Introduction to the company

Promoters: Nishant Mehra Anuj Rana Kapil Kumar Thawal Company address: J-Block Community Centre, Rajouri Garden, New Delhi Type of business: Private limited Company

CHAPTER-1

INTRODUCTION
1.1) Objective of the project
To provide good quality of food and services to the customer. To have profit maximization. To use the strategy of value for money. To build relationship with the customer.

1.2) Rationale and scope of the project

The aim of preparing the project is to establish a fast food restaurant. The location of the restaurant is at J-block community center, Rajouri Garden. This place has been selected as to tap the market opportunity and capture the market opportunity. There is no restaurant serving Chinese food in this locality which gives us a huge market potential to tap on. We will provide a variety of foods at cheap prices and unique taste with good ambience. The location is also easily accessible to the customers.

1.3) Review of the industry

A restaurant prepares and serves food, drink, and dessert to the customer. Meals are generally served and eaten on premises, but many restaurants also offer take-away and home delivery services. Restaurants provide greatly in appearances and offerings, including a wide variety of main chefs cuisines and services model. Restaurant means a business whose principle purpose is the sale of food or beverages served containers for immediate consumption inside. In the restaurant products and supplies are used on first- in, first- out basis to ensure freshness. Fast food is the term given to food that can be prepared and served very quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with low quality preparation and served to the customer in a packaged form for take-out/take-away.

Outlets may be stands or kiosks, which may provide no shelter or seating, or fast food restaurants (also known as quick service restaurants). Franchise operations which are part of restaurant chains have standardized foodstuffs shipped to each restaurant from central locations. Despite the challenges and problems of the fast food industry in India it has recorded phenomenal growth during last decade. The fast food industry has captured the customers of the age between 20 to 35 in a larger scale, but still the Indian culture is attached to the cultural cult and traditional approach towards the purchasing, hence India fast food industry has to think to overcome the problem of cultural and traditional approach effect on the minds of the customers. The scene of the fast food industry in India has a chance to grow in a faster rate, as of today Indian customers are thinking to buy and eat the products of the fast food industry because it is very convenient and very easily available to the customers. o Food industry is growing by the rate of 13% estimated by the CSO ( CENTRAL STATISTICAL ORGANIZATION) o We have chosen to enter into the particular industry because as per the BIRD OF GOLD report by McKinsey Global Institute Indian. The industry will grow from 50million to 583 million by 2025. o As the per capital income is rising in the fast food restaurant. It is expected that it will grow to US$310 billion by 2015.

CHAPTER-2

TECHINICAL FEASIBLITY 2.1) Description of the Product

The proposed project presents an investment opportunity in setting up a Chinese Restaurant. We cater to Mid-Income Level people keeping in view the location of the proposed restaurant We offer a variety of delicious Chinese snacks and dishes with a healthy menu plan. Major products in this case would be Crispy Honey Chicken, Chicken Wonton and Talumein Soup. Also this outlet would facilitate the production of products in view of the customers with the help of a glass wall separating the production area with the customer seating area.

2.2) Product Specification

The products offered by the restaurant are as follows Soups: Monchow, Talumein and Hot n Sour Appetizers: Dimsums, Wonton, Spring Rolls, Corn and Chicken Pepper Salt, Honey Chilly Potatoes and Crispy Honey Chicken. Main Course: Veg/Egg/Chicken Fried Rice, Veg/Egg/Chicken Hakka Noodles, Veg/Chicken Chopsuey, Chilly Paneer/Chicken Manchurian & Beverages.

2.3) Use of the Product

People in India enjoy traditional food very well but recently world known food chains have brought about a cultural change. With a change in lifestyle, there has been a drastic change in the food habits of people. Nowadays a quite category of people have switched to western food habits to facilitate their busy life schedule. It would support this lifestyle of people keeping in mind their taste and health issues and would bring a pinch of western change in their lives. It would also be a source of providing new lines and varieties of Chinese Food.

2.4) Manufacturing Process

The proposed project will be using Local Utensils & Equipments such as Cleaver, Chopping Block, Clay Pots, Wok and accessories, Bamboo Steamer, Rice Cooker and Hot Pot etc. These are quite competitive in price in comparison to the foreign equipments. Additionally, it is linked with the viability of the project as the foreign new machinery and installation would not be feasible due to high costs involved.

Crispy Honey Chicken Ingredients: 1 lbs boneless skinless chicken breasts (cut into 1 chunks), Oil (for deep frying) Batter4 tablespoons cornstarch, cup flour, 1 teaspoon baking powder, cup water, teaspoon salt, 1 egg, 1 egg white Sauce1 tablespoons oil, 2 teaspoon ginger (minced), 3 tablespoons garlic (minced), 1 teaspoon salt, 3 tablespoons honey, 1 teaspoon rice wine vinegar, cup water, 1 teaspoon cornstarch (mixed with 1 teaspoon water) Sesame seeds (for garnish) Method of Preparation: Step 1: In a large bowl mix all batter ingredients together until smooth. Cover and allow the batter to site for at least 30 minutes. Add the chicken to the batter tossing to coat. Step 2: Heat a deep fryer to 350 degrees. Fry chicken bits in patches for 2 minutes or until batter becomes firm. Drain on paper towels. Step 3: To make the sauce. Heat 1 tablespoons of oil in your wok. Add garlic and ginger and stir fry for 30 seconds. Add salt, honey, vinegar, and water. Mix well. Combine 1 teaspoon of water with 1 teaspoon of cornstarch. Add to the sauce and Simmer for 2 minutes. Step 4: Coat chicken with the sauce and garnish with sesame seeds. Serve with white rice.

Chicken Wonton Ingredients: 2 tablespoons finely chopped shallot, 1 clove garlic, finely chopped, 2 green onions, 8 ounces ground chicken meat, 3 tablespoons reduced fat peanut butter, 3 tablespoon shredded carrot,1 teaspoon green curry paste,2 tablespoons soy sauce, 1 1/2 teaspoons sugar substitute, 2 teaspoons lime juice

Methods of Preparation: Step 1.Preheat the oven to 350 degrees Fahrenheit (about 175 degrees Celsius). Spray 2 9 X 13 inch baking sheets with non-stick cooking spray (such as Pam).

Step 2. Heat the wok over medium-high to high heat. Add 2 tablespoons oil, drizzling it down the sides of the wok. When the oil is hot, add the shallots, garlic and green onion. Stir-fry briefly, then add the chicken meat and stir-fry on high heat until the chicken changes color and is nearly cooked through. Stir in the remaining ingredients. Remove the wok from the burner and allow the mixture to cool.

Step 3. Set out the wonton wrappers with a small bowl filled with water. Lay out 1 wonton wrapper, and place approximately 1 tablespoon of the chicken mixture in the middle. Dip your finger in the water and run it along the edges of the wonton wrapper to wet. Take another wonton wrapper and place it on top in a way that forms a star shape (i.e. the top wrapper looks like a diamond instead of a square). Continue with the rest of the mixture.

Step 4. To cook the wonton, lay them out on the baking sheets and spray lightly with cooking spray. Bake for 12 to 15 minutes until golden, turning halfway through cooking.

Talumein Soup Ingredients 6 cups chicken or vegetable stock,1 cup boiled noodles,2 eggs (optional),1/3 cup boiled and shredded chicken,1 carrot (in shreds and boiled), 8 10 beans (in strips), cup ,cabbage (shredded), Salt to taste (approx. 1 tsp), tsp white pepper, 1 tsp soya sauce, 1/3 tsp china salt, 3 tsp corn flour, 1 tsp sugar (optional), tsp chili sauce Methods of Preparation: Heat stock. When it boils add corn flour. Give few more boils. Now add all the vegetables and chicken pieces and do simmering for 10 15 minutes. Add seasoning and all sauce. Serve it hot.

2.5) Alternative Manufacturing Process

The alternative manufacturing process would be to use some other methods of preparation but the equipments will remain the same.

2.6) Justification for the adoption of selected process

This process has been selected in relation to the availability of human resources, feasibility of economies of scale, equation of the present nutrient content and the amount of units to be produced at a time.

2.8) Plant Size

The proposed restaurant will be consisting of 2000 sq. feet of land. The details are given below:

Details

% (Sq. Feet)

Size (Sq. Feet)

Cost(Rs/sq ft)

Total Construction Cost(Rs.)

Dining Waiting Kids Play Kitchen and Preparation Office Stores Total

63% 4% 3% 25% 1.5% 3% 100%

1,250 80 70 500 30 70 2,000

Table no.1

700 700 800 450 450 450 3550

8,75,000 56,000 56,000 2,25,000 13,500 31,500 12,57,000

Note: The above table has also been used in the financial analysis.

The total construction cost has been included in fixed capital whereas the land will be acquired for rent. Approximately 2000 square feet is desirable for the restaurant, which is available at about Rs 1,00,000 per month.

2.9) Production schedule

Item Name
Monchow Soup (chicken) Talumein Soup (veg) Veg Dimsums Veg Wonton Chicken Wonton Veg Spring Roll Chicken Spring Roll Crispy Chilly Potatoes Crispy Honey chicken Chicken Chopsuey Potatoes In Hot Garlic Sauce Chicken In Chili Bean Sauce Chilly Paneer Chicken In Chilly Bean Sauce

Order Time (in minutes) 5 5-7 3 6 8-10 3-4 4-5 8 10-12 6-7 5-7 8 5 12
Table no.2

2.10) Selection of Machinery and Equipment

Plant and Machinery for the proposed project are stated below:
Table no.3

Item Details
Freezers (12 cf)

Quantity 3

Unit (Rs.) 25,000 40,000

Total Price (Rs.) 75,000 2,00,000

Chimney (Faber Heat Kraft Arco 5 90 Plus Isola SS)

Deep Well Frier (Single Valve With 2 Baskets)

40,000

80,000

Sunflame Gas Stove

6,000

30,000

Bin Marry Soup Container (2 Valve With Steel Cabinet)

55,000

1,65,000

Kelvin machine

Star

soda

vending

2,10,000

2,10,000

Potato Cutter (8mm)

3,000 6,000

6,000 6,000

Pillar (4.5 Kg Potato Peeling 1 Capacity) Advance Wok set Microwave Working Tables Keg Racks & Shelves Total 5 3 2 2 15

10,000 15,000 20,000 10,000

50,000 45,000 40,000 20,000 9,67,000

Note: The above table has also been used in the financial analysis. Depreciation is charged at 10% p.a. on diminishing value. All machines would require routine cleaning and maintenance after every three months and an annual service which costs around 1% to 5% of the total cost depending upon the use of the machine and operator's skill. We have assumed an

average of 2.5% of the depreciated cost as the annual maintenance cost.

2.11) Plant Location

The restaurant will be located in J-block, Community center, Rajouri Garden which is densely populated area where all utilities and facilities are properly available. The fast food outlet will be opened on the ground floor wherein the consumer traffic will be a maximum. The shop is near the main road which will boost its sales potential. Many corporate offices are also located nearby further augmenting the sales prospects.

2.12) Cost of the Erection of the Proposed Building and Land Improvements

ACTIVITIES Pre-design and Feasibility

TIME (MONTHS) 1

Master Plan and Budget Preparation 1 Projects Layout and Design Manufacturing and Construction Pre-Opening Operations Total
Table no.4

2 3 2 9

This is the total extent of the work involved in the project conception, design and implementation phase. Moreover, some of the activities listed above can also be carried out in parallel. Wherein the construction cost is Rs 13, 07,000 exclusive of the cost of the preopening operations, manufacturing cost and project layout and design.

2.13) Study of Availability of Raw Materials and Utilities

As the proposed restaurant is going to offer a variety of products, a number of ingredients would be used. Some ingredients for basic items are used below:

INGREDIENTS Butter Sugar Maida Baking Powder

COST (Rs/KG) 150 30 25 48

10

Eggs (per pc) Vinegar Honey Black pepper Cheese Cottage Ghee/oil Mayonnaise & Ketchup Soya sauce Salt Onion Masala Capsicum Tomatoes Chicken Garlic Ginger Lemon Cornstarch Rice/Noodles Cabbage Potatoes Lettuce Mushrooms Oregano Pickles Flour Carrot Beans Chilli paste Coriander Baby Corn Bean sauce Sesame seeds Table no.5

4 50 160 35 180 250/70 120 40 8 15 40 25 30 175 10 12 15 40 65 10 18 27 30 45 50 32 30 35 40 5 22 25 35

11

2.14) Estimate of Labor Requirement

Designation No. of Employees Monthly (Rs.) Owner Kitchen Supervisor Shift 3 2 6,000 8,000 12,000 24,000 Salary Total Salary (RS.)

Supervisor 3

(including Relievers) Cooks Servers Take away 4 6 order 1 4,000 3,000 6,000 16,000 18,000 6,000

takers/ Cashiers Dishwasher Cleaner Guard (12hours) Total 2 1 1 21 2,500 2,500 6,000 38,000
Table no.6

5,000 2,500 6,000 89,500

2.15) Type and Quantity of Waste Disposal

The waste generated out of the product would be majorly biodegradable and would be sent to the Karampura recycling plant and the rest out to the local garbage centre.

2.16) Components from Outside

No such component has been purchased from outside to optimize cost.

2.17) Power Requirement (H.P. /K.W.)

Main utilities would be gas, power and water. Distribution transformation station, loading capacity averaging 10 KW, 3-phase industrial meter is estimated to fulfil the requirement of power. B-1 category is advisable for electric consumption. Electricity will be supplied by BSES. Monthly gas consumption is estimated at 46 HM3 on average for the project. Water supply would be through local municipality.

12

2.18) Estimate of the Production Cost

The pre operating expenses are Rs 50,000 whereas the total expense is Rs 51, 02,250.

Item
Construction Cost (all inclusive) Dining & Office Furniture Equipment & Machinery Advance Rent Preliminary Expenses Working Capital Total

Cost(Rs.)
13,07,000 5,42,250 9,67,000 12,00,000 50,000 10,36,000 51,02,250
Table no.7

Note: The above table has also been used in the financial analysis.

13

CHAPTER-3

MARKET FEASIBILITY

3.1) Market description

The fast food market has been witnessing rapid growth on the back of positive developments and presence of massive investments. Currently, market growth is largely fuelled by the rising young population, working women, hectic schedules, and increasing disposable income of the middle-class households. According to the latest fast food market analysis, the Indian Fast Food Industry is anticipated to grow at a CAGR of around 34% during 2011-2014. Anticipating the future growth, many big international players are entering into the market by making deals with the domestic players. And those already present in the Indian market are expanding their presence in different provinces of the country. Chinese food is seen being popular since always and has risen from being a food eaten at local hangouts to fine dine restaurants. As put by Puja Mahajan, Director, Unitas Foods, Yum! Yum! Dimsum, There are a number of factors such as popularity, familiarity with the cuisine, spicy and flavorful, health angle and with more Indians travelling to Asian countries the exposure to oriental food is growing. The cuisine is very popular with younger people age groups of 18-35. With globalization and India being viewed as a potential growth market, there has been a profusion of Chinese food chains springing up across the country. These include Mainland China, Yo China, Mandarin Trail, Bercoz, Tao by Zen, Yum Yum Dimsum.

3.2) Methods of transportation

Along with the above mentioned machinery and equipment the proposed business will also be using three motorcycles from the existing stock which were purchased by the owners for their personal use and hence for home delivery orders. For raw materials (vegetables etc) wholesalers/suppliers deliver the former on a weekly basis for an amount which has been included in the preliminary expenses.

14

3.3) Existing Rates of Transportation

The rates of transportation are in accordance with the fuel charges of vehicles used for home delivery. Keeping in mind the fuel charges, the cost of petrol of the 3 vehicles for each day is approximately 300 Rupees which comes to around 9000 Rupees on a monthly basis.

3.4) Channels of Distribution

There are no such channels of distribution, suppliers are allotted who provide us with the raw materials on a weekly basis. As far as home deliveries are concerned vehicles from the existing stock are used for delivering orders.

3.5) General trade practices

As far as the pricing is concerned, our restaurant charges appropriate price for each and every food item and services. There are no unfair trade practices followed whatsoever.

3.6) Analysis of past and present demand

The demand for Chinese food in India has increased comparatively as fast food has become the new trend of the mass especially teenagers. The demand has risen as people nowadays are getting more conscious about their health and avoid spicy oily food which traditional Indian food is rich for.

3.7) Quantity Value of Consumption

Items Soups Appetizers Main Course Beverages Quantity Sold(Monthly) 1,440 5,490 2,070 11,850
Table no.8

15

3.8) Major Consumers of the product

The major consumers of our product are divided into three categories: Lunch Hours: This category includes the people who work in offices and find it easy and less time consuming. Evening Hours: This category includes teenagers and their friends who hangout in market places and need something to eat. Dinner: We receive customers in the form of families and also people who work till late in this category.

3.9) Analysis of past and present supply

There is no such Chinese restaurant in the locality but there are some restaurants serving Chinese food in nearby markets. Due to the absence of a Chinese fast food restaurant in our locality there is a huge market opportunity for us to open a restaurant which will in itself push(boost) the supply and hence the demand.

3.10) Competitive Position of the Product

The competitive position of the product is very strong with respect to the present market conditions and demand. The competition in the Chinese food restaurant is very wide. The main aim is to provide best quality of food, great ambience, and good services to our customer better than competitors. The main competitors are Yo China, Bercoz, Trip to Beijing, Mainland China, and China Treat. Yo China, Bercoz and Mainland China are the main threats to us as they are an established brand. They are known to the public. Trip to Beijing and China Treat are the local brands in the market. There is not much threat to us from them. The outlet provides with the facility for customers to see the making of the given orders. The Kitchen area would be divided with a thick glass wall which would help a clear vision. The nutrient content of the product is kept keeping in mind the peoples choice of health consciousness.

16

3.11) Quality and Marketing Practices of Competitors

Getting customers in the door seems one of the most basic tenets of operating a restaurant. Word of mouth has often been cited as the most effective form of marketing in the fast food industry, and while that remains unchanged, other marketing methods are changing quickly. Use of combos and other discount coupons is also one of the well known marketing practices. One of the biggest changes has been the rise of the internet and smart phones, which give consumers instant access to the full breadth of information available online. Restaurants have to ensure that their products are free from any type of contamination which would affect their health for the well being of their customers and also deliver a quality product. To ensure that quality standards are maintained the quality control practices are verified and assured by independent inspectors from the government.

17

Chapter-4 FIANANCIAL ANALYSIS

4.1) Fixed Capital Machinery Equipment:

Item Details Freezers (12 cf) Chimney (Faber Heat Kraft Arco 90 Plus Isola SS) Quantity 3 5 Unit (Rs.) 25,000 40,000 Total Price (Rs.) 75,000 2,00,000

Deep Well Frier (Single Valve With 2 Baskets)

40,000

80,000

Sunflame Gas Stove

6,000

30,000

Bin Marry Soup Container (2 Valve With Steel Cabinet)

55,000

1,65,000

Kelvin machine

Star

soda

vending

2,10,000

2,10,000

Potato Cutter (8mm) Pillar (4.5 Kg Potato Peeling Capacity) Advance Wok set Microwave Working Tables Keg Racks & Shelves Total

2 1

3,000 6,000

6,000 6,000

5 3 2 2 15

10,000 15,000 20,000 10,000

50,000 45,000 40,000 20,000 9,67,000

The restaurant will require the following machine / equipment for its operations:

18

o Machine Maintenance
All machines require routine cleaning and maintenance after every three months and an annual service which costs around 1% to 5% of the total cost depending upon the use of the machine and operator's skill. We have assumed an average of 2.5% of the depreciated cost as the annual maintenance cost.

Dining Furniture & General Fixtures

The restaurant is expected to entertain a minimum of 300 customers in a day, which requires a good seating layout to avoid any confusion and problems during rush hours. The following table gives the details of the dining tables and chairs that would serve approximately 100 customers (maximum capacity) at a time:

Items Details

Qua ntity

Unit Price (Rs.)

Total Price (Rs.) 1.50,000

Dining Table - Square (2X2) Chairs 14) Kitchen Set Dining (Plate, Cutlery* Fork, Cutlery (Standard

25

6,000

100

1,500

1,50,000

2,500

5,000

150

150

22,500

Knife,Spoon,Glass) Air Conditioner Split 2 31,000 62,000

Units (6 Ton) Hot Water Geyser Large 1 20,000 20,000

19

Halogen Lights Wall (Large) Portable Emergency Light Generator (1.5KVA) Counter Chairs Office Table Chair Set Waiting Chairs for Lights

25 4

250 1,500

6,250 6,000

2,500

10,000

90,000

90,000

2 1

1,500 2,500

3,000 10,000

1,500

7,500

Take Away Customers

Total

322
Table no.10

1,68,400

5,42,250

Construction
The allocation of space between different allocations would be as follows. Details % ( Sq.Feet) Size (Sq.Feet) Civils works & Total Decors (Cost in Assumption Rs./Sq.Feet) Dining Waiting Kids Play Kitchen Preparation Office Stores Total 1.5 3 100 30 70 2,000
Table no.11

(Rs.) 8,75,000 56,000 56,000 2,25,000

63 4 3 & 25

1,250 80 70 500

700 700 800 450

450 450 3,550

13,500 31,500 12,57,000

20

4.2) Working Capital Staff Salaries:

The human resource requirement for the general and management staff are as follows:

Designation/Type

Number

Monthly (Rs.)

Salary Total Salary (Rs.)

Owner Kitchen Supervisor Shift Supervisor

1 2 3

6,000 8,000

12,000 24,000

(including Reliever) Cook Servers Take Away Order Taker/Cashier Dish-Washer Cleaner Guard Total 2 1 1 21
Table no.12

4 6 1

4,000 3,000 6,000

16,000 18,000 6,000

2,500 2,500 6,000 38,000

5,000 2,500 6,000 89,500

21

 Utilities Requirement:
The following table presents the assumed breakup of utilities on a monthly basis:

Utility Electricity Water Gas Telephone Total

Monthly Charges (Rs.) 25,000 2,000 10,000 15,000 52,000

Table no.13

We have arrived to these figures after enquiring from a few restaurant owners about their utility charges and the tie ups with several departments like electricity, water or gas.

Rent: The proposed premises will be acquired on a rental basis with 6 month
deposit and 6 months advance rent after which rent will be payable on a monthly basis. The monthly rent is approximately Rs. 50/ Sq Feet for the ground floor which would amount to Rs. 100,000 per month for the proposed fast food outlet (2,000 Sq Ft.) The rent for the assumed premises will be Rs. 100,000/- per month. It is assumed that Rs. 12,00,000 will be given in advance before possession of premises. This will include 6 months deposit and 6 month advance rent. The rent would be payable on a monthly basis and is expected to increase at the rate of 10% per annum for the projected period.

4.3) Initial Capital Requirements Initial project cost would be Rs 51,02,250 . Contribution by Promoters will be Rs.
2,551,125 and Bank loan of Rs. 2,551,125. We will be repaying loan with an EMI of approximately Rs 8 lacks 50 thousand per year at 15% interest.

22

4.4) Cost of Production

SOUPS Monchow(veg/chicken) Talumein(veg/chicken) Hot n Sour(veg/chicken) APPETIZERS Veg Dimsums Chicken Dimsums Veg Wonton Chicken Wonton Veg Spring Roll Chicken Spring Roll Corn Pepper Salt Chicken Pepper Salt Crispy Chili Potatoes Crispy Honey chicken MAIN COURSE Veg Fried Rice Egg/Chicken Fried Rice Veg Hakka Noodles Egg/Chicken Hakka Noodles Veg Chopsuey Chicken Chopsuey Potatoes In Hot Garlic Sauce Veg/Chicken Manchurian Chili Paneer/Chicken Chicken In Chili Bean Sauce BEVERAGES Fruit Beer Cole Slaw Soft Drink(large) Soft Drink(regular) 8 6 40 9 25 15 50 15 5 5 10 375 125 75 500 5625 18 20 18 20 30 35 70 50 50 140 70 80 60 80 75 85 125 140 140 250 3 3 6 12 6 9 18 3 3 6 54 60 108 240 180 315 1260 150 150 840 18 23 12 20 20 25 12 20 35 40 40 45 40 45 50 55 40 55 80 80 18 18 6 3 24 36 3 21 30 24 324 414 72 60 1200 1980 36 420 1050 960 Cost/Unit Price/Unit 25 25 35 75 75 65 Unit Sales 6 6 36 Total Cost 150 150 1260

23

Total
Table no.14

13,478

The above table shows daily total cost. Daily Monthly 4,04,340 Yearly 49,10,140

Total Cost(Rs.)

13,478

4.5) Annual Projected Income Statement

Projected Income Statement (Rs.) Revenue Net Sales - Raw Material Cost - Labor & Salaries - Utilities Cost of Sales Gross Profit General Administrative & Selling Expenses - Rent Expense - Office & Miscellaneous Expenses Amortization Expenses Depreciation Expense Maintenance Expense Subtotal Operating Income 12,00,000 72,000 10,000 2,81,625 21,758 15,85,383 18,21,677 13,20,000 79,200 10,000 2,53,463 19,582 16,82,244 25,66,281 14,52,000 87,120 10,000 2,28,116 17,624 17,94,860 34,54,392 15,97,200 95,832 10,000 2,05,305 15,861 19,24,198 45,12,234 17,56,920 1,05,415 10,000 1,84,774 14,275 20,71,384 57,70,284 2012 10015,200 2013 11517,480 2014 13245,102 2015 15231,867 2016 17516,647

1,00,15,200 1,15,17,480 1,32,45,102 1,52,31,867 1,75,16,647 49,10,141 10,74,000 6,24,000 66,08,141 34,07,059 54,01,155 11,81,400 6,86,400 72,68,955 42,48,525 59,41,270 12,99,540 7,55,040 79,95,850 52,49,252 65,35,397 14,29,494 8,30,544 87,95,435 64,36,432 71,88,937 15,72,443 9,13,598 96,74,979 78,41,668

Financial Charges (15% Per Annum)

3,57,889

2,98,344

2,29,228

1,49,001

55,878

Earnings Before Taxes Tax Net Profit

14,63,788 3,65,947 10,97,841

22,67,936 5,66,984 17,00,952

32,25,164 8,06,291 24,18,873

43,63,233 10,90,808 32,72,425

57,14,406 14,28,602 42,85,805

Monthly Profit After Tax

91,487

1,41,746

2,01,573

2,72,702

3,57,150

Table no.15

24

4.6)

Annual Projected Cash Flow Statement

2012 2013 2014 2015 2016

Projected Statement of Cash Flows (Rs.) Cash Flow From Operating Activities

Net Profit Add: Depreciation Expense Amortization Expense Net Cash Flow From Operations Cash Flow From Financing Activities

10,97,841 17,00,952 24,18,873 32,72,425 42,85,805 2,81,625 10,000 2,53,463 10,000 2,28,116 10,000 2,05,305 10,000 1,84,774 10,000

13,89,466 19,64,415 26,56,989 34,87,729 44,80,579

Receipt of Long Term Debt Repayment of Long Term Debt Owner's Equity Net Cash Flow From Financing Activities (3,70,404) (4,29,949) (4,99,065) (5,79,292) (6,72,415) (3,70,404) (4,29,949) (4,99,065) (5,79,292) (6,72,415)

Cash Flow From Investing Activities

Construction Cost Office Furniture Equip & M/C Advance Rent Preliminary Expenses Net Cash Flow From Investing Activities

0 0

NET CASH FLOW

10,19,062 15,34,466 21,57,924 29,08,437 38,08,164

Cash at the Beginning of the Period

1,36,000

20,55,062

35,89,528

57,47,452

86,55,889

Table no.16

25

4.7) Total Investment

This section will provide the total cost of the project.

Item
Construction Cost (all inclusive) Dining & Office Furniture Equipment & Machinery Advance Rent Preliminary Expenses Working Capital Total

Cost(Rs.)
13,07,000 5,42,250 9,67,000 12,00,000 50,000 10,36,000 51,02,250
Table no.17

26

4.8) Annual Projected Balance Sheet

Projected Balance Sheet (Rs.)

2012

2013

2014

2015

2016

Assets Current Assets Cash & Bank Balance Prepaid Rent 20,55,062 12,00,000 35,89,528 12,00,000 57,47,452 86,55,889 12,00,000 12,00,000 1,24,64,053 12,00,000

Total Current Assets

32,55,062

47,89,528

69,47,452 98,55,889

1,36,64,053

Fixed Assets Fast Food Machinery Shop Office Fixtures 8,70,300 11,76,300 4,88,025 7,83,270 10,58,670 4,39,223 7,04,943 9,52,803 3,95,300 6,34,449 8,57,523 3,55,770 5,71,004 7,71,770 320,193

Total Fixed Assets Preliminary Expenses

25,34,625 30,000

22,81,163 20,000

20,53,046 18,47,742 10,000 -

16,62,967 -

Total Assets

58,29,687

71,00,690

90,20,498 1,17,13,631

1,53,27,020

Owner's Equity

36,48,966

53,49,918

77,68,791 1,10,41,216

15,327,020

Long Term Liability

21,80,721

17,50,772

12,51,707

6,72,415

Total Equity & Liabilities

58,29,687

71,00,690

90,20,498 1,17,13,631

15,327,020

Table no.18

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4.9) Assumptions & Financial Analysis The project cost estimates for the proposed fast food outlet have been formulated
on the basis of discussions with relevant stakeholders and experts. The cost projections cover the cost of land, building, inventory, equipment including office furniture etc. The specific assumptions relating to individual cost components are given as under:

Revenue & Cost Projections:

The Sales are expected to increase by 15% every year while the cost of raw materials is assumed to increase by 10%. The 15% annual increase in revenue is expected to result from a part increase in population increase and part increase in product price. The prices used to calculate the gross revenue earned are based on the billing rate at which the entrepreneur will charge the customer. The prices are also inclusive of the General Sales Tax. Furthermore it is assumed that the following sales breakup will form the revenue streams for the fast food outlet.

Revenue Stream Dine In Take Away Home Delivery Total Revenue

% of Total Sales 60 20 20 100

Table no.19

The minimum delivery order size is assumed to be Rs. 250/- per order with 3 delivery riders being employed at the charge out rate of Rs. 25 per delivery order wherein no transportation fuel is provided by the fast food outlet. For Take Away and Home Delivery another 1% of sales added cost due to packing is assumed.

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Rent Cost: The rent for the assumed premises will be Rs. 100,000/- per month. It is assumed that Rs.12 lakhs will be given in advance before possession of premises. This will include 6 months deposit and 6 month advance rent. The rent would be payable on a monthly basis and is expected to increase at the rate of 10% per annum for the projected period.

Utilities Requirement: The following table presents the assumed breakup of utilities on a monthly basis: We have arrived to these figures after enquiring from a few restaurant owners about their utility charges and the tie ups with several departments like electricity, water or gas.

Utility Electricity Water Gas Telephone Total

Monthly Charges (Rs.) 25,000 2,000 10,000 15,000 52,000

Table no.2

As depicted above the most of the fast food machines require considerable gas during the preparation process. The preheating procedure of the equipment before commencement of preparation also consumes considerable gas. It is assumed that utilities expenses will be increased by 10% every year.

Depreciation on Building & Equipment: Depreciation on Shop, Equipment, Machinery and Fixtures is assumed to be at the rate of 10% per annum based on the diminishing balance method for the projected period.

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Working Capital & Pre Operating Costs: It is estimated that an additional amount of approximately Rs. 1,036,000 will be required as cash in hand to meet the working capital requirements / contingency cash for the initial stages. The requirement is based on the rent, utilities and salaries expenses for at least four months and 3 days raw material inventory. The following table gives the break up. Item 4 Months Cost

(Rs.) Utilities Salaries Raw Material Rent Total 2,08,000 3,58,000 70,000 4,00,000 10,36,000
Table no.21

The provision for pre operating costs is assumed to be Rs. 50,000 which will be amortized equally over a 5 year period. Account Receivables: All sales will be made strictly on cash basis. It is not advisable to operate a fast food restaurant on credit basis.

Miscellaneous Outlet Expenses: A monthly figure of Rs. 6,000 (200 per day) is assumed to be incurred for miscellaneous expenses which are expected to increase at the rate of 10% per annum for the projected period.

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Financial Charges: It is assumed that long-term financing for 5 years will be obtained in order to finance the fast food setup which would mainly include construction & dcor of Building, Purchase of machinery & equipment, purchase of inventory etc. This facility would be required at a rate of 15% (including 1% insurance premium) per annum with 60 monthly installments over a period of five years. The installments are assumed to be paid at the end of every month.

Taxation: The service tax on, what are essentially, sale of meals/beverages, etc., and/or on the charges for the use of movable assets like furniture, linen, cutlery, crockery, etc. These are activities which are clearly considered as sale within the meaning of the VAT law and are accordingly subjected to the levy of VAT. Therefore, we are assuming that the tax rate would be the same for the proposed fast food setup.

Cost of Capital: The cost of capital is explained in the following table:

Particulars Required Return On Equity Cost of External Bank Debt Weighted Average Cost of Capital
Table no.22

Rate 20.0% 15.0% 17.5%

The weighted average cost of capital is based on the debt/equity ratio of 50:50.

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Key Assumptions:

Item Sales Increase Increase in Cost of Raw Material Increase in Staff Salaries

Assumption(s) 15% per annum 10% per annum 10% per annum

Increase in Utilities(electricity, gas, 10% per annum water) Increase in Rent Increase in Office Expenses Debt-Equity Ratio Depreciation -Shop Building & Fixtures -Kitchenware & Machinery -Furniture Equipment Annual Maintenance Cost Raw Food Inventory-Meat Raw Food Inventory-Spices & Sauce Lease Period Lease Installment Financial Charges(Lease Rate) Tax Charges
Table no.23

10% per annum 10% per annum 50:50

10% per annum(Diminishing Balance) 10% per annum(Diminishing Balance) 10% per annum(Diminishing Balance) 2.5% of Written Down Value 3 Days 7 Days 5 Years Monthly 15% per annum Income Tax On Salaried Individuals

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Chapter 5
CONCLUSION
The fast food restaurant holds a lot of opportunity in the market. As we are opening the restaurant in such locality where the competition is less and lot of opportunity is there to tap. The main focus is made on the medium income group. The main aim of our fast food restaurant is to provide value for money which means good quality food but not at high price. Technically we have included sufficient equipments in the restaurant which are used in the production process and services to the customer. We have a good projected financial position. We hope that our stakeholders will have faith in us.

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Bibliography
o http://www.wikinvest.com/industry/Fast_Food_Restaurants_(QSR)

o http://www.ibisworld.com/industry/default.aspx?indid=1676

o http://www.fastfoodrestaurant.in/

o http://www.economist.com/node/17209665

o http://www.dieselniteclub.com/ o http://www.scribd.com/doc/19018679/fast-food-industry-in-india-a-study

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