INTRODUCTION
Mister Donut is a prominent franchisor within the Philippine food service industry,
known for its delectable range of doughnuts and baked goods. Founded in 1981, Mister Donut
has expanded significantly over the decades, currently operating approximately 1,200 outlets,
comprised of both company-owned and franchised units. This expansion has been fueled by a
keen understanding of local tastes and preferences, allowing the brand to adapt its offerings
accordingly. Mister Donut's success can be attributed to several factors, including its strategic
location choices, affordability of products, innovative marketing strategies, and a robust support
system for franchisees. The company’s recent initiative to waive franchise fees for new
entrepreneurs, especially, demonstrates its commitment to fostering business growth and
employment opportunities in the Philippines, further reinforcing its reputation as a leading player
in the quick-service restaurant sector.
The brand's capacity to remain relevant amid changing consumer trends, along with its
emphasis on community engagement, has solidified its position in the market. By consistently
delivering high-quality products and maintaining strong customer relationships, Mister Donut
has cultivated a loyal customer base. The organization’s focus on training and support for
franchisees not only enhances operational success but also contributes to the brand's overall
resilience in the face of market fluctuations.
WHY DID THE PROPONENTS CHOOSE THIS FRANCHISE?
The choice to pursue a Mister Donut franchise presents a fitting opportunity for aspiring
entrepreneurs seeking to enter the food service industry with limited capital. Given that Mister
Donut offers a Low Franchise Fee packages to new franchisees, it significantly reduces the initial
financial burden, making it an accessible venture for individuals who may not yet be financially
stable. Additionally, the compact size of the business model allows for streamlined operations
that are manageable for new entrants in the field.
The selected location in J&F Mall Daraga further enhances the franchise's growth
potential. Situated near a bustling mall frequented by many residents in the area, this site
presents an ideal positioning for this kind of shop. The high foot traffic also provides an excellent
opportunity for maximizing visibility and sales, particularly as individuals often seek convenient
snacks while strolling. Thus, the combination of a low-cost entry and strategic location makes
Mister Donut a compelling choice for establishing a thriving business.
COST ANALYSIS
Initial Capital Requirements
The total capital required to initiate the Mister Donut franchise is 285,000 pesos. This
capital comprises a variety of expenditures essential for the franchise's launch, including rentals,
equipment, and operational expenses. To finance the initial capital, the group will contribute 25%
in cash, amounting to 71,250 pesos. Dividing this contribution among three partners results in
individual investments of 23,750 pesos each. The remaining 75%, equivalent to 213,750 pesos, is
to be financed through a loan.
Given an interest rate of 10% per annum, the total interest payable over three years
amounts to 64,125 pesos (calculated as 21,375 pesos annually for three years). Therefore, the
total amount payable for the loan, inclusive of both principal and interest, is 277,125 pesos,
derived from the sum of the original loan amount and the accumulated interest.
Breakdown of Capital Inclusions
The initial capital of 285,000 pesos will cover several key expenditures:
1. Rental of Assets: The lease for space is a substantial initial cost, as it provides the
franchise location needful for operations.
2. Basic Small Wares: These essential items, necessary for daily operations, comprise the
initial inventory.
3. Uniforms: Branding is crucial in a franchise environment, and uniforms serve as an
initial investment in employee branding.
4. Crate Cabinets and Shelves: These fixtures play an essential role in establishing
efficient operational space for product storage and display.
5. Mobilization Fees: This encompasses the costs associated with obtaining requisite
business permits.
6. Products: Initial stock for Market readiness is also accounted for in the start-up costs.
7. Incidental Expenses: A cushion for unforeseen costs is also included in the budget.
Employee Payroll Forecast
In the initiation phase, payroll expenses must be forecasted accurately to ensure
operational sustainability. The franchise will employ two contractual employees working three
days each in a 6-day weekly operation. The monthly payroll will amount to 9,480 pesos when
calculated at the minimum wage of 395 pesos per day in Albay. In total, the annual payroll for
these employees is projected to be 113,760 pesos.
Cash Flow Evaluation
Based on market estimates, the franchise anticipates generating an average profit of
33,000 pesos per month after taxes. To establish a clear understanding of net profit, we factor in
payroll and loan repayment. The monthly obligation for the loan is approximately 7,698 pesos
(277,125 pesos divided by 36 months). Deducting both the payroll and loan payment from the
average monthly profit yields an estimated net income of 15,822 pesos per month. Over the span
of one year, this amounts to a total profit of 189,864 pesos during the first three years per year
until the loan is repaid.
After the conclusion of the loan repayment cycle, the potential annual income could rise
significantly. With debts settled, the franchise stands to earn an estimated 282,240 pesos
annually, reinforcing the financial viability of this business venture.
FINANCING
To fund the start-up costs for the Mister Donut franchise, a systematic financial strategy
will be employed. The total capital required is PHP 100,000, of which 25% (PHP 25,000) will be
contributed as cash, while the remaining 75% (amounting to PHP 75,000) will be sought through
a loan. At an annual interest rate of 10%, repayable over a ten-year period, the total repayment
amount can be computed to gauge the long-term financial implications. Utilizing standard loan
amortization formulas, monthly repayments would amount to approximately PHP 1,063.43,
resulting in an annual financial obligation of around PHP 12,761.16.
To enhance financing capabilities, the proponents will consider taking on part-time work.
This supplementary income stream would provide immediate cash flow to support both personal
expenses and business operations. As the business begins to thrive, reinvestment of profits into
expanding the franchise could occur, ultimately paving the way for opening additional units to
increase revenue generation and financial stability.
OWNERSHIP
For the ownership structure of the Mister Donut franchise, a sole proprietorship model is
proposed. This form of business ownership offers multiple advantages, including complete
control over decision-making processes. Such autonomy is critical in an initial venture, allowing
for rapid responses to consumer trends and operational challenges without the need for
consensus among partners or shareholders. Additionally, the inherent flexibility of a sole
proprietorship reduces regulatory burdens and overhead costs, ideal for those operating with
constrained financial resources.
Defending the choice of a sole proprietorship also stems from a commitment to
dedicated, personalized customer service and brand management. Entrepreneurs holding sole
responsibility for the business can build a direct rapport with customers, fostering community
connections that are essential for long-term loyalty and success. The simplicity of this structure
not only aligns with current resource limitations but also lays a solid foundation for potential
future expansion.
MARKET STUDY
To validate the demand for a Mister Donut franchise, a targeted consumer market study
will be conducted. This study shall encompass surveys and direct interactions with local
residents, commuters, and patrons of nearby businesses to assess brand recognition and
consumer preferences regarding sweet treats and beverages. Understanding local consumption
patterns will enable the franchise to tailor its menu to better meet regional tastes and
expectations.
Additionally, a competitive analysis will be essential in identifying the strengths and
weaknesses of existing food establishments within the area, particularly MK’s Takoyaki. By
analyzing customer demographics, pricing strategies, and marketing efforts, data can be utilized
to inform product offerings and promotional tactics that differentiate Mister Donut from its
competitors. This comprehensive market examination will enhance the franchise's positioning,
ensuring that it captures a significant share of the local consumer base.
EXIT STRATEGY
The exit strategy for the Mister Donut franchise is centered on establishing a sustainable
business over a period of five to ten years. During this timeframe, the goal is to solidify the
franchise's foothold in the local market, establish a loyal customer base, and explore
opportunities for expansion through the acquisition of additional franchise units. By building a
reputable brand presence and increasing cash flow, a potential sale or transfer of the franchise
may be considered as market conditions allow.
This strategy acknowledges the inherent unpredictability of business ventures while
remaining adaptable to evolving market dynamics. Continuous evaluation of the franchise’s
performance will inform decisions regarding potential expansions or exit options, ensuring that
all paths lead to maximizing the return on investment. Ultimately, a well-thought-out exit
strategy will not only provide a secure transition for the proponents but will also safeguard the
longevity and success of the Mister Donut brand in the community.
CONCLUSION
The decision to pursue a Mister Donut franchise is laden with both optimism and caution.
The opportunity affords an accessible entry into the food service industry with a well-established
brand that has demonstrated resilience and adaptability. The waiver of franchise fees, coupled
with a strategic location, positions the venture for potential success and revenue generation.
However, the realities of business ownership are inherently risky, and navigating the
complexities of the food industry requires thorough preparation, market awareness, and a strong
operational framework.
While enthusiasm for the business is strong, the acknowledgment of the associated risks
underscores the necessity for meticulous planning and a strategic approach. Balancing the
potential for growth against the uncertainties inherent in any entrepreneurial endeavor requires a
pragmatic mindset. Therefore, although the desire to pursue this franchise is evident, a well-
rounded consideration of both the risks and rewards will be crucial in determining its feasibility
and long-term success.
