KFC Feasibility report :

Introduction:

“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 human element 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

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 : 150 People at a time

` Main Utilities : Original Recipe Deep Fried Chicken, KFC Special Chicken, Zinger Burger, Fillet Burger, Soft drinks (produced by Pepsi),

` 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 yThe 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 of taste, music to the sense of sound, aroma of dishes to sense of smell, decor to the sense of sight and clean crockery, cutlery and environment in general to the sense of touch. Taking care of all five senses our customers would be the core of our strategy.

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 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:

One cannot do any business if it is started at a place where the trend of 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 business place is located where one could fetch the consumers. So the trend of consumer is also important before selecting the business.

Budget Of Partners:

Before getting into business, the spirit should be high, but always keeping in mind that it should be planed within the available budget. It is an art to get maximum benefits by spending minimum resources. However, the element of risk and luck always becomes the major cause of success of business. Therefore, always plan business by keeping budget in mind.

Budget of Consumers:

The purchasing power and the real income of the consumer should be kept in mind before choosing business.

By giving thorough study and elaborate discussions on above-mentioned factors, we now have to choose business out of unlimited jobs one could get into. After loads of thinking and vast study, we all partners concluded that the business of opening an outlet of an International Franchise Restaurant could be the best for us. So we all decided to open a restaurant where the full range of eatables of international standard are provided on competitive rates. Since the occupants of the area, which is selected for this restaurant, have a lot of trend for hoteling, therefore, we sincerely hope and pray that this business would meet the required success.

The Scope Of The ProjectThe outlets of KFC all over the world and in Pakistan

in cities like Lahore and Karachi are meeting with unlimited success day-by-day, resulting in expansion all over the world.

Since people have to eat, therefore, the business in eatables will not fail if properly looked after by a team of dedicated lot. In Multan, there are number of hotels and restaurants, cheap and expensive, but all these places are always filled with people of different class. We have felt that if conducted properly, this project could bring us luck.

We have also carried out surveys and have found that almost 60% of the occupants have a trend of eating out with families and friends. Moreover, this business also benefits the government policies of unemployment – also does not hinder the government polices. A lot of revenue is paid to the government in shape of excise duty and sales tax.

As we have selected one of the best spots in Multan, therefore, we are sure that we will be able to compete with other restaurants in surrounding areas. We are young, energetic and honest. We want to stand on our feet; we want to bright in our future with respect and dignity. With our honest efforts, we are positive that this project will be able to meet the success.

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 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 yThe 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.

There are many ways through which market survey can be conducted and the most popular method available entails about 80% of the facts considered and 20% of necromancy and judgment. It would be true to say that the luck of statistical data would make the study useless.

There are different ways through which market survey can be conducted. It is only right, therefore to describe the various ways of the market research, there are eight different types of market research.

These are:

Consumer Research

Product Research

Market Research

Dealer Research

Price and Policy Research

Selling and Advertising Research

Ware Housing

Inventory Research,

Cost and Efficiency Studies

In order to conduct our market survey we aimed at:

Factual survey

The awareness information system

The opinion survey

The attitude survey

The future inventory survey

The reason “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 of the city. It includes people living in cantonment area, Tipu Sultan Road, Officers Colony, Nasheman Colony, and few sprinkled here and there.

The people living in these are mostly rich and can afford to have a good and expensive food.

Middle Class:

It includes mostly the people living in areas such as Gulgasht, New Multan, Shah Rukn-e-Alam and Bosan Road. Most people living in these areas belong to middle class.

The survey report results are as follows:

In order to provide our customers with pleasant atmosphere and good quality of food, we need different types of machinery and equipment.

Results of Market ResearchQ.No.1: How frequently in a month do you usually go

out to a restaurant?

By this question we wanted to know that at which time we should be expecting more customers and the result was that 76% people come out dinner, 19% at lunch and 5% at other.

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 and 5% by Personal discovery.

Q.No.4: Rate the following attributes according to their importance for a restaurant?

We asked this question to know to focus more.

Quality of food = 40%

Quality of services = 10%

Location = 15%

Crowd = 5%

Price = 30%

Q.No.5: Would you like the new restaurant in:

Cantt. Locality 46%

Bosan Road 35%

New Multan 19%

Note: Future plans are to open KFC branches on Bosan Road and in New Multan.

The following questions were asked from those who have visited KFC.

(In Pakistan or Abroad)

Q.No.6: On the scale of (1–5) how would you rate KFC?

1 for most Good 5 for least Good

90% people ranked KFC No. 2 and 10% ranked it as No. 1.

T e c h n i c a l A n a l y s i sTypes of Machinery

The different machines, which we need, are:

Several machinery is going to be supplied by KFC (USA)

Cooking Range:

For cooking purpose, we need specially designed cooking range, which is systematically for cooking and baking at different requirement temperatures.

Deep Freezers:

We need deep freezers to fulfil the requirements of our customers.

In this section total expenses for our KFC restaurant are given. From this survey of markets, we have estimated the least price with good quality.

Air Conditioners:

We also want to provide good and pleasant atmosphere so that people can enjoy food, therefore, we require 5 split units of air conditioners.

Separate Stoves:

We also require a separate stove with eight terminals to cook different foods in large quantity.

Deep Frier:

Deep frier is a basic necessary of fast food. It is needed for frying French fries, chicken, etc. French fries are liked by almost everyone, so we need a deep frier.

Cost of these pieces of equipment and total expenditure on it is given in Financial Analysis.

F i n a n c i a l A n a l y s i sIn this section total expenses for our KFC restaurant

from this survey of market we have estimated the least price with good quality.

Ownership Of Business:

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 the costs, which will incur only once.

Commercialization Cost Of Land:

As we are constructing restaurant in a residential area, so we go it commercialized at Rs. 8 lac /canal.

Total estimated commercialization cost of 2 canal

= Rs 1,600,000

Land:

The total land is 2 canal and the cost of land is in that area 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.

Super Structure

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

Walls

1 foot 1.5 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 be of glass and wire gauze windows on the inside.

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.

Cost of 1 air-conditioning unit= Rs. 8000

Cost of 5 air-conditioning units = Rs. 400,000

Furniture:

We will place high quality furniture to match the standard of our restaurant.

Tables:

Several tables are required for proper sitting arrangements.

Total 30 tables will be placed.

Cost of 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 of 1 chair = Rs. 800

Cost of 150 chairs (150x800) = Rs. 120000

Interior Decoration:

We have decided to decorate our restaurant with beautiful scenery.

Cost of one moving scenery = Rs. 15,000

Cost of 4 moving scenery = Rs. 60,000

Deep Frier:

As French fries are the ever favorite of all people of all ages, so deep frier will be bought.

Cost of 1 deep frier = Rs. 2500

Cost of 5 deep frier (2500 x 5 ) =Rs.12500

Cooking Range:

We have decided to use a specially designed cooking range provided by KFC for convenient and easy cooking.

Cost of 1 cooking range = Rs. 100,000

Fresh Pepsi Maker:

Cost of 2 Fresh Pepsi Makers = Rs. 40,000

Stove:

A special stove with eight terminals will be installed.

Cost of one stove = Rs. 10,000

Number of Utensils Number of units

Cost of each (unit) (Rs.) Total cost

Dishes 200 50 Rs. 10000

Forks 300 8 Rs. 2400

Disposable Glasses (of KFC) 200/day 3 Rs. 600

Total Rs. 13000

Total fixed cost = Rs. 170,09,100

Variable Costs:

These are the costs, which are subject to change, these costs are taken

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

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

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 a large advertisement expense.

Advertisement Through Newspapers:

Many daily and weekly newspapers are published in Multan. The people of Multan frequently read newspapers, that’s why we advertise our restaurant by these newspapers.

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 Urdu newspapers, 10 days before the opening ceremony of Restaurant and then 30 days after it.

Rates:

Nawa-i-Waqt and Din = Rs. 1,700 per ad on 2nd page Size = 3 col x 10 cm

Khabrain = Rs. 1,200 per ad.

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

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

Expenditure of Din (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:

The News = Rs. 1.800 per ad.

Dimension = 3 col x 10 cm on 2nd page

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 have chosen 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:

During Drama Hour (7-9 PM),

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

After Khabarnama (9PM – 12 AM),

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

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

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

Advertisement Through Printed Material:

We will also advertise through printed material like banners, handbills, signboards, and stickers. This is important way of advertising because these printed materials almost cover the whole city. Those people who miss ads. on TV or those who cannot read newspaper, will certainly see this material.

Cost:

30 banners @ Rs. 300 = Rs. 9,000

4 signboards @ Rs. 8,000 = Rs. 32,000

15,000 handbills @ Rs. I.5 = Rs. 22,500

15,000 stickers @ Rs. 1 = Rs. 15,000

Total Cost = Rs. 78,500

Total Advertising Expense:

Newspapers = Rs 238,000

TV Media = Rs. 540000

Printed Media = Rs. 785,000

Total = Rs. 1563000

Revenues:

We have found out our revenues on average basis per month. The name of items available in our restaurant, their prices and quantity sold will be given as follows:

C A T E G O R Y N O . 1 B U R G E R S

Name Rate Quantity Sold Revenue

KFC Zinger 100 6000 600000Fillet Burger 80 4500 360000

Masala Burger 50 6000 240000

Total 1200000

Note: These Burgers are specialty of KFC

C A T E G O R Y N O . 2 S O F T D R I N K S

Name Rate Quantity Sold Revenue

Pepsi 15 2000 30,000Marinda 15 15000 22500

7 up 15 1000 15000

Total 67500

Note: Pepsi is sponsoring KFC all around the world.

C A T E G O R Y N O . 3 K F C C H I C K E N

Name Rate Quantity Sold Revenue

10 PCS Plate 450 150 675008 PCS Plate 400 250 1000005 PCS Plate 325 400 1300003 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

Break-even Point:

The break-even point is the point where the total revenue is equal to the total cost. This point shows 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.

A s s u m p t i o n s

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

1. We have assumed that as our business moves towards success, we will offer different discount packages for our customers and will give special discount to the students. Eventually this will increase our sales.

2. We have assumed that we will try to compete all the existing firms in this field.

3. Our restaurant will remain opened for the full week and also during special holidays like Eid, 14 th

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 chain restaurant will be opening in Multan for two years.

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 [___________]

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 1–5)

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 [___________]

The following questions are for those who have visited KFC only (In Pakistan or Abroad)

8. On the scale of (1–5) how would you rate KFC? [___________]

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 for data analysis only.

1. Gender

Male [___________]

Female [___________].

2. Age (in years)

[___________]