KFC Feasibility report :

Introduction:

“The pleasures of the table belong to all times and all

ages, to every country and ever day, they go hand in
hand with all other pleasures, outset them and remain
to console us for their loss.”

Restaurant business is one of the oldest known to

man and to a large extent is still an art and will remain so in
future. System and practices make the job of managing a hotel
or restaurant much similar, but the human element is difficult
to systemize. The field of restaurant business is
interdisciplinary. It draws up economics, psychology,
management, food technology, architecture and marketing
clustered together. It is a business of hospitality.

Multan is one of the oldest cities of Pakistan and

is expanding everyday. The trend of the people of Multan is
drifting extensively towards modern means of socializing
and relaxation. Therefore, while starting our business, we
want to introduction a revolution in the business of
restaurant. We plan to introduce a restaurant of
international standard, KFC, the name require no
explanation. It is a chain of restaurants operating in more
than 80 countries around the world –from Shanghai to Sao
Polo; from the sand of Saudi Arabia to the side walks of
New York and now in Pakistan. Therefore, while starting our
business we have decided to open a restaurant in the posh
locality of Multan, and then extended to other parts.

Brief Description Of Proposed Project

In this project we are introducing a Fast Food

Restaurant (KFC) in Multan.

` Project : Fast Food Restaurant

` Name : KFC (Kentucky Fried

Chicken)

` Project Site : Cantt. Locality,

Tipu Sultan Road.

` Total Area : 2 Canal

` Operating Time : 12:00AM – 12:00PM

(Weekdays)

12:00AM – 1: 00PM

(Sundays)

30 days a month,

12 months a year
 ` Project Capacity : 150 People at a time

` Main Utilities : Original Recipe Deep Fried

Chicken,
KFC Special Chicken, Zinger
Burger,
Fillet Burger,
Soft drinks (produced by
Pepsi),
` End Project : Opening a number of more
restaurants after success of
project.

O p e r a t i o n S t r a t e g y
The operation strategy of our restaurant will be
designed around the concepts of five senses. From our
description research of the industry we found out that
restaurant business is one of those rare services which touch
all the five senses of human being.

The food will cater to the sense of taste, music to the

sense of sound, aroma of dishes to sense of smell, decor to the
sense of sight and clean crockery, cutlery and environment in
general to the sense of touch. Taking care of all five senses our
customers would be the core of our strategy.

Structure of Management:

Our business is a partnership which includes 6

partners investing capital.
 Once it is decided that we are getting into
business the question arises that what is uncountable list of
occupations the point is what kind of business to be done.
The answer to this question may be found while considering
following factors:

Government Policy:

The factor of government policy plays a major role

in the success of any business. Before deciding to get into
the business. One must also keep in mind the advantages
and disadvantages of any business for the country. Earning
money by keeping the interest of the country at stake
should not be even thought of. The business must be
chosen considering its benefit to the country, in the shape
of taxes, revenues and over coming unemployment.

Number of Consumers:

This factor is also of vital importance. This

business only flourishes when the demand of that product
or number of consumers is more. Thus, while choosing any
business we must see the field which provides maximum
number of consumers, so that the invested capital is not
blocked or wasted.

Demand Of The Product:

 Demand of the product by the user is also a
key feature before choosing any business. If the chosen
business in competition with others then one should not
forget that profit is divided. However, by producing quality
product, this factor could be dealt with properly and in our
favour. One could fetch more business if demand of the
product increases.

General Trend Of The Area:

One cannot do any business if it is started at

a place where the trend of the people is not favorable.
Therefore, before choosing the trend of people must be
created for it. Hasty decisions should be avoided. See to
the fact, that business place is located where one could
fetch the consumers. So the trend of consumer is also
important before selecting the business.

Budget Of Partners:

Before getting into business, the spirit should

be high, but always keeping in mind that it should be
planed within the available budget. It is an art to get
maximum benefits by spending minimum resources.
However, the element of risk and luck always becomes the
major cause of success of business. Therefore, always plan
business by keeping budget in mind.
Budget of Consumers:

The purchasing power and the real income of the

consumer should be kept in mind before choosing business.

By giving thorough study and elaborate

discussions on above-mentioned factors, we now have to
choose business out of unlimited jobs one could get into.
After loads of thinking and vast study, we all partners
concluded that the business of opening an outlet of an
International Franchise Restaurant could be the best for us.
So we all decided to open a restaurant where the full range
of eatables of international standard are provided on
competitive rates. Since the occupants of the area, which is
selected for this restaurant, have a lot of trend for hoteling,
therefore, we sincerely hope and pray that this business
would meet the required success.

The Scope Of The Project

The outlets of KFC all over the world and in Pakistan
in cities like Lahore and Karachi are meeting with unlimited
success day-by-day, resulting in expansion all over the world.
Since people have to eat, therefore, the business in eatables
will not fail if properly looked after by a team of dedicated lot.
In Multan, there are number of hotels and restaurants, cheap
and expensive, but all these places are always filled with
people of different class. We have felt that if conducted
properly, this project could bring us luck.

We have also carried out surveys and have found that

almost 60% of the occupants have a trend of eating out with
families and friends. Moreover, this business also benefits the
government policies of unemployment – also does not hinder
the government polices. A lot of revenue is paid to the
government in shape of excise duty and sales tax.

As we have selected one of the best spots in Multan,

therefore, we are sure that we will be able to compete with
other restaurants in surrounding areas. We are young,
energetic and honest. We want to stand on our feet; we want to
bright in our future with respect and dignity. With our honest
efforts, we are positive that this project will be able to meet the
success.

We strongly believe that if success has to be met,

then we will have to put in our best and honest efforts to
provide our food to the entire satisfaction of consumers. We
believe that we can make a difference, we will demonstrate
personal pride and commitment in everything we do. We have
a passion for making things better and we have a positive
outlook. We know working as team always gets the best
results. We will by the grace of God work with all our zeal and
enthusiasm.

By considering all above-mentioned factors of

our project, it is quite evident that we will compete in the
market. The scope of our project is good and the results will be
prolific. The location of business spot is already been
mentioned which appears to be the best in Multan. We intend
covering our clients from all part of the city mainly from
cantonment area. The rest from Gulgasht, Bosan Road, New
Multan and Railway Colony. In future we plan to introduce more
outlets of KFC in different areas of Multan.

M a r k e t S u r v e y
The market survey was carried out with express
intention of its being factual and maximum possible care has
been exerted to use the best sources of information.

There are many ways through which market survey

can be conducted and the most popular method available
entails about 80% of the facts considered and 20% of
necromancy and judgment. It would be true to say that the luck
of statistical data would make the study useless.

There are different ways through which market

survey can be conducted. It is only right, therefore to describe
the various ways of the market research, there are eight
different types of market research.

These are:

 Consumer Research
 Product Research
 Market Research
 Dealer Research
  Price and Policy Research
 Selling and Advertising Research
 Ware Housing
 Inventory Research,
 Cost and Efficiency Studies
In order to conduct our market survey we aimed at:

 Factual survey
 The awareness information system
 The opinion survey
 The attitude survey
 The future inventory survey
 The reason “why” survey.
To conduct a proper and a good survey, we divided the
city in to closes i.e. Upper Class and Middle Class.

Upper Class:

It includes the elite class of the city. It includes

people living in cantonment area, Tipu Sultan Road, Officers
Colony, Nasheman Colony, and few sprinkled here and there.
 The people living in these are mostly rich and can
afford to have a good and expensive food.

Middle Class:

It includes mostly the people living in areas such

as Gulgasht, New Multan, Shah Rukn-e-Alam and Bosan Road.
Most people living in these areas belong to middle class.

The survey report results are as follows:

In order to provide our customers with pleasant

atmosphere and good quality of food, we need different types
of machinery and equipment.

Results of Market Research

Q.No.1: How frequently in a month do you usually go
out to a restaurant?

By this question we wanted to know that at which

time we should be expecting more customers and the
result was that 76% people come out dinner, 19% at
lunch and 5% at other.

Q.No.2: Do you usually go out with your?

Friends 36%

Family 41%

Business Guests 23%

By this question we wanted to know what kind of

entertainment and atmosphere we should provide.
Q.No.3: How do you become aware of new restaurants?

We wanted to know in which field should we advertise

more. The results were that 30% come to now from
reviews of Mag. 29% TV, 21% Recommendation, 15%
by banners and 5% by Personal discovery.

Q.No.4: Rate the following attributes according to their

importance for a restaurant?

We asked this question to know to focus more.

Quality of food = 40%

Quality of services = 10%

Location = 15%

Crowd = 5%

Price = 30%

Q.No.5: Would you like the new restaurant in:

Cantt. Locality 46%

Bosan Road 35%

New Multan 19%

Note: Future plans are to open KFC branches on Bosan Road

and in New Multan.

The following questions were asked from those who

have visited KFC.

(In Pakistan or Abroad)

Q.No.6: On the scale of (1–5) how would you rate KFC?

1 for most Good 5 for least Good

90% people ranked KFC No. 2 and 10% ranked it as No. 1.

T e c h n i c a l A n a l y s i s
Types of Machinery

The different machines, which we need, are:

Several machinery is going to be supplied by KFC (USA)

Cooking Range:

For cooking purpose, we need specially designed

cooking range, which is systematically for cooking and baking
at different requirement temperatures.

Deep Freezers:

We need deep freezers to fulfil the requirements of

our customers.

In this section total expenses for our KFC restaurant

are given. From this survey of markets, we have estimated the
least price with good quality.

Air Conditioners:

We also want to provide good and pleasant

atmosphere so that people can enjoy food, therefore, we
require 5 split units of air conditioners.
 Separate Stoves:

We also require a separate stove with eight terminals

to cook different foods in large quantity.

Deep Frier:

Deep frier is a basic necessary of fast food. It is

needed for frying French fries, chicken, etc. French fries are
liked by almost everyone, so we need a deep frier.

Cost of these pieces of equipment and total

expenditure on it is given in Financial Analysis.

F i n a n c i a l A n a l y s i s
In this section total expenses for our KFC restaurant
from this survey of market we have estimated the least price
with good quality.

Ownership Of Business:

Our business is on partnership basis and we have six

partners, each one investing his/her own capital, which is near
about Rs. 643,000 as franchise will cost us Rs. 20,000,000.

Fixed Cost:

Following are the costs, which will incur only once.

Commercialization Cost Of Land:

As we are constructing restaurant in a residential

area, so we go it commercialized at Rs. 8 lac /canal.
Total estimated commercialization cost of 2 canal

= Rs 1,600,000

Land:

The total land is 2 canal and the cost of land is in that

area is Rs. 180,000 per marla. So the total land cost is Rs.
7,200,000.

Construction:
The basic aim to open a KFC restaurant is to given an
ideal eating place with pleasant atmosphere. So we will
construct our restaurant in a way that it would catch the
attention of our customers.

Specifications:

Foundation

P.C.C. (1:4:8) in base.

Super Structure

B.B. in cement Mortar (1:5)

Walls

1 foot 1.5 inches thick, coated with hot bitumen,

2 coat and 2 sheets of polyethene to all external
walls.

Floors
 Marble floors with 4 inches marble skirting.

Roof

R.C.C. roof slab (1:2:4) as per design.

Internal Finish

Cement mortar (1:2) ceilings;

Cement mortar (1:4) walls.

Internal & External Paint

Emulsion paints weather shield of off-white

colour.

Wash Room:

Marble tiles for floors and glazed titles for walls.

Opening

Whole front will be of glass and wire gauze windows

on the inside.

Schedule of the Area

Total area = 10800 squares feet

= 40 marlas

Total covered area = 8000 square feet

= 29.6 marlas
 Estimated cost

of construction = Rs. 800/sq. foot

Total estimated cost

of construction = 29.6 x 270 x 800

= Rs. 6393600

The total cost includes cost of construction of

building, glass & lighting.

Total sitting capacity = 150 persons

Air-conditioning Unit:

Five air-conditioner units will be installed to keep our

customers safe from the blazing heat of Multan and give them
a cool and relaxing atmosphere.

Cost of 1 air-conditioning unit= Rs. 8000

Cost of 5 air-conditioning units = Rs. 400,000

Furniture:

We will place high quality furniture to match the

standard of our restaurant.

Tables:
 Several tables are required for proper sitting
arrangements.

Total 30 tables will be placed.

Cost of 1 table = Rs. 2000

Cost of 30 tables = Rs. 60,000

Chairs:

To make our customers comfortable, relaxed

and easy, we will buy specially designed chairs. Total 150
chairs will be used.

Cost of 1 chair = Rs. 800

Cost of 150 chairs (150x800) = Rs. 120000

Interior Decoration:

We have decided to decorate our restaurant with

beautiful scenery.

Cost of one moving scenery = Rs. 15,000

Cost of 4 moving scenery = Rs. 60,000

Deep Frier:

As French fries are the ever favorite of all

people of all ages, so deep frier will be bought.

Cost of 1 deep frier = Rs. 2500

Cost of 5 deep frier (2500 x 5 ) =Rs.12500

Cooking Range:
 We have decided to use a specially designed
cooking range provided by KFC for convenient and easy
cooking.

Cost of 1 cooking range = Rs. 100,000

Fresh Pepsi Maker:

Cost of 2 Fresh Pepsi Makers = Rs. 40,000

Stove:

A special stove with eight terminals will be installed.

Cost of one stove = Rs. 10,000

Number of Cost of each

Number of Utensils Total cost
units (unit) (Rs.)
Dishes 200 50 Rs. 10000
Forks 300 8 Rs. 2400
Disposable Glasses
200/day 3 Rs. 600
(of KFC)
Total Rs. 13000

Total fixed cost = Rs. 170,09,100

Variable Costs:

These are the costs, which are subject to change,

these costs are taken
Salary of the Manager (Per month) = Rs. 18000

Salary of 5 Chefs (4000 x 5) = Rs. 20,000

Salary of 3 receptionists = Rs. 5,200

Salary of Waiters (10x1200) = Rs. 12000

Salary of Security Guard = Rs. 2,000

Salary of 4 Sweepers(1200 x 4) = Rs. 4800

Charges of Waste Buster Van = Rs. 400

Monthly Utilities Bill = Rs.80,000

Total = Rs. 142400

Total accrued cost of ingredients per month

like buns, eggs, beef, chicken, spices assorted,

vegetables, soft drinks, Monthly Tax

= Rs. 427,675 + 80,000

= Rs. 507,675

Total variable cost (142400 + 507,675) = Rs. 650075

Advertisement Expense:
 We are entering in the market with the large advertisements. So, for this reason,
we would have a large advertisement expense.

Advertisement Through Newspapers:

Many daily and weekly newspapers are published in Multan. The people of
Multan frequently read newspapers, that’s why we advertise our restaurant by these
newspapers.

The main daily newspapers published in Multan are:

 Nawa-I-Waqt

 Din

 Khabrain

Among English newspapers, important one is “This News” our ads. Will be given in
Urdu newspapers, 10 days before the opening ceremony of Restaurant and then 30 days
after it.

Rates:

Nawa-i-Waqt and Din = Rs. 1,700 per ad on 2 nd page Size

= 3 col x 10 cm

Khabrain = Rs. 1,200 per ad.

Dimensions of ad. = 3 col x 10 cm on 2 nd page

Expenditure of Nawa-i-waqt (1,700 x 40) = Rs.68,000

Expenditure of Din (1,700 x 40) = Rs.68,000

Expenditure of Khabrain (1,200 x 40) = Rs.48,000

Total expenditure = Rs.184,000

Ads. will be given in English Newspaper “The News”.

We will advertise KFC Restaurant in “The News” for

complete one month.

Rates:

The News = Rs. 1.800 per ad.

Dimension = 3 col x 10 cm on 2 nd page

Expenditure = (1,800 x 30)

= Rs. 54,000

Advertisement Through Television:

In Pakistan, we have three TV channels that are ‘PTV’, Channel-3 ‘PTV World’.
But we have chosen PTV for the advertisement of our KFC Restaurant, because it is the
most popular TV channel in Multan.

3 ads. will be displayed during “Drama Hour”

2 ads. will be displayed after “Khabarnama”.

 These ads will start one week before the inauguration
of our restaurant and will last till the end of next three
weeks.

Rates:

During Drama Hour (7-9 PM),

3 ads of 10 sec @ 3,800 = Rs. 11,400

After Khabarnama (9PM – 12 AM),

2 ads of 10 sec. @ 3,300 = Rs. 6,600

Daily Cost (11,400 + 6.600) = Rs. 18000

Total Adv. Exp. (8000 x 30) = Rs. 540000

Advertisement Through Printed Material:

We will also advertise through printed material like banners, handbills,

signboards, and stickers. This is important way of advertising because these printed
materials almost cover the whole city. Those people who miss ads. on TV or those who
cannot read newspaper, will certainly see this material.

Cost:

30 banners @ Rs. 300 = Rs. 9,000

4 signboards @ Rs. 8,000 = Rs. 32,000

15,000 handbills @ Rs. I.5 = Rs. 22,500

 15,000 stickers @ Rs. 1 = Rs. 15,000

Total Cost = Rs. 78,500

Total Advertising Expense:

Newspapers = Rs 238,000

TV Media = Rs. 540000

Printed Media = Rs. 785,000

Total = Rs. 1563000

Revenues:

We have found out our revenues on average basis per

month. The name of items available in our restaurant, their
prices and quantity sold will be given as follows:

CATEGORY NO. 1 BURGERS

Name Rate Quantity Sold Revenue
KFC Zinger 100 6000 600000
Fillet Burger 80 4500 360000
Masala Burger 50 6000 240000

Total 1200000

Note: These Burgers are specialty of KFC

 CATEGORY NO. 2 SOFT DRINKS
Name Rate Quantity Sold Revenue
Pepsi 15 2000 30,000
Marinda 15 15000 22500
7 up 15 1000 15000

Total 67500

Note: Pepsi is sponsoring KFC all around the world.

CATEGORY NO. 3 KFC CHICKEN

Name Rate Quantity Sold Revenue
10 PCS Plate 450 150 67500
8 PCS Plate 400 250 100000
5 PCS Plate 325 400 130000
3 PCS Plate 250 500 125000
Total 422500

Note: These Chicken Plates are Main Utility of KFC

So the total revenue per month is Rs. 1690000

Break-even Point:

The break-even point is the point where the total revenue is equal to the total
cost. This point shows that after how much time we can get our profit.

Break-even point : C(x) = R(x)

Cost = Fixed Cost + Variable Cost

= 18572100 + 650075 (x)

where x = months
 18572100 + 650075x = 1690000 (x)

1690000x – 650075x = 18572100

1039925x = 18572100

x = 17.9

So we can achieve our break-even point in 17 months and 28 days.

A s s u m p t i o n s

While considering our project, we have taken the following assumptions:

1. We have assumed that as our business moves

towards success, we will offer different discount
packages for our customers and will give special
discount to the students. Eventually this will
increase our sales.

2. We have assumed that we will try to compete all the

existing firms in this field.

3. Our restaurant will remain opened for the full week

and also during special holidays like Eid, 14 th
August, etc.
 4. There may be a variation in the price of the
ingredients, which we will be using with respect to
taxes.

5. We are assuming that no other international chain

restaurant will be opening in Multan for two years.

Q u e s t i o n n a i r e
(Feasibility of Opening KFC in Multan)

1. How frequently in a month do you usually go out to restaurants?

Lunch [___________]

Dinner [___________]

Other [___________]

2. What is your monthly household expenditure on food?

Rupees [___________]

3. Do you usually go out with

Friends [___________]

Family [___________]

Business Guests [___________]

4. What kind of food do you usually prefer to have at restaurants?

Pakistani Food [___________]

 Chinese Food [___________]

Fast Food [___________]

Others [___________]

5. How do you become aware of new restaurant?

Recommendation [___________]

Banners [___________]

Reviews and Mag. [___________]

Personal Discovery [___________]

6. Rate the following attributes according to their importance for a

restaurant?

(Rate from 1–5)

Quality of food [___________]

Quality of Service [___________]

Location [___________]

Crowd [___________]

Price [___________]

7. How much do you spend on an average when you go out to a

restaurant?

Rupees [___________]
 • The following questions are for those who have visited KFC
only (In Pakistan or Abroad)

8. On the scale of (1–5) how would you rate KFC? [___________]

9. Would you prefer KFC food to other restaurants in Multan?

Yes [___________] No [___________]

10. Would you like new restaurant in

Cantt Locality [___________]

Bosan Road Locality [___________]

New Multan Locality [___________]

11. Would you prefer any other thing at KFC (Please Specify).-

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________

Kindly provide the following information about yourself. It will be kept secret and is
required for data analysis only.

1. Gender

Male [___________]

Female [___________].

2. Age (in years)

[___________]