15 |A Feasibility Study of Franchising Chowking

CHAPTER 1

INTRODUCTION

This chapter of the paper presents the background of the study, statement of the problem, the
significance of the study, scope and limitation, and operational definition of terms.

Background of the Study

Chowking gained entrance to the highly competitive fast food industry in the Philippines in 1985,
when it dominates by western-style burger joints. Robert Kuan is the founder of this new and appealing
'Chinese themed' fast-food chain. He especially thought of making a neighborhood counterpart of the
giant world fast-food chain McDonald's. With this in mind, Chowking used to be born, and its unique
notion right away delivered her to success. It also paved the way for attractive Chowking into a
collaborative partnership with Jollibee Foods Corporation in the year 2000.

In 1995, the brand opened its first store in the United States of America. Today, Chowking USA serves
not only the Filipino community but also the local US market by offering a healthy and satisfying Chinese
fast food experience. Chowking restaurants are present at 15 locations in three states: California,
Nevada, and Washington (Chowking, USA, n.d.).

The impact of Chinese culture on Filipino's lifestyle cannot as it takes on a generous effect, most
notably with the dietary patterns of Filipinos. It is the place they looked for after Chinese style
inexpensive food gets its motivation as it offers a combination of the Chinese and Filipino cooking across
the board store named Chowking. It all started way back in 1989, opened its first franchise and
provincial store in Meycauayan, Bulacan, and expand all over the Philippines. Currently, there are 457
branches of Chowking (Business World Online, 2016).

This study proposes because of the growing numbers of residents in Mati City in which the wants and
its demand of the people are increasing, especially in food wherein Chowking gives the best quality of
products and services to the people.

Statement of the Problem

This study intends to franchise Chowking in Mati City, Davao Oriental, if this will be feasible or not.
The researchers also want to know whether people are interested in Chowking in Mati City. This study
seeks the answer to these questions explicitly:

How much will the customers able to pay in ordering in Chowking?

What is the level of acceptability of franchising Chowking in Mati City?

How much is its breakeven point?

Significance of the Study

 This study is significant in connection with the feasibility of Chowking in Mati City. Thus, the results of
the study will be beneficial specifically to the following:

Customers. The researchers get to find out their thoughts with regards to putting up a franchised
business, whether it satisfies them and affordable.

Employees. Chowking gives them opportunities to have work for their financial needs.

Investors. With this study, they will be able to know the preferences and tastes of the citizens of Mati
City and help them to identify what kind of business is marketable or profitable in Mati.

Local Government Unit. Franchising a business is beneficial to the government since it helps to grow
its income and can add up many investors to the city/province.

Other researchers. Future researchers allow providing information that helps to support the study.

Scope and Limitation

This study focuses on the feasibility of Chowking in Mati City, Davao Oriental, wherein the researchers
conduct the survey within the locality, particularly in Baywalk and City Hall. The study limits the
respondents to those who earned average income in which they will answer the distributed
questionnaires by the researchers.

These 100 random persons considered appropriate as the population of the study because they are the
most affected variable in terms of the daily basis of income and possible changes of their wants and
needs and some other factors as mainstream in the city.

Operational Definition of Terms

Acceptability – being agreed or accepted

Feasibility – a possibility that can make or viable enough

Franchising – purchases a business to establish to another branch

Viability - able to have a reasonable chance to put up the specific business

Chapter II

REVIEW OF RELATED LITERATURE

This chapter of the research paper presents the review of related literature used in the conduct of the
current feasibility study.

Promotion

Chowking restaurant is one of the well-known fast-food Chinese restaurants in the Philippines. As time
goes by, the Chowking scope becomes wider throughout the country. About 400 stores in the
Philippines, Chowking shows its viability inside the country ( Dela Peña, 2010). Its 1st expansion was in
the United States in 1995 next is in Jakarta Indonesia in 2005, UAE in 2006, and 2008 build more outlets
in the Philippines. (Chowking, 2012). With their best strategic promotion, Chowking becomes more
accessible to different individuals.

There are seven kinds of promotion. Personal selling, social media marketing, direct marketing, General
advertising, public relations, sponsorship, and sales promotion (Pejak, 2014)

Chowking uses the advertisement kind of development (Franco-Diyco, 2016). In which the business uses
mass media, newspapers, billboards, TV spots, and Internet banners. In every city throughout the
country, Chowking Billboards looks to be catchy to the eyes of the consumers. The big picture of the
food used to posted in billboards craves the appetite of every consumer. As well as in televisions,
Chowking used to advertise their products using celebrities like Kris Aquino to encourage more
customers to eat Chowking products (Franco-Diyco, 2016). With these promotions, Chowking becomes
more viable and well-known in the Philippines.

Advantages of a restaurant franchise

There are a lot of favorable circumstances in diversifying. First is that it can help the business increased,
and it results in a higher or more excellent salary. Diversifying advantages incorporate lower hazard,
lower startup costs, existing brand acknowledgment, and parent organization showcasing support.
Potential franchisees can choose an establishment dependent on their area, interests, assets, and a
necessity, which implies that going into a diversifying plan, can be an adaptable procedure. The
establishment association model offers the franchisee the capacity to develop under a typical brand and
provide in the advantages of a more significant gathering of entrepreneurs. Preparing from competent
business administrators, a lower danger of disappointment as well as the loss of speculations than if
somehow managed to go into business without any preparation.

The following are the advantages in restaurant franchising (Webstaurantstore, 2018):

Instant Brand Recognition

People choose to have a restaurant franchise since they get the opportunity to get the benefit and trust
of the consumers, which takes a long time to assemble. It can easily be recognized from its uniqueness
and good taste of the products.

In-Depth Training Process

Franchisees can expect an inclusive training process before able to launch their restaurants, which
allows an owner to learn all the key steps that lead to a successful business.

Turnkey Ready

Single proprietorship usually does on researching a location, rent agreement, building, as well as
purchasing inventory, creating a menu, and do planning and marketing.
Franchise Business Disadvantages

Set aside the effort to think about the detriments alongside favorable circumstances on the off chance
that you need to venture into the realm of diversifying. Understanding the issues will help you in taking
care of the related problems later on.

Never under any circumstance, settle on a choice medium-term. Set aside the vital effort to assess the
advantages and disadvantages and gauge your preferences. Almost certainly diversifying is a fascinating
and happening opportunity, yet is it reasonable for your motivation is a million-dollar question (Bhasin,
2019).

High Initial Investment

Franchise business needs significant capital that requires a high initial investment or top startup cost.
This will give difficulties to the firm to start operating the industry and will be risky for the company to
exit the competitive market. The initial capital includes the land, building, and raw materials for the
product.

Lack of Privacy

A franchise business is dependent on the leading company wherein the company has the control to give
information to the franchisor to improve audit-royalty payments. This significant disadvantage to the
franchise owner because he/she cannot do anything if there is an order from the company.

Decrease Profits

In every business, the entrepreneur received their profits directly. But unlike franchising, the franchisor
would not accept the overall benefit of the business. Because the franchisor still needs to pay the initial
fees and the royal fees of the leading company.

Shared information

When conducting a business, the information about the company must strictly keep by the
entrepreneur. It must not be shared with other firms to avoid the highly competitive market. The door
must strictly close the secret of operating the business and the flow of finance.

Less control

In conducting your own business, you have the power for everything in and out of your business
operation. Unlike a franchisor, he/she would not be able to control the process of the business because
the Main Company was the one who set everything to operate the business. The franchisor cannot do
whatever he/she wants in running the business. The only thing that a franchisor can do is to follow the
orders of the leading company.

Difficult to exit

As stated in the first disadvantage of franchising business, franchising business required a high initial
investment or top startup cost. As the franchise business begins to operate in the market, it is hard to
exit the market due to the high amount of capital that was paid by the franchisor. If ever a franchise
business will exit, there is a high possibility that a company cannot quickly recover from its losses.
Rapid Growth

Since a franchise business has a lot of outlets in different geographical locations, it is hard to franchise
business to grow because of the competitive market. The original brand will outshine every other brand
and will lead to several branches. It is challenging to build this kind of business because of the
competition of other departments inside the market.

It is hard to keep up this sort of promotion and that too inside a restricted limit. The expanded degree of
rivalry, later on, will demonstrate an inconvenience for the entire establishment situated around there.

A franchisor or the parent organization puts a few confinements in the method for another
establishment. It needs to pursue every one of the guidelines and guidelines according to
understanding.

Better experience each aspect to comprehend the orders and potential drawbacks before settling on a
practical choice to push ahead.

It is not accessible to franchise restaurants because there are a lot of things to be considered, such as
the limitations, money, and other items needed in franchising. If there are advantages of franchising
restaurants, it is expected to have their disadvantages. One of its problems is, the owner of a franchise
restaurant is not the one who will have a hard time making decisions because the owner cannot
interfere with how the franchise restaurant operates. There are limitations that the owner should
follow. The owner should not decide easily because the owner may not be aware of its negative effect
on the business. The more the owner thinks of its business' good, it can lead to an unhealthy or failure in
managing the business. The owner should think of the adverse effects of every method or strategy that
the owner believes that can help the company to become successful.

In franchising a restaurant, it is given that the person needs to have a significant amount of money. If
the person has no money to pay for franchising, then do not expect to have a franchise restaurant. The
money that the person has should be enough for franchising, opening a franchise restaurant, and for the
needs of the business to become successful and profitable. The owner of a franchise restaurant should
be ready for the expenses of the business needs. The owner must be prepared for the future problems
that the business will encounter, especially when it comes to financial issues. The owner must have
extra money for emergency purposes so that it will not make the company go down.

Chapter III

METHODOLOGY

This chapter includes research design, sources of data, research locale, and respondents of the study,
sampling technique, sample size, instrument, data collection procedure, and data treatment.

Research Design

This is a feasibility study through a quantitative technique. Specifically, the study utilizes Survey
Research Design. The survey aims to obtain information from people on the predominance, distribution,
and interrelationship of variables within the specified group (Bryman, 2008). In other words, surveys
performed to gather evidence of people's knowledge, views, attitudes, and values on different issues
and concerns.

Respondents respond to survey research through survey questionnaires. It is an appropriate tool for 100
random respondents in the locality of Mati City. The researchers will able to know the demographic
profile of the respondents, understand what the consumers think about the products and services of
Chowking as well as their willingness to purchase in Chowking, which leads to creating a better decision
for the franchised business. This will be conducted through a face-to-face survey method to lessen
expenses, and the questionnaires will quickly get.

In Survey Research Design, the data gathered will be secured, and the tool used in analyzing is statistical.

Sources of Data

Data collection is done through primary sources. Primary data sources include key informants and
survey questionnaires. On the other hand, questions require respondents to answer using a
questionnaire developed by a researcher. The gathered information is entirely confidential. The said
questionnaires shall be retrieved right after it was given to them to guarantee a higher return
percentage of the questionnaires.

Research Locale

The research will be conducted within the area of Barangay Central particularly in City Hall and Baywalk
and those 100 random respondents will be given a survey questionnaire.

Source: Google Map

Figure 1 Vicinity Map

Respondents of the study

In the said study, the researchers need 100 respondents to supply enough data from various types of
people from the city. The respondents will be in the specific area of Barangay Central, Mati City wherein
they earned average income.

Sampling Technique

The study is a quantitative technique so that the sampling will be used as a Probability Sampling that
uses statistical data through Stratified Random Sampling. This technique divides population elements
into small subgroups (strata) based on similarity in such a way that the items within the group are
homogeneous and heterogeneous among the other subgroups created (Singh, 2018).

The researchers used the Stratified Random Sampling for selecting the participants in the study. The
stratified sample ensures that subgroups (strata) of a given population are adequately represented in
the overall sample population of the research study. The community is divided into different subgroups
such as age, gender, educational level, etc.

The sampling will be used appropriately regarding the 100 random respondents of the locality of Mati.

Sample Size

The study will have a sample size of 100 random respondents who has enough income to make it easier
and quicker to conduct. With this method, it can provide greater precision to give a survey
questionnaire. Moreover, since it only chooses random participants it saves time and money in
conducting (Hayes, 2019).

The Instrument

The instrument will be used by the researchers is a subject-completed instrument through survey
questionnaires in which information of the respondents will be collected which includes the name
(optional), age, sex, educational attainment, and monthly income (for workers).

Data Collection Procedure

In gathering the information, the analysts will be utilizing the study investigate strategy. Study surveys
disseminate among the respondents. These overview surveys will contain several questions that will
offer assistance in replying to the most investigate questions of this ponder. These study questions will
be in association to investigate questions and will have a coordinated impact on the answers to inquire
about the questions. The upper portion of the questionnaire contains the demographics of the
respondent.

The sort of overview survey is done by checking the choice they concur with or involvement. The survey
will comprise of a few questions that are in connection to eatery and its capacity to fulfill the needs and
needs of the individuals. The analysts will be the one to manage the study.

Data Treatment

The plan of data analysis is a roadmap for how your study information will be organized and analyzed
(Survey Monkey, 2019). Since this is a feasibility study through a quantitative method, the study is to
analyze and use through the following statistical tools:

Mean. This will be used to determine the level of the questions in this analysis through the use of mean
ranges. Through measuring the mean, researchers will be able to interpret the information based on the
size of the instruments to be used.

Frequency. The frequency distribution is a representation, either in a graphic or tabular format that
displays the number of observations within a given range.

Chapter IV

RESULTS AND DISCUSSION

This chapter contains the interpretation of the data gathered by the researchers and the relevant
information concerning the proposed business. This also includes financial statements.

Basic Information

Figure 1. Respondent's Age

Out of 100 respondents surveyed by the researchers, 2% were aged 56 years old and above, 8% were
aged 46 to 55 years old, 15% were aged 36 to 45 years old. 23% were 26 to 35 years old, and 52% were
aged 28 to 25 years old. It is clearly stated that most of the consumers are in the age range of 18 to 25
years old.

Figure 2. Respondent's Sex

The graph shows that the sex most of the respondents who respond in the survey are female with 56%
while the least that responds is the male with 44%. Possibly, the consumers can be dominantly females
as what the survey implicated.

Figure 3. Respondent's Educational Attainment

 Out of 100 respondents, the respondents are college graduates with 61%, both graduates in high school
and pursued post-graduate are 19%, and only 1% is in elementary. Specifically, the majority of
consumers are college graduates.

Figure 4. Respondent's Monthly Income

12% were found out to earn a monthly income ranging from ₱ 20,001 to 30,000; 14% earn ₱ 30,001 and
above; 26% were in the range ₱ 10,001 to ₱ 20,000 and ₱ 5,000 to ₱ 10,000; and 22% have ₱ 40,000 and
above. Results showed that approximately half of the consumers are minimum-wage earners.

Do you eat Chinese Food?

Yes

76

No

24

Question Proper

Table 1. Number of respondents who tried a Chinese food

The table shows most of the respondents who respond in the survey have eaten Chinese food with a
total number of 76 and only 24 haven't eaten yet.

How often do you eat in a fast-food chain/ restaurant?

Daily
3

Weekly

30

Monthly

29

Once a week

Twice a week

Twice a month

23

Never

Table 2. Respondent's number of tries in eating in fast-food

The table shows that most of the respondents like to go to a fast-food chain or restaurant weekly with a
total number of 30 responses while there are only 2 respondents who haven't tried.

With whom are you with?

Family

59

Partner

Friends

27

Alone

Table 3. Respondent's preference for eating with

The table shows that the respondents mostly go in the restaurant or fast-food chain with their family
with a total number of 59 responses out of 100 who answered the survey questionnaires. The least
number of answered choices is alone with a total number of 6 responses who likely to eat alone.

Have you ever tasted the food of Chowking?

Yes

91

No

Table 4. Number of respondents tasted the food of Chowking

The table shows that 91 respondents already tasted food in Chowking while only 9 respondents who
haven't tasted in Chowking.

4.1 If NO, are you interested to try Chowking's food?

Yes

No

Table 4.1. Number of respondents who are interested to try in Chowking

The table shows that out of 9 respondents who haven't tried Chowking, there are only 7 responses who
are interested to taste the food of Chowking and only 2 who don't want to try.

How much are you willing to spend on purchasing products of Chowking?

Php 50-150

19

Php 151-200

40

Php 201-250

29

Php 251 and above

11

Missing (No response)

1
Table 5. Respondent's willingness to spend in Chowking

The table shows that the highest number of responses who are willing to spend on purchasing products
in Chowking is Php 151-200. As you can see there is a missing response it means that there is one
respondent who is not willing to spend his or her money in purchasing in Chowking.

In question 6, the respondents are asked to pick his or her top 5 choices of food on what to order in
Chowking of each category. These are the following results:

CHAOFAN

No. of Interested Respondents**

Rank

Beef Chao Fan with Topping

40

2nd

Beef Chao Fan

20

3rd

Pork Chao Fan with Topping

44

1st

Pork Chao Fan

18

5th

Yang Chow Chao Fan with Topping

19

4th

Yang Chow Chao Fan

6th

Table 6. Respondent's products prefer to buy in the category of Chao Fan

In Chow Fan, most of the respondents choose Pork Chao Fan with Topping with a total number of 44
respondents.
LAURIAT

No. of Interested Respondents**

Rank

Sweet n Sour Chicken Lauriat

25

2nd

Sweet n Sour Pork Lauriat

17

3rd

Shanghai Rolls Lauriat

29

1st

Sweet n Sour Fish Lauriat

10

4th

Table 7. Respondent's products prefer to buy in the category of Lauriat

In this table for Lauriat, Shanghai Rolls Lauriat is the most picked food to order by the respondents with
a total number of 29.

DESSERT AND DRINKS

No. of Interested Respondents**

Rank

Iced Tea

10

3rd

Coke

11

2nd

Sprite

6th

Pineapple Juice

4th

Halo-halo

59

1st

Milk Tea

5th

Table 8. Respondent's products prefer to buy in the category of Dessert and Drinks

When it comes to desserts and drinks, most of the respondents choose Halo-halo with a total number
of 59 responses.