Dragon Chinese BBQ
Comm 447 Business Plan
Kelly Liu
December 5,2014
Table of Contents
1.0 Executive Summary ..............................................................................................3
2.0 Business Overview ...................................................................................................4
2.1 Introduction to Dragon Chinese Restaurant .....................................................................................................4
2.2 Mission and Vision Statements ............................................................................................................................4
2.3 Objectives ...................................................................................................................................................................4
3.0 Operations Plan .......................................................................................................5
3.1 Location and Floor Plan .........................................................................................................................................5
3.2 Quality Control Plan ................................................................................................................................................7
3.3 Average Business Day ............................................................................................................................................7
3.4 Supply Analysis ........................................................................................................................................................8
3.5 Planned Capital Budget ..........................................................................................................................................8
3.6 Cost of Sales...............................................................................................................................................................8
3.7 Operating Expenses .................................................................................................................................................9
3.8 Working Capital Plan ..............................................................................................................................................9
4.0 Human Resources Plan .......................................................................................... 10
4.1 Organizational Structure...................................................................................................................................... 10
4.2 Working Hours ....................................................................................................................................................... 11
4.3 Human Resources Strategy................................................................................................................................. 11
4.4 Human Resources Costs ...................................................................................................................................... 12
5.0 Marketing Plan ...................................................................................................... 13
5.1 The Marketing Mix ............................................................................................................................................... 13
5.2 Segmentation, Targeting and Positioning ...................................................................................................... 15
5.3 Competitive Analysis ........................................................................................................................................... 15
5.4 Revenue Estimates ................................................................................................................................................ 16
5.5 Marketing Expenses.............................................................................................................................................. 17
6.0 Financial Plan ........................................................................................................ 17
6.1 Financial Structure ................................................................................................................................................ 17
6.2 Dividend Policy...................................................................................................................................................... 17
6.3 Investment Analysis.............................................................................................................................................. 18
7.0 Summary ............................................................................................................... 19
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1.0
Executive Summary
The following report is a business plan for the Dragon Chinese Restaurant to establish
in Saskatoon. Through this report and the attached spreadsheet, it will give the
business framework of the operations, human resources, marketing and financial
planning. The analysis of this business resulted as a profitable and feasible venture.
The Dragon Chinese Restaurant will be located on 8th street in the Grosvenor Park
Centre. This location is one of the busiest areas in Saskatoon and many restaurants
located there as well. Dragon Chinese Restaurant will provide the customers real
authentic Cantonese food, especially Cantonese barbecues, at a reasonable price.
There are currently no other authentic Cantonese restaurants in Saskatoon.
The operating and marketing strategy is backed by a financial analysis that proves the
viability of this business plan. Key financial projections are as follows:









Total revenue for 2015 is estimated to reach $950,400 with growth in the next
four years to reach $1,526,703 in 2019.
The gross margin from total revenue is estimated at 65%, this margin is
expected to remain constant over the five-year projection period.
Net income in the first year operation is expected to be $99,189, and it is going
to increase over the following years.
The restaurant required investment of total $300,000, which is 33% of debt
and 67% of equity.
The ROI is 20%, with the net present value of $915,634.
There is large positive net payback of $2,103,130.
The expected internal rate of return on investment is 104.6%.
The break-even point is met within the first year, and dividends will begin to
pay in year 2.
The owner compensation will be $50,000 for the first year, as there is no
dividend pay out, however it is going to increase from the second year. The
owner is able to get back her equity investment after the second year of
operation.
With the introduction of Dragon Chinese Restaurant, it is expected to be a
profitable venture. It will provide people in the Saskatoon area the real authentic
Cantonese food and barbecues.
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2.0 Business Overview
2.1 Introduction to Dragon Chinese Restaurant
Dragon Chinese Restaurant is a sole proprietorship restaurant whose owner is Kelly.
The restaurant is willing to provide the real authentic Cantonese style of food for the
customers, especially the Cantonese barbecue, which is known as siu mei in the
Cantonese cuisine. The location of the restaurant will be in Saskatoon on 8th Street at
the Grosvenor Park Centre, where many restaurants are located there and people are
willing to go there for lunch and supper.
2.2 Mission and Vision Statements
Mission Statement
The mission is to provide customers the real authentic Cantonese food, especially
Cantonese barbecues, with a reasonable price.
Vision Statement
The vision is within the next 5 years Dragon Chinese Restaurant can become the most
well known Chinese restaurant in the Saskatoon area; and for more customers to
enjoy the real authentic Cantonese food.
2.3 Objectives
The objectives for the Dragon Chinese Restaurant over the following 5 years are:

To provide customers the real authentic Cantonese food, especially the
Cantonese barbecue.
4

To remain competitive advantage in the Saskatoon area and expand in the
future

To increase the net profit each year in order to cover the costs of operation,
including the increased salaries to retain the chefs.
3.0 Operations Plan
3.1 Location and Floor Plan
The Dragon Chinese Restaurant will be located on 8th Street at the Grosvenor Park
Centre, which is one of the busiest areas in Saskatoon. The Cantonese BBQ food, siu
mei is a type of food that is usually purchased as take-out, but many people would like
to have in. Also, the cooking equipment is big for cooking Chinese barbecue, so Dragon
Chinese Restaurant will need a big area for the big kitchen as well as the customers.
The restaurant will be 2400 square feet.
There are many stores and restaurants located on the 8th street area, which caused
many people going to this area. Although there are many different restaurants, none of
them provide the real authentic Cantonese barbecue and other food, so this will be a
competitive advantage to attract customers to visit Dragon Chinese Restaurant. As
there are many people working or living at the surrounding area, they are willing to go
nearby to enjoy delicious food.
There are many different types of siu mei, such as barbecued pork, roasted duck,
roasted pig with crisp skin, marinated steamed chicken and soy sauce chicken. Due to
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the different types of siu mei required different kinds of meat, the restaurant will need
a big walk-in cooler for the daily inventory of meats.
1100.0 mm. x
1100.0 mm.
1100.0 mm. x
1100.0 mm.
1100.0 mm. x
1100.0 mm.
1100.0 mm. x
1100.0 mm.
1100.0 mm. x
1100.0 mm.
800.0 mm. x 750.0 mm.
800.0 mm. x 750.0 mm.
800.0 mm. x 750.0 mm.
800.0 mm. x 750.0 mm.
1100.0 mm. x
1100.0 mm.
800.0 mm. x 750.0 mm.
800.0 mm. x 750.0 mm.
Kitchen
Walk-in
Cooler
Office
6
3.2 Quality Control Plan
The restaurant quality control of food safety will be the basic of the overall company
success. The restaurant will be following the HACCP standards in the long run
operation, which includes provide a food safety hazards, find and correct the problems
in food production before the end-stage of production, and keep recording. The
manager have to make sure that the ingredients are clean and safe to eat, and enforce
a cleaning standard for the customers; also the restaurant will continue to get
feedback from the customers to improve the quality of the restaurant.
3.3 Average Business Day
Time
8:00am
Position
Manager, Chefs,
Kitchen Staffs
8:30am
Chefs and Kitchen
Staffs
Full time employees
Duties
Arrive at work. Chefs and kitchen staffs need to
take inventories of all food products. Manager
check for inventory and order new inventory if
needed.
Begin to prepare ingredients and make sure area
is clear and safe. Start cooking the barbecues.
Arrive at work. Ready for the restaurant to open
All Staff and Manager
Restaurant open, employees serve customers.
Chefs and Kitchen
Staffs
All Staff and Manager
BBQ oven off, no more barbecue
10:00am
(11:00am on
Sunday)
10:30am
(11:30am on
Sunday)
7:00pm
9:00 pm
(10:00pm on
FridaySunday)
Restaurant closed, Chefs and staffs clean up the
kitchen and floor. Manager does cash out and
keep the money in safe. Manager lock the door.
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3.4 Supply Analysis
Equipment will be provided by Atlanta Culinary Equipment, Inc., which is at USA. This
supplier is chosen because they contain all of the equipment needed for Chinese
barbecue and they offered equipment installation for the customers.
Ingredients include meats and the spices for preparing the barbecue. For the meats
such as chicken, pork, duck and other meat products will come from Maple Leaf Food
and The Real Canadian Wholesale Club. These items will be delivered to the restaurant
weekly in order to keep the inventory fresh. Also, other ingredients such as spices and
vegetables will purchase from The Real Canadian Wholesale Club and Superstore,
which is also available to deliver weekly based on inventory needs.
3.5 Planned Capital Budget
The planned capital budget is outlined in the table, and it can also be found in the
attached financial spreadsheet.
Lease Hold of Improvement
Equipment and Furniture
Total
50,000
250,000
$300,000
3.6 Cost of Sales
Year
Food
Drinks
Total Cost
of Goods
Sold
Year 1
299,376
33,264
Year 2
368,232
40,915
Year 3
415,182
46,131
Year 4
446,840
49,649
Year 5
480,911
53,435
332,640
409,147
461,313
496,489
534,346
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3.7 Operating Expenses
Leasing
Occupancy
Accounting &
Legal Services
Advertising
Insurance
Repair &
Maintenance
Wages
Employee
Benefits
Telephone
General
Supplies
Miscellaneous
Capital Cost
Allowance
Debt Interest
Total
Year 1
Year 2
Year 3
Year 4
Year 5
72,000
73,800
75,645
77,536
79,475
19,200
19,680
20,172
20,676
21,193
2,000
2,000
4,000
2,050
2,050
4,100
2,101
2,101
4,203
2,154
2,154
4,308
2,208
2,208
4,415
3,000
316,600
3,075
341,830
3,152
366,028
3,231
385,998
3,311
407,582
44,197
1,200
47,719
1,230
51,098
1,261
53,885
1,292
56,898
1,325
1,800
4,752
1,845
5,845
1,891
6,590
1,938
7,093
1,987
7,634
26,000
7,000
503,749
46,960
6,721
556,906
37,882
6,423
578,547
30,606
6,104
596,975
24,774
5,763
618,772
3.8 Working Capital Plan
Year 1
Year 2
Year 3
Year 4
Year 5
Inventory
6,468
7,956
8,970
9,654
10,390
Account Payable
6,503
8,362
9,387
10,081
10,828
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4.0 Human Resources Plan
4.1 Organizational Structure
The Dragon Chinese Restaurant is a sole proprietorship, which the owner is Kelly.
Below is the organizational structure of the restaurant. The owner will become the
manager of the restaurant.
Manager
2 Chefs
3 Full time
employees
2 Full Kitchen
staffs
The manager is in control of the restaurant’s operations as all other employees are
under the manager’s control. The main duties of the manager are managing the food
and service quality to meet the customer needs; managing the inventories, COGS and
other financial planning for the restaurant. The manager is responsible for the
performance of the employees and ensures the customers are satisfied by the
restaurant’s foods and services. The manager is also in charge of the money and the
door lock for the restaurant. Moreover, the manager is responsible to evaluate,
promote and recruit the employees.
The two chefs are in charging the kitchen. They are responsible for managing the
kitchen as well as the kitchen staffs; they must ensure the quality of the dishes and the
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raw materials as well as the quantity of the inventories. Also, they must ensure the
kitchen is under a safe and clean circumstance. The kitchen staffs work under the
chefs. They should prepare the raw materials and food as to help the chefs, washing
dishes, and to clean the kitchen after everyday operation. They are responsible to
keep the kitchen to be a clean area. The full time employees are working under the
manager. They are responsible to serve the customers and to clean the dinning areas.
4.2 Working Hours
Day
Manager
Monday-Thursday
8:00a.m.-9:00p.m.
Chefs and Kitchen
Staffs
8:00a.m.-9:00p.m.
Friday - Saturday
8:00a.m. –
10:00p.m.
8:00a.m. –
10:00p.m.
Sunday
8:00a.m. –
10:00p.m.
8:00a.m. –
10:00p.m.
Floor Staffs
10:00a.m. –
9:00p.m. (F)
5:00p.m. –
9:00p.m. (P)
10:00a.m. –
10:00p.m. (F)
5:00p.m. –
10:00p.m. (P)
11:00a.m. –
10:00p.m. (F)
5:00p.m. –
10:00p.m. (P)
4.3 Human Resources Strategy
As the organizational structure, for the first five year Dragon Chinese Restaurant will
only have one manager, which will be the owner, two chefs, two full time kitchen
staffs, and three full time employees. There will not be any long-term training
provided to the employees, but there will be an one-week in job training provided by
the experienced chefs to the kitchen staffs, and the full-time or part-time employees
will get training from the manager. The two chefs will have at least 5 years experience
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of working in a Chinese barbecue restaurant; as the restaurant want to provide real
authentic barbecue food for customers, the chefs will be the most important parts in
the business, so they will obtain the highest salaries. The high salaries are in purpose
of retaining the chefs to stay in the restaurant, because now in Saskatoon there is
lacking of chefs that can cook real authentic Chinese food and barbecue. Dragon
Chinese Restaurant will hire the full time at $13.00/hour, and at minimum pay for part
time workers.
Also, there will be having employee benefits, which is 13.96% of the wages. These
costs will be shown in the financial statements.
4.4 Human Resources Costs
Salaries/Wages
Manager
Chef Salary (yearly)
Full time staff (wage
rate/hr)
Part time staff (wage
rate/hr)
Yearly Salary and Wage
Costs
Manager
Chefs
Full time staff
Part time staff
Total Salaries and Wages
2015
50,000
69,600
2016
51,250
71,340
2017
52,531
73,124
2018
53,845
74,952
2019
55,191
76,825
$13.00
$13.33
$13.66
$14.00
$14.35
$10.20
$10.46
$10.72
$10.98
$11.26
50,000
139,200
127,400
316,600
51,250
142,680
130,585
17,315
341,830
52,531
146,247
133,850
33,401
366,028
53,845
149,903
137,196
45,054
385,998
55,191
153,651
140,626
58,115
407,582
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5.0 Marketing Plan
5.1 The Marketing Mix
Products and Services
Dragon Chinese Restaurant is going to provide the high quality of real authentic
Cantonese food to the customers, especially the Cantonese barbecue, at a reasonable
pricing and quantity. The chefs of the restaurant are having many years of experience
in cooking Cantonese food, in order to provide the customers the real taste of
Cantonese food, and the memory of the homeland for the Cantonese.
Everyday in the morning, the barbecues and ingredients for making others Cantonese
food are ready for the customers to come and order. Since the barbecues have been
made before the orders and the other Cantonese food need no more than 30 minutes,
the customers can choose to take out without waiting for a long time. This will be very
convenient for all kinds of customers. Also, Dragon Chinese Restaurant has a big
dinning place for the customers who would like to stay in to enjoy their lunch and
suppers. There will also have daily special of Cantonese style of soup being prepared
during the lunch hours and supper hours, customers who choose to stay in can have
one bowl of the soup for free if they want to have one. The menu of the restaurant will
have more Cantonese food included as the restaurant matured.
Pricing
Dragon Chinese Restaurant will set the price based on the other Chinese restaurant in
Saskatoon, which is a competitive pricing. Based on this average price, Dragon
Chinese Restaurant will be able to attract Chinese people and other customers to come
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and try. Since the restaurant can provide the real taste of the Cantonese food at the
reasonable average price, Dragon Chinese Restaurant can use some time to gain
market share and reputation in Saskatoon, in order to attract more customers to dine
at Dragon Chinese Restaurant.
Place
Dragon Chinese Restaurant will be located on 8th street, at the Grosvenor Park Centre.
8th Street is an area that has many different types of restaurants, including many
Chinese restaurants. Many people are willing to go to 8th street, and then select one
restaurant to dine there. Also, there are many residential areas nearby 8th street, the
people who live in the nearby residential area will able to come and dine. Locate on
8th street will have a big opportunity for restaurant to attract customers due to big
population, but there are also high competition based on many restaurants located
there. Therefore, Dragon Chinese Restaurant is going to target the people who are
willing to dine at 8th street and living at the surrounding area as well as Chinese
people.
Promotion
Dragon Chinese Restaurant will implement the promotion plan based on some low
cost but efficient methods. The focus of the promotion will be in the 8th street area and
the community of the Chinese people. At the first 5 years, we will focus on three core
promotion: flyers, website and yellow selection. The flyers will include the product
information, location, contact information, and opening hours, etc. There will be have
a 15% discount for the first month operating of Dragon Chinese Restaurant. This is
intended to attract as much people’s attention as possible and come to try our
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products. Dragon Chinese Restaurant will have the detailed information of the
restaurant on the website, including the menu, so everyone in Saskatoon will be able
to search Dragon Chinese Restaurant online. Also, Dragon Chinese Restaurant will
have advertisement on the Saskatoon phone book “yellow selection” for restaurants.
The families who have the phone book will be able to know Dragon Chinese
Restaurant. The other source of promotion of the restaurant will be by the word-ofmouth of the customers who dined at Dragon Chinese Restaurant.
5.2 Segmentation, Targeting and Positioning
The market will be segmented based on the geographic area. Since Dragon Chinese
Restaurant is located on 8th street, where most restaurants are located, we would have
a greater chance to attract people to dine at Dragon Chinese Restaurant. Based on this
location, the restaurant will be targeting to people who is willing to dine on 8th street
and living at the surrounding areas, such as College Park, Cumberland, Braidwood, etc.
Also, the Chinese people in Saskatoon will be Dragon’s target market as well.
Dragon Chinese Restaurant is positioned as a Chinese restaurant provides the real
authentic Cantonese food and barbecue with reasonable price and quantity in the
Saskatoon area. Having this positioning within the market will help target the people
with their friends and families, who are willing to enjoy the real authentic Cantonese
food in Saskatoon.
5.3 Competitive Analysis
Dragon Chinese Restaurant will have two types of competitors. One is the Chinese
restaurant that provides Cantonese barbecues, and the second competitors are the
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Chinese restaurants that provide other Cantonese types of foods. The first type of
competitors will be mainly the New Fuhao Restaurant, which is located in downtown
20th Street. This restaurant provided the same types of Cantonese barbecue food, such
as roast duck, barbecue pork, barbecue chicken, and roast meat, etc. Also, this
restaurant’s pricing is based on the average of the Chinese restaurant, which has the
similar price as Dragon Chinese Restaurant. The second type of competitors will
mainly be Yip Hong’s Dim Sum Restaurant on 8th street and Mandarin Restaurant on
20th street, which will provide different types of Cantonese food at lunch and dinner
hours. They have the similar price with different quality and quantity. Since there are
those competitors, Dragon will need to come up with a competitive advantage in order
to survive and grow in Saskatoon. The competitive advantage of Dragon Chinese
Restaurant is the experience chefs the restaurant has been hired. The chefs have over
5 years experience of cooking the real Cantonese barbecue and food, this will attract
people to come and dine at the restaurant.
5.4 Revenue Estimates
Revenues
Food
Drinks
Total
Revenues
Year 1
855,360
95,040
Year 2
1,052,093
116,899
Year 3
1,186,235
131,804
Year 4
1,276,685
141,854
Year 5
1,374,032
152,670
950,400
1,168,992
1,318,038
1,418,539
1,526,703
The revenue estimate is based on 3 turns per day, having 120 customers per day in the
first year at 56% of the maximum capacity, which the restaurant has 72 seats for one
turn.
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5.5 Marketing Expenses
Marketing Expenses
Website
Flyers (5000)
Yellow Selection
Total Marketing
Expenses
Year 1
500
900
600
Year 2
513
923
615
Year 3
525
946
630
Year 4
538
969
646
Year 5
552
993
662
2,000
2,050
2,101
2,154
2,208
6.0 Financial Plan
6.1 Financial Structure
In order to have the required start-up capital, the Dragon Chinese Restaurant will be
using approximately 33% bank debt. The rest will be based on the owner’s equity. By
relying more on the owner’s equity and less on the debt, there will be less risk for the
business.
Financial Budget
Bank Debt (33%)
Equity
Total
100,000
200,000
300,000
6.2 Dividend Policy
As showing in the table below, the dividends will be first paid in 2016, which is the
second year of operation. The dividend will be paid when the cash assets are more
than the holding amount of $20,000 for operating the restaurant.
Retained
Earnings
Beg RE
Net Income
Dividends
End RE
2015
2016
2017
2018
2019
99,189
99,189
99,189
176,557
101,245
174,502
174,502
242,015
219,631
196,886
196,886
282,815
275,351
204,351
204,351
325,018
308,557
220,812
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6.3 Investment Analysis
After analyzing the base scenario for the restaurant in the financial statement. There
is a result as shown as below.
Gross Payback
Net Payback
Net Present Value
IRR
Owner
Compensation
Manager
Salary
Dividends
Total
2,303,130
2,103,130
915,634
104.6%
Year 1
Year 2
Year 3
Year 4
Year 5
50,000
50,000
51,250
101,245
152,495
52,531
219,631
272,162
53,845
275,351
329,195
55,191
308,557
363,748
A sensitivity analysis has been performed using the critical risk factors. The critical
risk factors for Dragon Chinese Restaurant are customers per day and purchases per
customer. These are the most critical factors to the success of Dragon Chinese
Restaurant, because either one of the number of customers per day or the purchase
per customer changed, there will result in a big difference in the average earning over
the five year period. The required return on investment set at 20%, and with an
expected 104.6% internal rate of return, and there resulted to a large, positive net
present value. Also, the owner compensation showed that in year 3, the owner could
get back the full amount of equity that she invested into the restaurant. This showed
the base case of 120 customers with $22 average purchases per customer is assumed
to be not only feasible but profitable as well. This also showed there is a low risk for
operating this restaurant.
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7.0 Summary
The Dragon Chinese Restaurant aims to provide customers the real authentic
Cantonese food on the 8th street and Grosvenor area in the City of Saskatoon. Based on
the overall analysis, it shows the Dragon Chinese Restaurant will be a worthwhile
investment, and will be successful in the long-term as a well-known Chinese
restaurant. The restaurant must start as soon as the owner is ready, because it will be
easier to gain market share while there is no real authentic Cantonese restaurant exist
yet.
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