Starting Restaurant Business - Book Report/Review Example

YOU ARE AN ENTREPRENEUR of the of the Answer A. Product and services and general staffing plan The business that is selected for the operation as an entrepreneur is starting the business of restaurant. The first thing that is required for taking into consideration is developing a proper concept of food that mainly includes the steakhouse, seafood, casual dining restaurant, family style restaurant, pizzeria, ethnic restaurant, bakery , coffeehouse, family style restaurant and sandwich shop which will provide us a clear idea about the expectation and requirement of the potential customers. The determination and proper planning of the restaurant business will assist or help us in designing and structuring the business. And when the planning about the food concept is done then the menu of the foods are required to be prepared. The menu list is required to be prepared in such a way that it reflects or highlights there product that is expected by us to be chosen by the customer and it is also required by us to take into consideration what our potential competitors are providing or offering to its customers. The staff planning mainly deals with categorizing or selecting the employees for each department such as the human resources, kitchen staff and wait staff. B. Form of business and benefits of this business The business of opening a restaurant is mainly lucrative in nature. The restaurant business is considered or regarded as a secure and safe enterprise. The benefit that is provided or received by opening of a restaurant is that it offers the customers with good quality of food. The place of eating is required to be wide and large and once the restaurant becomes famous and well known it is loaded with large number of customers. The number of the stocks that is ordered for the promotion of business is accurate and perfect on the basis of the past experience and performance. It provides and offers the customers what is expected by the customers. C. Business unit, division, product lines The business unit mainly deals with providing separate and related operations and the processes that is based on very sensible units. the criteria mainly includes a wide range of concepts that comprises of the product lines, geographic regions and functions for example in case of a business it is required or expected to separate and distinguish each business operation according to the performance and function such as production, accounting and sales. The sources of revenue for restaurants are in case of food and beverage sales for the restaurants, earning or generating revenue from merchandise which includes gift cards or gift certificates and the other important method which can be regarded or considered as source of revenue is organizing catering events or services for the customers. The source of expenses of the restaurant business mainly includes the cost of the goods sold, the operating cost, occupancy cost which includes property taxes, rent or mortgage and the payroll that includes that a portion of the income is to be allocated in salaries. Answer 2 The restaurant industry is required to adopt the accounting principles and standards on the basis of GAAP and IFRS. There are many advantages or benefits in adoption of IFRS since the process is complicated it will influence and affect the various financial areas of the restaurant such as the investor relations, tax, treasury and the functions related to financial reporting. The interest cost that is charged on the hotel loan is required to be capitalized under the accounting standard of US GAAP and the cost of impairment of asset in case of the restaurant when it is no longer able to meet or fulfill its cash projections and then carrying its value is required to reduce or minimize the change to income, business combination and the stock option in accounting. Therefore it is required to consider and follow the GAAP convergence and IFRS accounting standards for formulating its accounting policies. The IFRS will assist and guide us in undertaking the following process or steps such as impact assessment, for planning and designing, for implementing and embedding the process through training. Answer 3 The preformed of the income statement of the company is given below. SALES     Percentage to Sales Food $ 9,298.00   78.4 Liquor $ 1,144.00   9.7 Beer $ 1,359.00   11.5 Catering $ -   0.0 Soft beverages $ 52.00   0.4 Total Sales   $ 11,853.00   COGS       Food $ 2,022.00   17.06 Liquor $ 200.00   1.69 Beer $ 500.00   4.22 Catering $ -   0 Soft beverages $ 100.00   0.84 Total COGS   $ 2,822.00 23.81 Gross profit   $ 9,031.00 76.19 Operating expenses       Selling expenses $ 4,000.00     General and administrative expenses $ 2,000.00     Total operating expenses   $ 6,000.00   Net operating income   $ 3,031.00 25.57 EBIT $ 3,031.00 25.6 Interest and Tax paid $ 1,000.00     Net income   $ 2,031.00 17.13 The income statement signifies or reveals that total sales is 11,853 US dollar which included or comprises of the products such as food, liquor, catering, beer and soft beverages and as the restaurant has been opened recently therefore the gross profit of the company is 9031 dollar and the net income has been calculated and determined as 2031 US dollar with net profit margin of 17.13%. Proposed balance sheet of the newly opened restaurant can be explained as follows. Balance Sheet Current asset   Cash $ 3,000 Receivables $ 1,600 Inventory $ 1,800 Advances $ 600 Total current assets $ 7,000 Long term assets   Leasehold improvement $ 6,500 Furniture $ 8,300 Total long term assets $ 14,800 Total assets $ 21,800 Current Liabilities   Suppliers payable $ 1,500 Others payable $ 1,000 Payroll payable $ 500 Short term borrowings $ 1,000 Total current liabilities $ 4,000 Long term liability   Note payable $ 7,000 Total liabilities $ 11,000 Total Equity $ 10,800 Total equity and liabilities $ 21,800 Balance sheet of the newly opened restaurant has the current asset of 70,000.00 US dollar and it has been observed that the current asset of the restaurant is more than the current liabilities of the company which is a good indicator for the financial position of the restaurant and since it is a newly opened restaurant therefore it has to focus on its cash receivables (Walton, 2011). Answer 4 In order to protect the restaurant and its assets and resources various measures and steps are required to be adopted for formulating internal control for providing safety and protection of the assets of the restaurants which includes both current as well as fixed assets and also focusing on the importance in reduction or minimization of risk. The increase in the fraud and misrepresentation has forced the investors and the other companies to focus and provide importance on the internal control in the newly opened ventures. The main advantages or the benefit that will be received by adopting the various internal control measures are it will focus or highlight on collecting the financial statements that are right and the adoption of the various internal control measures will provide the restaurant to overcome the potential and future problems or difficulties and it will assist in solving the various business problems in the course of its operation and it will assist in prevention of fraud and misrepresentation of facts and figures and the adoption of proper internal control system will urge the recommendation and advise of the accountant, investors and bankers (Daniels, 2002). Therefore it can be concluded that proper internal control measure is essential and important for prevention of fraud, determining accurate and proper financials and embezzlement detection. Answer 5 The various steps that is implemented for establishing the procedures and control in the accounting system for the adoption of the various measures of internal control of the restaurant business in consideration with the business environment, book keeping and accounting comprises or is staffed with more than one employees. It is required to be taken into consideration that in case of the newly opened restaurant business in relation to the business environment is that we must adopt proper accounting steps and standards for measuring, calculation and maintaining of the book keeping since it is not only the restaurant or business that is adopting accounting standard and methods of book keeping (Fullen, 2005). It is required to understand and properly review the financial statement of the restaurants and undertake correct and accurate accounting measures for evaluating the facts and figures. Answer 6 The Sarbanes Oxley act is commonly and popularly known as the Public company accounting reform and this act has been formulated and passed for serving various regulatory functions. The main objective and aim for passing this act is restoring and gaining the confidence o9f the investors and reinforcing the corporate accountability for the purpose of improving and developing the reliability and accuracy in the information that is provided to the potential investors. This act is mainly formulated for auditing and internal control measures that are required to be focused and highlighted (DeVay, 2006). This act should be abided by in case of our restaurant business since it increases the various needs and requirements for disclosure and it focuses on the assessment and the disclosure in maintaining adequacy in the internal control measures or process. References Daniels, P. (2002). Restaurant business start-up guide: A complete guide to establishing your business. New York: Venture Marketing. DeVay, D. (2006). The effectiveness of the Sarbanes-Oxley Act of 2002 in preventing and detecting fraud in financial statements. Florida: Universal-Publishers. Fullen, S.L. (2005). Opening a restaurant or other food business starter kit: How to prepare a restaurant business plan & feasibility study. Florida: Atlantic Publishing Company. Walton, P. (2011). An executive guide to IFRS: Content, costs and benefits to business. London: Wiley Read More