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Group 5

Valerichelle
Food Services
Inc.
A Proposal to Operate an
Orange Brutus Branch in
Bugo, Cagayan de Oro City
Executive
Summary
Executive
Summary
Services
o Great Food
o Clean and friendly environment
o Low prices
o Healthy Dishes

Customers
o DMPI Workers includes Project Hires and Contractual
o Students
o Workers & Residents
o Travelers

Management
o Valer, Michelle, Richard
Objectives
a) Open an Orange Brutus outlet at
Bugo, CdO on June 1, 2005
b) Sales of Ps 5.6 million the 1st year and
Ps 6.2 million in Year 2.
c) Keep Food cost below 45% of revenue
d) Maintain control – costs & operations
Mission
Orange Brutus will strive to be a great place to
eat combining highest quality food at
unbelievably low prices in a clean and friendly
environment. We want fair profit for the
owners, and a rewarding place to work for the
employees.

We must deliver on this pledge 100% of the


time without exception.
Keys to Success
a) Quality food, services and facilities
b) Proper Pricing
c) Product Lines
d) Advertising and Promotion
e) Availability of Raw Materials
Company
Summary
Company
Summary
Valerichelle Food Services, Inc.
will apply for an
Orange Brutus franchise
for an outlet in
Bugo, Cagayan de Oro City
Company
Ownership
The company will be formed by
three (3) XU MBA students:

a) Bautista VP
b) Comique MB
c) Siwagan RR
Start-up Summary
Particulars Amount in PhP

Start-up Assets
Franchise Fee 300,000
Warranty Deposit 50,000
Sub-total 350,000
Leasehold Improvement 200,000
Operating Equipment / Utensils 500,000
Initial Inventory 75,000
Sub-total 775,000
Motorcycle - for delivery 75,000
Total Start-up Assets 1,200,000

Start-up Expenses:
Start up Cash on Opening day 108,000
Building Rental – for 6 months 90,000
Registrations, permits and licenses 60,000
Store Launching/Opening Activities:
Advertising - (see details in Exh ) 42,000
Sub-total 300,000
Grand Total – Requirements 1,500,000

Funding:
Owners' Equity
Bautista, Valeriana 800,000
Comique, Michelle 400,000
Siwagan, Richard 300,000
Total Investment 1,500,000
Start-up Capital
Start-up Capital
Opening Cash
Franchisee fee /
Balance
Warranty Deposit

Expenses

Initial Inventory

Capital Assets

Franchisee fee / Warranty Deposit Capital Assets


Initial Inventory Expenses
Opening Cash Balance
Company Location
& Facilities
Plant Location Butuan

International
Port

Villa Trinitas Subdivision

Jeepney
Station
CALTEX

Bukidnon, Davao
To Puerto Barangay Hall SHELL

PETRON
Bus
Station

Puerto Public Market

Cagayan de Oro
Floor Plan
O RAN GE BRUTUS
Bugo, Cagayan de Oro City
Group 5 ( name)
PROPOSED FLOOR PLAN

18 m
7m Male
CR 11
Female Seats
CR
Working Area Condiments/
Freezer Ref Garbage
Aircon

Storage
Kitchen
Grill 24
Seats
Supplies

Microwv Working Area Fryer


Office Drinks
5m

Garbage

Ref
Counter Aircon 30
Seats
Tools/Eqpts

Aircon

Condiments/
Garbage 18
Seats

24
Seats
Summary of Section and Area Dimension
Section/ Area Dimension (m) Size

Kitchen 3 1/2 x 7 24.5 m2

Food Service Area 1 1/2 x 7 10.5 m2

Eating Area 11 x 5 55 m2

TOTAL 18 x 5 90 m2

Seating Capacity
Area Table & Chairs Seating Capacity
Inside Long side-table 11
6 tables for 4 24
6 tables for 4 24
3 tables for 2 6
Outside 10 tables for 4 18
6 umbrella-tables for 4 24
TOTAL 107
 High visibility
 Easy access to all destinations –
Bukidnon, CdO, Butuan, etc
 Heavy blue-collar worker makeup in
the community
 No over abundance of competition in
the area (same type)
Services
 Services – provide quality food 7 days a week
 Competitive Comparison
• Lower price point
• No tipping
• Speed of service
• Clean, aircon
 Future Services
• Slow and cautious growth during its initial start-up phase
• Franchiser continue its food technology and development
and will share to all franchisee
• Target to introduce new product – 1 for each quarter
Market Analysis
Summary
 Market Analysis Summary
 Market Segmentation
 Market Needs / market survey
 Wants Variety and flavor in its food
 Seeks strong value at low prices
 Looks for speed of service
 Wants a convenient location for dining
 Appreciates promotional items and activities
 Insists upon a clean, cool, friendly and attractive dining environment
 Market and Industry Analysis
 Competition
Ave Annual Ave Ave.
Sales Sales/Mo. Sales/Day
Outlet /Restaurant

1) Consumers Coop – DMPI 24,102,000 2,008,500 77,250

2) BOEA Canteen 3,000,000 250,000 9,615

Sub-total DMPI 27,102,000 2,258,500 86,865

3) Outside carenderias:

a) Grace Food house 4,200,000 350,000 13,462

b) JB Restaurant 2,400,000 200,000 7,692

c) Princess 1,800,000 150,000 5,769

d) Ayelet Bakeshop 900,000 75,000 2,885

4)“Lechon” manok/liempo - LD Cons 3,075,600 256,300 9,858

5 smaller stalls 4,500,000 375,000 14,423

Sub-total outside DMPI 16,875,600 1,406,300 54,088


Grand Total – market 43,977,600 3,664,800 140,954
Strategy &
Implementation
Summary
 Strategy and implementation strategy
 Competitive Edge
 Popular prices
 No tipping
 Fast service

 Marketing strategy
 Pricing
 Positioning
 Marketing Tactics
 Promotion
 Marketing Program
 Sales Strategy
Estd No. of Customers / Frequency

Annual
Particulars Annual Monthly Daily
Amount

Total patronage frequency 126,719

Average sales / transaction 45

Sub-total sales – regular 5,702,374 126,719 10,560 352

Total seasonal demand 3,781

Average sales /transaction 150

Sub-total seasonal 567,122 3,781

Estimated Gross Sales 6,269,495 130,500 10,875 363


 Sales Programs

Grand Opening
Budget
Sticker design
Orange Brutus
Delivery
Bugo Highway
857-8888/74-8888
Poster & Flyer design
Orange Brutus
Bugo Highway,
Fronting Del Monte Cannery
857-8888/ 74-8888

Opens on June 1, 2005


With
With Sheree
Sheree of
of Viva
Viva Hotbabes
Hotbabes

Free
Free Ice
Ice Tea
Tea on
on the
the Opening
Opening Day!
Day!
Try our Power P25 Snacks (with Iced
Tea)
Brutus Power Meals for as low as P29
only
Brutus Budget Meals for P39.00 only
(With Rice & Softdrink)
•Vegetable Lumpia & BBQ
•Vegetable Lumpia & Beefstew
•Vegetable Lumpia & Pork Adobo
•Vegetable Lumpia & Chicken Wings
•Vegetable Lumpia & Ham Steak

Home
Home of
of the
the Best
Best Burgersteak
Burgersteak &
&
Fresh
Fresh Fruit
Fruit Shakes
Shakes
Streamer design
Orange Brutus
Bugo Highway, fronting Del Monte Cannery

Opens on June 1, 2005


With Sheree of Viva Hotbabes
Free Ice Tea on the Opening Day!

Home of the Best Burgersteak & Fresh Fruit Shakes


Try our Power 25 Snacks (with Iced Tea)
Brutus Power Meals for as low as P29 only
Brutus Budget Meals for P39.00 only (With Rice & Softdrink)
Advertising Media Exposures
Advertising Media Coverage

Airtime: 3 weeks before the opening


Radio
Schools, Offices, Posts at the three areas
(Bugo, Puerto & Tagoloan)
Posters
Trees along Carmen Hill Highway
Tagoloan Highway
Agusan Highway
Streamers Bugo Highway
Proposed Site

Motorellas, Jeepneys, Trisikads


Schools, Offices,
Terminals

Stickers Offices, Clinics, Banks, Hospital at the three areas


 

Flyers
Gantt Chart for the Activities on Each Stage

Introduction Stage
Activities/ Month 1 2 3 4 5
Radio          
Grand Opening          
Flyers          
Stickers          
Growth Stage
Activities/ Month 1 2 3 4 5
Flyers          
Stickers          
Maturity Stage
Activities/ Month 1 2 3 4 5
Flyers          
Decline Stage
Activities/ Month 1 2 3 4 5
Flyers          
Advertising Budget Summary
Estimated
Stage Promotional Activities
Cost

Introduction
rand Opening 500
1,000
Priest 500
1,150
Hotel Accommodation of Guest
1,000
Balloons - 2 dozens 33,600
1,800
Flowers - 2 toppery stand 400
1,250
800
Radio – production 42,000
Growth 400
Radio
Flyers –- 200
airtime
pcs3 weeks 500
900
Streamers - 5 pcs
Stickers - 200 pcs

Maturity  Flyers -- 40
Posters
ubtotal 200pcs
pcs 400
Subtotal 400
Stickers - 500 pcs

Decline Flyers
 Flyers - 200
- 400 pcs
pcs 400
Subtotal 400
ubtotal

TOTAL   43,700
Management
Summary
Organizational Structure
O RANGE BRUTUS
Bugo, Cagayan de Oro City
Valerichelle Food Services Inc.
PROPOSED SET-UP

Franchise Owners

Counter Supervisor

Admin Staff

Cashiers Cooks Dining Crews


2 4 3
Management Team
1) Bautista VP - CPA, will be responsible for all company finances and accounting
as the Chief Financial Officer. She earned her Bachelors of Science in
Commerce, major in Accounting from Polytechnic University of the Philippines.
Her financial control skills will be invaluable in keeping Orange Brutus on track
and profitable.

2) Comique MB – will act as HR Manager and will focus on the personnel issues.
She has earned her Bachelors of Science in Industrial Engineering from the
University of San Carlos. She has three (3) years experience as HR specialist at
Del Monte Philippines, Inc.

3) Siwagan RR - CPA, will be the Operations Manager. Richard has extensive


experience of organizations ranging from six to 12 people. He earned his
undergraduate course from Cagayan de Oro College. He has extensive Audit
experience and currently working as Accountant of PANTEL 10FAB for three (3)
years already.
Management Team Gaps
Personnel Plan
Financial Plan
Financial
Assumptions
Financial Assumptions

1) Patronage frequency is computed based on the


target population and average sales at Ps 45.
This is also near the per capita consumption of
P541.17 a year.
INCOME Total CDO Total Misor Total
BRACKET (Puerto/Bugo) (Tagoloan) Combined
# of Household 98,937 122,070 221,007
Population 461,877 664,338 1,126,215

INCOME
Total income (in '000 pesos) 18,069,999 10,942,328 29,012,327

EXPENDITURE
TOTAL (in '000 pesos) 13,083,099 8,665,676 21,748,775

Expenditure on certain items: in % % %


Total Food 42.6 50.7
Food Consumed at Home 39.2 48.8
Food regularly Consumed outside the Home 3.3 1.9
Other expenditures 57.4 49.3

Total Expenditures (in '000) 13,083,099 8,665,676 21,748,775


Total Food (42.6%) 5,573,400 4,393,498 9,966,898
Food consumed at home (39.2%) 5,128,575 4,228,850 9,357,425
Food consumed outside the home (3.3%) 444,825 164,648 609,473

Per capita - food consumed outside the home 963.08 247.84 541.17
Average per month 80.26 20.65 45.10
2) Initial franchise fee is Ps 300,000 plus a
security deposit of Ps 50,000. The term is 5
years renewable with a 20% renewal fee based
on the latest franchise fee.
3) The franchise fee includes the following:
 Equipment – stainless cooking wares,
kitchen/utensils
 Furniture & Fixtures – tables, chairs, air
conditioners etc
 Training – management and store staff
 Store Launching/Opening – provision of an
“Opening Team” for 7 days after opening
 Marketing Support
4) Royalty fee is 5% of sales and 2% for Marketing
Support Fund
5) CAPITALIZATION.
Start-up capital is around Ph P 1.5 million, which
will be financed by equity as follows:
Investors Amount in Pesos

Bautista, Valeriana 800,000  

Comique, Michelle 400,000  

Siwagan, Richard 300,000  

Capitalization

Siwagan, Richard
20%

Bautista, Valeriana
53%

Comique, M ichelle
27%
6) PROFIT MARGIN.
 During the first year, gross profit margin is
estimated to be 55% of sales.

 In the succeeding years, although gross profit will be


the same at 55% of sales, but an increase in net from
11.9% to 12..6% of sales
7) GROWTH IN SALES.
Sales is estimated to increase by 10% in the second year
and by 20% in succeeding years. This is due to
expected increase in customers’ patronage.
8) PERSONNEL PLAN.
The following is the ideal number of staff and crew for
our type and size of outlet:
 Supervisor – 1
 Cook – 2 to 4
 Admin staff – 1
 Cashier – 2
 Dining Crew - 3
The owners will be hands-on franchisees and each would
be assigned to personally oversee the outlet’s operations.
8)
Salaries & Wages
The following shall be the planned salaries of the outlet’s
staff and crew
Position Monthly Rate

Supervisor 10,000
Cook 8,000
Cashier 7,000
Admin Clerk/Clerk 6,000
Crew 5,000

An annual increase in salary at 8% annually will be


provided.
8)
Fringe Benefits – SSS, Compensation insurance and
Philhealth premiums shall be provided by the company.
Refer to Schedule 2 for details of Employees Salaries and
Wages and benefits.
9) DEPRECIATION CHARGES
 Leasehold improvements shall be depreciated over 10 years as
the term of the lease will be short-term only.
 Equipments, furniture and fixtures are to be provided by the
franchiser. Due to absence of breakdown, the total package shall
be depreciated over 10 years.
 A motorcycle to be used for delivery shall be purchased and to
be depreciated over 4 years.
 Repairs and Maintenance of the equipments and Motorcycle is
also provided at 2% cost when not yet fully depreciated and 5%
of cost after fully depreciation.
10) OTHER EXPENSES.

 SPOILAGE AND WASTAGES. This represents spoiled food,


estimated at 0.01% of sales.

 MISCELLANEOUS EXPENSE. This represents cleaning


materials for sanitation and disposal of garbage, estimated at
0.08% of sales.
Break-even
Analysis
       
Annual Costs    
Fixed Costs
   
  Building Rental   216,000    
  Salaries & Wages   924,000    
  Employee Benefits   154,440    
  Depreciation/Amort of Preoptng Costs   169,150    
  Business Tax and licenses   15,000    
  Utilities   180,000    
  Repairs & Maintenance   15,500    
  Others   50,783    
  Total Fixed Costs   1,724,873    
  Estimated Fixed Costs per Month   143,739    
           
Break-even Analysis:        
  Monthly Units Break-even   6,655    
  Monthly Revenue Break-even   299,457    
           
Assumptions:        
100
  Average selling price per unit   45.00   %
  Cost of Sales - 45%   20.25   45%
  Royalty fees - (5% + 2% MSF)   3.15   7%
  Gross Margin / Unit   21.60   48%
Break Even Chart

400,000
350,000
300,000
250,000
Profit
Sales

200,000
150,000
100,000
50,000
Break-even point
0
Loss
300

900

1,500

2,100

2,700

3,300

4,500

5,100

5,700

6,300

6,900

7,500

8,100
3,900

Units

Sales Total Cost


Projected
Profit & Loss
Projected
Cash Flow
DESCRIPTION YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
OPERATING ACTIVITIES
Net income after tax 668,813 784,783 1,107,569 1,509,960 2,024,572
Depreciation 88,750 88,750 88,750 88,750 70,000
Amortization - Franchise fee 60,000 60,000 60,000 60,000 60,000
Increase in inventories (10,580) (1,058) (2,328) (2,793) (3,352)
Increase in prepayments (81,600) 20,400 20,400 20,400 20,400
Increase in tax payable 314,736 54,574 151,899 189,361 242,170
Increase in VAT payable 373,035 37,303 82,068 98,481 118,177
Sub-total 1,413,154 1,044,753 1,508,358 1,964,159 2,531,968

INVESTING ACTIVITIES
Payment to Franchiser/Assets (1,125,000)

(1,125,000) - - - -

FINANCING ACTIVITIES
Bank loan
Owner's Equity 1,500,000
Decrease in Loans Payable
Withdrawals - - - - -
1,500,000 - - - -
NET CASH INFLOW 1,788,154 1,044,753 1,508,358 1,964,159 2,531,968
Cash, beginning 1,788,154 2,832,907 4,341,265 6,305,425
CASH, END 1,788,154 2,832,907 4,341,265 6,305,425 8,837,392
Projected
Balance Sheet
DESCRIPTION YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
ASSETS:
CURRENT ASSETS
Cash 1,788,154 2,832,907 4,341,265 6,305,425 8,837,392
Inventories 10,580 11,638 13,965 16,758 20,110
Total Current Assets 1,798,734 2,844,545 4,355,231 6,322,183 8,857,502
FIXED ASSETS
Leasehold improvements 200,000 200,000 200,000 200,000 200,000
Equipment/fixtures/Tables/Chairs 500,000 500,000 500,000 500,000 500,000
Motorcyle 75,000 75,000 75,000 75,000 75,000
Total 775,000 775,000 775,000 775,000 775,000
Less: Accumulated depreciation 88,750 177,500 266,250 355,000 425,000
Total Fixed Assets 686,250 597,500 508,750 420,000 350,000
OTHER ASSETS
Secuirty Deposit 50,000 50,000 50,000 50,000 50,000
Preoperating Cost - net 81,600 61,200 40,800 20,400 -
Franchise fee, net 240,000 180,000 120,000 60,000 -
Total Other Assets 371,600 291,200 210,800 130,400 50,000

TOTAL ASSETS 2,856,584 3,733,245 5,074,781 6,872,583 9,257,502

LIABILITIES
Income tax payable 314,736 369,310 521,209 710,570 952,740
VAT Payable 373,035 410,338 492,406 590,887 709,065
Loans payable
Total Liabilities 687,771 779,648 1,013,615 1,301,457 1,661,804
OWNER'S EQUITY
Owner's Equity 1,500,000 2,168,813 2,953,597 4,061,166 5,571,126
Net income 668,813 784,783 1,107,569 1,509,960 2,024,572
Total Equity 2,168,813 2,953,597 4,061,166 5,571,126 7,595,698

LIABILITIES & OWNER'S EQUITY 2,856,584 3,733,245 5,074,781 6,872,583 9,257,502


Business Ratios
ACCOUNTS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Sales Revenue 5,642,546 6,206,800 7,448,160 8,937,793 10,725,351


Less: Cost of sales 2,539,146 2,793,060 3,351,672 4,022,007 4,826,408
GROSS PROFIT 3,103,400 3,413,740 4,096,488 4,915,786 5,898,943
Operating expenses:
Royalty fees 394,978 434,476 521,371 625,645 750,775
Franchise fee - Amortization 60,000 60,000 60,000 60,000 60,000
Building rental 216,000 226,800 238,140 250,047 262,549
Salaries & wages 924,000 997,920 1,077,754 1,163,974 1,257,092
SSS, ECC and Philhealth 154,440 154,440 162,162 162,162 170,270
Depreciation expense 88,750 88,750 88,750 88,750 70,000
Amortization - preoperating expenses 20,400 20,400 20,400 20,400 20,400
Business tax 15,000 16,500 18,150 19,965 21,962
Utilities expense 180,000 189,000 198,450 208,373 193,056
Repairs and maintenance 15,500 15,500 15,500 15,500 19,000
Spoilage and wastages 5,643 6,207 7,448 8,938 10,725
Miscellaneous expenses 45,140 49,654 59,585 71,502 85,803
TOTAL EXPENSES BEFORE INTEREST 2,119,851 2,259,647 2,467,710 2,695,256 2,921,632

INCOME BEFORE INTEREST 983,549 1,154,093 1,628,778 2,220,530 2,977,311


Interest expense - - - - -

INCOME BEFORE TAX 983,549 1,154,093 1,628,778 2,220,530 2,977,311


INCOME TAX 314,736 369,310 521,209 710,570 952,740

NET INCOME AFTER TAX 668,813 784,783 1,107,569 1,509,960 2,024,572


Marketing
Research
120 Respondents
Methods of Research
 Data Analysis

 Survey Questionnaire

 Traffic Count
Occupation of All the Respondents
4% Tagoloan
Residents
4% Bugo Residents

4% Puerto Residents

Travelers
20%

Del Monte
63%
Other Co. Workers
5%

Del Monte Other Co. Workers Travelers


Puerto Residents Bugo Residents Tagoloan Residents
Age of All the Respondents
16-20years
old (8)

More than
30years old 21-25years
(45) old (30)

26-30years
old (37)
Analysis &
Interpretation of
Data
Traffic Count
West to CdO = 329 CdO to West = 296
332
350 338
300 272
318 331 285
250

200

150

100
8/31/2004 5:00 PM
50
8/21/2004 3:00 PM
0
8/21/2004 10:30 AM
West to CDO
CDO to West

8/21/2004 10:30 AM 8/21/2004 3:00 PM 8/31/2004 5:00 PM


Occupation – Will Patronize/ Will Not
80 74
70 DM
60 Travelers
50 Other Co. Workers
40 Puerto Residents
4
19 5 1
30 4
6 0 Bugo Residents

Tagoloan Residents
20 1

Bugo Residents
0 Tagoloan Residents
5
Puerto Residents
10
Other Co. Workers

1
0
Travelers

Will
DM

Patroni Will
ze Not
Patroni
ze
Reasons for Preference – Will Patronize

120
97
100
P r ic e
80 67
Food
45
60 40 42 S e r v ic e
29 36 40 37
40
18 24
L o c a tio n
17 19
20 W ith p r o m o
58 3 4 4 7 8
1 2 0 4
3
0
Ra nk 1 Rank 2 Rank 3 Rank 4 Rank 5
Respondents: Will Patronize/ Will Not
Will Not
Patronize
7%

Will Patronize
93%