Business Plan: Opening A Restaurant in Ulaanbaatar, Mongolia

Business Plan
Opening a restaurant in Ulaanbaatar, Mongolia
Type of Documents : Business Plan

No of Words : 15,000
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Business Plan: Opening a restaurant in

Ulaanbaatar, Mongolia
Submitted on: 26 th Oct 2012

Words: 12000
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ACKNOWLEDGEMENT
I am extremely indebted for the support presented to me during completion of this
business plan by my mentor, family and friends. In sequence, I would like to thank my
mentor, for providing me the opportunity to venture this project and guiding me at each step
of the work. Furthermore, I also fancy thanking my team members for helping me in the data
collection and analysis for primary research in order to have relevant results for the
dissertation.

EXECUTIVE SUMMARY
It is basically a business development plan, intended for establishing a new venture as
an entrepreneur. Every new venture requires a detailed business proposal plan. The main
advantages of writing a detailed business plan is the offsetting the costs. This business
proposal plan is a prescribed expression of the entrepreneurial vision along with description
regarding the operations and strategy of the proposed endeavor. Business plan enables the top
management and executives in the firm to think about the business comprehensively, to
converse the business objectives to personnel, to include a decision making base and to
smooth the progress of the planning.
This plan supplies detailed information about the proposed business plus the place of
business and covers the essential strategic business plan required for preliminary
establishment and operation of A : Food for choosers, a multi cuisine restaurant and
bar at Ulaanbaatar. It is a project requiring start-up capital of $350,500. This restaurant will
target the tourists coming to the city Ulaanbaatar. This target customer base has been chosen
as a result of increasing tourism in the country. Here, customer will experience a completely
new theme for enjoying their preferred food choices at a single place in a Mongolian cultural
ambience.
This restaurant also includes a bar in it. This bar will offer liquor from different
origins with best quality service. Actually the restaurant is going to provide Mongolian style
hospitality for food of customer’s choice from any cuisine. This plan outlines the business
growth, methods, operations, and infrastructure management. This business will be
developed by a dynamic and hard-working team of proven managers and chef.
This entire work flows in five consecutive chapters. First chapter is of introductory,
which offers rationale for the Business idea, chosen place of business, aims and objectives of
the work etc. By this, the reader will get acquaintance about the background of the study. The
main aims of the study are to provide a detailed business plan to establish the proposed
business backed by rigorous feasibility tests. Beginning of the chapter sketches the pertaining
business process, client base, situation, working etc at the proposed restaurant.
In the second section, the Business Concept has been defined. Here a detailed portrait
of the business idea, Mission, Vision, Concerned Product, Positioning, Scale and growth
anticipation etc. have been given. It provides details related to the company, company’s
management, business process, industry etc. Feasibility Analysis is the third section of the
work, which aims to analyze the business proposal’s feasibility from different perspectives,
such as Product/service, Industry/market, Organizational and financial angles. Further a
resource requirement evaluation has been carried out for the Business.
In the fourth section, strategic analysis of the business proposal and a business model
has been developed. This incorporates Strategic analysis of the Business Idea through
literature review, Value chain and SWOT analysis of the proposal, identification of
competitive advantages and sustainability, strategy selection for business success etc.
The last section offer an overall assessment of Business Development Proposal,
schedule of Business Plan and discussion of critical success/ failure factors for the business.
On the basis of the entire work, it can be said firmly that opening a restaurant with the
proposed theme, seems to be challenging but is a profitable and has a potential of long term
sustainability.
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Table of Contents
CHAPTER 1: INTRODUCTION .............................................................................................. 1
1.1 Rationale for the Business idea ................................................................................... 1
1.2 Scenario Chosen .......................................................................................................... 2
1.3 Aims and objectives of the work ................................................................................. 3
1.4 Structure of the work ................................................................................................... 4
CHAPTER 2: THE BUSINESS CONCEPT ............................................................................. 5
2.1 Description of the business idea .................................................................................. 5
2.2 Mission ........................................................................................................................ 5
2.3 Vision .......................................................................................................................... 6
2.4 Menu............................................................................................................................ 6
2.5 The Ambience ............................................................................................................. 7
2.6 Positioning ................................................................................................................... 9
2.7 Scale and growth anticipation ..................................................................................... 9
2.8 Start-up summary ...................................................................................................... 10
CHAPTER 3: FEASIBILITY ANALYSIS ............................................................................. 16
3.1 Primary Market research ........................................................................................... 16
3.2 Secondary Market Research ...................................................................................... 18
3.3 Feasibility .................................................................................................................. 18
3.1.1 Product/service ................................................................................................... 18
3.1.2 Economy, Industry and Place ............................................................................ 20
3.1.3 Organizational Feasibility .................................................................................. 22
3.1.4 Financial Feasibility ........................................................................................... 23
3.4 Resource requirement Evaluation ............................................................................. 31
CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL ................................... 32
4.1 Strategic analysis of Business Idea ........................................................................... 32
4.2 Value chain and SWOT............................................................................................. 33

4.3 Sources of competitive advantages and sustainability .............................................. 34
4.4 Business model .......................................................................................................... 34
CHAPTER 5: BUSINESS PLAN ............................................................................................ 36
5.1 Overall assessment of Business Development Proposal ........................................... 36
5.2 Business Plan Schedule ............................................................................................. 36
5.3 Discussion of critical Success/failure factors ............................................................ 38
APPENDICES ......................................................................................................................... 39
REFERENCES ........................................................................................................................ 41
BIBLIOGRAPHY .................................................................................................................... 45


List of Figures
Figure 1 Table arrangements in the A ---------------------------------------------------------- 7
Figure 2 Interior of the restaurant gers. ---------------------------------------------------------------- 8
Figure 3 Mongolian Hospitality style and clothing --------------------------------------------------- 9
Figure 4 Mongolian traditional art ---------------------------------------------------------------------13
Figure 5 Rating of key competitors for different attributes ----------------------------------------20
Figure 6 Growth representation for Mongolian GDP (Hallberg, R., 2012) ----------------------21
Figure 7 Break Even Analysis -------------------------------------------------------------------------30
Figure 8 value chain at A ------------------------------------------------------------------------33
List of Tables
Table 1 Estimation of customer foot fall at A ................................................................ 10
Table 2 Start-up human resourse requirement ......................................................................... 10
Table 3 Start-up requirements .................................................................................................. 13
Table 4 Comparative study of competitors .............................................................................. 19
Table 6 Personnel planning ...................................................................................................... 23
Table 7 Start-up Funding ......................................................................................................... 24
Table 8 General Assumptions .................................................................................................. 25
Table 9 Customer visit for caste .............................................................................................. 25
Table 10 Projected revenue ...................................................................................................... 25
Table 11 Cost Projections for restaurant section ..................................................................... 26
Table 12 Cost projections for Liquor section .......................................................................... 26
Table 13 Sales forecast for coming four years......................................................................... 26
Table 14 Cash flow for project ................................................................................................ 26
Table 15 Projected P & L......................................................................................................... 28
Table 16 Projected B alance sheet ............................................................................................ 28
Table 17 Break Even Analysis ................................................................................................. 29
Table 18 Payback period analysis ............................................................................................ 30
Table 19 SWOT Analysis ........................................................................................................ 33
Table 20 Business Model ......................................................................................................... 35
Table 21 Gantt Chart ................................................................................................................ 37

CHAPTER 1: INTRODUCTION
It is a business development proposal, designed for establishing a new venture as an
entrepreneur. A new venture needs to have a detailed business proposal plan. This business
proposal plan is a prescribed expression of the entrepreneurial vision along with description
regarding the operations and strategy of the proposed endeavor. The main advantages of
writing a detailed business plan is the offsetting the costs. Business plan enables the top
management and executives in the firm to ponder about the business comprehensively, to
converse the business objectives to personnel, to include a decision making base and to
smooth the progress of the planning (George and Bock, 2012).
Also, an entrepreneur needs to accept the business proposal making task
enthusiastically. A business plan needs to be tapped by professionals, such as consultants,
accountants, and lawyers for their advice and proficiency. Drafting of the plan facilitates the
entrepreneurs for considering all key aspects of the proposed business and assures the
familiarity with all the details. This aids in decision making regarding the new venture. A
sound business proposal also allures good investment (Hamel, 2000). Backed by the
advocacy of the entire benefits, this business proposal plan has been drafted. This plan
encompasses the proposal for opening a multi-cuisine restaurant in Mongolia.

It is a new restaurant, which will be based on a totally unique concept for Mongolia.
The idea of opening a tourist targeted restaurant has crept in by seeing the aesthetic beauty of
Mongolia. Mongolia has emerged as a new tourist destination in last few years because of its
geography and historical importance. This location has proven to be an excellent place for a
restaurant. This restaurant will serve dual purposes by providing dining for family as well as
an area for expensive intimate dining. The menu includes Indonesian, Mexican, Mongolian,
Italian and Indian food alternatives both vegetarian and non-vegetarian. A multi-cuisine menu
will fascinate tourists along with a unique Mongolian theme based interior. The decor of the
Restaurant will be touched by Mongolian handicraft and culture. This unique combination of
Mongolian ambiance and multi cultural food is the point of difference for this restaurant
(Brown, 2007).
1.2 Scenario Chosen

Geographically, Mongolia is locked between Russia and China. The area covered by
this country is 1,565,000 sq km., in which 60% populace lives in Ulaanbaatar, the capital.
The estimated population of Ulaanbaatar is 950.000. B esides this, there are two other urban
centers, Darkhan and Erdenet, where 95,000 and 74,000 inhabitants live. That is why the
place for opening this restaurant has been chosen to be Ulaanbaatar. The diverse landscapes
ranging from the vast steppes, forested mountains and Gobi desert in Mongolia attracts the
tourism (Developmental Biology, 2010).
The Mongols had their roots in the 13th century with Chinggis Khaan’s name in the
world history. After the death of Chinggis Khaan, the empire was partitioned into number of
powerful states. The Mongols, in the late 17th century, came under the rule of Chinese
empire. Mongolia got independence in 1921 and then in 1924, a Communist regime was
installed. Backed by a peaceful democratic revolution in the country, in 1990 and
subsequently in 1992, the ex-Communist Mongolian People's Revolutionary Party or MPRP
won the elections, but in the 1996 elections, the Democratic Union Coalition or DUC
defeated MPRP.
Now, there exists a coalition government formed by MPRP and DUC. This
government has been in power till January 2014.
Mongolian economic has been based on agriculture and herding. Besides these,
Mongolia's widespread mineral deposits have attracted investment from abroad. Copper,
gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten are extracted from the land of
Mongolia, which justify the major part of FDI (foreign direct investment) and government
revenues. Looking into the performance of Mongolia’s economy, it is evident that it stands as
a nation with rapid development amongst the transition economies. The annual GDP growth
rate in 2004 has been recorded to 10.7%, in 2005 to 6.2% and in 2006 to 8.4%. Mongolia has
recorded the nd2 highest per capita GNI i.e. 1051 USD in 2006 and at the same time the
lowest inflation rate. The most important contributors in GDP of Mongolia have been the
Wholesale and retail trade dragging agriculture to the 2 nd place and mining and
manufacturing at rd3. The growth average, within 2004-08 period, has been nearly 9% per
year largely as a result of high copper prices and new gold production. But the existence or
soaring inflation in 2008 and the effects of the global financial crisis, resulted in a trade off
for commodity prices and inflation. This has also reduced the government revenues
(Mongolia - The Ec onomy, n.d).
In 2009, the country has started moving out of the crisis. In October 2009, the long-
awaited legislation has been passed on an investment agreement for developing Mongolia's
Oyu Tolgoi mine, one of the world's biggest unexploited copper mine. This has resulted in an
estimated growth of 7% in 2010. Transfer of funds from Mongolians working abroad are
considerably large, but have dropped as a result of the economic crisis. Money laundering is a
serious concern in Mongolia. Mongolia is a member of the World Trade Organization since
1997 and looks for expanding participation in the provincial economic and trade regimes
(Mongolia: economy statistics and industry reports , 2011).

1.3 Aims and objectives of the work

Aim of the current work is to provide a foundation for a business plan incorporating a
multi-cuisine restaurant in Mongolia. This work has been carried out considering an
entrepreneurial approach for the business. All the aspects of the business development and
operations will be analyzed deeply. This is to provide a detailed business plan by defining all
the functional areas (Linder and Cantrell, 2000). After accomplishing this report following
aims could be met:
1. A detailed portrait of the Mongolian economy and business environment can be
assessed.
2. Assessment of restaurant business in Mongolia.
3. Demonstration of the method of developing a business plan.
4. Preparation of a business plan for opening up a restaurant in Mongolia.
1.4 Structure of the work
This work has been segregated into 5 chapters. These are named as Introduction, The
Business Concept, Feasibility, Strategic Analysis and Business Model and finally the
Business Plan (McKeever, 2012).
Chapter one is of introductory chapter. Rationale for the Business idea, Scenario
Chosen, Aims and objectives of the work and Structure of the work will be defined here. This
chapter acquaints the reader with the background of the study. Here the aims and objectives
of the study and a detailed synopsis of the entire report’s structure will be disclosed.
Beginning of the chapter sketches the pertaining business process, client base, situation,
working etc at the proposed restaurant.
The second chapter deals with The Business Concept. Here a detailed portrait of the
business idea, Mission, Vision, Concerned Product, Positioning, Scale and growth
anticipation etc. will be given. This chapter provides details about the company, company’s
management, business process, industry etc. This chapter provides ground to the entire study.
Feasibility Analysis is the third section of the work, which aims to analyze the business
proposal’s feasibility from different perspectives, such as Product/service, Industry/market,
Organizational and financial angles. Further a resource requirement evaluation will be carried
out for the Business.
In the fourth section strategic analysis of the business proposal and business model
development will be done. This incorporates Strategic analysis of the Business Idea through
literature review, defining Value chain and attaining SWOT analysis of the proposal,
identification of sources of competitive advantages and sustainability, strategy selection for
business triumph and finally developing an appropriate business model for the proposal.
In the last section, backed by the entire above study, a detailed and finalized business
plan will be written. This plan will offer an overall assessment of Business Development
Proposal, schedule of Business Plan and discussion of critical success/ failure factors for the
business.

CHAPTER 2: THE BUSINESS CONCEPT
Business Concept of any business proposal outlines what the business exactly will do
and how it will provide value to all its constituents. It supplies base for all the follow on
activities. It is one of the essential artifacts of a business plan. It articulates the vision
mission, business model, product/service etc. The target audiences, the product features and
the unique business value, all will be defined here in this section. Business C oncept also
covers definitions of strategies for implementing the business proposal, including pricing,
revenue, and distribution models.
2.1 Description of the business idea

This business proposal is about a multi-cuisine restaurant, which will be started in

customers.
2.2 Mission
Mission of A is to offer delicious and remarkable food and drinks to the coming
tourists from different parts of the globe. The food and drink should meet the highest
standards of superiority, freshness and seasonality combining both creative and customary
styles of cooking. Providing the customers an impeccable service through warmth, civility,
effectiveness, acquaintance and professionalism is one of the aims,
A strives for.
Friendly, cooperative and rewarding environment should be offered to the employees so as to
encourage long-term, pleasing, growth oriented work environment.
A aims to be a
benevolent member of the Mongolian community and improve the quality of life in the
region.
2.3 Vision
The vision statement of A is as follows:
“A intends to become the first choice for multi-cuisine test seekers in Mongolia
among the different origin tourists.”
2.4 Menu
A is a multi-cuisine restaurant offering food of Indonesian, Mexican,
Mongolian, Italian and Indian origins in a Mongolian cultured ambience. The menu will
comprise of the most popular dishes of different cuisines.
Menu of Indonesian food will include the most preferred dishes of Indonesian
origin, such as Ayam Taliwang, Babi Guling, Bakwan Malang, Betutu, Gudeg,
Gulai, Cakalang fufu, Laksa, Mie goreng, Nasi Campur, Paniki, Sangsang,
Tongseng, Mendoan, Tahu sumedang etc.
Mexican Menu will comprise of the Mexican dishes such as Burritos,
Chimichangas, Enchiladas, Fajitas, Flautas, Tacos, Tamales, Taquitos,
Tostadas, Quesadillas etc.
In Italian menu, dishes such as lasagna, fresh egg pasta, risotto,
Panzerotti, Piadinas, Arancini, Polenta, Gelato, Tiramisù along with some
Italian Drinks, namely wine will be included.
Indian Menu will cover dishes named as Butter Chicken, Tandoori
Chicken, Chicken Tikka Masala, Rogan Josh, Malai Kofta, Chole (chickpea
curry), Palak Paneer, Kaali Daal, Chaat and Naan.
Among the Mongolian cuisine, A will offer Horhog, Mantuun buuz,
Guriltai shol, Pyartan, Bantan, Suutei tsai, Buuz, B oortsog, Milk tea with
bansh, Bansh, Hushuur, Marmot boodog, Boodog etc.
This huge menu will demand chefs from different regions and ingredients specific to
the cuisine. The food products used will be fresh and of the premium quality, prepared with
compassion and care. Along with the tasteful food options, customers will also be able to
enjoy wine and other drinks of their preferences. The drink list will be modest in size and
chiefly focused on the wines from Italy. A moderate international beer selection will also be
featured in the restaurant. The calm softly lit bar features a complete assortment of the finest
Vodkas, homemade Italian aperitifs and digestives (like Lemon cello) and single malt
Scotches as well as all of the other favorites.
In summers, customers will also be offered a choice to sit outside on the terrace or
garden sitting arrangements and enjoy special summer menus, exotic drinks and other non-
alcoholic offerings. At the terrace or the garden, some cultural activities of Mongolia will be
organized for making the food much special for the customers. Restaurant will be open 7
days a week.
2.5 The Ambience

Interior of theA will be totally based on the Mongolian theme. Basically

Figure 1 Table arrangements in the A

When a customer walks into
A , he will feel the, musical Khoomi singing
(throat singing) and the playing of the Morin Huur or Horse Head fiddle (traditional musical
styles of Mongolia). Contrasting to many other restaurants, A will go with excellent
decorating, expected menu items and regular theme.
Figure 2 Interior of the restaurant gers.

Style of Service
Service at the restaurant will be smart and quick with affability with standards of
kindness and warmth hospitality. Customer will be overwhelmed by the value, hospitality and
ambience. Consistency of quality and service will be provided so as to develop a sense of
assurance in the customers. The management and servers will handle every detail to make the
customer's special evening even more special. All this and our great atmosphere will make
customers want to come back again and again.

Figure 3 Mongolian Hospitality style and clothing

2.7 Scale and growth anticipation

A is targeting the tourists coming to the country for its services so the scale of
the business and its growth anticipations will be highly dependent on the tourism scenario in
the country. According to the available statistics of the tourism industry, in 2005, 338 000
arrivals from divers regions have been recorded. This has generated an aggregate income of
201 million USD in 2005. There has been an average increase of 15 to 20% per year in the
number of tourists coming to Mongolia. If this rate of growth continues, the anticipated
growth rate of the proposed restaurant will also be the same. Taking a conservative
perspective, we take a growth rate of 15% per year. A ’s estimated scale of service is
20% of the total coming tourist in Mongolia once in a while during their stay in the country
(Ministry of Road, Transport and Tourism . n.d). Thus the expected scale of the restaurant can
be derived as shown in the below table:

Table 1 Estimation of customer foot fall at A
Year Growth factor Expected tourists Estimated Average per day
(15% per year) in Mongolia customers for visiting customers
A
2013 3.059 1033942 206788 567
2014 3.518 1189084 237817 652
2015 4.046 1367548 273510 749
2016 4.652 1572376 314475 862
Formula used for calculating the estimated value of tourists coming to Mongolia is as
written below:
2.8 Start-up summary

If this estimated customer arrival continues, then for providing the aspired service
quality to the visitors, a well versed staff will be required. Staff description is as follows:
Table 2 Start-up human resourse requirement
Staff name Number of persons required
Head Chef 1 (expert of the proposed menu cuisines)
Chef 5 (experts of each cuisine)
Assistant cooks 5
Waiters 10
Bar manager 1
Reception and counter staff 1
Manager 1
The key founder of the company is Mr. X. He will work as the manager managing the
entire restaurant from kitchen to personnel, accounts, algorithms, and computerized
functions. He will take care of the service standards and food quality plus financial issues of
the restaurant. Mr. A will be the Restaurant’s head chef, and will manage the entire cooking
section and assure the food quality. Mr. B will be assigned the overall responsibility of the
Bar section.
For catering the estimated customer visits, a proper floor will be required. As the
sitting arrangements are to be done in the form of traditional Mongolian gers, the floor of the
restaurant must be an open place. A terrace or a garden will suit the requirement. Total forty
tables, twenty in ger and rest twenty is the open floor will be placed. On each table, minimum
four persons could sit and eat comfortably (Mongolia's housing market recovering, 2011).
The space required for each table is 4 sqm. Thus the total floor area required for the
restaurant can be derived as follows:
Floor required for the restaurant = floor required for each table * number of tables +
floor required for kitchen area + floor required for administration and other facility area +
Area for bar
Here,
Floor required for each table = 4 sqm
Number of tables = 40
Floor required for kitchen area = 30 sqm
Floor required for administration and other facility area = 10 sqm
Area for bar = 20 sqm
Floor required for the restaurant = 4*40+30+10+20
= 220 sqm

The exact cost can be calculated for these items from day-to-day experience and a
market research. Stationery includes invoices, letterhead, envelopes, catering and
event contracts etc. Stationery will be in a very simple format with the A ’s logo
on it. Many of the above items can be designed and produced in-house, which will be
done by the restaurant admin in-charge. This will save thousands of bucks. The menu
will also be designed, developed and revised internally to further save funds. Final
printing will be outsourced.
Rent, or lease payments
The floor for opening up a restaurant in any centralized location must be rented or
leased. We need a place for 250 sqm. The rent rate in Ulaanbaatar is about
$17<$18/sqm per month, whereas the land purchase prices are extremely attractive
lying in the range of $900/sqm to $1300/sqm. Initially the floor will be hired on rent

but later on this can be purchased (Temple View Residence Ulaanbaatar Mongolia .
n.d).
Office Supplies and General Set-up
All kind of general usage items such as staplers, pens, paper cutter, paper, pads and
pencils, shredder and file cabinets for the waiter and host station, kitchen and office
are included in this list.
Exterior and Interior Signage
Sand wretched sign for the frontage as well as informational and directional signs for
the parking, facility etc area will be included in this list. Other critical signage will be
required inside for injury, Workers Comp, Material Safety Data Sheets, Workers
Right to Know, etc. Members of the team can be better understand what to do, what
not to do and how to do, via these signs and instructions everywhere.
Staff Uniforms
Staff will serve the clients in traditional outfits of Mongolian origin. The Mongolian
cloth deel will be dressed in by the waiters and waitresses. Each deel cost about $100.
We will require 30 deels and for the kitchen staff kitchen apparels will be needed. 20
kitchen apparels will be enough for the staff.
Restaurant Building and ambience
With the assistance of a Mongolian ger master, 20 small sized gers with 3 walls will
be designed for the restaurant. The average cost for which will be $875 each (Dealing
with Construction Permits in Mongolia, 2012). Besides these, 20 sets of Mongolian
style furniture will be purchased from any traditional furniture supplier
Cost ( of
Living in Ulaanbaatar, Mongolia. 2012). This furniture and other fixture work will be
done by service contract with any furniture maker in Ulaanbaatar. This estimated cost
of the work is $4000.

Figure 4 Mongolian traditional art

choices.
Table: Start-up
Table 3 Start-up requirements
Start-up Requirements Estimated cost
Start-up Expenses
Stationery, Menus, Guest Checks $4,000

Printing of Menus $200
Property $18,000
Office Supplies & General Set-up $2,000
Serving Staff Theme Uniforms $3,000
Kitchen Staff Uniforms $3,000
Restaurant Building and ambience $21,500

Liquor License (coming 4 months) $60,000
Computer and computer Software $4,000
Chamber of Commerce/Other Memberships $2,000

Initial Job Hiring Related Advertising $1,000
Initial, Kick-start, Teaser Advertising $5,000
Phone, Electric, Cable and Gas Deposits $5,000
Food and Liquor Setup $8,000

Kitchen Supplies $4,000
Opening Celebration $5,000
Exterior and Interior Signage $1,500

Start-up employee Cost for initial four Months $96,000
Expense Account for Food, Fuel, Bills $2,300
Pre-funding Costs to Fluno Gorgonzola $3,400

printer cum copy Machine (Canon) $800
Fire and Burglar Alarm Installation $5,000
Milestones/Contingency/Other $20,000
Commercial Pre-Inspection of Building $800

Total Start-up Expenses $275,500
Start-up Assets
Cash Required $50,000
Start-up Inventory $25,000
Other Current Assets $0

Long-term Assets $0
Total Assets $75,000
Total Requirements $350,500

$300,000
$250,000
$200,000
$150,000 Total Start-up Expenses

Total Assets
$100,000
$50,000
$0
Amount $


CHAPTER 3: FEASIBILITY ANALYSIS
Setting up a business is headed by the verdict to desire an entrepreneurial career and
recognition of a promising business idea backed by a careful examination of the existence of
entrepreneurial opportunities. Idea generation is not enough but the business idea should also
be feasible from techno-economic, legal and financial perspectives. So after the initial
screening of the prima facie promising idea, an in-depth examination for feasibility must be
carried out prior to set the one where time, money and energies will be exerted. Feasibility
study backs by a detailed primary and secondary market research (Rogoff, 2007).
A is a multi-cuisine restaurant in Ulaanbaatar, the capital of Mongolia. For this
restaurant, both primary and secondary research will be done. Primary research will target the
customer and the local market characteristics. Primary research will be conducted through a
survey method. In this survey the tourists coming to the country will be asked for their
opinions about the concept of the restaurant and their expectations. Further, an expert
interview method will also be used for their opinions and suggestions. The secondary
research will be done for assessing the industry and economic condition. Backed by both,
feasibility of the business idea will be tested.
Making a decision for investing enormous fund in a new project proper analysis of
things must be done. This analysis can be attained by means of either primary or secondary
research. Literally the primary research means the research conducted specially for the
problem under study by means of interviews, surveys and observations. For establishing a
restaurant in Ulaanbaatar, Mongolia, considerable fund and other supplementary resources
will be required. Along with this, significant time and manpower will be needed. This makes
it essential to conduct a detailed research before setting the plan go (Joseph and Covelo,
2006).
3.1 Primary Market research

Primary research is based on the principles of scientific methods. This theory of
investigation has been developed by John Stuart Mill in the mid nineteenth century and
discussed this in the book “Philosophy of the Scientific Methods”. There are three methods to
conduct a primary research, such as observations, interviews and surveys.
Here, for convenience and ease, interview method has been adopted. This is an online
interview method conducted through a blog designed for the visitors of Mongolia. This is a
well structured interview, where a previously set bunch of questions are asked to the visitors
of to the blog and asked for their opinions. In this blog, description of different natural and
heritage sights of Mongolia are discussed with different viewpoints. Visitors the blog are
asked to provide their opinions about the concept A of . Also they can share their
experiences during their visits to Mongolia and their food experiences along with suggestions
to improve the services. In this interview both past visitors and the potential visitors are
addressed. This research has been carried out in a time frame of three months. Almost, 1000
interviews have been collect from the tourists from different region of the world. Interview
questionnaire is attached in the appendix section. Observations for the interviews are briefed
as below:
1. Majority of the visitors are so allured by the aesthetic nature and awful culture of
Mongolia that they wish to be there again and refer this place to their friends and
families. According to them the place is full of energy as pollution is not much,
besides this, it is an affordable place for the low budget tour plans. Terroristic
activities are also not there, which adds to its beauty.

4. The most preferred cuisines among the respondents are three. These are Italian,
Mongolian and Indian. Further, some of the respondents have also shown interest in
the Indonesian and Mexican food.
5. According to the collected response, 72% respondents said that the average spent per
head for food in Mongolia was £25~£30. 18% said that their average spent on food in
Mongolia was over £30 and rest responses advocates the other options.
6. Making payment was a tedious task for the 70% tourists as majority of the food places
were not accepting the debit cards. Just for that, they had to take help of the currency
converters.

7. Idea of opening a new restaurant in Ulaanbaatar with features of multi-cuisine in the
Mongolian cultural ambience plus availability of liquor from different region in the
bar section with facility of payments through debit cards has attracted the interest of
90% respondents. They have appreciated this idea.
3.2 Secondary Market Research

Secondary market research employs information assembled by outside sources such,
as government agencies, trade and industry associations, media sources, labor unions,
chambers of commerce, and many others. Secondary sources of information include the
following:
Commercial sources
Public sources
Educational institutions
Here, for satisfying the urge of the current study, Guide for doing business in Mongolia
2012-13 has been used as the secondary source of information. The data published in this will
be used time to time in the current paper where ever required.
3.3 Feasibility
Literally, feasibility means the ability of any idea to fare well in the market both in
terms of profits and market share. This spots the existence of a sizeable market for the
proposed service and the investment requirements of the business. The financing and
technical aspects are also answered by feasibility analysis such as where to acquire funding,
whether the necessary technical knowledge for realizing the idea in a live business is
available and many more. Feasibility assessment involves a check of the operations, HR,
financial and marketing aspects of the proposed business on ex-ante basis. Under the
feasibility the facets of the proposed project idea, such as market, technical, financial,
economic and legal etc will be analyzed (Bangs, 2002).
3.1.1 Product/service
First and the foremost thing in the feasibility analysis are to analyze the viability of
the business idea or the product or service, the business is aspiring to offer to its clients. In
the service feasibility test following questions should be answered for refining the business
idea:
Is the proposed business address to any specified need in the marketplace?
Does the proposed business sound profitable?
Does the business proposal have the capacity to face the competition in the market?
All the above stated questions can be answered through the observations of the
primary research. Primary research provides the buyer’s opinion regarding the proposed
business and their willingness to accept such service in the market.
According to the primary research conducted by the structured interview, the potential
customer reference group or the past visitors of Mongolia have appreciated the idea of the
restaurant. Their positive response to the idea of restaurant advocates the market viability.
Thus from the customer point, restaurant A is a good and attractive proposal, which
assures that the business will be profitable as a considerable demand of such a restaurant
exists in the Mongolian restaurant industry ( City Guide - Ulaanbaatar – Restaurants . 2012).

Table 4 Comparative study of competitors

Name of Cuisine Interior Service Food Venue Ambience Prices range
restaurant Theme
Namaste Indian Indian 4 4 4 3 $6 - $10

Ambience Reasonable
Hazara Indian Romantic 4.5 4.5 3.5 4 $10 - $15
ambiance
Luna Asian, 4.5 4.5 5 4.5 $3 - $15

Blanca Western and
Mongolian
cuisine

Millie's American, 4.5 4.5 4 4
Café European,
Mexican,
International
The Bull Asian 4 4 4 4
Sakura Japanese 5 5 5 5
Restaurant
4
Service
3 Food
2 Venue
1 Ambience
0
Namaste Hazara Luna Blanca Millie's Café The Bull Sakura
Restaurant
Figure 5 Rating of key competitors for different attributes

Looking at the details available for the competitor, it is clear that none of these is a
direct competitor forA as our target customers are tourist from western countries.
A also proposes to offer food from not only Asian cuisines but from different ones.
The offered cuisines by the existing top players of the UB restaurant world are not matching
with our proposed menu. Menu A
at tends to serve food from Indian, Indonesian,
Mongolian, Italian and Mexican cuisines in a totally Mongolian cultural ambience. This is a
unique restaurant idea offering multiple cuisine food for taste seekers.
3.1.2 Economy, Industry and Place
Attractiveness of economy
Mongolian economy is not merely a country with hope, but a country with a very remarkable
economical trail record of recent. Average GDP growth in the country is over 7% since 2002
(IMF report, 2007), and according to the latest official data about 2006 GDP the growth has
been recorded 7.5%. It is a good sign for any underdeveloped economy. Inflation in
Mongolia is very low and steady at -0.1% as per the records of 2007 beginning (IMF report,
2007) and is expected to be at 4.2% for the coming year (Bank of Mongolia, 2007). The
economy is overwhelmed with high levels of FDI investment, an open and progressive
government, lofty education standards and availability of various schemes and incentives for
entrepreneurialism. The unemployment issues are pleasingly low i.e. just 3.3% in 2005
(World fact-book, 2006).
Figure 6 Growth representation for Mongolian GDP (Hallberg, R., 2012)

Service Industry – 50.4% of the GDP is the result of this industry and it is growing
continuously.
Science & Technology– Technology industry of Mongolia has been increasingly
developing since the democratic revolution in the country taken place in the early 1990s.
Since then many new technology firms have founded their operations in the country ( Doing
Business Guide in Mongolia , 2012).
Attractiveness of industry and market

Service industry comprises of financial services, hospitality and tourism industry and
other services. Economist in the country is estimating high growth in this sector in the
coming years. This positive growth of the country’s overall economy and the hospitality and
tourism industry are the positive factors for the proposed business line (Mongolia looks to
tourism to diversify its economy, 2012). Restaurant is expected to be open in Ulaanbaatar, so
the importance of the city in the overall economy both from economic as well as from
tourism perspective must be evaluated Ulaanbaatar
( Restaurants, n.d.). Evaluation of
Ulaanbaatar is as follows:
Ulaanbaatar
It is the Economic & financial centre of Mongolia and headquarter for all FDI &
MNC businesses.
It is an energetic, lively and exciting city, awash with entrepreneurial activities
resulting in a flourishing atmosphere for new business openings.
As a result of international firm’s high interest levels (from countries like USA,
Japan, China and Korea), a booming tourism industry is being experienced by
Ulaanbaatar and its vicinity, which has eventually increased the statistics of 5-star
hotels and resorts in city centre and countryside.
Near about half of the total country’s populace lives in this city, which is fueling the
urbanization’s fast pace in the city.
The city has potential for very lofty investment returns (Restaurants in Ulaanbaatar.
2012).
3.1.3 Organizational Feasibility

Organizational Feasibility analysis’s main purpose is to determine if there exist
sufficient skills and resources to bring service to market successfully. This involves analysis
of non-financial factors important for the business. Here, 2 primary issues to be considered
are the management competence and sufficiency of resources. For assessing the former issue,
the ability of the management team must be evaluated on the basis of the passion and
expertise for the launch of the new venture. Further to assess the availability of resources
needed to launch the proposed venture, focus must be on the nonfinancial resources such as
the availability of affordable floor, possibility of government support, workforce pooling
quality, acquaintance of the key suppliers, customers, and competitors etc. To test the
resource sufficiency, critical nonfinancial resources must be listed to move idea ahead and if
the resources are not sufficiently available, idea should be re-worked.
If this estimated customer arrival continues, then for providing the aspired service
quality to the visitors, a well versed staff will be required. Staff description is as follows:
Table 5 Personnel planning
Staff name Number of persons required
Head Chef 1 (expert of the proposed menu cuisines)
Chef 5 (experts of each cuisine)
Assistant cooks 5
Waiters 10
Reception and counter staff 1
Manager 1
Founder of the company i.e. Mr. X, and two other i.e. Mr. A and Mr. B are the faces
of theA . The initial management team will highly depend on their expertise and
industry receptiveness. Main management responsibilities will be divided between the top
three. While all 3 need to focus mainly on the quality of proficiency, but one must take
eventual responsibility of administration, finance and marketing, while the other one
of personnel and property and the remaining one for food service and bar services. With the
growth of the firm, an additional consulting assistance can also be obtained for graphic,
editorial, sales, and marketing issues.

3.1.4 Financial Feasibility

Financial feasibility analysis gives a conceptual expression of the business proposal’s
ability to seek fund. The financial feasibility is the last element of feasibility analysis. This
gives financial merits of the proposed business. This financial plan is based on
raising roughly $300,000 through short term loans and $50,500 will come from the owner’s
pocket. Profitability depends on the nature of growth.

Start-up Funding
The start-up capital will come from owner’s fund and short-term loans. The cost of
financing is to be financed from owner’s investment. The total fund requirements for start-
up are listed in the below table.
Table 6 Start-up Funding
Start-up Funds Funds
Start-up Expenses to Fund $275,500
Start-up Assets to Fund $75,000
Total Funding Required $350,500
Assets
Non-cash Assets from Start-up $25,000
Cash Requirements from Start-up $50,000
Additional Cash Raised $0
Cash Balance on Starting Date $50,000
Total Assets $75,000
Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Owner Equity $50,500
Short term loan $300,000
Additional Investment Requirement $0
Total Planned Investment $350,500
Loss at Start-up (Start-up Expenses) ($275,500)
Total Capital $75,000
Total Capital and Liabilities $75,000
Total Funding $350,500
Key Assumptions
Entire financial plan is dependent on some important assumptions, majority of which
are revealed in the below table. The underlying key assumptions are:
A high-growth economy, exclusive of major recession impact has been assumed in
Mongolia. It is assumed that the opening ceremony A of will be held in the
first week of January 2013 and the average per day traffic will be 567 individual.
There does not exist unforeseen changes in the anticipation about the popularity of
A .
Accesses to both investments and financing requirements for the proposed business
plan are available with certainty. General financial and investment availability
assumptions for the plan are as shown in the tables.
Meal for 2, in any Mid-range Restaurant with Three courses cost to the customers in
the range of $20 to $30. The average cost per head is assumed to be $15 per meal.
Alcohol cost per head is assumed to be $15.
It is assumed that the gross profit margin of restaurant industry of Mongolia is 30%.
Liquor section works for 40% profit margin (Happy Mongolia, 2012).

Table 8 Customer visit for caste

Year Estimated customers for A Estimated customers in the liquor section
2013 206788 41357
2014 237817 47563
2015 273510 54702
2016 314475 62895
It is assumed that the customers in the bar section are just 20% of the total arrivals in
the restaurant. Estimation of sales revenue from both restaurant and bar sections for A
is shown in the below table:
Table 9 Projected revenue
Year 2013 2014 2015 2016
Food section revenue
Estimated customers for A per year 206788 237817 273510 314475
Revenue per head 15 16.5 18 20
Total revenue 3101820 3923981 4923180 6289500
Liquor section revenue
Estimated customers for A per year 41357 47563 54702 62895
Revenue per head 15 15.75 16.5 17.32
Total revenue from liquor section ($) 620364 749117.25 902583 1089341.4
Total revenue for A ($) 3722184 4673097.75 5825763 7378841.4
Schedule for estimated cost of sales for food service section is as under:
Table 10 Cost Projections for restaurant section
Annual Inflation Cost per Estimated customers for Total cost of sale per
Year rate % order A year
2013 4 10.5 206788 2171274
2014 4 10.92 237817 2596962
2015 4 11.36 273510 3107074
2016 4 11.81 314475 3713950
Schedule for estimated cost of sales for Liquor section is as under:

Table 11 Cost projections for Liquor section
Cost Total cost of
per Estimated customers for Total cost of sale persales (liquor +
Year order A year food)
2013 9 41357 372213 2543487
2014 9.5 47563 451849 3048810
2015 10 54702 547020 3654094
2016 10.5 62895 660398 4374347
Sales forecast: Sales forecast for the coming four years is as given in the below table:
Table 12 Sales forecast for coming four years
(a) SALES FORECAST

Year 0 1 2 3 4
Units 248,146 285,380 328,212 377,370
Sales Value @£1000/unit 3,722,190 4,708,770 5,957,048 7,534,192
Sales policy
Cash flow on Sales 3,722,190 4,708,770 5,957,048 7,534,192
(b) Cost of goods 0 2,543,487 3,048,810 3,654,094 4,374,347

Supplier payment policy
Cash flow on cost of goods 0 2,543,487 3,048,810 3,654,094 4,374,347
Cash Flow for the project:

Table 13 Cash flow for project
(2) CASHFLOW FORECAST
Preop
Year 0 1 2 3 4
CASH INFLOWS
Cash from Sales 3,722,190 4,708,770 5,957,048 7,534,192
Directors loans 300,000
Share capital 50,500 0
Other external finance/loans
Other cash inflows
TOTAL CASH INFLOW 350,500 3,722,190 4,708,770 5,957,048 7,534,192
CASH OUTFLOWS
Payments for materials 0 2,543,487 3,048,810 3,654,094 4,374,347
operating expenses
Premises (rent, rates) 9,000 54,000 59,400 65,340 71,874
Wages and salaries 0 288,000 331,200 380,880 438,012
General expenses 0 91,350 117,480 110,214 121,434
Interest and bank charges 0 30,000 30,000 20,000 10,000

Cash flow summary

NET CASHFLOW FOR 170,000 715,353 1,021,880 1,205,787 1,987,433
PERIOD
OPENING CASH BALANCE 0 170,000 885,353 1,907,233 3,113,020
CLOSING CASH BALANCE 170,000 885,353 1,907,233 3,113,020 5,100,452
Projected Profit and Loss

It is a financial statement, which summarizes the sales revenues, costs of goods and
expenses incurred in the business during the specific time period usually a quarter or year. It
gives information about the ability of the business to generate profit by improvising revenue
and curtailing costs. It is also known as a statement of profit and loss, an income statement or
an income and expense statement (Levine and Michele, 2008).
Profit and Loss statement has been prepared following a conservative point-of-view
and the projections are based majorly on the past performance of some other restaurants
running in Ulaanbaatar. Through service position strengthening and customer relationship re-
engineering, popularity among the target customer base will be achieved and as a result
increased sales revenues will be reaped.
Projected P & L for A

Table 14 Projected P & L
(4) PROFIT AND LOSS FORECAST
Year 0 1 2 3 4
Revenue 0 3,722,190 4,708,770 5,957,048 7,534,192
Cost of sales 0 2,543,487 3,048,810 3,654,094 4,374,347
Gross profit 0 1,178,703 1,659,960 2,302,954 3,159,845
Expenses/overheads
Premises (rent, rates) 9,000 54,000 59,400 65,340 71,874
Wages and salaries 288,000 331,200 380,880 438,012
General expenses 91,350 117,480 110,214 121,434
Interest and bank charges payable 30,000 30,000 20,000 10,000
Lease payments 0 0 0 0
Depreciation 2150 2150 2150 2150
Other expenses 150,000
Total expenses/overheads 9,000 615,500 540,230 578,584 643,470
Profit before tax -9,000 563,203 1,119,730 1,724,370 2,516,375
Tax @25% 420,733 431,092 629,094
Profit after tax 563,203 698,997 1,293,277 1,887,281
Dividends 0 0 0 0
Transfer to reserves 563,203 698,997 1,293,277 1,887,281
Projected Balance Sheet

Table 15 Projected Balance sheet
(5) BALANCE SHEET
Year 0 1 2 3 4
ASSETS
Fixed Assets
Building 0 0 0 0 0
Furniture 21,500 19,350 17,200 15,050 12,900
Vehicles 0 0 0 0 0
Plant & machinery 0 0 0 0 0
Net Fixed assets 21,500 19,350 17,200 15,050 12,900
Current Assets
Stock 211,957 254,068 304,508 364,529 0
Debtors 0 310,183 392,398 496,421 627,849
Cash 170,000 885,353 1,907,233 3,113,020 5,100,452
other -
Rent 9,000 54,000 59,400 65,340 71,874
Market survey costs 10,000
other preliminary expenses 140,000
subtotal 540,957 1,503,603 2,663,538 4,039,309 5,800,175
Current Liabilities
Taxation 420,733 431,092 629,094
subtotal 0 0 420,733 431,092 629,094
Total assets less current liabilities 562,457 1,522,953 2,260,005 3,623,267 5,183,982
LIABILITIES
Share cap 50,500 50,500 50,500 50,500 50,500
Reserves 563,203 1,262,200 2,555,477 4,442,758
Total equity 50,500 613,703 1,312,700 2,605,977 4,493,258
Loans 300,000 300,000 200,000 100,000 0
Total 350,500 913,703 1,512,700 2,705,977 4,493,258

volumes. This can be calculated by the following formula:
Here the fixed cost will comprise of following elements:

1. Rent
2. Salaries
3. Liquor license cost
Whereas the variable cost is about the food ingredient and supplement cost.
For A , values of fixed cost and variable cost and selling prices are defined in the below
table:
Table 16 Break Even Analysis
Rent monthly $4,500
liquor license renwal fee monthly $1,000
salaries monthly $24,000
Total $29,500
Contribution per customer $4.50
Breakeven Point (customer)per month 6556
Breakeven Point (customer)per day 220
Figure 7 Break Even Analysis

BEP i.e. break-even point for the proposed business is below the estimated sales
volume level, which males the venture attractive for investment.
Pay Back Period
Pay back period is a financial evaluation technique. By payback period, the meaning
is that the time period required for any project to pay the initial investment back. It is non
discounted technique (Dayananda et al, 2002). Here in our proposed plan, $350,500 is
required as the start-up fund. This fund will be recovered through the business’ net profit.
Calculation for the pay-back period for the restaurant project in shown in the below table:
Table 17 Payback period analysis
Year Net profit Cumulative net
profit
2013 $25,438 $25,438
2014 $143,258 $168,696
2015 $460,848 $629,544
2016 $879,710 $1,509,254
From the above table it is clear that the initial investment will be repaid by the
business in the third year of commencement. If a linear distribution of profit is assumed, then
the exact pay-back period will be calculated as follows:
Pay-back period = 2+ (350500-168696)/460848
= 2.4 years or 2 years and 5 months
Pay back period of the employed capital investment is relatively low, which implies
the attractiveness of the venture among the investors.
3.4 Resource requirement Evaluation
Any physical or virtual entity with limited availability, such as supply of money,
materials, staff and other assets required for venturing any business are termed as resources.
For A , six broad types of resources are required. All of which are defined in the below
section:
Finance: Total start up fund is $350500. $50500 would be invested by the owner and

business, where customer will evaluate the restaurant by the service provided to them
through employees. Availability of staff is not big concern for A , in Mongolia.
Technological resources: are embodied in a process, system or physical
transformation, e.g. unique software products and tailored information system
architecture.
Organizational resource: Such resources include the structure of the business, routines
and systems.

CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL
Strategic analysis aims to look at the external environment of the organization
concerning about the present and the future consequences. Through the strategic analysis two
questions must be answered, like:
How the external incidences happening might affect the business?
What should be the best response of the business to the likely changes?
While, the business model is the manager ’s logic, which allows a venture to capture
the market opportunity by mitigating risks. This also aids in identifying the required resource
set; and create value for investors and founders.
Here, a thorough analysis of the business idea from the strategic view will be carried
out and based on this a proper business model will be developed.
4.1 Strategic analysis of Business Idea

Restaurant opening seems to be a glamorous business and by being successful
restaurateurs, one can attain fame and fortune both, but success in restaurant business is not
easy to attain and failures are not rare. Prior to opening a restaurant, one must gain the basic
understanding of the industry and competition structure.
According to the Entrepreneur website (2009), there has been a tremendous growth of
about 155,000 to 900,000 in number of food-service from 1970 to 2009. This trend is
expected to persist as now people choose to eat out rather than taking time to prepare meals at
home. This advocates the idea of opening the right sort of restaurant at the right location.
Restaurant is basically a people business, so a socialist must flourish in such type of
business. But, the success highly depends on the staff’s especially the servers ability to
entertain the customer requirements and strong people skills. Retains of right people is a
serious challenge for the restaurant business. Having young staff leads to higher employee
turnover issues ( What is strategic analysis?, n.d.) .
A is a restaurant starting from scratch and for that things must be designed and
managed in the owner’s way. This may result in difficulties for establishing the brand and
positioning it in the market. A is a new concept and generally a new concept involves
high degree of risk. Besides, restaurants are not easy to operate. One requires having
knowledge regarding the proper equipment to purchase and grow to be versed in food-
handling measures and local health codes. An extensive market research must be conducted
before taking the plunge in order to assess the acceptability of the business concept by the
targeted customers.
According to a report of Entrepreneur.com (2010), many restaurants fail all through
the first year of commencement, largely due to a poor planning. Taking the time to prepare a
carefully researched business plan will give you a better chance of success and is essential if
you wish to obtain bank financing to get started. Bank finance for starting up funds can be
better acquired on the basis of a good and rigorous business plan.
4.2 Value chain and SWOT

Concept of value chain has its origin in Michael Porter’s book “Competitive
Advantage: Creating and Sustaining Superior Performance” published in 1985. Value chain
includes a sequence of activities performed by a firm operating in a specific industry to
deliver valuable services to its clients (Woudstra and Adria, 2003). Below diagram indicates
the value chain at A .

This value chain and operational competence of the firm result in specific strengths
and weaknesses along with external opportunities and threats from the outer circumstances.
SWOT analysis of A is given in the below chart:
Table 18 SWOT Analysis
Strengths Weaknesses
Innovative business idea Highly dependent of the acceptability of
Backed by proper research and planning the restaurant among the tourists
Financially viable Highly dependent on the growth of
Lucrative market growth of the past tourism in the country
Sensitive to the government laws and
regulations
Success is dependent on the staff
performance
Threats Opportunities
No entry barriers exists, which makes a High growth economy
threat of increasing competition Increasing tourism\
Business’ Point of difference is its
innovative theme and cuisines, which can
easily be copied
Government’s dependency on the FDI
investment may cause serious damage to
tourism
Counties proximity to the terrorist
sensitive countries may spoil the business
4.3 Sources of competitive advantages and sustainability

For survival and prosperity of any business in an industry, companies must meet two
decisive factors. First, they must deliver customers what they want to buy, and second that
they must endure in competition. Overall competitive advantage can be attained through
creating difference between offered customer value and cost of creating such customer value
as compared to its market peers. Competitive advantage takes 2 forms namely differentiation
advantage and cost advantages. Differentiating advantages can be attained by creating the
superiority of the service in the customer minds, while cost advantages can be attained
through economies of scale.
Here, A is a completely new venture so it is not possible for it to attain cost
advantages. Competitive advantaged through differentiation can easily be attained by it as it
involves a completely new idea and theme.
A can fare the uniqueness of cuisines
offered at a single place with innovative theme and service for differentiation of services in
the market place. This may give a higher sustainability to the restaurant.
4.4 Business model

Business model for A will describe the underlying principle of the organization
to create, capture and deliver value in terms of economic, social, cultural, or any other forms.
Business model construction process is a part of the business strategy (Peterovic and Kittl et
al, 2001). It aids in describing and classifying business, plus exploring the possibilities of
future development. For a creative management, business model operates like a recipe
(Chesbrough and Rosenbloom, 2002). Business model for
A is given in the below
section:
Table 19 Business Model
Ownership Key activities Value proposition Customer Customer
- Company is - In restaurant line, - Delivering value for relationship segments
solely Maintaining food money to the - Respect for - Tourists coming to
owned by quality and customers customer the city
the consistency - Catering niche feedbacks - Lowers of multi
entrepreneu - In liquor section, market’s expectations - After sales cuisine food
r timely renewal of - Maintaining higher services
- Key license food quality
motivations Key resources - Maintaining higher Channels
for the - Financing comes services standards - Marketing
investment from the owner’s - Providing growth through
is growth of pocket or through opportunities to the tourist
economy short-term loans staff members companies
and tourism - Human resource and - Having equality - Online
industry of other operational policy marketing
Mongolia requirements will be - Tie ups with
availed from tourist firms
Mongolia
Marketing Revenue streams
- Consistent marketing activities at the places sensitive - Through restaurant
to tourism Through Bar


CHAPTER 5: BUSINESS PLAN
5.1 Overall assessment of Business Development Proposal
Business set-up is headed by the decision for having an entrepreneurial career and
recognition of a promising business idea backed by a careful examination of the existence of
entrepreneurial opportunities in the selected market. A is a multi-cuisine restaurant in
Ulaanbaatar, the capital of Mongolia. For this restaurant, both primary and secondary
research has been conducted. Primary research has given a positive response towards the
proposal along with the secondary one. According to the customer response to the proposed
idea of business,A has a positive probability of success in the market among the
targeted market.
Now looking towards the feasibility of the proposed business plan, every constituent
of analysis has given a positive response for it. According to the service viability analysis, it
will have good response among the tourists coming to Ulaanbaatar as presently, there is no
restaurant, which offers the same cuisines that are the part of our menu. Also, the theme of
the restaurant and bar is a unique one, which will certainly attract customers. This result is
also proven through the primary research conducted.
Now, when the discussion comes to the industry and market attractiveness, both are
found to be profitable and growth oriented. Mongolian economy is currently at its growth
stage and market for restaurants in Ulaanbaatar is very attractive from the point of
investment. Inflation rate is quite low (4%) in the country, which is a good symbol for an
entrepreneurial start up. Currently Mongolia has emerged as a new tourist destination and
average growth of tourism industry in the country is recorded to be 15 to 20%, which is a
good indicator for a tourist targeted business venture.
Financial feasibility analysis shows the ability of the venture to repay the initial
investments in a very short time period i.e. 2 years and 5 months. Also the growth in profit
margin is considerable. Besides all, the initial investment for opening up a restaurant in
Ulaanbaatar is comparatively low.
The entire analysis has given positive responses making the proposal worthy to get
investments. This will prove beneficial for getting the loan from the corporate or the banks
for the initial start-up funds.
5.2 Business Plan Schedule

Execution of the proposed plan can be segregated into following activities:
1. Arrangement of fund 1 week
2. Obtaining licenses both for restaurant and liquor business 1week
3. Finalization of the floor 1 week
4. Building ger 4 weeks
5. Interior 2 weeks
6. Other fixture procurement and installations 1 week

Table 20 Gantt Chart

Activity Week Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
1
Arrangement of
fund
Obtaining
licenses both for
restaurant and
liquor business
Finalization of
the floor
Building ger
Interior
Other fixture
procurement and
installations
Menu designing
Printing work
Designing
advertisement
and promotional
activities
Organizing a
complementary
event for launch
of the restaurant
Inauguration of
the restaurant

5.3 Discussion of critical Success/failure factors
Critical success and failure factors for entrepreneurial success in the restaurant
business are very important to be considered as restaurant functions in a complex business
environment. This business line is very sensitive and has the highest failure rate among other
business start-ups. For flourishing in the restaurant industry, the critical success and failure
factors must be taken into consideration by any entrepreneur (Joseph, n.d.).
Critical success and failure factors for the proposed business plan are given as below
(The Center for Hospitality Research of C ornell University, 2008):
Strategic choices
Strategic choices like location of the restaurant, business plan, positioning and
business concept, target market, competitive strategies (differentiation) and value of firm are
critical for the success of the business. This is because; all these decisions or choices define
the business nature and characteristics. Decisions regarding these must be backed by a
rigorous analysis so as to avoid serious consequences.
Competitive factors
Competitive factors such as restaurant density or competitive intensity in the market,
comprehension of the competitive forces and product relevance plays an important role in
any business’ success story.
Marketing
Basically marketing aims at recognition of demand and satisfying the demand
profitably. For this, restaurant must have marketing abilities, good customer relationship and
community involvement. Pricing plays a critical role for success so firm must stick to the
value delivery concept.
Resources and capabilities
Firm size, financial capital, profitability, internal controls, organizational culture,
efficiency, product quality and consistency, service levels, competence of employees,
employee relationships, employee turnover rate etc are the critical factors from the resource
and capability perspective.
All of the above described critical factors should be taken care of for the success of
the proposed restaurant plan.

APPENDICES
Opinions of you
Mongolia tourists! For making your tour more pleasant with a new food house,
A is following you where you go in Mongol. For offering the best menu to
satisfy our customers, we need your comments on the questions below.
Your help in answering these questions will be highly appreciated!

Q. 3. How was your food experience during the trip?
Q. 4. Have you missed something there terribly?

Q. 5. Style of cuisine you prefer
(Tick a maximum of three as appropriate)
Modern Italian Mongolian Indonesian
Mediterranean Japanese British European
Thai French Indian German
Other (please specify)..................................................................................
Q. 6. What has been your normal spending for food at Mongolia?

A. £15~£20 per head
B. £20~£25 per head
C. £25~£30 per head
D. Over £30 per head
Q. 6. How did you made payment for your food during your trip?
Q. 7. A new restaurant is going to be opened in Ulaanbaatar. In this restaurant, customer

will be able to enjoy its favorite cuisine in the Mongolian cultural ambience. Besides, one can
enjoy liquor of different region in the bar section of the restaurant. Payments can be made
through your countries debit cards. What is your opinion regarding this?
Q. 8. Do you have any other comments? If so, please state here:
Thanks for consideration!

REFERENCES
Books and Journals
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Companies. Boston, Massachusetts: Harvard Business School.
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Capital Budgeting: Financial appraisal of investment projects.

McKeever, M., 2012. How to write a Business Plan. 11th ed. USA: TERRI HEARSH.
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Publishing.
Sharon L. Fullen, S. L., 2004.

Opening a Restaurant or Other Food Business starter Kit.
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Woudstra, A., and Adria, M., 2003.

Organizing for the new network and virtual forms of
distance education: Handbook of distance education. Mahwah, NJ: Erlbaum.
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City Guide - Ulaanbaatar – Restaurants
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[Accessed 21st October 2012].
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<http://www.prenhall.com/behindthebook/0132294389/pdf/Zimmerer_CH04.pdf>.
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at:<http://www.numbeo.com/cost-of-
living/city_result.jsp?country=Mongolia&city=Ulaanbaatar> [Accessed 22nd October
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at: <http://www.doingbusiness.org/data/exploreeconomies/mongolia/dealing-with-
construction-permits/>. [Accessed 20 th October 2012].
Developmental Biology. 2010.Ulaanbaatar foundation , [pdf] 28th March. Available at:

<http://ulanbatorfoundation.org/UBF/CaMMP%20Program%20News_files/Hospital_
Proposal.pdf>. [Accessed 22 nd October 2012].
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<http://www.pwc.com/en_MN/mn/publication/assets/doing-business-in-
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out/what-is-strategic-analysis> [Accessed 22 nd October 2012].
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http://www.ganttchart.in/>. [Accessed on 20 th July 2012].
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10th October 2012].
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<http://www.griffinhammis.com/publications/Assistance_not_Assessment.pdf>.
[Accessed 20th October 2012].
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at:<http://www.happymongolia.net/ger-export.html> [Accessed 22 nd October 2012].
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<http://www.mongabay.com/reference/country_studies/mongolia/ECONOMY.html>.
[Accessed 24th October 2012].

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<http://www.abilitiesfund.org/resources/feasibility_101.php>. [Accessed 22 nd October
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BIBLIOGRAPHY
http://www.numbeo.com/cost-of-living/city_result.jsp?country=Mongolia&city=Ulaanbaatar
http://forum.ls-rp.com/viewtopic.php?f=614&t=225776
http://www.mongolian-ways.com/culture.htm
http://www.bplans.com/fast_food_restaurant_business_plan/financial_plan_fc.php#.UIUTw



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Business Plan: Opening a restaurant in

Submitted on: 26 th Oct 2012

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1.1 Rationale for the Business idea ................................................................................... 1

1.2 Scenario Chosen .......................................................................................................... 2

1.3 Aims and objectives of the work ................................................................................. 3

1.4 Structure of the work ................................................................................................... 4

CHAPTER 2: THE BUSINESS CONCEPT ............................................................................. 5

2.1 Description of the business idea .................................................................................. 5

2.2 Mission ........................................................................................................................ 5

2.3 Vision .......................................................................................................................... 6

2.5 The Ambience ............................................................................................................. 7

2.6 Positioning ................................................................................................................... 9

2.7 Scale and growth anticipation ..................................................................................... 9

2.8 Start-up summary ...................................................................................................... 10

CHAPTER 3: FEASIBILITY ANALYSIS ............................................................................. 16

3.1 Primary Market research ........................................................................................... 16

3.2 Secondary Market Research ...................................................................................... 18

3.3 Feasibility .................................................................................................................. 18

3.1.1 Product/service ................................................................................................... 18

3.1.2 Economy, Industry and Place ............................................................................ 20

3.1.3 Organizational Feasibility .................................................................................. 22

3.1.4 Financial Feasibility ........................................................................................... 23

3.4 Resource requirement Evaluation ............................................................................. 31

CHAPTER 4: STRATEGIC ANALYSIS AND BUSINESS MODEL ................................... 32

4.1 Strategic analysis of Business Idea ........................................................................... 32

4.2 Value chain and SWOT............................................................................................. 33

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4.4 Business model .......................................................................................................... 34

CHAPTER 5: BUSINESS PLAN ............................................................................................ 36

5.1 Overall assessment of Business Development Proposal ........................................... 36

5.2 Business Plan Schedule ............................................................................................. 36

5.3 Discussion of critical Success/failure factors ............................................................ 38

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1.2 Scenario Chosen

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1.3 Aims and objectives of the work

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2.1 Description of the business idea

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2.5 The Ambience

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Figure 1 Table arrangements in the A

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Figure 2 Interior of the restaurant gers.

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2.7 Scale and growth anticipation

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2.8 Start-up summary

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