BIRYANI HOUSE BUSINESS PLAN Comprehensive Business Plan Report

“Entrepreneurship and Small Business Management”

Entrepreneurship and Small Business Management

Business Plan Report

Submitted to: Sir. Farid Shami

Submitted by:

Muhammad Nauman (2012-EE-155)

Ali Yousaf (2013-EE-39)

Arshad Aleem (2012-EE-84)

Malik M. Zaid (2013-EE-37)

Mudasser Rahim (2013-EE-36)

Rabi-ul- Islam (2013-EE-38)

Date: 11th June, 2016

Business Idea

Executive Summary:

This report is prepared for the course of “Entrepreneurship and

Small Business Management” guided by Mr. Farid Shami. This is a

comprehensive report on the establishment of a Biryani House. A

complete analysis of environment of this restaurant is given which

supports the succession of the project in selected location i.e. Johar

Town Lahore.

The project is financed by six partners each contributing equal

investment. Its building will be rented and it will be around competitors’

zone on M.M Alam Road. The marketing and promotion will be

accomplished by placement of bill boards and distribution of handbills

in general public. The target market is chosen upper-middle and middle-

middle classes. All the machinery will be procured from Pakistan but

some of the equipment which are not available in Pakistan can be

imported. A complete organizational setup has been defined from

managing director to the waiters. The project cost estimated is more than

the investment so a loan of 500,000 has been sanctioned from bank for 3

years payback period at 26% interest rate.

Finally, 3 year projections of income statements cash flows and

balance sheet has been performed. The thorough and comprehensive

projections along with income statement and balance sheet assumptions

show that project is a viable and practical business to be run.

Mission Statement:

“To serve our customers with best quality Biryani

with different flavors and a good environment.”

Other objectives are:-

Along with running a restaurant, our other objectives are

To provide better taste and different types of Biryani

To provide a free home delivery to customers up to 10 p.m within

a specified area

Make sure the availability of cold drinks and mineral water for

customers

To maintain a courteous behavior with customers, so they could

come again and with staff.

To build good relationships with the customers for the sake of

advertisement

To establish good relations with other fellows running other

companies and restaurants in that market area.

Feasibility

Johar Town is very populated area, with joyful people. It is one of

the biggest towns in Lahore. The area is so overcrowded because of its

importance. It has its own shopping malls, universities, institutes,

Theatres, gyms, and both family and community parks. The area has all

kind of facilities and bother upper and middle class people live here. So

the opening of a Biryani House in such a crowded area would be very

beneficial.

Moreover the market we select is Food Street, which is always full

with people all the time. Although the building for the restaurant is on

rent and owner is demanding a very high price. But this price describes

its importance. The name of market is Moon Market. The market is very

hustle bustle place and is always enriched with the people. There are

also other restaurants which provide Biryani but a place with specifically

serving Biryani and with different types would be attractive. So, in the

light of above all facts, we have a very positive notion about our success

in the market.

Requirement

Backgrounds/ Introduction of Partners:

Malik M.Zaid:

Zaid has worked in a multinational company as an accountant.

Ali Yousaf:

Ali is a business man who is currently doing import and export business.

Rabi-ul- Islam:

Rabi takes care his father’s restaurant and has a very good managing

experience.

Arshad Aleem:

Arshad is currently working as HR manager in a cooperation.

Mudaseer Rahim:

Mudaseer Rahim is working as chief engineer in PEL.

Muhammad Nauman:

Nauman has electrical engineering degree and has done MBA.

Company Description:

We will operate the house by the name of “Bismilla

Biryani House”. The restaurant will be locate at the Johar Town near

Allah Ho Chowk just close to a dense population of target market. The

project will be on rent and would take 6 months for the interior setup

and marketing. The house will then be opened and the operations phase

of the project can begin.

Loan from Bank:

Our sources of finance will be

1) Equity Assets

2) Bank Loan

The equity positions are:

Sr. No Name of Invester Share in Investment

1 Ali Yousaf 300,000

2 Malik M.Zaid 300,000

3 Rabi-ul- Islam 300,000

4 Mudasser Rahim 300,000

5 Arshad Aleem 300,000

6 Muhammad Nauman 300,000

Total = 1800,000 Rs/-

Liability from Bank:

The cost of whole project was greater than the

equity invested by us, so we needed loan to fulfill our requirement from

the bank. We presented our whole business plan and convinced them on

our success. We presented them all the documents and properly

managed to get liability from bank. The bank gave its liability at the

interest rate of 26% annually with the loan to return within the duration

of 3 years.

Working Plan

Competitive Analysis:

The proposed Biryani House will aim at providing good quality

food to people especially families of upper-middle and middle-middle

group. There are a number of restaurants located in different areas of

Lahore. Especially at Johar Town there are many competitions in our

way which are also targeting to the upper-middle and middle-middle

class. The main competitors are Karachi Biryani and Lasania restaurants.

As we are opening up at Moon Market so we have to face a lot of

competition but by providing best quality food and with the help of

marketing strategies along with competitive prices we aim at making our

name and place in the market share soon.

Target Market:

Moon market is a well-established market providing

all kind of facilities to customers. This is a very hustle and bustle area.

The departmental stores, restaurants and theatre cinema attracts people

towards the market. The shops remain opened till 12 am. Our product

will be targeted to the upper-middle and middle-middle class because we

will provide an appropriate environment with the product with an extra

intended service. As this is a restaurant, we are expecting that families

will contribute more in our customers.

Services and Price:

We are providing different types of biryanis with different taste

regions.

Types of Items and their Prices:

With Local Taste:

Chicken Biryani

Sr. Item Type Price (Rs/-)

1 Chicken Biryani (Half Plate) 130

2 Simple Biryani (Half plate) 100

3 Chicken Biryani (Full Plate) 230

Mutton Biryani

Sr. Item Type Price (Rs/-)

1 Mutton Biryani (Half Plate) 160

2 Mutton Biryani (Full Plate) 260

Beef Biryani

Sr. Item Type Price (Rs/-)

1 Beef Biryani (Half Plate) 130

2 Beef Biryani (Full Plate) 230

With Regional Taste:

Sindhi Biryani

Sr. Item Type Price (Rs/-)

1 Sindhi Biryani (Half Plate) 130

2 Sindhi Biryani (Full Plate) 230

Bombay Biryani

Sr. Item Type Price (Rs/-)

1 Bombay Biryani (Half Plate) 130

2 Bombay Biryani (Full Plate) 230

Shami Pilaf

Sr. Item Type Price (Rs/-)

1 Shami Pilao (Half Plate) 130

2 Shami Pilao (Full Plate) 230

Other Items:

Sr. Item Type Price (Rs/-)

1 Kaddo Raita (small) 40

2 Kaddo Raita (Large) 80

3 Salad 40

4 Regular Drinks 25

5 Half liter Drinks 50

6 1.5 Liter Drinks 100

Restaurant Setup:

We have 15 tables with each table accommodating 6 people.

The basement of building is reserved for customers with family,

with 6 cabins for separate families.

The front of the house is decorated with name of Restaurant

“Bismillah Biryani House”.

We have arranged 5 waiters, one for 3 tables taking order from

them.

For Basement, we have 2 waiters for taking order.

To make environmental comfortable, we have arranged air

conditioning system.

Promotion:

Since this is a restaurant there will be more promotional

activity the initial thing which we will do is we can spread the pamphlets

in general public, the major strategy for promotion will be “word of

mouth” besides it is the most difficult to maintain as the chances of

failure remain a continuous matter of concerns.

Our Promotion vehicles will be:

1. E-Marketing

2. Bill Boards

3. Brochures and Pamphlets

4. Cable TV-Marketing

5. New papers Advertisements (Jang, Dawn and DailyLahore)

Home Delivery Service:

We will also provide a free home delivery service to those

customers who want our services at their home. For home delivery, we

have arranged two delivery boys which will provide their services

throughout the Johar Town.

Machinery and Equipment:

Understanding the customer’s individual needs

and the capability to satisfy these completely is a vital part of the

restaurant’s success. This is in turn dependent on the machinery and

equipment used to produce good quality food. Food machines are easily

available in the market the owner has to choose between expensive

brands and cheaper ones depending on how much he can afford to give

quality to his customers.

The machines can be ordered local whole sellers with a minimum

delivery period of 3 months while refurbished / reconditioned machines

are also available. Since we are new to this industry so we have

preferred to go with new machinery and we have estimated their cost in

feasibility.

Equipment Quantity Cost/unit (Rs/-) Total Cost (Rs/-)

Cooking Stooves 3 5000 15000

Oven 2 15000 30000

Fridge 1 30000 30000

Exhaust fans and

Lightining

4 4500 18000

Large Cooking Vessels 5 10000 50000

Large Plates 250 40 10000

Small Plates 500 20 10000

Bowls 30 100 3000

Glasses 300 20 6000

Miscellaneous 1 18000

Total = 190000

Dining Furniture and Fixtures:

Lobby Furniture

Quantity

Cost/Unit

Total Cost (Rs/-)

Glass Tables 21 5000 105000

Wooden Chairs 130 1000 130000

Dining Cutlery Set 120 50 6000

Air Conditioners 4 35000 140000

TV LCD 1 40000 40000

Generator Large 1 120000 120000

Wall fans 10 10000 100000

Wiring and Switching 1 15000 15000

Surround Sound System 1 10000 10000

Lights 40 300 12000

Office Chair & Table Set 1 30000 30000

Miscellaneous 1 50000 50000

Computer Set 1 20000 20000

Telephones 3 800 2400

Security System 1 12000 12000

Total: 702400

Reception and Owner’s Office:

Dedicated area

Requirement

% age area usage

Dining 60%

Reception & waiting 5%

Staff Room 5%

Kitchen and

Preparation

20%

Owner’s Office 10%

Total 100%

Human Resource Management:

A better human resource is the core factor in developing any

business and well-motivated and adequately paid employees contribute a

major part in maintaining the standards, the human resource which we

are going to use are as follow:

Human Resource

Quantity

Wages/unit

Wages

(monthly)

Wages

(Yearly)

(Rs/-)

Chief Chef 1 20000 20000 420000

Guard 1 6000 6000 72000

Waiters 8 6000 48000 576000

Dishwasher 2 5000 10000 120000

Sweeper 1 5000 5000 60000

Manager 1 20000 20000 240000

Delivery Rider 2 4000 8000 96000

Cooks 3 10000 30000 360000

Labor wages 147000 1764000

Total 200,0000

The Labor wages is assumed to be increased 15% annually.

Taxations on Revenue:

The tax will be paid under the Pakistani law with the rate of

straight 35 percent on total income. Every tax year is self-contained year

hence taxable profit is the profit accrued or arisen in that year.

Anticipated of potential profit or losses which may occur in the future

are not considered for arriving at taxable income of a tax year. This rule

is however, subject to one exception stock in trade may be valued on the

basis of cost or net realizable value. The revenue will be rest taken out of

the liabilities and taxes from total income.

𝑡𝑜𝑡𝑎𝑙 𝑇𝑎𝑥 = 𝑇𝑜𝑡𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒 ∗35

100 (Rs/-)

Total Cost of Project Cost

Rent 1000000

Machinery and

Equipment

190000

Furniture and fixture 702400

Interior Decoration 50000

Vehicles 70000

Pre operating Cost 100000

Total Project Cost 2112400

Financing Plan

Rs. 2112400

Equity (85.2%)

Rs. 1800000

DEBT (14..8%)

Rs. 312400

Revenue and Cost Projections:

We are expecting that in starting we may have to bear the cost

below equilibrium, but as we move on with the proposed strategy of

“Quality with Consistency” our sales volume will increase. Concerning

the pricing, we will revalue our products after every 3-month period

considering the attributes of demand and product market.

The sales are expected to grow by 20 percent (year-on year) while we

are expecting that we will recover our fixed cost in almost 2 years after

which the present values of cash flows will ultimately marked under the

profits. On the other hand the increase in variable cost numbers is

anticipated relative to inflation rate which is 20 percent year-on-year.

Further on, after the consensus with different categories of market

players we are expecting the following sales breakup,

Revenue Stream

% of Total Sales

Dine In

75%

Home Delivery

25%

Utility Requirements:

Following breakup of utility bills is expected in relation to the

equipment used in the restaurant.

Utility

Charges (monthly)

Charges (Annually)

Electricity

40000

480000

Water

2500

30,000

Gas

10,000

120,000

Telephone

5000

60000

Total Utility

57500 Rs/-

690000 Rs/-

As depicted above the most of the food equipment require

considerable gas during the preparation process. The preheating

procedure of the equipment before commencement of preparation also

consumes considerable gas for the boiling and roasting of all types of

meet. It is assumed that utilities expenses will be increased by 10%

every year.

Financial Statements

1) Balance Sheet:

End of

Construction

Year 1 Year 2 Year 3

Fixed Assets Machinery and Equip 190000 190000

20000

170000

190000 40000

150000

190000 60000

130000

Furniture and

Fixture 702400 702400

100000

602400

702400

200000

502400

702400

300000 402400

Vehicles 70000 70000

14000

56000

70000

28000

42000

70000

42000

28000

Total Fixed Assets 962400 828400 694400 560400

Current Liabilities

Accounts payable

Rent Payable

Tax Payable

150000 200000

200000

23000

250000

200000

86000

300000

200000

121000

Total Current

Liabilities

150000 423000 536000 621000

Long term

Liabilities

500000 630000 760000 890000

Total Liabilities 1053000 1296000 1511000

Owner’s Equity 1800000 1800000 1800000

Total Assets 2853000 3096000 3311000

2) Income Statement:

Year 1 Year 2 Year 3

Total Sales 800,0000 900,0000 1300,0000

Cost of Goods Sold 250,0000 300,0000 350,0000

Gross profit 550,0000 600,0000 950,0000

Operating Expenses

Electricity 480000 480000 480000

Sui Gas 120,000 120,000 120,000

Water 30,000 30,000 30,000

Rent for Building 1000000 1000000 1000000

Telephone 60000 60000 60000

Advertising Expenses 60000 60000 60000

Salary Expenses 200,0000 200,0000 200,0000

Machinery & Equipment 20000 20000 20000

Furniture & Fixtures 100000 100000 100000

Vehicles Expenses 14000 14000 14000

Total Operating

Expenses

3884000 3884000 3884000

Operating Profit (EBIT) 1616000 2116000 5616000

Interest Payment loan 210000 150000 110000

Income Tax (35%) 492100 688100 1927100

Net Profit after Tax 918900 1277900 3578900

3) Cash Flow Statement:

Year1 Year 2 Year 3

Sources of Funds

Operating Profit 1616000 2116000 5616000

Add:

Depreciation(total) 134000 268000 402000

Total Funds from

Operations

1750000 2384000 6018000

DFI

Loan

1400000

Paid up Capital 1800000

Bank Borrowings 500000

Conclusion and Recommendation:

The restaurant being located in area like Johar Town, it will

be facing an ever increasing fierce competition therefore the

menu and sme special features must be continuously evolved.

The restaurant should work efficiently and effectively to grab

a huge part of local market share within a year.

In order to gain consumer appeal, the restaurant should

particularly take care of its customer’s service, food quality,

hygiene and cleanliness, good interior and pleasant appealing

environment.

The restaurant should use an attractive marketing policy and

promotion campaigns to place the house into a unique

category.

Best quality and freshness of raw materials to be used in the

menu must be ensured.

The restaurant can also offer an introductory discount to

attract customers.

The restaurant should also come up with fresh, nutritious and

diet menus to cater to the health conscious customers. Sugar-

free beverages should be introduced at the same time.

The house should use efficient cost saving techniques to get

the best benefit out of its pricing.