Research Report - Feasibility for Smart Calories

Smart Calories The newest restaurant in town!

ContentsIntroduction:3SMART Objectives3Objective 1:3Objective 2:3Character Traits of Our Service3Market Research4Target Market4Competitors4Pricing and Promotions5Operations Plan5Organizational Chart6Financial Projections6Master Budget7References:16

Introduction:In a report published by the World Health Organization, it was revealed that about 40% of the women and 25.5 % of the men in the UAE are obese (The National, 1). In a cultural hub like the UAE, we want to revolutionize the dining industry by introducing scrumptious gourmet meals that are rich in taste and full of health! We call this phenomenal restaurant Smart CaloriesSMART ObjectivesObjective 1: To provide a range of healthy and do-it-yourself cuisines to the health conscious population of Al-Ain city, and inflict the need of eating healthy in the remaining population by giving providing a range of tastes and options in local and international cuisines.Objective 2: To achieve a 30% growth in revenue after the end of the second fiscal year by increasing customer base through extensive marketing including social media marketing, internet marketing and print advertising.We hope to fulfill our objectives to the core, and once our restaurant is up and running, our major success could then be measured by the opening of another branch of the restaurant in the state of Abu-Dhabi after a span of 3 years. Character Traits of Our ServiceBecause the restaurant aims to instill healthy values in its clientele, it will have a small, green and inviting outlet in the city. The interior will be inspired from colors of nature and promote an aura of freshness generally. The restaurant will provide an option of making-your-own-meal, where customers will be given a range of semi-cooked healthy ingredients, from where they can choose a perfect mix of ingredients to suit their tastes. They will also have the option of choosing from the restaurants line of specialties if they feel that they want to leave the cooking to professional chefs. Smart Calories will also deliver meals to customers, who can book their orders through telephone or emails. In a nutshell, our customers will benefit from the range of healthy food options at affordable prices at their doorsteps!Market ResearchThe service we want to offer in Abu-Dhabi is that we want to improvise cooking to the level that dining out is not in the form of a Diet Package; instead it is a restaurant experience that gives quality food which is healthy. Target MarketAbu Dhabi city has a variety of restaurants that offer a range of cuisines. There are over 200 restaurants in Abu Dhabi city alone (Tripadvisor, 1). Despite this overwhelming statistic, we want to offer our services to the population of Abu Dhabi keeping in view their preferences and out own restaurants specialties. One point that can be inferred from the number of restaurants in the city is that people are ready to pay money to dine out. The buying capacity is thus not a problem.The market is Abu Dhabi offers meal packages for people who want to eat right and/or reduce weight. For instance, meal plans for one month are offered by restaurants like Health Factory at a cost of 1500 4000 AED per month; Bite Rite with a cost of 2500 AED per month; Slim N Lite with a cost of 2000 AED per month and D-Club with a cost of 2800 AED per month (Time Out Abu Dhabi, 1). CompetitorsThe only idea that will differentiate our product from others in the market is the fact that we offer healthy food, and no restaurant in the city has especially directed its efforts to provide only healthy meals. There are healthy food restaurants in Dubai that have made their mark in the food and dining industry (Top 4 Healthy Restaurants In Dubai, 1-4) eg. Baker and spice in Downtown Dubai; the North American franchise Freshii in Dubai; Magnolia at Souk Madinat Jumeriah and More Caf at the Mall of Emirates. A few restaurants in Abu Dhabi that offer dine-in healthy food options include Forty Fruity, Caf Sante and The Atlas Restaurants (Zomato- AbuDhabi, 1). The price per meal for 2 people ranged from 40 AED to 120 AED. Keeping this in mind, and the fact that there is less marketing for a healthy food restaurant in Abu Dhabi, we aim to target a meal for 2 between a price range of 60 70 AED, while maintaining the quality of a good restaurant for the customers.Additionally, there are international food chains like Subway for customers in Abu Dhabi but our restaurant will give a feel of a restaurant, offer delivery services, and yet serve food that is low calorie and nutritious. We intend on using a website and social media marketing mechanisms to market the value of our restaurant online so that more and more people can be accessed through these internet mechanisms.Pricing and PromotionsThe pricing policy of our restaurant will be competitive, based on the competitive nature of the Abu Dhabi restaurant market. Initially, we will price our dishes at a markup of 40% of cost, which is not great considering the pricing plans of other restaurants that have mark-ups of 80-100%. As part of our promotions campaign, we will initially start our delivery service at zero cost. This will hopefully create our clientele in the area because people will have access to healthy food at their doorstep without having to pay for delivery. Operations PlanOur restaurant space will be located in Abu Dhabi, and we will have to set up the restaurant from scratch. This will include making an initial investment in the interior of the restaurant, including buying furniture, utensils, knives, flooring, imported plants, kitchen electronics, etc. Once these things are bought, we will hire an architect to design the restaurant according to our needs. Once the interior and exterior is finalized, official activities will kick off. The delivery department will be provided with only one delivery van in the beginning. Subsequent additions will be made once the volume of orders increases substantially. The restaurant management team including the HR manager, the restaurant managers, the drinks manager and the dining room manager will be based in our restaurant, in offices at the back side. From there, everyday operations of the restaurant will be managed, including the purchase of ingredients, assistances to the chefs, marketing activities and general management activities. Organizational Chart

Financial ProjectionsThe financial projections for Smart Calorie are presented below; we plan to start the business with ordinary share capital of AED 400,000 invested by Owner. The depreciation is calculated on 10 years of useful life with no salvage value. The Sales and purchase budgets are also presented in the Master Budget.

7

4 | Page

Master Budget"Smart Calories" Master Budget for two years (20X1 & 20X2)

Smart CaloriesSmart Calories

Opening Balance Sheet Balance Sheet

1 Jan 20X1 (AED)1 Jan 20X2 (AED)

Assets

Cash520480 526960

Accounts receivable 0 55000

Inventory 75000 20000

Equipment35000 35000

Less accumulated depreciation0 35000 350031500

Total assets630480 633460

Liabilities and Equity

Liabilities

Accounts payable16500 18480

Note payable to bank (12% per year)1980 18480 1980 20460

Long-term notes payable 6% interest per year212000 212000

Total liabilities230480 232460

Shareholders' equity

Ordinary shares400000 400000

Retained earnings0 400000 1000 401000

Total liabilities and equity630480 633460

Notes: The useful life assumed 10 years for equipment

Sales Budget20X120X2

1st Qtr2nd Qtr3rd Qtr4th Qtr1st Qtr2nd Qtr3rd Qtr4th Qtr

Prior quarters sales in units 0 6000 6660 7326 8059 8864 9751 10726

Plus 10%0 1200 666 733 806 886 975 1073

Projected unit sales5000 6660 7326 8059 8864 9751 10726 11799

Selling price per unit30 30 30 30 30 30 30 30

Projected sales AED150000 199800 219780 241758 265934 292527 321780 353958

Sales Total for the Year811338 1234199

Sales first quarter following20X1 1st Qtr20X2 1st Qtr

Prior quarters sales in units 5000 11799

Plus 10%500 8059

Projected unit sales5500 12978

Selling price per unit30 30

Projected sales AED165000 389354

Purchases Budget


Next quarter's unit sales 4000 7326 8059 5500 9751 10726 11799 12978

Ending inventory % (multiply)25%25%25%25%25%25%25%25%

Desired units ending inventory1000 1832 2015 1375 2438 2681 2950 3245

This month's unit sales (add)5000 6660 7326 8059 8864 9751 10726 11799

Units to be available6000 8492 9341 9434 11302 12432 13676 15043

Less beginning inventory in units (minus)1250 1000 1832 2015 1375 2438 2681 2950

Units to be purchased4750 7492 7509 7419 9927 9995 10994 12094

Budgeted $ cost per unit (multiply)12 12 12 12 12 12 12 12

Projected purchases AED57000 89898 90110 89027 119126 119936 131930 145123

Purchases Total for the Year (total for 4 quarters)326035 516115

Budgeted cost of goods sold


This quarter's unit sales 5000 6660 7326 8059 8864 9751 10726 11799

Budgeted $ cost per unit (multiply)13 13 13 13 13 13 13 13

Projected cost of goods sold AED65000 86580 95238 104762 115238 126762 139438 153382

Cost of goods sold for the year351580 534819

Budgeted inventory for December 31st

Units 1375 3245

Cost per unit - AED (multiply)13 13

Total17875 42180

Selling Expenses Budget


Budgeted sales AED150000 199800 219780 241758 265934 292527 321780 353958

Delivery charge rate (multiply)3%3%3%3%3%3%3%3%

Delivery charge total450059946593725379788776965310619

Sales Manager salary3600045000450004500045000450004500045000

Projected selling expenses4050050994515935225352978537765465355619

Selling expenses yearly total195340217026

General and Administrative Expenses Budget


Administrative Salaries2000020000200002000020000200002000020000

Depreciation80008000800080008000800080008000

Interest on long-term notes - 0.5% monthly20002000200020002000200020002000

Interest on short-term notes - 1% monthly750000000

Totals3007530000300003000030000300003000030000

General and admin expenses yearly total120075120000

Expected Cash Receipts From Customers


Budgeted sales 150000199800219780241758265934292527321780353958

75%75%75%75%75%75%75%75%

Ending accounts receivable - 75% (multiply)75%112500149850164835181319199450219395241335265468

Cash receipts

Cash sales - 25% (of the quarter's sales)3750049950549456044066483731328044588489

Collections of last quarter's receivables (i.e. 90% of 75%)90%101250134865148352163187179505197456217201

Collections of receivables 2 quarters ago (i.e. 10% of 75%)10%112501498516484181321994521940

Total cash to be collected37500151200201060223776246154270769297846327630

Accounts receivable 4th quarter = all credit sales of 4th quarter sales plus 10% of credit sales of 3rd quarter)197802289602

Expected Cash Payments To Suppliers


50% previous quarter, 50% present quarter45000734499000489569104077119531125933138526

Expected Dec 31st balance4451472561

Cash Budget


Beginning cash balance520480448425453182490645550599617698693160788420

Cash receipts 37500151200201060223776246154270769297846327630

Equipment sales

Shares issue

Total cash available 5579805996256542427144217967538884679910061116050

Cash payments

Payments for merchandise 45000734499000489569104077119531125933138526

Sales delivery expense450059946593725379788776965310619

Salaries

Sales 3600045000450004500045000450004500045000

Administrative 2000020000200002000020000200002000020000

Interest on long-term notes 20002000200020002000200020002000

Dividends

Interest on short-term notes3%750000000

Total cash payments107575146443163597163821179055195307202586216145

Preliminary balance (Total cash available - Total cash payments)450405453182490645550599617698693160788420899905

Additional loan (min cash balance 40,000) (add)00000000

Amount Available for loan repayment if any410405413182450645510599577698653160748420859905

Loan repayment (minus)19800000000

Ending cash balance (4th quarter balance appears in balance sheet)448425453182490645550599617698693160788420899905

Ending short-term notes (4th quarter balance appears in balance sheet)00000000

Budgeted Income Statement

Sales 8113381234199

Cost of goods sold (minus) 351580534819

Gross profit459758699379

Operating expenses

Sales expenses195340217026

General and administration 120075120000

Total operating expenses315415337026

Net income (Loss)144343362353

Budgeted Statement of Retained Earnings

Beginning retained earnings (given)01000

Net income 144343362353

Funds available for distribution144343363353

Less cash dividends 00

Ending retained earnings144343363353

Budgeted Balance Sheet

Smart CaloriesSmart Calories

Budgeted Balance Sheet Budgeted Balance Sheet

31 Dec 20X131 Dec 20X2

Assets

Cash550599 899905

Accounts receivable 197802 289602

Inventory 17875 42180

Equipment450000 450000

Less accumulated depreciation (depreciation in opening balance sheet plus depreciation expense for the year)-32000418000 -64000386000

Total assets1184276 1617687

Liabilities and Equity

Liabilities

Accounts payable44514 72561

Note payable to bank0 44514 0654334

Long-term notes payable595419 200000

Total liabilities639933 854334

Shareholders' equity

Ordinary shares400000 400000

Retained earnings144343 544343 363353763353

Total liabilities and equity1184276 1617687

References:

18th March 2013. Healthy Restaurants in Abu Dhabi. Retrieved from http://www.zomato.com: http://www.zomato.com/abudhabi/restaurants/health-food7th June 2011. Healthy Takeaways in Abu Dhabi. Retrieved from http://www.timeoutabudhabi.com/: http://www.timeoutabudhabi.com/restaurants/features/24525 healthy-takeaways-in-abu-dhabi30th May 2011. Top 4 Healthy Restaurants in Dubai. Retrieved from http://savoirflair.com/: http://savoirflair.com/dubai/food/top-4-healthy-restaurants-dubai6th June 2009. New Survey Highlights Extent of Obesity Crisis. Retrieved from http://www.thenational.ae: http://www.thenational.ae/news/uae-news/health/new-survey-highlights-extent-of-obesity-crisis

Documents

Research Report - Feasibility for Smart Calories