

120 000

620 000

7 500 000

2

7 500 000

500 000

112 500

40 000

652 500

7 000 000

3

7 000 000

500 000

105 000

605 000

6 500 000

4

6 500 000

500 000

97 500

597 500

6 000 000

5

6 000 000

500 000

90 000

590 000

5 500 000

6

5 500 000

500 000

82 500

582 500

5 000 000

7

5 000 000

500 000

75 000

575 000

4 500 000

8

4 500 000

500 000

67 500

567 500

4 000 000

9

4 000 000

1 000 000

60 000

1 060 000

3 000 000

10

3 000 000

1 000 000

45 000

1 045 000

2 000 000

11

2 000 000

1 000 000

30 000

1 030 000

1 000 000

12

1 000 000

1 000 000

15 000

1 015 000

0

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