Return on equity (also known as “Return on equity” – ROE) indicates: 1 unit of average equity invested in business brings in how many units of profit after tax. The higher the return on equity, the higher the operating efficiency. Therefore, the higher the business efficiency and vice versa.
CHAPTER 2: BUSINESS STATUS OF THE CITY DINER RESTAURANT
2.1. Overview of The City Diner restaurant:
2.1.1. Formation and development process:
The City Diner restaurant was established by Do Thi Quan Company Limited in early 2007.
Location: THE MANOR Building – 91 – NGUYEN HUU CANH -
P. 22 - BINH THANH DISTRICT.
Business line: Catering services Business license number: 0304496397 Tax code: 0304496397
Phone: 083.514.3200
Fax: 0835143201
Website: www. Thecitydiner.net
Mail: thecitydiner@yahoo.com Image 2.1: The City Diner Restaurant
The current restaurant director is Mr. Huynh Cong Khanh.
The restaurant is decorated in the style of New York diners in the 1950s and 1960s. The interior of the restaurant looks like a train car with rows of brightly colored seats and tables. The main colors used in the restaurant are red, white, and black, which are harmoniously combined.
The first impression for diners when entering the restaurant is the statue of cowboys that can move when controlled by a special remote. These cowboys can also answer diners' questions in English.
In addition, when you come here, you will have the opportunity to admire a rather old two-wheeled motorcycle produced in the US in the 60s of the 20th century. This vehicle was brought here from the US by an American, Mr. Ralf, the former owner of the restaurant.
According to an American diner, there are only two such cars in Ho Chi Minh City, one at The City Diner and the other owned by that guest. The restaurant is decorated with pictures of famous singers, stars, and actors of the same era. The background music is famous classical songs from the 50s and 60s. The restaurant is divided into two areas: one side has sofas against the wall and the other side is the bar.
With a capacity of 100 seats including both indoor and outdoor areas, the space is luxurious and comfortable. The City Diner is an ideal place for intimate family meals, meeting business partners, friends...
The founder of the restaurant was an American. After a period of operation, the restaurant was transferred to an American Vietnamese.
The dishes at The City Diner are mainly American-style dishes. Diners can enjoy American beef prepared in many different ways.
Coming here you will be welcomed by the friendly smiles of the restaurant staff and enjoy a professional service style.
After more than three years of establishment and operation, with a young age, The City Diner restaurant has faced many difficulties. However, overcoming those difficulties, the restaurant still exists and is trying its best to overcome the difficulties to improve business efficiency.
2.1.2. Restaurant organizational structure:
The restaurant has a relatively compact organizational structure, to save on salary costs but still ensure good customer service.
Restaurant Manager
( Restaurant Director )
Head Chef
Staff
Miscellaneous
( Odd job)
Diagram 2.1: Organizational structure chart of The CiTy Diner restaurant
Manage
( Restaurant Manager)
Waitress
Bartender
Cashier
Source: Documents of The City Diner restaurant
2.1.3. Restaurant product and service system:
Food:
The restaurant's dishes are divided into 3 categories: Appetizers include:
+ Soups include: Chicken noodle soup, Minestrone soup, Cream of Chicken soup, Pea soup.
+ Salads include: Long tall sally, After the Gym, Ceasar salad, Tuna salad... In addition, there are other dishes such as: French Fries, Chicken Wings, Chilli
Con Carne, Garlic Bread, Chilli cheese Fries… Main course includes:
+ Spaghetti Bolognaise, Spaghetti Carbonara, Mac & Cheese, Shrimp Pasta Marinara, Chicken & Mushrom Alfredo…
+ Hot Dogs: Diner Dog, Polish Dog, Chilli Cheese Dog…
+ Burgers: Chilli Cheese Burger, Chicken Burger, Diner Burger, Bacon Cheese Burger, “The King” Burger…
SW…
+ Sandwiches: Grill cheese SW, Tuna SW, “Sea of Love” SW, Rewben
+ Pizza: Seafood Pizza, Vegtable Pizza, Hawaiian Pizza, Magarita Pizza... There are also other specialties for visitors to choose from such as:
BBQ Beef, BBQ Chicken, Ribeye Steak, Aus Beef, Fish & Chip...These are all the restaurant's specialties.
In addition to the dishes served for lunch and dinner mentioned above, the restaurant also serves Western-style breakfast dishes. However, if you are Asian and do not like European food, when you come here, you can still satisfy your appetite with quite attractive Asian dishes such as: Shaking beef, broken rice with ribs, shrimp fried rice, seafood fried rice, Indonesian fried rice, Singaporean fried noodles, etc.
Dessert:
+ Ice cream: has strawberry, chocolate, vanilla.
+ Cakes: Apple cakes, Tirasumi, Cheese cakes and other cakes.
Drinks:
- Mineral water
- Soft Drinks: Pepsi, 7-up, Soda, Coca light.
- Smoothie: Pineapple, strawberry, papaya, banana, carrot.
- Juice: Orange, lemon, carrot, strawberry, apple, pineapple, coconut water.
- Beer: Heniken, Tiger, Budweiser.
- Coffee: Latte, Cappuccino, Espresso, Ice coffee, Regular coffee, Ice white coffee
- Tea: Lipton, Peppermint, Ear Gray, Camomile
Other services:
- Free delivery for customers in The Manor building. Accept outside delivery for customers in Binh Thanh, Phu Nhuan, District 1, 2, 3... If customers order with an amount over $10, free delivery will be provided.
- Coloring pages for children.
- The restaurant also has English newspapers, magazines and books available for free to guests.
- Promotions: 10 to 20% discount on major holidays.
2.1.4. Restaurant customer market:
Traditional market:
+ Business guests (Mice guests)
+ High income earners
Market segmentation:
- The Asian market is mainly customers: Japan and Korea account for
25% of the restaurant's total customers. Vietnamese customers account for a small percentage, only 5% of the total customers.
- European market: mainly customers from America, France, Australia account for 75% of total customers.
Chart 2.1: Customer market structure of The City Diner restaurant
Europe (USA, France, Australia) 75%
Vietnam 5%
Asia (Japan, Korea) 20%
Source: Documents of The City Diner restaurant
2.1.5 Competitors of The City Diner restaurant:
- Direct competitors: Highland Coffee, Pho 24, KFC, new restaurants about to open in The Manor II building. These are food service establishments located in The Manor building and are direct competitors of the restaurant.
- Indirect competitors: These are neighboring restaurants and restaurants serving Western food located in the downtown area.
2.2. Current business situation of The City Diner restaurant:
2.2.1. General assessment of business performance:
To evaluate the general business performance of The City Diner restaurant, we will first calculate the following indicators: Profitability of equity, Profitability of revenue, Profitability of operating costs in 2008 and 2009. Then, use the method of comparing the values of these indicators between 2009 and 2008 to analyze and evaluate.
Table 2.1: General assessment table of business performance of The City Diner restaurant
Currency: VND
Target
Year 2008 | Year 2009 | 2009 vs. | with | 2008 | |
Absolute (±) | Soy sauce (%) | opposite to | |||
A | B | C | D | E | |
Equity | 917.276.302 | 934,574,200 | 17,297,898 | 1.9 | |
Net revenue: | 2,172,094,551 | 2,071,843,505 | (100,251,046) | (5) | |
- Sales revenue | 2,171,447,700 | 2,071,479,595 | |||
and service provision | |||||
- Net operating revenue | 646,851 | 363,910 | |||
financial | |||||
Operating costs: | 2,102,511,841 | 2,144,048,465 | 41,536,624 | 2 | |
- Cost of goods sold | 488,563,938 | 640,691,569 | |||
- Selling expenses | 228,658,119 | ||||
- Management costs | 1,613,612,903 | 1,274,166,236 | |||
Business | |||||
- Financial costs | 170,000 | 532,541 | |||
- Other costs | 165,000 | ||||
Profit after tax | 69,582,710 | (52,204,960) | |||
Profitability of Equity (ROE) (times) | 0.08 | (0.06) | (0.14) | (175) | |
Profitability of branch return on operating expenses (ROOE) (times) | 0.033 | (0.024) | (0.057) | (173) | |
Business profitability return on investment (ROS) (times) | 0.032 | (0.025) | (0.057) | (178) | |
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Source: Financial report of The City Diner restaurant in 2008 - 2009
Analysis and evaluation :
Through table 2.1, we can see that in 2009, the profitability of equity was: -0.06, down 0.14 times and down 175% compared to 2008 (0.08 times). The profitability of operating expenses in 2009 was -0.024, down 0.057 times and down 173% compared to 2008 (0.033 times). The profitability of net revenue in 2009 was -0.025, down 0.075 times and down 178% compared to 2008 (0.032 times). The rate of decline in profitability of the above three factors in 2009 was quite high, from 170% or more, which means that the restaurant business suffered losses. The reason for the decline in profitability is that the restaurant's operating costs in 2009 increased by 41,536,624 (VND) compared to 2008 and increased by 2%. The increase in operating costs was due to the increase in gasoline prices and the consequences of the global financial crisis, which caused the prices of some goods to increase in 2009. Meanwhile, net revenue in 2009 decreased by 100,251,046 (VND) compared to 2008 and decreased by 5%. Through the following chart, we will see that decline.
Chart 2.2: The chart shows the fluctuations in the restaurant's net revenue from 2007 to 2009.
Billion VND
2,172 2,071
0.997
2.5
2
net revenue
1.5
1
0.5
0
2007
2008
2009
Year
Source: The City Diner restaurant's financial report 2007 - 2009.