Edit This Plan

Make it your own. Use Business Plan Pro to edit this plan or any of 500+ other sample plans.

Italian Restaurant Business Plan

The Pasta House Co. Fenton

This business plan was created with Business Plan Pro software, the fastest way to prepare a complete business plan.

With Business Plan Pro, you can open this plan (or any of the 500 others included in the product) and quickly customise it to match your business. Or you can use the software's step-by-step wisard to easily create a custom business plan from scratch. Learn more »

Financial Plan

8.0 Financial Plan

1. Growth will be moderate, cash flows steady.
2. Sales increase at a steady rate of 4% per year.
3. Costs will increase at a rate of 1% to 2% per year.
4. The company will invest residual profits into financial markets and not company expansion (unless absolutely necessary).
5. General maintenance and repairs will be kept up to maintain a solid operation.
6. Future cash investments will use NPV projections to achieve maximum return with limited risk.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual figures. The key underlying assumptions are:

• We assume JD Drews will be unable to make their note payment or lease payment and will have to default on their loans.
• We assume that we will take over the SBA note payment and acquire all of the assets and leasehold improvements.
• We assume the equipment is in good working order.
• We assume this will happen in the next three to six months.
• We assume a slow-growth economy, without major recession.
• We assume that there are no unforseen changes in the expectancy in the popularity of our candidates.
• We assume access to loans and financing are sufficient to maintain and fulfil our financial plan as shown in the tables.
• We assume the landlord will have no problem allowing us to take over the current lease.
• We assume The Pasta House Co. will approve our leasehold improvements and budget.

General Assumptions

General Assumptions
	FY 2004	FY 2005	FY 2006
Plan Month	1	2	3
Current Interest Rate	5.50%	5.50%	5.50%
Long-term Interest Rate	9.50%	9.50%	9.50%
Tax Rate	22.03%	21.30%	22.03%
Other	0	0	0

8.2 Projected Profit and Loss

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 time the restaurant will develop its customer base and reputation and the growth will pick up more rapidly towards the fourth and fifth years of business.

Month-by-month assumptions for profit and loss are included in the appendix.

Profit and Loss

Pro Forma Profit and Loss
	FY 2004	FY 2005	FY 2006
Sales	£1,681,248	£1,747,957	£1,817,321
Direct Cost of Sales	£421,053	£429,474	£438,064
Other Costs of Goods	£0	£0	£0
	------------	------------	------------
Total Cost of Sales	£421,053	£429,474	£438,064
Gross Margin	£1,260,195	£1,318,483	£1,379,257
Gross Margin %	74.96%	75.43%	75.90%
Expenses
Payroll	£471,438	£528,780	£544,643
Sales and Marketing Promotions	£0	£0	£0
Depreciation	£66,144	£66,144	£66,144
Credit Card Discounts	£21,692	£21,930	£22,172
Royality & Advertising Fees	£104,142	£105,288	£106,446
Rent Fixed Rate with Cam	£112,200	£113,434	£114,682
Utilities 2.4% of Sales	£40,350	£40,794	£41,243
Insurance	£35,304	£35,692	£36,085
Paper Costs	£30,262	£32,881	£36,169
Coupons	£158,555	£160,299	£162,062
Trash Disposal	£1,500	£1,517	£1,533
Uniforms	£3,000	£3,033	£3,066
Telephone	£3,000	£3,033	£3,066
Maintaince & Repairs	£13,500	£13,649	£13,799
Smallwares	£1,500	£1,517	£1,533
Outside Services	£3,000	£3,033	£3,066
Cleaning & Dishwashing	£11,769	£11,898	£12,029
Menus & Guest Checks	£1,200	£1,213	£1,227
Linen & Laundry	£1,500	£1,517	£1,533
Music & Entertainment	£1,500	£1,517	£1,533
Advertising	£1,500	£1,517	£1,533
Over/Short	(£180)	(£182)	(£184)
Professional Fees	£4,500	£4,550	£4,600
Taxes & Licenses	£1,980	£2,002	£2,024
Bank Charges	£936	£946	£957
Pest Control	£1,500	£1,517	£1,533
Payroll Taxes (National Insurance)	£47,144	£52,878	£54,464
Office Expense	£3,900	£3,943	£3,986
Other	£2,100	£2,123	£2,146
	------------	------------	------------
Total Operating Expenses	£1,144,936	£1,216,460	£1,243,090
Profit Before Interest and Taxes	£115,259	£102,023	£136,167
EBITDA	£181,403	£168,167	£202,311
Interest Expense	£56,050	£53,200	£50,667
Taxes Incurred	£13,067	£10,399	£18,831
Net Profit	£46,142	£38,423	£66,668
Net Profit/Sales	2.74%	2.20%	3.67%

Profit Monthly



Profit Yearly



Gross Margin Monthly



Gross Margin Yearly



8.3 Projected Cash Flow

The cash flow depends on assumptions for stock turnover, payment days, and accounts receivable management. Our projected same-day collections is critical, and is reasonable and customary in the restaurant industry. We do not expect to need significant additional support even when we reach the less profitable months, as they are expected. The first six months of PHC openings have shown huge sales volumes. We expect this volume, however our projections do not reflect this high volume. We have done this in the event there is normal sales during the first six months.

Month-by-month assumptions for projected cash flow are included in the appendix.

Cash Flow

Pro Forma Cash Flow
	FY 2004	FY 2005	FY 2006
Cash Received
Cash from Operations
Cash Sales	£1,681,248	£1,747,957	£1,817,321
Subtotal Cash from Operations	£1,681,248	£1,747,957	£1,817,321
Additional Cash Received
VAT, VAT, HST/GST Received	£0	£0	£0
New Current Borrowing	£0	£0	£0
New Other Liabilities (interest-free)	£0	£0	£0
New Fixed liabilities	£0	£0	£0
Sales of Other Current Assets	£0	£0	£0
Sales of Fixed assets	£0	£0	£0
New Investment Received	£0	£0	£0
Subtotal Cash Received	£1,681,248	£1,747,957	£1,817,321
Expenditures	FY 2004	FY 2005	FY 2006
Expenditures from Operations
Cash Spending	£471,438	£528,780	£544,643
Bill Payments	£1,036,823	£1,113,804	£1,138,592
Subtotal Spent on Operations	£1,508,261	£1,642,584	£1,683,235
Additional Cash Spent
VAT, VAT, HST/GST Paid Out	£0	£0	£0
Principal Repayment of Current Borrowing	£0	£0	£0
Other Liabilities Principal Repayment	£7,500	£7,500	£7,500
Fixed liabilities Principal Repayment	£26,664	£26,664	£26,664
Purchase Other Current Assets	£0	£0	£0
Purchase Fixed assets	£0	£0	£0
Dividends	£0	£0	£0
Subtotal Cash Spent	£1,542,425	£1,676,748	£1,717,399
Net Cash Flow	£138,823	£71,208	£99,922
Cash Balance	£228,823	£300,031	£399,953

Cash



8.4 Projected Balance Sheet

The projected Balance Sheet is quite solid. We do not anticipate difficulty meeting our debt obligations providing that we achieve our specific goals.

Balance Sheet

Pro Forma Balance Sheet
	FY 2004	FY 2005	FY 2006
Assets
Current Assets
Cash	£228,823	£300,031	£399,953
Stock	£39,382	£40,170	£40,973
Other Current Assets	£10,000	£10,000	£10,000
Total Current Assets	£278,205	£350,201	£450,926
Fixed assets
Fixed assets	£547,600	£547,600	£547,600
Accumulated Depreciation	£66,144	£132,288	£198,432
Total Fixed assets	£481,456	£415,312	£349,168
Total Assets	£759,661	£765,513	£800,094
Liabilities and Capital	FY 2004	FY 2005	FY 2006
Current Liabilities
Accounts Payable	£91,398	£91,676	£93,754
Current Borrowing	£0	£0	£0
Other Current Liabilities	£67,500	£60,000	£52,500
Subtotal Current Liabilities	£158,898	£151,676	£146,254
Fixed liabilities	£573,336	£546,672	£520,008
Total Liabilities	£732,234	£698,348	£666,262
Paid-in Capital	£0	£0	£0
Retained Earnings	(£17,400)	£28,742	£67,165
Earnings	£46,142	£38,423	£66,668
Total Capital	£28,742	£67,165	£133,833
Total Liabilities and Capital	£760,976	£765,513	£800,094
Net Worth	£27,427	£67,165	£133,833

8.5 Business Ratios

We expect our net profit margin, and gross margin to increase steadily over the three-years. Our net working capital will increase by year three, proving that we have the cash flows to remain a going concern. The following table shows these important financial ratios. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5812.0108, Italian restaurant, are shown for comparison.

Ratios

Ratio Analysis
	FY 2004	FY 2005	FY 2006	Industry Profile
Sales Growth	0.00%	3.97%	3.97%	6.96%
Percent of Total Assets
Stock	5.18%	5.25%	5.12%	3.90%
Other Current Assets	1.32%	1.31%	1.25%	28.39%
Total Current Assets	36.62%	45.75%	56.36%	37.68%
Fixed assets	63.38%	54.25%	43.64%	62.32%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	20.92%	19.81%	18.28%	19.17%
Fixed liabilities	75.47%	71.41%	64.99%	29.21%
Total Liabilities	96.39%	91.23%	83.27%	48.38%
Net Worth	3.61%	8.77%	16.73%	51.62%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	74.96%	75.43%	75.90%	59.31%
Selling, General & Administrative Expenses	72.17%	73.20%	72.15%	39.09%
Advertising Expenses	0.00%	0.00%	0.00%	2.75%
Profit Before Interest and Taxes	6.86%	5.84%	7.49%	1.59%
Main Ratios
Current	1.75	2.31	3.08	1.26
Quick	1.50	2.04	2.80	0.87
Total Debt to Total Assets	96.39%	91.23%	83.27%	54.38%
Pre-tax Return on Net Worth	215.88%	72.69%	63.89%	3.27%
Pre-tax Return on Assets	7.79%	6.38%	10.69%	7.17%
Additional Ratios	FY 2004	FY 2005	FY 2006
Net Profit Margin	2.74%	2.20%	3.67%	n.a
Return on Equity	168.23%	57.21%	49.81%	n.a
Activity Ratios
Stock Turnover	10.91	10.80	10.80	n.a
Accounts Payable Turnover	12.33	12.17	12.17	n.a
Payment Days	27	30	30	n.a
Total Asset Turnover	2.21	2.28	2.27	n.a
Debt Ratios
Debt to Net Worth	26.70	10.40	4.98	n.a
Current Liab. to Liab.	0.22	0.22	0.22	n.a
Liquidity Ratios
Net Working Capital	£119,307	£198,525	£304,673	n.a
Interest Coverage	2.06	1.92	2.69	n.a
Additional Ratios
Assets to Sales	0.45	0.44	0.44	n.a
Current Debt/Total Assets	21%	20%	18%	n.a
Acid Test	1.50	2.04	2.80	n.a
Sales/Net Worth	61.30	26.02	13.58	n.a
Dividend Payout	0.00	0.00	0.00	n.a