Simulate business strategies Strategic project evaluation

Review and Simulate Business Strategies

We return to our business plan, now to simulate business strategies for the restaurant, quantify alternative scenarios and improve the results we want to obtain.

Estimated Reading Time: 5 minutes

Rethink and Simulate New Strategies

The pandemic has had a significant impact on all companies, both directly and indirectly.

That is why there have been some changes in the way companies have adapted the provision of their service.

In fact, they adapted not only to the new rules imposed by Public Health, but also to the change in the behavior of customers who, for fear or because of the imposition of security rules, prefer to make transactions more safely, using digital technologies .

We witnessed an explosion of e-commerce, with many Portuguese people incorporating this model in their consumption habits, having exceeded the volume of physical purchases, during confinement.

This trend has continued, even during the period of deflation.

The European Investment Bank (EIB) gives our country a high score on its digitization index (EIBIS), considering Portugal strong in the adoption of digital technologies.

Likewise, the European Innovation Scoreboard, considers Portugal among the “Highly innovative countries".

In the restaurant business, which was the example we adopted, we have already registered the introduction of menus in electronic format using QR Codes, the growth of the “take away”, the reservation of tables online, the possibility of ordering online and home delivery .

Can we continue to innovate? Can information technology help us?

These are some of the questions we now ask.

Let's think about more innovative strategies, put the assumptions of those strategies on our business plan spreadsheet and see their results.

After analyzing what is going on around us, which restaurants have been more successful and what strategies they have adopted, we will simulate alternative business strategies to the services we provide.

Sales or Income

We introduce take-away meals, which can be lunches that can have drinks, juices and desserts although the price of these is not included in the menu.

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In relation to Sales Plan that we had done previously, we considered a different distribution of the quantities sold for each of the type menus.

Nr of Dishes / dayPrices of dishes with VATTotal / Day

With this distribution, the average value of the lunch menu price was € 9,40 with VAT included, ie € 8,17 without VAT. We consider that the meal has an average VAT of 15%.

We also consider the sale of confectionery and breakfasts under the same take-away regime and special brunches by advance order.

We put these new sales assumptions on the spreadsheet and also in Year 1, the beginning of our project, a value lower than Year 2 in which the business, it is expected, is at cruising speed.

INCOMEPeople per dayPrice per unit without VATNº Days, events per yearTotal Year 1Total Year 2
Take Away lunches508,17 €300112 000 €122 609 €
Beverages, Juices, Desserts Take Away304,07 €30018 000 €36 585 €
Special Brunches4024,39 €5036 000 €48 780 €
Confectionery and Breakfast Take Away302,03 €30012 000 €18 293 €
Total Income (€)178 000 €226 267 €

Direct Costs or Variable Costs

Direct costs or variable costs are slightly different from what we had planned.

In take-away meals, as they are delivered by a partner, we consider a reduction in the margin since we have to pay a fee for this service, since the customer does not take his meal.

Therefore, we admit, in this aspect, to make an agreement with a delivery company, to avoid the fixed cost of having our own distribution structure.

If we consider that we can deliver a large part of our capacity, then we can weigh the costs of this structure, the benefit of an eventual improvement in the quality of delivery and see if it will be more profitable than subcontracting.

We can also review the production cost (unit cost) of the menus we are considering, but for now we stick to the assumptions.

CONSUMPTION / CostsIncidence on the Selling Price (%)Unit value without VATTotal Year 1Total Year 2
Take Away lunches40%3,27 €44 800 €49 043 €
Beverages, Juices, Desserts Take Away25%1,02 €4 500 €9 146 €
Special Brunches35%8,54 €12 600 €17 073 €
Confectionery and Breakfast Take Away25%0,51 €3 000 €4 573 €
Total Consumption (€)64 900 €79 836 €

Human Resources Strategy

We will simulate and evaluate different business strategies, now using the average employee remuneration.

CHARGES WITH STAFFMonthly valueRatesTotal for 14 monthsTotal Year 1Total Year 2
Total No. of Workstations55
- Management1111
- Senior Personnel / Average Compensation1144
Wages (€)€ 2€ 32€ 79€ 80
- Management€ 1€ 17€ 17€ 17
- Senior Personnel / Average Compensation€ 1€ 15€ 61€ 62
Social Security Charges (€)€558€ 7€ 18€ 19
- Management€29723,75%€ 4€ 4€ 4
- Senior Personnel / Average Compensation€26123,75%€ 3€ 14€ 14
Total Personnel Charges (€)€ 2€ 40€ 97€ 99

It will be a way to have high motivation and we can have the best team, able to face new challenges.

However, we maintain the staff with 5 people, of whom 1 is the manager.

Fixed Costs or External Supplies and Services

We also adjusted the fixed costs of Supplies and external services that we consider to be necessary.

We introduced a budget for advertising on social networks, for example, advertising on Instagram, giving note of the new services we are providing.

We consider the possibility of technical support in Information Technologies, to create a simple website that considers the possibility of online reservations or even advance purchase.

To maintain motivation in our human resources, we have introduced a quality and productivity award, with annual payment.

To reward the customers who take the products, we will include a budget in Marketing, whose final form should be considered.

SUPPLIES AND EXTERNAL SERVICESNotesEstimatesMonthly valueYear 1Year 2
Subcontracts (ROC)€150€ 1€ 1
Electricity€300€ 3€ 3
Fuels and Gas€100€ 1€ 1
Tools and utensilsMaintenance, cleaning, laundry and ironing, HCCP€245€ 2€ 2
Office materialBank office40 €, 25 €€65€780€796
Incomes and rents€500€ 6€ 6
Render space€500€ 6€ 6
Insurance€147€ 1€ 2
Work Accidents2% Payroll€47€564€ 1
Other insurancePersonal Health Insurance€100€ 1€ 1
Marketing€100€ 1€ 1
Social Media Advertising€100€ 1€ 1
AIP / AHRESP shares€40€480€490
IT technical support€100€ 1€0
Occasional travel€100€ 1€ 1
Performance AwardsAnnual€ 2€ 5
Other ESFAdditional support€100€ 1€ 1
TOTALS€ 2€ 27€ 30


We admit some changes to the investments, taking into account these new scenarios.

Eventually, part of this investment may be for the purchase of special baskets for transporting brunches or for the purchase of some e-commerce software.

INVESTMENTAcquisition valueAmortization RateAmortization AmountOverview
Tangible Fixed Capital / Tangible
-Adaptation / Expansion of facilities€ 210,0%€200Paintings and Repairs
-Basic equipment€012,5%€0
-Administrative and Social Equipment€ 112,5%€125Mobile Equipment, Internet, Stereo
-Kitchen equipment€ 1033,3%€ 3Palamenta, POS, barcode reader, Convector Oven, Freezers, Towels, Baskets for Brunches, ...
-Tools / Utensils€025,0%€0
Intangible / Intangible Fixed Capital
-Studies and Projects33,3%
-Technical assistance33,3%
Interest on investment
Miscellaneous / Start-up expenses€ 2100,0%Income security, Company Constitution, Miscellaneous Records, Inauguration, Software
Working capital€ 312Nr MonthsSalaries + SS + FSE + MP
TOTALS€ 46€ 3

In this plan we consider € 13.000 of tangible fixed capital, € 2.000 in start-up expenses, which we consider to be 100% amortizable in the first year.

Finally, we consider for petty cash we would need capital for 2 months of activity, ie €31.752.

Project Financing

Equity5 000 €
Social capital5 000 €
Supplementary Payments0 €
Sub Receipt Prepayment0 €
Others0 €
Foreign Capital41 752 €
Loans from members41 752 €
Incentives (IEFP…)0 €
Investment support0 €
Others (jobs)0 €
Lost Fund Grant0 €
Others0 €
TOTAL46 752 €

In order to reach the total capital required, if the share capital is € 5.000, we will have to resort to other forms of financing. In this case, we put this source as loans from the partners.

Exploration Results

Since the spreadsheet is fully automated, we have an immediate view of the result of these assumptions.

Table 8 - Income statement account
Income178 000 €226 267 €
Sales Products------
Services provided178 000 €226 267 €
Costs196 169 €213 494 €
Cost of stocks sold64 900 €79 836 €
FSE27 724 €30 537 €
Personnel charges97 886 €99 463 €
Amortization and Depreciation5 658 €3 658 €
Exploration results-18 169 €12 773 €
Financial charges------
Result after charges-18 169 €12 773 €
Income tax for the year0 €2 723 €
net income-18 169 €10 051 €

So, very quickly, we see that the Net Result is positive from the 2nd year onwards, a good sign for your business plan.

We can always outline different approaches to generating ideas that can lead to “out of the box” results.
It can be done with your internal team or with the support of specialists who can help you create a sales plan .

See too

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