Will the Blackfriars Restaurant Achieve a Desired Return?

The investment appraisal analysis for the proposed project at Blackfriars restaurant reveals a negative return of £8596 and an internal rate of return (IRR) of 10%, which is lower than the industry average. This outcome suggests that the company needs to focus on other proposals that can enhance profit margins. On the other hand, customer attitude towards dining services at Blackfriars is positive, and with rising disposable income, people's lifestyles are changing, leading to an increase in restaurant visits. It is recommended that the restaurant unit explores its business area further.

Business Decision Making

Table of Contents
INTRODUCTION......................................................................................................................4
TASK 1......................................................................................................................................4
1.1...........................................................................................................................................4
1.2...........................................................................................................................................5
1.3...........................................................................................................................................6
2.1...........................................................................................................................................8
2.2...........................................................................................................................................9
2.3.........................................................................................................................................10
2.4.........................................................................................................................................11
TASK 2....................................................................................................................................12
3.1.........................................................................................................................................12
3.2.........................................................................................................................................13
3.3.........................................................................................................................................13
3.4.........................................................................................................................................14
TASK 3....................................................................................................................................14
4.1.........................................................................................................................................14
4.2.........................................................................................................................................15
4.3.........................................................................................................................................16
CONCLUSION........................................................................................................................17
REFERENCES.........................................................................................................................18

INTRODUCTION
Decision taken by the higher management has high level of impact on the growth and
success of firm. Thus, manager of the firm needs to make decision by evaluating all the
internal and external factors that affects the smooth functioning of the business operations
and functions. Along with this, consumer and market trend, behavior etc. are the main factors
that directly impact the productivity and profitability of firm. In this regard, by making
evaluation of the each possible alternative business organization can develop suitable
framework which aid in the decision making aspect. The present report is based on
Blackfriars restaurant which is planning to expand its restaurant chain with the motive to
enhance customer base and profitability. Hence, report will describe the extent to which plan
in relation opening of another restaurant is viable by using both statistical and financial tools
and techniques.
TASK 1
1.1
Primary data collection: Information which is gathered and analyzed according the research
issue or purpose is known as primary data (Sutherland and Holstead, 2014). There are several
methods which can be undertaken by the researcher for the collection of primary data namely
survey, observation, focus group etc.
Plan
 Selection of method: For the collection of primary data, survey method has been
selected by the scholar. Moreover, it is one of the most effectual methods which helps
in fulfilling the aims and objectives of the study to the large extent. Such method
enables researcher to evaluate the mindset of the respondents to the large extent
(Barlett, 2016).
 Assessment of sample size: In order to conduct survey, scholar is required to select the
suitable sample size which in turn helps in meeting the purpose of investigation.
Hence, 30 respondents have been selected by the scholar by using simple random
sampling technique.

 Preparation of questionnaire: At this stage, researcher will prepare questionnaire by
including questions regarding the taste, preferences and expectation level. This in turn
helps owner of the restaurant in developing suitable product mix.
 Conducting survey: In the last stage, scholar will send questionnaire to all the
respondents through the means of internet.
Hence, by following all the above mentioned stages primary data will be gathered by
the scholar.
Secondary data collection plan:
Secondary data may be defined as one which is already gathered and analyzed by
another scholar in the past years (Popovič and et.al., 2012). Thus, researcher will gather
secondary data in the following way:
 Internet surfing: In order to analyze the trend and growth aspect of restaurant sector
researcher will make assessment of books, journals and other articles which are
available on internet. Thus, by taking assistance of internet researcher can make
review of the solution found by other scholars.
 Approaching owner of the restaurant: For getting information about the performance
aspect of existing unit of Blackfriars researcher will gather data about sales and profit
aspect. In this, by applying statistical tools and techniques researcher can provide
owner of the restaurant with effectual framework for decision making.
1.2
Sampling frame: Probabilistic and non-probabilistic are the main two types of sampling
technique which provides assistance to the scholar in the selection of suitable sample size.
Moreover, in probabilistic technique each potential respondent gets equal chance to being
selected as sample (Craft, 2013). On the other side, in non-probabilistic technique researcher
selects sample according to the research issue and convenience level. Hence, in the present
study simple random sampling technique has been used by the scholar. On the basis of this
aspect, researcher has randomly selected 30 people with the motive to get information about
customers taste and other aspects which have influence on their dinning decision.
Survey methodology: It refers to the pathway which is followed by the scholar for conducting
survey. By preparing outline on the initial stage researcher can reduce the possibilities of
mistake to the large extent (Yu, 2013). Hence, for organizing survey researcher will get e-

mail id of the customers from the record maintained by the restaurant. Thereafter,
investigator will take permission of the respondents that they are interest in such kind of
survey. In this, researcher will communicate goals and objectives of such survey to the
respondents. Hence, thereafter scholar will send questionnaire on the mail id of respondents
which have been selected for it. In this way, survey will be conducted by the researcher to
collect primary information.
1.3
Questionnaire
Demographic information
Name…….
Age ………
Gender………
1. Kindly mention the date when you last time dined in Blackfriars?
Date…………………….
2. How often do you experience the dinning services offered by Blackfriars?
 Daily ()
 Weekly ()
 Monthly ()
3. Stating the waiting which is preferable by you?
 0-5 minutes
 5-10 minutes
 11-15 minutes
 15-20 minutes
4. What do you think about the quality aspect of the dinning services in terms of following
aspects?
Particulars Excellent Good Average Below
average level
Poor

Taste
Hygiene
Presentation
of food
5. How do rate the various aspects of restaurant?
Particulars Excellent Good Average Below
average level
Poor
Menu or
variety of
food
High quality
napkins,
utensils,
sauces etc.
Competent
and friendly
workforce
High quality
beverages
Cleanliness
of restaurant
6. Do you agree that ambiance of the restaurant is highly effective?
 Agree ()
 Strongly agree ()
 Neutral ()
 Disagree ()
 Strongly disagree ()
7. Which kind of food varieties do you like most?
 Italian ()
 Chinese ()
 Mexican ()

 British ()
 Indian ()
 Al of the above ()
8. Do you think that prices charged by the restaurant gives high value for money?
 Yes ()
 No ()
9. Which factor impacts your decision in relation to dinning outside?
 Internet ()
 Discounting offers ()
 Friends and family members ()
10. Do you recommend the services to your friends and family members in the near future?
 Yes ()
 No ()
11. Which location will give more convenience to you ………………
12. Any kind of recommendation which do you want to give to the restaurant for further
improvement……………………………………..
2.1
Sales and profit figure of Blackfriars restaurant from 2008 to 2015 are as follows:
Years Sales Profit
2008 1150 287.5
2009 1180 295
2010 1220 305
2011 1195 298.75
2012 1205 325
2013 1225 350
2014 1250 375
2015 1285 398

Particulars Sales Profit
Standard deviation 41.73 40.89
Minimum 1185 287.5
Maximum 1285 398
Range 135 110.5
By using the statistical tools and techniques it has been assessed that standard
deviation of sales and profit is £41.73 and £40.89. Hence, in the near future sales revenue and
margin will deviate from the mean amount significantly. Besides this, during the period of 8
years minimum value of sales and profit is £1185 and £287.5. Along with this, maximum
value of sales and profitability aspects is £1285 and £398 respectively. Hence, such aspect
shows that in the near future sales revenue and gross margin will increase or decrease to such
limit. In this way, such measures of dispersion will assist Blackfriars restaurant in making
suitable policies to the great extent.
2.2
Analysis of primary data:
Theme 1: Services offered by the restaurant gives high value of money to the customers
Particulars Respondents No. of respondents
Yes 27 90%
No 3 10%
Total 30 100%
Yes No
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No. of respondents
No. of respondents

Outcome of primary data entails that 90% customers agreed with the aspect that
prices which are charged by Blackfriars is highly effective. Hence, price is one of the main
factors which have high level of influence on the satisfaction level of customers. Moreover,
now customers take decision by evaluating the prices which is charged by another firms for
the dinning services (Pavlopoulos and et.al., 2015). In this regard, view points of the
respondents clearly entails that pricing policy of the restaurant is highly competent. On the
other side, 10% respondents said that they not satisfied with the pricing policy of the
restaurant. One of the respondents said that other restaurants charge less as compared to
Blackfriars.
Theme 2: Internet is the main factor which is undertaken by the customers while taking
decision about dinning
Particulars Respondents No. of respondents
Internet 15 50%
Discounting offers 8 26.67%
Friends and family members 6 23.33%
Total 30 100%
Internet Discounting
offers Friends and
family members
0%
10%
20%
30%
40%
50%
60%
No. of respondents
No. of respondents
From primary data, it has been identified that internet surfing is done by the
customers for the selection of restaurant. Moreover, internet clearly provides deeper insight to
the customers about menu and price level. On the basis of such aspect 50% respondents
support such aspect. Further, 26.67% respondents said that they consider discounting offers
while taking decision about making use of dinning services. Whereas, 23.33% customers said

that they consider the advice of friends and family members for selecting the restaurant.
Hence, business unit should consider such aspect while framing promotional strategies and
campaign (Carretero, de la Rosa and Sanchez-Rodas, 2016).
2.3
Computation of mean, mode and median
Particulars Sales Profit
Mean 1213.75 329.28
Mode #N/A #N/A
Median 1212.5 315
From statistical analysis, it has been determined that average sales and profit
generated by Blackfriars restaurant during the last 8 years were £1213.75 and £329.28.
Whereas, 50% profit and sales generated by the restaurant unit accounted for the amount of
and £315 and ££1212.5. Hence, mean and median sales as well as gross margin is highly near
to each other. In the previous years, restaurant has performed its activities in the best possible
way.
2.4
Quartile is one of the most effectual statistical measure which helps in evaluating the
performance of the firm in relation to each quarter (Bajwa, 2015). In contrast to this,
percentile presents the figures in the form of percentage and thereby helps in making suitable
decision for the near future.
Calculation of quartile and percentile
Particulars Sales Profit
Quartile 1 and 25th Percentile 1191.25 297.81
Quartile 2 and 50th Percentile 1212.5 315
Quartile 3 and 75th Percentile 1231.25 356.25
Statistical analysis presents that in first and third quartile of sales accounted for
£1191.25 and £1231.25. On the other side, Q2 entails the median amount such as £1212.5
respectively. It shows that sales and profit margin of the restaurant increased in each quarter.
Hence, it reflects that customers more frequently make use of dinning services offered by
Blackfriars.

Correlation co-efficient: This measure helps business organization in assessing the level to
which two or more variables are highly related to each other (McNeil, Frey and Embrechts,
2015). By this, business unit can determine the impact of one variable on another to the
significant level.
Particulars Sales Profit
Sales 0.93 1
Profit 1 0.93
From statistical analysis, it has been assessed that sales and profit of the firm is highly
associated with other. The above mentioned table presents that .93 correlation takes place
between the sales and profit margin. Hence, by taking into consideration such aspect it can be
said that both sales and profit will incline or decline in the same direction. Thus, restaurant
owner needs to frame strategies by taking into consideration such aspect.
TASK 2
3.1
Years Sales Profit
2008 1150 287.5
2009 1180 295
2010 1220 305
2011 1195 298.75
2012 1205 325
2013 1225 350
2014 1250 375
2015 1285 398
Column chart

1 2 3 4 5 6 7 8
0
200
400
600
800
1000
1200
1400
Sales
Profit
The above mentioned graph entails that sales and profit aspect of the restaurant is
continuously increasing. From the period of 2008 to 2010 sales and profits were
continuously inclined. However, in the period of 2011 sales and profit margin of Blackfriars
restaurant declined. Hence, to enhance both sales and profit margin restaurant needs to make
focus on placing advertisement on social networking sites such as Facebook, Twitter etc. This
in turn provides information to the customers about the exclusive dinning services offered by
the restaurant (Kardys and et.al., 2015). Graph presents that at the end of 2015 sales of the
business organization inclined from £1150 to £1285.
Further, profit margin of the firm was also increased in the last 8 years along with the
sales revenue. Hence, by taking into account all such factors it can be said that restaurant is
performing better to the large extent. It indicates that by making proper management of the
business activities and functions owner will achieve success from another restaurant.
3.2
Trend line may be defined as a indicator which clearly depicts the extent to which
specific data set will move either in upward or downward direction (Yager and Kacprzyk,
2012). In this way, by assessing the future trend or pattern manager of the firm is in position
to frame suitable strategies and policies.

1 2 3 4 5 6 7 8
0
200
400
600
800
1000
1200
1400
f(x) = 15.7142857142857 x + 1143.03571428571
f(x) = 15.889880952381 x + 257.776785714286
Sales
Linear (Sales)
Profit
Linear (Profit )
From the above mentioned trend line, it has been analyzed that in the near future both
sales and profit will move in the upward direction. Hence, this aspect clearly indicates that
plan in relation to opening of second restaurant will prove to be more profitable for firm.
Further, on the basis of the existence of positive relationship both sales and gross margin of
the restaurant will grow in the near future.
3.3
Enclosed in power point presentation.
3.4
To,
Board of Directors,
Date: 18th December, 2016
 Introduction: This report will provide deeper insight to the management about the
views and expectation level of customers. Besides this, it will also shed light on the
on the future trend of restaurant in terms of growth, sales and profitability level.
 Methodology: In order to analyze the customers thinking and mindset survey has been
conducted by the scholar to gather such primary data. Besides this, books, journals
and scholarly articles also have been evaluated by the researcher to collect secondary
data. Along with this, researcher has selected sample of 30 people by using the simple
random sampling technique. Further, thematic perception test technique has been used
by the researcher to analyze data more effectively and efficiently.
 Findings: From analysis, it has been found that customers are highly satisfied from

the quality of food offered by the restaurant. Besides this, it has been identified that
personnel of the restaurant are highly courteous and offers highly effectual services to
the customers. Hence, in the service industry, personnel are the one who represents
the quality of services in front of the customers. Thus, by considering such aspect it
can be stated that business unit would become able to covert customer satisfaction
into loyalty with the help of talented workforce. Further, trend line also presents that
financial position of the firm will significantly increased over the time frame.
 Conclusion and recommendations: It has been concluded from primary and
secondary data investigation that expansion decision will prove to be more profitable
for the firm. It is recommended to the restaurant to include unique dishes in menu.
Besides this, restaurant should make focus on developing attractive ambiance which
in turn evolves high level of satisfaction among them.
TASK 3
4.1
There are several information processing tools which is undertaken by Blackfriars
restaurant. It includes MIS, DSS and TPS which helps in evaluating the large amount of data
more effectively and efficiently. Hence, restaurant makes use of software to analyze data
which in turn helps it in making suitable decision (Management information system, 2016).
Along with this, business unit also focuses on maintaining daily record of transaction which
provides high level of assistance to the firm in developing competent strategic and policy
framework.
4.2
Gantt chart and network diagram
Plan for the implementation of opening of another restaurant is enumerated below:
S. No. Activities Immediate
predecessors
Duration (in days)
1. Creating outline for the
research activity
- 7
2. Gathering primary and 1 18

secondary data
3. Recording and analyzing the
collected data
2 12
4. Framing budget 2 & 3 7
5. Preparing plan for establishing
another unit in London
3 & 4 8
6. Execution of the plan 5 20
7. Reviewing the performance 6 5
8. Making suitable changes in the
existing plan or framework
7 8
By taking into consideration the above network diagram it can be said that Blackfriars
restaurant needs to follow the below mentioned path which in turn helps in accomplishing the
project within the period of 73 days:
Critical path: 1+ 2 + 4 + 5 + 6 + 7 + 8
4.3
The cited case situation presents that restaurant has investment proposal with the
initial investment of £190000. In this regard, Blackfriars restaurant undertakes tools and
techniques of investment appraisal to assess the viability of project in financial terms. Net
present value (NPV) and internal rate of return (IRR) is the most effectual discounting
valuation methods that helps in assessing the return which will be generated by the firm after
the predetermined time frame (Zimmerman and Yahya-Zadeh, 2011).
Calculation of NPV and IRR
Year Cash inflow
(in £)
PV factor @
12%
Discounted
cash inflow
Initial 190000

investment
1 50000 .893 44650
2 64000 .797 51008
3 58000 .712 41296
4 70000 .635 44450
Total
discounted
cash inflow
181404
NPV (Total
discounted
cash inflow –
initial
investment)
-8596
Internal rate of return
Year Cash inflow
(in £)
Initial
investment
-190000
1 50000
2 64000
3 58000
4 70000
IRR 10%
Outcome of the investment appraisal analysis entails that owner of Blackfriars
restaurant will earn negative return of £8596 from such investment proposal. Besides this,
IRR of such project is 10% which is highly lower than industry average. Moreover, earning
high level of profitability is one of the main objectives of firm behind making investment.
Hence, company needs to make focus on assessing other proposals which in turn enhances
the profit margin of the business enterprise.

CONCLUSION
In conclusion to this report, it can be said that attitude and preferences of the
customers towards the dinning services of Blackfriars is highly positive. Besides this, it can
be inferred that with the rise in disposable income high level of changes take place in the
lifestyle of people. It can be seen in the report that now people prefer to go to the restaurant
more frequently as compared to the past years. Further, it can be revealed from the report that
sales and profitability aspect of the firm will incline in near future. By taking into
consideration such aspect it can be said that restaurant unit can explore its business area to the
large extent. Along with this, it has been articulated that proposed investment project will not
offer desired level of outcome or success to the firm.

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