INTRODUCTION
Rational of the project
Foods and drinks are the main nutrient sources to help us survive It is true
To sustain our bodies, it is essential to consume enough calories through food and beverages, as we cannot survive without them for more than a few days This necessity drives individuals to earn money for sustenance, highlighting the significance of the food and beverage service market Numerous restaurants cater to diverse tastes by offering a wide range of dining options, from simple dishes to gourmet experiences, each with unique services that attract various consumers However, hygiene remains a critical concern for diners, especially in public meals In many Asian cultures, including Vietnam, the tradition of sharing food from the same plate is a common practice that reflects cultural customs.
Maintaining a shared eating style within the family fosters solidarity and connection However, the demands of a busy work life often lead individuals to prioritize meals with partners for business discussions over family dinners This shift in dining habits raises concerns about health, as sharing a plate can facilitate the spread of infectious bacteria.
The economic growth of Ho Chi Minh City attracts foreigners for various reasons, with the food market being a significant aspect of their experience As a result, Vietnamese cuisine serves as a popular alternative for replenishing energy alongside their traditional meals.
The concept of opening a restaurant that blends Western and Vietnamese cuisine has emerged, but distinguishing it from competitors poses a challenge Drawing from my experience, I believe that incorporating Western service styles into the Vietnamese dining experience can enhance food safety by minimizing bacterial spread and cater to hesitant diners, allowing them to explore diverse cuisines comfortably To bring this vision to life, I am developing a comprehensive business plan aimed at securing funding and gathering essential information to ensure the restaurant's success in the competitive food market.
The project objective
The objective is to find out the food market, to collect and analyze related information, and to build business plan for this restaurant.
Research methodology and data collection
Firstly, to collaborate and talk with the closest friends about the original idea and set up a new style service of a restaurant to get more feedback about its feasibility
Following the feedback received, a questionnaire table was created and distributed to five friends for their insights and suggestions Subsequently, 500 questionnaires were emailed to various companies, representative offices, and personal contacts to gather relevant information for the project.
Meanwhile, I also find out salary of staff, input factors, facilities from suppliers, etc who are running restaurants in order to forecast all expenses to prepare funds for the project
To effectively define market needs in the food and beverage sector, I analyze key data on population growth, per capita spending on dining, annual tourist arrivals in Ho Chi Minh City, and citizen income derived from various media sources such as newspapers and television, as well as functional departments.
Scope and limitation
This project integrates the theories I have learned in school with my observations and ideas, highlighting the complexity of translating theory into practice Additionally, the research and data collection phase was limited in duration, resulting in some shortcomings Out of 500 samples distributed for market research, only 281 feedback responses were received, indicating a low fidelity in market assessments.
Consumer psychology is constantly evolving, influenced by factors such as income, socio-economic conditions, and government policies Consequently, data gathered from surveys may accurately reflect the current moment but may not remain valid over time.
This project is developed in the context of an economic downturn, leading to instability in key data like interest rates, inflation rates, and market prices Additionally, the focus of this project is on investing in a restaurant, which means that specific menu items are not detailed.
1.5 The contents of the project
Chapter 3 : Food market of Ho Chi Minh City
The content of The project
This project is grounded in knowledge acquired from various sources, including textbooks, educators, peers, practical observations, and personal experiences In this chapter, we will review the relevant theories that underpin this project.
2.1 Succinctness about styles of service
In the "Host Service," the host is actively involved in food presentation and serving Waiters bring platters of food to the host for approval before placing them on the tables The host can either serve the food directly onto guests' plates or portion it for the waiter to serve For replenishing dishes, the waiter may circulate to allow guests to help themselves or serve them directly.
This personalized dining experience involves serving food directly from the kitchen on dishes and salvers placed on the table Guests can easily help themselves by using separate service tools to transfer food onto their plates, ensuring a unique and interactive meal.
The American service style features pre-plated meals, where food is prepared and served directly onto the guest's plate in the kitchen before being presented This method ensures predetermined portion sizes and a balanced nutritional profile, with attention to color and presentation It is commonly utilized in coffee shops and fast food chains, where quick service is essential.
Vietnamese dining is characterized by a family-style service, where beautifully arranged dishes are placed in the center of the table Guests enjoy the experience by serving themselves using their own chopsticks and spoons, fostering a communal and interactive atmosphere.
THEORETICAL FRAMEWORKS
Entrepreneur and entrepreneurial process
An entrepreneur identifies opportunities and establishes an organization to capitalize on them, influenced by personal, sociological, and environmental factors The decision to pursue a business idea often hinges on support from family and friends, role models, economic conditions, and resource availability Most entrepreneurial ideas stem from daily job experiences or industries in which individuals have worked previously, highlighting the importance of routine and familiarity in the innovation process.
During their work, individuals often identify faults and propose new methods or tools for improvement However, generating ideas is just the beginning; the key factor lies in the decision to pursue these ideas, influenced by various elements Entrepreneurs are typically characterized by traits such as decisiveness, determination, and attention to detail They possess a strong desire to take control of their own destiny and demonstrate resilience, refusing to give up even when faced with seemingly insurmountable challenges.
According to Prof Olivier Witmeur, entrepreneurs are revolutionary individuals who thrive on challenges and actively seek to mitigate risks while providing solutions They quickly assess problems, make swift decisions, and implement them effectively, often pioneering in unconventional fields Entrepreneurs take charge of their destinies, refusing to be passive They embody various managerial roles, from human resources to finance and sales, and approach their work with enthusiasm, wishing for longer days to achieve their goals They view failure as a stepping stone to success and understand the importance of leveraging available resources, including contacts and funds, to build a strong team that can turn innovative ideas into reality This process involves careful assembly and combination of resources to effectively execute their vision.
Entrepreneurial process involves all the functions, activities and actions associated with perceiving opportunities and creating organizations to pursue them (Bygrave
2007) From the first business idea to forming entrepreneurship, it takes many stages Firstly, He/She assess opportunity and select right time to develop the idea
Entrepreneurs must establish a network of contacts, including customers, suppliers, investors, and bankers, to identify opportunities for assistance before launching their ventures They begin by utilizing available resources to refine their business ideas, navigating essential steps such as legal documentation, renting premises, and preparing for operations According to Prof Olivier Witmeur, three key variables influence entrepreneurship: the entrepreneur's characteristics, including skills, motivation, and leadership; the reactions of customers, investors, and potential employees; and macroeconomic factors like government policies and economic conditions These variables interact from the initial business idea to the stages of growth and stability, emphasizing that entrepreneurship is a dynamic process.
Source: Lecture of Professor Olivier Witmeur
Opportunity assessment
An opportunity is characterized by its attractiveness, durability, and timeliness, centered around a product or service that adds value for buyers (Timmons, 2004) For entrepreneurs, a good idea serves merely as a tool; the true challenge lies in transforming creativity into viable opportunities This process begins by understanding customer needs and involves iterative trial and error to align offerings with what customers are willing to pay Feasibility, determined by the team's capability, is crucial in this journey According to Prof Olivier Witmeur, a genuine opportunity arises when a "window of opportunity" is open long enough, featuring essential traits such as a sufficiently large market size, customer willingness to pay, and favorable economic conditions Typically, this window opens during the initial stage of a product's life cycle.
• Individual variables: skill, profile, motivations…
• Group-level variables: reactions from customers, investors, potential employees…
• Societal-level variables: governmental policies, economic conditions…
Source: Lecture of Professor Olivier Witmeur
Business plan
There are three crucial components for successful new businesses They are the opportunity, team and the resources (Bygrave 2007, The entrepreneurial process)
A successful new business relies on the integration and interaction of three key ingredients: a solid idea transformed into a viable opportunity, thorough preparation to seize that opportunity, and a strategic partnership of resources To effectively outline what needs to be done, when, and how, a concrete business plan is essential.
A business plan is a professional document that outlines a business opportunity and details how a team will establish and manage a new company, demonstrating its feasibility within a specific timeframe, as explained by Prof Olivier Witmeur.
Three driving forces for successful new business from Jeffry A Timmons – New Venture
Source: Lecture of Professor Olivier Witmeur
A top-notch business opportunity is rendered ineffective without a skilled management team, and even the best opportunities and management cannot thrive without the necessary resources.
To create an effective Business Plan, it is essential to consider all facets of a company's operations, including products, marketing, production, research and development, human resources, and financial analysis, as highlighted by Prof Claude Jottrand These elements must be analyzed in the context of industry trends, current and future competitors, and government policies By accurately collecting, analyzing, and processing this information, companies can mitigate risks and enhance the successful implementation of their plans.
Successful entrepreneurs excel in resource allocation and frugality, understanding which resources are vital for their company's market success They often prioritize investing in high-quality locations and recruiting skilled employees, even if it means higher costs Conversely, they may choose to outsource certain functions instead of maintaining in-house staff, which allows them to avoid the expenses of owning factories and equipment, as well as the challenges of recruitment and training This strategic approach helps keep overhead low while maximizing productivity and minimizing capital asset ownership Ultimately, effective resource management enables entrepreneurs to reduce the initial capital required to launch and grow their businesses.
Market research is essential for entrepreneurs to gain insights into their target market, including customer needs, behaviors, and preferences It helps in predicting market evolution, identifying segmentation, and recognizing major trends that impact the industry Additionally, understanding competitors and their strategies, as well as establishing effective distribution channels, is crucial This comprehensive analysis enables entrepreneurs to select a niche market, tailor their offerings, forecast sales, and create a robust marketing plan According to Prof Claire Gruslin from the Solvay Business School, effective market research can involve various methods such as desk research, field observation, qualitative studies, and quantitative studies, with the choice of method tailored to specific research needs.
Investors typically evaluate a proposed project's feasibility by considering various appraisal criteria before making a final investment decision Key factors often include the Net Present Value (NPV), which plays a crucial role in determining the project's potential profitability and overall viability.
Value, Internal Rate of Return, and Payback Period to determine investment
Net Present Value (NPV) represents the difference between the present value of cash flows generated by an investment and the initial investment amount, as explained by Prof Claude Jottrand from the Solvay Business School.
Net Present Value (NPV) can yield either positive or negative results, serving as a crucial criterion in project appraisal This metric helps investors determine whether to invest in a project or opt for a savings account The calculation of NPV follows a specific formula that evaluates the potential profitability of investments.
C1,2…,j : Cash flow generated after one year,…, and j year r : Discount rate
C1,j/(1+r) 1,j : Present Value of cash flow generated after year one,…, and year j
(1+r) 1,j : Compounded interest to make value of money from present to future
If the NPV is positive it means that the cash inflow is much more than the cash outflow hence, it is better to make an investment and vice versa
The Internal Rate of Return (IRR) is the interest rate that equates the Net Present Value (NPV) of a project's cash flows to zero To calculate the IRR, two NPVs are determined at different discount rates, ensuring that one NPV is positive and the other is negative This allows for the formulation of an equation to derive the IRR effectively.
The meaning of IRR is that if IRR is higher the discount rate it is better to make investment and vice versa
One important criterion for evaluating investments is the Payback Period (PP), as explained by Prof Nguyen Tan Binh from OU The Payback Period refers to the time needed to recoup the initial investment capital This method involves calculating the total Net Cash Flow produced by the investment until it equals the initial capital invested.
FOOD MARKET OF HO CHI MINH CITY
Brief on cooking arts in food market
In the food service industry, various techniques are employed to enhance the flavor and presentation of dishes and beverages, making them more appealing Often, the processing methods can obscure the original ingredients, creating a sense of mystery around the final product Skilled professionals in this field have the ability to craft dishes and drinks that leave diners guessing about their components.
Below is overview about food sources processed for our daily meals:
Food products are comprised from animal sources such as:
- Fowls : Chicken, Duck, Turkey, etc
- Farm animals: Cow, Goat, Lamb, etc
- Seafood : Fish, Crab, Shrimp, etc
Other foods are made from plants such as:
- Food comes from stem : Asparagus, Bamboo shoot, Bean sprouts, etc
- Food comes from leaves : Lettuce, Cabbage, etc
- Food comes from roots : Potato, Carrot, Beet, etc
From above foods, cooking experts can create thousands of dishes with different smells, flavors and recipes to take shape varieties style of eating and drinking world
Rice serves as a versatile ingredient in traditional dishes across various countries, including Vietnamese pancakes, steamed rice flour wrapped with pork, and spring rolls; Cantonese fried rice in China; and sushi in Japan Additionally, a single seafood, crab, can be transformed into a variety of delectable meals such as steamed crab, sautéed crab with tamarind, grilled crab, curry crab, and crab hot pot.
Market potential on food realm of Ho Chi Minh City
Spring rolls Cantonese fried rice Sushi
Source: http://ws.infospace.com
Nowadays, we can easily find restaurants, ranging from cheap to high price; from common to luxurious, just step outside of your door or working place in HCMC
As consumer demand for dining experiences continues to rise, there is an increasing expectation for improved cooking methods, decor, service, and ambiance However, these elevated standards are often only found in upscale restaurants or renowned hotels.
Figures 2: Mouth-watering display of dishes
Through cooking methods and eating culture of each country will take shape of specific style of service
3.2 Market potential in food realm of Ho Chi Minh City
3.2.1 Finding household expenditures in daily life activities
Expenditures in human life cover many things from unessential to essential ones
Families typically prioritize spending on essential needs over non-essential items, leading them to plan their expenditures on a monthly or yearly basis Basic necessities, such as food and beverages, significantly influence household budgets, with a report from the Statistical Office in Ho Chi Minh City indicating that spending on eating and drinking constitutes the largest portion of overall household expenditures.
Table 01: Monthly Average Expenditure Per Capita
Source: Statistical Office in Ho Chi Minh City
Household spending on food and beverages highlights their essential nature in daily life As incomes increase, consumers are likely to allocate more of their budget to this sector, seeking higher quality products This trend is particularly evident in Ho Chi Minh City, where rising incomes drive demand for better food options.
City is one the most developing city of whole country in culture, socio-economy
The recent development has significantly boosted job opportunities for citizens, leading to a continuous increase in their income and an improved standard of living Over the past decade, statistics have consistently demonstrated this positive trend.
Table 02: Average income per capita in HCMC
As above-mentioned, the economic growth of HCMC creates more jobs, decreases the jobless and brings up a stable income for people who is living and working here
3.2.2 Finding the population of Ho Chi Minh City
As the economy of Ho Chi Minh City continues to grow, it becomes an attractive destination for many individuals seeking to establish their lives While there are no official statistics on the exact number of residents, the influx of people from other regions pursuing business opportunities and stability contributes to the city's population However, available statistics do indicate the number of registered residents in the area.
Table 03: Populate Statistics of Ho Chi Minh City
Source: Statistical Office in Ho Chi Minh City
Besides that, the number of foreign visitors come to HCMC are also growing up every year They come for many purposes such as tourist, entertainment, seeking business opportunities, etc
Table 04: Numbers of Foreign visitor come to HCMC Year to year 2005 2006 2007 2008 2009
Source: HCMC Department of Culture, Sports and Tourism
The table 04 shows that the number of foreign visitors slightly drops down in 2009 because of economic crisis However, according to Mr La Quoc Khanh, Deputy
The General Manager of the Department of Tourism in Ho Chi Minh City announced in Saigon Times on December 17, 2009, that the city is expected to welcome approximately 2.8 million foreign visitors in 2010, based on a corporate contract established between travel agencies and their partners.
The analysis shows a growing demand in the food sector, with consumers increasingly willing to spend on food-related products and services This rising demand has led to a surge in business activities within the food market, resulting in a daily increase in the number of businesses in this sector.
3.3 Business activities of existing restaurant of Ho Chi Minh City
Culinary experts can astonish consumers with a diverse array of cooking techniques, prompting investors to seize opportunities in the food industry Consequently, a variety of restaurants are emerging, each offering unique dining experiences.
Business activities of existing restaurant in Ho Chi Minh City
To cater to consumer demands, many Asian restaurants, including Vietnamese establishments, are now blending multiple cuisines within a single venue This strategy not only provides diners with diverse options but also enhances market share by maximizing customer appeal.
3.3.1 Information obtained from general statistic reports
According to the report of “The department of planning and investment in Ho Chi
As of December 31, 2009, Ho Chi Minh City is home to more than 675 companies, including representative offices, situated along its three main streets: Le Loi Avenue, Nguyen Hue, and others.
Boulevard and Pasteur Street host numerous companies, and with an average of just 8 office workers per company, this area is home to approximately 5,400 office employees These workers, excluding local residents and non-residents, create a significant demand for food and beverage services.
The surge in visitors to Ho Chi Minh City presents lucrative opportunities for investors to tap into this growing market As a result, there has been a significant increase in the number of hotels and motels in the area, catering to the needs of travelers.
The Saigon-tourist Holding Company offers approximately 2,600 luxury hotel rooms in District 1, specifically along Nguyen Hue, Le Loi, and Dong Khoi streets During peak season, these hotels accommodate over 4,000 visitors daily, not including other independent hotels and motels in the area.
Table 05: Number of rooms in hotels located on Le Loi, Nguyen Hue and Dong Khoi streets
Hotels Rx Kd Con Maj Gra BS
1-2 Pal SG Car She Osc Hya Dux Leg
Source: The Saigon-Tourist Holding Company
Perceiving this potential market, the investors in food business have invested in restaurants to supply foods for this market According to the statistic reports from
The Department of Planning and Investment in Ho Chi Minh City reports that District One is home to over 500 restaurants, with approximately 68 of these establishments situated along four key streets, including Le Loi.
Nguyen Hue Boulevard, Dong Khoi Street, and Pasteur Street are the main thoroughfares in Ho Chi Minh City, featuring a concentration of office buildings and renowned hotels This prime location is home to over fifty restaurants out of a total of sixty-eight, offering a diverse range of Western and Asian cuisines Approximately twenty establishments specialize in Western-Asian fusion, while fifteen focus solely on Western dishes, ten serve traditional Vietnamese cuisine, and the remaining restaurants showcase specialties from other countries, including Korean and Mexican foods These dining options are categorized as standard restaurants, reflecting the unique characteristics of the area.
3.3.2 Information obtained from the survey
Through the market survey about consumer’s choice to restaurant style, the majority of surveyed people selected “Family restaurant” when they read the question
In Ho Chi Minh City, family restaurants are increasingly popular among consumers due to their affordable prices, diverse service options, and vibrant atmospheres that enhance the dining experience.
Some consumers prefer a tranquil dining atmosphere where they can savor their meals in a specific style alongside flavorful dishes Among the 281 surveyed individuals, 42.70% reported frequent visits to standard restaurants, while 53.38% preferred the family restaurant experience These preferences are visually represented in the accompanying chart.
Chart 01: Consumer’s choice about type of restaurant they prefer eating frequently
Fam ily res taurant Standard restaurant Luxury restaurant
The chart reveals that only 3.91% of consumers perceive luxury dining as satisfactory This does not imply that luxury restaurants fail to meet expectations; rather, they cater to specific consumer needs Research shows that popular dining locations are primarily found in District 1 and District 3, where patrons are willing to pay a premium for their meals.
Location of restaurant that they prefer coming Price consumer usually paid
Where does your prefer restaurant locate?
Recent survey results indicate a shift in the eating habits of consumers, reflecting an increase in living standards Previously, diners primarily sought affordable restaurants that provided ample portions; however, their psychological approach to dining has evolved.
A recent survey reveals that individuals prioritize different factors when selecting a dining establishment The accompanying charts will further illustrate these findings.
First priority belongs to food tasting Second order is sanitation
Taste of food and beverage?
Top priority Second priority Third priority Fourth priority Fifth priority Bottom priority
The third is staff manner The fourth is decoration of dishes
Top priority Second priority Third priority Fourth priority Fifth priority Bottom priority
Dining room design versus Menu price
Second priority Third priority Fourth priority Fifth priority Bottom priority
The chart 08 and chart 09 show that the selection between Dining room design and
The survey revealed that menu prices are consistent across the board, but its findings are limited due to a small sample size Nonetheless, it highlights a trend in consumer decision-making regarding dining options As individuals experience an increase in monthly income and a rise in living costs, menu prices become less of a priority in their choice of restaurants.
Top priority Second priority Third priority Fourth priority Fifth priority Bottom priority
Top priority Second priority Third priority Fourth priority Fifth priority Bottom priority
Top prioritySecond priorityThird priorityFourth priorityFifth priorityBottom priority
Many customers find that their expectations are often unmet in restaurants, particularly regarding hygiene standards Contrary to what they believe should be a secondary concern, cleanliness is often overlooked, even as health becomes a top priority for diners Survey results indicate that a significant number of restaurants still do not prioritize hygiene, highlighting a disconnect between customer expectations and restaurant practices.
The service standards in many restaurants are not being met, primarily due to the attitude of the staff, which falls under the responsibility of management A recent survey indicates that most patrons rated their experience as "Fairly good," rather than "Good" or "Very good," in relation to the value of their payment.
Attitude of staff in existing restaurant
Worst Average Fairly good Good Very good
The above survey indicates that there is only 15.27% answers assess very good and
18.32% answers rate staff manner of existing restaurant as good quality while the
New style of service for the WVFR in Ho Chi Minh City
This chapter provides a comprehensive overview of the business plan, covering essential aspects such as selecting a location, securing rental agreements, acquiring restaurant equipment, conducting financial analyses, and evaluating project feasibility Additionally, it outlines specific action plans for each phase of the project, ensuring a structured approach to implementation.
4.1.1 Restaurant location and its capacity
The survey indicates that most restaurants frequented by respondents are situated in District 1, District 3, and District 7, despite many residents living in other areas As highlighted in Chapter 03, District 1 serves as the administrative hub of Ho Chi Minh City, hosting numerous companies, representative offices, and hotels, which attracts a mid-to-high working class and tourists for both work and leisure Consequently, the findings suggest that District 1 represents a promising niche market for launching the WAFR.
The projected rental area is 300 square meters, with the kitchen section expected to occupy approximately 60 square meters and an additional sub-section of 40 square meters The remaining space will accommodate around 180 seats, allowing for an effective calculation of the seat turnover rate.
180 seat x 03 shift x 365 days = 197.100 seats per year
4.1.2 Specific characteristics of the differentiations
As mentioned in previous chapters, the outstanding combination between food cuisines and service styles will attract consumer’s curiosity come to see and enjoy it
The differentiations of this restaurant are:
BUSINESS PLAN
Restaurant model
4.1.1 Restaurant location and its capacity
The survey reveals that most restaurants frequented by respondents are situated in District 1, District 3, and District 7, despite many living in other areas As highlighted in Chapter 03, District 1 serves as the administrative hub of Ho Chi Minh City, housing numerous companies, representative offices, and hotels, which attracts a mid-high working class and tourists Consequently, the findings indicate that District 1 presents a promising niche market for launching the WAFR.
The projected rental space is 300 square meters, including a kitchen area of approximately 60 square meters and an additional sub-section of 40 square meters The remaining space accommodates around 180 seats, leading to a calculated seat turnover rate.
180 seat x 03 shift x 365 days = 197.100 seats per year
4.1.2 Specific characteristics of the differentiations
As mentioned in previous chapters, the outstanding combination between food cuisines and service styles will attract consumer’s curiosity come to see and enjoy it
The differentiations of this restaurant are:
Dining room : The space is warmly, luxurious, romantic and hygienic
Staff : They are well-trained, neat and clean uniform, courteous, hospitable attitude and professional skills in knowledge of restaurant products and career
Price : Based on the survey and current price of the same level restaurants
Service style : Vietnamese foods served by Western food service style
Food taste : processed by professional cooks and regularly checked before bringing to serve consumer
Menu : Western and Vietnamese that focus on seafood, beef and green foods
Cooking : Mainly on steam, boil and grill
Financial analysis
In this part, all involved factors to costs and expenses are mentioned in order to prepare funds, estimate sales and profit for investment assessment on financial analysis part
4.2.1.1 Renting price, renovation and other relative expenses
The rental space is set at approximately 300 square meters, with a monthly budget of 180,000,000 Dong for a duration of five years Assuming the rental price remains stable throughout the contract, the Lessor mandates a six-month deposit upfront, which will be refunded upon the contract's expiration.
Design, renovation and decoration of the premises must harmonize with business orientation of this restaurant An estimated expense for this step takes about
Others are relative to legal procedure as business license, construction license, traveling expense, etc estimated about 18,000,000 Dong
In the beginning time, a new brand product enters the market; it is hard achieve maximum volume Meanwhile, there are many elements needed adjustment
Therefore, the WVFR is forecasted operate with an output below (see table 06)
In the eating and drinking business, effectively managing both sales and food costs is crucial Insights from restaurant owners suggest that maintaining food costs around 35% of revenue is a reasonable benchmark for this model Given the consumer expenditure data reviewed earlier and a report from BBC News on February 22, 2010, which indicated concerns among economic experts about inflation potentially exceeding 7%, it is assumed that the inflation rate will remain at 7% annually throughout the project Consequently, the average expenditure per consumer is expected to increase by 7% each year.
Table 06: Seating turnover versus price and material cost
Year to year Year 1 Year 2 Year 3 Year 4 Year 5
The restaurant aims to offer a unique blend of Western-Vietnamese cuisine, focusing on a service style that emphasizes Western standards To achieve this, it is essential that the crockery used meets high-quality standards, including glossy finishes and non-absorbent properties to ensure an appealing dining experience.
No Description Unit Unit Price Quantity Amount(VND)
18 Rice container + cover 22cm Unit 191,000 30 5,730,000
Source: Minh Long I Ceramic & Porcelain ware Supplier
4.2.1.3.2 Cloth ware and miscellaneous items
The service style of foods in this restaurant is Western manner A romantic atmosphere will be its hallmark Piano is planned for background music of restaurant
Table 08: Cloth ware and miscellaneous items
No Description Unit Unit Price Quantity Amount (VND)
Requirement to this equipment is stainless steel, Shiny and elastic
No Description Unit Unit Price Quantity Amount(VND)
Source: Tran Bich Trading & Manufacturing Company
4.2.1.3.4 Electrical equipments and incidental expenses
The WVFR requires essential equipment to ensure operational continuity, particularly in the event of a power outage Without electricity, all raw materials risk spoilage, leading to significant business losses To mitigate this risk, an electric generator has been installed to maintain functionality during such emergencies.
Table 10: Electrical equipments and incidental expenses
No Description Unit Unit Price Quantity Amount(VND)
09 Water pump and tank Set 10,000,000 1 10,000,000
When starting a business, it is crucial to account for additional incidental expenses in the early stages These costs can include printing flyers and menus, travel expenses, office stationery, cleaning supplies, and packaging materials, which can amount to an estimated 100,000,000 Dong annually.
4.2.1.4 Bar tools and Glass ware
Glassware items must be transparent and heat resistant
Table 11: Bar tools and glassware
No Description Unit Unit Price Quantity Amount (VND)
Source: Tran Bich Trading & Manufacturing Company
Restaurant menu is Western and Vietnamese foods therefore kitchen utensils need equipping fully with cooking tools for Western and Vietnamese dishes
No Description Unit Unit Price Quantity Amount (VND)
09 Large – Small frying pans Set 1,980,000 1 1,980,000
This restaurant is committed to delivering a high standard of service, necessitating that staff recruitment criteria align with these service standards Additionally, payroll considerations are informed by insights from the internal data presented in the table below.
With the objective of bringing the best service to consumers once they visit my restaurant so, the staff force must have professional skills in Western food service
To ensure effective recruitment for senior positions such as restaurant managers and supervisors, candidates must possess a relevant training certificate or be required to complete a refresher course at a professional school post-recruitment, which will be covered by training expenses.
Unit: VND Form of training Manager Supervisor Schedule Expense
At School of hospitality 01 06 months 7,200,000
Source: The Saigontourist Training School
To ensure that consumers feel their investment is valued, it is essential for staff uniforms to be neat and tidy According to a quote from "Ruby Uniform," a tailor located in Tan Binh district, the costs associated with staff uniforms are outlined as follows.
Capital expenditure involves the acquisition of long-term assets, including buildings, furniture, and facilities The total capital expenditure is detailed in the following table, based on market references and calculations.
5 Deposit (six months in advance) 1,080,000,000
Starting a business requires initial funding to cover essential expenses such as electricity, water, and wages Insights from my experienced friends in this field highlight the importance of securing adequate resources to ensure smooth operations from the outset.
- Electricity using (max): 350KW/day (follow facilities was equipped at the WVFR)
1 Foods and Beverages Costs 05 days 56,700,000
3 Gas, electricity, water using 01 month 26,000,000
4 Cleaning tools, stationery, wrapping and packaging 01 year 100,000,000
From the above tables, the budget for my investment plan is estimated to starting capital of 4,356,581,000 Dong Assumption that, the owner capital has only
2,000,000,000 Dong and the rest is borrowed from Bank with interest rate 13% per year
To ensure adequate funding for acquiring additional revenue-generating facilities, it is essential to allocate an expense for potential repairs and maintenance These facilities may experience breakdowns or malfunctions during operation, making it crucial to account for these costs effectively.
The restaurant will allocate 2% of its revenue for operational costs From the third to the fifth year, it plans to hire two additional servers, increasing the total staff to 69 employees A pianist will be contracted for 300,000 Dong for two hours each evening Additionally, the straight-line depreciation method will be utilized for the initial capital investment, as outlined in Table 18.
No Description Year 1 Year 2 Year 3 Year 4 Year 5
Assuming there are no outstanding debts from suppliers or consumers and no changes in inventory during operations, the restaurant's initial investment facilities will be liquidated in the sixth year, with the deposit refunded in the fifth year The debt repayment plan will commence in the first year and conclude by the fourth year of business operation.
Table 19: Interest and Debt repayment schedule
No Description Year 1 Year 2 Year 3 Year 4 Year 5
The owner's capital constitutes approximately 45.91% of the total initial capital, while the remaining funds will be sourced through a bank loan with an annual interest rate of 13%, as per BIDV Bank Additionally, the savings account interest rate is set at 11% per year Consequently, this information is essential for calculating the Weighted Average Cost of Capital (WACC).
As mentioned above, inflation rate is about 7 % per year so the nominal rate is: rn = rr + g + g x rr in which, rn : Nominal rate rr : Real rate g : Inflation rate rn = 12.08% + 7% + 12.08% x 7% = 19.93%
Net Present Value (NPV) is calculated by subtracting the initial investment amount from the Present Value of the cash flows generated by that investment In the case of a restaurant, if the design and renovation are completed quickly, the establishment can begin operations within the first year of the plan, potentially leading to favorable cash flow outcomes.
NCF : Net Cash Flow rn : Nominal rate
Ct : Starting capital j : from 1 to 5
Description Year 1 Year 2 Year 3 Year 4 Year 5
Action plan
As mentioned, the total starting capital of 4,356,581,000 Dong is the big amount
Investors must carefully assess their financial situation Based on the analysis, the owner's capital stands at approximately 2,000,000,000 Dong, representing 45.91% of the total investment This capital can be combined with partners, while the remaining amount may be financed through a bank loan with an interest rate of 13% per year, requiring collateral for security If obtaining a bank loan proves difficult, seeking additional partners will be necessary.
To obtain a business license, consulting companies will handle the application process, which typically takes about one week from the submission of the legal documents It is important to note that the application for the business license can only be submitted after both parties have signed the rental agreement.
4.3.3 Premises renovation and decoration plan
To ensure a variety of options for renovation and decoration expenses, it's essential to obtain quotes from at least three different companies This process should ideally be completed within two months, particularly due to the impact of high rental fees.
Operating system of restaurant also requires a proper structure to run well This chart indicates that restaurant manager is person who monitors the restaurant and is responsible to investor
Chart 14: Organization chart of WVFR
Chef cook Supervisor Chief accountant
The operating hours of a restaurant are primarily determined by the times when customers seek to enjoy meals and beverages Consequently, the number of staff required fluctuates based on customer volume Peak dining times typically occur between 6:00 to 9:30 AM, 11:00 AM to 1:30 PM, and 7:00 to 9:00 PM Based on practical experience, it is observed that a server can effectively manage four tables, each accommodating four guests, while a busboy can assist two servers by bringing and clearing dishes simultaneously during service.
No Position Mon Tue Wed Thu Fri Sat Sun Note
1 Supervisor 1 AB AB OFF AB AB AB AB
2 Supervisor 2 CD CD CD OFF CD CD CD
3 Supervisor 3 BD BD AB CD OFF BD BC
4 Receptionist 1 AB AB OFF AB AB AB AB
5 Receptionist 2 CD CD CD OFF CD CD CD
6 Receptionist 3 BD BD AB CD OFF BD BD
7 Server 1 OFF AB AB AB AB AB AB
8 Server 2 AB Off AB AB AB AB AB
9 Server 3 AB AB OFF AB AB AB AB
10 Server 4 AB AB AB OFF AB AB AB
11 Server 5 AB AB AB AB OFF AB AB
12 Server 6 AB AB AB AB OFF AB AB
13 Server 7 AB AB AB OFF AB AB AB
14 Server 8 AB AB OFF AB AB AB AB
15 Server 9 AB OFF AB AB AB AB AB
16 Server 10 OFF AB AB AB AB AB AB
17 Server 11 OFF CD CD CD CD CD CD
18 Server 12 CD Off CD CD CD CD CD
19 Server 13 CD CD OFF CD CD CD CD
20 Server 14 CD CD CD OFF CD CD CD
21 Server 15 CD CD CD CD OFF CD CD
22 Server 16 CD CD CD CD OFF CD CD
23 Server 17 CD CD CD OFF CD CD CD
24 Server 18 CD CD OFF CD CD CD CD
25 Server 19 CD OFF CD CD CD CD CD
26 Server 20 OFF CD CD CD CD CD CD
27 Busboy 1 OFF AB AB AB AB AB AB
28 Busboy 2 AB OFF AB AB AB AB AB
29 Busboy 3 AB AB OFF AB AB AB AB
30 Busboy 4 AB AB AB OFF AB AB AB
31 Busboy 5 AB AB AB AB OFF AB AB
32 Busboy 6 OFF CD CD CD CD CD CD
33 Busboy 7 CD OFF CD CD CD CD CD
34 Busboy 8 CD CD OFF CD CD CD CD
35 Busboy 9 CD CD CD OFF CD CD CD
36 Busboy 10 CD CD CD CD OFF CD CD
37 Bartender 1 OFF AB AB AB AB AB AB
38 Bartender 2 CD OFF CD CD CD CD CD
39 Bartender 3 AB CD OFF BD BD BD BD
40 Sub-bartender BD BD BD OFF BD BD BD
For activity characteristic of this restaurant, there are 02 cooks of Western food and
02 cooks of Vietnamese food are recruited Each shift is secured with 01 western food cook and 01 Vietnamese food cook
No Position Mon Tue Wed Thu Fri Sat Sun Note
41 Chef cook BD OFF BD BD BD BD BD
42 Cook 1 OFF AB AB AB AB AB AB
43 Cook 2 AB AB OFF AB AB AB AB
44 Cook 3 CD CD CD OFF CD CD CD
45 Cook 4 CD CD CD CD OFF CD CD
46 Cook helper 1 OFF AB AB AB AB AB AB
47 Cook helper 2 AB OFF AB AB AB AB AB
48 Cook helper 3 AB AB OFF AB AB AB AB
49 Cook helper 4 OFF CD CD CD CD CD CD
50 Cook helper 5 CD OFF CD CD CD CD CD
51 Cook helper 6 CD CD OFF CD CD CD CD
52 Cleaner 1 OFF AB AB AB AB AB AB
53 Cleaner 2 AB OFF CD BD AB AB AB
54 Cleaner 3 CD CD OFF CD CD CD CD
55 Cleaner 4 BD BD BD OFF CD CD CD
Table 23: Roster for administrative staff
No Position Mon Tue Wed Thu Fri Sat Sun Note
58 Cashier 1 OFF AB AB AB AB AB AB
59 Cashier 2 CD OFF CD CD CD CD CD
60 Cashier 3 AB CD OFF BD BD BD BD
62 Valet parking 1 OFF AB AB AB AB AB AB
63 Valet parking 2 BD OFF BD BD BD BD BD
64 Valet parking 3 BD BD OFF BD BD BD BD
65 Valet parking 4 AC CD CD OFF CD CD CD
66 Valet parking 5 AB AB AB AC OFF AD AD
67 Engineer 1 BD BD OFF BD BD BD BD
4.3.4.3 Source and form of recruitment
Staff will be recruited from hospitality schools in Ho Chi Minh City, as these institutions offer a skilled workforce knowledgeable in Western food service This recruitment strategy is key to transitioning Vietnamese food service practices to a Western style.
Although hiring price for these employees can make salary expense increase, company-training expenses is low
Staff recruitment will adhere to the specific requirements of each department, allowing for a larger pool of candidates to ensure thorough screening for unqualified applicants Recruitment notices will be published in newspapers and hospitality schools immediately after the rental agreement is finalized Applications will be collected, and candidates will be invited for direct interviews once their documents have been reviewed.
To qualify for the roles of restaurant manager and supervisor, candidates must possess extensive knowledge, professional skills, and a minimum of two years of experience in restaurant operations These individuals will also serve as trainers, responsible for educating staff throughout daily business operations A key duty includes conducting 15-minute briefings with staff before each shift For candidates with significant experience and strong skills but lacking formal training, arrangements will be made for them to attend hospitality school for a refresher course.
To ensure consumer safety and achieve long-term business goals, all food and beverage supplies must come from certified food hygiene companies For commodities exempt from certification, such as certain raw vegetables and seafood, compliance with the food hygiene department's regulations in HCMC is essential To minimize food costs, long-lasting and bulk-storable commodities will be sourced from Binh Dien Market, the largest agricultural and marine wholesale market in HCMC, known for its lower prices on fresh and raw materials compared to other markets.
Office stationery, cleaning tools, and various miscellaneous items will be sourced from Metro Cash & Carry Vietnam, as they offer monthly purchases and provide discounts for bulk orders.
To ensure consumer safety, eggs and poultry meats are sourced from Saigon Co-op Mart, where the food hygiene department in Ho Chi Minh City enforces strict regulations on these products.
A banner will be displayed at the restaurant location immediately after the rental agreement is finalized Additionally, brochures will be distributed to office workers, travel agencies, and passersby one month prior to the restaurant's launch Meanwhile, the newly recruited staff will be tasked with marketing efforts directed at local households through flyer distribution.
Introducing the exclusive "Golden Cycle" member card, available in limited quantities, as a special discount program to encourage consumer support for WVFR during its opening days Additionally, a complimentary dessert offer will be available for a limited time to entice customers to indulge in our offerings.
Advertisements in the "Tuoi Tre" and "Thanh Nien" newspapers will be published one week prior to the restaurant's opening day A curated list of special VIP guests, closely linked to the restaurant's business activities, will receive direct invitations Additionally, a hosting schedule is set for two days before the opening, aimed at training the staff and introducing the WVFR to the community.
CONCLUSION AND RECOMMENDATION
Conclusion
Eating and drinking are essential for human survival, leading households to allocate over 40% of their monthly budget to these necessities As people prioritize business opportunities and spend more time outdoors, the demand for convenient food services has increased, driven by the need for quick meals and social interactions outside the home.
Once they spend money on buying service, they require its quality corresponding to what they paid Moreover, a full stomach is now not a first choice of consumers
Customers seek dining establishments that provide value for their money, with the combination of cooking methods and service style being key differentiators for restaurant success Western cuisine is favored by foreign tourists and local patrons who enjoy this culinary style Meanwhile, carefully selected Vietnamese dishes, expertly prepared to achieve a unique flavor, paired with Western service practices, create a distinctive identity for the restaurant.
In a stable economy, the selling price is determined by the intersection of supply and demand Therefore, conducting thorough market research alongside financial analysis and understanding consumer demands is essential for the restaurant's business plan Additionally, providing regular training for staff in food preparation, service style, and professional etiquette is a crucial factor that sets this restaurant apart from competitors.
Financial analysis indicates that all criteria are viable Investing 4,356,581,000 Dong in a bank at a compound interest rate of 11% per year would yield a return of only 7,341,092,000 Dong after five years In contrast, investing in this restaurant would generate a significantly higher return of 17,715,251,000 Dong, which is over 2.4 times greater than the non-investment option.
Recommendation
To ensure the stability of a restaurant's business, two key factors must be prioritized: material facilities and the human element Material facilities, often referred to as "tangible products," can be easily acquired with sufficient capital investment In contrast, the human factor focuses on creating "intangible products," which significantly enhance the dining experience This includes everything from food presentation and service style to staff interactions, all of which contribute to the overall value of the restaurant's offerings Developing these intangible products is more challenging and relies heavily on the training capabilities of managers and the unique qualities of each staff member.
Effective staff recruitment in the restaurant industry requires meticulous screening and training for both key positions, such as chefs and managers, and essential roles like busboys and cleaners This approach ensures that the quality of products and services consistently meets consumer demands.
Vietnamese cuisine presented in a Western style is an innovative concept in the food industry Selecting the appropriate dishes requires expert advice to ensure they meet consumer preferences Additionally, when sourcing dining essentials like plates, bowls, and utensils, it is crucial to prioritize elegance and functionality to enhance the dining experience for customers.
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As an MBA student in the Vietnam-Belgium program, I am focusing on investing and operating a restaurant in Ho Chi Minh City I sincerely appreciate your time in answering a few questions from my questionnaire, as your insights will greatly assist me in turning this project into a reality.
After finishing, please kindly send me back by my personal email at: utnguyen142@gmail.com
Note: (This note is helping you easier in awareness of type of Restaurants)
- Name of Family Restaurant : Number 4 Ly Thuong Kiet, Number 1 Tran Phu, etc
- Name of Standard restaurant: Underground, Santa Lucia, Amago, etc
- Luxury dinning room : Restaurants in luxurious hotels
A/ THE CONCEPT OF THESE QUESTIONNAIRES
1 Which type of restaurants have you preferred eating frequently?
(Please select one only, in case you select A, please keep moving to PART B)
2 How much do you often pay a meal per person when you do come to your preferred Restaurant?
3 How is your feeling when doing payment for your meal? Level of priority of your decision making to choose a place for meals? (Highest 1, lowest 6)
DESCRIPTION Worst Average Fairly good Good Very good
Level of Priority a Decoration of dishes Food
Drink c Attitude of staffs d Hygiene
Toilet e Decoration of restaurant f Price for F only very cheap cheap Reasonable expensi ve too expensiv e
4 Where does your prefer restaurant locate? (Select one location where you come often)
Dist 1 Dist 2 Dist 3 Dist 4 Dist 5 Dist 6
Dist 7 Dist 8 Dist 9 Dist 10 Dist 11 Dist.12
Dist Tan Binh Dist Binh Thanh Other Dist
(If it is one of these dist 2,4,5,6,7,8,9,10,11,12, Tan Binh, Binh Thanh, others, please move to the question 06.)
5 What do you think about the restaurant that is selected? (only 01 selected anwser for each part)
DESCRIPTION Not good Good Very good a Convenient location b Suitable for guest party c Suitable for family dinning d Reasonable price and cool service
6 How much are you willing to pay per person for outside meal where you would receive good service as your expectation?
7 Which food cuisine do you like most? (You can select all) a Chinese cuisine b Vietnamese cuisine c European cuisine d Japanese cuisine
8 What do you think if Western food service is applied for Vietnamese food to avoid bacteria spread through ingestion while eating in the same plate? a Don’t know b Try d No need to do that
Dist 1 Dist 2 Dist 3 Dist 4 Dist 5 Dist 6
Dist 7 Dist 8 Dist 9 Dist 10 Dist 11 Dist.12
Dist Tan Binh Dist Binh Thanh Other Dist
3/ What is your current work? a Staff b Junior staff c Senior staffs d Others
4/ Your education level a High school b College c University d Post University
5/ How much money do you earn per month?
Less than 5 million dong From 5 – to 10million dong
Up to 15 million dong Upper 15 million dong
YOU HAVE FINISHED ALL THE QUESTIONNAIRES
THE SURVEY RESULTS A/ THE CONCEPT OF THESE QUESTIONNAIRES
1 Which type of restaurants have you preferred eating frequently?
(Please select one only, in case you select A, please keep moving to PART B)
A Family Restaurant B Standard restaurant C Luxury restaurant
2 How much do you often pay a meal per person when you do come to your preferred Restaurant?
3 How is your feeling when doing payment for your meal? Level of priority of your decision making to choose a place for meals? (Highest 1, lowest 6) a Decoration of dishes a.1/ Food
Very good 10 c Attitude of staffs
Very good 20 d Hygiene d.1/ Dining room
Very good 10 e Decoration of restaurant
Level of priority (Highest 1, lowest 6) a Decoration of dishes
4 Where does your prefer restaurant locate? (Select one location where you come often) (If it is one of these dist 2,4,5,6,7,8,9,10,11,12, Tan Binh, Binh Thanh, others, please move to the question 06.)
5 What do you think about the restaurant that is selected? (only 01 selected answer for each part) 5.a Convenient location
5.d Reasonable price and cool service
6 How much are you willing to pay per person for outside meal where you would receive good service as your expectation?
7 Which food cuisine do you like most? (You can select all)
8 What do you think if Western food service is applied for Vietnamese food to avoid bacteria spread through ingestion while eating in the same plate? Don’t know 36
No need to do that 70