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CaseStudy3-AlKhooryRestaurant.pdf

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Al Khoory Restaurant Licensed

Al Khoory Restaurant Rashid is considering buying a restaurant. It has been a dream of his for some years to own his own business, and a restaurant in particular. He wants to feel proud to own a place where people gather to enjoy a high-quality meal, feel comfortable in, and that is attractive in appearance. Of course, he also wants the restaurant to be profitable! Rashid now has the funds to purchase a restaurant and has been looking for a suitable one for some time. Being cautious, he doesn’t want to start a new restaurant as it might be too complicated and risky. So, he is looking for one that is already operating or has closed recently and can be purchased and opened easily. He decided to buy in an area of Dubai, UAE where he lives, as there are few restaurants there. The reason there are few restaurants is because this section of the city is relatively new. There are mostly new villas and apartment buildings in the area, built over the last 10 years. Before this time the land had been empty desert. The rapid growth of Dubai meant that their area of town has been built up very quickly. Services such as grocery stores, restaurants, salons, and mobile phone stores are just now starting to open. The population of the area now justifies these services. Details of the population of the area are included in Appendix A. A restaurant closed recently in Rashid’s target area and is available to buy. Really, he is only buying all the equipment inside and leasing the space from the building owner. The family running the restaurant previously decided to focus their business interests elsewhere. There is almost no data on how well the restaurant did, except that locals say it was excellent food and it was in a good location. The location is good because:

• There is lots of parking.

• There is good visibility from main roads.

• There is easy access from main roads, and many people walking and driving past the location.

The restaurant could easily be set up as a casual, moderate, or high-end establishment. The rent would be the same for whatever type of restaurant Rashid decided to open in the location. Rashid’s friend is an interior designer. He created a restaurant layout for Rashid because all the equipment, tables, and chairs in the previous operation had been dissembled and piled at one end of the restaurant when it closed. The layout is included in Appendix B.

Al Khoory Restaurant Licensed

The minor problem… Rashid does have a problem. He knows very little about the restaurant business. He has never really investigated how restaurants work, what foods to offer, and how to manage one. He needs help with just about everything (except the layout). Rashid hires you as a consultant to help him set up his restaurant. He has assembled some data for you to work with:

1. Some information on menus and food types in Appendix C. 2. Some data on the cost of hiring staff and other operating expenses in Appendix

D. This is all you have to work with. Important Notes:

1. American $ 1 = Dhs. 3.67

2. Assume that customers visit only the restaurants in their own geographic areas on a regular basis.

3. Assume that the above demographic information is the most important relevant information for this situation.

Al Khoory Restaurant Licensed

Appendix A Some demographic information about Rashid’s area of Dubai:

Total Population of the area 55,000

Ethnic groups: UAE Nationals 36,000 Asian Expatriates 14,000

Europeans/North Americans 5,000

Age groupings (UAE Nationals) <10 years old 15% 11-18 years old 20%

19-35 years old 30% 36-50 years old 25%

>50 years old 10% Average income levels UAE Nationals Dhs. 35,000

(per month only for those who work)

Asian Expatriates Dhs. 2,800

Europeans/North Americans Dhs. 21,000

Restaurants in the area Premium 1 Family 2

Fast food/cafeteria 4

Grocery stores Choithrams 0 Co-op 1

Spinney’s 1

Average number of meals taken at restaurants (per month)

UAE Nationals 12

Asian Expatriates 6 Europeans/North Americans 8

Al Khoory Restaurant Licensed

Appendix B

Layout suitable for a Fast Food/cafeteria or Family or Premium-style Restaurant

Al Khoory Restaurant Licensed

Appendix C Some data on restaurant types in the UAE:

Fast Food/Cafeteria Examples: McDonald’s, local cafeterias

Food types Shwarmas, burgers, milkshakes, sandwiches, Indian dishes, Indian and Arabic breads - A shorter menu

Average order value per customer Dhs. 36

Average order cost per customer Dhs. 14

Average food production time per order

10 minutes from the time the customer orders to the time the customer receives his meal. (many customers are “take-away” customers)

Average number of customers per day 400

Average opening days per month 30 days (open every day)

Family restaurant Examples: TGIF, Arabic family restaurants

Food types Indian dishes and/or Arabic full meals, and/or American style full meals. A medium length menu

Average order value per customer Dhs. 45

Average order cost per customer Dhs. 18

Average food production time per order

20 minutes from the time the customer orders to the time the customer receives his meal. (some customers are “take-away” customers)

Average number of customers per day 200

Average opening days per month 30 days (open every day)

Al Khoory Restaurant Licensed

Premium restaurant Examples: A restaurant with a nice interior and a large menu and excellent food

Food types Indian dishes and Arabic full meals, and/or American or European style full meals. A full length menu.

Average order value per customer Dhs. 165

Average order cost per customer Dhs. 48

Average food production time per order

30 minutes from the time the customer orders to the time the customer receives his meal.

Average number of customers per day 125

Average opening days per month 30 days (open every day)

Al Khoory Restaurant Licensed

Appendix D Staffing and operating costs for the UAE:

Fast Food/Cafeteria

Average number of waiters/servers/table cleanup staff

1.5

Average number of cooks/food preparers 3

Average labor costs per month per employee Dhs. 2,200

Restaurant operating costs per month (total of all costs)

Dhs. 16,000

Family restaurant

Average number of waiters/servers/table cleanup staff

Average number of cooks/food preparers 3

Average labor costs per month per employee Dhs. 2,800

Restaurant operating costs per month (total of all costs)

Dhs. 21,000

Premium restaurant

Average number of waiters/servers/table cleanup staff

Average number of cooks/food preparers 4

Average labor costs per month per employee Dhs. 3,500

Restaurant operating costs per month (total of all costs)

Dhs. 40,000