The following topics and tables outline our financial plan. We plan to turn a significant profit, but we will structure the business so as to maintain a healthy cash flow.
The financial plan depends upon 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 which include our full payroll, rent, and utilities, and an estimation of other running costs.
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 given time the restaurant will develop its customer base and name, and the growth will pick up more rapidly towards the fourth and fifth years of business. The increase in gross margin will be due to a slow increase in sales prices and an increase in customer base, which is critical.
Month-by-month assumptions for profit and loss are included in the appendix.
The cash flow depends on assumptions for inventory turnover, payment days, and accounts receivable management. Our projected same-day collection is critical, and also reasonable and expected in the restaurant industry. We don't expect to need that much continued support even when we reach the less profitable months, as they are expected.
The projected Balance Sheet is quite solid. We do not project any real trouble meeting our debt obligations, as long as we can achieve our specific goals.
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5812, Eating places, are shown for comparison.