Food for Friend Expansion Project Analysis

The assignment provides a comprehensive analysis of the expansion project of Food for Friend, including data analysis, network diagram, and financial tools. The data analysis reveals that the project has good growth opportunity due to rising perception and attitude of Britishers towards eating out at restaurants. However, investment appraisal suggests that the project is not acceptable due to negative NPV and IRR below required return.

BUSINESS DECISION MAKING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK -1...........................................................................................................................................1
1.1 The data collection methods.............................................................................................1
1.2 The survey methodology and sampling frame.................................................................1
1.3 Questionnaire....................................................................................................................2
TASK 2............................................................................................................................................3
2.1 Creating information for decision making by summarizing primary data set..................3
2.2 Analyzing results to draw valid conclusion......................................................................6
2.3 Assessing data set through using measures of dispersion................................................7
2.4 Explaining the use of quartile, percentile and correlation co-efficient in decision making
................................................................................................................................................7
TASK 3............................................................................................................................................8
3.1 Graphical presentation......................................................................................................8
3.2 Forecasting through trend line........................................................................................10
3.3 Power point presentation................................................................................................10
3.4 Formal business report...................................................................................................11
TASK-4..........................................................................................................................................11
4.1 Use of appropriate information processing tools............................................................11
4.2 Project plan to establish new brand of Food for Friend in London................................12
4.3 Using financial tools for good investment decisions......................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................15

INTRODUCTION
In the modern times, management plays an integral part is being played by decision-
making. Both organizational and managerial activities are been determined by decisions. In the
success of the organization the decision-making plays a vital role (Weigold,Weigold and Russell,
2013). Good decision means good business. In the company or organization the efficient and
effective decision are being made by the managers in order to make use that profit is being
gained in the business.In this report, the data will be collected for the new restaurants that is
“Food for Friends”. Further, different tools will be applied to the data which is been collected
regarding this new restaurant.
TASK -1
1.1 The data collection methods
Data collection – It is the process by which the data can be collected and measures
information on targeted variables in an established systematic fashion. The questions are been
asked in order to analyze the outcomes. For a particular purpose, the data is being gathered
systematically. The data is being collected in order to make decision about important issues. In
all fields of research, data collection can be used. There are basically two types of data collection
methods that is been used to collect data about the new food restaurant that is “food for friends”
Primary data – In this data is being gathered for the first time and it is fresh. Under the
control and supervisor of an investor the data is been gathered. It is a form original data that is
been collected for the specific purpose. The surveys, experiments, focus groups etc are some
type of primary research methods through which data can be gathered. In order to gather data for
this new restaurant a real survey of customers was conducted (Orkin, 2014).
Secondary research- In this the data is being collected by someone for before. For
another purpose, the data is being gathered in this. The time and cost and efforts that is need in
the collection of data is less in this in comparison with primary as it is taking place for the first
time. It is being used again in different context. The some of the resources of secondary data are
magazines, the internet, newspaper, books and journals etc. For this new restaurant the secondary
data that is being used is sales, profit , history of customer for 10 years is been used.
1.2 The survey methodology and sampling frame
The survey methodology examines the sampling of individual units from a population
and the associated survey techniques of data collection such as construction of questioners. In
1

this the survey will be done by making questionnaire regarding the new plan of restaurant that is
“food for friends”. Food for Friend must conduct survey of their existing customer base to know
their perception towards opening a new outlet. Moreover, survey will provide useful information
to the restaurant about their satisfaction level and helps to determine areas where restaurant need
to focus to mitigate customer difficulties.
Questionnaires- In the survey research the most commonly used tool is questionnaire,. If
the questionnaire are not written adequately the outcomes of a particular survey are worthless.
The valid and reliable demographics variable measures should be produced by questioners .In
order to collect information the series of questions are been there in questions (Litosseliti, 2017).
Here, food for Friend will conduct survey of customers, in which, they will ask with a set of
questions to find out their desires, food choices and perception toward its offerings and prices
charged to know their satisfaction level. It will help the restaurant to make solid plan for opening
new restaurant for expanding its operations.
Sampling frame - In order to gather or collect information about this new restaurant the
sampling frame is use randomly .As it is not possible to collect data from all the customers. So ,
a random size of about 60 people is been selected randomly. The random process is been used to
distribute these questions among 60 persons. Food for Friend will draw a sample of 60 customers
randomly from its large customer base. Random selection is preferred to avoid unnecessary
biasness which is helpful to generalize the results to the entire population, because all units or
customers have equal probability of being included in the drawn sample. Selected consumers
will be asked with different kind of questions mentioned in questionnaire and they need to
respond their answer through e-mail which does not takes too much time.
1.3 Questionnaire
Questionnaire presents various set of questions that the selected customers need to reply
to express their choices and preferences. In order to know customer food choices, preferences,
price sensitivity and other, different kind of questions like open-ended, close-ended, ranking
questions and others is prepared. It will help Food for Friend to determine highly preferred
cuisine that gains high demand in the market. Moreover, sensitivity of the customer will help
restaurant to make rationale-pricing strategy in line with the customer affordability. Besides this,
location based question will enable restaurant to open the new outlet at the best location which
seems convenient for all the users.
2

1.The number of times you go to a restaurant form lunch or dinner?
 Several time a week
 About once a week
 3-3 times in month
 Never
 Less than 2-3 years
2. The number of money that is been spent on each person when you go out in a restaurant
 Less than $ 10
 In between $ 12 and $ 20
 In between $ 21 and $ 35
 In between $ 35 and $ 49
 More than $ 49
3. The main reasons for you to got to a restaurant
 To have good food
 For some events such as anniversary, apry
 Others
4. What are the criteria that are more important for you when you go in a restaurant
 Concept of restaurant
 Quality of food
 Service
 Price
 Convenience
5. The style of restaurant that is most preferred by you?
 Traditional
 Homey
 Modern
 Mixture of tradition and modern
6. The type of cuisine preferred by you?
 American
 Thai
 Indian
3

 Arabic
 French
 Chinese
7. The location of the restaurant that is been preferred by you?
 Near to college campus
 1-2 km away from college
 Far-away from the college
8. If it is been offered in a restaurant what would attract you the most in it?
 Live music
 Classical music
 Host book clubs
TASK 2
2.1 Creating information for decision making by summarizing primary data set
Primary data assessment
Theme 1: Mixture of tradition and modern style of restaurant that is most preferred by the
customers
Particula
rs
Views of
responde
nts
% of
responde
nts
Tradition
al
10 17%
Homey 5 8%
Modern 15 25%
Mixture
of
tradition
and
modern
30 50%
Total 60 100%
4

% of respondents
% of respondents
Interpretation: Outcome of survey presents that large number of customers such as 50%
prefer mixture of modern and traditional style. On the other side, 25% respondents five priority
to the modern style while making selection of restaurant. Thus, considering such result it is
suggested to F&F to indulge such style within the restaurant unit which in turn helps in attracting
more customers.
Theme 2: American and Chinese cuisine is preferred by the customers
Particular
s
Views of
respondents
% of
respondents
American 20 33%
Thai 6 10%
Indian 4 7%
Arabic 2 3%
French 8 13%
Chinese 20 33%
Total 60 100%
5

% of respondents
% of respondents
Interpretation: In survey, 33% respondents said that they prefer American style, whereas
7% people like Indian food. Further, out of selected respondents 13% stated that French food is
the most likely preferred by them. In contrast to this, 33% customers, who are selected as
respondents, like Chinese food menu. Thus, considering the preference of customers F&F should
include more American and Chinese dishes in menu.
Theme 3: Live music concert is mostly offered by the customers in a restaurant
Particular
s
Views of
respondents
% of
respondents
Live music 32 53%
Classical
music
18 30%
Host book
clubs
10 17%
Total 60 100%
6

% of respondents
% of respondents
Interpretation: From survey, it has found that customers like to visit restaurant that
organizes live music concert. On the other side, 18% respondents give more preferences to the
classical musical night. Thus, for attracting customers and attaining high margin F&F should
focus on organizing live musical shows or nights.
2.2 Analyzing results to draw valid conclusion
Sales and profit data of F&F for the year of 10 years is as follows:
Year
Sales (in
£)
Profit (in
£)
2008 1220 220
2009 1380 320
2010 1470 440
2011 1330 380
2012 1580 590
2013 1700 680
2014 1840 740
2015 2050 830
2016 2130 900
2017 2300 970
Sales (in
£)
Profit (i
n £)
Mean 1700 607
Standard Error 116.619 81.79989
Median 1640 635
7

Mode #N/A #N/A
Range 1080 750
Minimum 1220 220
Maximum 2300 970
Sum 17000 6070
Count 10 10
Interpretation: From assessment, it has found that mean and median sales of F&F were
£1700 &£607 significantly. Further, during the period of 10 years minimum and maximum sales
of £1220 &£2300 was generated by the restaurant unit. In addition to this, average profitability
attained by restaurant during the concerned period was £607. Along with this, median or 50%
profit margin belongs from the value of £635. Thus, by taking into account all the above aspects
it can be presented that performance of restaurant unit is good.
2.3 Assessing data set through using measures of dispersion
Calculation of standard deviation
Sales (in
£)
Profit (i
n £)
Standard
Deviation 368.78 258.67
Sample
Variance 136000 66912.22
Kurtosis -1.22 -1.404
Skewness 0.37 -0.089
Interpretation: Results of statistical evaluation shows that standard deviation pertaining
to sales and profit margin accounts for £368.78 & 258.67. Hence, in the near future mean value
will deviate from such figure. Such standard deviation is neither too high nor too lower (Moja
and et.al., 2016). Hence, for getting the desired level of outcome ors success restaurant unit
should focus on developing strategic or competent framework.
2.4 Explaining the use of quartile, percentile and correlation co-efficient in decision making
Calculation of quartile and percentile
Particulars Sales (in £) Profit (in £)
Quartile 1 and 25th percentile 1402.5 395
Quartile 2 and 50th percentile 1700 680
8

Quartile 3 and 75th percentile 2070 847.5
Interpretation: Outcome of statistical analysis shows that quartile 1 and 3 pertaining to
sales of F&F accounts for £1402.5 &£2070 respectively. Further, quartile 2 implies for median
which in turn shows that 50% of sales is related to £1700 significantly. Along with this, profit of
F&F also increased from quartile 1 to 3 to a great extent. Referring such statistical result it can
be depicted that sales and margin of the concerned restaurant unit is continuously increasing.
Correlation co-efficient
Sales Profit
Sales 1 .98
Profit .98 1
Interpretation: By doing statistical analysis, it has found that highly positive relationship
takes place between the concerned variables such as sales and profit. On the basis of such aspect,
both the concerned variables will move in a similar tandem (Mukaka, 2012). Thus, F&F should
lay emphasis on effectual promotional campaign which in turn helps in enhancing both sales as
well as profit margin.
TASK 3
3.1 Graphical presentation
Financial data set
in £
9

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
1220 1380 1470 1330
1580 1700 1840
2050 2130
2300
220 320 440 380
590 680 740 830 900 970
Line chart
Sales (in £) Profit (in £)
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1220
1380
1470
1330
1580
1700
1840
2050
2130
2300
220
320
440
380
590
680
740
830
900
970
Bar chart
Profit (in £) Sales (in £)
Interpretation: The above column graph presents that in the year of 2008 sales of F&F
accounted for £1220 respectively. On the other side, at the end of 2017 sales revenue of
restaurant unit reached on £2300 significantly. Along with this, due to having positive
relationship profit margin of F&F also moved from £220 to £970. Hence, considering the trend
of financial data set it can be stated that customers prefer to visit restaurant more frequently.
Increasing sales pattern exhibits that customers are highly satisfied from the dinning services
which are offered by F&F.
10

3.2 Forecasting through trend line
Trend line is used to assess historical trend and use it to predict future. It facilitate
managerial team in good quality decisions.
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
1220 1380 1470 1330 1580 1700 1840 2050 2130 2300
220 320 440 380 590 680 740 830 900 970
f(x) = 118.30303030303 x + 1049.33333333333
R² = 0.943331352743118
f(x) = 84.4242424242424 x + 142.666666666667
R² = 0.976428236802525
Column chart
Sales (in £) Linear (Sales (in £))
Profit (in £) Linear (Profit (in £))
Trend line derived following outcme for future years:
 Sales trend line shows a rapid growth by representing R square of 0.9433 and also
predicts increase in sales for future years.
Sales for 2018: 118.3x + 1049.3
= 118.3(11) + 1049.3
= GBP 2,350.6
 Profitability trend line demonstrates a slightly moderate growth rate because with the
increase in sales, Food for Friend incurred more cost due to inflation and also spent more
on advertisement, staffing and other overheads, resultant slightly increase in profit
(Babajana and Phillips, 2016).
 In forthcoming period, restaurant expects a moderate growth from the current level of
GBP 970 due to high growth in revenues at little bit increase in cost.
Profitability for 2018: 84.42x + 142.67
= 84.42(11) + 142.67
= 1071.29
3.3 Power point presentation
Attached
11

3.4 Formal business report
To: Food For Friends
From: Business analyst
Date: 22nd December 2017
Introduction: This formal report is presenting to report managerial team about the key areas to provide
insight towards historical performance regarding sales and profit aspects.
Methodology: Graphical presentation is used to discover underlying trends and pattern whereas trend
line is applied to predict future trends.
Results and decisions:
 In all the year, sales shows increasing trend with one and only exception in 2011 when it dropped
downwards.
 Similar trend is discovered for the profit performance which changes in the same direction and trend
followed by sales. Profit shows rising trend except only 2011 when it goes down to GBP 380.
 After 2012, sales and profit shows a strong progress because the trend towards eating out become
highly popular and now, people visit restaurant frequently.
Recommendations: Quality management, best services, nutritional and healthier food delivery at
acceptable price would enable Food for Friend to cover a good growth.
Thank You!
Regards
Business Analyst
TASK-4
4.1 Use of appropriate information processing tools
In the management of the business the essential role is been played by information
technology. With greater accuracy and efficiency the business can be managed by using
computers for storage transfer, retrieval or transmission of information. The corporation, tactical
and operational strategies can be formulate by business by considering information technology in
the bushiness (Wright and Jack, 2016).
Transaction processing system – From day-to-day operation, a business process
transaction may result. By making use of TPS the pay checks can able created and the orders can
be purchased. The interaction of users with the system is need in TPS in real time in order to
12

direct system to gather, store and modify data. By means of a terminal transaction is being
entered by user.
Management information system – On an industry specific management information
system the business managers and owners rely on. With this all information about the sales and
inventors data can be receive by the company. The pre- schedule reports can be created by them
and in the strategic, tactical and operational planning it can be used (Jacob and Braun, 2017).
Decisions support system – In this, the predetermined or ad hoc reports are bee sued by
managers and owner to support operation of planning and problem resolution decision. To a
specific question the answered are been find by the users through DSS.
Executive support system – The long-term trends can be identified by owners of business
and the mangers as it contains predetermined reports. These long terms trends that are been
identifies are then used in to support strategic planning ad non-routine decision-making. On any
icon that is been displayed on the ESS screen the system users click on this and in order to see
individual predetermined reports and graphs they enter report criteria. On any issues, the ESS
report briefs the owners of business and owners (Bloom and Van Reenen, 2014). In order to
predict outcomes, asses performance and calculate statistics that are based on current data the
ESS offers analysis tools.
4.2 Project plan to establish new brand of Food for Friend in London
Task Name Duration Start Finish Predecessors Total Slack
New restaurant in
London 55 days Fri 12/22/17 Thu 3/8/18 0 days
Need recognition 5 days Fri 12/22/17 Thu 12/28/17 0 days
Gathering information
by market research 17 days Fri 12/29/17 Mon 1/22/18 2 0 days
Conceptualization 4 days Wed 1/24/18 Mon 1/29/18 3 0 days
Decision matrix 3 days Fri 12/29/17 Tue 1/2/18 2 19 days
Analysis and design 8 days Tue 1/30/18 Thu 2/8/18 4,5 0 days
Selecting the best
location 3 days Fri 2/9/18 Tue 2/13/18 6 0 days
Budget preparation 2 days Fri 2/9/18 Mon 2/12/18 6 6 days
Setting infrastructure 12 days Wed 2/14/18 Thu 3/1/18 7,8 5 days
Recruitment 10 days Wed 2/14/18 Tue 2/27/18 7 0 days
Staff training 7 days Wed 2/28/18 Thu 3/8/18 10 0 days
Supplier contract 5 days Tue 2/13/18 Mon 2/19/18 8 12 days
Inaugration 1 day Tue 2/20/18 Tue 2/20/18 12 12 days
13

Above created Gantt chart presents every activity with their beginning time, ending date
and duration that it will take to complete. Every activity is presented in the form of bar across the
time scale.
14

Network diagram prepared above present some activities in red mark; all these are critical
means requires more attention of the PMO (Project Manager Officer) to finish it anyhow
according to the set schedule. If any of these events were delay by some period, then, it would
lead to delay the entire completion of new restaurant opening project. The graph visualized that
events 2, 3, 4, 6, 7, 10 and 11 are critical with no slack, thus, summing up their duration together,
project is probable to finish in 5 + 17 + 4 + 8 + 3 + 10 + 7 = 55 days.
4.3 Using financial tools for good investment decisions
Net present value: It is a valuable tool that analyst can use to measure their potential costs
and project success. NPV is the PV (present value) of the future cash flows at the required return
rate compared to the beginning outlay. In practically, it is a method to compute return on
investment (ROI) of the project (Gallo, 2015). Food for Friend can choose it to carry out
financial analysis. The method is one of the most preferable tool of investment appraisal because
it helps to know the net return after discounting all the relevant forecasts made by managerial
team for future. Hence, it is more superior way over payback and accounting rate of return.
However, the results accuracy heavily depends upon the managerial estimations for cash flows
and appropriateness of discounting factor used (Dellavigna and Pollet, 2013).
Internal rate of return: It is sometime also known as yield on project at which investment
proposal promises to generate favorable return. It is the discount rate at which PV of prospected
15

cash inflows becomes equal to its outlay (Internal rate of return, 2016). The rate is set by the
management and mostly, it is the cost of capital. If IRR is greater or equal to the project rate,
then, the project seems acceptable for Food for Friend otherwise, it must be rejected.
Year Cash flows
0 -190000
1 50000
2 64000
3 58000
4 70000
IRR 10%
Negative NPV and IRR of 10% below required return @ 12% suggests Food for Friend not
to undertake such investment project.
CONCLUSION
The data analysis found that considering rising perception and attitude of Britishers towards
eating out at restaurant, the expansion project of opening a new outlet is found with good growth
opportunity. Moreover, secondary analysis determined that it is expected that Food for Friend
will generate more sales at good return in following years. It is because, trend line predicts rising
trend for future and opening one more restaurant will increase its existing customer base, which
in turn, drive more sales and profitability. In spite of this, it is found that expansion of the
restaurant by opening a new restaurant unit is expected to take 55 days in completion. However,
investment appraisal does not seem existing project acceptable due to negative NPV and IRR
below required return.
16

REFERENCES
Books and journals
17