darden restaurant corporate finance group assignment

Darden Restaurant, Inc as a restaurant business, our main service is to provide high-quality food and dining experience to our customers.. And more, we would like to introduce our new re

1 Nguyễn Phan Thịnh - DE 160385

2 Hoàng Thị Thanh Thư - DS170004

3 Hoàng Minh Hiếu - DE 170803

4 Mustapha Aji - DS160004.

5 Đặng Ngô Bảo Ngọc - DS170078

Table of contents:

I, Introduction: 2

II, Analysis: 5

A: Project Cost (Include: Initial Costs, cost and revenue in each year) 5

B: Costs and Revenue: 6

C: NPV & IRR 10

D: Payback period 10

III CONCLUSION: 11

Darden Restaurant, Inc as a restaurant business, our main service is to provide high-quality food and dining experience to our customers In addition to food and beverage services, Darden is alsocommitted to sustainability and social responsibility initiatives, such as reducing water use and food waste, as well as supporting farmers and communities' local community The company also offers job opportunities and career advancement for employees And more, we would like to introduce our new restaurant project and invite you to invest in our joint venture.

Business Overview:

Darden Restaurants, Inc is a multinational restaurant company based in the United States, with headquarters in Orlando, Florida The business is the owner and operator of a variety of well-known restaurant brands, including Yard House, The Capital Grille, Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Seasons 52, and Bahama Breeze Than 175,000 people are employed by Darden Restaurants, which has more than 1,800 locations across North America Business takes pride in its dedication to offering guests top-notch food and service.Menu:

Our business operates multiple distinct restaurant brands, each with its own culinary style and aesthetic, ranging from casual to upscale dining To ensure quality and taste for our customers, we will only use fresh, locally obtained ingredients to prepare our dishes In addition, we will have unique and creative menu meals to attract customers and set us apart from our competitors.

service, and a unique atmosphere across all of its restaurant brands Its offerings include sourcingthe freshest ingredients, offering a wide range of beverages, online ordering, catering, and efficient service delivery We also aim to create amazing dining experiences that exceed our guests' expectations and leave them impressed to come back for more.

Marketing and Promotion:

Social media marketing: Social media is a vital instrument for advertising For each of our restaurant brands, we will establish and maintain a social media presence on well-known websites like Facebook, Instagram, and Twitter To reach potential customers, we'll leverage social media to construct tailored advertising campaigns.

Email and SMS Marketing: We will use email and SMS marketing to reach our existing customers and inform them about promotions, special events, and new menu items We will use this channel to interact with customers and build relationships.

Influencer Marketing: We will leverage influencer marketing to promote our restaurants This strategy involves partnering with social media influencers and food bloggers with a significant following who can promote our brands through sponsored posts, reviews

Events and Sponsorship: To promote our restaurants, we will create and participate in local food festivals and other events to showcase our brands and create awareness We will seek sponsorship opportunities for events and community initiatives Being part of such events will

To build our financial estimates, we did thorough market research and studied industry trends steady increase in sales throughout the first three years of operation, including the construction phase and the initial ramp-up period, with a profit margin 13% as our goal discovered possible cost savings and income streams that will assist us in meeting our financial objectives in the future.

Investment Opportunity:

To enhance the quality and value of the company, we are looking for investors to help us realize our ambition With your request of $350,000, we were able to build a destination restaurant that will become a neighborhood favorite The money invested will be used to fund promotion and advertising, build space, purchase equipment and supplies.

We offer attractive ownership rates on our restaurants and the ability to receive a great return on investment in return for your investment We think that our restaurant project offers a special andexciting opportunity for investors to enter a growing field and potentially earn great profits We are dedicated to providing our customers with excellent food and service and growing a thriving company We appreciate your interest in investing in our restaurant project.

II, Analysis:

A Project Cost (Include: Initial Costs, cost and revenue in each year)

2 Equipment and machinery: $95,000

3 Tools:$50,000

4 Rent deposit: $25,125

5 License and permits: $5,000

6 Marketing and advertising: $20,000

7 Employee salaries (3 months): $27,000

Year 2:

Sales revenue: $350,500 ($65/1pax)Cost of goods sold: $40,000

Insurance: $15,245Total costs: $137,745Net Cash flow: $212,755

Year 3:

Sales revenue: $400,500 ($78/1pax)Cost of goods sold: $50,000Labor costs: $90,000Utilities: $3,500Insurance: $15,245Total costs: $158,745Net Cash flow: $241,255

Year 4:

Sales revenue: $370,250 ($69/1pax)Cost of goods sold: $35,000Labor costs: $80,000Utilities: $3,000Insurance: $15,245Total costs: $133,245Net Cash flow: $237,005

Year 5:

Sales revenue: $490,500 ($80/1pax)

Utilities: $3,500Insurance: $15,245Total costs: $163,745Net Cash flow: $326,755

Costs and Revenues

Year 1 Year 2 Year 3 Year 4 Year 5

Sales revenue $385,050 $350,500 $400,500 $370,250 $490,500

Cost of goods sold $45,000 $40,000 $50,000 $35,000 $50,000

Labor costs $90,000 $80,000 $90,000 $80,000 $95,000

Insurance $15,245 $15,245 $15,245 $15,245 $15,245

Total Cost $153,245 $137,745 $158,745 $133,245 $163,745

Net cash flow $231,805 $212,755 $241,255 $237,005 $326,755

= -295,125 + 231,805/(1+13%) + 212,755/(1+13%)^2 + 241,255/(1+13%)^3 + 237,005/(1+13%)^4 + 326,755/(1+13%)^5

=> NPV = 566,541

The business is expected to generate positive cash flow and is worth long-term investment.

* IRR: The internal rate of return for the restaurant business is:

0= -295,125 +90,000/(1+x) + 80,000/(1+x)^2 +90,000/(1+x)^3 +80,000/(1+x)^4 +95,000/(1+x)^5

=> IRR = 14,39%

The internal rate of return for the restaurant business is 14.39%, which is higher than the requiredrate of return of 13% It is easy to see that an investment in a business has the potential to be highly profitable.

D Payback period :

Year 0: $295,125

Year 1: - $295,125 + $231,805 = -63,320

Year 4: $390,690 + $237,005= $627,695Year 5: $627,695 + $326,755= $954,450

=> Payback period = 1+ ($63,320/$212,755755)= 1.3 years

The payback period is about 1,3 years, which is relatively short and indicates that the investment is likely to be recovered quickly.

III CONCLUSION:

In conclusion, Darden Restaurant, Inc is a well-established restaurant with a strong reputation for providing high-quality food and exceptional customer service The company operates multiple distinct restaurant brands, each with its culinary style and aesthetic, ranging from casual to upscale The company has over 1,800 locations across North America and employs more than 175,000 people.

The new restaurant project that Darden proposes is a promising opportunity for investors.The project cost has been carefully calculated, including initial expenses such as furnitureand fixtures, equipment and machinery, tools, rent deposit, license and permits, marketingand advertising, employee salaries, and miscellaneous expenses The net cash flows for

costs, utilities, and insurance taken into account.

Using evaluation techniques such as NPV, IRR, and Payback period, we can see that the project is financially feasible and has the potential to generate positive returns for investors The NPV calculation considers the time value of money and shows that the project is expected to create a positive net present worth The IRR calculation shows that the project has an internal rate of return higher than the cost of capital, indicating that the project is financially viable Finally, the Payback period calculation shows that the projectis expected to break even within a reasonable timeframe.

Investing in this joint venture with Darden Restaurant, Inc is a promising opportunity forthose looking to invest in the restaurant industry With its strong reputation, commitment to sustainability, and social responsibility initiatives, Darden Restaurant, Inc is well-positioned for success in the years to come.