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CHAPTER 1 INTRODUCTION Surigao City, although geographically small, has one of most dynamic economies in the country. Being the major growth and service center in the Mindanao Pacific Rim, the city, for the past decade, has shown continuous positive tempos of urbanization. Demographic indicators would show a positive migration trend into the city brought about by increasing economic opportunities. In the whole of Caraga Region, the City of Surigao has posted the highest population growth rate which has been largely attributed to migration. With an industrial base anchored primarily on mining and mineral processing, the expected resurgence of mining activities in the forthcoming years would invariably result to a boom in the local economy. However beyond the mining industry, the city’s doors are widely open to other industries such as manufacturing, 1

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CHAPTER 1

INTRODUCTION

Surigao City, although geographically small, has one of most dynamic

economies in the country. Being the major growth and service center in the

Mindanao Pacific Rim, the city, for the past decade, has shown continuous

positive tempos of urbanization.

Demographic indicators would show a positive migration trend into the city

brought about by increasing economic opportunities. In the whole of Caraga

Region, the City of Surigao has posted the highest population growth rate which

has been largely attributed to migration. With an industrial base anchored

primarily on mining and mineral processing, the expected resurgence of mining

activities in the forthcoming years would invariably result to a boom in the local

economy.

However beyond the mining industry, the city’s doors are widely open to

other industries such as manufacturing, tourism, food, industrial plantations,

transshipment facilities, information and communications technology, finance,

trade and even general services.

Due to the anticipated boom in the mining industry which is expected to

create a positive spillover to other industries and with Surigao at the launching

pad or urbanization, the proponents of this study has decided to start a steak and

sizzling house, the first of its kind here in the city.

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To put this novel concept in action, the proponents conducted this

feasibility study. This feasibility study will evaluate the restaurant’s establishment

feasibility, financial profitability, marketability and socio-economic desirability.

The following pages will give details on how the restaurant plans to operate its

systems, serve and develop its menu, and promote and market its products. This

feasibility study will also be the basis for possible future expansion projects and

franchising opportunities to the public.

CHAPTER 2

PROJECT SUMMARY

2.1Name of the Project

The proposed restaurant will be named 3-First Steak and Sizzling House.

It is named such because of the “three firsts” in the lives of its owners. First, if

realized the restaurant will be the first steak and sizzling house in the city.

Second, it is the first business that the owners will put up together; and third, the

owners of the said restaurant will open on the first day of March next year.

Attaching steak and sizzling house into its name also automatically tells its target

clients what the restaurant is all about. Since both the name and concept are

pretty much new in the ears of the Surigaonon people, the restaurant can expect

a positive name recall among its target customers.

2.2Location of the Project

The proposed business will be established in a lot area located at Gimena

cor. Kaimo Streets, Surigao City. The lot is the former Paloma residence and is

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directly in front of the Surigao Facial Care Clinic and is near the Avon building.

The proponents chose this area because it is relatively accessible to its target

market. At the same time, it is a walking distance from nearby schools and other

entertainment centers frequented by students.

The area is also less crowded compared to other accessible parts of the

city. This will therefore give 3-Firsts’ target clientele a comfortable and fun dining

experience.

2.3Brief Description of the Project

At 3-First Steak and Sizzling House, customers will love the quality of

food, adore the choice of drinks and enjoy it all in a friendly and comfortable

atmosphere.

3-First will put – up a one – storey building with simple, but cozy and

elegant interiors. The dining area will have eight to ten tables with a total sitting

capacity of 28. The restaurant will have huge kitchens and male and female

comfort rooms.

The menu will predominantly be steaks and other sizzling dishes but the

restaurant will also offer appetizers, soups, salads, other main dishes and

different kinds of beverages.

All in all, the restaurant will be a family restaurant and a place to hang out

with friends and family.

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2.4Objectives of the Project

This project aims to:

1. Establish a restaurant that serves steak and sizzling meals and other

delicious offerings;

2. Efficiently deliver services by putting in mind customer service as its priority;

3. Derive profit from fast inventory turn-over;

4. Expand into chains through franchising beginning in Surigao del Norte;

5. Generate employment within the city.

2.5Highlights of the Project

2.5.1 Nature of the Business

3-First Steak and Sizzling house belongs to the restaurant and food

service industry. While the restaurant is mainly a food establishment, 3-First is a

novel idea in the city since it is the first restaurant to be offering steaks and

sizzling dishes as its signature dishes. The establishment is further classified into

a casual dining specialty and full service restaurant.

2.5.2 Mode of Financing

The business’ start – up capital will be financed through loans and

personal savings of the owners. Each of the future partners will apply for a loan

in the Rural Bank of Placer and will place their personal assets as collateral. A

start – up capital of Php4,900,000.00 is needed to construct the restaurant

building as well as purchase all the necessary equipment needed to operate the

place.

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2.6Project Time Table and Status

2.6.1 From Planning Stage to Start of Normal Operation

The proponents of this study began to come up with the concept of putting

up the said venture in June this year. The formal conduct of the feasibility study

however started during the first week of July and will be completed by the end of

September.

Generation of the needed capital to start the business will begin

immediately after the completion of the feasibility study. Since the start – up

capital will be in cash that will be contributed by each partner, there is a need to

appoint a depository bank and open a checking account within the said bank.

Thus, generation of capital and registration of the partnership will have to be

accomplished almost simultaneously. In order to open a bank account, the

partnership will have to be registered first with the Securities and Exchange

Commission (SEC) and the Department of Trade and Industry (DTI). Registration

normally takes one to two weeks. After Certificate of Registration is issued, the

partnership can then open a checking account appointing at least two of the

three partners as signatory to all company checks. Opening a checking account

only takes a day.

After registering with SEC, the company will then have to apply for

Business Permit with the city government of Surigao. Application for business

permit usually takes a week. After the business permit is issued, the corporation

will then register with the Bureau of Internal Revenue (BIR) in order to obtain a

Tax Identification Number (TIN) needed to print receipts.

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Building construction will take place after permits and other licenses are

obtained. Building construction will be completed in six months. While

construction is ongoing, the owners of 3-First will begin canvassing for materials

needed and purchasing those that fit the restaurant’s needs as well as pass its

quality standards. Purchasing and delivery of goods will have to be completed

within a month.

Personnel training and hiring will be done after all equipments are

purchased. Personnel will have training in the restaurant. The conduct of the

market survey will mark the start of the promotions for the restaurant. Market

survey will be carried out during the conduct of the restaurant’s feasibility study.

Official promotions however, will begin on December this year. Operations are

expected to begin by March, 2011.

2.6.2 Schedule of Activities

The table below is the schedule of activities divided into seven phases.

Table 1: Schedule of Activities

PHASE DESCRIPTION DATEI Feasibility Study June to September, 2010II Service of Financing September t 2010III Application of Licenses and

PermitsSeptember t 2010

IV Building Construction September 2010 to February 2011

V Hiring and training of personnel October to December 2010VI Promotion and Advertising November 2010 to February

2011VII Start of Operations March 2011

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2.7Major Assumptions and Summary of Findings

2.7.1 Market Feasibility

The novelty of a steak and sizzling house in the city is the restaurant’s

introduction strategy. Because the concept is fairly new the restaurant will have

to conduct awareness campaigns. However over time, the restaurant will

eventually become known as “the place to be” to enjoy delicious meals that can

be shared with friends and family. The restaurant also provides comfort food;

exactly what people need to cap off a day.

If the restaurant is successful in projecting the image mentioned above,

then its position as one of the market leaders in the restaurant business in the

city is guaranteed.

2.7.2 Technical Feasibility

The restaurant will have to have an efficient and heavy-duty kitchen set-up

to meet its daily operating requirements. The kitchen equipment must also be

durable and long – lasting. The restaurant layout must allow for both aesthetics

and efficiency.

2.7.3 Financial Feasibility

The proposed project aims to gain and earn profit thereby increasing its

assets in every year of operation. The starting capital of the business is three

million pesos; with each partner contributing one million each. The said venture is

expected to generate earnings throughout a projected five – year period. Some

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of the start-up capital will cover operations expenses for the business’ first four

months of operation.

2.7.4 Socio – Economic Feasibility

3-First Steak and Sizzling House will increase the purchasing power of the

people in the city by providing employment to its constituents. Furthermore, the

restaurant will increase business activity in the city through its backward and

forward linkages and supply chain. The restaurant will also bring in more

revenues to the city’s coffers. The restaurant can also be a tourist destination

since it is a specialty restaurant. This will hopefully increase tourist spending and

boost economic activity in the city.

2.7.5 Management Feasibility

The proposed restaurant will be owned by a partnership. The partnership’s

three partners will oversee the operations of the restaurant with each having

separate roles in the partnerships upper management.

A manager and other corresponding employees will be hired following the

standard qualifications set by the members of the board of trustees of the

partnership. These qualifications include education, good interpersonal skills, and

good health. Applicants with experience in the fast food industry will be

considered an advantage.

Proper work scheduling includes two (2) shifts per day. The first shift will

work from 10:00 o’clock in the morning to 6:00 o’clock in the evening; and the

second shift will immediately commence at exactly 6:00 o’clock in the evening to

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2:00 o’clock in the morning. The salaries of the manager, cook, waiters, and

cashier will be given on a monthly basis. All employee benefits include

government required insurance such as the Social Security System (SSS) and

that of the Philippine Health Insurance System (Philhealth). Likewise, all

employees will have a day-off once a week and are entitled to one paid sick

leave per month.

CHAPTER 3

MARKET STUDY

3.1Market Description

3.1.1 Demography

Surigao City is located at the northeastern most tip of Mindanao and the

capital of the province of Surigao del Norte, Philippines. It has a total land area of

245.34 sq. km. According to the 2007 census, 132,151 people live in the city.

With an annual growth rate of 1.52%, it is the most densely populated urban area

in the entire Caraga Region with 540 persons per square kilometer. Surigao was

founded by the Spanish colonists in 1655 who named it Distrito de Caraga. It was

a vital port town for transport of goods to neighboring islands in the archipelago.

Today, Surigao is one of the most important seaports in Mindanao

after Davao and Cagayan de Oro for gross registered tonnage handled. It is

ranked consistently by the Asian Institute of Management as one of the most

competitive cities in the Philippines with a total income of approx Php450 million

pesos in 2009.

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3.1.2 Economic Factor

Demand for restaurant is expected to rise together with the steady

increase of Surigao City’s population and the increase in the city’s productivity

due to the anticipated economic boom.

3.1.3 Social and Cultural Forces

Majority of the residents in the city and lowland areas originate from

various ethnic groups around the country including Boholanos, Tagalogs,

Ilonggos, Warays, Cebuanos, and other Visayan groups. Foreign influence is

evident in the city in terms of food preference and is reflected by the opening of

restaurants that serve mostly continental cuisine.

3.1.4 Political and Legal Forces

The new administration’s promise to focus on productivity and efficiency

across all sectors has positive marketing impact for all businesses in the city.

The company will be paying both corporate income and value – added tax.

The company will also be incurring expenses in the application of permits and

other licenses to operate. In addition, the company will hire the services of an

external auditor to be paid on a service hour basis.

The company will also have to register its corporation to the Securities and

Exchange Commission in order for it to be recognized as a legal corporation in

the Republic of the Philippines.

3.1.5 Technology

3 First Steak and Sizzling house will make use of modern kitchen

equipment in order to create its menu of impeccable dishes. Marketing using

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social networking sites will also be an option the company will exploit. A

computerized accounting, payroll and inventory system will also be used.

3.1.6 Competition

3 First faces numerous challenges from a number of restaurants, hotels

and other the cheaper barbecue joints found along Bilang-Bilang Street here in

the city. The major competitors would be big value chain restaurants like Jollibee,

Greenwich and Chowking. All these competitors positioned themselves as a

place to have food which is called restaurant. And none of these food chains are

in themed based.

But 3 First will definitely enjoy the competitive advantage in positioning

itself saying Sizzling, Refreshing, Exciting! For A Meal To Remember...

3.2 Marketing Mix

3.2.1 Market

Strategically, targeting the 25-44 year old age range in upper middle class

areas close to our restaurant helps serve the needs and requirements of our

customers, and ties in logically with our marketing plan and style of restaurant.

Typically, the upper middle class in the 25-44 range are raising families whose

children range from toddlers to teens, yet tend to continue to have "disposable"

pesos available for a quality diversion to get them away from home and work.

These customers have regimented schedules in their lives, and find value in

exceptional service, timely service, and mouthwatering, delightful food. If a

couple chooses to leave the kids home, they'll find value in the form of

satisfaction and fun together, in their diversionary time. If they bring the kids, they

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will appreciate a value based kids menu. This first tier of our market segment is

also the primary focus of our marketing plan which has a deep commitment to

focusing on kids, at their schools and in their community. These kids are primarily

the children of our 25-44 tier-one groups.

Our SECOND-TIER market group (45-59), will also find value in great

service, and delicious food. 3 First will also be considered a refreshing escape

from restaurants that sing and clap for birthdays.

Our THIRD-TIER group, the 15-24 year olds will find that the menu

contains many favorites available to them that are considered essential:

tantalizing appetizers, spicy steaks, and drinks and specialty beers. 3 First turns

down the lights for late hour business on the weekends, and offers jazz and food

and beverage specials, offering our customers a chance for some socializing and

conversation.

FOURTH-TIER simply extends the market radius out to a five mile area,

with the same demographics included in tiers 1-3.

FIFTH-TIER (60+) represents a market that has abundant disposable

income, and truly reveres attentive, efficient service. 3 First serves all of its meals

with the option of cooking with little or no spices. This customization is much

more appreciated by this group, who often prefer meals prepared to their own

specifications. Because 3 First has only one purpose in mind when it comes to

our customers – All Customers Must Leave Happy, customizing a meal to our

treasured customers will always be a pleasure!

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The SIXTH-TIER group will benefit from all of the quality approaches that

are marketed to the previous five tiers, and will gain exposure to us primarily

through our community involvement and word-of-mouth.

3.2.2 Product

3 First Steak and Sizzling House is a comfortable, inviting restaurant

designed to make our customers feel as if they are enjoying VIP services in a

world all to themselves. The decor and theme is centered around the custom

made "Fire Fountain", a unique show kitchen grill that has a cascading water

fountain combined with flame throwing torches on the dining room side, and is a

sizzling 48" gas powered steak grill on the kitchen side. The energy and

atmosphere of the restaurant is high, and draws some of its power from the

dazzling "Fire Fountain".

The real power and energy of the restaurant comes from the attentive and

courteous service provided by our floor staff, and the indescribably delicious

steaks and sizzling dishes caringly prepared by our motivated kitchen team.

Each night that we are open, two managers are on duty. One manager

carefully orchestrates the proper execution of the kitchen, so that all food comes

out prepared perfectly, and on time. The other manager attends to the flow of the

dining room, there to facilitate outstanding customer service and satisfaction. Our

floor managers are extremely high profile, taking the time to greet every

customer at some point in their stay. Our customer service policy is simple: All

customers must leave happy about our service and food!

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The restaurant will be open daily from 10:00 am to 1:00 am. From

10:00pm – 1:00 am the lights come way down, and customers enjoy light jazz

music. Gift Certificates are always available. We have private dining facilities for

group events. We offer "take-out" food for those on the run! Visitors to our

website will find upcoming events, specials, and catering and gift certificate

information.

3.2.2 Price

Prices are fit to attract the consumer who prefers a quality steak and

sizzling dishes for a reasonable price.

3.2.3 Promotion and Advertising

3 First will use a mix of various promotions and media to spread news

about the restaurant. This includes:

a. Direct mail - Free surprise dinners given to winners of radio station contests.

b. Eye-catching exterior neons and torches.

c. In-store Company cards for appetizers and desserts.

d. Sponsorship to city and provincial events like fiestas, etc.

e. Trade shows, to promote private dining and banquets.

f. High profile interaction between managers, and the customers.

g. Excellent service and high food quality every single day in the restaurant.

3.2.4 Distribution

All products and services will be available at the restaurant. Customers

can also opt to take out their orders. All the food in the menu are cooked as soon

as they are ordered.

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3.3 Marketing Analysis

3.3.1 Findings of Market Survey

A market survey was conducted to determine the needs and wants of the

target market. The survey was conducted in Surigao City. There were 40

respondents. Fifty percent of the respondents were below 18 years old while the

other half is above 18 years old. On the other hand 37.5% are females while 62.5

are males. Furthermore, 62.5 are single while 37.5 are married. Among those

surveyed 27.5 work for the government, 22.5 are private employees, 17.5 are

self-employed, and 32.5 are students.

3.3.2 Economic Variables

A. Demand

The demand for restaurants has been rapidly increasing in proportion to

the increase in the number of young professionals (such as nurses and others) in

the city. In addition, college students have recently become a profitable market in

the city and they purchase anything from food to entertainment.

Moreover, the continuous modernization of the city has given rise to the

fast – paced lifestyle most young adults and students now live.

In addition, the influx of tourists has also contributed to the change in the

way Surigaonons eat. The city known to be the city of island adventures has

been a destination to those seeking out adventure and fun.

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Age Group 2000 2005 2010 201510 – 14 62,100 62, 800 62, 300 64, 00015 – 19 51, 500 60, 300 61, 000 60, 80020 – 24 38, 900 50, 300 58, 900 59, 60025 – 29 33, 100 38, 500 49, 800 58, 40030 – 34 30, 600 32, 800 49, 500 58, 10035 - 39 28, 600 30, 300 32, 500 37, 900Total 244, 800 275, 000 314, 000 338, 800

Table 2: Projected population of Target Market by Five Year Interval in the Province of Surigao del Norte. Source: National Statistics Office

B. Supply

The major players in the restaurant industry are divided into two. The first

is the high – end fast food which is dominated by national fast food giants such

as Jollibee, Greenwich, Chowking and Mang Inasal. The other caters to the lower

income class in the city. This group is comprised of food kiosks such as Kudus,

Rahayo Burger, Yatz Diner and the barbecue joints in Bilang – Bilang. Fine

dining restaurants on the other hand include, Hotel Tavern, Gateway Hotel,

Islands Restaurant, Mama Aida’s Seafood Restaurant, Peng-U Grill, Sameplace,

Chicken Ati-Atihan and Spectacular View Restaurant.

3.3.3 Forecast Number of Customers and Sales

The proponents came up with the following formula to forecast sales for

the restaurant.

Maximum Capacity = N x T x S where:

N = number of seats = 40

T = seat turn over – 1 customer per hour

Customer Per Hour:

C = average time per hour customer = 1 hour

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S = serving time (peak hour)

Steaks and Sizzling Dishes (AM): 10:00am – 12:00pm= 40 x 1 x 3= 120 persons for AMSteaks and Sizzling Dishes (PM) 12:00 pm – 10:00pm= 40 x 1 x 10=400 persons for PMSteaks and Sizzling Dishes (Late Night) 10:00pm – 1:00am=40x1x3= 120 persons

Sales for Steak and Sizzling Dishes

Steaks and Sizzling Dishes

Maximum Capacity

Estimated Percentage

Seat Occupancy

AM 120 20% 24PM 400 40% 160

Late Night 120 15% 18

Steaks and Sizzling Dishes

Seat Occupancy Average Price Sales

AM 24 P120.00 2,880.00PM 160 P120.00 19,200.00

Late Night 18 P120.00 2,160.00TOTAL P24,240.00

TOTAL SALES/DAY P24,240.00TOTAL SALES/MONTH P727,200.00

TOTAL SALES/YEAR P8,726,400.00

Sales for Salads, Soups, Appetizers and Other Dishes

Steaks and Sizzling Dishes

Maximum Capacity

Estimated Percentage

Seat Occupancy

AM 120 15% 18PM 400 30% 120

Late Night 120 10% 12

Steaks and Sizzling Dishes

Seat Occupancy Average Price Sales

AM 18 P70.00 1,260.00

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PM 120 P70.00 8,400.00Late Night 12 P70.00 840.00

TOTAL P10,500.00

TOTAL SALES/DAY P10,500.00TOTAL SALES/MONTH P315,000.00

TOTAL SALES/YEAR P3,780,000.00

Sales for Beverages and Desserts

Steaks and Sizzling Dishes

Maximum Capacity

Estimated Percentage

Seat Occupancy

AM 120 20% 24PM 400 40% 160

Late Night 120 25% 30

Steaks and Sizzling Dishes

Seat Occupancy Average Price Sales

AM 24 P50.00 1,200.00PM 160 P50.00 8,000.00

Late Night 30 P50.00 1,500.00TOTAL P10,700.00

TOTAL SALES/DAY P10,700.00TOTAL SALES/MONTH P321,000.00

TOTAL SALES/YEAR P3,852,000.00

ANNUAL SALES

Steak and Sizzling Dishes P8,726,400.00

Salads, Soups, Appetizers and Other Dishes P3,780,000.00

Beverages and Desserts P3,852,000.00

TOTAL ANNUAL SALES P16,358,400.00

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CHAPTER 4

MANAGEMENT STUDY

4.1.1 Organizational Chart

4.1.2 Type of Operation

The owners of the restaurant will form a partnership that will oversee the

hostel’s overall operations. The owners will hire a manager who will be in-charge

of handling day-to-day operations as well as serve as the direct supervisor to the

hostel’s staff. The hostel will have one head chef and head waiter. The company

will likewise hire bookkeepers in order to manage the company’s books.

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Industrial Partner

Restaurant Manager

Bookkeeper Head Chef Head Waiter

Cooks

Waiters

Assistant Restaurant Manger

Managing Partner

Security Guard