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Feasibility Study Final Draft

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Market Feasibility
Restaurants and Fast food chains are present everywhere in Iloilo City and there are already competitors present in the prospected area at Plaza Libertad, Iloilo City. But food is a basic necessity and no matter what form, it will always be a major commodity. Since Grillers Oyster House offers a product that is a necessity, the demand for its product is inelastic and thus customers chances of buying the product is high. Customers usually take into consideration some factors in choosing a restaurant.

These factors include, but are not limited to: a) quality of food/services offered, b) price and c) location. Often, there are more people than not who prefer or who need to dine out rather than make their own meals. In the Plaza Libertad area for example, more people are now dining out for lunch or for special occasions. The expansion of Grillers Oyster House is to meet the growing demand in the food industry. It aims to capture the market in the Iloilo City Proper where a considerable number of residents, students and employees are located.

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Technical Feasibility
Griller’s Oyster House will be conveniently located in Plaza Libertad, Zamora Street, right beside BPI Plaza Libertad (BPI Iloilo Main) branch just in front of the Plaza. The area is surrounded by many government, business and commercial districts and is only a short distance away from Downtown Iloilo. It will also be within reach of one of its sources for raw materials, Iloilo Central Market.

The restobar is proposed to occupy a 100-square meter space in the building beside BPI. The original interior and ambiance will still be retained, save for the flooring which will be changed into red-stone floor tiles. The total cost for equipment, sound reinforcement system, kitchenware, furniture and fixtures and miscellaneous items is estimated to be P 463,691.59, thus making estimated total investment cost to be P957,480.

Financial Feasibility
The projected financial statements consist of the projected Income Statement, Balance Sheet, Statement of Cash Flows and Notes to the financial statement, all to cover a period of five years. The first year will be broken down into monthly projections.

Based on the projected financial statements, the proposed restaurant will have Return on Investment (ROI) of 3% in its first year of operation and 12%, 21%, 31% and 42% in its second, third, fourth and fifth years of operation respectively. The payback period is 4.35 years using the traditional method and 5.45 using the discounted payback method.

Organization and Management Feasibility
The proprietor will set the direction for the business and is responsible for overall planning and strategizing. The general manager will be responsible for supervising the finances of the restobar, overseeing daily operations and procurement for the materials needed in the restobar. Before operation begins, the business will need to hire 12 employees: one General Manager, Supervisor, Bookkeeper, Chef, Head Waiter, Cashier, Assistant Cook,
Dishwasher, Dispatcher, two waiters and a part-time Utilities person.

Social and Economic Feasibility

The social aspect is concerned with the impact of the project relative to employees, lenders, customers and government and their agencies. Griller’s Oysters House will fulfill its social responsibility to these groups through its action programs, policies, adherence to government rules and regulations and quality service at affordable prices. The economic aspect covers the effect of new business to the economy in terms of job opportunities and job worth. The following are the economic effects of putting up new business in a new location: employment creation, improvement of quality of life, contribution to equitable distribution of income, utilization of resources and bringing social benefits through the government.

Legal and Taxation Feasibility
The proposed restaurant business shall comply with all the necessary legal requirements needed prior and during the operation of the business. The various documents, certificates and business plates required by the Government and its agencies such as BIR, SSS, Philhealth, PAG-IBIG and DTI need to be processed and completed before Griller’s Oyster House can legally and rightfully operate.

CHAPTER II
MARKETING ASPECT
Market and Demand
Restaurants and Fast food chains are present everywhere on Iloilo City and there are already competitors present in the prospected area at Plaza Libertad Iloilo City. Nevertheless these competition, Grillers Oyster House offers a different type of product (seafood) compared to the other competitors. Since Grillers Oyster House offers a product that is a necessity, the demand for its product is inelastic and thus customers chances of buying the product is high. Target Market

The expansion of Grillers Oyster House aims to capture the market in the Iloilo City Proper where a considerable number of residents, students and employees are located. (21-50 years old, class A or class B people, college students and young professionals, employees) Behavior Factors

Survey shows that 43.75% of our respondents eat outside on special occasions or simply for lunch or dinner at least once a week either with families, friends, or alone. The survey also shows that those who are gainfully employed or those between the age brackets of 21-50 have a bigger spending habits compared to those who are not, but this does not stop them from dining to restaurants.

Market Needs
The expansion of Grillers Oyster House is to meet the growing demand in the food industry. According to the survey that we have conducted, customers usually take into consideration some factors in choosing a restaurant. These factors are summarized into the following: 1. Quality of food and services offered

Customer loyalty is very important in an industry where competition is very tight. In order to be loyal to a certain restaurant, consumers are looking for good quality of food and services which could satisfy their diverse preferences. Distinctive flavor and taste, aesthetical food presentation, wide variety of menu and cleanliness could make consumers prefer your restaurant than your competitors.

2. Price
Another factor which can attract customers is the price. Although affordability is a subjective matter, customers surely want to be satisfied with the food that they are paying for. According to them, prices should be reasonable and should be matched with the quality of food that a restaurant offers.

3. Location
The location of a restaurant is also another factor which consumers consider before going out. Due to increasing prices for transportation customers want to eat out where it is near their house or work place to save the unnecessary transportation expense. In addition to accessibility and convenience of location, customers also prefer a restaurant that is clean, warm and welcoming: A place fit for eating with family and friends. SWOT Analysis

Strengths
Grillers Oyster House offers a very relaxing ambiance fit for dining There is high quality of food and services
Food and services offered are at a very reasonable price
The food offered is continuously innovated to suit the taste of consumers The food presentation is aesthetically pleasing

The prospective location for expansion is very convenient and accessible for customers Only fresh ingredients are used

Mode of financing for the business does not heavily rely on debts Just in time system is implemented, thus, the spoiled inventory is minimal The suppliers are usually friends of the owner and they give many discounts Weaknesses

The restaurant is not yet well- established and well-known
The restaurant has poor marketing strategies
There is limited cash
Opportunities
Food is a basic need of human beings, thus demand for food is consistently high The restaurant industry is fast growing
Commercial establishments, schools, banks and government offices are near the prospective location There is a growing trend nowadays that people like to dine out with family and friends for reasons such as convenience and group bonding Survey shows that people from the working class dine out at least twice a week According to the survey conducted, Ilonggos love to eat sea food and Filipino food Grillers is the only restaurant along the area who offers grilled products and sea food products The Iloilo City Hall will be transferred back to Plaza Libertad near the prospective location of Grillers The Annual Dinagyang Festival is celebrated in Freedom Grandstand, a block away from the prospective site Oysters and sea food are abundant in Western Visayas, thus a consistent and fresh supply of it can be guaranteed. Threats

There is a tight competition in the restaurant industries
Many local eateries and fast food chains are also situated along the area who offer lower prices Iloilo City has low power supply
Panay Electric company charges high rates for electricity
Frequent occurrence of brown outs and blackouts, thus there is a need for generators Occurrence of red tides and e-coli infection for marine products Occurrence of Calamities
Inflation
Marketing Strategies
Product/Services
a. The food presentation must be aesthetically appealing to customers b. Food must be palatable
c. Maintain the uniqueness if products offered (Grillers will be the only restaurant around the area that offers grilled food and seafood) d. Wide variety of menu to cater diverse preference of different consumers e. Unique menu

f. Open reservations for parties

Place
a. Place must be sanitary (Clean and well kept)
b. Convenient and accessible
c. Maintain good ambiance for dining

Price
a. Offer combo meals
b. Use cost plus pricing
c. May also implement odd pricing
d. First few months – promotional pricing ( offer prices slightly lower than competitors)
e. 6 months after – competitive prices (prices same as competitors) f. If customer loyalty is obtained, you can gradually increase prices

PROMOTION
1. Verbal advertising – friends, family, relatives of owner 2. Radio ad, posters, and print ads – first few months introductory stage

Product Positioning
Grillers, where oysters play a little twist
Taste oysters in another way! Only at grillers
Grillers Oyster house, grilling soon at Plaza Libertad Iloilo City It’s flavorful! It’s delicious! It’s grilled only at Grillers!

3. Participate in Dinagyang food festival, October food festival etc.

CHAPTER III
TECHNICAL ASPECT
Products and Services
Dishes
Aside from its various succulent oyster dishes, Griller’s Oyster House offers its patrons their choice of classic Ilonggo favourites. Their menu is intended to fit with the general local tastes. Customers may choose to have their chicken, pork, beef or seafood grilled, broiled, fried or stewed. Recently, the restaurant also incorporated noodle, soup and shellfish dishes into its menu. In keeping with its objective to serve customers with tasty, quality and affordable meals, Griller’s also began serving value meals. Attached to the appendix is a list of the dishes that it currently serves in its branch in Small Ville.

Beverages
Griller’s Oyster House offers non-alcoholic (i.e. soft drinks such as Pepsi Cola and Mountain Dew, Iced Teas) and alcoholic beverages (San Miguel Beer, Manila Beer, and Red Horse) on its menu.

Raw Materials and Suppliers
Griller’s Oyster House multi-sources its raw materials. Oysters and other sea foods are to be delivered fresh every morning from a supplier in Roxas City while meats will be bought locally from a meat shop in Metropolis Avenue, Iloilo. On the other hand, poultry meat will be bought from separately another supplier. Condiments (i.e. garlic, onions, leeks, etc.) will be bought wholesale from Iloilo Central Market. Beverages are distributed by local distributors, notably Pepsi Co. and Manila Beer. As with the other branches, rice will be supplied by Iloilo Panay Rice Mill.

The table below shows an estimate of the prices of raw materials per unit measure:

Oysters (Talaba)
Oysters, also known as talaba in local dialect, are a good source of animal protein. Oyster meat is delicious and is made into special dishes in hotels and restaurants. But they can be as tasty eaten as they are. According to the manager of the Small Ville Branch, Griller’s suppliers deliver them sacks of fresh talaba from Roxas City early every morning. However, Roxas City isn’t the only place to obtain fresh oysters. Alternatively, the business can also be supplied oysters from oyster farms in Sabi-an Bay, Capiz and Banate Bay, Iloilo; both of which are naturally abundant in oysters according to a recent report produced by the Fisheries and Aquaculture Department titled Status of Oyster Culture in Selected Asian Countries.

Meat, poultry, fish and vegetables
One alternative for the business is to source some of its meats, fish and vegetables commodities in Iloilo Central Market, located in Downtown Iloilo City, bounded by Iznart – Guanco – Aldeguer – Rizal Streets which offers its products at cheaper wholesale and retail prices. Below is a table showing a list of selected agricultural commodities and their estimated prevailing retail and wholesale prices in Iloilo City for the December 2010 and July 2011:

Location
The proprietor is planning to expand his business in Plaza Libertad, near the new Iloilo City Hall which is set to open late this year or early next year in 2012. He intends for the store to be conveniently located right beside BPI Plaza Libertad (BPI Iloilo Main) branch just in front of the Plaza, alongside two food chains, Coffee Break and Green Mango. Aside from the unfinished city hall buildings, the surrounding area of the plaza also includes banks, government offices, schools, ancestral houses and the iconic Iloilo Masonic Temple Building, located in direct opposite of the Catholic Church. Among the commercial, government and educational buildings which surround the area are: Development Bank of the Philippines, GSIS, SSS, San Jose Catholic School, Iloilo Society Commercial Inc. and Landbank of the Philippines.

Floor Plan
The area is estimated to be 100 square meters. It will be divided into four (4) areas, each with their specific purpose. On the upper left corner of the space is the Kitchen Area. This area will be where the orders will be cooked and dispatched from. It will contain the kitchen equipment and various kitchen wares as well as the stainless steel griller. Adjoining the kitchen is the bar, which will also function as the take away counter. This area will display the wines and other liquors that are offered in the menu. The General Manager and Cashier will be stationed in this area. On the upper right side are the Washrooms, separated according to sex: Male and Female. The center of the space will cover the dining area. Eight 4-seater tables and two 6-seater tables are estimated to fit that area. Additionally, four 8-seater tables will be placed outside to accommodate customers who want to dine al fresco. Utilities and Disposal

The restaurant will be powered by Iloilo Electric Cooperative (ILECO) and the electricity expense, together with the telephone, will be charged to Utilities Expense account. Griller’s Oyster House will abide with the R.A. 9003 Ecological Solid Waste Management Act of 2000, that is proper segregation and disposal of waste and conform to the schedule of the garbage collectors.

OPERATIONAL FLOWCHART- Daily Operation

Equipment, Sound Reinforcement System, Kitchenware, Furniture and Fixtures and Miscellaneous Estimates

CHAPTER IV
MANAGEMENT ASPECT
Business Type
Griller’s Oyster House, Plaza Libertad will be a single proprietorship business. As a restaurant, it is a service-type business. The capital of the business will be partially financed by the owner and partially financed from loan borrowings.

Officers and Key Personnel Job Descriptions
JOB TITLE
REQUIRED
JOB DESCRIPTION
General Manager
1
Responsible for supervising the finances on a day- to- day basis, overseeing daily operations and for the procurement of the materials needed to keep the operation going.

Supervisor
1
Responsible for directing the work of personnel, monitoring their work and taking corrective actions when necessary. Bookkeeper
1
Responsible for maintaining and keeping safe the books and ledgers. He shall record the daily money transactions including revenue and expenses and maintain general ledgers for all accounts and ensure that all the figures are in order.

Chef
1
Responsible for the preparation for the menu and directing the kitchen staff in kitchen activities and maintenance, food presentation and keeping track of supplies and ingredients. Head Waiter
1
Responsible for directing and monitoring the work of waiters. Responsible for receiving and seating customers. Assistant Cook
1
Responsible for assisting the Chef in preparing and bringing together meals and updating the Chef of the inventory of hand. Cashier
1
Responsible for handling cash collection, credit card transactions and other means of defrayal. Waiter
2
Responsible for welcoming, seating and taking orders from customers. They will receive orders from customers and issues order slips to the kitchens. At the end of the meal, they will bill customers, receive payment and give them the official receipt with change, if any. They shall also be in charge of cleaning tables and arranging the chairs for the next customer. Dishwasher

1
Responsible for washing dirty kitchenware and generally keeping the work stations clean and sanitary. Dispatcher
1
Responsible for receiving the order slips from the waiters and informing the Chef of the orders. After the food is cooked, they receive the order and dispatch it to the restaurant.

Job Title and Qualifications
JOB TITLE
QUALIFICATIONS
SALARY
EMPLOYMENT STATUS
General Manager
Male or Female
25-35 years old
Graduate of business-related course
At least 2 years work experience
Pleasing personality and excellent work ethics
Good Leadership and motivational skills
Has at least basic knowledge in accounting
Excellent oral and communication skills

P15,000/month

FULL TIME

Supervisor
Male
22-28 years old
College graduate
At least 1 year work experience,
Pleasing personality and excellent work ethics
Shrewd
Good Leadership and motivational skills
Good communication Skills
Excellent customer service skills

P9,000/month

FULL TIME
Bookkeeper
Female
24-27 years old
Accountancy Graduate or Management Accountancy graduate
Pleasing personality and excellent work ethics
Great understanding of bookkeeping and other accounting related fuctions Can work with minimal supervision
Able to multi-task and work under pressure

P9,000/month

FULL TIME
Chef
Male or Female
At least 23 years old
At least a graduate of 2 year vocational course in the area of food service 1 year work experience
Experience in quantity food preparation
Able to multi-task, can works fast and under pressure

P9,000/month

FULL TIME
Head Waiter
Male
At least 5’5
At least High School Graduate
Pleasing personality and good oral communication skills
Excellent customer-service Skills
Good leadership skills

P8,000/month

FULL TIME

Assistant Cook
Male or Female
At least 21 years old
Has experience in working in kitchens and/or catering services Sufficient knowledge in food service
Can work fast and under pressure

P8,000/month

FULL TIME
Cashier
Female
21-28 years old
At least a college graduate
Pleasing personality and excellent work ethics

P8,000/month

FULL TIME

Waiters
Male/Female
At least 5’5 for Males
At least 5’3 for Females
21-20 years old
At least a High School Graduate

P39.59/hour

FULL TIME

Dishwasher
Male/Female
20-28 years old
At least a High School Graduate
Can work fast and efficiently

P39.59/hour

FULL TIME
Dispatcher
Male or Female
20-28 years old
At least High School Graduate
Able to Multi-task
Good oral communication skills

P39.59/hour

FULL TIME
Utilities Person
Male
20-40 years old
Prompt
Able to Multi-task
Can work fast and efficiently

P39.59/hour

PART TIME

Standard salary rates for each position are maintained. Waiters and utility personnel are paid a per hour basis based on the minimum wage as ordered by WAGE ORDER No. RB VI-15 PROVIDING FOR THE NEW MINIMUM WAGE RATES (ILOILO CITY. The rate per hour shall accordingly increase or decrease each year on that basis. Insurance and health benefits are also included and income tax withheld by the employer. The tenure of employment is dependent on the performance rendered which is evaluated every six (6) months. Promotion will be based on merits length of service with the company.

Organizational Chart

CHAPTER V
FINANCIAL ASPECT
Summary of Office Supplies, Equipment, Sound Reinforcement System, Kitchenware, Kitchen Equipment, Furniture and Fixtures, Leasehold Improvements and Miscellaneous Estimates Office Supplies P 2,000

Office Equipment 14,500
Store Equipment 15,830
Kitchen Equipment178,685
Kitchenware 37,365
Leasehold Improvements254,900
Sound Reinforcement System 50,000
Furniture and Fixtures204,200
Cash 100,000
Start-up Inventory _100,000
Total Investment Cost P957,480

General Assumptions
Grillers Oyster House has the following assumptions applied to its financial aspect: Projected Financial Statements include Income Statement, Balance Sheet and Cash Flow Statement. It is prepared in a yearly basis for 5 years starting 2011. A monthly income statement ending December 31, 2012 is also prepared. A mark up of 50% on Net Sales is used

Sales are composed of sales from daily operations only
Sales for 2011 are projected by estimating the average customer per day and the average revenue per customer Sales are projected to increase by 10% per year attributable to increasing market share and increase in population Cost of Sales and Operating Expenses other than depreciation are expected to increase by 4% per year Noncurrent assets are depreciated on a straight line basis with an estimated life of 8 years Inventory includes ingredients, seasoning and other materials used in food production as well as drinks and beverages on hand Accounts payable at year end is estimated at 10% of year-end inventory Year-end inventory is maintained at 5% of Cost of Goods Sold Cash flow is expected to increase by 10% after year 5

Repairs and Maintenance is estimated to be 10% of depreciation expense Office supplies are maintained at 1% of year-end inventory
Furniture and Fixtures is composed of tables and chairs
Kitchen Equipment is composed of Freezers, Coolers, Dispensers, Rice Cooker, Pressure Cooker, Griller and Deep Fryer Store Equipment is composed of electric fans, ceiling fans, exhausted fans and hanging lamps Kitchenware is composed of spoons, fork, plates, glasses, trays, bowls and other kitchen tools Leasehold Improvements is composed of the renovation costs for wash area, kitchen, wash room, bar and Dining area and other improvements in the rented space Office Equipment refers to a cash register

Miscellaneous Expenses refers to uniforms for employees, table napkins, toothpick, straw, cleaning facilities and other items not included on the line item in the expenses section Salaries and wages include the salaries of cashiers, bookkeeper, chefs, waiters, manager and other part-time employees Dues and contributions include the employer share of Phil Health, SS and Pag-ibig contributions Except for salaries and wages, dues and contributions and depreciation, other operating expenses are based on estimates Financial ratios include Return on Investment for 5 years, the traditional payback period and the discounted payback period A cost of capital of 12% is used in computing for financial ratios The loan payable is estimated to be paid uniformly in 5 years and the interest rate used is 12% Income tax is computed using the tax table provided by the BIR for sole proprietorship businesses

FIVE-YEAR PROJECTED FINANCIAL STATEMENTS
Grillers Oyster House

Projected Statement of Income (Monthly)

Jan
Feb
Mar
Apr
May
Jun
Gross Sales

403,000.00
377,000.00
382,850.00
390,000.00
382,850.00
370,500.00
Less: 12% VAT

48,360.00
45,240.00
45,942.00
46,800.00
45,942.00
44,460.00
Net Sales

354,640.00
331,760.00
336,908.00
343,200.00
336,908.00
326,040.00
Less: Cost of Goods Sold
177,320.00
165,880.00
168,454.00
171,600.00
168,454.00
163,020.00
Gross Profit

177,320.00
165,880.00
168,454.00
171,600.00
168,454.00
163,020.00

Less: Operating Expenses

Salaries and Wages

96,968.00
94,124.00
96,968.00
96,020.00
96,968.00
96,020.00
Dues and Contributions
6,498.50
6,498.50
6,498.50
6,498.50
6,498.50
6,498.50
Utilities Expense

18,000.00
18,000.00
18,000.00
18,000.00
18,000.00
18,000.00
Repairs and Maintenance
770.47
770.47
770.47
770.47
770.47
770.47
Office Supplies Expense
1,297.47
1,297.47
1,297.47
1,297.47
1,297.47
1,297.47
Depreciation Expense

7,869.58
7,869.58
7,869.58
7,869.58
7,869.58
7,869.58
Rent Expense

27,500.00
27,500.00
27,500.00
27,500.00
27,500.00
27,500.00
Other Taxes, Fees and Licenses
5,454.83
454.83
454.83
454.83
454.83
454.83
Miscellaneous Expenses
5,640.00
1,740.00
1,740.00
1,740.00
1,740.00
1,740.00
Total Operating Expenses
169,998.85
158,254.85
161,098.85
160,150.85
161,098.85
160,150.85
Income Before Interest and Taxes
7,321.15
7,625.15
7,355.15
11,449.15
7,355.15
2,869.15
Less: Interest Expense

5,000.00
5,000.00
5,000.00
5,000.00
5,000.00
5,000.00
Income Before Tax

2,321.15
2,625.15
2,355.15
6,449.15
2,355.15
(2,130.85)
Less: Income Tax

116.06
131.26
117.76
322.46
117.76
0.00
Profit/(Loss)

2,205.09
2,493.89
2,237.39
6,126.69
2,237.39
(2,130.85)

Grillers Oyster House

Projected Statement of Income (Monthly)

Jul
Aug
Sept
Oct
Nov
Dec
Gross Sales

362,700.00
362,700.00
370,500.00
403,000.00
390,000.00
423,150.00
Less: 12% VAT

43,524.00
43,524.00
44,460.00
48,360.00
46,800.00
50,778.00
Net Sales

319,176.00
319,176.00
326,040.00
354,640.00
343,200.00
372,372.00
Less: Cost of Goods Sold
159,588.00
159,588.00
163,020.00
177,320.00
171,600.00
186,186.00
Gross Profit

159,588.00
159,588.00
163,020.00
177,320.00
171,600.00
186,186.00

Less: Operating Expenses

Salaries and Wages

96,968.00
96,968.00
96,020.00
96,968.00
96,020.00
96,968.00
Dues and Contributions
6,498.50
6,498.50
6,498.50
6,498.50
6,498.50
6,498.50
Utilities Expense

18,000.00
18,000.00
18,000.00
18,000.00
18,000.00
18,000.00
Repairs and Maintenance
770.47
770.47
770.47
770.47
770.47
770.47
Office Supplies Expense
1,297.47
1,297.47
1,297.47
1,297.47
1,297.47
1,297.47
Depreciation Expense

7,869.58
7,869.58
7,869.58
7,869.58
7,869.58
7,869.58
Rent Expense

27,500.00
27,500.00
27,500.00
27,500.00
27,500.00
27,500.00
Other Taxes, Fees and Licenses
454.83
454.83
454.83
454.83
454.83
454.83
Miscellaneous Expenses
1,740.00
1,740.00
1,740.00
1,740.00
1,740.00
1,740.00
Total Operating Expenses
161,098.85
161,098.85
160,150.85
161,098.85
160,150.85
161,098.85
Income Before Interest and Taxes
(1,510.85)
(1,510.85)
2,869.15
16,221.15
11,449.15
25,087.15
Less: Interest Expense

5,000.00
5,000.00
5,000.00
5,000.00
5,000.00
5,000.00
Income Before Tax

(6,510.85)
(6,510.85)
(2,130.85)
11,221.15
6,449.15
20,087.15
Less: Income Tax

0.00
0.00
0.00
622.12
322.46
1,508.72
Profit/(Loss)

(6,510.85)
(6,510.85)
(2,130.85)
10,599.04
6,126.69
18,578.44

Grillers Oyster House

Projected Statement of Income (Yearly)

2012
2013
2014
2015
2016
Gross Sales

4,618,250.00
5,080,075.00
5,588,082.50
6,146,890.75
6,761,579.83
Less: 12% VAT

554,190.00
609,609.00
670,569.90
737,626.89
811,389.58
Net Sales

4,064,060.00
4,470,466.00
4,917,512.60
5,409,263.86
5,950,190.25
Less: Cost of Goods Sold

2,032,030.00
2,235,233.00
2,458,756.30
2,704,631.93
2,975,095.12
Gross Profit

2,032,030.00
2,235,233.00
2,458,756.30
2,704,631.93
2,975,095.12

Less: Operating Expenses

Salaries and Wages

1,156,980.00
1,203,259.20
1,251,389.57
1,301,445.15
1,353,502.96
Dues and Contributions

77,982.00
81,101.28
84,345.33
87,719.14
91,227.91
Utilities Expense

216,000.00
224,640.00
233,625.60
242,970.62
252,689.45
Repairs and Maintenance

9,245.63
9,615.45
10,000.07
10,400.07
10,816.07
Office Supplies Expense

15,569.61
14,856.42
15,912.69
16,542.78
17,198.22
Depreciation Expense

94,435.00
94,435.00
94,435.00
94,435.00
94,435.00
Rent Expense

330,000.00
343,200.00
356,928.00
371,205.12
386,053.32
Other Taxes, Fees and Licenses

10,457.96
10,876.28
11,311.33
11,763.78
12,234.33
Miscellaneous Expenses

24,780.00
25,771.20
26,802.05
27,874.13
28,989.10
Total Operating Expenses

1,935,450.20
2,007,754.83
2,084,749.64
2,164,355.80
2,247,146.37
Income Before Interest and Taxes

96,579.80
227,478.17
374,006.66
540,276.13
727,948.76
Less: Interest Expense

60,000.00
48,000.00
36,000.00
24,000.00
12,000.00
Income Before Tax

36,579.80
179,478.17
338,006.66
516,276.13
715,948.76
Less: Income Tax

3,486.97
32,369.54
76,402.00
130,533.88
198,422.58
Profit/(Loss)

33,092.83
147,108.63
261,604.66
385,742.24
517,526.18

Grillers Oyster House

Projected Statement of Cash Flows (Yearly)

2012
2013
2014
2015
2016

Operating Activities

Net Income

33,092.83
147,108.63
261,604.66
385,742.24
517,526.18

Add: Depreciation

94,435.00
94,435.00
94,435.00
94,435.00
94,435.00

Total

127,527.83
241,543.63
356,039.66
480,177.24
611,961.18

Changes in Working Capital

(Increase)/Decrease in Inventory
(1,601.50)
(10,160.15)
(11,176.17)
(12,293.78)
(13,523.16)

(Increase)/Decrease in Office Supplies
983.99
(101.60)
(111.76)
(122.94)
(135.23)

Increase/(Decrease) in Accounts Payable
10,160.15
1,016.02
1,117.62
1,229.38
1,352.32

Net Changes in Working Capital
9,542.64
(9,245.74)
(10,170.31)
(11,187.34)
(12,306.08)

Total Operating Cash Flows
137,070.47
232,297.89
345,869.35
468,989.90
599,655.10

Investing Activities

0.00
0.00
0.00
0.00
0.00

Financing Activities

Loan Payment

(100,000.00)
(100,000.00)
(100,000.00)
(100,000.00)
(100,000.00)

Total Cash Flows

37,070.47
132,297.89
245,869.35
368,989.90
499,655.10

Cash – Beginning

100,000.00
137,070.47
269,368.36
515,237.71
884,227.62

Cash – End

137,070.47
269,368.36
515,237.71
884,227.62
1,383,882.72

CHAPTER VI
LEGAL AND TAX ASPECT

LEGAL ASPECT
Before Griller’s Oyster House can fully operate, there are certain legal requirements that should be complied with. Also included in this chapter are the licenses that the business shall abide with during the course of its existence.

Mayor’s Permit
REQUIREMENTS FOR BUSINESS PERMIT
Before processing of application of Business Permit the following must first
be compiled and submitted. Barangay Clearance
Comm. Tax Certificate/Corporate Tax
SSS Registration –Memo Circular No. 147, S-1993 of the DILG Fire Certificate
Official Receipts (OR) of 4th quarter (prior year) business tax payment. Real Property Tax OR for 4th quarter.
Certificate of Occupancy for new building.
Other Requirements
For restaurants, canteens and other businesses involved with food and/or handling or processing, a Sanitation Permit to be secured from the City Health Office.

Bureau of Internal Revenue (BIR)
The BIR is attached agency of the Department of Finance. It is responsible in the assessment and collection of all the internal revenue taxes, fees, and charges. It can also enforce forfeitures, penalties, and fines in connection to its responsibility in the preceding statement. The agency also give effect to and administer supervisory and police power conferred to it by the National Internal Revenue Code (NIRC) and special loss.

Requirements for application of Tax Identification Number (TIN): Accomplished Form 1901
DTI Certificate of Registration of Business Name
Mayor’s Permit
Registration Fee of P500.00, P15.00 for the Certification Fee and P15.00 for the Documentary Stamp Tax The RDO shall issue the Certificate of Registration (Form 2303)

Procedures
a) Accomplish BIR Form 1901 and submit the same together with the documentary requirements to the RDO having jurisdiction over the place where the head office and branch, respectively. b) Pay the Annual Registration Fee (P500.00) at the Authorized Agent Banks (AABs) of the concerned RDO. c) Pay Documentary Stamp Tax (DST) (loose DST / BIR Form 2000* for DST on Contract of Lease, etc). Present proofs of payment. d) Submit requirements for ATP and registration of books of accounts. e) Attend the taxpayer’s initial
briefing to be conducted by the RDO concerned for new registrants in order to apprise them of their rights and duties/responsibilities. f) The RDO shall then issue the Certificate of Registration (Form 2303) together with the “Ask for Receipt” notice, Authority to Print and Books of Accounts.

Deadline
› All Individuals engaged in trade or business shall accomplish and file the application on or before the commencement of business operation or from the day the first (1st) transaction occurred or within thirty (30) days from the application with LGU for issuance of Mayor’s Permit/Professional Tax Receipt (PTR), which ever comes earlier.

Social Security System (SSS)
SSS administers two programs. The Social Security Program provides replacement income for workers in times of death, disability, sickness, maternity and old age and funeral cash benefits to whoever shoulders the burial expenses of deceased member or pensioner. The Employees’ Compensation Program, started in 1975, provides a second compensation to the worker when the illness, death or accident occurs during work-related activities.

Requirements for registration in SSS:
SSS Forms R-1 (Employer’s Data Record) and R-1A (Initial or Subsequent List of Employees). DTI Business Permit
Mayor’s Permit
PhilHealth
Registration with Philhealth is important to private sector employers to enable them to provide social health insurance coverage to their employees. The requirements for registration are:
Employer Data Record or ER1 Form (in duplicate)
Department of Trade and Industry Registration

After processing, the employer will be issued the following: PhilHealth Employer Number (PEN) and the Certificate of Registration PhilHealth Identification Number (PIN) and Member Data Record (MDR) for concerned employees Employers shall be asked to display the Certificate of Registration in their offices as proof of registration with PhilHealth. Premiums shall be remitted to PhilHealth or at any accredited collecting bank/agent on or before the 10th day of the month following the month being paid for using the ME-5 Form. PAG-IBIG

Employer’s Data Form (EDF [FPF040])
Specimen Signature Form (SSF [FPF170])
Certified true copy of Proof of Business Existence

for Sole Proprietorship
Department of Trade and Industry (DTI) Certificate of Registration Business Permit/Mayor’s Permit

Original copies of the required documents must be presented for authentication.

Department of Trade and Industry (DTI)
Application form (c/o DTI)
2×2 Picture- 3 pcs.
Preferred names
Registration fee (P300.00)
Documentary Stamps, photocopies (P30.00)

TAXATION ASPECT
Sole proprietorship businesses are subject to graduated income tax. The taxable income of business will be the base on arriving at the correct amount of income tax. The income tax is based on the graduated income tax table shown below. Taxable Income

Tax Due
Not over P10,000
5%
Over P10,000 but not over P30,000
P500 10% of the excess over P10,000
Over P30,000 but not over P70,000
P2,500 15% of the excess over P30,000
Over P70,000 but not over P140,000
P8,500 20% of the excess over P70,000
Over P140,000 but not over P250,000
P22,500 25% of the excess over P140,000
Over P250,000 but not over P500,000
P50,000 30% of the excess over P250,000
Over P500,000
P125,000 34% of the excess over P500,000

Sale of services like restaurants, refreshments, cafes and other eating places shall be subject to 12% Value added tax of the gross receipts. Value Added Tax is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on importation of goods in the Philippines. It is also an indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services. As a taxpayer it shall be noted that the deadline for manual filing is not later than the 20th day following the end of each month. For restaurants the period for filing monthly VAT declarations through Electronic Filing and Payment System (eFPS) is 25 days following the end of the month.

Chapter VII
SOCIA-ECONOMIC ASPECT
SOCIAL ASPECT
Employees
Employees are concerned with the benefits and incentives they receive from a company. In selecting a job, they prefer companies which can assure them of financial stability and sense of belongingness in the workplace. Employees are motivated not only by cash during pay day but most importantly the intangible benefits they get which take in the form of recognition and the like. Griller’s Oyster House is an organization focused on the needs and wants not only of its customers but also of its employees as well. It has an incentive program that caters the needs of its employees. Griller’s also provides an atmosphere of good employer-employee relationship and safety working stations for the benefit of their employees. Griller’s also is an organization that is willing to hear the voices of its employees to value their opinions and recognize their capability in doing their job.

Lenders
Lenders are concerned with the capacity of the company to repay their loans in specified time. Griller’s Oyster House make it a policy to repay their loans, whether short term or long term, on or before they fall due. Customers

Customers are concerned with the satisfaction they get from the product or service they purchase. They are also concerned with the company’s stability and capacity to provide them with the products and services for a long period of time and assure them of continuing satisfaction. Griller’s Oyster House is an organization centered towards the needs and demands of its customers. They provide quality products for the customer’s satisfaction. They make sure that the food and beverages coming out of its kitchen are aesthetically pleasing when served and delicious enough when tasted to satisfy the taste and preferences of a variety of customers.

Suppliers
They are concerned when the amounts due to them will be paid when they fall due. Griller’s Oyster House assures to pay on or before the deadline to take advantage of the discount and to uphold company reputation.

Government and their agencies
They are interested in the allocation of resources and therefore the activities of the business. They need to regulate the activities of the entity, determine taxation policies as a basis for national income and similar statistics. Thus, Griller’s Oyster House will wholly abide and comply with the laws and regulation to meet the needs of government and their agencies.

ECONOMIC ASPECT
A business affects the economy in terms of creating worth and job opportunities. Worth is created by the entrepreneur who uses labor to add value to existing resources. This value is counted in the economy’s gross income and gross national product. The following are the other economic effects of putting up the business: 1. It will create employment.

Due to its expansion, Griller’s Oyster House is in need of new employees to work for them. Hiring new employees will create employment in our locality since man people will be given a job. 2. It will improve the quality of life.

Having a stable job enables the employees to attend to their needs and satisfy their wants in order to survive. 3. It will contribute to a more equitable distribution of income. With more jobs provided to the people in the town, these people have more work opportunities thus, discouraging them from resettling in other places. 4. It will utilize resources.

In the conduct of its operations, it needs raw materials to be used in the production. Thus, we may use our natural resources in our production in order to convert them into a more useful thing. 5. It will bring social benefits through the government

The resources collected by the government through taxation policies are given back to the people in the form of services, infrastructure projects, school buildings, and maintenance of peace and order.

CHAPTER VIII
CONCLUSION/RECOMMENDATION
Based on our analysis, the project is feasible because:
A significant number of people in the area prefer to dine out for lunch or special occasions on a weekly basis. The prices offered in Grillers’ menu is affordable and accessible to most professionals working in the Plaza Libertad area. The store will be located in an area surrounded by many government buildings, schools and business establishments and within short distance of its suppliers. The total investment cost is P957,480.

The projected ROI is 3%, 12% 21%, 31%, 41% for the five years respectively.
The payback period using traditional method is 4.35 years and 5.45 years using discounted payback method. Griller’s Oyster House will comply will all the government organization requirements, tax requirements and rules and regulations prior to its inception and thereafter.

Therefore, Griller’s Oyster House should push through with its expansion in Plaza Libertad.

CHAPTER IX
SENSITIVITY ANALYSIS
Our feasibility study involved projected data to determine its future market demands and sales and profits. It was developed under specific assumptions which make uncertainty an inevitable element in this study. To minimize the impact of these uncertainties, a sensitivity analysis is done to identify the changes in the factors that can greatly influence the projected results. A. Economic Factors

1. Inflation
2. Deflation
3. Economic Recession
4. Economic expansion
5. Increasing competition

B. Political Factors
1. Changes in rules and regulations or legal requirements for business 2. Labor conditions
3. Legislations which might change tax laws

C. Cultural/Social Factors
1. Highly mixed culture
2. Seasonality of demand
3. Changes in taste and preferences
4. Religious prohibition

D. Fortuitous events
1. Flood
2. Fire
3. Robbery
4. Oil spill
5. Red tide
6. E- coli contamination

E. Force majeure
1. Earthquake
2. Typhoon

F. Inaccuracy of projections

Economic factors
Inflation is primarily caused by either cost push factors or demand-pull factors. Cost-push factors are those related to the costs of production, and causes these costs of production to increase. Demand-pull factors are those factors that enable firms to increase prices because demand is increasing. Higher demand leads to higher prices. If firms pass on these increased costs to consumers, prices would increase. Increased prices will need to another round of wage increases, as workers try to protect their spending power (real incomes). As prices increase consumers tend to decrease their spending.

Deflation also brings major problems to Firms it can lead to fall in wage levels, and increasing real debt burdens (value of debts increase relative to value of assets and income). This factor discourage expenditure, as a result demand will fall, also consumers will defer purchases, waiting for the price of goods to fall further, so again reducing demand. Firms will also be nervous of investing as the return that investments will produce will be uncertain, as firms do not know how much the goods produced will be sold for. Also real debts of firms increase, pushing up the risk of failure.

The impact of recession in the business are loss of jobs, decline in real income, slowdown in industrial production and manufacturing and slump in consumer spending. As sales revenues and profits decline, the businesses will cut back on hiring new employees, or freeze hiring entirely. In an effort to cut costs and improve the bottom line, the businesses may stop buying new equipment, curtail research and development and stop new product rollouts (a factor in the growth of revenue and market share). Expenditures for marketing and advertising may also be reduced. These cost-cutting efforts will impact other businesses, both big and small. Economic growth is a long-term expansion of the productive potential of the economy. Sustained economic growth lead higher real living standards and rising employment. Competition has significant impact in business and it applies both internally and externally.

However, in one way or the other competition also implies negative impact. Because of competition, an entrepreneur is always challenged to make sure that his product or service being offered has the highest quality in order to attract more customers in his business. Continuous product and service development is always the key in assuring a constant flow of loyal customers that will drive your business to success. Competition challenges the entrepreneur to always provide cheap products and services without sacrificing its quality. Competition discourages further competition. A fellow entrepreneur competitor deters from further entering into a competition as he will battle with the present competition of quality products and lower selling price. Competition is not for the faint-hearted entrepreneur.

Political Factors
Government may impose legal rules governing the business, or may prohibit any business sector from operating to avoid illegal business operations. Local and national regulations influence how well a business can take advantage of economic opportunities and adapt to the changing economic landscape. Regulation standards affect the ability of smaller businesses to create jobs and revenue. Efficient laws on bankruptcy ensure that assets are quickly reallocated. Stable property rights and investment protection establish trust so that investors start investing again.

Cultural/social factors
Different people and different culture has different tastes and preferences. The increasing population of Koreans in the Philippines might cause some
changes in the sales volume of the restaurant.

Fortuitous events and force majeure
Many events are unavoidable beyond the control of the management such as earthquakes and typhoons. To prepare for these unforeseeable events, the building space should have an emergency exit it case these events will occur to facilitate the safety of the customers and employees.

Inaccuracy of Projections
The estimates and projections are based on the current time that this study was made and any errors and inaccuracies on the amounts may arise on the future due to this limitation.

Cite this Feasibility Study Final Draft

Feasibility Study Final Draft. (2016, May 23). Retrieved from https://graduateway.com/feasibility-study-final-draft/

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