Restaurant’s Financial Model could be a daunting task because this industry works on a very different perspective. They require operational efficiencies in order to take maximum profit margin. Our client has a Thai Restaurant in Mexico. He was planning to open.
He was planning to open his another branch in Mexico, so he needs some external capital investment, and require a financial projection for the second branch with consideration of his first branch sales and expenses.
Oak Business shook hands with the client to become the official advisor in the project. Oak business core job is to forecast the restaurant’s Capital need, Assets requirements, Burn rate and profit and loss. Restaurant business has a different perspective to analysis, as we couldn’t apply growth rate in the restaurant because the area is limited, irrespective of the population and demand. We can only serve to limited no. of customers as long as we have space, So in the restaurant model, Business acumen open new branches to increase the revenue and profit. Similarly, restaurant business requires more operational efficiencies, because if the kitchen gets late to cook cuisine, this means customers will wait until cuisine has been served, the customer will occupy the table and chair, means, for the time being, you cannot serve afterward customers.
Oak business consultant provided the following services.
We built input assumptions of investment, followed by restaurant layout, Assets, and operating expenses so that we can forecast the expected revenue. The layout is the most crucial element to consider first because restaurant revenue all depends on the design. If the model is efficient, so we could have more chairs and table in that space, means for customers can be served in a time period. Based on the Layout out, we make assumptions of the assets and operational expenses.
Revenue Forecast/ Income Statement
After getting the sense of layout, we search out the population and demand for the Thai cuisine and assume percentage of customers we can serve based on the design. We calculated the inflow of no. of customers in a day, then week and then months.
Secondly, we build design income statement, with the revenue and expenses that we expected to occur. All variable and fixed expenses are calculated in the sheet, including Salaries, Marketing, Content, Utilities, etc.
Based on the revenue model and cost structure, we build an income statement for 5 years.
Cash Flow Statement
We built cash flow analysis, which was linked with Income Statement, input assumptions in a way so that there was no need to add in the sheet, and sheet change instantly.
Then we build a third and last financial statement, i.e., Balance sheet, which was also linked with Input sheets and cash flow.
Every business has to know its breakeven point. It helps investors and entrepreneur to set the mark so that they can put extra effort to cross this point.
Graphs speak more than numbers because it helps both the investor or Entrepreneur to see the graphical representation of the projection.
We following graphs in the dashboard sheet
After completion of all the projections, an Investor and, an entrepreneur needs to evaluate the forecasting model. This evaluation sheet helps them to check the feasibility and viability of the project. Oak business consultant provided NPV, IRR, Free Cash Flow analysis, WACC, and payback period as well. Our report will not help them to evaluate the project but also help them to know the equity that investor should take against the investment. .