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Draft Report

Rational behind choosing the Project:-


Food is one of the basic necessities for all human. Being
away from home good quality food has become dream for all students and
working people. As we are students and away from home we crave for it too.
There are lot of hotels who provide food in Bhubaneswar but there food quality
is not up to the mark. Thus the first idea that came in our mind while
confronted of making a project was food business. Later we analyzed it to be
profitable and social welfare activity also because if we provide good quality
food at a reasonable rate it will decrease health deases also.
Starting Date and End Date:-
We started the project on 12th February,2010 on which
project groups were formed. The second step was selecting three projects and
planning to do one of them as allotted by our respective faculty. Final project
report submission is on 14th April, 2010. But as per our enhanced interest in
this project we plan to transform it into reality irrespective of the time it may
require.
Define the Project title:-
''SPECIAL PAKWAN'' Services Ltd.
Particular Geographical Location of the Project and justification for
the same:-
We choose the ''Patia'' and its surrounding area for
implementation of catering service. As this is the place we acquainted with and
has brighter prospect of catering business pertaining to various educational
and professional organizations in the vicinity we have chosen this place as our
target market.
Marketing Feasibility and Marketing Plan:-
a. Product Planning:-
''Special Pakwan'' Service Ltd. Is a hypothetical start-up. It is
set up by five management graduates who found opportunity in catering
services in Bhubaneswar. The company decided to focus on providing nutritious
quality food. Its make-to-order plan with effective home delivery approach.
It plans to enter and sustain in the local market of Bhubaneswar. It
provides breakfast, lunch, snacks and dinner also. Social gathering and special
celebrations are the major work options.
b. Pricing Strategy:-
1. Penetrative Pricing- Our potential customers are
students and working people who want daily meals. Hence we would enter the
market at penetrative price to compete with the existing service provider.
2.Differentiating Pricing-As market strategy is push type differentiating pricing
needs to be adopted.
3.Going rate Pricing- We will fix our price of meal after analyzing competitor
market.
4.Value Pricing- We will charge a fairly low pricing for a high quality offer.
We offer discounts for regular customers,bulk orders,seasonal and
festivals discount, price reduction for initial customer.
c. Distribution Channel or Strategy:-
We will recruit five delivery boys and provide them with
vehicles and mobile phones and allocate them different locations near by Patia.
For Sundays or any holidays to fulfill excess demand of our service we recruit
two additional delivery boys on part time basis.
d. Promotional Strategy:-
1.We will distribute leaflets in area of operations.
2.Advertise in local news paper like Sambad, Twin City etc.
3.Contact all available authorities of local institutions
4.Offer discount for membership.
e. Competitor’s Analysis w.r.t. above points:-
''Dimples kitchen''-
1.Price- High price and medium quality.
2.Place- In and around Bhubaneswar.
3.Product-North Indian, Chinese , south Indian and
confectionery.
4. Promotion-Advertising through Internet.
f. Industry Analysis:-
1.PESTEL Analysis:
2.SWOT Analysis:
g. Demand Forecast:-
After analyzing competitor’s market we assume that our
market demand will be 500 meals per day initially. And in Sundays and holidays
it will be around 750 meals.
h. Sales Target:-
our sales target would be 600 meals per day for first six
months. By the end of first year we will target 1000 meals per day. On special
occasions target would be set of 1500 meals on an average.
i. Sales Team Structure:-
Sales team will consist of regular five boys and part time seven
boys for delivery
j. Potential Buyers:-
All students who stayed in mess and working people who are
away from home.
k. Potential suppliers:-
We will connected with some milk and milk product
provider,meat provider and vegetables provider. We also keep contact with
general stores from where we can get

Costing of each product and services:-


Process & Sequence

PURCHASE

RECEIPT/DELIVERY

AMBIENT/CHILLED/FROZEN

STORAGE

PREPARATION

COOKING

CHILLING HOT HOLDING

REGENERATION

SERVICE
 Technical Feasibility
Technical Assumptions: Technical equipments what we have are best
available in the market . And In future we have technical advantage on our
competitors.
1. Facilities and Major Equipment price(in Rs)
1.1 Kitchen facilities
1.2 Refrigerators and freezers (23,000)
1.3 Ranges and hot plates (12,000)
1.4 Ovens (15,000)
1.7 Transportation equipment (15,000)
1.8 Washer and dryer (7,000)
2. Kitchen Furnishings (20,000)
3.Smaller Equipment

3.1 Food processors (5,000)


3.2 Mixers (3,000)
4. Miscellaneous Electric Equipment
4.1 Coffeemakers (2,000)
4.2 Electric kettles, heating trays, and crock pots (7,000)

5. Kitchen Equipment
5.1 Knives (5,00)
5.2 Cutting boards (3,00)
5.3 Scales, pots and pans, and strainers (2,500)
6. Serving Equipment
6.1 Serving ware (1,500)
6.2 China, glassware, and linen (4,000)
6.3 Baskets and other decorative items (7,000)
7. Nonessentials and Other Small Tools and Equipment
Administrative Equipment
 Desk and chair.
(4,000)
 Computer with printer, CD-RW, Microsoft Office, and QuickBooks Pro.
(17,000)
 Copier and fax machine. (4,000)
 Stationary. (1,000)

Methods of Production
Food production and assembly will take place in the kitchen. Fresh vegetables, meat and dairy
products will be used to create most of the dishes from scratch. The chef will exercise strict
standards of sanitation, quality production, and presentation or packaging over the kitchen and
service staff.

The four main things to processed for good hygiene, they are:

1. Cross-contamination: Cross-contamination is one of the most common


causes of food poisoning. So,to avoid it clean work surfaces, chopping
boards and equipment are used before start preparing food.

2. Cleaning: Effective cleaning gets rid of bacteria on hands, equipment


and surfaces. So it helps to stop harmful bacteria from spreading onto
food.

3. Chilling: Chilling food properly helps to stop harmful bacteria from


growing. Some foods need to be kept chilled to keep them safe.

4. Cooking: Thorough cooking kills harmful bacteria in food. So it is


extremely important to make sure that food is cooked properly. When cooking or
reheating food, always check that it is piping hot all the way through

These are known as the 4 Cs. They will help us to prevent the most common food safety
problems.

Ecological Issue
 Electricity, gas and others, is wasted due to energy inefficient appliances
and human activated waste.So, we are giving too much emphasizing on
this. Because wastage of energy cause harm to environment.
 We are using kitchen appliances that carry the Energy Star logo.
 Waste management system.
 Educating our employee employees about the various environment
friendly and energy efficient alternatives available today.

Legal requirements
 Food Safety Act 1990

Under the Food Safety Act, we must not:

1. sell (or keep for sale) food that is unfit for people to eat
2. cause food to be dangerous to health
3. sell food that is not what the customer is entitled to expect, in
terms of content or quality
4. describe or present food in a way that is false or misleading
.
 Food Premises (Registration) Regulations 1991
If we are planning to start a new food business, we must register
our premises 28 days before opening.
 Food Safety (General Food Hygiene) Regulations 1995
These Regulations set out the basic hygiene rules that food
businesses must follow in relation to staff, premises and food
handling.
 Food Safety (Temperature Control) Regulations 1995
The regulations cover the following issues:
1. the temperature at which certain foods must be kept
2. which foods are exempt from specific temperature control
3. when the regulations allow flexibility
 Fire safety must always be ensured
 Tax considerations are essential during the formation of a new
business and during its entire life. When a business is just starting out, it
may have little or no income or assets and the choice of structure may
not seriously affect its tax liability. However, as the business grows, the
tax implications become more significant.

 Insurance is a necessary expense. This includes product and personal


liability, as well as coverage on the space used for the business,
equipment, vehicle used for the business, and worker's compensation for
any employees.
 The sale of liquor, wine or beer requires a license.
 VAT registration number.

Layout of the business unit

Financial Plan

Project Budget
At this time, the Catering Business requires 100,000 of debt funds. Below is a breakdown of
how these funds will be used:

Projected Startup Costs


Business Startup Year 2010
Initial Lease Payment And Deposits 25,000
Working Capital 65,000
FF & E 25,000
Leasehold Improvements 10,000
Security Deposits 2,500
Opening Supplies 10,000
Company Vechiles and Lease Deposits 20,000
Marketing Budget 10,000
Miscellaneous and Unforseen Costs 7,500
Total Startup Costs 175,000

Sales Forecasts

Year 2010 2011 2012 2013 2014


Sales 655,290 741,266 778,550 788,650 809,980
Operating costs 377,526 391,666 424,768 435,654 450,456
EBITDA 212,235 251,173 275,927 280,345 290,876
Taxes,Interest,And Depreciation 99,649 108,901 117,691 121,536 130,987
Net profit 112,586 148,165 164,129 184,645 207,453

Organizational Budget

Personnel Plan - Yearly


Year 2010 2011 2012 2013 2014
Owners 65,000 66,950 68,959 71,957 73,576
Manager 50,000 51,500 53,045 55,546 57,890
Customer Service 58,000 59,740 61,532 63,745 65,598
Seasonsl Staff 45,000 46,350 63,654 73,786 77,548
Administrative Staff 25,000 25,750 26,523 26,955 27,990
Total 243,000 250,290 273,712 291,989 302,602

Numbers of personnel
Year 2010 2011 2012 2013 2014
Owners 5 5 5 5 5
Manager 1 1 1 2 2
Customer Service 6 6 7 9 10
Seasonsl Staff 3 3 4 5 5
Administrative Staff 1 1 1 2 2
Totals 16 16 18 23 24
General Assumptions

• The Catering Business will have an annual revenue growth rate of 16% per year.
• The loan will have a 10 year term with a 9% interest rate.
• The Owner will acquire 100,000 of debt funds to develop the business.

Project financing:-
 Sources of Funds-
a. Equity Capital
b. Long term loan from Small Industries Development Bank
Source of Funds
FINANCING
Equity contribution
Management Investments 25,000.00

Total Equity Financing 25,000.00


Banks And Lenders
Banks And Lenders 150,000.00
Total debt financing 150,000.00
Total financing 175,000.00

General Assumptions:
Year 2010 2011 2012 2013 2014
Short Term Intereste Rate 09.05% 09.05% 09.05% 09.05% 09.05%
Long Term Intereste Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Centeral Govt. Tax Rate 33.00% 33.00% 33.00% 33.00% 33.00%
State Tax Rate 05.00% 05.00% 05.00% 05.00% 05.00%
Personnel Tax 15.00% 15.00% 15.00% 15.00% 15.00%
Projected Profit and Loss account
Profit and Loss Statements:
Year 2010 2011 2012 2013 2014
Sales 655,290 714,266 778,550 889,56 909.50
7 9
Cost of Goods Sold 65,529 71,427 78,855 84,532 86,309
Gross Margin 90.00% 90.00% 90.00% 90.00 90.00%
%

Operating income 589,761 642,839 700,69 75,74 79,459


5 6

Expenses
Payroll 243,000 250,290 273,712 281,72 283,89
3 4
General administrative 14,400 14,976 15,575 16,598 17,345
Marketing Expenses 13,761 15,000 16,350 17,578 19,624
Professional Fees 25,000 25,750 26,523 27,642 29,432
Insurance Cost 7,500 7,875 8,269 9,465 9,978
Travel and Vehicle Cost 15,000 16,500 18,150 18,890 20,890
Rent and Utility 17,500 18,375 19,294 21,732 23,845
Miscellaneous Cost 4,915 5,357 5,839 6,767 7,354
Payroll Taxes 36,450 37,544 41,057 42,132 43,785
Total Operating Cost 377,526 391,666 424,76 427,8 435,25
8 34 7

Central Govt. Tax 70,038 78,862 87,359 91,567 99,784


State Govt. Tax 10,612 11,949 13,236 15,486 18,656
Interest Expenses 13,107 12,197 11,202 13,890 15,468
Depreciation Expenses 5893 5893 5893 5893 5893

Net Profit 112,586 148,165 164,129 174,70 180,78


9 6
Profit Margin 17.18% 20.74% 21.08% 24.75 29.86%
%

Cash Flow Analysis:


Year 2010 2011 2012 2013 2014
Cash From Operations 118,479 154,058 170,022 185,068 196,785
Cash From Receivable 0 0 0 0 0
Operating Cash Inflow 118,479 154,058 170,022 185,068 196,785

Other Cash Inflows


Equity Investment 25,000 0 0 0 0
Increased Borrowing 150,000 0 0 0 0
Sales and Business Assets 0 0 0 0 0
A/P Increases 37,902 43,586 50,125 52,739 54,983

Total Other Cash Inflows 212,902 43,587 50,125 52,739 54,983

Total Cash Inflow 331,381 197,645 220,148 237,807 251,768

Cash Outflow
Payment of Principle 9695 10,605 11,599 14,537 16,485
A/P decreases 24,897 29,876 35,852 37,734 39,539
A/P Increases 0 0 0 0 0
Assets Purchases 82500 15,406 17,002 19,743 21,654
Dividends 94,783 123,247 136,018 140,573 146,754
Total Other Cash outflows 211,876 179,133 200,471 234,725 140,673
Net Cash Flow 119,506 18,512 19,677 21,836 23,231

Cash Blance 119,506 138,018 157,695 196,786 256,823

Balance Sheet
Performa Balance Sheet-
Yearly
Year 2010 2011 2012 2013 2014
Assets
Cash 119,506 138,018 157,695 159,674 163,723
Amortized Expansion Cost 45,000 46,541 48,241 59,689 62,396
Opening Supplies 2,500 5,581 8,982 9,067 12,648
Furniture & Equipment 15,000 18,851 23,102 26,546 27,495
Company Vechile & Lease 20,000 28,473 37,824 39,637 42,539
Deposits
Accumulated Depreciation (5,893) (11,786) (17,679) (18,456) (24,625)
Total Assets 196,113 225,679 258,165 294,613 308,801

Liabilities & Equity


Accountant Payable 13,005 26,716 40,990 42,839 44,789
Long Term Liabilities 140,305 129,700 119,096 109,867 105,736
Other Liabilities 0 0 0 0 0
Total Liabilities 153,310 156,416 160,085 152,706 150,525

Net Worth 42,803 69,262 98,079 102,835 120,674


Total Liabilities & Equity 196,113 225,679 258,165 294,613 308,801
Break even Analysis
Our break-even analysis is based on the ongoing costs we incur to keep Catering For running.
Fixed costs including the overhead for use of the commercial kitchen, utilities/contract services,
payroll, and marketing costs. The payroll cost includes the salary for one permanent part-time
staff person who will manage the operation of the catering business as well as instruct the
student workers for the entrepreneurship portion of the curriculum. Marketing expenses will be
kept to a minimum, primarily employing word-of-mouth and other inexpensive means. Our
assumptions on the average unit revenue are based on the average price we will charge for our
corporate boxed lunch, however this is not the only product that will be offered by Catering For
Kids. The result of this analysis offers general insight regarding the number of boxed lunches
we must sell in order to maintain uninterrupted operation of the catering business each month.

Break Even:
Break even point = Fixed cost/ Contribution per unit
Contribution per unit = Selling price per unit – variable cost per unit
General Assumptions
Monthly Break Even Analysis
Year 2010 2011 2012 2013 2014
Monthly Revenue 34,956 36,265 39,330 40,471 45,963
Yearly Revenue 419,473 435,185 471,964 504,543 542,78

Social cost benefit analysis:-


a. Health benefit
b. Environmental benefit (no use of polythene bags)
c. Income of the local vendors gets benefited
d. Employment benefits to the skilled and unskilled labour

Business Ratios
Business Ratio - Yearly
Year 2010 2011 2012 2013 2014
Sales
Sales Growth 0.0% 9.0% 9.0% 10.00% 11.00%
Gross Margin 90.0% 90.0% 90.0% 90.0% 90.0%

Financials
Profit margin 17.18% 20.74% 21.08% 23.09% 24.86%
Assets to Liabilities 1.28 1.44 1.61 1.61 1.63
Equity to Liabilities 0.28 0.44 1.61 1.65 1.68
Assets to Equity 4.58 3.25 2.63 2.71 2.87
Liquidify
Acid test 0.78 0.88 0.99 0.99 0.99
Cash to Assets 0.61 0.61 0.61 0.61 0.61
CATERING LAY OUT:
HDF SCHOOL OF MANAGEMENT
PROJECT MANAGEMENT

for
PGDM 2009-11
PROJECT REPORT ON
CATERING BUSINESS

SUBMITTED BY-
ANANYA GHOSH, PGDM09002
SATISH KUMAR JHA, PGDM09005
SUBHASHIS SINHA, PGDM09008
K.CANDAN KUMAR,PGDM09021
AANSHU SONALI RATH, PGDM09031

SUBMITTED TO-
Prof P.K.RATH