Opening a Restaurant Plan Dissertation Sample

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Business Plan

Opening a restaurant in Ulaanbaatar, Mongolia

Type of Documents : Business Plan No of Words : 15,000

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Submitted on: 26th Oct 2012

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Business Plan: Opening a restaurant in

Ulaanbaatar, Mongolia




ACKNOWLEDGEMENT

I am extremely indebted for the support presented to me during completion of this

business plan by my mentor, family and friends. In sequence, I would like to thank my

mentor, for providing me the opportunity to venture this project and guiding me at each step

of the work. Furthermore, I also fancy thanking my team members for helping me in the data

collection and analysis for primary research in order to have relevant results for the

dissertation.




EXECUTIVE SUMMARY

It is basically a business development plan, intended for establishing a new venture as

an entrepreneur. Every new venture requires a detailed business proposal plan. The main

advantages of writing a detailed business plan is the offsetting the costs. This business

proposal plan is a prescribed expression of the entrepreneurial vision along with description

regarding the operations and strategy of the proposed endeavor. Business plan enables the top

management and executives in the firm to think about the business comprehensively, to

converse the business objectives to personnel, to include a decision making base and to

smooth the progress of the planning.

This plan supplies detailed information about the proposed business plus the place of

business and covers the essential strategic business plan required for preliminary

establishment and operation of Aмттай: Food for choosers, a multi cuisine restaurant and

bar at Ulaanbaatar. It is a project requiring start-up capital of $350,500. This restaurant will

target the tourists coming to the city Ulaanbaatar. This target customer base has been chosen

as a result of increasing tourism in the country. Here, customer will experience a completely

new theme for enjoying their preferred food choices at a single place in a Mongolian cultural

ambience.

This restaurant also includes a bar in it. This bar will offer liquor from different

origins with best quality service. Actually the restaurant is going to provide Mongolian style

hospitality for food of customer’s choice from any cuisine. This plan outlines the business

growth, methods, operations, and infrastructure management. This business will be

developed by a dynamic and hard-working team of proven managers and chef.

This entire work flows in five consecutive chapters. First chapter is of introductory,

which offers rationale for the Business idea, chosen place of business, aims and objectives of

the work etc. By this, the reader will get acquaintance about the background of the study. The

main aims of the study are to provide a detailed business plan to establish the proposed

business backed by rigorous feasibility tests. Beginning of the chapter sketches the pertaining

business process, client base, situation, working etc at the proposed restaurant.

In the second section, the Business Concept has been defined. Here a detailed portrait

of the business idea, Mission, Vision, Concerned Product, Positioning, Scale and growth

anticipation etc. have been given. It provides details related to the company, company’s

management, business process, industry etc. Feasibility Analysis is the third section of the




work, which aims to analyze the business proposal’s feasibility from different perspectives,

such as Product/service, Industry/market, Organizational and financial angles. Further a

resource requirement evaluation has been carried out for the Business.

In the fourth section, strategic analysis of the business proposal and a business model

has been developed. This incorporates Strategic analysis of the Business Idea through

literature review, Value chain and SWOT analysis of the proposal, identification of

competitive advantages and sustainability, strategy selection for business success etc.

The last section offer an overall assessment of Business Development Proposal,

schedule of Business Plan and discussion of critical success/ failure factors for the business.

On the basis of the entire work, it can be said firmly that opening a restaurant with the

proposed theme, seems to be challenging but is a profitable and has a potential of long term

sustainability.

This is a Sample, for complete

Paper kindly contact at

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Table of Contents

CHAPTER 1: INTRODUCTION .............................................................................................. 1

1.1 Rationale for the Business idea ................................................................................... 1

1.2 Scenario Chosen .......................................................................................................... 2

1.3 Aims and objectives of the work ................................................................................. 3

1.4 Structure of the work ................................................................................................... 4

CHAPTER 2: THE BUSINESS CONCEPT ............................................................................. 5

2.1 Description of the business idea .................................................................................. 5

2.2 Mission ........................................................................................................................ 5

2.3 Vision .......................................................................................................................... 6

2.4 Menu............................................................................................................................ 6

2.5 The Ambience ............................................................................................................. 7

2.6 Positioning ................................................................................................................... 9

2.7 Scale and growth anticipation ..................................................................................... 9

2.8 Start-up summary ...................................................................................................... 10

CHAPTER 3: FEASIBILITY ANALYSIS ............................................................................. 16

3.1 Primary Market research ........................................................................................... 16

3.2 Secondary Market Research ...................................................................................... 18

3.3 Feasibility .................................................................................................................. 18

3.1.1 Product/service ................................................................................................... 18

3.1.2 Economy, Industry and Place ............................................................................ 20

3.1.3 Organizational Feasibility .................................................................................. 22

3.1.4 Financial Feasibility ........................................................................................... 23

3.4 Resource requirement Evaluation ............................................................................. 31

CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL ................................... 32

4.1 Strategic analysis of Business Idea ........................................................................... 32

4.2 Value chain and SWOT............................................................................................. 33




4.3 Sources of competitive advantages and sustainability .............................................. 34

4.4 Business model .......................................................................................................... 34

CHAPTER 5: BUSINESS PLAN ............................................................................................ 36

5.1 Overall assessment of Business Development Proposal ........................................... 36

5.2 Business Plan Schedule ............................................................................................. 36

5.3 Discussion of critical Success/failure factors ............................................................ 38

APPENDICES ......................................................................................................................... 39

REFERENCES ........................................................................................................................ 41

BIBLIOGRAPHY .................................................................................................................... 45



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List of Figures

Figure 1 Table arrangements in the Aмттай ---------------------------------------------------------- 7

Figure 2 Interior of the restaurant gers. ---------------------------------------------------------------- 8

Figure 3 Mongolian Hospitality style and clothing --------------------------------------------------- 9

Figure 4 Mongolian traditional art ---------------------------------------------------------------------13

Figure 5 Rating of key competitors for different attributes ----------------------------------------20

Figure 6 Growth representation for Mongolian GDP (Hallberg, R., 2012) ----------------------21

Figure 7 Break Even Analysis -------------------------------------------------------------------------30

Figure 8 value chain at Aмттай ------------------------------------------------------------------------33

List of Tables

Table 1 Estimation of customer foot fall at Aмттай ................................................................ 10

Table 2 Start-up human resourse requirement ......................................................................... 10

Table 3 Start-up requirements .................................................................................................. 13

Table 4 Comparative study of competitors .............................................................................. 19

Table 6 Personnel planning ...................................................................................................... 23

Table 7 Start-up Funding ......................................................................................................... 24

Table 8 General Assumptions .................................................................................................. 25

Table 9 Customer visit for caste .............................................................................................. 25

Table 10 Projected revenue ...................................................................................................... 25

Table 11 Cost Projections for restaurant section ..................................................................... 26

Table 12 Cost projections for Liquor section .......................................................................... 26

Table 13 Sales forecast for coming four years......................................................................... 26

Table 14 Cash flow for project ................................................................................................ 26

Table 15 Projected P & L......................................................................................................... 28

Table 16 Projected Balance sheet ............................................................................................ 28

Table 17 Break Even Analysis ................................................................................................. 29

Table 18 Payback period analysis ............................................................................................ 30

Table 19 SWOT Analysis ........................................................................................................ 33

Table 20 Business Model ......................................................................................................... 35

Table 21 Gantt Chart ................................................................................................................ 37




CHAPTER 1: INTRODUCTION

It is a business development proposal, designed for establishing a new venture as an

entrepreneur. A new venture needs to have a detailed business proposal plan. This business

proposal plan is a prescribed expression of the entrepreneurial vision along with description

regarding the operations and strategy of the proposed endeavor. The main advantages of

writing a detailed business plan is the offsetting the costs. Business plan enables the top

management and executives in the firm to ponder about the business comprehensively, to

converse the business objectives to personnel, to include a decision making base and to

smooth the progress of the planning (George and Bock, 2012).

Also, an entrepreneur needs to accept the business proposal making task

enthusiastically. A business plan needs to be tapped by professionals, such as consultants,

accountants, and lawyers for their advice and proficiency. Drafting of the plan facilitates the

entrepreneurs for considering all key aspects of the proposed business and assures the

familiarity with all the details. This aids in decision making regarding the new venture. A

sound business proposal also allures good investment (Hamel, 2000). Backed by the

advocacy of the entire benefits, this business proposal plan has been drafted. This plan

encompasses the proposal for opening a multi-cuisine restaurant in Mongolia.

It is a new restaurant, which will be based on a totally unique concept for Mongolia.

The idea of opening a tourist targeted restaurant has crept in by seeing the aesthetic beauty of

Mongolia. Mongolia has emerged as a new tourist destination in last few years because of its

geography and historical importance. This location has proven to be an excellent place for a

restaurant. This restaurant will serve dual purposes by providing dining for family as well as

an area for expensive intimate dining. The menu includes Indonesian, Mexican, Mongolian,

Italian and Indian food alternatives both vegetarian and non-vegetarian. A multi-cuisine menu

will fascinate tourists along with a unique Mongolian theme based interior. The decor of the



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Restaurant will be touched by Mongolian handicraft and culture. This unique combination of

Mongolian ambiance and multi cultural food is the point of difference for this restaurant

(Brown, 2007).

1.2 Scenario Chosen

Geographically, Mongolia is locked between Russia and China. The area covered by

this country is 1,565,000 sq km., in which 60% populace lives in Ulaanbaatar, the capital.

The estimated population of Ulaanbaatar is 950.000. Besides this, there are two other urban

centers, Darkhan and Erdenet, where 95,000 and 74,000 inhabitants live. That is why the

place for opening this restaurant has been chosen to be Ulaanbaatar. The diverse landscapes

ranging from the vast steppes, forested mountains and Gobi desert in Mongolia attracts the

tourism (Developmental Biology, 2010).

The Mongols had their roots in the 13th century with Chinggis Khaan’s name in the

world history. After the death of Chinggis Khaan, the empire was partitioned into number of

powerful states. The Mongols, in the late 17th century, came under the rule of Chinese

empire. Mongolia got independence in 1921 and then in 1924, a Communist regime was

installed. Backed by a peaceful democratic revolution in the country, in 1990 and

subsequently in 1992, the ex-Communist Mongolian People's Revolutionary Party or MPRP

won the elections, but in the 1996 elections, the Democratic Union Coalition or DUC

defeated MPRP.

Now, there exists a coalition government formed by MPRP and DUC. This

government has been in power till January 2014.

Mongolian economic has been based on agriculture and herding. Besides these,

Mongolia's widespread mineral deposits have attracted investment from abroad. Copper,

gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten are extracted from the land of

Mongolia, which justify the major part of FDI (foreign direct investment) and government

revenues. Looking into the performance of Mongolia’s economy, it is evident that it stands as

a nation with rapid development amongst the transition economies. The annual GDP growth

rate in 2004 has been recorded to 10.7%, in 2005 to 6.2% and in 2006 to 8.4%. Mongolia has

recorded the 2nd highest per capita GNI i.e. 1051 USD in 2006 and at the same time the

lowest inflation rate. The most important contributors in GDP of Mongolia have been the

Wholesale and retail trade dragging agriculture to the 2nd place and mining and

manufacturing at 3rd. The growth average, within 2004-08 period, has been nearly 9% per

year largely as a result of high copper prices and new gold production. But the existence or




soaring inflation in 2008 and the effects of the global financial crisis, resulted in a trade off

for commodity prices and inflation. This has also reduced the government revenues

(Mongolia - The Economy, n.d).

In 2009, the country has started moving out of the crisis. In October 2009, the long-

awaited legislation has been passed on an investment agreement for developing Mongolia's

Oyu Tolgoi mine, one of the world's biggest unexploited copper mine. This has resulted in an

estimated growth of 7% in 2010. Transfer of funds from Mongolians working abroad are

considerably large, but have dropped as a result of the economic crisis. Money laundering is a

serious concern in Mongolia. Mongolia is a member of the World Trade Organization since

1997 and looks for expanding participation in the provincial economic and trade regimes

(Mongolia: economy statistics and industry reports, 2011).

1.3 Aims and objectives of the work

Aim of the current work is to provide a foundation for a business plan incorporating a

multi-cuisine restaurant in Mongolia. This work has been carried out considering an

entrepreneurial approach for the business. All the aspects of the business development and

operations will be analyzed deeply. This is to provide a detailed business plan by defining all

the functional areas (Linder and Cantrell, 2000). After accomplishing this report following

aims could be met:

1. A detailed portrait of the Mongolian economy and business environment can be

assessed.

2. Assessment of restaurant business in Mongolia.

3. Demonstration of the method of developing a business plan.

4. Preparation of a business plan for opening up a restaurant in Mongolia.



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1.4 Structure of the work

This work has been segregated into 5 chapters. These are named as Introduction, The

Business Concept, Feasibility, Strategic Analysis and Business Model and finally the

Business Plan (McKeever, 2012).

Chapter one is of introductory chapter. Rationale for the Business idea, Scenario

Chosen, Aims and objectives of the work and Structure of the work will be defined here. This

chapter acquaints the reader with the background of the study. Here the aims and objectives

of the study and a detailed synopsis of the entire report’s structure will be disclosed.

Beginning of the chapter sketches the pertaining business process, client base, situation,

working etc at the proposed restaurant.

The second chapter deals with The Business Concept. Here a detailed portrait of the

business idea, Mission, Vision, Concerned Product, Positioning, Scale and growth

anticipation etc. will be given. This chapter provides details about the company, company’s

management, business process, industry etc. This chapter provides ground to the entire study.

Feasibility Analysis is the third section of the work, which aims to analyze the business

proposal’s feasibility from different perspectives, such as Product/service, Industry/market,

Organizational and financial angles. Further a resource requirement evaluation will be carried

out for the Business.

In the fourth section strategic analysis of the business proposal and business model

development will be done. This incorporates Strategic analysis of the Business Idea through

literature review, defining Value chain and attaining SWOT analysis of the proposal,

identification of sources of competitive advantages and sustainability, strategy selection for

business triumph and finally developing an appropriate business model for the proposal.

In the last section, backed by the entire above study, a detailed and finalized business

plan will be written. This plan will offer an overall assessment of Business Development

Proposal, schedule of Business Plan and discussion of critical success/ failure factors for the

business.




CHAPTER 2: THE BUSINESS CONCEPT

Business Concept of any business proposal outlines what the business exactly will do

and how it will provide value to all its constituents. It supplies base for all the follow on

activities. It is one of the essential artifacts of a business plan. It articulates the vision

mission, business model, product/service etc. The target audiences, the product features and

the unique business value, all will be defined here in this section. Business Concept also

covers definitions of strategies for implementing the business proposal, including pricing,

revenue, and distribution models.

2.1 Description of the business idea

This business proposal is about a multi-cuisine restaurant, which will be started in

customers.

2.2 Mission

Mission of Aмттай is to offer delicious and remarkable food and drinks to the coming

tourists from different parts of the globe. The food and drink should meet the highest

standards of superiority, freshness and seasonality combining both creative and customary

styles of cooking. Providing the customers an impeccable service through warmth, civility,

effectiveness, acquaintance and professionalism is one of the aims, Aмттай strives for.

Friendly, cooperative and rewarding environment should be offered to the employees so as to

encourage long-term, pleasing, growth oriented work environment. Aмттай aims to be a



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benevolent member of the Mongolian community and improve the quality of life in the

region.

2.3 Vision

The vision statement of Aмттай is as follows:

“Aмттай intends to become the first choice for multi-cuisine test seekers in Mongolia

among the different origin tourists.”

2.4 Menu

Aмттай is a multi-cuisine restaurant offering food of Indonesian, Mexican,

Mongolian, Italian and Indian origins in a Mongolian cultured ambience. The menu will

comprise of the most popular dishes of different cuisines.

Menu of Indonesian food will include the most preferred dishes of Indonesian

origin, such as Ayam Taliwang, Babi Guling, Bakwan Malang, Betutu, Gudeg,

Gulai, Cakalang fufu, Laksa, Mie goreng, Nasi Campur, Paniki, Sangsang,

Tongseng, Mendoan, Tahu sumedang etc.

Mexican Menu will comprise of the Mexican dishes such as Burritos,

Chimichangas, Enchiladas, Fajitas, Flautas, Tacos, Tamales, Taquitos,

Tostadas, Quesadillas etc.

In Italian menu, dishes such as lasagna, fresh egg pasta, risotto,

Panzerotti, Piadinas, Arancini, Polenta, Gelato, Tiramisù along with some

Italian Drinks, namely wine will be included.

Indian Menu will cover dishes named as Butter Chicken, Tandoori

Chicken, Chicken Tikka Masala, Rogan Josh, Malai Kofta, Chole (chickpea

curry), Palak Paneer, Kaali Daal, Chaat and Naan.

Among the Mongolian cuisine, Aмттай will offer Horhog, Mantuun buuz,

Guriltai shol, Pyartan, Bantan, Suutei tsai, Buuz, Boortsog, Milk tea with

bansh, Bansh, Hushuur, Marmot boodog, Boodog etc.

This huge menu will demand chefs from different regions and ingredients specific to

the cuisine. The food products used will be fresh and of the premium quality, prepared with

compassion and care. Along with the tasteful food options, customers will also be able to

enjoy wine and other drinks of their preferences. The drink list will be modest in size and

chiefly focused on the wines from Italy. A moderate international beer selection will also be

featured in the restaurant. The calm softly lit bar features a complete assortment of the finest




Vodkas, homemade Italian aperitifs and digestives (like Lemon cello) and single malt

Scotches as well as all of the other favorites.

In summers, customers will also be offered a choice to sit outside on the terrace or

garden sitting arrangements and enjoy special summer menus, exotic drinks and other non-

alcoholic offerings. At the terrace or the garden, some cultural activities of Mongolia will be

organized for making the food much special for the customers. Restaurant will be open 7

days a week.

2.5 The Ambience

Interior of the Aмттай will be totally based on the Mongolian theme. Basically

Figure 1 Table arrangements in the Aмттай



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When a customer walks into Aмттай, he will feel the, musical Khoomi singing

(throat singing) and the playing of the Morin Huur or Horse Head fiddle (traditional musical

styles of Mongolia). Contrasting to many other restaurants, Aмттай will go with excellent

decorating, expected menu items and regular theme.

Figure 2 Interior of the restaurant gers.

Style of Service

Service at the restaurant will be smart and quick with affability with standards of

kindness and warmth hospitality. Customer will be overwhelmed by the value, hospitality and

ambience. Consistency of quality and service will be provided so as to develop a sense of

assurance in the customers. The management and servers will handle every detail to make the

customer's special evening even more special. All this and our great atmosphere will make

customers want to come back again and again.




Figure 3 Mongolian Hospitality style and clothing

2.7 Scale and growth anticipation

Aмттай is targeting the tourists coming to the country for its services so the scale of

the business and its growth anticipations will be highly dependent on the tourism scenario in

the country. According to the available statistics of the tourism industry, in 2005, 338 000

arrivals from divers regions have been recorded. This has generated an aggregate income of

201 million USD in 2005. There has been an average increase of 15 to 20% per year in the

number of tourists coming to Mongolia. If this rate of growth continues, the anticipated

growth rate of the proposed restaurant will also be the same. Taking a conservative

perspective, we take a growth rate of 15% per year. Aмттай’s estimated scale of service is

20% of the total coming tourist in Mongolia once in a while during their stay in the country

(Ministry of Road, Transport and Tourism. n.d). Thus the expected scale of the restaurant can

be derived as shown in the below table:



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Table 1 Estimation of customer foot fall at Aмттай

Year Growth factor (15% per year)

Expected tourists in Mongolia

Estimated customers for Aмттай

Average per day visiting customers

2013 3.059 1033942 206788 567 2014 3.518 1189084 237817 652 2015 4.046 1367548 273510 749 2016 4.652 1572376 314475 862

Formula used for calculating the estimated value of tourists coming to Mongolia is as

written below:

2.8 Start-up summary

If this estimated customer arrival continues, then for providing the aspired service

quality to the visitors, a well versed staff will be required. Staff description is as follows:

Table 2 Start-up human resourse requirement

Staff name Number of persons required Head Chef 1 (expert of the proposed menu cuisines) Chef 5 (experts of each cuisine) Assistant cooks 5 Waiters 10 Bar manager 1 Reception and counter staff 1 Manager 1

The key founder of the company is Mr. X. He will work as the manager managing the

entire restaurant from kitchen to personnel, accounts, algorithms, and computerized

functions. He will take care of the service standards and food quality plus financial issues of

the restaurant. Mr. A will be the Restaurant’s head chef, and will manage the entire cooking

section and assure the food quality. Mr. B will be assigned the overall responsibility of the

Bar section.

For catering the estimated customer visits, a proper floor will be required. As the

sitting arrangements are to be done in the form of traditional Mongolian gers, the floor of the

restaurant must be an open place. A terrace or a garden will suit the requirement. Total forty

tables, twenty in ger and rest twenty is the open floor will be placed. On each table, minimum

four persons could sit and eat comfortably (Mongolia's housing market recovering, 2011).




The space required for each table is 4 sqm. Thus the total floor area required for the

restaurant can be derived as follows:

Floor required for the restaurant = floor required for each table * number of tables +

floor required for kitchen area + floor required for administration and other facility area +

Area for bar

Here,

Floor required for each table = 4 sqm

Number of tables = 40

Floor required for kitchen area = 30 sqm

Floor required for administration and other facility area = 10 sqm

Area for bar = 20 sqm

Floor required for the restaurant = 4*40+30+10+20

= 220 sqm

The exact cost can be calculated for these items from day-to-day experience and a

market research. Stationery includes invoices, letterhead, envelopes, catering and

event contracts etc. Stationery will be in a very simple format with the Aмттай’s logo

on it. Many of the above items can be designed and produced in-house, which will be

done by the restaurant admin in-charge. This will save thousands of bucks. The menu

will also be designed, developed and revised internally to further save funds. Final

printing will be outsourced.

Rent, or lease payments

The floor for opening up a restaurant in any centralized location must be rented or

leased. We need a place for 250 sqm. The rent rate in Ulaanbaatar is about

$17<$18/sqm per month, whereas the land purchase prices are extremely attractive

lying in the range of $900/sqm to $1300/sqm. Initially the floor will be hired on rent



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but later on this can be purchased (Temple View Residence Ulaanbaatar Mongolia.

n.d).

Office Supplies and General Set-up

All kind of general usage items such as staplers, pens, paper cutter, paper, pads and

pencils, shredder and file cabinets for the waiter and host station, kitchen and office

are included in this list.

Exterior and Interior Signage

Sand wretched sign for the frontage as well as informational and directional signs for

the parking, facility etc area will be included in this list. Other critical signage will be

required inside for injury, Workers Comp, Material Safety Data Sheets, Workers

Right to Know, etc. Members of the team can be better understand what to do, what

not to do and how to do, via these signs and instructions everywhere.

Staff Uniforms

Staff will serve the clients in traditional outfits of Mongolian origin. The Mongolian

cloth deel will be dressed in by the waiters and waitresses. Each deel cost about $100.

We will require 30 deels and for the kitchen staff kitchen apparels will be needed. 20

kitchen apparels will be enough for the staff.

Restaurant Building and ambience

With the assistance of a Mongolian ger master, 20 small sized gers with 3 walls will

be designed for the restaurant. The average cost for which will be $875 each (Dealing

with Construction Permits in Mongolia, 2012). Besides these, 20 sets of Mongolian

style furniture will be purchased from any traditional furniture supplier (Cost of

Living in Ulaanbaatar, Mongolia. 2012). This furniture and other fixture work will be

done by service contract with any furniture maker in Ulaanbaatar. This estimated cost

of the work is $4000.




Figure 4 Mongolian traditional art

choices.

Table: Start-up

Table 3 Start-up requirements

Start-up Requirements Estimated cost

Start-up Expenses

Stationery, Menus, Guest Checks $4,000



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Printing of Menus $200

Property $18,000

Office Supplies & General Set-up $2,000

Serving Staff Theme Uniforms $3,000

Kitchen Staff Uniforms $3,000

Restaurant Building and ambience $21,500

Liquor License (coming 4 months) $60,000

Computer and computer Software $4,000

Chamber of Commerce/Other Memberships $2,000

Initial Job Hiring Related Advertising $1,000

Initial, Kick-start, Teaser Advertising $5,000

Phone, Electric, Cable and Gas Deposits $5,000

Food and Liquor Setup $8,000

Kitchen Supplies $4,000

Opening Celebration $5,000

Exterior and Interior Signage $1,500

Start-up employee Cost for initial four Months $96,000

Expense Account for Food, Fuel, Bills $2,300

Pre-funding Costs to Fluno Gorgonzola $3,400

printer cum copy Machine (Canon) $800

Fire and Burglar Alarm Installation $5,000

Milestones/Contingency/Other $20,000

Commercial Pre-Inspection of Building $800

Total Start-up Expenses $275,500

Start-up Assets

Cash Required $50,000

Start-up Inventory $25,000

Other Current Assets $0

Long-term Assets $0

Total Assets $75,000

Total Requirements $350,500




$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

Amount $

Total Start-up Expenses

Total Assets



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CHAPTER 3: FEASIBILITY ANALYSIS

Setting up a business is headed by the verdict to desire an entrepreneurial career and

recognition of a promising business idea backed by a careful examination of the existence of

entrepreneurial opportunities. Idea generation is not enough but the business idea should also

be feasible from techno-economic, legal and financial perspectives. So after the initial

screening of the prima facie promising idea, an in-depth examination for feasibility must be

carried out prior to set the one where time, money and energies will be exerted. Feasibility

study backs by a detailed primary and secondary market research (Rogoff, 2007).

Aмттай is a multi-cuisine restaurant in Ulaanbaatar, the capital of Mongolia. For this

restaurant, both primary and secondary research will be done. Primary research will target the

customer and the local market characteristics. Primary research will be conducted through a

survey method. In this survey the tourists coming to the country will be asked for their

opinions about the concept of the restaurant and their expectations. Further, an expert

interview method will also be used for their opinions and suggestions. The secondary

research will be done for assessing the industry and economic condition. Backed by both,

feasibility of the business idea will be tested.

Making a decision for investing enormous fund in a new project proper analysis of

things must be done. This analysis can be attained by means of either primary or secondary

research. Literally the primary research means the research conducted specially for the

problem under study by means of interviews, surveys and observations. For establishing a

restaurant in Ulaanbaatar, Mongolia, considerable fund and other supplementary resources

will be required. Along with this, significant time and manpower will be needed. This makes

it essential to conduct a detailed research before setting the plan go (Joseph and Covelo,

2006).

3.1 Primary Market research

Primary research is based on the principles of scientific methods. This theory of

investigation has been developed by John Stuart Mill in the mid nineteenth century and

discussed this in the book “Philosophy of the Scientific Methods”. There are three methods to

conduct a primary research, such as observations, interviews and surveys.

Here, for convenience and ease, interview method has been adopted. This is an online

interview method conducted through a blog designed for the visitors of Mongolia. This is a

well structured interview, where a previously set bunch of questions are asked to the visitors

of to the blog and asked for their opinions. In this blog, description of different natural and




heritage sights of Mongolia are discussed with different viewpoints. Visitors the blog are

asked to provide their opinions about the concept of Aмттай. Also they can share their

experiences during their visits to Mongolia and their food experiences along with suggestions

to improve the services. In this interview both past visitors and the potential visitors are

addressed. This research has been carried out in a time frame of three months. Almost, 1000

interviews have been collect from the tourists from different region of the world. Interview

questionnaire is attached in the appendix section. Observations for the interviews are briefed

as below:

1. Majority of the visitors are so allured by the aesthetic nature and awful culture of

Mongolia that they wish to be there again and refer this place to their friends and

families. According to them the place is full of energy as pollution is not much,

besides this, it is an affordable place for the low budget tour plans. Terroristic

activities are also not there, which adds to its beauty.

4. The most preferred cuisines among the respondents are three. These are Italian,

Mongolian and Indian. Further, some of the respondents have also shown interest in

the Indonesian and Mexican food.

5. According to the collected response, 72% respondents said that the average spent per

head for food in Mongolia was £25~£30. 18% said that their average spent on food in

Mongolia was over £30 and rest responses advocates the other options.

6. Making payment was a tedious task for the 70% tourists as majority of the food places

were not accepting the debit cards. Just for that, they had to take help of the currency

converters.



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7. Idea of opening a new restaurant in Ulaanbaatar with features of multi-cuisine in the

Mongolian cultural ambience plus availability of liquor from different region in the

bar section with facility of payments through debit cards has attracted the interest of

90% respondents. They have appreciated this idea.

3.2 Secondary Market Research

Secondary market research employs information assembled by outside sources such,

as government agencies, trade and industry associations, media sources, labor unions,

chambers of commerce, and many others. Secondary sources of information include the

following:

Commercial sources

Public sources

Educational institutions

Here, for satisfying the urge of the current study, Guide for doing business in Mongolia

2012-13 has been used as the secondary source of information. The data published in this will

be used time to time in the current paper where ever required.

3.3 Feasibility

Literally, feasibility means the ability of any idea to fare well in the market both in

terms of profits and market share. This spots the existence of a sizeable market for the

proposed service and the investment requirements of the business. The financing and

technical aspects are also answered by feasibility analysis such as where to acquire funding,

whether the necessary technical knowledge for realizing the idea in a live business is

available and many more. Feasibility assessment involves a check of the operations, HR,

financial and marketing aspects of the proposed business on ex-ante basis. Under the

feasibility the facets of the proposed project idea, such as market, technical, financial,

economic and legal etc will be analyzed (Bangs, 2002).

3.1.1 Product/service

First and the foremost thing in the feasibility analysis are to analyze the viability of

the business idea or the product or service, the business is aspiring to offer to its clients. In

the service feasibility test following questions should be answered for refining the business

idea:

Is the proposed business address to any specified need in the marketplace?

Does the proposed business sound profitable?



Does the business proposal have the capacity to face the competition in the market?

All the above stated questions can be answered through the observations of the

primary research. Primary research provides the buyer’s opinion regarding the proposed

business and their willingness to accept such service in the market.

According to the primary research conducted by the structured interview, the potential

customer reference group or the past visitors of Mongolia have appreciated the idea of the

restaurant. Their positive response to the idea of restaurant advocates the market viability.

Thus from the customer point, restaurant Aмттай is a good and attractive proposal, which

assures that the business will be profitable as a considerable demand of such a restaurant

exists in the Mongolian restaurant industry (City Guide - Ulaanbaatar – Restaurants. 2012).

Table 4 Comparative study of competitors

Name of restaurant

Cuisine Interior Theme

Service Food Venue Ambience Prices range

Namaste Indian Indian Ambience

4 4 4 3 $6 - $10 Reasonable

Hazara Indian Romantic ambiance

4.5 4.5 3.5 4 $10 - $15

Luna Blanca

Asian, Western and Mongolian cuisine

4.5 4.5 5 4.5 $3 - $15



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Millie's Café

American, European, Mexican, International

4.5 4.5 4 4

The Bull Asian 4 4 4 4

Sakura Restaurant

Japanese 5 5 5 5

Figure 5 Rating of key competitors for different attributes

Looking at the details available for the competitor, it is clear that none of these is a

direct competitor for Aмттай as our target customers are tourist from western countries.

Aмттай also proposes to offer food from not only Asian cuisines but from different ones.

The offered cuisines by the existing top players of the UB restaurant world are not matching

with our proposed menu. Menu at Aмттай tends to serve food from Indian, Indonesian,

Mongolian, Italian and Mexican cuisines in a totally Mongolian cultural ambience. This is a

unique restaurant idea offering multiple cuisine food for taste seekers.

3.1.2 Economy, Industry and Place

Attractiveness of economy

Mongolian economy is not merely a country with hope, but a country with a very remarkable

economical trail record of recent. Average GDP growth in the country is over 7% since 2002

(IMF report, 2007), and according to the latest official data about 2006 GDP the growth has

been recorded 7.5%. It is a good sign for any underdeveloped economy. Inflation in

Mongolia is very low and steady at -0.1% as per the records of 2007 beginning (IMF report,

2007) and is expected to be at 4.2% for the coming year (Bank of Mongolia, 2007). The

economy is overwhelmed with high levels of FDI investment, an open and progressive

government, lofty education standards and availability of various schemes and incentives for

0

1

2

3

4

5

6

Namaste Hazara Luna Blanca Millie's Café The Bull SakuraRestaurant

Service

Food

Venue

Ambience




entrepreneurialism. The unemployment issues are pleasingly low i.e. just 3.3% in 2005

(World fact-book, 2006).

Figure 6 Growth representation for Mongolian GDP (Hallberg, R., 2012)

Service Industry– 50.4% of the GDP is the result of this industry and it is growing

continuously.

Science & Technology – Technology industry of Mongolia has been increasingly

developing since the democratic revolution in the country taken place in the early 1990s.

Since then many new technology firms have founded their operations in the country (Doing

Business Guide in Mongolia, 2012).

Attractiveness of industry and market



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Service industry comprises of financial services, hospitality and tourism industry and

other services. Economist in the country is estimating high growth in this sector in the

coming years. This positive growth of the country’s overall economy and the hospitality and

tourism industry are the positive factors for the proposed business line (Mongolia looks to

tourism to diversify its economy, 2012). Restaurant is expected to be open in Ulaanbaatar, so

the importance of the city in the overall economy both from economic as well as from

tourism perspective must be evaluated (Ulaanbaatar Restaurants, n.d.). Evaluation of

Ulaanbaatar is as follows:

Ulaanbaatar

It is the Economic & financial centre of Mongolia and headquarter for all FDI &

MNC businesses.

It is an energetic, lively and exciting city, awash with entrepreneurial activities

resulting in a flourishing atmosphere for new business openings.

As a result of international firm’s high interest levels (from countries like USA,

Japan, China and Korea), a booming tourism industry is being experienced by

Ulaanbaatar and its vicinity, which has eventually increased the statistics of 5-star

hotels and resorts in city centre and countryside.

Near about half of the total country’s populace lives in this city, which is fueling the

urbanization’s fast pace in the city.

The city has potential for very lofty investment returns (Restaurants in Ulaanbaatar.

2012).

3.1.3 Organizational Feasibility

Organizational Feasibility analysis’s main purpose is to determine if there exist

sufficient skills and resources to bring service to market successfully. This involves analysis

of non-financial factors important for the business. Here, 2 primary issues to be considered

are the management competence and sufficiency of resources. For assessing the former issue,

the ability of the management team must be evaluated on the basis of the passion and

expertise for the launch of the new venture. Further to assess the availability of resources

needed to launch the proposed venture, focus must be on the nonfinancial resources such as

the availability of affordable floor, possibility of government support, workforce pooling

quality, acquaintance of the key suppliers, customers, and competitors etc. To test the

resource sufficiency, critical nonfinancial resources must be listed to move idea ahead and if

the resources are not sufficiently available, idea should be re-worked.




If this estimated customer arrival continues, then for providing the aspired service

quality to the visitors, a well versed staff will be required. Staff description is as follows:

Table 5 Personnel planning

Staff name Number of persons required Head Chef 1 (expert of the proposed menu cuisines) Chef 5 (experts of each cuisine) Assistant cooks 5 Waiters 10 Reception and counter staff 1 Manager 1

Founder of the company i.e. Mr. X, and two other i.e. Mr. A and Mr. B are the faces

of the Aмттай. The initial management team will highly depend on their expertise and

industry receptiveness. Main management responsibilities will be divided between the top

three. While all 3 need to focus mainly on the quality of proficiency, but one must take

eventual responsibility of administration, finance and marketing, while the other one

of personnel and property and the remaining one for food service and bar services. With the

growth of the firm, an additional consulting assistance can also be obtained for graphic,

editorial, sales, and marketing issues.

3.1.4 Financial Feasibility

Financial feasibility analysis gives a conceptual expression of the business proposal’s

ability to seek fund. The financial feasibility is the last element of feasibility analysis. This

gives financial merits of the proposed business. This financial plan is based on

raising roughly $300,000 through short term loans and $50,500 will come from the owner’s

pocket. Profitability depends on the nature of growth.



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Start-up Funding

The start-up capital will come from owner’s fund and short-term loans. The cost of

financing is to be financed from owner’s investment. The total fund requirements for start-

up are listed in the below table.

Table 6 Start-up Funding

Start-up Funds Funds Start-up Expenses to Fund $275,500 Start-up Assets to Fund $75,000 Total Funding Required $350,500 Assets Non-cash Assets from Start-up $25,000 Cash Requirements from Start-up $50,000 Additional Cash Raised $0 Cash Balance on Starting Date $50,000 Total Assets $75,000 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $0 Capital Planned Investment Owner Equity $50,500 Short term loan $300,000 Additional Investment Requirement $0 Total Planned Investment $350,500 Loss at Start-up (Start-up Expenses) ($275,500) Total Capital $75,000 Total Capital and Liabilities $75,000 Total Funding $350,500

Key Assumptions

Entire financial plan is dependent on some important assumptions, majority of which

are revealed in the below table. The underlying key assumptions are:

A high-growth economy, exclusive of major recession impact has been assumed in

Mongolia. It is assumed that the opening ceremony of Aмттай will be held in the

first week of January 2013 and the average per day traffic will be 567 individual.



There does not exist unforeseen changes in the anticipation about the popularity of

Aмттай.

Accesses to both investments and financing requirements for the proposed business

plan are available with certainty. General financial and investment availability

assumptions for the plan are as shown in the tables.

Meal for 2, in any Mid-range Restaurant with Three courses cost to the customers in

the range of $20 to $30. The average cost per head is assumed to be $15 per meal.

Alcohol cost per head is assumed to be $15.

It is assumed that the gross profit margin of restaurant industry of Mongolia is 30%.

Liquor section works for 40% profit margin (Happy Mongolia, 2012).

Table 8 Customer visit for caste

Year Estimated customers for Aмттай Estimated customers in the liquor section 2013 206788 41357 2014 237817 47563 2015 273510 54702 2016 314475 62895

It is assumed that the customers in the bar section are just 20% of the total arrivals in

the restaurant. Estimation of sales revenue from both restaurant and bar sections for Aмттай

is shown in the below table:

Table 9 Projected revenue

Year 2013 2014 2015 2016

Food section revenue Estimated customers for Aмттай per year 206788 237817 273510 314475 Revenue per head 15 16.5 18 20 Total revenue 3101820 3923981 4923180 6289500



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Liquor section revenue Estimated customers for Aмттай per year 41357 47563 54702 62895 Revenue per head 15 15.75 16.5 17.32

Total revenue from liquor section ($) 620364 749117.25 902583 1089341.4

Total revenue for Aмттай ($) 3722184 4673097.75 5825763 7378841.4

Schedule for estimated cost of sales for food service section is as under:

Table 10 Cost Projections for restaurant section

Year Annual Inflation rate %

Cost per order


Total cost of sale per year

2013 4 10.5 206788 2171274 2014 4 10.92 237817 2596962 2015 4 11.36 273510 3107074 2016 4 11.81 314475 3713950

Schedule for estimated cost of sales for Liquor section is as under:

Table 11 Cost projections for Liquor section

Year

Cost per order


Total cost of sale per year

Total cost of sales (liquor + food)

2013 9 41357 372213 2543487

2014 9.5 47563 451849 3048810

2015 10 54702 547020 3654094

2016 10.5 62895 660398 4374347

Sales forecast: Sales forecast for the coming four years is as given in the below table:

Table 12 Sales forecast for coming four years

(a) SALES FORECAST Year 0 1 2 3 4 Units 248,146 285,380 328,212 377,370 Sales Value @£1000/unit 3,722,190 4,708,770 5,957,048 7,534,192 Sales policy

Cash flow on Sales 3,722,190 4,708,770 5,957,048 7,534,192

(b) Cost of goods 0 2,543,487 3,048,810 3,654,094 4,374,347 Supplier payment policy

Cash flow on cost of goods 0 2,543,487 3,048,810 3,654,094 4,374,347

Cash Flow for the project:

Table 13 Cash flow for project

(2) CASHFLOW FORECAST




Preop Year 0 1 2 3 4 CASH INFLOWS Cash from Sales 3,722,190 4,708,770 5,957,048 7,534,192 Directors loans 300,000 Share capital 50,500 0 Other external finance/loans Other cash inflows TOTAL CASH INFLOW 350,500 3,722,190 4,708,770 5,957,048 7,534,192 CASH OUTFLOWS Payments for materials 0 2,543,487 3,048,810 3,654,094 4,374,347 operating expenses Premises (rent, rates) 9,000 54,000 59,400 65,340 71,874 Wages and salaries 0 288,000 331,200 380,880 438,012 General expenses 0 91,350 117,480 110,214 121,434 Interest and bank charges 0 30,000 30,000 20,000 10,000

Cash flow summary

NET CASHFLOW FOR PERIOD

170,000 715,353 1,021,880 1,205,787 1,987,433

OPENING CASH BALANCE 0 170,000 885,353 1,907,233 3,113,020 CLOSING CASH BALANCE 170,000 885,353 1,907,233 3,113,020 5,100,452

Projected Profit and Loss

It is a financial statement, which summarizes the sales revenues, costs of goods and

expenses incurred in the business during the specific time period usually a quarter or year. It

gives information about the ability of the business to generate profit by improvising revenue

and curtailing costs. It is also known as a statement of profit and loss, an income statement or

an income and expense statement (Levine and Michele, 2008).

Profit and Loss statement has been prepared following a conservative point-of-view

and the projections are based majorly on the past performance of some other restaurants



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running in Ulaanbaatar. Through service position strengthening and customer relationship re-

engineering, popularity among the target customer base will be achieved and as a result

increased sales revenues will be reaped.

Projected P & L for Aмттай

Table 14 Projected P & L

(4) PROFIT AND LOSS FORECAST

Year 0 1 2 3 4

Revenue 0 3,722,190 4,708,770 5,957,048 7,534,192

Cost of sales 0 2,543,487 3,048,810 3,654,094 4,374,347

Gross profit 0 1,178,703 1,659,960 2,302,954 3,159,845

Expenses/overheads

Premises (rent, rates) 9,000 54,000 59,400 65,340 71,874

Wages and salaries 288,000 331,200 380,880 438,012

General expenses 91,350 117,480 110,214 121,434

Interest and bank charges payable 30,000 30,000 20,000 10,000

Lease payments 0 0 0 0

Depreciation 2150 2150 2150 2150

Other expenses 150,000

Total expenses/overheads 9,000 615,500 540,230 578,584 643,470

Profit before tax -9,000 563,203 1,119,730 1,724,370 2,516,375

Tax @25% 420,733 431,092 629,094

Profit after tax 563,203 698,997 1,293,277 1,887,281

Dividends 0 0 0 0

Transfer to reserves 563,203 698,997 1,293,277 1,887,281

Projected Balance Sheet

Table 15 Projected Balance sheet

(5) BALANCE SHEET

Year 0 1 2 3 4

ASSETS

Fixed Assets

Building 0 0 0 0 0

Furniture 21,500 19,350 17,200 15,050 12,900

Vehicles 0 0 0 0 0

Plant & machinery 0 0 0 0 0

Net Fixed assets 21,500 19,350 17,200 15,050 12,900

Current Assets

Stock 211,957 254,068 304,508 364,529 0

Debtors 0 310,183 392,398 496,421 627,849

Cash 170,000 885,353 1,907,233 3,113,020 5,100,452

other -




Rent 9,000 54,000 59,400 65,340 71,874

Market survey costs 10,000

other preliminary expenses 140,000

subtotal 540,957 1,503,603 2,663,538 4,039,309 5,800,175

Current Liabilities

Taxation 420,733 431,092 629,094

subtotal 0 0 420,733 431,092 629,094

Total assets less current liabilities 562,457 1,522,953 2,260,005 3,623,267 5,183,982

LIABILITIES

Share cap 50,500 50,500 50,500 50,500 50,500

Reserves 563,203 1,262,200 2,555,477 4,442,758

Total equity 50,500 613,703 1,312,700 2,605,977 4,493,258

Loans 300,000 300,000 200,000 100,000 0

Total 350,500 913,703 1,512,700 2,705,977 4,493,258

volumes. This can be calculated by the following formula:

Here the fixed cost will comprise of following elements:

1. Rent

2. Salaries

3. Liquor license cost

Whereas the variable cost is about the food ingredient and supplement cost.

For Aмттай, values of fixed cost and variable cost and selling prices are defined in the below

table:

Table 16 Break Even Analysis

Rent monthly $4,500 liquor license renwal fee monthly $1,000 salaries monthly $24,000 Total $29,500 Contribution per customer $4.50



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Breakeven Point (customer)per month 6556 Breakeven Point (customer)per day 220

Figure 7 Break Even Analysis

BEP i.e. break-even point for the proposed business is below the estimated sales

volume level, which males the venture attractive for investment.

Pay Back Period

Pay back period is a financial evaluation technique. By payback period, the meaning

is that the time period required for any project to pay the initial investment back. It is non

discounted technique (Dayananda et al, 2002). Here in our proposed plan, $350,500 is

required as the start-up fund. This fund will be recovered through the business’ net profit.

Calculation for the pay-back period for the restaurant project in shown in the below table:

Table 17 Payback period analysis

Year Net profit Cumulative net profit

2013 $25,438 $25,438 2014 $143,258 $168,696 2015 $460,848 $629,544 2016 $879,710 $1,509,254

From the above table it is clear that the initial investment will be repaid by the

business in the third year of commencement. If a linear distribution of profit is assumed, then

the exact pay-back period will be calculated as follows:




Pay-back period = 2+ (350500-168696)/460848

= 2.4 years or 2 years and 5 months

Pay back period of the employed capital investment is relatively low, which implies

the attractiveness of the venture among the investors.

3.4 Resource requirement Evaluation

Any physical or virtual entity with limited availability, such as supply of money,

materials, staff and other assets required for venturing any business are termed as resources.

For Aмттай, six broad types of resources are required. All of which are defined in the below

section:

Finance: Total start up fund is $350500. $50500 would be invested by the owner and

business, where customer will evaluate the restaurant by the service provided to them

through employees. Availability of staff is not big concern for Aмттай, in Mongolia.

Technological resources: are embodied in a process, system or physical

transformation, e.g. unique software products and tailored information system

architecture.

Organizational resource: Such resources include the structure of the business, routines

and systems.



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CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL

Strategic analysis aims to look at the external environment of the organization

concerning about the present and the future consequences. Through the strategic analysis two

questions must be answered, like:

How the external incidences happening might affect the business?

What should be the best response of the business to the likely changes?

While, the business model is the manager’s logic, which allows a venture to capture

the market opportunity by mitigating risks. This also aids in identifying the required resource

set; and create value for investors and founders.

Here, a thorough analysis of the business idea from the strategic view will be carried

out and based on this a proper business model will be developed.

4.1 Strategic analysis of Business Idea

Restaurant opening seems to be a glamorous business and by being successful

restaurateurs, one can attain fame and fortune both, but success in restaurant business is not

easy to attain and failures are not rare. Prior to opening a restaurant, one must gain the basic

understanding of the industry and competition structure.

According to the Entrepreneur website (2009), there has been a tremendous growth of

about 155,000 to 900,000 in number of food-service from 1970 to 2009. This trend is

expected to persist as now people choose to eat out rather than taking time to prepare meals at

home. This advocates the idea of opening the right sort of restaurant at the right location.

Restaurant is basically a people business, so a socialist must flourish in such type of

business. But, the success highly depends on the staff’s especially the servers ability to

entertain the customer requirements and strong people skills. Retains of right people is a

serious challenge for the restaurant business. Having young staff leads to higher employee

turnover issues (What is strategic analysis?, n.d.).

Aмттай is a restaurant starting from scratch and for that things must be designed and

managed in the owner’s way. This may result in difficulties for establishing the brand and

positioning it in the market. Aмттай is a new concept and generally a new concept involves

high degree of risk. Besides, restaurants are not easy to operate. One requires having

knowledge regarding the proper equipment to purchase and grow to be versed in food-

handling measures and local health codes. An extensive market research must be conducted

before taking the plunge in order to assess the acceptability of the business concept by the

targeted customers.




According to a report of Entrepreneur.com (2010), many restaurants fail all through

the first year of commencement, largely due to a poor planning. Taking the time to prepare a

carefully researched business plan will give you a better chance of success and is essential if

you wish to obtain bank financing to get started. Bank finance for starting up funds can be

better acquired on the basis of a good and rigorous business plan.

4.2 Value chain and SWOT

Concept of value chain has its origin in Michael Porter’s book “Competitive

Advantage: Creating and Sustaining Superior Performance” published in 1985. Value chain

includes a sequence of activities performed by a firm operating in a specific industry to

deliver valuable services to its clients (Woudstra and Adria, 2003). Below diagram indicates

the value chain at Aмттай.

This value chain and operational competence of the firm result in specific strengths

and weaknesses along with external opportunities and threats from the outer circumstances.

SWOT analysis of Aмттай is given in the below chart:

Table 18 SWOT Analysis

Strengths Innovative business idea

Weaknesses Highly dependent of the acceptability of



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Backed by proper research and planning Financially viable Lucrative market growth of the past

the restaurant among the tourists Highly dependent on the growth of

tourism in the country Sensitive to the government laws and

regulations Success is dependent on the staff

performance Threats

No entry barriers exists, which makes a threat of increasing competition

Business’ Point of difference is its innovative theme and cuisines, which can easily be copied

Government’s dependency on the FDI investment may cause serious damage to tourism

Counties proximity to the terrorist sensitive countries may spoil the business

Opportunities High growth economy Increasing tourism\

4.3 Sources of competitive advantages and sustainability

For survival and prosperity of any business in an industry, companies must meet two

decisive factors. First, they must deliver customers what they want to buy, and second that

they must endure in competition. Overall competitive advantage can be attained through

creating difference between offered customer value and cost of creating such customer value

as compared to its market peers. Competitive advantage takes 2 forms namely differentiation

advantage and cost advantages. Differentiating advantages can be attained by creating the

superiority of the service in the customer minds, while cost advantages can be attained

through economies of scale.

Here, Aмттай is a completely new venture so it is not possible for it to attain cost

advantages. Competitive advantaged through differentiation can easily be attained by it as it

involves a completely new idea and theme. Aмттай can fare the uniqueness of cuisines

offered at a single place with innovative theme and service for differentiation of services in

the market place. This may give a higher sustainability to the restaurant.

4.4 Business model

Business model for Aмттай will describe the underlying principle of the organization

to create, capture and deliver value in terms of economic, social, cultural, or any other forms.

Business model construction process is a part of the business strategy (Peterovic and Kittl et

al, 2001). It aids in describing and classifying business, plus exploring the possibilities of

future development. For a creative management, business model operates like a recipe




(Chesbrough and Rosenbloom, 2002). Business model for Aмттай is given in the below

section:

Table 19 Business Model

Ownership - Company is

solely owned by the entrepreneur

- Key motivations for the investment is growth of economy and tourism industry of Mongolia

Key activities - In restaurant line,

Maintaining food quality and consistency

- In liquor section, timely renewal of license

Value proposition - Delivering value for

money to the customers

- Catering niche market’s expectations

- Maintaining higher food quality

- Maintaining higher services standards

- Providing growth opportunities to the staff members

- Having equality policy

Customer relationship

- Respect for customer feedbacks

- After sales services

Customer segments

- Tourists coming to the city

- Lowers of multi cuisine food

Key resources - Financing comes

from the owner’s pocket or through short-term loans

- Human resource and other operational requirements will be availed from Mongolia

Channels - Marketing

through tourist companies

- Online marketing

- Tie ups with tourist firms

Marketing - Consistent marketing activities at the places sensitive

to tourism

Revenue streams - Through restaurant Through Bar



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CHAPTER 5: BUSINESS PLAN

5.1 Overall assessment of Business Development Proposal

Business set-up is headed by the decision for having an entrepreneurial career and

recognition of a promising business idea backed by a careful examination of the existence of

entrepreneurial opportunities in the selected market. Aмттай is a multi-cuisine restaurant in

Ulaanbaatar, the capital of Mongolia. For this restaurant, both primary and secondary

research has been conducted. Primary research has given a positive response towards the

proposal along with the secondary one. According to the customer response to the proposed

idea of business, Aмттай has a positive probability of success in the market among the

targeted market.

Now looking towards the feasibility of the proposed business plan, every constituent

of analysis has given a positive response for it. According to the service viability analysis, it

will have good response among the tourists coming to Ulaanbaatar as presently, there is no

restaurant, which offers the same cuisines that are the part of our menu. Also, the theme of

the restaurant and bar is a unique one, which will certainly attract customers. This result is

also proven through the primary research conducted.

Now, when the discussion comes to the industry and market attractiveness, both are

found to be profitable and growth oriented. Mongolian economy is currently at its growth

stage and market for restaurants in Ulaanbaatar is very attractive from the point of

investment. Inflation rate is quite low (4%) in the country, which is a good symbol for an

entrepreneurial start up. Currently Mongolia has emerged as a new tourist destination and

average growth of tourism industry in the country is recorded to be 15 to 20%, which is a

good indicator for a tourist targeted business venture.

Financial feasibility analysis shows the ability of the venture to repay the initial

investments in a very short time period i.e. 2 years and 5 months. Also the growth in profit

margin is considerable. Besides all, the initial investment for opening up a restaurant in

Ulaanbaatar is comparatively low.

The entire analysis has given positive responses making the proposal worthy to get

investments. This will prove beneficial for getting the loan from the corporate or the banks

for the initial start-up funds.

5.2 Business Plan Schedule

Execution of the proposed plan can be segregated into following activities:

1. Arrangement of fund 1 week




2. Obtaining licenses both for restaurant and liquor business 1week

3. Finalization of the floor 1 week

4. Building ger 4 weeks

5. Interior 2 weeks

6. Other fixture procurement and installations 1 week

Table 20 Gantt Chart

Activity Week 1

Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Arrangement of fund

Obtaining licenses both for restaurant and liquor business

Finalization of the floor

Building ger Interior Other fixture procurement and installations

Menu designing Printing work Designing advertisement and promotional activities

Organizing a complementary event for launch of the restaurant

Inauguration of the restaurant



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5.3 Discussion of critical Success/failure factors

Critical success and failure factors for entrepreneurial success in the restaurant

business are very important to be considered as restaurant functions in a complex business

environment. This business line is very sensitive and has the highest failure rate among other

business start-ups. For flourishing in the restaurant industry, the critical success and failure

factors must be taken into consideration by any entrepreneur (Joseph, n.d.).

Critical success and failure factors for the proposed business plan are given as below

(The Center for Hospitality Research of Cornell University, 2008):

Strategic choices

Strategic choices like location of the restaurant, business plan, positioning and

business concept, target market, competitive strategies (differentiation) and value of firm are

critical for the success of the business. This is because; all these decisions or choices define

the business nature and characteristics. Decisions regarding these must be backed by a

rigorous analysis so as to avoid serious consequences.

Competitive factors

Competitive factors such as restaurant density or competitive intensity in the market,

comprehension of the competitive forces and product relevance plays an important role in

any business’ success story.

Marketing

Basically marketing aims at recognition of demand and satisfying the demand

profitably. For this, restaurant must have marketing abilities, good customer relationship and

community involvement. Pricing plays a critical role for success so firm must stick to the

value delivery concept.

Resources and capabilities

Firm size, financial capital, profitability, internal controls, organizational culture,

efficiency, product quality and consistency, service levels, competence of employees,

employee relationships, employee turnover rate etc are the critical factors from the resource

and capability perspective.

All of the above described critical factors should be taken care of for the success of

the proposed restaurant plan.




APPENDICES

Opinions of you

Mongolia tourists! For making your tour more pleasant with a new food house,

Aмттай is following you where you go in Mongol. For offering the best menu to

satisfy our customers, we need your comments on the questions below.

Your help in answering these questions will be highly appreciated!

Q. 3. How was your food experience during the trip?

Q. 4. Have you missed something there terribly?



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Q. 5. Style of cuisine you prefer

(Tick a maximum of three as appropriate)

Modern Italian Mongolian Indonesian

Mediterranean Japanese British European

Thai French Indian German

Other (please specify)..................................................................................

Q. 6. What has been your normal spending for food at Mongolia?

A. £15~£20 per head

B. £20~£25 per head

C. £25~£30 per head

D. Over £30 per head

Q. 6. How did you made payment for your food during your trip?

Q. 7. A new restaurant is going to be opened in Ulaanbaatar. In this restaurant, customer

will be able to enjoy its favorite cuisine in the Mongolian cultural ambience. Besides, one can

enjoy liquor of different region in the bar section of the restaurant. Payments can be made

through your countries debit cards. What is your opinion regarding this?

Q. 8. Do you have any other comments? If so, please state here:

Thanks for consideration!




REFERENCES

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Dayananda, D. et al, 2002. Capital Budgeting: Financial appraisal of investment projects.

McKeever, M., 2012. How to write a Business Plan. 11 th ed. USA: TERRI HEARSH.

Peterovic, O. and Kittl, C., et al, 2001. Developing Business Models for e-Business. International Conference on Electronic Commerce.

Rogoff, E. G., 2007. Bankable Business Plans: Second Edition. 2 nd ed. New York: Rowhouse Publishing.

Sharon L. Fullen, S. L., 2004. Opening a Restaurant or Other Food Business starter Kit. Florida: Atlantic Publishing Group, Inc.

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The Center for Hospitality Research of Cornell University, 2008. Success and Failure in Northern California: Critical Success Factors for Independent Restaurants. [Online] Available at:<http://www.uk.sagepub.com/chaston/Chaston%20Web%20readings%20chapters%201-12/Chapter%204%20-%2013%20Camillo%20et%20al.pdf> [Accessed 22nd October 2012].

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BIBLIOGRAPHY

http://www.numbeo.com/cost-of-living/city_result.jsp?country=Mongolia&city=Ulaanbaatar

http://forum.ls-rp.com/viewtopic.php?f=614&t=225776

http://www.mongolian-ways.com/culture.htm

http://www.bplans.com/fast_food_restaurant_business_plan/financial_plan_fc.php#.UIUTw



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