Feasibility Study

Identification and exploration of business

scenarios
Throughout the restaurant industry there is a wide variety
of service styles. Determining which style of service best suits
our talents and needs is the first process of opening a business.
Each service style caters to specific markets and in order to
ensure success our service style must please our target market.
Fast Food, also known as quick service restaurants, caters to
people in fast paced environments. This style of restaurant
primarily serves food such as burgers, fries, chicken sandwiches,
etc. that are made in bulk, wrapped, and kept warm until served.
This doesnt allow foods to be made fresh with high quality
ingredients along with having the healthiest selection of food.
Fast Food restaurants have minimal seating, if any as they might
have a drive-thru option available. Our concept for Our Daily
Bread is looking on building relationships with our customers on
a personal level. The fast food service style does not fit this
image. Our caf plans to make our products fresh with healthy
options, therefore fast food is not the best choice. Fast casual
restaurants do not offer full tableside service but some places
may have some aspects of tableside service available. This is a
new and upcoming concept that is a combination between fast food
and casual dining. Fast casual dining also focuses on healthier
food options as well as fresh ingredients. These restaurants
cater to people who would like to receive their food in a timely
manner to get in and out of the restaurant rather than sitting
around waiting for food and service, such as in casual or fine
dining. This style of service would fit perfectly for the needs
of our target market. Having a fast casual style allows customers
to come at any time of day and receive quality food without
having to commit a lot of time to dining. Casual Dining is a
style of service where a restaurant serves moderately-priced food
in a casual atmosphere. Casual dining restaurants provide full
table service as well as a fully stocked bar. Our concept for Our
Daily Bread is a smaller caf instead of a full service
restaurant, having a full casual dining restaurant would not be a
realistic service to pursue. Fine dining restaurants are full
service restaurants offering only the highest quality food,
service, and experience. Even though Our Daily Bread will focus
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on providing quality food and service, making Our Daily Bread
into a fine dining restaurant would be inappropriate. Especially
considering the style of food we would provide and the target
market we are trying to appeal to.

Type and Quality of Products Marketed

Our Daily Bread will consist of two different departments;
the bakery and the sandwich bar. The bakery carries a variety of
goods such as bagels, breads, muffins, pastries, cookies, and
cupcakes. There will also be select sandwiches made from the
bakerys bagels and breads. The bakery department is generally
geared toward the breakfast crowd and for those with a sweet
tooth at any time of the day. The sandwich bar will appeal more
to the lunch crowd, offering the freshest ingredients along with
a healthy selection. Our Daily Bread will also offer a variety of
beverages featuring espressos, coffee, juice, tea, and fountain
beverages.

How will the business make money?

Our Daily Bread will earn its profit by simply being the
best caf around. This is determined by not only the quality of
the food but also by the customer service provided. Our Daily
Bread plans on having a small, close, and well-trained staff that
can meet the public and the companys needs. Having a small staff
creates a family like atmosphere with the caf. By inviting the
public into what we consider our home, makes the customer feel
special and we are able to create strong, loyal, relationships
with them.

Technical Processes, Size, Location, Kinds

of Inputs
Our Daily Bread plans to have a generous size caf, but nothing
that is too large or overwhelming. There will be some comfortable
indoor seating along with a few tables outside for when the
weather is nice. The target markets for Our Daily Bread will be
families and businesses. The best location for these markets
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would be the SM Cabanatuan. The SM Cabanatuan is an up and coming
shopping mall.

Relationship to the surrounding

geographical area
Bringing our business into the SM Cabanatuan community is going
to create competition for surrounding businesses similar to Our
Daily Bread; however, this will bring more revenue into the
community. Our Daily Bread would be located in an area which
already has buildings available instead of building a new place
and requiring heavy construction in the area. This saves the
community the hassle of having to work and travel around our
business and hopefully make a good impression on the SM
Cabanatuan community.

Industry Description
The restaurant industry is one of the seven service industries in
the hospitality industry (other categories include lodging, event
planning, theme parks, transportation, cruise line, and tourism
industries). Food and beverage facilities are essentially retail
stores that carry and prepare food items. They are facilities
that prepare food and drink to order for customers in exchange
for money. Meals can be consumed on premises, but restaurants
also offer offsite delivery or carryout services. According to
the statistics provided from the National Restaurant Association,
there are approximately 970,000 food service locations nationwide
with a projected sales of $632 billion in 2012; the typical sales
is 1.7 billion per day (Facts at a Glance). The types of
restaurants are categorized based upon menu style, preparation
methods and pricing. The four major categories in the restaurant
industry are fast food, fast casual, casual dining, and fine
dining restaurants. Target markets in the restaurant industry are
versatile; consumers can be categorized by age, food preference,
cultural background etc. Some on the market segments includes
young adults, seniors, tourists, vegetarians, business people,
sports fans, lunch break crowd, happy hour crowd, etc. Our
concept is fast casual, the type of restaurant that does not
offer full table service but offers a friendlier atmosphere with
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higher quality of food. Most fast casual establishments offer
counter service accompanied with food. The menu is usually
limited and extends to over the counter displays with various
options in the way the food is prepared. This restaurant concept
was popularized in the mid 1990s; however, it did not become
trendy until the 2010s. The reason behind this change in trends
was because consumers started to prefer food service that offers
healthier food options compared to fast food and with a
relatively low cost as compared to casual and fine dining. The
success of a restaurant is based on a variety of factors that
include food quality, customer service, location, menu price,
etc. One of these factors is trend which can be defined as the
direction in which something tends to move. In the restaurant
industry, it is focused more on the kinds of food being served.
The National Restaurant Association identifies the trend in the
next year or two to focus on childrens nutritional menus and
sourcing ingredients from local farms. Consumers nowadays focus
more on the nutritional value of food and how ingredients are
harvested. Factors that contribute to this trend including the
ingredients freshness, methods which they are grown, and the
distance the ingredients have traveled before they are made onto
the table.

The Restaurant Life Cycle

The restaurant life cycle of restaurants has four stages:
Introduction, growth, maturity and decline.
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The introductory stage is when a new product or service

enters the marketplace, in this case our bakery cafe. The
nature of hospitality products is typically intangible which
can make market testing difficult before introduction. Ideally
the product should be developed on the basis of consumer
research. This stage may also be one of high costs. Typically,
the introduction often begins with a soft opening that may be a
few days to a few weeks before the official opening. Word of
mouth brings some customers or small groups to test the
products and services offered in the restaurant. The growth
stage of the restaurant industry differs from manufacturing
industry; if the menu items in a newly opened restaurant are
not successful, the managers will simply take the items off the
menu and offer new ones. In manufacturing industry, if a
product is not successful then the entire plan is terminated.
The growth stage of the hospitality unit is one of excitement
and disappointment. Sales may be growing monthly or there may
not be enough seats in the restaurants. Customers who tried the
facility in the introductory stage have told others who are now
trying it. Business is booming, but there are many marketing
issues at hand. It is during the growth stage that the previous
relationship with marketing pays off. Consumers come back for
the food and service and they will tell others about it. The
growth stage is also a time of product refinement. Continuous
customer research and feedback should assist in eliminating
flaws and fine tuning our products to the target market. An
important note during this stage is that it is not a good time
to raise product prices. The mature stage of the product life
cycle can continue for a long time or it can end quickly. If
the product has successfully and correctly gone through the
introductory and growth stages, the market should now be pretty
well in place. In the mature stage, the restaurant has to run
harder just to stand still. With other competitions sharing the
same target market, the concept and facility could be getting
old. The best way to avoid this is to keep and increase the
loyal customers during the growth stage. The best way to stay
in business is to stay close to the customer, find new markets,
seek and solve customers problems, and do it better than the
competition.If the restaurant is not maintained during the
mature stage it will enter the decline stage. For example, the
menu items may lose their freshness, consumers may change, or
it is time for the restaurant to go. Decline has a tendency to
progress faster than growth stage. During the beginning of this
stage, managers face declining revenue by cutting expenses. The
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managers may decrease the front and back of the house employees
to cut labor costs, use cheaper raw ingredients, and decrease
menu prices. However, these actions cause more revenue decline
and result in unhappy customers, which results in even more
revenue decline (Shoemaker).

Industry Competitiveness
According to the National Restaurant Association 2012
Restaurant Industry Fact Sheet, seven out of ten eating and
drinking establishments are single unit operations. This means
that franchises make up almost thirty percentage of the
industry. The first year success rate for restaurants is
roughly ten percent. However, since franchises have better
operation systems and are well known for their reputations,
their success rate has increased to forty percent. The 2009
average unit sales were $837,000 for full service restaurants
and $738,000 for quick service restaurants. Although the unit
sales for full service are higher, the profit margin may not be
as high as compared to quick service restaurants. Quick service
restaurants serve food at lower prices and have high guest
turnover ratios. Their labor costs and food and beverage costs
are also lower which means that their profit margin may also be
higher. The major competitors at the SM Cabanatuan are NE
bakeshop, Red Ribbon, Goldilocks,. Our competitive advantage
over them is that we offer a variety of specialty items.
advantages is that it has many target markets with many loyal
customers.

Bargaining Power
The suppliers of ingredients, equipment, labor, and expertise
services provided have power over the restaurant industry. The
bargaining power is the price for the materials and services
provided. The restaurant industry has many suppliers that vary
in different sizes and specialties. Restaurant owners will
choose the suppliers who can correspond to their needs. One
indication that suppliers have bargaining power is that the
suppliers can contract with only certain independent or
franchise operations and can set the amount of ingredients the
operation must order. Small independent units may not be able
to purchase from certain vendors because they do not have the
financial power to purchase in large quantities. If our bakery
cafe offers menu items that are ingredient driven (for example,
fresh local produce and proteins), this will increase supplier
power as the suppliers can demand higher prices for their
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products and increase our food cost. The Bargaining power of
customers plays an important role in the restaurant industry.
When the buyer power is strong, the buyers can certainly set
the price they are willing to afford. Consumers of fast casual
restaurants will like to have high quality food and a better
experience offered at a reasonable price. It is dangerous for
fast casual restaurants to raise prices because of the low
prices offered by competitors and the expectations of their
consumers. One of the reasons that fast casual restaurants were
able to succeed during the recent recession is because the
owners were able to maintain reasonable prices to offer their
consumers. The threat of new potential entrants in fast casual
restaurants is extremely high. There are fewer barriers for
entry into this market because it requires relatively low
capital. Restaurantowner.com identifies that an approximate
cost to start a restaurant business is P225,000. Another factor
that can influence more potential entrants is the possibility
to create a better dining experience. Fast casual restaurants
not only need to offer a better dining experience, but they
also need to serve good food. If the restaurants are able to
revolutionize their consumers experience, it will be extremely
easy to enter into the fast casual segment. To succeed in this
extremely competitive market, a fast casual restaurant must
have a competitive advantage. A restaurant can obtain this
advantage by lowering menu prices while creating product
differentiation, exploiting relationships with suppliers, and
distributing products differently. It is reasonable to assume
that most fast casual restaurants offer similar menu items in
the same price range. The restaurant owner must lower their
menu prices and/or improve customer service. Competition
increases in this industry because the number of restaurants is
constantly increasing and they are battling for the same group
of customers. A fast casual restaurant should always try to
increase their revenue by expanding their targeting market.

Market Potential
The product we offer will be sold in both the product and
service market; our menu items such as sandwiches, baked goods,
and drinks are the products and our dining experience is the
service. The demand for fast casual restaurants in the
restaurant industry has been constantly growing. This concept
meets the customers demand of eating on the run and provides
healthier options. In recent years consumers favor healthy food
options. The food quality and preparation methods at the
traditional fast food restaurants have been scrutinized in
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recent years. The food options provided in these establishments
have been shown to have negative health consequences. However,
consumers desire of healthier food options does not supersede
the need of quick service dining. Consumers prefer food that
can be eaten quickly during a lunch break or picked up on the
way home. Fast casual restaurants have found a niche where the
consumers needs of healthy food overlap with quick service.
This is an opportunity for restaurateurs because fast casual
restaurants are targeting two potential markets; quick service
and casual dining. Although restaurants in this category do not
offer full tableside service, their food quality is just as
high and the food takes shorter time to prepare. The price for
a typical meal is anywhere from eight to fifteen dollars.
Although this price is higher than what is offered at fast food
restaurants, consumers are willing to pay more for higher
quality and healthier food. In order to become a branded
product our restaurant concept must become a franchise.
Franchising is the practice of using a firms business model.
The franchisee must pay a fee to the franchisor in order to use
the franchisors business concept, logo, menu, design, etc. It
is less risky than independent operations because a
franchisors concept has been proven to be successful. To be
established as a successful operation, a business must
successfully operate for a few years to prove to potential
clients that its concept is worth purchasing. According to Los
Angeles Times, the market share of fast casual dining
establishments in early 2012 was at six percent. Although the
market share is not as high as the other kinds of food
establishments, it is the only segment in the restaurant
industry that has shown growth in the last five years.

Access to Market Outlets

Our target markets are mainly focused on families and
businesses. To promote and advertise our products and services we
are planning on using a variety of social media, including
Facebook, groupons, direct mails, etc. Our plan is to use
approximately 3.5% of our monthly income for advertising.

Sources Intermediaries
(Growers, Manufacturer and (Middlemen)
Processors)
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Retailers
(Restaurant)

Costumers
(Guests)

The Restaurant Industry Distribution System Sources

Intermediaries (Growers, manufacturers, and processors)
(Middlemen) Retailers (Restaurants) Consumers (Guests) The
industry distribution system has the following components:
sources, intermediaries, retailers, and consumers. A source is a
supplier at the beginning of a products channel of distribution.
For instance, a farmer is a source our restaurant can use for
fresh fruits in our baked goods. This supplier typically sells
items to an intermediary that resells them to hospitality
operations. Intermediaries are also known as vendors, which
retailers such as restaurants and grocery stores order items
from. Items retailers order from vendors are in larger quantities
and are offered in wholesale prices. The only way consumers can
purchase these items is through the retailers (Product Life
Cycle).

Proposed Business Concept Our proposed business will be a small

bakery located at SM Cabanatuan, Maharlika Hi-way Cabanatuan
City, Nueva Ecija Philippines. Our selected location allows us to
access nearly two thousand homes in the Cabanatuan neighborhood
along with numerous office buildings within a 5 mile radius. The
main utilities used in these properties are gas, power, and
water. In order to obtain a food service facility license a menu,
HACCP flow charts for each menu item, insurance documentation,
and a set of complete plans are ready to be submitted to the
Maryland Department of Health and Human Services. Our bakery will
be offering a variety of products that use a number of high
quality ingredients from local bakery suppliers. We have selected
to use local suppliers because of their quite competitive pricing
and high quality ingredients when compared to other imported
suppliers.
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Business Ownership
A partnership between four managing owners has been formed
to run our bakery. Since the four owners have managed restaurants
in the area, they are familiar with local buying sources,
suppliers, and methods. The managers also have leadership skills
and have the ability to supervise personnel while reflecting the
style and character of the bakery. Two full time bakers are
needed to maintain the operation of the baked goods. They have to
work early in the morning to begin preparing our fresh baked
breads, cakes, bagels, and pastries. We will need two cake
decorators, one full-time and one part-time, to manage all
special ordered cakes and cupcakes. The lead cake decorator needs
to arrive early in the morning to begin preparing items for the
morning and creating a list for the afternoon. The part-time cake
decorator will help with the afternoon and weekend shifts. Five
clerks are required to maintain the daily operation; order
taking, making sandwiches/soups, busing tables, and keeping
dining area clean. Three Prep workers are needed for preparation
of sandwiches and soups, at the same time keep working areas
organized.

Financial Studies

The main monthly expenses for our bakery is a rent payment

at P10,000 a month in SM Cabanatuan, a payment on our equipment
loan, and accounts payable to our vendors. The building was
previously used as a retail store and is 960 square feet. We will
need to renovate inside and purchase or lease all equipment
needed to run a bakery. This listing was found on Showcase.com
and advertised storefronts in The SM Cabanatuan and the
surrounding areas. Some of our main purchases will include, but
are not limited to:

Double Racks Oven P 45,000 (Three)

Proof Box P 34,589
Microwave P 3,780 (Two)
Pastry Racks and Sheet Pans P 3,800 (20)
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Ranges P 2,535
Ice Maker P 1,683
Mixers P 11, 200
Dough sheeter P 6,482
Coffee Machine P 8,100
Soda Machine P 4,114
Bread Slicer P 2,332
Scales P 600 (Two)
Table and Chairs P 5, 000 (15)

Our estimated main equipment costs are P143,208. We will add

approximately P150,000 to this estimate to cover the costs of
renovation and any unforeseen extra equipment needed. If there
are any funds leftover we will roll them into the purchase of
supplies and ingredients. We will need approximately P25,000 for
those purchases. Equipment prices were estimated from various
commercial kitchen websites such as galasource.com and
Bakeryequipment.com. Our menu was designed by one of the founding
partners. The creative edge from comes from her extensive
restaurant background from working in various restaurants and
bakeries in the past. I spent a lot of time researching market
prices and comparing competitors prices from NE bakeshop and
Goldilocks.

Estimated Financial Statements

Following are the estimated financial statements for the
first months to the end of our first year in business. We will
use these statements to forecast sales and obtain market research
to continue to improve our business. We have an estimated
depreciation rate of 16.5% over a course of ten years for our
equipment. Our estimated interest rate on our loan from the bank
is 4.25% over the course of 15 years. The purpose of forecasting
financial statements is so the owners can make budget plans for
the first few months after opening. Once the business has been
opened, the forecasted statements can be replaced with actual
data. We can compare our estimates to our data recorded from the
first few months to see if we are headed in the right direction.
We will make adjustments where needed to ensure we stay as close
to our target goals as possible.
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Balance Sheet
Ending of Our First Month
ASSETS
Current
Cash P60,000.00
Inventory 7,297.23
Accounts Receivable 10,715.77
Total Current Assets 78,013.00
Non Current
Furniture 7,664.00
Equipment 142,000.00
Total noncurrent assets 149,664.00
Total Assets = 227,677.00

LIABILITIES
Current
Wages 11,258.00
Utilities 10,500.00
Advertising 2,000.00

Current Portion LT debt 3,500.00