Business Plan: Business Plan For Start-Up: Restaurant in Ulaanbaatar, Mongolia

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Business Plan
Business Plan for Start-up:
Restaurant in Ulaanbaatar, Mongolia
Type of Documents : Business Plan

No of Words : 12850
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Business Plan for Start-up: Restaurant in

Ulaanbaatar, Mongolia
Submitted on: 26th Oct 2012

Words: 12000
Email: help@globalassignmenthelp.com, Phone: (UK) +44 203 3555 345, (USA) +1 201 5650 588
ACKNOWLEDGEMENT
I am extremely indebted for the support presented to me during completion of this
business plan by my mentor, family and friends. In sequence, I would like to thank my mentor,
for providing me the opportunity to venture this project and guiding me at each step of the
work. Furthermore, I also fancy thanking my team members for helping me in the data
collection and analysis for primary research in order to have relevant results for the dissertation.
EXECUTIVE SUMMARY
This business development plan is intended for establishing a new venture as an
entrepreneur. Every new venture requires a detailed business proposal plan. The main
advantages of writing a detailed business plan is the offsetting the costs. This business proposal
plan is a prescribed expression of the entrepreneurial vision along with description regarding
the operations and strategy of the proposed endeavor. Business plan enables the top
management and executives in the firm to think about the business comprehensively, to
converse the business objectives to personnel, to include a decision making base and to smooth
the progress of the planning.
This plan supplies detailed information about the proposed business plus the place of
business and covers the essential strategic business plan required for preliminary establishment
and operation of Aмттай: Food for choosers, a multi cuisine restaurant and bar at
Ulaanbaatar. It is a project requiring start-up capital of $350,500. This restaurant will target the
tourists coming to the city Ulaanbaatar. This target customer base has been chosen as a result
of increasing tourism in the country. Here, customer will experience a completely new theme
for enjoying their preferred food choices at a single place in a Mongolian cultural ambience.
This restaurant also includes a bar in it. This bar will offer liquor from different origins
with best quality service. Actually the restaurant is going to provide Mongolian style hospitality
for food of customer’s choice from any cuisine. This plan outlines the business growth,
methods, operations, and infrastructure management. This business will be developed by a
dynamic and hard-working team of proven managers and chef.
This entire work flows in five consecutive chapters. First chapter is of introductory,
which offers rationale for the Business idea, chosen place of business, aims and objectives of
the work etc. By this, the reader will get acquaintance about the background of the study. The
main aims of the study are to provide a detailed business plan to establish the proposed business
backed by rigorous feasibility tests. Beginning of the chapter sketches the pertaining business
process, client base, situation, working etc at the proposed restaurant.
In the second section, the Business Concept has been defined. Here a detailed portrait
of the business idea, Mission, Vision, Concerned Product, Positioning, Scale and growth
anticipation etc. have been given. It provides details related to the company, company’s
management, business process, industry etc. Feasibility Analysis is the third section of the
work, which aims to analyze the business proposal’s feasibility from different perspectives,
such as Product/service, Industry/market, Organizational and financial angles. Further a

resource requirement evaluation has been carried out for the Business.
In the fourth section, strategic analysis of the business proposal and a business model
has been developed. This incorporates Strategic analysis of the Business Idea through literature
review, Value chain and SWOT analysis of the proposal, identification of competitive
advantages and sustainability, strategy selection for business success etc.
The last section offer an overall assessment of Business Development Proposal,
schedule of Business Plan and discussion of critical success/ failure factors for the business.
On the basis of the entire work, it can be said firmly that opening a restaurant with the
proposed theme, seems to be challenging but is a profitable and has a potential of long term
sustainability.
Table of Contents
CHAPTER 1: INTRODUCTION .............................................................................................. 1
1.1 Rationale for the Business idea ................................................................................... 1
1.2 Scenario Chosen .......................................................................................................... 2
1.3 Aims and objectives of the work ................................................................................. 3
1.4 Structure of the work ................................................................................................... 4
CHAPTER 2: THE BUSINESS CONCEPT ............................................................................. 5
2.1 Description of the business idea .................................................................................. 5
2.2 Mission ........................................................................................................................ 5
2.3 Vision .......................................................................................................................... 6
2.4 Menu............................................................................................................................ 6
2.5 The Ambience ............................................................................................................. 7
2.6 Positioning................................................................................................................... 9
2.7 Scale and growth anticipation ..................................................................................... 9
2.8 Start-up summary ...................................................................................................... 10
CHAPTER 3: FEASIBILITY ANALYSIS ............................................................................. 16
3.1 Primary Market research ........................................................................................... 16
3.2 Secondary Market Research ...................................................................................... 18
3.3 Feasibility .................................................................................................................. 18
3.1.1 Product/service ................................................................................................... 18
3.1.2 Economy, Industry and Place ............................................................................ 20
3.1.3 Organizational Feasibility .................................................................................. 22
3.1.4 Financial Feasibility ........................................................................................... 24
3.4 Resource requirement Evaluation ............................................................................. 32
CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL ................................... 33
4.1 Strategic analysis of Business Idea ........................................................................... 33
4.2 Value chain and SWOT............................................................................................. 34
4.3 Sources of competitive advantages and sustainability .............................................. 35
4.4 Business model .......................................................................................................... 35
CHAPTER 5: BUSINESS PLAN ............................................................................................ 37
5.1 Overall assessment of Business Development Proposal ........................................... 37
5.2 Business Plan Schedule ............................................................................................. 37
5.3 Discussion of critical Success/failure factors ............................................................ 39
APPENDICES ......................................................................................................................... 40
REFERENCES ........................................................................................................................ 42
BIBLIOGRAPHY .................................................................................................................... 46
List of Figures
Figure 1 Table arrangements in the Aмттай ---------------------------------------------------------- 7
Figure 2 Interior of the restaurant gers. ---------------------------------------------------------------- 8
Figure 3 Mongolian Hospitality style and clothing --------------------------------------------------- 9
Figure 4 Mongolian traditional art ---------------------------------------------------------------------13
Figure 5 Rating of key competitors for different attributes ----------------------------------------20
Figure 6 Growth representation for Mongolian GDP (Hallberg, R., 2012) ----------------------21
Figure 7 Break Even Analysis -------------------------------------------------------------------------31
Figure 8 value chain at Aмттай ------------------------------------------------------------------------34
List of Tables
Table 1 Estimation of customer foot fall at Aмттай................................................................ 10
Table 2 Start-up human resourse requirement ......................................................................... 10
Table 3 Start-up requirements .................................................................................................. 13
Table 4 Comparative study of competitors .............................................................................. 19
Table 6 Personnel planning ...................................................................................................... 23
Table 7 Start-up Funding ......................................................................................................... 24
Table 8 General Assumptions .................................................................................................. 25
Table 9 Customer visit for caste .............................................................................................. 25
Table 10 Projected revenue ...................................................................................................... 26
Table 11 Cost Projections for restaurant section ..................................................................... 26
Table 12 Cost projections for Liquor section .......................................................................... 26
Table 13 Sales forecast for coming four years......................................................................... 26
Table 14 Cash flow for project ................................................................................................ 27
Table 15 Projected P & L......................................................................................................... 28
Table 16 Projected Balance sheet ............................................................................................ 29
Table 17 Break Even Analysis ................................................................................................. 30
Table 18 Payback period analysis ............................................................................................ 31
Table 19 SWOT Analysis ........................................................................................................ 34
Table 20 Business Model ......................................................................................................... 36
Table 21 Gantt Chart ................................................................................................................ 38
CHAPTER 1: INTRODUCTION
It is a business development proposal, designed for establishing a new venture as an
entrepreneur. A new venture needs to have a detailed business proposal plan. This business
proposal plan is a prescribed expression of the entrepreneurial vision along with description
regarding the operations and strategy of the proposed endeavor. The main advantages of
writing a detailed business plan is the offsetting the costs. Business plan enables the top
management and executives in the firm to ponder about the business comprehensively, to
converse the business objectives to personnel, to include a decision making base and to smooth
the progress of the planning (George and Bock, 2012).
Also, an entrepreneur needs to accept the business proposal making task
enthusiastically. A business plan needs to be tapped by professionals, such as consultants,
accountants, and lawyers for their advice and proficiency. Drafting of the plan facilitates the
entrepreneurs for considering all key aspects of the proposed business and assures the
familiarity with all the details. This aids in decision making regarding the new venture. A sound
business proposal also allures good investment (Hamel, 2000). Backed by the advocacy of the
entire benefits, this business proposal plan has been drafted. This plan encompasses the
proposal for opening a multi-cuisine restaurant in Mongolia.
1.1 Rationale for the Business idea

A multi-cuisine restaurant is proposed to be started in Mongolia, an Asian country.
Venturing a multi-cuisine restaurant in an underdeveloped country with FDI playing a key role
in economy and having a potential tourism destination, is a prolific idea for young and dynamic
entrepreneurs. Restaurant business offers a range of services to a culturally diversified
customer base. Being a multi-cuisine restaurant, the restaurant will be able to cater the
diversified client base with the different cultural food. This restaurant will also incorporate a
bar in it (Sharon and Fullen, 2004).
It is a new restaurant, which will be based on a totally unique concept for Mongolia.
The idea of opening a tourist targeted restaurant has crept in by seeing the aesthetic beauty of
Mongolia. Mongolia has emerged as a new tourist destination in last few years because of its
geography and historical importance. This location has proven to be an excellent place for a
restaurant. This restaurant will serve dual purposes by providing dining for family as well as
an area for expensive intimate dining. The menu includes Indonesian, Mexican, Mongolian,
Italian and Indian food alternatives both vegetarian and non-vegetarian. A multi-cuisine menu
will fascinate tourists along with a unique Mongolian theme based interior. The decor of the
Restaurant will be touched by Mongolian handicraft and culture. This unique combination of
Mongolian ambiance and multi cultural food is the point of difference for this restaurant
(Brown, 2007).
1.2 Scenario Chosen

Geographically, Mongolia is locked between Russia and China. The area covered by
this country is 1,565,000 sq km., in which 60% populace lives in Ulaanbaatar, the capital. The
estimated population of Ulaanbaatar is 950.000. Besides this, there are two other urban centers,
Darkhan and Erdenet, where 95,000 and 74,000 inhabitants live. That is why the place for
opening this restaurant has been chosen to be Ulaanbaatar. The diverse landscapes ranging
from the vast steppes, forested mountains and Gobi desert in Mongolia attracts the tourism
(Developmental Biology, 2010).
The Mongols had their roots in the 13th century with Chinggis Khaan’s name in the
world history. After the death of Chinggis Khaan, the empire was partitioned into number of
powerful states. The Mongols, in the late 17th century, came under the rule of Chinese empire.
Mongolia got independence in 1921 and then in 1924, a Communist regime was
installed. Backed by a peaceful democratic revolution in the country, in 1990 and subsequently
in 1992, the ex-Communist Mongolian People's Revolutionary Party or MPRP won the
elections, but in the 1996 elections, the Democratic Union Coalition or DUC defeated MPRP.
Now, there exists a coalition government formed by MPRP and DUC. This government
has been in power till January 2014.
Mongolian economic has been based on agriculture and herding. Besides these,
Mongolia's widespread mineral deposits have attracted investment from abroad. Copper, gold,
coal, molybdenum, fluorspar, uranium, tin, and tungsten are extracted from the land of
Mongolia, which justify the major part of FDI (foreign direct investment) and government
revenues. Looking into the performance of Mongolia’s economy, it is evident that it stands as
a nation with rapid development amongst the transition economies. The annual GDP growth
rate in 2004 has been recorded to 10.7%, in 2005 to 6.2% and in 2006 to 8.4%. Mongolia has
recorded the 2nd highest per capita GNI i.e. 1051 USD in 2006 and at the same time the lowest
inflation rate. The most important contributors in GDP of Mongolia have been the Wholesale
and retail trade dragging agriculture to the 2nd place and mining and manufacturing at 3rd. The
growth average, within 2004-08 period, has been nearly 9% per year largely as a result of high
copper prices and new gold production. But the existence or soaring inflation in 2008 and the
effects of the global financial crisis, resulted in a trade off for commodity prices and inflation.
This has also reduced the government revenues (Mongolia - The Economy, n.d).
In 2009, the country has started moving out of the crisis. In October 2009, the long-
awaited legislation has been passed on an investment agreement for developing Mongolia's
Oyu Tolgoi mine, one of the world's biggest unexploited copper mine. This has resulted in an
estimated growth of 7% in 2010. Transfer of funds from Mongolians working abroad are
considerably large, but have dropped as a result of the economic crisis. Money laundering is a
serious concern in Mongolia. Mongolia is a member of the World Trade Organization since
1997 and looks for expanding participation in the provincial economic and trade regimes
(Mongolia: economy statistics and industry reports, 2011).
Tourism industry of Mongolia has enjoyed speedy development in the last 15 years.
The tourism base in Mongolia is its pristine nature, diverse fauna and flora, unpolluted water,
fresh air, unique culture and itinerant life style. Mongolia is a new and unique travel as well as
business destination offering a great diversity of untouched options (Ministry of Road,
Transport and Tourism, n.d).
Ulaanbaatar is the capital of the country. All of the regulations in the country are done
from here only. Besides, it is also at the proximity to the international airport, which makes it
the first and last tourist destination in the country. Opening up a theme based restaurant in
Ulaanbaatar is a potential business proposal (Street map of Ulaanbaatar, capital city of
Mongolia, 2003).
1.3 Aims and objectives of the work

Aim of the current work is to provide a foundation for a business plan incorporating a
multi-cuisine restaurant in Mongolia. This work has been carried out considering an
entrepreneurial approach for the business. All the aspects of the business development and
operations will be analyzed deeply. This is to provide a detailed business plan by defining all
the functional areas (Linder and Cantrell, 2000). After accomplishing this report following
aims could be met:
1. A detailed portrait of the Mongolian economy and business environment can be
assessed.
2. Assessment of restaurant business in Mongolia.
3. Demonstration of the method of developing a business plan.
4. Preparation of a business plan for opening up a restaurant in Mongolia.
1.4 Structure of the work

This work has been segregated into 5 chapters. These are named as Introduction, The
Business Concept, Feasibility, Strategic Analysis and Business Model and finally the Business
Plan (McKeever, 2012).
Chapter one is of introductory chapter. Rationale for the Business idea, Scenario
Chosen, Aims and objectives of the work and Structure of the work will be defined here. This
chapter acquaints the reader with the background of the study. Here the aims and objectives of
the study and a detailed synopsis of the entire report’s structure will be disclosed. Beginning
of the chapter sketches the pertaining business process, client base, situation, working etc at
the proposed restaurant.
The second chapter deals with The Business Concept. Here a detailed portrait of the
business idea, Mission, Vision, Concerned Product, Positioning, Scale and growth anticipation
etc. will be given. This chapter provides details about the company, company’s management,
business process, industry etc. This chapter provides ground to the entire study. Feasibility
Analysis is the third section of the work, which aims to analyze the business proposal’s
feasibility from different perspectives, such as Product/service, Industry/market,
Organizational and financial angles. Further a resource requirement evaluation will be carried
out for the Business.
In the fourth section strategic analysis of the business proposal and business model
development will be done. This incorporates Strategic analysis of the Business Idea through
literature review, defining Value chain and attaining SWOT analysis of the proposal,
identification of sources of competitive advantages and sustainability, strategy selection for
business triumph and finally developing an appropriate business model for the proposal.
In the last section, backed by the entire above study, a detailed and finalized business
plan will be written. This plan will offer an overall assessment of Business Development
Proposal, schedule of Business Plan and discussion of critical success/ failure factors for the
business.
CHAPTER 2: THE BUSINESS CONCEPT

Business Concept of any business proposal outlines what the business exactly will do
and how it will provide value to all its constituents. It supplies base for all the follow on
activities. It is one of the essential artifacts of a business plan. It articulates the vision mission,
business model, product/service etc. The target audiences, the product features and the unique
business value, all will be defined here in this section. Business Concept also covers definitions
of strategies for implementing the business proposal, including pricing, revenue, and
distribution models.
2.1 Description of the business idea

This business proposal is about a multi-cuisine restaurant, which will be started in
Mongolia. Name of the restaurant will be Aмттай: Food for choosers. Амттай is
a Mongolian word, which means yummy or delicious in English. This prolific business will
offer a range of services to the culturally diversified targeted customer base. Basically, by being
a multi-cuisine restaurant, it will be catering cultural specific requirements of the diversified
tourist with the different cultural food at a single place. A bar will also be established there in
it. This new restaurant, based on a totally unique concept for Mongolia, will offer all these
services to its customers in a Mongolian ambiance. It will be serving both family and expensive
intimate dining requirements of its clients. The menu will include Indonesian,
Mexican, Mongolian, Italian and Indian food alternatives both for vegetarian and non-
vegetarian consumers. The decor of the Restaurant will be touched by Mongolian handicraft
and culture. This unique combination of Mongolian ambiance and multi cultural food is the
point of difference for this restaurant. This restaurant will be opened at Ulaanbaatar, the capital
city of the country, so as it could drag attention of its targeted customers.
2.2 Mission
Mission of Aмттай is to offer delicious and remarkable food and drinks to the coming
tourists from different parts of the globe. The food and drink should meet the highest standards
of superiority, freshness and seasonality combining both creative and customary styles of
cooking. Providing the customers an impeccable service through warmth, civility,
effectiveness, acquaintance and professionalism is one of the aims, Aмттай strives for.
Friendly, cooperative and rewarding environment should be offered to the employees so as to
encourage long-term, pleasing, growth oriented work environment. Aмттай aims to be a
benevolent member of the Mongolian community and improve the quality of life in the region.
2.3 Vision
The vision statement of Aмттай is as follows:
“Aмттай intends to become the first choice for multi-cuisine test seekers in Mongolia
among the different origin tourists.”
2.4 Menu
Aмттай is a multi-cuisine restaurant offering food of Indonesian, Mexican, Mongolian,
Italian and Indian origins in a Mongolian cultured ambience. The menu will comprise of the
most popular dishes of different cuisines.
 Menu of Indonesian food will include the most preferred dishes of Indonesian
origin, such as Ayam Taliwang, Babi Guling, Bakwan Malang, Betutu, Gudeg,
Gulai, Cakalang fufu, Laksa, Mie goreng, Nasi Campur, Paniki, Sangsang,
Tongseng, Mendoan, Tahu sumedang etc.
 Mexican Menu will comprise of the Mexican dishes such as Burritos,
Chimichangas, Enchiladas, Fajitas, Flautas, Tacos, Tamales, Taquitos,
Tostadas, Quesadillas etc.
 In Italian menu, dishes such as lasagna, fresh egg pasta, risotto,
Panzerotti, Piadinas, Arancini, Polenta, Gelato, Tiramisù along with some
Italian Drinks, namely wine will be included.
 Indian Menu will cover dishes named as Butter Chicken, Tandoori
Chicken, Chicken Tikka Masala, Rogan Josh, Malai Kofta, Chole (chickpea
curry), Palak Paneer, Kaali Daal, Chaat and Naan.
 Among the Mongolian cuisine, Aмттай will offer Horhog, Mantuun buuz,
Guriltai shol, Pyartan, Bantan, Suutei tsai, Buuz, Boortsog, Milk tea with bansh,
Bansh, Hushuur, Marmot boodog, Boodog etc.
This huge menu will demand chefs from different regions and ingredients specific to
the cuisine. The food products used will be fresh and of the premium quality, prepared with
compassion and care. Along with the tasteful food options, customers will also be able to enjoy
wine and other drinks of their preferences. The drink list will be modest in size and chiefly
focused on the wines from Italy. A moderate international beer selection will also be featured
in the restaurant. The calm softly lit bar features a complete assortment of the finest Vodkas,
homemade Italian aperitifs and digestives (like Lemon cello) and single malt Scotches as well
as all of the other favorites.
In summers, customers will also be offered a choice to sit outside on the terrace or
garden sitting arrangements and enjoy special summer menus, exotic drinks and other non-
alcoholic offerings. At the terrace or the garden, some cultural activities of Mongolia will be
organized for making the food much special for the customers. Restaurant will be open 7 days
a week.
2.5 The Ambience

Interior of the Aмттай will be totally based on the Mongolian theme. Basically
Mongolian culture is a nomadic based culture and similar to any other nomadic culture, it is
popular for its hospitality. So as on arrival of any guest, guest will be treated with traditional
offerings such as dairy products in the summer session and meat in the winters. They live in
ger. The ger is made up of wood and leather thongs, which are covered with cloths, is the home
of the Mongolian itinerant.
In the same way, Aмттай will be arranged in gers for sitting arrangements and the
interior décor will be done with Mongolian traditional portraits. A soft light would be placed
inside each ger. Entire Aмттай will be organized as a bigger ger and many small gers will be
there for offering sitting arrangements to the customers.
Figure 1 Table arrangements in the Aмттай
When a customer walks into Aмттай, he will feel the, musical Khoomi singing (throat
singing) and the playing of the Morin Huur or Horse Head fiddle (traditional musical styles of
Mongolia). Contrasting to many other restaurants, Aмттай will go with excellent decorating,
expected menu items and regular theme.
Figure 2 Interior of the restaurant gers.

Style of Service
Service at the restaurant will be smart and quick with affability with standards of
kindness and warmth hospitality. Customer will be overwhelmed by the value, hospitality and
ambience. Consistency of quality and service will be provided so as to develop a sense of
assurance in the customers. The management and servers will handle every detail to make the
customer's special evening even more special. All this and our great atmosphere will make
customers want to come back again and again.
Figure 3 Mongolian Hospitality style and clothing

2.6 Positioning
Through positioning, marketers attempt to give an image or more specifically an
identity to the product or services, which resides in the minds of their target customer
population. Positioning matters a lot for a new brand as it will decide how the customers will
perceive it. According to Kottler, Marketing is nothing but war of positioning. Thus, Aмттай
will need a strong positioning to stand on its feet in the highly competition prone restaurant
industry of Mongolia. Aмттай will position itself as the place for enjoying Mongolian culture
without sacrificing the taste preferences.
2.7 Scale and growth anticipation

Aмттай is targeting the tourists coming to the country for its services so the scale of
the business and its growth anticipations will be highly dependent on the tourism scenario in
the country. According to the available statistics of the tourism industry, in 2005, 338 000
arrivals from divers regions have been recorded. This has generated an aggregate income of
201 million USD in 2005. There has been an average increase of 15 to 20% per year in the
number of tourists coming to Mongolia. If this rate of growth continues, the anticipated growth
rate of the proposed restaurant will also be the same. Taking a conservative perspective, we
take a growth rate of 15% per year. Aмттай’s estimated scale of service is 20% of the total
coming tourist in Mongolia once in a while during their stay in the country (Ministry of Road,
Transport and Tourism. n.d). Thus the expected scale of the restaurant can be derived as shown
in the below table:
Table 1 Estimation of customer foot fall at Aмттай

Year Growth factor Expected tourists Estimated Average per day
(15% per year) in Mongolia customers for visiting customers
Aмттай
2013 3.059 1033942 206788 567
2014 3.518 1189084 237817 652
2015 4.046 1367548 273510 749
2016 4.652 1572376 314475 862
Formula used for calculating the estimated value of tourists coming to Mongolia is as
written below:
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑡𝑜𝑢𝑟𝑖𝑠𝑡𝑠 𝑖𝑛 𝑛𝑡ℎ 𝑦𝑒
= 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑦𝑒𝑎𝑟 𝑎𝑟𝑟𝑖𝑣𝑎𝑙 ∗ 𝑔𝑟𝑜𝑤𝑡ℎ 𝑓𝑎𝑐𝑡𝑜𝑟 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑛𝑡ℎ 𝑦𝑒𝑎𝑟
2.8 Start-up summary

If this estimated customer arrival continues, then for providing the aspired service
quality to the visitors, a well versed staff will be required. Staff description is as follows:
Table 2 Start-up human resourse requirement
Staff name Number of persons required
Head Chef 1 (expert of the proposed menu cuisines)
Chef 5 (experts of each cuisine)
Assistant cooks 5
Waiters 10
Bar manager 1
Reception and counter staff 1
Manager 1
The key founder of the company is Mr. X. He will work as the manager managing the
entire restaurant from kitchen to personnel, accounts, algorithms, and computerized
functions. He will take care of the service standards and food quality plus financial issues of
the restaurant. Mr. A will be the Restaurant’s head chef, and will manage the entire cooking
section and assure the food quality. Mr. B will be assigned the overall responsibility of the Bar
section.
For catering the estimated customer visits, a proper floor will be required. As the sitting
arrangements are to be done in the form of traditional Mongolian gers, the floor of the
restaurant must be an open place. A terrace or a garden will suit the requirement. Total forty
tables, twenty in ger and rest twenty is the open floor will be placed. On each table, minimum
four persons could sit and eat comfortably (Mongolia's housing market recovering, 2011). The
space required for each table is 4 sqm. Thus the total floor area required for the restaurant can
be derived as follows:
Floor required for the restaurant = floor required for each table * number of tables +
floor required for kitchen area + floor required for administration and other facility area + Area
for bar
Here,
Floor required for each table = 4 sqm
Number of tables = 40
Floor required for kitchen area = 30 sqm
Floor required for administration and other facility area = 10 sqm
Area for bar = 20 sqm
 Floor required for the restaurant = 4*40+30+10+20
 = 220 sqm
Restaurant floor construction will start on November 1, 2012 and open it in January,
2013. An investor for financing the start up of the restaurant is required now.
The start-up cost for the venture will be mostly expensed for equipments, furniture,
paintings, rent, reconstruction, start-up personnel, liquor license, legal and consulting costs and
six months operating cash etc. These are the requirements for starting up of Aмттай to the best
of our knowledge and experience of the industry. Cost notes for a number of items have been
specified in the below notes:
 Stationery, Menus and Guest Checks
The exact cost can be calculated for these items from day-to-day experience and a
market research. Stationery includes invoices, letterhead, envelopes, catering and event
contracts etc. Stationery will be in a very simple format with the Aмттай’s logo on it.
Many of the above items can be designed and produced in-house, which will be done
by the restaurant admin in-charge. This will save thousands of bucks. The menu will
also be designed, developed and revised internally to further save funds. Final printing
will be outsourced.
 Rent, or lease payments
The floor for opening up a restaurant in any centralized location must be rented or
leased. We need a place for 250 sqm. The rent rate in Ulaanbaatar is about $17<$18/sqm
per month, whereas the land purchase prices are extremely attractive lying in the range
of $900/sqm to $1300/sqm. Initially the floor will be hired on rent but later on this can
be purchased (Temple View Residence Ulaanbaatar Mongolia. n.d).
 Office Supplies and General Set-up
All kind of general usage items such as staplers, pens, paper cutter, paper, pads and
pencils, shredder and file cabinets for the waiter and host station, kitchen and office are
included in this list.
 Exterior and Interior Signage
Sand wretched sign for the frontage as well as informational and directional signs for
the parking, facility etc area will be included in this list. Other critical signage will be
required inside for injury, Workers Comp, Material Safety Data Sheets, Workers Right
to Know, etc. Members of the team can be better understand what to do, what not to do
and how to do, via these signs and instructions everywhere.
 Staff Uniforms
Staff will serve the clients in traditional outfits of Mongolian origin. The Mongolian
cloth deel will be dressed in by the waiters and waitresses. Each deel cost about $100.
We will require 30 deels and for the kitchen staff kitchen apparels will be needed. 20
kitchen apparels will be enough for the staff.
 Restaurant Building and ambience
With the assistance of a Mongolian ger master, 20 small sized gers with 3 walls will be
designed for the restaurant. The average cost for which will be $875 each (Dealing with
Construction Permits in Mongolia, 2012). Besides these, 20 sets of Mongolian style
furniture will be purchased from any traditional furniture supplier (Cost of Living in
Ulaanbaatar, Mongolia. 2012). This furniture and other fixture work will be done by
service contract with any furniture maker in Ulaanbaatar. This estimated cost of the
work is $4000.
Figure 4 Mongolian traditional art
 Start-up employee Cost for initial four Months

Service staff will be assigned above the average monthly salary in Mongolia i.e. $500
per month. Salaries for the cooking staff will be $1000 per month and the head chef and
chef’s salary will range in between $2000 to $3000 per year.
 Liquor licensing
As per the law and regulations lay down by the Office of Liquor Control and
the Los Santos Government application fee for liquor license in Mongolia is
$20,000 and once the liquor license has been granted, a $10,000 monthly renewal fee
has to be deposited on monthly basis (Taifun, 2012).
 Computers, Printers and Fax Setup
Microsoft XP Professional will be the guiding force behind all of the hardware related
choices.
Table: Start-up
Table 3 Start-up requirements
Start-up Requirements Estimated cost
Start-up Expenses
Stationery, Menus, Guest Checks $4,000
Printing of Menus $200

Property $18,000
Office Supplies & General Set-up $2,000
Serving Staff Theme Uniforms $3,000
Kitchen Staff Uniforms $3,000
Restaurant Building and ambience $21,500
Liquor License (coming 4 months) $60,000
Computer and computer Software $4,000
Chamber of Commerce/Other Memberships $2,000
Initial Job Hiring Related Advertising $1,000
Initial, Kick-start, Teaser Advertising $5,000
Phone, Electric, Cable and Gas Deposits $5,000
Food and Liquor Setup $8,000
Kitchen Supplies $4,000
Opening Celebration $5,000
Exterior and Interior Signage $1,500
Start-up employee Cost for initial four Months $96,000
Expense Account for Food, Fuel, Bills $2,300
Pre-funding Costs to Fluno Gorgonzola $3,400
printer cum copy Machine (Canon) $800
Fire and Burglar Alarm Installation $5,000
Milestones/Contingency/Other $20,000
Commercial Pre-Inspection of Building $800
Total Start-up Expenses $275,500
Start-up Assets
Cash Required $50,000
Start-up Inventory $25,000
Other Current Assets $0
Long-term Assets $0
Total Assets $75,000
Total Requirements $350,500
$300,000
$250,000
$200,000
$150,000 Total Start-up Expenses

Total Assets
$100,000
$50,000
$0
Amount $
CHAPTER 3: FEASIBILITY ANALYSIS
Setting up a business is headed by the verdict to desire an entrepreneurial career and
recognition of a promising business idea backed by a careful examination of the existence of
entrepreneurial opportunities. Idea generation is not enough but the business idea should also
be feasible from techno-economic, legal and financial perspectives. So after the initial
screening of the prima facie promising idea, an in-depth examination for feasibility must be
carried out prior to set the one where time, money and energies will be exerted. Feasibility
study backs by a detailed primary and secondary market research (Rogoff, 2007).
Aмттай is a multi-cuisine restaurant in Ulaanbaatar, the capital of Mongolia. For this
restaurant, both primary and secondary research will be done. Primary research will target the
customer and the local market characteristics. Primary research will be conducted through a
survey method. In this survey the tourists coming to the country will be asked for their opinions
about the concept of the restaurant and their expectations. Further, an expert interview method
will also be used for their opinions and suggestions. The secondary research will be done for
assessing the industry and economic condition. Backed by both, feasibility of the business idea
will be tested.
Making a decision for investing enormous fund in a new project proper analysis of
things must be done. This analysis can be attained by means of either primary or secondary
research. Literally the primary research means the research conducted specially for the problem
under study by means of interviews, surveys and observations. For establishing a restaurant in
Ulaanbaatar, Mongolia, considerable fund and other supplementary resources will be required.
Along with this, significant time and manpower will be needed. This makes it essential to
conduct a detailed research before setting the plan go (Joseph and Covelo, 2006).
3.1 Primary Market research

Primary research is based on the principles of scientific methods. This theory of
investigation has been developed by John Stuart Mill in the mid nineteenth century and
discussed this in the book “Philosophy of the Scientific Methods”. There are three methods to
conduct a primary research, such as observations, interviews and surveys.
Here, for convenience and ease, interview method has been adopted. This is an online
interview method conducted through a blog designed for the visitors of Mongolia. This is a
well structured interview, where a previously set bunch of questions are asked to the visitors
of to the blog and asked for their opinions. In this blog, description of different natural and
Page 16
heritage sights of Mongolia are discussed with different viewpoints. Visitors the blog are asked
to provide their opinions about the concept of Aмттай. Also they can share their experiences
during their visits to Mongolia and their food experiences along with suggestions to improve
the services. In this interview both past visitors and the potential visitors are addressed. This
research has been carried out in a time frame of three months. Almost, 1000 interviews have
been collect from the tourists from different region of the world. Interview questionnaire is
attached in the appendix section. Observations for the interviews are briefed as below:
1. Majority of the visitors are so allured by the aesthetic nature and awful culture of
Mongolia that they wish to be there again and refer this place to their friends and
families. According to them the place is full of energy as pollution is not much, besides
this, it is an affordable place for the low budget tour plans. Terroristic activities are also
not there, which adds to its beauty.
2. The most fascinating thing at Mongolia was its natural heritage and monuments.
Colorful and beautiful culture also attracts the individual tourists. Many of the
respondents said that the place is a single destination with lots of natural facets in it.
3. Talking about their food experiences, 80% of individuals said that the food was the key
issue there. Everything was good but the taste and cuisine preferred was not available
with the Mongolian ambience. They have missed the taste of their preferred cuisines in
Mongolia. Also, while having food, the main issue was of language. In majority of the
places, menus were even in Mongolian script, which made the things much difficult.
The hospitality was very warm and comfortable but a weeklong trip made them feel
home seek especially in terms of the home like place to enjoy the food of choice.
4. The most preferred cuisines among the respondents are three. These are Italian,
Mongolian and Indian. Further, some of the respondents have also shown interest in the
Indonesian and Mexican food.
5. According to the collected response, 72% respondents said that the average spent per
head for food in Mongolia was £25~£30. 18% said that their average spent on food in
Mongolia was over £30 and rest responses advocates the other options.
6. Making payment was a tedious task for the 70% tourists as majority of the food places
were not accepting the debit cards. Just for that, they had to take help of the currency
converters.
7. Idea of opening a new restaurant in Ulaanbaatar with features of multi-cuisine in the
Mongolian cultural ambience plus availability of liquor from different region in the bar
Page 17
section with facility of payments through debit cards has attracted the interest of 90%
respondents. They have appreciated this idea.
3.2 Secondary Market Research

Secondary market research employs information assembled by outside sources such, as
government agencies, trade and industry associations, media sources, labor unions, chambers
of commerce, and many others. Secondary sources of information include the following:
 Commercial sources
 Public sources
 Educational institutions
Here, for satisfying the urge of the current study, Guide for doing business in Mongolia
2012-13 has been used as the secondary source of information. The data published in this will
be used time to time in the current paper where ever required.
3.3 Feasibility
Literally, feasibility means the ability of any idea to fare well in the market both in
terms of profits and market share. This spots the existence of a sizeable market for the proposed
service and the investment requirements of the business. The financing and technical aspects
are also answered by feasibility analysis such as where to acquire funding, whether the
necessary technical knowledge for realizing the idea in a live business is available and many
more. Feasibility assessment involves a check of the operations, HR, financial and marketing
aspects of the proposed business on ex-ante basis. Under the feasibility the facets of the
proposed project idea, such as market, technical, financial, economic and legal etc will be
analyzed (Bangs, 2002).
3.1.1 Product/service
First and the foremost thing in the feasibility analysis are to analyze the viability of the
business idea or the product or service, the business is aspiring to offer to its clients. In the
service feasibility test following questions should be answered for refining the business idea:
Is the proposed business address to any specified need in the marketplace?
Does the proposed business sound profitable?
Does the business proposal have the capacity to face the competition in the market?
Page 18
All the above stated questions can be answered through the observations of the primary
research. Primary research provides the buyer’s opinion regarding the proposed business and
their willingness to accept such service in the market.
According to the primary research conducted by the structured interview, the potential
customer reference group or the past visitors of Mongolia have appreciated the idea of the
restaurant. Their positive response to the idea of restaurant advocates the market viability. Thus
from the customer point, restaurant Aмттай is a good and attractive proposal, which assures
that the business will be profitable as a considerable demand of such a restaurant exists in the
Mongolian restaurant industry (City Guide - Ulaanbaatar – Restaurants. 2012).
Looking into the competition structure in the Mongolian restaurant industry gives the
proposal’s viability from the market competition perspective. Ulaanbaatar is crammed with
good restaurants, which over and over again surprises the first time visitors to Mongolia. Every
as well as any sort of food from any cuisine is available here, including Indian to Korean,
Japanese and American food varieties. Every week, new venues open while others close (The
Abilities Fund. 2012). It is really a dynamic city for food business. Ulaanbaatar is always re-
inventing itself as a regional cooking capital. The most famous and preferred food destinations
in the city for outsiders are Namaste, Hazara, Luna Blanca, Millie's Café, The Bull and Sakura
Restaurant etc. All the above described restaurants are the highest ranked restaurants by the
tourists at the website http://www.tripadvisor.com/Restaurants-g293956-Ulaanbaatar.html. On
the basis of the reviews from the website, the competitor structure has been designed. For
testing the viability of the proposed restaurant plan, tabulation method will be of much use
(MAD Investment Solution, 2012). Table indicating the different competitors and their market
performance is as under:
Table 4 Comparative study of competitors

Name of Cuisine Interior Servic Foo Venu Ambienc Prices
restauran Theme e d e e range
t
Namaste Indian Indian 4 4 4 3 $6 - $10
Ambienc Reasonabl
e e
Hazara Indian Romanti 4.5 4.5 3.5 4 $10 - $15
c
ambiance
Luna Asian, 4.5 4.5 5 4.5 $3 - $15

Blanca Western and
Page 19
Mongolian
cuisine
Millie's American, 4.5 4.5 4 4

Café European,
Mexican,
Internationa
l
The Bull Asian 4 4 4 4
Sakura Japanese 5 5 5 5
Restaurant
4
Service
3 Food
2 Venue
1 Ambience
0
Namaste Hazara Luna Blanca Millie's Café The Bull Sakura
Restaurant
Figure 5 Rating of key competitors for different attributes

Looking at the details available for the competitor, it is clear that none of these is a
direct competitor for Aмттай as our target customers are tourist from western countries.
Aмттай also proposes to offer food from not only Asian cuisines but from different ones. The
offered cuisines by the existing top players of the UB restaurant world are not matching with
our proposed menu. Menu at Aмттай tends to serve food from Indian, Indonesian, Mongolian,
Italian and Mexican cuisines in a totally Mongolian cultural ambience. This is a unique
restaurant idea offering multiple cuisine food for taste seekers.
3.1.2 Economy, Industry and Place
Attractiveness of economy
Mongolian economy is not merely a country with hope, but a country with a very remarkable
economical trail record of recent. Average GDP growth in the country is over 7% since 2002
(IMF report, 2007), and according to the latest official data about 2006 GDP the growth has
been recorded 7.5%. It is a good sign for any underdeveloped economy. Inflation in Mongolia
is very low and steady at -0.1% as per the records of 2007 beginning (IMF report, 2007) and is
Page 20
expected to be at 4.2% for the coming year (Bank of Mongolia, 2007). The economy is
overwhelmed with high levels of FDI investment, an open and progressive government, lofty
education standards and availability of various schemes and incentives for entrepreneurialism.
The unemployment issues are pleasingly low i.e. just 3.3% in 2005 (World fact-book, 2006).
Figure 6 Growth representation for Mongolian GDP (Hallberg, R., 2012)
Mongolia has been a member of the World Trade Organisation since 1997 and open for
cross country trade with 78 countries around the world since then. It has as well been a full
member of MIGA (Multilateral Investment Guarantee Agency) of the World Bank Group since
1999. Besides, it also has a Mutual Protection of Investment agreement with thirty one
countries plus an Exemption on Double Taxation agreements with 19 countries (Japan
Mongolia Business Workshops, 2012). The key industry sectors in Mongolia are as follows:
Mining Industry – Mongolia has extensive deposits of minerals. Major part of the
mining production is made up of Cooper, coal, molybdenum, tin, tungsten and gold. The high
growth of GDP is mainly as a result of higher copper prices and new gold production in the
country. 23% of GDP is formed by this sector.
Service Industry– 50.4% of the GDP is the result of this industry and it is growing
continuously.
Science & Technology – Technology industry of Mongolia has been increasingly
developing since the democratic revolution in the country taken place in the early 1990s. Since
Page 21
then many new technology firms have founded their operations in the country (Doing Business
Guide in Mongolia, 2012).
Attractiveness of industry and market

Service industry comprises of financial services, hospitality and tourism industry and
other services. Economist in the country is estimating high growth in this sector in the coming
years. This positive growth of the country’s overall economy and the hospitality and tourism
industry are the positive factors for the proposed business line (Mongolia looks to tourism to
diversify its economy, 2012). Restaurant is expected to be open in Ulaanbaatar, so the
importance of the city in the overall economy both from economic as well as from tourism
perspective must be evaluated (Ulaanbaatar Restaurants, n.d.). Evaluation of Ulaanbaatar is
as follows:
Ulaanbaatar
 It is the Economic & financial centre of Mongolia and headquarter for all FDI & MNC
businesses.
 It is an energetic, lively and exciting city, awash with entrepreneurial activities resulting
in a flourishing atmosphere for new business openings.
 As a result of international firm’s high interest levels (from countries like USA, Japan,
China and Korea), a booming tourism industry is being experienced by Ulaanbaatar and
its vicinity, which has eventually increased the statistics of 5-star hotels and resorts in
city centre and countryside.
 Near about half of the total country’s populace lives in this city, which is fueling the
urbanization’s fast pace in the city.
 The city has potential for very lofty investment returns (Restaurants in Ulaanbaatar.
2012).
3.1.3 Organizational Feasibility

Organizational Feasibility analysis’s main purpose is to determine if there exist
sufficient skills and resources to bring service to market successfully. This involves analysis of
non-financial factors important for the business. Here, 2 primary issues to be considered are
the management competence and sufficiency of resources. For assessing the former issue, the
ability of the management team must be evaluated on the basis of the passion and expertise for
the launch of the new venture. Further to assess the availability of resources needed to launch
the proposed venture, focus must be on the nonfinancial resources such as the availability of
Page 22
affordable floor, possibility of government support, workforce pooling quality, acquaintance
of the key suppliers, customers, and competitors etc. To test the resource sufficiency, critical
nonfinancial resources must be listed to move idea ahead and if the resources are not
sufficiently available, idea should be re-worked.
If this estimated customer arrival continues, then for providing the aspired service
quality to the visitors, a well versed staff will be required. Staff description is as follows:
Table 5 Personnel planning
Staff name Number of persons required
Head Chef 1 (expert of the proposed menu cuisines)
Chef 5 (experts of each cuisine)
Assistant cooks 5
Waiters 10
Reception and counter staff 1
Manager 1
Founder of the company i.e. Mr. X, and two other i.e. Mr. A and Mr. B are the faces of
the Aмттай. The initial management team will highly depend on their expertise and industry
receptiveness. Main management responsibilities will be divided between the top three. While
all 3 need to focus mainly on the quality of proficiency, but one must take eventual
responsibility of administration, finance and marketing, while the other one of personnel and
property and the remaining one for food service and bar services. With the growth of the firm,
an additional consulting assistance can also be obtained for graphic, editorial, sales, and
marketing issues.
If the decisions made for the firm are guided by the company mission and vision
statement, the management will not face problems and the success of the firm is certain. Rest
of the staff will be recruited from Ulaanbaatar through a public notice for recruitment in the
local dailies. Tasks must be assigned to the staff on the basis of their creativity, knowledge,
and social abilities.
Each member of the Aмттай team is highly valued for it, opinions from each are
respected equally as this team will make the business excel. People committed to high standards
of excellence will be employed, who blossom on a team atmosphere and have exceptional
customer service skills. This idealism is represented by the current staff, and will continue to
be the guideline by which new team members are hired.
Page 23
3.1.4 Financial Feasibility
Financial feasibility analysis gives a conceptual expression of the business proposal’s
ability to seek fund. The financial feasibility is the last element of feasibility analysis. This
gives financial merits of the proposed business. This financial plan is based on raising roughly
$300,000 through short term loans and $50,500 will come from the owner’s pocket.
Profitability depends on the nature of growth.
Start-up Funding
The start-up capital will come from owner’s fund and short-term loans. The cost of
financing is to be financed from owner’s investment. The total fund requirements for start-
up are listed in the below table.
Table 6 Start-up Funding
Start-up Funds Funds
Start-up Expenses to Fund $275,500
Start-up Assets to Fund $75,000
Total Funding Required $350,500
Assets
Non-cash Assets from Start-up $25,000
Cash Requirements from Start-up $50,000
Additional Cash Raised $0
Cash Balance on Starting Date $50,000
Total Assets $75,000
Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Owner Equity $50,500
Short term loan $300,000
Additional Investment Requirement $0
Total Planned Investment $350,500
Loss at Start-up (Start-up Expenses) ($275,500)
Total Capital $75,000
Total Capital and Liabilities $75,000
Page 24
Total Funding $350,500
Key Assumptions
Entire financial plan is dependent on some important assumptions, majority of which
are revealed in the below table. The underlying key assumptions are:
 A high-growth economy, exclusive of major recession impact has been assumed in
Mongolia. It is assumed that the opening ceremony of Aмттай will be held in the first
week of January 2013 and the average per day traffic will be 567 individual.
 There does not exist unforeseen changes in the anticipation about the popularity of
Aмттай.
 Accesses to both investments and financing requirements for the proposed business
plan are available with certainty. General financial and investment availability
assumptions for the plan are as shown in the tables.
 Meal for 2, in any Mid-range Restaurant with Three courses cost to the customers in
the range of $20 to $30. The average cost per head is assumed to be $15 per meal.
 Alcohol cost per head is assumed to be $15.
 It is assumed that the gross profit margin of restaurant industry of Mongolia is 30%.
 Liquor section works for 40% profit margin (Happy Mongolia, 2012).
Table 7 General Assumptions
General Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Plan Month 1 2 3 4 5
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00%
Annual inflation rate 4% 4% 4% 4% 4%
Sales forecast for the restaurant is dependent on the popularity of the restaurant concept
between the tourists and tour agencies. The expected tourists visit is briefed in the below table:
Table 8 Customer visit for caste
Year Estimated customers for Aмттай Estimated customers in the liquor section
2013 206788 41357
2014 237817 47563
2015 273510 54702
2016 314475 62895
Page 25
It is assumed that the customers in the bar section are just 20% of the total arrivals in
the restaurant. Estimation of sales revenue from both restaurant and bar sections for Aмттай
is shown in the below table:
Table 9 Projected revenue
Year 2013 2014 2015 2016
Food section revenue
Estimated customers for Aмттай per year 206788 237817 273510 314475
Revenue per head 15 16.5 18 20
Total revenue 3101820 3923981 4923180 6289500
Liquor section revenue
Estimated customers for Aмттай per year 41357 47563 54702 62895
Revenue per head 15 15.75 16.5 17.32
620364 749117.25 902583 1089341.4
Total revenue from liquor section ($)
3722184 4673097.75 5825763 7378841.4
Total revenue for Aмттай ($)
Schedule for estimated cost of sales for food service section is as under:
Table 10 Cost Projections for restaurant section
Annual Inflation Cost per Estimated customers for Total cost of sale per
Year rate % order Aмттай year
2013 4 10.5 206788 2171274
2014 4 10.92 237817 2596962
2015 4 11.36 273510 3107074
2016 4 11.81 314475 3713950
Schedule for estimated cost of sales for Liquor section is as under:

Table 11 Cost projections for Liquor section
Cost Total cost of
per Estimated customers for Total cost of sale per sales (liquor +
Year order Aмттай year food)
2013 9 41357 372213 2543487
2014 9.5 47563 451849 3048810
2015 10 54702 547020 3654094
2016 10.5 62895 660398 4374347
Sales forecast: Sales forecast for the coming four years is as given in the below table:
Table 12 Sales forecast for coming four years
(a) SALES FORECAST

Year 0 1 2 3 4
Units 248,146 285,380 328,212 377,370
Sales Value @£1000/unit 3,722,190 4,708,770 5,957,048 7,534,192
Page 26
Sales policy
Cash flow on Sales 3,722,190 4,708,770 5,957,048 7,534,192
(b) Cost of goods 0 2,543,487 3,048,810 3,654,094 4,374,347

Supplier payment policy
Cash flow on cost of goods 0 2,543,487 3,048,810 3,654,094 4,374,347
Cash Flow for the project:

Table 13 Cash flow for project
(2) CASHFLOW
FORECAST
Preop
Year 0 1 2 3 4
CASH INFLOWS
Cash from Sales 3,722,190 4,708,770 5,957,048 7,534,192
Directors loans 300,000
Share capital 50,500 0
Other external finance/loans
Other cash inflows
TOTAL CASH INFLOW 350,500 3,722,190 4,708,770 5,957,048 7,534,192
CASH OUTFLOWS
Payments for materials 0 2,543,487 3,048,810 3,654,094 4,374,347
operating expenses
Premises (rent, rates) 9,000 54,000 59,400 65,340 71,874
Wages and salaries 0 288,000 331,200 380,880 438,012
General expenses 0 91,350 117,480 110,214 121,434
Interest and bank charges 0 30,000 30,000 20,000 10,000
payable
Lease payments 0 0 0 0 0
Corporation Tax 420,733 431,092
Market survey costs 10,000
Other preliminary expenses 140,000
capital expenditure
Plant and other capital 21,500
expenditure
financing repayments
Loan repayments 0 100,000 100,000 100,000
Dividends 0 0 0 0
TOTAL CASH OUTFLOWS 180,500 3,006,837 3,686,890 4,751,261 5,546,759
Cash flow summary
NET CASHFLOW FOR 170,000 715,353 1,021,880 1,205,787 1,987,433
PERIOD
OPENING CASH BALANCE 0 170,000 885,353 1,907,233 3,113,020
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CLOSING CASH BALANCE 170,000 885,353 1,907,233 3,113,020 5,100,452
Projected Profit and Loss

It is a financial statement, which summarizes the sales revenues, costs of goods and
expenses incurred in the business during the specific time period usually a quarter or year. It
gives information about the ability of the business to generate profit by improvising revenue
and curtailing costs. It is also known as a statement of profit and loss, an income statement or
an income and expense statement (Levine and Michele, 2008).
Profit and Loss statement has been prepared following a conservative point-of-view
and the projections are based majorly on the past performance of some other restaurants
running in Ulaanbaatar. Through service position strengthening and customer relationship re-
engineering, popularity among the target customer base will be achieved and as a result
increased sales revenues will be reaped.
Projected P & L for Aмттай

Table 14 Projected P & L
(4) PROFIT AND LOSS
FORECAST
Year 0 1 2 3 4
Revenue 0 3,722,19 4,708,77 5,957,04 7,534,19
0 0 8 2
Cost of sales 0 2,543,48 3,048,81 3,654,09 4,374,34
7 0 4 7
Gross profit 0 1,178,70 1,659,96 2,302,95 3,159,84
3 0 4 5
Expenses/overheads
Premises (rent, rates) 9,000 54,000 59,400 65,340 71,874
Wages and salaries 288,000 331,200 380,880 438,012
General expenses 91,350 117,480 110,214 121,434
Interest and bank charges payable 30,000 30,000 20,000 10,000
Lease payments 0 0 0 0
Depreciation 2150 2150 2150 2150
Other expenses 150,000
Total expenses/overheads 9,000 615,500 540,230 578,584 643,470
Profit before tax - 563,203 1,119,73 1,724,37 2,516,37
9,000 0 0 5
Tax @25% 420,733 431,092 629,094
Profit after tax 563,203 698,997 1,293,27 1,887,28
7 1
Dividends 0 0 0 0
Transfer to reserves 563,203 698,997 1,293,27 1,887,28
7 1
Page 28
Projected Balance Sheet
Table 15 Projected Balance sheet
(5) BALANCE SHEET
Year 0 1 2 3 4
ASSETS
Fixed Assets
Building 0 0 0 0 0
Furniture 21,500 19,350 17,200 15,050 12,900
Vehicles 0 0 0 0 0
Plant & machinery 0 0 0 0 0
Net Fixed assets 21,500 19,350 17,200 15,050 12,900
Current Assets
Stock 211,95 254,068 304,508 364,529 0
7
Debtors 0 310,183 392,398 496,421 627,849
Cash 170,00 885,353 1,907,23 3,113,02 5,100,45
0 3 0 2
other -
Rent 9,000 54,000 59,400 65,340 71,874
Market survey costs 10,000
other preliminary expenses 140,00
0
subtotal 540,95 1,503,60 2,663,53 4,039,30 5,800,17
7 3 8 9 5
Current Liabilities
Taxation 420,733 431,092 629,094
subtotal 0 0 420,733 431,092 629,094
Total assets less current 562,45 1,522,95 2,260,00 3,623,26 5,183,98
liabilities 7 3 5 7 2
LIABILITIES
Share cap 50,500 50,500 50,500 50,500 50,500
Reserves 563,203 1,262,20 2,555,47 4,442,75
0 7 8
Total equity 50,500 613,703 1,312,70 2,605,97 4,493,25
0 7 8
Loans 300,00 300,000 200,000 100,000 0
0
Total 350,50 913,703 1,512,70 2,705,97 4,493,25
0 0 7 8
Break-even Analysis
It is a calculation of the sales volume necessary for covering costs. A lower sales
volume than the calculated break-even point would be unprofitable whereas a higher one would
Page 29
guarantee the profitability of the business. This analysis primarily focuses on the existing
relationship between, the fixed cost, variable cost and selling price. Sales volume, at which the
company breaks even, profits are $0 (Fast4cast, 2012). This point is called the break-even
point. Break-even awareness facilitates any restaurant operators to know the possibility for the
restaurant to be profitable by just knowing the weekly or monthly sales volumes. This can be
calculated by the following formula:
Break Even Point = Fixed Costs / (selling price − variable costs)
Here the fixed cost will comprise of following elements:
1. Rent
2. Salaries
3. Liquor license cost
Whereas the variable cost is about the food ingredient and supplement cost.
For Aмттай, values of fixed cost and variable cost and selling prices are defined in the below
table:
Table 16 Break Even Analysis
Rent monthly $4,500
liquor license renwal fee monthly $1,000
salaries monthly $24,000
Total $29,500
Contribution per customer $4.50
Breakeven Point (customer)per month 6556
Breakeven Point (customer)per day 220
Page 30
Figure 7 Break Even Analysis
BEP i.e. break-even point for the proposed business is below the estimated sales volume
level, which males the venture attractive for investment.
Pay Back Period
Pay back period is a financial evaluation technique. By payback period, the meaning is
that the time period required for any project to pay the initial investment back. It is non
discounted technique (Dayananda et al, 2002). Here in our proposed plan, $350,500 is required
as the start-up fund. This fund will be recovered through the business’ net profit. Calculation
for the pay-back period for the restaurant project in shown in the below table:
Table 17 Payback period analysis
Year Net profit Cumulative net
profit
2013 $25,438 $25,438
2014 $143,258 $168,696
2015 $460,848 $629,544
2016 $879,710 $1,509,254
From the above table it is clear that the initial investment will be repaid by the business
in the third year of commencement. If a linear distribution of profit is assumed, then the exact
pay-back period will be calculated as follows:
Pay-back period = 2+ (350500-168696)/460848
= 2.4 years or 2 years and 5 months
Page 31
Pay back period of the employed capital investment is relatively low, which implies the
attractiveness of the venture among the investors.
3.4 Resource requirement Evaluation
Any physical or virtual entity with limited availability, such as supply of money,
materials, staff and other assets required for venturing any business are termed as resources.
For Aмттай, six broad types of resources are required. All of which are defined in the below
section:
 Finance: Total start up fund is $350500. $50500 would be invested by the owner and
rest would be availed through short-term loans from any corporate or government body.
$300000 are to be arranged from outside, which is a serious challenge for the owner,
but curativeness of the idea of restaurant and demand in the market may assist in
availing this fund from the market.
 Physical resources: Tangible properties, such as kitchen equipment, administrative
devices like computer, printer etc. and office space, furniture, fixtures etc comes under
this head. All must be achieved through local markets. All are easily available.
 Human resources: Employees are the faces of any business especially for restaurant
business, where customer will evaluate the restaurant by the service provided to them
through employees. Availability of staff is not big concern for Aмттай, in Mongolia.
 Technological resources: are embodied in a process, system or physical transformation,
e.g. unique software products and tailored information system architecture.
 Organizational resource: Such resources include the structure of the business, routines
and systems.
Page 32
CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL
Strategic analysis aims to look at the external environment of the organization
concerning about the present and the future consequences. Through the strategic analysis two
questions must be answered, like:
 How the external incidences happening might affect the business?
 What should be the best response of the business to the likely changes?
While, the business model is the manager’s logic, which allows a venture to capture the
market opportunity by mitigating risks. This also aids in identifying the required resource set;
and create value for investors and founders.
Here, a thorough analysis of the business idea from the strategic view will be carried
out and based on this a proper business model will be developed.
4.1 Strategic analysis of Business Idea

Restaurant opening seems to be a glamorous business and by being successful
restaurateurs, one can attain fame and fortune both, but success in restaurant business is not
easy to attain and failures are not rare. Prior to opening a restaurant, one must gain the basic
understanding of the industry and competition structure.
According to the Entrepreneur website (2009), there has been a tremendous growth of
about 155,000 to 900,000 in number of food-service from 1970 to 2009. This trend is expected
to persist as now people choose to eat out rather than taking time to prepare meals at home.
This advocates the idea of opening the right sort of restaurant at the right location.
Restaurant is basically a people business, so a socialist must flourish in such type of
business. But, the success highly depends on the staff’s especially the servers ability to
entertain the customer requirements and strong people skills. Retains of right people is a serious
challenge for the restaurant business. Having young staff leads to higher employee turnover
issues (What is strategic analysis?, n.d.).
Aмттай is a restaurant starting from scratch and for that things must be designed and
managed in the owner’s way. This may result in difficulties for establishing the brand and
positioning it in the market. Aмттай is a new concept and generally a new concept involves
high degree of risk. Besides, restaurants are not easy to operate. One requires having knowledge
regarding the proper equipment to purchase and grow to be versed in food-handling measures
and local health codes. An extensive market research must be conducted before taking the
plunge in order to assess the acceptability of the business concept by the targeted customers.
Page 33
According to a report of Entrepreneur.com (2010), many restaurants fail all through the
first year of commencement, largely due to a poor planning. Taking the time to prepare a
carefully researched business plan will give you a better chance of success and is essential if
you wish to obtain bank financing to get started. Bank finance for starting up funds can be
better acquired on the basis of a good and rigorous business plan.
4.2 Value chain and SWOT

Concept of value chain has its origin in Michael Porter’s book “Competitive
Advantage: Creating and Sustaining Superior Performance” published in 1985. Value chain
includes a sequence of activities performed by a firm operating in a specific industry to deliver
valuable services to its clients (Woudstra and Adria, 2003). Below diagram indicates the value
chain at Aмттай.
Figure 8 value chain at Aмттай

This value chain and operational competence of the firm result in specific strengths and
weaknesses along with external opportunities and threats from the outer circumstances. SWOT
analysis of Aмттай is given in the below chart:
Table 18 SWOT Analysis
Strengths Weaknesses
 Innovative business idea
Page 34
 Backed by proper research and 
Highly dependent of the acceptability
planning of the restaurant among the tourists
 Financially viable  Highly dependent on the growth of
 Lucrative market growth of the past tourism in the country
 Sensitive to the government laws and
regulations
 Success is dependent on the staff
performance
Threats Opportunities
 No entry barriers exists, which makes  High growth economy
a threat of increasing competition  Increasing tourism\
 Business’ Point of difference is its
innovative theme and cuisines, which
can easily be copied
 Government’s dependency on the
FDI investment may cause serious
damage to tourism
 Counties proximity to the terrorist
sensitive countries may spoil the
business
4.3 Sources of competitive advantages and sustainability

For survival and prosperity of any business in an industry, companies must meet two
decisive factors. First, they must deliver customers what they want to buy, and second that they
must endure in competition. Overall competitive advantage can be attained through creating
difference between offered customer value and cost of creating such customer value as
compared to its market peers. Competitive advantage takes 2 forms namely differentiation
advantage and cost advantages. Differentiating advantages can be attained by creating the
superiority of the service in the customer minds, while cost advantages can be attained through
economies of scale.
Here, Aмттай is a completely new venture so it is not possible for it to attain cost
advantages. Competitive advantaged through differentiation can easily be attained by it as it
involves a completely new idea and theme. Aмттай can fare the uniqueness of cuisines offered
at a single place with innovative theme and service for differentiation of services in the market
place. This may give a higher sustainability to the restaurant.
4.4 Business model

Business model for Aмттай will describe the underlying principle of the organization
to create, capture and deliver value in terms of economic, social, cultural, or any other forms.
Page 35
Business model construction process is a part of the business strategy (Peterovic and Kittl et
al, 2001). It aids in describing and classifying business, plus exploring the possibilities of future
development. For a creative management, business model operates like a recipe (Chesbrough
and Rosenbloom, 2002). Business model for Aмттай is given in the below section:
Table 19 Business Model
Ownership Key activities Value proposition Customer Customer
- Company - In restaurant line, - Delivering value for relationship segments
is solely Maintaining food money to the - Respect for - Tourists coming
owned by quality and customers customer to the city
the consistency - Catering niche feedbacks - Lowers of multi
entreprene - In liquor section, market’s - After sales cuisine food
ur timely renewal of expectations services
- Key license - Maintaining higher
motivation Key resources food quality Channels
s for the - Financing comes - Maintaining higher - Marketing
investment from the owner’s services standards through
is growth pocket or through - Providing growth tourist
of short-term loans opportunities to the companies
economy - Human resource and staff members - Online
and other operational - Having equality marketing
tourism requirements will be policy - Tie ups with
industry of availed from tourist firms
Mongolia Mongolia
Marketing Revenue streams
- Consistent marketing activities at the places - Through restaurant
sensitive to tourism Through Bar
Page 36
CHAPTER 5: BUSINESS PLAN
5.1 Overall assessment of Business Development Proposal
Business set-up is headed by the decision for having an entrepreneurial career and
recognition of a promising business idea backed by a careful examination of the existence of
entrepreneurial opportunities in the selected market. Aмттай is a multi-cuisine restaurant in
Ulaanbaatar, the capital of Mongolia. For this restaurant, both primary and secondary research
has been conducted. Primary research has given a positive response towards the proposal along
with the secondary one. According to the customer response to the proposed idea of business,
Aмттай has a positive probability of success in the market among the targeted market.
Now looking towards the feasibility of the proposed business plan, every constituent of
analysis has given a positive response for it. According to the service viability analysis, it will
have good response among the tourists coming to Ulaanbaatar as presently, there is no
restaurant, which offers the same cuisines that are the part of our menu. Also, the theme of the
restaurant and bar is a unique one, which will certainly attract customers. This result is also
proven through the primary research conducted.
Now, when the discussion comes to the industry and market attractiveness, both are
found to be profitable and growth oriented. Mongolian economy is currently at its growth stage
and market for restaurants in Ulaanbaatar is very attractive from the point of investment.
Inflation rate is quite low (4%) in the country, which is a good symbol for an entrepreneurial
start up. Currently Mongolia has emerged as a new tourist destination and average growth of
tourism industry in the country is recorded to be 15 to 20%, which is a good indicator for a
tourist targeted business venture.
Financial feasibility analysis shows the ability of the venture to repay the initial
investments in a very short time period i.e. 2 years and 5 months. Also the growth in profit
margin is considerable. Besides all, the initial investment for opening up a restaurant in
Ulaanbaatar is comparatively low.
The entire analysis has given positive responses making the proposal worthy to get
investments. This will prove beneficial for getting the loan from the corporate or the banks for
the initial start-up funds.
5.2 Business Plan Schedule

Execution of the proposed plan can be segregated into following activities:
1. Arrangement of fund 1 week
2. Obtaining licenses both for restaurant and liquor business 1week
Page 37
3. Finalization of the floor 1 week
4. Building ger 4 weeks
5. Interior 2 weeks
6. Other fixture procurement and installations 1 week
7. Menu designing 2 weeks
8. Printing work 1 week
9. Designing advertisement and promotional activities 4 weeks
10. Organizing a complementary event for launch of the restaurant 1 week
11. Inauguration of the restaurant ---------
All these activities are to be completed in two months time as the proposed opening of
the restaurant is in first week of January 2013 (GanttPoject, 2011). Thus all the activities should
be accomplished in Nov to Dec, 2012. Schedule for the plan can be represented through a Gantt
chart. Gantt chart for this business plan is as follows:
Table 20 Gantt Chart
Activity Week Week Week Week Week Week Week Week
1 2 3 4 5 6 7 8
Arrangement
of fund
Obtaining
licenses both
for restaurant
and liquor
business
Finalization of
the floor
Building ger
Interior
Other fixture
procurement
and
installations
Menu
designing
Printing work
Designing
advertisement
and
promotional
activities
Organizing a
complementary
event for
Page 38
launch of the
restaurant
Inauguration of
the restaurant
5.3 Discussion of critical Success/failure factors

Critical success and failure factors for entrepreneurial success in the restaurant business
are very important to be considered as restaurant functions in a complex business environment.
This business line is very sensitive and has the highest failure rate among other business start-
ups. For flourishing in the restaurant industry, the critical success and failure factors must be
taken into consideration by any entrepreneur (Joseph, n.d.).
Critical success and failure factors for the proposed business plan are given as below
(The Center for Hospitality Research of Cornell University, 2008):
Strategic choices
Strategic choices like location of the restaurant, business plan, positioning and business
concept, target market, competitive strategies (differentiation) and value of firm are critical for
the success of the business. This is because; all these decisions or choices define the business
nature and characteristics. Decisions regarding these must be backed by a rigorous analysis so
as to avoid serious consequences.
Competitive factors
Competitive factors such as restaurant density or competitive intensity in the market,
comprehension of the competitive forces and product relevance plays an important role in any
business’ success story.
Marketing
Basically marketing aims at recognition of demand and satisfying the demand
profitably. For this, restaurant must have marketing abilities, good customer relationship and
community involvement. Pricing plays a critical role for success so firm must stick to the value
delivery concept.
Resources and capabilities
Firm size, financial capital, profitability, internal controls, organizational culture,
efficiency, product quality and consistency, service levels, competence of employees,
employee relationships, employee turnover rate etc are the critical factors from the resource
and capability perspective.
All of the above described critical factors should be taken care of for the success of the
proposed restaurant plan.
Page 39
APPENDICES
Opinions of you
Mongolia tourists! For making your tour more pleasant with a new food house,
Aмттай is following you where you go in Mongol. For offering the best menu to
satisfy our customers, we need your comments on the questions below.
Your help in answering these questions will be highly appreciated!
Demographics:
Name
Country
E-mail
Tel:
Q. 1. Have you ever been to Mongolia? If yes, would you wish to be there again and why?
Q. 2. What was the most fascinating thing at Mongolia?
Q. 3. How was your food experience during the trip?
Q. 4. Have you missed something there terribly?
Page 40
Q. 5. Style of cuisine you prefer
(Tick a maximum of three as appropriate)
Modern Italian Mongolian Indonesian
Mediterranean Japanese British European
Thai French Indian German
Other (please specify)..................................................................................
Q. 6. What has been your normal spending for food at Mongolia?

A. £15~£20 per head
B. £20~£25 per head
C. £25~£30 per head
D. Over £30 per head
Q. 6. How did you made payment for your food during your trip?
Q. 7. A new restaurant is going to be opened in Ulaanbaatar. In this restaurant, customer will

be able to enjoy its favorite cuisine in the Mongolian cultural ambience. Besides, one can enjoy
liquor of different region in the bar section of the restaurant. Payments can be made through
your countries debit cards. What is your opinion regarding this?
Q. 8. Do you have any other comments? If so, please state here:
Thanks for consideration!
Page 41
REFERENCES
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W_Miot
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Business Plan for Start-up: Restaurant in

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such as Product/service, Industry/market, Organizational and financial angles. Further a

1.1 Rationale for the Business idea ................................................................................... 1

1.2 Scenario Chosen .......................................................................................................... 2

1.3 Aims and objectives of the work ................................................................................. 3

1.4 Structure of the work ................................................................................................... 4

CHAPTER 2: THE BUSINESS CONCEPT ............................................................................. 5

2.1 Description of the business idea .................................................................................. 5

2.2 Mission ........................................................................................................................ 5

2.3 Vision .......................................................................................................................... 6

2.5 The Ambience ............................................................................................................. 7

2.7 Scale and growth anticipation ..................................................................................... 9

2.8 Start-up summary ...................................................................................................... 10

CHAPTER 3: FEASIBILITY ANALYSIS ............................................................................. 16

3.1 Primary Market research ........................................................................................... 16

3.2 Secondary Market Research ...................................................................................... 18

3.3 Feasibility .................................................................................................................. 18

3.1.1 Product/service ................................................................................................... 18

3.1.2 Economy, Industry and Place ............................................................................ 20

3.1.3 Organizational Feasibility .................................................................................. 22

3.1.4 Financial Feasibility ........................................................................................... 24

3.4 Resource requirement Evaluation ............................................................................. 32

CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL ................................... 33

4.1 Strategic analysis of Business Idea ........................................................................... 33

4.2 Value chain and SWOT............................................................................................. 34

4.3 Sources of competitive advantages and sustainability .............................................. 35

4.4 Business model .......................................................................................................... 35

CHAPTER 5: BUSINESS PLAN ............................................................................................ 37

5.1 Overall assessment of Business Development Proposal ........................................... 37

5.2 Business Plan Schedule ............................................................................................. 37

5.3 Discussion of critical Success/failure factors ............................................................ 39

1.1 Rationale for the Business idea

1.2 Scenario Chosen

1.3 Aims and objectives of the work

1.4 Structure of the work

CHAPTER 2: THE BUSINESS CONCEPT

2.1 Description of the business idea

2.5 The Ambience

Figure 1 Table arrangements in the Aмттай

Figure 2 Interior of the restaurant gers.

Figure 3 Mongolian Hospitality style and clothing

2.7 Scale and growth anticipation

Table 1 Estimation of customer foot fall at Aмттай

2.8 Start-up summary

Figure 4 Mongolian traditional art

 Start-up employee Cost for initial four Months

Printing of Menus $200

$150,000 Total Start-up Expenses

3.1 Primary Market research

3.2 Secondary Market Research

Table 4 Comparative study of competitors

Luna Asian, 4.5 4.5 5 4.5 $3 - $15

Millie's American, 4.5 4.5 4 4

The Bull Asian 4 4 4 4

Figure 5 Rating of key competitors for different attributes

Figure 6 Growth representation for Mongolian GDP (Hallberg, R., 2012)

Attractiveness of industry and market

3.1.3 Organizational Feasibility

Liabilities and Capital