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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
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