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Ed Project

In: Business and Management

Submitted By cenadeepak
Words 4643
Pages 19
Executive Summary

The number of movie theaters is decreasing as the major chains create multiplexes that pile more people into smaller spaces. This profit strategy has left once popular downtown theaters vacant. Second Run Pizza is a theater/restaurant business that believes there is a significant number of theater-goers that are craving a more satisfying and enjoyable way to catch a movie and a bit to eat. Second Run Pizza is renovating the downtown City plus Theater and creating a medium-size restaurant that will show second-run movies that have proven to still be popular in our target market. We will offer a totally unique dining and movie experience at an affordable price that will fill the theater with repeat customers, waiting to be satisfied once again.
Entrepreneur’s profile
The owners of Second Run Pizza Milind Tiwari and Nikunj Rungta, stress on two factors that they believe reaffirms the success of the business:
Milind's experience as a regular movie goer and Nikunj's family friend’s experience as manager of a small theater, will be helpful in turning the trends of a small art house theater into a complete profitable business. Co-owner Milind Tiwari’s family friend has been a regular of the city's restaurant scene for the past 15 years. He managed four successful restaurants and has received industrial accolades for his operational excellence. He is now a highly sought after consultant in improving restaurant operating efficiency and work flow. His client list includes the city's best restaurants.
Nikunj's family’s strong seven year working relationship with Film Distributors whichwill provide the second run films for Second Run Pizza. Nikunj Rungta’s family has 20 years of experience in the movie theater industry. One of Nikunj’s family relative was the manager for seven years before taking a position with Premiere Film Distributors while he served as a regional distribution coordinator for six years. When Nikunj took over the challenge of managing the Light house Theater, the business was failing and losing significant market share to the larger chain theaters such as Inox and Cinemax . Under his management, the theater regained its vitality as an Indie film center. Usage levels increase by 200% over a two-year period and the theater soon became a key feature in the city's cultural community. The combination of Milind and Nikunj's experience will ensure that Second Run will be a unique competitive force in both the theater and restaurant industries.

Our market and financial analyses indicate that with a start-up expenditure of Rs1,50,00,000, we can generate Rs3,00,00,000 in sales by the end of year one, and produce high net profits by the end of year three.

Company profile:

Sales over Rs3,00,00,000 is estimated in the first year,and more than Rs5,00,00,000 is estimated by the third. Personnel costs less than Rs1,50,00,000 in the first year. It is expected that it will be profitable in the 1st year, with the net profits increasing every year.
Second Run's mission is to create a new theater experience for the customers that will be so enjoyable and satisfying that they will return often and recommend Second Run to their friends and family. Our customers will be delighted with our level of service, the quality of the food, and a theater environment that is second to none. When the film ends and the applause dies out, we believe that our customers would crave to watch a new movie at Second Run theater than to ever be squeezed into a Multiplex again.
Company Summary
Second Run Pizza is a unique place of its kind where certain movies which fared a bomb in the box office are re-released and it also provides a delightful platter of cuisines which never fail tempting customers and are very hard to resist. The huge expenses of the city will not treacle to the wonderful facilities of this resto-cum theater where customers will find a deluge of astonishing moments worth to write home about. All of these will be available at amazingly moderate prices and it is a fair wind from the daily chaos of the city where people of all age groups can come and enjoy an evening of glitters.

Industry profile:
This new company is based on two separate industries and derives the benefits from both of them.
One is the food industry, and another is the entertainment industry
The food industry is one of the most profitable industries in India as this is one industry which can never stay static and it always generates some amount of money. There are ample number of restaurants in the entire city of Bangalore and what distinguishes this from other restaurants is that the various quarters of other entertainment that it has in the offing.
Another is the entertainment industry which is also a flourishing industry. Entertainment industry has various cultural as well as fun elements which has the potential to hold onto the imagination of the people.

Small Scale Industry:
This business comes under the small scale perview with an approximate investment of Rs.1,50,00,000.
A small business, also called mom and pop store by some in the United States, is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. The legal definition of "small" varies by country and by industry, ranging from fewer than 15 employees under the Australian Fair Work Act 2009, 50 employees in the European Union, and fewer than 500 employees to qualify for many U.S. Small Business Administration programs. Small businesses can also be classified according to other methods such as sales, assets, or net profits.
Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen),hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing, and online business, such as web design and programming, etc.

Advantages of Small Scale Industries:
A small business can be started at a very low cost and on a part-time basis. Small business is also well suited to internet marketing because it can easily serve specialized niches, something that would have been more difficult prior to the internet revolution which began in the late 1990s. Adapting to change is crucial in business and particularly small business; not being tied to any bureaucratic inertia, it is typically easier to respond to the marketplace quickly. Small business proprietors tend to be intimate with their customers and clients which results in greater accountability and maturity.
Independence is another advantage of owning a small business. One survey of small business owners showed that 38% of those who left their jobs at other companies said their main reason for leaving was that they wanted to be their own bosses. Freedom to operate independently is a reward for small business owners. In addition, many people desire to make their own decisions, take their own risks, and reap the rewards of their efforts. Small business owners have the satisfaction of making their own decisions within the constraints imposed by economic and other environmental factors. However, entrepreneurs have to work very long hours and understand that ultimately their customers are their bosses.
Several organizations, in the United States, also provide help for the small business sector, such as the Internal Revenue Service's Small Business and Self-Employed One-Stop Resource.

Problems faced by small scale industries:
Small businesses often face a variety of problems related to their size. A frequent cause of bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions - it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his anticipated expenses. For example, if the prospective owner thinks that he will generate $100,000 in revenues in the first year with $150,000 in start-up expenses, then he should have no less than $250,000 available. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he end up in bankruptcy court, under the theory of undercapitalization.
In addition to ensuring that the business has enough capital, the small business owner must also be mindful of contribution margin (sales minus variable costs). To break even, the business must be able to reach a level of sales where the contribution margin equals fixed costs. When they first start out, many small business owners underprice their products to a point where even at their maximum capacity, it would be impossible to break even. Cost controls or price increases often resolve this problem.
Another problem for many small businesses is termed the 'Entrepreneurial Myth' or E-Myth. The mythic assumption is that an expert in a given technical field will also be expert at running that kind of business. Additional business management skills are needed to keep a business running smoothly.
Still another problem for many small businesses is the capacity of much larger businesses to influence or sometimes determine their chances for success.

Purpose of selecting
1)Selection of popular films that work best in the group viewing environment; i.e. comedies, scary or adventure films.
2)Provide exceptional service that leaves an impression.
3)Consistent entertainment atmosphere and product quality.
4)Managing our internal finances and cash flow to enable upward capital growth and strict control of all costs, at all times, without exception.
5)Selection of popular films that work best in the group viewing environment; i.e. comedies, scary or adventure films.

Chapter 2- Feasibility Study

Second Run Pizza is a single-unit, medium-sized restaurant. We focus on pizza and a few creative Italian dishes. The restaurant will be located downtown near the major shopping centers and evening entertainment establishments.

. Start-up Summary
The founders of the company are Nikunj Rungta and Milind Tiwari. Milind focuses on the financial issues and Nikunj on the personnel issues. Milind earned his business major undergraduate degree from Christ University . A lease for the location has been secured for 1,00,000 per month. The theater will have to be equipped as a restaurant. It will be able to set up a shop in time to begin turning a profit by the end of month eleven and be profitable in the second year. Both Nikunj and Milind are investing 75,00,000 each to start up the company.

Start-up Funding | | Start-up Expenses to Fund | 70,40,000 | Start-up Assets to Fund | 79,60,000 | Total Funding Required | 1,50,00,000 | | | Assets | | Non-cash Assets from Start-up | 5,00,000 | Cash Requirements from Start-up | 74,60,000 | Additional Cash Raised | 0 | Cash Balance on Starting Date | 74,60,000 | Total Assets | 79,60,000 | | | | | Liabilities and Capital | | | | Liabilities | | CurRent Borrowing | 0 | Long-term Liabilities | 0 | Accounts Payable (Outstanding Bills) | 0 | Others CurRent Liabilities (interest-free) | 0 | Total Liabilities | 0 | | | Capital | | | | Planned Investment | | Investor 1 | 75,00,000 | Investor 2 | 75,00,000 | Others | 0 | Additional Investment Requirement | 0 | Total Planned Investment | 1,50,00,000 | | | Loss at Start-up (Start-up Expenses) | 70,40,000 | Total Capital | 79,60,000 | | | | | Total Capital and Liabilities | 79,60,000 | | | Total Funding | 1,50,00,000 |

Particulars | Amount | Requirements | - | | | Start-up Expenses | | Legal | 50,000 | Stationery etc. | 50,000 | Insurance | 90,000 | Rent | 1,00,000 | Projection Equipment | 20,00,000 | Kitchen | 20,00,000 | Initial Marketing | 7,50,000 | Dining Products | 2,50,000 | Interior Refit | 17,50,000 | Total Start-up Expenses | 70,40,000 | | | Start-up Assets | | Cash Required | 74,60,000 | Others Current Rent Assets | 5,00,000 | Long-term Assets | 0 | Total Assets | 79,60,000 | | | Total Requirements | 1,50,00,000 |

1)Attractive downtown/Main Street
2)High quality of pleasure experience
3)Low cost atmosphere
4)Skill and diversity of resident
5)Infrastructure in good shape with room to expand
1)High taxes
2)Totally new business
3)Limited space available
4)Difficulty in coordination of theatre staff and kitchen staff.

1)Totally new concept
2)No competitors
3)Scope for expansion and diversification
4)Location is good for becoming a gateway to the region.
1)Risk of failure
2)Increasing cost
3)At later stage probability of big competitors.

Aim- To find out whether the people are familiar with the concept of resto-cum movie theater and to spread this word among probable customers.
Name : -
Age :- 1) How many restaurants cum movie theatre have you been too ? a) 1 b) 5 c) 10 d) None

2) Would you like to have dinner along with the movie ? a) Yes b) No c) Sometimes

3) How much will you be willing to pay for such an experience ? a) <500 b) 500 - 700 c) 700 - 1000 d) >1000

4) What show time would you prefer ? a) Morning show b) Afternoon show c) Evening show 5) What kind of quality service you expect from our staff ? a) Hospitable b) Responsive to needs c) Both of the above

6) Will you be keen on watching the blockbusters again on the big screen at much cheaper price ? a) Yes b) No c) Sometimes

7) Will it be worthy for you to watch movie over lunch /dinner ? a) Yes b) No c) May be

8) Will it be a new experience for you to watch the same blockbuster movie again with new diffeRent service and atmostphere ? a) Yes b) No c) Can’t say

9) Your feedback:-

Data Analysis

The questionnaire was distributed to twenty people and on the basis of their responses, it was concluded that the concept of a resto cum movie theater is not very popular among the respondents and steps should b taken to increase its familiarity among the people. It was found out that eight out of the twenty respondents were at ease with the concept of a resto cum movie theater which is about 40%.


We can interpret that this concept has a lot of opportunities in the offing since it is a relatively fresh and new concept and the respondents are more likely to take the initiative to enjoy new services. And since there are not much competitors left in the city of Bangalore in this field, profits are a thing of asurity.

Chapter 3-Marketing

The 4 P’s Of Marketng:

Product: A product is seen as an item which a consumer needs or wants. It is a tangible good or an intangible service which meets the needs and expectations of the customers.

In this case, the service is a resto cum movie theater(Second Run Pizza). It is a place where popular movies are re-released which allows the people to walk down the long memory lane and enjoy some sublime cuisines which will tempt them to come back, over and over again.

Price-It is the amount which the customer pays for the product. The price is very important for the service as it determines its profits and hence, the survival. Adjusting the price has a profound impact on the marketing strategy.

The general prices of this service will be kept low. There will be discounts in certain shows which are extremely popular and the morning shows will be moderately priced. A vintage movie will be screened every Sunday and for every morning show of these vintage classiscs, will be any pizza upto Rs.!00 absolutely free. The pinch in the pocket would be approximately about rs.50 -100 every beverage and about Rs.100-275 every pizza.

Promotion-It represents all of the methods of communication that a marketer may use to communicate information to all the parties about the product.

This service is not much popular among the respondents. Therefore certain promotional strategies should be adopted to make this service popular among the customers. Customers should be satisfied because effective word of mouth publicity and posters, and hoardings all around the city will help in promoting the service. Advertisements will also be put up in the newspaper and its website will be constructed to provide additional information about the service.

Place-This business is set up in one of the better areas of Bangalore which is Koramangala. Set up in a posh area, it is expected that the business will reap enough profits and customers will visit Second Run Pizza over and over again.



The business is to cater to the needs of people of all age group whether it being a small children or aged people.

We are focusing on paRents with children who want to catch a movie with a pizza in the afternoon or early evening, before or after shopping at the downtown mall.
Young Adults:
The second group we are going to focus on is young adults ages 18 - 26 for the evening shows. We believe that this target group will enjoy this unique way to watch a film and Second Run Pizza will become a common place for friends to have an affordable evening's entertainment together.

Market Analysis | | | | | | | | | | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | | Potential Customers: | | | | | | | | Families | | 400,000 | 460,000 | 529,000 | 608,350 | 699,603 | | Young Adults | | 200,000 | 220,000 | 242,000 | 266,200 | 292,820 | | Others | | 0 | 0 | 0 | 0 | 0 | | Total | | 600,000 | 680,000 | 771,000 | 874,550 | 992,423 | |


The Menu:
The menu is extremely simple. Pizza is the perfect finger food for watching a movie. We will also include select Italian dishes along with north Indian starters that will fit in the viewing environment.
The films will be chosen with two target audiences in mind. The first is the families that will come to Second Run Pizza to watch movies like Shrek, Spy Kids, Kung Fu Panda, Titanic . These movies will be shown three times during the afternoon. The second group is young adults who will come to the evening shows to watch movies like In Time, the Fast and the Furious, and Rush Hour 2, Underwater, Forrest Gump, Cast away, The Notebook and the like. There will be three evening shows of these films. In addition, these will be midnight movies for the college crowd on Friday and Saturday.

We are focusing on paRents with children who want to catch a movie with a pizza in the afternoon or early evening, before or after shopping at the downtown mall.
Young Adults:
The second group we are going to focus on is young adults ages 18 - 26 for the evening shows. We believe that this target group will enjoy this unique way to watch a film and Second Run Pizza will become a common place for friends to have an affordable evening's entertainment together.

Market Analysis | | | | | | | | | | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | | Potential Customers: | | | | | | | | Families | | 400,000 | 460,000 | 529,000 | 608,350 | 699,603 | | Young Adults | | 200,000 | 220,000 | 242,000 | 266,200 | 292,820 | | Others | | 0 | 0 | 0 | 0 | 0 | | Total | | 600,000 | 680,000 | 771,000 | 874,550 | 992,423 | |

The restaurant cum movie theatre will be located in Kormangla 5th block so that the place is accessible easily to the people of all age group. The presence of girls college along with residential area provides the business better growth opportunity.
4 P’S
Movie watching experience along with lunch or dinner is unique and a concept of it’ s own kind , which will tend to attract people.
The price will be low or moderate in order to enhance the experience of leisure.
The restaurant cum movie theatre will be located in such an area along with other entertainment facilities and leisure.
Hoardings and facebook will be used to promote our concept.

* Features of a theater company include an artistic director, who represents the vision of the company while the executive director manages the business end of the company. The ensemble is the core group of actors who work with the company. The company may also have a managing director who organizes finances.
* A production usually begins in the imagination of the artistic director. The artistic director reads a play and wants to produce it. The play is brought to the executive director and the board of directors, or for smaller theatres the entire company. The artistic director and managing director choose a time frame for the production and start scheduling auditions, production meetings, rehearsals and performances. The executive director and managing director begin planning marketing, fundraising and budgeting.
* Theatre companies structure their organizations diffeRently based on their needs; for example, a small company and a Broadway production have diffeRent needs and thus structure their organizations diffeRently. A standard theater company structure begins with a directorial head: an artistic director, producing director or executive director. The middle rung of the company's organization is balanced with business functionaries such as a managing director, marketing director or financial director, who work closely with the artistic staff on funding for a production. Below the second rung of decision makers are educational directors and production managers and finally the actors, resident directors, designers and stage managers. When a production is in rehearsal production managers, directors and stage managers take on major leadership roles.

As the personnel plan shows, we expect to invest in a good team, fairly compensated. We think the planned staff is in good proportion to the size of the restaurant and projected revenues.

Table: Personnel Personnel Plan | | | | | Year 1 | Year 2 | Year 3 | Manager | 24,00,000 | 26,50,000 | 29,00,000 | Hostess | 18,00,000 | 20,00,000 | 22,00,000 | Kitchen Staff | 30,00,000 | 32,00,000 | 34,00,000 | Cleaning | 18,00,000 | 19,00,000 | 20,00,000 | Servers | 36,00,000 | 36,00,000 | 36,00,000 | Projectionist | 18,00,000 | 20,00,000 | 22,00,000 | Total People | 12 | 15 | 18 | | | | | Total Payroll | 1,44,00,000 | 1,53,50,000 | 1,63,00,000 |

There would be walk in interview and cooking test for the kitchen chef .
There would be two shifts of working hours from – 10 am till 4pm , then from 5pm to 11pm .
The hostesses will be trained in order to deal with diffeRent types of customers and the theatre staff will be trained with better communication skills .

Table: Profit and Loss Pro Forma Profit and Loss | | | | | Year 1 | Year 2 | Year 3 | Sales | 3,46,05,000 | 4,30,00,000 | 5,75,00,000 | Direct Cost of Sales | 88,62,750 | 1,06,75,000 | 1,43,50,000 | Movie Screening Expenses | 38,93,050 | 48,37,500 | 64,68,750 | Total Cost of Sales | 1,27,55,800 | 1,55,12,500 | 2,08,18,750 | | | | | Gross Margin | 2,18,49,200 | 2,74,87,500 | 3,66,81,250 | | | | | | | | | | | | | Expenses | | | | Payroll | 1,44,00,000 | 1,53,50,000 | 1,63,00,000 | Sales and Marketing and Others Expenses | 11,30,000 | 4,00,000 | 4,00,000 | Depreciation | 0 | 0 | 0 | Leased Equipment | 0 | 0 | 0 | Utilities | 7,20,000 | 7,20,000 | 7,20,000 | Insurance | 10,80,000 | 10,80,000 | 10,80,000 | Rent | 12,00,000 | 12,00,000 | 12,00,000 | Payroll Taxes | 21,60,000 | 23,02,500 | 24,45,000 | Others | 0 | 0 | 0 | | | | | Total Operating Expenses | 2,06,90,000 | 2,10,52,500 | 2,21,45,000 | | | | | Profit Before Interest and Taxes | 11,59,200 | 64,35,000 | 1,45,36,250 | EBIT | 11,59,200 | 64,35,000 | 1,45,36,250 | Interest Expense | 0 | 0 | 0 | Taxes Incurred | 3,47,750 | 19,30,500 | 43,60,900 | | | | | Net Profit | 8,11,450 | 45,04,500 | 1,01,75,400 |
Table: Cash Flow Pro Forma Cash Flow | | | | | Year 1 | Year 2 | Year 3 | Cash Received | | | | | | | | Cash from Operations | | | | Cash Sales | 3,46,05,000 | 4,30,00,000 | 5,75,00,000 | Subtotal Cash from Operations | 3,46,05,000 | 4,30,00,000 | 5,75,00,000 | | | | | Additional Cash Received | | | | Sales Tax, VAT, HST/GST Received | 0 | 0 | 0 | New CurRent Borrowing | 0 | 0 | 0 | New Others Liabilities (interest-free) | 0 | 0 | 0 | New Long-term Liabilities | 0 | 0 | 0 | Sales of Others CurRent Assets | 0 | 0 | 0 | Sales of Long-term Assets | 0 | 0 | 0 | New Investment Received | 0 | 0 | 0 | Subtotal Cash Received | 3,46,05,000 | 4,30,00,000 | 5,75,00,000 | | | | | Expenditures | Year 1 | Year 2 | Year 3 | | | | | Expenditures from Operations | | | | Cash Spending | 1,44,00,000 | 1,53,50,000 | 1,63,00,000 | Bill Payments | 1,68,61,700 | 2,37,75,000 | 3,03,77,050 | Subtotal Spent on Operations | 3,12,61,700 | 3,91,25,000 | 4,66,77,050 | | | | | Additional Cash Spent | | | | Sales Tax, VAT, HST/GST Paid Out | 0 | 0 | 0 | Principal Repayment of CurRent Borrowing | 0 | 0 | 0 | Others Liabilities Principal Repayment | 0 | 0 | 0 | Long-term Liabilities Principal Repayment | 0 | 0 | 0 | Purchase Others CurRent Assets | 0 | 0 | 0 | Purchase Long-term Assets | 0 | 0 | 0 | Dividends | 0 | 0 | 0 | Subtotal Cash Spent | 3,12,61,700 | 3,91,25,000 | 4,66,77,050 | | | | | Net Cash Flow | 33,43,300 | 38,75,000 | 1,08,22,950 | Cash Balance | 1,08,03,300 | 1,46,78,300 | 2,55,01,300 |

Table: Balance Sheet Balance Sheet | | | | | Year 1 | Year 2 | Year 3 | Assets | | | | | | | | CurRent Assets | | | | Cash | 1,08,03,300 | 1,46,78,300 | 2,55,01,300 | Others CurRent Assets | 5,00,000 | 5,00,000 | 5,00,000 | Total CurRent Assets | 1,13,03,300 | 1,51,78,300 | 2,60,01,300 | | | | | Long-term Assets | | | | Long-term Assets | 0 | 0 | 0 | Accumulated Depreciation | 0 | 0 | 0 | Total Long-term Assets | 0 | 0 | 0 | Total Assets | 1,13,03,300 | 1,51,78,300 | 2,60,01,300 | | | | | Liabilities and Capital | Year 1 | Year 2 | Year 3 | | | | | CurRent Liabilities | | | | Accounts Payable | 25,31,900 | 19,02,350 | 25,49,950 | CurRent Borrowing | 0 | 0 | 0 | Others CurRent Liabilities | 0 | 0 | 0 | Subtotal CurRent Liabilities | 25,31,900 | 19,02,350 | 25,49,950 | | | | | Long-term Liabilities | 0 | 0 | 0 | Total Liabilities | 25,31,900 | 19,02,350 | 25,49,950 | | | | | Paid-in Capital | 1,50,00,000 | 1,50,00,000 | 1,50,00,000 | Retained Earnings | (70,40,000) | (62,28,550) | (17,24,050) | Earnings | 8,11,450 | 45,04,500 | 1,01,75,400 | Total Capital | 87,71,450 | 1,32,75,950 | 2,34,51,300 | Total Liabilities and Capital | 1,13,03,300 | 1,51,78,300 | 2,60,01,300 | | | | | Net Worth | 87,71,450 | 1,32,75,950 | 2,34,51,300 |

BREAK EVEN ANALYSIS Break-even Analysis
Our break-even analysis is based on the average of the first-year numbers for total sales by meal served, total cost of sales, and all operating expenses. These are presented as per-unit revenue, per-unit cost, and Rents. We realize that this is not the same as Rent, but these conservative assumptions make for a better estimate of real risk. Table: Break-even Analysis

Break-even Analysis | | | | Monthly Units Break-even | 7,778 | Monthly Revenue Break-even | 23,17,800 | | | Assumptions: | | Average Per-Unit Revenue | 298 | Average Per-Unit Variable Cost | 76.5 | Estimated Monthly Rent | 17,24,150 |


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