Balti Palace Restaurant Expansion Analysis

This assignment analyzes the feasibility of Balti Palace opening a second restaurant. It examines the relationship between sales and profits, conducts a statistical analysis to understand trends, and performs a financial analysis including Net Present Value (NPV) and Internal Rate of Return (IRR). The goal is to determine if the expansion would be financially beneficial for Balti Palace.

BUSINESS DECISION
MAKING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Presenting data gathering plan..........................................................................................1
1.2: Methodology of survey and used sample framework.....................................................2
1.3: Designing a questionnaire...............................................................................................3
TASK 2............................................................................................................................................5
2.1: Summary of data by the use of representative values.....................................................5
2.2: Analysis of the result.....................................................................................................11
2.3: Analysing data using measures of dispersion................................................................11
2.4: Explanation of quartile, percentile and correlation in business context........................12
TASK 3..........................................................................................................................................14
3.1: Producing graphs for drawing valid conclusions..........................................................14
3.2: Trend line to forecast future information......................................................................16
3.3: Business presentation....................................................................................................16
3.4: Formal business report..................................................................................................22
TASK 4..........................................................................................................................................23
4.1: Information processing tools.........................................................................................23
4.2: Project plan for new restaurant......................................................................................23
4.3: Financial tools for decision making..............................................................................25
CONCLUSION..............................................................................................................................26
REFERENCES..............................................................................................................................27

INTRODUCTION
The business decisions are key drivers which leads an organization towards the success,
as the organization productivity and profitability is mostly depend on the business decision
which they take. The business decision are considered as choosing the action from a set of
alternatives for the purpose of achieve managerial and organizational goals and objectives. The
decision making process is consistent and indispensable component of controlling any business
activities of the organization. The business decision making cover the overall operations which
an organization perform, decision are made each and every level of the organization or the
purpose of ensuring that the goals and objectives set by the organization achieve smoothly and
efficiently(Yager and Kacprzyk, 2012). The present study is focused upon a restaurant chain the
Balti palace who are offering the food and associated services to their customers. Are planning to
open their second restaurant in London. For this purpose shareholder of the restaurant want to
know the potentiality of the market, so the study is focused on accessing the customer preference
about the taste price and location. The role of mean, mode, median, co-relation also been
discussed so that the viable argument can be made.
TASK 1
1.1 Presenting data gathering plan
As per the case scenario the Balti palace willing to open their second restaurant in
London so shareholders want to know the potential of the market and what the preference of the
customer in term of taste, price and location. So the required information can be collect by the
use of both primary as well as secondary data collection. First is considered as the data that
investigator gathers himself or herself as per according to the need of the research. Primary data
can be collect by the use of the several sources such as focus group, survey, interview,
observation and so on(Speckbacher, Neuman and Hoffmann, 2015). On the other hand secondary
data considers as the data or information collected by some other researcher for the purpose of
their own research the sources for the secondary data can be research papers, books, journals and
so on.
Plan for collection of primary data: The questionnaire method is use so that survey can
be conducted by the researcher. For the valid and viable outcome it is important to adopt the
sample as per the need of the research. In the present study researcher will use questionnaire
1

method to surveying the 30 different customers who make use of the services offered by the Balti
palace restaurant. The questionnaire contains various type of the question open-close ended,
preference and not prefer question for figure out the taste, location and price preference of the
customers. This will be the most effective technique for the researcher to evaluate the viewpoint
of the customer and also the gathering of the information will be not so much cumbersome task
by the use on the primary data collection(Samuels, Witmer and Schaffner, 2012).
Plan for collection of secondary data: In order to fulfil the purpose of knowing the
attitude and behaviour of the customer towards the new opening of the restaurant researcher can
make use of the previous conducted research on the similar issue. Furthermore, internet is also
full with the various research articles so the related article from issue can be easily available
there. So the researcher can get help from the library and internet in order to collect suitable
secondary data from there. The secondary data will enhance the understanding of the researcher
about the preference of location, taste and convenience of the customer in the particular
restaurant business(Rostamzadeh, Ismail and Zavadskas, 2014).
1.2: Methodology of survey and used sample framework
Survey methodology- It refers to the study the sampling of selected units from universe
and the other tools which applied for the purpose of collection of dataset. Survey methodology
provide a wide understanding to researcher so that the survey can be conduct without any
confusion. For the purpose of assessing the customer preference about the taste, location and
price researcher can sends the questionnaire to the 30 different respondent by the use of the
internet. The generated information will provide assistance to the researcher about the issue of
opening the new restaurant in the London. This is very cumbersome task to making the decision
on the basis of customer satisfaction as by the use of above stated methodology researcher will
be able to present a fair view on the present issue(Price and Van der Walt, 2013).
Sampling frame- The sampling frame is a statistical tool or technique which is use for
the purpose of drawn the sample. It is the list of all chosen units from the universe. So, for the
purpose of conducting an effective research, researcher have to choose the appropriate sample so
that the information can be access easily within the population. When the size of the sample is
not to small and large researcher can easily sampled them for the research. There are two
possible sampling techniques are available such as probability and non-probability (Matsuzaki,
Kumagai and Hayashi, 2016). Probability sampling technique use in the situation where each and
2

every person among the population get the chance to being selected in the sample. On the other
hand in the non-probability sampling technique researcher will select the sample size on the basis
of aim and objectives of the study. The sampling frame in the present study consist 30
respondent.
1.3: Designing a questionnaire
NAME:
AGE:
GENDER:
1. How many time do you visit in a restaurant?
 Once in a month
 Twice in a month
 Thrice in a month
2. Often on what time, you often decides to take meal outside?
 At the breakfast
 At the lunch
 At the dinner
3. What factor is more important for you while choosing restaurant ?
 Price
 Quality of food
 Atmosphere
 Convenience
4. How much amount you often spent on eating out per month?
 £ 10-£ 20
 £ 30-£ 50
 £ 50- £ 100
 More than £ 100
3

5. What are the challenges which you face during eating in a restaurant?
 Cuisine
 Communication barrier
 Different charges
 Variety of meal
6. While your go in the restaurant, which factors highly encourage or motivate you?
 Ambiance
 Quality of services
 Hygiene
 Deals and offers
7. Among the following restaurant which one is on the top in your priority list ?
 Black-friars restaurant
 Food for friends
 Murano
 Balti palace
8. Do you choose such restaurants which provide dine-in or take away facilities?
 Dine in
 Take away
 Both
9. Which type of food you mostly like to have ?
 Chinese
 Spanish
 Indian
 Intercontinental
10. Any recommendation which you want to give to Balti palace.............................
4

TASK 2
2.1: Summary of data by the use of representative values
Primary data can be summarized by the use of the table. The information collected by the
response given in questionnaire method is summarize below:
How many times do you visit in a restaurant
1. How many time do you visit in a restaurant ?
No. of
Respondent
Once in a month 12
Twice in a month 10
Thrice in a month 8
30
The above graph is indicating that 12 out of 30 respondent states that they visit restaurant
one in a month whereas 10 respondent stating that they visit the restaurant twice in a month. 8
5
Once in a month Twice in a month Thrice in a month
0
2
4
6
8
10
12
14
12
10
8
No. of Respondent

respondent visit in a restaurant thrice in a month. The analysis of collected data is clearly
indicating that people are interested in visiting in a restaurant several time in a month which is a
positive indicator for the Balti palace to start their second restaurant (Loe, Ferrell and Mansfield,
2013).
Dinner time is mostly prefer to visit in a restaurant
2. Often on what time do you prefer to visit the restaurant ?
No. of
Respondent
At the breakfast 6
At the lunch 8
At the dinner 16
30
As per according to the above pie chart it is clearly understand that 16 respondent out of
30 are prefer dinner time to visit in a restaurant, on the other side 8 respondent prefer the lunch
time and 6 prefer the time of the breakfast. From the analysis of the collected information it is
eAs per according to the above pie chart 6 out of 30 respondent spend £10 to £20 in a month for
the dining out, whereas 8 out of 30 respondent spend £30 to £50, 11 respondent spend £50 to
6
6
8
16
At the breakfast
At the lunch
At the dinner

£100 in a month and 5 respondent spend more than £100 in a month. The analysis of the
collected information easily making the understanding that people are often spend on the dining
out so it will be beneficial for the Balti palace to open a restaurant. asily understand that Balti
palace should target the dinner time to attract the more customer in their new restaurant.
Quality of the food is more important for customer while choosing restaurant
3. What factor is more important for you while choosing restaurant ?
No. of
Respondent
Price 6
Quality of food 10
Atmosphere 5
Convenience 9
30
The above graph is indicating that 6 out of 30 respondent consider the price factor more
important while visiting any restaurant, 10 respondent states that the quality of food is more
important for them. Whereas 5 respondent look at the atmosphere first and 9 respondent give
priority to the convenience factor more. Here Balti palace can make some understanding out of
7
Price
Quality of food
Atmosphere
Convenience
0 2 4 6 8 10 12
6
10
5
9
No. of Respondent

the collection of data as if they want to make the performance more effective in front of the
customer than surely they have to manage the quality of the food adequately.
How much amount you often spent on eating out per month? No. of
Respondent
£ 10-£ 20 6
£ 30-£ 50 8
£ 50- £ 100 11
More than £ 100 5
30
As per according to the above pie chart 6 out of 30 respondent spend £10 to £20 in a
month for the dining out, whereas 8 out of 30 respondent spend £30 to £50, 11 respondent spend
£50 to £100 in a month and 5 respondent spend more than £100 in a month. The analysis of the
collected information easily making the understanding that people are often spend on the dining
out so it will be beneficial for the Balti palace to open a restaurant.
8
6
8 11
5
£ 10-£ 20
£ 30-£ 50
£ 50- £ 100
More than £ 100

Secondary data- The secondary information is already available in the market so there
is no need for researcher to conduct a survey for the purpose of allocation of secondary
resources. Previous 11 year records of the sales and profit for Balti palace has been collected
from the internet, trade journals and government economic reports.
Here mean, mode and median are some techniques which are use for the purpose of
determining the values of profit as well as sales.
Mean- Mean is considered to average of the numbers, a calculated central value from a
series of numbers. It is calculated by the division of profit and sales with the number of years .
For the Balti palace restaurant mean can be useful for calculating the sales and profit on an
average basis (Loe , Ferrell and Mansfield, 2013).
Median- Median is considered as the middle value in the entire set of numbers. For the
Balti palace restaurant the median will be 50% of the total profit and sales over the last 11 years.
Mode- Mode is considered as the most highest frequency among all. It helps in
identifying the uncover or hidden trends in the entire data set(Jackson, Finn and Scheepers,
2014).
Year Sales Profit
2005 1000 100
2006 1050 110
2007 1100 120
2008 1200 140
2009 1250 142
2010 1300 155
2011 1500 180
2012 1800 200
2013 2200 250
9

2014 2500 300
2015 3000 385
Total 17,900 2,082
Calculation of mean, median and mode
Mean = ∑x/N
Sales = 17,900/11 = 1627.273
Profitability = 2,082/11 = 189.2727
Median = Value of (N+1/2)th item
= (11+1)/2 = 12/2
= value of 6th item
Sales = 1300
Profitability = 155
Mode: Highest frequency of the item is known as mode. In the given series, none of the sales
and profit figure repeated twice and more, therefore, mode doesn’t exist.
Descriptive statistics:
Sales Profitability
Mean 1627.273 Mean 189.2727
Standard Error 201.2872 Standard Error 26.85791
Median 1300 Median 155
Mode #N/A Mode #N/A
S. D. 636.526 S. D. 84.93
Sample Variance 445681.8 Sample Variance 7934.818
Kurtosis 0.123315 Kurtosis 0.986807
10

Skewness 1.104957 Skewness 1.257565
Range 2000 Range 285
Minimum 1000 Minimum 100
Maximum 3000 Maximum 385
Sum 17900 Sum 2082
Count 11 Count 11
2.2: Analysis of the result
Mean- As per according to the above table the mean of the sales series is 1627.273 that
indicating the sale of the every year is similar around this value. The average profit earned by the
Balti palace restaurant is £189.2727 on an average basis.
Median- The sales series median is £1300 and the profit median is £155. This implies
that the 50% of the sales in last 11 years is equals to £1300 where the profit median for the same
is £155.
Mode- In the above calculation no mode is figure out in the profit as well as sales. It can
be analysed that the amount of profit and sales is different in each and every year. Highest
frequency of the item is known as mode. In the given series for sales and profitability, none of
the sales and profit figure repeated twice and more, therefore, mode doesn’t exist.
2.3: Analysing data using measures of dispersion
Dispersion is a statistical tool describe that how spread out a series of data is. The
following tool are using in the dispersion technique.
Range- The Balti palace highest and lowest sales over past years :
Range = Highest sales/profits – lowest sales/profits
Range for sales = £3000 - £1000 = £2000
Range for profits = £385 - £100 = £285
11

Interpretation- The range is determining that the range of minimum and maximum profit is £285,
where as the minimum and maximum range for the sales is £2000.
Variance- The above table is describing that the variance of sales is 445681.8 , where as
the variance for profit is 7934.818. It implies that each and every year profits and sales are
significantly different from each other (Graham, Harvey and Puri, 2015).
Standard deviation- Standard deviation is one of the most useful tool in the dispersion.
Here the standard deviation for the sales is 636.526 where profit has the standard deviation to
84.93. The results are implying that the profit and sales data are highly scattered or deviated, so
the Balti palace restaurant volatile which is indicating that either sales may go increase or
decrease in the near future (Goetsch and Davis, 2014).
Calculation of standard deviation by indirect method
Year Sales Dx = X-A DX2 Profit Dx = X-A DX2
2005 1000 -300 90000 100 -55 3025
2006 1050 -250 62500 110 -45 2025
2007 1100 -200 40000 120 -35 1225
2008 1200 -100 10000 140 -15 225
2009 1250 -50 2500 142 -13 169
2010 1300 0 0 155 0 0
2011 1500 200 40000 180 25 625
2012 1800 500 250000 200 45 2025
2013 2200 900 810000 250 95 9025
2014 2500 1200 1440000 300 145 21025
2015 3000 1700 2890000 385 230 52900
Total 3600 5635000 377 92269
Here, A: Assumed mean
Sales = 1300
Profit = 155
Standard deviation = √∑dx2/N – (∑dx/N)2
Sales = √5635000/11- (3600/11)2
= 636.526
Profitability = √92269/11- (377/11)2
= 84.93
2.4: Explanation of quartile, percentile and correlation in business context
The quartile and percentile for the Balti palace are calculated as under:
12

Sales Profit
1000 100
1050 110
1100 120
1200 140
1250 142
1300 155
1500 180
1800 200
2200 250
2500 300
3000 385
Q1: Value of (N+1/4)th item
= (11+1)/4
Value of 3rd item
Sales = 1100
Profitability = 120
Q2 = Value of (N+1)/2th item
= (11+1)/2
= value of 6th item
Sales = 1300
Profitability = 155
Q3 = Value of 3(N+1)/4th item
= 3(11+1)/4th item
= value of 9th item
Sales = 2200
Profitability = 250
Table 1: Quartile and percentile for sales and profitability
Quartile/Percentile Sales Profitability
Q1/P25 1100 120
Q2/P50 1300 155
13

Q3/P75 2200 250
Correlation formula:
r = n(∑xy) – (∑x) (∑y)/√[n∑x2- (∑x)2] [n∑y2- (∑y)2
Correlation- The sales and profit data of the Balti palace restaurant is co-related
positively, but it is important to calculate the coefficient of co-relation to figure the relationship
between the sales and profit. The co-relation between the the sales and profit for the Balti palace
is 0.9946886212. It is implying that both the sales and profit are highly co related and single
pound of increase in sales leads to 90% incline of profit.
TASK 3
3.1: Producing graphs for drawing valid conclusions
Column chart
Bar graph
14

Line graph
Interpretation:
The above graphs are showing the figures for sales and profit for the year 2005-2015. The
graph is indicating that in the starting year the growth in the profit and sales was low. In the year
2011 the sales is increase from £1500 to £3000, on the other hand profit inclined to £385 in
2015. The figures are indicating that the Balti palace restaurant is earning a revenues and profit.
15

3.2: Trend line to forecast future information
The trend line will help the Balti palace to understand that the profit and sales are moving
in upward direction or downward direction:
Interpretation:
The above trend line is indicating the upward direction for both profit as well as sales,
which implies that in coming years the Balti palace will generate high profit and sales by £3000
and £385 respectively.
3.3: Business presentation
Slide 1
16

Slide 2
The above graph is indicating that 12 out of 30 respondent states that they visit restaurant
one in a month whereas 10 respondent stating that they visit the restaurant twice in a month.
8 respondent visit in a restaurant thrice in a month. The analysis of collected data is clearly
indicating that people are interested in visiting in a restaurant several time in a month which
is a positive indicator for the Balti palace to start their second restaurant.
Slide 3
17

As per according to the above pie chart it is clearly understand that 16 respondent out of 30
are prefer dinner time to visit in a restaurant, on the other side 8 respondent prefer the lunch
time and 6 prefer the time of the breakfast. From the analysis of the collected information it
is eAs per according to the above pie chart 6 out of 30 respondent spend £10 to £20 in a
month for the dining out, whereas 8 out of 30 respondent spend £30 to £50, 11 respondent
spend £50 to £100 in a month and 5 respondent spend more than £100 in a month. The
analysis of the collected information easily making the understanding that people are often
spend on the dining out so it will be beneficial for the Balti palace to open a restaurant.
Slide 4
18

The above graph is indicating that 6 out of 30 respondent consider the price factor more
important while visiting any restaurant, 10 respondent states that the quality of food is more
important for them. Whereas 5 respondent look at the atmosphere first and 9 respondent give
priority to the convenience factor more. Here Balti palace can make some understanding out
of the collection of data as if they want to make the performance more effective in front of
the customer than surely they have to manage the quality of the food adequately.
Slide 5
As per according to the above pie chart 6 out of 30 respondent spend £10 to £20 in a month
for the dining out, whereas 8 out of 30 respondent spend £30 to £50, 11 respondent spend
£50 to £100 in a month and 5 respondent spend more than £100 in a month. The analysis of
the collected information easily making the understanding that people are often spend on the
dining out so it will be beneficial for the Balti palace to open a restaurant.
Slide 6
19

The trend line will help the Balti palace to understand that the profit and sales are moving in
upward direction or downward direction
Slide 7
The above trend line is indicating the upward direction for both profit as well as sales, which
implies that in coming years the Balti palace will generate high profit and sales by £3000
and £385 respectively.
Slide 8
20

Slide 9
The above trend line is indicating the upward direction for both profit as well as sales, which
implies that in coming years the Balti palace will generate high profit and sales by £3000
and £385 respectively.
21

Slide 10
Slide 11
3.4: Formal business report
To
Managing director of Balti palace restaurant
Date: 23rd May, 2017
According to the above graphical presentation in can be reported that the profit and sales
for the stated years are fluctuating in the initial years. Thereafter it is showing increment at a
22

faster rate. Which implies that restaurant will generate growth in sales and profit after the year
2011. The trend line is indicating that there are maximum chances to increase sales and revenues.
The profitability is also moving in the upward direction from £385 of present period. So it can be
said that the new outlet of your restaurant will perform better in the near future.
TASK 4
4.1: Information processing tools
Decision support system- This support system is useful in making the effective decision.
Most of the time managers are not in a position where they can take an appropriate decision, in
that situation decision support system is very useful to make decision(Sikavica, Hunjak and
Hernaus, 2014).
Transactional processing system- By the use of these system all the transaction of the
organization can be recorded by the personnel in highly effective manner. The clarity which
transactional processing system provide helps the top level managers in their decision making
process(Zsambok and Klein, 2014).
Management information system- This system is very useful for the middle level
managers of the organization in their decision making process. The manager are able to make the
assessment of the information by the use of primary and secondary data(Ford and Richardson,
2013).
4.2: Project plan for new restaurant
For the purpose of attaining the objectives and business goals effectively the Balti palace
need a project plan for their new restaurant. The following plan provide the assistant to balti
palace in their opening of new restaurant.
S. No. Activities Days
Predece
ssor
1
Preparing the research framework to assess the price, location as
well as customers preferences in regard to the food services
which are offered by Food for Friends. 18 -
2 Collection of primary and secondary data 9 1
3 Analyzing data with the help of statistical tolls and techniques 15 2
4 Preparation of budget 10 2,3
5 Strategic plan for the opening of second restaurant in London 8 3,4
23

6 Implementation of the plan 12 5
7 Reviewing the performance of newly opened restaurant 7 6
8
Strategic actions to meet up the organizational goals and
objectives. 11 7
The above critical path is indicating the project time for opening the new restaurant. The
numbers refers to days as the most efficient critical path will be 1+ 2 + 4 + 5 + 6+ 7 +8
24

( 18+9+10+8+12+7+11 ) which is 75 days. Hence by this Balti palace will be able to open the
new restaurant in 75 days.
4.3: Financial tools for decision making
Net present value
Formula: Total discounted cash inflows – Initial investment
Year Cash inflow (£)
Discounting factor
@12%
Discounted cash inflow
(£)
0 (Initial investment) 190000
1 50000 0.893 44650
2 64000 0.797 51008
3 58000 0.712 41296
4 70000 0.636 44520
Total discounted cash
inflow 181474
NPV (Total discounted
cash inflow – initial
investment)
(181,474 – 190,000)
= -8526
Internal rate of return
= ra + NPVa/ (NPVa – NPVb) * (rb – ra)
Year
Cash
inflow
(£)
Discounting
factor
@10%
Discounting
factor
@12%
Discounted
cash
inflows @
10%
Discounted
cash
inflows @
12%
25

1 50000 0.909091 0.892857 45454.55 44642.86
2 64000 0.826446 0.797194 52892.56 51020.41
3 58000 0.751315 0.71178 43576.26 41283.25
4 70000 0.683013 0.635518 47810.94 44486.27
189734.3 181432.8
Less: Beginning
investment 190000 190000
Net present value
(NPV) -265.692 -8567.21
= 10% + (-265.692/ (-265.692) – (-8,567.21) * (12% - 10%)
= 9.94%
The above financial analysis is stating that if Balti palace invest £190000 they will get
negative return the analysis is showing that the project will not the project of opening the second
restaurant will not get any monetary benefit to the organization.
CONCLUSION
The above research resulted in the providing outcome to the Balti palace to opening their
second restaurant. the sales and profit are showing a higher rate of relationship with each other,
which implies that if sales increase simultaneously profit will also increase. The statistical
analysis provide a good understanding to the firm and helpful for them to attain the objective and
aims set by the organization. The financial analysis is showing that the opening the second
restaurant will not get monetary benefit to the organization.
26

REFERENCES
27