Business Plan Set Up of a Restaurant
Name of the Restaurant
The restaurant is a partnership firm. As it will be established in an aristocratic area, the name should be worthy to attract the attention of the customers. So, the entrepreneurs decided to name it as ‘Ambrosia’.
Location and Facilities of the Restaurant
‘Ambrosia’ will range in size of 3000 square feet and will seat 100 guests at a time. In order to attract the target customers this restaurant will be located in Agrabad Area of Chittagong city. The restaurant will be equipped with a state-of-the-art sound system where our customers will be able to select their favorite country and western songs for free. The restaurant will be built on some prototype specifications: clean lines, open, and pleasing to the customer.
The site/building selection will be chosen based upon the following list of criteria:
Community size minimum of 50000 people within one mile.
High visibility.
Easy access to parking lot with a minimum of 10 parking spaces.
Access of high officials during the working days.
No overabundance of competition in the trade area.
All of these qualities are consistent with the goal of providing a top quality, entertaining dining experience at a justified price. The consumers’ satisfaction on the organic menu and service would be the best form of marketing.
Nature of the Business
Restaurant business is a service oriented business. The main objective is to provide the consumers an atmosphere of eating with pleasure, relaxation and satisfaction. So, the service rendering is the main nature of the business.
Still there is a portion of manufacturing involved in this business which acts as a backward linkage for the supply of raw materials in order to prepare the organic food stuffs.
Objectives
‘Ambrosia’ is an organic restaurant situated in the upper-class area of Chittagong city. The main objectives of our business are:
To provide quality organic food stuffs to the locality.
To modify the menu and other services with the change in consumer taste, market demand and competitors’ strategy.
To render an enlightening environment to enjoy food items.
To extend the business in different locality if the acceptability of our cuisines meets our prior expectation.
To maintain the costs and operation under tight managerial expertise so that the mission of our venture can be satisfied.
To increase the average sales from year to year by materializing the above mentioned objectives.
Executive Summary
‘Ambrosia’ restaurant is a new medium-sized restaurant located in a busy locality of Agrabad in the neighborhood of some aristocratic areas like Banani. Our restaurant is supposed to provide organic food to the consumers in of the restaurant. An emphasis on organic ingredients is based on our dedication to sustainable development. Additionally, the restaurant procures local foods when possible, reducing the dependence on the foreign suppliers.
‘Ambrosia’ restaurant offers a fashionable, fun place to have a great food in a social environment. Our chef has a vast repertoire of ethnic ingredients and recipes. Majority of our demand will be forecasted from the recommendations of the customers. Organic recipes will be used to provide customers with diverse and specialized menu. We would also offer some healthy dishes, recognizing the trend within the restaurant industry for the demand for healthy cuisine.
‘Ambrosia’ restaurant supposes that the market can be segmented into some distinct groups that it aims to target. At first, we want to attract the conscious persons who want to have an appetite at the same time can be ensured with hygiene. The second group is the families want to have organic elements in their food stuffs. The third group consists of the white-collar officials who wish to have their enthusiasm for having frequent facilities of cleanliness by enjoying the organic food items. The last group which is particularly conscious of the organic food is the foreigners. Most of the foreign women preferring diet want to have such organic food items.
In our restaurant we hope to offer organic cuisines to 86000 to 120000 consumers annually. Our capacity at a time is 100 customers and we hope that our average customers will be 100 consumers.
‘Ambrosia’ restaurant has assembled a strong management team. We have a very sagacious general manager who has enough perception and decision making ability in any line of business. Moreover, the capital budgeting techniques and structuring will also be performed under his strict supervision so that cost-effectiveness and appropriate leverage condition can be met. Again, we have engaged some other managing partners who have also some problem solving attributes and the operation of the restaurant business. Furthermore, our production and purchase manager has some prior experience in working in some other organizations. So, we also expect that he can manage this segment efficiently. Our chef has an experience of 5 years who can decorate the food items in a very organized way and can also prepare the cuisines in proper mixtures.
Most important to ‘Ambrosia’ restaurant is the financial success which will be achieved through the strict financial control of the Manager in Accounts. Additionally success will be ensured by offering a high-quality service and extremely clean, non-greasy food with interesting twists.
The market and financial analysis indicate that with a start-up expenditure of tk 16,930,604.00 which might generate sales of 13,832,800.00 by year two, 15,344,200.00 by year three, and 16,408,400.00 by year four. In the initial year of operation we might incur a loss of -3,239,004.00 tk in year one. Profitability will be achieved from the operation of year two.
Taking over of competing firms, impressive relationship with suppliers and cutting costs are expected to be our main opportunities of the venture. We hope to maintain these by proper planning and rendering of services timely.
The trends and potential growth of the restaurant is really a matter of sanguine. We have observed that the sales growth will be 20-25% more in the coming years and also some increase in the contribution of GDP from restaurant business which might facilitate the achievement of our objectives.
The marketing strategy is quite simple. We have a huge advertising budget for the initial year which will be included in the start-up expenses of the venture. This will provide the funding for the billboard in the main circle of the city. Again, we would incur some other advertising expenses for banners and poly signs in every year. These activities might pace up our sales and other campaigns.
Our production plan would be in two steps. The first will be the production of raw materials, and another will deal with the production of food-stuffs. Our production of raw materials will be in our own firms situated in Hathajari. This production plant will be strictly managed by our production personnel for the maintenance of organic nature of the restaurant.
Industry Analysis
Restaurant Industry Overview in Bangladesh
In the midst of nine segments in the service sector of our country, hotel and restaurant is playing a predominant role. Bangladesh is a densely populated country. So the emergence of hotel and restaurant business knows no bounds.
We will analyze the restaurant industry under the following domain. This is:
Involvement in nominal GDP (in billion tk)
In the following table the nominal GDP (in million tk)of Hotel and Restaurant industry is shown from FY01-FY04:
| Nominal GDP (in billion tk) | ||||
| Industry | FY01 | FY02 | FY03 | FY04 |
| Hotel and Restaurant | 15.9 | 17.4 | 19.4 | 22 |
This information also illustrates that the contribution of the restaurant industry is pacing up gradually in the Nominal GDP of Bangladesh. Even though the inflation slows down the contribution, still this sector is a matter of sanguine to the potential investors.
Industry demand
At present there are more or less 5000 hotels and restaurants in our country from small to large scale. But very few of these maintain the expected level of hygiene and environmental climate for the holding customers’ attraction.
Now we estimate the demand of this industry from the viewpoint of our selected location. As the restaurant will be situated in an aristocratic area like Gulshan, we hope to capture the surrounding 40,000-50,000 customers. Moreover, demand for our restaurant will be affected by the present level and service of the restaurants in the locality.
Nature of the Market Capture:
The nature of the market capture would work as one of the key driver of demand for our restaurant. Here we will operate as market nicher. As the existing restaurants are providing Indian, Thai, Chinese cuisines, we expect to operate in a different arena. Our most impressive feature is organic food stuffs. Here organic denotes natural or devoid of any fertilizer, insecticides etc.
Future outlook and trends
Due to the emerging nature of our economy, the restaurant industry would flourish in Bangladesh in long-term future. This will lead to more investment in this industry in the form of companies that will assist boosting up of our financial market.
Another distinguished feature in the industry is the increase in education on Hotel management and Hospitality management. Many private universities and institutions are providing graduate and post-graduate degrees on these braches of knowledge. So, there is a promising opportunity for the restaurant business in near future.
At present some restaurants are offering some distinguished features to attract the attention of the potential customers. So still there remains chance to expand the business thoughts and ideas. These may be introducing segments for couples, for elderly people, health conscious persons to a great extent.
According to the theory of Economics, people spending increase with the increase in income. As our target consumers are an upper-class urban citizens, their preference must be on luxury as well as in hygiene.
Analysis of competitors
There are at least 20-30 restaurants in Agrabad area at present. Out of these Asparagus, Aristocrat, ‘the pavilion’ would be our prime competitors even though none of them provide pure natural or organic food stuffs. The services provided by these restaurants are quite satisfactory. But still we have to compete for capturing the market with our organic feature of food items.
Market Segmentation
Our market has been segmented according to our specialized services. Our menu will attract the conscious citizens at large.
Below are our targeted market segments.
Age: Seniors, young married couples with children, aged persons specially health conscious people.
Gender: We will equally target both sexes with a slight skew for fatty females due to their heavy consumption of mixed vegetables.
Income: We will appeal to the high side of high income individuals and to all in the middle income bracket.
Occupation: We will target the white-collar worker, young professionals with a family.
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As our target customers will be offered with variety and health conscious services through our menu, we can expect that there will be growth in the demand for the cuisines. The following table shows the growth rate of customers in 2008 and 2009 respectively. Although we hope that the officials, couples and other visitors might not grow in 2009, families and foreigners will grow to a great extent.
Contribution to real GDP growth
In the following table the real GDP growth of Hotel and Restaurant industry is shown from FY01-FY04:
| Real GDP Growth by Sectors (%) | |||||
| Industry | FY01 | FY02 | FY03 | FY04 | |
| Hotel
and Restaurant |
7.0 | 6.9 | 7.0 | 7.10 | |
Here we see that the growth rate is always positive and showing and increasing trend in the recent year. So, we can say that this sector is optimistic for further investment and flourish.
Description of Ambrosia
Services
The Menu
The menu is going to be very simple yet exotic to attract our target customers. As we are opening an organic food restaurant the menu would be set keeping in mind that the guests will expect the food to be fresh and hygienic.
The menu will include different cuisines from different cultures. It would include all the cuisines that are generally served in the main stream restaurants in Dhaka and also some other different kind of dishes.
The dishes served would be for three persons and we will also have the option of set menu. The set menu can be served from different cuisines. The cuisines served would be Thai, Chinese, Indian, Continental and also some special dishes from some European cuisines as our target customers also include guests from foreign countries.
Organic Ingredients
Organic food is, in general, food produced without the use of artificial pesticides, herbicides, and Genetically Modified Organisms (GMOs). In common usage, the word organic can apply equally to store-bought food products, food from a home garden where no synthetic inputs are used, and even food gathered or hunted in the wild.
The organic food served in our restautant will be produced in our firm (mostly) and the other ingredients will be collwcted from the local area market. We will produce all the vegetables that we will serve and also the meat and fish. All the sea foods, shrimps and the ingredients will be collected from the market.
Ethnic Ingredients
Our chef will have great latitude in designing and producing menu offerings from many different world cultures. We will endeavor to produce all the traditional, authentic ingredients necessary to hold true to these varied and interesting cultural recipes.
Interior design
People need to keep life interesting and our artwork will reflect the world influences that are core to the attitude of the chef of the restaurant. We will do the interior decoration keeping in mind that the overall view of the restaurant should reflect the objective of the restaurant that is fresh and hygienic.
The entrance of the restaurant will be soothing yet attractive because the first sight matters a lot. The next emphasis will be on the usage of light in the total environment. Because we want to say that “everything is clean and clear as you see”. All the furniture used in the restaurant will be specially made for the comfort of the guests. The walls of the restaurant will be decorated with attractive paintings and there would use of green plants in decorative manner.
The internal planning of the building that means the architectural design will be done by an Architect from a well known firm and also the interior decoration will be done by the architect and one of our managers.
Technology
We will invest in three high speed computers to provide a fast and efficient connection to the internet and also be a link to our cash register. We will then be able to daily digest key financial information. We will also order online, email and have webpage.
The cash register will be used for all the day to day dealings of bills and the computers will be used for keeping the records and update all the data.
Infrastructure
Description of the building
We are going to rent a small independent house on a 5-katha land on the main road of Agrabad. We will renovate the house and turn it to a restaurant.
The building is a bungalow kind of house, single-storied and has a lawn in front of it. The dining area, the kitchen and the office of the restaurant will be within the building. The parking area will be done in the lawn and also over the street but with the prior permission of Chittagong City Corporation.
The area of the building is of 3000 square feet. We are going to use 2500 sq. feet (approximately) as the dining and office area and 500 sq. feet area as kitchen.
Ownership of the building
The building is owned by a retired person who now needs some source of earning. So we are in a contract with the owner to give him monthly rent payment.
The renovation of the house will be done by us and all the costs will be done by us and all the costs will be borne by us. The owner of the building does not have any obligation in the business.
Capacity
We are able to serve 100 people at a time. The dining will be comprised of table for 6, table for 4 and table for 2.
The number of table is given bellow:
| Size of table | No. of tables | No. of guests |
| Large (6) | 4 | 24 |
| Medium (4) | 14 | 56 |
| Small (2) | 10 | 20 |
| Total | 28 | 100 |
Parking facilities
As we have mentioned earlier the parking area will be within the restaurant boundary and also outside it. We are able to give parking of 10 cars at a time within the boundary.
The responsibility of the cars parked within the boundary will be the obligation of the restaurant but the cars parked on the streets will be the guests’ responsibility.
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Equipments
Our equipments are divided in two major parts:
Equipments used in the firm
Equipments used in the restaurant.
Equipments used in the firm:
The equipments used in the firm are stated below
Pump
Generator
Tractor
Other cultivation equipments
Equipments used in the restaurant
These can be divided in four parts-
Equipments used in kitchen
Equipments used in dining area
Equipments used in office area
Equipments used in front desk
Equipments used in kitchen:
| Gas burner | Oven |
| Brick oven | Micro wave oven |
| Chiller freezer | Refrigerator |
| Blender | Grinder |
| Chopper | Pans |
| Spoons | Bowls and baskets |
| Dishwasher | Exhauster |
Equipments used in dining area:
Crockery used for serving
Crockery used for taking food
Tables and chairs
Air conditioners
Equipments used in office:
Office desk
Chair for managers
Air conditioners
Computers
Equipments used in front desk:
Front desk
Chair
Computer
Sofa (for guests who will be waiting)
Marketing Plan
Our main focus in marketing will be to increase customer awareness in the target market. We will direct all of our tactics and programs toward the goal of our explaining of whom we are and what we are all about. We have no plan to join in the coupon/discounting wars that other have embarked. We will price our products fairly, keep our standards high, and execute the concept so that word of mouth will be our main marketing force.
Target Market
The production of organic food is costlier than producing it in inorganic way. That’s why; the food served in our restaurant will be a little costlier than any other restaurant. Because of this reason our target customer will be persons willing to pay a little higher money for a good appetite which will also give them the feeling that their money is returning to them.
Conscious person:
Persons, who are conscious about their health and also what food they are taking, will be our target customers, because our restaurant will serve foods which will be mainly produced in our firm. Other food items and spices will be collected from such sources that the food served before the guests will be fully organic.
Families:
Now days in our country, the awareness for healthy food and healthy environment of restaurants have been increased. That’s why; the families want to go to restaurant where the food will be hygienic. So they will be our target customers we believe that our restaurant will be able to cater their needs properly.
Officials:
That is the last customer pool who in offices and they need to take their food outside. It is not that much healthy for them. So if we can serve food which can fulfill their needs and even match their price range and satisfaction level, then they will come to our restaurant.
Foreign Visitors:
A large portion of our target customer will be foreign visitors. The foreigners are generally more health conscious and they prefer taking organic food. But in our country they don’t get restaurants or even markets where they can get organic food or food items. So if they get restaurant in our country serving organic food they will definitely come as our guests.
Pricing Strategy
In pricing the products of our restaurant we are going to use Premium Pricing Strategy. This strategy is used to produce high quality product and charge the highest price.
As the production procedure of organic food is costly, the higher price charged in the restaurant will be reasonable and the higher value paid by the consumers will get back to them as we are going to serve them with quality foods that are promised by us.
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The advertising procedure of the restaurant will be comprised of
Setting advertising objectives
Setting the advertising budget
Developing the advertising strategy
Evaluating the advertising campaigns
Setting advertising objectives
The first step is to set the advertising objective. An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time.
Our advertising objective will be firstly to inform the consumers and after a certain period of time it will be reminding. Now the rationales behind the objectives are:
As we are introducing a new line of food in the market, our advertising will be informative. The primary objective is to build public demand.
We will also do persuasive advertising by saying that we are serving the best quality food.
Reminder advertising is important for mature products-it keeps consumers thinking about the product. As we are going to run a restaurant it will be very important for us to remind the consumers that we are there to serve them with quality food which will value their money.
Setting the advertising budget
As we are starting a totally new venture, we have to set an advertising budget that is large in size. Because we have to build awareness and gain consumer trial, the market share also impacts the advertising budget as we have to build a market for our product and also take share from the competitors.
Developing advertising strategy
Advertising strategy consists of two major elements-
Creating advertising message and
Selecting advertising media.
For the advertising of the restaurant we are going to use billboards, banners and poly sign as the media. We will hire a billboard at Gulshan-2 circle. This billboard will hold the main reason for opening the restaurant; that is the organic food will value the money of the guests as well as give them a good appetite. This is also the advertising message.
The banners will be used in all the main roads of Gulshan-1, Gulshan-2 and Banani. We will use the banners specially in front of all the embassies, high commissions, multinational corporations, NGOs, and in other main office areas.
The poly sign will be used in front of our restaurant.
Evaluating advertising campaign
We have to evaluate both the communication effects and the sales effects of advertising regularly. Sales effects are also affected by many other factors like product features, price, satisfaction etc. But the communication effects solely depend on the advertising. After opening the restaurant the number of guests coming each day and the frequency of the guests’ visit will give evidence of effective communication.
Organzational Plan
SWOT Analysis
The market of organic food is fresh in our country. We launch our product in a market in which there is no direct competitor. People who prefer organic food will be a large portion of our potential customer.
Strengths
Fully New idea
The most important strength of our venture is- the concept of organic food restaurant is fresh and new for our country. There is no such restaurant is present in Bangladesh now. Thus our venture will get an extra attention to the customer.
No dependence on raw materials
We do not depend on external sources for our basic raw materials (such as chicken, fish, egg, milk, meat, vegetables etc). Rather we produce these products in our own firm. This will ensure continuous supply of raw materials at a lower cost.
Organic elements are ensured
If we purchase our basic raw materials from outside suppliers, we can not ensure our customer that the food stuffs we supply are fully organic. As we produce the raw materials in our own firm and we ourselves monitor each and every steps of the production process, we can ensure our customer that our products are fully organic.
Customer satisfaction
As we can ensure the organic element in our food items, this will satisfy our customer to seek for organic food and helps us to retain old customers and create new customers.
Strong staff resources
Our five entrepreneurs are directly engaged in the management of the business. This will ensure the proper monitoring of the business. Also at every stage of production and operation we employed sufficient staffs and workers.
Modification of menu
Our menu is not fixed. We will change our menu and add new items in our menu to attract new customers and to give customers a good experience in dining.
Own transport
We use our own 1.5 ton truck to carry raw materials from our firm to our restaurant. Thus we need not rely on outside transport and our transportation cost will be substantially low.
Advertising
Not all restaurants in our country advertise. But we know the strength of advertisement and we go for it. Our billboard will definitely inform the potential customer that a new way of restaurant is being opened for their experience. Poly signs and banners are also helpful in promoting our advertising process.
Secured source of capital
Our restaurant has raised its capital from internally generated funds mainly. Some portion would be provided by an investor in the venture. So, the sources of capital are quite secured.
Modern technology
We have adopted some modern technologies keeping facilities online contracts with the customers. Moreover, we welcome the guests to use their credit cards or debit cards in the payment of the bill.
Attractive interior
Our restaurant would provide some attractive interior arrangements with soothing environment which will be enlightened and dirt free enough to please our guests. Moreover, our rhythmic sound system would pace up the entertainment at a large scale.
Proper management
Five of our entrepreneurs are directly engaged in management. They will work with their best effort and this will ensure a proper management system.
Proper planned organizational structure
Our organizational structure is very simple. Senior management is under the supervision of the partners which would ensure the proper planning and implementation of the decisions.
Weaknesses:
Very unfamiliar concept
As the concept of organic food is not so familiar with our present customers, some customers may not be interested with the idea or they may not belief the credibility of the food items to be organic fully.
Cost-sensitive project
Since the production of raw materials is somewhat costlier than producing other ingredients for this line of business, offering organic food is really a cost-sensitive project.
3. Small dimension of the restaurant
The dimension of the restaurant is not too large to accommodate more than 100 visitors at a time. Moreover, some other restaurants are offering more spacious arrangement for serving the cuisines.
Amateur senior management
The senior management of our restaurant is quite amateur because they don’t have any prior realistic experience of maintaining and controlling the operations of business. Thus, this may appear as a weakness for the well-functioning of the restaurant.
Absence of occasional discount
Even though we are opening a new arena of restaurant business in Bangladesh, we won’t provide any occasional discount system on food stuffs whereas other competitors would provide these opportunities to the potential customers. Our conception is that such discount might reflect a negative attitude on the customers regarding the quality of our cuisines.
Opportunities:
Opportunities arise from the circumstances of external environment. As the entrepreneurs we expect the following opportunities that our venture can confront in future:
Taking over of competing firms
Since our operation would attract the potential flavor of customers and the number of circumspect consumers might increase keeping the consideration of quality and hygiene of the food stuffs, we hope to take over other competing firms in future; which is an imperative opportunity of our restaurant business.
Impressive relationship with suppliers
As some of our raw materials for the preparation of food items would be collected from the suppliers, we hope to maintain an effective relationship with them. This would ensure the quality materials.
Cutting costs
In order to ensure organic nature of our food items, we won’t use any insecticide or chemical fertilizer in our production unit lands. Our own generated manure from dairy and poultry would be used in those lands. So, this will cut our cost to some extent.
Threats
Sometimes the opportunities may not appear with regard to the expectation. So, some threats might affect the venture at large. Our restaurant business might face the following threats:
1. Competitors’ change in action:
In quest of tackling our business strategy, the competitors might change their course of action. For example, they can also open this organic branch of operation that might lead our market capture. Again, they can also introduce new diversified mechanisms.
2. Change in consumer taste:
Since the consumers always transform their taste or preference in any commodity, we might face a lower consumer demand under that situation. The rationale behind this is the over abundance of restaurants in the organic line of food ventures.
Conclusion:
‘Ambrosia’ restaurant offers a fashionable, fun place to have a great food in a social environment. Our chef has a vast repertoire of ethnic ingredients and recipes. Majority of our demand will be forecasted from the recommendations of the customers. Organic recipes will be used to provide customers with diverse and specialized menu. We would also offer some healthy dishes, recognizing the trend within the restaurant industry for the demand for healthy cuisine.