Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
on
Launching of a
“Theme Restaurant”
By ITC Ltd
Submitted to:
Prof. Deeksha Kumar
Submitted by:
Anisha Mukkerjee-08BS0000343
Bhawna Gambhir-08BS0000750
Piyush Jain-08BS0002211
Surbhi Ahuja-08BS0003489
ACKNOWLEDGEMENT
ITC is one of India's foremost private sector companies with a market capitalization of
nearly US $ 14 billion and a turnover of over US $ 5 billion. It has a diversified presence
in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business,
Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal
Care, Stationery, Safety Matches and other FMCG products.
ITC's diversified status originates from its corporate strategy aimed at creating multiple
drivers of growth anchored on its time-tested core competencies: unmatched distribution
reach, superior brand-building capabilities, effective supply chain management and
acknowledged service skills in hoteliering. Having established a niche for itself in the
Hotel Industry, ITC has planned to enter into new segment of a Theme Restaurant by the
name of “Season Theme Restaurant”.
The themes has been finalized by carrying out a primary research using questionnaires
and surveys . Nearly 95% of surveyed individuals endorsed having a choice of different
themes within a restaurant. The themes finalized for the restaurant so as to cater to the
varied interest of our target audience are as follows:
SNOWY WINTERS
RAIN AND LUSH GREENERY
GOLDEN SUN AND BEACH
Background
ITC's foray into the hotels business began in 1975. Inspired by the vision to promote
India's rich tourism heritage and also contribute to the nation's then scarce foreign
exchange earnings, ITC's hotels business set about to create a unique value proposition
that would redefine the fine art of hospitality. Since then ITC-Welcomgroup has emerged
as one of India's premier hospitality chains offering hotels, resorts and palaces.
With over 100 hotels in more than 80 destinations and four brand propositions spanning
Luxury to Five-Star and Budget to Heritage, ITC-Welcomgroup has set new standards of
ain the hotel industry touching new dimensions in Accommodation, Cuisine,
Environment and Guest Safety. ITC‟s commitment to delivering globally bench marked
services, embedded in a culture deeply rooted in India‟s rich tradition of hospitality, gives
it a unique and distinct identity.
A leader in the premium hospitality segment, ITC Hotels have had the privilege of
hosting world leaders, Heads of State, business leaders and other distinguished guests
from all across the world.
The Fortune chain added to its properties with the launch of Fortune Select
JP Cosmos in the heart of Bengaluru city. The hotel offers an excellent range
of guest facilities, tailored to give the best of services to the discerning
business traveller.
WelcomHeritage Hotels brought into its fold 3 new properties, adding to its
array of more than 60 properties across 19 states in India. The first is the
Shivavilas Palace at Sandur, Karnataka; second the Sirsi Haveli near Jaipur;
and the third is WelcomeHeritage Naukuchiatal Resort, 30 kilometres from
Nainital, on the shores of the Naukuchiatal Lake.
ITC Welcomgroup adjudged the Best Employer in Asia in the hospitality sector
by the global Human Resources consulting and outsourcing firm, Hong Kong-
Hewitt Associates in partnership with Wall Street Journal.
Bukhara, at ITC Maurya, was declared the Best Indian Restaurant in Asia - 2008
by the Restaurant magazine.
Best City Spa Award for Kaya Kalp at ITC Mughal at the Tatler Spa Awards in
London.
ITC Welcomgroup won the NCPEDP Shell Helen Keller Award 2008, in the
category „Companies /Organisations/Institutions who share our vision and
through their policies and practices demonstrate their belief in equal rights and
gainful employment for persons with disabilities‟.
The Best Premium Hotel Brand to ITC Hotels at the sixth edition of the annual
Galileo Express Travel World Awards, organised by The Express Group.
National Tourism Award for ITC Grand Central for the best private public
enterprise providing facilities for physically challenged guests at the hotel.
Project background
These shall be a premium segment restaurants catering to SEC A and SEC B category.
The CWEs of nearly half the SEC A households work in executive positions. The
other half comprises mainly of industrialist/businessmen or shop owners. Almost
all of them are either graduates or post graduates. CWEs of SEC B households
are primarily employed at clerical or supervisory levels (46%). 29% are
shopkeepers while 10% are industrialist/businessmen. Less than half are
graduates or post graduates (45%). 38% are educated till the 10th or 12th grade,
while 13% have had some college education.
Analysts say food is a major driving force in the retail sector, with a growth rate of 30%.
And contrary to belief that fashion is the largest segment in organized retail, the food and
beverages segment is worth Rs 8.97 lakh crore.
INDUSTRY ANALYSIS:
Food service industry in India has a huge potential and is expected to grow to $8
billion in 2012, with an increase of 26.2% from 2007.
Cafes and restaurants segment contributes 21.9% to the food service industry
annually (2007) and contributed 7.6% to GDP of India in 2007.
Considering the opportunities in the food service market ITC would like to
capitalize on it to strengthen its position in the hospitality segment.
SEGMENT ANALYIS
With more and more diners yearning for a break from the urban bustle, theme-
restaurants with out-of-the box offering in terms of ambience, cuisine and décor
are gaining acceptance.
"Eating out is no longer just about food but involves the entire experience of
enjoying it", says Babita Jayaram, Marketing Vice President of BJN group, a
leading player running a popular chain of theme restaurants in the country. Good
cuisine is a must and if blended with a good theme, a well-researched decor and
overall ambience that enhances the eating experience, there is little reason for
these players not to hope to see a full table, says Priyanka, the entrepreneur
behind the food portal, "Hungry Zone".
While industrialists and celebrities are known to frequent premium theme joints
and restaurants, slowly a new breed of consumers has started developing a liking
for theme restaurants. A number of restaurants differentiated on basis of themes
and nature of cuisines are getting more popular.
In the suburbs too, theme restaurants are becoming more and more popular. As
suburban life gets more hectic, consumers are looking for more than just the pure
vanilla experience at restaurants. This explains the gradual increase in the number
of theme restaurants like Village, Machan and Rudey‟s Forest Café.
On an average, the Village outlet attracts as many as 400 consumers daily while
weekends see double the number of consumers. At an average ticket price of Rs
300, this works out to a business of Rs 120000 daily.
Jog informs that there is another upcoming theme concept, soon opening in Vashi
called „Umrao Jaan‟, which will boast of Lucknowi specialties and North Indian
food. In addition, Chowpatty- the spirit of Mumbai is also coming up soon at
Raghuleela Mall.
Source – “Theme restaurants cash in on concepts to sell”- Indian Express, Jun 18, 2009,
“Theme restaurants are the flavour of the season” – Hindustan times, Jan 07, 2008
Food Service Industry in India – Data monitor – Publication September 2008
MARKET AND DEMAND ANALYSIS
Theme Selection: Nearly 95% of our surveyed focus group endorsed having a choice of
different themes within a restaurant. ITC's Theme Restaurant concept is built to offer
different-themes within a restaurant. Our customers want the option to choose what
satisfies their desires. The introductory restaurant would be an epitome of the name of the
unit “Seasons Theme Restaurant”. The restaurant will have three segments with the
themes of snowy winters, golden sun and the beach, and rains and lush greenery
Menu Variety: Ethnic restaurants are increasing in the NCR region. The proliferation of
international cookbooks, food magazines, TV cooking shows and imported goods offers
ample evidence that India, as a whole, is currently on an international tasting spree. Our
research results do not identify any single ethnic style of restaurant as desired, but rather
suggest that incorporating strong multi-ethnic influences in the menu selection will be
popular. Again, variety is the underlying element for this concept.
The Dining Experience: Customer satisfaction with food and service has been and
continues to be of utmost importance, but our findings indicate that the décor, lighting,
bar, and other options to improve the dining experience are also factors in
customer decisions. ITC has taken all these factors in consideration for the design of this
theme restaurant.
Reasonable Prices: This was no surprise given the economic tide. Although the
restaurant industry as a whole has seen growth in 2008/2009, customers are demanding
value for their dining rupee. ITC's theme restaurant menu is priced at a upper and mid-
tier level. In addition ITC would have an extended Appetizer selection priced between
Rs. 200 – Rs. 1,500, allowing budget dining in a full-service restaurant.
The first step involved in the project analysis is to estimate the potential size of the
market for the proposed project. In this case we are planning to construct a theme
restaurant in the NCR region. So we did the analysis in various stages:
Firstly we find out whether there was any requirement of the theme restaurant.
As Delhi is a Cosmopolitan City with people from varied backgrounds having
different lifestyle, a theme restaurant would be a ideal hangout place for people
to de-stress themselves from their everyday routine. ITC‟s proposed theme
restaurant would be a complete experience in itself, as people would be free to
choose from any theme according to their requirements. Good cuisine is a must
and if blended with a good theme, a well-researched decor and overall ambience
that enhances the eating experience, there is little reason for these players not to
hope to see a full table,
For market analysis of the resorts and hotels, we tried to find out the answers to
various questions like:
a) Who will be the main customers?
b) What will be the total current demand of the theme restaurant?
c) What facilities would be required by the customers?
d) What are the prices they will be ready to pay?
e) What is the current strategy followed by other restaurant owners?
After the survey we came to the following conclusion that our proposed theme restaurant
will not only target business tourist but will also cater to the need of a vast market of
Downtown Working Couples ,The Destination Customer ,High-End Singles and the
Tourists. The new townships being developed by reputed builders in the nearby area will
also be an added advantage.
No. of Themes : 3
These particular market segments are 25-50 years old, have disposable income, and are
seeking upscale, trendy, and comfortable restaurant options. These are the types of people
who frequently visit other restaurants and bars in the area. They are likely to spend more
on experiences they perceive as unique, cosmopolitan, and sophisticated. They are also
the most open to trying something new, foodwise, and will embrace our international
fusion cuisine.
Market Analysis
Downtown Working
32% 17,645 18,527 20,565 21,593 22,673 6.47%
Couples
The Destination
8% 4,411 4,499 4,724 4,818 4,914 2.74%
Customer
The Business Person: They work hard all day and often stay overnight in a strange city.
They need a competent establishment that helps impress clients and prospects. Afterward,
they want to relax and use the money they are making (or is expensed by their company).
They spend the most on drinks, food and tips. ITC's cosmopolitan flair and comfortable
atmosphere will be perfect for sophisticated business people, whether they live in and
around NCR or are here for work.
Downtown Working Couples: The restaurant will have an intimate, romantic, enticing
adult atmosphere that suggests "date." ITC's will be the best date location in town. These
young Midtown couples are generally very successful working professionals. In most
cases they are budgeting to eat out on a regular basis, as they don't have the time to
prepare food nightly.
The Destination Customer: NCR is a very 'sectioned' city, and consumers often look
only in their own neighborhoods for restaurant options. ITC will break these habits, using
marketing to draw customers from outside the main city limits. will be a destination
restaurant. Our Destination Clients tend to be new suburbanites that miss the excitement
of the inner city. They have disposable income, and will spend quite a bit on such
outings. ITC's will be especially appealing to married suburban couples indulging
themselves with a "date night" downtown, away from the kids.
High-end Singles: We will attract them with our electic atmosphere and layout. Our
international menu, striking decor, entertainment and events, excellent service and
engaging clientele will confirm the feeling of being in "the in place" in NCR. These are
the individuals that pride themselves on socializing and dining at the premier locations -
The Image Seekers.
Tourists: New Delhi being the capital of India attracts many vacationers during the
summer months of May through September. ITC's will be a destination dining locale,
with its attractive atmosphere, international menu, and lounge. A large percentage of the
tourist population are vacationing singles, here to socialize and be entertained. This is
especially true for the tourist population that visit for sporting and social events - they
are not interested in family establishments.
The Next step involved in the project analysis is to decide the
Marketing Strategy for the proposed project
Promotional Campaign:
The best way to reach our potential customers is to develop an intense advertising
campaign promoting our STR concept .In addition to standard advertising practices, we
will gain considerable recognition through newspapers, newsletters and public
announcements. Consumers will be encouraged to visit our website to be greeted with a
flash media intro that highlights the restaurant, past happenings, upcoming attractions and
our dynamic menu.
Our periodic customer surveys and weekly menu item sales evaluations will help us to
understand what advertising is working and what is not; basically, who we are reaching.
Our goal is to understand our customer, measure the success of our direct marketing and
media activities, and redirect advertising as effectively as possible.
Publicity Strategy:
ITC will focus on the following publicity strategies:
Develop a sustained public relations effort, with ongoing contact between key
editors and top-level personnel at local dining publications.
Develop a regular and consistent package update program for the major target
media, keeping key editors abreast of all new promotions, and menu
introductions.
Establish contact with editorial staff for the purpose of being included in
entertainment "round-ups"--product comparisons in dining publications and the
local papers.
Produce a complete STR Restaurant history and menu offering piece to be used as
the primary public relations tool for all target media editorial contact. This will
also be effective for inclusion in press kits.
Press Release/Grand Opening: STR Restaurant will release a series of press releases on
the Grand opening.
Editorial Visitation: Leading up to the Grand Opening, and over the first 6 months of
operations, we will invite the most influential reporters and editors from all local
publications to STR Restaurant in order to evaluate our menu, service, and atmosphere.
Community: ITC will look for key opportunities to pair with local community
development organizations and radio stations to interface with our customers. We will
continually look for local community programs in which we can participate, in order to
better our community, and give something back.
Marketing Program
In line with our Marketing strategy, we will employ three different marketing tactics to
increase customer awareness of STR: In-Restaurant Marketing, Public Relations
Marketing, and Media Marketing. Our most important tactic will be word-of-mouth/in-
restaurant marketing. This will be by far the cheapest and most effective of our marketing
programs.
Word-of-mouth/In-Restaurant Marketing
Restaurant Night: Every first Monday of the quarter, we will have a special
evening for restaurant people. A perfect night for the local area's restaurant
owners, chefs and staff to get together to discuss the market and food trends.
Monthly Dating Connection: With the increasing appeal of Internet and speed
dating, the restaurant will offer a monthly dating night. In addition to food and
beverages, customers can choose from an array of dating packages up for auction.
Wait Area Marketing: Wait staff will service appetizers to customers waiting to
be seated or on the wait list.
Restaurant and Special Events Website: We have contracted with local design
teams to deliver a high-quality, navigable, constantly updated website.
Media Relations: Several media relations teams will be utilized to market the
Restaurant. HT City food guide & India Todayare two media companies we will
utilize for media relations. Both companies have an insightful presence and
connection with our target market.
Billboard Advertisement: One month prior to the opening, distinct billboard ads
will advertise the launch of the Restaurant.
Sales Strategy
Our strategy is simple: we intend to succeed by giving our customers a combination
of delicious and interesting food in an appealing environment, with excellent customer
service, whether on their first visit or their hundredth.
Our marketing strategies are designed to get critics and initial customers into our doors.
Our sales strategies must take the next step and encourage customers to become repeat
customers, and to tell all their friends and acquaintances about the great experiences they
just had at STR.
New restaurants often make one of two mistakes: they are unprepared or underprepared
for opening, and initial poor service, speed, or quality discourages customers from
returning, or they spend all of their efforts at opening, and are unable to maintain the
initial quality customers expect on return visits, decreasing word of mouth advertising
and leading to poor revenues.
STR's sales strategy requires consistently high quality food, service, speed, and
atmosphere. They can accomplish this by:
Hiring employees who genuinely enjoy their jobs and appreciate STR's unique
offerings
Continually assessing the quality of all aspects mentioned above, and immediately
addressing any problems
Interacting with our customers personally, so they know that their feedback goes
directly to the owners
Evaluating food choices for popularity, and keeping favorites on the menu as we
rotate seasonal foods and specials
Sales Forecast
ITC is looking at forecasting sales for its new theme restaurant. ITC‟s new restaurant
STR as discussed earlier would have three themes decided that it would be able to seat
fifteen tables of four people each as a starting point. Then they did some simple math:
fifteen tables of four means at capacity they would be serving 60 meals. Meals take about
an hour at lunch, and about two hours at dinner. STR figured they would have one
servicing of lunch and two of dinner, roughly calculating the 5-5:30 crowds as the first
serving, and the 7:30-8:00 crowd as the second serving. So an absolutely full lunch
service in a day would be 60 lunches. An absolutely full dinner service in a day would be
120 dinners.
They decided that an average lunch would be Rs.1000 of food and Rs.800 of beverage.
And that an average dinner would be Rs.2000 food and Rs.1000 beverage.
At capacity STR would sell 60 lunch and 120 dinners in a day, with matching beverages.
They can do a simple calculation to figure a good day‟s sales:
1. Lunches are 60 times Rs.1000 plus 60 times Rs.800, which comes to 60,000 plus
48,000, or Rs. 108,000, when it‟s at full capacity.
2. Dinners are 120 times Rs.2000 plus 120 times Rs.1000, which comes to
Rs.240,000 plus Rs.120,000, or Rs.360,000, when it‟s at full capacity.
TECHNICAL ANALYSIS:
LOCATION
The location for the themed restaurant has been finalized as on Gurgaon Faridabad road,
sector 54. This is one of the busiest roads of India and more than five lakhs vehicles pass
through this road on a single day. The location can be highlighted as under:
The themed restaurants will cater to the upper segment of the society. Gurgaon
being a hub of restaurants, clubs, hotels, nightlife centers, malls, spas & salons is
a prime location for such lifestyle options
There are many sports clubs like basketball club, badminton club, football club
squash club and many more. The clubbing culture in sector 52 in particular and
Gurgaon at large helped us secure this location.
There are over two dozen restaurants in the vicinity of the area that sell food at
similar prices. Although this presents an obvious challenge in terms of market
share, it also indicates the presence of a large, strong potential. And moreover it is
the only themed restaurant in Delhi/NCR Region
Companies like TCS,HCL,GE Capital, Unitech limited and many more have their
units in gurgaon. We are expected a good number of corporate clients
(Rs. In
Lacs)
4 Sky- lite metal frame with toughened Glass/ 1800 sq. ft. @ Rs. 600 10.8
poly carbonate
5 Floor stone with laying cost 30000 sq. ft. @ Rs. 140 42
6 Floor inlays, special treatment with laying 2000 sq. ft. @ Rs.300 6
cost
9 Special walls cladding with special treatment 5000 sq. ft. @ Rs. 1000 50
10 Landscaping 10000 sq. yards 15
TOTAL 509.74
EQUIPMENTS
The detailed lists of the equipments required are given below:
(Rs. in
Lacs)
1 Central air conditioning system for the 81.93 Blue Star Ltd., Delhi
3 Reverse Osmosis Plant of 500 LPH 2.1 Eco- Water Solutions, Delhi
5 Rain water harvesting system 2.84 K.C. Tube well Works, Delhi
6 Generator set
TOTAL 299.27
Add Sales Tax, Installing, Freight, 11.97
a)
FURNITURE AND FIXTURES
Rs.in
Lacs
4 Internal lightings
TOTAL 129.46
Particulars Proposed
The total man power requirement of the restaurant will be 90 persons who will get direct
employment. Their detailed salaries and wages pattern is given below:
month
A. Indirect/Administrative
Total(A) 13 95000
B. Direct/Operations
Total(B) 77 4100000
505000
Total Wages
ENVIRONMENTAL ASPECTS
ITC constantly endeavors to minimize the direct and indirect environmental impact of its
business operations. Not only does it ensure serious and concerted efforts to conserve
natural resources but, wherever possible, the Company also strives to enrich the
environment.
ITC group is actively committed to environmental protection and so is its subsidiary STR
Pvt. Ltd. The launch of the new theme restaurant by STR will work on the similar lines of
ITC group with their guiding principle of „Reduce, Reuse and Recycle‟
SNOWY WINTERS
RAIN AND LUSH GREENERY
GOLDEN SUN AND BEACH
ENVIRONMENTAL ANALYSIS
There shall be no visible fume emission from the kitchen exhaust and no Odour
nuisance to the nearby sensitive receptors.
Public sewers of sufficient capacity are available to collect the effluent discharges
from the restaurant and adequate space and facilities for waste storage and pick up
available.
SALIENT FEATURES SO AS TO COMPLY WITH ENVIRONMENTAL
REQUIREMENTS :
1. Health
i. Premise is laid on with mains water supply.
ii. Premises are provided with a proper drainage system.
iii. Premises are provided with proper flushed toilets.
iv. No manholes are located in the proposed kitchen, food preparation room
and scullery.
v. Premises are capable of providing an independent and separate
ventilating system to the kitchen, toilets and seating accommodation.
2. Sustainable Site
ii. Heat Island Effect: More than 75% of the terrace will be insulated and
coated with the reflective high albedo roof paint. “High albedo paint” deflects
heat back into the atmosphere. Given that the roofs and side walls of a
building account for 47 per cent of heat gain in a building, the heat-deflecting
paint means that the air-conditioning can run at a comparatively higher
temperature .
iii. Light Pollution Reduction: Minimum exterior lighting will be used to limit
night sky pollution.
3. Water Efficiency
1. Use of solar photo voltaic for emergency lighting would be done so as to save
on generators.
2. Use of green material would be done to reduce heat gain from rooftop /
building envelope with high performance glazing and proper insulation material .
3. A solar hot water system and solar concentrator would be installed for kitchen.
6. Low Emitting Materials: Low VOC levels of adhesives / sealants would be used
for carpets /composite woods / paints.
7. Food Quality
All the requirements of Food Safety Act are adhered to for ensuring that food is
safe for human consumption, and no sale of food that is contaminated or
otherwise unfit for human consumption will be fulfilled.
8. Educating Employees
Educating employees about the environmental actions the property takes, why
those actions are important, why the staff needs to support the program, as well as
encouraging staff to take their own green actions would be promoted and any
ideas towards the green movement would be supported by STR.
COST OF THE PROJECT
It is the first step in conducting financial analysis and it is very important as it decides the
initial investment that the project need to be carried on.On the basis of this,the means of
Financing is decided.
Here the following assuptions have been considered after the technical analysis:
Through technical analysis all components of the the cost of the project can be calculated.
The preoperative expenses incurred up to the point of time the plant and machinery are
ready for use are capitalised by apportioning them to depreciable fixed assets in
proportion to their book values.the interest on term loan during the construction period of
6 months at the rate of 12% is Rs 49.58 lacs. This is excluded while calculating
contingencies.
Over and above the escalation under various items of cost on the basis of latest
avaliable rate of inflation, contingency provision is made on the basis of project
implementation scheldule.
Escalation may arise due to minor changes in the specifications of the buildings, plant
Contingency Provision
Firm Costs Non-Firm Costs Escalation @ 10%
Site Development 0 228.30 22.83
Buildings 0 281.44 28.14
Machinery 0 311.24 31.12
Furnitures & Interiors 0 129.50 12.95
Other Fixed Assets 0 50.00 5.00
Preliminary Expenses 0 15.00 1.50
Pre-operaticeEXpense(Excluding
Interest) 0 30.42 3.04
Total 104.59
Thus the total provision of the contingencies would be Rs 104.59 lacs(excluding margin
money for working capital and interest during construction period).
The preliminary expences incurred is about 1% of the total project cost and therefore can
be written off over the ten years entirely.
WORKING CAPITAL REQUIREMENT
Here the cash required to be held by the unit for day to day expenses is estimated to be
Here the project is proposed to be funded through promotor‟s contribution (40%) and
term loan from banks (60%). Here rate of interest on the loan is 12 % from IDBI.
% Means Of Financing
SALES ESTIMATION
TOTAL annually in
lacs 1,274.52
Total Annual Revenue 1,274.52
COST OF PRODUCTION
Cost of production includes Raw materials, labor, utilities and administration overheads.
Cost of Production
Power, fuel, gas 41.463 43.902 46.341 46.341 46.341 46.341 46.341 46.341 46.341 46.341
Repairs and
Maintenance(in
lacs) 1.02 1.5 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6
Salary 41.95 35.66 37.76 39.85 41.85 43.94 46.13 48.44 50.86 53.41 56.08
Administrative
Expense 10 12 14 14 14 14 14 14 14 14
Estmated Power, Fuel and Gas as well as Salaries have been calculated in the Technical
Analysis.
Repairs and maintainance as well as administration overheads have been taken as rough
estimates.
Here capacity utilaization has been assumed to be 85% in the first year, 90% in the
sesond year and 95 % in the third year.
The Raw Materials have been calculated by taking into account its two components:
Perishable items
Non perishable items
Raw materials
average cost (in Rs
per lt, Daily consumption annual cost per
kg,nos,bottle) (lt,kgs,nos,bottle) consumption year
perishable
Milk 9 6 2190 19710
vegetables 65 15 5475 355875
red meat 190 4 1460 277400
white meat 320 5 1825 584000
Total 12.37
non perishable
rice 28 4 1460 40880
wheat 22 5 1825 40150
flour 35 4 1460 51100
eggs 3 40 14600 43800
others 40 2 730 29200
alcoholic drinks
beer 42 20 7300 306600
wine 1000 1 365 365000
vodka/gin/ rum 320 2 730 233600
whisky 350 3 1095 383250
others 330 1 365 120450
non alcoholic drinks 50 20 7300 365000
Total 19.79
Here provision for depreciation is made by the Written Down Value method as per the
rates given in the Income Tax Act.
Preoperative expences during the construction period and contingencies are allocated to
the fixed assets in proportion to their values before providing depreciation.
Building
Opening Balance 603.8 543.4 489.1 440.2 396.1 356.5 320.9 288.8 259.9 233.9
Less:Depreciation@10% 60.4 54.3 48.9 44.0 39.6 35.7 32.1 28.9 26.0 23.4
Closing Balance 543.4 489.1 440.2 396.1 356.5 320.9 288.8 259.9 233.9 210.5
Machinery
Opening Balance 368.7 320.7 279.0 242.8 211.2 183.7 159.9 139.1 121.0 105.3
Less:Depreciation@13% 47.9 41.7 36.3 31.6 27.5 23.9 20.8 18.1 15.7 13.7
Closing Balance 320.7 279.0 242.8 211.2 183.7 159.9 139.1 121.0 105.3 91.6
Total
Opening Balance 1358.5 1228.9 1113.8 1011.4 920.3 839.3 767.2 703.0 645.9 595.0
Less:Depreciation 129.6 115.2 102.4 91.1 81.0 72.1 64.2 57.1 50.9 45.3
Closing Balance 1228.9 1113.8 1011.4 920.3 839.3 767.2 703.0 645.9 595.0 549.7
INTEREST SCHEDULE
Interest has to be paid at the rate of 12% for the next ten years. Below is the repayment
schedlue.
This is the amount that is calculated on the working capital gap to pay back the bank at
the rate of 12%.
Taxable Profits 390.79 454.16 515.52 550.87 570.43 588.33 604.76 619.87 633.79 646.65
Financial Appraisal
Project appraisal is a generic term that refers to the process of assessing, in a structured
way, the case for proceeding with a project or proposal. It often involves comparing
various options, using economic appraisal or some other decision analysis technique.
The technique used to financially appraise the project is called capital budgeting.
Term loan and working capital loan are charged at 12% p.a for 10 years
Hence cheapest source is IDBI at 12 % p.a., reason being IDBI and ITC have long
banking relations.
o Surcharge @10%
o Education cess @ 3%
o Machinery @ 13%
For the purpose of calculation of cost of land prevailing market rate from property
from “Indiaproperty.com” has been used.
The seating at each restaurant shall be 60 seater with tables for two each which
could be conveniently joined and disjoined as per the requirement.
Each of the restaurants shall have enough vacant space to accommodate 150
people in case of large gatherings required.
TECHNIQUES USED:
Payback period in business and economics refers to the period of time required
for the return on an investment to "repay" the sum of the original investment. For
example, a $1000 investment which returned $500 per year would have a two
year payback period. It intuitively measures how long something takes to "pay for
itself." Shorter payback periods are obviously preferable to longer payback
periods (all else being equal).
This implies that the restaurant shall break be able to recover initial investment at
the end of the 2.67 years.
"Elsewhere in the world, the cost of building a five-star hotel is very different
from that of building a three-star one, while in India these costs get leveled," said
Marina Smirnova, the head of the Analytical Department at the University of
Hotel, Travel and Restaurant Businesses association. "Profit margins vary from
hotel to hotel, but on the average a hotel operating in the high-end segment pays
back in six to eight years, and a restaurant in three to four. This is why this
segment is so attractive for investors."
Payback Period
Cash Flows at Cummulated
Year Cash Flows discounted value Cash Flows
0 (1,382.20) (1,382.20) (1,382.20)
1 1433.85 1,248.99 (133.21)
2 1529.15 1,160.28 1,027.08
3 1629.46 1,077.00 2,104.08
4 1641.37 945.01 3,049.08
5 1650.54 827.78 3,876.86
6 1660.06 725.22 4,602.07
7 1669.85 635.45 5,237.52
8 1679.86 556.84 5,794.36
9 1690.01 487.98 6,282.34
10 1700.27 427.65 6,709.99
The discount rate often used in capital budgeting that makes the net present value
of all cash flows from a particular project equal to zero. Generally speaking, the
higher a project's internal rate of return, the more desirable it is to undertake the
project. As such, IRR can be used to rank several prospective projects a firm is
considering. Assuming all other factors are equal among the various projects, the
project with the highest IRR would probably be considered the best and
undertaken first.
IRR = 109%
INTERNAL RATE OF RETURN
Year Cash Flows
0 (1,382.20)
1 1433.85
2 1529.15
3 1629.46
4 1641.37
5 1650.54
6 1660.06 NPV @ 90% 298.08
7 1669.85 NPV @ 110% (15.69)
8 1679.86
9 1690.01 IRR 109.00%
10 1700.27
o IRR gives how much return is the project generating, but since the project
undertaken does not have a definite time period, thus is not valid enough.
o Cash flows used are for 10 years, however if only say 5 years cash flows
were to be used, then IRR would have surely been less than 109%.
o Thus shorter the period, lower would have been the IRR.
Profitability index:
An index that attempts to identify the relationship between the costs and benefits
of a proposed project through the use of a ratio.
Profitabilty Index
Cash Flows at Cummulated
Year Cash Flows discounted value Cash Flows
0 (1,382.20) (1,382.20) (1,382.20)
1 1433.85 1,248.99 (133.21)
2 1529.15 1,160.28 1,027.08
3 1629.46 1,077.00 2,104.08
4 1641.37 945.01 3,049.08
5 1650.54 827.78 3,876.86
6 1660.06 725.22 4,602.07 Profitability Index 4.85
7 1669.85 635.45 5,237.52
8 1679.86 556.84 5,794.36
9 1690.01 487.98 6,282.34
10 1700.27 427.65 6,709.99
An index above 1 indicates that the project is profitable. Industry average for
profitability index varies according to different ventures. There is no standard as
such available.
For projecting the financial condition of the project, forecasts of income, assets and
liabilities and cash flows are necessary. Based on the assumptions and estimates the
following statements are prepared:
Total(A) 829.32 1650.56 1763.64 1888.04 1903.30 1919.02 1934.53 1949.82 1964.88 1979.70 1994.26
Application of funds
Fixed Assets1000.48
Prelimianary/Pre-operative
95 Expenses
Increase in working capital3.60 0.21 3.81
Repayment of term loan 82.93 82.93 82.93 82.93 82.93 82.93 82.93 82.93 82.93 82.93
Income Tax 130.17 151.34 171.84 179.00 185.55 191.54 197.04 202.09 206.75 211.06
Total(B) 1095.48 216.71 234.49 258.58 261.94 268.48 274.47 279.97 285.03 289.69 293.99
Opening Balance 0 -266.16 1167.688 2696.838 4326.299 5967.666 7618.207 9278.266 10948.12 12627.97 14317.99
Difference(A-B)
-266.16 1433.85 1529.15 1629.46 1641.37 1650.54 1660.06 1669.85 1679.86 1690.01 1700.27
Closing Balance
-266.16 1167.69 2696.84 4326.30 5967.67 7618.21 9278.27 10948.12 12627.97 14317.99 16018.26
Projected Income Statement
Year I II III IV V VI VII VIII
Operational Utilization
0.85 0.9 0.95 0.95 0.95 0.95 0.95 0.95
Income
Sales(A) 1083.34 1147.07 1210.79 1210.79 1210.79 1210.79 1210.79 1210.79
Operating Cost
Utilities(Power,Water&Fuel)
41.463 43.902 46.341 46.341 46.341 46.341 46.341 46.341
Raw materials 9.52 10.08 10.64 10.64 10.64 10.64 10.64 10.64
Work in progress
0.204 0.216 0.228 0.228 0.228 0.228 0.228 0.228
Finished goods 17 18 19 19 19 19 19 19
Repairs ,Maintenance
1.02 & Insurance
1.5 1.6 1.6 1.6 1.6 1.6 1.6
Depreciation 130.11 115.65 102.83 91.46 81.36 72.40 64.44 57.37
Total(B) 199.32 189.35 180.64 169.27 159.17 150.21 142.25 135.18
C Administrative Expenses
Salary 35.66 37.76 39.85 41.85 43.94 46.13 48.44 50.86
Administrative Overheads
10 12 14 14 14 14 14 14
Marketing Expense
54.17 57.35 60.54 60.54 60.54 60.54 60.54 60.54
Total(C) 99.82 107.11 114.39 116.38 118.48 120.67 122.98 125.40
D Financial Expenses
Interest:Term Loan@10%
93.30 83.35 73.39 63.44 53.49 43.54 33.59 23.64
Interest on Working
1.35 Capital1.43
Loan@10%
1.51 1.51 1.51 1.51 1.51 1.51
Total(D) 94.65 84.77 74.90 64.95 55.00 45.04 35.09 25.14
E Total Expenses(E=B+C+D)
393.79 381.23 369.93 350.60 332.64 315.93 300.32 285.72
Preliminary Expenses
1.50 written
1.50off 1.50 1.50 1.50 1.50 1.50 1.50
Income Tax@33.33%
130.17 151.34 171.84 179.00 185.55 191.54 197.04 202.09
Theme restaurants are the upcoming trend in the market and are here to
stay for long. Such restaurants have high potential demand in
metropolitan and tier 1 and 2 cities.
Factors like
Finacial appraisal
The project is financially viable, as it has high profitability index and the
discounting payback period is shorter than the industry average.
Thus combining together the various analysis, the project will certainly be a
business of good margin and high development potential
Finally the following 7 considerations suggested to the key reference for the
projects future development, as well as the conclusion of the report:
VENDOR
Vendors have been selected keeping in mind that the vendor‟s performance satisfies the
project needs. We are expecting a cordial vendor-vendee relationship. Most of the
vendors are Delhi based , this will ensure low transportation costs of equipments.
B-83,
Okhla Industrial Area,
Phase- I,
New Delhi-110020
Ph:+91-11- 41024791,
+91-11- 41024792
Fax:+91-11-41024790
Email : info@ecowater.co.in
sales@ecowater.co.in
ecowatersolution@yahoo.co.in
3.KC TUBEWELL WORKS
RU-33, Pitampura,
New Delhi-110034
Ph : 27348618
Fax : 27345935
Ph:
Fax
5.HITEK SOLUTIONS
Delhi-110063
6.APEX ELEVATORS
WZ-1656 A,
8. S. L. INDUSTRIES, DELHI
Mr. K. K. Pahuja (+91-9811144169)
F -57, Mayapuri Industrial Area, Phase-II
New Delhi - 110 064, New Delhi (India)
Phone. : +(91)-(11)-41845134
E-mail: elegante@vsnl.net, kkelegante@yahoo.co.in
Janak Puri,
832, West End Mall,
District Centre,
011 25552337
09810055338 - Mobile
10.SOMYA PYROTEX SERVICES
09811141246
11.F. M. ENGINEERING
I-73, Sector-1,
Bawana Industrial Area,
Delhi - 110039, India
Ph:91-11-27750653
Fax:91-11-27750654
ANNEXURE 2
QUESTIONNAIRE
4. On which of the following parameters you make your decision regarding visit to
a new restaurant?
5. If given a choice, where will you Dine out of the following choices?
6. The reason that influenced your decision for the above choice?
a) Price
b) Brand Name
c) Dining Experience
d) Cuisine
e) Other (Please specify)
7. The company must start a Multi Theme Restaurant with Multi Cuisine and
excellent ambience?
a. Agree b. Disagree
8. Which theme excites you more from the following list of themes?
9. How much per person would you like to pay for a meal? Including beverage
a. Less than 500 b.500-1000 c) >1000 d) No limit
PERSONAL DETAILS (We assure you that your personal details would
be kept strictly confidential and would not be disclosed to anyone):