Murano Restaurant Expansion Plan

This assignment tasks students with analyzing Murano restaurant's expansion plan within the city of London. It requires evaluating market attractiveness, consumer preferences through market surveys, identifying a suitable location (Central London), establishing an operational timeline (96 days), and assessing the financial feasibility using capital budgeting techniques.

Business Decision Making
1 | P a g e

Table of Contents
Introduction................................................................................................................................4
Task 1.........................................................................................................................................4
1.1 Plan for the collection of primary and secondary data for Murano..................................4
1.2 Survey methodology & sampling frame..........................................................................5
1.3 Questionnaire....................................................................................................................5
2.1Information for decision making.......................................................................................7
2.2 Analysis of Secondary & Primary information................................................................7
2.3 Measures of Dispersion..................................................................................................10
2.4 Quartile, Percentiles and the correlation coefficient......................................................10
Task 2.......................................................................................................................................11
3.1 Graphical presentation....................................................................................................11
3.2 Trend line for forecasting...............................................................................................11
3.3 Business Presentation.....................................................................................................11
3.4 Formal Business Report ................................................................................................13
Task 3.......................................................................................................................................13
4.1 Appropriate information processing tools......................................................................13
4.2 Gantt chart & Network Diagram (Project Management)..............................................14
4.3 Financial tool for decision making.................................................................................15
References................................................................................................................................17
2 | P a g e

Index of Tables
Table 1: Sales & Profit during last ten years..............................................................................7
Table 2: Descriptive statistics.....................................................................................................7
Table 3: Do you prefer having Italian food products?...............................................................8
Table 4: Do you know about Murano restaurant in Queen Street?............................................8
Table 5: Do you agree that the Murano has its own taste of Italian food products?..................9
Table 6: Do you agree that the restaurant unit has pleasant and soothing ambience?...............9
Table 7: Measures of Dispersions............................................................................................10
Table 8: Quartiles.....................................................................................................................10
Table 9: Percentiles..................................................................................................................10
Table 10: Correlation coefficient.............................................................................................11
Table 11: List of activities........................................................................................................14
Table 12: Net present value......................................................................................................15
Table 13: Internal Rate of return..............................................................................................16
3 | P a g e

INTRODUCTION
Businesses in present scenario need to decide suitable course of action so as to
achieve success in long term. The report proposed herewith emphasizes on evaluating distinct
set of decisions for the restaurant unit. It is through application of different statistical and
financial techniques that the researcher has justified decision making process of the
organization. An investigation is conducted for London-based restaurant unit, Murano that is
planning to expand operations by opening up a novel branch. The research work accumulates
a wide variety of financial and non-financial information so as to decide future course of
action for the organization.
TASK 1
1.1 Plan for the collection of primary and secondary data for Murano
Murano is an Italian restaurant that is located at Queen Street in London. The cafe is
planning to open up its second branch within city. Customer tends to widely accept its
eatables due to pleasing taste. Further, it offers quality products to its clientele base with
customer-oriented services. In order to ascertain the feasibility of expansion for the business
unit, a set of primary and secondary information is accumulated. A plan for accumulation of
secondary and primary data is presented underneath in detail.
Collection of secondary information: The secondary data is collected through
different published articles, books and journals. The recent articles published related to
changing consumers' preferences in London. It is through government publications that trend
for tourism and demographic profile of population can be identified. This in turn helps in
targeting appropriate set of market segment (Taylor, 2013). The researcher also evaluates
various factors that impacts buying decisions of customers through accumulation of relevant
secondary information.
Collection of primary information: The researcher needs to conduct an investigation
so as to accumulate the primary information. The survey is conducted for customers so as to
collect understand their preferences and buying pattern. A sample of customers would be
selected so as to collect the first hand information (Jaggia and et.al., 2016). It is through
distribution of questionnaire among sample of population that the researcher is able to collect
the required information. Murano is able to identify consumers' taste and preferences through
the market survey. This in turn helps in satisfaction of customer demand.
4 | P a g e

1.2 Survey methodology & sampling frame
In order to accumulate the required set of primary information, the business unit needs
to conduct the market research. It is essential for Murano to design a survey methodology and
frame a plan for sampling. The sampling plan and survey methodology for Murano is
described below:
 Survey Methodology: The researcher is supposed to design and blueprint of
conducting market research. The survey can be conducted in number of ways on part
of scholar. The different methodologies to conduct survey and accumulate primary
information are as follows: distribution of questionnaire, conducting interviews and so
on. In present case, Murano restaurant is going to conduct survey through online
distribution of questionnaire (Anderson and et.al., 2016). The methodology avoids all
kinds of biasness involved in collection of information. Further, the online
distribution would help the restaurant unit in accumulating information from large
sample of population.
 Sampling plan: The first and foremost step in collection of primary data is to select a
non-biased sample of population. The researcher has option to select sample of
population through distinct set of methods such as: probabilistic sampling method and
non-probabilistic sampling method. In present case, the researcher is going to select
sample of population through adoption of random sampling technique. The technique
allocates equal probability to all respondents (Spetzler,Winter and Meyer,2016). This
n turn helps in avoiding all kind of biasness involved in selection of sample. Further,
the technique provides an opportunity to collect information from different groups of
customers. The researcher is going to select sample of 30 customers in present case
through adoption of random sampling technique.
1.3 Questionnaire
A sample of questionnaire for collection of primary information on part of Murano
restaurant is enclosed underneath.
Questionnaire
Part 1: Personal Profile
Name: _________________
Gender: _____________________
Age group: __________________________
Income level: _______________________
Occupation: ______________________
5 | P a g e

Part 2: Customer and market-oriented information
Q.1. Do you prefer having Italian food products?
 Strongly prefer
 Prefer
 Neutral
 Somewhat prefer
 Not preferred at all
Q.2. Do you know about Murano restaurant in Queen Street?
 Yes
 No
Q.3 DO you like the eatables offered by Murano restaurant?
 Yes
 No
Q. 4 Do you agree to the fact that restaurant provides quality food products at reasonable
price?
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly agree
Q.5. Do you agree that the Murano has its own taste of Italian food products?
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly agree
Q.6. Do you agree that the restaurant unit has pleasant and soothing ambience?
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly agree
Q. 7 Which of the following restaurants; do you like the most?
 Blackfriars Restaurant
6 | P a g e

 Food for Friends
 Murano
 Balti Palace
Q.8 "If Murano would open up a new restaurant in Central London" What would be your
reaction?
Ans. ________________________________________
Q. 9. Any recommendation for Murano
Ans. ___________________________________________
2.1 Information for decision making
Table 1: Sales & Profit during last ten years
(Figures in £'s)
Years Sales (in £) Profit (in £)
2009 1250 250
2010 1520 380
2011 1680 470.4
2012 1830 512.4
2013 1980 594
2014 2070 662.4
2015 2150 817
2016 2260 904
The above stated table shows about the sales as well as profit generated by selected
restaurant i.e. Murano from the accounting period 2009 to 2016. It can be concluded from the
above summarised data that, sales generation capability of the cited restaurant is enhanced
consistently. When looking the profitability position then it also increased over the period of
2009 to 2016. Hence, it can be said that financial performance of Murano restaurant is
increasing consistently in the food industry.
2.2 Analysis of Secondary & Primary information
Analysis of Secondary information
Table 2: Descriptive statistics
Sales (in £) Profit (in £)
7 | P a g e

Mean 1842.5 Mean 573.775
Standard Error 121.0924971 Standard Error 77.14812689
Median 1905 Median 553.2
Mode #N/A Mode #N/A
Standard Deviation 342.5013034 Standard Deviation 218.2078547
Sample Variance 117307.1429 Sample Variance 47614.66786
Kurtosis -0.487149903 Kurtosis -0.668518637
Skewness -0.614471488 Skewness 0.156753155
Range 1010 Range 654
Minimum 1250 Minimum 250
Maximum 2260 Maximum 904
Sum 14740 Sum 4590.2
Count 8 Count 8
Confidence Level (95.0%) 286.3382553 Confidence Level (95.0%) 182.4263318
As per the table presented above, it is seen that on average restaurant unit is earning
revenue of £1842.50. Of which, the organization is earning profit of £ 573.775. This in turn
indicates that the restaurant unit is earning profit of around 31.14% on total revenue. Further,
the revenue and profit for Murano is continuously increasing from last ten year. This shows
that the restaurant unit has achieved sufficient growth in recent past. Further, the revenue
ranges from £1250.00 to £2260.00 in duration of ten years. On other hand, profit ranges from
£250.00 to £904.00 in ten years period (Bedeian, 2014). It can be said that the Murano has
sufficient level of profitability and has captured demand of adequate amount of population.
The adequate amount of demand adds to revenue of the organization.
Analysis of Primary information
Theme 1: Consumers do have high preference for Italian food products
Table 3: Do you prefer having Italian food products?
Do you prefer having Italian food products? Number of respondents % of respondents
Strongly prefer 14 46.67%
Prefer 10 33.33%
Neutral 2 6.67%
Somewhat prefer 2 6.67%
Not preferred at all 2 6.67%
Total 30 100.00%
8 | P a g e

Figure 1: Do you prefer having Italian food products?
The graph presented above indicates that consumers have high preference for Italian
food products. It is seen that 79% of customers either strongly prefer or prefer the taste of
Italian food products.
Theme 2: Customers have sufficient level of awareness about Murano restaurant.
Table 4: Do you know about Murano restaurant in Queen Street?
Do you know about Murano restaurant in
Queen street?
Number of
respondents
% of
respondents
Yes 28 93%
No 2 7%
Total 30 100%
Figure 2: Do you know about Murano restaurant in Queen street?
As per the survey conducted, 93% of customers are aware of Murano restaurant that is
located in Queen Street. This in turn indicates that the restaurant unit has adequate level of
awareness among customers in London.
Theme 3: Murano has its unique taste of its eatables or food items
Table 5: Do you agree that the Murano has its own taste of Italian food products?
Do you agree that the Murano has its own taste of
Italian food products?
Number of
respondents
% of
respondents
Strongly agree 15 50%
Agree 10 33%
Neutral 1 3%
Disagree 2 7%
Strongly agree 2 7%
Total 30 100%
Figure 3: you agree that the Murano has its own taste of Italian food products?
9 | P a g e

Taste of food products is considered to be its core advantage that attracts large
number of customers. As per the survey conducted for consumers, it is seen that the Murano
prepares Italian appetisers with a unique blend of taste.
Theme 4: The restaurant unit has pleasant and soothing ambience that catches
customers' attention
Table 6: Do you agree that the restaurant unit has pleasant and soothing ambience?
Do you agree that the restaurant unit has pleasant
and soothing ambience?
Number of
respondents
% of
respondents
Strongly agree 14 47%
Agree 10 33%
Neutral 2 7%
Disagree 2 7%
Strongly disagree 2 7%
Total 30 100%
Figure 4: Do you agree that the restaurant unit has pleasant and soothing ambience?
The graph presented above indicates that the 79% of consumers find ambience of the Murano
to be soothing and pleasant. Respondents claimed that ambience of the restaurant unit provide
them a true experience of enjoying eatables and drinks.
2.3 Measures of Dispersion
Table 7: Measures of Dispersions
Sales (in £) Profit (in £)
Standard Error 121.0924971 Standard Error 77.14812689
Standard Deviation 342.5013034 Standard Deviation 218.2078547
Sample Variance 117307.1429 Sample Variance 47614.66786
Kurtosis -0.487149903 Kurtosis -0.668518637
Skewness -0.614471488 Skewness 0.156753155
As per the estimations described in table above, it is seen that the values are highly
scattered in nature due to high level of standard deviation and sample variance (Fletcher,
2016). The high level of deviation suggests that the restaurant unit is exposed to risk of high
level of deviations in anticipated levels of revenue and profits.
10 | P a g e

2.4 Quartile, Percentiles and the correlation coefficient
Quartiles and percentiles
The quartiles and percentiles tend to segregate revenue and profit figures over a
period of time into distinct sets as per their distribution. The values of quartiles and
percentiles are estimated and presented in tables below.
Table 8: Quartiles
Quartiles Sales (in £) Profit (in £)
1st quartile 1538.5 385
2nd Quartile 1600 420
3rd Quartile 1745 467.5
Table 9: Percentiles
Particulars Sales (in £) Profit (in £)
25th Percentile 1538.5 385
50th Percentile 1600 420
75th Percentile 1745 467.5
As per the values estimated in tables above, it can be said that 25% of value of sales
lies below £ 1538.5; 50% falls under £ 1600 and 75% under £ 1745. On other hand, 25%,
50% and 70% of profit falls below value of £ 385, £ 420 & £ 467.5 respectively. The value of
quartiles and percentiles increases when a ladder is climbed into an upward direction
(Bedeian, 2014). This in turn indicates that the revenue and profits for the business unit is
increasing continuously year-on-year basis.
Correlation Coefficient
Correlation coefficient tends to identify the degree and level of relationship between
two variables. In case of Murano, the correlation coefficient between sales and profit is
estimated as follows:
Table 10: Correlation coefficient
Sales (in £) Profit (in £)
Sales (in £) 1
Profit (in £) 0.970072325 1
The value of correlation coefficient is estimated to be 0.97 which indicates that the
there is a direct and strong relationship between two variables. It can be said that 1 unit
increase/decrease in revenue would lead to 0.97 unit change in profit into the same direction.
11 | P a g e

Henceforth, it can be claimed that profit and revenue are highly correlated for the business
unit (Ramnarayanan, Berenson and Oppenheim, 2016). The organization should therefore
strive to increase its clientele so as to boost up revenue. This in turn would automatically
result in escalating profit for the restaurant unit.
TASK 2
3.1 Graphical presentation
Figure 5: Bar Chart- Revenue & profits
The bar chart sketched above shows growth in revenue and profits of the restaurant
unit in duration of last ten years. It is seen that the revenue and profits are initially increasing
at constant rate; and thereafter, at increasing rate. This shows that the Murano has witnessed
adequate level of growth in terms of revenue and profits earned.
3.2 Trend line for forecasting
Trend line helps in forecasting growth that is expected to occur in future period of
time. It emphasizes on anticipating future value on the basis of historical data. The same is
presented for Murano restaurant underneath.
Figure 6: Trend line - Revenue & profit
As per the trend line, it is expected that sales and profit would continuously grow in
upcoming five years of time. Further, as per the value of r-square, it can be said that the value
of revenue and profits adequately depends on respective values of previous year.
3.3 Business Presentation
Enclosed in PPT
12 | P a g e

3.4 Formal Business Report
TASK 3
4.1 Appropriate information processing tools
The information processing tools would help the restaurant unit in managing its
complex set of data in an efficient manner. The distinct set of information processing tools
are listed underneath
Management Information System (MIS): A proper implementation of MIS would
result in accumulation of all raw data and it's sorting into organized manner. It is through
proper sorting that the large amount of data can be analysed to support future decision
making process (Siegel, 2016).
Data base Management System: DBMS provides a common platform through which
information can be accessed by different departments and group of employees. A concrete
Database Management system results in proper flow of information avoiding all kind of
redundancies into operations (Spetzler, Winter and Meyer, 2016).
13 | P a g e

4.2 Gantt chart & Network Diagram (Project Management)
The restaurant unit is planning to expand operations by opening up a new branch in
city of London. In order to select the suitable market place and hire efficient employees, the
organization needs to incorporate following list of activities:
Table 11: List of activities
S.no. List of Activities Duration Preceding activities
1 Conducting market survey 10 days
2 Selecting a suitable Location 15 days 1
3 Reviewing different financing options &
deciding suitable alternative
10 days 1
4 Acquiring funds 7 days 3
5 Rennovating the interiors 25 days 4
6 Hiring employees 15 days 5
7 Training and development 15 days 6
8 Pilot testing of operations 10 days 5,7
9 Finally conducting operations 4 days 8
Figure 7: Gantt chart
The Gantt chart presented above describes schedule through which plan to open up a
new outlet will be succeeded in the shortest duration possible. It is through the date wise
schedule that the business unit is able to open up a new venture within specified duration of
time. Further, the Gantt chart provides a blue print on the basis of which restaurant’s project
14 | P a g e

to open up a new venture is implemented in an efficient manner (Turner, Ledwith and Kelly,
2010).
Figure 8: Network Diagram
Network diagram presented above indicates critical path so as to estimate the shortest
duration in which implementation of project would be completed. As per the critical path
estimated, it is seen that the restaurant unit will start conducting operations within duration of
96 days. It is in minimum duration of 96 days that the new outlet of Murano will start its
operations.
4.3 Financial tool for decision making
The financial feasibility of the plan of restaurant unit to expand business operations
by opening up a new outlet can be judged through application of capital budgeting techniques
(DaDalt and Coughlin, 2016). These techniques tend helps in estimating worth in monetary
terms that the plan is going to generate. In present case, the Net Present Value (NPV) and
Internal Rate of Return (IRR) are estimated to ascertain financial feasibility of the project into
consideration.
Net present value
The technique emphasizes on estimating net monetary value that the project is
expected to generate on today's date (Peavler, 2017). It takes into consideration time value of
money and cost of capital; henceforth is considered to be the most suitable method to
evaluate investment decision.
15 | P a g e

Table 12: Net present value
Year
Cash inflow
(in £)
PV factor
@ 12%
Present
Value
1 50000 0.893 44642.9
2 64000 0.797 51020.4
3 58000 0.712 41283.3
4 70000 0.636 44486.3
Total Present value 181433
Initial investment 190000
Net Present Value (Sum of Discounted cash
inflow - initial investment) -8567.2
The values estimated in above table indicate that the present value of anticipated cash
flow is negative in nature. This in turn indicates that the business plan to expand operations is
not viable on financial grounds.
Internal Rate of return
It is the rate that the project is expected to generate when NPV is equivalent to zero. It
indicates the overall return that the project under consideration can generate in percentage
terms.
Table 13: Internal Rate of return
Year Cash inflow (in £)
1 50000
2 64000
3 58000
4 70000
IRR 10%
The value of Internal Rate of Return (IRR) is estimated at % which is comparatively
lower in nature. It can be said that the investment plan of Murano restaurant is not generating
adequate level of return in duration of four years. The business unit should therefore consider
profitability in long run while deciding for expanding operations.
CONCLUSION
The report proposed herewith emphasizes on evaluating the case of Murano who is
planning to expand operations within city of London. The primary and secondary information
16 | P a g e

is accumulated so as to identify attractive market place. Further, the consumers' preferences
are also identified through market survey. As per the analysis, it can be said that the
restaurant unit should expand operations in Central London. Moreover, the new outlet will
start its operations within duration of 96 days. Finally, the capital budgeting technique states
that the plan to expand operations is not highly feasible in nature. Therefore, the organization
is expected to fix loopholes that exist on financial grounds so as to expand operations.
REFERENCES
Books and Journals
Anderson, D. R. and et.al., 2016. Statistics for business & economics. Nelson Education.
Bedeian, A.G., 2014. “More Than Meets the Eye”: A Guide to Interpreting the Descriptive
Statistics and Correlation Matrices Reported in Management Research. Academy of
Management Learning & Education.13(1). pp.121-135.
DaDalt, O. and Coughlin, J. F., 2016. Managing Financial Well-Being in the Shadow of
Alzheimer’s Disease. Public Policy & Aging Report. 26(1). Pp.36-38.
Fletcher, F., 2016. Solutions: Business Problem Solving. Routledge.
Jaggia, S. and et.al., 2016. Essentials of business statistics: communicating with numbers.
McGraw-Hill Education.
Ramnarayanan, R., Berenson, M. L. and Oppenheim, A. J., 2016. A Comparison of Student
Learning in a Business Statistics Course Using Courseware Assisted, Traditional, and
Mixed Assessment Methods. Academy of Business Research Journal. 1. p.25.
Siegel, A., 2016. Practical business statistics. Academic Press.
Spetzler, C., Winter, H. and Meyer, J., 2016. Decision quality: Value creation from better
business decisions. John Wiley & Sons.
Taylor, W.B., 2013. Introduction to Management Science. 11th ed. Pearson.
Turner, R., Ledwith, A. and Kelly, J., 2010. Project management in small to medium-sized
enterprises: Matching processes to the nature of the firm. International Journal of
Project Management. 28(8). pp.744-755.
17 | P a g e