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Business Plan
Pasta De' Italiano
Sir Arbab Naseebullah Kasi
Rabia Iftikahr, MBA 6th
B, CMSID 12285
December 15, 2014
ACKNOWLEDGEMENTS:
Praise and thanks to “ALLAH” Almighty, the one testing us all at all times and making decisions
about wh...
Legal Page
Confidentiality Agreement
The undersigned reader acknowledges that the information provided by Rabia Iftikhar i...
Page 1
Table of Contents
1. Executive Summary................................................................................
1
1. Executive Summary
Taste De' Italiano will be the leading pasta restaurant in Quetta with a rapidly developing consume...
2
2. Company Summary
Taste De' Italiano is a restaurant started in Quetta. Taste De' Italiano serves individuals, families...
3
Loss at Start-up (Start-up Expenses) -$2,100
Total Capital $82,900
Total Capital and Liabilities $162,900
Total Funding ...
4
iv. Meats are all top-shelf varieties, organic when possible.
At Taste De' Italiano, food is not the only product. Taste...
5
Table: Market Analysis
Market Analysis
2014 2015 2016 Year 4 Year 5
Potential
Customers
Growth CAGR
Individuals 8% 12,45...
6
a) Musketeers: This is an upscale Italian restaurant that has a limited selection of pasta dishes.
Although the selectio...
7
5.3. Marketing Strategy
Taste De' Italiano Gourmet Pasta's advertising budget is very limited, so the advertising progra...
8
Chart: Sales Monthly
Chart: Sales by Year
6. Management Summary
Rabia Iftikhar, President
 Duties: strategic developmen...
9
Zarqa Qamar, General Manager
 Duties: Manages the front of the house, human resources, server hiring, server training, ...
10
Table: General Assumptions
General Assumptions
2014 2015 2016
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.0...
11
7.3. Projected Profit and Loss
The following table will indicate projected profit and loss.
Chart: Profit Monthly
Chart...
12
Chart: Gross Margin Yearly
Table: Profit and Loss
Pro Forma Profit and Loss
2014 2015 2016
Sales $279,415 $707,301 $770...
13
Table: Cash Flow
Pro Forma Cash Flow
2014 2015 2016
Cash Received
Cash from Operations
Cash Sales $279,415 $707,301 $77...
14
7.5. Projected Balance Sheet
The following table will indicate the projected balance sheet.
Table: Balance Sheet
Pro Fo...
15
Table: Ratios
Ratio Analysis
2014 2015 2016 Industry
Profile
Sales Growth N/A 153.14% 8.95% 7.60%
Percent of Total Asse...
16
Interest Coverage -6.38 7.48 10.89 N/A
Additional Ratios
Assets to Sales 0.44 0.24 0.30 N/A
Current Debt/Total Assets 1...
Appendix
Page 1
Table: Sales Forecast
Sales Forecast
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Sales
Individuals - ...
Appendix
Page 2
Table: Personnel
Personnel Plan
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Ramshah $2,500 $2,500 $2,...
Appendix
Page 3
Table: General Assumptions
General
Assumptions
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Plan Month...
Appendix
Page 4
Table: Profit and Loss
Pro Forma
Profit and
Loss
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Sales - ...
Appendix
Page 5
Total
Operating
Expenses
$11,650 $12,770 $17,122 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $...
Appendix
Page 6
Table: Cash Flow
Pro Forma
Cash Flow
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Cash
Received
Cash f...
Appendix
Page 7
New
Investment
Received
- - - - - - - - - - - -
Subtotal Cash
Received
- - $10,494 $18,356 $21,300 $25,018...
Appendix
Page 8
Purchase
Other Current
Assets
- - - - - - - - - - - -
Purchase
Long-term
Assets
- - - - - - - - - - - -
Di...
Appendix
Page 9
Table: Balance Sheet
Pro
Forma
Balance
Sheet
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Assets Start...
Appendix
Page 10
Liabilitie
s and
Capital
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Current
Liabilitie
s
Accounts
P...
Appendix
Page 11
Total
Liabilitie
s and
Capital
$162,900 $153,064 $139,628 $132,176 $126,895 $121,094 $117,675 $114,684 $1...
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Business plan; Pasta De Italiano

  1. 1. Business Plan Pasta De' Italiano Sir Arbab Naseebullah Kasi Rabia Iftikahr, MBA 6th B, CMSID 12285 December 15, 2014
  2. 2. ACKNOWLEDGEMENTS: Praise and thanks to “ALLAH” Almighty, the one testing us all at all times and making decisions about what we don’t know and can’t know. The business plan being submitted today is a result of my great effort. There are innumerous helping hands behind who have guided me on my way. Writing this plan appeared to be a great experience to me. It added a lot to my knowledge. This project is one of my memorable experiences in student life. Though words are inadequate in offering thanks to my teacher but I owe my profound gratitude to Sir Arbab Naseebullah Kasi for stimulating my creative abilities by assigning this business plan to our class and for his able guidance and useful suggestions, which helped me in completing the project in time. Whatever I have learnt from him and this project report has put indelible impression on my mind and it is my conviction that this learning experience will always be a source of help in my practical life and professional career. Finally, yet importantly, I would like to express our heartfelt thanks to my beloved parents, for cooperation, help, kindness and blessings, my family and friends for their help and wishes for the successful completion of the work.
  3. 3. Legal Page Confidentiality Agreement The undersigned reader acknowledges that the information provided by Rabia Iftikhar in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of Rabia Iftikhar. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader may cause serious harm or damage to the business owner. Upon request, this document is to be immediately returned to the respective person. ___________________ Signature Rabia Iftikhar January 1st 2014
  4. 4. Page 1 Table of Contents 1. Executive Summary............................................................................................................................ 1 Chart: Highlights................................................................................................................................. 1 1.1. Objectives..................................................................................................................................... 1 1.2. Mission......................................................................................................................................... 1 2. Company Summary ............................................................................................................................ 2 2.1. Company Ownership.................................................................................................................... 2 2.2. Start-up Summary ........................................................................................................................ 2 Table: Start-up Funding...................................................................................................................... 2 Table: Start-up .................................................................................................................................... 3 3. Services............................................................................................................................................... 3 4. Market Analysis Summary ................................................................................................................. 4 Table: Market Analysis....................................................................................................................... 5 4.2.1. Competition and Buying Patterns......................................................................................... 5 5. Strategy and Implementation Summary.............................................................................................. 6 Table: Milestones................................................................................................................................ 6 5.3. Marketing Strategy....................................................................................................................... 7 5.4.1. Sales Forecast........................................................................................................................ 7 6. Management Summary....................................................................................................................... 8 6.1. Personnel Plan.............................................................................................................................. 9 7. Financial Plan...................................................................................................................................... 9 The following sections will outline important financial information. ........................................................ 9 7.1. Important Assumptions................................................................................................................... 9 Table: General Assumptions............................................................................................................. 10 7.2. Break-even Analysis .................................................................................................................. 10 Table: Break-even Analysis.............................................................................................................. 10 7.3. Projected Profit and Loss ........................................................................................................... 11 Chart: Profit Monthly........................................................................................................................ 11 Chart: Profit Yearly........................................................................................................................... 11 Chart: Gross Margin Yearly.............................................................................................................. 12 Table: Profit and Loss....................................................................................................................... 12 7.4. Projected Cash Flow............................................................................................................... 12 Table: Cash Flow .............................................................................................................................. 13 Chart: Cash........................................................................................................................................ 13 7.5. Projected Balance Sheet............................................................................................................. 14 Table: Balance Sheet......................................................................................................................... 14 7.6. Business Ratios .......................................................................................................................... 14 Table: Ratios..................................................................................................................................... 15 Table: Sales Forecast .................................................................................................................................. 1 Table: Personnel.......................................................................................................................................... 2 Table: General Assumptions....................................................................................................................... 3 Table: Profit and Loss................................................................................................................................. 4 Table: Cash Flow........................................................................................................................................ 6 Table: Balance Sheet................................................................................................................................... 9
  5. 5. 1 1. Executive Summary Taste De' Italiano will be the leading pasta restaurant in Quetta with a rapidly developing consumer brand and growing customer base. The signature line of innovative, premium, pasta dishes include pesto with smoked salmon, pancetta in an Alfredo sauce, and fresh mussels and clams in a marinara sauce. Taste De' Italiano also serves distinctive salads, desserts, and beverages. Taste De' Italiano will reinvent the pasta experience for individuals, families, and take-away customers with discretionary income by selling high quality, innovative products at a reasonable price, designing tasteful, convenient locations, and providing industry benchmark customer service. Taste De' Italiano's first restaurant will be financed through a combination of direct owner investment and long-term loans, guaranteed by the owner's collateral. Chart: Highlights 1.1.Objectives Taste De' Italiano's objectives are to build brand awareness and customer service, while growing sales by opening new stores. It intends to utilize the following strategies to achieve these objectives:  Offer high quality, innovative menu items, utilizing premium vegetables, meats and cheeses.  Provide an excellent dining value.  Build brand awareness through inexpensive, guerrilla marketing tactics.  Pursue disciplined restaurant growth.  Provide superior customer service.  Leverage the experience, intelligence, and skills of our sophisticated advisory board. 1.2.Mission Taste De' Italiano Gourmet Pasta's mission is to provide the customer the finest pasta meal and dining experience. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.
  6. 6. 2 2. Company Summary Taste De' Italiano is a restaurant started in Quetta. Taste De' Italiano serves individuals, families, and take-away customers with fresh, creative, attractive pasta dishes, salads and desserts. It uses homemade pasta, fresh vegetables, and premium meats and cheese. 2.1.Company Ownership Taste De' Italiano is a privately held restaurant. The majority stock holder is Rabia Iftikhar. 2.2.Start-up Summary Taste De' Italiano will incur the following start-up costs:  Pasta machines.  Commercial stove.  Commercial refrigerators and freezers.  Commercial dishwasher.  Cabinets with cutting board surfaces.  Chairs and tables.  Beverage dispenser.  Dishware and flatware.  Assorted knives, mixing bowls, and other accessories needed in the production of food.  Point-of-Sale terminal.  Computer with Internet connection, CD-RW, and printer. Table: Start-up Funding Start-up Funding Start-up Expenses to Fund $2,100 Start-up Assets to Fund $162,900 Total Funding Required $165,000 Assets Non-cash Assets from Start-up $75,000 Cash Requirements from Start-up $87,900 Cash Balance on Starting Date $87,900 Total Assets $162,900 Liabilities and Capital Liabilities Long-term Liabilities $80,000 Total Liabilities $80,000 Capital Planned Investment Rabia Iftikhar $85,000 Total Planned Investment $85,000
  7. 7. 3 Loss at Start-up (Start-up Expenses) -$2,100 Total Capital $82,900 Total Capital and Liabilities $162,900 Total Funding $165,000 Chart: Start-up Table: Start-up Start-up Requirements Start-up Expenses Legal $1,000 Stationery etc. $100 Menus $1,000 Total Start-up Expenses $2,100 Start-up Assets Cash Required $87,900 Long-term Assets $75,000 Total Assets $162,900 Total Requirements $165,000 3. Services Taste De' Italiano has created pastas and salads that are differentiated and superior to competitors. Customers can taste the quality and freshness of the product in every bite. The following are some characteristics of the product: i. Taste De' Italiano dough is made with Italian semolina flour. ii. Cheeses are all imported. iii. Vegetables are organic and fresh with three shipments a week.
  8. 8. 4 iv. Meats are all top-shelf varieties, organic when possible. At Taste De' Italiano, food is not the only product. Taste De' Italiano prides themselves on providing service that is on par with fine dining. This is accomplished through an extensive training program and only hiring experienced employees. At A Glance--The Taste De' Italiano Store:  Location: an upscale mall, suburban neighborhood, or urban retail district.  Design: Bright and clean.  Size: 1,200-1,700 square feet.  Employees: Eight to ten full time.  Seating: 45-50.  Types of transactions: 80% dine in, 20% take away. 4. Market Analysis Summary The market can be divided into three target markets, individuals, families and take-away business. Taste De' Italiano expansion strategy is to further penetrate the existing markets by opening an additional store (or stores) in Quetta in 2015. This clustering approach enables Taste De' Italiano to increase brand awareness and improve operating and marketing efficiencies. For example:  Clustering allows Taste De' Italiano to negotiate a fixed percentage contract with the food wholesalers.  Marketing expenditures can be spread over multiple revenue centers. This strategy reduces risks involved with opening new restaurants given that Taste De' Italiano better understands the competitive conditions, consumer tastes, and spending patterns in the market. When the Quetta market is saturated with one or two additional stores, then Taste De' Italiano intends to look at new markets. 4.1. Market Segmentation The market can be segmented into three target populations:  Individuals: People that dine in by themselves.  Families: A group of people, either friends or a group of relatives dining together.  Take away: People that prefer to eat Taste De' Italiano food at another location. Age is not the most defined demographic of this customer base; all age groups enjoy pasta. The most defined characteristic of the target market is income. Taste De' Italiano pasta has been very successful in Cantt and Jinnah road. These areas have a large day and night population consisting of business people and families who have household disposable incomes over $40,000. Combining several key demographic factors, Taste De' Italiano arrives at a profile of the primary customer as follows:  Sophisticated families who live nearby.  Young professionals who work close to the location.  Shoppers who patronize the high rent stores.
  9. 9. 5 Table: Market Analysis Market Analysis 2014 2015 2016 Year 4 Year 5 Potential Customers Growth CAGR Individuals 8% 12,457 13,454 14,530 15,692 16,947 8.00% Families 9% 8,974 9,782 10,662 11,622 12,668 9.00% Take away 10% 24,574 27,031 29,734 32,707 35,978 10.00% Total 9.27% 46,005 50,267 54,926 60,021 65,593 9.27% Chart: Market Analysis (Pie) 4.2. Service Business Analysis In 1999, global pasta sales reached $8 billion. Pasta sales are estimated to grow by at least 10% for the next five years. The big four, Pizza & Pasta Co., Yum Pasta, Hot Spot, and Café 76contribute $2 billion in combined 2000 revenues. The rest of the market is primarily made up of independent restaurants. The barriers to entry into the pasta market are low, due to insufficient capitalization, most entrants fail within their first six months. 4.2.1. Competition and Buying Patterns  National Competition a) Pizza & Pasta Co.: This restaurant offers consumers their choice of noodles, sauces, and ingredients, allowing the customer to assemble their dish as they wish. Food quality is average. b) Yum Pasta: This Company has a limited selection but the dishes are assembled with high- quality ingredients. The price point is high, but the food is quite good. c) Hot Spot: This company offers pasta that is reasonably fresh, reasonably innovative and at a lower price point. The company was sold a few years ago, and consequently the direction of management has been stagnant lately and has resulted in excessive employee turnover. d) Café 76: This Company had medium-priced pasta dishes that use average ingredients, no creativity, and less than average store atmosphere. Taste De' Italiano is not sure how this company has been able to grow in size as their whole product is mediocre at best.  Local Competition
  10. 10. 6 a) Musketeers: This is an upscale Italian restaurant that has a limited selection of pasta dishes. Although the selection is limited and pricey, the dishes are quite good. b) RV Pizza: An Italian restaurant with a decent pasta selection, however quality is inconsistent. c) Serena: An upscale restaurant with a large wine selection and good salads. Everything else is mediocre at best and over-priced. Service can often be poor. 5. Strategy and Implementation Summary Taste De' Italiano will leverage their two competitive advantages, superior product and industry benchmarked customer service to build a loyal customer base. 5.1. Competitive Edge Taste De' Italiano competitive edge is quite simple - superior product and superior service.  Product: the product will have the freshest ingredients including homemade pasta, imported cheeses, organic vegetables and top-shelf meats. The product will also be developed to enhance presentation, everything will be aesthetically pleasing.  Service: customer service will be the priority. All employees will ensure that the customers are having the most pleasant dining experience. All employees will go through an extensive training program and only experienced people will be hired. 5.2. Milestones Taste De' Italiano will have several milestones: 1. Business plan completion. This will be done as a roadmap for the organization. This will be an indispensable tool for the ongoing performance and improvement of the company. The business plan will be also used for raising capital. 2. Set up of the restaurant. 3. Opening of the second store. 4. Profitability. Table: Milestones Milestones Milestone Start Date End Date Budget Manager Department Business plan completion 6/12/2013 8/12/2013 - Ramshah Marketing Set up of the restaurant 6/12/2013 4/5/2014 $162,900 All Department Profitability 16/12/2013 31/11/2014 - Ramshah Department Opening of the second store 6/1/2015 6/30/2015 $100,000 Ramshah, Sidra and Zarqa Department Totals $262,900
  11. 11. 7 5.3. Marketing Strategy Taste De' Italiano Gourmet Pasta's advertising budget is very limited, so the advertising program is simple. Taste De' Italiano will do direct mail, banner ads, and inserts, with inserts in the Register-Guard likely to be the most successful of the campaigns. Lastly, Taste De' Italiano will leverage personal relationships to get an article about the opening of Taste De' Italiano in the Register-Guard business section. Previously, friends who have had their restaurant featured in the Register-Guard have seen a dramatic increase of sales immediately after the article was published. 5.4. Sales Strategy The sales strategy will be to allow people to try the superior product and service for themselves. In essence, the product will speak for itself. The marketing campaign will attract people into Taste De' Italiano and the sales strategy will be to let people experience Taste De' Italiano, this will be sufficient to turn the person into a long-term customer. 5.4.1. Sales Forecast The first two months will be used to get the restaurant up and running. By month three things will get a bit busier. Sales will gradually increase, and by the end of the first year we will be running at 2/3 capacity. We will approach full capacity in year two (full capacity for a restaurant being 90% full), and the introduction of new, higher price-point items in the third year accounts for that year's increase. Table: Sales Forecast Sales Forecast 2014 2015 2016 Sales Individuals $103,710 $262,527 $286,024 Families $150,304 $380,474 $414,528 Take away $25,401 $64,300 $70,055 Total Sales $279,415 $707,301 $770,608 Direct Cost of Sales 2014 2015 2016 Individuals $46,669 $118,137 $128,711 Families $67,637 $171,213 $186,538 Take away $11,431 $28,935 $31,525 Subtotal Direct Cost of Sales $125,737 $318,286 $346,773
  12. 12. 8 Chart: Sales Monthly Chart: Sales by Year 6. Management Summary Rabia Iftikhar, President  Duties: strategic development, back-office administration, financial analysis, internal control, server, and line cook.  Education: B.Com and MBA, BUITEMS.  Restaurant experience: two years as a server and busser. Chef Ramshah Hassan, Executive Chef  Duties: Manages the back of the house, product development, kitchen hiring, kitchen training, and inventory management.  Education: Western Culinary Institute.  Restaurant Experience: Fifteen years of restaurant experience at Harrah's & JQ Hammonds. At JQ Hammonds ran an opening crew for new properties, also the executive sous chef managing 20 and plated 800 meals a day.
  13. 13. 9 Zarqa Qamar, General Manager  Duties: Manages the front of the house, human resources, server hiring, server training, and quality control.  Education: BS sociology, University of Oregon.  Business experience: Office and facilities manager, Cube Inc., managed a staff of five, managed system implementation and construction projects and negotiated satellite office lease. Advisory Board  John Stevens, VP Food Starbucks Coffee Co., Inc.  Arthur Johnson, Former VP Real Estate Starbucks Coffee Co., Inc.  Donald Davis, franchise owner of Sheraton Hotel and Tony Roma's.  Jerry Slippery, CPA, Partner, Arthur Anderson. 6.1. Personnel Plan Ramshah, Zarqa, and Sidra will all be working full time. In addition to this management team, there will be four other full-time employees brought on board during the end of the third month for the first store. The second store will see the hiring of five additional employees. Table: Personnel Personnel Plan 2014 2015 2016 Ramshah $30,000 $37,800 $39,690 Sidra $30,000 $37,800 $39,690 Zarqa $62,000 $75,600 $79,380 Full time employee $11,480 $13,440 $13,440 Full time employee $11,480 $13,440 $13,440 Full time employee $11,480 $13,440 $13,440 Full time employee $10,472 $13,440 $13,440 Full time employee - $13,440 $13,440 Full time employee - $13,440 $13,440 Full time employee - $13,440 $13,440 Full time employee - $13,440 $13,440 Full time employee - $13,440 $13,440 Total People 7 12 12 Total Payroll $166,912 $272,160 $279,720 7. Financial Plan The following sections will outline important financial information. 7.1. Important Assumptions The following table details important financial assumptions.
  14. 14. 10 Table: General Assumptions General Assumptions 2014 2015 2016 Plan Month 1 2 3 Current Interest Rate 10.00% 10.00% 10.00% Long-term Interest Rate 10.00% 10.00% 10.00% Tax Rate 30.00% 30.00% 30.00% Other 0 0 0 7.2. Break-even Analysis The following topic and table shows our Break-even Analysis. Table: Break-even Analysis Break-even Analysis Monthly Revenue Break-even $31,017 Assumptions: Average Percent Variable Cost 45% Estimated Monthly Fixed Cost $17,059 Chart: Break-even Analysis
  15. 15. 11 7.3. Projected Profit and Loss The following table will indicate projected profit and loss. Chart: Profit Monthly Chart: Profit Yearly Chart: Gross Margin Monthly
  16. 16. 12 Chart: Gross Margin Yearly Table: Profit and Loss Pro Forma Profit and Loss 2014 2015 2016 Sales $279,415 $707,301 $770,608 Direct Cost of Sales $125,737 $318,286 $346,773 Other Production Expenses - - - Total Cost of Sales $125,737 $318,286 $346,773 Gross Margin $153,678 $389,016 $423,834 Gross Margin % 55.00% 55.00% 55.00% Expenses Payroll $166,912 $272,160 $279,720 Sales and Marketing and Other Expenses $2,400 $2,400 $2,400 Depreciation $15,000 $15,000 $15,000 Insurance $2,400 $3,600 $3,600 Rent $18,000 $36,000 $36,000 Total Operating Expenses $204,712 $329,160 $336,720 Profit Before Interest and Taxes -$51,034 $59,856 $87,114 EBITDA -$36,034 $74,856 $102,114 Interest Expense $8,000 $8,000 $8,000 Taxes Incurred - $15,557 $23,734 Net Profit -$59,034 $36,299 $55,380 Net Profit/Sales -21.13% 5.13% 7.19% 7.4. Projected Cash Flow The following chart and table will indicate projected cash flow.
  17. 17. 13 Table: Cash Flow Pro Forma Cash Flow 2014 2015 2016 Cash Received Cash from Operations Cash Sales $279,415 $707,301 $770,608 Subtotal Cash from Operations $279,415 $707,301 $770,608 Expenditures 2014 2015 2016 Expenditures from Operations Cash Spending $166,912 $272,160 $279,720 Bill Payments $136,690 $372,140 $417,494 Subtotal Spent on Operations $303,602 $644,300 $697,214 Net Cash Flow -$24,187 $63,001 $73,394 Cash Balance $63,713 $126,714 $200,107 Chart: Cash
  18. 18. 14 7.5. Projected Balance Sheet The following table will indicate the projected balance sheet. Table: Balance Sheet Pro Forma Balance Sheet 2014 2015 2016 Assets Current Assets Cash $63,713 $126,714 $200,107 Other Current Assets $0 $0 $0 Total Current Assets $63,713 $126,714 $200,107 Long-term Assets Long-term Assets $75,000 $75,000 $75,000 Accumulated Depreciation $15,000 $30,000 $45,000 Total Long-term Assets $60,000 $45,000 $30,000 Total Assets $123,713 $171,714 $230,107 Liabilities and Capital 2014 2015 2016 Current Liabilities Accounts Payable $19,846 $31,549 $34,562 Current Borrowing $0 $0 $0 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $19,846 $31,549 $34,562 Long-term Liabilities $80,000 $80,000 $80,000 Total Liabilities $99,846 $111,549 $114,562 Paid-in Capital $85,000 $85,000 $85,000 Retained Earnings ($2,100) ($61,134) ($24,835) Earnings ($59,034) $36,299 $55,380 Total Capital $23,866 $60,165 $115,545 Total Liabilities and Capital $123,713 $171,714 $230,107 Net Worth $23,866 $60,165 $115,545 7.6. Business Ratios The following table outlines some of the more important ratios from the restaurant industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5812, Eating Places.
  19. 19. 15 Table: Ratios Ratio Analysis 2014 2015 2016 Industry Profile Sales Growth N/A 153.14% 8.95% 7.60% Percent of Total Assets Other Current Assets 0.00% 0.00% 0.00% 35.60% Total Current Assets 51.50% 73.79% 86.96% 43.70% Long-term Assets 48.50% 26.21% 13.04% 56.30% Total Assets 100.00% 100.00% 100.00% 100.00% Current Liabilities 16.04% 18.37% 15.02% 32.70% Long-term Liabilities 64.67% 46.59% 34.77% 28.50% Total Liabilities 80.71% 64.96% 49.79% 61.20% Net Worth 19.29% 35.04% 50.21% 38.80% Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 55.00% 55.00% 55.00% 60.50% Selling, General & Administrative Expenses 91.28% 55.14% 51.74% 39.80% Advertising Expenses 0.43% 0.17% 0.16% 3.20% Profit Before Interest and Taxes -18.26% 8.46% 11.30% 0.70% Main Ratios Current 3.21 4.02 5.79 0.98 Quick 3.21 4.02 5.79 0.65 Total Debt to Total Assets 80.71% 64.96% 49.79% 61.20% Pre-tax Return on Net Worth -247.35% 86.19% 68.47% 1.70% Pre-tax Return on Assets -47.72% 30.20% 34.38% 4.30% Additional Ratios 2014 2015 2016 Net Profit Margin -21.13% 5.13% 7.19% N/A Return on Equity -247.35% 60.33% 47.93% N/A Activity Ratios Accounts Payable Turnover 7.89 12.17 12.17 N/A Payment Days 27 24 29 N/A Total Asset Turnover 2.26 4.12 3.35 N/A Debt Ratios Debt to Net Worth 4.18 1.85 0.99 N/A Current Liab. to Liab. 0.20 0.28 0.30 N/A Liquidity Ratios Net Working Capital $43,866 $95,165 $165,545 N/A
  20. 20. 16 Interest Coverage -6.38 7.48 10.89 N/A Additional Ratios Assets to Sales 0.44 0.24 0.30 N/A Current Debt/Total Assets 16% 18% 15% N/A Acid Test 3.21 4.02 5.79 N/A Sales/Net Worth 11.71 11.76 6.67 N/A Dividend Payout 0.00 0.00 0.00 N/A
  21. 21. Appendix Page 1 Table: Sales Forecast Sales Forecast Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Sales Individuals - - $3,895 $6,813 $7,906 $9,286 $10,057 $10,664 $12,044 $13,424 $14,804 $14,817 Families - - $5,645 $9,874 $11,458 $13,458 $14,575 $15,455 $17,455 $19,455 $21,455 $21,474 Take away - - $954 $1,669 $1,936 $2,274 $2,463 $2,612 $2,950 $3,288 $3,626 $3,629 Total Sales - - $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920 Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Individuals - - $1,753 $3,066 $3,558 $4,179 $4,526 $4,799 $5,420 $6,041 $6,662 $6,668 Families - - $2,540 $4,443 $5,156 $6,056 $6,559 $6,955 $7,855 $8,755 $9,655 $9,663 Take away - - $429 $751 $871 $1,023 $1,108 $1,175 $1,327 $1,480 $1,632 $1,633 Subtotal Direct Cost of Sales - - $4,722 $8,260 $9,585 $11,258 $12,193 $12,929 $14,602 $16,275 $17,948 $17,964
  22. 22. Appendix Page 2 Table: Personnel Personnel Plan Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Ramshah $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 Sidra $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 Zarqa $3,500 $3,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 Full time employee - $280 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 Full time employee - $280 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 Full time employee - $280 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 Full time employee - $280 $112 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 Full time employee - - - - - - - - - - - - Full time employee - - - - - - - - - - - - Full time employee - - - - - - - - - - - - Full time employee - - - - - - - - - - - - Full time employee - - - - - - - - - - - - Total People 3 7 7 7 7 7 7 7 7 7 7 7 Total Payroll $8,500 $9,620 $13,972 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980
  23. 23. Appendix Page 3 Table: General Assumptions General Assumptions Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Plan Month 1 2 3 4 5 6 7 8 9 10 11 12 Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% Other 0 0 0 0 0 0 0 0 0 0 0 0
  24. 24. Appendix Page 4 Table: Profit and Loss Pro Forma Profit and Loss Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Sales - - $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920 Direct Cost of Sales - - $4,722 $8,260 $9,585 $11,258 $12,193 $12,929 $14,602 $16,275 $17,948 $17,964 Other Production Expenses - - - - - - - - - - - - Total Cost of Sales - - $4,722 $8,260 $9,585 $11,258 $12,193 $12,929 $14,602 $16,275 $17,948 $17,964 Gross Margin - - $5,772 $10,096 $11,715 $13,760 $14,902 $15,802 $17,847 $19,892 $21,937 $21,956 Gross Margin % 00% 00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% Expenses Payroll $8,500 $9,620 $13,972 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 Sales and Marketing and Other Expenses $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 Depreciation $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 Leased Equipment - - - - - - - - - - - - Utilities - - - - - - - - - - - - Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 Payroll Taxes 15% - - - - - - - - - - - - Other - - - - - - - - - - - -
  25. 25. Appendix Page 5 Total Operating Expenses $11,650 $12,770 $17,122 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 Profit Before Interest and Taxes ($11,650) ($12,770) ($11,350) ($8,034) ($6,415) ($4,370) ($3,228) ($2,328) ($283) $1,762 $3,807 $3,826 EBITDA ($10,400) ($11,520) ($10,100) ($6,784) ($5,165) ($3,120) ($1,978) ($1,078) $967 $3,012 $5,057 $5,076 Interest Expense $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 $667 Taxes Incurred - - - - - - - - - - - - Net Profit ($12,317) ($13,437) ($12,017) ($8,701) ($7,081) ($5,037) ($3,894) ($2,995) ($950) $1,095 $3,140 $3,159 Net Profit/Sales 00% 00% -114.51% -47.40% -33.25% -20.13% -14.37% -10.42% -2.93% 3.03% 7.87% 7.91%
  26. 26. Appendix Page 6 Table: Cash Flow Pro Forma Cash Flow Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Cash Received Cash from Operations Cash Sales - - $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920 Subtotal Cash from Operations - - $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920 Additional Cash Received Sales Tax, VAT, HST/GST Received - - - - - - - - - - - - New Current Borrowing - - - - - - - - - - - - New Other Liabilities (interest-free) - - - - - - - - - - - - New Long- term Liabilities - - - - - - - - - - - - Sales of Other Current Assets - - - - - - - - - - - - Sales of Long-term Assets - - - - - - - - - - - -
  27. 27. Appendix Page 7 New Investment Received - - - - - - - - - - - - Subtotal Cash Received - - $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920 Expenditures Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Expenditures from Operations Cash Spending $8,500 $9,620 $13,972 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 Bill Payments $86 $2,567 $2,724 $7,407 $10,871 $12,208 $13,856 $14,784 $15,551 $17,224 $18,898 $20,515 Subtotal Spent on Operations $8,586 $12,187 $16,696 $22,387 $25,851 $27,188 $28,836 $29,764 $30,531 $32,204 $33,878 $35,495 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out - - - - - - - - - - - - Principal Repayment of Current Borrowing - - - - - - - - - - - - Other Liabilities Principal Repayment - - - - - - - - - - - - Long-term Liabilities Principal Repayment - - - - - - - - - - - -
  28. 28. Appendix Page 8 Purchase Other Current Assets - - - - - - - - - - - - Purchase Long-term Assets - - - - - - - - - - - - Dividends - - - - - - - - - - - - Subtotal Cash Spent $8,586 $12,187 $16,696 $22,387 $25,851 $27,188 $28,836 $29,764 $30,531 $32,204 $33,878 $35,495 Net Cash Flow ($8,586) ($12,187) ($6,202) ($4,031) ($4,551) ($2,169) ($1,741) ($1,033) $1,918 $3,962 $6,007 $4,425 Cash Balance $79,314 $67,128 $60,926 $56,895 $52,344 $50,175 $48,434 $47,401 $49,318 $53,281 $59,288 $63,713
  29. 29. Appendix Page 9 Table: Balance Sheet Pro Forma Balance Sheet Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Assets Starting Balances Current Assets Cash $87,900 $79,314 $67,128 $60,926 $56,895 $52,344 $50,175 $48,434 $47,401 $49,318 $53,281 $59,288 $63,713 Other Current Assets - - - - - - - - - - - - - Total Current Assets $87,900 $79,314 $67,128 $60,926 $56,895 $52,344 $50,175 $48,434 $47,401 $49,318 $53,281 $59,288 $63,713 Long- term Assets Long- term Assets $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 Accumul ated Depreciat ion - $1,250 $2,500 $3,750 $5,000 $6,250 $7,500 $8,750 $10,000 $11,250 $12,500 $13,750 $15,000 Total Long- term Assets $75,000 $73,750 $72,500 $71,250 $70,000 $68,750 $67,500 $66,250 $65,000 $63,750 $62,500 $61,250 $60,000 Total Assets $162,900 $153,064 $139,628 $132,176 $126,895 $121,094 $117,675 $114,684 $112,401 $113,068 $115,781 $120,538 $123,713
  30. 30. Appendix Page 10 Liabilitie s and Capital Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Current Liabilitie s Accounts Payable - $2,481 $2,481 $7,046 $10,466 $11,747 $13,364 $14,267 $14,979 $16,596 $18,214 $19,831 $19,846 Current Borrowin g - - - - - - - - - - - - - Other Current Liabilitie s - - - - - - - - - - - - - Subtotal Current Liabilitie s - $2,481 $2,481 $7,046 $10,466 $11,747 $13,364 $14,267 $14,979 $16,596 $18,214 $19,831 $19,846 Long- term Liabilitie s $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 Total Liabilitie s $80,000 $82,481 $82,481 $87,046 $90,466 $91,747 $93,364 $94,267 $94,979 $96,596 $98,214 $99,831 $99,846 Paid-in Capital $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 Retained Earnings ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) Earnings - ($12,317 ($25,753 ($37,770 ($46,471 ($53,553 ($58,589 ($62,484 ($65,478 ($66,428 ($65,333 ($62,193 ($59,034) Total Capital $82,900 $70,583 $57,147 $45,130 $36,429 $29,347 $24,311 $20,416 $17,422 $16,472 $17,567 $20,707 $23,866
  31. 31. Appendix Page 11 Total Liabilitie s and Capital $162,900 $153,064 $139,628 $132,176 $126,895 $121,094 $117,675 $114,684 $112,401 $113,068 $115,781 $120,538 $123,713 Net Worth $82,900 $70,583 $57,147 $45,130 $36,429 $29,347 $24,311 $20,416 $17,422 $16,472 $17,567 $20,707 $23,866

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