Managerial Accounting Anaya Ethnic Food Restaurant

Question: Describe about the Market analysis of Anaya ethnic food restaurant? Answer: Introduction Initial statement of investor and financial investor is starting an ethnic food restaurant company diagram. It is a honest disclosed if the Anaya ethnic food restaurant. The restaurant intended to set business expectation and profitability of the business venture. Anaya determine an exciting restaurant; merge an efficient environment with outstanding and exciting food. The job of the restaurant is to have greater food variety, well-organized and better facility because the customer fulfilment is primary purpose of the business. Anaya will be the restaurant of all type of customer. Anaya will be the preference for middle age and adult people, couples and singles, juvenile and aged, male and female. It will be a complete family restaurant. Employee welfare, training of the staff and participation are evenly important for a successful business. Every employee is treated fairly and with the greatest respect. For the success of Anaya Ethnic food restaurant, the employee will feel a part of this success (Archer and D'Ambrosio, 1983). The restaurant concept combines variety, entertainment, and ambiance and better-quality stuff to generate wisdom of place in order to achieve the ambition of the business plan. The restaurant offers fair profit for the investors and owner of the restaurant and a rewarding system for better performance of the employees. The investor will choose the ethnic food restaurant because it is a unique type of food restaurant (Ardagna and Lusardi, 2009). People always want to try something new kind of entertainment and food is a fundamental necessary thing to fulfil the hunger. In this business, all kind of customer will come. This plan of activity is the formation of a exclusive, and innovative eating environment will make a distinction from other business and also for competition. That's why the investor or owner chooses this plan of activity. Market analysis of Anaya ethnic food restaurant The market analysis recognized the subsequent input attribute as area of chance to provision for restaurant customers: Portion section: Nearly 95% of studys focal point is group endorses having a option of dissimilar size portion. This study is arranged by the table service operator review. The portin selection study is making to offer various size portions. The customer wants more option to choose the taste satisfaction (Bragg, 2013). Menu variety: ethnic restaurants are growing in Sidney. The explosion of global food books, magazine, and TV cooking show is changing the testing spree of customers. In a matter of fact, dining places provide reorganization as ethnic institutions that numbered nearly 78000 in 1999 and recorded sales of 30.5 billion. The dining experience: it indicates the interior decoration, lighting, and former option to develop the dining knowledge and it is an important factor in customer choice. Anaya capture this entire factor into consideration to design of this restaurant. Reasonable price: although the whole restaurant industry has been the increase in 2002/2003, customers are demanding cost for their eating dollar. Anaya's menu is priced at a moderate level, with no entry in excess of A$20 (Droms and Wright, 2010). Anaya ethnic food restaurant is determined to cater to on large customer base. Anaya wishes that all of the employee feels greeting and entertained. For market research Anaya divide the client by segmentation. It contributes to business growth outcrop. The business person Couples The destination customer High-end singles Tourists This market segment has deposable income, fashionable and relaxing restaurant choice. These type of people who repeated others restaurant and bars in the neighbourhood (Garrison and Noreen, 1997). They are expected to expend more on understanding they take in as exclusive, comfortable and sophisticated. The customer are also trying something new, food wise. Market Analysis Year 1 Year 2 Year 3 Potential Customers Growth Business Person 18% 9,925 10,223 11,348 Couples 32% 17,645 18,527 20,565 Tourists 13% 7,168 7,311 7,896 The Destination Customer 8% 4,411 4,499 4,724 High-end Singles 29% 15,991 16,950 18,815 Total 5.76% 55,140 57,510 63,348 Market location of Anaya ethnic food restaurant Sidney is the site selected for Anaya ethnic food restaurant business concept. The outlook of Sidney is active and most progressive development area of Australia. It is a developed city so this is an opportunity for the enterprise (Horngren, 1982). Competition in the market of Anaya Ethnic restaurant is a unique type of business so; there are fewer competitors in the market. The competitors include Zaika, Evlline, Dinner hub, etc. The environment of the restaurant is differing from the other restaurant. Menu of the restaurant is specialized and unique. In this restaurant, all type customer is comfortable. Anaya is a complimentary mingling of international cuisine on a single list (Horngren and Bhimani, 2008). The source of revenue will be alcohol and bar sales. Anaya has all this facilities and also have exotic drinks on the separate menu. The menu pricing is moderate it is another high point of Anaya. The effect of financial decision on the business Anaya have foundation outlay on the food industry and sensible practical knowledge with parallel undertaking. The economic model is taken from the business notion to plane for the most terrible but supervise for the best. The first-year sales volume is under average, seat turn is under average, and food cost is above average. This situation will help to make sure adequate financial planning to contain a practical ramp-up time, and business success, also make sure that the company do not entire venture undercapitalized (Michalos and Poff, 2013). The financial position of the company will help to reach success of the company. 1. Start up Cost Analysis Start up cost are mainly expensed utensils, furniture, reconstructions, start up labour, painting, rent, business license and legal cost, discussion cost connected with opening for a restaurant. At the beginning of industry A$,97000 will be paid for business operation. This is a substantial start-up estimate based on market analysis (Osburg and Schmidpeter, 2013). Anaya will pay for the following A$73311 of current assets during start up the company: Fixture and lighting: A$32250 Bar equipment: A$26183 Sound and televisions: A$8378 Office equipment: A$65000 The owner of the restaurant is executing A$110000 of capital and A$300000 loan guaranty. Anaya obtained an A$130000 grand for re-establishment of building, dependent upon locating in the projected space. Anaya investor is seeking A$200000 of equity venture to fund Anayas start up cost fully. Start-up Requirements Start-up Expenses PROJECT MANAGEMENT $0 Restaurant Consultant (4 months) $15,911 DESIGN $0 Architectural Design $2,195 Structural Plumbing Design $1,368 Mechanical Electrical Design $2,155 Graphic Design $1,185 Electrical Structural Engineering Fees $2,592 Design Consultants (Kitchen, Interior Dining) $9,119 Engineer Architect Fees $7,040 CONSTRUCTION $0 Plumbing $33,244 HVAC (Air Return, Air Ducts, etc.) $19,250 Electrical $7,964 Disposal Demolition $4,122 Structural Construction (4 Months General Labour) $52,099 Facade (Exterior Construction) $3,092 Plaster (Dry Wall) $2,061 Mill Metal Work $8,244 Interior Finishes (2500 - 3000 sq. ft.) $14,538 Flooring $14,622 Fire Alarm System $3,092 Security Phone System $4,615 EQUIPMENT $0 Liquor Control System - Lease $0 Stools, Chairs, Tables, Uniforms $38,025 POS (Point of Sale System) - Lease $0 Glassware, Flatware, Small ware (Bar Lounge) $3,298 Glassware, Flatware, Small ware Supplies (FOH) $8,298 Dishwasher, Ice Glass washer - Lease $0 Kitchen Equipment Freight Fees $2,389 FFE Taxes (Taxes on Purchase) $7,988 OPERATIONAL $0 Capitalized Legal Fees (LLC, Investor Agreements) $7,080 Software: Restaurant/Inventory $5,500 Software: Cost Control $6,000 Impact, Tap Permit Fees $3,115 Business License Temp Certificate of Occ. $1,615 Liquor Licenses $4,615 Utilities, Disposal, Tax Insurance $9,275 Security Deposits (Phone/Elec/Gas/Water) $6,250 Initial Lease Deposits $6,250 Bank Loan Closing Costs $6,250 Web Site Construction $5,800 Initial Marketing, Training PR $19,550 Research Development $3,050 Start-Up Salary (Mngt Chefs) $58,050 Recruiting (Staff) $14,550 Inspections $750 Initial Cleaning Services $1,000 Total Start-up Expenses $427,209 Start-up Assets Cash Required $97,099 Start-up Inventory $27,500 Other Current Assets $73,311 Long-term Assets $65,000 Total Assets $262,910 Total Requirements $690,119 loss at Start-up (Start-up Expenses) ($427,209) Total Capital $12,791 Total Capital and Liabilities $312,791 Total Funding $740,000 2. Cost/ Benefit Analysis Cost benefit will be conducted with SWOT analysis of the restaurant. Strength, weaknesses, are the internal factor and threat and opportunity is an external factor. A complete SWOT analysis of business indicates the proper way to success. Anaya ethnic food restaurant focuses on establishing a physically powerful identity in the community by impressive opening. The restaurant focuses on advertising that is help to increase customer consciousness in the nearby area. Anaya will generate an attractive and entertaining atmosphere with unconquerable quality at a brilliant price. Anaya will be an thrilling and electric restaurant, and that's why it will be the talk of the town. All this is the strands of the restaurant. The price of the menu are moderate, it is also a high point because Anaya is giving extraordinary food at rational prices for the average restaurant dinner. It will increase the profitability of the business. The weakness point may decrease the cost-effectiveness of the ente rprise. The following are the weaknesses of Anaya ethnic food restaurant: the owners throughout understanding of opening and running a restaurant (Ardagna and Lusardi, 2009). International menu is changes every four months it will be the bigger weakness of the business. It is a multi-ethnic restaurant located in core business community. This is also a threat to the company because there are many types of restaurant are present like zaika, evelline, dinner hub, etc. All these are competitor of Anaya, and it will decrease the customer. The opportunity for business is to increase the value of the company. The main opportunity of Anaya is its location. Sidney is the corporate city in Australia. There are many organisations are existed that's why many people are travel every day. Anaya's primary target customers are the business personality and traveller. The biggest percentage of this client section will be looking for a restaurant in which to perform business or family institution, so, they will select Anaya ethnic food restaurant. 3. Break- Even Analysis For the initial year the break-even analysis indicate that the there will be an average running of fixed cost around $60230 every month which consist of full utilities, payroll and overall rent and calculation of other several key running cost.Anayas monthly break-even point is A$92081 with the direct cost of goods sold at 35% of sales. First-year break-even point shows Anaya will get a surplus (Droms and Wright, 2010). As Anaya ethnic food restaurant outlet the start-up point of the business and focus on cost control, it will make the cost of goods sold down, reducing the break-even value and increasing gross margin. Break-even Analysis Monthly Revenue Break-even $83,630 Assumptions: Average Percent Variable Cost 35% Estimated Monthly Fixed Cost $54,703 4. Cost- Volume Analysis (CVP) Analysis Cost volume profit analysis look primarily at effects of differing levels of activity on the financial result of the business. The owner of Anaya knew that how many customers would come in a day and what type of menu they order. They could ensure that stuffing level was exactly accurate and there are no waste occurs in the kitchen. In reality the discussion of such stuffing and food purchases have to be made on the basis of estimation. The estimation will calculated by the past experience. This type of analysis is known as cost volume profit. It will increase the profit volume of the business and it also decreases the wastage of the restaurant. 5. Pro Forma Financial Statement Financial Statement Anaya ethnic food restaurant model is based on selling concept to plan for worst , but manage for best. Anaya have come within reach of the financial plan as follows: Important assumption Risk analysis Sales forecast Break even analysis Profit and loss analysis Income statement The most important assumption in this business is income statement which is state gross margin of the business. The start up phase and of the business increases in year 2 and move the accepted annual sales forecast. This conversion shows the retour ant managing through its start up period and raising its effectiveness and customer loyalty. Last of all the restaurant will expand its customer base and status and rapidly growth will increase in third year. Month by month assumption for income statement are included in the appendices. Cash Flow Statement The cash flow is mainly dependent on the assumption for inventory turnover and billing times. Anaya dont have any credit, so cash flow does not track account receivable. Anaya do not anticipate requiring any supplementary financial support, even the business reach less profitable months. The downturn is integrated in to the revenue discrepancy figures. Balance sheet Anayas proposed balance sheet is become durable. Anaya do not expect difficulty meeting the debt obligation based on accomplishing targets which outline of the plan. On a liner projection, Anaya ethnic food restaurant has appositive net worth beginning in year 3. 6. Discussion Ananias ethnic food restaurant are dedicated to the business and its visibility. The step into this endeavour with assurance and the achievement of the Anaya restaurants of particular prior business hard work. No one effort a business predicts failure, some time venture do not fulfil their commitment. Reference Archer, S. and D'Ambrosio, C. (1983).The Theory of business finance. New York: Macmillan. Ardagna, S. and Lusardi, A. (2009).Heterogeneity in the effect of regulation on entrepreneurship and entry size. Cambridge, Mass.: National Bureau of Economic Research. Bragg, S. (2013).Accounting best practices. Hoboken, N.J.: Wiley. Droms, W. and Wright, J. (2010).Finance and accounting for nonfinancial managers. New York: Basic Books. Garrison, R. and Noreen, E. (1997).Managerial accounting. Chicago: Irwin. Horngren, C. (1982).Cost accounting. Englewood Cliffs, N.J.: Prentice-Hall. Horngren, C. and Bhimani, A. (2008).Management and cost accounting. Harlow: Financial Times/Prentice Hall. Michalos, A. and Poff, D. (2013).Citation classics from the Journal of business ethics. Dordrecht: Springer. Osburg, T. and Schmidpeter, R. (2013).Social innovation. Berlin: Springer. Appendixes Pro-forma Cash Flow Statement Pro Forma Cash Flow Year 1 Year 2 Year 3 Cash Received Cash from Operations Cash Sales $1,073,769 $1,211,088 $1,279,204 Subtotal Cash from Operations $1,073,769 $1,211,088 $1,279,204 Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $1,073,769 $1,211,088 $1,279,204 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending $399,588 $400,788 $429,828 Bill Payments $601,114 $724,989 $745,324 Subtotal Spent on Operations $1,000,702 $1,125,777 $1,175,152 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $47,772 $47,772 $47,772 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $20,000 $10,000 Subtotal Cash Spent $1,048,474 $1,193,549 $1,232,924 Net Cash Flow $25,295 $17,539 $46,280 Cash Balance $172,276 $189,815 $236,095 Pro Forma Balance Sheet Pro Forma Balance Sheet Year 1 Year 2 Year 3 Assets Current Assets Cash $172,276 $189,815 $236,095 Inventory $37,839 $39,175 $38,109 Other Current Assets $73,311 $73,311 $73,311 Total Current Assets $283,426 $302,300 $347,514 Long-term Assets Long-term Assets $65,000 $65,000 $65,000 Accumulated Depreciation $6,500 $13,000 $19,500 Total Long-term Assets $58,500 $52,000 $45,500 Total Assets $341,926 $354,300 $393,014 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable $58,194 $59,713 $61,398 Current Borrowing $0 $0 $0 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $58,194 $59,713 $61,398 Long-term Liabilities $252,228 $204,456 $156,684 Total Liabilities $310,422 $264,169 $218,082 Paid-in Capital $440,000 $440,000 $440,000 Retained Earnings ($427,209) ($428,496) ($359,869) Earnings $18,712 $78,628 $94,801 Total Capital $31,504 $90,131 $174,932 Total Liabilities and Capital $341,926 $354,300 $393,014 Net Worth $31,504 $90,131 $174,932 Pro forma Income Statement Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales $1,073,769 $1,211,088 $1,279,204 Direct Cost of Sales $371,416 $398,407 $406,976 Other $0 $0 $0 Total Cost of Sales $371,416 $398,407 $406,976 Gross Margin $702,353 $812,681 $872,228 Gross Margin % 65.41% 67.10% 68.19% Expenses Payroll $399,588 $400,788 $429,828 Marketing/Promotion $18,656 $22,000 $25,000 Depreciation $6,500 $6,500 $6,500 Leased Equipment $12,000 $12,000 $12,000 Accounting/Payroll Processing $6,600 $6,600 $6,600 Legal Retainer Fees $2,400 $2,400 $2,400 Business Licenses Permits $6,000 $6,000 $6,000 Credit Card Expense $18,576 $19,983 $21,107 Bank Fees $1,200 $1,200 $1,200 Music Entertainment $3,744 $3,744 $3,744 Training / Employee Retention Programs $0 $5,008 $6,008 Repairs Maintenance $9,000 $9,000 $9,000 Utility Services (Gas/Electric/Water/Sewer) $24,996 $26,496 $27,821 Telephone/Communication Expense $1,800 $1,800 $1,800 Insurance: Fire/Theft/Liability/Liquor/Product $20,400 $21,624 $22,705 Restaurant Occupancy Cost (Lease) $75,000 $77,250 $79,568 Payroll Taxes (FICA/FUTA/SUTA) Employee Benefits $0 $0 $0 Exterminator/Trash Removal $4,800 $4,800 $4,800 Dishware/Uniforms/Cleaning Supplies/Decor $11,760 $12,466 $13,089 Printing/Paper/Postage/Subscriptions $9,156 $9,500 $9,500 Facility (Exterior Cleaning/Grease Trap/Hood/Windows,etc.) $3,333 $3,640 $3,640 RD Meals $2,200 $2,400 $2,400 General Business Comps $12,400 $22,850 $23,125 Owner Comps $2,124 $2,124 $2,124 Other Expenses (ComAreaMaint, etc.) $4,200 $4,200 $4,200 Total Operating Expenses $656,433 $684,372 $724,158 Profit Before Interest and Taxes $45,920 $128,309 $148,070 EBITDA $52,420 $134,809 $154,570 Interest Expense $19,189 $15,984 $12,640 Taxes Incurred $8,020 $33,698 $40,629 Net Profit $18,712 $78,628 $94,801 Net Profit/Sales 1.74% 6.49% 7.41%