File Tools View B329 - Saved to this Copying from a text which is about to be submitted for the same assignment The TMA Questions at various options in Dubai, he decided to open a momo restau rant. A Tibetan-Nepalese-Indian hybrid, a momo was a big dump- ling filled with meat and/or vegetables and cheese, and served with chili or spicy sauce. Momos were originally intended to be filled with buffalo meat, but goat or chicken was also used, and vegetarian versions were available. In 2012, very few restaurants in Dubai offered momos, and they were usually served as side dishes. Given their popularity among North Indian expatriates and the relative scarcity of shops selling momos in Dubai, Goel de- cided to go into the momo business. PART A: YALLA MOMOS: EXPANSION DILEM- MAS OF A SMALL BUSINESS The restaurant's two unique selling points were its low prices and the fact that momos could be consumed as a snack, at any time of day. Goel focused on providing authentic and tasty momos and ensuring customer satisfaction. The restaurant was designated "pocket friendly" on the Zomato website. Zomato, used daily by millions of diners in more than 10,000 cities across 23 countries, gave Yalla Momos four stars out of five and posted a number of positive reviews from customers, including the following: T have always loved the concept of momos. This place serves (everything from stormed to fried momos. I have tried their spinach, vegetable, shrimp, and chicken momos. All are equally good in taste. Conveniently located in the heart of the city, baving multiple branches, for a quick and a tasty bite, this place is a must try. I often order their food bome, and it never disappoints. Sinolta Blanin As he sat in his office and watched customers walk in on a busy Friday night in April 2016, Prashant Goel, the owner and founder of Yalla Momos restaurant, contemplated its future expansion. He had started the business in 2012 and, within four years, had taken it to great heights. With total sales of AED504,000 in 2015, it seemed he was right on track. While sales in 2015 were 5 per cent higher than in 2014, Goel was concerned with sales growth in 2016. As the Dubai market prepared for the much-awaited Expo 2020, competition was getting tough and it had become hard to maintain low prices because of escalating costs, What could he do to meet his 2016 profit target in the face of increased competition? As a successful businessman, he needed to carefully evaluate luis options to identify a course of action that would sustain the profit- ably he had worked so hard to achieve. A BUSINESS JOURNEY Goel had always wanted to become an entrepreneur, but had no intention of joining the family tobacco business in India. In 2007, Goel defied his family's cxpectations and went to Dubai to pursue an MBA, which he received in 2009. He began a job in corporate branding at a Dubai form and worked there for three years while looking to start a business of his own. He eventually decided to pursue his lifelong dream of opening his own restaurant, and in- vited his younger brother to join him in this venture. After looking BUSINESS Goel and his brother started Yalla Momos in 2012. Yalla was an Arabic word, meaning, "let us go." The restaurant was strategi- cally located in the residential district of Al Karama (Karama), which was a very popular market for Indian food. Karama was close to Dubai Creek and part of the bustling older part of the city. Karama was considered the ultimate place for shopping and eating on a shoestring budget and was home to approximately 135 res- taurants. Gocl and his brother knew that if their prices were right, they would attract customers. They collected the menus of other restaurants in the area and came up with a rough estimate of what they could charge for their momos. The basic version was priced al AED13, while other versions cost between AED12 and AED15. These prices were estimated to yield a gross profit margin of 40 to 50 per cent. Goel and his brother deliberately kept the prices low to make their momos more attractive to buyers and thereby capture the market. They did not undertake any major marketing activities, except for post- ing on Facebook and other social media sites. Using Goel's sav- ings, they made a basic investment in utensils and other necessary cquipment and opened a small space that sat 12 customers. No frills; nothing fancy here. It's a cozy, little, humble joint that serves good motos. You can choose to bave them fried or steamed. We recom- mend the latter. Two in-house sauces accompany your plate of momos, but we think you might be better off asking for some ketchup. The Hungry Architects, Zomato the Expert in Al Karama Given the great demand for momos, Goel was able to quit his cor- porate branding job within three months of starting the restaurant. His wife also joined the business, the sales of which continued to increase Yalla Momos had a number of competitors, the foremost being Momos Magie. Momos Magic had five outlets in Dubai and, while it charged higher prices than Yalla Momos did, its menu op- tions were more limited. To capitalize on the huge demand Yalla Momos had created, Goel opened a second branch in Dubai Inter- national city, a flourishing residential district with over 22,000 residences. The third Yalla Momos restaurant was opened in a Screens 5-7 of 13 D Focus E 10046 Type here to search O 6 A J 19 ENG 208 AM 5/1/2021 15 13 18 File Tools View 8329 - Saved to this RC new kiosk inside Big Bazaar Supermarket in Bur Dubai. This was one of the most populated areas of Dubai and a hub for tourists visiting nearby museums and other attractions. Goel took out bank loans to open the second and third branches in Dubai Intemational city and Bur Dubai. they were influenced by the views of friends and family. "Dining out is becoming a favorite activity for many U.A.E. residents, who spend an average of AED841 on restaurant meals per month, the highest in the Middle East market." Based on a survey of small and medium-sized enterprises in Dubai, the restaurant and cater- ing segment earned a gross profit margin of 5060 per cent, with an operating profit margin of 12-18 per cent, and a net profit mar. gin of 10-15 per cent. terms of the quality of the food served. Apart from raw materials, other expenses included rent and utilities, administrative costs, and depreciation. The rent for all three locations was AED68,000 in 2015 and AED75,000 in 2016. Goel did not maintain very de- tailed financial records, but kept a rough estimate of overall ex- penses (sce Exhibit 1). The owners did not pay themselves a sal- ary, but shared in the profits of the business. With the opening of the new outlets, Goel moved the central kitchen from Karama to the Dubai International city site; the latter was a larger space with cheaper rent. From there, the momos were transported to the other branches, where they were steamed or fried THE RESTAURANT INDUSTRY IN DUBAI Business Monitor International estimated that food consumption in Dubai would reach AED35 billion in 2016. In addition, the compounded annual growth rate of per capita consumption was cxpected to be 5.5 per cent in 201218. Hassan Al Hashemi, vice president, International Relations, at Dubai Chamber of Com- merce and Industry, commented, "Restaurant chains, which in the UAE (United Arab Emirates) account for more than one third of total sales, or AED11 billion, are growing on the back of higher consumer spending." According to a survey conducted by Klynveld Peat Marwick Goerdeler (KPMG), supply would remain much higher than de- mand in 2015 16 for the United Arab Emirates. With the in- creasing appetite for out-of-home dining and growing discretion- ary wealth in the Middle East, there is plenty of room for restau- rant brands to expand their business," said Gary Moore, regional vice president and general manager, Middle East and North Af rica, of the casual restaurant chain, Applebee's. After word-of-thouth, online reviews were the second most influ- ential factor in people's restaurant choices, with 40 per cent of diners referring to them before trying a new restaurant. The web- sites most frequently consulted were Zomato and Time Out. Inter estingly, advertising was less persuasive. Research by Euromonitor International indicated there were 6,021 food and beverage outlets in the United Arab Emirates, with an- other 19,000 expected to open by 2019. In addition, the demand for restaurant and street food was expected to increase substan- tially with the heavy inflow of visitors to Expo 2020. The U.A.E. government was expected to be liberal in granting licenses to all of these new restaurants, provided they met financial and legal re- quirements. The expected rate of inflation for 2016 was 2.4 per cent, while the price of food and non-alcoholic beverages was ex- pected to rise by 0.05 per cent to 2.0 per cent in 2016. PROJECTIONS FOR 2016 Following expansion, Goel decided to use advertising to boost sales at the Dubai International city restaurant and the Bur Dubai kiosk. The cost of advertising would be AED8,000 for the three locations, and advertising was projected to increase overall sales by 10 per cent, from AED504.000 in 2015 to AED554,400 in 2016. Nevertheless, Goel had to keep strict control of expenses to stay competitive. He was keen to introduce new varieties of mo- mos, but wanted to maintain the same quality and cost. Previ- ously, be had sourced his raw materials from nearby supermar- kets; he now planned to source his materials from special whole sale markets, from which he could obtain the same material at a lower price. Buying in bulk at wholesale prices would lower costs, lyut would require more storage facilities to keep the raw materials fresh. FINANCIALS FOR 2015 Yalla Momos, which Goel had started with his stall savings in 2012, generated AED504,000 in total sales and AED 156,240 in revenue in 2015. The average meal was priced at AED20, includ- ing food and beverages; beverages accounted for approximately 20 per cent of revenue. FINANCIALS FOR 2016 Gocl was thinking of opening one more outlet (the fourth) in Al Barsha. Al Barsha was a populated area with different nationali- ties and with lower rent than Karama or Bur Dubai. He thought he could capitalize on the growing demand for his product but knew that he would face stiff competition from the many caes and quick-bite outlets already operating in Al Barsha. The central kitchen in Dubai loternational city was large enough to accommo- date the additional cooking, but Goel would incur additional ex- penses if he decided to open a new kiosk (see Exhibit 2). In 2015, C.A.C. diners spent, on average, AED51-100 per meal U.A.F.. consumers were prepared to pay a high price for decent service, and word-of-mouth was the most common factor in peo- ple's restaurant choices: 70 per cent of consumers indicated that Goel was particular about the quality of the raw materials used, which included the white flour dough as well as the meat and/or vegetable and cheese fillings. No compromise was acceptable in Screens 8-10 ct 13 C Focus EL 10046 Type here to search O AJ* ENG 209 AM 5/1/2021 13 18 File Tools View 8329 - Saved to this RC 130 PO EXHIBIT 2: TALLA SOMOS PROTECTIONS FOR THE YEAR 20H (IN AED With four locations, Goel's depreciation costs were estimated to be AED 19,000 per year. Advertising costs, meanwhile, would in- crease to AED12,000 per year. Goel would continue using social media for marketing. Increased advertising could boost net reve- nues to AED727,200 per year. Goel had never engaged in aggres- sive marketing and was skeptical about its effectiveness. Worry- ing about both the competition and the costs associated with ex- pansion, Gocl nevertheless decided to give it his best shot. - Total Marks: 80 + 20 10 Marks of deductions for general presen tation and references In your answer, you should explain each point or inquiry sepa- rately 111 answers should be supported by examples. Sali 73,00 61,40 15.300 31590 14,00 17/06 SA 13.00 21 21.30 TITE DILEMMA Source: Cossipar document, brey publicaties Lise the following headings (below) to make up the different sections your work: Priem Tech Pape Tarta de para Weiler werden die Here di END of TMA Good Luck Fart D Four years after he started the business, Goel frankly admitted that he had not properly evaluated its financial performance. He was happy with the increase in customers and revenues, and consid- cred himself well off, but he was not sure how to measure the per- formance of the company or interpret its success. Goel wanted to set up one more branch, despite the fact that sales at the Bur Dubai kiosk and the Dubai International city branch were not as strong as those at the Karama branch Gocl was wor- ried about net revenue and felt that he should take a more struc- tured approach to expansion. Should he concentrate on the current business or should be open an additional restaurant? What if things did not turn out as expected? His competitors were engaged in aggressive marketing and Goel knew he had to make a quick decision. The Dubai market was expanding, but the volatile nature of growth and the shoer number of competitors might cat into his profits. With these fears in mind, he knew that his decision was going to be critical to the continued success of his business. Required: 1. Discuss the main issues faced by Yalla Momos. (350 words) 2. Evaluate the current financial perfondance of Yalla Momos and compare his performance to the industry ralios. (200 words) 3. Elaborate on the relevant factors that need to be considered when deciding to expand. (200 words) 4. How can companies like Yalla Momos benefit from CVP analysis? Calculate the 2015 BEP and Margin of safety (MOS) in quantity and monetary terms. (1.50 words) En of documen. [Marks: (20+20+20+20) - 80 PART B: Performance management Discuss the role of profit plau in implementing strategy. (250 words) FXHIBITI: YALLA SOMOS INCONE STATEMENT FOR THE YEAR ENDING IN EN Pa: TN 214.000 Powe Can aftale 15:29 R 10 Saluri 34.300 32300 DES 925 3. AB Marks: 201 Screens 11-13 of 13 Focus EL 10046 Type here to search O 9 AJ 19 ENG 209 AM 5/1/2021 13 18