BHM 329

Entrepreneurship for Hospitality

TU BHM · Semester 8 · Recent BHM syllabus series

Requirement
elective
Credits
3
Past papers
1 papers

Past exam papers

Complete papers are arranged by official model question paper.

Dean's Office Official Model Question Paper

Report problem

Tribhuvan University

Faculty of Management

Office of the Dean

Official Model Question Paper / Dean's Office Blueprint

Course: BHM 329 · Entrepreneurship for Hospitality

Level: Bachelor of Hotel Management (BHM) · Semester 8

Full Marks: 60

Time: 3 hrs.

Candidates are required to give their answers in their own words as far as practicable. Figures in the margin indicate full marks.

Group A

Brief Answer Questions. Attempt ALL questions. (5 × 2 = 10)

[5*2=10]

  1. What is an artisan bakery or boutique restaurant startup?

    [2]
    View model solution

    Boutique Hospitality Startup

    A specialized, independent hospitality venture focusing on handcrafted, high-quality, distinctive culinary offerings and intimate guest experiences rather than mass-market volume.

  2. Define ‘Value Proposition’ for a hospitality startup.

    [2]
    View model solution

    Value Proposition

    A concise statement articulating the unique bundle of benefits, emotional comfort, and functional solutions a hotel or restaurant delivers to solve customer pain points better than competitors.

  3. What is a franchise royalty fee?

    [2]
    View model solution

    Franchise Royalty Fee

    An ongoing periodic payment (typically 4% to 8% of monthly gross sales) paid by the franchisee to the franchisor for the continuous right to use the brand name, operating systems, and marketing support.

  4. State two sources of seed funding for a hospitality venture in Nepal.

    [2]
    View model solution

    Sources of Seed Funding

    1. Personal savings and capital from friends and family (bootstrapping).
    2. Local angel investor networks and concessional SME bank loans.

  5. What is prime cost in a restaurant startup?

    [2]
    View model solution

    Prime Cost in Restaurants

    The combined sum of Total Cost of Goods Sold (Food & Beverage Cost) plus Total Labor Cost (wages, taxes, benefits). Standard target in well-managed restaurants is below 60% of sales.

Group B

Descriptive Answer Questions. Attempt any THREE questions. (3 × 10 = 30)

[3*10=30]

  1. Explain the step-by-step process of preparing a comprehensive Feasibility Analysis for establishing a 40-seat specialty rooftop café in Jhamsikhel, Lalitpur.

    [10]
    View model solution

    Feasibility Analysis for a Specialty Rooftop Café

    1. Product / Service Concept Feasibility: Defining specialty artisan coffee, sourdough toasts, and sunset mocktails; testing menu appeal with sample tastings.
    2. Industry & Target Market Feasibility: Assessing catchment demographics (diplomats, expat workers, young professionals) and evaluating competitor footfalls in Jhamsikhel.
    3. Organizational & Technical Feasibility: Securing building rooftop structural stability clearances, water storage, elevator access, and commercial espresso equipment suppliers.
    4. Financial Feasibility: Projecting initial CapEx (interior decor, bar counter, kitchen machinery) against expected daily covers (average check: Rs 850; breakeven at 45 covers/day).

  2. Compare the advantages and risks of launching an independent hospitality venture versus purchasing an established international franchise (e.g., KFC, Subway, Marrybrown) in Nepal.

    [10]
    View model solution

    Independent Venture vs. Franchise Startup

    Dimension Independent Startup International Franchise
    Brand Awareness Zero initial brand awareness; requires heavy marketing. Instant global brand recognition and customer trust.
    Operational Autonomy Total creative freedom over menu, design, and pricing. Highly restricted; must strictly follow rigid corporate guidelines.
    Startup Capital Moderate; can be scaled incrementally. Very high initial franchise fees and mandatory equipment imports.
    Ongoing Fees Zero royalties; all net profits retained. Recurring 4–8% royalty and 2–4% global advertising levies.
    Survival Rate Higher risk of early failure. Statistically lower failure rate due to proven operational playbook.

  3. Explain Menu Engineering and Menu Design for a startup restaurant. How does psychology (eye-scanning patterns, decoy pricing, typography) influence guest spending?

    [10]
    View model solution

    Menu Engineering and Psychology in Restaurant Startups

    1. The Golden Triangle: Diners’ eyes naturally gravitate first to the middle of the page, then to the top right corner, and finally to the top left. High-margin signature dishes (‘Stars’) should be placed in the top right quadrant.
    2. Decoy Pricing: Placing a very expensive premium steak (e.g., Rs 2,500) at the top of the menu makes a high-margin Rs 1,400 burger appear reasonable and attractive by comparison.
    3. Removing Currency Signs: Removing raw ‘Rs.’ or ‘$’ signs (writing ‘650’ instead of ‘Rs. 650’) reduces the psychological pain of paying.
    4. Descriptive Storytelling: Utilizing sensory, origin-based descriptions (‘Hand-pulled Jumla walnut noodles’) increases perceived value and willingness to pay by up to 27%.

  4. Explain the key legal, licensing, and environmental compliance steps required to establish and register a food and beverage hospitality enterprise in Nepal.

    [10]
    View model solution

    Regulatory Roadmap for Hospitality Startups in Nepal

    1. Company Registration: Registering Private Limited entity with the Office of the Company Registrar (OCR).
    2. Tax Registration: Obtaining Permanent Account Number (PAN) and Value Added Tax (VAT) certificate from the Inland Revenue Department (IRD).
    3. Local Municipal Business Registration: Obtaining local operating business permit from the respective Ward Office and Municipality.
    4. Food Safety & Quality Licensing: Securing commercial food processing and hygiene clearances from the Department of Food Technology and Quality Control (DFTQC).
    5. Liquor License: Obtaining an excise license from the Inland Revenue Office for retail alcoholic beverage sales.
    6. Fire Safety & Waste Management Compliance: Installing certified fire extinguishers and grease traps for wastewater disposal.

Group C

Comprehensive Answer / Case Analysis Question. (1 × 20 = 20)

[1*20=20]

  1. Case Study: Scaling ‘Himalayan Bean Roasters’ from Specialty Coffee Shop to Franchise Chain

    Three years ago, an entrepreneur established ‘Himalayan Bean Roasters’, a 25-seat specialty third-wave coffee shop in Patan focusing on 100% organic single-origin Arabica coffee sourced from Nuwakot and Gulmi. The outlet generates NPR 1,200,000 in monthly sales with an exceptional 24% net profit margin. Encouraged by strong brand loyalty, the founder wants to scale by opening 8 franchised coffee shops across Pokhara, Chitwan, Butwal, and Dharan.

    However, the founder faces strategic dilemmas:

    • How to standardize coffee quality and latte art consistency across remote franchisee locations.
    • How to protect proprietary roasting profiles and wholesale bean supply.
    • How to structure the Franchise Agreement and royalty framework.

    As Franchise Strategy Consultant: a. Formulate the Franchise Business Model (Upfront franchise fee, ongoing royalty %, marketing fund contribution, and territory rights). b. Design the Quality Control and Supply Chain Blueprint ensuring 100% coffee bean and milk consistency. c. Create a Franchisee Recruitment and Selection Profile. d. Develop a 2-Year Expansion Roadmap outlining milestones and risk mitigation.

    [20]
    View model solution

    Comprehensive Franchise Scaling Blueprint: Himalayan Bean Roasters

    a. Franchise Financial Model

    • Initial Franchise Fee: NPR 800,000 per outlet (covers brand license, initial 3-week barista training, and architectural design blueprints).
    • Monthly Royalty Fee: 6% of monthly gross sales.
    • National Marketing Fund (NMF): 2% of gross sales pooled into central digital marketing campaigns.
    • Territory Exclusivity: Guaranteed 2 km exclusive geographic radius per franchisee.

    b. Quality Control & Supply Chain Integrity

    1. Centralized Roasting & Packaging: All green coffee beans are roasted exclusively at the Patan commissary roastery and shipped in nitrogen-flushed, valve-sealed bags to franchisees. Franchisees are legally bound to buy beans exclusively from the parent company.
    2. Mandatory Equipment Standardization: Mandate dual-boiler commercial espresso machines (e.g., La Marzocco or Nuova Simonelli) with automated water filtration systems to guarantee identical water mineral composition.
    3. Quarterly Mystery Shopper Audits: Unannounced audits evaluating espresso extraction time (25–30 sec), milk micro-foam temperature (60°C–65°C), and customer hospitality scores.

    c. Ideal Franchisee Profile

    • Hands-on owner-operators passionate about coffee culture rather than passive financial investors.
    • Minimum net worth of NPR 5 million with NPR 2.5 million liquid capital.
    • Willingness to undergo 3 weeks of mandatory full-time barista certification at the flagship store.

    d. 2-Year Expansion Roadmap

    • Months 1–6: Open 2 company-owned pilot branches in Pokhara (Lakeside) to stress-test supply chains outside Kathmandu.
    • Months 7–12: Award first 3 franchise licenses in Chitwan (Bharatpur) and Butwal; deploy regional quality auditor.
    • Months 13–24: Expand into Eastern Nepal (Dharan, Biratnagar); establish centralized digital inventory ordering software.