EELPA Employee Restaurant Business plan

Prepared by:

February 2021
Ethiopia
 Executive Summary
EELPAEmployeeand restaurant will be located nearby to EELPAInstitiute which is best
location to accommodate demand for students. EELPAEmployeeand restaurant will respond to
the demand of the students for quality food, quick service, fair price and better customer
handling which can entertain students and made the business unique from the others. The
business will accommodate 1800 customers per month.

The EELPAEmployeeand restaurant is named to show or express the optimistic prediction of the
business members’ growth in the future because “Haawii” is Afan Oromo term, meaning “being
ambitious”. The business mainly provides beyayinet, shiro, sanbusa, bonbolino, cake, rice and
related food items and tea, milk, makiato,yejebenabuna,sprice and soft drinks to customers.

The total investment requirement is estimated at Birr 212,210to be covered by the contributions
of the promoters (COOPI) through EELPAInstitiute . This initial capital investment will allow
EELPAEmployeeand Restaurant to provide its customers with full service operations at the
beginning level with appropriate environmental considerations. A unique, upscale, and
innovative environment is required to provide the customers with an atmosphere that will
promote socialization and good interaction. Successful operation in year one will provide
EELPAEmployeeand Restaurant with a customer base that will allow it to be self-sufficient in
year two, year three and even more…

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Besides, the project can create employment for 9 persons at the starting level and operation.

Table of Content
Executive Summary................................................................................................................................III
INTRODUCTION...................................................................................................................................1
THE BUSINESS DESCRIPTION...........................................................................................................2
Business Objectives.............................................................................................................................2
Mission statement................................................................................................................................2
The Key success..................................................................................................................................2
Ownership...........................................................................................................................................3
Legal Form..........................................................................................................................................3
Start-Up Summary...............................................................................................................................3
Market Analysis......................................................................................................................................3
Industry Analysis.................................................................................................................................4
Competitive Landscape.......................................................................................................................4
Products...............................................................................................................................................4
Price.....................................................................................................................................................4
Place....................................................................................................................................................5
Promotion............................................................................................................................................5
Positioning...........................................................................................................................................5
Target Market......................................................................................................................................5

III
 Main Competitors................................................................................................................................6
Market Segments.................................................................................................................................6
Target Market Segment Strategy.........................................................................................................6
Market Needs......................................................................................................................................6
Market Growth....................................................................................................................................7
Marketing Strategy and Implementation..............................................................................................7
SWOT Analysis...................................................................................................................................7
Marketing Strategy and Positioning.........................................................................................................8
Pricing Strategy...................................................................................................................................8
Promotion and Advertising Strategy....................................................................................................8
Sales Strategy......................................................................................................................................8
Sales Forecast......................................................................................................................................9
Sales Programs....................................................................................................................................9
Work plan................................................................................................................................................9
Exit Strategy..........................................................................................................................................10
Organization and Management.................................................................................................................10
Organizational Structure....................................................................................................................10
Management Team................................................................................................................................10
Personnel Plan...................................................................................................................................10
Financial Plan.............................................................................................................................................11
Important Assumptions......................................................................................................................11
Start-Up Costs...................................................................................................................................11
Source and Use of Funds.......................................................................................................................12
Projections.............................................................................................................................................12
Projected Profit and Loss...................................................................................................................12
Business Ratios..................................................................................................................................14

IV
 1. INTRODUCTION
Micro and Small business has long been touted as a driving force for economic development by
way of the employment opportunities provided (Egan, nd. They are found in a wide array of
business activities, ranging from the single artisan producing agricultural implements for the
village market, the coffee shop at the corner, the internet café in a small town to a small
sophisticated engineering or software firm selling in overseas markets (OECD, 2004). In market
economies, the enterprise sector is predominantly private and spans through the whole spectrum
of economic activity in agriculture, manufacturing and services. Within the private sector, there
are different types of market players: the self-employed, micro, small, medium and large
enterprises (OECD, 2004)

Among service categories, cafeteria is selected to be implemented in this business plan. Cafeteria
is a small social gathering place which sells food and drink. As well, Cafeterias are:Somewhere
you can go for afternoon/morning tea, light lunch or coffee and become very popular at present
times. In addition, due to their popularity cafeteria are now often developed into more of a
restaurant with a full range of food and beverage services (Mackenzie and Chan, 2009).

In the context of Ethiopia particularly the case of the town of Robe, cafes are increasing in
number from time to time. However, some customers are complaining about the issue of
housekeeping, quality of food, unfair pricing and customer handling techniques. To alleviate
such problems the contribution of professionals and trained service providers is very crucial.
Because they can provide customer tailored food and beverage products with better customer
service (personal observation).

In this regard, the proposed business plan intends to solve the problems raised by establishing
EELPAEmployeeand Restaurant to serve the customers based on customer tailored services,
fair price and better customer handling mechanisms so as to generate revenue at reasonable
manner.

The business will be established at Robe Town particularly nearby EELPAInstitiute where there
is potential customers from EELPAInstitiute students mainly non-café students. The area is also
potential for different ingredients to the cafeteria including the milk products and other related

1
elements which enable the business to be profitable if managed in a good way. so, apart from
getting revenue it will initiate other cafeterias to provide better services and facilities and
motivate suppliers to supply more from time to time based on increasing business performance.

1.1 THE BUSINESS DESCRIPTION

EELPAEmployeeand restaurant will be established in rent building in Robe town around the

main campus of MaddaWalabu Institiute . The estimated opening date is August 2016. The café

will serve coffees,Tea, Cake, breakfast foods, different types fasting foods and beverages.All

cake and bread will be supplied daily by a local bakery.

1.1.1 Business Objectives

EELPAEmployeeand Restaurant has the following objectives which can be fulfilled by
short term and in long run:
■ Provide quality and customer tailored service to its customers as much as possible

■ Able to satisfy the customers and create conducive environment to entertain them

■ Able to practice good customer handing technique and add satisfaction to customers

■ Provide products and services with reasonable price to accommodate the capacity of the
students
■ Generate reasonable revenue to the business after satisfying customer for long run

■ Increase the business carrying capacity from time to time as much as possible

■ Be the Café of Choice by the customer in nearby EELPAInstitiute for long term.

1.1.2 Mission statement

Become popular by providing customer tailored services, fair price, entertaining and clean
environment and better customer handling and made the students entertained and enjoyed as
much as possible by even incorporating candle light evenings. It will attract not only non-café
students but also café students by promoting with word of mouth and flyers.

1.1.3 The Key success

The key to the success of EELPAEmployeeand Restaurant are:

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  Providing quality service by which is unique from the others by quality, price, and
cleanliness and servicing.

 Preparing additional entertaining programs with the cooperation of

EELPAInstitiute students organized in different clubs.

 Serving with smiling face and entertain the customers as much as possible.

 Give great emphasis to the customers to be loyal to the established business.

 Provide music in diversified characteristics and aspects (different ethnic groups).

1.2 Ownership
EELPAEmployeeand restaurant will be owned by nine graduate students. Awol kelil chairman of
EELPAEmployeeand degree in business Management.The other group members also graduated
in Eco- tourism, Economics, Chemistry and Geography from EELPAInstitiute ..

1.3 Legal Form

EELPAEmployeeand restaurant will be formed as Micro Enterprise owned by nine graduate
students.

1.4 Start-Up Summary

The EELPAEmployeeand restaurant will have 30 chairs for customers. The rent is 3,000 Birr a
month, with a six month rent pay in advance. The Building consisting of a dining room, a coffee
bar, two restrooms, and a store room in back. The coffee and Tea machine cost will be around
90,000Birr. The equipment will consist of two cooking Equipment, cold drink carets, frothing
equipment and refrigerator. The cost for the equipment is 50.000 Birr. The furniture will consist
of wood chairs, plastic chairs, coffee tables, rack and Bin. Total cost to furnish is around 60,000
birr. Other start up expenses will be working capital for purchase of different types of input used
to prepare food dishes, rent deposit, and marketing. the total estimated working capital is around
40,000 birr.

2. Market Analysis

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 Bale is gifted with natural tourist attracting features like, Bale Mountain national park, the
fascinating Sofumer cave and Dire Shekhussein shrine. Robe town is located in oromia National
regional state in Bale Zone at a distance of 430 Km far from Capital city of Ethiopia it is place
to live and hot business area in Bale Zone.

Robe town has a total population of 175,265 based on the 2010 census. The median household
income is $77,881 and the median age is 37.9. (2010 US Census)Drive

2.1 Industry Analysis

The café and restaurant operated under trade license in Robe town includes about 30with
combined annual revenue of about . Major companies include Haanicafé,ManaNyatanJiddha,
Shameshet Café and Gojotraditional bar and restaurant . we were motivated to go in business
through Café and restaurant after hearing many complaints from customers about the quality of
the existing Café and restaurant business in near by Maada Walabu Universitey. Then we tried to
gather information about Café and restaurant business so that the industry is highly competitive
and risky business. Most new Café and restourantes are opened by inexperienced owners due to
that it difficult to cope up with the needs of customers. However those business which were
opened based on solid understanding of the market needs and management of inventory and
staffa have much higher chance of success specially when combined with previous experience in
the café and restaurant business. Café and restourantes make money by taking inexpensive in
gredientes, combining them in creative ways cooking them properly selling them at much higher
price. Any ingredients wasted in the kichen are many thrown out. Any wasted in seating
customer, taking orders or preparing food is many walking away.while some entrepreneurs think
that success is a simple as a good location and trendey concept. To succed in Café and restaurant
business EELPAEmployeeand restaurant need to understand the risk and financial condtion, the
ability to handle enormous pressure and the organizational skill to serve throughout the day.

2.2 Competitive Landscape

The profitability of individual companies depends on the ability to secure prime locations,
deliver high-quality products and customer handling. Large companies have advantages in
purchasing, finance, and marketing. Small companies can compete effectively by offering
specialized products, serving a local market, or providing superior customer service.

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2.3 Products/service
Major foodstuffs include beverages and food. Beverages include coffee and tea; bottled water;
soft drinks; and juices. Food includes fasting food,pastries, bakery items, desserts, sandwiches,
Sambusa, fool, firfer and other breakfast food.

List of food stuff and beverage are as follows

Breakfast foods Beverages

Chachbesa Tea
Fetira Coffee
Firfer Milk with Coffee
Silse Beso Juice
Ruz with vegetables Yogurt
Pasta with vegetables Soft Drinks
Foul
Desserts
Sandwiches
Sambusa
Bonbolino
Kake
Lunch
Beyayenetu

2.4 Price
Since our targe customers are EELPAstudents more care and analysis is needed The majority of

the business’ sales will come from breakfast foods and beverages. Representative prices are as

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follows: 1 for tea, $3.00 for coffee with milk. 10 birr for beyeaynet, 3.50 for bonbolino,

sandwiches 12 ----------

A comprehensive survey was made of local restaurants break fastfoods and drinks on their
menu. The general price range for sandwiches was 13.00 to 20.50, .9.00 birr to 10.50 for soft
drinks, and 5 birr for coffee. Bye ayenete 15 birr to 25 birr.

Breakfast foods price Beverages price

Chachbesa 15.00 Tea 1.00
Fetira 18.00 Coffee 3.00
Firfer 12.00 Milk with Coffee 4.00
Silse 13.00 Beso Juice 5.00
Ruz with vegetables 13.00 Yogurt 10.00
Pasta with vegetables 13.00 Soft Drinks 8.00
Foul 11.00
Desserts 9.00
Sandwiches 13.00
Sambusa 4.00
Bonbolino 4.00
Kake 8.00
Lunch
Beyayenetu 11

2.5 Place
EELPAEmployeeand restaurant is plan to operate around EELPAunivesitey campus. Because
our target market easily access our service.Customers would be attracted to EELPAEmployee
because of its scenery and easy accessibility. All of these factors weigh in favor
ofEELPAEmployeeas a potential location, despite the fact that Tokkummacafé and other local
cafe, is located on the Northeast street.

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2.6 Promotion
EELPAEmployeewill be promoted with a variety of marketing methods: customer words of

mouth, bilboard, other types of sales promotion is also used.

2.7 Positioning

EELPAEmployeeand restaurant will position itself as a providing different types of breakfast

foods and special types of foods with its unique flavor for EELPAInstitiute students, instructors
and administration staff.

Preparing unique Candle light program specially in weekend more over the service and quality
of the product will commensurate with the price

 EELPAEmployee is genuinely unique place to gather and meet friends, and enjoy
coffee
 facilities such as free WIFI in the long run , chess games, comfortable chairs,
create a relaxing environment

2.8 Target Market

The general market analysis shows that demand service in café and restaurant sales are on the

increase and will continue to increase. Further, the target market for the service is students of

EELPAInstitiute , Instructors and Administration workers.

Mainly our focus here is Non café students as desirable target market, the growth pattern is
depicted in the following table

Year students of Non café Estimated no of

EELPAInstitiut studentes students served Unmet demand
e by competitor
(70%)
2013 5,926 1467 1027 440
2014 6,074 1504 1053 451
2015 6,264 1551 1086 465
2016 6,477 1604 1123 481

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2.9 Main Competitors

MENISOTA Café serves good coffee and break fast foods (fool.omelet,firfir) as well as lunch
and dinner foods including some international dishes such as burger and club sandwiches in
pleasantly outdoor seating area. Service is particularly fast and friendly.

TOKUMA Cafe: serves break fast foods as well as lunch and dinner foods.

Mother Café: serves Excellent coffee and breakfast food as well as lunch and dinner including
some international dishes such as spaghetti and rice with vegetables.

Caaya Cafe: serves

Segni Caféerves

Kukusha Café and restaurant: serves different types of foods like yefesig megiboch
( misto,kikile……) and fasting foods

Total café: serves good breakfast foods and hot drinks

Student Cafteria in the Institiute campus: serves verities of breakfast foods and beverages

2.10 Market Segments

EELPAEmployeeis targeting the three top segments of the population those are students,
instructors and and administrative workers representing 10% of the population in the Robe town:

2.10.1 Target Market Segment Strategy

EELPAEmployeeserve the students with their special types of needs with affordable price. So we
segment the students with non café, café users, the administrative workers and instructors. Most
of the time non café users served in far distance from the Institiute unlike other competitors our
service area is accessible for our customers. Mother Café and other main competitors were stand
apart from our café . more over we provide quality service, as all of our members graduate
students of EELPAInstitiute and better know how about the special needs of students to capture
the needs of market niche.

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2.10.2 Market Needs

Café and restaurant customer, by nature, are looking for good customer handling Unique
products (specialized beyayentu , local ingredients, custom drinks by the‘star’ barista, beso juicet
abish local drinks ,yoghurt , etc.) quality product and services with fair price. More over they
want to recreate and spare their time by watching TV or playing chases games and other similar
types of games. Hosting or sponsoring local events (entertainment, readings, special clubs and
welcoming fresh students.

2.10.3 Market Growth

As we observe in Robe city and in the Institiute campus consumers were drinking ye jebena
buna. The sales of coffee dominate sales of hot beverages in robe city as well in the campus, and
it will expect to increase in the next year by 3%. More over the demand for food items also
increase as long as there is good customer handling and providing quality service for the
customer. (First survey)

3. Marketing Strategy and Implementation

EELPAEmployeeand restaurant will sustain to provide a quality product and service with
relaxing environment and an ideal café to visit with friends. The café’s baristas and our all staff
will be extremely knowledgeable and offer assistance in any types of service that we provide.

3. 1 SWOT Analysis
The SWOT analysis examines the café’s strengths and weaknesses that need to be addressed.
Further, this section examines the opportunities presented to Café as well as potential threats.

Strengths

 As we all are graduate students from the Institiute , more understanding on the needs of
our target customer.
 Since we are from different background diversified ideas will be created.,
 our chair man is graduated from Management
 good moral of the group to change

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  good collaboration and team work
 member’s knowledge of the local culture eating habit and other
 Good relationships with the students of the Institiute because knows the Institiute
environment
 Provide quality service
Weaknesses

 EELPAEmployee has a minimal budget and is competing against the existing

business market.
 Lack of experience in the aspect of customer handling and customer behavior
 Some of the meals we provide for customer are also found at neighbor
restaurant
 Some raw materials that we use for production is not from local areas which
results high cost of the production
 Lack of motivation in some aspects of the daily routine business activities
 Skill gap among memberes
Opportunities

 Good collaboration of the Institiute management

 Good initiation of (COOPI) to assist graduate student
 Good government support towards MIS business
 Increasing demand of customer for food and beverage services
 Availability of the raw materials in the local market
 Low quality of goods and services that are found in the competitors
business
 The establishment of dairy farm product market by our collogues and used
as our supply chain
 The existence of EELPAInstitiute near to our Café and restaurant
 The incremental of non café students with substantial amount in
EELPAInstitiute

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Threats

 The existence of competitors which afford their product or service with

relatively low price
 Fluctuation of market demand
 Seasonality of some inputs
 Continuous incremental of house rent expenses
 Inflation
 Variable mood of customer
 Unable of the supplier to provided all the ingredients timely
 The tendency of non café students to serve outside or go far distance in the
city
 Many competitors in the area

Strategy Pyramid

This indicates we use different strategies to achieve our goals by using SWOT analysis matrix as
follows:

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 In the short-term, a number of promotions and activities are planned around launch of
the business to create awareness. We will prepare flyers , as well as countertop
displays and posters .
 In addition, during its first year of operations the EELPAEmployeeand restaurant
will pass out a limited number of coupons for a free cup of coffee to prospective
customers visiting our business center.
 Retain our customers by providing quality and range of services that help us to
capture customers and loyal to our business
 Meet the increasing demand of customers by customer handling techniques of our
skill members
 Kept the materials which are not perishable easily to mitigate the risk of inflation
 Use as supply chain of our colleagues and make contract buying to minimize the risk
of higher price of ingredients

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 4. Marketing Strategy and Positioning
As customer needs are always in dynamics by nature, our business strive to go in line with
diversified needs and interests by identifying through research special needs of customer. Based
on this our services will be best fit the needs and wants of customer. This includes Candle light, ,
pottery reading nights, arrangement of entertainment program wel coming students and organize
bands.

Haawi Cafe and restaurant utilizes a focus strategy on its market. By specifically targeting four
segments they can cater specifically to their needs.
4.1 NONE CAFÉ

EELPAEmployeeand restaurant will target this market by their habit of consumption preference
will serve by preparing customized products and service.
4.2 café users

The café will attract campus café users by providing quality breakfast foods and unique flavor
tea and Coffee as well as providing interesting games in the customer area.

4.3 ADMINISTRATIVE WORKERS

The third targeted markets, Institiute administrative workers. The café will have long term plans
to attract the administrative workers to using our service on daily basis. Because most
administrative staff that employee in the main campus came from Goba. So it is a good
opportunity for our café to attract and retain loyal customers.
4.4 INSTRUCTORS

Most EELPAinstructors are young so this create a good opportunity as long as we provide
quality service with special customer handling

4.5 Pricing Strategy

Our pricing strategy is low price to increase sales and get market share. Once market share has
been captured may well then increase their price.

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4.6 Promotion and Advertising Strategy
The good advertising and promotion for our café and restaurant is by free delivery, word of
mouth advertisement, and prompt, courteous and efficient service. Fifteen days prior to opening,
distinct billboard ads will advertise the launch of the café and restaurant. in addition or business
plan to use flyers to local to surrounding customers. one fortune aspect of the restaurant business
is that once a potential steps into the establishment, the chance of purchase are very high.

More over we will develop a simple face book page, which will provide basic information about
the business, the menu, and links to their presence on the aforementioned social media channels.

4.7 Sales Strategy

The Haawi and Café will use the following methods to increase sales revenue :
 The baristas are the salespeople and have a great deal of influence over the customer
ordering process. baristas will have some form of sales and customer service training
to make each transaction active, rather than passive. Sales contests will emphasize
high margin items or cross selling
 The menu will focus on the most profitable products sold. The café will always draw
customer attention to the most profitable products.
 As warranted, the café will raise prices to boost brand image. Prices communicate a
perceived value of a product; so if set too low, the customers might assume that the
beverages are inferior compared to the competition.
 Monitor flavoring inventory – Excess flavoring inventory ties up capital and valuable
back room space for storage.
 Control waste and theft – audit sales and inventory reports to evaluate ingredient
waste due to inefficient preparation, returned drinks and employee consumption..
 Monitor and evaluate hours of operation
5. Sales Forecast
The sales forecast assumes a 5% increase in revenues during Year Two and 10% increase in
Year Three. The following chart shows estimated sales over the next three years.

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 Table
Annual sales forecast

Annual sales forecast 2009 2010 2011

Food items 799,200 839,160 923,076
Beverages 684,000 718,200 790,020
Total Income 1,483,200 1,557,360 1,713,096
Cost of sales
Food items 665,100 698,355 768,190.5
Beverages 558,000 558,900 614,790
Total cost of Sales 1,223,100 1,257,255 1,382,980.5
Gross Margin 260,100 300,105 330,115.5

5.1 Sales Programs

The EELPAEmployeeand restaurant will run employee sales competition – selected group
members
are the salespeople and have a great deal of influence over the customer ordering process. All
baristas will be required to have sales and customer service training to make each transaction.
The sales competition will emphasize high margin items.

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5.2 Work plan

Listed below are the milestones for the EELPAEmployeeand restaurants

:
Activities Responsibility July Aug Aug 30
10-
Training on Business All memberes completed
plan preparattion
Rent house for Cafe All memberes

Purchase of furniture Memberes

and Decor and mentores
Assemble and hire memberes
Bariesta
Advertise Selected
memberes
Open for business All memberes

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6. Organization and Management
6.1 Organizational Structure
EELPAEmployeeand restaurant understands the importance of strong management team plays a
great role in operation. The strength of our management staff positions us for success. Day to day
operational management will be conducted by Restaurant Manager. in addition to the
management of the day to day operation, , finance manager within the company, will see
oversee menu development, purchasing, portioning , pricing and inventory control, including
approval of all financial obligation of our business. Restaurant Manager will plan, develop, and
establish customer service policies and objectives and write, explain and enforce employee’s
manual for all employees related policies. Responsibilities for hiring and firing employees lie
solely with manager, and any decisions in these areas will be made jointly.

General Manager

House Kitchen
keeping Manager Waiter Finance

steward Helper Bar men

6.2 Management Team

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General Manager

General Manager duties include coordinating the day to day operation of the business. Planning,
organizing, directing and controlling the activities of all types of activities in the Restaurant.

Finance Manager

Finance Manager distributes the financial resources of a Restaurant, is responsible for the budget
planning of recipe based on available menu, and supports the manager by offering insights and
financial advice that will allow them to make the best business decisions for the business.

Collects purchase needs from kitchen Manager and other user departments facilitate purchasing
activities for in collaboration with the manager.

Casher: collect daily sales revenue of the restaurant, reporting sales revenue timely

kitchen manager

Manage kitchen staff and coordinate food orders. Supervise food prep and cooking. Check food
plating and temperature. Establish portion sizes. Schedule kitchen staff shifts. Price menu items
in collaboration with the Restaurant Manager.

Kitchen Helper

Kitchen Helpers perform various cleaning, maintenance, preparation, and stocking duties in the
kitchens of restaurants, wash dishes, help Cooks prepare meal ingredients, and clean kitchens

Waiter

Providing excellent wait service to ensure satisfaction. Taking customer orders and delivering
food and beverages. Making menu recommendations, answering questions and sharing additional
information with restaurant customers.

Bar Man

Mixing beverages like tea, coffee or Juice by using an extensive range of ingredients including
liquor, bitters, soda, water, sugar, and fruits. Taking beverage orders from customers or wait staff

18
and serving drinks as requested, paying extreme attention to detail. Satisfying patron requests in
a timely manner.

House keeping

Housekeepers handle light cleaning needed for the upkeep of restaurant. Clean rooms, halls
and replace toiletries.

Steward

A restaurant steward's responsibilities are to assist a restaurant with cleaning, dishwashing, and
restocking the kitchen and dining room.

6.3 Personnel Plan

Initially the café will hire 1 baristas and 1 cooker. In Year 2, the café plans to hire 1
additional full time barista.
Table Personal plan
Position Year 1 Year 2 Year 3
Restaurant Manager 60,000 60,000 70,000
Finance Manager 48,000 48,000 55,000
Casher 36,000 36,000 45,000
Kitchen Manager 48,000 48,000 55,000
Waiter1*4 12,000 12,000 12,000
Kitchen Helper 12,000 12,000 12,000
Bar Man 24,000 24,000 30,000
Steward( Cleaner)2*2 12,000 12,000 12,000
House keeping 12,000 12,000 12,000
Total cost 3 312,000 312,000 342,000

1
Total waiter require four, two on the morning shift and two in the Afternoon
2
Two cleaner require
3
Bonus will be calculated if the restaurant get substantial profit. Bonus proportion to profit decided by the
management

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7. Financial Plan
The financial plan will cover the following:

 Required Cost of Start-Up

 Profit and Loss
 Cash Flow
 Balance Sheet
 Financial Ratios
7.1 Important Assumptions
 The sales forecast is conventional and assumes a 5% increase in every Year
 The analysis accounts for economic seasonality – wherein some months revenues peak
(such as during summer) and wane in slower months.
 Moderate ramp- up in staff over the 3 years forecast
 In general, most Restaurant have an 85% gross profit margin

7.2 Start-Up Costs

Table

Following are the needed start-up costs associated with EELPAEmployee and restaurant

Operating capital 23,779

Salaries and Wages 11,200
Legal and Accounting fee 500
Rent deposits 18,000
Advertising and promotion 4000
Other start up costs 3000
Working Capital(Cash on 5,000
hand)
Total start up Expenses 65,479

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 Start-Up Assetes Quantity cost Total cost
Table 10 500 5,000
Chair 50 500 25,000
Tea Machine 1 50,000 50,000
Oven 1 80,000 80,00
plate 100 100 10000
Juice machine 1 3000 3000
Chips Maker 1 2000 2000
Burger Oven 1 3000 3000
Cutleries big 5 100 500
Cutleries Small 50 100 5000
Frigg 1 20,000 15,000
Amplifier 1 5,000 5,000
Flat screen TV 62 inch 1 40,000 40,000
Rack display for salon 1 10,000 10,000
Bin 1 10,000 10,000
Rack for kitchen 1 10,000 10,000
Cooking Equipment 5,000 5,000
Furniture and fixture 5,000 5,000
Other Fixed Asset 21,021 21,021
Total start-up Assetes 194,521
Total required Start-up 260,000
costs

7.3 Source and Use of Funds

All source of funds expected to be donated by COOPI INTERNATIONAL NGO and

EELPAUniversitey

Annual sales forecast 2009 2010 2011

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Food items 799,200 839,160 923,076
Beverages 684,000 718,200 790,020
Total Income 1,483,200 1,557,360 1,713,096
Cost of sales
Food items 665,100 698,355 768,190.5
Beverages 558,000 558,900 614,790
Total cost of Sales 1,223,100 1,257,255 1,382,980.5
Gross Margin 260,100 300,105 330,115.5

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 The Break even analysis
The break-even analysis indicates that 797,928.80 will be required in monthly sales revenue to reach the break-even point.

53,000

50,000

5000 7,000 10,000 12,000

Break-even Analysis; Units Break-even 10,000 Sales Break-even revenue 53,000

Assumptions:
Average Per-Unit Revenue birr 7 Average
Per-Unit Variable Cost birr 2 Average
Estimated Monthly Fixed Cost birr 50,000

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 7.4 Projections
Projected Profit and Loss
The estimated profit and loss for the EELPAEmployeeand Restaurantare as follows:

Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 1,483,200 1,557,360 1,635,228 1,716,989.4 1,802,838.8 1,892,980.74 1,987,629.7 2,087,010 2,191,360 2,300,928
Less:
Operating
exp. 1,223,100 1,257,255 1,320,117.7 1,386,123.5 1,455,429.6 1,528,200 1,604,610 1,684,840 1,769,082 1,857,536
Gross
Margin 260,100 300,105 315,110.20 330,865.81 347,409.12 364,780.7 383,019.7 402,170 422,278 443,392
Total
Salaries 26,400 27,720 29,106 30,561.3 32,089.36 33,693.8 35,377.6 37,146.4 39,003.72 40,953.8
Advertising 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
Rent 41,000 41,000 41,000 43,050 45,202.5 47,462.6 49,835.7 52,327.4 54,943.7 57,690.88
Depreciatio
n 3000 3000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
Total
Expenses 66,3000 75,720 77,106 80,611.3 84,291.86 88,156.4 92,564.22 97,190.4 102,049.9 107,152.3
Less income
tax 30% * 58,140 67,315.5 71,401.2 75,076.35 78,935.17 82,987.2 87,136.6 91,493.4 96,068.4 100,871.9
Net Income 135,660 157,069.5 166,603 175,177.4 184,182.08 193,637.0 203,318.3 213,486.6 224,159.7 235,368.7

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 Table 8.6: Projected cash flow statement

Year Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Yea
Cash out flow 260,000 0 0 0 0 0 0 0 0
income 0 1,483,200 1,557,360 1,635,228 1,716,989.4 1,802,838.8 1,892,980.74 1,987,629.7 2,087,010 2,
Total cash inflow 0 1,483,200 1,557,360 1,635,228 1,716,989.4 1,802,838.8 1,892,980.74 1,987,629.7 2,087,010 2,
Land leas ex 0 0 0 0 0 0 0 0 0

Cash flow from

operating
activity 0 1275041.7 1291031.7 1312329.3 1334052.9 1356210.9 1378812.1 1401865.3 1425379.5 144
Terminal cash
flow 0 66,3000 75,720 77,106 80,611.3 84,291.86 88,156.4 92,564.22 97,190.4 102
Total cash out
flow 0 1,341,341.7 1,366,751.7 1,389,435.3 1,414,664.2 1,440,502.4 1,466,968.5 1,494,429.5 1,5222,569.9 1,55
Net chash flow -260,000 141,858.3 190,608.3 245,792.7 302,325.2 362,335 426,012 430,800 450,645
EELPAEmployeeand restaurant

Projected Cash Flow Statement

This business plan indicates the promising nature of the business with an internal rate of return (IRR) value of 50% and
Implementation time table

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