Managing Financial Resources Student Help
Managing Financial Resources (0832428) Birmingham Business School
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Word Count: 2,000 words (including titles, references and footnotes, but excluding
bibliography, calculations and cover page) Due date: 14th May 2021 at 12 noon
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Required: Produce a four-parts report (part A, B, C & D) which address tasks 1 – 4. Please note that the essay marking rubric is available on Canvas.
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Managing Financial resources
YALLA MOMOS: EXPANSION DILEMMAS OF A SMALL BUSINESS
Refer to the case study : Yalla Momos expansion dilemmas of a small business (pdf, page 1-5 only) and answer the below requirements. THE DILEMMA
PART A : CVP ANALYSIS
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. Goel was worried about the
net revenue and felt that he should take a more structured approach to expansion. He was wondering if
he should concentrate on the current business or open an additional restaurant? What if things will not
turn out as he is expecting?
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 sheer number of competitors
might eat into his profits. With these fears in mind, he knew that the present decision was going to be
critical to the continued success of his business.
Would expansion be beneficial to Goel? Respond to Goel’s dilemma by supporting your argument with
Cost-volume profit analysis.
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YALLA MOMOS INCOME STATEMENT FOR THE YEAR ENDING 2015 (IN AED)
Net Revenue 504,000
Cost of Food sales 151,200
Gross Profit 352,800
Administrative costs 23,000
Miscellaneous expenses 15,800
Advertisement costs 0
Operating Profit 148,800
Net Profit 135,800
Note: AED = United Arab Emirates (Emirati) Dirham; US$1 = AED3.67 on April 30, 2016.
Source: Created by the authors based on company data.
YALLA MOMOS PROJECTIONS WITH AND WITHOUT EXPANSION (2016) (IN AED)
Amounts shown in AED Without Expansion With Expansion
Sales price per unit 20.00 20.00
Sales volume per period (units) 27,720 36,360.00
Raw material cost 6.00 6.00
Rent 75,000.00 88,000.00
Salaries 61,400.00 75,000.00
Administrative costs 26,000.00 34,000.00
Depreciation 34,720.00 38,360.00
Utilities 14,000.00 19,000.00
Miscellaneous expenses 17,060.00 19,180.00
Advertisement cost 8,000.00 12,000.00
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Part B & C BUDGETING AND BEYOND BUDGETING
Goel has identified a niche in healthy vegan food and customers concerned about the impact of
restaurants on the environment. He is contemplating whether to add vegan menu to the Yalla Momos
restaurant brand or start a new restaurant brand called Dinefest to provide vegan and low-cost healthy-
eating options. He thinks he has a good chance of becoming a market leader if he introduces low gourmet
membership fees and a ‘no-frills’ service concept and highlights the environmentally friendly attributes of
He estimates that Dinefest can generate AED 1.3 million in 2017 to AED 3.5 million in 2019 in sales
revenue. He estimates that the number of restaurants he operates will also increase between 2 and 5
restaurants within the period. He will increase the number of restaurants through a mixture of organic
growth and acquisition of existing restaurant groups.
Dinefest’s business model will offer a no-contract gourmet membership, i.e. there is no fixed membership
period. Dinefest will use eco-friendly cookware and equipment based on ceramic technology to prevent
food from sticking to them. This non-stick technology will provide a better alternative to Teflon, which has
been traditionally used in some cookware but tends to break down in high cooking temperatures. Other
eco-friendly cookware products will be sourced from recyclable materials and designed to heat food
In order to offer low Gourmet membership fees, their model will be based on a no-frills concept, meaning
that he will restrict the restaurant to cuisines prepared with organic ingredients sourced locally. There will
be no buffets and no café or bars that you would expect to find in traditional restaurants.
The low-cost model that will be used by Dinefest will be dependent on advanced technology. Prospective
Gourmet members can join using a simple online process that can be completed in minutes. Members
can also manage their accounts, view cooking class timetables and book cooking lessons online.
The use of technology results in an efficient staffing model with, for example, no need for dedicated in-
restaurant sales and marketing teams.
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Dinetfest Gourmet membership will be on a no-contract basis, i.e. it will not involve a fixed membership
period, and members are free to cancel their membership at any time without penalty. There will be two
types of membership: basic gourmet membership, where the member can access two chosen restaurants
and premium membership where the member can access restaurants nationwide. Both types of
membership require payment of a monthly fee. It will be possible to access restaurants daily by booking
online or by telephone. Membership fees vary depending mainly on the location of the restaurants.
Occasional marketing campaigns will be run, offering discounted membership to all new members.
Student members will also receive a discount, and kids below the age of five can eat for a fixed price yet
to be determined. Each gourmet member will be provided with a club card which will be used to get the
privileges meant for members. Premium members will have access to free cooking classes and healthy
living dieting guides. They can also arrange for individual coaching from a master chef without an
A typical restaurant will have five employees (three chefs and two waiters), a manager and an assistant
manager, who manage the restaurant. Other staff will work at the head office in various functions
including IT, HR, Finance and Marketing. Restaurant staff will be complemented by some ad hoc waiters
that will be hired on a zero-hours contract where they are not guaranteed to be offered work in any one
week. The ad hoc waiters will be paid the minimum hourly wage rate but will able to supplement their
income with tips that they will receive from benevolent customers. All waiters will be trained to be
courteous, polite and respectful to the customers. They will be trained to be diligent in their duty and to
uphold the motto: “the customer is a king”, and they will be expected to attend additional training
sessions related to health and safety. Goel will empower restaurant managers to run their sites
independently, but he will determine the membership fees.
The marketing team’s main activities are market research; the promotion and advertising of new and
existing restaurants; raising brand awareness and advising on pricing strategies. The Marketing team will
work closely with the IT and Properties department. Marketing efforts will be directed at both existing
members, to try to ensure member retention and the recruitment of new members. The marketing team
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will use the website to provide members with details of cooking classes being operated each week and
any other news or member offers. The managers will also use the customer database to communicate
electronically with members using email and text messages. Regular marketing campaigns will ensure that
the awareness of the Dinefest brand is high.
The financial information system will be developed to produce monthly management accounts and half-
yearly and annual statutory accounts. It also will generate daily and weekly sales revenue and membership
number information for management to monitor actual results against budgets. The Finance team will
also carry out ad-hoc projects, including investment appraisal and investigations, along with ongoing
decision support. Some areas, including all internal audit work, will be delivered by external experts.
Budgets will be produced annually using incremental budgeting for sales and cost items. All budgets will
be broken down into monthly periods, with the exception of the sales budget, which is broken down into
Budget information 2019
Gourmet Membership Fee Budget 2017
City Suburbs Total
Number of Restaurants 3 2 5
Average number of members per restaurant
Premium 365 305 670
Basic 115 104 219
Total 480 409 889
Average membership fee per month (AED)
Premium 50.00 45.00 95.00
Basic 25.00 20.00 45.00
Total membership fees per year (AED 000)
Premium 18,250 13,725 31,975
Basic 2,875 2,080 4,955
Total 21,125 15,805 36,930
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Explain which of the costs will be relevant if he decides to establish Dinefest as a separate restaurant
brand. Explain any other factors that Goel should take into consideration before deciding whether to go
ahead with Dinefest.
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