It is key to our financial success to grow Rutabaga Sweets not just as a dessert bar, but as a company. We are looking for an investment of $300,000 seed money with the hopes of eventually selling an established chain of dessert bars or establishing our company as a gourmet franchise. This means we must always be reinvesting in the future of Rutabaga Sweets.
The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:
For our break-even analysis, we assume running costs including our full payroll, rent, and utilities, and an estimation of other running costs. Payroll alone, at our present run rate, is only about $4,000.
Margins are harder to assume that far in the future.
An important assumption when calculating our P&L is the increase in sales from year to year. We are basing our assumptions on the financial success of Finale Dessertery in Boston, Massachusetts. They reported a 50% increase in sales the second year of business followed by a 30% increase the next year. We feel Rutabaga Sweets can match, if not beat those sales, considering the National Restaurant Association's analysis of the Bureau of Labor Statistics Consumer Expenditure Survey states that Washington DC households spend the most at restaurants per year.
It is also vital that we hold our food cost at 20% and 15% respectively for dine-in desserts and POP, carry-out and weekly lessons. That will assure our gross margin remains high.
Being a quick-service oriented business, our cash flow depends on sales assumptions. It is critical to keep our food cost low. We also need to be careful to balance slow (non-holiday) months with busy months with big holidays such as Christmas, Valentine's Day and Mother's Day.
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 objectives. We realize we've projected aggressively, but are confident the location we've chosen for Rutabaga Sweets, as well as the dessert bar concept itself , will be very successful.
At this point we haven't included any assets or depreciation in our calculations. Whether we purchase new or used kitchen equipment will determine those numbers at a later date.