Chapter 7
Financial plan
7.1 Important assumptions
Supplies in the food industry, particularly vegetables and grains, are constantly subject to
changes in the prices, while we attempt to maintain consistency, menu prices are also
subject to change.
All payments are received on due time i.e. we do not deal in credit.
Taxation policy of government does not change.
A strong economy, without a major recession.
We assume that there are no unforeseen changes in consumers’ tastes or interests to make
our concept less competitive.
7.2 Key financial Indicators
Monthly achievement of targets
Control of costs
Constant increase in profits.
7.3 Break even analysis
7.3.1 The Initial investment includes the following costs:-
Kitchen on rent: Rs 10000 per month( 200 sq feet)
Kitchen equipment( including stove and utensils) : Rs 15000(approx)
Cost of food materials( including spices, wheat, rice, vegetables): Rs. 105000 (Rs 70
per Tiffin combo i.e. Breakfast + Lunch + dinner)
Cooking Gas: 2000 per month(approx)
2 Bicycles for delivery: Rs 6000( Rs 3000x2)
2 Fans: Rs 3000
Staff salary(per month)- cook- Rs 5000, helper- Rs 3000,
Delivery men- Rs 4000 each
Promotional expenses- a) 300 Fliers- Rs 1000
b) Employee for distributing – Rs 500
Miscellaneous expenses- Rs 1500
The total of all these expenses amount to be = Rs 1, 60,000
7.3.2 Cash inflow per month
Sales target per month- 1500 Tiffin combos
Selling price per Tiffin combo-100
This implies the amount of earnings per month = Rs 150000
7.3.3 Break even
The total cost incurred in the first month is Rs 1, 60,000 and the revenue generated per day is
Rs 5000 (i.e. no of Tiffin sold per day x price per Tiffin= 50 x 100) so we will be able to
recover Rs 160000 in 32 days.
7.4 Projected Profit or Loss
Costs incurred during the year
A. Initial onetime costs ( incurred only in first month)
Kitchen equipment( Gas stove, crockery)- Rs 15000
Cost of two bicycles- Rs 6000
Cost of two Fans- Rs 3000
Promotion expenses( 300 Fliers + Employee for distributing Fliers)-
Rs 1000+500=Rs 1500
B. Fixed costs
Rent of Kitchen- Rs 10000 (includes electricity and water charges)
C. Variable costs
Cost of food materials -105000( Rs 70 per Tiffin combo)
Cooking Gas- Rs 2000
Staff Salary- Rs 16000
Miscellaneous( Due to Repairs or due to loss)- Rs1500
Total expenditure for the year = one time investment costs+ fixed
costs for 12 months + Variable costs for 12 months
Total expenditure = Rs( 25500+ 120000+1494000) = Rs 1639500
Revenue generated for the year
Monthly target= 1500 Tiffins( Breakfast+Lunch+Dinner)
Yearly target= 18000 Tiffins
Selling price per tiffin = Rs 100
Total revenue= No. of Tiffins sold in a year + selling price per Tiffin
= Rs (18000 x 100) = Rs 1800000
Profit for the Year = Total Revenue – Total costs
Rs (1800000 – 1639500) = Rs 160500
7.5Long term Plan
We hope to increase our profits manifold in the next three years on the basis of our
goodwill and high quality standards. We want to be the dominant player in the Industry
where we can be our own leader.
Annexure
Menu Items
1.) Breakfast
a) Bread Butter/Jam
b) Omelette
c) Sprouts
d) Grilled Sandwich
e) Bread Pakoras(2 pcs)
f) Stuffed Paranthas
g) Dosa/vada/idli ( with sambhar)
h) Macroni/Pasta
2.) Lunch
Lunch comprises of 1 Dal, 1 vegetable, a bowl of curd/Raita, 2 chapattis, Rice and salad.
Dal makhani( black dal)
Moong dal ( yellow dal)
Dum aloo
Shahi paneer
Kadai paneer
Butter Paneer Masala
Bhindi
Raita( pineapple, aloo, boondi, vegetables)
Malai kofta
Rajma
Chana masala
3.) Dinner
Dinner comprises of 2 vegetables, Rice, 2 chapattis, salad, a dessert
Dum aloo
Shahi paneer
Kadai paneer
Butter Paneer Masala
Palak Paneer
Bhindi
Karela lajabdari
Rajma
Chana Masala
Aloo matar
Desserts- gulab jamun, kheer, Icecream, moong dal halwa
