Introduction

Restaurant industry is facing three big challenges, namely: a) the industry is labour-intensive and its sales per full-time equivalent were substantially lower than in other industries, approximately $ 52, 480; b) the record-low unemployment rate of 2% has resulted in a severe labour shortage; c) increased turnover forced some restaurant owners to deviate from hiring standards (Reinsford & Bangs 2000). These and other risk factors result from unconsidered shutdown of the restaurant and insufficient use of the funds.  In order to enter the restaurant industry and achieve success, one should learn marketing and management strategies in depth to be able to deal with financial, operational, and legal issues (Hair, Wolfinbarger & Money 2007). Case study approach to the issue allowed a profound study of intended use of funds needed to open a start-up and to support consequent franchising operations (Bell 2010).

The research demonstrated the importance of loans in the start-up stage, efficient methods of pricing calculations, and difference between types of business entities and their dependency on the tax rate. Marketing and management strategies are engaged in efficient business planning. Used scientific methods allowed to outline the following factors to be considered to lower the risk of a start-up: a) customers’ age and categories of their preferences; b) working hours of the restaurant; c) the amount of profit to be earned in order to minimize the probability of a shut-down; d) investors’ and judicial advisors’ help; e) leasing a building rather than purchasing or constructing premises in uncompetitive location; f) obtaining necessary lawful permits and insurance; g) create an innovative and effective  business plan for the restaurant to ensure its effective management (Walker 2008). Survey, comparison, calculation, and risk management methods are justified throughout the development of the implementation plan.

The main research questions are the following: a) How much funds should be invested in the restaurant’s start-up to ensure its further successful management? b) How to choose the best restaurant type in terms of the geographically location and deductibles for the profit? c) Should the possibility of a franchise be considered to increase the sales level?

 Some newcomers to the industry do not rely on the family support. They use small funds at the start-up stage and do not seek for legal representatives’ advice (Kotschevar & Withrow 2007). Some restaurants offer catering services to schools, hospitals, and colleges apart from the menu concept approach in their management (Walker 2008). However, this type of business is sufficient in terms of appropriate selection of funds and experience in the industry. Research questions are designed in line with the concept of effective business plan, which describes the key points in operational planning of the business, financing, and managing of the restaurant (Alonzo 2007).

According to the above mentioned conditions the main objectives of the proposal are the following: a) to select among profitable business entities the one, which will cover the loan equity and fully repay it in 3 years; b) create customer-oriented promotion campaign, which will provide stable profit in the competitive area and attract more than 1000 guests a day; c) create effective business plan to cover expenses and interest payments and obtain a 10% net profit. All main development concepts of profit increasing, risk avoidance, and operation planning facilitation are covered in the business plan.

Literature Review

1.Methodology and Strategies of Restaurant Development

Basic effective steps of the newcomer in the restaurant industry are gaining experience in industry, analysing operational strategies of successful restaurants, and considering the lifestyle of citizens in the chosen area of restaurant location (Reinsford & Bangs 2000).

Management theory in restaurant business studies working process in restaurant premises and defines it as a controlled shop, administrative management, and coordination with employees (Walker 2008). The concept of effective operation planning plays a major role and includes food supply controlling, income and spending of funds, equipment, furniture, and inventories’ provision for sufficient operation (Alonzo 2007). Marketing theory suggests that it is important to deal with competition of industry premises located nearby, focus on menu selection, and study market efficiency (Walker 2008).

The following methods and strategies were used to study the aspects of the most effective planning of restaurant start-up: a) survey, which helped to determine the most efficient type of restaurant based on people’s preference choices and location; b) comparison, which outlined the main characteristics of different types of restaurants based on their tax rate and profit; c) calculation, which helped to estimate the value of sales, net profit, and expenses; d) risk management, which helped to eliminate potential negative outcomes of taken decisions (Bell 2011). Writing the business plan was chosen as a way to create an effective operational action plan to increase owner’s income and establish efficient management (Alonzo 2007).

 Significant controversy surrounds the catering management field. Some consider it as a solution to balancing of the work flow, profit increase, and as an option of selling the masterpiece to other restaurants (Reinsford & Bangs 2000). In this case, franchising becomes an important aspect that helps to mitigate moral issues when high monitoring costs are expected (Alonzo 2007). Third parties agree to cooperate, retail sales and services, and implement marketing methods on their capital costs. Therefore, franchise is a particular product or service (Alonzo 2007). Some researchers claim that catering management is a great contribution to sales during particular season. They also state that less profitable items of its framework should be excluded during the season (Sethi 2007). However, considering the volume of sales, which can be calculated by dividing the amount of fixed cost and selling price by the difference of selling price and variable cost per unit, the catering management system has several disadvantages. First, the demand for the product is not taken into account. Second, net profit is not related to the invested capital and becomes direct function of sales turnover (Sethi 2007). Moreover, the rental company has to meet the schedule of providing services to clients: rent chairs, tents, and kitchen equipment (Reinsford & Bangs 2000). Expenses and profit consideration are central for the arrangement of a catering business.

Restaurant concept development requires the newcomer to carefully consideration the numerous issues. These include concept development issues, which entail gathering information about different types of restaurants, fighting competition that the restaurant will be facing, and search for favourable location (Reinsford & Bangs 2000).

Other aspects to consider are financial issues that include searching for potential sources, which could provide loan and equity funds, forecast potential costs for leasing, buying, or constructing, and studying the uniform system of accounts for restaurants (Walker 2008).

Operational issues must also be considered. These include studying the requirements for the optimal size and square footage, including kitchen, storage, dining, and lounge areas, using the most outstanding recipes, and looking for reliable restaurant equipment dealers (Alonzo 2007). It should be mentioned that “leasing an existing fully-equipped restaurant needs investigation why it went out of business” (Reinsford & Bangs 2000).

Finally, legal issues should also be considered. These include getting information about lawyers, insurance agents, and accountants, obtaining health and other permits, including license to serve liquor, studying insurance requirements and liability insurance, and selecting business entity (sole partnership, partnership, cooperation, limited liability cooperation) (Hair et al. 2007 ). It was discovered that in sole partnership one should be extremely effective in managing people and should know how to use investments efficiently (Reinsford & Bangs 2000). To ensure successful operation planning it is important to consider other stakeholders like employees, vendors, and investors (Reinsford & Bangs 2000). Main aspects of the concept development can be seen in the map in Appendix 1 of this paper.

Getting experience in managing the desirable restaurant, sufficient beforehand planning, and family support will help to lower the risk of the start-up (Reinsford & Bangs 2000). It is important to choose from the possible types of restaurants: full-service family style, full-service fine dining, quick service, cafeteria etc. (Reinsford & Bangs 2000).

Statistics show that total revenue of full-service restaurants declined by 2, 9% and amounts to $178,1 bn (Full-Service Restaurants in US 2010). Tax rate for those restaurants decreases their sales by 5% (Schmigdall, Hayes & Ninemeier 2002). Totally, US restaurant business comprises of full-services restaurants (35 %), quick (limited) service restaurants (31 %), and others (35 %) (Full-Service Restaurants in US 2010). Brief overview of the customers’ demand allows for division of clients into the following categories: 70 % high to middle income households, 15 % low income households, 10 % business and corporate travellers, and 5% international travellers (Full-Service Restaurants in US 2010). Moreover, the upcoming year forecasts the following growth of the industry-related aspects: revenue – 2, 1%, industry value – 2, 0%, employment – 1, 3%, and wages – 1, 8% (Full-Service Restaurants in US 2010). The amount of revenues does not include increase in assets from business loans, receiving checks for future banquets, if any are planned in the restaurant, and sale of capital stock (Schmidgall et al. 2002).

Therefore, full-service restaurants give more possibilities to earn higher net profit than limited service restaurants, even though tax rate of the latter is smaller than that of full-service restaurants (Reinsford & Bangs 2000).

After the appropriate type of the restaurant has been chosen, there come the time to look for the profitable geographic area. Newcomer can research which geographical areas are the most preferred by people by means of attending meetings, reading newsletters, and analysing successful restaurants in the area (Arduser 2003). Conducting a survey helps to find out food preferences of the particular age category. This information can be used when deciding what type of food will be served in the new restaurant. To avoid competition pressure, one can create unique menu and design of the restaurant.

Loan and equity funds can be provided by local potential sources such as SBA (DeFranco & Lattin 2006). Because newcomers cannot rely on the help from commercial banks, there is a possibility for other restaurant’s share in the business. Buy-back provision can be negotiated in order to purchase the share back based on the agreed formula (DeFranco & Lattin 2006). Debt service coverage ratio should not be considered risky for the lender so that the loan would not be denied. For example, if the loan is $ 100,000 it is better to return it in two payments by $ 50,000 rather than making the ratio 1:1 (DeFranco & Lattin 2006).

Restaurant’s building and equipment are more likely to be leased rather than purchased. This is because beginner will reduce the investment amount, and if the restaurant does not show sustainable profit, lower loss will be suffered (Walker 2008). The shorter lease with the possibility of renews or equipment replacement is more desirable. Leasing amount generally depends on sales rate and location and range from 5 to 8% (Walker 2008). Since licensing authorities may demand modifications to bring restaurant to code, a skilled lawyer should be hired in order to obtain necessary permits (Walker 2008). In case of failure, if the restaurant is purchased it will be possible to sell it, shut it down, or merge with a bigger chain (Reinsford & Bangs 2000). One of the best tax related strategies is to start the business for the profit interest and sell it for multiplied earnings (Reinsford & Bangs 2000).

System of accounts should include the following categories: a) the amount of sales of the food and beverages in separate percentage; b) cost of sales of the food and beverages; c) total sales, including costs and amounts; d) operating expenses, which comprise of salary, wages, employees benefits, marketing, repair, maintenance and other expenses; e) interest, income tax, and income before income taxes. All these expenses influence the amount of net income (Schmidgall et al. 2002). This balance sheet requires the beginner to study market supply and demand as well as employ the accountant for appropriate finance controlling.

Regarding operational issues, restaurant design should not be overemphasized. Decoration of the restaurant should correspond to its type and meet market demands. Design success depends on demographical and psychological preferences of customers’ preferences in the particular area. Even the problem of chain restaurants is solved, when their design is unified according to common requirements (Baraban & Durocher 2010). Concept development becomes effective when the stage of renewal requires small design modifications, rather than changing all surroundings entirely. Successful design helps to meet owners’ expectations, which could be estimated as a 20 % return on investment (Baraban & Durocher 2010). Further research should be conducted to decide on the size and storage questions.

Once the appropriate size, location, and type of a restaurant were chosen, seeking insurance coverage makes good financial sense. To protect the restaurant from possible risk or harm, insurance coverage is required either by law (worker’s compensation) or by lenders to protect their collateral (Barth 2007). In cases of workers’ compensation, employees must fully report to the manager, because the latter pays higher premium than the employee in case the accident is caused by negligence. An efficient insurance policy should cover a loss or damage to the building, loss or damage to personal property, and loss of business income resulting from the interruption of business operations (Barth 2007). Different types of liability insurance represent legal requirements from the governmental side, whose penalties may be imposed on workers and managers (Walker 2008).

 In order to obtain health and other permits, the entrepreneur will include 7% of his/her total investment in case of delays with opening (Barth 2007). Certificate of occupancy, health department agreement, and fire department agreement will be needed to eliminate the delays with opening or loss of the funds (Walker 2008). Lawyer can advise on types and costs of liquor license, the value of which varies among states and can reach $ 180,000 (DeFranco & Lattin 2006).

Abovementioned financial, operational, and legal issues that relate to the concept development strategies made important the following aspects, which increase possibilities of business success: a) selecting the full-service customer-oriented restaurant capable of serving 1000 guests a day and thus, obtaining greater profit; b) choosing of leasing of premises to reduce expenses associated with the start-up; c) selection of full insurance package to reduce risk factors, which can result into loss of profit. Therefore, in order to create sufficient and effectively operating restaurant it is important to include all the existing factors in the business plan based on the case study research.

2. Research Plan. Case Study Approach of Owning and Managing a Restaurant     

Based on the survey carried out in San Francisco, non-competitive full-service middle-priced restaurant was selected. Leasing of the building was preferred over purchasing to reduce extra expenses. This will require 27, 5% charge of the total controllable expenses. Preferable location with intensive road traffic and public area nearby is expected to attract up to 1300 guests per day with its outstanding design and effective promotion. These figures will help to increase weekly sales and cover loan equity in the shortest period. With the sufficient business plan and correspondence of all related issues to the requirements of the successful start-up, it is expected to achieve 10% profit growth in the following year after grand opening.               

In order to achieve success and reduce the possibility of a shut-down of the restaurant, the beginner is expected to have complete, accurate, and defendable business plan, which will be positively evaluated by the prospective investors and lenders (Alonzo 2007). Hereafter, the main aspects of the research, which are based on the case study approach, are used to to describe some main points in more depth (Bell 2010).

Statement of purpose.

Robert Laws, Sarah Laws, and Richard Laws, who own 45%, 40%, and 15% of the business respectively seek a loan of $1,250,000, which together with their personal investment of the same amount will be used to obtain a lease on Stockton street near Washington Square Park in San Francisco. This loan will also help to meet all necessary requirements for the system of accounts and cover other pre-opening expenses necessary to open “After Ride Steak Break” restaurant. Timely pack of the loan is assured and expected to be transferred in the next year, as it is required by common rules (DeFranco & Lattin 2006).

Business.

The research showed the need to open a full-service restaurant near the Washington Square Park, which will be located on the Stockton Street. The restaurant will serve millions of clients passing by the restaurant each year as well as the professional basketball team playing in the park (Poole & Lenkert 2012).

Research revealed that there is only one Italian restaurant on the corner of the same street and 1,500 people survey helped to see that steak-and-ribs restaurant will be the most welcomed (Poole & Lankert 2012). “After Ride Steak Brake” (further referred to as “restaurant”) will occupy 2,400 square feet space and will accommodate 152 guests; 90 seats will be provided for the dining room, 30 seats – in the lounge, and patio seats will accommodate additional 32 guests. Service will be provided from 11 am till midnight. Sporting events will be broadcasted on two large TV-sets. The jazz pianist will play from 7 till 11 pm on selected days, when sporting events will not take place.

Concept.

It will be a medium-priced restaurant with sophisticated décor. Basketball theme and bright yellow ball will be used as attention getters. Scale models of basketball balls will be placed in the interior. Broad-panelled walls will have pictures of the most outstanding basketball payers of the national league. Menu covers will feature basketball graphics on the main panel. Lights will be designed in the shape of the net for the ball, caps will be in shape of the ball and chairs will resemble seats of the aisles (Baraban & Durocher 2010).    

Location.

The restaurant will be located in the revitalized area at Stockton Street (Poole & Lenkert 2012). Occupancy cost will be $ 105 per square foot on a triple-net lease, obtained for 7 years by agreement. The population of the town is 812,826 people, thus 5% of the age category of 21 and over will be attracted in that area (Poole & Lenkert 2012). It is estimated that basketball fans will visit the restaurant 5 times a month on average. Thus, several millions of people annually will come to the restaurant.

The restaurant will be easily reached by the car, taxi cab, bus, or by foot from the nearby park, since 40 parking places are reserved for clients (Poole & Lenkert 2012).

Other resources.

Agreements for lines of credit can be established with the following firms: Quicken Loans and Home Equity Loan Rates (Poole & Lenkert 2012). Professional food services will be provided by the following firms: Boudin Bakery, Del Monte Foods, TCHO, and ZeroCarter (Poole & Lenkert 2012).

Objectives and financial expectations.

Since the restaurant will be managed by the head-chef Robert Laws, 10% of the total sales are expected to be generated before taxes as a net profit. Owners are expected to get 20% of the annual return on investment in excess.

The menu will include steaks, beef ribs, chicken, fish, and beef kebabs for dinner, as well as soups, sandwiches, burgers, salad plates, and upscale appetizers (Kotschevar & Withrow 2007).

Total sales revenue from food is expected to reach 73% and 27 % from beverages. Food cost percentage will operate in the dining room of 33% and in the lounge – 23%. The combined total cost of sales will be 30%, thus gross profit will reach 70% by the means of total sales. The loan and partners’ investments will be repaid in five years.

Research indicates that thousands of tourist buses will bring people to visit the unique architecture of the restaurant. Many basketball fans will come to the restaurant when it opens in six months. The foremost goal is to provide them with outstanding experience and make them come back again. City outreaches to out-in-goers tourists and attractive locations make it a desirable destination (Schmidgall et al. 2002).

Study of the competitors showed that none of the nearby restaurants will create much competition since they have different concepts and menu offerings. Food and drinks preparation methods and closeness to the popular attraction site will contribute to the winning strategy over competitors (Baraban & Durocher 2010).

The “After Ride Steak Break” will serve three types of customers: people, who go to events to the Washington Square Park, employees of the nearby offices, and tourists (Poole & Lenkert 2012).

Promotion.

Advertisements and commercials will position the “After Ride Steak Break” restaurant as a place you should visit when you are in San Francisco. Support will be given by some known charitable organizations, and business partners will be active members of the branch commerce. 

Personnel.

The restaurant will include the project staff of 11 full-time employees and 19 part-time employees, who will work 755 hours per week and generate weekly payroll of $ 34, 240 on average. The estimated annual payroll of $ 17,803, 50 will comprise 30% of total sales (Barth 2007). Calculation figures are recorder according to the statistics data (Schmidgall et al. 2002)

Financial projections.

Financial projections for restaurant start-up include the following funds:

-         cash (working capital) - $ 46, 250;

-         leasehold improvements - $ 650, 000;

-         licenses - $ 180, 000;

-         food, beverages and supplies - $ 190, 000;

-         furniture, fixtures and equipment - $ 675, 50;

-         opening expenses - $ 350, 000.

Total start-up investment requires the following amount – $ 2, 500, 000.

            The number of the customers per week is expected to be the following:

-         lunch – 585 guests;

-         dinner – 455 guests;

-         bar – 255 guests (DeFranco & Lattin 2006).

Thus, total customers per week will be 1,295 people.

            Estimated guest check per person for the average amount of the ordered food:

-         lunch (sandwich or salad plate plus drink) -  $ 57,25;

-         dinner (entrée, salad, 0,5 desert, plus drink) - $ 150;

-         bar (average two drinks) - $ 45 (Schmidgall et al. 2002).

Estimated weekly sales will be $ 113, 216 and total annual sales (multiplying on 52 working weeks) will reach - $ 58, 872, 32.

            Monthly fixed costs include the following aspects:

-         rent - $ 21, 000;

-         salaries –  $ 51, 070;

-         utilities - $ 16, 625;

-          insurance  - $ 13, 790;

-         taxes - $ 15, 235;

-         depreciation – $ 9,729 (Schmidgall et al. 2002).

 Therefore, total monthly fixed costs will reach $ 128, 079. Daily sales volume will be $ 12, 490. Calculation for sales, costs, and tax rate per year are provided in the Appendix 2.

The abovementioned figures are given as estimation according to the 5% rate increase and average amount data is based on full-service restaurants in US (Full-Service Restaurants in US 2010). Restaurant financial basics are used to calculate the necessary amounts (Schmidgall et al. 2002).

According to the calculation, the number of guests expected will be 1,295 people. Net profit will grow by 12% and exceed occupancy costs by 7%, thus making first payment of the loan to be transferred in the next 3 months. Full coverage of the loan will be possible in the following year after the grand opening. 

The weakness of the project is associated with big amount of funds that has to be borrowed and with the need to encourage partner firms to act for the sake of mutual benefit. The strength is operational planning and stage-after-stage description of the main controlling points. Collateral is taken for the reasons of security and commitment (Reinsford & Bangs 2000).

Abovementioned financial projections made 10% safety factor to exceed costs and understate revenue. Leased premises will help to reduce spending on the start-up stage and eliminate risks associated with the full ownership. Intended use of funds and management risks are described further.                     

 3. Risks. Key Points of Financial and Operational Risk Factors

To obtain a lease on the Stockton Street the Laws family will provide collateral on their home with current market value at $ 2, 375, 000. They also selected debt-to-equity ratio as 1 to 1, thus promising to make payment in 3 months after transaction date of loan. The full term of loan is 15 years. Other protection promises included naming the lender as a beneficiary in case of interruption of business.

 Legal entities, which provide loans are not likely to approve the selected debt-to-equity ratio (Barth 2007). Full term of loan is provided to secure those who borrow, but requires 12% of interest.

Borrowers will incur insurance costs to safeguard the business against interruption and shut-down to solve these and other insurance problems. The borrowed funds will be used in conjunction with their own investment to make the opening possible, to acquire necessary license, and meet other operational needs. Thus, the cash flow budget should be calculated against actual performance (Reinsford & Bangs 2000). This means that tax rate has to be included in the income to calculate net profit (Walker 2008). If the hard cash flow appears, the loyalty of vendors is expected to solve the problem of shortages. Calculations show that total insurance costs, according to the current market prices, will amount to 5,8%. 

Competition struggle should not be overestimated as well. Competitors may be interested in the new restaurant and its concept but they should not be treated as partners (Reinsford & Bangs 2000).

Since payroll expenses amount to 30, 1 % of controllable expenses, sufficient staff training should be implemented two weeks prior to the opening (Barth 2007). Food service handlers will be given sanitation and safety instructions. Cooperation between lawyers, restaurant designers, and public relation firm is needed for the sufficient managing of funds (Schmidgall et al. 2002). Appropriate balance between food costs and labour costs maintenance, focusing on food and service quality as well as on managing employees’ turnover, will serve as a critical success factor (Alonzo 2007).

The strength of the project is based on the elaborated consideration of financial, operational, and legal issues. Clear working capital (cash, needed for the business) correlates with the suitable selection of the location and promotional strategies. Financial managing is expected to cover the loan equity in the following year and bring 12% on top of the profit.  

Weaknesses of the project are based on its financing and turnover. When the possibility appears to withdraw from the business, it will be more sufficient to merge into the bigger operation and become executive company of the catering system. It is also possible to transform the business into customer oriented industrial canteen.

4.   Ethical Issues of the Restaurant Concept Case-to-Case Study Research                        

The research used quantitative approach, which ensured that participating individuals were not identified (Bryman & Bell 2011).

Ethics was ensured by obtaining consent of the survey participants to use their internal information on the concepts development, financial, and operational actions. To complete business plan for the effective start-up and further restaurants’ success, data analysis on the main points of the operational planning had to be performed. Marketing and management strategies had to be profoundly studied, in order to compare theoretical ideas with practical ideas. 

Case-to-case study helped to correlate main financial aspects of profit and expenses. Effective planning schedule helped to sketch the main concept details and present them in monetary and percentage terms.

The background of the restaurant industry and its basic locations were profoundly researched.

Statistics of the full-service and limited service restaurants and percentage correspondence were looked through. Elaborated calculations were made in order to estimate the existing market demand, price values, and legal basics.

Deception was not used in the research to mislead the participants (Bryman & Bell 2011). Data analysis results were selectively used in the research, since some aspects were not regarded, such as franchise business approach. The conclusion was made that franchise approach is to be implemented after some years of experience in the industry.

Case-to-case study research helped to make the study practice-oriented (Bell 2011). Marketing and management strategies were evaluated to provide the most efficient outcome. Controversy presented the need further research the area of restaurant business (DeFranco & Lattin 2006). Favourable risk-benefit ratio was derived due to data validity, based on the current percentage of revenue figures (Schmidgall et al. 2002).

Independence of the research brought together responsibilities, obligation, and vulnerability selection. The main aspects of restaurant’s successful planning had been put into the context of the business plan. Confidentiality requirements and transparency were upheld to eliminate possible risks and reduce weaknesses of the proposal (Bell 2011). Obligations of the case-to-case research study were bound to minimize the risk of the failed decisions, which were taken.

Conclusion

The research indicated that legal, operational, and financial issues should be taken into consideration to reduce the risk of the start-up fail. Concept development map provided coordinated work of the main aspects of these issues in order to make the most sufficient business plan. Abovementioned plan included the following research methods: survey, comparison, and calculation. These methods helped to integrate the main issues to the framework. Survey method helped to define concept development and operational issues, which included selection of the restaurant’s type, possible competition on the place of the restaurant’s location, recipes preference, optimal size, and the size of restaurant premises. Thus, the method of survey was customer-oriented, based on the required demand. Comparison method helped to clear out financial issues and defined importance of the loan obtaining, leasing preference, and account system effective completion. Risk management method helped to make profound study on license requirements and possible hazards from impropriate use of funds.

Effective strategies of the research included: preference of the full-service restaurant selection, based on the sales amount and tax rate imposed on the profit; preference of leasing over purchasing, based on the increasing level of expenses; loan enquiry in order to support the operations of a restaurant; purchase of full insurance package to eliminate possible risky outcomes; decoration elaboration and location selection aimed to achieve success; business plan creation to integrate all the main issues, aspects, and system account calculations.

Completed research plan proved dependence of objectives and financial expectations on conditions of marketing strategies. 10% of all sales generated before net profit calculation should have proved the efficiency of the debt-to-equity rate selection of 1 to 1, which comprises the amount of loan enquiry - $ 1,250,000. Insurance coverage and collateral grant of the owned property prove commitment and ability to repay the loan. Location and menu are oriented on customers’ demand and are used as a marketing tool to attract clients. Restaurant’s unique decoration in basketball theme aimed to increase the effectiveness of marketing and management strategies and to attract 1295 customers per day, thus increasing restaurant’s profit. Low personnel turnover, control over the amount and quality of food, and cooperation with employees, vendors, and investors are the key points of the achieved goals. Additional findings show the need for tax management. Tension on the issue can be omitted by restaurant’s selling for multiple earnings or restaurant’s merge with a bigger chain.

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