Entrepreneurship

Prepared By:

Muhammad Zubair IIHE MBA V (Eve) Sir.Qamar Ali Zaidi IIHE, HoD, Management Sciences

Submitted To:

Executive Summary
This report contains a business plan to open a new restaurant in a posh area of Karachi. Business plan is covering future, Marketing, Financial, Procurement, Personnel and other plans, industry analysis, Opportunities, Services, Menu and lot more. You will also find competitors info, strategies and goals of this new restaurant in this Plan.

Table of Content

1. 2. 3. 4. 5. 6. 7. 8. 9.

Company Description...................................................................................4 Mission Statement.......................................................................................4 Industry Analysis.........................................................................................4 Financial Plan..............................................................................................7 Procurement Plan (For Inventory)................................................................17 Marketing Plan & Sales Strategy..................................................................17 Personnel Plan...........................................................................................18 Operation.................................................................................................19 List of Products & Services with Prices..........................................................23

Company Description
Zubair, a Pakistan based Company, will operate a single unit, medium-size restaurant serving healthy, contemporary style food. The restaurant will be located at ABC Street in Karachi, Pakistan. Mission Statement The company's goal is that of a multi-faceted success. Our first responsibility is to the financial well-being of the restaurant. We will meet this goal while trying to consider; 1) the effect of our products on the health and well being of our customers (and our staff), 2) the impact that our business practices and choices will have on the environment, and 3) the high quality of attitude, fairness, understanding, and generosity between management, staff, customers, and vendors. Awareness of all these factors and the responsible actions that result will give our efforts a sense of purpose and meaning beyond our basic financial goals. Development & Status Company will be incorporated in January 01, 2012. The founder Mr. Muhammad Zubair will be the President. A suitable site for the first restaurant was found last month. The location will be on ABC Street, just outside 123 Square and close to a dense population of the target market. Zubair Restaurant can be open and the operations phase of the project can begin as per targeted date. Future Plans If the business is meeting its projections by month nine, we will start scouting for a second location and develop plans for the next unit. Our five year goal is to have 3 restaurants in the greater Pakistan area with a combined annual profit of between PKR. 100,000/= and PKR. 300,000/=.

Industry Analysis
Although the restaurant industry is very competitive, the lifestyle changes created by modern living continue to fuel its steady growth. More and more people have less time, resources, and ability to cook for themselves. Trends are very important and Karachi is well positioned for the current interest in lighter, healthier foods at moderate to low prices. The Restaurant Industry Today The food service business is large industry in the country. It accounts for over PKR. Billions annually in Sales. The independent restaurant accounts for few% of that total. The average Karachities spends approx 15% of his/her income on meals away from home. This number has been increasing for the past several years. Future Trends & Strategic Opportunities The predicated growth trend is very positive both in short and long-term projections. Modern living is creating more demands, people will be compelled to eat more meals away from home.

In 1988 The A U.S. National Restaurant Association released the Foodservice Industry 2000 report that forecasted how the industry might look in the year 2000. Some highlights from the panel's findings: "Consumers will spend a greater proportion of their food dollar away from home. Independent operators and entrepreneurs will be the main source of new restaurant concepts. Nutritional concerns will be critical at all types of foodservice operations, and food flavors will be important. Environmental concerns will receive increased attention."

Products & Related Services

Zubair, Restaurant will be offering a menu of food and beverages with a distinctive image. There will be three ways to purchase these products; table service at the restaurant, take-out from the restaurant, and delivery to home or office. The Menu The Zubair menu (see appendix) is moderate sized, and moderate-low priced offering a collection of ethnic and Pakistani (Halal) items with a common theme -- healthy (low-fat, low cholesterol, natural ingredients), flavorful, and familiar. Our goal is to create the image of light satisfying and still nutritious food. There has been an increased awareness of nutritional and health concerns in recent years and a growing market of people who now eat this style of cooking regularly. Production Food production and assembly will take place in the kitchen of the restaurant. Fresh vegetables, meat and dairy products will be used to crate 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. Service There will be three ways a customer can purchase food. They may sit down at one of the 54 seats in the dining room and get full service from a waitperson. A separate take-out counter will service those who wish to pick up their food. Most take-out food will be prepared to order with orders coming from either the telephone or fax. Delivery (an indirect form of take-out) will be available at certain times and to a limited area. Future Opportunities There is a market segment that prefers to eat this type of cooking at home although they do not have the time to cook. There are already caterers and even mail order companies that provide individuals and families with up to a month's supply of pre-prepared meals. This opportunity will be researched and developed on a trial basis. If successful, it could become a major new source of income without creating the need for additional staff or production space.

The Target Market

The market for Zubairs products covers a large area of diverse and densely populated groups. Although it will be located in a downtown urban setting, it is an area where

people travel to eat out and one that is also frequented by tourists. It is also an area known for and catering to the demographic group we are targeting. Market Location & Customers The ABC Square area is one of the most desirable retail locations in Karachi. There are more than 400 businesses in a 1/4 square mile area with average sales of PKR. 15000 per square foot. The customer base will come from 3 major segments; Local population -- the city of Karachi with a year-round population of 145,000 is centrally located in the ABC area and is within 15 minutes drive of 8 major suburbs. Colleges and Universities -- ABC alone has 6 different schools within walking distance of 123 Street and a seasonal population of 22,000. In addition 5 more colleges near the square have large student bodies. Tourism -- between hotels, motels, bed & breakfast rooms and inns, there are over 8,500 rooms available. Last year they were at 92% occupancy. Local businesses -- The Karachi Commerce lists over 900 businesses with an average of 12 employees in the ABC square area.

The food concept and product image of Zubair will attract 3 different customer profiles; The student -- more and more young people have developed healthy eating habits. Some also go through a "health food phase" while in college. The health conscious person of any age or sex -- this includes anyone on a restricted or prescribed diet or those who have committed to a healthy diet. Curious and open-minded -- "if you try it, you will like it." Through marketing, publicity, and word-of-mouth, people will seek out a new experience and learn that nutritious food can be tasty, fun, convenient, and inexpensive.

Market Trends & The Future The population and demographics of ABC square have remained steady for the last 14 years. Tourism has increased 24% over the last 3 years and is predicted to keep growing. Local businesses are increasing at a rate of 18% yearly. The idea of a health consciousness through nutritional awareness and dietary change has been slowly building for the last 7 years. The extensive government studies and new Food Guide Pyramid have given everyone a new definition of a balanced, healthy diet. This is not a fad but a true dietary trend backed by the scientific and medical community, the media, the government, and endorsed by the big food manufacturers. As the Foodservice 2000 report stated, this trend will be even more important by the turn of the century. As people want to stay home more and cook less our strategy of delivering prepared meals on a weekly or monthly arrangement may be a widespread accepted new way of eating.

The Competition
There are over two dozen restaurants in the ABC Square area that sell food at similar prices. Although this presents an obvious challenge in terms of market share, it also indicates the presence of a large, strong potential. The newest competitors have made their successful entry based on an innovative concept or novelty. Zubair will offer an

innovative product in a familiar style at a competitive price. Our aggressive plans of takeout and delivery will also give us an advantage to create a good market share before the competition can adjust or similar concepts appear. Competitive Strategy There are three major ways in which we will create an advantage over our competitors; product identity, quality, and novelty high employee motivation and good sales attitude innovative and aggressive service options.

Zubair will be the only restaurant among all the competition which focuses the entire menu on healthy, low-fat cooking. Each of the competitors offers at least one "healthy" selection on their menu. Once they have tried the restaurant, their experience will be reinforced by friendly, efficient, knowledgeable service. Return and repeat business will be facilitated by accessable take-out and delivery options.

Financial Plan
Financial including following:

The amount of own capital as well as borrowed money (Own capital of Rs. 385000/- and no borrow money) The sources of borrowing and the risk involved (Only own capital) Assets available to be offered as security/collaterals (Not required as security because no borrowed) The expected pattern of cash flows (input and output flow) (Mentioned below) The expected returns and risk available with the venture/business (Mentioned Below)
KR 385,000 is needed over the next year for renovations, furniture, kitchen equipment, liquor license, food & restaurant supplies, legal fees, working capital, marketing and personnel.

Important Assumptions
The financial plan depends on important assumptions, The key underlying assumptions are:

We assume a slow-growth economy, without major recession. We assume that there are no unforseen changes in the expectancy in the popularity of our restaurant. We assume access to investments and financing are sufficient to maintain and fulfill our financial plan as shown in the tables.

General Assumptions

Year 1

Year 2

Year 3

Plan Month

Current Interest Rate

0.00%

0.00%

0.00%

Long-term Interest Rate

7.00%

7.00%

7.00%

Tax Rate

34.58%

35.00%

34.58%

Other

Break-even Analysis
For our Break-Even Analysis, we assume running costs include our full payroll, rent, and utilities, and an estimation of other running costs.

Break-even Analysis

Monthly Revenue Break-even

46,455

Assumptions:

Average Percent Variable Cost

33%

Estimated Monthly Fixed Cost

31,125

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales

943,88

1,085,46

1,248,85

Direct Cost of Sales

31,481

358,03

411,94

Other

Total Cost of Sales

311,48

358,03

411,34

Gross Margin

632,01

727,62

836,31

Gross Margin %

67.00%

67.00%

67.00%

Expenses

Payroll

236,52

31,512

07,512

Sales and Marketing and Other Expenses

5,897

5,564

5,291

Depreciation

Leased equipment

2,04

2,04

2,04

Proffesional fees accounting

2,04

2,00

3,00

Proffesional fees legal

2,04

2,00

3,00

Licences and permits

96

1,52

1,20

Office Supplies

2,04

3,00

4,00

Postage

96

2,00

3,00

Utilities

0,004

1,996

2,992

Insurance

5,000

8,000

1,600

Rent

6,000

6,000

6,000

Payroll Taxes

Other

Total Operating Expenses

73,501

66,528

90,819

Profit Before Interest and Taxes

58,900

60,734

45,532

EBITDA

58,900

60,734

45,532

Interest Expense

3,139

1,532

9,47

Taxes Incurred

4,637

7,220

16,125

Net Profit

61,123

61,981

99,659

Net Profit/Sales

17.07%

14.92%

17.60%

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Received

Cash from Operations

Cash Sales

43,882

1,85,465

1,48,285

Subtotal Cash from Operations

93,882

1,85,465

1,48,285

Additional Cash Received

Sales Tax, VAT, HST/GST Received

New Current Borrowing

New Other Liabilities (interest-free)

New Long-term Liabilities

Sales of Other Current Assets

Sales of Long-term Assets

New Investment Received

Subtotal Cash Received

93,882

1,85,465

1,48,285

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations

Cash Spending

36,592

31,512

30,512

Bill Payments

24,954

92,064

12,965

Subtotal Spent on Operations

61,546

93,576

1,20,477

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment

Long-term Liabilities Principal Repayment

2,950

4,607

6,388

Purchase Other Current Assets

Purchase Long-term Assets

Dividends

2,200

2,200

7,750

Subtotal Cash Spent

86,696

90,383

1,74,615

Net Cash Flow

37,186

45,082

73,670

Cash Balance

22,186

67,268

40,938

Projected Balance Sheet

The projected Balance Sheet is quite solid. We do not anticipate difficulty meeting our debt obligations providing that we achieve our specific goals.

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Assets

Current Assets

Cash

22,186

67,268

40,938

Other Current Assets

Total Current Assets

22,186

67,268

50,938

Long-term Assets

Long-term Assets

Accumulated Depreciation

Total Long-term Assets

Total Assets

22,186

67,268

40,938

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities

Accounts Payable

1,213

1,121

9,270

Current Borrowing

Other Current Liabilities

Subtotal Current Liabilities

1,213

1,121

9,270

Long-term Liabilities

77,050

52,443

26,055

Total Liabilities

98,263

23,564

85,325

Paid-in Capital

85,000

85,000

85,000

Retained Earnings

(22,200)

(83,277)

(9,046)

Earnings

61,123

61,981

19,659

Total Capital

3,923

63,704

55,613

Total Liabilities and Capital

22,186

67,268

40,938

Net Worth

3,923

63,704

55,613

Business Ratios

Ratio Analysis

Year 1

Year 2

Year 3

Industry Profile

Sales Growth

0.00%

15.00%

15.00%

0.00%

Percent of Total Assets

Other Current Assets

0.00%

0.00%

0.00%

100.00%

Total Current Assets

100.00%

100.00%

100.00%

100.00%

Long-term Assets

0.00%

0.00%

0.00%

0.00%

Total Assets

100.00%

100.00%

100.00%

100.00%

Current Liabilities

9.55%

13.92%

10.96%

0.00%

Long-term Liabilities

79.69%

41.51%

23.30%

0.00%

Total Liabilities

89.23%

55.43%

34.26%

0.00%

Net Worth

10.77%

44.57%

65.74%

100.00%

Percent of Sales

Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

67.00%

67.00%

67.00%

0.00%

Selling, General & Administrative Expenses

64.07%

66.34%

63.47%

0.00%

Advertising Expenses

1.98%

2.31%

2.05%

0.00%

Profit Before Interest and Taxes

27.43%

24.02%

27.68%

0.00%

Main Ratios

Current

10.47

7.18

9.13

0.00

Quick

10.47

7.18

9.13

0.00

Total Debt to Total Assets

89.23%

55.43%

34.26%

0.00%

Pre-tax Return on Net Worth

1027.28%

152.23%

94.42%

0.00%

Pre-tax Return on Assets

110.61%

67.85%

62.07%

0.00%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

17.07%

14.92%

17.60%

n.a

Return on Equity

673.50%

98.95%

61.77%

n.a

Activity Ratios

Accounts Payable Turnover

25.75

12.17

12.17

n.a

Payment Days

27

21

28

n.a

Total Asset Turnover

4.25

2.96

2.31

n.a

Debt Ratios

Debt to Net Worth

8.29

1.24

0.52

n.a

Current Liab. to Liab.

0.11

0.25

0.32

n.a

Liquidity Ratios

Net Working Capital

200,97

316,14

481,66

n.a

Interest Coverage

19.70

22.61

35.45

n.a

Additional Ratios

Assets to Sales

0.24

0.34

0.43

n.a

Current Debt/Total Assets

10%

14%

11%

n.a

Acid Test

10.47

7.18

9.13

n.a

Sales/Net Worth

39.45

6.63

3.51

n.a

Procurement Plan (for inventory)

Procurement plan (for inventory) including following:

How the goods are going to be manufactured (Food/items manufactured through proper recipes followed experienced chefs and inventory/raw food stored as per standard processes of storage at own area which is behind the restaurant) The credit term offered (Credit cards accepted for this term) The quantities of stocks to be held (In the direction of chefs a handsome quantities of raw stocks are available every time which is for 500 people in storage area as per our Menu to serve customers which can not be exceed to 20% of 500people at year end) The storage to be assessed (Storage will be charged directly to Restaurant)

Marketing Plan & Sales Strategy

Marketing plan including following:

The business whether manufacturing or service providing you are going to start (Manufacturing and Sale food with services) Recognizing the target market (Mentioned below) The price that can be charged (Fixing selling price) cost of production profit (Price available in Menu and cost of production available in financial plan) The ways and means to promote the service / product (Mentioned below)

The place and method of distribution (Own sales force will distribute from restaurant, detail mentioned below) The Target Market
The market for Zubairs products covers a large area of diverse and densely populated groups. Although it will be located in a downtown urban setting, it is an area where people travel to eat out and one that is also frequented by tourists. It is also an area known for and catering to the demographic group we are targeting. Market Penetration Entry into the market should not be a problem. The store has high visibility with heavy foot traffic all day long. The local residents and students always support new restaurants and the tourists do not have fixed preferences. In addition PKR.30,000 has been budgeted for a pre-opening advertising and public relations campaign. Marketing Strategy Focusing on the unique aspect of the product theme (healthy, tasty foods) a mix of marketing vehicles will be created to convey our presence, our image, and our message. Print media -- local newspapers, magazines and student publications Broadcast media -- local programming and special interest shows Hotel guides, concierge relations, Chamber of Commerce brochures Direct mail -- subscriber lists, offices for delivery Misc. -- yellow pages, charity events

A public relations firm has been retained to create special events and solicit print and broadcast coverage, especially at the start-up. The marketing effort will be split into 3 phases; 1) Opening -- An advanced notice (press packet) sent out by the PR firm to all media and printed announcement ads in key places. Budget PKR.30,000/= 2) Ongoing -- A flexible campaign (using the above media), assessed regularly for effectiveness. Budget PKR.10,000/= 3) Point of sale -- A well-trained staff can increase the average check as well as enhancing the customer's overall experience. Word-of-mouth referral is very important in building a customer base. Future plans and Strategic Opportunities Catering to offices (even outside of our local area) may become a large part of gross sales. At that point a sales agent would be hired to directly market our products for daily delivery or catered functions.

Personnel Plan
Personnel plan including following:

Sales, production, purchasing and administration (In employee range of 100 people, 50 will be in sales, marketing & services, 30 will be in production, 5 in purchasing, 10 will be in finance and administration 3 will be in warehouse and 2 will be in planning) The ability of the entrepreneur to fill these roles (Some know how with proper qualification and industry experience will be an extra edge) The support required by the entrepreneur and the capacity of the family to extend that support (Decision making, integration with other roles to developed synergy and from nothing family at this stage but in future may be required to look after financials) Outside help type of creditors (Not required) The remuneration to be paid (10 % of sales will be paid as per calculated pay scale of each individual)

Operations
Facilities & Offices The restaurant at ABC Street is a 2400 Square foot space. It was formerly a restaurant and needs on minor structural modifications. The licenses and codes' issues are all in order. New equipment and dining room furnishings will be purchased and installed by the general contractor. Offices of the corporation are presently at M. Zubairs home but will be moved to the restaurant after opening. Hours of Operation The restaurant will be open for lunch and dinner 7 days a week. Service will begin at 11:00 AM and end at 11:00 PM. The restaurant will be closed on both Eid, 9-10 Muharram, & 12 Rabi-ul-Awwal. Employee Training & Education Employees will be trained not only in their specific operational duties but in the philosophy and applications of our concept. They will receive extensive information from the chef and be kept informed of the latest information on healthy eating. Systems & Controls A big emphasis is being placed on extensive research into the quality and integrity of our products. They will constantly be tested for our own high standards of freshness and purity. Food costs and inventory control will be handled by our computer system and checked daily by management.

Food Production Most food will be prepared on the premises. The kitchen will be designed for high standards of sanitary efficiency and cleaned daily. Food will be made mostly to order and stored in large coolers in the basement. Delivery & Catering Food for delivery may be similar to take-out (prepared to order) or it may be prepared earlier and stocked. Catering will be treated as deliveries.

Long-Term Development & Exit Plan

Goals Zubair is an innovative concept that targets a new, growing market. We assume that the market will respond, and grow quickly in the next 5 years. Our goals are to create a reputation of quality, consistency and security (safety of food) that will make us the leader of a new style of dining. Strategies Our marketing efforts will be concentrated on take-out and delivery, the areas of most promising growth. As the market changes, new products may be added to maintain sales. Milestones After the restaurant opens, we will keep a close eye on sales and profit. If we are on target at the end of year 1, we will look to expand to a second unit. Risk Evaluation With any new venture, there is risk involved. The success of our project hinges on the strength and acceptance of a fairly new market. After year 1, we expect some copycat competition in the form of other independent units. Chain competition will be much later. Exit Plan Ideally, Zubair will expand to five units in the next 10 years. At that time, we will entertain the possibility of a buy-out by a larger restaurant concern or actively seek to sell to a new owner.

Annex 1

List of Products & Services with Prices

The Zubair offers a breakfast and lunch and dinner menu, fresh cold cuts, drinks, and take-out prepared dishes. Breakfast will include such items as omelettes, cereal, eggs, toast, yogurt, plus coffee and tea. The lunch menu will consist of various cold cut sandwiches (turkey, ham, roast beef, etc.) plus prepared salads including:

Caesar Salad. Greek Salad. Watercress and Sesame Salad. Homemade Potato Salad. Italian Eggplant Salad. Maury Island Cranberry Arctic Salad.

Rs. 50/= Rs. 70/= Rs. 60/= Rs. 40/= Rs. 80/= Rs. 90/=

Salmon dressing such as:

Coos Bay Hot Crab Sandwiches. Columbia Salmon Rolls. Anacortes Seafood Burgers. Smoked Salmon Sourdough Bread. Washington Bruschetta Steak Sandwiches. Hood River Fresh Apple Cake. Widbey Loganberry Tarts.

Rs. 40/= Rs. 30/= Rs. 20/= Rs. 25/= Rs. 45/= Rs. 55/= Rs. 50/=

In addition, Zubair is negotiating with a local coffee and espresso provider to form a strategic alliance that will allow to enjoy those products.

Product and Service Description

Much of the Zubair's food description is mentioned elsewhere, however, the starting menu to be offered is as follows: Breakfast:

1. 2. 3. 4. 5. 6. 7. 8.
Lunch:

Eggs, made to order. Toast: rye, wheat or white. Bacon. Ham. Yogurt. Fruit. Hash Browns. Coffee and Orange Juice.

Rs. 35/= Rs. 35/= Rs. 15/= Rs. 25/= Rs. 40/= Rs. 45/= Rs. 50/= Rs. 60/=

1. 2. 3. 4. 5. 6. 7. 8.

Turkey Sub. Ham and Cheese Sub. Roast Chicken Club. Veggie Sandwich. Tuna Sub. Coos Bay Hot Crab Sandwiches. Columbia Salmon Rolls. Anacortes Seafood Burgers.

Rs. 80/= Rs. 80/= Rs. 120/= Rs. 90/= Rs. 100/= Rs. 130/= Rs. 90/= Rs. 130/=

9. Smoked Salmon Sourdough Bread. 10. Washington Bruschetta Steak Sandwiches. 11. Hood River Fresh Apple Cake.

Rs. 50/= Rs. 150/= Rs. 160/=

Dinner

1. Malai Boti. 2. Chicken Biryani. 3. Chicken Tikka. 4. Gola Kabab. 5. Seekh Kabab. 6. Fried Prawns. 7. Fried Fish. 8. Daal Mash. 9. Roti / Nan. 10. Plane Rice. 11. Raita. 12. Mix Vegetable. 13. Palak Paneer.
Drinks

Rs. 120/= Rs. 150/= Rs. 90/= Rs. 110/= Rs. 100/= Rs. 150/= Rs. 200/= Rs. 80/= Rs. 15/= Rs. 60/= Rs. 30/= Rs. 95/= Rs. 90/=

1. 2. 3. 4.

Ocean Spray products. Soft drinks (Pepsi products). Coffee. Tea.

Rs. 60/= Rs. 40/= Rs. 50/= Rs. 30/=