Business plan for western and vietnamese food restaurant

TR

NG

IH CM

TP. HCM

UNIVERSITE LIBRE DE BRUXELLES

HO CHI MINH CITY OPEN UNIVERSITY

SOLVAY BRUSSELLES SCHOOL

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NGUYEN VAN UT

BUSINESS PLAN FOR
WESTERN AND VIETNAMESE FOOD RESTAURANT

MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME)

Tutor’s name: Dr. Nguyen Van Ngai

Ho Chi Minh City
(2010)

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UNDERTAKINGS

I undertake that all data, information collected and analyzed to do this project are
true. Meantime, the business plan for “Western and Vietnamese Food Restaurant” is
my own plan and is studied through academic knowledge, Professors, Friends and
experiences. I affirm that this is a new project, which is not ever handover to anyone
else or any other research.
Ho Chi Minh City, November 15 th, 2010

Nguyen Van Ut

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ACKNOWLEDGEMENT
I do not know how to appreciate all the Professors who have assisted me,
contributed their knowledge, shared their experiences and supported me to fulfill
this MBA course. Therefore, I would like to take this opportunity to express my
sincere gratitude and heartfelt thanks to all of them.
Especially, I would like to express my appreciation to Dr. Nguyen Van Ngai who is

with all his heart to support me doing this final project. Despite being very busy, he
always tries to arrange time for instructing my project. I have a greatest respect for
his done.
I deeply express my heartfelt gratitude to my parents for rearing, educating and
setting up my good life at the beginning day of being born. Thanks for my wife who
has arranged her schedule flexibly for my attending this part-time MBA course to
take care of our first baby.
I honestly send my best regards to my classmates for sharing their knowledge,
experiences during this course. I wish all the best to them and their family.
There is nothing more than my deep gratitude to all the Management Boards and the
staffs of The Université Libre de Bruxelles, The Solvay Business School, and The
Open University in Ho Chi Minh City for helping, supporting and for the favorable
conditions that help me doing my study.

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EXECUTIVE SUMMARY

Foods and beverages are energies for human life. It provides fuel to heat and keep
warm our body. Besides that, substances in foods and beverages like protein,
carbohydrate, vitamin, etc will help us grow and healthy. Without foods and
beverages human cannot live. When living in poverty, low-income people will not
consider much about other joyful aspects of life providing that they can have food

enough for their daily life. Since their life has been changed, their monthly income
has been increased they start thinking about an enjoyable life, demands that they
have ever had like enjoying delicious foods and being served like a King, etc
The socio-economic growth rate of HCMC is considered as a center of the whole
country that creates more jobs for the citizen and contributes to decrease
unemployment rate of HCMC and the whole country. With that improvement, the
citizen income and their life are stable more and more. Once they frequently have to
eat outside for less time to prepare cooking at home, they demand a higher level in
both the quality of meals and services in return with money they had paid. Through
the survey about consumer’s psychology indicates that consumer’s demands about
meal are now different. They are willing to pay amount of money to have a
delicious meal and good services instead of using this amount for several times of
full meals. Moreover, the findings obtained from questionnaires shows that the
eaters take hygiene secure in eating-places into consideration.
The idea to create an eating-place where can provide service to meet this expect
beside good foods is viable. For that reason, I emerged a plan to launch a restaurant.
The outstanding figure of this restaurant is a new style of service that applies service
style of Western food to Vietnamese food. The purpose is to point into eaters’
psychology about eating Vietnamese foods together in public area served by other
way to prevent spread disease through eating line. A combination between this ideal
and survey take shape a restaurant, which specializes in Western and Vietnamese

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cuisine will bring additional services for consumers performed by well-training staff
who are recruited and sorted out carefully from hospitality schools and from other
sources in this service business.
In fact, there are two products in service business operated in parallel. They are
tangible and intangible products. It is not difficult to build the tangible products but
it is not easy to make the intangible ones. Tangible products are the main blood
vessel to keep business alive but intangible ones are considered as the heart of
business. Therefore, the staff will be screened carefully and well-trained regularly
before, while and after each of working day in order to make this restaurant’s vessel
is always operation. The service manner of staff and the way of food serving will be
the second priority of business strategy of this restaurant just after the food taste.
To the Western cuisine, the main menus of this restaurant are beef and seafood
dishes because these foods are not only the main nutrition but also their common
dishes. To the Vietnamese foods, beside traditional foods, the menu will focus on
greens. The most favorite foods of consumer have changed they do not want to have
a meal with too much animal protein instead of high vegetable vitamin. Because of
that, the mainly cooking methods that are in the menus are steam, boil, and grill.
Here is also the food cuisine to make foods decrease its high fat content.
With an assumption about high risks which can happen when analyses financial
health through estimating all costs of good sold and expenses, the obtained results
shows that the WVFR is feasibility project. With the starting capital of
4,356,581,000 VND will bring up NPV = 14,082,515,000 VND, IRR = 249.03% and PP
is 1 year and 7 months to the investors whereas using this amount to put into bank
with compound rate 11 % in five year, they only get about 7,341,092,000 VND.

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COMMENTS OF TUTOR

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Ho Chi Minh City,

December, 2010
Tutor

Dr. Nguyen Van Ngai

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TABLE OF CONTENTS
Page

Undertaking .................................................................................................................. i
Acknowledgements ..................................................................................................... ii
Executive summary .................................................................................................... iii
Comments of Tutor ..................................................................................................... v
Table of contents ........................................................................................................ vi
Acronyms ................................................................................................................... ix
List of figures and tables ............................................................................................. x
List of charts ............................................................................................................... xi
Chapter 01 INTRODUCTION
1.1 Rational of the project ........................................................................................... 1

1.2 The project objective ............................................................................................. 2
1.3 Research methodology and data collection ........................................................... 2
1.4 Scope and limitation.............................................................................................. 3
1.5 The content of The project .................................................................................... 3
Chapter 02 THEORETICAL FRAMEWORKS
2.1 Brief on styles of service ....................................................................................... 4
2.1.1 English service .............................................................................................. 4
2.1.2 French service ............................................................................................... 4
2.1.3 American service .......................................................................................... 4
2.1.4 Vietnamese service ....................................................................................... 4
2.1.5 Silver service ................................................................................................ 5
2.2 Entrepreneur and entrepreneurial process ............................................................. 5
2.3 Opportunity assessment ........................................................................................ 7
2.4 Business plan ......................................................................................................... 8
2.4.1 Resource determination ................................................................................ 9
2.4.2 Marketing research ..................................................................................... 10
2.4.3 Financial appraisal ...................................................................................... 10

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2.4.3.1 Net Present Value ............................................................................ 10
2.4.3.2 Internal Rate of Return .................................................................... 11
2.4.3.3 Payback Period ................................................................................ 11

Chapter 03 FOOD MARKET OF HO CHI MINH CITY
3.1 Brief on cooking arts in food market .................................................................. 12
3.2 Market potential on food realm of Ho Chi Minh City ........................................ 13
3.2.1 Finding household expenditures in daily life activities .............................. 13
3.2.2 Finding population of Ho Chi Minh City ................................................... 15
3.3 Business activities of existing restaurant in Ho Chi Minh City .......................... 16
3.3.1 Information obtained from general statistic reports ................................... 16
3.3.2 Information obtained from the survey ........................................................ 17
3.4 New style of service for the WVFR in Ho Chi Minh City ................................. 22
Chapter 04 BUSINESS PLAN
4.1 Restaurant model ................................................................................................. 24
4.1.1 Restaurant location and capacity ................................................................ 24
4.1.2 Specific characteristics of the differentiations ........................................... 24
4.2 Financial analysis .................................................................................................25
4.2.1 Involved factors .......................................................................................... 25
4.2.1.1 Renting cost and related expenses ..................................................... 25
4.2.1.2 Material cost ....................................................................................... 26
4.2.1.3 Restaurant facilities ............................................................................ 26
4.2.1.3.1 Crockery ware ........................................................................... 26
4.2.1.3.2 Cloth ware and miscellaneous items ......................................... 27
4.2.1.3.3 Cutlery ware .............................................................................. 27
4.2.1.3.4 Electrical equipments and incidental expenses ......................... 28
4.2.1.4 Bar tools and glassware.......................................................................29
4.2.1.5 Kitchen ware .......................................................................................30
4.2.1.6 Payroll and other expenses..................................................................30

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4.2.2 Starting capital .............................................................................................32
4.2.2.1 Capital expenditure .............................................................................32
4.2.2.2 Revenue expenditure ...........................................................................33
4.2.3 Revenue and expenses .................................................................................34
4.2.4 Criteria analysis ...........................................................................................35
4.2.4.1 NPV .....................................................................................................36
4.2.4.2 IRR and PP ..........................................................................................36
4.2.5 Measure safety of the project.......................................................................37
4.2.5.1 Selling price is at 100.000 Dong ............................................................37
4.2.5.2 Food cost increases 20% .....................................................................37
4.3 Action plan ...........................................................................................................38
4.3.1 Source of capital ..........................................................................................38
4.3.2 Legal procedure ...........................................................................................38
4.3.3 Premises renovation and decoration plan ....................................................38
4.3.4 Labor plan ....................................................................................................38
4.3.4.1 Organization chart ...............................................................................38
4.3.4.2 Employee schedule .............................................................................39
4.3.4.3 Source and form of recruitment ..........................................................42
4.3.4.4 Training schedule ................................................................................42
4.3.5 Material source ............................................................................................42
4.3.6 Sales and Marketing plan ............................................................................43
Chapter 05 CONCLUSION AND RECOMMENDATION
5.1 Conclusion............................................................................................................44
5.2 Recommendation..................................................................................................45
Bibliography ...............................................................................................................46

Appendix 1 – Questionnaire .................................................................................................47
Appendix 2 – Survey results ..................................................................................................50
Appendix 3A – Calculation result .........................................................................................56
Appendix 3B – Calculation result .........................................................................................57
Appendix 3C – Calculation result .........................................................................................59

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ACRONYMS
OU-ULB
HCMC
WVFR
etc
Prof.
NPV
IRR
PP
NCF
F&B
VAT
USD
VND
Aver.

Rev.
Rest. Mgr
S&M
Pax
Rx
Kd
Con
Maj
Gra
BS 1-2
Pal
SG
Car
Sha
Osc
Hya
Dux
Leg

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: Open University – Universiteù Libre de Bruxelles
: Ho Chi Minh City
: Western and Vietnamese Food Restaurant
: et cetera
: Professor
: Net Present Value
: Internal Rate of Return
: Payback Period
: Net Cash Flow

: Food and Beverage
: Value Added Tax
: United State Dollar
: Vietnam Dong
: Average
: Revenue
: Restaurant manager
: Sales and Marketing
: Person
: Rex Hotel
: Kimdo Hotel
: Continental Hotel
: Majestic Hotel
: Grand Hotel
: Bong Sen Hotel 1 and 2
: Palace Hotel
: Saigon Hotel
: Caravelle Hotel
: Sheraton Hotel
: Osca Hotel
: Park Hyatt Hotel
: Duxton Saigon Hotel
: Legend Hotel

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LIST OF FIGURES AND TABLES

Page
Figure 01 - 02: Food decoration .................................................................................13
Table 01: Monthly average expenditure per capita ....................................................14
Table 02: Average income per capita.........................................................................14
Table 03: Population statistics of HCMC ..................................................................15
Table 04: Numbers of foreign visitor com to HCMC ................................................15
Table 05: Numbers of room of hotels around the area ..............................................17
Table 06: Estimate to seating capacity .......................................................................26
Table 07: Crockery ware ............................................................................................27
Table 08: Cloth ware and miscellaneous items ..........................................................27
Table 09: Cutlery ware ...............................................................................................28
Table 10: Electrical equipments and incidental expenses..........................................28
Table 11: Bar tools and glassware .............................................................................29
Table 12: Kitchenware ...............................................................................................30
Table 13: Employee payroll .......................................................................................31
Table 14: Training expenses ......................................................................................31
Table 15: Uniform Expenses ......................................................................................32
Table 16: Capital expenditure ....................................................................................33
Table 17: Revenue expenditure..................................................................................33
Table 18: Profit and Lost............................................................................................34
Table 19: Interest and Debt repayment schedule .......................................................35
Table 20: NPV calculation .........................................................................................36
Table 21: Roster for servers .......................................................................................40
Table 22: Roster for kitchen.......................................................................................41
Table 23: Roster for administrative staff ...................................................................41

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LIST OF CHARTS

Page
Chart 01: The kinds of restaurant that consumers usually come in HCMC ..............18
Chart 02: Restaurant location where people frequently come ...................................18
Chart 03: Price that consumers usually paid ..............................................................18
Chart 04: Top priority is belong to food tasting.........................................................19
Chart 05: The second priority is sanitation. ...............................................................19
Chart 06: The third rank is staff manner ....................................................................19
Chart 07: The fourth rank is decoration of dishes ......................................................19
Chart 08: Dining room design versus Menu price .....................................................19
Chart 09: Dining room design versus Menu price .....................................................19
Chart 10: Survey about hygiene in existing restaurant ..............................................20
Chart 11: Survey about attitude of staff in existing restaurant ..................................20
Chart 12: Price that consumers are willing to pay for their meals .............................21
Chart 13: Survey about Vietnamese food served by Western style ...........................22
Chart 14: Organization chart of the WVFR ...............................................................39

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CHAPTER 01
INTRODUCTION
This chapter is going to give good reason for forming this project. Meantime, it
shows the scope and limitation of this project.

1.1 Rational of the project
Foods and drinks are the main nutrient sources to help us survive. It is true.
Wherever we live or whatever we do, we surely must have enough calories to
recycle energy to heat and warm our body. We cannot live without eating or
drinking for only a few of days. For that reason, in order to survive people have to
strive to make money to get food and beverages. Perceiving the importance of the
food & beverage service market, there are many existing restaurants invested to run
these businesses. They provide food services from single dishes to multi dishes,
from common style to luxurious style. Along with it are additional services that
offer variety differentiates from restaurants to restaurants drawing consumers with
different taste to enjoy. However, the hygiene in public meals is most important
thing that eaters are still taking into consideration. The eating habit of eating from
same plate is traditional to the Vietnamese and customs to most Asian countries.
This eating style needs maintaining in the family and shows the sharing and
solidarity in the family. With the extremely busy work life, this makes people have
less time to eat at home instead increase the time for eating with partners to discuss
business. Thus, eating in the same plate would not be good when the infecting
bacteria can easily spread through ingestion.
The HCMC economic growth draws foreigners to come with many purposes in
which food market is a vital demand during their journey. Therefore, Vietnamese

foods are alternative meal for reproducing energy beside their own traditional foods.

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The idea to open a Western and Vietnamese food restaurant takes shape in my
mind. However, to figure out a way differentiate from other restaurants became an
issue. With working experience, I perceive that Western service style can be applied
for Vietnamese food service. Meantime, this style can also help eaters prevent
bacteria spreading through ingestion and help timid eaters enjoy different nation
foods by their own style of eating. To launch this restaurant into practice with the
goal of implementing this idea of western service with traditional Vietnamese
foods, a business plan is built to prepare funds as well as relative information for
driving this restaurant success in food market.
1.2 The project objectives
The objective is to find out the food market, to collect and analyze related
information, and to build business plan for this restaurant.
1.3 Research methodology and data collection
1.3.1 Primary research
Firstly, to collaborate and talk with the closest friends about the original idea and set
up a new style service of a restaurant to get more feedback about its feasibility.
After receiving response, a table of questionnaire is designed and sent to five
friends for feedback of opinions and idea to make it better. Then contribute 500
samples of questionnaires through emails to companies, representative office and

other personal emails in order to collect relative information for this plan.
Meanwhile, I also find out salary of staff, input factors, facilities from suppliers, etc.
who are running restaurants in order to forecast all expenses to prepare funds for the
project.
1.3.2 Secondary research
I also seek data and information about population growth, expenditure per capita of
resident in eating and drinking, numbers of tourists that visited HCMC per year,

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citizen income from newspapers, Television, Functional departments, to define
market needs for the business in this field.
1.4 Scope and limitation
This project is a combination between the theories I have learnt from school,
observations and my idea thus association between ideas and theory into reality is
not simple. In the meantime, the research and data collection are just in short time
so that it is still shortcoming. There are only 281 samples feedbacks for market
research in the 500 samples sent; thus, fidelity to market assessments is not high.
Besides that, consumer psychology is always changed. It mostly depends on
income, socio-economic condition, government policies, etc, therefore data
collected from surveyed people maybe right at this moment not forever.
Furthermore, this project is calculated based on the condition of the economic
downturn, which makes some data such as interest rate, inflation rate, market price,

etc not stable. Besides, this project focuses on investing a restaurant. Hence, what
dish in the menu is not elaborated.
1.5 The contents of the project
Chapter 1 : Introduction
Chapter 2 : Theoretical framework
Chapter 3 : Food market of Ho Chi Minh City
Chapter 4 : Business plan
Chapter 5 : Conclusion and Recommendation

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CHAPTER 02
THEORETICAL FRAMEWORK
This project is build on foundation of knowledge obtained from textbooks, teachers,
professors, friends, practicable observation and experience. Hence, in this chapter,
relevant theories for doing this project are reviewed.
2.1 Succinctness about styles of service
2.1.1 English service
Referring to the "Host Service" the host plays an active role in the service. Foods
are brought on platters by the waiter and are shown to the host for approval. The
waiter then places the platters on the tables. The host either portions the food into
the guest plates directly or portions the food and allows the waiter to serve. For
replenishment of guest food, the waiter may then take the dishes around for guests

to help themselves or be served by the waiter.
2.1.2 French service
It is a very personalized service. Foods are brought from the kitchen in dishes and
salvers, which are placed directly on the table. The plates are kept near the dish and
the guests help themselves to pick food into their plates by separate service tools.
2.1.3 American service
The American service is a pre-plated service, which means food are prepared and
served onto the guest's plate in the kitchen itself prior to serving it to the guest. The
portion is predetermined by the kitchen and the accompaniments served with a well
balance diet, the entire presentation in terms of nutrition and color. These types of
service are commonly used in a coffee shop and fast food chain where service is
required to be fast.
2.1.4 Vietnamese service
The Vietnamese service is a family service. Foods are prepare and beautifully
decorated in a large dish and arranged in the middle of the table. The guests serve
themselves by their own chopsticks and spoons.

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2.1.5 Silver service
The table is set for hors d'oeuvres, soup, main courses and sweet dish in sterling
silverware. The food is portioned into silver platters at the kitchen, after that the
waiters or waitresses bring it to the restaurant and place at the sideboard with

burners or hot plates to keep the food warm. Plates are placed before the guest. The
waiter then picks the platter from the hot plate and presents the dish to the host for
approval. He serves each guest using a service spoon and fork. All food is presented
in silver dishes with elaborate dressing.
2.2 Entrepreneur and Entrepreneurship
An entrepreneur is someone who perceives an opportunity and creates an
organization to pursue it (Bygrave, 2007). It could be interpreted that developing a
new enterprise comes out from personal, sociological and environmental factors. A
person could have an idea but whether or not he/she decides to pursue it depends on
factors as family, friends, role models, the state of economy, or the availability of
resources. However, where do they get ideas? In fact, most of the ideas are formed
by jobs they do routinely on a day-by-day basis, or at least works relative to
industries which they are employed or of which they have previous experience.
During their working time, they found faults and had ideas to change it by other
working method or helping tools to make it better. As mentioned above, ideas are
only the first step. The primary factor is whether they decide to pursue it. This
depends on many factors. The characteristics that people usually used to describe
most entrepreneurs are decisiveness, determination, devotion, details, etc. They are
the person who has a higher desire to be in control of their own fate and never gives
up even when they have to confront difficulties that seem to be insurmountable.
According to the lecture of Prof. Olivier Witmeur, “Entrepreneur is as
revolutionary”. They are people who like a challenge, face risks and try to reduce it
as well as give a solution to overcome. Once they accurately assessed the issue, they
make their decision quickly and implement it as swiftly as possible. They always

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pioneer in fields that seem unlikely to do to the others. They make themselves
active and never accept their own destiny. They want to control their fate rather than
depend on it. As in the lecture of Prof. Olivier Witmeur, “Entrepreneur is as
manager”. When embarking to business, they deal it with different aspects of
manager. Sometimes they play the role of human resource manager; other time they
are financial manager or even a sales manager. They are never tired of working but
opposite looks forward to it. They wish the time of a day is longer; even they can
work without sleep. They have ability to solve cases swiftly. They think that failure
is only a first step of success. Therefore, from their first business idea, he/she has to
be ability to associate all available sources from contacts and friends to funds to
create a good team for bringing idea into practice. To do that it requires a process of
assembling and combination sources to carry out the idea.
Entrepreneurial process involves all the functions, activities and actions associated
with perceiving opportunities and creating organizations to pursue them (Bygrave
2007). From the first business idea to forming entrepreneurship, it takes many
stages. Firstly, He/She assess opportunity and select right time to develop the idea.
Then, they need a host of contacts, including customers, suppliers, investors,
bankers, etc to find whom they can help before embarking on. In the meantime, they
use available sources to start doing steps to develop the business idea. From the first
step of legal documents, premises renting procedure to the stages of preparation,
operation, development and improvement are turning points that entrepreneur must
overcome. According to the lecture of Prof. Olivier Witmeur, there are three
variables in an entrepreneurship. The first one is relative to the entrepreneur
characteristic as skill, profile, motivation, leadership and commitment. The second
one concern about the business activities as reactions from customers, investors,
potential employees and the last one is about macro factors like governmental

policies, and economic conditions. These variables interacts each other at the first
time of emerging business idea to the period of thriving business and stability. In
short, entrepreneurship is as process.

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Entrepreneurship as a process

•
•

Individual variables: skill, profile, motivations…

•

Societal-level variables: governmental policies, economic conditions…

Group-level variables: reactions from customers, investors, potential
employees…

Idea /
Opportunity
recognition

Decision
to proceed

Analyzing
the project

Assembling
resources:
team, € …

Launch

Build /
Grow

Harness

Source: Lecture of Professor Olivier Witmeur

2.3 Opportunity assessment
An opportunity has the qualities of being attractive, durable, and timely and is
anchored in a product or service, which creates or adds value for its buyers or end
users (Jeffry A. Timmons, 2004). With an Entrepreneur, a good idea is nothing
more than a tool in his/her own hand. It is only the first step in a task of converting
his/her creativity into an opportunity. Therefore, a good idea must be started with
what customers and the marketplace want and it must be done by a series of trial
and error iterations until it can fit what the customer are willing to pay for. In the
meantime, the ability of the team to achieve it is feasibility. According to the lecture
of Prof. Olivier Witmeur, for an opportunity has these qualities, a window of

opportunity must be opened and remain open long enough. In the meantime, at the
time of “window of opportunity” opened, a good opportunity must have critical
characteristics: market size is big enough, customer are willing to pay for, and
economic condition is appropriate. Normally, a window of opportunity is opened at
the first stage of a life cycle of a product.

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Opportunity window
Sales

Opportunity
Window

Innovators

Early
adaptors

Early
majority

Late

majority

Laggards
Time

Source: Lecture of Professor Olivier Witmeur

2.4 Business plan
There are three crucial components for successful new businesses. They are the
opportunity, team and the resources (Bygrave 2007, The entrepreneurial process).
These three ingredients are integrated and interactive each other, which strengthens
the successful new business. With good idea converted into business opportunity, a
preparation to grasp it and an association between resources to activate it required a
concrete plan to describe what, when and how to do. That is called a business plan.
According to the lecture of Prof. Olivier Witmeur, Business plan is a professional
document describing one business opportunity and the way a team will start and
manage a new firm in order to demonstrate its feasibility into a given period.
Three driving forces for successful new business from Jeffry A. Timmons – New Venture
Creation

Oppor t u n it y

Com m unicat ion

Re sour ce s

Fit s and gaps
BUSI N ESS PLAN
Creat ivit y
Te a m

Convict ion

Source: Lecture of Professor Olivier Witmeur

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The above figure shows that there is no point in having a first-rate opportunity for a
new business if there is second-rate management team. Nor there are good
opportunity and management team without the appropriate resources.
According to the lecture of Prof. Claude Jottrand, in order to build Business Plan we
need referring to all aspects of company activities such as products, marketing,
production, R&D, Human resource and financial analysis. When analyzing these
elements, they are affected by business context like industry trends, present and
future competitors, Government policies, etc… therefore, collecting, analyzing and
processing information in business plan accurately will help company prevent risk
when carrying out the plan in the practice.
2.4.1 Resources determination
Most of successful entrepreneur are persons who knows how to allocate and be
frugal with their scarce resources. They know what resources are crucial for
company’s success in the market place and how to proportionate to it. In practice,
for instance, there are some stages that entrepreneur have to focus most of scarce
resources on renting a good location with high rental price instead of cheap one for

a poor location or on recruiting potential employees with high cost for business
strategy. Contrary to that, there are some parts in business fields, they are
outsourcing instead of using in-house employees to do it. With that way, they need
not own or lease their own factory and equipments. Nor does it have to worry about
recruiting and training production workers. This can help them keep overhead
lower. In short, a successful entrepreneur will know when and how to allocate, and
to proportionate their scarce resources in order to keep overhead low, high
productivity and ownership of capital assets to a minimum. By doing this, they
minimize the amount of capital they need to start their business and make it grow.
2.4.2 Market research
Market research is necessary for the entrepreneur to understand the market. The
market research is a tool to uncover the needs and behavior of customers, buyers or

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end-users; to foresee evolution of the marketplace: size, maturity, growth; to
identify market segmentation; to wait for the major trends affecting the market; to
realize competitors and their strategies; and to establish the distribution channel. All
these works is to help the entrepreneur select a niche market, adapt and refine the
offering to the selected market, forecast sales and benchmark for the marketing
plan. According to Prof. Claire Gruslin, the Solvay Business School, the methods of
market research are desk research, field observation, qualitative study, quantitative
study. A particular case of the research, a proper method or the combination will

taking into consideration.
2.4.3 Financial appraisal
In order to give a final decision for investment, the investors usually consider
criteria in appraisal result of a proposed project. There are many criteria to appraise
project feasibility or not. However, investors usually use criteria such as Net Present
Value, Internal Rate of Return, and Payback Period to determine investment.
2.4.3.1 Net Present Value
“NPV is equal to the difference between the Present Value of the cash flow
generated from the investment and the initial amount of money invested”, the
lecture of Prof. Claude Jottrand from the Solvay Business School. Therefore, the
NPV, after calculated, may be positive or be negative. The criterions are used in
project appraisal because it indicates that the amount of money of investors is better
to make project investment or put it on a saving account of the bank. The formula to
calculate this criterion has a form as follow
NPV = C1/(1+r) + C2/(1+r)2 + C3/(1+r)3 + . . . + Cj/(1+r)j – C0
In which,
: Initial investment
C0
: Cash flow generated after one year,…, and j year.
C1,2…,j
r
: Discount rate
1,j
C1,j/(1+r) : Present Value of cash flow generated after year one,…, and year j
(1+r)1,j : Compounded interest to make value of money from present to future.

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If the NPV is positive it means that the cash inflow is much more than the cash
outflow hence, it is better to make an investment and vice versa.
2.4.3.2 Internal Rate of Return
IRR is a proper interest rate to make the Net Present Value of all cash flows of the
project equal to zero. The IRR is calculated by using two NPV at different discount
rate as long as one NPV is positive and the other is negative, then the equation to
find IRR will have the following form
IRR = r1 + (r2 – r1) ×

NPV1
NPV1 + NPV2

The meaning of IRR is that if IRR is higher the discount rate it is better to make
investment and vice versa.
2.4.3.3 Pay-back Period
Another criterion is usually used to appraise investment is PP. Following the lecture
of Prof. Nguyen Tan Binh, OU, the PP is the length of time required to recover the
initial investment capital. The method is to sum up all the Net Cash Flow generated
by the investment until the initial investment capital is reached.

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CHAPTER 03
FOOD MARKET OF HO CHI MINH CITY

3.1 Brief on cooking arts in food market
In the food service market, there are many methods to process foods and drinks to
make it more appetizing and delicious. Some of dishes or drinks after being
processed it were hardly for us to know what the ingredients are. Especially, experts
in this field, they can create dishes or drinks that make us unable to know what it is.
Below is overview about food sources processed for our daily meals:
Food products are comprised from animal sources such as:
-

Fowls

: Chicken, Duck, Turkey, etc

-

Farm animals: Cow, Goat, Lamb, etc

-

Seafood

: Fish, Crab, Shrimp, etc

Other foods are made from plants such as:
-

Food comes from stem

: Asparagus, Bamboo shoot, Bean sprouts, etc

-

Food comes from leaves

: Lettuce, Cabbage, etc

-

Food comes from roots

: Potato, Carrot, Beet, etc

From above foods, cooking experts can create thousands of dishes with different
smells, flavors and recipes to take shape varieties style of eating and drinking world.
From rice, for instant, they can process many kinds of traditional food of each
country such as “Pan cake, Steamed rice flour and wrapped with pork meat, Springrolls” in Vietnam; “Cantonese fried rice” in China; “Sushi” in Japan. Or we can
make many dishes which only come from one seafood named “Crab” such as
steamed crab, sautéed crab with tamarind, grilled crab, curry crab, crab in hot pot,
etc.

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Figure 01: Experts can make differently traditional dishes from only rice product

Spring rolls

Cantonese fried rice

Sushi
Source:

Nowadays, we can easily find restaurants, ranging from cheap to high price; from
common to luxurious, just step outside of your door or working place in HCMC.
With high demand in eating and drinking, consumers request methods of cooking,
decoration, service manner, space and a warm atmosphere much better. However,
we only discover that form of cooking methods in luxurious restaurant or restaurant
in well-known hotels.
Figures 2: Mouth-watering display of dishes

Fish

Dear

Noodle
Source: Author’s collection

Through cooking methods and eating culture of each country will take shape of
specific style of service.
3.2 Market potential in food realm of Ho Chi Minh City
3.2.1 Finding household expenditures in daily life activities
Expenditures in human life cover many things from unessential to essential ones.
With the characteristic of needs, they usually prioritize to spend money on
essentials and less prior to non-essential part. That is why expenditures of each
family are scheduled monthly or even yearly. There is needs that force human life
expenditure to be on passive and vice versa. These expenditures are eating and
drinking. According to statistic report from “Statistical office in Ho Chi Minh City”,

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