A business that you own is a dream of many individuals, but very few actually work hard to accomplish it. The initial struggle involved in the start of any venture is exhausting and when that business is of running a restaurant, it becomes all the more challenging.
Any good eatery has to maintain food quality, customer relations, the ambiance and its staff. It’s not an easy job to be par with everything at once. It requires relentless effort from the owner as well as the staff. To look for inspiration you can look at the best restaurants in your city to get a clearer picture of how good restaurants work.
Anyone expecting to open up a new restaurant as their first entrepreneurial adventure must be aware of a few things that will help them in their journey. The basic foundation of a business has to be their budget for the project, and a restaurant start-up is no exception. To map out all the possibilities, your money matters have to be set in place, this will then be your guide to further advancements in the planning of your project. To help you stay within budget, here are a few tips that will let you run the restaurant that you had once dreamt of opening.
Any restaurant hoping to provide its chefs with the best tools would want to buy the best utensils. But this doesn’t always have to be the case. A restaurant’s chef needs are defined by the cuisine it serves. When you have decided on the menu of your restaurant, or the certain types of foods you will be serving there, only then you should choose your equipment. There are a variety of stoves and grills that serve different purposes. If grilled food is not a part of your menu, then don’t opt for a stove with a grill or an oven which you are suspecting your chefs may never use. In order to better understand these choices, consult a chef or someone with sufficient knowledge in cooking food.
Another option available to you is to look for second-hand equipment. Second-hand stuff is relatively cheap and could be bought off from a lot of places. It could be online, or a restaurant that has gone out of business. If the condition of the tools seems good enough to serve the intended purpose without any hindrance, then it is surely a good investment.
An ambiance is a strong point of any restaurant catering to anyone who is looking for something more than just good food. It adds an experience to the diner and has the potential to create a loyal customer. But seeing that you have a budget, you should introduce things to the room little by little. If you really want to decide between the two decorations, then make the decision based on your needs over your wants. It is important that you have a fancy light on the ceiling more than beautiful wallpaper or a plush leather seat. Use tactics on the design of your dining area more than money to make the place look tasteful and interesting.
If you are opening a restaurant that is aiming to produce Haute cuisines, then you may as well put that idea to rest, unless you have the proper resources or a good loan plan. As your student loan payments may have taught you that the loans are not easy to pay, so keep the initial investments lower. Your Food expense is something that you will have to go through daily. Groceries and meat prices can fluctuate, which may work to your advantage or disadvantage accordingly, but the percentage of the profit and loss doesn’t vary significantly here. But if you are serving food items that are costly, then it will definitely affect your monthly budget. Don’t directly choose delicacies which will cost you more than most of your groceries combined. Introduce items that are expensive in the menu later and go for dishes that cost less to prepare in the starting few months of your eatery.
It is a good strategy to make your presence known before you start operations. But one must remember to not go overboard with these promotional tactics. A planned marketing will direct the right type of customers to you. It is always better to use social media to your advantage rather than any other medium to promote your restaurant. It costs less and is more effective than any other medium in existence. With its variety of options to find and serve to your desired niche, you will be able to set a customer base and advertise to them within a short while.
Avoiding any of these can have a bad response to your efforts. Therefore to follow a plan is the best way to have a successful running business. Each part of the tactics is correlated with each other and is set to provide you with the best outcome in a minimal budget. Remember, a good strategy will help you reach the top, not over spending.
Will Europe Even Greenlight DeFi Regulation?
Regulation of the decentralized finance industry is a hot topic today. It appears some regions are more forthcoming on that front than others. Even so, Europe, and by extension, the European Union, have made notable progress, creating an example for other nations to embrace.
The European Union has been on a mission to create a regulatory framework for the cryptocurrency and blockchain industry. The EU acknowledges cryptocurrencies remain a hot trend and can no longer be ignored. However, the impact of new technologies always needs to be evaluated carefully, as bitcoin and other currencies can disrupt the current status quo and usher in a new era of buying, selling, trading, and handling financial assets.
That includes covering all potential threats and risks posed by these cryptocurrencies, including fraud, cyber attacks, market manipulation, and other deceptive practices. By establishing the EU regulatory framework for crypto-assets, the European Commission assesses whether current EU legislation is sufficient to cover cryptocurrencies, if new regulatory measures are needed, and whether new guidelines are even necessary.
It is worth noting this initiative was put in place in early December of 2019. That makes Europe one of the leaders in cryptocurrency regulation or at least attempting to bring more clarity to bitcoin and similar assets. The framework received support from policymakers in Spain, Italy, and Belgium, yielding comments such as “key priority”. However, it is evident EU member states have been waiting on a unified and streamlined approach to addressing the proverbial elephant in the room.
While the initiative above was incorporated in 2021, it took until March 2022 until new developments came to fruition. The European Parliament advanced a regulatory proposal regarding cryptocurrencies. There were initial concerns over this proposal, as it would ban proof-of-work-based cryptocurrencies like bitcoin. Researchers and analysts have expressed concerns over the energy consumption and environmental impact proof-of-work currencies represent, even if the calculations have been refuted repeatedly due to bias and general inaccuracy.
Even so, one cannot deny that proof-of-work currencies require tremendous electricity. Being mindful of that aspect and pushing for broader adoption of renewable energy – initiatives from within the global cryptocurrency community – are underway to help resolve these matters. The European Parliament deemed it fit to remove the ban on proof-of-work currencies. Many consider this a big victory for crypto, although the work is far from done.
The slow and steady approach by the European Union has proven beneficial and forward-thinking. Although things may not progress as quickly as some would like, the Markets In Crypto Assets bill is another key milestone for the industry. After several revisions and delays, the Markets in Crypto Assets (MiCA) proposal was officially adopted in March 2022. Moreover, the proposal will enable a reliable supervisory structure for cryptocurrencies and companies in this industry.
That may not be the final step in the EU’s plans to regulate crypto, though. Other proposals have been rumored, including one that will help address the environmental impact of cryptocurrencies and make them meet the European Green Deal goals. There is no indication of cracking down on crypto mining activities, but a further nudge toward sustainability and renewable electricity sources is not out of the question.
Despite the efforts by the European Union and European Parliament, Europe remains a divided front for cryptocurrencies. On the one hand, there are progressive countries like Malta. Through its initial focus on cryptocurrencies, the company introduced clear income tax guidelines, value-added tax regulations, distinguishing between utility tokens and cryptocurrencies, etc. It has allowed Malta to thrive as a crypto hub in Europe.
On the other hand, regions like the United Kingdom crack down on cryptocurrencies, and in particular, stablecoins. The UK’s FCA is on a divergent regulatory path from Europe, although it aims to license and regulate the industry fully. Those plans will see the UK Treasury regulate stablecoins, which are considered an “immediate risk to traditional payment methods.” The FCA will continue to investigate [unauthorized or unregistered] crypto firms, noting a steep increase in cases since 2021.
The more aggressive approach by UK policymakers seems counterproductive to what the EU is doing. However, officials have confirmed Britain will be “consistent” with the EU’s regulatory policy. It remains unclear how that will play out exactly, but having more building blocks can lead to faster regulation – and legitimization – of cryptocurrencies across Europe.
More fights, battles, and discussions lie ahead for cryptocurrency in Europe and beyond. There are many aspects to consider and tackle, and establishing a unified framework will not be easy. However, proposals like MiCA show it can be done, even if some European countries continue to follow their own path for extra rules and safeguards.
Going beyond the current approaches by EU-level regulators and policymakers, there is a growing demand for a regulatory framework from within the cryptocurrency industry. Rather than waiting on the powers-that-be to make decisions, projects like Phree establish a new frontier. The team works with new and existing decentralized finance (DeFi) protocols to build compliant environments and ecosystems.
However, the team works in the opposite direction too. It is a way for traditional finance organizations to build DeFi solutions that are regulatory compliant. One may label this as “reverse decentralization,” yet the approach has tremendous merit. Decentralized finance can only grow by attracting mainstream liquidity, developers, users, products, and services. Bridging the gap between traditional and decentralized finance through a bi-directional approach is a big step forward for the industry.
Establishing such a foundation for DeFi and TradFi organizations would not be possible without collaborative efforts. There’s approach involves working with the Swiss government – Switzerland is another forward-thinking region regarding crypto and blockchain, like Malta – and traditional banks and risk management firms. Moreover, its approach paves the way for an open and regulated environment that requires minimal or no further intervention from EU-level regulators later on.
As these regulation-oriented discussions rag eon, the industry continues to innovate and push the boundaries. Web3 technology is the next frontier to conquer. It borrows elements from decentralized finance but goes much further to put consumers in control and remove all intermediaries from the equation. That poses a challenge to banks and other organizations and will require a radical shift in thinking by current policymakers.
Moreover, Web3 technology is all around us. The financial aspect represents one of the many facets associated with this technology. It tackles many aspects of daily life, including commerce, advertising, social activities, etc. Moreover, it has proven to establish new revenue streams, including play-to-earn gaming, move-to-earn mechanics, and whatever else the future may hold.
That said, there is still a need for KYC and AML solutions, risk management, addressing systematic fraud, price manipulation, and more. These are all existing concepts that need to be transformed into modern implementations to accommodate cryptocurrencies, blockchain, and Web3. Regulators will have their work cut out to make it so, and further progress – both in the EU and globally – will need to materialize over the coming years.
The Flawed Fabric of Pakistan’s Economic Policymaking
Finally, the fiscal year ended after a tortuous ride from rate hikes to regime change to near-bankruptcy. Even the end node of this chapter was a bang of inflation. According to the data released by the Pakistan Bureau of Statistics (PBS), the Consumer Price Index (CPI) measured inflation breached through a 14-year ceiling – stricking at 21.3% in June – sailing on the back of subsidy withdrawals, petroleum levies, high energy tariffs, and basically, everything demanded by the IMF. Two days earlier, the Finance Ministry forecasted the June inflation to range between 14.5-15.5%. The jump in the CPI of June (over May) was 6.3% – the highest monthly rise in the history of Pakistan. Typically, the central banks intervene to harness the inflationary pressures as such. However, the State Bank of Pakistan (SBP) has already been tightening the screws since September, cumulatively raising the policy rate by 675 basis points. Still, inflation is far from even remotely under control. One should wonder if the SBP has actually lost the ability to regulate prices and correct external imbalances?
The straightforward answer is no; the SBP is still in control. For instance, study the currency valuation in the global forex market. Despite a modest recovery in the rupee in the past few weeks, it has rapidly shed value against the greenback. However, the deterioration is in tandem with the global inflationary outlook and reactionary policies enacted by the major economies. The hawkish tune adopted by the US Federal Reserve is the key to understanding this dynamic. The fed has been aggressively hiking the policy rate since late March – cumulatively raising the short-term rate by 150 basis points in three months. The increment of 75 basis points last month was the most aggressive rate hike since 1994. As similar rate increases are expected throughout the second half this year, other currencies (primarily belonging to developing or frontier markets) are rapidly losing value against the US dollar. The Japanese yen, for instance, is down to record low levels against the greenback despite being the monetary unit of the world’s third-largest economy. Thus, the deterioration in the Pakistani rupee (and resulting inflation) is not entirely due to the inefficacy of our national monetary policies.
The depreciation effect in the rupee is exacerbating due to high global commodity prices influenced by the Russian invasion of Ukraine. The subsequent western sanctions have skyrocketed the global energy prices that have even flared the US inflationary pressures to the highest point since the 1970s. Pakistan has faced the brunt through excessive dollar outflows for imports of expensive petroleum products, premium RLNG cargoes, and inflated staple commodities. In the outgoing fiscal year, the import bill loomed around the historically-high figure of $65 billion against mediocre export receipts. About one-fourth of the import bill anchors to imports of crude and petroleum derivatives from the international market. As a result, the trade deficit skewed over $48 billion; the current account deficit breached the budgetary target to settle at around $16 billion (over 4% of GDP). This economic hodgepodge slumped the rupee by record 30% in the outgoing fiscal year. And despite transient recoveries, the currency is projected to further deteriorate by an average of 5-6% in the FY22-23.
The war in Ukraine is grinding, seemingly unending. The resulting economic outlook is bleak – not just for Pakistan but the rest of the world. The curiosity should pique then, and one should question: how should Pakistan cruise through this strenuous period? There is no simple answer but to persevere. However, subtle hints of control are discernible in the latest auction of sovereign debt securities by the government of Pakistan. The recent auction of T-bills reveals cues regarding the perception of the SBP. The government raised Rs 1.732 trillion (against a target of Rs 800 billion) by auctioning the three-month T-bills at a cut-off yield of 15.23% – slightly lower than the 11-year high yield of 15.25% in the mid-June auction. The modest fall of two basis points was due to the unconventional liquidity injection earlier by the SBP of Rs 491.7 billion to the commercial banks via a 77-day long Open Market Operation (OMO) at a rate of 13.85%. It was the most enduring OMO in the history of Pakistan, perhaps aimed to narrow the gap between the policy rate and the cut-off yields as the preceding 63-day OMOs failed to cool down the commercial lending rates. Thus, the SBP was trying to signal that the policy rate has peaked i.e. the current rate of 13.75% is apt to maintain economic stability without destroying business confidence.
Ultimately, I believe the gap is still broader than the traditional variance – between T-bill yields and the policy rate – of under 100 basis points. Therefore, I expect a modest rate hike of 50 basis points when the Monetary Policy Committee (MPC) convenes on 7th July. I hope for clear cues, fact-based reassurances of economic stability, and a workable roadmap toward an expansionary schedule. There is no doubt that the regional high policy rate is harming the export sector. However, a ban on certain imports and the new super tax introduced on virtually every business sector is more damaging to the welfare of Pakistan’s economy. Thus, we should question the fiscal policies of Pakistan alongside the monetary decisions of the SBP. While the SBP tightens the screws, the federal cabinet should devise complementary frameworks instead of countering the effect to bag an electoral agenda. Banning imports when exports are contingent on imported goods is blasphemy of economic principles. Overtaxing businesses when the lending rates are spiraling sky-high is murdering national financial viability and stability. And obsequiously bowing down to every condition laid out by the IMF without any regard for public tolerance is quite simply bad governance. Hence, we may somehow survive this road to a global recession. However, without a structured (and balanced) approach to economic policymaking, I’m afraid we are paving our very own path toward eventual doom.
An Assessment on China’s Inflation Trend and Outlook
In the quarterly meeting of its monetary policy committee, the People’s Bank of China (PBoC) repeatedly mentioned price stabilization in its policy statement. The trend of inflation in China is not only becoming a restrictive factor for monetary policy to support stable growth, but has also increasing impacted its economic recovery. This has also aroused worry in the market that with changes in the international situation, inflation will exceed the central bank’s 3% policy target, which could trigger passive adjustments in the policy or even hyperinflation in extreme cases.
Despite the spike in global inflation levels, inflation in China has remained relatively stable in recent years without significant fluctuations. Yet, as the international situation changes, what will happen to inflation in China? Will there be a situation of high inflation as in developed countries? As this is not only related to the process of economic recovery in the second half of the year, but also to the direction of future macro policy adjustments, it has been an issue of concern for the country’s policymakers.
When it comes to the issue of global inflation, researchers at ANBOUND have noted that high inflation in developed countries such as the United States and Europe may cause short-term outbreaks of aggregate demand under the post-pandemic monetary stimulus. In addition, there is also an imbalance in energy sources brought about by rising geopolitical risks. Factors like the restructuring of supply and demand during the pandemic and carbon reduction development policies have also brought long-term effects. Such circumstances would mean that economies with high dependence on energy and with heavy service industries have to face the threat of high inflation. Inflation in the United States was 8.6% in May, while the United Kingdom saw a record high of 9%, and the latest data showed that the inflation level in the eurozone reached 8.6% in June. There is the risk that the inflation problem is getting out of control, which forces major central banks in Europe and the United States to adopt tightening policies like raising interest rates and shrinking balance sheets to deal with the risks brought by inflation at the expense of economic slowdown or recession.
Price Changes in China and in the United States
Source: Eastmoney.com, chart plotted by ANBOUND
Although China’s inflation did increase in the second quarter, the moderate rise in inflation did not form a fundamental constraint on the country’s economic development and monetary policy. This is mainly because its economic cycle is different from that of Europe and the United States. While China is also affected by external factors, the lack of domestic demand in the economy is still the main reason for changes in inflation. At the same time, the COVID-19 outbreaks in developed areas of the country in the first quarter of this year have had a great impact on China’s production and life, while the recovery of consumer and service demands has not seen a retaliatory rebound. Therefore, the recovery of demand as a whole requires a certain process. In the case of insufficient effective demand, it would be difficult for domestic inflation to change rapidly.
When it comes to the aspect of supply, it should be pointed out that China’s policies have placed a lot of emphasis on energy security and bulk commodities. This has essentially guaranteed the supply of resources, thus avoiding the occurrence of hyperinflation caused by externally imported inflation. As far as the domestic industry is concerned, China itself has a relatively complete industrial chain and supply system, which has also minimized the disturbance to production and supply caused by uncertain factors brought about by the adjustment of the global supply and industrial chains. On the one hand, through the monopoly of state-owned enterprises in industrial upstream, China has basically maintained the crude oil import channel even under the circumstance of crude oil price fluctuations. On the other hand, the coal-electricity linkage is used to maintain the stability of the electricity price of enterprises as much as possible. Although a large number of power generation enterprises have suffered losses, and there has also been the issue of “power cuts” in some places, the overall electricity price is still in a stable state. This greatly alleviates the impact of energy price fluctuations on business production.
Due to fluctuations in international energy and commodity prices, the increase in production prices as a “global factor” has continued for quite some time for China. The country’s PPI level will remain high for a long time from 2021. However, the widening of the scissors gap between PPI and CPI has not resulted in a short-term sharp increase in final consumer prices. Thanks to the continuous improvement of the production efficiency of enterprises, some of the pressure of rising costs has been absorbed. Meanwhile, in most traditional fields, under the situation of overcapacity, flexible production buffers the pressure of rising upstream prices, accelerates industrial integration, and passively achieves “de-capacity”.
In the iron and steel industry, where the problem of overcapacity is more prominent, since the outbreak of the pandemic, the price of crude steel products has not fluctuated much. At the same time, some leading enterprises are also accelerating the integration, which has alleviated the impact of fluctuations in energy prices and iron ore prices on the industry. This, in turn, has also eased the cost pressure on downstream enterprises. All these factors signify that the commodity price is continuously digested through the industrial chain, and finally, the terminal price is protected from the upstream influence.
In addition, the PBoC has always emphasized a “prudent” monetary policy, adhered to the policy of matching the growth rate of money and social financing scale with nominal GDP, and not over-issuing money. This in effect keeps the domestic money supply stable, which is the main factor for the basic stability of the RMB exchange rate and the stable domestic short-term price level. There is a clear difference between the environment within China and the international environment, which contributes to the overall stability after the COVID-19 outbreaks ended.
As the PBoC put forward the overall consideration of “stabilizing prices” and “stabilizing employment”, its focus should be on avoiding hyperinflation caused by food, energy, and supply chain constraints. This is especially true when it comes to “imported inflation” brought about by the uncertainties such as increased geopolitical risks and international capital flows. It is worth noting that the price of pork, which is the main component of the CPI, has undergone some changes in the context of the shifts in the pig cycle and the increase in food import prices, which may impact food prices and inflation trends. However, this change is more of a cyclical factor. According to the current situation of production and demand in China, when the industrial chain is complete and the logistics system is stable, it is unlikely that there will be an overall imbalance of supply and demand. This means that domestic inflation may rise moderately as the economy recovers, but there will be no hyperinflation.
Under the current situation, researchers at ANBOUND believe that among the triple pressures of demand contraction, supply shock, and weakening expectations, the main contradiction facing the Chinese economy is still demand contraction. Macro policy adjustments, including monetary policy, still need to focus on “stabilizing growth”. Only by stabilizing aggregate demand can employment issues and structural problems be solved. As far as monetary policy is concerned, it is still necessary for China to maintain a “moderately loose” tone to provide an appropriate monetary environment for economic recovery and stability. Of course, the issue of inflation cannot be completely ignored, but the coordination of other industrial policies and market supervision policies is needed to stabilize the supply chain, sustain a complete domestic production system, and maintain a balance between supply and demand, so as to effectively promote market recovery and sustainable growth.
Final analysis conclusion:
Inflation is not only a problem that major economies have to face, but also a potential risk factor in China’s economic recovery. For now, insufficient domestic effective demand is still the main factor restraining inflation. In the short term, China’s complete industrial chain, stable supply system, as well as its restrained monetary policy will play an important role in alleviating inflation. However, in the medium and long term, with the intensification of the international energy crisis and the surge in global inflationary pressure, the country still needs to be alert to the risk of high inflation.
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