Restaurant Business Analysis and

Feasibility Study

BUSINESS
FEASIBILITY
STUDY
Table of Contents

1. Executive Summary........................................................................................................................2
2. Project Profile..................................................................................................................................2
2.1 Product List..............................................................................................................................2
2.2 Additional service.....................................................................................................................2
2.3 Business Ownership.................................................................................................................2
2.4 Location.....................................................................................................................................2
2.5 Area...........................................................................................................................................2
2.6 Employees.................................................................................................................................3
3. Finances...........................................................................................................................................4
3.1 Capital Requirements..........................................................................................................4
3.2 Overall Project Analysis.......................................................................................................4
4. Annexures........................................................................................................................................5
5. Financial Statements......................................................................................................................6
6. Key Assumptions.............................................................................................................................8
 1. Executive Summary

The overall objective of this feasibility report is to tell you that what type of business I am planning to start in the
future and how much capital and Operating expenses would be required to start that business. Furthermore if this
business is started then how much profit can be generated so that I can easily pay off my debt amount including
interest fee.
The objective of starting my own small business is that, I want to be self-employed so that I shall not be
dependent upon anyone else and furthermore as I am jobless at the moment it would help me to support my
family and meet my daily life needs. I have an experience more than 7 years’ experience of fast food industry. I
am confident that I would be able to run my fast food business successfully and efficiently in the future.

2. Project Profile

2.1 Product List

In order to start the fast food business, there are needed to offer some products to the customers. I have planned
to offer the following products to customers for my fast food business:

Sr. Product Name Price (PKR)

1 Chicken Burger 200
2 Zinger Burger 250
3 Beef Burger 300
4 Chicken Sandwich 200
5 Club Sandwich 250
6 Small Pizza 250
7 Medium Pizza 550
8 Large Pizza 770
9 Soft Drinks 30
10 Fried Chicken 200
11 Regular Fries 100
12 Small Shawarma 80

13 Large Shawarma 120

2.2 Additional service

I am planning to offer a home delivery service along with the dine inn and take away in the future as well.

2.3 Business Ownership

This business will wholly owned by me and will be sole proprietorship.

2.4 Location
I have made an extensive research on location where the fast food restaurant should be opened and I have come
to the decision that if I will open my restaurant in the future then the best place from business point of view will be
Johar Town. I have analysed that the demand for fast food business in johar town is high.

2.5 Area
The estimated area of the restaurant taken on rent will be 14X14 Square Meter. The rental to be paid will be
70,000 Rs.
 2.6 Employees

The estimated number of employee’s required to run this business is as follows:

Sr. Employee Type Number Salary/Person Total

Salary
1 Chef 1 30,000 30,000
2 Helper Boy 3 18,000 54,000
3 Sweeper 2 12,000 24,000
4 Waiters 5 15,000 75,000
5 Manager 1 30,000 30,000
6 Cashier 1 15,000 15,000
 3. Finances

3.1 Capital Requirements

This section will provide you with the view of total cost of a project.

Description Amount (Rs.)

Capital Cost
Renovation Cost 385,000
Machinery & Equipment 639,000
Furniture and Fixtures 52,000
Pre Operating Expense 30,000
Total Capital Cost 681,000
Working capital
Raw Material 450,000
Cash 50,000
Rent 70,000
Salaries 228,000

Total Working Capital 798,000

Total Project Cost 1,479,000

3.2 Overall Project Analysis

Initial
Human
Capacity Capacity Equipment Location
Resourced
Utilization
300 Customers Per Middle to High Income Level
0.6 14 New
Day Area
Financial Summary
Project Cost IRR NPV Payback Period Cost of Capital
1,356,000 130% 7,799,084 0.8 6%

As the calculated Net Present Value is positive with a great amount so I am hopeful that my project will be
successful in near future if setup properly as discussed. I am very much hopeful that it will be a profitable
business.
 4. Annexures

4.1 Annexure-1

Sr. Description Cost

1 Tiles 30,000
2 Paint 20,000
3 Blower Fan 30,000
4 Exhaust fan 5,000
5 Cabins 30,000
6 Wiring 10,000
7 Fancy Lights 10,000
8 Ceiling Work 20,000

Total 155,000

4.2 Annexure – 2

Sr. Description No. Cost Total Cost

1 Fryer 2 60,000 120,000
2 Pizza Owen 1 70,000 70,000
3 Hot Plates 1 20,000 20,000
4 Sandwich Maker 2 2,000 4,000
5 Breading Tables 1 15,000 15,000
6 Dressing Table 1 15,000 15,000
7 SEW's 1 65,000 65,000
8 Freezer 2 50,000 100,000
9 Microwave Owen 1 15,000 15,000
10 Computer 1 15,000 15,000
11 Printer 1 10,000 10,000
11 Generator 1 25,000 25,000
12 Crockery 50 400 20,000

Total 65 362,400 494,000

4.3 Annexure - 3

Sr. Description No. Cost Total Cost

1 Tables 4 5,000 20,000
2 Chairs 12 1,000 12,000

Total 16 6,000 32,000

 5. Financial Statements

Statement of Comprehensive Income

FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 FY-2023 FY-2024 FY-2025 FY-2026 FY-2027
Sale 10,800,000 11,880,000 13,068,000 14,374,800 15,812,280 17,393,508 19,132,859 21,046,145 23,150,759 25,465,835
Cost of Sales (8,976,000) (9,549,600) (10,480,320) (11,530,764) (12,686,254) (13,957,293) (15,355,438) (16,893,399) (18,585,157) (20,446,092)
Gross Profit 1,824,000 2,330,400 2,587,680 2,844,036 3,126,026 3,436,215 3,777,421 4,152,746 4,565,602 5,019,743

Other Expenses
Admin Exp 96,000 100,800 105,840 111,132 116,689 122,523 128,649 135,082 141,836 148,928
Electricity Exp 120,000 128,400 137,388 147,005 157,296 168,306 180,088 192,694 206,182 220,615
Travelling Exp 18,000 19,440 20,995 22,675 24,489 26,448 28,564 30,849 33,317 35,982
Communication Exp 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729 18,616
Office Exp 60,000 63,600 67,416 71,461 75,749 80,294 85,111 90,218 95,631 101,369
Professional Fees 5,000 5,100 5,202 5,306 5,412 5,520 5,631 5,743 5,858 5,975
Depreciation Exp - 54,600 60,060 66,066 72,673 79,940 87,934 96,727 106,400 117,040
Promotional Exp 50,000 53,500 57,245 61,252 65,540 70,128 75,037 80,289 85,909 91,923
Miscellaneous expense 50,000 53,500 57,245 61,252 65,540 70,128 75,037 80,289 85,909 91,923
Total Other Expenses (411,000) (491,540) (524,621) (560,041) (597,972) (638,601) (682,131) (728,776) (778,772) (832,371)
Net Profit Before Tax 1,413,000 1,838,860 2,063,059 2,283,995 2,528,054 2,797,613 3,095,290 3,423,970 3,786,830 4,187,373
Tax (282,600) (367,772) (412,612) (456,799) (505,611) (559,523) (619,058) (684,794) (757,366) (837,475)
Net Profit After Tax 1,130,400 1,471,088 1,650,447 1,827,196 2,022,444 2,238,091 2,476,232 2,739,176 3,029,464 3,349,898

Statement of Comprehensive Income

FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 FY-2023 FY-2024 FY-2025 FY-2026 FY-2027
Balance Brought Forward -
1,130,400 2,601,488 4,251,935 6,079,131 8,101,575 10,339,665 12,815,897 15,555,073 18,584,537
Total Profit Available
1,130,400 1,471,088 1,650,447 1,827,196 2,022,444 2,238,091 2,476,232 2,739,176 3,029,464 3,349,898
Balance Carried Forward 1,130,400 2,601,488 4,251,935 6,079,131 8,101,575 10,339,665 12,815,897 15,555,073 18,584,537 21,934,435
 Statement of Financial Position

FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 FY-2023 FY-2024 FY-2025 FY-2026 FY-2027
Current Assets
Cash & Bank 649,000 3,056,638 4,496,763 6,096,034 7,871,514 9,841,826 12,027,309 14,450,187 17,134,749 20,111,342
Accounts Receivables 10,000 10,500 11,025 11,576 12,155 12,763 13,401 14,071 14,775 15,513
Short Term Inventory 45,000 47,250 49,613 52,093 54,698 57,433 60,304 63,320 66,485 69,810
Raw Material Inventory 500,000 575,000 661,250 760,438 874,503 1,005,679 1,156,530 1,330,010 1,529,511 1,758,938
Sub-Total 1,204,000 3,689,388 5,218,650 6,920,141 8,812,870 10,917,700 13,257,545 15,857,588 18,745,520 21,955,603

Fixed Assets
Machinery and Equipment 449,000 404,100 363,690 327,321 294,589 265,130 238,617 214,755 193,280 173,952
Furniture and Fixtures 97,000 87,300 78,570 70,713 63,642 57,278 51,550 46,395 41,755 37,580
546,000 491,400 442,260 398,034 358,231 322,408 290,167 261,150 235,035 211,532

Total Assets 1,750,000 4,180,788 5,660,910 7,318,175 9,171,101 11,240,108 13,547,712 16,118,738 18,980,556 22,167,135

Current Liabilities
Accounts Payable 150,000 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699
Sub-Total 150,000 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699

Other Liabilities
Long Term Loan 1,600,000 1,421,800 1,243,600 1,065,400 887,200 709,000 530,800 352,600 174,400 -
Sub-Total 1,600,000 1,421,800 1,243,600 1,065,400 887,200 709,000 530,800 352,600 174,400 -

Equity
Retained Earnings - 2,601,488 4,251,935 6,079,131 8,101,575 10,339,665 12,815,897 15,555,073 18,584,537 21,934,435
Sub-Total - 2,601,488 4,251,935 6,079,131 8,101,575 10,339,665 12,815,897 15,555,073 18,584,537 21,934,435

Total Liabilities and Equity 1,750,000 4,180,788 5,660,910 7,318,175 9,171,101 11,240,108 13,547,712 16,118,738 18,980,556 22,167,135
 6. Key Assumptions

Key Assumptions
Description Per Year
Raw Material 10%
Rent 10%
Wages 10%
Sale 10%
Admin Exp 5%
Electricity Exp 7%
Travelling Exp 8%
Communication Exp 5%
Office Exp 6%
Professional Fees 2%
Machinery and Equipment 10% (Reducing Balance Method)
Furniture and Fixtures 10% (Reducing Balance Method)
Miscellaneous expense 5%