ENTREPRENEURSHIP TRAINING ITALIAN SUPERIOR RESTAURANT - BUSINESS PLAN PREPARED - APRIL 2016
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ENTREPRENEURSHIP TRAINING
ITALIAN SUPERIOR RESTAURANT
BUSINESS PLAN
PREPARED - APRIL 2016; PRESENTED - JUNE 2020
PRESENTED BY DAVID N. PAUL
nziovid@gmail.com
+254726360952
TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES
1.EXECUTIVE SUMMARY The Italian Superior Restaurant (I -SURE), here-after-referred to as the restaurant, will be a unique business offering an excellent assortment of alcoholic beverages and Italian cuisines. The restaurant hopes to capture at least 2% of the patrons seeking a unique place to relax and enjoy deliciously prepared Italian foods while taking a sip of local and exotic brews. The owners of the restaurant have progressive experience in the hospitality sector. As such, they understand the food industry and are able to put in place a marketing strategy that shall see the business break even within three years. Employees will be hand-picked and effort made to ensure that they have the same views as the owners. The start-up cost of the business shall be Ksh. 10,000,000. The business hopes to repay this amount to the investor in three years. This plan summarizes the proposed business and its growth plans. 1.1 Business Objectives The Italian Superior Restaurant will be a newly established restaurant located in Nairobi City, Kenya. It will provide quality menu featuring Italian foods. The restaurant hopes to capture at least 2% of the restaurant market by the end of the first business year. Furthermore, the restaurant hopes to make a profit within the first 12 months and repay all financial obligations by the first 3 years of operation. The business will achieve these goals by having excellent customer care, a vast selection of beverages, excellent cuisine, pocket friendly prices and a good relaxing environment for patrons. 1.2 Mission Statement To be the best Italian restaurant of choice in Nairobi City that offers an affordable and comfortable relaxation place for tourists, expatriates and locals. 1.3 Guiding Principles The philosophy of the restaurant shall be simple: put patrons in your own shoes. As such, the restaurant shall strive to create a restaurant that has patrons at heart. The staff of the restaurant shall be tasked to offer services that they would wish for themselves had they been the patrons. In this light, the spirit of integrity and professionalism shall be upheld by waiters as well all other staff of the restaurant.
1.4 Keys to Success The key to success of the restaurant will be based on: Dedication to excellent customer services Devotion to outstanding customer satisfaction – through a neat and hospitable relaxing environment Variety and sophistication in alcoholic beverages offering 2.0 BUSINESS DESCRIPTION The restaurant will be located in Nairobi CBD or one of its up-market suburbs such Westlands, Hurlingum and Village Market among others. It will be operated as a partnership business and registered under the Business Names Act (cap 499) in Kenya. The process is entirely online. The company shall rent existing restaurant premises or possibly an open space and refurbish it itself. To this, the restaurant shall purchase furniture or have them made specifically for the restaurant if those in the acquired restaurant do not match the required standards. 2.1 Ownership The restaurant shall be owned as a partnership. Details for such partnership shall be provided in a partnership deed so drawn. The partners have wide experience in the hospitality industry and business management among other fields. A profile of the partners is attached as Addendum I. 2.2 Start-Up Summary Total starts up costs are KSh.10 million (approximately USD 10,000). This money shall be provided by the partners & bank loans. NB: The restaurant shall be obligated to pay back this amount within a period of 3 years. 2.3 Location and Facilities The restaurant shall be located in Nairobi City. This location is sought specifically because it is the capital city of Kenya. In this light, there are numerous foreign and local visitors. The city has a population of about 4 million inhabitants. There are also extensive roads connecting the various parts of the city. Furthermore, there is reliable water and electricity supply. Security in the city is excellent and there are numerous local and international financial institutions. This means that the restaurant can get the support services needed cost effectively.
3.0 PRODUCTS 3.1 Products/Services Descriptions The restaurant will offer a broad and deep variety of specialty beverages which will appeal to the public’s ever changing and increasingly more sophisticated demands for variety beverages. The restaurant shall offer Italian foods. In this regards, chefs with expertise in preparing such cuisine shall be hired locally or from Italy. The kitchen will close at 10 pm, but patrons will still have the option of easily prepared foods, that the chefs can microwave or easily throw into the deep fryer. 3.2 Competitive Comparison In the city there are several comparables. There are 8 major Italian restaurants, some with branches, in Nairobi City. These include: La Dolce Vita (Muthaiga Area), Lucca (Villa Rosa Kempiski Westlands), Mambo Italia (Lavington Curve Mall and Galleria Mall), Mediterraneo (Nine West, the Junction and Gigiri), Osteria Del Chianti (Karen, Lenana and Gigiri), Pablos (Along Argwings Kodhek Road), Roberto Restaurant (in the Laico Legency), Trattoria (Nairobi CBD) among others. The restaurant shall constantly study the market so as to create a niche within the Italian restaurants market. 3.3 Product/Service Sourcing The key food suppliers for the business will be local traders in the Kenyan market selected through competitive bidding. The company shall endeavor to have at least three suppliers so as to have exceptional delivery times and better overall prices. Restaurant supplies (pots, pans, cutlery, and cooking utensils) will come from Kitchen Suppliers Kenyaand Nairobi Kitchen Care among others. Beverages will be prepared at the restaurant. The restaurant will use P-O-S (Point of Sale) touch screen system throughout the restaurant area. These monitors and hand held units will provide information on orders and sales. They will help in inventory control analysis. ETR machines shall also be used. These shall help in tax calculations as well as provision of information on cash sales and credit card sales.
3.4 Inventory Management The POS system will be instrumental in restaurant success. Employees’ theft can quickly contribute to the financial demise of any business. The POS systems will enable managers to undertake inventory control. It will also help waiters and chefs place orders when need be. 3.5 Warehousing and Fulfillment The restaurant shall not have a warehouse. A small store shall be prepared at the restaurant or sourced else for receiving and storing supplies. 4.0 MARKET ANALYSIS 4.1 Industry Analysis Although people still gather to socialize in restaurants, just as they have for hundreds of years, other factors have come into play in the industry. There are many competitors in the market, some selling at extremely low prices in small makeshift food stands. Furthermore, many people often prefer to purchase their food and consume it at their places of work. This notwithstanding, there are still many patrons in Kenyan restaurants The company shall compete for a share of these. 4.2 Market Size In Nairobi there are about 329 restaurants in Nairobi CBD. No major restaurant dominates the market but there is stiff competition. Established restaurants account for 80% of the market while small and upcoming business share the remaining 20%. This proposed business shall aim to make a footprint in the 20% lower market segment and strive to capture 2% of this segment in the first year. 4.3 Industry Participants There are few barriers to entry in restaurant industry, and the capital costs of starting a new restaurant are low. However, competition among restaurants is intense due to the large number of restaurants in the target market. When combined with a small industry growth rate, market share gain by one restaurant is usually at the expense of others.
4.4 Main Competitors
The restaurant falls under the hospitality industry in Kenya. The hospitality industry is a broad category of fields within the service industry that
includes lodging, restaurants, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry. The
hospitality industry is a several billion Kenya Shilling industry that mostly depends on the availability of leisure time and disposable income. There
is much competition in the restaurant and hospitality segments in Kenya. As already pointed out, there are about 329 restaurants in Nairobi CBD
some of these could offer completion to this business. The main competition though shall be provided by the other 8 Italian restaurants in Nairobi.
Competitors
Italian restaurants 2%
Other restaurants 98%
Figure 1 Competitors
4.5 Market Segments
The restaurant targets the following kind of customers:
Middle class, ‘white collar’ office workers on their way home from work.
Tourists and workers on their lunch hour
Weekend and later night entertainment seekers - the restaurant will have live music performance during weekends and some weeknights.4.6 Market Entry The restaurant shall enter the market as a totally new business. This shall be vital since it shall create its own footprint and market niche. The business shall benefit from the expertise of its partners and local connections to penetrate the Kenyan market. 5.0 MARKETING STRATEGY AND IMPLEMENTATION The business shall use various marketing venues. These shall include advertisement in websites, social media as well as through special events. It shall also have an excellent customer service. Furthermore, the restaurant shall have a grand opening. It shall also use Outdoor signs and branding and word of mouth. Some of the partners are in the tourism industry and have wide connections within the hospitality sector. They shall be instrumental in promoting the business. 5.1 Pricing Strategy The restaurant shall start with low prices so as to attract initial patrons. In subsequent months, the firm shall adjust prices but in respect to acquisition costs so as to maintain its patrons. Prices shall be 200% of costs of acquisition. In this regard, if preparing a plate of food costs Ksh. 100, the plate shall be sold at Ksh. 300 and so on. 5.2 Promotion and Advertising Strategy The restaurant shall use various ways of promoting and advertising the business. These include: sign on the building, websites, social media and specially organized events. As such, the restaurant shall partner with cultural institutions, embassies and participate in their events so as to get forums for advertising itself. In this light, the restaurant shall host events in which its brand shall be carried high. At the outset, the restaurant shall spend Ksh. 70,000 for advertisement and promotion.
5.3 Sales Forecast The following table demonstrates the annual sales forecast: Table 1 Annual Sales Forecast Annual Sales Forecast Year 1 Year 2 Year 3 Average Drink 12,000,000 14,000,000 16,500,000 Average Meals 12,000,000 14,500,000 17,000,000 Total Income 24,000,000 28,500,000 33,500,000 Cost of Sales Average Drink 5,000,000 5,500,000 7,500,000 Average Meals 6,000,000 6,000,000 6,500,000 Total Cost of Sales 11,000,000 11,500,000 14,000,000 Gross Margin 13,000,000 17,000,000 19,500,000 5.4 Sales Programs The employees of the restaurant will be the main salespeople. Tour promoters and other stakeholders in the hospitality sector shall be engaged in attracting patrons to the business. Tips and commissions shall be given based on the business attracted to the restaurant by such individuals. 6.0 LEGAL REQUIREMENTS The restaurant will be registered under the business names act in Kenya. The licenses that shall be obtained include: work permits for one of the partners as well as any other foreign employee, trade license, health certificates for workers, national environment management authority license, music copyright board license, tax compliance certificates (periodically), NHIF and NSSF registration certificates. 7.0 MILESTONES The following milestones will guide the restaurant to meet its goals:
Table 2 Milestones Milestone Date Secure Space and Negotiate Lease Terms May 31 2016 Refurbish and furnish the space June 30 2016 Obtain all necessary licenses June 30 2016 Purchase Kitchen equipment and POS system July 10 2016 Purchase initial supplies July 15 2016 Hire and train employees where need be July 31 2016 Grand opening August 1 2016 8.0 EXIT STRATEGY In the event that sales drop more than 10% for more than four consecutive quarters, the restaurant will have to liquidate before it losses going concern. After employee’s compensation, furniture, equipment and premises will be sold or leased to another party to recover the capital. 9.0 ORGANIZATION STRUCTURE The following information provides the organizational components relevant to the restaurant. 9.1 Organizational Structure The restaurant will be owned by the partners under agreed profit sharing ratios. These partners will take up duties, according to their capacities (and as enshrined in a specially formulated partnership deed). These duties include: review of daily operations, inventory control, employee training, employee hiring and firing, ordering supplies, and routine maintenance and upkeep of the restaurant, equipment and facilities management.
9.2 Personnel Plan The restaurant shall hire 1 head chef, 2 cooks, 6 waiters, 2 cashiers and 1 book keeper (on contractual basis). This shall make a total of 12 employees. All the 11 full time employees will have benefits such as health insurance (NHIF), Social Security Welfare (NSSF) and education and training as need arises. They will have an opportunity to participate in profit sharing based on their input in the restaurant. The following chart shows employee salaries over the next three year period: Table 3 Personnel Plan Position Year 1 Year 2 Year 3 Head Chef 600,000 600,000 600,000 Cook 1 360,000 360,000 360,000 Cook 2 360,000 360,000 360,000 Waiter 1 180,000 180,000 180,000 Waiter 2 180,000 180,000 180,000 Waiter 3 180,000 180,000 180,000 Waiter 4 180,000 180,000 180,000 Waiter 5 180,000 180,000 180,000 Waiter 6 180,000 180,000 180,000 Cashier 1 240,000 240,000 240,000 Cashier 2 240,000 240,000 240,000 Book keeper 1 240,000 240,000 240,000 Total Personnel Costs 3,120,000 3,120,000 3,120,000
10 FINANCIALS 10.1 Start-Up Costs As already pointed out, the business shall lease restaurant space and make improvements that shall include: new heating/air conditioning, electrical, plumbing, and painting, carpentry, flooring and smoke detectors. Equipment consists of stoves and ovens, one walk in refrigerator, a freezer, two microwaves and a deep fryer. Furniture and fixtures consist of leather chairs and, stools. The restaurant shall also need money for buying supplies (ingredients), initial working capital (paying initial salaries and other overheads) as well as licenses. These are shown in Table 4. Table 4 Start-Up Costs Startup expenses Ksh Salaries for 3 months 520,000 Beginning inventory 600,000 Management cost 1,000,000 Rent and premises acquisition 5,000,000 Advertisement and promotions 70,000 Licenses 300,000 Other costs (Miscellaneous) 10,000 Total Start Up Expenses 7,500,000 Start-Up Assets Real Estate 0 Building 0 Leasehold Improvements 0 Equipments 1,500,000 Furniture and Fixtures 1,000,000 Vehicles 0 Other fixed assets 0 Total assets 2,500,000 Total Required Startup Capital 10,000,000
10.2 Projected Profit and Loss The restaurants estimated profit and loss for the initial three years of operations is reflected below: Table 5 Pro Forma Profit and Loss Annual Sales Forecast Year 1 Year 2 Year 3 Average Drink 12,000,000 14,000,000 16,500,000 Average Meals 12,000,000 14,500,000 17,000,000 Total Income 24,000,000 28,500,000 33,500,000 Cost of Sales Average Drink 5,000,000 5,500,000 7,500,000 Average Meals 6,000,000 6,000,000 6,500,000 Total Cost of Sales 11,000,000 11,500,000 14,000,000 Gross Margin 13,000,000 17,000,000 19,500,000 Expenses Owners Compensation (Investor Repayment) 2,500,000 3,500,000 4,000,000 Salaries 3,120,000 3,120,000 3,120,000 Statutory deductions (NHIF, NSSF) 372000 372000 372000 Management Costs 1,000,000 0 0 Partners dividends 1,500,000 3,000,000 3,000,000 Advertising 70,000 100,000 100,000 Internet 36,000 36,000 36,000 Telephone 60,000 60,000 60,000 Utility 1,200,000 1,200,000 1,200,000 Rent on business premises 1,800,000 1,800,000 1,800,000 Total Expenses 11,658,000 13,188,000 13,688,000 Net Operating Income 1,342,000 3,812,000 5,812,000 Less Income Taxes (30%) 402,600 1,143,600 1,743,600 Net Profit (Loss) 939,400 2,668,400 4,068,400
10.3 Projected Cash Flow Table 6 Projected Cash Flow Pro Forma Cash Flow Year 1 Year 2 Year 3 Beginning Cash Balance 0 11,939,400 26,107,800 Cash Inflow Income from Sales 24,000,000 28,500,000 33,500,000 Accounts Receivables 0 0 0 Total Inflows 24000000 40,439,400 35748400 Total Outflows (Expenses + Tax) 12,060,600 14,331,600 15,431,600 Operating Cash Balance 11,939,400 26,107,800 20,316,800 Other Financials ADDENDUM I: PARTNERS’S PROFILES ADDENDUM II: BUSINESS REGISTRATION CERTIFICATES
***THANK YOU***
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