DOLPHIN SEA FOOD

RESTAURANT
(GULISTAN-E-JAUHAR KARACHI)

Business Feasibility Report

Groups Members:
Haji Salam Latif 56830
Tariq Mehmood 56908
Aleem ullah 56083
Urooj Mushtaq 56840
Bisma Hasmat 57070
PROJECT BRIEF
 Dolphin is the name proposed for our
Sea food restaurant. It will be located
into the mainstream of Gulistan – e –
Jauhar. Dolphin would provide to its
customers a whole new experience of
dine in and take away. The
recommended area for the proposed
business setup will be in a densely
populated middle income area (for
example Gulistan-e-Jauhar, Karachi).
VISION
To create the best, branded, healthy eating
restaurant in the PK, to be recognized for
providing great food, entertainment and fast,
efficient friendly service.

MISSION
Our Team will create a strong restaurant by
providing unique, healthy, consistent and exciting
eating experiences to all our clients in the form of
restaurants, takeaways and other outside services.
CONTENTS
 Project Investment
 SWOT ANALYSIS – Strengths

 Forecasted Income Statement

 Forecasted Balance Sheet
 Forecasted Cash Flow Statement
 Key Assumptions
 Projected Financial Ratios
 Vertical Analysis Of Income Statement
 Vertical Analysis Of Balance Sheet
 Common Size Of Income Statement
 Common Size Of Balance Sheet
PROJECT INVESTMENT
. .

Item: Cost (Rs.)

Construction Cost 1,307,000
Dining and Office Furniture 542,250
Equipment and Machinery 967,000
Advance Rent 1,200,000
Preliminary Expenses 50,000
Working Capital 1,036,000
Total 5,102,250
.
SWOT ANALYSIS - STRENGTHS

High-quality food offerings that

exceed competitor’s offerings in
quality, presentation, and price.
Strong Cash Flows.
Innovative range of Sea foods under
one roof.
SWOT ANALYSIS - WEAKNESSES

A limited marketing budget to develop

brand awareness.
 Lack of knowledge about our customers.
 SWOT ANALYSIS - OPPORTUNITIES
 Growing market with a significant percentage
of the target market still not aware that Sea
food exists.
 Balanced menu.

 Customer focus.

 Increase delivery service.

 SWOT ANALYSIS - THREATS

 Competition from other Sea food

restaurants.
 A slump in the economy reducing
customer's disposable income spent on
eating out.
 Increasing wage rates directly affect menu
prices.
 Changing customer demands.

 Rising raw material costs.

Forecasted Income Statement
YEAR YEAR YEAR YEAR YEAR
2014 2015 2016 2017 2018

NET SALES (15%increase/year) 10,015,200 11,517,480 13,245,102 15,231,867 17,516,647

RAW MATERIAL COST(10% increase/year) 4,910,141 5,401,155 5,941,270 6,535,397 7,188,937
LABOR & SALARIES(10% increase/year) 1,074,000 1,181,400 1,299,540 1,429,494 1,572,443
UTILITIES 624,000 686,400 755,040 830,544 913,598
COST OF SALES 6,608,141 7,268,955 7,995,850 8,795,435 9,674,979
GROSS PROFIT 3,407,059 4,248,525 5,249,252 6,436,432 7,841,668

RENT EXPENSE 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

OFFICE AND MESCELLANEOUS EXPENSE 72,000 79,200 87,120 95,832 105,415
AMORTIZATION EXPENSE 10,000 10,000 10,000 10,000 10,000
DEPRECIATION EXPENSE 281,625 253,462 228,116 205,305 184,774
MAINTANCE EXPENSE 21,758 19,582 17,624 15,861 14,275
SUB TOTAL 1,585,383 1,682,244 1,794,860 1,924,198 2,071,384
OPERATING INCOME / EBIT 1,821,676 2,566,281 3,454,392 4,512,234 5,770,284
FINANCIAL CHANGE (15% PER ANNUM) 357,889 298,344 229,228 149,001 55,878
INCOME BEFORE TAX / EBT 1,463,787 2,267,937 3,225,163 4,363,233 5,714,407
TAX(25% of EBT) 365,947 566,984 806,291 1,090,808 1,428,605
NET PROFIT 1,097,840 1,700,953 2,418,873 3,272,424 4,285,805
FORECASTED BALANCE SHEET
Forecasted Balance Sheet
Dolphin Sea Food Restaurant
As of 31st December 2014, 2015, 2016,2017,2018
Description Year 0 Dec 31, 2014 Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Dec 31, 2018

ASSETS
CURRENT ASSETS
CASH AND BANK BALANCE 1,036,000 2,055,062 3,589,528 5,747,452 8,655,889 8,995,939
PREPAID RENT 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
TOTAL CURRENT ASSETS 2,236,000 3,255,062 4,789,528 6,947,452 9,855,889 10,195,939

FIXED ASSETS
MACHINERY 967,000 870,300 783,270 704,943 634,449 571,004
SHOP 1,307,000 1,176,300 1,058,670 952,803 857,523 771,770
OFFICE FIXTURES 542,250 488,025 439,223 395,300 355,770 320,193
TOTAL FIXED ASSETS 2,816,250 2,534,625 2,281,163 2,053,046 1,847,742 1,662,967
PRELIMINARY EXPENSES 50,000 40,000 30,000 20,000 10,000 -

TOTAL ASSETS 5,102,250 5,829,687 7,100,691 9,020,498 11,713,631 11,858,906

OWNERS EQUITY 2,551,125 3,648,965 5,349,918 7,768,790 11,041,215 15,327,020

LONG TERM LIABLITY 2,551,125 2,180,722 1,750,773 1,251,708 672,416 -

TOTAL EQUITY AND LIABLITY 5,102,250 5,829,687 7,100,691 9,020,498 11,713,631 15,327,020
 FORECASTED CASH FLOW STATEMENT
Forecasted Cash Flow Statement
Dolphin Sea Food Restaurant
As of 31st December 2014, 2015, 2016,2017,2018
Y0 2014 2015 2016 2017 2018
OPERATING ACTIVITIES
NET PROFIT - 1,097,840 1,700,953 2,418,873 3,272,424 4,285,805
(Add) DEPRECIATION EXPENSE - 281,625 253,463 228,116 205,305 184,774
AMORITZATION EXPENSE - 10,000 10,000 10,000 10,000 10,000
NET CASH FLOW FROM OPERATIONS - 1,389,465 1,964,416 2,656,989 3,487,729 4,480,579
FINANCING ACTIVITIES
RECEIPT OF LONG TERM DEBT 2,551,125
REPAYMENT OF LONG TERM DEBT -370,404 -429,949 -499,065 -579,292 -672,415
OWNER EQUITY 2,551,125
NET CASH FLOW FROM FINANCING ACTIVITIES 5,102,250 -370,404 -429,949 -499,065 -579,292 -672,415
INVESTIONG ACTIVITIES:
CONSTRUCTION COST -1,275,000
OFFICE FURNITURE -542,250
EQUIP AND MIC -999,000
ADVANCE RENT -1,200,000
PRELIMINARY EXPENSES -50,000
NET CASH FLOW FROM INVESTING ACTIVITIES -4,066,250 0 0 0 0 0

NET CASH FLOW 1,036,000 1,019,061 1,534,467 2,157,924 2,908,437 3,808,164

CASH AT BEGINNING 0 1,036,000 2,055,061 3,589,528 5,747,451 8,655,889
CASH AT ENDING 1,036,000 1,019,061 1,534,467 2,157,924 2,908,437 3,808,164
KEY ASSUMPTIONS
Item(s) Assumptions
Sales Increase 15 % per year
Increase in Cost of Raw Materials 10 % per year
Increase in Staff Salaries 10 % per year
Increase in Utilities (Electricity / Water /Gas) 10 % per year
Increase in Rent 10 % per year
Increase in Office Expenses 10 % per year
Debt / Equity Ratio 50 : 50
Depreciation:
Shop Building & Fixtures 10 % per annum (Diminishing Balance)
Kitchenware & Machinery 10 % per annum (Diminishing Balance)
Furniture 10 % per annum (Diminishing Balance)
Equipment Annual Maintenance Cost 2.5% of Written Down Value
Raw Food Inventory – Fishes 3 Days
Raw Food Inventory – Spices & Sauce 7 Days
Lease Period 5 Years
Lease Installments Monthly
Financial Charges (Lease Rate) 15 % per annum
Tax Rate 25% of EBT
PROJECTED FINANCIAL RATIOS
Ratio Year – 2014 Year – 2015

Gross Profit Margin 34.02% 36.89%

Net Profit Margin 10.96% 14.77%

Debt to Equity Ratio 0.59 : 1.0 0.32 : 1.0

Return on Assets 18.33% 23.95%

Return on Equity 30.09% 31.09%

 VERTICAL ANALYSIS OF INCOME STATEMENT
Description Dec 31, 2014 Dec 31, 2015 Dec 31, 2016
NET SALES (15%increase/year) 100.00% 100.00% 100.00%
RAW MATERIAL COST (10% increase/year) 49.03% 53.93% 59.32%
LABOR & SALARIES(10% increase/year) 10.72% 11.80% 12.98%
UTILITIES 6.23% 6.85% 7.54%
COST OF SALES 65.98% 72.58% 79.84%
GROSS PROFIT 34.02% 42.42% 52.41%
0.00% 0.00% 0.00%
RENT EXPENSE 11.98% 13.18% 14.50%
OFFICE AND MESCELLANEOUS EXPENSE 0.72% 0.79% 0.87%
AMORTIZATION EXPENSE 0.10% 0.10% 0.10%
DEPRECIATION EXPENSE 2.81% 2.53% 2.28%
MAINTANCE EXPENSE 0.22% 0.20% 0.18%
SUB TOTAL 15.83% 16.80% 17.92%
OPERATING INCOME / EBIT 18.19% 25.62% 34.49%
FINANCIAL CHANGE (15% PER ANNUM) 3.57% 2.98% 2.29%
INCOME BEFORE TAX / EBT 14.62% 22.64% 32.20%
TAX (25% of EBT) 3.65% 5.66% 8.05%
NET PROFIT 10.96% 16.98% 24.15%
Monthly Profit After tax 0.91% 1.42% 2.01%
 VERTICAL ANALYSIS OF BALANCE SHEET
Description Dec 31, 2014 Dec 31, 2015 Dec 31, 2016

ASSETS

CURRENT ASSETS
CASH AND BANK BALANCE 35.25% 50.55% 63.72%

PREPAID RENT 20.58% 16.90% 13.30%

TOTAL CURRENT ASSETS 55.84% 67.45% 77.02%

FIXED ASSETS

MACHINERY 14.93% 11.03% 7.81%

SHOP 20.18% 14.91% 10.56%

OFFICE FIXTURES 8.37% 6.19% 4.38%

TOTAL FIXED ASSETS 43.48% 32.13% 22.76%

PRELIMINARY EXPENSES 0.69% 0.42% 0.22%

TOTAL ASSETS 100.00% 100.00% 100.00%

OWNERS EQUITY 62.59% 75.34% 86.12%

LONG TERM LIABLITY 37.41% 24.66% 13.88%

TOTAL EQUITY AND LIABLITY 100.00% 100.00% 100.00%

 COMMON SIZE OF INCOME STATEMENT
Description Dec 31, 2014 Dec 31, 2015 Dec 31, 2016

NET SALES (15%increase/year) 100.00% 115.00% 132.25%

RAW MATERIAL COST (10% increase/year) 100.00% 110.00% 121.00%

LABOR & SALARIES(10% increase/year) 100.00% 110.00% 121.00%

UTILITIES 100.00% 110.00% 121.00%

COST OF SALES 100.00% 110.00% 121.00%

GROSS PROFIT 100.00% 124.70% 154.07%

RENT EXPENSE 100.00% 110.00% 121.00%

OFFICE AND MESCELLANEOUS EXPENSE 100.00% 110.00% 121.00%

AMORTIZATION EXPENSE 100.00% 100.00% 100.00%

DEPRECIATION EXPENSE 100.00% 90.00% 81.00%

MAINTANCE EXPENSE 100.00% 90.00% 81.00%

SUB TOTAL 100.00% 106.11% 113.21%

OPERATING INCOME / EBIT 100.00% 140.87% 189.63%

FINANCIAL CHANGE (15% PER ANNUM) 100.00% 83.36% 64.05%

INCOME BEFORE TAX / EBT 100.00% 154.94% 220.33%

TAX (25% of EBT) 100.00% 154.94% 220.33%

NET PROFIT 100.00% 154.94% 220.33%

Monthly Profit After tax 100.00% 154.94% 220.33%

 COMMON SIZE OF BALANCE SHEET
Description Dec 31, 2014 Dec 31, 2015 Dec 31, 2016

ASSETS

CURRENT ASSETS
CASH AND BANK BALANCE 100.00% 174.67% 279.67%

PREPAID RENT 100.00% 100.00% 100.00%

TOTAL CURRENT ASSETS 100.00% 147.14% 213.44%

FIXED ASSETS

MACHINERY 100.00% 90.00% 81.00%

SHOP 100.00% 90.00% 81.00%

OFFICE FIXTURES 100.00% 90.00% 81.00%

TOTAL FIXED ASSETS 100.00% 90.00% 81.00%

PRELIMINARY EXPENSES 100.00% 75.00% 50.00%

TOTAL ASSETS 100.00% 121.80% 154.73%

OWNERS EQUITY 100.00% 146.61% 212.90%

LONG TERM LIABLITY 100.00% 80.28% 57.40%

TOTAL EQUITY AND LIABLITY 100.00% 121.80% 154.73%

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