kfc feasibilty

8/9/2019 kfc feasibilty

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KFC feasibility

I n t r o d u c t i o n

The pleasures of the table belong to all times and all ages,

to every country and ever day, they go hand in hand with all

other pleasures, outset them and remain to console us for

their loss.

Restaurant business is one of the oldest known to man and to a

large extent is still an art and will remain so in future. System and practices

make the job of managing a hotel or restaurant much similar, but the humanelement is difficult to systemize. The field of restaurant business is

interdisciplinary. It draws up economics, psychology, management, food

technology, architecture and marketing clustered together. It is a business of

hospitality.

Multan is one of the oldest cities of Pakistan and is expanding

everyday. The trend of the people of Multan is drifting extensively towards

modern means of socializing and relaxation. Therefore, while starting our

business, we want to introduction a revolution in the business of restaurant. We

plan to introduce a restaurant of international standard, KFC, the name require

no explanation. It is a chain of restaurants operating in more than 80 countries

around the world from Shanghai to Sao Polo; from the sand of Saudi Arabia to

the side walks of New York and now in Pakistan. Therefore, while starting our

business we have decided to open a restaurant in the posh locality of Multan,

and then extended to other parts.

Brief Description Of Proposed Project


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In this project we are introducing a Fast Food Restaurant (KFC)

in Multan.

`Project : Fast Food Restaurant

`Name : KFC (Kentucky Fried Chicken)

`Project Site : Cantt. Locality,

Tipu Sultan Road.

`Total Area : 2 Canal

`Operating Time : 12:00AM 12:00PM

(Weekdays)

12:00AM 1: 00PM

(Sundays)

30 days a month,

12 months a year

`Project Capacity : 150Peopleat a time

`Main Utilities :Original RecipeDeepFriedChicken,

KFC Special Chicken, Zinger

Burger,

Fillet Burger,

Soft drinks (produced by Pepsi),


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`End Project : Opening a number of more restaurants after success of

project.

O p e r a t i o n S t r a t e g y The operation strategy of our restaurant will be designed around

the concepts of five senses. From our description research of the industry we

found out that restaurant business is one of those rare services which touch all

the five senses of human being.

The food will cater to the sense o f taste, music to thesense of sound, aroma of dishes to sense o f smell, decor to thesense o f sight and clean crockery, cutlery and environment ingeneral to the sense of touch. Taking care o f all five senses our

customers wouldbethecoreofourstrategy.

Structure of Management:

Our business is a partnership which includes 6 partners investing

capital.

Once it is decided that we are getting into business the question

arises that what is uncountable list of occupations the point is what kind of

business to be done. The answer to this question may be found while

considering following factors:

Government Policy:

The factor of government policy plays a major role in the success of

any business. Before deciding to get into the business. One must also keep in

mind the advantages and disadvantages of any business for the country.

Earning money by keeping the interest of the country at stake should not be even


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thought of. The business must be chosen considering its benefit to the country,

in the shape of taxes, revenues and over coming unemployment.

Number of Consumers:

This factor is also of vital importance. This business only flourishes

when the demand of that product or number of consumers is more. Thus, while

choosing any business we must see the field which provides maximum number of

consumers, so that the invested capital is not blocked or wasted.

Demand Of The Product:

Demand of the product by the user is also a key feature before

choosing any business. If the chosen business in competition with others then

one should not forget that profit is divided. However, by producing quality

product, this factor could be dealt with properly and in our favour. One could

fetch more business if demand of the product increases.

General Trend Of The Area:

Onecannotdo any business if it is started at aplace

where the trend o f the people is not favorable. Therefore,

before choosing the trend of people must be created for it.

Hasty decisions should be avoided. See to the fact, that

businessplace is located whereonecould fetch theconsumers.

So the trendofconsumer is also important before selecting the

business.


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The Scope Of The Project

Theoutletsof KFC allover the world and inPakistan incities like Lahore and Karachi are meeting with unlimited success

day-by-day, resulting inexpansion allover theworld. Sincepeoplehave to eat, therefore, the business in eatables will not fail ifproperly looked after by a teamofdedicated lot. In Multan, therearenumberof hotels andrestaurants, cheapandexpensive, but alltheseplaces are always filled withpeople of different class. We

havefelt that ifconductedproperly, thisprojectcouldbring us luck.

We have also carried out surveys and have found thatalmost 60% o f the occupants have a trend of eating out with

families and friends. Moreover, this business also bene fits thegovernmentpolicies o f unemployment also does not hinder thegovernmentpolices. A lotof revenue ispaid to the government inshapeofexciseduty andsales tax.

As we have selected one o f the best spots in Multan,therefore, we are sure that we will be able tocompete with otherrestaurants in surrounding areas. We are young, energetic andhonest. We want to stand on our feet; we want to bright in our

future with respect and dignity. With our honest efforts, we arepositive that thisproject will beabletomeet thesuccess.

We strongly believe that if success has to be met, then we will have

to put in our best and honest efforts to provide our food to the entire satisfaction

of consumers. We believe that we can make a difference, we will demonstrate

personal pride and commitment in everything we do. We have a passion for

making things better and we have a positive outlook. We know working as team

always gets the best results. We will by the grace of God work with all our zeal

and enthusiasm.

By considering all above-mentioned factors of our project, it is

quite evident that we will compete in the market. The scope of our project is

good and the results will be prolific. The location of business spot is already

been mentioned which appears to be the best in Multan. We intend covering our

clients from all part of the city mainly from cantonment area. The rest from


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Gulgasht, Bosan Road, New Multan and Railway Colony. In future we plan to

introduce more outlets of KFC in different areas of Multan.

M a r k e t S u r v e y

The market survey was carried out with express intention of its

being factual and maximum possible care has been exerted to use the best

sources of information.

Thereare many ways through which market surveycanbeconducted and themostpopular method availableentails about80%of the factsconsideredand20%of necromancy andjudgment.It wouldbe true tosay that the luckof statisticaldata wouldmake

thestudy useless.

There are different ways through which market surveycan beconducted. It isonlyright, therefore todescribe the variousways o f the market research, there are eight different types of

marketresearch.

Theseare:

ConsumerResearch

Product Research

Market Research

DealerResearch

PriceandPolicy Research

Selling andAdvertising Research

Ware Housing

Inventory Research,


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Cost andEfficiency Studies

In order to conduct our market survey we aimed at:

Factual survey

Theawareness information system

The opinion survey

Theattitudesurvey

Thefuture inventory survey

Thereason why survey.

To conduct a proper and a good survey, we divided the city in to closes

i.e. Upper Class and Middle Class.

Upper Class:

It includes the elite class o f the city. It includespeople

living in cantonment area, Tipu Sultan Road, Officers Colony,Nasheman Colony, andfew sprinkledhereand there.

Thepeople living in thesearemostlyrich andcan afford

tohavea goodandexpensivefood.

Middle Class:

It includes mostly the people living in areas such as

Gulgasht, New Multan, Shah Rukn-e-Alam and Bosan Road. Mostpeople living in theseareas belong tomiddleclass.

Thesurveyreportresults areas follows:


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In order to provide our customers with pleasantatmosphere and good quality of food, we need different types of

machinery andequipment.

Results of Market Research

Q.No.1: How frequently in a month do you usually go out to a restaurant?

By this question we wanted toknow that at which timewe should be expecting more customers and the resultwas that 76%peoplecomeoutdinner, 19% at lunch and

5% atother.

Q.No.2: Do you usually go out with your?

Friends 36%

Family 41%

Business Guests 23%

By this question we wanted to know what kind of entertainment and

atmosphere we should provide.

Q.No.3: How do you become aware of new restaurants?

We wanted to know in which field should we advertise more. The results were

that 30% come to now from reviews of Mag. 29% TV, 21%

Recommendation, 15% by banners and5% by Personal discovery.

Q.No.4: Rate the following attributes according to their

importance for a restaurant?

Weasked this question toknow tofocus more.

Quality of food = 40%

Qualityof services = 10%


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Forcookingpurpose, weneedspeciallydesignedcookingrange, which is systematically for cooking and baking atdifferent

requirement temperatures.

Deep Freezers:

We needdeep freezers to fulfil the requirements of our

customers.

In this section totalexpenses forourKFCrestaurant aregiven. From this survey o f markets, we have estimated the least

pricewith goodquality.

Air Conditioners:

We also want toprovide good andpleasant atmosphereso thatpeoplecanenjoy food, therefore, werequire 5 split unitsof

airconditioners.

Separate Stoves:

We alsorequire a separate stove witheight terminals to

cookdifferent foods in largequantity.

Deep Frier:

Deep frier is a basic necessaryof fast food. It is neededforfrying French fries, chicken, etc. French fries are likedby almost

everyone, soweneedadeep frier.

Costo f thesepiecesofequipment and totalexpenditure

on it is given in Financial Analysis.

Financial Analysis

In this section totalexpenses forourKFCrestaurant fromthis surveyo f market we haveestimated the leastprice with good

quality.


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Ownership OfBusiness:

Our business is on partnership basis and we have six partners, each

one investing his/her own capital, which is near about Rs. 643,000 as franchise

will cost us Rs. 20,000,000.

Fixed Cost:

Following are thecosts, which will incuronlyonce.

Commercialization Cost Of Land:

As we are constructing restaurant in a residential area,

sowego itcommercializedat Rs. 8 lac/canal.

Total estimated commercialization cost of 2 canal

= Rs 1,600,000

Land:

The total land is 2canal and the costo f land is in thatarea is Rs. 180,000 per marla. So the total land cost is Rs.

7,200,000.

Construction:

The basic aim to open a KFC restaurant is to given an ideal eating

place with pleasant atmosphere. So we will construct our restaurant in a way

that it would catch the attention of our customers.

Specifications:

Foundation

P.C.C. (1:4:8) in base.


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SuperStructure

B.B. in cement Mortar (1:5)

Walls

1 foot1.5 inches thick, coated with hot bitumen, 2 coat and 2

sheets of polyethene to all external walls.

Floors

Marble floors with 4 inches marble skirting.

Roof

R.C.C. roof slab (1:2:4) as per design.

Internal Finish

Cement mortar (1:2) ceilings;

Cement mortar (1:4) walls.

Internal & External Paint

Emulsion paints weather shield of off-white colour.

Wash Room:

Marble tiles for floors and glazed titles for walls.

Opening

Whole front will beof glass andwiregauze windowson

the inside.


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Schedule of the Area

Total area = 10800 squares feet

= 40 marlas

Total covered area = 8000 square feet

= 29.6 marlas

Estimated cost

of construction = Rs. 800/sq. foot

Total estimated cost

of construction = 29.6 x 270 x 800

= Rs. 6393600

The total cost includes cost of construction of building, glass &

lighting.

Total sitting capacity = 150 persons

Air-conditioning Unit:

Five air-conditioner units will be installed to keep our customers

safe from the blazing heat of Multan and give them a cool and relaxing

atmosphere.

Costof 1 air-conditioning unit = Rs. 8000

Costof 5 air-conditioning units = Rs. 400,000

Furniture:


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We will place high quality furniture to match the

standardofourrestaurant.

Tables:

Several tables are required for proper sitting

arrangements.

Total 30 tables will beplaced.

Costof 1 table= Rs. 2000

Cost of 30 tables = Rs. 60,000

Chairs:

To make our customers comfortable, relaxed and easy,we will buy specially designed chairs. Total 150 chairs will be

used.

Cost of1 chair = Rs. 800

Cost of150 chairs (150x800) = Rs. 120000

InteriorDecoration:

We have decided to decorate our restaurant with

beautiful scenery.

Cost of one moving scenery = Rs. 15,000

Costof 4 moving scenery = Rs. 60,000

Deep Frier:

As French fries are the ever favoriteo f allpeopleo f all

ages, sodeep frierwill bebought.

Costof 1 deep frier= Rs. 2500

Costof 5deep frier (2500x5 ) =Rs.12500


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Cooking Range:

We have decided to use a specially designed cooking

rangeprovidedby KFC forconvenient andeasycooking.

Costof 1 cookingrange= Rs. 100,000

Fresh Pepsi Maker:

Costof 2 FreshPepsi Makers = Rs. 40,000

Stove:

A special stovewitheight terminals will be installed.

Costofonestove= Rs. 10,000

Numberof UtensilsNumberof

unitsCostofeach(unit) (Rs.)

Totalcost

Dishes 200 50 Rs. 10000

Forks 300 8 Rs. 2400

Disposable Glasses (of

KFC)200/day 3 Rs. 600

Total Rs. 13000

Total fixedcost = Rs. 170,09,100

Variable Costs:

Theseare thecosts, which are subject tochange, thesecosts

are taken

Salary of the Manager (Per month) = Rs. 18000

Salary of5 Chefs (4000 x 5) = Rs. 20,000


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Salary of 3 receptionists = Rs. 5,200

Salary of Waiters (10x1200) = Rs. 12000

Salary of Security Guard = Rs. 2,000

Salary of 4 Sweepers(1200 x 4) = Rs. 4800

Charges of Waste Buster Van = Rs. 400

Monthly Utilities Bill = Rs.80,000

Total = Rs. 142400

Total accrued cost of ingredients per month

like buns, eggs, beef, chicken, spices assorted,

vegetables, soft drinks, Monthly Tax

= Rs. 427,675 + 80,000

= Rs. 507,675

Total variable cost (142400 + 507,675) = Rs. 650075

Advertisement Expense:

We are entering in the market with the large advertisements. So, for this reason, we would have alarge advertisement expense.

Advertisement Through Newspapers:

Many daily and weekly newspapers are published in Multan. The people of Multan frequentlyread newspapers, thats why we advertise our restaurant by these newspapers.


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The main daily newspapers published in Multan are:

Nawa-I-Waqt

Din

Khabrain

Among English newspapers, important one is This News our ads. Will be given in Urdunewspapers, 10 days before the opening ceremony of Restaurant and then 30 days after it.

Rates:

Nawa-i-Waqt andDin = Rs. 1,700 per ad on 2ndpage Size = 3 col x 10 cm

Khabrain = Rs. 1,200 per ad.

Dimensions of ad. = 3 col x 10 cm on 2ndpage

Expenditure of Nawa-i-waqt (1,700 x 40) = Rs.68,000

Expenditure ofDin (1,700 x 40) = Rs.68,000

Expenditure of Khabrain (1,200 x 40) = Rs.48,000

Total expenditure = Rs.184,000

Ads. will be given in English Newspaper The News.

We will advertise KFC Restaurant in The News for complete one month.

Rates:


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The News = Rs. 1.800 per ad.

Dimension = 3 col x 10 cm on 2ndpage

Expenditure = (1,800 x 30)

= Rs. 54,000

Advertisement Through Television:

In Pakistan, we have three TV channels that are PTV, Channel-3 PTV World. But we havechosen PTV for the advertisement of our KFC Restaurant, because it is the most popular TV

channel in Multan.

3 ads. will be displayed during Drama Hour

2 ads. will be displayed after Khabarnama.

These ads will start one week before the inauguration of our restaurant and will

last till the end of next three weeks.

Rates:

DuringDrama Hour (7-9 PM),

3ads of 10 sec @3,800 = Rs. 11,400

After Khabarnama (9PM 12 AM),

2 adsof 10 sec. @ 3,300 = Rs. 6,600

Daily Cost (11,400 + 6.600) = Rs. 18000

Total Adv. Exp. (8000 x 30) = Rs. 540000


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We have foundoutourrevenueson average basisper month. The

nameof items available inourrestaurant, theirprices and quantity

soldwill begiven as follows:

Category No. 1 BurgersName Rate Quantity Sold Revenue

KFC Zinger 100 6000 600000

Fillet Burger 80 4500 360000

Masala Burger 50 6000 240000

Total 1200000

Note: These Burgers are specialty of KFC

Category No. 2 Soft DrinksName Rate Quantity Sold Revenue

Pepsi 15 2000 30,000

Marinda 15 15000 22500

7 up 15 1000 15000

Total 67500

Note: Pepsi is sponsoring KFC all around the world.

Category No. 3 KFC ChickenName Rate Quantity Sold Revenue

10 PCS Plate 450 150 67500

8 PCS Plate 400 250 100000

5 PCS Plate 325 400 130000

3 PCS Plate 250 500 125000

Total 422500

Note:These Chicken Plates are Main Utility of KFC

So the total revenue per month is Rs. 1690000


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Break-even Point:

The break-even point is the point where the total revenue is equal to the total cost. This pointshows that after how much time we can get our profit.

Break-even point : C(x) = R(x)

Cost = Fixed Cost + Variable Cost

= 18572100 + 650075 (x)

where x = months

18572100 + 650075x = 1690000 (x)

1690000x 650075x = 18572100

1039925x= 18572100

x = 17.9

So we can achieve our break-even point in 17 months and 28 days.

Assumptions

While considering our project, we have taken the following assumptions:

1.We have assumed that asour business moves towards

success, we willofferdifferentdiscountpackages for

our customers and will give special discount to the

students. Eventually this will increaseour sales.


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2. We have assumed that we will try to compete all the

existing firms in this field.

3.

Ourrestaurant willremainopened for the full week andalso during special holidays like Eid, 14th August,

etc.

4. There may be a variation in the price of the ingredients, which we will

be using with respect to taxes.

5. We are assuming that no other international chainrestaurant will beopening in Multan for twoyears.

Q u e s t i o n n a i r e

(Feasibility of Opening KFC in Multan)

1.How frequently in a month do you usually go out to restaurants?

Lunch [___________]

Dinner [___________]

Other [___________]

2.What is your monthly household expenditure on food?

Rupees [___________]

3.Do you usually go out with

Friends [___________]

Family [___________]

Business Guests [___________]


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4.What kind of food do you usually prefer to have at restaurants?

Pakistani Food [___________]

Chinese Food [___________]

Fast Food [___________]

Others [___________]

5.How do you become aware of new restaurant?

Recommendation [___________]

Banners [___________]

Reviews and Mag. [___________]

Personal Discovery [___________]

6.Rate the following attributes according to their importance for a restaurant?

(Rate from 15)

Quality of food [___________]

Quality of Service [___________]

Location [___________]

Crowd [___________]

Price [___________]

7.How much do you spend on an average when you go out to a restaurant?

Rupees [___________]

yThe following questions are for those who have visited KFC only (In Pakistan

or Abroad)

8.On the scale of (15) how would you rate KFC? [___________]


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9.Would you prefer KFC food to other restaurants in Multan?

Yes [___________] No [___________]

10.Would you like new restaurant in

Cantt Locality [___________]

Bosan Road Locality[___________]

New Multan Locality [___________]

11.Would you prefer any other thing at KFC (Please Specify).-

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________

Kindly provide the following information about yourself. It will be kept secret and is required fordata analysis only.

1.Gender

Male [___________]

Female [___________].

2.Age (in years)

[___________]

Thank you

kfc feasibilty

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