Design and Layout of Foodservice Facilities by John C. Birchfield

By John C. Birchfield

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Design and Layout of Foodservice Facilities

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4. Demographic data and economic factors for the community are analyzed to determine the potential market for the restaurant. Traffic counts and proximity to demand generators are used to assess the viability of possible sites for the restaurant. A competitive analysis is performed to determine whether the market can sustain another restaurant at each potential site. Based on these analyses, sales projections are formulated. Each of these steps in the market feasibility study is described in greater detail in the sections that follow.

The format for the P&L should follow the Uniform System of Accounts developed for hotels and restaurants for income and expense categories that fit the needs of the food operation. 7. 7. Pro Forma Statement of Profit and Loss. 8. Calculating Standard Recipe Cost. Several supporting schedules are prepared to supplement the P&L statement. Because food and labor costs combined typically run between 60 and 80 percent of sales revenue, schedules providing detailed information on how the cost of food sales and the cost of personnel and related expenses were calculated are often provided.

The market feasibility study focuses on the income statement and is conducted to determine whether revenues are sufficient to generate a profit. The financial feasibility study focuses on the balance sheet and is conducted to determine whether retained earnings (derived from net income) will be sufficient to satisfy the owners’ expectations for a return on their investment. P1: OTE/SPH P2: OTE JWPR036-BIRCHFIELD August 30, 2007 11:55 Feasibility The primary question addressed in the market feasibility study is: What level of sales revenues can the operation be expected to generate?

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