The Lowland Heights Roadhouse expects business to grow steadily until we are at an average of over 60% capacity for the year 2004 with a conservative capacity rate of 50% expected at times. The year 2005 we expect business to grow steadily until we are at an average of over 90% capacity. We will be growing slowly with profits growing at a rate of about 10%. Expenses will be well managed, allowing Lowland Heights Roadhouse to make a profit even if the capacity rate drops as low as 50%.
We estimate average monthly fixed costs shown below. Peak and off-season will have significant impact on the monthly earnings. For the first year, on-season revenues will offset off-season losses. As Lowland Heights Roadhouse builds its market position among the local patrons, we anticipate that off-season revenues will be enough to break even during that season. Further, a rate increase may be considered in Fiscal Year 2005.
Below is the Lowland Heights Roadhouse projected income statement for the next three years. As mentioned above, earnings are subject to seasonal fluctuations. The new owners will, however, strengthen the Lowland Heights Roadhouse's market position among the local communities who will patronize the establishment during the low season, and thus offset the negative impact of the season.
The Cash Flow projections are outlined below. Again, these projections are based on our basic assumptions with revenue generation factors carrying the most significant weight regarding the outcome. We are anticipating that we will not need to invest any additional capital into the business with a healthy cash flow in place.
The following is a projected Balance Sheet showing sufficient growth and a very acceptable financial position.
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7011, Hotels and Motels, are shown for comparison.