Department of Mechanical Engineering

Faculty of Engineering Jazan University

Kingdom of Saudi Arabia.

Feasibility Study for Establishing a Restaurant in Jeddah

Date: Section: Group:1215

Name JU ID No.
1 Sultan Mahdi Talea 201904371

2 Hassan komait 201906672

3 Khaled Fkerah 201904376

4 Ibrahim Muqri 201906543

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 Content

1. Abstract…………………………………………………………3
1.0. Introduction………………………………………4
1.1. Project Idea…………………………………………………………………4

1.2. Objectives…………………………………………………………………..5

2. Literature Review…………………………………….…5
2.1. Previous Feasibility Studies………………………………………………...5
2.2. Gourmet Food and Brioche……………………………………………..….8
2.3. Market Study……………………………………………………………..….9

3.Technical feasibility study……………………………....16

3.1. Process Description………………………………………………………....16

4. Enterprise Resource Planning (ERP)……..……………22

5. Human Resources……………………………………….23
6. Site Selection………………………………………..24
6.1. Site Layout …………………………………………………….……………25

6.2 Infrastructure services……………………………………………….……….27

7. Weighted Scoring Method……………………………….29

8. Social and Environmental Feasibility Study……………30
9. Economic Feasibility Study………………………………30
10.Conclusions……………………………………………….34
11. Recommendations………………………………………35
12. References……………………………………………….37

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Abstract
The primary purpose of this paper is to express an in-depth and comprehensive
feasibility study for a gourmet restaurant in Jeddah since a feasibility study is crucial to
the success of any business project. This study targets to explore the success of
establishing a gourmet restaurant in Jeddah and to answer the question whether this
business idea will continue successfully. We propose that the gourmet restaurant will
comprise a signature store made brioche bread, as a novel idea. The business type
needed, data regarding the gourmet restaurant industry and the history and development
of brioche bread are basic information required. The feasibility study contains six
categories: business strategy, market feasibility study, technical feasibility study,
location and site selection study, social and an environmental feasibility study, and
economic feasibility study. The market study addresses the requisite information on
demand and supply, as well as the detailed information about competitors. The
technical study contains the necessary machinery, production capacity, needed raw
material and inputs, computer system(s) and human resources plans. Accordingly and
based on quantitative selection criteria, the most suitable site was chosen. This study
also identifies the impact on society and environment. The economic feasibility study
recognizes the financial resources needed to channelize and operate the business and
calculates all the economic performance indicators for the project.

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1- Introduction
This paper presents a feasibility study for a gourmet restaurant in the heart of
Jeddah city. This study will assist in supporting the viability of the business
plan. Additionally, it can identify possible complications ahead of time thus,
eliminating them from occurring by planning for precautions. The paper will
also enable the creation and testing of the business structure of the gourmet
restaurant. The gourmet restaurant will serve sandwiches and international
cuisine alongside baked store made bread specifically Brioche. Brioche is a
French bread dark with golden crust that contains a high proportion of fat,
primarily butter and egg yolks that gives the bread a soft crumbly and flaky
texture. The conceptual idea of the restaurant alongside the creative cuisine and
several marketing ideas allows clarity to the business scheme, which ultimately
with the support of this study will align investors and stakeholders on a detailed
plan and the science behind it.

1.1. Project Idea

The gourmet restaurant with its signature item being the Brioche bread, consists
of a dry and a wet kitchen as well as a bar overlooking the ground floor seating
area. It has a spacious seating area divided between two floors with high seating,
coach seating and normal set tables. Our current focus is selling gourmet dishes
and drinks, a market study will determine the eatables where both the demand
and supply are calculated based on studying the common trend in the market.
This feasibility study is going to be for Saudi market and the focus market area
will be the western region, targeting Jeddah with a medium business scale. At
the onset, the restaurant will have a soft opening and will be testes on varied
menus to determine the final products prior to its grand opening. Social media
networks, for e.g. Snapchat, Instagram, Twitter and Google etc. are our primary
choice for marketing purposes.

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1.2. Objectives
The ultimate objective of a feasibility study is to ensure a project is sustainable,
technically feasible and economically justifiable. This is indispensable to
determine whether the project is worth the investment and its risk factors. This
paper addresses these main objectives:

1. Description of the sandwich industry, analysis of the current market and

assessing future demand and market potential;

2. Detailed description of competition and targeted customers.

3. Development of a marketing plan.

4. Determine the needed material, labor, transportation and technology.

5. Projection about capital needs and how these needs would be met, what would
be the ROI (Return on Investment).

6. Defining the structure of business and its organizational needs.

7. Development of human resources plan.

8. Determining the social and environmental feasibility of studies;

9. Selecting the suitable site and location.

2.Literature Review

There are numerous successful gourmet restaurants, but understanding of the

business proper planning is the key to success. For a new gourmet restaurant, a
business plan works as the roadmap towards examination of all aspects of the
business and preparing for triumph and profit [3].

2.1 Previous Feasibility Studies

A catering company in Pennsylvania, USA contacted the business consultancy
firm named Ground Floor Partners to conduct a feasibility study for a planned
restaurant. The selected location was in an old building in an historic district
undergoing extensive revitalization. The consultancy firm made a feasibility
study based on the detailed plans for the restaurant, the local and regional

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demographics, traffic patterns, local competition, and projected financials. The
study concluded that the long-term opportunity was prosperous [4]. As part of
a feasibility study for a Le Diner Restaurant, a new system was also evaluated.
The feasibility study for the Le Diner Restaurant included operational,
technical, economic and schedule feasibility. The purpose of the study was to
decide whether the problems they are currently facing with the system is worth
solving. The operational feasibility study tests the operational range of the new
information system. A technical feasibility study checks the technical
requirements of the new proposed system for the restaurant which will
eventually increase employee satisfaction. Economic feasibility analyses the
new system costs and incomes and compares the benefits with the lifetime costs.
Schedule feasibility is a collaboration between time and costs. It is the
probability that the project will be completed within the timeframe, thus the
restaurant management must establish a firm timetable for the project [5]. A
feasibility study of a new site-down restaurant in Ventura was considered for a
project feasibility and food industry was briefly discussed as it is the most
known industry in the world. Ventura is a city in southern California that has
been renewing its image to attract more people to the downtown area. The city
is considered a beach town with many people visiting the beach every spring
and summer. Sit-down restaurants typically offer full menus, which include
appetizers, entrees, sides, desserts, and all types of beverages. Such restaurants
usually have a host that greets people as they walk in and set them to their table.
They also have well trained chiefs and waiters. The quality of the waiter’s
experience affect customer satisfaction. Also, the restaurant have different
things that differentiate itself from other sit-down restaurants, the experience
should become a form of entertainment for the visitors. The study can assist
people planning to open a restaurant in an area with similar demographics as
Ventura [6].

Another research paper analyzed the literature concerning restaurant feasibility

study located in China. The literature analyzed the different aspects of starting
up a restaurant business, which include market area, consumer spending pattern,
competition analysis, site evaluation and financial statement. Thorough
investigation the market area was identified, for the consumer-spending pattern.

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The survey result shows some aspects of the customer profile of the market area
of the restaurant. The competitive analysis was conducted for 45 restaurants
through observational research and five specific competitors were identified and
studied. Through observation of the site analysis was conducted and a site was
chosen. In addition, a pro forma financial analysis was conducted to determine
the financial future of the restaurant [7].

A document was created by the government of Pakistan under the Ministry of

Industries and Production. The purpose of this document is to facilitate potential
investors in Fast Food Restaurant for the small and medium enterprise authority
by providing them with a general understanding of the business. The pre-
feasibility study is important to facilitate potential entrepreneurs. The study
included a project brief, plan for a successful restaurant, required machinery and
equipment, Land and building requirements, Human resources requirements,
financial analysis and key assumptions. Fast food was defined as food which is
prepared and served quickly at outlets and is a multi-billion dollar industry
which continues to grow rapidly all over the world. A fast food restaurant is a
restaurant characterized by both food and service, food is supplied quickly and
minimal service is provided. Most fast food restaurants are part of a franchise
operation that are shipped for overseas [8]. Another feasibility study about a
restaurant includes a scope, a simple methodology, market potential,
recommended considerations and size, first year revenue, economic and
demographic, supply analysis and requirements for success. The restaurant is
planned to be in the Peacock & Lewis clubhouse development team by the
Village of North Palm Beach, USA. North Palm Beach has an adequate
population base, substantial disposable income and a noticeable lack of food
and beverage spending. Thus, it is an economic environment that would support
a new restaurant to be established. The study provides recommendations
regarding the size of the components of the restaurant facilities, financial
aspects for a five-year period, collect and analyze economic and demographic
data and providing comparison data to related restaurant and operations [9].

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2.2 Gourmet Food and Brioche
The proposed project will be a gourmet restaurant. The term gourmet is
associated with good quality beverages and foods. Gourmet Restaurants are
usually of high prices because of the high care, authenticity, quality and
expenses that are incurred during preparing the meal and the restaurant
experience as a whole. In the food or restaurant industry, the term gourmet is
used for "specialty" and "premium" restaurant. The retail of gourmet products
has been promoted from the hourglass market phenomenon i.e. when the
consumer demand for a product is strong at either the high end or the low end
and weak in the middle. Historically, high-end products like luxury chocolate
had a thinly defined position. The target audience was affluent consumers who
were able to afford high end products. Currently, gourmet products are
becoming mainstream because most consumers are better educated and have
larger global exposure. This exposure to a finer palette in foods and drinks in
cafes and restaurants cause most consumers to choose better. In addition,
markets are advertising gourmet foods and drinks as more affordable luxuries
that may be enjoyed more frequently. Even in times of turbulence in the
economy, gourmet foods have shown to deal well because consumers are using
these small indulgences as comfort food [4]. The gourmet restaurant plan is to
target baking homemade brioche bread that can be examined by researching the
history of this unique French bread. The past of Brioche (a sweet and buttery
French bread) is vast and filled with noteworthy encounters. While modern
restaurants only use Brioche buns in burgers, there is a record of Brioche being
enjoyed for hundreds of years as a Viennoiserie. A Viennoiserie is a mix
between pastry and bread made with a yeast dough kneaded with butter, eggs,
and milk. For centuries, the French, from their royalty to philosophers, have
enjoyed Brioche as a delicacy. Brioche was first created by the Norman Vikings,
who brought their own breed of cows to northern France. The Normandy cow’s
milk is known for its creamier butter, and in order to save it from becoming
spoilt Brioche was invented, as its creation needed higher quantities of butter
and eggs than normal bread. Initially, Brioche was eaten by peasants who
churned butter, butter being a byproduct of dairy farming; and was mostly
consumed by dairy farmers. The transition in the status of Brioche happened

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 when the 16th century archbishop commanded prohibition on consumption of
local Normandy butter. Thereby elevating its status to be associated with wealth
and power, making butter and its coveted (an enormous) consumption by the
elite class, and the ensuing Brioche and its popularity. Brioche, is the precursor
to the Pain Benit (blessed bread), which was distributed at religious gatherings
[5].

2.3 Market Study

Market research, which includes social and opinion-based research, is the
systematic gathering and interpretation of information about individuals or
organizations using statistical and analytical methods of applied social sciences to
gain support in decision-making. Market study is one of the key factors used in
maintaining a competitive edge over competitors, and is essential towards
identifying qualitative techniques such as focus groups, in-depth interviews, and
ethnography, as well as quantitative techniques such as customer surveys, and
analysis of secondary data [10]. In this segment, the demand and supply are
identified based on the population of Jeddah. After that, the gap is calculated in
order to determine the product mix and the production capacity of the restaurant.
Demand is an economic principle that describes a consumer's desire and willingness
to pay a price for specific goods or services. Some basic factors affecting the
demand side are remarkable growth in population, huge number of pilgrims visit
the country every year, and growing health awareness [11]. Last known population
of Makkah region is about 8,338,321 (year 2016) 8,550,114 in 2017 [12]. The
population growth rate is 2.54%/year, and then Jeddah’s population in 2017 would
be 4,287,163. The population of Jeddah is breaking-down based on the
demographics of Makkah region, we multiplied the total population of Jeddah with
the willing percentage column (We assumed that the demographics of Jeddah is
equal to Makkah region). A survey has been submitted to a similar Restaurant with
241 responses, questions were include: age, gender, occupation, currency of
approaching a similar restaurant, currency of approaching a specific restaurant,
attraction factors to a specific restaurant, meals taken at similar restaurants, important
factors for preferring a specific restaurant, money spent at a restaurant, and
accompanying persons to the restaurant. Figure 1 presents responses for some of these
questions

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 Figure 1: Responses of customers what is your age

Figure 2: Responses of customers for how often do you eat in sandwiches

restaurants.

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 Figure 3: Responses of customers for which meal do you usually have at Brioche?

Figure 4: Responses of customers for which of the following best describes your
current occupation?

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 Figure 5: Responses of customers for when choosing a restaurant.

Figure 6: Responses of customers for how much do you usually spend when visiting Brioche?

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From the figures and the results of the questionnaire, we can conclude:

• Customers come to the restaurants are mostly of ages from 20 to 59 years old,

• No preference according to gender, employees represent the most percentage of

customers,

• The majority come to the restaurant every 2 weeks,

• Visitors come for the three meals but majority come for dinner, and

• The majority of customers spend about 100-300 SAR per visit.

Table 1 presents the response from another survey about the percentage willing to eat
in similar restaurants according to the age percentages; the percentage is multiplied by
the population size of each segment visits to come up with the anticipated market
size/week. The anticipated market size is counted as one quarter of the total population
of the region that is considered as an encouraging factor.

From the survey, we know that people willing to eat sandwiches 1 time every two
weeks, then the number of customers per year = 275,474 x 26 = 7,162,324. Some basic

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factors affecting the supply side are high income rate, willing to eat outside.
Aconsiderable number of restaurants were visited and the number of customers are
identified. Then alternative goods were checked by comparing menu items in different
restaurants and evaluating the similarities and differences. In addition, we compare the
degree of commercial activity and consumer behavior by checking the environment and
interiors, and how the customer reacts to it in comparison to other restaurants in the
industry as shown in table 2. The commercial activity factor is measured relative to
Sandwich Gallery which is considered with factor a, all other restaurants are compared
to it. A restaurant with factor of 2 means that its commercial activity is twice that of
Sandwich Gallery.

From the secondary information, we know that the average daily customers of
Sandwich Gallery (one of the similar brands) is SAR is 400 customer / day. Then the
total amount of supply = 400 x 365 x 20 = 2,920,000 customer per year. A market gap
is defined as an unfulfilled consumer need or a group of potential customers who are
not yet purchasing any goods or services [13]. The bright side to having a gap in the
market is that it allows opportunities for companies to have great expansion in their
customer base by three ways: increasing awareness, creating targeted offers and
advertising campaigns to reach the untapped market. From the anticipated market size
and the supply side, it is clear that here is a business opportunity to open a new
restaurant. The fact that no one of the similar restaurant closed any in the recent period
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in Jeddah much supported the idea in a great extent. The anticipated capacity is
estimated by considering some of the similar brands and by consulting with respective
expertise as given in Table 3. Figure 2 shows some products of the restaurant [14]. Food
industry is considered one of the largest industries in Saudi Arabia, and especially in
Jeddah food is considered an entertainment destination as well as a necessity for living.
The market is huge yet the average quality vs. price in the market is low. Majority of
the food retailers and service providers does not provide superb authentic experiences.
Either too low in class or too high in price [15].

People in Jeddah are willing and able to consume food and use it as a joy. But,
sandwiches aren’t considered a gourmet or fancy food anywhere in Jeddah except the
sandwich gallery. The general idea of a sandwich falls into either ill executed Panini’s
(a sandwich made with Italian bread, usually toasted) or very cheap cafeteria sandwich.
Usually, it is not considered a real meal. As per the latest few years, trend leaned into
better quality food, and local food makers who are either directly involved owners or
wannabe chefs. The introduction of master Arabia Arabian chef contributed into
increased value of an Arab chef. Therefore, the market needs better quality food, Better
variety, local ownership and an idea based food that does not cost much. In addition,
many will compare it to Riyadh, Dubai or even Europe and the states.

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3. Technical feasibility study

3.1. Process Description

A description of the process flow is necessary to identify the production steps and hence
the needed machinery. The first phase of the production program is assembling and
weighing, then mixing the production ingredients. The factors that will influence the
weighing and mixing of the ingredients include friction, dough temperature and water
temperature. During the second phase, the ingredients are mixed and the yeast cells are
distributed evenly in the dough. The methodology of mixing the ingredients in the
restaurant is known as continuous mixing methodology. The methodology will require
conventional equipment that will prepare a liquid sponge by using coil tanks that are
refrigerated and accordingly there will be no individual sponges in the mixture. The
fermentation of the dough will take place in the third phase, and the fermentation
process will accelerate the leavening of the dough. The temperature of the mixture will
be equalized through punching, and this will be the fourth stage of the production
program. The mixture will be molded in the fifth stage, and then the dough will be
placed in the oven. The products will be used as the main ingredient in all the
sandwiches. The daily amount of dough at the restaurant will rely on the restaurant’s
marketing strategies and market requirements. All the needed machinery for the
restaurant depend on the identified process of the dough making. The next section will
describe all the technical details of the production lines and identify the area, labor, and
layout.

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1- Dough Mixer
Power: 1 Kw – 12 A 380V. Capacity: 22 KG per load. Labor: 1 (computer
programmer). Area: 50 cm x 70 cm Price: 24,000 SAR

Figure 7: Dough Mixer

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2- Proofer
Power: 10 A 380V. Capacity: 38 KG per Load Labor: 1 Area: 60 x 60 cm Price: 12,000
SAR

Figure 8: Proofer

3- Rational 5 senses white efficiency Oven

Power: 69 A 380 V Capacity: 10 GN1/1 per load Labor: 1, (computer programmer).
Water inlet required Min 1.5 barrel. Water drainage outlet required Labor =: 1 Area: 60 *
60 * 180 cm Price: 126,000 SAR

Figure 9: Rational 5 white efficiency oven

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 4- Coffee Maker 2 outlets semi-automatic
Power Required 220V 20 Amp Yield: 30 gm per second per nozzle Water inlet: 1 par
min Water Drainage outlet required Labor needed:
Area: 90 cm x 40 cm Price: 30,000 SAR

Figure 10: Coffee Maker 2 outlets semi-automatic

5- Other Equipment
Table 6 presets other equipment with quantities and prices.

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4.Enterprise Resource Planning (ERP)
Utilization of business management software aided by tools such as QuickBooks
(for accounting purposes) for the creation of Touch Bistro (the Points Of sales
“POS” solution for the restaurant) specifically designed to support, collect store and

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manage data and needs of the restaurant industry. QuickBooks is a popular online
accounting software which helps you in getting accounting information organized,
saving time and simplifying your day-to-day activities. You can find your sales,
purchases, expenses, and customer & vendor profiles online all in one place. The
Quick book accounting software online lets you easily track the incoming and
outgoing funds in your business [17]. This application provides table, outdoor
catering/takeaway support, custom restaurant layouts, menus, bill splitting, sales
reports, unlimited order and cash register printers. Touch Bistro is an iPad-based
point of sale (POS) solution for restaurants of all types. Specifically designed to
meet the unique needs of the restaurant industry, Touch Bistro comes complete with
food service specific features and advanced management capabilities. For fine
dining and traditional restaurants, staff have the ability to bring the POS system to
each table, to allow patrons to check out. The mobile functionality of the POS
allows staff to bring a register directly to patrons instead of requiring them to leave
their table to pay bills or place orders. Touch Bistro software can manage split-
checks and parties of various sizes. Receipts can be printed, if desired, or signed on
screen and emailed. Detailed sales reports within the system can help provide
management with insight into which items are selling the best. To help cope with
rushes, the POS can be removed from the counter, and move with your staff down
the line. Touch Bistro is sufficiently equipped with food service specific features
and advanced management capabilities, suited for an inimitable experience starting
from service staff’s capability to POS system printed receipts which can be signed
on screen and also emailed [18].

5.Human Resources
Human resources comprises workforce of an organization, business sector, or
economy and is the human capital, on which an industry or business depends
heavily to augment its goals, and missions. The business in its nascent years needed
high skill workers on the lines of chefs, architects and engineers for its proper set
up and thereafter graduated to hire long term employees; to be followed by hiring
of workers dependent on the production capacity, availability of machinery, nature
of the products and the overall project. Business expansion would also yield in the
future jobs in the fields of separate packaging, administration and account

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departments. Table 8 represents the needed human resources and salary expenses.
Saudi Arabian Ministry of Labor and Social Development’s guidelines and
Saudization measures (nationalization program by the Saudi Arabian government)
are considered when determining the human resources positions and the salary
scales (in line with the business practices).

6.Site Selection
An integral part of the project initiation plan is the site selection. It determines
financial viability, risk potential and the sustainability of the project. In order to
select an appropriate, site a detailed assessment of the project needs is required
when evaluating site options. Many factors affect the site selection decision making
process such as environmental and technical factors. The restaurant has been

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 designed with the application of industrial planning and engineering aspects, taking
into consideration architectural and engineering criteria suitable for the conditions
prevailing in the Kingdom of Saudi Arabia, in accordance with local and
international standards and regulations.

6.1. Site Layout The site layout will include kitchen space, storage rooms for raw
materials and finished products, parking space, fire water tank, canteen, mosque,
guardroom, septic tank, pump room and an electricity room. Table 9 and Figure 7
illustrate a summary of the space requirement for the restaurant and the proposed
layout. The space for each area is decided based on the needed area for kitchen
operations and the seating area is based on the expected average number of client visits.

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Site Selection
The specific requirements of kitchen, storage of food and foodstuff require different
designs pertaining to corresponding buildings, taking into consideration the following
factors:
• Knowing the concept and business.
• Customer’s characteristics.
• Minimum required size.
• Access and parking.
• Building amenities.
• Budget.

Figure 11: Dimensions of site

Site assessment will consider three candidate sites in Jeddah depending on the market
scan and foot count of the area: Site A: Jeddah – Tahlia Street.
Tahlia Street is a central shopping destination in midtown of Jeddah, comprising
upscale department stores as well as many restaurants. As it is a shopping destination,
rentals are higher than average.

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6.2 Infrastructure services:
1. Road services.
2. Water services.
3. Janitorial services.
4. Sewage services.

Figure 12: Site A

Site B: Jeddah – Prince Sultan Street:

Prince Sultan Street is a commercial location in the northern area of Jeddah. It contains
office buildings, shopping boutiques and restaurants. As it is a commercial location,
rentals are higher than average, Figure 12.

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Infrastructure services:
1. Road Services, 2. Electricity Services, 3. Water Services, 4. Janitorial Services, 5.
Sewage services.

Figure 13: Site B

Jeddah - Al Kayyal Street Al Kayyal Street is a residential area within midtown Jeddah.
It contains large residential houses and many boutique shops and restaurants, Figure
13.

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7.Weighted Scoring Method
A weighted scoring method is a tool that provides a systematic process for selecting
alternatives based on many criteria. To use this model, first decide what criteria are
important and then decide the relative importance of these criteria. This will give the
weight column shown in Table 10. Note that the weights should total 100%. You then
assign a score from 0–10 to each criterion for each alternative. After assigning the
weights and scores for each alternative, calculate the weighted score by multiplying the
weight for each criterion by its score and adding the resulting values [19]. In this case,
site C has the highest weighted score.

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8.Social and Environmental Feasibility Study
Most of the population in Jeddah is mainly a middle-class population characterized
with high socio-economic characteristics among others. Some positive social
impact of the project are the following: creating new job opportunities, introducing
the market to new local chiefs, creating a local based restaurant that is not an
international franchise and exported products and offering a new restaurant for
neighbors and those customers roaming the region. Other indirect benefits include
encouraging the acceptance of local chiefs rather than the need to recruit overseas
talent. Creating a positive social impact analysis increasingly reduces the risk of the
project and strengthens general social support. An environmental feasibility study
considers both human and environmental health factors, it is a comparative process
that determines all potential solutions to health factors. The goal is to find the
operational option, preferably one that permanently eliminates or lessens
contamination or health risks. Based on the industry of food services, our impact

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will be on air, water and materials. The impact into the air will be coming from the
cooking steam that will be minor as the restaurant is co3nsiderably small in size,
we will mountain an elevated chimney to prevent smoke from flying in the air
inhaled by pedestrians. While the impact on water will be through the water waste,
as a lot of water waste is included in the cooking and cleaning of restaurants. As a
cautionary measurement, we planned to buy a washing machine to reduce the water
waste. Materials will be recycled such as access food and plastic and glass products.
Additionally, some efforts will be made by putting some instructions on our bags
and walls on how to save the environment and how to minimize hazard that may
come from ignorance of instructions and give our customers awareness how to keep
the environment clean. Also from our social media, we will give our customers
some information for how to keep the environment clean. The gourmet restaurant
will not distress any sever environmental impact such as the following: Climate
change, Environmental degradation, Environmental health, Environmental issues
with energy, Environmental issues with war, Overpopulation, Pollution, Cutting
and moving trees, Toxicants and Waste. The restaurant will try to limit its
environmental footprint by working with a recycling organization to pick up the
food waste and plastic materials on a semi-daily basis; it is one of the values to be
earth friendly.

9.Economic Feasibility Study

The purpose of the economic feasibility assessment is to determine the economic
benefits of the proposed project. Net profit margin is the ratio of net profits to
revenues for a company or business segment typically expressed as a percentage.
Net profit margins show how much of each dollar collected by a company as
revenue translates into profit. Total revenue or total sales includes all the money a
company earned from its operations during the period and is typically the first
number listed on the income statement. Net income represents the amount of
revenue left over after all expenses have been paid for the period. This is always
located at the bottom of the income statement hence the nickname “the bottom line.”
Net margin = net profit / revenue. Return on equity (ROE), sometimes called "return
on net worth” is a measure of profitability that calculates how many dollars of profit
a company generates with each dollar of shareholders' equity. ROE = Net Income /

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 Shareholders' Equity. Return on Asset (ROA) is a measure of percentage of profit
that a company earns in relation to its overall assets. ROA = Net Income / Total
assets [20]. Table 11 presents the profitability margins for the years 2018, 2019 and
2020.

Payback Period (PBP) is the length of time required for an investment to recover its
initial outlay in terms of profits or savings. It is calculated by dividing the cost of the
investment by the annual net cash flow to determine the expected payback period of
years. Uneven cash flows occur when the annual cash flows are not the same amount
each year. PBP = Year before cash being positive + (Last negative cash flow / Cash
flow to firm at that year). The net present value (NPV) or net present worth (NPW) is
a measurement of the profitability of an undertaking that is calculated by subtracting
the present values (PV) of cash outflows (including initial cost) from the present values
of cash inflows over a period of time. Internal rate of return (IRR) is a metric used in
capital budgeting measuring the profitability of potential investments. Internal rate of
return is a discount rate that makes the net present value of all cash flows from a
particular project equal to zero. IRR must be > Bank interest rate by a significant
number. IRR is calculated by excel using the formula: XIRR (PV,Date). The
profitability index is an index that attempts to identify the relationship between the costs
and benefits of a proposed project [21]. Table 12 presents the economic feasibility
measures for the project.

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Conclusions

After the execution of market, technical, site selection, environmental, social

and economic feasibility studies, it is concluded that the thorough project
description supported by all parts of a complete feasibility study encourages the
incorporation of a gourmet restaurant. The market analysis has been
implemented, and demand and supply have been estimated which favored the
project. Products, quality, prices and anticipated production capacities are
determined. The needed machinery, equipment, raw material, human resources
and site layout with all associated costs are determined in the technical
feasibility study part. Three suitable sites are chosen, criteria for selection are
identified and the weighted score method is used to select the best place. The
project will concentrate upon its inception in Jeddah, initially on one branch in
Rawdah district and based on profitability, will continue to open new branches
on other locations. Some positive social impacts of the project are the following:
creating new job opportunities, introducing the market to new local chiefs,
creating a local based restaurant that is not an international franchise and
exported products and offering a new restaurant for neighbors and those
customers roaming the region. Other indirect benefits include encouraging the
acceptance of local chiefs rather than the need to recruit overseas talent.
Creating a positive social impact analysis increasingly reduces the risk of the
project and strengthens general social support. With respect to the
environmental feasibility, the gourmet restaurant will not distress any sever
environmental impacts. The gourmet restaurant will not distress any sever
environmental impact the restaurant will perform all the necessary cautionary
measurement with respect to possible minor impacts on air, water and materials.
Firm instructions and awareness will be given to both employees and to
customers how to keep the environment clean. Lastly, a comprehensive
financial model and economic performance indicators are developed to
calculate the economic feasibility of the restaurant. All the economic indicators:
Payback Period, Discounted Payback Period, Net Present Value, Internal Rate
of Return and Profitability Index confirm that the idea of the new project is
highly recommended.

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Recommendations
The following points summarize the basic recommendations from the present study:
1. To pursue for the investment project as all the sections of the feasibility study
encourage establishment of the project. 2. Conduct a study on home and online
delivery for more exposure. 3. Conduct a thorough study for expansion on other
locations in Jeddah and other cities of Saudi Arabia. 4. Open new branches outside
Saudi Arabia such as Dubai and other Arab Gulf countries. 5. Add new main dishes
according to the customer preferences that will maximize profits.

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