Our biggest savings of the year
Fire Fountain Grille
Financial Plan
Our main concerns will be aggressive time management, so that our labor costs stay under control, and proper purchasing, prep and food handling to keep food costs down, as well as managing the higher costs of meats and seafoods. Secondarily, hiring the best grill and broiler cooks, training them properly and retaining them will be a critical component to good meat and seafood costs. A good grill cook does not waste steaks by burning them, nor does he anger customers by undercooking them. He must also be accurate time after time in how he carves his prime rib.
Growth will be sustained through a contribution to an expansion fund, and potential investment from current investors in a “roll-over” plan, and from potential future investors or bank capital.
8.1 Start-up Funding
We are seeking $900,000 (see section 2.2 “Start-up Summary”), and will seek it from one, two, or three investment groups, or under an SEC “Regulation D” equity offering (where the company sells partial ownership in the company – via the sale of stock or a membership unit, to raise capital). We prefer this approach as an early stage company because there is no set repayment schedule or debt service payments – the investors profit when the company profits. Initially, the company is projected as a Limited Partnership, but may switch the preferred structure to a stock “C” Corporation or Limited Liability Corporation “LLC”. The preparation of the investment documents will be handled in a cooperative effort by the legal firms representing each party individually. These documents will include, but are not limited to:
Private Placement Memorandum
The Private Placement Memorandum, or “PPM”, is the document that discloses all pertinent information to the investors about the company, proposed company operations, the transaction structure (whether we are selling equity ownership or raising debt financing from the investors), the terms of the investment (share price, note amounts, maturity dates, etc.), risks the investors may face, etc.
Form D SEC Filing
It notifies the SEC that we are using the Regulation D program and provides them basic information on the company and the offering. It is not an approval document or registration – it is merely a filing that notifies the SEC that we have a Regulation D Offering in place. Raising capital from investors without filing this document with the Federal government could place a company in violation of securities laws.
Subscription Agreement
The Subscription Agreement sets forth the terms and conditions of the investment. It is the “sales contract” for purchasing the securities.
Promissory Note
For a debt offering (if necessary), outlining the terms of any loan arrangement with the investors. The note is the actual “loan document” between the company and the investor.
Start-up Funding | |
Start-up Expenses to Fund | $324,500 |
Start-up Assets to Fund | $645,500 |
Total Funding Required | $970,000 |
Assets | |
Non-cash Assets from Start-up | $65,000 |
Cash Requirements from Start-up | $580,500 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $580,500 |
Total Assets | $645,500 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $50,000 |
Accounts Payable (Outstanding Bills) | $10,000 |
Other Current Liabilities (interest-free) | $10,000 |
Total Liabilities | $70,000 |
Capital | |
Planned Investment | |
Investor Group One | $300,000 |
Investor Group Two | $300,000 |
Investor Group Three | $300,000 |
Investor Contingency | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $900,000 |
Loss at Start-up (Start-up Expenses) | ($324,500) |
Total Capital | $575,500 |
Total Capital and Liabilities | $645,500 |
Total Funding | $970,000 |
8.2 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, payroll taxes, property taxes, excess rent, advertising and legal/professional fees are included.

Break-even Analysis | |
Monthly Revenue Break-even | $64,679 |
Assumptions: | |
Average Percent Variable Cost | 31% |
Estimated Monthly Fixed Cost | $44,890 |
8.3 Projected Profit and Loss
2004 is not a full year on the yearly P&L. Highlights include a bottom line of better than 18% for every year. The numbers reflect realism in the start up and continuing operations of the restaurant. We begin contributing aggressively to an expansion fund in 2005. We begin accruing for vacations immediately, and we are budgeting money from the insurance line for health benefits, all as an early commitment to the future prosperity of our staff. These numbers are an excellent indication that our investors, owners, partners and staff will all prosper and grow with the Fire Fountain Grille!




Pro Forma Profit and Loss | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | $1,297,957 | $2,360,000 | $2,548,800 | $2,752,702 | $2,972,917 |
Direct Cost of Sales | $397,121 | $732,671 | $789,990 | $853,198 | $921,455 |
Production Payroll | $100,140 | $171,576 | $174,980 | $178,503 | $182,578 |
Other Costs of Goods | $0 | $0 | $0 | $0 | $0 |
Total Cost of Sales | $497,261 | $904,247 | $964,970 | $1,031,701 | $1,104,033 |
Gross Margin | $800,696 | $1,455,753 | $1,583,830 | $1,721,001 | $1,868,884 |
Gross Margin % | 61.69% | 61.68% | 62.14% | 62.52% | 62.86% |
Operating Expenses | |||||
Sales and Marketing Expenses | |||||
Sales and Marketing Payroll | $75,876 | $128,164 | $128,346 | $128,531 | $122,719 |
Operating Supplies | $12,940 | $23,600 | $27,840 | $32,860 | $38,770 |
Janitorial | $10,500 | $18,000 | $18,000 | $18,000 | $18,000 |
Repairs | $1,750 | $3,000 | $6,000 | $6,000 | $9,000 |
Aprons, Towels & Napkins | $7,000 | $12,000 | $12,000 | $12,000 | $12,000 |
Menus | $1,050 | $1,800 | $1,800 | $1,800 | $1,800 |
Miscellaneous Supplies | $1,750 | $3,000 | $3,000 | $3,000 | $3,000 |
Miscellaneous Purchases | $51,500 | $3,000 | $3,000 | $3,000 | $3,000 |
Complimentary Meals or Drinks For PR | $5,250 | $9,000 | $9,000 | $9,000 | $9,000 |
Advertising/Promotion | $3,000 | $6,000 | $6,000 | $6,000 | $6,000 |
Credit Card Charges | $10,760 | $23,600 | $27,840 | $32,680 | $38,775 |
Fraud Credit Cards/Checks | $1,050 | $1,800 | $1,800 | $1,800 | $1,800 |
Professional Fees | $1,000 | $3,000 | $3,000 | $3,000 | $3,000 |
Membership Fees | $525 | $900 | $900 | $900 | $900 |
Uniforms | $600 | $1,800 | $1,800 | $1,800 | $1,800 |
Travel | $0 | $3,000 | $3,000 | $6,000 | $6,000 |
Employee Discounts | $3,500 | $6,000 | $6,000 | $6,000 | $6,000 |
Total Sales and Marketing Expenses | $188,051 | $247,664 | $259,326 | $272,371 | $281,564 |
Sales and Marketing % | 14.49% | 10.49% | 10.17% | 9.89% | 9.47% |
General and Administrative Expenses | |||||
General and Administrative Payroll | $81,200 | $139,200 | $140,160 | $141,168 | $142,226 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 | $0 | $0 |
Depreciation | $13,500 | $24,000 | $24,000 | $24,000 | $24,000 |
Leased Equipment | $1,050 | $1,800 | $1,800 | $1,800 | $1,800 |
Utilities | $58,000 | $99,000 | $105,000 | $108,000 | $111,000 |
Amortization | $35,000 | $60,000 | $60,000 | $60,000 | $60,000 |
Debt Service | $25,000 | $75,000 | $150,000 | $175,000 | $175,000 |
Insurance | $21,000 | $36,000 | $38,000 | $40,000 | $42,000 |
Excess Insurance | $3,500 | $6,000 | $6,500 | $7,000 | $7,500 |
Property Taxes | $10,500 | $18,000 | $19,000 | $20,000 | $21,000 |
Excess Taxes | $3,500 | $6,000 | $6,200 | $6,300 | $6,400 |
Vacation Accrual | $2,450 | $4,200 | $4,300 | $4,500 | $4,700 |
Base Rent | $42,000 | $72,000 | $72,000 | $72,000 | $72,000 |
Percentage Rent | $12,958 | $23,600 | $27,848 | $32,860 | $38,775 |
CAM Rent | $5,250 | $9,000 | $9,500 | $10,000 | $10,500 |
Payroll Taxes | $25,722 | $43,894 | $44,349 | $44,820 | $44,752 |
Other General and Administrative Expenses | $0 | $0 | $0 | $0 | $0 |
Total General and Administrative Expenses | $340,630 | $617,694 | $708,657 | $747,448 | $761,653 |
General and Administrative % | 26.24% | 26.17% | 27.80% | 27.15% | 25.62% |
Other Expenses: | |||||
Other Payroll | $0 | $0 | $0 | $0 | $0 |
Consultants | $0 | $0 | $0 | $0 | $0 |
Expansion Fund | $10,000 | $50,000 | $40,000 | $75,000 | $125,000 |
Total Other Expenses | $10,000 | $50,000 | $40,000 | $75,000 | $125,000 |
Other % | 0.77% | 2.12% | 1.57% | 2.72% | 4.20% |
Total Operating Expenses | $538,681 | $915,358 | $1,007,983 | $1,094,819 | $1,168,217 |
Profit Before Interest and Taxes | $262,015 | $540,395 | $575,847 | $626,182 | $700,667 |
EBITDA | $275,515 | $564,395 | $599,847 | $650,182 | $724,667 |
Interest Expense | $4,928 | $3,916 | $2,860 | $1,804 | $748 |
Taxes Incurred | $38,510 | $80,472 | $93,110 | $93,657 | $113,737 |
Net Profit | $218,577 | $456,007 | $479,877 | $530,721 | $586,182 |
Net Profit/Sales | 16.84% | 19.32% | 18.83% | 19.28% | 19.72% |
8.4 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 will need no new financing until we open our second unit.
Initial projections are a sales-to-investment ratio in excess of 2-to-1, return on investment in excess of 30 percent and return on equity of 20 percent-plus.

Pro Forma Cash Flow | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Cash Received | |||||
Cash from Operations | |||||
Cash Sales | $1,297,957 | $2,360,000 | $2,548,800 | $2,752,702 | $2,972,917 |
Subtotal Cash from Operations | $1,297,957 | $2,360,000 | $2,548,800 | $2,752,702 | $2,972,917 |
Additional Cash Received | |||||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 | $0 | $0 |
Subtotal Cash Received | $1,297,957 | $2,360,000 | $2,548,800 | $2,752,702 | $2,972,917 |
Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Expenditures from Operations | |||||
Cash Spending | $257,216 | $438,940 | $443,486 | $448,202 | $447,523 |
Bill Payments | $738,769 | $1,511,347 | $1,600,633 | $1,747,267 | $1,912,087 |
Subtotal Spent on Operations | $995,985 | $1,950,287 | $2,044,119 | $2,195,469 | $2,359,610 |
Additional Cash Spent | |||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $9,600 | $9,600 | $9,600 | $9,600 | $9,600 |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 | $0 | $0 |
Subtotal Cash Spent | $1,005,585 | $1,959,887 | $2,053,719 | $2,205,069 | $2,369,210 |
Net Cash Flow | $292,372 | $400,113 | $495,081 | $547,633 | $603,707 |
Cash Balance | $872,872 | $1,272,985 | $1,768,066 | $2,315,698 | $2,919,405 |
8.5 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 objectives.
Pro Forma Balance Sheet | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Assets | |||||
Current Assets | |||||
Cash | $872,872 | $1,272,985 | $1,768,066 | $2,315,698 | $2,919,405 |
Inventory | $61,302 | $113,099 | $121,947 | $131,703 | $142,239 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $934,174 | $1,386,084 | $1,890,013 | $2,447,401 | $3,061,645 |
Long-term Assets | |||||
Long-term Assets | $65,000 | $65,000 | $65,000 | $65,000 | $65,000 |
Accumulated Depreciation | $13,500 | $37,500 | $61,500 | $85,500 | $109,500 |
Total Long-term Assets | $51,500 | $27,500 | $3,500 | ($20,500) | ($44,500) |
Total Assets | $985,674 | $1,413,584 | $1,893,513 | $2,426,901 | $3,017,145 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Current Liabilities | |||||
Accounts Payable | $141,197 | $122,700 | $132,352 | $144,619 | $158,281 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 |
Subtotal Current Liabilities | $151,197 | $132,700 | $142,352 | $154,619 | $168,281 |
Long-term Liabilities | $40,400 | $30,800 | $21,200 | $11,600 | $2,000 |
Total Liabilities | $191,597 | $163,500 | $163,552 | $166,219 | $170,281 |
Paid-in Capital | $900,000 | $900,000 | $900,000 | $900,000 | $900,000 |
Retained Earnings | ($324,500) | ($105,923) | $350,084 | $829,961 | $1,360,682 |
Earnings | $218,577 | $456,007 | $479,877 | $530,721 | $586,182 |
Total Capital | $794,077 | $1,250,084 | $1,729,961 | $2,260,682 | $2,846,864 |
Total Liabilities and Capital | $985,674 | $1,413,584 | $1,893,513 | $2,426,901 | $3,017,145 |
Net Worth | $794,077 | $1,250,084 | $1,729,961 | $2,260,682 | $2,846,864 |
8.6 Business Ratios
The table follows with our main business ratios. We do intend to improve gross margin, collection days, sales and labor controls. Our ratios are compared to industry ratios for Steak Restaurants – SIC code 5812.0802.
Ratio Analysis | ||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
Sales Growth | 0.00% | 81.82% | 8.00% | 8.00% | 8.00% | 6.96% |
Percent of Total Assets | ||||||
Inventory | 6.22% | 8.00% | 6.44% | 5.43% | 4.71% | 3.90% |
Other Current Assets | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 28.39% |
Total Current Assets | 94.78% | 98.05% | 99.82% | 100.84% | 101.47% | 37.68% |
Long-term Assets | 5.22% | 1.95% | 0.18% | -0.84% | -1.47% | 62.32% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 15.34% | 9.39% | 7.52% | 6.37% | 5.58% | 19.17% |
Long-term Liabilities | 4.10% | 2.18% | 1.12% | 0.48% | 0.07% | 29.21% |
Total Liabilities | 19.44% | 11.57% | 8.64% | 6.85% | 5.64% | 48.38% |
Net Worth | 80.56% | 88.43% | 91.36% | 93.15% | 94.36% | 51.62% |
Percent of Sales | ||||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 61.69% | 61.68% | 62.14% | 62.52% | 62.86% | 59.31% |
Selling, General & Administrative Expenses | 44.89% | 42.42% | 43.12% | 43.35% | 42.99% | 39.09% |
Advertising Expenses | 1.00% | 1.00% | 1.09% | 1.19% | 1.30% | 2.75% |
Profit Before Interest and Taxes | 20.19% | 22.90% | 22.59% | 22.75% | 23.57% | 1.59% |
Main Ratios | ||||||
Current | 6.18 | 10.45 | 13.28 | 15.83 | 18.19 | 1.26 |
Quick | 5.77 | 9.59 | 12.42 | 14.98 | 17.35 | 0.87 |
Total Debt to Total Assets | 19.44% | 11.57% | 8.64% | 6.85% | 5.64% | 3.27% |
Pre-tax Return on Net Worth | 32.38% | 42.92% | 33.12% | 27.62% | 24.59% | 54.38% |
Pre-tax Return on Assets | 26.08% | 37.95% | 30.26% | 25.73% | 23.20% | 7.17% |
Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Net Profit Margin | 16.84% | 19.32% | 18.83% | 19.28% | 19.72% | n.a |
Return on Equity | 27.53% | 36.48% | 27.74% | 23.48% | 20.59% | n.a |
Activity Ratios | ||||||
Inventory Turnover | 10.91 | 8.40 | 6.72 | 6.73 | 6.73 | n.a |
Accounts Payable Turnover | 6.16 | 12.17 | 12.17 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 32 | 29 | 29 | 29 | n.a |
Total Asset Turnover | 1.32 | 1.67 | 1.35 | 1.13 | 0.99 | n.a |
Debt Ratios | ||||||
Debt to Net Worth | 0.24 | 0.13 | 0.09 | 0.07 | 0.06 | n.a |
Current Liab. to Liab. | 0.79 | 0.81 | 0.87 | 0.93 | 0.99 | n.a |
Liquidity Ratios | ||||||
Net Working Capital | $782,977 | $1,253,384 | $1,747,661 | $2,292,782 | $2,893,364 | n.a |
Interest Coverage | 53.17 | 138.00 | 201.35 | 347.11 | 936.72 | n.a |
Additional Ratios | ||||||
Assets to Sales | 0.76 | 0.60 | 0.74 | 0.88 | 1.01 | n.a |
Current Debt/Total Assets | 15% | 9% | 8% | 6% | 6% | n.a |
Acid Test | 5.77 | 9.59 | 12.42 | 14.98 | 17.35 | n.a |
Sales/Net Worth | 1.63 | 1.89 | 1.47 | 1.22 | 1.04 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | n.a |
8.7 Long-term Plan
Our long term plan is to continue to maintain a cash flow of 19-20% while increasing sales annually, thereby increasing actual dollars earned by our investors, principals and staff.