IB Business Management - Higher Level

Should Royal Address open a fast food restaurant branch in Dubai in order to increase
profitability?

F.A.O
CEO of Royal Address - Hassan Moghaddam

Word count
Proposal - 499

Submission date: May 2021

1
 Research Proposal

Research Question:

Should Royal Address open another branch of fast-food restaurants in Dubai in order to increase profitability?

Rationale:

The objective of the proposal is to help Royal Address decide whether the company should open another branch of fast food
restaurants in Dubai in order to increase profitability. Primary and secondary research is used such as; interviews with the
CEO, surveying regular customers, and profit and loss statements. This is beneficial for the company as it is an accurate tool
to predict if the investment is going to be profitable after a few years. It gives the business a budget to limit their spendings
and increase money coming into the business. Surveying customers in Dubai allows the business to innovate their fast food
meals to meet customer satisfaction and stand out from other competitors in the UAE. Fast food industry data over the past
two years is also beneficial to figure out if the market is growing or not and to know how Royal Address can dominate the
market.

Areas of Syllabus:

1.3: Organizational Objectives

- Ansoff matrix for different growth strategies of a given organization
- SWOT Analysis used to outline the current position of business

1.7: Organizational planning tools

- Force field analysis

3.4: Final accounts

- Profit and loss account
- Profitability ratios

3.8: Investment appraisal

- Investment opportunities using payback period and average rate of return (ARR)
- Investment opportunities using net present value (NPV)

Methodology:

This investigation will propose primary and secondary sources to determine if Royal Address should open another branch of
fast-food restaurants in Dubai in order to increase profitability?

Primary Research:
- Interview the CEO of Royal Address in order to gather strategic input from a key stakeholder
- Interview the financial manager of Royal Address
- External perspective by surveying regular fast-food customers (give samples to customers to get their opinion on the
fast-food meals).

Secondary Research:
- Profit and loss statement from 2019-2020 of Royal Address fast food restaurant operating in Tehran.
- Profit and loss statement (prediction figure) of Royal Address operating a fast food restaurant in Dubai.
- Royal Address’s expected cash flow statement in the upcoming 4 years

2
Anticipated Difficulties:

Anticipated Difficulty Reason for Difficulty Possible Solution

1. Different Languages Language may be a problem in - Interview will be conducted in Farsi

communicating with customers in Dubai, and will be translated into English.
banks, or the government as stakeholders Native speakers will be conducted
in the company may only speak Farsi. to make sure it is appropriate.

2. Inaccurate Financial Royal Address is providing an estimate of - Compare the primary and
Data their financial data in the past 2 years secondary research in order to
which may be inaccurate. know it is reliable.

3. Market Research Limited Market research does not identify - Identify competitors in the fast-
limitation competitors in the market and how Royal food market and their liabilities that
Address can dominate the market over Royal Address can use against in
other competitors in the fast-food industry. order to increase market share.

3
Action Plan:

Task April May June July Aug Sept Nov Dec Jan Feb

Find a suitable business

for the investigation

Start researching on
business and decide an
appropriate an RQ

Complete research
proposal

Start collecting primary

data

Interview the CEO and

marketing team of Royal
Address

Create a survey for

customers in order to
get customer feedback

Collect results from

surveys and interviews

Construct a profit and

loss statement from
data provided by Royal
Address

Prepare a profit and loss

statement (prediction
figure)

Perform Analysis -
explanation of collected
data

Complete introduction

Write Overall
Conclusion

Complete first draft

Act on supervisor’s
Feedback

Final Draft fully

completed

Submit Final Draft

4
 IB Business Management - Higher Level

Should Royal Address open another fast food restaurant branch in Dubai in order to increase
profitability?

F.A.O
CEO of Royal Address - Hassan Moghaddam

Written Report: 2000 words

Submission date: February 10, 2022

5
 Table of Contents

Acknowledgements 7

Executive Summary 7

Introduction 7

Methodology 8

Primary Data

Secondary Data

Business tools

Modification to Methodology 9

Main Result and Findings

Ansoff Matrix 9

SWOT Analysis 10

Force Field Analysis 11

Profit and Loss Account 12

Profitability Ratios 13

Investment Appraisal (PP, ARR, NPV) 13

Evaluation and Analysis

Financial Analysis 14

Non-Financial Analysis 15

Limitations of Research 15

Conclusion 15

Recommendations 16

Bibliography 16

Appendix A 17

Appendix B 20

Appendix C 22
6
Acknowledgments
I would like to thank the CEO of Royal Address, Hassan Dargahi, for giving me the opportunity to conduct my internal
assessment on his fast-food company. I appreciate the time he took out of his day to provide me with the information I
needed during the interview. I would also want to thank Mr. Mohammad Reza, for his co-operation during the interview
and for providing the financial data needed to answer the research question of this investigation. Finally, I would like to
thank my business teachers for providing me with the guidance I needed to conduct this investigation.

Executive Summary

Royal Address is a private limited corporation based in Tehran, Iran that specializes in fast-food restaurants. As a result of
the pandemic, Royal Address is exploring a strategic move in the UAE market: launching a new fast food restaurant to
increase profits. Interviews with the CEO and the finance manager were used to conduct primary research. After analyzing
the financial and non-financial data acquired from Royal Address, the business might encounter a slow increase in the first
to two years after the investment is made. However, Royal Address should open a new fast food restaurant branch in Dubai
as it will generate a 135% increase in net profit (AED 160,000) after 4 years have passed from the investment.

Word Count: 120

7
Introduction

Royal Address is a private limited corporation based in Tehran, Iran. The restaurant provides high-quality fast food from
countries around the world which people love to eat. The restaurant provides American, Italian, and Iranian cuisine. The
fast-food restaurant is situated in the Tehran Mall.

Since the epidemic began in 2020, many individuals have lost work due to COVID-19. Since then, the number of COVID-19
cases has risen dramatically, reducing the demand for fast food as many individuals attempt to save money due to the high
prices. Due to the epidemic, Royal Address is contemplating adding more fast food locations in order to increase
profitability. The ease of eating in your vehicle without needing to leave your car is highly popular in Dubai. So, in order to
increase profitability, this paper will examine whether Royal Address should establish another fast food restaurant in Dubai.

Methodology

Primary Data:

In order to gain insight information on Royal Address’s current operations and future plans, interviews in the following
order will be conducted.

● Interview conducted with the CEO of Royal Address, Mr. Hassan Dargahi. The purpose is to gain insight information
about the company in order to examine the research question.
● Interview conducted with the financial manager, Mr. Mohammad Reza. The purpose is to discover Royal Address’s
current sales, costs, and profits in the current location and its anticipated numbers in the new location in Dubai.
● A survey questionnaire will be conducted with regular fast-food customers in Dubai to get their opinion on the food
in order to gain information on other competitors in the fast-food market to increase market share.

Secondary Data:

● Review Royal Address’s profit and loss statement for the financial years 2016 through 2020 to help make a financial
decision whether opening a new fast food restaurant in Dubai will increase profitability.

Business Tools:

Unit 1: Business, organization, and environment

● 1.3: Organizational Objectives

- Ansoff matrix for different growth strategies of a given organization
- SWOT analysis to determine the current position of business

● 1.7: Organizational planning tools

- Force field analysis

8
Unit 3: Finance and Accounts

● 3.4: Final accounts

- Profit and loss account

● 3.5: Profitability ratios

● 3.8: Investment appraisal

- Investment opportunities using payback period, average rate of return (ARR)

Modifications to Methodology:

After conducting financial analysis and non-financial information from the CEO of the royal address, it became clear a SWOT
analysis is required in order to outline the current position of the business and whether opening a new branch in Dubai is an
effective strategy to increase profitability. Rather than a steeple analysis that does not help answer the main question of the
report.

Main Results and Findings

Figure 1: Ansoff Matrix:

Existing Products New Products

Existing Market Penetration: Product Development:

Markets - Royal Address can be ordered at home - Adding a different variety of fast food options
through an app called “snapp”. to attract a wider audience. Eg: Exotic shakes,
- Offer more deals like “buy 2 get 1 for hot Cheetos burger.
free” to increase sales revenue as many
people try to cut back on spending due
to Covid.
- Do more social media advertisements in
order to increase brand recognition.

New Markets Market Development: Diversification:

- Add a new variety of food cuisine like - Include a clothing line that can be purchased
offering baklava which is a Turkish online or in the restaurant.
dessert.

9
Figure 2: SWOT Analysis:

Strengths Weaknesses

Internal ● The quality and variety of fast ● High rent costs as the landlord are
Environment food. demanding a higher rent cost due to
● Great customer service coronavirus.
● Royal Address can be ordered ● language barrier as all employees speak Farsi
at home through an app called in the Tehran branch.
“snapp”.

Opportunities Threats

External ● Offer one free meal after
environment purchasing 5 orders from us
which can be tracked by a card
that can be stamped after each
purchase.
● Growing the social media
platforms on apps like TikTok
and Instagram.
● The Iranian government can possibly shut
down the existing branch in Tehran.
● The high number of COVID-19 cases has led
to a decrease in demand
● Existing dominant competitors in the fast-
food market in Dubai, such as Five Guys, Salt
Burger, Shake Shack, and High Joint.
● High risk and very hard to reverse the
investment made after.

Figure 3: Force Field Analysis:

Driving Restrainin
Forces: g Forces:
5 5 Already
Possible
existing
Increase in
dominant
Profits
competit
The demand 4 Langua
ors
for fast food 4 ge
is a lot barriers
higher Openi
can
Higherbe
Possible 3 ng a a issue 5
risk and
decrease New hard to
in total Fast reverse
costs to
Access Food
3 if not
more Branc successf
delivering ul
services h in
like
Paying Dubai
deliveroo
lower 3
and talabat
taxes in
Dubai
compar
Total Total
ed to
Driving Restraining 10
Iran
Forces: 18 Forces: 14
Figure 4: #1 Profit and Loss Account from 2020 of Royal Address Fast Food Restaurant in Tehran, Iran

AED AED

Sales Revenue 186,565

Direct Costs

Staff Wages (V) 38,948

Cost of Raw Material (V) 22,223 61,171

----------

Gross Profit 125,394

Less Expenses

Rent 55,727

Utilities 20,340

Insurance 9,583 85,650

--------

Net Profit/Loss 39,744

#2 Profit and Loss Account in 2021 of Royal Address Opening a New Branch in Dubai (Predicted)

AED AED

Sales Revenue 203,000

Direct Costs

Staff Wages 35,000

Cost of Raw Material 11,500 46,500

Gross Profit 156,500

Less Expenses

Rental 60,000

Utilities 18,500

Insurance 10,000 88,500

11
 Net Profit/Loss 68,000

Figure 5: Profitability Ratios:

Net profit before interst∧tax 39,744 x 100 = 21%

Net Profit Margin(2020)= x 100=¿
Sales Revenue 186,565

Net profit before interst∧tax 68,000 x 100 = 33%

Net Profit Margin(2021)= x 100=¿
Sales Revenue 203,000

Gross Profit 125,394 x 100 = 67%

Gross Profit Margin(2020)= x 100=¿
Sales Revenue 186,565

Gross Profit 156,500 x 100 = 77%

Gross Profit Margin(2021)= x 100=¿
Sales Revenue 203,000

Figure 6: Investment Appraisal:

Expected Cash Flow Forecast of a AED 150,000 Investment for Royal Address
Years Cash InFlow (AED) Cash Outflow (AED) Net Cash Flow Cumulative Net
(AED) Flow (AED)

0 0 150,000 (150,000) (150,000)

1 203,000 135,000 68,000 (82,000)

2 218,500 124,800 93,700 11,700

3 232,000 137,500 94,500 106,200

4 289,211 130,180 159,031 265,231

Amount ¿ pay 82,000

Payback Period = x 100 = x 12 = 10.5 = 11 months
Net cash flow∈the following year 93,700

1 year and 11 months = Pay Back

12
The investment of Royal Address opening a new fast food restaurant in Dubai is a AED 150,000 investment that
the business will be able to repay and start generating profit in 1 year and 11 months.

Average Rate of Return (ARR):

Total returns−capital cost / years of use

Average Rate of Return = x 100
Capital cost

415,231−150,000 /4
= x 100 = 44%
150,000

ARR = 44%

Evaluation and Analysis

Financial Analysis:

Financial tools were utilized to assess the company's financial health and invest to optimize profits. Profit and loss
statements, profitability ratios, and investment appraisals are examples of tools used to assess a company's performance
and make short and long term choices. Figure 4 shows Royal Address' profit and loss statement for 2020. The firm made
AED 39,700, a net profit of 21%. Positive figures imply that the company is still profitable and that its sales and expenses are
sufficient. Sales revenue decreases by 11% from AED 209,000 to AED 186,565 in 2020 owing to external causes like the
coronavirus. If Royal Address opened a new fast food restaurant in Dubai, sales would rise to AED 203,000, with a net profit
of 33%. This research predicts that the new branch in Dubai will expand profitably by 12% by earning adequate profit from
sales income while controlling operating and administrative expenditures. Figure 5 shows a 10% rise in gross profit margin
from 67 to 77 percent, indicating that after deducting the cost of products sold, more money is left over from sales income.

According to the CEO recorded in appendix A, the initial investment cost of opening a new branch is AED 150,000. The
estimated payback period, which forecasts future possible cash inflows and outflows, is 1 year 11 months. The calculated
payback period is relatively low, so opening a new branch in Dubai is a worthwhile investment that will increase profitability
after the first investment. It is Important to examine investment appraisals that exclude external factors like economical,
seasonal, and policy changes. The average rate of return (ARR) in figure 6 demonstrates the investment's value. Royal
Address’s calculated ARR is 44% which is relatively high. Having a high ARR is very beneficial as it would allow the business
to have high levels of returns during the first four years of business activity in Dubai. Therefore, the investment would
positively benefit Royal Address in increasing profitability.

Non-Financial Analysis:

To launch a new fast food restaurant in Dubai, Royal Address would need to design a market growth plan. Adding
unique fast-food dishes to our menu draws more consumers. For example, Salt Burger popularized the Cheetos burger,
which other fast-food chains followed it. This campaign would attract a wider audience, therefore increasing brand
awareness that may increase total net profit. Also, adding new items to the menu like baklava, which is a Turkish dessert.
13
This is a unique product that appeals to a niche demographic that likes Turkish cuisine. In addition, market penetration can
be used to minimize competition by giving the firm a competitive edge, which can increase profitability. These efforts
include allowing customers to be able to order from Delivero and Talabat. Royal Address benefits from increased brand
awareness as customers may order from home at any time. Other strategies include; posting regularly on TikTok and
Instagram to enhance brand exposure and attract new clients in Dubai. This will boost Royal Address's brand awareness and
hence sales revenue and net profit.

Royal Address would confront challenges if it remained in Tehran. According to the SWOT analysis, increased rent expenses
owing to the coronavirus which has displaced numerous enterprises. To operate the restaurant in the allocated location,
the landlord must pay a 20% annual increase in rent. Another difficulty is that Royal Address personnel in Tehran only speak
Farsi and hardly any English, which is the most spoken language in Dubai. This may lead to employee-customer
communication concerns. A large number of COVID-19 cases in Tehran has adversely impacted enterprises, according to the
SWOT analysis. As more individuals lose work in Tehran, the quality of life falls, and many choose to remain home rather
than dine out. This has reduced demand and so sales income. While Royal Address offers superb cuisine, service, and a
range of fast food options, the virus has forced millions of people to quarantine their homes. As a result, several firms in
Tehran, including Royal Address, have seen major sales declines.

Furthermore, in accordance with the performed force field analysis, The driving forces behind Royal Address opening a new
branch in Dubai include; a 135% rise in total net profit, an 11% drop in total cost. The demand for fast food is stronger in
Dubai which can lead to an increase in profitability. The reduction in overall expenses is rated 3 because it allows the
company to spend more in other areas like market research or R&D. However, it is just a 1% drop, therefore it is not
substantial on driving factors. Finally, taxes in Dubai are 10% cheaper than in Iran, lowering overall costs and allowing Royal
Address to invest in other areas of the company that needs improvement. The restraining forces of Royal Address opening a
new food restaurant in Dubai are the existing dominant competitors which is ranked a 5/5 since the restaurants have strong
customer loyalty. Finally, the language barrier is ranked a 5/5 since all Royal Address employees speak Farsi only. This may
lead to employee-customer communication concerns in Dubai.

Limitations of Research:

Although the report is based on primary and secondary data provided by the CEO, it includes limitations. The first limitation
is the numbers of the profit and loss statement and cash flow forecast are all predicted numbers given by the CEO. This is a
limitation because it does not encounter any difficulties like external factors such as; economic changes, policy changes, and
other complications Royal Address might encounter while opening a new branch. In addition, the numbers assigned to each
driving and restraining force in the force field analysis are subjective and may therefore contain bias. This is because each
factor is personal and different people can have different perspectives on how important it is.

Conclusion

Long and short-term impacts must be taken into consideration, in order to make a final conclusion on whether Royal
Address should open a new fast food restaurant in Dubai. In the long term, Royal Address will generate a 135% increase in
net profit (AED 160,000) after 4 years have passed from the investment. The total cost will have dropped by 13% due to the
cheaper rent that is paid in Dubai. However, in the short term, only 11% has increased in terms of net profit from 2020-to
2021. It will take one year and 11 months for Royal Address to pay back its investment so it has a much higher risk and is
hard to reverse if not successful. This relatively small increase can be threatening compared to other dominant competitors
in the fast-food market that may run Royal Address out of business. Although the business might encounter a slow increase
in the first to two years, opening a fast food restaurant in Dubai would allow Royal Address’s net profits to experience a
gradual increase and result in positively impacting the company’s long-term success.

14
Recommendations:

Through analyzing and evaluating both financial and non-financial data collected from Royal Address, this report reached
the conclusion that: Royal Address should open a new fast food restaurant branch in Dubai as it will generate a 135%
increase in net profit (AED 160,000) after 4 years have passed from the investment. Further research is required for more
detailed analysis:

- Conduct market research to gain information on whether regular fast-food customers enjoy Royal Address’s quality
food.
- Construct a positioning map to gain information on where you would be in the fast-food market in Dubai and to
know about other competitors that may be a threat.
- Plan geographic research to further examine areas available for rental in Dubai for Royal Address

Reflection

Throughout the investigation, the process went smoothly in collecting sufficient data from stakeholders of Royal Address
which assisted in examing the research question. The response was well thought out with a direct problem and solution
which provided assistance in increasing the company’s profitability. My time management skills were effectively shown in
this response as I was able to finish it by the end of September. As a result, I had plenty of time to make minor changes that
enabled me to remain stress-free. However, a challenge that was encountered while completing the investigation was
meeting with the CEO since he was very busy. There was a lot of communication between his assistant in order to find a
suitable date. Ultimately, the investigation was a successful process that I hope to assist with during my placement year at
university, where I will be studying finance for a bachelor’s degree.

Bibliography

1. Thinkib.net. (2021). IB Business Management. [online] Available at:

https://www.student.thinkib.net/businessmanagement?lg=28224 [Accessed 16 Sep. 2021].

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Appendix A

#1 interview with Mr. Hassan Dargahi, the CEO of Royal Address

Date: August 2nd, 2021

Question 1: Could you please introduce your business?

Royal Address is a fast food private company based in Tehran that was founded on January 9th, 2017. Our fast-food
restaurant is located in Tehran Mall in the fast-food sections. We provide a variety of choices for our customers from
American Food, Italian, to our local Iranian food. There are 3 different sections of the restaurant based on 3 different
cuisines provided. The restaurant is open from 9 am to 10 pm during weekdays and 10 am to 12 am on weekends.

Question 2: What is the main reason you want to expand Royal Address by opening a new fast food restaurant in Dubai?

● Due to COVID-19, Iran’s economy took a big hit as many people lost their jobs since the pandemic started in 2020.
The number of COVID-19 cases has increased rapidly ever since which has affected the demand for fast food as
many people have cut back on spending and are trying to save money in case they lose their jobs. Sales revenue is
starting to decrease as total fixed cost is increasing due to the pandemic, therefore Royal Address is considering a
strategic decision in the UAE market; opening new fast-food restaurants in order to increase profitability. It is very
popular in Dubai to drive-through fast-food restaurants, the majority located in Jumeirah, due to the convenience
of enjoying the food in your car without having to park.
● The landlord is asking for a much higher rent cost due to the coronavirus that is too expensive for us to operate at,
so opening a new branch in Dubai with a much lower fixed cost can increase our profitability.
● I thought the fast-food restaurants in Tehran were of very poor quality and lacked variety so I thought it would be a
great business idea to open a fast-food restaurant that would provide high-quality fast food from countries around
the world that people love to eat.

Question 3: What would you say the vision statement of Royal Address is?

● Ever since I started this company, the business's vision statement is to provide unmatched quality, service, and
value to every customer. Since fast-food restaurants are starting to become popular in Tehran, our mission is to
make our restaurant their favorite place to eat by providing delicious fast food and to create a community that
creates happy moments for customers while they enjoy our food.

Question 4: What do you think are some of Royal Address’s strengths and weaknesses?

Strengths:

● Some of the business’s main strengths are the quality of service and food that we provide for our customers that we
prioritize a lot by receiving customer feedback that we use to further improve any issues or recommendations

16
 customers may have. This is done by the customer filling out a questionnaire based on the overall satisfaction of the
food and service provided by the restaurant.
● Another strength Royal Address portrays is that we are one of the first fast-food restaurants in Tehran that provide
a variety of selections from Italian to American fast food.
● In addition, Royal Address can be ordered at home through an app called “snapp” at any time of the day which
causes more exposure that can lead to an increase in sales revenue.

Weaknesses:

● High rent costs as the landlord is demanding a higher rent cost due to the coronavirus that has driven many
businesses out of jobs. There is an increase of 20% of the rent cost that is 55,700 every year to the landlord in order
to run the restaurant in the designated spot.
● The language barrier can be an issue as all employees that work for Royal Address in Tehran speak only Farsi and
barely any English which is the main speaking language in Dubai. This can lead to communication issues with the
employees between customers.

Question 5: What are some threats to the business?

● A threat that Royal Address faces is when a business is doing really well in Tehran, the government decides to shut
them down for a specific period of time that can take a few weeks to reopen due to the delay in court. Our
restaurant has not been shut down by the government but we know there is a chance that in the near future the
Iran government may investigate our business as we are one of the top fast-food restaurants in Tehran.
● Another threat the business is facing recently has been due to the high number of COVID-19 cases in Tehran that
has significantly affected a lot of businesses negatively. There are more than 35,000 cases every day in Iran that
have caused many covid restrictions from the government such as; limiting the number of tables and chairs which
may worsen customer satisfaction as they have to take away their food. In addition, more and more people are
losing jobs in Tehran so the standard of living has decreased a lot so people choose to stay home instead of eating
out. This has led to a decrease in demand and therefore a decrease in sales revenue.

Question 7: Why are you planning on opening a new branch in Dubai out of all other cities?

● In the UAE there is no corp taxation except for oil companies and foreign banks so the total cost is less than Tehran
as we have to pay a 10% tax.
● The COVID-19 situation is significantly better in Dubai as the cases are way fewer than it is in Tehran so the
regulations are not as strict on businesses. The people in Dubai are very protected and take the rules very seriously
which limits the number of cases.
● Dubai is only a 2-hour ride to Tehran which is more convenient for managers to travel every 2 weeks like our
financial manager; Mr. Mohammad Reza and marketing manager; Ms. Yara Sarafai.
● The demand for fast food restaurants is very high in Dubai as many people enjoy eating fast food.

Question 8: What are the limitations of opening a new branch in Dubai?

● There are already existing dominant competitors in the fast-food market in Dubai such as Five Guys, Salt Burger,
Shake Shack, and High Joint.
● The Language barrier can be an issue as all employees that work for Royal Address in Tehran speak only Farsi and
barely any English which is the main speaking language in Dubai. This can lead to communication issues with the
employees between customers.

17
 ● It is a higher risk and very hard to reverse the investment made to open a new branch of fast food in Dubai. Over
AED 130,000 needs to be invested into the investment of the new branch so if it turns out to be unsuccessful then it
will significantly impact the company and may lead to bankruptcy.

Question 9: What are some growth strategies you could implement in your new branch in order to increase profitability?

● Some strategies we are thinking about is offering one free meal after purchasing 5 orders from us which you track
by the employees stamping a card to show the previous orders when collecting the free meal. This will attract more
customers to come back to our fast food restaurant in order to get the free meal.
● We want to add creative fast-food meals that attract customers to our restaurant like the Cheetos burger. This will
attract a different audience of people who love Cheetos who want to try our burger. Therefore, it may lead to an
increase in sales revenue.
● Growing our social media platforms on apps like TikTok and Instagram to increase our brand awareness by
attracting new customers in Dubai. Applications like TikTok are really easy to grow your account for, especially when
it involves topics about food that people love. This will increase Royal Address’s brand recognition, therefore may
lead to an increase in sales revenue; net profit increases.

Question 10: What are the obstacles you might encounter while opening a new branch?

● Marketing costs to advertise and attract new customers such as; billboards and ads
● Initial investment cost - averagely around AED130,000 that include; rent, marketing costs, raw material, and other
expenses.

Appendix C:

Interview conducted with Royal Address financial manager Mr. Mohammad Reza (August 3rd, 2021)

Question 1: Could you please provide me with the current total fixed costs that Royal Address currently incurs
in Tehran, Iran.

Answer: AED 85,650

Question 2: Also the total variable costs that Royal Address incurs in Tehran?

Answer: AED 32,233

Question 3: Could you individually provide me with the current rent, utilities, insurance, cost of raw material, and staff
wages paid by Royal Address in its current location?

Answer: Rent - AED 55,727

18
 Utilities- AED 20,340
Insurance - AED 9,583
Cost of raw material - AED 22,223
Staff Wages - AED 38,948

Question 4: What are the expected total fixed costs that Royal Address would incur if it opens a new fast food
restaurant in Dubai?

Answer: AED 90,00

Question 5: What are the expected total variable costs that Royal Address would incur if it opens a new fast
food restaurant in Dubai?

Answer: AED 45,000

Question 6: What about the current total sales revenue made by Royal Address in its current premises for the
last 4 years?

Answer: 2017 - AED 121,704

2018 - AED 158,233
2019 - AED 209,092
2020 - AED 186,565
Total - AED 675,594

Question 7: What are the current total costs made by Royal Address in its current premises for the last 4 years?

Answer: 2017 - AED 152,600

2018 - AED 149,756
2019 - AED 139,223
2020 - AED 146,821
Total - AED 588,400

Question 8: Could you individually provide me with the current rent, utilities, insurance, cost of raw material, and staff
wages paid by Royal Address if it opens in Dubai?

Answer: Rent - AED 60,000

Utilities- AED 18,500
Insurance - AED 10,000
Cost of raw material - AED 11,500
Staff Wages - AED 35,000

Question 9: What are the expected total revenues for the upcoming 4 years if Royal Address opens a fast food
restaurant in Dubai?

Answer: 2021 - AED 203,000

19
 2022 - AED 218,500 2
2023 - AED 232,000
2024 - AED 289,211
Total - AED 942,711

Question 10: What are the expected total costs for the upcoming 4 years if Royal Address opens a fast food restaurant in
Dubai?

Answer: 2021 - AED 135,000

2022 - AED 124,800
2023 - AED 137,500
2024 - AED 130,180
Total - AED 527,480

Appendix D:

Customer Survey: (Questions and Results)

Getting an external perspective by going to a few fast-food restaurants in Dubai and surveying regular customers to get
their opinion on the food. Asking many questions to find out what they think about the food, what they like, what they
would change, and if they would come back again. 10 regular customers were surveyed per restaurant in order to find out
what Royal Address can do differently to attract more customers than other fast-food restaurants. This will allow the
business to generate more profitability and increase market share.

1st Location: Salt Kite Beach

Question 1: Question 2:

20
Question 3:

2nd Location: Burger28:

Question 1: Question 2:

Question 3:

21
3rd Location: High Joint

Question 1: Question 2:

Question 3:

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