A FEASIBILITY STUDY ON VEGETABLE TACO PROJECT

A Paper Presented to
Ms. Aileen A. de la Cruz

College of Managament
University of the Philippines Visayas
Iloilo City, Philippines

In Partial Fulfillment
of the Course Requirements
in Management 138 (Enterprise Planning and Management)

By:

April Grace Bendita

Krisna Bonilla
Lovella Marie Cordova
Rochelle Larroza
Shirly Ann Maluenda
Shiela Mae Ocbena
Jennifer Sulleza

February 2009
EXECUTIVE SUMMARY

One of the most common Mexican food throughout North America and the world is taco.
Anything that can be rolled inside a tortilla becomes a taco and usually, it’s either sheep meat or
ground beef. However, despite the fact that it tastes good, the cost of taco is heavy on the budget.
That’s why in the Philippines only few businessmen venture in that kind of investment. In line
with that, we came up with our vegetable taco concept. Based on our research studies, majority
Filipino consumers have become tired with the usual beef and pork products sold in the market.
This is due to the fact that Filipino’s have become more aware of their health. Our product will
offer a different variety of taco since we will use ground carrots or turnips in replacement of
meat. However, we will not sacrifice the original Mexican taco flavor because we will utilize
sauces and seasonings with meaty taste. We also plan to sell refreshments with our tacos so that
we can also earn profit from a secondary product. Our target markets are semi-vegetarians and
families who crave Mexican foods. We also include teenagers who are health conscious in our
list of possible costumers since they are highly inclined to buy something new in the market. Our
advertising strategy will include flyers and posters in schools and public places. Our business
operations are in carts so that it will be hassle free and easier to manage. We plan to open our
business in leading Universities such as San Augustine, CPU and Iloilo Doctor’s because rent fee
is less expensive compared to the malls. Plans for expansion will depend largely on the profit
from our school operations. If the cash flow is good, a possibility of branching out to other
schools or even to malls is high.

INTRODUCTION

The project will use one of the most efficient food selling styles in the Philippines, the
stalls. This kind of business can be found in schools and shopping centers all over the country.
Aside from that, the researchers also noticed the heightened awareness of Filipino consumers
when it comes to their health. The impact of vegetables on our diet is recognized now. In North
America, taco is slowly becoming a part of their culinary landscape as much as hamburgers.
Putting this thought s in mind, we came up with a project that aims to give nutritious food a
twist. Vegetable taco is a Mexican delicacy garnished with locally available vegetables. It will be
sold along with refreshments such as iced tea and/or fruit juices on carts. This is because we are
trying to advocate health consciousness in our buyers. These carts will be positioned in schools
and other public establishments. Students and teachers, in particular, can have tacos during their
recess and even in their lunch breaks. However, aside from putting up carts in schools, our
expansion plans includes placing carts in malls. Those who are planning to watch a movie or
those who want to bring home something “exotic” and healthy for their kids will find our
vegetable taco project to their advantage.

PRODUCT/SERVICE

The purpose of the project is to introduce taco not just as a famous Mexican food but also
as a healthy snack option. In making Vegetable Taco, ground carrot will replace the usual maize
or wheat. A taco is often eaten by hand, without the aid of utensils. Usually, it is accompanied
with salsa and vegetables such as cilantro, onion, cabbage, tomato, or lettuce. Meat will be
substituted with vegetables such as beans, lettuce or turnips. Our tacos will still have that meaty
taste because of the sauce and flavoring we will use.

The product will use carrots, beans or turnips grown locally. The said vegetables will be
supplied in its raw taproot form to give buyers the chance to choose. After that, it will be mix and
prepared in accordance with the consumer’s preference.

A pre-feasibility study will be conducted. A survey will be done to find out the probable
success of the project. The need should be high enough to assure the marketability of the
business product. Marketing strategy will introduce the product in such a manner that will create
a need when there is none.

Identify any existing competition that can spoil chances of earning a healthy profit, and
calculate the risk involve in it. Observe the business operations of your competitors. If the new
product requires after-sales-service, then calculate the costs of the manpower that will be needed
to provide efficient service. An estimated calculation as to how many units of the product can be
sold within a particular period and target profit margin is necessary. Check to see if discounts can
be offered to customers as a form of product promotion.

A product pricing strategy will also be needed. If the product pricing strategy is to price
the product at a variable rate, then an introductory low price could be launched for a particular
period - or the other way around - before changing the price after that period.

After a quantified successful run, the product should be upgraded or product line
expanded to increase the profitability of the product without losing the health-value line used in
its launching.

TECHNOLOGY

The operation of this vegetable-filled taco business will be done with the use of
ambulatory cart that will roam around the school campus. Within the cart is the built-in cooking
apparatus that will be used in preparing the taco and some vegetables under special
circumstances. This equipment will function with the aid of an LPG tank. A container for
refreshment will also be part of the tools that can be found on the cart. For further development
needs, the business can adopt new technologies that will enable the rapid preparation for taco and
vegetables depending on the costumer’s instant demand.

MARKET ENVIRONMENT

The target market will be the students from different campuses here in Iloilo, ranging
from the city-based campuses up to the nearby towns with prominent schools that can offer a fair
amount of students to become customers. Also, stalls will be put to leading shopping malls to
cater the needs of different kinds of people who shop and might appreciate our product.

The end users of our product will primarily be vegetable-loving people or vegetarians to some
extent but not strict ones. They will be our primary consumers for our product is consists mostly
of vegetable contents which might perfectly suit their taste buds. Our customers on the other
hand are the people from our target places who just happen to try our product and fond it
appealing and who might patronize our product without the already built-in notion of buying our
product because it’s primarily made up of vegetable. In short, they are not that product-content
conscious. These people can be the students from our different target schools who happen to be
attracted to our product at first glance and decided to try it and eventually loved it. Our
customers may also include people who are on the malls and happen to behave just as our
student customers from different schools.

Our customers can really benefit from our product because first and foremost, it’s edible
and may cater to “stomach services”. Another important thing to consider is that this product of
ours is made up primarily of vegetables and is called “vegetable taco”. This comes with a lot of
benefits because it’s healthy and may help boost the body’s resistance against commonly
acquired sickness such as colds. And of course, it will also bring along with it all the benefits we
can get from pure vegetables with matching healthy fruit juices that can also be bought from our
stalls. The customers need not find us because we will be chasing after them with our product.
They can readily access our products in their respective schools (in case of students) and in
leading shopping malls. They should really buy our product because of its affordability, easy
accessed stalls and nutritional contents and benefits.

Our product’s primary concern is to fulfill the “stomach” related needs of target
customers with affordable, healthy and nutritious food. It can also cater the desire to eat
vegetable but not in the ordinary cooked dishes at home and other eating centers. Not so
vegetable-loving customers may enjoy the new taste we have put unto this product which they
will surely find as satisfying and fun to eat meat. The opportunity for this business is really big
because people will most likely most likely patronize our food services especially if it suites their
taste buds and this product will surely do. As projected, our market demand will most likely be
high and once our product reaches the market.

For business- to – business markets:

The target markets are students and interested consumers. As mentioned earlier, the key
players will be the students form schools and the people in the shopping centers. It is projected
that the product purchase for schools will be high for the price of our product in campuses will
be student- friendly and they can buy it anytime of the day. The purchasing process will also be
easy. The customers will just make a line in front of the booths or food carts and the first one on
the line will be served first. Two people will be stationed in each food stall to make the buying
process easier and faster. They will readily cater customer needs.

The estimated market size will be large because it will include schools, malls and public areas.
The initial targeted geographic areas will be in leading schools and shopping centers in Iloilo city
such as UP, San Augustine, CPU, Doctors , SM and Robinson’s Place.

For business – consumer markets:

Our campus customers will be college students from 15-21 years old and any student
from any income level and ethnicity will be catered for as long as they find our product
appealing.

People of different lifestyles can enjoy our product for as long as they have the appetite
for vegetables. In addition, one goal of our product is to change the way people look at veggies
and encourage them to enjoy it in a more tasteful and exotic dish.

Our product’s student- friendly price might give way for student customers to patronize
our product and we can expect higher frequency of purchases in schools. Our stalls will be put on
the leading shopping malls in the city to make sure that the number of customers will always be
on average levels and product purchases will never go down the targeted level.

COMPETITION

There are no direct threats for the start-up of the business since vegetable taco is not a
common business in Iloilo city.
The first operation of taco carts will be in schools. One barrier foreseen is the existing
canteens at schools. Although the enterprise offers a different product, it will have to compete
with other snacks available on cafeterias.
 Plans of enlarging the scope of the business such as putting up carts on the malls will be
based upon the profit rate of the branches inside schools. If business is good, plans for expansion
will be considered. There is also the difficulty of penetrating the local market due to other
established enterprises that are franchised and are on carts too. However, great confidence is
placed upon the business because it serves a different product from what is already served in the
market. It will be something new for the Ilonggo taste. It is also foreseen that other fast foods
may offer the same product (which is tacos).

INDUSTRY

Despite the country’s economic and sociopolitical difficulties, the food business
continues to thrive. Restaurants and many food establishments have flourished in many parts of
the country. Most people living in the urban area usually have no choice but to eat meat- juicy
burgers, chicken wings and drumsticks. However, once these vegetables products are introduced
in the market, it will be sold at a low price upon its first release to gain attention.

Food manufacturing is a profitable business since it has a full capacity utilization of 80%
and the value production of food manufacturing grew by 27.3% by 2004, encouraging trends by
April when the sector broke out resulting to consecutive declines but better sales growing still by
22%. From 2005, sales of food manufacturing sector grew significantly with 5%- 16% growth
rates. The food manufacturing industry is producing all sorts of products from the agricultural
sector. It is a big industry where competitive entrepreneurs like us can profit. Food is highest in
the hierarchy of expenditures of the average Filipino family. Demands for food products remain
stable despite economic downfall. This food business will vary its benefits from the income
levels of families. Aside from that, we will also utilize locally available vegetables to help the
agricultural industry. Thus, our ability to sell these products will only be constrained by our
production process and our competitors. Food production is slowing down but the demand for it
constantly grows faster. Food scarcity has been a consistent issue faced by the Philippines. Aside
from urbanization, one factor is the use of chemicals and irrigation techniques in the cultivation
of the soil.
 In 21st century, the average annual household expenditure for food away from home in
the US was $2137 ($855 per person). Income, age, and family composition are the factors that
consumers consider in buying food.

MARKETING AND SALES STRATEGY

Mujeres Vegetable Taco will be promoted with a variety of marketing methods:

A grand opening will be held with a local band providing the music and entertainment. Mujeres
Vegetable Taco will hold their 1st taco eating contest and offer chips and salsa to the general
public with a 10% discount on refreshments.
The appearance of all menu items as very critical component in the promotional process is one of
the main concerns of the Mujeres. Furthermore, certain values are also encouraged such as warm
and caring service; establish eye contact and smile, smile, smile. Also, it is suggested that
Mujeres should adopt the new trend which is to be your customer’s advocate; follow the rules,
and always remember the customer is first. These key ideas will be the focus of Mujeres
Vegetable Taco
One of the things that will make Mujeres a success is, with their excellent customer
service, will be the emphasis on the second best marketing tool -- the menu. The appearance of
the menu will be taken into serious consideration such as the details involving the colors for
headings on the menu and to highlight certain menu items that are the restaurant’s specialty.
Another important feature is the icons. This is a way to focus on more profitable items on the
menu and choose a symbol that is appropriate to the restaurant’s theme. The theme for Mujeres
Vegetable Taco is “Live happy. Be Healthy”.
The distribution of the taco product will be sold directly to the customers through sales
force. It can be directly purchased in the carts of Mujeres Vegetable Taco which will be
designated in certain areas.

Production and Operating Requirements

 Our enterprise will be using outsourcing as a method of acquiring raw materials. Reliable
and trustworthy vegetable- growing farm owners will be negotiated to lessen the costs. These
sources can be one of our or the owners common friends who have farm businesses who can
supply us competent veggies. After all the raw materials have been acquired, these will be
processed in our enterprises processing center (one of our houses or somewhere where we can
have our “mini office work” for management purposes and packaging of our product. The raw
materials will be packed according to the desired taco flavor and will be distributed to each of
our target markets through “branch” operators. The packed products will already contain the
desired taco flavor of the customers and will just be cooked/ heated in “built in kitchens” in our
stalls and carts. The number of taco packages to be distributed will be estimated by each” branch
operators” in order to avoid excess products to minimize costs.
The manufacturing process will be very complex because first and foremost our product
is food and it will surely affect our customer’s well being. It will be one of top priority to ensure
our customer’s safety through our thorough processing which will utilize quality and clean
equipments such as clean plastics for packaging and well sanitized place in preparing our raw
products. Our raw product processing will mostly utilize human labor. Simple kitchen wares will
be utilized for cutting veggies that will then be put into plastic packages for delivery. Sanitation
will be observed strictly to ensure cleanliness and safety.
The sources of our raw from outsourcing will be some of the most reliable vegetable farm
owners (Iloilo, Negros, or Manila). Common people who are already known to the owner will be
preferred more in order to negotiate prices to minimize costs on raw materials. A survey of
vegetable farm owners will be conducted first to ensure that suppliers of raw materials will be
readily available for constant or consistent supply source.
The enterprise will operate inside a “confined place” to ensure the confidentiality of our
processing and processing of raw materials will be done immediately upon arrival to ensure and
preserve their good quality as food products. Sanitation and cleanliness will be strictly imposed
to ensure quality service. Our period will cater to our customer’s food-related needs: Quality
service in food distribution will be our priority. Our service process starts from the moment a
customer approaches our designated stalls or food carts. Our service will be designed by putting
first in mind the satisfaction that our customers will be getting from our product. The design will
range from simple pleasant – looking and polite person’s in-charge, proper presentation of food
to customers and honesty in terms of money related aspects such as giving the exact change and
charging our products as based on its required price. The products will be delivered with enough
precautions to ensure the safety and good quality of our product to satisfy customer expectation.
Quality service checking will be done every now and then to trace the updates, improvements or
even lapses in service provisions in each of our designated areas. The checking or evaluations
will determine the improvements that are to be implemented in the business operations to ensure
quality service.

MANAGEMENT AND PERSONNEL

The restaurant will operate preferably hiring individuals aging 18 – 27 years old as its
principal employees to reflect a youthful image consistent with its “Live happy. Be Healthy.”
vision trigger. The manager must have an experience with regards to taco business or any
business that deals with food distributed through carts. The majority of the employees will be
students who will work part-time with a full-time manager. Employees will undergo a seminar
with regards to keeping the customer satisfied to help job performance and politeness. A policy
of promotion from within will be adopted.

INTELLECTUAL PROPERTY RIGHTS

In order to protect the patent of our project, we will legally apply for the intellectual
property rights of Mujeres Vegetable Taco business. This is to assure that other businesses will
not be able to copy or imitate our product and brand name without prior consultation from us.
We will have exclusive rights over the name of our business which is "Mujeres Vegetable Taco".
Aside from that, we will also have economic incentives from those who plan to engage or
develop the same line of food products as ours.

REGULATIONS/EVALUATION ISSUES
 The taco business plans to comply with governmetn regulations regarding health and
sanitation, taxes and environmental concerns.

Because it will enter the food industry, the management will acquire sanitary permit to ensure
quality products and assure customers that the equipments and materials used are clean and
well-maintained. Food ingredients will be guaranteed fresh and uncontaminated from harvest on
farmer-suppliers to the transportation and storage.

Business registration and permits from the municipal hall and approval of the school
administrations will be acquired. Compliance on proper payment of taxes on the Bureau of
Internal Revenue will be observed.

Trash bins or garbage bags are to be placed near the food carts and personnels will also
see to it that customers observe proper waste disposal.
The business wants to promote a healthy lifestyle. With this, a clean environment, energy-saving
and eco-friendly enterprise is to be pursued.

CRITICAL RISK FACTORS

`This business will be among the first of its kind here in Iloilo because of its distinct and
unique characteristic of having vegetables as fillings instead of meat which was the first one
introduced by Western countries. It is a deviation from what the Filipino people use to purchase
and eat. In terms of investment, it is easier to engage in this kind of business because it is not that
costly since it uses vegetables as raw materials, instead of having meat. Unlike in having meat as
fillings, the use of vegetables will not be that prone to changes in regulations. Meat is susceptible
to regulation changes (i.e. when there is an outbreak of a disease) while vegetable is not. For the
technology, obsolescence is not a problem since progress is in geometric rate and it can easily
cope with the changes in the operation. The critical risk that this business will be facing is the
economic factor. Among the list is the taste and preference of the people. With the introduction
of this modified taco product, it is expected that the demand will not be that great at first because
some Filipinos may still prefer meat instead of vegetables. As a solution, there is a need to create
fillings out of vegetables that will best suit the taste of the people and will encourage them to
 shift from they are used to. Promotion (“gimmicks”) can be a great help. Another risk that the
business has to consider is the price of raw materials (vegetables). Unanticipated problems may
occur such as the rise in the price of materials due to unfavorable weather conditions. This risk
cannot be prevented, but it can be lessen. In general, to mitigate these economic risks, market
intelligence is crucial. As a starting business, there is a need to collect and analyze information in
terms of consumer’s demand and the possible hindrances to the operation of the business on the
side of the producer, offer products that are in proportion with the people’s contemporary needs
and income especially that we are now facing an economic turmoil.

FINANCIAL PROJECTIONS

Balance Sheet Projection

The following objectives are for the first three years of Mujeres’ Vegetable Taco.
1. Owner draws Php 196,120 by the end of Year 3.
2. Payback period will be 2.61 years
3. Break- even price at Php 38.02
4. Break- even production 14743.59 pieces of tacos sold.

Table 1. Estimate of Production for Three Years

Item Quantity Unit Price/Piece Value (Php)

Taco 15120 39 589680
Coca Cola Products (12 oz.) 450 cases 12 181440
Total 771120

Table 2. Supplies Requirement for Three Years

Item Unit Cost/Piece or Case Acquisition Cost

Taco Shells 50/pack x (3600pcs) 180000
Vegetable Products 72000 72000
Coca Cola Products 260/case x (450 cases) 117000
Other Ingredients 20000 30000
Cooking Equipments 5000 5000
Total 404000

Table 3. Labor Requirements for Three Years

No. of Worker No. of Hours Monthly Salary Salary For Three
Years

One (1) 8 hours 3000 108000

Three Years Income Statement Projection

Sources of Capital

1. Personal Funds. The owners will invest Php 512000 into the business.
2. Loan Proceeds. The owner will borrow a certain big amount of the capital from a
microfinance agency.
3. Cash Receipts From Business. Php 135,640 in cash receipts net of sales taxes is estimated
for three years. This projection involves selling 15120 tacos at Php 39, 450 cases of 12 oz. Soft
drinks at Php 12. This is a very conservative estimate of cash receipts.
Cash Flow Projection

Three Years Cash Flow Projection

Sources of cash
1. Personal Funds 400,000
2. Loan Proceeds 200,000

Total Sources PHP 600,000

Uses of Cash

3. Equipments/Supplies 450,000
4. Rent 12,000
5. Business License Fee 3,000
6. Advertising 5,000
7. Miscellaneous Expenses 5,000
8. Loan Payments (Principal and Interest) 50,000

Total Uses PHP 525,000

Net Cash Flow for Three Years (Sources Minus Uses) PH

P 75,000

Table 4. Break- even and Cost Benefit Analysis

Item Total Cost

Total Variable Cost 417000
Taco Shells 180000
Soft drinks 117000
Vegetable Products 72000
Electricity 18000
Ingredients 30000
Total Fixed Cost 158000
Interest Rate 30000
Labor 108000
Rent 20000
Total Cost 575000
Gross Return 771120
Profit
Financial Profit 196120
Operating Profit 354120
Others
Return on Variable Cost 1.85
Return on Financial Cost 1.34
Return on Total Cost 1.34
Payback Period 2.61 years
Break- even Price 38.02
Break- even Production 14743.59
Capital Requirements

1. Equipment/Supplies. Basic equipment cost is estimated to be 450,000. This includes taco

shells, softdrinks, vegetable products, ingredients and cooking equipments.

2. Business License Fee. This business license fee based on business revenue.
3. Advertising and Promotion. 5,000 will be allocated to the advertising campaign. This firm
will advertise by using flyers, newspapers, and local radio.

4. Miscellaneous Expenses. 5,000 have been estimated for miscellaneous expenses based on
information provided by restaurant owners.

5. Loan Payments. 50,000 will be allotted for loan payment.

6. Lease Expense. 12,000 will be paid for the rent.

Recommendations and Findings

Mujere’s Vegetarian Taco can recover its initial investments immediately, given that the
cost and revenue remain constant. The payback period for investment is 2.61 years. It can
recover all the costs spent for production at price Php. 38.02 per piece of taco and 14743.59
pieces of taco sold.

Conclusion

Mujere’s Vegetable Taco will be successful. The business plan has documented that the
establishment of food stand is feasible. All the critical factors such as industry trends, marketing
analysis, competitive analysis, management expertise, and financial analysis support this
conclusion.
We invite you to attend our grand opening. Go to Mujere’s Vegetable Taco – “Live
Healthy! Be Happy!”