Food for Friends Restaurant Analysis

This assignment examines the potential of expanding 'Food for Friends' by opening a new restaurant branch. It involves conducting market research to understand customer preferences and factors influencing their dining choices. The analysis also evaluates customer satisfaction with current services and incorporates an accounting information system (AIS) review. Financial feasibility is assessed using the Net Present Value (NPV) technique to determine if the new branch is a viable investment.

BUSINESS DECISION MAKING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
1.1 Creating plan for primary and secondary data .....................................................................4
1.2 Survey methodology ............................................................................................................4
1.3 Designing questionnaire .......................................................................................................5
TASK 2............................................................................................................................................7
2.1 Information for decision making...........................................................................................7
2.2 Interpretation of results of mean, median and mode.............................................................7
2.3 Measure of dispersion...........................................................................................................8
2.4 Calculation of correlation and quartile..................................................................................9
TASK 3............................................................................................................................................9
3.1 Analysis of primary data.......................................................................................................9
3.2 Trend line............................................................................................................................12
3.3 Covered in PPT...................................................................................................................13
3.4 Formal business report .......................................................................................................13
TASK 4..........................................................................................................................................13
4.1 Use of suitable information processing tools .....................................................................13
4.2 Preparation of the project plan ...........................................................................................14
4.3 Financial tools for decision making ...................................................................................16
Conclusion ....................................................................................................................................18
References .....................................................................................................................................19
INDEX OF TABLES
Table 1: Calculation of mean, median and mode............................................................................7
Table 2: Median value....................................................................................................................8
Table 3: Calculation of standard deviation......................................................................................8
Table 4: Calculation of correlation..................................................................................................9
Table 5: Calculation of percentile....................................................................................................9
Table 6: People response on factors which influence them to visit Food for Friends?.................10
Table 7: People preference on food...............................................................................................10
Table 8: Project plan data..............................................................................................................15

Table 9: Calculation of payback period method............................................................................17
Table 10: Calculation of ARR.......................................................................................................17
Table 11: Calculation of net present value....................................................................................18
Table 12: Calculation of IRR 18
ILLUSTRATION INDEX
Illustration 1: People response on factors which influence them to visit Food for Friends?.........10
Illustration 2: People preference on food.......................................................................................11

INTRODUCTION
Business Decisions are very complex which are made for long-term and highly affect the
productivity of an organization. Decision making is the systematic process in which relevant
information is gathered, choices are made, and alternative occupations are assessed to make the
business operations more effective. These decisions are not easy to make, the owner of company
has to take into consideration many factors. Various analytic tools and concepts are used in the
research and interpretation of there results are made in the report. At end of the report, projects
are evaluated by using methods like pay back, ARR and IRR etc.
TASK 1
1.1 Creating plan for primary and secondary data
Food for Friends is planning to open its second new restaurant in the city of London.
Hence for the purpose of knowing the consumer taste and preferences, company is planning to
do a survey on the people. The plan for the primary and secondary data collection is as follows:
 Primary plan – Primary data is the first hand information which is unprocessed and fresh
in nature. Food for Friends will collect the primary data from the potential customers of
London through questionnaire technique (Huber, 2011). Primary research is conducted
because it helps firm in collecting facts and figures about the situation that is currently
prevalent in the market.
 Secondary plan – It is available through already published sources. This kind of
information is not new and needs to be collected from valid and authentic sources. In
present study secondary information will be collected from books, journals and
magazines. Information collected from these sources helps in develop proper
understanding about the research topic.
1.2 Survey methodology
Sampling makes the data collection work easier (Berenso and et.al., 2012). It is mainly
of two types’ probability and non-probability methods. For this research combination of random
and Purposive sampling techniques will be applied. The respondents will be selected who are
near to the location of different restaurants. It is appropriate because it helps in avoiding personal
bias. Purposive approach is appropriate because primary data is required to be collected from

people who prefer to eat in restaurants (Agresti and Kateri, 2011). Both qualitative and
quantitative approach has been kept for the research. There are number of sampling method and
some of them are as follows. Simple random sampling- This is method that is often used by the researchers when they
do not need specific type of respondents for data collection. In this method researcher
does not make use of any parameter for choosing sample units from population. Stratified sampling- In this method researcher determine the criteria that is considered
for selecting sample units from population. This method is used when one wants to
collect facts and figures from people that are different from each other on ground of
income level and education etc. This sampling method will be used in present study.
 Cluster sampling- Under this method specific geographic area is divided in to multiple
parts and sample units are taken from them. This method is employed in government
survey.
1.3 Designing questionnaire
Food for Friends Restaurant
 Name: _________________________________________
 Age : ______________________
 Gender:
 Male ()
 Female ()
 What is your employment status
 Employed ()
 Unemployed ()
 Student ()
 What is the frequency of your visit to Food for Friends?
 Every day ()
 After, 7 days ()
 Month ()
 Some times ()
 Which of below given factors influence you to visit Food for Friends?

 Taste of food ()
 Ambiance ()
 Price ()
 Service quality ()
 What sort of items you like to eat?
 Chinese ()
 Continental ()
 Spanish ()
 Regional ()
 Due you think that varied edible items are available in restaurant?
 Yes ()
 No ()
 Are you satisfied with the services of Food for Friends?
 Highly satisfied ()
 Satisfied ()
 Neutral ()
 Dissatisfied ()
 Highly dissatisfied ()
 In which of below given category our service quality fall?
 Poor ()
 bad ()
 Average ()
 good ()
 excellent ()
 Do you agree that improvements are required in services of Food for Friends?
 Highly agree ()
 Agree ()
 Neutral ()
 disagree ()
 Highly disagree ()
 Please give recommendations

TASK 2
2.1 Information for decision making
Table 1: Calculation of mean, median and mode
1 20000
2 25000
3 28000
4 33000
5 37000
Mean 28600
Median 28000
Mode #VALUE! Mean- Mean is commonly known analytic tool which help researcher in finding out
average value of the specific variable. Research analyst by using mean value measure the
performance of the specific variable. If variable is profit and value of mean is below
current value of variable then it reflects that concern failed to give excellent performance
in comparison to earlier years (Ge, 2002). Median- After mean, median is another method in statistics which do division of data in
different parts. By using mentioned statistic method performance of the firm can be
measured by the mangers (Gibbons and Chakraborti, 2011). There may be different
trends in two data sets and by using median value these different trends related to
variable can be easily identified by the managers. Hence, this is very important statistical
tool that is used for making business decisions.
 Mode- Mode is individual technique of statistics that help researcher in finding out values
that are frequently occurring in entire data (Snijders, 2011). In case if outcome of
mentioned statistic tool is zero then it reflects that there no single value that is repeating
number of times.
2.2 Interpretation of results of mean, median and mode
Following are the interpretations of mean, median and mode:-
Mean- In this case outcome of mean for Food for friends is 28,600 which is below current value
of sales which is 37,000. This comparison revealed that concern give good performance and it

can be expected that in forthcoming years also same trend will continue. There is huge gap in the
current value and figure of mean. This reflects relative to average value firm is making heavy
amount of sales in its business.
Median- Outcome of mentioned tool is 28,000 and it is the number that is classifying data set in
multiple segments. Trends are also different in these two data sets and it can be seen from the
below given table.
Table 2: Median value
1 20000
2 25000 25.00%
3 28000 12.00%
4 33000 17.86%
5 37000 12.12%
If we look from first value which is 20,000 to 28,000 than it can be seen that elevation rate of
variable shrink from 25% to 12%. Change in trend is observed after median value and value of
variable elevate. But in next year this trend comes to end which indicate that there is no stability
in the sales growth rate and some times it increases or decrease.
Mode- Calculation revealed that outcome is zero and it is clear that none of values is appeared
second time in set of values. Elevation in values of variable is observed which is good on the
basis of which it can be said that firm perform good.
2.3 Measure of dispersion
Table 3: Calculation of standard deviation
1 20000
2 25000
3 28000
4 33000
5 37000
Standard deviation 6655.82
Interpretation
Standard deviation revealed the extent to which value of the variable are far from mean
value. It is clear from the table that output of mentioned statistical tool is positive and it can be

said that there is difference between mean and current sales. Value of standard deviation can be
positive or negative (Weiers, 2010). Here variable is sales and due to this reason there must be
positive standard deviation. In order to make the best use of this tool standard deviation of each
and every year can be computed. By doing so it can be easily identified that sales of the firm is
increasing in year on year basis. By using this tool it can be identified that growth rate of sales is
increasing or decreasing. Thus, this very important statistical tool and widely used by analysts to
analyze variable.
2.4 Calculation of correlation and quartile
Table 4: Calculation of correlation
1 20000 2000
2 25000 2500
3 28000 2800
4 33000 3300
5 37000 3700
Correlation 1
Interpretation
Correlation indicate extent to which change comes in one variable due to variation that is
occurring in other one. Outcome of the mentioned statistical tool always comes in range of -1,0
and +1 (Siegel, 2011). One indicate that there is perfect correlation between two variables. In
case one variable increase by 30% then other variable will also increase by same percentage.
Similarly, in case if outcome is negative then it revealed that both variables are negatively related
to each other. In case if one of them is increasing then value of other one will decline. Here value
of correlation is one this indicate that firm is highly dependable on sales for earning entire profit
in the business.
Table 5: Calculation of percentile
1 20000
2 25000
3 28000
4 33000
5 37000

Q1 25000
Q2 28000
Q3 33000
Interpretation
It divides entire data in to several parts like median. In quartile data is divided in to three
parts (Gentle, Härdle and Mori, 2012). Value of all mentioned statistical tool is increasing which
reflect that value of variable is enhancing with passage of time period. Quartile and percentile are
same statistical tool only method of calculation is different and both methods produce same
results.
TASK 3
3.1 Analysis of primary data
What are the factors which influence you to visit Food for Friends?
Table 6: People response on factors which influence them to visit Food for Friends?
Taste for food 20
Ambiance 5
Price 20
Service quality 5

Interpretation
Majority of people are giving priority to price and taste of food. Hence, food for friend
needs to provide product at cheaper price and of the best quality which is enriched in taste.
What kind of food you like to eat?
Table 7: People preference on food
Chinese 15
Continental 10
Spanish 5
Regional 20
Taste for food Ambience Price Service quality
0
2
4
6
8
10
12
14
16
18
20
Column C
Illustration 1: People response on factors which influence them to visit Food for Friends?

Interpretation
Above image is reflecting that majority of the respondents are preferring to eat regional
and Chinese dishes. Hence, Food for friend needs to serve this two dishes on its restaurant.
15
10
5
20
Chinese
Continental
Spanish
Regional
Illustration 2: People preference on food

3.2 Trend line
Interpretation
From above chart it can be observed that trend line is moving upward and this means that
revenue of the company will continuously enhance in upcoming years. This prediction is made
by the chart on the basis of past sales figure. In future scene may be different and sale may fall.
Firm can not believe entirely on the result produced by this tool because it does not consider
changes that may happen in future (Cressie, 2015). Hence, firm must along with using trend
analysis method must use simulation method to make accurate prediction related to business.
Under this method firm can make projection about the future and can test its strategy chances of
success or failure in the future. Under simulation method firm can project estimated situation in
the relevant model and can test the extent to which strategy can deliver good result for the
business. Hence, firm must not rely entirely on the trend analysis chart.
1 2 3 4 5
0
5000
10000
15000
20000
25000
30000
35000
40000
20000
25000
28000
33000
37000
Column C
Linear (Column C)

3.3 Covered in PPT
3.4 Formal business report
To
The Directors of Food for friends
Date: 9th April 2016
Introduction
London is regarded as the most exciting location for opening of new hospitality services.
Food for Friend is also planning for its new chain of restaurant. The purpose of this report is to
analyse whether the new investment option is feasible or not.
Methodology
 Survey methodology has been adopted under which questionnaire technique is used.
 Combination of random and Purposive sampling has been used for selection of
respondents.
 Descriptive statistics has been used for evaluation of the collected secondary data
 Different types of bar graphs, trend lines, histograms have been prepared
Findings & Conclusion
It can be concluded that Food for Friends has the potential to open the new chain of
restaurant. The food and services of the brand is quite popular among the masses. It is expected
that new proposal can bring adequate returns for the business.
TASK 4
4.1 Use of suitable information processing tools
Different types of systems can be used by Food for Friends for processing the data related
to the customers and the business transactions. These are as follows:
 Accounting Information System – This system performs the collection, storage and
processing of financial data for the purpose of making business decisions. It is very
effective system in tracking the accounting activity in integration with the information
technology resources. It is of use for the accountants of the Food for Friends (Karlan, and
Valdivia, 2011).

 DBMS - It is another data processing tool. The tool is very effective in recording of the
commercial data. It produces different data sheets hence the information can be retrieved
easily. The users can transfer the data from one department to another department with
ease. It also has the feature of password security which can be used by the company.
 Management Information System – The system is very effectual managing the
communication with the internal and external stakeholders (Saunders, 2011). It becomes
easy for the employees to make interaction as they are on the same platform. The
managers within business can control their respective departments in effective manner.
 EPS – It stands out for Electronic point of sale. It is an electronic system which is highly
used in operations of restaurants these days. It is a self-contained system which has the
ability to perform all the activities of a store checkout counter.
4.2 Preparation of the project plan
Table 8: Project plan data
Activit
ies Name of the activities Durati
on Start date Finish
date
Predecess
ors
Resourc
es
aligned
A Preliminary design 5 days Thu
6/4/16
Wed
6/10/16 3
B Market research 3 days Thu
6/4/16
Mon
6/8/16 2
C Obtain engineering
quotes 2 days Thu
6/11/16
Fri
6/12/16 1 2
D Construct prototype 5 days Thu
6/11/16
Wed
6/17/16 1 5
E Prepare marketing
material 3 days Thu
6/11/16
Mon
6/15/16 1 3
F Costing 2 days Mon
6/15/16
Tue
6/16/16 3 2
G Product testing 4 days Thu
6/18/16
Tue
6/23/16 4 5
H Pilot survey 6 days Tue
6/16/16
Tue
6/23/16 2,5 4
I Pricing estimates 2 days Wed
6/24/16
Thu
6/25/16 8 1
J Final report 6 days Fri
6/26/16 Fri 7/3/16 6,7,9 2

The above table is the project plan for the new restaurant. It is related with the research
and finalization activities for the project.
Gantt chart
Network Diagram
It is a technique that is employed to find out the minimum time within in which project
should be executed at ground level (Dey, MüIler and Sinha,, 2012). Sequence of activities is
1+5+8+9+10= 22 days

4.3 Financial tools for decision making
Payback period method
Table 9: Calculation of payback period method
Initial
investment -190000
1 50000 -140000
2 64000 -76000
3 58000 -18000
4 70000 52000
Interpretation
Payback period is a technique that is employed to identify number of years that firm have
to wait for earning a profit on the project. It is clear from the table that concern after three years
will be able to earn a profit on this project. It is clear that propose project has not worth for the
firm. Plus point of this technique is that individual does not have knowledge of project
evaluation can also use mentioned method without any problem. Present value technique is not
employed in this method and it is its demerit.
Average rate of return method
Table 10: Calculation of ARR
Project A
Initial
investment 190000
1 50000
2 64000
3 58000
4 70000
Total 242000
Average 60500
ARR 31.84%
Interpretation

ARR reveals mean percentage that firm can earn if investment is made on specific
project. Mean return of 31.84% can be earned on the project which can be considered as normal
return on the invested amount. Project to some extent appear viable for the firm.
Net present value
Table 11: Calculation of net present value
Year Cash inflow (£) Discounting
factor @12%
Discounted cash
inflow (£)
0 (Initial investment) 190000
1 50000 0.893 44650
2 64000 0.797 51008
3 58000 0.712 41296
4 70000 0.636 44520
Total discounted cash
inflow
181474
NPV (Total discounted
cash inflow – initial
investment)
-8526
Interpretation
The above calculation is reflecting that net present value for the proposed investment is
negative (Bank, 2016). Hence, it shows that initial investment has not been recovered within the
business.
Internal rate of return
Table 12: Calculation of IRR
Year Cash inflow (£)
Initial investment -190000
1 50000
2 64000
3 58000

4 70000
5 0
6 0
IRR 9.94%
Interpretation
Actual rate of return that can be earned on this project is 9.94% which is very low . This
shows that investment option is suitable for investing funds.
Recommendation
It is recommended that restaurant owners should make investment in the option because
it is offering good internal rate of return. However, the results of NPV technique are not
suggesting that option should be selected because it is having negative NPV.
Conclusion
Making a business decision is very tough task and to take accurate actions specific
direction need to be identified by the managers. In order to conduct research primary and
secondary data must be collected by the researcher. By doing so research study can be done in
the best way. Among all the capital investment techniques, net present value is the most effective
one because in this time value of money technique is used to evaluate a project. Opening of the
new restaurant branch is a feasible option for the Food for Friends. The customers also seems to
be satisfied from the services of the company. AIS is very effective system in tracking the
accounting activity in integration with the information technology resources.