Our main concerns will be aggressive time management to keep labor costs under control. Proper purchasing, food preparation and handling, and control of cheese consumption to keep food costs down. Growth will be sustained through increased sales.
Our start-up figures are approximate costs for start-up of a 4 Moons Pizzeria franchise as prescribed by the Franchisor.
4 Moons has $160,000 initial investment, $25,000 of which will cover the franchise fee.
Our estimated start up is $505,000. We are seeking an SBA Loan in the amount of $345,000 (see Long term liability line).
We are projecting profit based on the performance of other franchises and our own judgement based on the following:
Break-even based on fixed costs including rent, insurance, maintenance, investor note, and pre-opening amortization. Additionally, controllables such as service labor, kitchen labor, management labor, excess rent, advertising, royalty, and legal/professional fees are included.
As the Profit and Loss table shows, the company expects to continue its steady growth in profitability over the next three years. We predicted a conservative 6% per year increase in sales.
The first month may have higher payroll due to employee training and restaurant set up.
Our operating expenses include rent at $4,242 estimate per month, royalty fees of 5% of gross sales, equipment rental and repair, utilities projected at 11% of gross sales, administrative charges including PC charges, cleaning supplies, payroll charges, and office supplies.
Marketing fees are 4% of gross sales per month.
The cash flow depends on assumptions for good daily operational management, good traffic counts in the restaurant, inventory turnover, payment days, and accounts receivable management. We do not predict any new financing until we open our second franchise.
Principal amounts are based on a loan of $345,000 with a 10 year SBA Loan at 7% interest.
The balance sheet is quite solid. We do not project any real trouble meeting our debt obligations--as long as we can achieve our specific sales objectives.
The company's projected business ratios are provided in the following table. The final column, Industry Profile, shows ratios for the "Pizza Restaurant Industry", as determined by the Standard Industry Classification 5812.0600 with annual sales of $500,000 to $999,000.