Professional Documents
Culture Documents
DIPLOMA IN ACCOUNTANCY
YEAR II
STREAM: A
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7.4 Break-Even Analysis......................................................................................................21
7.5 Projected Profit and Loss...............................................................................................22
7.6 Projected Cash Flow...................................................................................................... 23
7.7 Projected Balance Sheet.................................................................................................24
7.8 Business Ratios.............................................................................................................. 25
8.0 References....................................................................................................26
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1.0 Executive Summary
Cinnamon’s Grill is a new eating establishment that will provide moderate entrees. Will be
a moderately priced 60 seat restaurant offering family style varieties of food and service.
We will offer wide range of delicious authentic Indian grilled cuisine. Our menu perfectly
combines the ancient traditions and authentic flavors of India and fuses it with a
contemporary ethnic edge as well as our signature lamp chops. The restaurant will be
family owned and operated by brothers Ahmed and Sameer. Together they have over 10
year’s collective years’ experience in the restaurant and catering industry.
Sales projections assume 1700 customers per week resulting in weekly sales of just over
300,000 Tshs or 750,000 Tshs annually. This equates to around 6,000,000 Tshs per square
foot in sales annually which positions Cinnamon’s Grill as a highly desirable concept for
ownership in a table service market where 4,000,000 Tshs to 6,500,000 Tshs per square foot
is considered moderately profitable and therefore a good investment. Total startup costs will
be 6,000,000 Tshs and 2,000,000 Tshs of which will be contributed by the owners and the
remainder will be secured by a proposed bank loan.
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2.0 Company Summary
Cinnamon’s Grill will be located at Magomeni Usalama, Dar es salaam. The restaurant will
be wholly owned and operated by Ahmed and Sameer. The restaurant will serve a variety
of delicious authentic Indian grilled cuisine and grilled meat includes a long list of all kinds
of meat including chicken wings, lamb, chop, octopus, sausages, salmon, and many more.
The restaurant will be open 6 days a week with hours as follows:
2.1 Ownership
Will be jointly owned by Ali and Ahmed. Ahmed began his restaurant career at the age
of 15 working in a quick-service food service operation and earned his way at college
as a server and bartender. After earning his degree, he worked for a regional Grill chain
restaurant and an independent fine dining restaurant. In these organizations he held the
positions of F&B Assistant Manager and then Manager.
With the high turnover of help for startup restaurants, we will rely on family to fill in
where required until we are off the ground and making a profit.
Tshs4,000,000 of the start-up costs will be funded by the owners. The owner’s source
of funds is a combination of liquid assets and marketable securities, primarily from
their existing catering business.
2.3 Location and Facilities
The 2,500 square foot restaurant will be located in Magomeni Usalama and the
restaurant will feature a comfortable and open concept design. The restaurant is located
in a major traffic area, at the intersection of Kawawa road and Morogoro road
highway. The market has been carefully selected and tested for the necessary
demographics and retail traffic necessary to meet the goals laid down for profitability.
The busy Midtown commercial/residential location has been chosen based upon a
successful demographic model and a traffic count
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Magomeni area has a population of over 49,000 according to projection census of
2017. The residential population in the immediate area is comprised of a mixture of
single family and multi-family housing. The medium household income is
Tshs500,000. The target demographic is both men and women between the ages of 25
to 65 years old. Generally, these individuals have more disposable income than
younger individuals
The restaurant layout, including the dining room, kitchen and serving line, has been
designed for efficiency and flexibility to accommodate the fluctuation in customer
traffic and peak meal periods.
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▪ D’Tandoor - This is a full-service family restaurant established in Prices seemed a
little higher than Cinnamon’s Grill but the meal serving was excessive and equal to
the price point and range from Tshs6,000.00 - Tshs 10,000 per entry.
▪ Mambooz - this is a chain restaurant offering standard fare. The food quality is
average. Entrées range from Tshs5,000 - Tshs12,000
▪ Overall both competitors don’t have any signature grill menu nor a grill concept
restaurant.
▪
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Figure 3.3.1 (ii) back page 2
3.5 Technology
With an ample of technology, computerized information systems can improve and link
food preparation and serving operations. Touch screen ordering programs ensure
accurate communication of customer orders. Timing systems monitor meal progress
and can alert staff if an order is running behind schedule. Reservations programs
maximize traffic flow and seating. Inventory management systems track supply levels
and can help reduce waste due to spoilage. Cost accounting programs help companies
determine the profitability of individual menu items. Handheld point-of-sale (POS)
devices allow servers to place orders and print checks tableside, improving accuracy
and reducing ordering time. Some handhelds can also print customer checks and
process credit card payments.
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3.6 Future Services
Cinnamon’s Grill has future plans to provide catering services for family reunions,
weddings and other events desiring an authentic grill menu. This could potentially
become a large portion of gross sales are targeting Year 2 and at that point, a sales
agent would be hired to directly market the products for daily delivery or catered
functions.
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4.2 Market Segments
Cinnamon’s Grill will appeal to a consumer in both the residential and business
community. The location selected for Cinnamon’s Grill was chosen primarily to appeal
to the growing number of households in the area.
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▪ Preferences for healthier food options - are inclined to consume healthier and less
processed foods.
▪ Modification of menu - focusing on specialized menu to enhance quality standards,
speed, and service.
▪ Increase in food service
▪ Sustainable seafood
▪ Technological advancements - adopting new technologies for ordering, payment, and
loyalty programs to offer convenient.
▪ Generation Z –strategy to attract on high-tech service, louder music, high-speed
Cinnamon’s Grill will provide locals a place to socialize and talk shop while enjoying
grilled cuisine and hearty food.
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4.3.1 Main Competitors
The following restaurants are located within a 5 miles radius of Cinnamon’s Grill.
4.4 Positioning
Consumers believe that meals at home are healthier and higher quality than eating at
restaurants. At Cinnamon’s Grill we will position ourselves as the premier home-style
restaurant by preparing quality home cooked meals with simple wholesome ingredients.
Ahmed and Sameer will also provide home cooked fare that appeals to the current trends of
healthier food and offer menu selections which will appeal to this group. Cinnamon’s grill
will be positioned as the premier traditional home-style restaurant.
Tactics: First create awareness-- our signage on the front of restaurant will bring
customers to us and once inside, we will immediately acknowledge the
customer with and most sincere greeting and begin the service process
anticipating repeat customers.
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5.2 Value Proposition
Cinnamon’s Grill will be able to offer signature grill menus for a reasonable price in a
comfortable ‘home-like’ setting. The average check price is expected to be between
Tshs4,000-Tshs9,000 which appears in line with industry standards below Tshs12,000
this to hit the customers. As this is a new concept restaurant, to attract the customers we
will;
▪ Market the benefit, not the product.
▪ Ensure customer satisfaction.
▪ Develop long relationships.
▪ Market the company.
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5.4.3 Promotion Strategy
▪ Location- The restaurant will be located in a strip center at the busy
intersection of Kawawa road. With easy access from and to Morogoro road
and located on the “going home side” of the intersection. We will have
Signage on Morogoro road as well as signage over our entrance.
▪ Word of Mouth – We already have a database of existing catering customers
and will rely heavily on this method to attract and grow new business.
▪ Event Marketing -We plan on joining our local networking for our grand
opening
▪ Social Media – We will share with as much as friends on Facebook, Twitter,
WhatsApp
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The following table shows expected Sales Forecast for the next 3 years:
Sales Forecast
1,400,000.00
1,200,000.00
1,000,000.00
800,000.00
600,000.00
400,000.00
200,000.00
0.00
5.6 Milestones
Our initial milestones are as follows:
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Table 5.6 Milestones
Milestone Date
Sign Lease 2/1/2020
Complete Interior Decor 3/1/2020
Complete Kitchen / Wait Station Needs 3/1/2020
Hire Back Staff 3/1/2020
Hire Front Staff 3/1/2020
Secure a Point of Sale System 4/1/2020
Secure Lending for Initial Start-Up, Working Capital and Cash Flow 4/1/2020
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6.1 Organizational Structure
Cinnamon’s Grill expects to hire 19 employees. Together, Ahmed and Sameer will
personally select each candidate. They’ve adopted an effective interview process
designed to staff the restaurant with highly qualified people for each position.
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7.0 Financial Plan
The over-all financial plan for growth allows for use of the significant cash flow generated
by operations. Every opportunity will be seized to accelerate expansion past the critical
dates in this plan if cash flow from new stores exceeds projections. Plan for the worst, but
manage for the Best.
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Table 7.2 Start-Up Costs
Start-Up
Requirement
Start-Up Expenses
Contingency 20,000.00
Start-Up Assets
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Table 7.3 Source and Use of Funds
Start-Up Funding
Assets
Non-cash Assets from Start-up
-
Cash Requirements from Start-up
(142,000.00)
Additional Cash Raised
-
Cash Balance on Starting Date
(142,000.00)
Total Assets
(142,000.00)
Liabilities
Current Borrowing
189,000.00
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
189,000.00
Capital
Planned Investment
Ahmed
87,000.00
Sameer
87,000.00
Other
Additional Investment Requirement
Total Planned Investment
174,000.00
Total Funding
363,000.00
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7.4 Break-Even Analysis
Total fixed costs associated with the restaurant are Tshs669, 186 and represent the annual
expenses. The variable cost (overhead) is estimated to be Tshs6,000 per meal. Based on
the assumption of Tshs9,500 as the average meal price, the breakeven revenue then is
Tshs1, 108,970 or 97,535 meals (units).
This is further depicted in the Table Below and the Graph that follow:
Break-Even Analysis
Fixed Cost 669,186.01
Variable Cost 4.51
Number of Units 13,934
Avg. Unit Price 11.37
Net Units Sales Fixed Cost Variable Cost Total Cost Total Profit
-
- - (669,186.00)
669,186.00 669,186.00
13,934.00 62,826.00 (573,588.00)
158,424.00 669,186.00 732,012.00
27,867.00 125,653.00 (477,990.00)
316,849.00 669,186.00 794,839.00
41,801.00 188,479.00 (382,392.00)
475,273.00 669,186.00 857,665.00
55,734.00 251,306.00 (286,794.00)
633,697.00 669,186.00 920,492.00
69,668.00 314,132.00 (191,196.00)
792,122.00 669,186.00 983,318.00
83,601.00 376,958.00 (95,598.00)
950,546.00 669,186.00 1,046,144.00
97,535.00 439,785.00 -
1,108,970.00 669,186.00 1,108,971.00
111,468.00 502,611.00 95,598.00
1,267,395.00 669,186.00 1,171,797.00
125,402.00 565,438.00 191,196.00
1,425,819.00 669,186.00 1,234,624.00
139,335.00 628,264.00 286,793.00
1,584,243.00 669,186.00 1,297,450.00
153,269.00 691,090.00 382,391.00
1,742,668.00 669,186.00 1,360,276.00
167,202.00 753,917.00 477,989.00
1,901,092.00 669,186.00 1,423,103.00
181,136.00 816,743.00 573,587.00
2,059,517.00 669,186.00 1,485,929.00
195,070.00 879,570.00 669,185.00
2,217,941.00 669,186.00 1,548,756.00
209,003.00 942,396.00 764,783.00
2,376,365.00 669,186.00 1,611,582.00
222,937.00 1,005,222.00 860,381.00
2,534,790.00 669,186.00 1,674,408.00
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Break-even Analysis
3,000,000.00
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
500,000.00
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Sales Fixed Cost TotalCost
Expenses
Accounting / Legal 220,000 220,360 220,731
Bad Debts 150,711 160,482 170,276
Shrinkage 90,000 92,700 95,481
Credit Card Fees 20,568 21,185 21,821
Insurance 175,000 177,250 179,568
Miscellaneous 44,112 45,435 46,798
Payroll Taxes 0 0 0
Registration SSM and Licenses 57,356 57,577 57,804
Rent 468,000 470,040 472,141
Salaries 712,341 712,711 713,093
Wages 569,987 523,057 540,027
Total Expenses 2,508,075 2,480,797 2,517,740
Net Profit 3,020,234 5,166,470 7,291,493
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7.6 Projected Cash Flow
The statement of cash flow shows the incoming and outgoing cash of the business.
Cash Received
Sales Tax
Owners Investment 174,000
Subtotal Cash Received 1,539,523 1,192,438 1,247,237
Expenditures
Expenditures from Operations 765,113 414,176 426,602
Cash Spent 710,176 731,481 753,426
Bills Paid
Subtotal Spent on Operations 1,475,289 1,145,658 1,180,028
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7.7 Projected Balance Sheet
Current Assets
Cash 1,630,000 1,860,150 2,710,111
Accounts Receivable 650,000 860,250 1,280,219
Inventory 140,000 140,700 150,803
Other Current Assets 129,500 135,975 146,173
Total Current Assets 2,549,500 2,997,075 4,287,306
Retained Earnings
Earnings
Total Capital 223,000 234,150 251,711
Total Liabilities and Capital 1,088,000 1,131,550 1,256,641
Net Worth 223,000 234,150 251,711
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7.8 Business Ratios
These business ratios are future estimates based upon current assumptions.
Ratio Analysis
Industry
Year 1 Year 2 Year 3
Profile
Main Ratios
Quick Ratio 1.49 1.49 1.49 1.06
Current Ratio 3.92 3.92 3.92 1.46
Current Liabilities to Net
0.26 0.26 0.26 0.4
Worth
Current Liabilities to Inventory 4.21 4.21 4.21 5.85
Total Liabilities to Net Worth 1.24 1.24 1.24 1.24
Fixed Assets to Net Worth 1.2 1.2 1.2 1.11
Collection Period
Inventory Turnover 28.7 28.2 27 29.44
Assets to Sales 48.60% 45.20% 45.70% 49.10%
Working Capital to Sales 16.80% 15.60% 15.80% 14.00%
Accounts Payable to Sales 2.80% 2.60% 2.60% 2.80%
Return on Sales 0.10% 5.00% 7.50% 1.00%
Return on Assets 0.20% 11.10% 16.40% 2.10%
Return on Equity 0.60% 25.00% 36.70% 4.70%
Interest Coverage 0.8 7.6 15.5 1.66
Income Statement
Gross Sales 100.00% 100.00% 100.00% 100.00%
Gross Profit 60.90% 64.30% 65.50% 56.00%
Operating Income 0.10% 5.00% 7.50% 2.10%
Net Profit After Tax
Balance Sheet
Cash 12.60% 12.60% 12.60% 12.60%
Accounts Receivable 5.00% 5.00% 5.00% 5.00%
Inventory 2.80% 2.80% 2.80% 3.00%
Total Current Assets 46.30% 46.30% 46.30% 49.50%
Total Fixed Assets 28.90% 28.90% 28.90% 25.70%
Other Non-Current Assets 24.80% 24.80% 24.80% 24.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Accounts Payable 5.80% 5.80% 5.80% 5.80%
Total Current Liabilities 0.00% 0.00% 0.00% 17.60%
Total Long Liabilities 37.80% 37.80% 37.80% 37.80%
Net Worth 44.60% 44.60% 44.60% 44.60%
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8.0 References
2. https://en.wikipedia.org/wiki/Nibong_Tebal
3. https://www.dosm.gov.my/v1/index.php?r=column/cthree&menu_id=UEg1NkpJUFYzRzBKclE
4V2JEb2I3QT09
4. https://www.penang.gov.my/images/penerbitan/sosioekonomi/Penang-in-Numbers-2018-
2019.pdf
1. 4. https://www.bloomberg.com/news/articles/2018-04-14/americans-spending-on-dining-out-
just-overtook-grocery-sales-for-the-first-time-ever
5. QSR magazine as of May 20, 2018, accessed on June 9, 2019; Franchise Help accessed on June
10, 2019; Nerac accessed on June 10, 2019; PR Newswire as of August 10, 2018, accessed on
June 8, 2019
6. http://www.restaurant.org/Restaurant/media/Restaurant/SiteImages/News%20and%20Research/
Whats%20Hot/What-s_Hot_Concept_Trends_1.jpg
7. http://www.bplans.com/sports_bar_business_plan/financial_plan_fc.php
8. http://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1591&context=thesesdissertations
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