Balti Palace Restaurant Investment Analysis

This assignment examines the potential viability of opening a second restaurant for 'Balti Palace' by conducting an investment appraisal using techniques like Net Present Value (NPV) and Internal Rate of Return (IRR). The report also analyzes customer feedback to assess market demand. The findings suggest that the investment might not be profitable based on financial analysis, recommending alternative options for the business owner.

Business Decision Making

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
1.1 Planning for the collection of primary and secondary data..............................................3
1.2 Designing survey methodology and sampling frame used..............................................4
1.3 Preparing questionnaire for survey..................................................................................5
TASK 2......................................................................................................................................7
2.1 Summarization of data using representative values.........................................................7
2.2 Analyzing results for drawing valid conclusion...............................................................9
2.3 Measures of dispersion...................................................................................................10
2.4 Computation of quartile, percentile and correlation co-efficient...................................10
3.1 Presentation of data set graphically................................................................................12
3.2 Creating trend line for forecasting future aspects..........................................................14
3.3 Dissemination of information using power point...........................................................14
3.4 Business report...............................................................................................................14
TASK 3....................................................................................................................................15
4.1 Use of appropriate information processing tools for decision making..........................15
4.2 Preparing project plan for an activity and determining critical path..............................16
4.3 Decision making using investment appraisal techniques...............................................17
CONCLUSION........................................................................................................................18
REFERENCES.........................................................................................................................20

INTRODUCTION
In the recent times, tourism is increasing with the very high pace in London, which in
turn recognized as dynamic city of the world. Each year, several visitors, including both
inbound and outbound, visit London for several purposes commerce or business, studies, fun
etc. London is known for the combination of both amazing culture and commerce activities.
Hence, such tourism trend significantly contributes in the growth of firms operating in travel
and tourism sector. Considering such trend, business entity of Balti Palace is planning to open
second restaurant unit in London. In this regard, report will depict the manner in which
primary and secondary can be gathered for assessing the expectation level of both existing as
well as potential customers. Besides this, report will also provide deeper insight about how
statistical, information processing, project management and investment appraisal tools
facilitates quick decision making and thereby aid in profitability.
1.1 Planning for the collection of primary and secondary data
Now, research activity has gained high level of importance in every field or plan
whether it’s related to expansion or new offerings. R&D helps in gathering information about
target market and thereby assists in developing competent as well as strategic framework
(Ward and Peppard, 2016). By keeping in mind the significance of research, business entity
of Balti Palace, who is planning to establish second restaurant in London, contacted to
researcher for the collection of primary and secondary data. Hence, plan that will be followed
by the researcher for gathering primary and secondary data is enumerated below.
Primary data collection plan: Data that is specifically gathered by the scholar
specifically for meeting research objectives via survey, observation, focus group, interview
etc known as primary. Hence, following plan will be considered by the researcher for primary
data collection such as:
 In the first step, data collection technique has been selected by the researcher such as
survey. The reason behind making selection of such technique is that it helps in
collecting information as per the issue.
 At this stage, using non-probabilistic technique, such as purposive 30 customers of
restaurant units have been selected. Hence, survey will be focused on such
respondents rather than whole population.

 In the third stage, researcher will design questionnaire by including both open and
close ended questions into it regarding services, pricing strategies, promotional
aspects as well as preferences pertaining to location.
 In the last stage, by sending questionnaires on the respondent’s mail-id data survey
will be conducted or completed.
Thus, by following the above mentioned process primary data will be collected by the
scholar in a prominent way.
Secondary data collection plan: To analyze the trend of restaurant sector and tourism
level in the different areas of London, articles as well as governmental reports will be
evaluated by the researcher. This in turn gives input regarding location aspects, restaurant
styles etc. Besides this, other secondary sources such as books, journals and scholarly articles
will also be evaluated by the researcher to assess the factors that have impact on customer
decision making. Hence, for the collection of secondary data, internet surfing will be done,
that contains wide collection pertaining to books, journals and articles.
1.2 Designing survey methodology and sampling frame used
Survey methodology: For conducing survey in the best possible way there is a
requirement to prepare appropriate plan. Hence, survey methodology entails the way that
needs to be followed for collecting data from the selected respondents (Varmuza and
Filzmoser, 2016). Thus, referring the availability of limited time frame, online survey
technique has been chosen by the researcher. Hence, for conducting survey in accordance
with online methodology researcher will primarily acquire the mail-id of individuals who
selected as sample. Once mail-id of the respondents have acquired, thereafter by sending
questionnaire on the same responses will be gathered. Hence, by undertaking the above
mentioned tool and process survey will be initiated.
Sampling frame: In research, sample selection is vital due to having limited resources
such as time and finance. Thus, focus needs to be placed on sample selection from concerned
population by taking into account either probabilistic or non-probabilistic techniques
(Albright, Winston and Zappe, 2010). Hence, in this, using purposive sampling technique,
part of non-probabilistic, 30 respondents have been selected by the researcher. Hence, by
taking views from 30 customers of Balti Palace suitable information can be gathered for the
purpose of decision making.

1.3 Preparing questionnaire for survey
Questionnaire
Demographic information
Name.....
Age....
Profession.....
Gender:
 Female
 Male
Age (in years): ___________
Q:1. Kindly mention the frequency of visiting restaurant?
 Daily
 Every week
 Once in a month
 Twice in a month
 Once in a quarter
 Other (specify)
Q:2.Which components is extremely important for you when you choose to take dinner
out?
 Food taste
 Service quality
 Value for food
 Convenient place
 Concept of the restaurant
 Other (Specify)
Q:3. On what occasion, you generally visit restaurants?
 Anniversary
 Birthday
 Office party
 Family occasion
 Christmas
 No matters
Q:4. Which type of cuisine do you generally prefer to dine out?
 Chinese

 European
 Mexican
 Italian
 American
 Mexican
 Indian
 Other (Specify)
Q:5. How well staff at Balti Palace serves you?
 Extremely well
 Quite well
 Poor services
 Terrible
Q:6. What time, do you usually go restaurant?
 Breakfast time
 Lunch time
 Dinner time
 Doesn’t matter
Q:7. How much amount do you spend per visit to Balti Palace?
 Below £80
 £80-£120
 £120 - £150
 More than £150
Q:8. Does the source of ingredients impacts your buying decisions?
 Yes
 No
 Sometimes
Q:9. Does proper cleanliness are maintained by the staff at Balti Palace?
 Yes
 No
 Sometimes
Q:10 Give some suggestion to us to serve you better?
_____________________________________________________________________

TASK 2
2.1 Summarization of data using representative values
Theme: 1 Maximum number of people keeps food taste and value at top priority
Number of respondents %
Food taste 11 37%
Service quality 4 13%
Value for food 8 27%
Convenient place 3 10%
Concept of the restaurant 2 7%
Other (Specify) 2 7%
30 100%
Food taste Service
quality Value for food Convenient
place Concept of
the restaurant Other
(Specify)
0
2
4
6
8
10
12 11
4
8
3
2 2
Factors that affect customers buying decisions
Results: The findings supports that for a considerable customer base, food taste as
well as value for the food are the two top most priorities or factors that affects their buying
decisions. It means quality of food and prices have a significant influence over the buying
decisions of the customers. However, convenience, restaurant concept and service quality
plays a less important role (Anderson and et.al., 2016). Thus, based on this, Balti Palace can
be recommended to offer exceptional taste of food at competitive rates to people.
Theme: 2. In the market, European cuisine is in great demand among people
Number of respondents %
European 12 40%

Mexican 2 7%
Italian 2 7%
American 5 17%
Mexican 4 13%
Indian 2 7%
Other (Specify) 3 10%
30 100%
European Mexican Italian American Mexican Indian Other
(Specify)
0
2
4
6
8
10
12
14
12
2 2
5
4
2
3
Demand of various cuisine by people in London
Results: The graphical presentation supported that European cuisine is in huge
demand among people in the market. Thus, it clearly evident that a sizeable proportion of
customers demand European cuisine while other cuisine like Mexican, Indian, Italian,
American and others is in less demand (DeFusco and et.al., 2015). It is because London has a
significant proportion of Britishers therefore, such products are highly demanded and based
on this, Balti Palace can be suggested to offer such cuisine to people to satisfy them.
2.2 Analyzing results for drawing valid conclusion
Sales and profit figure of Balti Palace pertaining to the period of 10 years is as follows:
Year
Sales (in
£)
Profit (in
£)
2008 860 215
2009 980 260
2010 1190 320
2011 1050 290

2012 1220 355
2013 1385 410
2014 1470 460
2015 1630 520
2016 1750 590
2017 1920 680
Descriptive statistics
Sales (in
£)
Profit
(in £)
Mean 1348 355
Standard Error 113.2333 27.33537
Median 1285 340
Mode #N/A #N/A
Range 1090 260
Minimum 860 240
Maximum 1950 500
Sum 13480 3550
Count 10 10
Interpretation: Descriptive statistics evaluation shows that mean and median sales
account for £1348 & 1285 respectively. This aspect shows that average sales are higher as
compared to median. Hence, for increasing sales revenue owner of Balti Palace should focus
on offering membership and discounts to the customers. Meanwhile, such strategy
contributes in high revenue generation and thereby profitability of restaurant.
2.3 Measures of dispersion
Computation of variance and standard deviation
Sales (in
£)
Profit
(in £)
Standard
Deviation 358.07 86.44
Sample
Variance 128217.8 7472.222
Kurtosis -0.86311 -0.9668
Skewness 0.398586 0.373502

Interpretation: Results of statistical evaluation shows that mean value of sales and
profit will deviate from £358.07 & 86.44 respectively. Hence, business entity of Balti Palace
should keep in mind all such aspects while developing policies or strategies. Thus, firm
should lay focus on undertaking promotional activities which in turn enhances sales and
thereby profit.
2.4 Computation of quartile, percentile and correlation co-efficient
Quartile: Such statistical tool provides deeper insight about financial aspects in the
form of quarters such as 1, 2 and 3. In other words, quartile tool of statistics divides list of
numbers or dataset into four quarters.
Percentile: It indicates company’s performance or data set in the form of percentage
rather than numeric values. Percentiles mainly include 25th, 50th and 75th percentile which
helps in assessing trend as per data set more effectually.
Both such tools, quartile and percentile are highly significant which helps business
entity in measuring as well as evaluating performance in the form of both numeric and
percentage form.
Correlation co-efficient: It may be presented as a statistical measure which helps in
both defining and measuring relationship that takes place between two variables. By
undertaking such tool owner of restaurant unit can easily assess the extent to which one
variable is associated with other.
Quartile and percentile
Particulars Sales (in £) Profit (in £)
1st quartile & 25th
percentile 1085 297.5
2nd quartile & 50th
percentile 1285 340
3rd quartile & 75th
percentile 1575 413
Interpretation: The above depicted table shows that in each quarter value of sales and
profit margin increased. In the first quarters, sales revenue accounts for £1085 respectively,
whereas it reached on £1575 in 3rd quarter. Further, profit of Balti Palace also increased from
£297.5 to £413 at the end of third quarter. Hence, by taking into account the evaluation of

secondary data set, it can be depicted that customers who visit restaurant increased over the
time which in turn resulted into high sales as well as margin.
Correlation co-efficient
Sales Profit
Sales 1 0.99
Profit 0.99 1
Statistical evaluation presents that positive and higher relationship takes place
between the variables such as sales as well as profit margin. In accordance with .99
correlations, it can be stated that both sales and profit will move in a similar tandem either
positive or negative. Thus, owner of Balti Palace should focus on developing sound
framework that contributes in both sales revenue as well as profit margin.
3.1 Presentation of data set graphically

Above graph clearly highlighted that till the end of year 2010, Balti Palace restaurant
shows high increase in sales due to lack of competitive threats and new offerings introduced
by the restaurant. In subsequent year 2011, it suddenly dropped to £1050 because of change
in people preferences and coming of new restaurants who offers the services at competitive
rates. Thereafter, sales depicts a continuous increase because of improving lifestyle,
availability of more discretionary spending to the customers, in turn, people prefer visiting
restaurants and enjoy great luxury lifestyle (Sawyer, 2015). In line with this, profitability
shows a similar trend as till 2010, it continuously increases and then, fell. Since 2011, profit
came on its right track which is mainly driven by the cost-optimization effort taken by the
entity, increased sales and control over wasteful spending. The results clearly summarized
that Balti Palace had made good decisions such as introducing new cuisine in its menu,
various facilities such as free of cost wi-fi, unique infrastructure and others that contributed
towards growth in sales & profit (Davis and et.al., 2018).
3.2 Creating trend line for forecasting future aspects
The results of trend line evaluation present that in the near future, both sales and profit
margin of the restaurant unit will increase significantly. It is expected because of change in
the preferences, expectations and lifestyle of customers now increases the demand for the
restaurant industry. Now, people prefer tasting different cuisine and visiting restaurants to
satisfy their demand. However, at the same time, tough competitive rivalries may bring
significant pressure to the Balti Palace sales (Hair, 2015). On the other side, a profitability
trend line show a flattened growth in forthcoming years, the reason behind this is currently
cost pressure is rising for the restaurants. Moreover, increasing fuel charges expects to cut

down its margin. Despite this, in order to beat the competitors, it may require more
investment in marketing activities, in turn, cost will be increase and profit will not drive a
good growth.
3.3 Dissemination of information using power point
Slide 1
Slide 2
Slide 3

Slide 4
Slide 5
Slide 6

Slide 7
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Slide 9
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Slide 11

Slide 12
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Slide 14

3.4 Business report
To: Balti Palace’s manager
From: Financial Analyst
Date: 22nd March 2018
Introduction:
The report aims to present the key financial highlights about the historical sales and
profitability. Based on this, future will be predicted using trend line. This report will
present the extent to which plan pertaining to restaurant expansion in London is viable.
Methodology: Past 10 year’s revenues as well as profitability position of Balti palace is
examined using different graphs including bar graph, scatter plot and column graph.
However, future is anticipated through presenting trend line on the column graph. In
addition to this, for assessing customers need, want and preferences data has also been
gathered from primary sources. For this purpose, survey has been conducted by the
researcher on 30 respondents selected through purposive sampling technique.
Financial Highlights:
 After data visualization, it is evaluated that since 2010, Balti Palace revenues & profit
performance represents a good growth mainly driven by increase in demand due to quality
offerings in different cuisine. In next year, it suddenly came down may be due to tough
competition by the rivalries and availability of substitute choices to the people at desirable
rates. Thus, pricing war in the industry may be a reason behind such occurrence.
Thereafter, since 2011, it represents a commendable growth because of more dispensable
income to the people and improved lifestyle, due to which, demand has been increased
resultant grown sales revenue and profit.
 Trend line predicts that future will be better because sales revenue is expected to increase

driven by customer preferences to take meal out at different restaurants and taste various
cuisine. Despite considerable growth in revenue, high cost of supplies, ingredients
and rising fuel prices predicts flattened growth in profit.
Conclusion and recommendations :
The findings recommends that Balti Palace requires to introduce more offerings and items
in its menu so as to bring massive growth in sales volume by serving more people. It is
recommended to the owner of Balti palace to lay emphasis on undertaking promotional
campaign or plan. This in turn helps it in attracting more customers and thereby maximizes
profitability. Referring trend line and overall evaluation it can be presented that Balti
palace will attain success by opening another restaurant in London.
From:
Research analyst
TASK 3
4.1 Use of appropriate information processing tools for decision making
There are several tools that can be used by the researcher, analyst and business
entities for processing gathered information in a meaningful manner. Hence, by using
following information processing tools appropriate decisions can be made within the suitable
time frame (Peetz and Buehler, 2013). Management information, transaction processing and
decision support system are the main information processing tools that can be undertaken by
the manager of Balti Palace for decision making. MIS & DSS software provides business
entity with structured reports through analyzing data set pertaining to research etc and
thereby aid in decision making. In addition to this, TPS is also one of the most effectual
system that collects, stores, modifies as well as retrieve information and helps in getting
structured reports (Power, Sharda and Burstein, 2015). Thus, by taking into account all such
aspects it can be depicted that information processing tools such MIS, DSS and TPS
significantly contributes in decision making.
4.2 Preparing project plan for an activity and determining critical path
S. No. Activities Immediate
predecessors
Duration (in days)
1. Preparing brief outline for - 7

establishing another restaurant
unit
2. Conducting research to assess
market trend and collection of
primary data via survey
1 10
3. Summarizing and analyzing
data set
2 12
4. Operational planning 2 & 3 14
5. Setting of budgeting
framework
3 & 4 8
6. Establishment of restaurant
unit
5 20
7. Finding gap through taking
feedback from customers
6 6
8. Doing suitable changes for
improvement that contributes
in goal attainment
7 8
Network diagram
Critical path:
Path 1: 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8
Duration: 85 days
Path 2: 1 + 2 + 4 + 5 + 6 + 7 + 8
= 73 days
Path 3: 1 + 2 + 3 + 5 + 6 + 7 + 8

= 71 days
Out of such above mentioned critical path, business entity of Balti palace should
follow 3rd one. Moreover, such path will help owner of Balti Palace in establishing restaurant
within less time such as 71 days over other alternatives. Through following such path
business entity of the restaurant would become able to offer dinning services to more
customers and thereby attain profit margin.
4.3 Decision making using investment appraisal techniques
On the basis of given case situation, business entity of Balti Palace is concerned that
whether investment of £190,000 in another restaurant is suitable or not. In this, investment
appraisal tools, discounted techniques, such as net present value and internal rate of return
clearly presents the extent to which proposal is financially viable (Investment appraisal
techniques, 2018). Decisions which are based on such technique are highly suitable as it
presents solution by taking into account the time value of money concept.
Computation of Net present value
Year
Cash flows (in £) PV factor @ 12% Discounted cash
flows (CIF * PV
factor)
1 50000 .893 44642.86
2 64000 .797 51020.41
3 58000 .712 41283.25
4 70000 .635 44486.27
Total present value
of cash flows
(TPVCF)
181432.8
Less: Initial
investment (II)
190000
NPV (sum of
discounted or PV
cash flows – initial
investment)
-8567.22

Computation of Internal rate of return
Year
Cash flows (in £)
Initial investment (190000)
1 50000
2 64000
3 58000
4 70000
IRR 10%
Interpretation: By applying the techniques of investment appraisal such as NPV and
IRR, it has discovered that concerned investment plan will not prove to be profitable for
restaurant owner. From NPV analysis negative return such as -8567 has found which is not
considered as good. Moreover, as per the selection criteria project is viable when it offers
positive and high returns (Zimmerman and Yahya-Zadeh, 2011). Hence, negative returns
indicate that owner of Balti Palace should avoid making investment of £190,000 in second
restaurant. Further, IRR associated with the second restaurant plan is also highly lower such
as10%. Thus, for the attainment of suitable margin business owner should focus on other
investment options or plan.
CONCLUSION
From the findings of this report, it can be presented that owner of Balti Palace will
attain success by opening –up another restaurant unit in London. It can be summarized from
primary data evaluation that customers have positive attitude towards the services offered by
Balti Palace. Further, it has been articulated that business entity should focus on enhancing
sales revenue which in turn evidently leads high margin. It can be seen in the report that both
revenue and margin of the restaurant is increasing continuously which shows that customers
prefer to visit Balti Palace more frequently. Besides this, it can be stated for the attainment of
high margin owner of the restaurant should focus on finding profitable option rather than
investing £190000 in establishing another restaurant unit.

REFERENCES
Books and Journals
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Cengage Learning.
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Davis, B. and et.al., 2018. Food and beverage management. Routledge.
DeFusco, R.A. and et.al., 2015. Quantitative investment analysis. John Wiley & Sons.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.
Peetz, J. and Buehler, R., 2013. Different goals, different predictions: Accuracy and bias in
financial planning for events and time periods. Journal of Applied Social
Psychology. 43(5) pp.1079-1088.
Power, D. J., Sharda, R. and Burstein, F., 2015. Decision support systems. John Wiley &
Sons, Ltd.
Sawyer, T.Y., 2015. Making Business Decisions Using Quantitative Models: Decision
Analysis Best Practices. In Financial Modeling for Business Owners and
Entrepreneurs. Apress, Berkeley, CA. pp. 213-230.
Varmuza, K. and Filzmoser, P., 2016. Introduction to multivariate statistical analysis in
chemometrics. CRC press.
Ward, J. and Peppard, J., 2016. The Strategic Management of Information Systems: Building
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Zimmerman, J. L. and Yahya-Zadeh, M., 2011. Accounting for decision making and control.
Issues in Accounting Education. 26(1). pp.258-259.
Online
Investment appraisal techniques. 2018. Online. Available through: <
https://www.nibusinessinfo.co.uk/content/investment-appraisal-techniques >.
[Accessed on 7th December 2016].