7.0 Financial Plan
The following sections outline our financial plan:
- Required Cost of Start-Up
- Profit and Loss
- Cash Flow
- Balance Sheet
- Financial Ratios
- Hourly Labor Costs
- Weekly Sales Projections
7.1 Important Assumptions
- Meal Price range from $8.00 - $15.00
- Average lunch price: 8.79
- Average dinner price: 13.74
- The restaurant is located in the West Roads Shopping Center and is comprised of 3,400 square feet
- The dining room will be comprised of 20 tables with a seating capacity of 86 seats and 40 available parking spaces to meet the needs of the customers.
- The restaurant will employ 19 employees
- $860,000 -1,200,000 revenue target; Industry average for casual restaurant average of $860,000.
- Annual 3% increase for inflation and 5% annual increase in revenues
- Year 2 Assumes Catering Business in Place. Assumes 4 parties monthly @ $15 per plate and $50 persons. Catering will escalate to 8 parties monthly in month 20 and then 10 parties monthly thereafter. Also assumes additional increase in staffing (4 persons to be hired at 6 hours @ $8.00 per hour.
7.2 Start-Up Costs
Total start up costs will be $363,000, $174,000 of which will be contributed by the owners and the remainder will be secured through a proposed bank loan.
Table 7.2 Start-Up Costs
7.3 Source and Use of Funds
Total start-up costs are estimated to be $363,000. The majority of the costs are associated with the restaurant equipment, inventory and furniture and furnishings for the dining room. Total costs for these items are reported to be $110,500. The costs are associated with build out and renovation of the restaurant to provide updated plumbing and creating additional space in the dining area by removing a non-supporting wall: $50,000. Additional start up expenses are in the form of working capital and contingency $182,500.
Jeff and Betty Wright will contribute $174, 000 and are requesting an additional $189,000 in the form of a bank loan. The loan is expected to be a fully amortizing 5 year term note secured by UCC filings on all furniture fixtures and equipment.
Table 7.3 Source and Use of Funds
7.4 Break-Even Analysis
Total fixed costs associated with the restaurant are $669,186 and represent the annual expenses. The variable cost (overhead) is estimated to be $4.51 per meal. Based on the assumption of $11.37 as the average meal price, the breakeven revenue then is $1,108,970 or 97,535 meals (units). This is further depicted in the Table Below and the Graph that follow:
Table 7-4 Break-Even Analysis
7.5.1 Projected Profit and Loss
The profit and loss demonstrates modest increases in revenues over the three expected years with adjustments for inflation.
Table 7.5.1 Pro Forma Profit and Loss
7.5.2 Projected Cash Flow
The statement of cash flow shows the incoming and outgoing cash of the business.
Table 7.5.2 Pro Forma Cash Flow
7.5.3 Projected Balance Sheet
Table 7.5.3 Pro Forma Balance Sheet
7.6 Business Ratios
Table 7.6 Ratio Analysis
7.7 Hourly Labor Schedule
7.8 Weekly Sales Projections
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