Posted: April 1st, 2015

Analyzing Profitability of Opening a Subway Restaurant in UAE, Ras Alkhaimah

Analyzing Profitability of Opening a Subway Restaurant in UAE, Ras Alkhaimah

Introduction

Where is an appropriate eating place that offers fast foodstuff and has healthier alternatives in Ras Alkhaimah? Presently, there is no such restaurant. Because of the increase in the number of people worldwide willing to experience healthy eating and people that lead healthier daily life, it appears as though there are small niches in the marketplace in UAE. When these niches are considered, one eating place brand instantly comes to mind that would perhaps best fulfil consumers in the region while maintaining an amicable profit share is the brand known as Subway’s Food. It offers customized healthy food amid excellent service and great quality. The brand is extremely popular in the US and is turning out to be more and more common in the UAE. There are numerous junk food eateries in the city of Ras Alkhaimah, but none of them serves healthy food. Subway is a food making place whereby the foods are greatly customizable and therefore best fulfil the consumer’s wishes (William et al. 26). After looking into its website, I realized that it was an organization which has numerous merits and a few demerits as well which will be dealt with in the course of this feasibility research.

Ras Alkhaimah is a large region with more than four major streets which chiefly comprise of primary industry wholesale stores and numerous residential regions around this city. The big set of stores brings customers into the city with money for purchasing products and some of this cash will be utilized in buying meals while the consumers are away from their homes. The surrounding regions are mainly residential hence those people may turn out to be regular clients and visit regularly because of the ease of accessing the subway premises while driving. The success of this business can be determined through profitability of the subway restaurant branch during the first year. This timeline is sufficient since it will allow time for clients to be regulars and for the brand knowledge to become widespread. Twelve months are required for measuring the performance of the stores because as the times change, so do individuals’ inclinations hence there will be variations in customer buying trends, for instance just prior to Christmas when many people will spend time buying gifts they may as well purchase sandwiches while they are in the city so income may be high (Solansky 333).

Objectives

The key objective is to determine the profitability of adding another branch of the Subway restaurant in Ras Alkhaimah. My tertiary objectives include the following aspects: competitors, suppliers, clients, and finances. These tertiary key points will then aid me to draw my conclusions which underpin my main objective.

Research

This research will chiefly comprise of secondary study to find details and numbers regarding the city of Ras Alkhaimah such as figures on people residing in the surrounding areas. I will then rate my prospective market. These details are better compared to primary data since they are typically drawn from a wider perspective with a view of getting the most precise outcomes feasible for the using them whereas the outcomes may be misleading in an undersized study carried out over 8 individuals. A repeat customer has been known in making up the large number of the client base rather than once only client for most ventures in the hotel industry. A repeat customer is in addition an indication of consumer fulfilment since if customers were dissatisfied with the foodstuffs offered then they would not have visited the restaurant again (Dong 29). My primary study consists of an interview carried out in a subway restaurant located in Ras Alkhaimah and I will make notes about eating behaviours in Ras Alkhaimah like where I find majority of the people willing to have their lunch. Basically, this offers an improved understanding of the way a consumer thinks and his/her eating habits. This interview would be carried out at the streets of the city and during daily management’s meetings in a subway restaurant. This interview will be necessary in giving me background information on how a consumer thinks and how he/she views the subway restaurant I am studying and it will offer an informed perspective of the number of people willing to become regular customers at the Subway restaurant (Dong 33).

I will utilize methodical sampling in arbitrarily selecting the individuals that will be interviewed. This means that I will have to engage every 15^th individual who passes by during the period indicated if he/she would be willing to participate in an interview concerning starting a Subway restaurant branch in the area. The interview will be done during lunch period since the foods prepared at the Subway restaurant are more of lunch meals than supper or breakfast meals.

Tertiary objectives

Competitors

In investigating into the competition in the region, I did some primary study in Ras Alkhaimah and went to all of the possible rivalry. The likely competition will be from Pizza express, Franco, and 3 small inns. By the look of things, it is clear that the three inns do not focus on healthy eating and restaurants like Pizza express and Franco’s do not serve any good healthy meal. Franco’s and the three small inns offer some healthy diet, but at such places the customers typically pay mainly for the service offered to serve their food in an unwinding setting hence they do not offer the food as a fast service. These are promising aspects to this point since all of the possible rivalries are not openly connected in the same marketplace.

Utilizing the aforementioned details, I have realized that there is a likelihood of tough competition in the restaurant industry which may be difficult to deal with as the competitors may have strong brands but majority of the consumers will be from a more particular Subway market, the marketplace of people aged between 20 and 35 (Solansky 338).

Suppliers

Supplier trends are one of the key elements in an organization, if the supplier is demanding a lot for supplies then the organization costs will increase which could bring challenges to the organization. One benefit of opening an additional branch of a Subway is that all of the goods are tackled through the management of the Subway. This ensures that no time will be spent to search for a reliable supplier. Since there are other restaurant substations in Ras Alkhaimah, it should not need a lot of energy for Subway restaurant to offer additional goods to the region. This should be fine since the quality levels Subway restaurants demand are high hence the sandwich need to remain fresh.

Clients

Without clients, any organization will collapse hence prior to opening any company one has to be certain that there is adequate demand in the area for sustaining the business. There are numerous methods of knowing about possible clients. One method is by looking at the number of individuals residing in the city of Ras Alkhaimah. This is advantageous since it would be not inconvenient for the people of the Ras Alkhaimah to regularly take a fast snack from the Subway restaurant. Through utilizing the Census reports, I have realized that roughly 7,966 persons reside in the region. This figure offers a hopeful perspective about the number of native possible clients (William et al. 54).

Ras Alkhaimah is an exceedingly wealthy region with 4.5 times more individuals pocketing on average AED 40,000 a year compared to the national figure. This means that there are more working people in the region compared to other areas. Young people take their daily roles more gravely and do not have extended lunch time thus fast service is exceedingly significant together with the healthy diet most of the individuals take. The findings of the interview showed that majority of the individuals surveyed using the random sampling were between 20 to 35 years. Such ages are in addition the kind of age which majority usually mind about their overall eating habits, thus it is exceedingly interesting when these are the kinds of young professionals the focus group for the Subway business would be (Dong 39).

Finances

A feasibility research has to in addition include economic features since without finances, an organization cannot continue. There are four elements of money which affect, these include: preoperational costs, income from sales, fixed and variable costs. Since the organization is an area monopoly, charges must be remitted directly to the management of the company. This charge is AED 12,500 on average. There are 3 various forms of Subway that the branches are licensed to operate, low-cost Subways, mid-level Subway and high-cost Subway. The table below shows opening costs and operating costs for the first quarter.

With sales income, numerous aspects have to be contemplated; these consist of a sales quantity prediction and the influence on buying patterns. Firm direct cost consists of labour among other costs. As indicated (see table), the stock for the quarter costs between AED 500 to AED 1000 on average. Because of the kind of business, considering small and often supplies would be the recommended alternative since the food have to be fresh at the time of sale, guaranteeing good quality food and service (Dong 43).

Conclusion

After much discussion, I am convinced that this is the best of approaches of starting up a Subway business in Ras Alkhaimah. My key thinking behind this is due to the low risk involved. The level of risk is less than the foreseeable benefits and the prospective business person is guaranteed 100% that the Subway venture will not fail. My feasibility research however is inadequate to entirely remove any suspicion of the idea flopping. Additional aspects have to in addition be contemplated, not simply the four primary factors I have discussed because I feel they are the primary elements.