The demand for meat is rising with growing population. A number of small shops are operating in almost every residential and commercial area. However, these shops seldom follow required cleanliness standards; except for those few recently introduced in high-income group residential areas. With increasing public awareness of hygiene, the trend is shifting towards neat / clean hygienically maintained shops. The proposed outlet is expected to cash on this new trend.
The proposed meat shop would supply hygienically processed, quality mutton and beef. The shop is proposed to be located in a commercial market of residential area belonging to middle or upper middle-income group. The projected products available in the shop will include mutton and beef (with bone and boneless) minced meat, supplied according to the customers requirement.
The total initial project cost for setting up an outlet is estimated at Rs.1.24 million. The project is proposed to be financed through 90% debt and 10% equity. The Net Present Value (NPV) is projected around Rs. 1.10 million with Internal Rate of Return (IRR) of 42% and payback period of 3.11 years. The legal business status of this project will be ‘Sole Proprietorship’.
In this pre-feasibility study, a meat shop is proposed to sell processed mutton and beef. Growing health concerns among consumers to purchase hygienic processed meat has opened up new vistas of opportunities for meat shops offering hygienic meat.
This business involves purchase of carcass of slaughtered animals from a slaughterhouse. Contract procurement of animal carcass from reliable suppliers can be an economical alternative. Mutton is bought on ‘number of animal’ (carcass) basis; each assumed to have weight of around 12 kgs. Beef is purchased in multiples of 40 kg units. Particular attention would be paid on the quality of meat purchased. The meat is then cut into pieces or minced in the shop according to the customer’s demand. It is assumed that 85% of beef would be sold as beef with bones and 15% would be sold as boneless; however, there would be reduction in weight of meat due to natural phenomenon of water content evaporation (2% for mutton and 5% for beef). The shop will operate for 8 hours a day for 350 days per annum. The legal status of the proposed project is recommended to be sole proprietorship.
Critical Factors for Meat Shop Business in Pakistan
To establish meat shop business successfully, following critical factors must be considered:
- Location of shop, preferably in commercial markets of populated areas.
- Ensure good quality of service & supply of clean meat from healthy animals.
- Carcass should have stamps of authorized veterinarians.
- Shop should be neat and clean with standard tools and equipment.
- The sale of products must be according to the prevailing market price
Operational Capacity of Meat Shop
Generally, in this business, installed capacity is reflected by turnover potential in a given locality, while the shop should be able to store two day’s inventory requirement. The inventory requirement is based on bulk purchase orders to cover transportation cost.
In the proposed business, it is assumed that it would have installed capacity to sale 4,200 mutton carcass (average 12 kg per mutton carcass) and 1,050 mounds of beef per annum (or daily sale of 12 mutton carcass and 3 mounds of beef in 350 operational days per annum). However, it would be able to start at 65 % capacity in year one. With the 5% annual increase in capacity, the project would be able to attain the maximum capacity of 95% in year 10.
Geographical Potential of Meat Business in Pakistan
The location of the shop recommended in this pre-feasibility is in a commercial market of middle or upper middle-income group residential area. For example in Lahore, localities such as Model Town, Defence, Cavalry, Gulberg, Johar Town, Garden Town, WAPDA Town, Faisal Town etc. may be considered for setting up a meat shop. Similarly any major city of Pakistan including Peshawar, Rawalpindi, Quetta, Karachi and Faisalabad with similar demography is suitable for this business.
The target market is middle and upper middle-income group households, specifically health conscious individuals, who are particular about purchasing processed meat from hygienic shops.