G. Cash Flow Provision 4. How much does it cost?


G. Cash Flow Provision 4. How much does it cost?
1. Location
To find a suitable location for your Barcelos is crucial, the fact that you are opening a recognised brand does
not mean automatic success in any location. The following guidelines could be of assistance.
Firstly visit our website www.barcelos.co.za and go to Franchise Locator, this will give you an indication of
where the existing Barcelos outlets are located and which areas are destined to open soon, this will assist you
in determining the area you envisage.
Please check with Barcelos Head Office on 012 660 0450 before going through too much effort with regards
to a location.
• High visibility. Preferably customers on foot.
• Easy access. Can the customers enter with ease?
• A loading area for product delivery.
• Premises to be a square shape where possible and preferably have one open area.
• Few or no internal walls. New walls are constructed and existing internal walls must be broken down.
• Internal ceiling height of at least 3.1 meters. If there is no ceiling, a ceiling must be installed at 3.1 meters
from the finished floor level.
• Shop fronts to open the full width of the shop or at least 5 meters wide, no single door entry to the store.
• Sewerage and drainage for waste water.
• Premises must have 3 Phase electric power (380 V) with a minimum of 110 ampere stable supply available. If the supply is not stable, a standby generator might have to be installed. (Outlying areas)
Please note that the above mentioned points are initial guidelines and not the only criteria.
Barcelos Head Office will facilitate further negotiations and discussions.
2. Take-away or Restaurant?
It is important to note that the area that is selected will determine the type of outlet that will be required.
Various factors influence the outcome but the main factors to consider are as follows.
• The surrounding area/s will indicate the appropriate trading hours.
• The selling of liquor. (A liquor licence must be applied for by the prospective franchisee.
• An assumption can be made that longer trading hours combined with a liquor licence will require a larger
restaurant with maximum seating.
• Take-away outlets are generally established in an areas that have fewer trading hours, such as Industrial
areas, Residential areas, Office-only areas etc.
• A combination of a Restaurant and Take-away store would be preferable in areas that have sufficient
offices and/or residences with the potential for evening entertainment.
• You will require 80m² for a Take-away outlet (16 seater) or 120-180m² for a Restaurant (30 seater or more)
Please note that the above mentioned points are initial guidelines and other factors might
influence the final outcome. Barcelos Head Office will conduct the final assessment.
3. The Customer
At Barcelos we are determined to bring a fine balance between the traditional, healthy home-style cuisine
and the fast lane demand of the current world. The Barcelos customer is from all walks of life and all income
It is imperative to note the lifestyle of the patron will influence the buying behaviour of the patron. The following factors can be used to evaluate your client strategy.
• Income of the potential customer.
• Age group of the potential customer.
• Food of preference of the potential customer (red meat, vegetarian, chicken etc.)
• The affordability of the Barcelos product for the potential customer.
• The accessibility (transport) to outlets by potential customers (public transport consumers generally leave
an area by 6pm.)
4. How much does it cost?
The cost of a Barcelos outlet varies from one site to
another. The following are some of the main influencing factors to the cost.
A. The type of outlet
sanitary facilities for restaurant outlets etc. Outside
seating might require that a deck be constructed,
which will help to add ambience and create an extra
dimension to the outlet.
E. Accommodation and staff costs
You will be required to pay for the accommodation
Restautants require more seating and more equipment (Centurion), breakfast and dinner of the staff whilst
in the kitchen than a Take-away outlet.
they are on training. You might also have to pay your
staff, pro-rate salaries for the period prior to the
B. The size of the outlet
opening of the outlet.
Bigger restaurants take more equipment, larger extraction systems and more seating facilities.
They also require more décor and additional staff
C. The location of the outlet
Outlets outside the Gauteng region have additional
charges for transportation, accommodation etc. They
may also require more cold storage space to accommodate extra stock holding.
D. The construction of the outlet
The construction is the most important component in
the variable cost of the outlet. The internal construction of the outlet must conform to Barcelos layout and
design. This includes all the internal walls, plastering,
tiling (floors & walls), electrical supply to the outlet,
geysers, taps, drains, painting of the walls, building of
F. The rent and administration costs
As tenant of the outlet, you will be required to pay a
rent deposit (3 months rental) and at least the first
months rental. You will also be expected to pay the
cost of the contract with the landlord. Other costs you
should budget for are as follows:
1. The fees for the registration of a Close
Corporation or Company.
2. The fees for an auditor to register you as a VAT
payer and other.
3. Legal fees for the attorney to peruse the franchise
agreement on your behalf (optional).
4. Any costs related to opening a bank account.
G. Cash Flow Provision
It is critical in any business to provide sufficient cash
flow for the operation of the business. The amount
that should be provided varies greatly from business
to business but it should be sufficient to allow the
equivalent to the total monthly operating costs multiplied by two.
After finding the most suitable outlet, the factors as
previously mentioned will play a role in the costing of
the outlet.
4. How much does it cost?
An estimation of between R950,000 and R1,050,000 (excluding 14% VAT) can be used as a guideline for
costs, which should include all of the previously mentioned costs. Included in the estimation are the costs
payable to Barcelos Head Office for the following items:
• Furniture and fittings
• All kitchen equipment
• Extraction system
• Cold and freezer rooms
• Point-of-sale system
• Signage, flags and other
• Menu boards and other
• Training fees
• Joining fees, design fees, site supervision fees