Establishing McDonald Restaurant Feasibility Study

1.    General Objectives

1.1    Description of the Business Project

The proposed business will need a three-storey building in a 2,000 square-meter lot with a parking space at the rear.  The customers will drive in the left entrance greeted by the water-sprinkled Indian trees partly shielding the establishment from the fumes coming from the busy street.  Embraced by the multi-colored lights, the trees will set the cosmopolitan setting to a rustic atmosphere.  The M insignia appearing to be cradled by the trees from a distance will outshine the multi-colored lights below stressing the romantic surrounding.  The building will be constructed to hide the stockroom complementing the architectural masterpiece.  The smoothly cemented exit passing through the well-manicured lawn will draw sighs of satisfaction from the customers.

The state of the art tables, chairs and utensils will enhance the customers feeling that they are in a five-star hotel.  Very affordable, the food will enthrall every customer to come and savor the food over the widely spaced tables on the immaculately marbled floor.  The electronically flushing system of the restrooms will motivate the customers to force their friends and relatives to frequent this new McDonald Branch at the heart of the university belt.

1.2    Project Time Table

All minor detail considered, the project will start serving the ten thousand targeted daily customers within five months.  The contractors will complete the fence and the framework of the building in the first month.  They will finish the walls and the floors in the second month. They will install the electrical and the air conditioning units in the third month  After the first and second layer coating, they will complete the final painting in the fourth month and finally they will landscape and plant balled-trees in the fifth month.  As the project will be in progress, the company will buy the facilities to be used.

1.3    Management of the Business

With three managers alternately scheduled on an eight-hour duty to man the 130 crew in the 24-hour service, the business will surely satisfy the customers, propelling profit to soar.

The personnel will make a customer feel that he is the only one served amidst the queuing multitude.  The high wage given by the company and, likewise, the humane treatment of the superiors will inspire the crew to render machine-precise service.

2.    Product and Market Aspects

2.1 Market Outcome

A variety of expensive fireworks commence the business to attract the children, students, parents and professionals.  This opening blast will have been advertised a month before.  The initial big crowd from the different districts of the city will keep growing to actualize the management’s vision that this McDonald Branch will be the most profitable among the food chains that mushroom in the metropolis.

2.2 Market and Selling Price

The customers can order from a variety of choices in the counter staffed with beautiful and handsome ever-smiling crew.  The waiters will serve the orders in the well-crafted, smoke-free dining areas with both oriental and western motifs to fit their number and their tastes.  These areas will enhance customer-privacy as the customers enjoy eating while talking about the gossips of the town, or as they engage in a highly intellectual calisthenics about a hot political issue.  The area will also conduce lovers to cement their relationship with their soul-penetrating interlocked gazes that only lovers could fathom, as they savor their food.

3.    Technical Aspect

3.1    Location Factor

Situated at the corner of R. Papa and Dr. Nicanor Reyes streets at the heart of the University belt, this food center will surely draw customers from the cross-section of society.  The following factors will back-up the company’s foresight:

3.1.1    Topography

The 2,000 square-meter lot does not need labeling because the area is already flat.  Although the place lies in the lowest part of Manila, Mayor Atienza’s Buhayin ang Maynila program has eradicated the perennial floods that residents of the area suffer from.  No matter how strong the typhoon will be, the rains will not flood the area.  The customers will not be drawn away from enjoying the services of McDonald.

3.1.2    Cost of Land

The fertile business venture will cheapen the current Php 20,000 per square meter piece of land.  The forty million peso worth of property will double after only three years of operation.

3.1.3    Security

The place will be very safe.  Secretly installed cameras will monitor every move to ensure the security of the customers. Four security guards simultaneously assigned to the area will guarantee the safety of the clients.  This will be backed up the policemen assigned at the outpost nearby.

3.2     Size and Layout of the Building

To maximize the 40 x 50 meter land area, the engineers will erect the 20 x 50 meter land area, the engineers will erect 20 x 30 meter proposed three storey building, leaving five meters at both sides and 18 meters fronting the street.  Only two meters will be left at the back of the building  This will ventilate the establishment.

3.3    Equipment

The San Jose Builders will construct the building.  This construction company will use modern building equipment like a cement mixer, caterpillar, automatic digging drill, and other state-of-the-art construction materials.

4.    Project Cost

4.1 The Land and the Building

This project will cost about Php 43,500,000 which is roughly broken into the following:

Cost of 2,000 meter lot – Php 40,000,000
Cost of the 3-storey building – Php 3,000,000
Accessories and equipment – Php 500,000
Total Cost – Php 43,500,000

The 40 million pesos worth of land is the biggest of the capital investment but it is worth it because unlike the other expenses, the land value will appreciate through the years.  The contract with the San Jose Builders for the proposed three-storey building is Php 3,000,000.  This includes materials and labor.  With the five-month paying scheme, McDonald will pay Php600,000 every month until the last month.  The food center will need Php500,000 for the imported accessories like tables, chairs and other needs.

4.2    Franchise

The food center will pay the current Php1,000,000 McDonald franchise.

4.3    Sources of Financing

The proprietor will put in Php3,500,000  The remaining Php40,000,000 will be borrowed from the bank

5.    Business Operation

5.1  Revenues

With 50 thousand monthly net income target from about five thousand daily customers, the proposed branch projects the following net income by month and years:

First month – Php 1,500,000
First year – Php 18,000,000
Second year – Php 36,000,000
Third year – Php 54,000,000
Fourth year – Php 72,500,000

After four years of operation, this venture will have gained Php 11,500,000 as shown in the following computations:

Net income in four years – Php 72,500,000
Minus the sum of investments – Php 61,000,000
Difference – Php 11,500,000

Loaned money from the bank – Php 42,500,000
Interest of loaned money – Php 17,000,000
Franchise – Php 1,000,000
Maintenance – Php 500,000

Total – Php 61,000,000

5.2 Accessories and Equipments

Being of high quality, the accessories will still be usable after four years.  However,  Php 500,000 pesos is allotted for maintenance and replacements of damaged property,

Summary

The figures above prove how financially rewarding this business venture is.  Because food is a necessity, a venture like this guarantees 99% success  This is especially so if the location is the University belt like McDonald N. Reyes.

(This feasibility study was taken from Technical Writing Revised Edition by Corazon C Obnamia, et al)