Pre-Feasibility Study

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Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
Waheed Trade Complex, 1st Floor , 36-Commercial Zone, Phase III, Sector XX, Khay
aban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
PUNJAB SINDH NWFP BALOCHISTAN
Waheed Trade Complex,
1st Floor, 36-Commercial Zone, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Phase III, Sector XX, Complex II, M.T. Khan Road, State Life Building Chaman Hou
sing Scheme
Khayaban-e-Iqbal, DHA Lahore. Karachi. The Mall, Peshawar. Airport Road, Quetta.

Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 8
31623, 831702
Fax: (042) 5896619, 5899756 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 8319
22
helpdesk@smeda.org.pk helpdesk-khi@smeda.org.pk Helpdesk-pew@smeda.org.pk helpde
sk-qta@smeda.org.pk
December, 2006
Pre-Feasibility Study Fast Food Restaurant
DISCLAIMER
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 in
cluded 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 con
cerned
factors, and the actual results may differ substantially from the presented info
rmation.
SMEDA does not assume any liability for any financial or other loss resulting fr
om this
memorandum in consequence of undertaking this activity. Therefore, the content o
f this
memorandum should not be relied upon for making any decision, investment or othe
rwise.
The prospective user of this memorandum is encouraged to carry out his/her own d
ue
diligence and gather any information he/she considers necessary for making an in
formed
decision.
The content of the information memorandum does not bind SMEDA in any legal or ot
her
form.
DOCUMENT CONTROL
Document No. PREF-11
Revision 1
Prepared by SMEDA-Sindh
Approved by Provincial Chief Sindh
Issue Date December, 2006
Issued by Library Officer
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
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This document is developed to provide the entrepreneur with potential investment

opportunity in setting up and operating a medium sized fast food restaurant offe
ring a
variety of food items to the general public. This pre-feasibility gives an insig
ht into various
aspects of planning, setting up and operating a fast food restaurant for the gen
eral
populace. The document is designed to provide relevant details (including techni
cal) to
facilitate the entrepreneur in making the decision by providing various technolo
gical as
well as business alternatives. The document also allows flexibility to change va
rious
project parameters to suit the needs of the entrepreneur.
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Fast food is food which is prepared and served quickly at outlets called fast-fo
od
restaurants. It is a multi-billion dollar industry which continues to grow rapid
ly in many
countries. A fast-food restaurant is a restaurant characterized both by food whi
ch is
supplied quickly after ordering, and by minimal service. The food in these resta
urants is
often cooked in bulk in advance and kept warm, or reheated to order. Many fast-f
ood
restaurants are part of restaurant chains or franchise operations, and standardi
zed
foodstuffs are shipped to each restaurant from central locations. There are also
simpler
fast-food outlets, such as stands or kiosks, which may or may not provide shelte
r or chairs
for customers. Because the capital requirements to start a fast-food restaurant
are relatively
small, particularly in areas with non-existent or medium income population, smal
l
individually-owned fast-food restaurants have become common throughout Pakistan.

Generally restaurants, where the customers sit down and have their food orders b
rought to
them, are also considered fast food.
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The Fast Food Restaurant Market is a growing industry in Pakistan relying heavil
y on the
changing lifestyle patterns, population growth of the target age group and the r
elated
increase in employment of women. With today's hectic lifestyles, time-saving pro
ducts 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-
from

home market for much of the last one decade.

Demand for convenience has driven expenditures where people want quick and conve
nient
meals; they do not want to spend a lot of time preparing meals, traveling to pic
k up meals,
or waiting for meals in restaurants. As a result, consumers rely on fast food. K
nowing this,
fast food providers are coming up with new ways to market their products that sa
ve time
for consumers.
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Pre-Feasibility Study Fast Food Restaurant
Consumers want to combine meal-time with time engaged in other activities, such
as
shopping, work, or travel, therefore allocating less time for food, hence the gr
owing need
for fast food.
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The fast-food industry is popular in Pakistan, the source of most of its innovat
ion, and
many major international chains are based there. The presence of multinational f
ast food
chains like McDonalds, KFC, Pizza Express, Pizza Hut, Subway etc. have somewhat
catered to the high income segment therefore developing a niche as upscale fastf
ood
restaurants. Multinational corporations such as these typically modify their men
us to cater
to local Pakistan tastes and most overseas outlets are owned by native franchise
es to ensure
that cultural, ethnic, and community values are taken care of.
Additionally, multinational fast-food chains are not the only or even the primar
y source of
fast food in most cities of Pakistan. Many regional and local chains have develo
ped around
the main cities of Pakistan (for example Khan Broast in Karachi) to compete with
international chains and provide menu items that appeal to the unique regional t
astes and
habits at comparatively low costs. In Pakistan, multinational chains are conside
rably more
expensive; they usually are frequented because they are considered chic and some
what
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) prefe
rs
visiting local outlets that offer low cost fast food, hence more frequent visits
.
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The rapid rate at which the fast food industry continues to add outlets is as mu
ch a
reflection of consumer demand for convenience as it is a reflection of demand fo
r 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
of the
expansion has been in the form of "satellite" outlets. These tend to be smaller
in size, with
little or no seating capacity, and are often in nontraditional locations, such a
s office
buildings, department stores, airports, and gasoline stations; locations chosen
specifically
to maximize convenience and consumer accessibility.
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Fast-food outlets have become popular with consumers for several reasons. One is
that
through economies 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 fa
r from home.
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Pre-Feasibility Study Fast Food Restaurant
Multinational Fast food chains like McDonald's rapidly gained a reputation for t
heir
cleanliness, fast service and a child-friendly atmosphere where families on the
road could
grab a quick meal, or seek a break from the routine of home cooking. Prior to th
e rise of
the fast food chain restaurant, people generally had a choice between greasy-spo
on diners
(kiosk) where the quality of the food was often questionable and service lacking
, or high-
end restaurants that were expensive and impractical for families with young chil
dren.
Modern, stream-lined convenience of the fast food restaurant provides a new alte
rnative
and appealed to consumers' instinct for ideas and products associated with progr
ess,
technology and innovation.
Fast food restaurants have rapidly become the eatery "everyone can agree on", wi
th many
featuring child-size menu combos, play areas and whimsical branding campaigns, d
esigned
to appeal to younger customers. Parents can have a few minutes of peace while ch
ildren
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 trendy attract
ions in
many cities around Pakistan, particularly among younger people with more varied
tastes.
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Fast Food outlets tend to focus on the work while you eat philosophy similar to th
e
McDonald Outlet at Quaid e Azam Internation Aiport (Karachi) wherein seating spa
ce 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 Ea
t.
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Pakistan, currently ranked as 6th in terms of total population, is characterized
by a high
population growth rate of 1.9% (Pakistan Economic Survey 2005) and is set to tak
e the top
three positions in terms of total population with already 153.4 Million people r
egistered in
2005.1 With this, the per capita income has increased to US$ 736 while the produ
ctive age
group (15 to 64) years is said to take the major chunk of population (67% of tot
al
population) by 2020. 2
The growth rate in food consumption is also augmented by the rapid increase in t
he
employment rate for males / female population aging between 20 to 29 years (fast
food
goers) hence the greater income contribution to the overall income generated is
expected to
be higher.
1 2005 World Population Data Sheet, Population Reference Bureau, Washington; 200
5
2 Population Projections 1998-2023, Planning Commission; NIPS
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Pre-Feasibility Study Fast Food Restaurant
Population Pyramid 1998 & 2020*

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

ission; NIPS
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The Pakistani economy is becoming increasingly service-oriented, and over the pa
st
several decades, the foodservice industries that offer the highest levels of con
venience
have been rewarded with strong sales growth. In the face of rising population, i
ncomes and
increasingly hectic work schedules, a nearly insatiable demand for convenience w
ill
continue to drive fast food sales. Fast Food Outlets will strive to find ways to
make their
products even more accessible.
Even if incomes stagnate or attitudes change, consumers are unlikely to return t
o meal
preparation at home on a large scale. This suggests that even if consumers choos
e to spend
more time at home, for family or other reasons, much of the meal preparation wil
l still
occur elsewhere.
Many more table service restaurants, which traditionally focus on full-service i
n house
dining, will likely try to capture part of this market by offering take-out, and
possibly
experimenting with home delivery.
The value of consumer time, as well as the demand for consistent, high-quality f
ood
products, will continue to shape the fast food industry. Fast food, once conside
red a
novelty, has become an increasingly significant part of the young generation s die
t. The
role of convenience in this dietary shift cannot be over-emphasized, and the fut
ure growth
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Pre-Feasibility Study Fast Food Restaurant
of the rest of the foodservice industry will be driven in large part by its abil
ity to find new
ways to save consumers time.
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Whether you are opening a one-of-a-kind restaurant or trying to grow your existi
ng
restaurant into a multi-unit chain, there are winning principles that can help s
hape 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
some vague notion. To start, it is wise to first set specific goals and decide o
n the
ways you will measure your restaurants success.
ii) Longetivity
This can be described as the art of being able to maintain success over time whi
le
adjusting to meet the changing demands and buying habits of the customer. To
open a restaurant successfully and become profitable is one thing, but to mainta
in
that success over a long period of time is winning.
iii) Consistency
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 have a broad appeal

and well developed points of difference that enable them to dominate their
market niche. To be the first place the customer thinks of going when choosing t
o
dine out is the goal of the winning concept.
v) Expandability
Consistency of quality and service, and operating systems and management
procedures established in the first unit can result in more expandable opportuni
ties
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 i
n the
development of the menu. It involves designing an appealing selection of menu
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Pre-Feasibility Study Fast Food Restaurant
items that are competitively priced in the marketplace. Menu pricing is a very
tricky task because you need to price items so that you can operate profitably a
nd,
just as important, offer your targeted guests a good price/value relationship.
vii)Selecting Prime Location
The specific location within your target area also is critical. If you are situa
ted in an
infrequently traveled area no where near complimentary businesses or at the back

of a mall, you limit your earning potential. Even if you are the only outlet in
town
you must gauge the likelihood of outsiders visiting your restaurant. If the rest
aurant
is right off of a major freeway heavily traveled by truckers and road trippers y
ou
may be highly successful despite a remote location.
viii) Market Research
This is probably the most critical factor for running a successful fast food
restaurant. You need to visit fast food outlets, franchises and other chains to
see
how your concept would fit into the neighborhood you are planning to target.
Talk to customers to know their preferences, some detailed meetings with
restaurant managers / owners over dinner would do the trick in obtaining best
practices and critical information that otherwise could have been overlooked.
Keep in mind that because a concept works in one area does not mean it will be
well-received by customers in your location. Tastes are subject to location
preference and more often target market. In high scale urban areas (like PECHS,
KDA etc.) you are more likely to be successful with a niche concept than in a de
nse
middle income areas (like Gulistan e Jauhar). Another thing to consider is
competition. If your market is saturated with similar restaurants and the popula
tion
may not be large enough to support more restaurants, you may want to rethink you
r
concept.
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Although the legal status of business tends to play an important role in any set
up, the
proposed fast food business is assumed to operate on a sole proprietorship basis
which may
extend to partnership in case of addition of new products that might add signifi
cant
business to the existing setup.
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From burger stands to barbeque steakhouses more and more restaurants are popping
up in
cities every day. Since restaurants are such a common business venture, people m
ust enjoy
running them. However, all of those advantages come at a price -building a resta
urant
from scratch is not an easy task. It is a hard and expensive process, and the re
ality is that
many restaurants fail in their first year of business due to improper planning.
But rest
assured, there are ways to reduce the risk of becoming another statistic. Follow
ing are
some of the handy tips that can help run a successful fast food establishment.
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One of the best ways to reduce the risk of owning a failed restaurant is to have
some
restaurant experience before you start. Many successful restaurateurs have said
that the
best way to prepare for owning a restaurant is by working in one, hopefully in a
n eatery
similar to one you'd like to open. You'll learn more than just how to serve food
with a
smile; you can learn restaurant marketing, menu development, payroll, and other
significant components of the restaurant world. Working in the restaurant indust
ry and
learning the basics is an important first step to becoming an owner.
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Who do you see eating at your restaurant? Are you targeting the family crowd, te
enagers or
seniors? Knowing your target market before you start planning will not only help
you
solidify your menu; it will help determine your location, décor and the overall at
mosphere
of your 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 offering
a two-hour
dining experience wouldn't be appealing to teenagers or families with small chil
dren.
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What type of restaurant do you see yourself owning? Typically, your service styl
e will
either be fast-food, which offers food types that range from burgers, fries, sou
ps and
sandwiches; mid-scale, which has full course meals at value prices; or upscale,
offering
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
style of food choices. Is there a particular type of cuisine that you see yourse
lf serving? Do
you prefer pizza or soup? Sandwiches or Chinese? Choosing your food concept goes
hand

in-hand with your choice in service style.

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Like any other type of company, a restaurant will need a concise business plan.
This plan
should include but is not limited to: the overall concept and goal of the restau
rant; specific
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Pre-Feasibility Study Fast Food Restaurant
financial information and projections; a description of the target market; the m
enu and
pricing; equipment and employee details; advertising and marketing plan; and a p
otential
exit strategy.
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The menu can make or break a restaurant, and should be in accordance with the ov
erall
concept of the restaurant. Revisit the business plan to make sure the menu is at
tractive to
the target market, is affordable within specified budget, and complements the re
staurant's
design concept. For example, if the restaurant is family-friendly, you will need
a kids
menu. If it is supposed to be an upscale establishment, a lot of thought will ha
ve to go into
the dessert list.
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It is important to find a location that has a continuous stream of traffic, conv
enient parking,
and is in proximity to other businesses (especially if you're catering to the lu
nch crowd). It
is necessary to revisit the business plan to make sure you are close to your tar
get market. If
you are opening a fast food restaurant, it may not be the best idea to open it i
n the vicinity
of upscale homes but preferably near flats. In addition, make sure that the mont
hly rent is
in-line with the business plan's projected profit so that you do not become buil
ding-poor.
Once you find your location, the layout and design of the interior should be tak
en into
account. You should already have a concept of your restaurant in your business p
lan; bring
this concept into the design of the dining room. When designing your kitchen are
a, think
about what's on your menu in order to determine what is needed for the food prep
aration
area.
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The business plan will help you recognize how much money you will need to start
your
restaurant. If you are unsure about how much money you will need upfront, talkin
g to
other restaurant owners can help you project your expected start-up costs. There
are
numerous ways restaurateurs raise capital to start their business, including tak
ing
advantage of government programs that cater to upstart small business owners; li
quidating
assets or using them as collateral for a loan; or encouraging a family or friend
to become
the creditor.
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Restaurants are regulated and subject to inspection, and failing to be up to spe
ed with these
regulations could be detrimental to the fast food outlet. Therefore it is necess
ary to consult
with old restaurateurs to become familiar with what one must do to meet the nece
ssary
legal requirements.
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One of the 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
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Pre-Feasibility Study Fast Food Restaurant
and responsibilities. In addition, find out what other restaurants are paying th
eir employees
so that you can be competitive in the job market, without spending too much on p
ayroll.
However try linking your payroll with the bottom line and see how much money can
be
squeezed out for the employees.
2
22.
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11.
..1
110
00 A
AAd
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rrt
tti
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ee &
&& M
MMa
aar
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Every business needs a comprehensive marketing plan, and restaurants are no exce
ption.
After determining your marketing budget, price out billboard advertising, flyers
in
newspapers, and local cable TV advertising. Ask your customers how they found ou
t about
you, so that you can record where your advertising and marketing money are best
spent.
Opening up food stalls and setting up tasting booths at local neighborhood event
s or
having an event at the restaurant benefiting a students / event, can be an inexp
ensive way
to achieve positive word-of-mouth.
C
CCh
hho
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aa L
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nn
Not every food-service operation needs to be in a retail location, but for those
that do
depend on retail traffic like fast food outlets, here are some factors to consid
er when
deciding on a location:
.
Anticipated sales volume. How will the location contribute to your sales volume?

.
Accessibility to potential customers. Consider how easy it will be for customers

to get into your outlet. If you are relying on strong pedestrian traffic, consid
er
whether or not nearby businesses will generate foot traffic for you.
.
The rent-paying capacity of your business. If you've done a sales-and-profit
projection for your first year of operation, you will know approximately how muc
h
revenue you can expect to generate, and you can use that information to decide h
ow
much rent you can afford to pay.
.
Restrictive ordinances. You may encounter unusually restrictive ordinances that
make an otherwise strong site less than ideal.
.
Traffic density. With careful examination of food traffic, you can determine the

approximate sales potential of each pedestrian passing a given location. Two

factors are especially important in this analysis: total pedestrian traffic duri
ng
business hours and the percentage of it that is likely to patronize your food se
rvice
business.
.
Visibility is a location s ability to be seen and recognized. Good visibility can
create opportunities for the impulse eating decision that is critical for fast f
ood
operators, and it allows the exposure full-service restaurants require.
.
Customer parking facilities. In case you allow for parking the site should provi
de
convenient, adequate parking as well as easy access for customers.
.
Proximity to other businesses. Neighboring businesses may influence your store's

volume, and their presence can work for you or against you.
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
.
History of the site. Find out the recent history of each site under consideratio
n
before you make a final selection. Who were the previous tenants, and why are th
ey
no longer there?
.
Terms of the lease. Be sure you understand all the details of the lease, because
it's
possible that an excellent site may have unacceptable leasing terms.
.
Future development. Check with the local planning board to see if anything is
planned for the future that could affect your business, such as additional build
ings
nearby or road construction.
D
DDe
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nng
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oon
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tth
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Layout and design are major factors in your restaurant's success. You'll need to
take into
account the 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 office
space.
.
Dining area. This is where you'll be making the bulk of your money, so don't cut

corners when designing your dining room. Visit restaurants in your area and
analyze the décor. Watch the diners; do they react positively to the décor? Is it
comfortable or are people shifting in their seats throughout their meals? Note w
hat
works well and what doesn't.
Much of your dining room design will depend on your concept. It will help you to
know
that 40 to 50 percent of all sit-down customers arrive in pairs; 30 percent come
alone or in
parties of three; and 20 percent come in groups of four or more.
To accommodate the different groups of customers, use tables for four that can b
e pushed
together in areas where there is ample floor space. This gives you flexibility i
n
accommodating both small and large parties. Place booths for four to six people
along the
walls.
.
Production area. Too often, the production area in a restaurant is inefficiently

designed--the result is a poorly organized kitchen and less than top-notch servi
ce.
Keep your menu in mind as you determine each element in the production area.
You'll need to include space for receiving, storage, food preparation, cooking,
baking, dishwashing, production aisles, trash storage, employee facilities and a
n
area for a small office where you can perform daily management duties.
Arrange your food production area so that everything is just a few steps away fr
om the
cook. Your design should also allow for two or more cooks to be able to work sid
e by side
during your busiest hours.
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
2
22.
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DDe
ees
ssi
iig
ggn
nni
iin
nng
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&& D
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Since customers ultimately drive restaurant design trends, many of your restaura
nt design
ideas will come from your clientele. Successful restaurant design ideas are bred
with an
understanding of the types of experiences your customers are looking for and the
promise
your brand has made to them. You may know what types of menu items they crave, b
ut do
you know what kinds of restaurant design ideas create an atmosphere that will we
lcome
them time and time again?
.
Step One: The restaurant designer s process begins with a thorough understanding
of the eatery s menu, location, customers, architectural preferences and lighting
concerns. More than just a design powwow, the restaurant designer s process
includes budget considerations, timelines and coordination with city officials t
o
secure necessary building permits.
.
Step Two: The most effective restaurant design considers the flow of waiter staf
f
from the kitchen to the dining area or from the dining area to the restrooms. Th
e
restaurant designer s process contemplates the overall circulation within the
restaurant for maximum efficiency
.
Step Three: With the floor plan in hand and a concept in mind, the next stage in

the restaurant designer s process is interior design. Sketches may depict color
schemes, furniture placement, window treatments, artistic lighting and other
aspects of the ambiance. This is also the part of the restaurant designer s proces
s
where we consider paints, wallpapers, foliage and artwork.
2
22.
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55 C
CCr
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aat
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iin
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aa M
MMe
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Though menu variety has increased over the years, menus themselves are growing s
horter.
Busy consumers don't want to read a lengthy menu before dinner; dining out is a
recreational activity, so they're in the restaurant to relax. Keep your number o
f items in
check and menu descriptions simple and straightforward, providing customers with
a
variety of choices in a concise format. Your menu should also indicate what dish
es can be
prepared to meet special dietary requirements. Items low in fat, sodium and chol
esterol
should also be marked as such.
2
22.
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66 R
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That depends to some extent on how you answered the fundamental question mention
ed
above. For the sake of discussion, a restaurant can be understood in two parts;
the front-
house component and the back-house component, which we will call the engine. The
back-
house areas include, the cook-line, the food preparation areas, refrigerated any
dry storage
areas, office and the dishwashing area. The front-house functions are typically
dining
areas (interior and exterior), waiting area, to-go area, restroom, and private d
ining areas.
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
The speed of product delivery; the size of the engine, a casual or formal atmosp
here, and
numbers of patrons you want to accommodate will all factor in to the amount of s
pace you
need for your restaurant. The goal is trying to maximize the number of patrons o
ne can
serve, out of the smallest most efficient back-house possible.
H
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EEm
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Choosing employees who will do a good job is not only important to the success o
f your
business, but will also contribute to the image of your establishment, provided
they are
properly trained.
There are several categories of personnel in the restaurant business: manager, c
ooks,
servers, busboys, dishwashers and cleaners. When your restaurant is still new, s
ome
employees' duties may cross over from one category to another. For example, your
servers
may double as the cleaners. Be sure to hire people who are willing to be flexibl
e in their
duties.
.
Manager / Owner. The most important employee in most restaurants is the
manager. The best candidate is you or a person who has already managed a
restaurant or restaurants in the area and will be familiar with local buying sou
rces,
suppliers and 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 three cooks -two full
time and one part time. But one lead cook may need to arrive early in the mornin
g
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 help duri
ng
peak hours, such as weekend rushes, and can work as a line cook during slower
periods, doing simple preparation. Cooking schools can usually provide you with
leads to the best in the business, but look around and place newspaper ads befor
e
you hire. Customers will become regulars only if they can expect the best every
time they dine at your restaurant. To provide that, you'll need top-notch cooks
and
chefs.
.
Servers. The servers will have the most interaction with customers, so they need
to
make a favorable impression and work well under pressure, meeting the demands
of customers at several tables while maintaining a pleasant demeanor. There are
two times of day for wait staff: very slow and very busy. Schedule your employee
s
accordingly. The lunch rush, for example, starts around 11:30 a.m. and continues

until 1:30 or 2 p.m. Restaurants are often slow again until the dinner crowd arr
ives
around 6:30 to 7 p.m.
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
2
22.
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AA G
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FFa
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FFo
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EEx
xxp
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Based on some surveys conducted with fast food goers following are some of the f
actors
that contribute to a good fast food experience:
.
Location
.
Characteristics
.
Welcome
.
Food server
.
Food.
.
Environment (parking, restrooms, lighting).
.
Dessert Variety
.
Smile factor.
.
Time factor.
.
Profit factor (beverages offered, dessert menus presented).
Measuring good service is subjective, but generally what is expected from a serv
er when
reviewing restaurants.
.
The server should greet diners within 3 minutes of their being seated.
.
The server should neat and clean.
.
The server should not be too chatty or familiar.
.
The server should know the menu and be able to answer questions.
.
The server should bring drinks within 3 minutes of being ordered.
.
The appetizer (if any) should be served within 5 minutes of ordering.
.
Entrees should be served within 20 minutes of ordering.
.
Water or beverage glasses should be refilled regularly.
.
The server should silently survey the table and assess our needs without constan
tly
interrupting to ask, "Do you need anything else?"
.
The bill should be brought promptly when requested, and change should be
returned promptly.
.
Plates should be removed at the proper time, and the table should be cleared of
bread and butter before dessert is served.
2
22.
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LLe
eeg
gga
aal
ll R
RRe
eeq
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ss
The Pakistan Hotels and Restaurant Acts Act 1976 is the law which requires the o
wners of
all types of restaurants to register and obtain a license with the government. T
he restaurant
owner is required to apply to the controller for registration of the restaurant.

PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
Application for registration and determination of fair rates shall be made to th
e controller
in Form G together with a certificate of medical fitness in Form I from a registered

medical officer of the civil hospital in respect of the staff of the restaurant.

For registration of a restaurant, the owner of the restaurant is required to con

form to the
standard of health, hygiene and comfort which standards have been set out in Sch
edule II
of the act.
On receipt of application, the controller will carryout inspection of the aforem
entioned
premises and once satisfied will initiate the registration process. Once registe
red the owner
of the restaurant will apply to the controller for license as per the Act which
needs to be
renewed on a yearly basis for the prescribed fee.
2
22.
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00 P
PPr
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This section will provide the total cost of the project.
Item Cost (Rs.)
Construction Cost (all inclusive) 1,307,000
Dining & Office Furniture 542,250
Equipment & Machinery 967,000
Advance Rent 1,200,000
Preliminary Expenses 50,000
Working Capital 1,036,000
Total 5,102,250
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
2
22.
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11 P
PPr
rro
oop
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dd P
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ood
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MMi
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The proposed project is assumed to provide customers with a variety of fast food
items as
outlined in the following menu:
Broast Price Chinese Price
Chicken Broast (Qtr.) 65 Hot & Sour Soup (2 Servings) 75
Chicken Broast (Half) 125 Hot & Sour Soup (4 Servings) 140
Chicken Broast (Full) 250 Chicken Corn Soup (2 Servings) 75
Chicken Corn Soup (4 Servings) 140
Burgers Price Plain Rice 40
Chicken Burger 50 Chicken Fried Rice 80
Chicken Cheese Burger 55 Vegetable Fried Rice 60
Beef Burger 40 Egg Fried Rice 70
Beef Cheese Burger 45 Beef Fried Rice 80
Zinger Burger 80 Beef Chilli (w/o rice) 75
Chicken Chilli (w/o rice) 85
Sandwiches Price Price
Chicken Sandwich 55 French Fries (per plate) 25
Egg Sandwich 40 Cole Slaw 15
Beef Sandwich 45 Soft Drinks (Large) 50
Club Sandwich 80 Soft Drinks (Regular) 15
Based on the above the fast food restaurant can offer low cost combo meals to it
s
customers for increased value. Following are the proposed combo deals that can b
e further
modified to meet increasing demand:
Combos Items Price
Combo Deal 1 Zinger Burger / French Fries / Regular Drink 105
Combo Deal 2 Chicken Broast (Qtr.) / French Fries / Regular Drink 90
Combo Deal 3 Chicken Burger, Broast (Qtr.), French Fries, Regular Drink 135
Combo Deal 4 Club Sandwich / French Fries / Regular Drink 105
Family Deal 1 Full Broast / Zinger Burger / Club Sandwich / French Fries (4) / L
arge Drink 535
Family Deal 2 Zinger Burger (2) / Club Sandwich (2) / Broast (Half) / Large Drin
k / Fries (2) 515
Jumbo Deal 5% discount on purchase above Rs. 1,000/

It desirable to have a vast variety of food items to capture a larger target aud
ience 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 th
e initial
setup costs and desired profit margins. Once the fast food restaurant achieves a
steady sales
pattern further food items like Barbeque can be added and similarly for desserts
ice cream
would be the best potential. In case circumstances demand items other than the p
roposed
menu the entrepreneur should make immediate changes to the menu before he starts

loosing out customers.

PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
One important factor to consider here is that the entrepreneur must have the req
uisite skills
to decide on whether to introduce a new product line (like Barbeque, Pizza) or a
dd a new
item to the existing product line both of which might require the purchase of ad
ditional
kitchen equipment. Hence the experience of the entrepreneur will play an importa
nt role in
determining the course of action.
2
22.
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cco
oom
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een
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rrs
ss
300 Customers per
Human Resource Equipment
21
Local / American /
Chinese
Financial Summary
IRR NPV Payback Period
57% Rs. 13,076,676 2.5 Years
Middle Income
day
Level Area
Capacity
Location
Cost of Capital
Project Cost
(WACC)
Rs. 5,102,250
17.5%
2
22.
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PPr
rro
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ppo
oos
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eed
dd L
LLo
ooc
cca
aat
tti
iio
oon
nn
The recommended area for the proposed business setup will be in a densely popula
ted
middle income area (for example Gulistan-e-Jauhar, Karachi). The main reason for
such a
location is the presence of target market and customer traffic which are the pre
requisites
for the success of the restaurant.
3
33 M
MMA
AAC
CCH
HHI
IIN
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YY &
&& E
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NNT
TT
Understanding the customer s individual needs and the capability to satisfy these
completely is a vital part of the restaurant s success. This is in turn dependent
on the
machinery and equipment used to produce good quality fast food. Fast Food Machin
es are
easily available 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 cust
omers.
Secondhand equipment of world leading brands such as SPINZER, 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 machines can b
e
ordered through international vendors with a minimum delivery period of 3 months
while
refurbished / reconditioned machines are also available. Some outlets closing th
eir
business also tend to sell their machinery at low prices but the durability and
reliability
factor must be taken into consideration while buying such machines.
The typical fast food restaurant as outlined above would require the following m
achine /
equipment for its operations:
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
Item Details Quantity Unit Price (Rs.) Total Price(Rs)
Freezers (12 cf) 3 25,000 75,000
New Broast Machine (15 Pound
Capacity)*
1 650,000 650,000
Deep Well Frier (Single Valve With 2
Baskets)
2 40,000 80,000
Hot Plate for Burgers, Kebab, Sandwiches
(30 x 22 )
1 33,000 33,000
Bin Marry Soup Container (2 Valve With
Steel Cabinet)
1 50,000 50,000
Potato Cutter (8mm) 1 3,000 3,000
Pillar (4.5 Kg Potato Peeling Capacity) 1 6,000 6,000
Microwave 1 10,000 10,000
Working Tables 2 20,000 40,000
Keg Racks & Shelves 2 10,000 20,000
Total 15 -967,000
* Available from Spinzer USA, Delivery Time Three Months, Reconditioned Availabl
e at Rs. 200,000 with
the same specs and Delivery Time
3
33.
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11 M
MMa
aac
cch
hhi
iin
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eer
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yy M
MMa
aai
iin
nnt
tte
een
nna
aan
nnc
cce
ee
All machines require routine cleaning and maintenance after every three months a
nd an
annual service which costs around 1% to 5% of the total cost depending upon the
use of
the machine and operator's skill. We have assumed an average of 2.5% of the depr
eciated
cost as the annual maintenance cost.
3
33.
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DDi
iin
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nng
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FFu
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&& G
GGe
een
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ll F
FFi
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ttu
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ees
ss
The restaurant is expected to entertain a minimum of 300 customers in a day, whi
ch
requires a good seating layout to avoid any confusion and problems during rush h
ours. The
following table gives the details of the dining tables and chairs that would ser
ve
approximately 100 customers (maximum capacity) at a time:
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
Item Details Quantity Unit Price (Rs.) Total Price(Rs)
Dining Table Square
(2X2)
25 6,000 150,000
Chairs (Standard 14 ) 100 1,500 150,000
Kitchen Cutlery Set 2 2,500 5,000
Dining Cutlery* (Plate,
Fork, Knife, Spoon, Glass)
150 150 22,500
Air Conditioner Split Units
(6 Ton)
2 31,000 62,000
Hot Water Geyser Large 1 20,000 20,000
Halogen Lights 25 250 6,250
Wall Lights (Large) 4 1,500 6,000
Portable Emergency Light 4 2,500 10,000
Generator (1.5 KVA) 1 90,000 90,000
Counter Chairs 2 1,500 3,000
Office Table & Chair Set 1 10,000 10,000
Waiting Chairs for Take
Away Customers
5 1,500 7,500
Total 322 168,400 542,250
*Cutlery to be 1.5 times the maximum capacity (i.e. 100 customers)
4
44 L
LLA
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DD &
&& B
BBU
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4
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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 outl
et be opened
on the ground floor of flats or shopping mall wherein the consumer traffic will
be a
maximum. The more the shop is near the main road the better sales potential it w
ill have.
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
D
DDe
eed
ddi
iic
cca
aat
tte
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dd A
AAr
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eea
aa R
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The floor space needs to be carefully allocated to allow for maximum dining spac
e for
customers in rush hours. The allocation of space between different sections woul
d be as
follows:
Details
%
(Sq. Feet)
Size
(Sq. Feet)
Civil Works & Décor*
(Cost in Rs / square
feet)
Total Construction
Cost (Rs)
Dining 63 % 1,250 700 875,000
Waiting 4 % 80 700 56,000
Kids Play 3% 70 800 56,000
Kitchen &
Preparation
25 % 500 450 225,000
Office 1.5% 30 450 13,500
Stores 3% 70 450 31,500
Total 100 % 2,000 3,550 1,257,000
* Includes interior decoration as well as fancy fittings, lightings, hangings et
c.
4
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RRe
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mmm
mme
een
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dd M
MMo
ood
dde
ee
The proposed premises will be acquired on a rental basis with 6 month deposit an
d 6
months advance rent after which rent will be payable on a monthly basis. The mon
thly rent
is approximately Rs. 50/ Sq Feet for the ground floor which would amount to Rs.
100,000
per month for the proposed fast food outlet (2,000 Sq Ft.)
4
44.
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RRe
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To allow for maximum space for dining and security concerns (Cash control) it is

recommended that the owner should manage the reception counter as well as all ca
sh
handling emanating from the tables. Therefore a total of Rs. 50,000 would be req
uired to
erect the reception and cash counter along with the take-away order taking booth
.
The Office Furniture & Equipment will be depreciated at the rate of 10% per annu
m
according to the diminishing balance method for the projected period.
5
55 H
HHU
UUM
MMA
AAN
NN R
RRE
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SSO
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CCE
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The human resource requirement for the general and management staff are as follo
ws:
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
Designation / Type Number
Monthly Salary
(Rs.)
Total Salary
(Rs.)
Owner 1 --
Kitchen Supervisor 2 6,000 12,000
Shift Supervisor
(including reliever)
3 8,000 24,000
Cook 4 4,000 16,000
Servers 6 3,000 18,000
Take Away Order Taker
/ Cashier
1 6,000 6,000
Dishwasher 2 2,500 5,000
Cleaner 1 2,500 2,500
Guard (12 Hour) 1 6,000 6,000
Total 21 38,000 89,500
Considering the size of the proposed establishment it is assumed that the owner
would be
managing the overall affairs of the fast food setup. He will be required to proc
ess and
check bills, invoices, receivables management, maintain accounts, etc. for recor
d. The
owner will also ensure safe custody of store keys.
The cashier will only be responsible for receiving payment and handing over chan
ge while
the owner would be managing the cash drawer for control purposes. It is importan
t to note
that many food outlets tend to lose out due to inadequate cash control by the ow
ners
especially during rush hours where the counter staff can easily slip out one or
two
payments.
6
66 F
FFI
IIN
NNA
AAN
NNC
CCI
IIA
AAL
LL A
AAN
NNA
AAL
LLY
YYS
SSI
IIS
SS &
&& K
KKE
EEY
YY A
AAS
SSS
SSU
UUM
MMP
PPT
TTI
IIO
OON
NNS
SS
The project cost estimates for the proposed fast food outlet have been formulate
d on the
basis of discussions with relevant stakeholders and experts. The cost projection
s cover the
cost of land, building, inventory, equipment including office furniture etc. The
specific
assumptions relating to individual cost components are given as under:
6
66.
..1
11 R
RRe
eev
vve
een
nnu
uue
ee &
&& C
CCo
oos
sst
tt P
PPr
rro
ooj
jje
eec
cct
tti
iio
oon
nns
ss
The Sales are expected to increase by 15% every year while the cost of raw mater
ials is
assumed to increase by 10%. The 15% annual increase in revenue is expected to re
sult
from a part increase in population increase and part increase in product price.
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
The prices used to calculate the gross revenue earned are based on the billing r
ate 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 revenue
streams
for the fast food outlet
Revenue Stream % of Total Sales
Dine In 60%
Take Away 20%
Home Delivery 20%
Total Revenue 100%
The minimum delivery order size is assumed to be Rs. 250/-per order with 3 deliv
ery
riders being employed at the charge out rate of Rs. 25 per delivery order wherei
n no
transportation fuel is provided by the fast food outlet. For Take Away and Home
Delivery
another 1% of sales added cost due to packing is assumed.
6
66.
..2
22 R
RRe
een
nnt
tt C
CCo
oos
sst
tt
The rent for the assumed premises will be Rs. 100,000/-per month. It is assumed
that Rs.
1,200,000 will be given in advance before possession of premises. This will incl
ude 6
months deposit and 6 month advance rent. The rent would be payable on a monthly
basis
and is expected to increase at the rate of 10% per annum for the projected perio
d.
6
66.
..3
33 U
UUt
tti
iil
lli
iit
tti
iie
ees
ss R
RRe
eeq
qqu
uui
iir
rre
eem
mme
een
nnt
tt
The following table presents the assumed breakup of utilities on a monthly basis
:
Utility Monthly Charges (Rs.)
Electricity 25,000
Water 2,000
Gas 15,000
Telephone 10,000
Total 52,000
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
As depicted above the most of the fast food machines require considerable gas du
ring the
preparation process. The preheating procedure of the equipment before commenceme
nt of
preparation also consumes considerable gas. It is assumed that utilities expense
s will be
increased by 10% every year.
6
66.
..4
44 D
DDe
eep
ppr
rre
eec
cci
iia
aat
tti
iio
oon
nn o
oon
nn B
BBu
uui
iil
lld
ddi
iin
nng
gg &
&& E
EEq
qqu
uui
iip
ppm
mme
een
nnt
tt
Depreciation on Shop, Equipment, Machinery and Fixtures is assumed to be at the
rate of
10% per annum based on the diminishing balance method for the projected period.
6
66.
..5
55 W
WWo
oor
rrk
kki
iin
nng
gg C
CCa
aap
ppi
iit
tta
aal
ll &
&& P
PPr
rre
ee O
OOp
ppe
eer
rra
aat
tti
iin
nng
gg C
CCo
oos
sst
tts
ss
It is estimated that an additional amount of approximately Rs. 1,036,000 will be
required
as cash in hand to meet the working capital requirements / contingency cash for
the initial
stages. The requirement is based on the rent, utilities and salaries expenses fo
r at least four
months and 3 days raw material inventory. The following table gives the break up
.
Item 4 Months Cost (Rs.)
Utilities 208,000
Salaries 358,000
Raw Material Inventory 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
66.
..6
66 A
AAc
ccc
cco
oou
uun
nnt
tt R
RRe
eec
cce
eei
iiv
vva
aab
bbl
lle
ees
ss
All sales will be made strictly on cash basis. It is not advisable to operate a
fast food
restaurant on credit basis.
6
66.
..7
77 M
MMi
iis
ssc
cce
eel
lll
lla
aan
nne
eeo
oou
uus
ss O
OOu
uut
ttl
lle
eet
tt E
EEx
xxp
ppe
een
nns
sse
ees
ss
A monthly figure of Rs. 6,000 (200 per day) is assumed to be incurred for miscel
laneous
expenses which are expected to increase at the rate of 10% per annum for the pro
jected
period.
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
6
66.
..8
88 F
FFi
iin
nna
aan
nnc
cci
iia
aal
ll C
CCh
hha
aar
rrg
gge
ees
ss
It is assumed that long-term financing for 5 years will be obtained in order to
finance the
fast food setup which would mainly include construction & décor of Building, Purch
ase of
machinery & equipment, purchase of inventory etc. This facility would be require
d at a
rate of 15% (including 1% insurance premium) per annum with 60 monthly installme
nts
over a period of five years. The installments are assumed to be paid at the end
of every
month.
6
66.
..9
99 T
TTa
aax
xxa
aat
tti
iio
oon
nn
The tax rate applicable to sole proprietorship is the same as that of the salari
ed individual.
Therefore, we are assuming that the tax rate would be the same for the proposed
fast food
setup.
6
66.
..1
110
00 C
CCo
oos
sst
tt o
oof
ff C
CCa
aap
ppi
iit
tta
aal
ll
The cost of capital is explained in the following table:
Particulars Rate
Required return on equity 20.0 %
Cost 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.

6
66.
..1
111
11 O
OOw
wwn
nne
eer
rr
s
ss W
WWi
iit
tth
hhd
ddr
rra
aaw
wwa
aal
ll
It is assumed that the owner with withdraw from the business once the desired pr
ofitability
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 Fast Food Restaurant
6
66.
..1
112
22 K
KKe
eey
yy A
AAs
sss
ssu
uum
mmp
ppt
tti
iio
oon
nns
ss
Item Assumption(s)
Sales Increase 15 % per year
Increase in Cost of Raw Materials 10 % per year
Increase in Staff Salaries 10 % per year
Increase in Utilities (Electricity / Water / 10 % per year
Gas)
Increase in Rent 10 % per year
Increase in Office Expenses 10 % per year
Debt / Equity Ratio
50 : 50
Depreciation
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 Monthly
Financial Charges (Lease Rate) 15 % per annum
Tax Rate Income Tax on Salaried Individuals
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
INCOME STATEMENT:

FAST FOOD RESTAURANT

Projected Income Statement (Rs.) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year
7 Year 8 Year 9 Year 10
Revenue
Net Sales
10,015,200
10,015,200
11,517,480
11,517,480
13,245,102 15,231,867 17,516,647
13,245,102 15,231,867 17,516,647
20,144,145
20,144,145
23,165,766
23,165,766
26,640,631
26,640,631
30,636,726
30,636,726
35,232,235
35,232,235
Raw Material Cost
Labor & Salaries
Utilities
Cost of Sales
4,910,141
1,074,000
624,000
6,608,141
5,401,155
1,181,400
686,400
7,268,955
5,941,270 6,535,397 7,188,937
1,299,540 1,429,494 1,572,443
755,040 830,544 913,598
7,995,850 8,795,435 9,674,979
7,907,831
1,729,688
1,004,958
10,642,477
8,698,614
1,902,657
1,105,454
11,706,725
9,568,475
2,092,922
1,215,999
12,877,397
10,525,323
2,302,214
1,337,599
14,165,137
11,577,855
2,532,436
1,471,359
15,581,650
Gross Profit 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 19,650,584
General Administrative & Selling Expenses
Rent Expense
Office & Miscellaneous Expenses
Amortization Expenses
Depreciation Expense
Maintenance Expense
Subtotal
Operating Income
Financial Charges (15% Per Annum)
Earnings Before Taxes
Tax
Net Profit
1,200,000
72,000
10,000
281,625
21,758
1,585,383
1,821,677
357,889
1,463,788
365,947
1,097,841
1,320,000
79,200
10,000
253,463
19,582
1,682,244
2,566,281
298,344
2,267,936
566,984
1,700,952
1,452,000 1,597,200 1,756,920
87,120 95,832 105,415
10,000 10,000 10,000
228,116 205,305 184,774
17,624 15,861 14,275
1,794,860 1,924,198 2,071,384
3,454,392 4,512,234 5,770,284
229,228 149,001 55,878
3,225,164 4,363,233 5,714,406
806,291 1,090,808 1,428,602
2,418,873 3,272,425 4,285,805
1,932,612
115,957
0
166,297
12,848
2,227,713
7,273,955
0
7,273,955
1,818,489
5,455,466
2,125,873
127,552
0
149,667
11,563
2,414,655
9,044,386
0
9,044,386
2,261,097
6,783,290
2,338,461
140,308
0
134,700
10,407
2,623,875
11,139,359
0
11,139,359
2,784,840
8,354,519
2,572,307
154,338
0
121,230
9,366
2,857,241
13,614,348
0
13,614,348
3,403,587
10,210,761
2,829,537
169,772
0
109,107
8,429
3,116,846
16,533,738
0
16,533,738
4,133,435
12,400,304
Monthly Profit After Tax 91,487 141,746 201,573 272,702 357,150 454,622 565,274
696,210 850,897 1,033,359
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
BALANCE SHEET:

FAST FOOD RESTAURANT

Projected Balance Sheet (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Y
ear 7 Year 8 Year 9 Year 10
Assets
Current Assets
Cash & Bank Balance 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
Prepaid Rent 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,0
00 1,200,000 1,200,000 1,200,000 1,200,000
Total Current Assets 2,236,000 3,255,062 4,789,528 6,947,452 9,855,889 13,664,05
3 19,285,816 26,218,772 34,707,992 45,039,983 57,549,394
Fixed Assets
Fast Food Machinery 967,000 870,300 783,270 704,943 634,449 571,004 513,903 462,
513 416,262 374,636 337,172
Shop 1,307,000 1,176,300 1,058,670 952,803 857,523 771,770 694,593 625,134 562,6
21 506,359 455,723
Office Fixtures 542,250 488,025 439,223 395,300 355,770 320,193 288,174 259,356
233,421 210,079 189,071
Total Fixed Assets 2,816,250 2,534,625 2,281,163 2,053,046 1,847,742 1,662,967 1
,496,671 1,347,004 1,212,303 1,091,073 981,966
Preliminary Expenses 50,000 40,000 30,000 20,000 10,000 ------
Total Assets 5,102,250 5,829,687 7,100,690 9,020,498 11,713,631 15,327,020 20,78
2,486 27,565,776 35,920,295 46,131,056 58,531,360
Owner's Equity 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
Long Term Liability 2,551,125 2,180,721 1,750,772 1,251,707 672,415 0 0 0 0 0 0
Total Equity & Liabilities 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
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
CASH FLOW STATEMENT:

FAST FOOD RESTAURANT

Projected Statement of Cash Flows (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year
5 Year 6 Year 7 Year 8 Year 9 Year 10
Cash Flow From Operating Activities
Net Profit 0 1,097,841 1,700,952 2,418,873 3,272,425 4,285,805 5,455,466 6,783,2
90 8,354,519 10,210,761 12,400,304
Add: Depreciation Expense 0 281,625 253,463 228,116 205,305 184,774 166,297 149,
667 134,700 121,230 109,107
Amortization Expense 0 10,000 10,000 10,000 10,000 10,000 0 0 0 0 0
Net Cash Flow From Operations 0 1,389,466 1,964,415 2,656,989 3,487,729 4,480,57
9 5,621,763 6,932,957 8,489,220 10,331,991 12,509,411
Cash Flow From Financing Activities
Receipt of Long Term Debt 2,551,125
Repayment of Long Term Debt (370,404) (429,949) (499,065) (579,292) (672,415) 0
0 0 0 0
Owner's Equity 2,551,125
Net Cash Flow From Financing Activities 5,102,250 (370,404) (429,949) (499,065)
(579,292) (672,415) 0 0 0 0 0
Cash Flow From Investing Activities
Construction Cost (1,307,000)
Office Furniture (967,000)
Equip & M/C (542,250)
Advance Rent (1,200,000)
Preliminary Expenses (50,000)
Net Cash Flow From Investing Activities (4,066,250) 0 0 0 0 0 0 0 0 0 0
NET CASH FLOW 1,036,000 1,019,062 1,534,466 2,157,924 2,908,437 3,808,164 5,621,
763 6,932,957 8,489,220 10,331,991 12,509,411
Cash at the Beginning of the Period 0 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
PREF-11/December, 2006/
Pre-Feasibility Study Fast Food Restaurant
FAST FOOD RESTAURANT
Cost & Revenue Sheet
Broast Cost Price Unit Sales Total Cost Total Sales Chinese Cost Price Unit Sale
s Total Cost Total Sales
Chicken Broast (Qtr.) 35 65 36 0.12 1260 2340 Hot & Sour Soup (2 Servings) 25 75
6 0.02 150 450
Chicken Broast (Half) 70 125 18 0.06 1260 2250 Hot & Sour Soup (4 Servings) 50 1
40 3 0.01 150 420
Chicken Broast (Full) 140 250 6 0.02 840 1500 Chicken Corn Soup (2 Servings) 25
75 6 0.02 150 450
Chicken Corn Soup (4 Servings) 50 140 3 0.01 150 420
Burgers Cost Price Unit Sales Total Cost Total Sales Plain Rice 12 40 3 0.01 36
120
Chicken Burger 20 50 24 0.08 480 1200 Chicken Fried Rice 20 80 12 0.04 240 960
Chicken Cheese Burger 25 55 36 0.12 900 1980 Vegetable Fried Rice 18 60 6 0.02 1
08 360
Beef Burger 18 40 18 0.06 324 720 Egg Fried Rice 18 70 3 0.01 54 210
Beef Cheese Burger 23 45 18 0.06 414 810 Beef Fried Rice 20 80 3 0.01 60 240
Zinger Burger 40 80 24 0.08 960 1920 Beef Chilli (w/o rice) 30 75 6 0.02 180 450
Chicken Chilli (w/o rice) 35 85 9 0.03 315 765
Sandwiches Cost Price Unit Sales Total Cost Total Sales Cost Price Unit Sales To
tal Cost Total Sales
Chicken Sandwich 20 55 21 0.07 420 1155 French Fries (per plate) 8 25 5 40 125
Egg Sandwich 12 40 6 0.02 72 240 Cole Slaw 6 15 5 30 75
Beef Sandwich 20 45 3 0.01 60 135 Soft Drinks (Large) 40 50 10 400 500
Club Sandwich 35 80 30 0.1 1050 2400 Soft Drinks (Regular 250ml) 9 15 375 3375 5
625
TOTAL 8040 16650 TOTAL 5438 11170
Total Sales (Rs)
Total RM Cost (Rs.)
Gross Profit (Rs.)
Daily
27,820
13,478
14,342
Monthly
834,600
404,340
430,260
Additional
-
4,838
Final
834,600
409,178
425,422
Sales Break Down
Daily Basis
Orders Value (Rs) Packing Cost
1% of Sales
Delivery Cost
25 / Order
Add Cost
Dine In (60%)
Take Away (20%)
Delivery (20%)
Total
180
60
60
300
500,760
166,920
166,920
834,600
-
1,669
1,669
3,338
-
-
1,500
1,500
1,669
3,169
4,838
PREF-11/December, 2006/