4 Moons Pizzeria
Financial Plan
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.
7.1 Start-up Funding
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).
Start-up Funding | |
Start-up Expenses to Fund | $266,207 |
Start-up Assets to Fund | $238,793 |
Total Funding Required | $505,000 |
Assets | |
Non-cash Assets from Start-up | $151,507 |
Cash Requirements from Start-up | $87,286 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $87,286 |
Total Assets | $238,793 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $345,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $345,000 |
Capital | |
Planned Investment | |
Solutrian, Steve and Diane | $75,000 |
Mittani, Rikard and Carol | $75,000 |
Additional Investment Requirement | $10,000 |
Total Planned Investment | $160,000 |
Loss at Start-up (Start-up Expenses) | ($266,207) |
Total Capital | ($106,207) |
Total Capital and Liabilities | $238,793 |
Total Funding | $505,000 |
7.2 Important Assumptions
We are projecting profit based on the performance of other franchises and our own judgement based on the following:
- We assume by using marketing strategies, sales strategies, good customer relationships, fresh food, and good management practices, we will succeed.
- In order to meet the sales goal in the first year, open for at least 360 days, we would have to sell 111 checks each day with a $17 per check average.
- Our sales each day should reach an minimum average of $1,881.43.
- Our forecast is based on an average. Some months will increase and others decrease. We do not predict any major decreases in sales, as Ohno area restaurants are busy all year round.
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 | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
7.3 Break-even Analysis
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.

Break-even Analysis | |
Monthly Revenue Break-even | $22,254 |
Assumptions: | |
Average Percent Variable Cost | 20% |
Estimated Monthly Fixed Cost | $17,804 |
7.4 Projected Profit and Loss
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.




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $677,297 | $717,935 | $761,011 |
Direct Cost of Sales | $135,461 | $143,590 | $152,206 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $135,461 | $143,590 | $152,206 |
Gross Margin | $541,836 | $574,345 | $608,805 |
Gross Margin % | 80.00% | 80.00% | 80.00% |
Expenses | |||
Payroll | $126,738 | $129,228 | $136,982 |
Marketing/Promotion | $0 | $0 | $0 |
Depreciation | $30,000 | $30,000 | $30,000 |
Rent | $50,904 | $50,904 | $52,431 |
Royalty fees | $0 | $0 | $0 |
Equip rent/repair | $3,000 | $5,400 | $5,400 |
Utilities | $0 | $0 | $0 |
Admin charges | $3,000 | $3,000 | $3,000 |
Total Operating Expenses | $213,642 | $218,532 | $227,813 |
Profit Before Interest and Taxes | $328,194 | $355,813 | $380,992 |
EBITDA | $358,194 | $385,813 | $410,992 |
Interest Expense | $23,367 | $21,648 | $19,738 |
Taxes Incurred | $91,448 | $100,249 | $108,376 |
Net Profit | $213,378 | $233,915 | $252,878 |
Net Profit/Sales | 31.50% | 32.58% | 33.23% |
7.5 Projected Cash Flow
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.

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $677,297 | $717,935 | $761,011 |
Subtotal Cash from Operations | $677,297 | $717,935 | $761,011 |
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 | $677,297 | $717,935 | $761,011 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $126,738 | $129,228 | $136,982 |
Bill Payments | $276,887 | $324,767 | $340,189 |
Subtotal Spent on Operations | $403,625 | $453,995 | $477,171 |
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 | $22,576 | $26,332 | $28,237 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $426,201 | $480,327 | $505,408 |
Net Cash Flow | $251,096 | $237,608 | $255,603 |
Cash Balance | $338,382 | $575,990 | $831,592 |
7.6 Projected Balance Sheet
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.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $338,382 | $575,990 | $831,592 |
Inventory | $6,044 | $6,407 | $6,791 |
Other Current Assets | $41,775 | $41,775 | $41,775 |
Total Current Assets | $386,201 | $624,171 | $880,159 |
Long-term Assets | |||
Long-term Assets | $99,732 | $99,732 | $99,732 |
Accumulated Depreciation | $30,000 | $60,000 | $90,000 |
Total Long-term Assets | $69,732 | $39,732 | $9,732 |
Total Assets | $455,933 | $663,903 | $889,891 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $26,338 | $26,725 | $28,071 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $26,338 | $26,725 | $28,071 |
Long-term Liabilities | $322,424 | $296,092 | $267,855 |
Total Liabilities | $348,762 | $322,817 | $295,926 |
Paid-in Capital | $160,000 | $160,000 | $160,000 |
Retained Earnings | ($266,207) | ($52,829) | $181,086 |
Earnings | $213,378 | $233,915 | $252,878 |
Total Capital | $107,171 | $341,086 | $593,964 |
Total Liabilities and Capital | $455,933 | $663,903 | $889,891 |
Net Worth | $107,171 | $341,086 | $593,964 |
7.7 Business Ratios
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.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 6.00% | 6.00% | 5.24% |
Percent of Total Assets | ||||
Inventory | 1.33% | 0.97% | 0.76% | 4.34% |
Other Current Assets | 9.16% | 6.29% | 4.69% | 35.11% |
Total Current Assets | 84.71% | 94.02% | 98.91% | 43.74% |
Long-term Assets | 15.29% | 5.98% | 1.09% | 56.26% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 5.78% | 4.03% | 3.15% | 18.93% |
Long-term Liabilities | 70.72% | 44.60% | 30.10% | 25.48% |
Total Liabilities | 76.49% | 48.62% | 33.25% | 44.41% |
Net Worth | 23.51% | 51.38% | 66.75% | 55.59% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 80.00% | 80.00% | 80.00% | 61.91% |
Selling, General & Administrative Expenses | 48.50% | 47.42% | 46.77% | 39.08% |
Advertising Expenses | 4.43% | 0.00% | 0.00% | 2.55% |
Profit Before Interest and Taxes | 48.46% | 49.56% | 50.06% | 1.38% |
Main Ratios | ||||
Current | 14.66 | 23.36 | 31.35 | 1.14 |
Quick | 14.43 | 23.12 | 31.11 | 0.79 |
Total Debt to Total Assets | 76.49% | 48.62% | 33.25% | 49.97% |
Pre-tax Return on Net Worth | 284.43% | 97.97% | 60.82% | 3.97% |
Pre-tax Return on Assets | 66.86% | 50.33% | 40.60% | 7.93% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 31.50% | 32.58% | 33.23% | n.a |
Return on Equity | 199.10% | 68.58% | 42.57% | n.a |
Activity Ratios | ||||
Inventory Turnover | 23.52 | 23.07 | 23.07 | n.a |
Accounts Payable Turnover | 11.51 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 30 | 29 | n.a |
Total Asset Turnover | 1.49 | 1.08 | 0.86 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 3.25 | 0.95 | 0.50 | n.a |
Current Liab. to Liab. | 0.08 | 0.08 | 0.09 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $359,863 | $597,446 | $852,087 | n.a |
Interest Coverage | 14.04 | 16.44 | 19.30 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.67 | 0.92 | 1.17 | n.a |
Current Debt/Total Assets | 6% | 4% | 3% | n.a |
Acid Test | 14.43 | 23.12 | 31.11 | n.a |
Sales/Net Worth | 6.32 | 2.10 | 1.28 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |