Background of Restaurants Business Financial Model

Restaurants Financial Model could be a daunting task because this industry works from a very different perspective. They require operational efficiencies. This is because to take maximum profit margin. Our client has a Thai Restaurant in Mexico. He was planning to open.

The Problem of Restaurant Business

He was planning to open another branch in Mexico, so he needs some external capital investment and requires a financial projection for the second branch with consideration of his first branch’s sales and expenses.

Solutions

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 needs, Assets requirements, Burn rate, and profit and loss.
The restaurant business has a different perspective to analyze.  We couldn’t apply a growth rate in the restaurant because the area is limited, irrespective of the population and demand. We can only serve to limited number of customers as long as we have space, So in the restaurant model, Business acumen opens new branches to increase revenue and profit. Similarly, the 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, and the customer will occupy the table and chair, which means, for the time being, you cannot serve customers afterward. The oak business consultant provided the following services.

Input Assumptions of Restaurant Financial Model

We built input investment assumptions, followed by restaurant layout, Assets, and operating expenses to forecast the expected revenue.
The layout is the most crucial element to consider first because restaurant revenue depends on the design. If the model is efficient, we could have more chairs and tables in that space, which means customers can be served in a time period. Based on the Layout, we make assumptions of the assets and operational expenses.

Revenue Forecast/ Income Statement of Restaurants Business Excel model

After getting a sense of the layout, we searched out the population and demand for Thai cuisine and assumed a percentage of customers we could serve based on the design. We calculated the inflow of no. of customers in a day, then a week, and then months. Secondly, we build a 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.

Income Statement

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 the Income Statement, and input assumptions in a way so that there was no need to add in the sheet, and sheet changed instantly.

Balance Sheet

Then, we build a third and last financial statement. Balance sheet, which was also linked with Input sheets and cash flow.

Breakeven Point

Every business has to know its breakeven point. It helps investors and entrepreneurs set the mark so they can put extra effort to cross this point.

Dashboard for Restaurants Financial Model

Graphs speak more than numbers because it help both the investor and Entrepreneur to see the graphical representation of the projection. We have the following graphs in the dashboard sheet

Project Evaluation of Restaurants Business Financial Model

After completion of all the projections, an Investor and, an entrepreneur need to evaluate the forecasting model. This evaluation sheet helps them check the project’s feasibility and viability.
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 investors should take against the investment.
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