Chapter 1 Business name: Queenstar restaurant Briefly discuss the meaning: Offer great hospitality to the customers and variety of both dishes and biverages Business address: queenstar restaurant , p.o box 820, kericho business location : situated along Tengecha highyway reason why location is appropriate: Conducive environment: no litter is around such as used containers. There is a flower and tall tress along. Also there is evergreen grass around Security: the area is secured by the police since the place is near the prime minister farm. Market: availability of customers is much higher since the business is near a school, hospital and a company Appropriate transportation: there is a highway near the located business thus transportation of goods and services such as raw materials to be used in a restaurant is available Availability of raw materials: raw materials are available since people in the area are farmers and grow crops as potatoes, kales, maize, coffee and many others Business ownership: sole proprietorship Reasons for choosing sole proprietorship One is able to take decisions of planning and organizing the business unit Sole claims on profit: the sole trader receives full profit on the business He/she enjoys profit for himself as the owner of the business There is job security as one manager the business alone and no one else Easy to manage since there is no rules and regulations to follow Type of industry Service industry Five reasons for choosing the industry The business will provide variety of meals at all costs The business offer greater hospitality to the customers involved Easy to create since it requires little capital The business will serve every individual with respect and equality The business will ease the maintenance and operational of the restaurant Product and sales The restaurant will offer main dishes and beverages of different varieties The restaurant will serve the customers in a professional way There will be entertainment to put a smile on the customer’s face Hole booking rooms with toilets and bathroom will be available and affordable prices SWOT analysis AREA STRENTH WEAKNESS OPPORTUNITIES THREATS Management Availability of trained workers Manpower product line Demand high payment Environment Availability of raw materials Lack of professional or skilled employees Availability of land to expand the business Lack of enough capital Finance Adequate fund Lack of salaries to pay off employees Adequate raw materials High interest rate Technology Availability of Modern tools and equipment Costly and expensive to acquire Preservation of products and time saving in food preparation High maintenance cost Security Hired security available No quick action of measures High tight security High report of robbery location Technological adaptability Unavailability of market share Availability of customers competition CHAPTER 2 2.0 Marketing plan 2.1 The potential customer of the queenstar Restaurant will be individual customers INDIVIDUAL CUSTOMERS The business will offer good services and hospitality among the customers. It will offer goods at affordable price and much variety of meals in the restaurant. Due to high demand of refrigeration in hotels it requires more ntervene of the fridge in deep freezers and air conditioner. In this, it will be done at fair price to retain customers 2.2 Target market The targeted market will be both individual and institutional customers. Individuals include the residence and students within the area who occasionally have breakfast, lunch and dinner in the restaurant. Since they do not offer lunch and dinner in the school. Institutional customer such as colleges, companies are provided by lunch in the restaurant as they need to eat the work the following are the targeted customers of queestar restaurant (i) businessmen, tea research foundation, NSPSI, colleges, Catholic Church and utafiti primary 2.3 Sales potential The bill will be started on the menu bill and customers would be able to compare the prices of the meals and beverages available in the restaurant. Menu bill will indicate each price to the dish, the restaurant bill will indicate each price to the dish The restaurant bills are also allowed to be paid through m-pesa services and other services. Discount will be offered on Hotel bookings to attract more customers’ good services and hospitality would be offered on the regular basis 2.4 Promotional methods The business will be advertised through radios and newspapers, fliers, brochures and services will be done at a reduced price to win more customers. The business would also offer entertainment systems to attract customers and introduction of varieties of dishes. It will print posters which will be displayed; they will be distributed on the streets and other areas within Meals offered will be of nutritious values and special diets to the sick will be provided at affordable or accepted rate 2.5 Market segmentation Individual customer = 2000 2000/9000*100 = 22.2% Commercial customer = 3000 3000/900*100 = 33.3% Institutional customers = 4000 4000/9000*100 = 44.4% The following is competitor’s analysis table Name Address location Makerere restaurant P.o box 820 Kericho Along Gurunanak Highway Angels restaurant p.o box 355 Kericho Kings restaurant P.o Box 810 kericho Kericho town kisumu road Taidys restaurant P.o Box 555 Kericho Brookside road near stage 2.6 Market share Due to rapid growth of population within Kericho town and its environs has a population of about 40,000 people 2.7 Market research Since there is high competition among the business affordable prices should be considered to attract more customers unlike raising the prices offering extra services such as entertainment system in the restaurant to bring more customers Adding more values to the products rendered in the business such as swimming pools. Introduction of attachments to the students involved in the business to improve the creation of new skills and ideas to create the new product 2.8 demand analysis More profit is expected in the business to improve both the products and services rendered to the customers. The expected demand of the product should be considered and improve development of new strategies should be put in place. Raw materials should be considered on what is more used or consumed most by the customers such as the stable foods that most likely by the customers Market strategy The following is a chain of distribution Manager Head chef Assistant head chef Sous chef Waiters Customers Advantages of the chain Ensures that high nutritious dishes are provided to the customers Provide high quality and quantity of variety of meals to the customers Ensures proper handling of both the customer and meals Ensures that hospitality is offered in the restaurant to the customers Pricing policy The business has research on offering affordable prices on the services and products rendered in the restaurant. The business will offer conference centre for holding meetings and hotel bookings at expected levels. It has conducted a market research and found the prices offered by other restaurant so as holding parties and offering free meals and beverages to the customers as a way of celebrating both the creation of the business and appreciation of the employees 3.0 ORGANIZATIONAL AND MANAGEMENT PLAN Organizational structure 3.1 Draw an organizational structure for your business plan e.g. Manager Head finance head marketing head prodictory Workers Workers Workers 3.2 Key management personnel Identify the key management personnel and discuss Duties and responsibilities Professional qualification Other qualifications 3.2.1 Key management personnel: top management personnel 3.2.2 Other management personnel: middle level personnel, (duties and responsibilities) professional qualification 3.3.0 Recruitment training and promotion 3.3.1 Recruitment: process by which human resource are introduced to the organization Ensures the right people are recruited for the post available Discuss the recruitment process which include Job analysis Job description Job advertisement Application Start listing Interviews and selection Decision and notification 3.3.2 Training Discuss the induction process (after interview for introduction in to the system) Promotion 3.3.3 discuss the merit of promotion (criteria for promotion) and five benefits of promotion to its employee 3.4 Renumeration and incentives rewards e.g wages labour Personal position salary per month salary/year total Manager 120,000 1440,000 3.4.2 Incentives Discuss 5 incentives for your employment 3.5 license-kind of license -How you obtain the license Permit-given by location authority How much it cost per license 3.6 permit- list the permit you need and how much it cost per permit 3.7 by law or standard of operation in a business What standard of your business 3.8 support services Banking, service,: insurance those that help you operate your business CHAPTER II ORGANIZATION AND MANAGEMENT PLAN Organization structure The business will have the following individuals in the management of the business so as to achieve its objectives Manager Head chef (chef de cuisine) Sous chef Chef departie La applient waiters MANAGER Head chef Headwaiter Sous chef Chef departie Waiters La applient 3.2 Key management personnel Duties and responsibilities Manager: Manages or co-ordinates the activities Ensures that there is enough facilities and favorable working environment to attract customers Solves all the problems encountered in the restaurant Makes final decisions concerning the business Head chef (chef de cuisine) The head chef usually heads the kitchen. The following are duties of the head chef Complies the menu Ensures hygiene on the production process Recruits the kitchen staff Motivates the kitchen staff Allocates duties to the kitchen staff Orders raw materials of the food Sous chef: Assists the head chef when off duty Organizes the kitchen staff 3.2.2 Other management personnel Chef departie Responsible for specific section in the kitchen. This section include SOCCI sourcier. (Hot kitchen) Garde manager (pantry selection) Parttisier(pastry section) etc La applent: Are the trainnies in production section Prepare food assigned by (chef de partie) section Head waiter Ensures that the restaurant section is well set e.g table setting Controls all the activities done in the restaurant Waiters Organize the restaurant Responsible in serving the customers Transport all the equipment used in the restaurant to the kitchen Professional qualifications Manager: Should at least have a minimum of experience of 2 years in preferably in food and beverage sale and services production and management or in catering and accommodation Should have good communication skills (hospitality) Head chef: Have a diploma in food and beverage production Should be honest, hardworking and respectful Should have good interpersonal skills Sous chef Should posses a certificate in food production Have at least a one year experience in production Should be able to produce different varieties of dishes Chef departies Have knowledge in food production Able to be in hardship area and work long hours Hardworking, respectful and patent Headwaiter Have a diploma in both food and production and catering premises Good communication skills Respectful, honest and hardworking Two years of service experience Waiter Should have a certificate in food and beverage and catering Should have a good interpersonal skills Should be dedicated to his/her job 3.3.0 Recruitment, training and promotion 3.3.1 Recruitment The business will hire hardworking patient and respectful person who is able to handle and maintain customers Job analysis The business entails both production and catering operation; it involves the chef section and waiters in the restaurant housekeeping and front office Job description The business involves food and beverage production. Varieties of food and drinks are produced. Reservation rooms will also be offered to the customers, availability of qualified staff. The job offers comfortable payment and also accommodation to the workers Job advertisement All vacancies in the business will be advertised through newspapers, radios, TV and newsletters also by pining posters along the streets. Job qualification will also be stated Application The application forms will be distributed for free and all who will be interested will fill the form and post through posters or bring the application form personally to the company Short listing Selection panel will determine the short listing process and will asses all applications to the next round of the recruitment process. It determines which applications, based on their written application, possesses to the role and will be selected for further consideration Interview and selection The manager will be responsible in interviewing the workers. Also interview will be done for those who apply for the job and selection will also be done for those who apply for the job and selection will also be done according to the performance on the interview Decision and notification Decision or final decision will be done by the manager and hiring will be done according to the vacancy available in the restaurant. Qualified people will be employed to account for professional production of food and beverage. Every worker will be allocated his/her duty according to the qualification 3.3.2 Training All qualified stuff will be trained by the trainers such as la applenti. Who are the trainees in production section. The process will last for a month to prepare the workers for a professional cooking.education on hospitality will also be offered so as to maintain customer in the restaurant. The training will be internal done by the manager 3.3 Promotion Promotion will be done according to how the worker is hardworking and productive. Advertising through radio,newspapers and posters will promote the business. And attraction of more customers. The following are merits of promotion Helps one to provide information to potential customers that aids them in making a decision Promotion attract more customers to the restaurant during both lunch dinner meals Promote creation of profits in the business Helps in expansion of business Encourage customers to eat nutritious dishes in the restaurant 3.4.1 Remuneration and incentives Payment will be offered according to work levels and how productivity and dedication he/she works 3.4.2 Incentives Workers should be provided with cash money and valuable products and hardworking employees should be rewarded at the end of every year special gifts should be awarded as a way of appreciation 3.5 licenses The business operated should obtain a license and should be renewed annually As stipulated by countrys by laws The most common type of license used in restaurant include liquor license which is obtained from local authority. The restaurant licence should be obtained to run the business since the business has to do so it will acquire its restaurant licence at a cost of 2500 from Kericho municipal council 3.6 Permit Is a business licenses; one need a permit before running a business e.g one needs a licence when serving alcohol Rules for these license vary by municipality 3.7 By law or standard of operation A hgh standard of professionalism and adapt good practices in their operations e.g kitchen equipment is a core activity in the running of a catering business. Availability of high quality of kitchen tools and equipment for durability and preservations The equipments should be of high operating speed up the level of production sector 3.8 Support services To facilitate the growth and expansion of the restaurant the firm would borrow loans from banks or financial institutions The business will also obtain help from insurance. Newsletter would also help in creation and monthly client distribution The business should seek advice from other restaurants to obtains new skills and ideas and also get more information from the internet to improve the production section Professional cooks should be employed to improve the business CHAPTER FOUR 4.0 OPERATION AND PRODUCTION PLAN This involves production of high and good quality of goods and services. It offers great products produced by the professional qualificants who are employed in a business. Most commodities are to be sold in quantities designed by the manufacture 4.1 PRODUCTION FACILITIES AND CAPACITY In order to satisfy the customers need the owner of Queenstar Restaurant is to engage in a both education and training services to make the production more professional Tools and equipment quantity suppliers cost/unit Total Refrigerator 2 1500 30000 Oven 2 1700 34000 Fire extinguisher 2 4000 8000 Signal generator 1 20000 20000 Blender 2 4000 8000 Microwave cookery 1 10000 10000 Toaster 1 5000 5000 Pressure cooker 2 5000 10000 Gas cooker 2 10000 20000 Baking sheet 8 300 2400 Crater 4 100 400 Weighing scale 2 1000 2000 Whisk 2 300 600 Rolling pin 2 100 200 Rolling board 2 200 400 Wooden spoon 6 100 600 Sieve 3 100 300 Chopping board 6 200 1200 Coffee maker 2 2000 4000 Kitchen knife 15 100 1500 Spoons 30 50 15000 (206,000) 4.2 PRODUCTION STRATEGY The excutive head chef orders the Raw materials to be used in preparation of meals. He also compiles the menu and supervise other chefs when producing the meals. The food is prepared after the availability of the raw material to be used Different varieties of meals are prepared and also beverages if necessary. Meals such as grilled chicken mushroom soup, swiss potatoes are few example of meals produced The food is then transferred to the buffets which is ready The buffets are transferred to the restaurant and food is arranged in order is taken from the customer where silver service is or customers can do self service according to managers order Payment of bill is done after the customers satisfaction through cash or m-pesa 4.3 raw materials Raw material Quantity Amount Rice 10kg 2000 Cornfour 10kg 3500 Wheat flour 10kg 3000 Magarine 20l 5000 Sugar 20kg 3300 Salt 2kg 500 Milk 40l 5500 Meat/beef 10kg 6000 Soy source 2l 700 Yeast 500g 350 Cheese 500g 300 Custer sugar 500g 250 TOTAL 30,400 4.4 MONTHLY OPERATION OVERHEADS Items Amount Electricity bill 1000 Bank charges 500 Advertisement 2000 Sales and distribution 7000 Discount sales promotion 1000 Hotel reservations 1500 Water 500 Telephone bills 500 Postage 500 TOTAL 4.5 PRODUCTION OPERATION OVERHEAD Item Amount/total per mount Tools and equipment 5000 Labor 1000 Market research 2000 Overhead production 7000 Miscellaneous 2000 Total 17,000 4.6.0 PRODUCTION PROCESS AS Queenstar restaurant deals with hotel reservations, production sector and service also catering,orderly process should be conducted regarding goods and customers. The following is to be adopted in the restaurant Arrival of visitors Welcome or handled by waiters Headed menu to choose from variety Waiter takes the order Sewed Payment of bill Receipt handed to customer 4.6.1 PROCEDURES Customer are received by waiters and directed to who he/she is attended. The customer is handed the menu and the order is taken by the waiter. If the customer is not comfortable with the meals provided he/she can choose from varieties in the menu. An order is taken the customer is served either a three course meal or more . the bill is handed to the customer as he pays in the cashier. Once he/she is satisfied with the meals provided. After payment of the bill receipt is handed to the customer and any other extra change 4.6.2 FACTORS AFFECTING PRODUCTION Competition Queenstar restaurant will have to offer prices that are affordable to the customer. It should offer a large variety of meals and nutritious dishes. So as to win its competitors extra facilities such as swimming pool and entertainment section should be offered to the customer to attract move customers to attract more customers to the restaurant. Proper hospitality should be offered to win the customers trust Security Guards should be employed or hired to secured the the business and keep peace in case of any theft security. In the business is important to keep the customer confidence to visit the restaurant without any fear or doubt. The business should be fenced with electric wires to avoid burglars from breaking in to the business. Incase of theft cases it should be reported to a nearby police station for investigation to be done Political stability Stability in the country is important if there is no stability in the country the business operation will fluctuate or leads to loss of business in the country peace should be maintained and hence more customers in the business will brings out profit than loss Government policy The business should have a permit/license to operate a business. Taxes should be paid according to government authority which may had to loss in a business due to high taxation 5.0 CHAPTER FIVE 5.1 PRE-OPERATIONAL There are the expenses and cost to be incurred before business operator or before a business is generated to operate fully Details amount Registration 1000 Advertising 1500 Postal services 500 Banking services 500 Insurance 5000 Total 8500 5.2 WORKING CAPITAL ITEM Stock of raw materials Debtors Cash at hand Cash at bank Less Current liability Creditors Over debts Total 7,000 2,000 8000 10000 27000 5000 1000 700 6700 20300 8,000 2500 10000 15000 35500 3000 700 1000 4700 30800 9,000 3000 12000 20000 44000 7000 12000 1100 20100 23900 5.3 PROJECT CASHFLOW YEAR 1 QUEENSTAR RESTAURANT YEAR 1 DETAILS JAN FEB MAR APRIL MAY JUNE JULY AUG SEP OCT NOV DEC Bal/bf - 109500 236000 442000 580000 767000 816000 791700 740800 622900 509300 41000 6025200 Cash flow - - - - - - - - - - - - Cash sale 250000 200000 300000 240000 310000 200000 150000 140000 100000 100000 110000 112000 2212000 Debtors 90000 80000 70000 720000 710000 70000 65000 60000 50000 61000 60000 63000 812000 Total 340000 389500 606000 754000 961000 1037000 1031000 991700 890800 783900 679300 585000 90492000 Cash flow - - - - - - - - - - - - - Less - - - - - - - - - - - - - Cash flow 86000 80000 82000 80000 87000 95000 100000 110000 120000 130000 125000 129000 1224000 Rent 50000 40000 42000 43000 52000 60000 70000 75000 80000 81000 82000 83000 758000 Salaries 20000 15000 20000 25000 29000 35000 34000 31000 32000 31000 30000 29000 331000 Electricity 5000 4000 6000 8000 7000 8000 9000 6500 69000 7000 6800 6900 81100 Water 2500 3000 5000 4000 4500 5500 6000 4400 5000 5000 5000 5000 63000 Telephone 2000 2500 3000 3500 2500 3500 4000 55000 6000 3500 3000 3000 42000 Advertisement 500 1000 500 1500 7000 2000 2300 3000 3000 2800 2900 2800 23000 License 2000 3000 2500 3500 3800 4000 5000 5500 5000 4800 4900 4900 48900 Loan pay 4000 5000 3000 5500 6600 8000 9000 10000 10000 9500 9700 9800 90100 Total 230500 153500 164000 174000 193100 221000 239300 250900 267900 274600 269300 273400 2711500 Bal b/d 109500 236000 442000 580000 767900 816000 791700 740800 622900 509300 410000 311600 6337700 5.4 PROFORMA INCOME STATEMENT Proforma income statement for the year 10th April 2014 Proforma trading profit and loss account year 1 Item Kshs. KSHS. Sales Less cost of goods sold Debtors Opening stock Less closing stock Gross profit Less expenses Salaries Advertisements Electricity Telephone cost Rent Water License Loan interest Net profit before tax Net profit after tax 10% - 812000 250000 1062000 43700 31800 36200 28700 348000 43200 32200 20200 40,000 2212000 TOTAL 614,000 5.4 QUEENSTAR RESTAURANT PROFORMA INCOME STATEMENT ITEM PROFORMA INCOME STATEMENT PROFIT AND LOSS ACCOUNT YEAR 2 ITEM. KSH. KSH. SALES Less cost of goods Sold Debtors Opening stock Less closing stock Gross profit Less expenses Salaries Advertisement Electricity Telephone cost Rent Water License Loan interest Net profit before tax Net profit after tax 10% TOTAL 777000 10000 767 437000 31800 36200 28700 348000 43200 32200 20200 40000 1007300 1270000 5.4 QUEENSTAR RESTAURANT PROFORMA INCOME STATEMENT ITEM PROFORMA INCOME STATEMENT FOR THE YEAR 3 10TH APRIL 2015 PROFORMA INCOME STATEMENT PROFIT AND LOSS ACCOUNT ITEM KSHS KSHS Sales Less cost of goods Sold Debtors Opening stock Less closing stock Gross profit Less expenses Salaries Advertisements Electricity Telephone cost Rent Water License Loan interest Net profit before tax Net profit after tax 10% TOTAL 550000 1500 - 535000 214000 28800 29000 33800 116500 54500 34700 47600 - 40000 558.900 937000 558900 5.5 QUEENSTAR RESTAURANT PROFORMA BALANCE SHEET AS AT 10 APRIL 2014 YEAR 1 PROFORMA BALANCE SHEET ITEM KSHS KSHS FIXED ASSETS Land Buildings CURRENT ASSETS Stock of raw materials Debtors Cash at hand Cash at bank TOTAL ASSETS LIABILITIES Equity capital Net profit after tax Bank loan Loan from relatives creditors 70000 18000 7000 2000 8000 10000 27000 100000 40000 - 50000 88000 27000 115000 115000 5.4 QUEENSTAR RESTAURANT PROFORMA BALANCE SHEETAS AT 10TH APRIL 2014 YEAR 2 ITEM KSHS KSHS FIXED ASSETS Land Buildings CURRENT ASSETS Stock of raw materials Debtors Cash at hand Cash at bank TOTAL ASSETS LIABILITIES Equity capital Net profit after tax Bank loan Loan from relatives creditors 75000 20000 8000 2500 10000 15000 200000 50000 - 250000 95000 130500 225500 225500 5.5 QUEENSTAR RESTAURANT PROFORMA BALANCE SHEETAS AT 10TH APRIL 2014 YEAR 3 ITEM KSHS KSHS FIXED ASSETS Land Buildings CURRENT ASSETS Stock of raw materials Debtors Cash at hand Cash at bank TOTAL ASSETS LIABILITIES Equity capital Net profit after tax Bank loan Loan from relatives creditors 80000 25000 9000 3000 12000 20000 300000 60000 - 250000 105000 44000 149000 149000 149000 5.6 BREAK EVENT POINTS This is an attempt to determine the level of sales at which business does not make profit or loss 5.6.1 contribution margin (sales-variance ) = (total sales –variable costs) 1st year Variable cost Electricity 81100 Telephone charge 42000 Salaries 331000 Advertisement 23000 Rent 758000 1235100 Sales 2212000 Contribution margin = 2212000-1235100 = 976900 2nd year Variable cost Electricity 36200 Telephone 28700 Salaries 43700 Advertisement 23000 Rent 348000 481470 Sales 1270000 Contribution margin = 1270000-481470 = 788530 3rd year Variable cost 29000 Telephone 338000 Salaries 214000 Advertisement 28800 Rent 116500 422100 Sales 937000 Contribution Margin = 937000-422100 = 514900 5.6.2 CONTRIBUTION MARGIN Contribution margin = contribution * 100/ total sales 1st year 976900*100/221200 =44.1% 2nd year 788530*100/1270000 =62% 3rd year 514900*100/93700 54.9% =55% TOTAL FIXED COST FOR YEAR 1 Salaries Rent Telephone License Loan payment Electricity TOTAL 331000 758000 4200 48900 90100 81100 1351,100 5.6 BREAK EVENT POINTS Fixed cost Contribution margin 1st year = 1351100/44.1 = 30,637.2 5.7 PROFITABILITY RATIOS Profitability ratio 5.7.1 GROSS PROFIT RATION Gross profit*100/sales 1st year 1062000*100/2212000 = 48% 2nd year 767000*100/1270000 = 60.4% 3rd year 535000*100/937000 = 57.1% 5.7.2 RETURN ON EQUITY NET PROFIT*100/Net after tax/owner equity 1st year 40000*100/10000 = 40% 2nd year 30000*100/200000 =15% 3rd year 60000*100/300000 =30% 5.7.3 RETURN ON INVESTMENT Net profit-interest*100/Total investment 1st year Net profit-interest*100/Total investment 1st year 40000-20200*100/115000 =17.22% 2nd year = 30000-20200*100/225500 =4.34% 3rd year 60000-47600*100/149000 =8.32%