Feasibility Study for Fast Food Restaurant

feasibleness Study for abstain Food RestaurantI would initiatory give c ar to thank Mrs Sumaira Hamid for giving us the opport social unity to conduct this externalize which has enabled me to empathise deestablish forage eating houses more(prenominal) closely and thus it defiantly increases my association about the subject. I would also like to thank my friends, as without their cooperation this device would not befuddle been completed.Executive summaryThis travail is purely ground on economic and financial analysis. Here I defend conducted a feasibility study for a steadfast nutrient restaurant. I have tried to cover on the whole the aspects, economically link and financially related to the proposed endure. thither atomic number 18 two main ploughsh ars in this project. first one is the pre-feasibility study and second is feasibility study. In the first bug out I have analyzed the scenario in the sector and nourishmentstuff probable. In the second part I have tried to cover the financially related aspects of the project.IntroductionDefinition of fast nutrientInexpensive aliment, such as hamburgers and fried chicken, prepared and served right away.Food prepared and served quickly.A fast intellectual nourishment restaurant is the one that after ordering supplies nutrient quickly and with minimum service. Generally all restaurants are characterized as fast solid forage for thought restaurant. The food in these restaurants is pre prepared and kept warm. The food is produced in a huge quantity. There are most fast food restaurants, which even up dont provide sitting area to its costumiers.Main characteristics of a fast food restaurantThe main aim of fast food outlet is to centralize on consumer convenience. The increasing number of outlets clearly states the demand of consumer for fast food in the country. The company increases its approachingibility by increasing number of outlets. The purpose of free home pitch and tak e away has increased the gross sales, a major increase has been seen in satellite outlets such as airports, railroad track stations, gas station etc.The fast food is common among consumer for some(prenominal) reasons. several(prenominal) of them are as followingDeliver food to costumer at a low price.Accessibility for consumer.Good reputation for cleanliness. riotous service.Child friendly atmosphere.Break from routine cooking.Another aim of fast food restaurant is to decrease the cost and time consumed for food expending. The bring up in population, employment and increasing employment schedule has increased the apprize of time. Thus our economy is increasingly drawly service oriented. degraded food industry is becoming an big part our life. In these scenarios fast food industry allow for grow with a mode valuate speed. Fast food industry is becoming an important part our life.Scrotal analysisFast food industry is very popular in Pakistan, as some international fas t food chain like K.F.C, McDonalds, pizza-hut, Subway, etc are based here. These international corporations cater to postgraduate income segment and modify their menu match to the taste of their voltage consumer. These international chains are not the restrain source of fast food in the country. Many topical anaesthetic chains (AFC, Bryani express, cock and bull, Lahore brost) has been developed over time, to give a proper disceptation to these international chains by get downing their prices and hence increasing their sales by catering middle income and low income level consumers.The behavioral interpolate in food consumption among bulk has attracted many international organizations. Fast food industry in Pakistan insures a undimmed return. It has shown impressive make in the past, and leave alone continue in the future. The presence of international organization operating in the region is a clear shade of investment opportunity in the country. TheMarket of fast fo od industry in Pakistan has a room for many more. With the little help of government, much more dejection be do attract more international organization, or to bring up the local ones.Presence of SMES amble and Medium Enterprises (SMEs) melt a pivotal role in giving necessary caprice toemployment generation, GDP development and poverty alleviation and hence have been recognizedincreasingly all over the world. Although the performance of SME sector in Pakistan is quite encouraging, however due to some inherent and structural weaknesses and problems, its access to credit from the formal sector has been inadequate. The analysis of tone of loan portfolio reveals that, the step of SME loans has improved over the year in this sector.List of some popular fast food restaurants in PakistanMcDonaldsPizza HutKFCSubwayNandosAl BaikAl-Najam Fried Chicken 50Arizona GrillChicken CottageGinosMr. BurgerPapaSallis PizzaAWPapa JohnsPizza ExpressPizza NextDominosDunkin Donuts investiture opportuni tyAs the value of time in Pakistan is increasing day by day due to hectic work schedule, people are trying to save their time from any mean they bathroom, and thus are becoming increasingly service oriented. Fast food industry gives a good opportunity to save their time by providing fast and good food to its costumers. The food service industries that offer the highest levels of convenience have, been rewarded with strong sales growth. The value of consumer time, as well as the demand for consistent, high- part food products, lead continue to shape the fast food industry. Fast food is becoming an increasingly signifi back endt part of the young generations diet. The role of convenience in this dietary shift cannot be over-emphasizingd, and the future growth of the rest of the food service industry go out be driven in massive part by its ability to find new ways to save consumers time.Another important fact is the increase in food consumption due to increase in population. Consi dering these factors, investment in fast food restaurant is a good opportunityThere are some critical important factors, which if acted upon properly will provide a promising investment opportunity.Identify goals and ways to measure them.Adjustments according to change in consumer habits.Implementation system and ensure consistency of operation.Points of difference that enables them to dominant their market nitch.Consistency of quality and service, and operating systems and steering procedure.Menu selection and pricing.The special reparation within your target area.Conduct market survey.In skill investigationPakistan, currently ranked as 6th in equipment casualty of total population, is characterized by a highPopulation growth rate of 1.9% (Pakistan Economic Survey 2005) and is set to take the topThree positions in terms of total population with already 153.4 Million people registered in2005. With this, the per capita income has increased to US$ 736 while the productive agegrou p (15 to 64) long time is said to take the major chunk of population (67% of totalpopulation) by 2020.The growth rate in food consumption is also increase by the rapid increase in theemployment rate for males / effeminate population aging between 20 to 29 years (fast foodgoers) hence the greater income contribution to the overall income generated is expected tobe higher.The growth inRisksThere are certain risks involved in this sector. Some of them are stated below.Increase in pieces of dim real(a).Political asymmetryChange of trend in consumption pattern.Required machinery and other equipmentThe quality of food is highly affected by the technology used in its production. The machinery necessitate for production of fast food products is easily open in international market as well as in local market. It is up to the owner weather to purchase expensive branded ones or the cheaper ones. This decision depends on the question how much importance the owner gives to the quality of f ood being served to the consumer?. As fast food industry is evolution day by day, so is the technology being used in it.Branded equipment (first hand and second hand) is available in the market. The minimum delivery time ask is three months, if ordered through an internet vendor. There are also re-conditioned machines available in the market. Some outlets, before closure their backing sell their machinery at low cost.Maintenance of machinery is very important for maximum quality and long life of the equipment. The machine requires routine cleaning, forethought and annual service.We will use new machinery with latest technology in our project. This would help us in producing good quality food products, high efficiency, low labor and operating cost and would reduce human errors. The machinery required for the plant is easily available in local market, so all the purchases will be done locally. Local purchases would help us in clams of default piece, would prevent us from high tra nsportation be and government taxes and would reduce our time to start the project.Raw materialThe raw material required for the production in a fast food restaurant is easily available locally. In every city there is a local market from where these material are easily available at cheap prices. Thus the raw material for the proposed project will be purchased from the city local market .the list of raw material is addicted bellow with their nit prices, total units required and total cost.ItemsQuantityPer unit or per kilogram priceTotal priceEggs light speed505,000Sugar70302,100Spices25030075,000Flour for tack100707,000Chicken1000115115,000Meat cardinal hundred250100,000Beef quaternity hundred15060,000Cheese30025075,000Oil40010040,000Sauces25020050,000Corn50804,000Carrot5015750Cabbage60201,200Tomatoes70241,680 onion100181,8000Lettuce6015900Total539,430Human optionHiring right employee for the right job dose not only contributes to your sales but also creates a good image in the s ight of consumer. There are several categories of personnel in the restaurant business manager, cooks, servers and cleaners. The manager is the most important part of any organization. The manager for the proposed project should be skilled, should have it away about the area, supplies buying sources and most importantly should know about the buying behaviors of customers. At initial stage of a restaurant five people are required to carry out the work at kitchen. Another important part of a restaurant is servers. The servers will have the most interaction with customers, so they need to make a favorable impression, work well under pressure and meeting the demands for customers. state of matter requirement for the projectThe outlet of a fast food restaurant should be in such place where the traffic of its potential costumer is maximum. In the distribution of land for different areas in a restaurant, it is recommended that the largest part should be donated to the dining hall and seco nd preference should be given to kitchen. The land requirement in our project is 4475 sq.ft. The area should be live and should have proper utilities and facilities.The construction cost totally depends on the size of land the amount of work to be done on it. In our project the construction requirement in different parts of the restaurant is different. For example construction cost for kids playing area would be lower than construction cost for waiting area, as less has to be done in waiting area as compared to dining area.LocationThe location chosen for the required project is JOHER TOWN MAIN BUALIVORD.The traffic of potential costumer is maximum there .the construction of micro shopping mall and Pakistan trade center would bring a huge wave of potential costumersRentThe rent at Johet Town Main Boulevard for a double storied building is 125,000 per month.Plant capacityThe area required for this restaurant is 4500 sq feet. The seating arraignment is for 100 people. There are 25 die ing tables, and four people can sit on one table. The total management in the restaurant comprises of 23 people. Ten people can be seated at the waiting lung. Hence in total, the restaurant can shelter up-to 130 to 140 at a time.UtilitiesAssumptionsRent increases by 5% after every year.Salaries increase by 2% after every year.Residual value is zero.Capital utilization differs in four years, and remains constant afterwards.Debt-equity ratio is 50-50.Straight-line method is used for depreciation.Current raise rate is 20%..Tax rate is 20%..150 people visit the restaurant every day.Average purchase amounts RS.120.Do-ability of the projectThe proposed project can show high returns. the project perfectly sets to the changing patterns of the country. If the gets good reorganization among its potential costumers, the project can show amazing result, and can prove a good investment for the investor.Comparative advantageAs the demand for fast-food increases, the prices increase with it. The only comparative advantage is that, the owner will offer low prices to the costumers. This would increase its sales.ACCABILITY OF THE PROJECTAs shown, that the NPVs and IRRs calculated preceding(prenominal) are negative in most of the cases, except the resource statement. This shows that the project is not acceptable. On the other hand if the revenues assumed above are increased, the returns will increase, and thus will end up with positive NPV. This can be done by proper marketing of the restaurant.