Business plan

1. RESUME OF THE PROJECT

1.1 Title of the project

Cafйrestaurant «Korean BBQ»

1.2 Initiator of the project

The project introduces establishment of a new enterprise «Korean BBQ» that will be registered in the name of private entrepreneur PE Serdyukova with an authorized capital of 300 000 (three hundred thousand) rubles.

1.3 Objectives

Goal of the project: launching of a unique Korean cuisine cafйrestaurant based on a self — cooking barbecue scheme in Blagoveshchensk (Amur region, Russia); cafйrestaurant is primarily targeted at servicing during lunch time and evenings.

1.4 Strategy and major stages of project’s fruition

· Devising of project documentation, acquiring of necessary permits for business dealing in the sphere of public catering;

· Purchase and refurbishment of the premises;

· Installation of the equipment;

· Conducting of advertisement campaign and personnel hiring;

· Launching and maintaining of the project.

Stages of project’s implementation and the time frames are outlined in Table № 1.

Table № 1

1.5 Product

Production of Korean cuisine dishes, high service level and providing of community with recreation area.

2. MARKET ANALYSIS

2.1 Analysis of the industry sector

Modern restaurant market emerged in Russia recently; nevertheless, it is rapidly developing. According to the all-Union State Standard Р 50 762−95, there are three groups of restaurants: luxe, prime and the first, that imply certain sets of requirements to the restaurants. There is also a common classification of restaurants with regard to price level:

— fine dining (minimal bill 50 USD);

— casual dining (average bill — 10−50 USD);

— fast-food (average bill — 5−10 USD);

— cafes, coffee hause (average bill — 5−15 USD);

— clubs, canteens.

Experts' reports reveal that medium cost restaurants present the most opportune sector of the market. For instance, fast — food branch is only 15−20% occupied and its filling will take at least 5 years.

Sphere of public catering in the Amur region comprises 1200 companies, approximately 54% out of which are generally accessible. More than 200 of generally accessible public catering businesses are situated in Blagoveshchensk. The majority of them (110 units) has a status of a cafй and specializes chiefly in Chinese cuisine (56 cafes).

Financial turnover of public catering sector in the Amur region in actual prices has increased by 7.5 times and in physical quantity by more than 3 times since 2003. Level of citizens' provision with generally accessible public catering seats equals 74%. The norm of 40 seats per 1000 capita is fulfilled only in Blagoveshchensk (44 seats), Tynda and Uglegorsk.

Despite augmentation of public catering services' quantity, the number of businesses in the sector has not extended conformably. In 2005 the market included 578 restaurants, in 2006 — 630, and in 2007 — 600. Even though 23% of them have a foreign cuisine specialization, just a few have a corresponding decoration and specific traditions. Nonetheless, average seat turnover comprises 2,5 and 0,5 people per day in Chinese restaurants and other ones respectively.

Table 2- Forecast of public catering market capacity

All in all, the market is attractive albeit being saturated with multiple homogeneous cafes and restaurants.

2.2 Analysis of produce’s market

Company’s location

The restaurant will be situated in the city center among business centers, malls and office buildings. Therefore, a processing area located in the building of a business center will be purchased for 7050 thousand rubles. Overall area is 111 square meters, including 81 square meters of dining room. It is scheduled to acquire additional office area in 2013, thus the dining area will be expanded to 91 square meters.

Product description

Korean cuisine is considered to be one of the most peculiar among Asian cuisines. Since it has been evolving separately from neighboring Chinese and Japanese cuisines, it formed a unique blend of tastes and recipes. Bearing in mind that people living in the Russian Far East show preference to Asian cuisines, Korean cuisine has all necessary prerequisites for becoming a favorite. Likewise, a new format of each table’s equipment with mini oven and self-cooking of traditional dishes within 15 minutes will be attractive for perspective customers.

Initial intended menu will include:

— pork (frozen and thinly sliced, it will be cooked by the clients; seasoning, sauce and lettuce will be available unrestrictedly);

— beef (frozen and thinly sliced, it will be cooked by the clients; seasoning, sauce and lettuce will be available unrestrictedly);

— soup 1 («ghuk i tkhan»);

— soup 2 («yukkedyan»);

— 3 types of various salads;

— selection of vegetables;

— boiled rice («bap»);

— fried rice with vegetables;

— beverages (coffee, tea, beer, juice, Coca Cola, Sprite, Fanta).

Description of clients

Intended target group of the «Korean BBQ» cafй-restaurant lives in Blagoveshchensk and has an income exceeding subsistence level. Presumably, customers of the cafйrestaurant will comprise of young people and other employed working-age population. Specifically, «Korean BBQ» will be popular with middle-aged males (30−60 years old) since they possess highest incomes and prefer suggested produce (especially beer and meat).

2.3 Analysis of business rivals

There are no direct business rivals who would introduce the same commodities and services to the market, however indirect business rivals are presented by multifarious Chinese restaurants situated in the city center. Nevertheless, creation of unique Korean culture ambience and an opportunity to make customized traditional Korean dishes will single the cafй-restaurant out of them.

2.4 Marketing plan

Marketing strategy

The major goal of the project at the current stage is entering the market and subsequent promotion of its market position. Consequently, marketing strategy will contain augmenting of demand through increasing of sales volume, price policy, nonprice competition, and creation of enviable reputation. It will the following measures:

1. Printing and distribution of advertising leaflets in offices, business and trade centers;

2. TV and radio commercials.

Dynamics of approximate advertisement expenditures for the first 4 years of the cafй-restaurant's operation is presented below.

The outline of advertisement expenditures is provided below.

During the first year of company’s operation the expenditures on marketing measures will require 7% of the gains, in the posterior periods this number will not transcend 3%.

In addition a signboard will be ordered for the cafй-restaurant entrance, its price is 3160 rubles.

Pricing

«Korean BBQ» will be a medium price restaurant; production cost and intended profit constitute a base for the pricing.

Table № 3- Structure of production prime cost

3. PRODUCTION PLAN

3.1 Volume of sales

The forecast was elaborated with a reference to public catering market’s capacity and the size of «Korean BBQ» (44 seats, distributed among 4 tables for 6 persons and 5 tables for 4 persons).Volume of sales is estimated according to loading of the restaurant, average bill and seasonality. Monthly volume of sales forecast is presented on the graphs below:

The sales volume increases disproportionally due to commodities' ciclicity laws.

3.2 Prime cost of the output

The estimation was conducted proceeding from average commodities prices set by prospective suppliers.

Table № 4 — Prime cost output

As a result of sales volume accretion prime cost is gradually decreasing.

3.3 Personnel and company management

«Korean BBQ» will be registered in the form of private entrepreneur (PE) in order to simplify registration process and taxation system.

Directorthe chief manager will be responsible for:

— Organization and control of the restaurant’s work;

— Its condition, and personnel’s condition;

— Representation of the enterprise;

— Being in command of company’s property;

— Signing of contracts;

— Opening of enterprise’s bank accounts;

— Search of suppliers;

— Issuing orders, hiring and firing of personnel.

Accountant will be in charge of financial matters and occupy the position of vice-director. Overall, «Korean BBQ» will employ 9 staff members. Personnel arrangements are displayed in table № 5.

Table № 5 — Personnel arrangements at «Korean BBQ» cafй-restaurant

Self-cooking scheme practiced in the restaurant will contribute to retrenchment of personnel expenditures.

4. FINANCE

4.1 Cost of the project

The cost of the project is estimated as 8300 thousand rubles, comprising 8000 thousand rubles loan and 300 thousand rubles of equity. 7050 thousand rubles will be spent on purchasing and refurbishing of the premises, 385.6 thousand on manufacturing equipment, 82.08 thousand on other equipment, and 358 thousand of rubles on raw materials.

4.2 Sources of finance

A loan will be acquired for the purpose of project’s fruition, minimum preparatory period will take 1 month and the interest rate set by the bank-loaner is 18%. Disbursement of the major debt will be launched after two years. Ultimate loan payment period is 36 month since its receiving.

4.3 Internal rate of return analysis

4.4 Net present value analysis (in rubles)

The project is steadfast to fluctuation of expenditures and decline in sales volume. The major threat to project’s fruition is presented by augmenting expenditures for raw materials, however the risk is not critical.

5. FINANCE PLAN

5.1 Investments

The greatest portion of investments (7 549 323,31 rubles) will be directed to fixed assets and repairing works.

Table № 6 -Structure of fixed assets

5.2 Taxes

In concordance with chapter 26 TC RF, the company will utilize a simplified taxation scheme — unified tax on imputed income of individual entrepreneurs that accounts for 15% of basic profitability. The enterprise will pay 29 160 rubles quarterly until 2013, after acquiring of new premises — 32 760 rubles in 2013 and 2014. It will also transfer 14% of accrued wages as insurance installments.

5.3 Extinguishment of the debt

business strategy management marketing

Extinguishment of the debt is presented in Table № 7.

Table № 7