FUNKTION

Hospitality Design Consultancy Business Plan

TABLE OF CONTENTS

Executive Summary
FUNKTION is a proposed venture that will offer comprehensive creative leisure and F&B design consultancy for restaurants, cafes, spas and boutique hotels serving primarily Dubai and the UAE market. This venture offers a specialized service that is very limited in the existing target markets where there is a large number of hospitality ventures are being developed and on the way based on recent market research. The market strategy will be based on a cost effective approach for industry operators and investors in the clearly defined target market. FUNKTION will launch as a freelance service and will develop into a full service agency after a year of business. The approach to promote FUNKTION unique services will be through establishing relationships with key people in the market and then through referral activities once a significant client base is established. FUNKTION will focus on developing solid and loyal client relationships offering design solutions based on the client's taste, budget, use, and goals for the space. The additional selection, accessibility of product, design services, and value-based pricing will differentiate FUNKTION consultancy from the other options in the area. Total revenues in the first year are projected to exceed AED 390,000. The venture will show increasing profits in year two and three. This business plan outlines the concept and implementation and details regarding the first three years of this venture.

FUNKTION Business Plan

Incom Chart
400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 -

AED

2009

2010 Year Net Sales Cost

2011

1.1 Objectives
Our primary objectives over the next year of business are to: 1. Create strategic alliances with the following industries: o Interior Contracting Firm o Printing Press facility o Commercial kitchens supplier 2. Create a network of key industry leaders and potential investors. 3. Develop design and execute the design of 3 F&B outlets around the UAE.

1.2 Mission
Our mission is to become market leader and trend setter in the hospitality design consultancy sector. The mission will happen by providing our clients with unique services of a design excellence nature what give a good return on investment and will keep customers coming back. On the other hand, to fulfil our mission we understand the responsibility of providing designs to enrich the end user experience and create awareness to level of quality in design that the user has to expect in such a market like Dubai.

1.3 Keys to Success

The primary keys to success for FUNKTION will be based on the following factors: o o One stop shop for leisure and F&B design related services Provide unique, trend setting and quality driven creative design concepts that will insure our clients sustainability, profitability and leadership in their respective local market Provide seamless and productive communications with clients throughout the design process

Company Summary
FUNKTION is a creative hospitality design consultancy to serve the regional market. The consultancy aim is to develop world class hospitality concepts that are locally targeted. Services will be provided in two phases:

FUNKTION Business Plan

o Phase one, FUNKTION will develop food and beverage related concepts
such as restaurants, cafes, and gourmet food retail outlets.

o Phase two, FUNKTION will develop hospitality concepts that are larger in
scale and more comprehensive in service, such as spas and boutique hotels. FUNKTION will provide a full design solution to the hospitality industry with care for design excellence, feasibility, functionality and trend setting. This business will assist those that want to
have guidance and council in developing a basic design concept of their outlet, to the investor that desires someone to take it from concept to complete implementation.

2.1 Company Ownership

FUNKTION is a sole proprietorship, owned and operated by architect Karim Kaddoura. As the business expands, strategic alliances will be formed with other professionals.

2.2 Company Locations and Facilities

As per contract with RAK Free Trade Zone, the business will be conducted from a hot desk located in the Free Zone premise. Any sub-contractors hired for specific projects will not work in our office but will work from their own offices. The current rent cost is: AED 6,000/- per annum.

Products and Services

FUNKTION will provide design services tailored specifically to the hospitality industry. In the first phase of the business, FUNKTION will concentrate on offering F&B related services that will include the development of: o The initial concept of a leisure or F&B venture based on market research, consumer demand and brand positioning. o Feasibility study of each venture to insure our clients' profitability o Brand design and graphic design of related collateral materials required to enforce the brand strategy such as menus, uniforms, etc. o Interior design concept that reflect the brand strategy o Food and menu strategy concept o Supervision of design production and construction process will be offered o Production of operations manuals and procedures specifically for each venture to enhance the production quality, consumer satisfaction and internal communications In the second phase of the business, services will expand to offer the above services for larger hospitality scale of projects such as boutique hotels and spas. The hotel design branch of the services will be developed in alliance with a local architectural consultant.

3.1 Product and Service Description

FUNKTION will operate through two types of approaches: 1. The first type will be by developing a full design package of an F&B concept and present it to potential investors and market leaders such as Bin Hendi Group, Saleh Bin Lahej Group, and Emirates Leisure Group. 2. The second type will be through direct commissioning by a client where the process will be as follows: i. Concept Stage: Once an RFP is received by FUNKTION, a ten working days are required to present the client with a unique and creative concept along with a basic feasibility study. ii. Design Development Stage: Once agreed on the concept, fifteen working days are required to develop three options of design, such as name, brand, graphics and interior, for client approval.

FUNKTION Business Plan

iii. Detail Design Stage: Once the preferred design approach is locked, twenty working days are required to further develop the concept design. Initially subcontractors will be hired as needed to work on specific projects. Subcontractors will be hired based on their area of expertise and experience. Due to office space limitations, sub contractors will work out of their own offices and will be linked directly to our office via e-mail and the Internet. Within the next three years, full time consulting and administrative staff will be hired.

3.2 Competitive Comparison

Our competition is primarily from other F&B consultants, where most of the design elements are outsourced which could cause the end product to be short of of coherence as a whole. What makes FUNKTION different, is that it is driven by designers, with architectural and interior design experience along with hospitality expertise rather than the vice versa because we believe that the design uniqueness factor is proven to be the consumer magnet and then the quality of service is what creates the loyalty factor. Our expertise and in house services will assure coherence between the F&B concept and all other design elements in the end product of all our projects.

Industry Overview
4.1 Market Research
Dubai has become one of the fastest growing F&B markets of the world and a true culinary destination. Local consumers have grown a great attention to details and quality of service to be offered by the F&B industry. On the other hand, there is demand by consumers for new food concepts constantly and to cover the diverse demographic consumer base that Dubai had attracted as a major cosmopolitan city and a trend setter in the Middle East. UAE market leaders in the F&B management industry and potential clients for FUNKTION include: o Emirates Leisure Group o Saleh Bin Lahej Group o Bin Hendi Group o Arabian Food Supplier o Al Shaya Group o Gourmet Gulf Company

4.2 Competition
Dubai competitive and large market attracted international names in the industry to setup local presence and at the same time encouraged some to start their local practices. FUNKTION will compete with the following: F&B Turnkey Consultancies (Local Direct Competitors) o Thomas Klein Intl. o Roya Intl. o Emirates Taste o Concepts Intl. o Future Foods Interior Design Consultancies (Local Indirect Competitors) o LW Design Group o Hamilton Design

FUNKTION Business Plan

o o

KCA Design LAB Strength: Successful track records Rich database of design concepts, themes, suppliers, materials .etc. Experience in handling multiple suppliers and sub contractors Database of suppliers and sub contractors Weakness: Business is focused on large scale projects Relatively high fees for small and medium projects

4.3 Key Product Segments

FUNKTION leisure and F&B consultancy will offer its expertise to develop concepts in the following fields within the coming five years: o Restaurants (from food court unit to fine dining) and Cafes o Gourmet food retail outlet o Spas and wellness centres o Boutique Hotels

4.4 Industry Outlook

The local Hospitality and F&B market is growing rapidly even during the hard times of recession around the world. With people becoming more conscious on where and what to spend their money on, the market for high quality casual dining with good value for money deals will see a great demand. In the hotel sector, there is a growing demand for quality budget hotels to maintain the tourism flow and serve the exhibition industry, given the fact that Dubai had the highest hotel price rates in the world for the year 2008.With all that, Dubai market analysis revealed a very high consumer base for F&B outlets based on economical factors: o Dubai and other emerging emirates are developing very large scale projects that will be delivered in the next four years. F&B outlets are required in the new shopping malls and community centres that are being developed such as Mall of Arabia and Aswaaq centres. Around 173 residential and commercial towers in the New Dubai area are underway, which have a provision for at least two F&B outlets in each tower. There are around 125 Hotel developments underway in all seven emirates where each property will house a minimum of three F&B outlets. o Due to the high rent prices in residential units, Dubai residents tend to live in relatively small houses which resulted in having social gatherings in malls, restaurants or cafes. In addition to the fact that Dubai has a big bachelor working community, these social factors resulted in increasing the F&B consumer base in the city. o Dubai tourism phenomena resulted in attracting celebrity chefs from around the world to open their own food concepts in the Middle Easts most cosmopolitan city such as Zuma, Ronda Locatelli, Nobu and others. Dubai is becoming a renowned destination for culinary tourism.

Marketing
5.1 Target Markets
FUNKTION has a defined target market client that will be the basis of building this business. Our target markets will be small and medium sized new and existing businesses in Dubai and

FUNKTION Business Plan

the surrounding region. We will also submit proposals in response to any Request for Proposals we receive from potential investors and market leaders. Our aim is to support local companies and investors to create locally produced quality concepts or enhance their existing ventures to coop with the modern market needs.

5.2 Marketing Strategy

The marketing strategy is based on establishing FUNKTION as the resource of choice for F&B design. Our marketing strategy is based on superior performance in the following areas: Unique consulting services. Food concepts choices specifically chosen for each individual client project. Overall quality of the experience and the result. Excellent client service and support regardless. This marketing strategy will create awareness, interest, and appeal from our target market for what FUNKTION offers our clients. This will be executed in a manner that will entice them to come back for repeat projects and encourage them to refer friends and professional contacts.

5.3 Advertising

FUNKTION online services and portfolio through a website Flier circulation via door to door delivery and mail. E-promotion through email, SMS, and web site. Alliances & partnership with service providers in the market such as interior contractors and market research companies.

Pricing Scheme
Product pricing is based on offering high value to our clients compared to others in the market. Payment terms will be as follows:

50% on contract (Concept Stage) 30% Design Development Stage Submission 20% Detail Design Submission

Pricing Scheme Breakdown

Service
F&B Concept Creation Package Food Concept Feasibility Study

Deliverables

Price (AED)

Brand Positioning report Additional services Market Research

25,000.00 50,000.00 40,000.00

Branding Package

Name + Logo Stationary items Signage Collateral items: Menu

FUNKTION Business Plan

Uniforms Bill Folder Coasters Place mats Napkins

Expenses Freelance License Hot Desk Rental Security Deposit Joining Fees Freelance Sponsorship Fees Fixed Cost Total

2009 7,500 6,000 5,000 5,000 1,900 25,40 0 4,800 7,500 5,000 4,000

Condiments

2010

2011 7,500 6,000 13,50 0 4,800 4,000 120,00 0 128,80 0 390,00 0 60,00 0
25,000.00 40,000.00 15,000.00

7,500 Board Menus 6,000 Comment Card Take Away Menu Take Away Bags Packaging 13,50 E-mailer 0
Website Layout Vehicle Graphics 4,800

Etisalat Additional services Laptop Legal Advisor Interior Design Package& Advertising Marketing Karim's Annual Salary Variable Cost Total

Brand Design Manual

3D Perspectives CAD Drawings:

120,000 141,30 0 390,00 0 60,00 0

Plans Elevations Sections Detail Drawings

4,000 120,00 0 128,80 0

20,000.00

65,000.00

Furniture:

Loose selection 390,00 Fittings specs

Net Sales @ 3 projects/year* Sales

Materials specs Direct Cost of Sales (Outsource) Additional services

0 60,00 0 187,70 0

Interior Design Manual Kitchen Layout/Drawings 163,30

Net Profit

Construction Supervision

187,70 0

*Sales at rate of AED130,000/Project basic services

Pro Forma Income Statement

For the Periods Ending February

FUNKTION Business Plan

FUNKTION Business Plan