Software to Get the Money You Need to Start the Restaurant You Want- Now!

Example of Restaurant Business Plan Financials Part 5- Adjusting Restaurant Sales Projections

Now that we’ve got our sales entered, including the main food and beverage sales plus the other incidental but still important sales the next thing to do is make these sales realistic.

This is where a lot of people blow it and where you get (one of the many) benefit of using restaurant business plan software rather than just generic software.

The sales we estimated were for one good day of business. But we need projections that cover three years and we actually make projections that go out five years in our software. But every day is not going to be the same as our one good day. For one thing, some days you will probably be closed!

Even if you aren’t, you’d be about the only restaurant in the world that did the same sales on Monday as you do on Friday if you don’t modify your estimates to reflect this. You probably also don’t do the same sales in December as you do in June but here which one is busier depends on what kind of restaurant you are and where you are located.

A place in Florida might boom in December while a place in upstate New York might actually close for a few months in the winter. Either way, you have to adjust your sales volume to show these fluctuations or your projections will be worthless before you even start.

The first section of the revenue modifiers page is for adjusting both weekly sales and monthly sales. 100% is your busiest time, 0% means you are closed for the day and everything else is somewhere in between. Most restaurants don’t swing more than 40% between the busiest and slowest day and if they do it’s time to put some more restaurant marketing into the mix.

The next thing to adjust is your startup rate and your annual growth. The start up rate, or the speed at which your sales “ramp up” to get to your expected normal sales volume depends on the type of restaurant you start, how well you market and pick a location and the local conditions.

If you have bought an existing location you already know the current sales level and hopefully you only grow from there. If you are starting from scratch most places take six months to get to their 100% of normal level. A franchise may move faster than that since people aare already familiar with what it sells and what to expect.

Use your own judgment here about what will be realistic for your situation. realize the faster you ramp up the less cash you will need but on the other hand overestimating this may put you in the position of running out of cash before you hit break even which means you go out of business. So, be realistic but lean towards conservative.

Annual growth rates are hopefully at least five percent. You should achieve this just by raising your prices a little every year. If you think you can do better you can notch it up but realize growth over about 10% a year for an established restaurant is a very high rate a few places achieve that and even fewer do so year after year after year.

The last thing to input here is what your estimated starting month will be. Any time of year is fine for opening a restaurant so don’t worry too much about the timing- chances are it won’t happen exactly when you expect anyway.

This effects your sales (since sales are adjusted by the month as we did above) and of course the month labels on your spreadsheets. And the spreadsheet shows you the final adjusted sales numbers that resulted from the adjustments we made. You can see the starting sales at the top and the final sales at the bottom.

There should be a big difference in the two. If there isn’t you probably haven’t done enough downward adjusting. If the sales now look too low to be realistic, go back to the sales estimation page and make changes there first rather than changing this page. Once you’ve done that then you can adjust this page if the numbers still don’t seem quite right to you.

Tell Your Friends, Bookmark or Print:
  • Facebook
  • Twitter
  • Digg
  • StumbleUpon
  • Add to favorites
  • Print

Related Posts:

This entry was posted in Restaurant Business and tagged , , , , , . Bookmark the permalink.

Comments are closed.

  The #1 Restaurant Startup Resource

Restaurant Business Plans

Starting a Restaurant

Restaurant Franchises

Buying a Restaurant

Restaurant Services

Restaurant Resources


Copyright 2001-