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Restaurant Chain Essay Sample

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Restaurant Chain Essay Sample

EXECUTIVE SUMMARY

The business is basically establishing a highway restaurant chain that will be located into or next to highway gas stations. These restaurants will have quality and affordable food, coffee stand, salad bar, take away meal boxes, travel kits and clean toilets. There will be also available places for ATM machines as other revenue stream. I will centralize my production and distribute to branches from the center, so the food quality will be the same in every branch. Customers will know in which direction they go and find a familiar quality food. The reason for using gas stations is simple. People do not want to lose time. However, they want to a quick break and meal when they stop for the gas. These gas stations and my company will benefit mutually from this partnership.

Opportunity & Strategy:

In Turkey, road transportation is the most widely used way of transportation by passengers and truckers. These people on the roads are in need of good places to rest and eat. In the current landscape, there are places highly varied by quality, price and hygiene in meeting these needs. Although some of them are excelled in terms of customer satisfaction, most of the places are not providing sufficient service to satisfy the customers. Family-owned local places with a me-too-business mentality is also an impediment for an established highway food market in Turkey. There are no national strong player in the industry and the market is not matured yet. In these conditions, there is a good opportunity to enter the industry as a restaurant chain who provides quality service and healthy and traditionary food in a nice dining atmosphere with affordable prices to travellers.

The restaurant chain will be fastly spreaded over the country and provide standart service and content everywhere. As for strategy,I will make an agreement with one of the strongest gas distributor company in Turkey in order to establish restaurants in its gas stations. After that a market research will be performed in a detailed way for establishing a menu that would be both healthy and suitable for common Turkish people’s taste. Fancy prefabricate buildings for restaurants will be built in order to minimize required capital, increase flexibility of places and quickly diffusing to the market. Outsourcing by professional firms will be used at the first hand for the food production and distribution to minimize the cost. Also one of the most important things in this business is to sustain standardization because if standardization can be achieved than people that satisfied by the service and the taste in one location will tend to choose eating or resting in this chain in any other location.

Target market & projection:

Target market is mid-class business people, travelers and also families especially in holiday times. These people are conscious about their foods and service quality. They also want to know what to expect and find what they’ve expected. Competitive advantage:

My primary focus is making an agreement with one of the reputable oil company in order to provide some competitive advantage.I will try to provide win-win situation for both parties. First of all working with a reputable oil company will give me a competitive edge over reaching large amount of customers. The trust that people have for oil company provide my restaurant chain confidence and trust on eyes of the customers. After a certain point, my customers may choose that particular oil company because they want to eat in my restaurants. Secondly, in every location I will provide same quality foods and service. In every location I will provide high quality, healty and fresh food. Since one of the most important problems faced during travel is finding healthy ,quality and trustworthy food, my aim is providing standardized food in all over the restaurants.My “restaurant chain” brand image will give me an important competitive advantage over the local, individual restaurants. I will emphasize the idea of fresh,healty, trustworthy and standartized food and service in my marketing.

The Industry and the Company:

In every route there are certain restaurants which people know. Other than that there are a lot of family owned little restaurants which are mainly used by heavy users of that route. Also there is no restaurant except Varan facilities which has a chain like structure. Varan is also a bus company so that these facilities are mainly used by Varan’s own passengers. Moreover, there are some strong competitors like Özdilek (Özdilek considers itself as a shopping mall) and İkbal in Afyon. My company position itself differently than these competitors. It provides standardized Turkish cousine rather than local traditional food for people who want to satisfy their hunger without facing any local surprises. My branches are for people who travel with their own cars rather than for bus passengers;thus, they are close to boutique places instead of mass-scale places.

Market Research and Analysis:

According to Ministry of Transport General Directorate of Highways, in year 2012 354.2 million vehicles passed highways and the bridges. 190 million of vehicles of those vehicles had used highways. If I assume there are 2 people per car, this means in year 2012 380 million passenger used highways with their cars. This number increases every year and since 2001 this number is more than doubled.

1) Economics of Business

The gross margins are below for main items sold in my restaurant: Menu
Unit cost
Price
Margins
Margins (%)
Menu (3 items)
4,50 TL
9,00 TL
4,50 TL
50,00%
Soup
0,50 TL
3,00 TL
2,50 TL
83,00%
Main dish
4,00 TL
8,00 TL
4,00 TL
50,00%
Salad
2,00 TL
5,00 TL
3,00 TL
60,00%
Coffee
0,50 TL
2,00 TL
1,50 TL
75,00%
Tea
0,10 TL
1,00 TL
0,90 TL
90,00%
Meal box
4,50 TL
10,00 TL
5,50 TL
55,00%

Fixed Costs:
Fixed Cost

Number of units
Unit cost
Total yearly cost
Fuel Cost

1
1000
12000
Car leasing cost
Fiat doblo
1
200
2400
Salary of manager & food engineer

1
7000
84000
Monthly rent

3
1000
36000
Monthly personel cost

3
3500
126000
Other Expenses

3
3000
108000

Total
7500
356400

Note: Fuel costs are assumed as fixed montly costs determined due to the estimated miles travelled; the extra costs will be cut from the employee’s salary.

Variable Costs:
Variable costs

Sales
Unit cost
Total cost
Menu cost
3 types of meal
86.059
4,00 TL
344.237,68 TL
Salad cost

8.606
2,00 TL
17.211,88 TL
Coffee

8.606
0,45 TL
3.872,67 TL
Tea

43.030
0,10 TL
4.302,97 TL
Bottled water

25.818
0,20 TL
5.163,57 TL
Soft drinks

43.030
0,90 TL
38.726,74 TL

Total
413.515,51 TL

Marketing and Distribution Costs:
Distrubution cost
%10 of total cost
41.351,55 TL
Marketing cost
%5 of total sales
44.750,90 TL

Break-Even Chart:

2) Marketing Plan
Thanks to my business model my operation costs will be lower and also I can sustain my product quality. Thus, as a marketing strategy I will concentrate on price and quality in my communications. I will be using below the line marketing channels to communicate with the customers. Also I am giving certain unusual services to customers. For example there isn’t any place in the in the roads which serves take away hot food, take away meal boxes, coffee and tea. Also there are very limited places which have salad bars. I could also use these distinctive products in my marketing communication. My target market will be the price sensitive and also quality conscious customers. My offerings will be a good deal for the people who want convenient quality food with low price. Also I am targeting people which are travelling with their own cars. There will be also seasonality in demand. Demand will be higher in national holidays and bayram holidays.

Pricing
My prices will be very competitive and I can also lower the prices or at least I still have space to increase price

Menu
Unit cost
Price
Margins
Margins (%)
Menu (3 items)
4,50 TL
8,00 TL
3,50 TL
43,75%
Soup
0,50 TL
3,00 TL
2,50 TL
83,00%
Main dish
4,00 TL
8,00 TL
4,00 TL
50,00%
Salad
2,00 TL
5,00 TL
3,00 TL
60,00%
Coffee
0,50 TL
2,00 TL
1,50 TL
75,00%
Tea
0,10 TL
1,00 TL
0,90 TL
90,00%
Meal box
4,50 TL
10,00 TL
5,50 TL
55,00%

Advertising and promotion
For the first year my advertising budget will be 5% of the sales every year. No one in this industry is advertising so it will be easier for me to differentiate. For the first year I allocated 50.000TL for advertising as an investment cost.

I will be using billboards near our restaurants for advertising. I will use multiple boards like a story board. Other than that I will be placing ad boards in ferries and fast ferries running through Marmara Sea. Due to my low advertisement budget, my ads must be remarkable for the customers and easier for them to remind.

Distribution to my restaurants will be handled by suppliers.

3) Design and Development Plan
My business is in a service-based industry. To provide food service in my restaurants, certain steps should be accomplished. First, the restaurant buildings will be established. The buildings would be well-designed pre-fabricated units which will decrease our costs and provide flexibility. The industrial kitchen with necessary cooking items is gathered. The electrical systems, gas service, waste lines, air conditioning systems and sprinklers should also be set. The food production is outsourced to a catering company. The last step is recruiting employees. Our company’s expertise is location selection. It has a central approach for locations by meeting and sharing data with gas distributor company headquarters to increase the value created.

Problems can occur in menu planning and development. It is hard to satisfy all customers even within our target group because the customer segmentation is generally done based on age, income or social status. We should segment the highway market according to eating preferences or habits and create our menu accordingly. It is estimated that the cost of possible problems in the design and development stage is low (6%) compared to the total budget. For instance, a catering firm can give consultancy for the creation of the menu. The fee that the firm will charge is bearable within the budget. However, if the problem is overlooked, its consequences can risk the whole business.

Design and Development Budget
Prefabricated Buildings 180,000
Interior Design and Furniture 90,000
Kitchen Tools13,890
Costs of Labor126,000
Consulting and Research Fees 30,000
Total Costs 439,890 TL
500,000 TL are allocated as design and development budget.
The name of our chain will be a trademark. Trademarks are valid for 10 years in Turkey. The right to operate restaurants in gas stations can be an exclusivity agreeement with one of the gas distributor companies that Iseek.

4) Manufacturing and Operations Plan
Facilities&Offices
My restaurant chain will enter the business with 3 branches located alongside well-traveled highways and adjacent to major entrances to crowded regions. The required licenses to open the restaurants are acquired from Ministry of Culture and Tourism. My office will be in Rumelifeneri, Istanbul.

Hours of Operation
The restaurant will be open between 11 a.m. and 11 p.m 7 days a week.

Employee Training& Education
Employees will be trained in health and safety issues as well as the concept of the restaurants and culture of the organization.

Food Production
The food production will be outsourced to a catering firm. The catering firm will prepare ready-to-meal food for us. It will be heated in microwave within 3 min and served. Labor skills are not crucial. There is seasonality in the restaurant business especially in summer months and, official and religious holidays. In these periods, more packaged food is necessary. The frequency of deliveries will be adjusted regarding the seasonality so there won’t be any additional burden on storage.

Location Analysis
The locations of restaurants are very important for the business. The type of consumer goods we provide in our stores and the type of vehicle trips should be considered in location selection. There are three types of consumer goods which are convenience, specialty and shopping. The service in my mid-scale restaurants can be counted as convenience stores due to its low-unit cost, little selling effort and frequent purchase. The types of the trips are work trip, shopping trip and leisure trip. The characters of the trips affect the location that on which side the restaurant is located. For instance, convenience food stores want to be on the going-home side for work trips. Additionally, the pedestrian and automobile traffic counts are the most important factor for convenience stores to decide on the location.

Also, the service offered in my restaurants would mainly attract leisure trips. It require the restaurants to locate on the alongside of a well-traveled highway and adjacent to a major entrance to the community.I’ll start to locate my restaurant in highways based on these factors. With the development of my business, I’ll open branches in big cities as convenience food stores. Lastly, it is determined that a facility in a gas station, the restaurant, should be established after the gas station, it must be after a short blazing traffic light and the traffic should not be very fast moving.

Suppliers
The supplier of products offered in my restaurants are local groceries and farmers for salad bar, a catering or frozen food firm for main dishes and soup, soft drink distributors and tea and coffee companies.

Systems&Controls
The food production is outsourced to catering firm who has their own quality controls. To minimize the risk, I set a deal to place our own food engineer to follow the production process. A manager is responsible from the inventory control, orders and deliveries in all 3 stores.

5) Management
As a young entrepreneur,I take care of all the management functions.As a graduate of management department I acquired different specializations and capable of handling excessive responsibilities and work burden. Combining business skills with technical savvy, I will guide the company with professional care and interest.

Key Investors

In order to establish and create fund for my business;I made contact with many parties including some gas stations, food restaurant chains, independent ventures, catering firms. I got important information from them an even some of them offered me to make interview with them about our
business plan.

One of these firms is Bonşef which is a Turkish readymade firm. Their products are similar to my own menu and we decided that we could supply our food from Bonşef. After telling them our own business plan; they wanted to involve in my business. Also in our telephone interview they said that they may have a different plan with me. I think that they may refund us in return of selling their products under the name of Bonşefim restaurant chain. That’s to say they will be present in different channel and make their brand name to be heard by large amount of audiences.I may manage the restaurant chain for them.

Another potential investor for me may be gas station chain located in highways. In other words, if I make the project in Opet then there is a possibility that I can open my restaurant chain under the name of Opet and this will also give me flexibility in my operations and reputable image when we enter the market. In this scenario Opet will also help me funding and sourcing.

However these are only assumptions in my business and currently I have on my own for investing business. In other words capital will be provided by me and if I need an extra capital then I will take it from a bank.

6) Overall Schedule
My investment schedule will start with establishment of a corporate firm. After formation of business I will focus on location decisions and just after making decisions I will apply governmental bodies for necessary licenses and permissions. At the same time with applying for licenses and permissions,I will start to develop interior and external design of prefabricate building. Just after decision process I will order construction of prefabricate building, order and supply of restaurants tools (chairs, tables, kitchen items), start recruitment and training process. Through the completion of construction I will order and supply beverages. After these processes we will be ready for entering market. As you can understand from my schedule chart all development processes of my business will be completed
in 5,5 month.

7) Assumptions & Risks & SWOT
I based my business plan on some assumptions. According to my research 170 million of vehicles of those vehicles had used highways. If we assume there are 2 people per car, this means in year 2013 340 million passenger used highways with their cars. By the way, the number 170 million of cars isn’t covering the cars that travels free of charge highways and I can’t make assumptions about number of people in these roads. Information that ı received from OPET, %7 of cars travels in highways stops in gas stations. We assume that we can reach %0,01(238.000) of this people. For being more accurate in assumption I targeted 238.000 people yearly which is the total of passenger travels both of the charged and free-of charged highways. Targeting 238.000 people annually means 650 people for a day. In order to be safe side,I based my financial projections on 600 people per day and 219.000 annually.

I assume that I can reach this target level in 3 years. I make my financial projections about first year as I can reach %40 of my target. This means I aim to increase my sales %20 (on average) yearly. Another assumption that I made is about distribution costs of the food and beverages from the manufacturer. Because of my restaurants located in different locations our distribution costs will vary. Since distributed items are low in volume and can be stored for long period I assume that distribution costs per unit may be low. In order to that I assume that distribution costs will be %10 of the cost of one item. My third assumption is about sales of other items other than items in menu (main dish and soup) such as salad, coffee, tea, beverages and soup.I assume that; %50 of the menu buyers, buys soft drinks and tea, %10 buys salad and coffee, %30 buys bottled water.

Risks

My objective is to be first “inter urban highway restaurant chain” of Turkey. This meansI try to establish a new business category with new operational system. And there are some risks associated with establishing new business category. First of all, everyone who travels in inter urban roads have one favorite restaurant in specific locations and they desire to eat and rest in that places. Especially in Turkey, every region has one specialty, and during travelling people tend to eat that regional foods. For example iskender in Bursa, grill in Bolu etc. Unfortunately, it is hard to break habits of people and this brings great deal of risks in my business. Second, major risk that, our business face is to obtain sustainability in quality, taste and service. Since I outsource the food production and distribution from specialized company, I depended on them in all aspects. Financial trouble that they face or any fault and negligence of their employees directly affects my business. With this business plan I totally depend on outsourcers.

Since this business idea is new and untested idea I have difficulty in finding investor. Along with that, I don’t have any expertise in this sector. So, possibility of taking bank loan is too low and because of this, I can have to make this investment with my family and friends money which is about 500.000 TL in total. In addition to these, my standardized menu may not suitable for some people’s taste. Although I design this menu in accordance with common Turkish people taste, there is possibility of people may not want to choose eat this kind of food during travelling. They may want to eat different foods during travelling, not foods that they consume in their daily life at home.

SWOT
Strengths
Low investment and operational costs
No wastage
Easy to transport food, quick cooking time
Coffee stand and salad ba
Take-away products (coffee, tea, meal-box, meal, etc)

Weaknesses
High level of dependency on outsourcers
Not having a strong financial position

Opportunities
High potential in market
Increasing demand on quality food

Threats
Difficulty of changing people’s favorite restaurants
Possibility of peoples doesn’t like our menu

8) Financial plan
Investment Costs
Investment cost of one restaurant building with all elements including kitchen tools, furniture etc. is 130.000 TL. I am planning to enter market with 3 restaurants with total investment cost of 390.000TL. These costs are calculated generously and also I did not consider bargaining power. So these costs will be lower than I considered. Investment costs

Investment
info
# of units
Unit Cost
Cost
Building
Prefabricated 100m2
3
60.000,00 TL
180.000,00 TL
Interior design and Furniture
design expenses etc.
3
30.000,00 TL
90.000,00 TL
Kitchen tools
owens, washing machine,
3
30.000,00 TL
90.000,00 TL
Other

3
10.000,00 TL
30.000,00 TL

Total
=
390.000,00 TL

Breakeven Analysis

My fixed costs will be 356.400TL yearly for 3 restaurants. These costs include cost of labor, utilities, rent, management expenses etc. my average variable cost per customer calculated as 4,81TL and our average revenue per customer is 10,40TL. If I assume there is no seasonality in demand, I reach breakeven points in 8th month in year 1,6th month in year 2 and 5th month in the 3rd year.

INCOME STATEMENT
1.YEAR
2.YEAR
3.YEAR
4.YEAR
5.YEAR
TOTAL SALES REVENUE

Sales
1.457.664 TL
1.822.080 TL
2.277.600 TL
2.733.120 TL
3.279.744 TL
TOTAL SALES COST

Cost of Goods Sold
740.816 TL
926.020 TL
1.157.525 TL
1.389.029 TL
1.666.835 TL
GROSS PROFİT(LOSS)

Gross Margin
716.848 TL
896.060 TL
1.120.076 TL
1.344.091 TL
1.612.909 TL
Gross Margin %
0 TL
0 TL
0 TL
1 TL
1 TL
OPERATING EXPENSES

Salary Expense
134.400 TL
168.000 TL
210.000 TL
252.000 TL
302.400 TL
Rent Expense
23.040 TL
28.800 TL
36.000 TL
43.200 TL
51.840 TL
Leasing Expense
1.536 TL
1.920 TL
2.400 TL
2.880 TL
3.456 TL
Other Expenses
76.800 TL
96.000 TL
120.000 TL
144.000 TL
172.800 TL

Total Operating Expenses
235.776 TL
294.720 TL
368.400 TL
442.080 TL
530.496 TL
OTHER EXPENSES

Amortization Expense
39.000 TL
39.000 TL
39.000 TL
39.000 TL
39.000 TL
Marketing Expense
50.000 TL
72.883 TL
91.104 TL
109.325 TL
131.190 TL
OPERATING PROFIT
392.072 TL
489.457 TL
621.572 TL
753.686 TL
912.223 TL
Taxes incurred
137.225 TL
171.310 TL
217.550 TL
263.790 TL
316.548 TL
NET PROFIT
254.847 TL
318.147 TL
404.021 TL
489.896 TL
587.875 TL

References

http://www.capital.com.tr/haber.aspx?HBR_KOD=2840

http://www.aatravel.co.nz/gkrt/healthy-eating.php

http://www.eatromaine.com/romaine/sirius/stoler_trucker_eating.pdf

http://tastylife.wordpress.com/2009/08/31/healthy-eating-on-the-road/

http://www.bestplaceshawaii.com/tips/hints/healthy_eating.html

http://babyfit.sparkpeople.com/articles.asp?id=964

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