Capital session - setting up dhaba
Content
IIFT DHABA – FINANCIAL PLAN
INTRODUCTION
IIFT Dhaba is an eatery that is planned to set up near Indian Institute of
Foreign Trade, Qutab Institutional Area, South Delhi. A Financial Plan is
formulated taking into consideration of all external and internal factors affecting
the business and it proceeds as follows
FACT SHEET
1) Inflation rate – 6.38%(average inflation rate,2015)
2) Commercial Place Rent/Sq.Feet(near Qutab Institution Area, South Delhi)Rs. 200/-( Predominantly, priced on the basis of location advantage
Customer foot fall is likely less, As major customers are students studying
in nearby colleges. Also Semi-Furnished with Flooring and Lighting))
3) Service Tax-5.6% of the bill(As on June,2015)
4) VAT ( State Government)-12.5%
BASIC ASSUMPTIONS
1) The Dhaba is going to be set up with Funds with source ratio: 60%
investment by owners and 40% by Financing from bank.
2) The owners maintain positive CIBIL score and Legally clear. The Bank is
compliant to zero processing charge and Prepayment charges.
3) Bank Interest Rate-12.00%(variable as per Bank rate).
4) As more than 5 Dhabas are present one near another, market is primarily
consumer-focussed market. The pricing of a meal is based on customer
attractiveness, competition, quality of food, taste, variable costs, fixed
costs, economies of scale. On calculating , The average pricing of
i. Breakfast Price– Rs. 30/ii. Lunch Price- Rs. 40/iii. Dinner- Rs. 50/iv. Average Meal Price- Rs. 30/- to Rs. 50 /- (~ Rs. 40/-)
5) Considering high demand, the operating(flow) time and personnel in the
dhaba is high. The dhaba operates its business timing from 8:00 a.m to
12:00 a.m, in all 7 days of a week. The dhaba will employ 16 employees of
different skills where 5 are paid salaries( chefs, specialized skill set) and
11 are paid wages(based on working hours and shifts).
6) The dhaba operates in space of 800 square feet place with kitchen space
of 400 sq. Feet and dine-in space of 400 sq. Feet. It doesn’t have any
free(parking) space as such. Monthly Rate is Rs.1,60,000/-(800*200).
Advance amount to be paid Rs. 6,00,000/- .
7) Annual increase in revenues is going to be increase in more slope with
time for initial 2 years. Then, due to competition and inflation concerns,
the slope tends to be constant and decrease gradually(RevenueDuration(years) graph- Inverted U- graph).
Initial Set-Up Costs(Establishment Costs)
S.n
o
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Items
Amount
Commercial Place Advance Payment
First Month Rent
Tables and Furniture
Inventory Set-up*
Accounting Costs
Ordering and Payment Technology
Permits and Licenses
Insurance(as per Bank Norms)
Renovation
Working Capital**
Set-Up Assets Total***
Pre Opening Expenses
Promotion and Marketing charges
Other Expenses
Kitchen build out
Contingency Fund
TOTAL
6,00,000
3,20,000
1,50,000
3,00,000
25,000
10,000
8,000
12,500
2,00,000
2,25,000
3,00,000
20,000
30,000
10,000
1,00,000
30,000
23,40,500
*- Expense that includes setting up storage places such as freezers, refrigerators,
storage places.
**- Working Capital includes current assets and liabilities namely purchase of
perishable items for cooking, inventory, mortgage payable to bank and interest
payable to 3rd party financiers(if any), payment of salaries for work done.
***- Set-Up Assets includes products and services with depreciation and
amortization values that need to be reduced at the end of each FY. This includes
products like Kitchen wares, Utensils, small wares, Art, Decor, POS systems,
Ovens, food processors and so on.
Source of Funds
S.N
O
1
2
3
Funds
Amount
Owner’s Investment*
Bank Loans**
Other Financing
Total Funds
14,04,300
9,36,200
23,40,500
*- Owner’s Investment-60%(Based on Assumption)
**- Bank Loans-40%(Based on Assumption)
SALES FORECAST
WEEKLY SALES PROJECTION IN A PEAK LOAD TIME
Considering Average Meal Price and # Of Seats as 80 and take away charges. To
increase customer attractiveness, the Dhaba planned to cut its service charge
from the bill for initial years.
S.N
O
1
Day
2
Tuesday
3
Wednesday
4
Thursday
5
Friday
6
Saturday
7
Sunday
8
TOTAL
Monday
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Net Total
Customers
Food Cost
40
110
130
280
40
110
130
280
30
100
120
250
30
100
120
250
30
120
150
300
55
130
150
335
55
130
150
335
2030
1200
4400
6500
12100
1200
4400
6500
12100
900
4000
6000
10900
900
4000
6000
10900
900
4800
6000
11700
1650
5200
7500
14350
1650
5200
7500
14350
75500
DEMAND FLOW:
Demand(%)
90
80
70
60
Demand(%)
50
40
30
20
10
0
Jan
Feb Mar Apr May Jun
Jul
Aug Sep Oct Nov Dec
Figure 1: Demand rate over the month in a year
This demand flow is based on Customer flow. A foot fall is experienced as a result
of migration of students from campus.
YEARLY SALES FORECAST
Yearly Sales Forecast is done considering the change in demand and adjusted to
inflation. Considering the location advantage, the annual demand is assumed to
increase by 3%(corrected to inflation(CPI)).
75,500*4= Rs. 3,02,000 => peak load time ( assuming month of July,2015 demand rate-85% ).
350
300
250
200
Demand(%)
Sales(In '000s)
150
100
50
0
Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec
Figure 2: Sales Income over the month in year-2015
SALES FORECAST
2015
2016
SALE
31,83,4 32,78,9
S(in
35
38
lakhs)
2017
33,77,3
06
2018
34,78,6
25
EXPENSES
The expenses incurred are mainly Fixed costs and variable costs. Fixed costs
include Rental Payment, Maintenance Charges, Salaries and Wages of personnel.
Variable costs vary with the per unit of meal. Electricity Bills, Tax payables,
though varying, can be included in Fixed costs as average yearly amount.
Expense Type
1. Fixed Cost
2. Variable Costs**
Expense Detail
Rental
Payment(yearly)
Maintenance Charges
Salaries and Wages*
Mortgage Payable
Other Fixed Expenses
Per Unit product
Variable Cost
Charges
19,20,000
1,00,000
5,00,000
2,45,480
1,00,000
5/-
*- Wages are calculated on the Labour hourly charges, shift timing , customer
flow and demand rate. This will be adjusted as per inflation in the coming years.
**- Variable Costs are cost incurred per Unit product to be produced(can be used
to calculate COGS, this will include inventory charges also to it.) with correction
to inflation rates.
EXPENSE FORECAST
Cost of Goods Sold- Units produced * variable costs per unit
From Sales Record, and Average Unit price being Rs.40/-.
Units produced = Sales/Average Unit price
Average
Units
produced
Variable
costs
Cost of
Goods Sold
Fixed Costs
EMI
(accrue)*
2015
79585.875
2016
81973.45
2017
84432.65
2018
86965.625
5.15
5.3045
5.4636
3,97,925
4,22,163.27
4,47,872.99
475145.39
28,00,000
2,45,580
28,84,000
2,45,480
29,70,520
2,45,480
30,59,635.6
2,45,480
5
*- The EMI is calculated taking into financing from bank and the dhaba prepared
to settle the Interest + Pricipal within loan tenure of 5 yrs. After 5 yrs, this
expense will not get incurred.
BREAK EVEN ANALYSIS
Units
Sold
Sales
Revenues
Variable
Costs
Fixed
Costs
Operating
Profit
0
0
0
3,045,580
-3,045,580
21754
870,166
108,771
3,045,580
-2,284,185
43508
1,740,331
217,541
3,045,580
-1,522,790
65262
2,610,497
326,312
3,045,580
-761,395
87016
3,480,663
435,083
3,045,580
0
108770
4,350,829
543,854
3,045,580
761,395
130524
5,220,994
652,624
3,045,580
1,522,790
152279
6,091,160
761,395
3,045,580
2,284,185
174033
6,961,326
870,166
3,045,580
3,045,580
195787
7,831,491
978,936
3,045,580
3,806,975
The Business takes approximately 87016 units to make break even which will
happen in year 2019 First Financial Quarter.
INTRODUCTION
IIFT Dhaba is an eatery that is planned to set up near Indian Institute of
Foreign Trade, Qutab Institutional Area, South Delhi. A Financial Plan is
formulated taking into consideration of all external and internal factors affecting
the business and it proceeds as follows
FACT SHEET
1) Inflation rate – 6.38%(average inflation rate,2015)
2) Commercial Place Rent/Sq.Feet(near Qutab Institution Area, South Delhi)Rs. 200/-( Predominantly, priced on the basis of location advantage
Customer foot fall is likely less, As major customers are students studying
in nearby colleges. Also Semi-Furnished with Flooring and Lighting))
3) Service Tax-5.6% of the bill(As on June,2015)
4) VAT ( State Government)-12.5%
BASIC ASSUMPTIONS
1) The Dhaba is going to be set up with Funds with source ratio: 60%
investment by owners and 40% by Financing from bank.
2) The owners maintain positive CIBIL score and Legally clear. The Bank is
compliant to zero processing charge and Prepayment charges.
3) Bank Interest Rate-12.00%(variable as per Bank rate).
4) As more than 5 Dhabas are present one near another, market is primarily
consumer-focussed market. The pricing of a meal is based on customer
attractiveness, competition, quality of food, taste, variable costs, fixed
costs, economies of scale. On calculating , The average pricing of
i. Breakfast Price– Rs. 30/ii. Lunch Price- Rs. 40/iii. Dinner- Rs. 50/iv. Average Meal Price- Rs. 30/- to Rs. 50 /- (~ Rs. 40/-)
5) Considering high demand, the operating(flow) time and personnel in the
dhaba is high. The dhaba operates its business timing from 8:00 a.m to
12:00 a.m, in all 7 days of a week. The dhaba will employ 16 employees of
different skills where 5 are paid salaries( chefs, specialized skill set) and
11 are paid wages(based on working hours and shifts).
6) The dhaba operates in space of 800 square feet place with kitchen space
of 400 sq. Feet and dine-in space of 400 sq. Feet. It doesn’t have any
free(parking) space as such. Monthly Rate is Rs.1,60,000/-(800*200).
Advance amount to be paid Rs. 6,00,000/- .
7) Annual increase in revenues is going to be increase in more slope with
time for initial 2 years. Then, due to competition and inflation concerns,
the slope tends to be constant and decrease gradually(RevenueDuration(years) graph- Inverted U- graph).
Initial Set-Up Costs(Establishment Costs)
S.n
o
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Items
Amount
Commercial Place Advance Payment
First Month Rent
Tables and Furniture
Inventory Set-up*
Accounting Costs
Ordering and Payment Technology
Permits and Licenses
Insurance(as per Bank Norms)
Renovation
Working Capital**
Set-Up Assets Total***
Pre Opening Expenses
Promotion and Marketing charges
Other Expenses
Kitchen build out
Contingency Fund
TOTAL
6,00,000
3,20,000
1,50,000
3,00,000
25,000
10,000
8,000
12,500
2,00,000
2,25,000
3,00,000
20,000
30,000
10,000
1,00,000
30,000
23,40,500
*- Expense that includes setting up storage places such as freezers, refrigerators,
storage places.
**- Working Capital includes current assets and liabilities namely purchase of
perishable items for cooking, inventory, mortgage payable to bank and interest
payable to 3rd party financiers(if any), payment of salaries for work done.
***- Set-Up Assets includes products and services with depreciation and
amortization values that need to be reduced at the end of each FY. This includes
products like Kitchen wares, Utensils, small wares, Art, Decor, POS systems,
Ovens, food processors and so on.
Source of Funds
S.N
O
1
2
3
Funds
Amount
Owner’s Investment*
Bank Loans**
Other Financing
Total Funds
14,04,300
9,36,200
23,40,500
*- Owner’s Investment-60%(Based on Assumption)
**- Bank Loans-40%(Based on Assumption)
SALES FORECAST
WEEKLY SALES PROJECTION IN A PEAK LOAD TIME
Considering Average Meal Price and # Of Seats as 80 and take away charges. To
increase customer attractiveness, the Dhaba planned to cut its service charge
from the bill for initial years.
S.N
O
1
Day
2
Tuesday
3
Wednesday
4
Thursday
5
Friday
6
Saturday
7
Sunday
8
TOTAL
Monday
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Breakfast
Lunch
Dinner
Total
Net Total
Customers
Food Cost
40
110
130
280
40
110
130
280
30
100
120
250
30
100
120
250
30
120
150
300
55
130
150
335
55
130
150
335
2030
1200
4400
6500
12100
1200
4400
6500
12100
900
4000
6000
10900
900
4000
6000
10900
900
4800
6000
11700
1650
5200
7500
14350
1650
5200
7500
14350
75500
DEMAND FLOW:
Demand(%)
90
80
70
60
Demand(%)
50
40
30
20
10
0
Jan
Feb Mar Apr May Jun
Jul
Aug Sep Oct Nov Dec
Figure 1: Demand rate over the month in a year
This demand flow is based on Customer flow. A foot fall is experienced as a result
of migration of students from campus.
YEARLY SALES FORECAST
Yearly Sales Forecast is done considering the change in demand and adjusted to
inflation. Considering the location advantage, the annual demand is assumed to
increase by 3%(corrected to inflation(CPI)).
75,500*4= Rs. 3,02,000 => peak load time ( assuming month of July,2015 demand rate-85% ).
350
300
250
200
Demand(%)
Sales(In '000s)
150
100
50
0
Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec
Figure 2: Sales Income over the month in year-2015
SALES FORECAST
2015
2016
SALE
31,83,4 32,78,9
S(in
35
38
lakhs)
2017
33,77,3
06
2018
34,78,6
25
EXPENSES
The expenses incurred are mainly Fixed costs and variable costs. Fixed costs
include Rental Payment, Maintenance Charges, Salaries and Wages of personnel.
Variable costs vary with the per unit of meal. Electricity Bills, Tax payables,
though varying, can be included in Fixed costs as average yearly amount.
Expense Type
1. Fixed Cost
2. Variable Costs**
Expense Detail
Rental
Payment(yearly)
Maintenance Charges
Salaries and Wages*
Mortgage Payable
Other Fixed Expenses
Per Unit product
Variable Cost
Charges
19,20,000
1,00,000
5,00,000
2,45,480
1,00,000
5/-
*- Wages are calculated on the Labour hourly charges, shift timing , customer
flow and demand rate. This will be adjusted as per inflation in the coming years.
**- Variable Costs are cost incurred per Unit product to be produced(can be used
to calculate COGS, this will include inventory charges also to it.) with correction
to inflation rates.
EXPENSE FORECAST
Cost of Goods Sold- Units produced * variable costs per unit
From Sales Record, and Average Unit price being Rs.40/-.
Units produced = Sales/Average Unit price
Average
Units
produced
Variable
costs
Cost of
Goods Sold
Fixed Costs
EMI
(accrue)*
2015
79585.875
2016
81973.45
2017
84432.65
2018
86965.625
5.15
5.3045
5.4636
3,97,925
4,22,163.27
4,47,872.99
475145.39
28,00,000
2,45,580
28,84,000
2,45,480
29,70,520
2,45,480
30,59,635.6
2,45,480
5
*- The EMI is calculated taking into financing from bank and the dhaba prepared
to settle the Interest + Pricipal within loan tenure of 5 yrs. After 5 yrs, this
expense will not get incurred.
BREAK EVEN ANALYSIS
Units
Sold
Sales
Revenues
Variable
Costs
Fixed
Costs
Operating
Profit
0
0
0
3,045,580
-3,045,580
21754
870,166
108,771
3,045,580
-2,284,185
43508
1,740,331
217,541
3,045,580
-1,522,790
65262
2,610,497
326,312
3,045,580
-761,395
87016
3,480,663
435,083
3,045,580
0
108770
4,350,829
543,854
3,045,580
761,395
130524
5,220,994
652,624
3,045,580
1,522,790
152279
6,091,160
761,395
3,045,580
2,284,185
174033
6,961,326
870,166
3,045,580
3,045,580
195787
7,831,491
978,936
3,045,580
3,806,975
The Business takes approximately 87016 units to make break even which will
happen in year 2019 First Financial Quarter.
