Pre-Feasibility

Study
FAST FOOD
RESTAURANT

Pre-Feasibility Study
Restaurant

Fast Food

Small and Medium Enterprise

DevelopmentGovernment
Authority of
Pakistan
www.smeda.o
rg.pk

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st
OFFICE
Waheed Trade Complex, 1 Floor , 36-Commercial
Zone, Phase III, Sector XX, KhayabanTel: (042) 111-111-456, Fax: (042)
e-Iqbal, DHA Lahore
5896619,helpdesk@smeda.o
5899756
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OFFICE
PUNJAB
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st
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Zone,
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Lahore.
Tel: (042) 111Fax:111-456
(042) 5896619,
5899756
helpdesk@smeda.o
rg.pk

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TH

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December,
2006

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Pre-Feasibility Study
Restaurant

Fast Food

DISCLAIME
R

The purpose and scope of this information memorandum is to

introduce the subject matter
and provide a general idea and information on the said area. All the
material included in
this document is based on data/information gathered from various
sources and is based on
certain assumptions. Although, due care and diligence has been
taken to compile this
document, the contained information may vary due to any change in
any of the concerned
factors, and the actual results may differ substantially from the
presented information.
SMEDA does not assume any liability for any financial or other loss
resulting from this
memorandum in consequence of undertaking this activity. Therefore,
the content of this
memorandum should not be relied upon for making any decision,
investment or otherwise.
The prospective user of this memorandum is encouraged to carry
out his/her own due
diligence and gather any information he/she considers necessary for
making an informed
decisio
n.
The content of the information memorandum does not bind SMEDA in
any legal or other
for
m.

DOCUMENT
CONTROL
Document No. PREF11
Revision

Prepared
by
1
Sindh
Approved by
Sindh
Issue Date
2006
Issued by
Oficer

SMEDAProvincial Chief
December,
Library

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

1 PROJE
ROJECT
PROFIL
LE

Fast Food

s se
ts
1..1
1
Purpo
ef tof th
he
D
ocudocument
men ts
This
is developed to provide the entrepreneur with
potential investment
opportunity
in setting up and operating a medium sized fast food
restaurant
ofering
variety
of food
itemsa to the general public. This pre-feasibility gives an
insight
into
various
aspects of planning, setting up and operating a fast food
restaurant The
for document
the general
populace.
is designed to provide relevant details
(includingthe
technical)
to
facilitate
entrepreneur
in making the decision by providing
various
as
well
as technological
business alternatives.
The document also allows flexibility
to change
various to suit the needs of the
project
parameters
entrepreneur.
1..2
2
Proj je
etc t i f
B
r
e
ie
f
Fast food is food which is prepared and served quickly at outlets
called fast-food
restaurants.
It is a multi-billion dollar industry which continues to
grow
rapidly
many restaurant is a restaurant characterized both
countries. A in
fast-food
by food which
supplied
quicklyisafter ordering, and by minimal service. The food in
these cooked
restaurants
is in advance and kept warm, or reheated to
often
in bulk
order. Many are
fast-food
restaurants
part of restaurant chains or franchise operations,
and standardized
foodstufs
are shipped to each restaurant from central locations.
There areoutlets,
also simpler
fast-food
such as stands or kiosks, which may or may not
provide
shelterBecause
or chairsthe capital requirements to start a fast-food
for
customers.
restaurant
are relatively
small,
particularly
in areas with non-existent or medium income
population, small fast-food restaurants have become common
individually-owned
throughout
Pakistan. where the customers sit down and have their
Generally restaurants,
food orders
brought
to
them,
are also
considered
fast food.
e
1..3
3
Oppo
uitnity
y ti le
ppotrtu
R
atio
ona lFood Restaurant Market is a growing industry in Pakistan
The
Fast
relying heavily
on the
changing
lifestyle
patterns, population growth of the target age
group and
the related of women. With today's hectic lifestyles, timeincrease
in employment
saving products
are
increasingly
in demand
the most obvious being the fast food. The
rate of growth
in
consumer
expenditures
on fast food has led most other segments of
the food-away-fromhome
market for much of the last
one decade.
Demand for convenience has driven expenditures where people want
quick and
convenient
meals;
they
do not want to spend a lot of time preparing meals,
traveling
pick
up meals,
or
waitingtofor
meals
in restaurants. As a result, consumers rely on fast
food.food
Knowing
this, are coming up with new ways to market their
fast
providers
products that save time
for
consumers.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

Consumers want to combine meal-time with time engaged in other

activities, work,
such as
shopping,
or travel, therefore allocating less time for food,
hence
for
fastthe growing need
food.
1..4
4
The Fst
a st Food
I d st
oo
In
n
dustr
r
y
du
The fast-food industry is popular in Pakistan, the source of most of
its innovation,
and
many
major international
chains are based there. The presence of
multinational
fast food KFC, Pizza Express, Pizza Hut, Subway etc.
chains
like McDonalds,
have somewhat
catered
to the high income segment therefore developing a niche
as upscale fastfood
restaurants.
Multinational corporations such as these typically modify
their
menus
to cater
to
local
Pakistan
tastes and most overseas outlets are owned by native
franchisees
ensureand community values are
that
cultural,toethnic,
taken care of.
Additionally, multinational fast-food chains are not the only or even the
primary
ofcities of Pakistan. Many regional and local chains have
fast
foodsource
in most
developed
aroundof Pakistan (for example Khan Broast in Karachi)
the
main cities
to compete with
international
chains and provide menu items that appeal to the unique
regional
and
habits
at tastes
comparatively
low costs. In Pakistan, multinational chains are
considerablythey
more
expensive;
usually are frequented because they are considered
chic and somewhat
glamorous
and because they usually are much cleaner than local
eateries.
However much
of
the middle-income
segment (which forms a major chunk of
fastfood
goers)
prefers
visiting local outlets that ofer low cost fast food, hence
more frequent visits.
sising
1..4
4. .1
1 IIn
ncrre
ea
ng Num
r bfer ostf Fast Food
tl ts
Num
O
utle
erapid
ts
The
rate at which the fast food industry continues to add
outlets is of
asconsumer
much a demand for convenience as it is a reflection of
reflection
demand
for fast food
itself.
Expanding
the number of outlets increases accessibility, thus
making it more
convenient
for consumers to purchase fast food. Especially in recent
years, much
ofbeen
the in the form of "satellite" outlets. These tend to be
expansion
has
smaller
with capacity, and are often in nontraditional
little
or in
nosize,
seating
locations, department
such as ofice
buildings,
stores, airports, and gasoline stations; locations
chosen
specifically
to
maximize
convenience and consumer
accessibility.
1..4
4. .2
2 Cosn su
urmer l
A
ppea
a
ppe
l
Fast-food outlets have become popular with consumers for several
reasons. economies
One is that
through
of scale in purchasing and producing food, these
companies
can deliver
food
to consumers
at a very low cost. In addition, although some
people
dislike fast food
for
its predictability,
it can be reassuring to a hungry person in a
hurry or far from home.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

Multinational Fast food chains like McDonald's rapidly gained a

Pyramid 1998
&
reputation for
cleanliness,
fasttheir
servicePopulation
and a child-friendly
atmosphere
where families
2020*
on the
grab
a road
quickcould
meal, or seek a break from the routine of home cooking.
Prior
to the
of restaurant, people generally had a choice between
the fast
foodrise
chain
greasy-spoon
(kiosk)
where diners
the quality of the food was often questionable and
service
lacking, or
highend
restaurants
that
were expensive and impractical for families
with young children.
Modern, stream-lined convenience of the fast food restaurant provides
a new
alternative
and
appealed
to consumers' instinct for ideas and products
associated and
with progress,
technology
innovation.
Fast food restaurants have rapidly become the eatery "everyone can
agree
on",child-size
with many
featuring
menu combos, play areas and whimsical branding
campaigns,
to
appeal todesigned
younger customers. Parents can have a few minutes of
peace while
children
played
or amused
themselves with the toys included in
the premsises.
Many consumers see multinational fast food restaurants as symbols of
the wealth,
progress
and
well-ordered
openness of Western society and therefore become
trendycities
attractions
many
aroundinPakistan, particularly among younger people with
more varied tastes.
1..4
4. .3
3 Focsiu sing
ng on sConsu
Conr umer i
Conve
ven
n
ie
e
nce
Con
Fast Food outlets tend to focus on the work while you eat
philosophyOutlet
similaratto
the e Azam Internation Aiport (Karachi) wherein
McDonald
Quaid
seating
space
is
also available for passengers in transition or the KFC outlets in large
shopping
malls
like
the
Millenium
Shopping
Mall in Karachi promoting the concept of Shop
While You Eat.
sising
r a rke
1..4
4. .4
4 IIn
ncrre
ea
ng M
ost
r Fast Food The
l ti
tket
f r fo
P
opula
oncurrently
Boom ranked as 6th in terms of total population, is
opu ation
Pakistan,
population
growth
characterized
by arate
highof 1.9% (Pakistan Economic Survey 2005) and is
set to positions
take the top
three
in terms of total population with already 153.4 Million
1
people
registered
in per capita income has increased to US$ 736 while
2005.
With
this, the
group
(15 to 64)
the productive
ageyears is said to take the major chunk of
population (67%
of total
population)
by
2
2020.
The growth rate in food consumption is also augmented by the
rapid increase
in for
the males / female population aging between 20 to
employment
rate
29 years
(fastthe
food
goers)
hence
greater income contribution to the overall income
generated is expected to
be
higher.
1

2005 World Population Data Sheet, Population Reference Bureau,

Population Projections
1998-2023, Planning
Washington;
2005
Commission; NIPS
2

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

*Population Census Organization; Population Projections 1998-2023, Planning

Commission; NIPS

t urtu
1..4
4. .5
5 The F
ure
fet ofI the
hestr
Indu
ndust
y
ry
The Pakistani economy is becoming increasingly service-oriented,
and over
the past
several
decades,
the foodservice industries that offer the highest
levels
of
convenience
have been rewarded with strong sales growth. In the face of rising
population, incomes
and schedules, a nearly insatiable demand for
increasingly
hectic work
convenience
will fast food sales. Fast Food Outlets will strive to find
continue
to drive
ways to make
products
even their
more
accessible.
Even if incomes stagnate or attitudes change, consumers are unlikely
to return to at
meal
preparation
home on a large scale. This suggests that even if
consumers
to for
spend
more
time choose
at home,
family or other reasons, much of the meal
preparation will still
occur
elsewhere.
Many more table service restaurants, which traditionally focus on
full-service
house
dining, will in
likely
try to capture part of this market by ofering takeout, and possibly
experimenting
with home
delivery.
The value of consumer time, as well as the demand for consistent,
high-quality
products,
willfood
continue to shape the fast food industry. Fast food,
once considered
a
novelty,
has become
an increasingly significant part of the young
generations
diet. The
role
of convenience
in this dietary shift cannot be over-emphasized,
and the future growth

Pre-Feasibility Study
Restaurant

Fast Food

of the rest of the foodservice industry will be driven in large part by its
abilitytotosave
find new
ways
consumers time.
sse ss tFas/
1..5
5
Key Succe
cto
orsti/ Plraictic
psss
sfcal Tip
cc
fo
o
r
S
u
cce
e
cc
ss
Whether you are opening a one-of-a-kind restaurant or trying to
grow your into
existing
restaurant
a multi-unit chain, there are winning principles that
can help shape
your
restaurant
and improve
its chances of
succeeding.
i) Conceive the Winning
Concept
A well-defined concept stands a much better chance of long
term success
than To start, it is wise to first set specific goals
some
vague notion.
and decide
onmeasure
the
ways
you will
your
restaurants success.
ii)
Longetivity
This can be described as the art of being able to maintain
success over
time while
adjusting
to meet
the changing demands and buying habits of
the customer.
To successfully and become profitable is one
open
a restaurant
thing,
but to over
maintain
that
success
a long period of time is
winning.
iii)
Consistenc
y To not simply open a restaurant, but to truly develop a winning
concept
requires
implementing
systems and procedures to ensure consistency
of your operation.
iv) Market
Appeal
All restaurants want to be busy but winning concepts seem to
havewell
a broad
appeal points of diference that enable them to
and
developed
dominate
theirTo be the first place the customer thinks of going
market
niche.
whenout
choosing
to of the winning
dine
is the goal
concept.
v)
Expandabilit
y Consistency of quality and service, and operating systems
and management
procedures
established in the first unit can result in more
expandable
opportunities
where
all systems
are already developed and waiting to
be implemented.
vi) Menu
Pricing
One of the most important factors in the strategic planning of a
restaurant is in
development
ofthe
the menu. It involves designing an appealing
selection of menu

PREF-11/December,
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Pre-Feasibility Study
Restaurant

Fast Food

items that are competitively priced in the marketplace. Menu

pricingtask
is abecause
very you need to price items so that you can
tricky
operate
profitably offer
and, your targeted guests a good
just
as important,
price/value relationship.
vii) Selecting Prime
Location
The specific location within your target area also is critical. If you
are situated in
an
infrequently
traveled
area no where near complimentary
businesses
or at
theyour
back
of
a mall, you
limit
earning potential. Even if you are the
only must
outletgauge
in town
you
the likelihood of outsiders visiting your
restaurant.
If the
restaurant
is
right of of
a major
freeway heavily traveled by truckers and
road be
trippers
may
highlyyou
successful despite a
remote location.
viii) Market
Research
This is probably the most critical factor for running a
successful fast
food to visit fast food outlets, franchises and
restaurant.
You need
otheryour
chains
to see would fit into the neighborhood you are
how
concept
planning
to target. to know their preferences, some detailed
Talk
to customers
meetings with
restaurant
managers / owners over dinner would do the trick
in obtaining
practices
andbest
critical information that otherwise could have
been overlooked.
Keep in mind that because a concept works in one area does
not
mean it will
well-received
bybe
customers in your location. Tastes are
subject to and
location
preference
more often target market. In high scale urban
areasetc.)
(likeyou
PECHS,
KDA
are more likely to be successful with a niche
concept income
than in aareas
dense(like Gulistan e Jauhar). Another thing
middle
to consider is
competition.
If your market is saturated with similar restaurants
and the
may
not population
be large enough to support more restaurants, you may
want to rethink your
conce
pt.
1..6
6
Props
o se
ed sB
i usin
ssnessl t t s
L
e
g
a
l
S
ta
a
tu
u
s
Although the legal status of business tends to play an important role
in any setup,
the business is assumed to operate on a sole
proposed
fast food
proprietorship
basis which
may of addition of new products that
extend
to partnership
in case
might add
business
to significant
the existing
setup.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

2 OPENIN
ENI NG A SUCCESSF
SSFUL
R
ESTAURANT
AURAN
From
burger Tstands to barbeque steakhouses more and more

restaurants
up in
cities
every are
day.popping
Since restaurants
are such a common business
venture, them.
peopleHowever,
must enjoy
running
all of those advantages come at a price building
a restaurant
from
scratch
is not an easy task. It is a hard and expensive process,
and
the
reality is that
many
restaurants
fail in their first year of business due to improper
planning. there
But rest
assured,
are ways to reduce the risk of becoming another
statistic.
Following
are that can help run a successful fast
some
of the
handy tips
food establishment.
t
2..1
1
How
otSta
tart ast
Howt to
Resta
auran t?
?
ik in
2..1
1. .1
1 Wro rk
n ast r t
R
estau
aura
n t best ways to reduce the risk of owning a failed
One
of a
the
is to have some
restaurant experience
before you start. Many successful restaurateurs
have way
saidto
that
the for owning a restaurant is by working in one,
best
prepare
hopefully
anyou'd
eaterylike to open. You'll learn more than just how to
similar to in
one
serve food
smile;
you with
can alearn restaurant marketing, menu development,
payroll, and
other
significant
components
of the restaurant world. Working in the
restaurant
learning
theindustry
basics isand
an important first step to
becoming an owner.
2..1
1. .2
2 Know Yrou rr Tatrg
gert t
M
a
rk
k
e
t
Who do you see eating at your restaurant? Are you targeting the family
crowd, teenagers
seniors?
Knowing or
your target market before you start planning will
not onlyyour
helpmenu;
you it will help determine your location, dcor and the
solidify
overall
of
your atmosphere
restaurant. A family-style restaurant, which caters to parents
and
their kids,
may
not appeal
to seniors.
On the other hand, an upscale, quiet restaurant
oferingexperience
a two-hourwouldn't be appealing to teenagers or families
dining
with small children.
tec t ar S
2..1
1. .3
3 Sl e le
vtic
cl e Sty
yle
e & Foodt
i e rv
Con
pt
Concetype
What
of restaurant do you see yourself owning? Typically, your

servicebe
style
will
either
fast-food,
which ofers food types that range from
burgers, fries,
soups and
sandwiches;
mid-scale,
which has full course meals at value prices; or
upscale,
ofering
full
service
meals with high-class ambiance and, in turn,
higher prices.
After narrowing your establishment to one of these three options,
you can
narrow
your Is there a particular type of cuisine that you see
style
of food
choices.
yourself
serving?
Dosoup? Sandwiches or Chinese? Choosing your food
you
prefer
pizza or
concept
goes
handin-hand with your choice in
service style.
l e lop
2..1
1. .4
4 Deve
op asi ss l
ev
B
u
sin
n
e
ss
P
lan
an
Like any other type of company, a restaurant will need a concise
business
plan. This
should
include
but isplan
not limited to: the overall concept and goal of the
restaurant; specific

PREF-11/December,
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Pre-Feasibility Study
Restaurant

Fast Food

financial information and projections; a description of the target

market; equipment
the menu and
pricing;
and employee details; advertising and marketing
plan; and a potential
exit
strategy.
2..1
1. .5
5 rC re
etat
te
e the
he Menu
t not
enu and
no

a mmenu
enu
nu can make or break a restaurant, and should be in
The

accordance
with
the overall
concept
of the
restaurant.
Revisit the business plan to make sure the
menu
is attractive
the
target
market, to
is affordable within specified budget, and
complements
theFor
restaurant's
design
concept.
example, if the restaurant is family-friendly, you
will need
menu.
If itaiskids
supposed to be an upscale establishment, a lot of thought
will dessert
have to go into
the
list.
2..1
1. .6
6 Choo
e a Ltiocation
hoso se
oca on & t
L
ut
ayo
Itayou
is important
to find a location that has a continuous stream of trafic,
convenient
parking,to other businesses (especially if you're catering to
and is in proximity
the
lunch crowd).
It the business plan to make sure you are close to
is
necessary
to revisit
yourare
target
market.
If food restaurant, it may not be the best idea to
you
opening
a fast
open
it in the
vicinity
of
upscale
homes
but preferably near flats. In addition, make sure that
the monthly
rent
is
in-line
with the
business
plan's projected profit so that you do not
become building-poor.
Once you find your location, the layout and design of the interior
should beYou
taken
intoalready have a concept of your restaurant in your
account.
should
business
plan;
bring
this
concept
into
the design of the dining room. When designing your
kitchen
area,
think
about what's on your menu in order to determine what is needed for
the food preparation
are
a.
2..1
1. .7
7 Gtti
e tting
ng
herApprop
ate
e
ri topria
i
t the
pp
F
unding
ng
undbusiness
The
plan will help you recognize how much money you will

need to start
your are unsure about how much money you will need
restaurant.
If you
upfront,
talking toowners can help you project your expected startother
restaurant
up costs. There
numerous
ways are
restaurateurs raise capital to start their business,
including taking
advantage
of government programs that cater to upstart small
business
liquidating
assets
or owners;
using them
as collateral for a loan; or encouraging a family
or friend to become
the
creditor.
2..1
1. .8
8 Be Faili
mil
aritWith
ety
yl ti s
r ia
fh tSafe
R
egula
a
tio
o
n
egu
s
Restaurants are regulated and subject to inspection, and failing to be up
to speed with
these
regulations
could
be detrimental to the fast food outlet. Therefore it is
necessary
to consult to become familiar with what one must do to
with
old restaurateurs
meet the necessary
legal
requirements.
iriiring
s
2..1
1. .9
9 H
ng l
E
m
p
loy
oye
e
e
One of thes biggest challenges restaurants face is a lack of qualified
labor.
In order
to get
and
retain
qualified
employees, make sure your pay scales relate
clearly to the job's duties

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

and responsibilities. In addition, find out what other restaurants are

paying
employees
so
that their
you can
be competitive in the job market, without spending
too muchtry
on linking
payroll.your payroll with the bottom line and see how
However
much
money
be
squeezed
out can
for the
employees.
2..1
1..10
10 Adve
ertise
e &r t
dv
rtis
Mark
ke
Every tbusiness needs a comprehensive marketing plan, and

restaurants
are no exception.
After
determining
your marketing budget, price out billboard
advertising, and
flyers
in cable TV advertising. Ask your customers how
newspapers,
local
they so
found
about
you,
thatout
you
can record where your advertising and marketing
money are
Opening
upbest
foodspent.
stalls and setting up tasting booths at local
neighborhood
events
having
an event
at theorrestaurant benefiting a students / event, can be
an achieve
inexpensive
wayword-ofto
positive
mouth.
sisin
2..2
2
Cho
ng a ti
Choo
Loc
c
a
tio
o
n
Lo
Not every food-service operation needs to be in a retail location, but
for thoseonthat
do trafic like fast food outlets, here are some factors
depend
retail
to consider
deciding
on awhen
location:
Anticipated sales volume. How will the location contribute to
sales volume?
your
Accessibility
to potential customers. Consider how easy it
willtobeget
for into
customers
your outlet. If you are relying on strong pedestrian
traffic, consider
whether
or not nearby businesses will generate foot
traficrent-paying
for you.
The
capacity of your business. If you've done
a sales-and-profit
projection for your first year of operation, you will know
approximately
how
muchto generate, and you can use that
revenue
you can
expect
information
to decide
how
much
rent you
can afford
to pay.
Restrictive
ordinances. You may encounter unusually
restrictive
that site less
make anordinances
otherwise strong
than ideal.
Trafic
density. With careful examination of food trafic, you
canapproximate
determine the
sales potential of each pedestrian passing a
given location.
Two important in this analysis: total
factors
are especially
pedestrian
trafic
business
hours
andduring
the percentage of it that is likely to patronize
your
food
service
busine
ss.
Visibility
is a locations ability to be seen and recognized.
Good
visibility
can
create
opportunities
for the impulse eating decision that is
critical for and
fastitfood
operators,
allows the exposure full-service
restaurantsparking
require. facilities. In case you allow for parking the
Customer
siteconvenient,
should provide
adequate parking as well as easy access
for customers.
Proximity
to other businesses. Neighboring businesses may
influence
your
volume,
andstore's
their presence can work for you or
against you.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

History of the site. Find out the recent history of each site
under
consideration
before
you make a final selection. Who were the previous tenants,
andlonger
why are they
no
there?
Terms of the lease. Be sure you understand all the details of
thepossible
lease, because
that an it's
excellent site may have
unacceptable
leasing terms.
Future
development.
Check with the local planning board to
seeplanned
if anything
is future that could affect your business, such as
for the
additional
buildings
nearby
or road
construction.

2..3
3
Deci id
d
ng o
he t
i in
t n th
Layou
u
Layo
t
Layout and design are major factors in your restaurant's success.
You'll need
take
into
account
theto
size
and
layout of the dining room, kitchen space, storage
space
and
counter.
Typically, restaurants allot 40 to 60 percent of their space to the dining
area,
approximately
30
percent
to the kitchen and prep area, and the remainder to
storage and ofice space.
Dining area. This is where you'll be making the bulk of your
money,
so don't
corners
when cut
designing your dining room. Visit restaurants in
your area
analyze
theand
dcor. Watch the diners; do they react positively to
the dcor? Isoritare people shifting in their seats throughout their
comfortable
meals?well
Note
what
works
and
what
doesn't.
Much of your dining room design will depend on your concept. It will
help 40
youtoto50know
that
percent of all sit-down customers arrive in pairs; 30
percent
come
alone
parties of three;
and or
20in
percent come in groups of
four or more.
To accommodate the diferent groups of customers, use tables for four
that can be
together
in pushed
areas where there is ample floor space. This gives
you flexibility inboth small and large parties. Place booths for four to
accommodating
six people along the
wall
s.
Production area. Too often, the production area in a
restaurant
is ineficiently
designed--the
result is a poorly organized kitchen and less than
top-notch
service.
Keep your menu in mind as you determine each element in the
production
You'll
need area.
to include space for receiving, storage, food
preparation,
cooking, production aisles, trash storage, employee
baking,
dishwashing,
facilities
anoffice where you can perform daily
area
for aand
small
management duties.
Arrange your food production area so that everything is just a few
steps Your
awaydesign
from the
cook.
should also allow for two or more cooks to be able to
work side
bybusiest
side
during
your
hours.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

2..4
4
Desisig
ginin
ng &
D
ecorcustomers ultimately drive restaurant design trends, many of
Since
your
ideasrestaurant
will come design
from your clientele. Successful restaurant design
ideas are bred of
with
understanding
thean
types of experiences your customers are looking
for and
the has
promise
your
brand
made to them. You may know what types of menu
items
theywhat
crave,
but do
you
know
kinds
of restaurant design ideas create an atmosphere
that will
welcome
them
time
and time
again?
Step One: The restaurant designers process begins with a
of the understanding
eaterys menu, location, customers, architectural
thorough
preferences
and than
lighting
concerns.
More
just a design powwow, the restaurant
designers
process
includes
budget
considerations, timelines and coordination with
city oficials
to building
secure
necessary
permits.
Step Two: The most effective restaurant design considers the
from
the kitchen
flow
of waiter
staf to the dining area or from the dining area to
the restrooms.
The
restaurant
designers
process contemplates the overall
circulation for
within
the
restaurant
maximum
eficiency
Step Three: With the floor plan in hand and a concept in mind,
restaurant
thethe
next
stage in designers process is interior design. Sketches
may depictfurniture
color
schemes,
placement, window treatments, artistic
lighting of
and
aspects
theother
ambiance. This is also the part of the restaurant
designers
process paints, wallpapers, foliage
where
we consider
and artwork.
2..5
5
Creatitin
ng a
M
enu menu variety has increased over the years, menus themselves
Though
are growing
shorter.
Busy
consumers
don't want to read a lengthy menu before dinner;
dining out isactivity,
a
recreational
so they're in the restaurant to relax. Keep your
numberand
of items
check
menu in
descriptions simple and straightforward, providing
customers
with a in a concise format. Your menu should also indicate
variety
of choices
what dishes
bespecial dietary requirements. Items low in fat,
prepared
to can
meet
sodiumalso
and be
cholesterol
should
marked
as such.
2..6
6
Rest
aura
t nit
sta
S
iz
ze depends to some extent on how you answered the fundamental
That
question
mentioned
above. For
the sake of discussion, a restaurant can be understood in
two parts;
the fronthouse
component
and the back-house component, which we will call the
engine.areas
The backhouse
include, the cook-line, the food preparation areas,
refrigerated
areas,
ofice any
anddry
thestorage
dishwashing area. The front-house functions
are typically
areas
(interiordining
and exterior), waiting area, to-go area, restroom, and
private dining areas.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

The speed of product delivery; the size of the engine, a casual or

formal atmosphere,
and want to accommodate will all factor in to the
numbers
of patrons you
amount
space
you
need
forofyour
restaurant.
The goal is trying to maximize the number
of
patrons
one
can
serve, out of the smallest most eficient backhouse possible.
s
2..7
7
Hiir
riin
ngt th
hei Rig
tght l
E
m
p
loy
oye
e
e
s
Choosing employees
who will do a good job is not only important to
the success
ofwill
your
business,
but
also contribute to the image of your establishment,
provided they are
properly
trained.
There are several categories of personnel in the restaurant
business:busboys,
manager,dishwashers
cooks,
servers,
and cleaners. When your restaurant
is
still
new,
some
employees' duties may cross over from one category to another. For
example,
your
may
double
as servers
the cleaners. Be sure to hire people who are willing to
be flexible in their
dutie
s.
Manager / Owner. The most important employee in most
manager. isThe
restaurants
thebest candidate is you or a person who has
already
managed
a
restaurant or restaurants
in the area and will be familiar with
local buying
suppliers
andsources,
methods. The manager should have leadership skills
and the ability
to
supervise
personnel
while reflecting the style and character
of the restaurant.
Chefs and cooks. When you start out, you'll probably need
time
and -one
three
cooks
twopart
full time. But one lead cook may need to arrive
early
in the
morning
to
begin
preparing
soups, bread and other items to be served that
day. One
full-time
cook
should
work days, and the other evenings. The part-time
cook will
helpsuch
during
peak
hours,
as weekend rushes, and can work as a line
cook during
slower
periods,
doing
simple preparation. Cooking schools can usually
provide
leads
to you
the with
best in the business, but look around and place
newspaper
ads beforewill become regulars only if they can
you
hire. Customers
expect
thedine
bestatevery
time
they
your restaurant. To provide that, you'll need
top-notch
cooks
and
chef
s.
Servers. The servers will have the most interaction with
soeq
they
make
and work well under pressure,
2 .9
9customers,
Leg
R
uir
reneed
mimpression
entto
Legaal favorable
s
meeting
the demands
of
customers
at several tables while maintaining a pleasant
demeanor.
arewait staff: very slow and very busy. Schedule
two
times ofThere
day for
your employees
accordingly.
The lunch rush, for example, starts around 11:30
a.m. 1:30
and continues
until
or 2 p.m. Restaurants are often slow again until the
dinner crowd
around
6:30 toarrives
7
p.m.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

Application
fordregistration
determination
of fair rates shall be
t st Food
2..8
8
A Good
Fsa
Resta
stand
tauranit
oo
ood
made
controller
E
xperto
ie
enthe
ce
Based
on
some surveys conducted with fast food goers following are
some
of the factors
that contribute
to a good fast food
experience:

Location
Characteristics
Food
Welcome
server
Environment (parking, restrooms,
Food.
lighting).
Dessert
Variety
Smile
Time
factor.
Profit factor (beverages offered, dessert
factor.
menus presented).
Measuring good service is subjective, but generally what is expected
from a server when
reviewing
restaurants.
The server should greet diners within 3 minutes of
their
The
server
should neat
being
seated.
andThe
clean.
server should not be too chatty
or familiar.
The server should know the menu and be able to
answer
The server
should bring drinks within 3 minutes of
questions.
being
Theordered.
appetizer (if any) should be served within 5
minutes
Entrees
be served within 20 minutes
of should
ordering.
of ordering.
Water or beverage glasses should be
refilled
The server
should silently survey the table and assess our needs
regularly.
interrupting
to ask, "Do you need
without
constantly
anything
else?"
The bill should be brought promptly when requested, and
returned
change
should be
promptly.
Plates should be removed at the proper time, and the table
bread
butterofbefore dessert
should
beand
cleared
is served.
.

ts

The Pakistan Hotels and Restaurant Acts Act 1976 is the law which
requires
owners of to register and obtain a license with the
all
types the
of restaurants
government.
The restaurant
owner
is required
apply to the controller for registration of
the restaurant.to

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant
Club Sand8

Fast Food
Soft Drinks (Regular)

15

in Form G together with a certificate of medical fitness in Form I

from a registered
medical
oficer of the civil hospital in respect of the staf of
the restaurant.
For registration of a restaurant, the owner of the restaurant is
required to
to the and comfort which standards have been
standard
of conform
health, hygiene
setthe
out in Schedule II
of
act.
On receipt of application, the controller will carryout inspection of
Burger
the
aforementioned
premises
and once satisfied will initiate the registration process. Once
Chicken
Burger
s
registered
the owner
of
the restaurant
will apply to the controller for license as per the Act
which needs
be basis for the
renewed
on ato
yearly
prescribed fee.
t
2..10
10 Proj jec
ect
tI
st
In
n
vestm
m
e
n
ve
t
This section will provide the total cost of
the project.
Item
(Rs.)
Construction Cost (all inclusive)
Dining
& Ofice Furniture
1,307,000
Equipment
& Machinery
542,250
Advance Rent
967,000
Preliminary
1,200,000 Expenses
Working
50,000 Capital
Total
1,036,000
5,102,250

PREF-11/December,
2006/

Cost

Pre-Feasibility Study
Restaurant

Fast Food

2..11
11 Props
o se
ed
t i
P
rodproposed
uct Mix
x project is assumed to provide customers with a variety of
The
fast
foodinitems
as
outlined
the following
menu:
Broast
Chicken Broast (Qtr.)
Chicken Broast (Half)
Chicken Broast (Full)

300 Customers
per

Chicken Cheese Burger

Beef Burger
Beef Cheese Burger
Zinger Burger
Sandwiches
Chicken Sandwich
Egg Sandwich
Beef Sandwich

Price
Price
65
75
125
140
250
75
Price
50
55
60
40
70
45
80
75
Price
Price
55
25
40
15
45
50

Chinese
Hot & Sour Soup (2 Servings)
Hot & Sour Soup (4 Servings)
Chicken Corn Soup (2 Servings)
Chicken Corn Soup (4 Servings)
Plain Rice
Middle
140
Chicken
Fried Rice
40
Income
80
Vegetable Fried Rice
Egg Fried Rice
Beef Fried Rice
Beef Chilli (w/o rice)
Chicken Chilli (w/o rice)
85
French
Fries (per plate)
Cole Slaw
Soft Drinks (Large)

Based on the above the fast food restaurant can offer low cost
combo meals
to its
customers
for increased
value. Following are the proposed combo deals
that
can
be
further
modified to meet increasing
demand:
Combos
Combo
Combo
Combo
Combo

Deal
Deal
Deal
Deal

1
2
3
4

Family Deal 1
Drink Deal 2
Family
Fries (2)
Jumbo
Deal
Rs. 1,000/-

Items
Price
Zinger Burger / French Fries / Regular Drink
105 Broast (Qtr.) / French Fries / Regular Drink
Chicken
90
Chicken
Burger, Broast (Qtr.), French Fries, Regular Drink
135 Club Sandwich / French Fries / Regular Drink
105
Full Broast / Zinger Burger / Club Sandwich / French Fries (4) / Large
535 Burger (2) / Club Sandwich (2) / Broast (Half) / Large Drink /
Zinger
515
5% discount on purchase above

It desirable to have a vast variety of food items to capture a larger

target audience
but
initially
the entrepreneur
needs to be careful in choosing the right
product
mix
that
has
the
greatest acceptability such that the sales volume generated are able
to cover
theand
initial
setup
costs
desired profit margins. Once the fast food restaurant
achievesfurther
a steady
sales
pattern
food
items like Barbeque can be added and similarly for
desserts
would
beice
thecream
best potential. In case circumstances demand items
other than
the proposed should make immediate changes to the
menu
the entrepreneur
menu before
he starts
loosing
out
customers.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

One important factor to consider here is that the entrepreneur must

have
the requisite
skills
to
decide
on whether
to introduce a new product line (like Barbeque,
Pizza)toorthe
addexisting
a new product line both of which might require the
item
purchase
of additional
kitchen equipment.
Hence the experience of the entrepreneur will play
an importantthe
rolecourse
in
determining
of
action.
2..12
12 Reco
ect t s
ecommendedj Prtoje
PaCapacity
ramete
er s
Human Resource
Equipment
da
y
Project Cost
Period
Rs. 5,102,250

Location
2
1
Financial
Summary
IRR
NPV

57%
Rs. 13,076,676
17.5%

Local /
American
Chine /
se
Payback
2.5 Years

Level
Area
Cost of
Capital
(WACC
)

2..13
13 Props
o se
ed ti
Loc
c
a
tio
o
n
Lo
The recommended area for the proposed business setup will be in a
denselyincome
populated
middle
area (for example Gulistan-e-Jauhar, Karachi). The main
reason for
a
location
is such
the presence
of target market and customer traffic which
are the
thesuccess
prerequisites
for
of the
restaurant.

3 MACHIIN
NERY &
I
E
QUIP
PMENT
Understanding
the customers individual needs and the capability

to satisfy these
completely
is a vital part of the restaurants success. This is in turn
dependent
on
machinery and the
equipment used to produce good quality fast food. Fast
Food Machines
easily
available are
in the market wherein the owner has to choose
between
expensive
brands
and cheaper ones depending
on how much he can afford to give
quality to his equipment
customers. of world leading brands such as SPINZER,
Secondhand
FRYMASTER,
HENNY PENNY, LINCOLN, AYRKING, KEATING, MIRROR,
CARPIGIANI,
LINCAT, MORRETTI, ILSA, ROUND-UP, SANYO, ELETTROBAR are available
while
cheaper Chinese brands have gained popularity over the years. The
machinesthrough
can beinternational vendors with a minimum delivery period
ordered
of 3 months /while
refurbished
reconditioned machines are also available. Some
outlets closing
their
business
also tend
to sell their machinery at low prices but the
durability
and
factor
must
be reliability
taken into consideration while buying
such machines.
The typical fast food restaurant as outlined above would require the
following machine
equipment
for its /
operations:

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Item Details
Price(Rs)
Freezers (12 cf)

Fast Food

Quantity Unit Price (Rs.)

New Broast Machine (15

Pound
Capacity
)*
Deep Well Frier (Single Valve
With 2
Basket
s) Plate for Burgers, Kebab,
Hot
Sandwiches
(30 x
22)
Bin Marry Soup Container (2
Valve With
Steel
Cabinet)
Potato Cutter (8mm)
Pillar (4.5 Kg Potato Peeling Capacity)
Microwave
Working Tables
Keg Racks & Shelves
Total

3
75,000
1
2
1
1
1
3,000
1
6,000
1
10,000
2
40,000
2
20,000
15
967,000

Total

25,000
650,000
650,000
40,000
80,000
33,000
33,000
50,000
50,000
3,000
6,000
10,000
20,000
10,000
-

* Available from Spinzer USA, Delivery Time Three Months, Reconditioned Available at
Rs. 200,000
withand
the
same specs
Delivery Time

i in
3..1
1
Mach
nery i t
ach
M
in
nte
enancerequire routine cleaning and maintenance after every
Allamachines
three
an costs around 1% to 5% of the total cost
annualmonths
serviceand
which
depending
upon
use of skill. We have assumed an average of 2.5%
the
machine
and the
operator's
of the
cost
asdepreciated
the annual
maintenance cost.
3..2
2
Diin
ni in
ng Fuit
rn itu
ure & Gel niertal s
F
ix
x
tu
u
r
e
s
The restaurant
is expected to entertain a minimum of 300
customers
in a seating
day, which
requires
a good
layout to avoid any confusion and problems
during rush
hours.
The the details of the dining tables and chairs
following
table
gives
that would serve
approximately
100 customers (maximum
capacity) at a time:

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Item Details
DiningPrice(Rs)
Table
Square
(2X2
)
Chairs (Standard 14)
Kitchen Cutlery Set
Dining Cutlery*
(Plate,
Fork, Knife, Spoon,
Glass)
Air Conditioner Split
Units
(6
Ton)
Hot Water Geyser Large

Fast Food

Quantity
25
100
150,000
2
5,000
150
2

1
20,000
Halogen Lights
25
6,250
Wall Lights (Large)
4
6,000
Portable Emergency Light 4
10,000
Generator (1.5 KVA)
1
90,000
Counter Chairs
2
3,000
Office Table & Chair Set
1
10,000
Waiting Chairs for
5
Take
Away
Customers
Total
322
542,250

Unit Price (Rs.)

Total

6,000
150,000
1,500
2,500
150
22,500
31,000
62,000
20,000
250
1,500
2,500
90,000
1,500
10,000
1,500
7,500
168,400

*Cutlery to be 1.5 times the maximum capacity (i.e.

100 customers)

4 LAND & BU
LD
NG
I IL
I ING
REQU
REMENT
EQUIR

t
i
4..1
1
Land
R
e
q
u
r
e
m
e
n
ir
t
The land requirement is around 2,000 sq.ft. in densely populated area
where
all utilities
and
facilities
are properly available. It is recommended that the fast
food
outlet
be
on the groundopened
floor of flats or shopping mall wherein the consumer
traffic will The
be amore the shop is near the main road the better sales
maximum.
potential it will have.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

t
4..2
2
Dedi ic
ctate
ed Area i
R
equ
ir
remspace
en t needs to be carefully allocated to allow for maximum
The
floor
dining
space
customers
in for
rush hours. The allocation of space between different
sections would be as
follow
s:
Detai
ls
Dining
Waiting
Kids Play
Kitchen
&
Preparati
on
Office
Stores
Total

Civil Works &

%
Siz
Dcor*
(Cost in Rs /
e
(Sq.
(Sq.
square
fee
Feet)
Feet)
t)
63 %
1,250
700
875,000
4%
80
700
56,000
3%
70
800
56,000
25 %
500
450
225,000
1.5%
30
450
13,500
3%
70
450
31,500
100 %
2,000
3,550
1,257,000

Total
Construction
Cost
(Rs)

* Includes interior decoration as well as fancy fittings,

lightings, hangings etc.

4..3
3
Reco
ecommended
M
o
d
e
The proposed premises will be acquired on a rental basis with 6
month deposit
months
advanceand
rent6 after which rent will be payable on a monthly
basis.
The monthly
is
approximately
Rs.rent
50/ Sq Feet for the ground floor which would
amount
to for
Rs. the
100,000
per
month
proposed fast food outlet
(2,000 Sq Ft.)
4..4
4
Receti
p tion & Ownffi
er
O
ce
Tofic
allow
for maximum space for dining and security concerns
(Cash control) that
it is the owner should manage the reception counter
recommended
as well as
all cash from the tables. Therefore a total of Rs. 50,000
handling
emanating
would
be reception
required to
erect the
and cash counter along with the take-away
order taking booth.
The Ofice Furniture & Equipment will be depreciated at the rate of
10% per annum
according
to the diminishing balance method for the
projected period.

5 HUMAN RESO
I
ESOURCE
RCE
R
EQU
UIR
REMEresource
NT
EQhuman
The
requirement for the general and management
staf are as follows:

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

Designation / Type
Owner
Number

Kitchen Supervisor

2
12,000
3

Shift
Supervisor
(including
reliever)
Cook
Servers
Take Away Order
Taker
/
Cashie
Dishwasher
r
Cleaner
Guard (12 Hour)
Total

4
16,000
6
18,000
1
2
5,000
1
2,500
1
6,000
21
89,500

Monthly
Salary
(Rs
.)-

Total
Salary
(Rs
.)-

6,000
8,000
24,000
4,000
3,000
6,000
6,000
2,500
2,500
6,000
38,000

Considering the size of the proposed establishment it is assumed that

the owner would
be afairs of the fast food setup. He will be
managing
the overall
required
to
process
check bills, invoices,and
receivables management, maintain accounts,
etc. forwill
record.
The safe custody of
owner
also ensure
store keys.
The cashier will only be responsible for receiving payment and handing
overowner
change
whilebe managing the cash drawer for control purposes. It
the
would
is important
to note
that
many food
outlets tend to lose out due to inadequate cash
control by during
the owners
especially
rush hours where the counter staf can easily slip
out one or two
paymen
ts.

6 FIIN
NANCIA
S&
ANCI AL ANALYISIS
I
K
EY project
ASSUMP
TIO
ONS
The
cost
estimates for the proposed fast food outlet have

been of
formulated
on with
the relevant stakeholders and experts. The cost
basis
discussions
projections
cover
the inventory, equipment including ofice furniture
cost
of land,
building,
etc. The specific
assumptions
relating to individual cost components are
given as under:
6..1
1
Revenue & st
Co stj ti s
P
roje
e
ctio
onare
s expected to increase by 15% every year while the cost
The
Sales
of raw materials
is
assumed
to increase
by 10%. The 15% annual increase in revenue is
expected
toincrease
result in population increase and part increase
from
a part
in product price.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

The prices used to calculate the gross revenue earned are based on the
billing
rate at which
the
entrepreneur
will charge the customer. The prices are also
inclusive
of
the
General
Sales
Tax.
Furthermore it is assumed that the following sales breakup will form
the the
revenue
streams
for
fast food
outlet
Dine In

Revenue Stream
Sales

% of Total

60%
Take Away
20%
Home Delivery
20%
Total Revenue
100%

The minimum delivery order size is assumed to be Rs. 250/- per

order with
delivery at the charge out rate of Rs. 25 per delivery
riders
being3 employed
order wherein fuel
no is provided by the fast food outlet. For Take Away
transportation
and Home
another
1%Delivery
of sales added cost due to
packing is assumed.
6..2
2
Rentt st
C
o strent for the assumed premises will be Rs. 100,000/- per month. It
The
is
assumedwill
thatbeRs.
1,200,000
given in advance before possession of premises.
This willdeposit
includeand
6 6 month advance rent. The rent would be payable
months
on
basis
andaismonthly
expected
to increase at the rate of 10% per annum for
the projected period.
t
6..3
3
Utiliti
ses i
tilitie
R
equ
ir
remen ttable presents the assumed breakup of utilities on
The
following
a monthly basis:
Utility
Monthly Charges
(Rs.)
Electricity
Water
25,000
Gas
2,000
Telephone
15,000
Total
10,000
52,000

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

As depicted above the most of the fast food machines require

considerableprocess.
gas during
preparation
Thethe
preheating procedure of the equipment
before
commencement
of
preparation also consumes considerable gas. It is assumed that
utilities expenses
increased
by 10% will be
every year.
6..4
4
Depreictiia
a tio
on on
din
ngi & t
il B
i uild
E
quip
pmen t on Shop, Equipment, Machinery and Fixtures is assumed
Depreciation
to beper
at the
ratebased
of
10%
annum
on the diminishing balance method for the
projected period.

itplita
6..5
5
Work
ng Ca
al & Pre ti
sts
Worki in
O
atin
ng Cost
s an additional amount of approximately Rs.
It piserestimated
that
1,036,000
will betorequired
as cash in hand
meet the working capital requirements /
contingency
cash for the is
initial
stages.
The requirement
based on the rent, utilities and salaries
expenses
for3at
least
four
months
and
days
raw
material inventory. The following table
gives the break up.
Utilities

Item
(Rs.)

4 Months Cost

Salaries
208,000
Raw
Material Inventory
358,000
70,000
Rent
400,000
Total
1,036,000
The provision for pre operating costs is assumed to be Rs. 50,000 which
will
be amortized
equally
over a 5 year
period.
6..6
6
Acco
ccoutn t i l s
R
vab
bwill
le
e s be made strictly on cash basis. It is not advisable to
ece
Alleceiva
sales
operate a fast
food
restaurant
on credit
basis.
6..7
7
Mis
cll
e lla
aneou
et s s
s ustlO
t utle
isc
eo
E
x
p
e
n
se
e
A monthlys figure of Rs. 6,000 (200 per day) is assumed to be incurred
for miscellaneous
expenses
which are expected to increase at the rate of 10% per
annum for the projected
perio
d.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

s
6..8
8
Fiin
nanicia
lal
Cha
ge s
Chisarassumed
It
that long-term financing for 5 years will be obtained in
order
to
finance
the would mainly include construction & dcor of
fast food setup which
Building, Purchase
of
machinery
& equipment,
purchase of inventory etc. This facility would
be required
a
rate
of 15% at
(including
1% insurance premium) per annum with 60
monthly
installments
over
a period
of five years. The installments are assumed to be paid
at the end of every
mont
h.
6..9
9

ti

The tax rate applicable to sole proprietorship is the same as that of the
T
axa tio
on
salaried
individual.
Therefore,
we are assuming that the tax rate would be the same for
the proposed fast food
setu
p.
6..10
10 Cost
st fof it l
C
apita
a l of capital is explained in the
The
cost
following table:
Particulars
Required return on equity
20.0
Rate
%
C
ost of finance
15.0
%
Weighted average cost of capital
17.5
%
The weighted average cost of capital is based on the
debt/equity ratio of 50:50.
l
6..11
11 Ownes
rs it
W
ithd
hdr
rawa l that the owner with withdraw from the business once the
It is
assumed
desired
profitability
is reached
from the start of operations. The amount would
depend on business
sustainability
and availability of funds for
future growth.

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

6..12
12 Key ss
A ssu
umptio
on s

ti s
Item

Sales Increase
15 % per
Assumption(s)
year
Increase in Cost of Raw Materials
10 % per
year
Increase in Staf Salaries
10 % per
year
Increase in Utilities (Electricity / Water / 10
%
per year
Gas
)Increase in Rent
10 % per
year
Increase in Ofice Expenses
10 % per
year
Debt / Equity Ratio
50 :
50
Depreciati
on
o Shop Building & Fixtures
10 % per annum (Diminishing
Balance)
o Kitchenware & Machinery
10 % per annum (Diminishing
Balance)
o Furniture
10 % per annum (Diminishing
Balance)
Equipment Annual Maintenance Cost 2.5% of Written Down
Value
Raw Food Inventory - Meat
3
Days
Raw Food Inventory Spices & Sauce 7
Days
Lease Period
5
Years
Lease Installments
Financial Charges (Lease Rate)
15 % per
Monthly
annum
Tax Rate
Income Tax on Salaried
Individuals

PREF-11/December,
2006/

Pre-Feasibility Study
Restaurant

Fast Food

INCOME
STATEMENT:
FAST FOOD
RESTAURANT
Projected Income Statement (Rs.)
10

Year 1

Revenue
30,636,726 35,232,235
Net Sales
30,636,726
35,232,235
Raw Material
Cost
11,577,855
Labor & Salaries
Utilities
Cost of Sales
15,581,650
Gross Profit
19,650,584
General Administrative & Selling
Expenses
Rent Expense
Office & Miscellaneous Expenses
Amortization Expenses
Depreciation Expense
Maintenance Expense
Subtotal
Operating Income
16,533,738
Financial Charges (15% Per Annum)

10,015,200

Earnings Before Taxes

16,533,738
Tax
Net Profit
12,400,304
Monthly Profit After Tax

1,463,788 2,267,936 3,225,164 4,363,233 5,714,406 7,273,955 9,044,386 11,139,359 13,614,348

365,947
566,984
806,291 1,090,808 1,428,602 1,818,489 2,261,097 2,784,840 3,403,587
4,133,435 1,700,952 2,418,873 3,272,425 4,285,805 5,455,466 6,783,290 8,354,519 10,210,761
1,097,841

PREF-11/December,
2006/

Year 2

Year 3

11,517,480

Year 4

13,245,102

Year 5

15,231,867

Year 6

17,516,647

Year 7

Year 8

20,144,145

Year 9

23,165,766

Year

26,640,631

10,015,200 11,517,480 13,245,102 15,231,867 17,516,647 20,144,145 23,165,766 26,640,631

4,910,141 5,401,155 5,941,270 6,535,397 7,188,937 7,907,831 8,698,614 9,568,475 10,525,323
1,074,000 1,181,400 1,299,540 1,429,494 1,572,443 1,729,688 1,902,657 2,092,922 2,302,214
2,532,436
624,000
686,400
755,040
830,544
913,598 1,004,958 1,105,454 1,215,999 1,337,599
1,471,359 7,268,955 7,995,850 8,795,435 9,674,979 10,642,477 11,706,725 12,877,397 14,165,137
6,608,141
3,407,059 4,248,525 5,249,252 6,436,432 7,841,668 9,501,668 11,459,042 13,763,234 16,471,589

1,200,000
2,829,537
72,000
169,772
10,000
281,625
109,107
21,758
8,429
1,585,383
3,116,846
1,821,677

1,320,000
79,200
10,000
253,463
19,582
1,682,244
2,566,281

1,452,000
87,120
10,000
228,116
17,624
1,794,860
3,454,392

1,597,200
95,832
10,000
205,305
15,861
1,924,198
4,512,234

357,889

298,344

229,228

149,001

91,487
141,746
1,033,359

201,573

272,702

1,756,920 1,932,612
105,415
115,957
10,000
0
184,774
166,297
14,275
12,848
2,071,384 2,227,713
5,770,284 7,273,955
55,878

357,150

454,622

2,125,873 2,338,461 2,572,307

127,552
140,308
154,338
0
0
0
0
149,667
134,700
121,230
11,563
10,407
9,366
2,414,655 2,623,875 2,857,241
9,044,386 11,139,359 13,614,348
0

565,274

696,210

850,897

Pre-Feasibility Study
Restaurant

Fast Food

BALANCE
SHEET:
FAST FOOD
RESTAURANT
Projected Balance Sheet (Rs.)
10
Asset
s Current
AssetsCash & Bank Balance
Prepaid Rent
Total Current Assets
Fixed
Assets
Fast Food Machinery
Shop
Office Fixtures
Total Fixed Assets
Preliminary Expenses
Total Assets
Owner's Equity
Long Term Liability
Total Equity & Liabilities

PREF-11/December,
2006/

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year

1,036,000 2,055,062 3,589,528 5,747,452 8,655,889 12,464,053 18,085,816 25,018,772 33,507,992 43,839,983
56,349,394 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
1,200,000
1,200,000
1,200,000
1,200,000
1,200,000
1,200,000 3,255,062 4,789,528 6,947,452 9,855,889 13,664,053 19,285,816 26,218,772 34,707,992 45,039,983
2,236,000
57,549,394
967,000
337,172
1,307,000
455,723
542,250
189,071
2,816,250
981,966
50,000

870,300
1,176,300
488,025
2,534,625

783,270
1,058,670
439,223
2,281,163

704,943
952,803
395,300
2,053,046

40,000

30,000

20,000

634,449
571,004
857,523
771,770
355,770
320,193
1,847,742 1,662,967
10,000

513,903
694,593
288,174
1,496,671

462,513
625,134
259,356
1,347,004
-

416,262
562,621
233,421
1,212,303

374,636
506,359
210,079
1,091,073
-

5,102,250 5,829,687 7,100,690 9,020,498 11,713,631 15,327,020 20,782,486 27,565,776 35,920,295 46,131,056
58,531,360
2,551,125 3,648,966 5,349,918 7,768,791 11,041,216 15,327,020 20,782,486 27,565,776 35,920,295 46,131,056
58,531,360
2,551,125 2,180,721 1,750,772 1,251,707 672,415
0
0
0
0
0
5,102,250 5,829,687 7,100,690 9,020,498 11,713,631 15,327,020 20,782,486 27,565,776 35,920,295 46,131,056
58,531,360

Pre-Feasibility Study
Restaurant

Fast Food

CASH FLOW
STATEMENT:

FAST FOOD
RESTAURANT
FAST&
FOOD
Cost
Revenue
RESTAURANT
Sheet

30
0 Sales
Broast
Cost
Price
Unit
Total Cost Total Sales
Projected
Statement
Cash Flows
1
Year2340
2
Year 3
Sales
Chicken Broast
(Qtr.) of 35
65 (Rs.)
36Year 00.12 Year
1260
10
450
Chicken Broast (Half)
70
125
18
0.06
1260
2250
Cash
Flow
From
Operating
420
Chicken
Broast
(Full)
140
250
6
0.02
840
1500
Activities
450
Net Profit
0
1,097,841
2,418,873
Burgers
Cost
Price
Unit Sales
Total Cost1,700,952
Total Sales
12,400,304
Add: Depreciation
Expense
253,463
120
Chicken
Burger
20
50
24 0
0.08 281,625
480
1200 228,116
109,107
Expense
10,000
960
ChickenAmortization
Cheese Burger
25
55
36 0 0.12 10,000
900
1980 10,000
360
Beef Burger
18
40
18
0.06
324
720
Net Cash Flow From Operations
0
1,389,466 1,964,415 2,656,989
210
Beef Cheese Burger
23
45
18
0.06
414
810
12,509,411
240
Zinger Burger
40
80
24
0.08
960
1920
Cash Flow From Financing
450
Activities
Sandwiches
Cost
Price
Unit Sales
Total Cost Total Sales
Receipt
of Long Term Debt
Sales
Chicken Sandwich
20
55
21
0.07
420
1155
Repayment of Long Term Debt
(370,404) (429,949) (499,065)
125
Egg Sandwich
12
40
6
0.02
72
240
2,551,125
Owner's Equity
75
Beef Sandwich
20
45
3
0.01
60
135
500
Club
Sandwich
35
80
30
0.1
1050
2400
2,551,125
Net Cash Flow From Financing Activities
5,102,250 (370,404) (429,949) (499,065)
5625
TOTAL
8040
16650
11170
Cash Flow From Investing
Activities
Daily Monthly Additional
Construction Cost
Total
(Rs)
27,820 Final
834,600
Office Sales
Furniture
834,600 404,340
(1,307,000)
Total
Cost (Rs.)
13,478
4,838
Equip RM
& M/C
409,178
(967,000)
Gross
Profit
14,342
430,260
425,422
Advance
Rent(Rs.)
(542,250)
Preliminary Expenses 0.509731129
(1,200,000)
(50,000)
Sales
Break
Down
Orders Value
(Rs) Packing
Cost
Delivery
Cost 0Add
Net
Cash
Flow
From Investing
Activities
(4,066,250)
0

Cost
Daily Basis
Order
NET CASH FLOW
Dine In (60%)
Take Away (20%)
Delivery (20%)
Cash at the Beginning
Total

1% of Sales

180
500,760
60
166,920
1,669 166,920
60
3,169
of
300
the Period
834,600
4,838

PREF-11/December,
2006/

25 /

Chinese

Cost Price Unit Sales

6Year 80.02
Hot & Sour Soup (4 Servings)
50 140
3
0.01
Chicken Corn Soup (2 Servings) 25
75
6
0.02
Chicken Corn Soup (4 Servings) 50 140
3
0.01
3,272,425
8,354,519
4206,783,290
Plain Rice 4,285,805 5,455,466 12
40
3
0.01
205,305
184,774
166,297 20 149,667
134,700
Chicken Fried
Rice
80
12
0.04
10,000
10,000
0
0
Vegetable Fried
Rice
18
60
6 0 0.02
Egg Fried Rice
18
70
3
0.01
3,487,729 4,480,579 5,621,763 6,932,957 8,489,220
Beef Fried Rice
20
80
3
0.01
Beef Chilli (w/o rice)
30
75
6
0.02
Chicken Chilli (w/o rice)
35
85
9
0.03
765 Price Unit Sales
Cost
French Fries (per plate)
8
25
5
(579,292) (672,415)
0
0
0
Cole Slaw
6
15
5
Soft Drinks (Large)
40
50
10
Soft Drinks (Regular 250ml)
9
15
375 0
(579,292) (672,415)
0
0
TOTAL
Year
Year 6 25 Year
Hot &4 Sour Year
Soup 5
(2 Servings)
75 7

1,036,000 1,019,062 1,534,466 2,157,924 2,908,437 3,808,164 5,621,763

12,509,411
-

1,669
1,669
3,3380

0
6,932,957

0
8,489,220

Total Cost Total

Year
Year
150 9
150
150
150
10,210,761
36
121,230
240
0
0
108
54
10,331,991
60
180
315
Total Cost Total
40
0
0
30
400
3375
0
0
5438

0
10,331,991

1,500
1,036,000
1,500 2,055,062 3,589,528 5,747,452 8,655,889 12,464,053 18,085,816 25,018,772 33,507,992

43,839,983