BUSINESS PLAN

FOR

KUANGLU RESTAURANT

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 Table of Contents

Executive Summary ........................................................................... 3

Market Description ............................................................................ 4

Competitive analysis ......................................................................... 4

Marketing Strategies .......................................................................... 4

Manufacturing Plans ..........................................................................5

Financial Projections .......................................................................... 5

Income Statement ..................................................................... 6
Cash Flow Analysis ............................................................................ 7
Balance Sheet ..................................................................................... 8
Graph ……. ........................................................................................ 9

Contingency Plans ............................................................................. 9-10

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Executive Summary

Guo Ya Hui has been involved with the food industry for several years. He opened their
first restaurant in Harare in 2019. Although praised for the quality of many of the items on
his menu, he has attained a special notoriety for their desserts. After years of requests for
his flavoured whipped cream toppings, he has decided to pursue marketing these products
separately from the restaurants.

Guo Ya Hui has developed several recipes for flavoured whipped cream topping. They
include chocolate, raspberry, cinnamon almond, and strawberry. These flavoured dessert
toppings have been used in the setting of his restaurant over the past 2 years, and has been
produced in large quantities. The estimated shelf life of the product is 21 days at
refrigeration temperatures and up to six months when frozen. Mr Guo Ya Hui intend to
market this product in its frozen state in 8 and 12-ounce plastic tubs. He also intends to
have the products available in six ounce pressurized cans. Special attention has been given
to developing an attractive label that will stress the gourmet/specialty nature of the
products.

Distribution of Kuanglu Restaurant Whipped cream products will begin in the Central business
District of Harare. Mr Guo Ya Hui have an established name and reputation in this area, and
product introduction should encounter little resistance.

Financial analyses show that the Restaurant will have both a positive cash flow and profit in the
first year. The expected return on equity in the first year is 10.88%

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Market Description

The flavoured whipped toppings that Kuanglu Restaurant will market will fall into two
distinct categories: Dairy products and gourmet/specialty foods. This business plan will look
at these two markets separately.

Dairy Products: While the overall consumption of dairy products in Zimbabwe has
declined from 2011 to 2019 the market has seen a slight increase in the past four years
(Census of Agricultural Products, 2019). The Minister of Agriculture expects the
consumption of dairy product in Zimbabwe to continue a modest increase of 1.5-2% per
year, which is significant in this $5 million annual market. This is attributed in part to
more sophisticated processing techniques which have increased the variety of dairy
products available, as well as the increased awareness of the benefits of a calcium rich diet

Competitive analysis

There are several brands of whipped topping available in mainstream retail outlets. In the
grocery stores in the Harare CBD area, all of the ready-to-eat varieties are produced by
large players, specifically Probrands and Dairiboard. There are also dry mixes available,
but these are not direct competition for Kuanglu Restaurant. The major completion will be
from existing companies that are well established and have already captured a market.
Such companies have got added advantage over our Restaurant in the sense that they
already have a business relationship with some of the clients which are also our clients

Marketing Strategies

Distribution of Kuanglu Restaurant products will begin in the Central Business District of
Harare. Mr Guo Ya Hui has established a name and reputation in this area, and product
introduction should encounter little resistance. The Restaurant intends to maintain an
extensive marketing campaign that will ensure maximum visibility for the business in its
targeted market. The Restaurant will be involved in advertising of our products on the
websites and advancing to direct our efforts to advertising on the print media, television
and also by the use of door to door advertising using the best sales executives who are well
vested in the industry

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Manufacturing Plans

Because Kuanglu Restaurant owns and operates a restaurant in Harare, they have facilities
available to them for a certain amount of the production.

Kuanglu Restaurants has a 50-gallon high speed mixer, a pressurized tank in which the
product can be gassed with nitrous oxide, and a 10-foot by 10-foot walk-in freezer, enabling
them to both produce and store frozen tubs of Whipped cream. This process is already
established on a commercial scale. They are in fact already making Whipped cream for use
in their restaurant, and storing it in the freezer.

Mr Guo Ya Hui feels that the specialty nature of the product will lend itself well to the
pressurized can, to pursue that opportunity, Kuanglu Restaurants has contracted production
of the pressurized 6-ounce cans with Farm Fresh. A non-competition/non-disclosure
agreement is in place.

Financial Projections

The following pages include multiyear projections for income, cash flow, balance statement,
as well as estimated financial ratios. These projections are for the historical financial
information on Kuanglu Restaurant is available upon request.

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Income Statement

INCOME
STATEMENT Year 1 Year 2 Year 3 Year 4 Year 5
USD USD USD USD USD

Sales 870,000 922,200 977,532 1,036,184 1,098,355

Cost of sales (248,501) (273,352) (297,953) (321,789) (353,968)

Gross profit 621,499 683,648 745,177 804,791 885,270

Administration
Selling and
distribution (343,148) (377,463) (411,434) (444,349) (488,784)

Profit from
operations 278,351 306,186 333,742 360,442 396,486

Finance costs (26,250) (21,499) (16,511) (11,274) (5,774)

Total profit/
(loss) before
tax 252,101 284,686 317,231 349,168 390,712

Taxation (64,916) (71,407) (77,834) (84,061) (92,467)

Profit for the

year 187,185 205,903 224,434 242,389 266,628

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Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5

NON CURRENT
ASSETS
Machinery &
Equipment 330,000 313,500 297,000 280,500 264,000

Furniture and Fixtures 10,000 9,000 8,000 7,000 6,000

Office and IT
Equipment 12,000 10,800 9,600 8,400 7,200

Motor Vehicles 27,000 25,650 24,300 22,950 21,600

Total 379,000 358,950 338,900 318,850 298,800

CURRENT ASSETS

Stocks 864,000 794,354 664,695 731,078 391,799

Debtors 4,201 4,118 4,521 4,964 5,451

Cash at bank and in
hand 5,000 307,173 687,341 889,180 1,523,056

Total 873,201 1,105,645 1,356,556 1,625,222 1,920,307

Total assets 1,252,201 1,464,595 1,695,456 1,944,072 2,219,107

LIABILITIES

Provisions 64,916 71,407 77,834 84,061 92,467

Total current
liabilities 64,916 71,407 77,834 84,061 92,467
Equity

Share capital 100 100 100 100 100

Shareholders
contributions 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Retained earnings 187,185 393,088 617,522 859,912 1,126,540

Total Equity 1,187,285 1,393,188 1,617,622 1,860,012 2,126,640

Total equity and

current liabilities 1,252,201 1,464,595 1,695,456 1,944,072 2,219,107

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Cash flow Statement

CASHFLOW Year 1 Year 2 Year 3 Year 4 Year 5

USD USD USD USD USD

Operating profit /(loss) 187,185 205,903 224,434 242,389 266,628

Depreciation - 20,050 20,050 20,050 20,050

Cash generated (utilized)
from operations before
working capital changes 187,185 225,953 244,484 262,439 286,678
Working capital movements

Inventory (864,000) 69,646 129,659 (66,384) 339,279

Debtors (4,201) 83 (403) (443) (487)

Net movement in working
capital (868,201) 69,729 129,256 (66,827) 338,792

Cash generated (utilized)

from operations (681,016) 295,682 373,741 195,612 625,470

Net Interest paid - - - - -

Net cash generated
(utilized) from operating
activities (681,016) 295,682 373,741 195,612 625,470

Capital expenditure (379,000) - - - -

Net cash generated
(utilized) in investment
activities (379,000) - - - -

Additional borrowings 1,000,000 - - - -

Provisions 64,916 6,492 6,427 6,227 8,406

Sale of shares/ Share
capital raised 100 - - - -
Net cash raised from
financing activities 1,065,016 6,492 6,427 6,227 8,406

` Net increase (decrease) in

cash and cash equivalents 5,000 302,174 380,167 201,839 633,876

Opening cash and cash

equivalents - 5,000 307,173 687,341 889,180
Closing cash and cash
equivalents 5,000 307,173 687,341 889,180 1,523,056

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Contingency Plans

While careful planning was involved in setting the strategic goals for the restaurant it may
be that these goals are not met. Mr Guo Ya Hui has decided to set a zone of acceptability for
meeting sales and financial objectives. For both sales and financial objectives, a 10%
negative deviation from expected sales and projected returns on assets will be accepted.
However, if sales objectives and returns on investment are less than 90% of projections,
certain actions will be taken. These actions include:

1. For unacceptable sales levels during the first year: Kuanglu Restaurant will
combat this problem by doubling in-store promotions at the restaurant and in areas of
distribution. Mr Guo Ya Hui will personally arrange and carry out these promotions on
weekends at peak shopping times. If sales do not increase within one month of the in-
store promotions, Kuanglu Restaurant will advertise in the weekly shopping circulars of
the stores for one month.

2. For unacceptable sales levels: After 6 months of marketing products in these two
metropolitan areas, sales will be evaluated. If not meeting acceptable sales levels,
Kuanglu Restaurant will consider contracting with local marketing to carry out the in-
store promotions and push the products to the stores. This contractual relationship will
be based upon sales commissions (to be determined by the specialists and Kuanglu
Restaurant), thereby providing incentive for the specialists to generate sales.

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3. For unacceptable business liquidity: In the event that the business lacks liquidity,
Kuanglu Restaurant will examine their accounts receivable procedures to ensure that
payment periods are just and that payments are being received in a timely manner. Also,
cash flow projections will be reviewed to determine if unforeseen cash layouts/expenses
are undermining the financial health of the enterprise.

4. For unacceptable returns on equity: If returns on assets and owners’ equity fall
below acceptable levels, Kuanglu Restaurant will first examine and compare the per-unit
costs of production and marketing with sales prices. If the margins are too thin, a price
increase for products sold in specialty/gourmet shops will be considered. However,
because established non-flavored substitutes already exist at lower prices, the lost sales
resulting from a price increase may make this option unsuitable for products sold in
general food stores. Kuanglu Restaurant will therefore assess opportunities for
minimizing production costs and examine different marketing/distribution alternatives.

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