Feasibility Report for a Fast Food Restaurant

FEASIBILITY REPORT FOR A FAST FOOD RESTAURANT preambleWe have taken out time to write this key out for several reasons among which be pic This project serves as part of the private-sector participation initiative drive embarked by our company pic Our desire to make you reconsider your present stand about not wanting to invest in the Nigerian parsimoniousness, for now pic Our belief that this report can form a base for an enlarged feasibility report, which we hope you, would commission us to carry out pic Our desire to make you see the pecuniary viability of this project pic Our desire to make you see the potentials of the Nigerian market pic Our desire to bring viable investments into this country pic Our desire to portray the true image of Nigeria to the right(prenominal) world pic Our desire to see your company operational in Nigeria It is therefore our firm belief that later reading through this report, there will be a burning desire to reap the benefits of investing in Afr icas biggest market, and partnering with us in its quest to touch hearts through the McDonalds heritage. TABLE OF CONTENT 1. entropy GATHERING 2. CONCEPT DEVELOPMENT 3. SITE compend 4. COMPETITOR ANALYSIS 5. fiscal STATEMENT pic DATA GATHERING picBASIC FACTS ABOUT NIGERIA AFRICAs BIGGEST DEMOCRACY AND MARKET. FEDERAL big(p) ABUJACOMMERCIAL CAPITAL LAGOS POPULATION Nigeria with a population of 113,828,587 (July 1999 EST. ) is the most populous country in Africa. It has a Population Growth rate 2. 92% (1999 EST. ) AGE STRUCTURE 0-14 YEARS 45% (MALE 25,613,974 FEMALE 25,397,166) 15-64 YEARS 52% (MALE 30,272,539 FEMALE 29,197,611) 65 YEARS AND OVER 3% (MALE 1,678,732 FEMALE 1,668,565) (1999 EST. ) picMARKET AREA We show that McDonalds setup its source restaurant, in Lagos State. It has also pinned down any of these locations for its first restaurant, namely Broad and Marina Streets in Lagos Island, Awolowo Road in Ikoyi, and Akin Adesola and Ahmadu Bello Way, in capital of Seychel les Island.There is a school of thought that says that the Market in Lagos is bigger than the Market in former(a) countries of West Africa put to jerk offher. For people conversant with Lagos, these locations atomic number 18 prime locations, as they boast of the presence of Nigerias high rise buildings, Nigerias most successful shops and companies, with their attendant management and senior staff, who invariably are Nigerias creme de la creme. These locations can also be regarded as Nigerias Jugular vein in commerce. They also presently boast of hosting the best ready Food Restaurants in Lagos. We are already looking forward to a healthy competition among you and them. Another feature of these locations is that they can be accessed at heart 5-10minutes of each other.It is therefore usual to see people working in capital of Seychelles Island moving all over to a restaurant in Ikoyi, or Lagos Island, and iniquity versa. picDEMOGRAPHY OF POTENTIAL CONSUMERS Age Infant 60 and ab ove ( near libertine solid food restaurants have playing pens for infants) Sex Male Female (55% 45%) Income $300/ year and above Usage Rate Worst Case Scenario 500 consumers/day just Case Scenario 1200 consumers/day Best Case Scenario 2000 consumers/day With McDonalds we expect figures to get as high as 1,500, 2,200 and 2,700 respectively. User Status Ranges from first time users, Regular users and Occasional Users. For an average day in the 1ST year of trading operationsFirst Time Users approx. 10% Regular Users approx. 50% Occasional Users approx. 40% Loyalty Status Indifferent (N adept) 42% Medium 35% Strong 20% Absolute 3% We are however confident that with McDonalds, consumers can be pulled from the indifferent categories, to being strong and absolute consumers with McDonalds. Occupation Predominantly white trey workers, airmen also form a sizable proportion of consumers. During weekends and evenings, the major(ip)ity of consumers are whole families, couples, lovers etc. E ducational Qualification Secondary (High) school present holders to PHD holders. Religion Predominantly Christian and liberal Muslims.This therefore means, a willingness/freedom to associate with people, including the opposite sex in public. Provisions for Takeaway snacks also spare the recluse patronize Fast Food Restaurants. Social Status 80% of all classes of society BENEFITS These are related to some kind of advantages looked for in patronising any business. In the case of Fast Food Restaurants, the following parameters have been used to assess patronage Economical Nature of Investment Medium evaluate Convenience High Rating Prestige High Rating Hangout Venue High Rating LOCAL TRAFFIC PATTERNS Lagos has a high profession pattern. On a busy weekday afternoon in Lagos, duty density is approx. 000 cars/sq. kilometers. pic CONCEPT DEVELOPMENT Concept development means making decisions about the components of the fast food restaurant concept, including theme, menu, expediency style, hours of operations. Since this feasibility is for the setting up of an already established name, its concept would basically be centered upon what is presently obtainable. It is however grand to make some recommendations, as the data from the population in the market theatre of operations would help in evaluating a fast food restaurants concept that fits the areas needs and preferences. Lagos Island and its sister island, Victoria Island, form what is called Lagos City or EKO.It is a city with a high rate of hustle and bustle. In some parts of this city, the lights never go out. It is a city in which 70 percent of its work force comes from smaller towns (3-70 kilometers) from within and outside Lagos State, on a daily basis. This scenario automatically creates needs in the minds of some migrants to Lagos City, which must be met, such as 1. Where do we eat eat, considering that we might have to wake up very early so as to avoid the early morning rush, which results in traf fic jams? 2. Where do we eat lunch, considering the fact the demands of work and the distance in the midst of workplace and home will prevent us from going home? 3.Where do we eat dinner, considering that we might need to allow the traffic jam caused by motorists leaving Lagos City, subside? Apart from these variables, fast food restaurants in Lagos play host to people who live in Lagos City, and also provide a contributive environment for businessmen. We would therefore recommend that hours of operation span from 6. 45am to 9. 45pm daily. pic SITE ANALYSIS Specifically, we would like to narrow down our site search to Akin Adesola Street, in Victoria Island. This road is directly linked to the bridge that connects Lagos Island at the Ikoyi and Old Ikoyi end of Lagos Island a drive of less than 5 minutes.It is important to note that Old Ikoyi is the most expensive residential area in Lagos State, and it is followed closely by Victoria Island, which also houses the most expensive of fice apartments in Lagos State. What this means is that McDonalds would be contiguous the rich and tasteful people resident in Lagos State. Akin Adesola Street, which spans about 1. 1Km is directly linked to the major streets in Victoria Island such as Ahmadu Bello way, Ozumba Mbadiwe, Adeyemo Alakija, Adeola Odeku, Sanusi Fafunwa, Karimu Kotun and Bishop Oluwole Streets. It traffic density is not too high as the road is dualised. At the other end of this street is the famous Bar beach with Kuramo beach slightly the corner. McDonalds would therefore benefit from people coming to the beach who require Take-away.The presence of the beach also guarantees a constant supply of fresh air. Presently, only one major fast food restaurant operator has an outlet on this major road. Around Victoria Island there are presently about half-dozen fast food restaurants and based on the potentials of this area of Lagos State it would be an understatement to say that that Akin Adesola Street, would comfortably house another restaurant, most especially the first McDonalds restaurant in Nigeria. It is important to note that apart from Lagos City, other towns in Lagos State, such as Ikeja and Apapa can comfortably host a McDonalds restaurant. pic COMPETITOR ANALYSIS Fast foods in Nigeria are as old as Nigeria itself.From the time of Nigerias independence fast food shops have been opened in the major towns of Nigeria. It was however not until 1986 that United African Company of Nigeria (UACN) in a diversification bid opened the first real fast food arrange of restaurants in Nigeria. Since then a number of other operators have graced the fast food restaurant industry stage. Presently, it is one of the fastest growing sectors of the Nigerian economy and it would not be out of place to say that there is already a fast food craze in Nigeria, and this is just the beginning. In financial term, the fast food industry is approximately a $40 million dollar market, with over 83% of this m arket in Lagos State alone.In doing a proper competitor analysis, it will be appropriate to first identify the major competitors whose presence will bring out the best of McDonalds. The major players are MR. Biggs (a fast food restaurant operated by UACN), Tantalizers, Tastees Fried Chicken, Sweet Sensations, Munchies, Favorites, Friends Eatery, Kas Chicken, Fingers (a fast food restaurant operated by United Trading Company), St. Elmos (a South African Franchise). For this analysis, only the three major fast food joints will be discussed. MR. BIGGS This is a subsidiary of the big conglomerate, United African Company of Nigeria (UACN). It started operations in 1986, and is historied for being the first real operator of fast food restaurants in Nigeria.Presently, there are thirty-seven outlets spread all over Nigeria, with a massive twenty-two in Lagos State. Plans are on the ground to increase the total number of restaurants to fifty-seven by the end of the year. An estimated 1200 pe ople inflict an average Mr. Biggs outlet per day. STRENGHTS Biggest financial muscle Brand Name recognition skilful Knowledge of the Nigerian market Complete support of the UACN conglomerate as it is rumored to be the only subsidiary presently making a profit Strong emphasis on family and catching the young Formation of alliances with companies providing complementary goods Good use of the electronic and print media Starts operations as early as 6. 5am, with the intention of attending to people who want a good meal breakfast before working hours commence WEAKNESSES Its strength fizzles out at the arrival of the other major fast food operators to the neighborhood It is presently not noted for its excellent food, as it places emphasis on its snacks The initial excitement that heralded its entrance to the market seems to have been lost, as there seems to be an out of elbow room, cover on it with the presence of the new entrants. This feeling is however peculiar to Lagos, as the opening of any Mr. Biggs restaurant outside Lagos gives a feeling at long last, to the residents of these towns TANTALIZERS One of the most promising fast food restaurants in Nigeria.They began operations in the Festac area of Lagos State in 1995, and within the shoes of about six years have opened seven other outlets. The management of Tantalizers can be regarded as very aggressive marketers. Their marketing strategy seems to be directly aimed at their competitors. In the last four outlets they have opened, they have set up shops almost directly opposite or at best, a little close to their competitors in the process of drawing customers to their outlets. STRENGTHS Effective Marketing Strategy Improving Brand Name Recognition Commendable customer Service Vastly improving financial muscle Marketing emphasis is on catching couples and lovers WEAKNESS Increasing complaint about the quality of their food Diversification into Africa Meals may be their undoing as they woul d be dividing their effort between the Fast food restaurant and the new African food restaurant There seems to be an emerging class distinction within the fast food industry, and the feeling is that Tantalizers falls within the middle class category. In other words, for serious minded businessmen and the upper-class, Tantalizers would naturally not come as their first choice of a fast food restaurant TASTEE FRIED lily-livered It is one of the most promising fast food restaurants in Nigeria. It began operations in Surulere, Lagos State.It is attributed to be the second new generation fast food restaurant, after Mr. Biggs. At the time of this report they have only three restaurants. When one considers the time they have spent in the fast food industry in Nigeria, and the fact that they only have three restaurants to show for it, one would want to mistakenly write them off as underachievers. Doing this will however be at ones peril as they seem to be carving a niche among the busines s and upper classes. STRENGTHS Improving Brand Name Recognition Commendable client Service High taste and consumer conducive environment Regarded as having the best food in the industry Marketing emphasis seems to be on, catching the business class WEAKNESS Ineffective class distinction. Class distinction which they claim to be their marketing strategy for luring the business and upper classes, has not seen them charging higher prices for their service with the belief that consumers who value their products and service will be willing to pay for it. In other words, even though it may seem that they are providing amend products and service, it has not accrued to relatively bigger profit, as it seems that their expenses are relatively higher than their competitors, while the profit, which should be proportional to expenditure, is lower. Marketing is not aggressive pic FINANCIAL STATEMENTFinancial Analysis will be based on the demography of potential consumers of McDonalds as ar rived at in the demographic studies (USAGE RATE) on page 4 of this report. According to the survey carried out on existing fast food restaurants, Usage Rate Worst Case Scenario 500 consumers/day Average Case Scenario 1,200 consumers/day Best Case Scenario 2,000 consumers/day With McDonalds we expect figures to get as high as 1,500, 2,200 and 2,700 respectively per restaurant. Using these figures, assuming an average consumer spends $1. 5/visit/day, expected income For Worst Case Scenario 1,500 X $1. 5 X 360 days per year = $810,000 per year For Average Case Scenario 2,200 X $1. 5 X 360 days per year = $1,188,000 per year For Best Case Scenario 2,700 X $1. 5 X 360 days per year = $1,458,000 per yearIn reality, consumers presently spend between $0. 4 $5 per visit, making our estimated income analysis of $1. 50 per visit very conservative. CONCLUSION The nature of this report has made us only able to do extensive work on areas such as Data Gathering, Concept Development and Site Anal ysis. It has only been able to peripherally touch areas such as Competitor Analysis and Financial Statement. A proper analysis on areas such as Competitor Analysis and Financial Statement which form an entire part of any Feasibility work, will only be possible if the company for which this report has been done and sent to, finds it necessary to commission us on a more extensive feasibility study.