Restaurant Investment Feasibility Analysis

This assignment involves calculating the Net Present Value (NPV) and Internal Rate of Return (IRR) for a hypothetical restaurant project. It provides insights into the financial feasibility of the project, with IRR exceeding the cost of capital at 9.94%. However, other factors such as customer satisfaction and market goodwill are also discussed. The assignment highlights potential challenges in investment appraisal and future investments.

BUSINESS DECISION
MAKING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Data collection plan...............................................................................................................1
1.2 Survey methodology and sampling framework....................................................................1
1.3 Questionnaire........................................................................................................................2
TASK 2............................................................................................................................................5
2.1 Summarizing collected data..................................................................................................5
2.2 Central tendency and analysis.............................................................................................17
2.3 Dispersion and its derivation...............................................................................................20
2.4 Quartile and Correlation coefficient....................................................................................21
TASK 2..........................................................................................................................................25
3.1 Graphical presentation of collected data.............................................................................25
3.2 Trend line method for forecasting on business operations..................................................26
3.3 PowerPoint presentation......................................................................................................27
3.4 Business report....................................................................................................................27
TASK 4..........................................................................................................................................29
4.1 Information processing tools...............................................................................................29
4.2 Project plan..........................................................................................................................29
4.3 Investment appraisal techniques.........................................................................................31
CONCLUSION..............................................................................................................................33
REFERENCE.................................................................................................................................34

ILLUSTRATION INDEX
Illustration 1: Using formula to evaluate mean................................................................................5
Illustration 2: Used for calculating median of collected data..........................................................6
Illustration 3: Project plan activities..............................................................................................30
Illustration 4: Gantt chart ..............................................................................................................30
Illustration 5: Network diagram as project plan............................................................................31
Illustration 6: Project plan..............................................................................................................31
Illustration 7: NPV.........................................................................................................................32
Illustration 8: IRR..........................................................................................................................32

INTRODUCTION
For the accomplishment of the business, different choices and arrangements should be
executed precisely. Notwithstanding, gathering of information and coming into a point in the
wake of breaking down it very troublesome, it requires solid utilization of psyche and diligent
work. For this situation, concentrate earlier report will uncover the sharp understanding with
respect to the venture choice made for the concerned eatery. Aside from this, it will likewise
comprehend the present example that clients are taking after including their inclination. While at
the last stride, the venture getting ready for the reasonability of future speculations and
manageability of riches expansion is dissected utilizing different monetary instruments.
TASK 1
1.1 Data collection plan
Data are collected using different methods at primary and secondary level by which
actual position of organisation is identified.
Primary data collection: Information are gathered through conducting survey, face to
face interview, door to door asking questions and so on (Amaya and et.al., 2015). Therefore,
actual position of entity can be gained by which different ideas can generate for further
implementations and business operations effectively.
Secondary data collection: information are collected using ready and prepared tools
such as; articles mentioned in newspapers, books and journal etc. As well, using social
networking sites for decision making on further business activities. Therefore, data collection
methods are used for analysing position of Murano and its operations.
In this project, for analysing performance of Murano, researcher is to use primary data
collection method through conducting survey and generating ideas for further activities. For this
purpose, researcher selects respondents randomly for analysing their views on services provided
by the restaurant. However, actual position of entity can be identified on which ideas are
generated regarding its expansion and increasing quality services. Therefore, data are collected
through conducting survey and collecting respondents' views on services efficiently.
1.2 Survey methodology and sampling framework
Survey: It is a process to identify respondents' views on services of Murano in different
ways. In this process, researcher selects respondents in samples such as; systematic, simple
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random sampling and so on. Therefore, for analysing customers' opinion on its services,
researcher is to use random sampling through selecting respondents randomly.
Sampling: Random sampling method is used for survey and collecting data regarding
food and accommodation services of organisation. In this process, researcher prepares
questionnaire of questions related with its services and different ideas are generated for
improving its services and enhancing efficiency on large scale. Hence, survey is to conducted for
identifying actual position of organisation and increasing its food and accommodation facilities.
For decision making regrading Murano restaurant, researcher is to conduct survey with
20 people to identify its market demand. In this regard, he prepares questionnaire consists of
questions related to food services and accommodation of the entity. Therefore, different ideas are
generated for better quality services and satisfying its customers at maximum level.
As indicated by the previously mentioned review, the essential research holds the most
elevated inclination over online review since it takes out the biasses in applying testing
technique. Arbitrary testing accomplished for social affair reaction from the clients went by
Murano as it requires to be done in a substantial scale. Be that as it may, the polls are
appropriated in the field inside 3 days in regard to different administrations offered by Murano.
1.3 Questionnaire
Q1. Please choose your age group
 Below 18
 18-24
 25-31
 32-38
 39-45
 46-52
 Above 52
Q2. Tick your current occupation
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 Business person
 Service holder
 Retired
 Students
 Professional
Q3 what is the frequency of your restaurant visit?
 Once a month
 Twice a month
 Frequently
 Rare
 Occasionally
Q4. What is the purpose you come for?
 Family outing
 Friends birthday party
 Get together
 Business meeting
 Personal purpose
 Occasions
Q5. What are the attributes you would like in a restaurant?
 Food quality
 Price
 Product variety
 Ambience
 Service quality
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 Staffs behaviours and treatment
Q6. What is the feature you like most in Murano?
 Food variety
 Interior
 Location
 Price
 Service delivery
Q7. Are you satisfied with your current choice of restaurant?
 Highly satisfied
 Satisfied
 Neutral
 Dissatisfied
 Highly dissatisfied
Q8. Would you prefer to visit another restaurant to experience in another location?
 Yes
 No
 Not sure
Q9. What else in the restaurant would you like to add for better experience?
 Taste of different regions
 Home delivery
 Special dishes on occasions
 Self-service options for beverage
Q10. Would you like to revisit the restaurant again in future?
 Yes
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 No
 Not sure
Q11. Would you like to refer the brand others?
 Yes
 No
 Not sure
TASK 2
2.1 Summarizing collected data
Data collection estimation is done through mean, median and mode. However, estimation
collected data as customers' views on services of Burano can be understood as:
 Mean: It is an average value on overall collected data evaluated by dividing sum of
collected responds to number of participants who involved in the survey. However, used
formula to determine mean is as:
Illustration 1: Using
formula to evaluate
mean
Age Mean
18 2
18-24 5
25-31 7
32-38 3
5

39-45 2
46-52 1
Total 20
Mean 3.3333333333
It is determined that on average respondents participated in survey are belonged to
between 25 to 31 at most. Similarly, average of total respondents in age factor is 3.33. Therefore,
different ideas can be generated regarding Murano restaurant and improving its quality services.
 Median: It is considered as mid value of overall collected data on which decisions are
made for further business planning. For even and odd number of respondents, median is
evaluated by using formula as:
For even number of respondents:
Median = (n/2)th term
For odd number of participants:
Illustration 2: Used for calculating median of collected data
 Mode: In this way, data collection is done through analysing repeated respondents as
frequency of answers of collected data.
Current occupation:
6

Frequency of restaurant visit:
7

The purpose of restaurant visit:
8

Attributes would like in a restaurant:
9

Feature you like most in Murano:
10

Satisfaction with current choice of restaurant:
11

New location:
12

Additional services:
13

Revisit the restaurant again in the future:
14

Refer the brand others:
15

Verbal summarization:
From the given diagrams, it is found that age assemble between 32-45 jump at the chance
to visit eatery often yet the motivation behind their visit is unique for the most part for get
together and family trips are more typical. In any case, the nature of sustenance and
administration has fulfilled clients to some degree. Aside from these individuals of age
gathering, 32-39 has given constructive reaction to set up the eatery in an objective area yet
normal matured individuals is against the choice. Furthermore, seniors and normal matured
clients are supportive of self-administration choice for drink yet youth has demonstrated their
distinct fascination in choice for accessibility of uncommon dish on events. In any case, in the
setting it is resultantly found that client inside the age amass 32-52 might want to return to as per
their advantage.
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2.2 Central tendency and analysis
Researcher conducted survey and collected data related to different age group people
through asking questions and decision making for Murano restaurant. However, average on
collected data is to evaluated through mean, median and mode affect further business operations.
In this regard, mean, median and mode on collected data can be determined as:
Occupation:
Age
Business
person Service holders Retired Students Professionals
Below 18 5 2 0 4 2
18-24 4 3 2 1 1
25-31 2 4 1 5 3
32-38 4 5 3 4 4
39-45 2 4 4 5 3
46-52 7 3 2 2 2
Above 52 0 3 0 1 1
Mean 3.4285714286 3.4285714286
1.714285714
3 3.1428571429 2.2857142857
Median 4 3 2 4 2
Mode 2 3 0 1 1
On average, respondents are of different occupations as presented above therefore variety
of opinions can be gained on services of Murano restaurant. However, average of business man
for participating is 3.42 and almost of them are near about 3 which is moderate and different
ideas generated for expansion of the entity. Including this, median of collected data is determined
for different business person, service holders, retired and students as average of 4 and 3.
Therefore, it is recognised that its market position of the entity is effective which can be
maintaied for
Frequency to visit restaurant
Age Once month Twice month Frequently Rare
Below 18 3 2 2 2
18-24 3 1 1 4
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25-31 5 2 3 2
32-38 3 6 2 4
39-45 5 4 3 1
46-52 3 6 2 4
Above 52 2 2 0 0
Mean 3.4285714286 3.2857142857 1.8571428571 2.4285714286
Median 3 2 2 2
Mode 3 2 2 4
Frequency of people to visit restaurant is 2nd order at most. However, they take advantage
of its services more efficiently as well attractive grade on recommending their familiar has been
collected affect further operations. Therefore, visiting of respondents is recognised as monthly at
most.
Purpose to visit
Age
Family
outing
Friends
birthday party
Get
together
Business
meeting
Personal
purpose Occasion
Below 18 3 3 2 3 2 0
18-24 2 3 1 2 3 0
25-31 3 3 4 1 1 3
32-38 7 4 4 1 1 3
39-45 8 3 2 1 1 3
46-52 3 3 2 5 3 0
Above 52 0 3 2 0 0 0
Mean
3.714285714
3 3.1428571429
2.42857142
86 1.8571428571 1.5714285714
1.285714
2857
Median 3 3 2 1 1 0
Mode 3 3 2 1 1 0
Different respondents visit the place for various purposes in which for family outing,
friends' birthday party, visiting of respondents is determined at most. Mean of the collected data
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is 3 around as well median is of different values. However, their purposes remain different for
Murano restaurant evaluates its market position and demand for its services.
Attributes would like in restaurant
Age
Food
quality Price
Product
variety Ambience
Service
quality
Staff
behaviou
rs and
treatmen
t
Below 18 4 1 2 1 3 2
18-24 1 3 2 1 2 2
25-31 5 4 0 3 2 1
32-38 2 6 0 4 5 3
39-45 6 4 3 1 1 3
46-52 5 2 4 2 3 0
Above 52 1 1 1 1 0 1
Mean
3.428571428
6 3
1.71428571
43 1.8571428571 2.2857142857
1.714285
7143
Median 4 3 2 1 2 2
Mode 1 1 0 1 2 1
It is evaluated that on average, customers are attracted with food quality of Murano
restaurant affect its demand and attraction of respondents at maximum level. However, on food
services, they give 1st order rank also sustain their interests.
Features liked at most
Age Food variety Interior Location Price Service delivery
Below 18 4 3 1 3 2
18-24 2 4 2 2 1
25-31 5 5 1 2 2
32-38 7 6 2 3 2
39-45 7 3 1 6 1
46-52 4 3 0 5 4
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Above 52 1 1 0 2 1
Mean 4.2857142857 3.5714285714 1 3.2857142857 1.8571428571
Median 4 3 1 3 2
Mode 4 3 1 2 1
At most, respondents are attracted with variety of food and their deliciousness. Including
this, it interior is also attractive for getting services and recommending others. Effective and
positive data is evaluated on this factor for which decision can be made regarding expansion the
hotel.
Satisfaction with current choice of restaurant:
Age
Highly
satisfied Satisfied Neutral Dissatisfied
Highly
dissatisfied
Below 18 5 3 1 2 2
18-24 4 6 1 0 0
25-31 2 3 0 6 4
32-38 3 10 2 1 4
39-45 4 9 0 1 4
46-52 5 6 2 2 1
Above 52 3 1 0 1 0
Mean 3.7142857143 5.4285714286
0.857142857
1 1.8571428571 2.1428571429
Median 4 6 1 1 2
Mode 3 3 0 1 4
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On average, it is recognised that people belonged to different aged group like services of
hotel entity in different ways. However, it is gained that almost all the respondents are satisfied
with its services that can be maintained and improved in the future time effectively.
By evaluating mean, median and mode of the collected data, market position is
recognised by which different ideas are determined for its further implementation as well
business activities.
2.3 Dispersion and its derivation
Occupation
Age
Business
person Service holders Retired Students Professionals
SD 2.2990681342 0.9759000729
1.496026483
1 1.7728105209 1.1126972805
Frequency to visit the restaurant:
Age Once momth Twice month Frequently Rare
SD 1.133893419 2.0586634592 1.0690449676 1.6183471874
Purpose of visit:
Age
Family
outing
Friends
birthday party
Get
together
Business
meeting
Personal
purpose Occasion
SD
2.811540841
7 0.377964473
1.13389341
9 1.6761634197 1.133893419
1.603567
4515
Attributes like to be improved
Age
Food
quality Price
Product
variety Ambience
Service
quality
Staff
behaviou
rs and
treatmen
t
SD 2.070196678 1.8257418584
1.49602648
31 1.2149857926 1.6035674515
1.112697
2805
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Features liked at most
Age Food variety Interior Location Price Service delivery
SD 2.2886885411 1.6183471874
0.816496580
9 1.6035674515 1.0690449676
Satisfaction with current choice of restaurant:
Age
Highly
satisfied Satisfied Neutral Dissatisfied
Highly
dissatisfied
SD 1.1126972805 3.3094381626
0.899735410
8 1.9518001459 1.86
Standard deviation is considered as difference between actual and expected position of
the entity. On average, there is moderate difference between the two values regarding
satisfaction level of customers that can be managed efficiently.
2.4 Quartile and Correlation coefficient
Quartiles:
It is data estimation as dividing all data into segments as 25%, 50% and 75% . It is
considered as first, second and third quartiles. However, satisfaction level of respondents in three
segments regarding Murano restaurant's actual market position can be evaluated as:
Age
Highly
satisfied Satisfied Neutral Dissatisfied
Highly
dissatisfied
Below 18 5 3 1 2 2
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18-24 4 6 1 0 0
25-31 2 3 0 6 4
32-38 3 10 2 1 4
39-45 4 9 0 1 4
46-52 5 6 2 2 1
Above 52 3 1 0 1 0
Mean
3.71428571
43
5.42857142
86
0.85714285
71
1.85714285
71
2.14285714
29
Median 4 6 1 1 2
Mode 3 3 0 1 4
Q1 3 3 0 1 0.5
Q2 4 6 1 1 2
Q3 4.5 7.5 1.5 2 4
It is interpreted that highly satisfied respondents are of 3 on average segmented at the
percentile of 25%. Similarly, for data segmentation on 50% is evaluated as different values effect
which decisions are made for Murano restaurant. Along with this, Q3 of satisfied respondents
data are evaluated as 4.5, 7.5,1.5, 2 an 4 which is evaluated as on 75%. Therefore, data
segmentation of conducted survey is identified at first, second and third order.
Correlation is to analyse relation between two or more factors on which decisions are
made for further business operations. In this regard, correlation on collected data can be
evaluated as:
Relational factors Correlation
Occupation (Business person & service) -0.24
Frequency to visit
restaurant (Once in a month and twice) 0.01
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Purpose of visit
(Family outing and friend's
birthday party) 0.51
Attributes like to be
improved (Food quality and price) 0.08
Features liked at most (Food variety and interior) 0.62
Satisfaction with current
choice of restaurant
(Highly satisfied and
satisfied) 0.21
It is evaluated for participated respondents' are come for purposes family outing and
friend's birthday party which correlation is 0.51 and relation between features like by people is
0.62 which is good. Therefore, relational factor of collected data are analysed for decision
making in the future time.
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25

Analysis
Above stats has shown the correlation and coefficient calculation in order to analyse the
response of the customers who have visited the restaurant. Due to the positive relation between
the survey and the implementation of the decision, it can easily be stated that customers are
satisfied with the food and service served by Murano, moreover the restaurant is making
valuable decision on the ground of customer retention, keeping investment appraisal aside.
TASK 2
3.1 Graphical presentation of collected data
It is interpreted that people respondents who participated in the survey belong to age
between 18 to 24 at most. Similarly, occupation of them is service holder are in wide range out
of them. Including this, their visiting frequency is also good that can be maintained and
improved. However, respondents are agreed that food quality of the restaurant is quite effective
as of variety of food are available impact on frequency of people to visit Murano restaurant.
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3.2 Trend line method for forecasting on business operations
Trend line is for forecasting on further business operation. In this regard, it is determined
that most of the customers are satisfied with services of Murano restaurant as well visit the place
repeatedly. On this analysis, it can be forecast that new expansion of the hotel will be succeed
and can increase its efficiency at maximum level.
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3.3 PowerPoint presentation
Attached in enclosed ppt.
3.4 Business report
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To
The Board of Directors
Murano, London
Ref. Presentation of report of the restaurant for future viability.
Sir,
As there is decision making on expansion of Murano restaurant for which, its actual position
is to be identified. In this process, researcher conducts survey with 20 people to identify their
satisfaction with food qualities of the entity and how is its market position. In this regard, it is
evaluated that respondents are attracted towards food services and accommodation of the entity.
Including this, its market position is quite effective and also determined that customers demand
for its services on larger scale shows effectiveness in its market position as well. On behalf of
collected data, decision should be made regarding expansion of restaurant influences its
effectiveness and good further business operations. As the quality measures of sustenance,
interior and outside structure of the eatery, benefit quality and straightforward entry are the real
territories where clients are pulled in. Taking administration as a worry, it is however noticed
that seat booking office must be included with a current administration because the client
conduct is eccentric, in this manner they can move their enthusiasm to other eatery even the
home conveyance office is extraordinary. Additionally, Murano got a bit of baffling input from
the clients with respect to the estimating framework, as they discovered introduction of
nonsensical value some place in one of the administrations. General photo of the eatery is very
palatable; lion's share of the clients cherishes particularly cooking introduction framework.
Subsequently, a solid proclamation can without much of a stretch be drawn specifying the
further extent of presence of Murano and presentation of other new eateries in London.
It is recognised that customers are satisfied at large scale with services of the hotel entity. It
can be forecast that this attraction can be maintained for longer time period. Including this, it is
evaluated that respondents are attracted with food services of Murano also recommend their
friends and family for taking advantage of it. It shows good market position of entity and
enhancing its efficiency at maximum level. However, different ideas are created for improving
quality services and enhancing its reputation for longer time period. Thus, this report is to
recommend that Murano restaurant should expand its business through increasing in its quality
services of food and accommodation at most.
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Then again, it is prudent that expert of the concerned eatery ought to keep sound controlling
framework and great administration to guarantee the accomplishment of the business for a long
run.
TASK 4
4.1 Information processing tools
The concerned expert of Murano has chosen to set up their new branch in London with an
expect to hold a greater part of piece of the overall industry, expanding its riches and to win
goodwill. Be that as it may, time is a key consider each part of life, comparatively remembering
the use of time proficiently and adequately turns out to be more fundamental before beginning a
venture. Keeping in mind the end goal to fire up another business number or research should be
done while considering time as an official due date to complete the pointed venture. As indicated
by Dobrkovic et al (2016, p.95), Scheduling procedure can meet the venture criteria if executed
precisely because the begin of a business relies on upon the time taken for the finish of the
venture. In any case, to critical parts of planning procedure must be seen appropriately, these are
designation of undertaking and distribution of asset. As in this venture, an eatery can't guarantee
its money related feasibility without appropriate comprehension of these components and
without legitimate venture arranging. As refered by Dobrkovic et al (2016, p.95), it is the sole
obligation of a venture chief to examine every perspective for the advance of a venture because
lone a venture supervisor can guarantee the quality models of the venture.
MIS: It is information processing system for exchanging information from person to
person. However, it is used by middle level managers at most as different departments' managers
like; finance, marketing, HR, production and operation, research and operation and so on.
Including this, this level of managers work between top level and lower level managers for
getting suggestions from top level and giving guidance to lower level employees of Muramo
restaurant for its expansion.
4.2 Project plan
Rundown of conceivable strategy that the improvement of another eatery would go by after the
endorsement of the arrangement.
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Illustration 3: Project plan activities
Gantt chart:
It is tool for presenting project plan from start to end regarding accomplishing the tasks.
However, project is to completed as of mentioned planning in the Gantt Chart. Therefore, project
planning and all tasks can be accomplished in a specified time systematically.
Illustration 4: Gantt chart
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Network diagram:
In the network diagram, all activities of the project plan for expansion of Murano
restaurant are recognised. In addition to this, connection of all action plans with each other as
step by step process are recognised. In this regard, network diagram for the project plan is to
identified as:
Illustration 5: Network diagram as project plan
Project plan:
Illustration 6: Project plan
4.3 Investment appraisal techniques
It is clear from the result of the calculation that NPV of the wander is negative, hereafter
the wander is not monetarily down to earth. According to Leyman and Vanhoucke (2016, p.145)
NPV suggests the total contributed by the theorists with reference to the present estimation of
money appeared differently in relation to the future return of that money what is contributed
today after setting apart around the specific rate. With association with the outcomes it is found
32

that the wander criteria could meet the wishes of the monetary experts if 9% cost of capital is
taken, because it passes on positive NPV conveying flexibility of future sensibility.
NPV:
IRR:
33
Illustration 7: NPV
Illustration 8: IRR

Calculation of internal rate of return (IRR)
If the discounting rate 10% is taken then the NPV is negative, and if the discounting rate
9% is taken then the NPV is positive. Therefore, the IRR will be the average of these two
discounting rates.
Therefore, IRR = 9.94%
As in the case of IRR, if the hurdle rate over the cost of capital is greater it would be
good for the investors because hurdle rate means the minimum rate of return that an investor
requires on a project. In the viewpoint of Dash (2016, p.78), Internal rate of return (IRR) is that
rate of return where the net present value of discounted cash flow is neither positive nor
negative, it is equivalent to zero.
After the calculation is shown above, it is found that IRR is about 9.94% which implies
the beginning point where a restaurant starts gaining. It is because here IRR is greater than cost
of capital (12%). Therefore, the project is not viable for taking future undertakings.
CONCLUSION
Based on the study, it can be stated that the company has earned goodwill from the
market in terms of customer satisfaction (Kang et al 2015, p.18). The key influencing factors
affecting the restaurant are mentioned clearly in the business report while other reasons are laid
down on a quantitative basis that appraisal of investment appraisal has delivered negative
influence on the investment. Two possible reasons are raised for supporting the argument, either
lack of financial feasibility or the underestimated forecast of the future investments. However
according to the judgement of customers, Murano has a good scope to flourish in London.
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