Optimizing-Business-Model-for-Bismillah-Khichuri-Ghar-1.pptx

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1. Optimizing Business Model for Bismillah Khichuri Ghar A Data-Driven Approach to Profit Maximization Presented by: [Team 4] Date: [6 th June]

2. Introduction Overview of the Restaurant Industry: The restaurant industry in Bangladesh is known for its fierce competition and dynamic nature. Success hinges on efficient operations, cost management, and maximizing profits. Introducing Bismillah Khichuri Ghar : Located in Road No 8, D block, Muslim Bazar, Mirpur 12, Dhaka. Renowned for its delicious and authentic khichuri dishes. Objective: Data-Driven Roadmap to Success: Analyze current operations and develop strategies for optimizing the business model. Use break-even analysis and price optimization to maximize profitability.

3. The Restaurant Battlefield

4. Introducing Bismillah Khichuri Ghar Location and Popularity: Bismillah Khichuri Ghar is situated in a prime area of Mirpur 12, attracting a diverse customer base. It is popular for its authentic and delicious khichuri dishes. Challenges Despite Loyal Customer Base: Despite a loyal customer base, the restaurant faces challenges such as competition, fluctuating ingredient costs, and pricing strategy issues. There is a need to evaluate and optimize the current business model for better profitability.

5. Objective: A Data-Driven Roadmap to Success

6. Problem Statement

7. Collected Data

8. Rationale of the Study

9. Break-Even Analysis: The Foundation for Profitable Pricing

10. Cost Structure Fixed Costs: - Include rent, employee salaries, chef salaries, and utility expenses. These costs remain constant regardless of the number of plates sold. Variable Costs: - Costs that fluctuate with production volume. This typically includes the cost of ingredients used in a single serving along with any labor costs directly associated with preparing one plate of khichuri.

11. Model-01: Break-Even Point (BEP)

12. Model-01: Break-Even Point (BEP) Break-Even Point Calculation The break-even point (BEP) is the number of units that must be sold to cover all costs. It is calculated using the formula:  

13. Graphical Representation of BEP Model Application Substitute the given values:  

14. Introducing Price Setting Strategy Models Goal: Achieve profitability: Move beyond breaking even to profit maximization. Price Optimization Modeling: Discuss the importance of setting the right price to balance customer demand and production capacity.

15. Price Optimization Model Components: Given: a = 400: The maximum possible demand when the price is zero. Despite unlimited demand at a price of 0 BDT, they cannot produce more than 400 plates due to constraints. b = 1.5: The rate at which demand decreases with an increase in price. This is estimated based on market sensitivity and customer behavior. Revenue Function The revenue function should consider the total number of plates sold daily (300 plates) multiplied by the price per plate:  

16. Price Optimization Model Cost Function The cost function includes both fixed and variable costs: Profit Function The profit function is the difference between total revenue and total cost: Optimization Process To find the price that maximizes profit, we follow these steps:  

17. Optimal Price Calculation Profit Function The profit function is the difference between total revenue and total cost:   Optimization Process To find the price that maximizes profit, we follow these steps:  

18. Revenue and Profit Calculations: Revenue Description 170 BDT 198 BDT (Optimal) 220 BDT Price per Plate 170 198 220 Number of Plates Sold Daily 300 300 300 Total Daily Revenue 51000 59400 66000 More to Earn -8400 - 6600 The graph above shows how profit changes as the price per plate changes. The optimal price point is highlighted.

19. Revenue and Profit Calculations: Profit The graph below shows how profit changes as the price per plate changes. The optimal price point is highlighted. Description 170 BDT 198 BDT (Optimal) 220 BDT Price per Plate 170 198 220 Total Cost per Plate 161.726 161.726 161.726 Profit per Plate 8.274 36.274 58.274 Total Daily Profit 2482.2 10882.2 17482.2 More to Earn -8400 - 6600

20. Customer Lifetime Value (CLTV) Model

21. Key Components of CLTV Model Components: - Average Purchase Value (APV): The average amount a customer spends per purchase. - Purchase Frequency (PF): The average number of times a customer makes a purchase in a given period. - Customer Lifespan (CL): The average duration a customer continues to make purchases from the business. - Customer Acquisition Cost (CAC): The cost associated with acquiring a new customer. - Profit Margin (PM): The percentage of total sales revenue that the business retains after costs. - Customer Retention Rate (CRR): The percentage of customers who return to make purchases over a specific period.

22. CLTV Calculation 1. Profit Margin Contribution:  

23. CLTV Calculation Customer Retention Rate (CRR): Example Calculation: Interpretation: - Average CRR for restaurant industry in Bangladesh: 30%. - Bismillah Khichuri Ghar's CRR: 40%. - Indicates better performance in retaining customers compared to industry average.  

24. CLTV Model Justification Strategic Marketing: Focus marketing efforts on high-value customers to increase retention and profitability. Resource Allocation: Efficiently allocate resources to customer acquisition and retention strategies that offer the highest returns. Performance Evaluation: Compare the customer retention rate (CRR) with industry standards to evaluate performance and identify improvement areas.

25. Evaluation of Customer Retention Performance CRR Comparison with Industry Average: Highlight how Bismillah Khichuri Ghar performs against the industry. The average CRR for the restaurant industry in Bangladesh is about 30%, while Bismillah Khichuri Ghar has a CRR of 40%. Graph Placeholder: Compare CRR visually with industry standards.

26. Justification for Each Model Break-Even Point Analysis (BEP): - Cost management, pricing strategy, profit planning. BEP helps in understanding the minimum sales volume needed to cover costs. Price Optimization Strategy: - Maximizing profit, customer satisfaction, dynamic pricing. Ensures prices are set to balance demand and production capacity. Customer Lifetime Value (CLTV) Model: - Strategic marketing, resource allocation, performance evaluation. CLTV helps in understanding the long-term value of customers.

27. Limitations of Each Model Break-Even Point (BEP) Analysis: Static assumptions, single product focus, no demand consideration. Price Optimization Strategy: Simplified demand function, customer sensitivity, external factors. Customer Lifetime Value (CLTV) Model: Estimation of lifespan, static purchase frequency, exclusion of indirect costs.

28. Conclusion and Recommendations

29. Operational Efficiency

30. Customer Satisfaction and Retention

31. Future Growth Opportunities