Food for Friends Restaurant Analysis

This assignment analyzes the performance of 'Food for Friends', a successful vegetarian restaurant. It investigates customer satisfaction through surveys and feedback, examining factors like food variety, ambience, and service. The analysis also delves into the restaurant's financial health, calculating key metrics such as Net Present Value (NPV) and Internal Rate of Return (IRR) to assess the viability of investing in a second-hand restaurant. Additionally, a Gantt chart is used to visualize project activities and durations, highlighting the critical path for efficient operations.

BUSINESS DECISION
MAKING

Illustration Index
Illustration 1: Customers enjoy food................................................................................................4
Illustration 2: Satisfaction level on variety of food offered.............................................................4
Illustration 3: First preference of the customers..............................................................................5
Illustration 4: Satisfaction level from ambience..............................................................................6
Illustration 5: Column Chart............................................................................................................9
Illustration 6: Bar chart..................................................................................................................10
Illustration 7: Line chart.................................................................................................................10
Illustration 8: Scatter diagram........................................................................................................11
Illustration 9: Trend Line...............................................................................................................12
Illustration 10: Gantt Chart............................................................................................................16
Illustration 11: Critical path...........................................................................................................16
Index of Tables
Table 1: Data of sales and profits....................................................................................................6
Table 2: Calculation of central tendency.........................................................................................6
Table 3: Computation of standard deviation....................................................................................7
Table 4: Computation of Quartiles, Percentiles and coefficient of correlation...............................8
Table 5: Activities involved...........................................................................................................14
Table 6: Duration of activities and slack.......................................................................................14
Table 7: Computation of DCF and NPV........................................................................................16
Table 8: Computation of IRR........................................................................................................17

INTRODUCTION
Decision making is an important activity that is conducted before investing in some new
business. It helps to assess that whether the investment will be feasible for the entity or not (Chen
and Hwang, 2012). Food for Friends is a vegetarian restaurant situated in historic South Lanes
which is planning to open its second restaurant in UK. The assignment discusses the primary
data collected to study the preferences of the customers. Further, sales and profits data is taken
into consideration to draw graphs and charts depicting the success of the restaurant. Gantt chart
is prepared to analyse the activities that conducted to start the restaurant. In the end, NPV and
IRR will be calculated to study the financial viability of the plan.
TASK 1
A.C. 1.1 Planning to collect primary and secondary data
Primary data is the first time collected data for anything which is not used before
anywhere. This data is the first hand data and it is specific research that is done for a specific
purpose. This can be modified according to the needs of the situation. This data can be collected
by anyone in any type like questionnaire, surveys, observation, communication i.e. direct and
indirect and many more. This data helps the market as it provides the proper information.
Secondary data is the second hand data as it is used by the others previously. It is an
information that already collected by the others. This data can be in any form like census,
internet searches and data are collected by the government that is used by the others according to
their needs. This data is time saving then the primary data as there is no need to research on
something as the data already exist.
If the market research is conducted by the company then they can use both type of data
according to the situation demands In market the primary data will give the information about
the new choices and the preferences of the customers and secondary data will tell about the
status of the product in the market. It will help to understand the growth, market, price, taste and
location preferences in order to understand that whether the decision of opening a second
restaurant is viable or not.
A.C.1.2 Survey methodology and sampling frame used
The survey conducted for Food for friends will consist of to type f data collection
methods. Primary data will be collected with the help of questionnaire, there data of 50
respondents will be collected. The questionnaire will consist of 10 questions which are relevant
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to be asked in order to understand market perspective. It will have closed ended questions in
which respondent will require marking suitable option. The data received from these
respondents will be interpreted in order to find out the results. Random sampling method will be
used where the respondents will be selected on random basis. This technique will help to get
unbiased results from the population (Hacklin and Wallnöfer, 2012). Secondary data will be
collected based on the information already provided by Food for friends. Data of sales revenue
and profit will be taken into consideration to get valuable outcomes. It will help to understand
the historical sales and profit growth and relationship between both the figures to forecast the
future trend.
A.C. 1.3 Design of questionnaire
Primary data
Questionnaire
Name ….......................
Gender …....................
Age …........................
Question 1: Do you enjoy food served by Food for Friends?
 Yes
 No
 Neutral
Question 2: Are you satisfied with the variety of food offered by Food for Friends?
 Highly satisfied
 Satisfied
 Dissatisfied
 Highly dissatisfied
Question 3: While visiting in a restaurant, what is the first thing you prefer the most?
 Ambience
 Service
 Hygiene
 Variety of menu
 Price
Question 4: Are you satisfied with the ambience provided by Food for friends?
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 Highly satisfied
 Satisfied
 Dissatisfied
 Highly dissatisfied
Rate the following services of Food for Friends from 1 to 5 where,
1 is very good, 2 is good, 3 is average, 4 is bad 5 is worst
Question 5: Attentiveness of staff 1 2 3 4 5
Question 6: Cleanliness
Question 7: Order time
Question 8: Environment
Question 9: Sitting arrangement
Question 10: Location of the restaurant
Question 11: What suggestion will you give to Food for friends restaurant?
Ans….................................................................................................................................................
...............................................................................................................................................
The questionnaire will help to assess the customer satisfaction level based on the services
provided by the restaurant. If the customers are not satisfied then it can raise the bar of quality
standards for its second restaurant. It will also help to analyse the preferred areas of the
customers and what are their expectations from the restaurant. The questionnaire contains yes or
no questions, multiple choice questions, ratings question and an open ended question which will
help to get suggestions from the customers.
A.C. 2.1 Analysing the collected data and summary of representative values
Theme 1: Majority of the customers enjoy food served by Food for friends.
Factors Respondents
Yes 29
No 12
3

Neutral 9
Interpretation
Based on the above pie chart it can be interpreted that the customers are satisfied with the
food served by Food for Friends. Out of 50, 29 are satisfied and 12 are not satisfied.
Theme 2: Majority of the customers are satisfied with the variety of food offered by Food for
Friends
Factors Respondents
Highly satisfied 12
Satisfied 16
Dissatisfied 13
Highly dissatisfied 9
4
Yes
No
Neutral
Illustration 1: Customers enjoy food

Interpretation
Out of 50 respondents, 16 customers are satisfied with the variety of food provided by
Food for Friends. However, 13 people are dissatisfied by the services. It is recommended that the
restaurant should increase the variety in its second restaurant in London.
Theme 3: Foremost preference of majority of the customers is hygiene while looking for the
restaurant
Factors Respondents
Ambiance 7
Service 5
Hygiene 15
Variety of menu 11
Price 12
5
Highly satisfied
Satisfied
Dissatisfied
Highly dissatisfied
Illustration 2: Satisfaction level on variety of food offered

Interpretation
The customer prefer hygiene over anything while selecting restaurant for visit. Price is
the second factor considered by the customers. It shows that Food for Friends should concentrate
on these two factors in its second restaurant.
Theme 4: Majority of the customers are satisfied by the ambience provided by Food for Friends
Factors Respondents
Highly satisfied 14
Satisfied 18
Dissatisfied 11
Highly dissatisfied 7
6
Ambience
Service
Hygiene
Variety of menu
Price
Illustration 3: First preference of the customers

Interpretation:
Out of 50 respondents, 18 are satisfied by the ambience provided by Food for Friends to
its customers. The restaurant can go with the standards it has already set for its ambience in the
new restaurant based on the old one.
Secondary data
The values of sales and profits are taken in order to understand that whether it will be
viable for Food for Friends to open another restaurant. These data are already been published and
hence, are categorized as secondary data.
Table 1: Data of sales and profits
Year Sales (in £) Profit (in £)
2011-12 35447 4300
2012-13 37559 6200
2013-14 38042 7252
2014-15 40569 8980
2015-16 42365 11264
A.C. 2.2 Calculations for sales and revenue and recommendations based on it.
Mean mode median of sales and profit
Table 2: Calculation of central tendency
7
Highly satisfied
Satisfied
Dissatisfied
Highly dissatisfied
Illustration 4: Satisfaction level from ambience

Measurement of central tendency helps in identifying the central point of the data. Mean
is used to find an average of data (Hartman, DesJardins and MacDonald, 2014). Based on the
above calculation, mean of sales is 38796.4 which shows that on an average Food for friends
have sales of £38796 every year. However, the sales are at increasing phase shows that the
restaurant is earning higher sales revenues every year. In case of profit, the man value is £7599.2
which shows that the restaurant earned the profit of £7599.2 every month. Profit is also at
increasing phase which signifies good running condition of the restaurant.
Median is the middle value of any data when arranged in ascending or descending order
(Laudon and et.al., 2012.). The calculation above displays, the mid value of sales is 38042 which
is quite close to the value of mean. In case of profits, median is 7252 which is a bit lower from
the value of mean.
2.3 Calculation of standard deviation
Table 3: Computation of standard deviation
Year Sales (in £) Profit
2011-12 35447 4300
2012-13 37559 6200
2013-14 38042 7252
2014-15 40569 8980
2015-16 42365 11264
Standard deviation 2701.66 2659.91
Standard deviation shows the deviated data in quantifiable terms. Less deviation shows
that the data point lies near to the mean and high standard deviation depicts that the points of the
data are scattered over wide range of values (Zsambok, 2014). Based on the calculation
conducted above for sales revenues and profits, it can be interpreted that the data of sales
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revenue and profits both is highly scattered between wide rage of values due to presence of high
standard deviation.
2.4 Calculating quartiles, percentiles and coefficient correlation
Table 4: Computation of Quartiles, Percentiles and coefficient of correlation
Quartile divides the data set which is already sorted in ascending or descending order, in
four equal parts. Median divided the data is two parts but quartile divides it in 4 parts (Pettigrew,
2014). This method is used in order to study large data sets. Based on the calculations conducted
above, it can be interpreted that £37559 of sales revenue falls in one fourth of the data set,
£37559 of the sales revenue falls in half of the data set and so on. It helps in estimating future
estimated figures of sales revenue. In case of profits, £6200 of the gains have been achieved
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through one fourth of the data set, £7252 have been gained through half of the sales revenues and
so on. In case of percentiles, 25% of sales achieved by Food for Friends is £37559, However
when considering 100% of the data set, the restaurant has achieved £42365 of sales revenues.
Coefficient of correlation describes the correlation and dependence in quantifiable terms.
It depicts the relationship of two or more variables. The values of correlation lie between =1 and
-1 (Solomon, 2014). In the case of Food for friends restaurant, correlation coefficient interprets
the relationship between sales revenues and profits. Since, the value of coefficient of correlation
is +0.99 it shows that there is positive linear relationship between sales revenue and profits.
Moreover, as the sales revenues are increasing year by year, the profits of the restaurant are also
at increasing phase.
TASK 2
A.C. 3.1 Graphical representation and interpretation
Year Sales (in £) Profit (in £)
2011-12 35447 4300
2012-13 37559 6200
2013-14 38042 7252
2014-15 40569 8980
2015-16 42365 11264
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2011-12 2012-13 2013-14 2014-15 2015-16
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Sales (in £)
Profit
Illustration 5: Column Chart
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12
2011-12
2012-13
2013-14
2014-15
2015-16
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
Sales (in £)
Profit
Illustration 6: Bar chart
2011-12 2012-13 2013-14 2014-15 2015-16
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Sales (in £)
Profit
Illustration 7: Line chart

Based on the above graphs, it interprets that, the sales revenue is in increasing phase
which shows that Food for Friends is growing every year. The profits have grown drastically in
2015-16 and the graph is upward going in this year. The sales for the restaurant doesn't increase
much from 2012-13 to 2013-14. However, the growth is continuous and positive in sales revenue
and profits both. Further, it concludes that the company's business profits are growing and hence
giving rise to increase in brand image. Further, if the company invest in other restaurant, it will
prove to be profitable for the company due to growing demand.
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35000 36000 37000 38000 39000 40000 41000 42000 43000
0
2000
4000
6000
8000
10000
12000
Profit
Illustration 8: Scatter diagram

A.C. 3.2 Preparation of trend line and its interpretation
Trend line denotes the direction of something and helps to make future projections. Based
on the trend line developed for sales, it can be articulated that it is on increasing phase.
The equation of trend line are as follows:
Trend line equation for sales: f(x) = 1684.6x + 33742.6
Trend line equation for profits: f(x) = 1670.8x + 2586.8
It shows the sales of the restaurant is increasing. Also, the market conditions are in favour
of the restaurant. It shows that the customers are happy of offerings of Food for Friends. The
restaurant is recommended to continue with what is presently offering to its customers.
Moreover, the profits of the restaurant are also growing due to increase in its sales revenue. The
restaurant is advised to continue with the workings of opening second restaurant in UK.
A.C. 3.3 Business Presentation
Attached in PPT
A.C. 3.4 Formal business report
Respected CEO
It is required to inform you that market research is conducted in order to find out whether
Food for Friends should start one more restaurant in London or not. Based on the analysis
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2011-12 2012-13 2013-14 2014-15 2015-16
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
f(x) = 1684.6x + 33742.6
f(x) = 1670.8x + 2586.8
Sales (in £)
Linear (Sales (in £))
Profit
Linear (Profit)
Illustration 9: Trend Line

conducted referring to the sales revenue and profits of the existing restaurant, the data shows
positive results. The sales of the existing restaurant are in increasing phase which is generating
higher profits since last 5 years. A survey was conducted among the customers which reveals
that the customers are satisfied with all the amenities the restaurant is offering at its existing
restaurant. It is advised to continue with what the company is already offering in order to attract
existing customers. Trend line is prepared based on the data of sales revenue and profits of last 5
years. It shows that the restaurant have a bright future in coming years as well and it will grow in
comparison to its present position. Also, there is a positive correlation between sales and profits
which shows that the restaurant is earning profits in positive and equivalent ratio of its sales.
Therefore, it is advised that the restaurant should invest in opening the new restaurant in
London. It is forecasted that it will prove to be profitable and will earn higher sales revenues.
Hence, the investment will prove to be fruitful for Food for Friends food chain.
Sincere Thanks
TASK 3
A.C. 4.1 Information processing tools
There are various tools that are used by the companies in order to process their information.
Some tools are discussed below:
 Accounting information system: It is a part of MIS which plays an important role in
decision making process of the company. It provides precise financial statements and
statistical reports which further help the management in assessing and evaluating the
trends and taking prudent decisions for the company. It is also helpful for external people
as it provided information about taxation, creditors and investors of the company
(Solomon, 2014). It will be helpful for Food for Friends to keep track of its finances for
better decision making.
 Transaction Processing System: It is a information processing tool helps in operations
and business transactions of the company. It helps to ascertain the process involved in the
business and divide it into subsets for better functioning (Triantaphyllou, 2013). If
production is happening in batches then it processes entire batch in one go. It is
inexpensive and can easily be adopted by Food for Friends. It assists in sales, production,
inventory, receiving, shipping etc.
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 Executive Information System: It is a type of MIS which assists the top level
management in providing information which are required for decision making process. It
assist in internal and external data available which are important for organizational goals
(Zionts, 2012). It is effective information management tool that can be used by Food for
Friends for better decision making in their restaurants.
A.C. 4.2 Main activities involved in getting the restaurant ready
Activities that are required to be conducted in order to make the restaurant ready:
Table 5: Activities involved
Table 6: Duration of activities and slack
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Illustration 10: Gantt Chart
Illustration 11: Critical path
Critical path is 35, which shows that it is the longest path of completing the activity with
the shortest duration involved in it. It is advised to Food for Friends that critical path should not
be delayed.
A.C. 4.3 Calculation of discounted cash flow of NPV and IRR
Initial investment is £190,000
Return = 12% per annum
Table 7: Computation of DCF and NPV
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Based on the calculation conducted above, it is advised to Food for Friends that it should
not invest if second hand restaurant due to negative present value. The investment will not be
beneficial for the restaurant.
Table 8: Computation of IRR
Year Amount £
Initial Investment -190000
1 50000
2 64000
3 58000
4 70000
9.94%
Since, the Internal Rate of Return is less than cost of capital which is 12%. It is advised
that the restaurant should not opt for old restaurant.
CONCLUSION
Above report articulates that, Food for Friends, which is a vegetarian restaurant have
satisfied customers and they are happy with what is offered by the restaurant. Based on the data
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collected it can be interpreted that it is earning high profits and growing sales revenues. Further,
a Gantt chart is prepared which shows the activities that are conducted by the restaurant to
conduct. In the end, NPV is calculated which is in negative. It interprets that the decision is not
financially viable for the restaurant. Also, based on the results of IRR, the decision may not
prove to be profitable for Food for Friends.
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