Gabri's Restaurant & Lounge

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Fine Dining Restaurant Business Plan

Financial Plan

$385,000 of funding is needed over the next year for renovations, furniture, kitchen equipment, liquor license, food & restaurant supplies, legal fees, working capital, marketing and personnel.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual figures. The key underlying assumptions are:

  • We assume a slow-growth economy, without major recession.
  • We assume that there are no unforseen changes in the expectancy in the popularity of our restaurant.
  • We assume access to investments and financing are sufficient to maintain and fulfill our financial plan as shown in the tables.
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 0.00% 0.00% 0.00%
Long-term Interest Rate 7.00% 7.00% 7.00%
Tax Rate 34.58% 35.00% 34.58%
Other 0 0 0

8.2 Break-even Analysis

For our Break-Even Analysis, we assume running costs include our full payroll, rent, and utilities, and an estimation of other running costs.
Break-even Analysis
Monthly Revenue Break-even $46,455
Assumptions:
Average Percent Variable Cost 33%
Estimated Monthly Fixed Cost $31,125

8.3 Projected Profit and Loss

The most important assumption in the Projected Profit and Loss statement is the gross margin. Although it doesn't jump drastically in the first year, over time the restaurant will develop it's customer base and reputation and the growth will pick up more rapidly towards the fourth and fifth years of business.

Month-by-month assumptions for profit and loss are included in the appendix.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $943,882 $1,085,465 $1,248,285
Direct Cost of Sales $311,481 $358,203 $411,934
Other $0 $0 $0
Total Cost of Sales $311,481 $358,203 $411,934
Gross Margin $632,401 $727,262 $836,351
Gross Margin % 67.00% 67.00% 67.00%
Expenses
Payroll $236,592 $301,512 $307,512
Sales and Marketing and Other Expenses $55,897 $75,564 $85,291
Depreciation $0 $0 $0
Leased equipment $2,004 $2,004 $2,004
Proffesional fees accounting $2,004 $2,400 $3,000
Proffesional fees legal $2,004 $2,400 $3,000
Licences and permits $996 $1,152 $1,320
Office Supplies $2,004 $3,200 $4,800
Postage $996 $2,300 $3,300
Utilities $20,004 $21,996 $22,992
Insurance $15,000 $18,000 $21,600
Rent $36,000 $36,000 $36,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $373,501 $466,528 $490,819
Profit Before Interest and Taxes $258,900 $260,734 $345,532
EBITDA $258,900 $260,734 $345,532
Interest Expense $13,139 $11,532 $9,747
Taxes Incurred $84,637 $87,220 $116,125
Net Profit $161,123 $161,981 $219,659
Net Profit/Sales 17.07% 14.92% 17.60%

8.4 Projected Cash Flow

The cash flow depends on assumptions for inventory turnover, payment days, and accounts receivable management. Our projected same-day collection is critical, and is reasonable and customary in the restaurant industry. We do not expect to need significant additional support even when we reach the less profitable months, as they are expected.

Month-by-month assumptions for projected cash flow are included in the appendix.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $943,882 $1,085,465 $1,248,285
Subtotal Cash from Operations $943,882 $1,085,465 $1,248,285
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $943,882 $1,085,465 $1,248,285
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $236,592 $301,512 $307,512
Bill Payments $524,954 $592,064 $712,965
Subtotal Spent on Operations $761,546 $893,576 $1,020,477
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $22,950 $24,607 $26,388
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $22,200 $22,200 $27,750
Subtotal Cash Spent $806,696 $940,383 $1,074,615
Net Cash Flow $137,186 $145,082 $173,670
Cash Balance $222,186 $367,268 $540,938

8.5 Projected Balance Sheet

The projected Balance Sheet is quite solid. We do not anticipate difficulty meeting our debt obligations providing that we achieve our specific goals.
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $222,186 $367,268 $540,938
Other Current Assets $0 $0 $0
Total Current Assets $222,186 $367,268 $540,938
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $222,186 $367,268 $540,938
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,213 $51,121 $59,270
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $21,213 $51,121 $59,270
Long-term Liabilities $177,050 $152,443 $126,055
Total Liabilities $198,263 $203,564 $185,325
Paid-in Capital $185,000 $185,000 $185,000
Retained Earnings ($322,200) ($183,277) ($49,046)
Earnings $161,123 $161,981 $219,659
Total Capital $23,923 $163,704 $355,613
Total Liabilities and Capital $222,186 $367,268 $540,938
Net Worth $23,923 $163,704 $355,613

8.6 Business Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 15.00% 15.00% 0.00%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 100.00%
Total Current Assets 100.00% 100.00% 100.00% 100.00%
Long-term Assets 0.00% 0.00% 0.00% 0.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 9.55% 13.92% 10.96% 0.00%
Long-term Liabilities 79.69% 41.51% 23.30% 0.00%
Total Liabilities 89.23% 55.43% 34.26% 0.00%
Net Worth 10.77% 44.57% 65.74% 100.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 67.00% 67.00% 67.00% 0.00%
Selling, General & Administrative Expenses 64.07% 66.34% 63.47% 0.00%
Advertising Expenses 1.98% 2.31% 2.05% 0.00%
Profit Before Interest and Taxes 27.43% 24.02% 27.68% 0.00%
Main Ratios
Current 10.47 7.18 9.13 0.00
Quick 10.47 7.18 9.13 0.00
Total Debt to Total Assets 89.23% 55.43% 34.26% 0.00%
Pre-tax Return on Net Worth 1027.28% 152.23% 94.42% 0.00%
Pre-tax Return on Assets 110.61% 67.85% 62.07% 0.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 17.07% 14.92% 17.60% n.a
Return on Equity 673.50% 98.95% 61.77% n.a
Activity Ratios
Accounts Payable Turnover 25.75 12.17 12.17 n.a
Payment Days 27 21 28 n.a
Total Asset Turnover 4.25 2.96 2.31 n.a
Debt Ratios
Debt to Net Worth 8.29 1.24 0.52 n.a
Current Liab. to Liab. 0.11 0.25 0.32 n.a
Liquidity Ratios
Net Working Capital $200,973 $316,147 $481,668 n.a
Interest Coverage 19.70 22.61 35.45 n.a
Additional Ratios
Assets to Sales 0.24 0.34 0.43 n.a
Current Debt/Total Assets 10% 14% 11% n.a
Acid Test 10.47 7.18 9.13 n.a
Sales/Net Worth 39.45 6.63 3.51 n.a
Dividend Payout 0.14 0.14 0.13 n.a

8.7 Exit Strategy

No one attempts a business anticipating failure, however sometimes ventures do not fulfill their promise. 

We at Gabri's are committed to our concept and its viability. In the event that our venture cannot achieve profitability and retire the encumbrances; we will first attempt to sell the operation and use the proceeds to clear all outstanding balances. If we are unable to sell the operation for sufficient proceeds we will forced to default whereby the SBA loan will be in senior standing. Any further outstanding balances will be borne by the investors on a weighted percentage basis of the total amounts due in bankruptcy proceedings.