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HOW TO CREATE A RESTAURANT FINANCIAL FORECAST


Before we dive into this one, I have a few thoughts...like who actually does the following?


If more people actually read this before getting involved in the restaurant business, there would be fewer horror stories out there.

And there are more than a few, but I will save that for another day.


Do you enjoy cooking and have always wanted to open a restaurant of your own? For this dream to become a reality, you must create a restaurant financial forecast and put it at the center of your project.

As a potential business owner, creating a financial forecast for your dream business is the closest means to seeing your company’s future. And the same applies to the restaurant business. Creating a financial forecast for a restaurant will enable you to review all the budgetary requirements for opening your restaurant. In addition, it will also help you understand the potential profitability of the restaurant business better.


No doubt, the thought of creating a financial forecast for your restaurant might seem like a complex task. And this is why, in this article, we will provide you with all the information you need to make creating the financial forecast an easy task.

In this article, we will evaluate the budget’s role and the data required to make it work. We will also look at the three main sections of the restaurant business plan with the spreadsheets that make them up. Furthermore, we will outline the different tools that will assist you in creating your forecast.


The Importance of Creating a Financial Forecast for a Restaurant


The financial forecast enables you to determine the profitability of your project. During financial forecasting, you will get to evaluate every aspect of the restaurant you envision. These include costs and menu prices to ensure that it is financially viable.

You will also outline the investments needed to start your business, such as kitchen equipment and furniture, to determine how much money you will need to get started. Another important part of creating a financial forecast is that it will give you an idea of what to expect in the future. And with an idea of what to expect in the future, you can confidently plan your business development.


Note: The budget for your restaurant will be essential during fundraising. A banker or investor will certainly request these figures when you present your project. Therefore, you should ensure they are accurate and appealing.


The Information Required to Create a Restaurant Financial Forecast


The financial forecast for your restaurant will depend on the necessary specific data you should gather ahead of time. First and foremost, you must have conducted market research to assess the commercial potential of your location. Conducting market research enables you to answer questions such as:

  • What will the average spend be per person?

  • How many times will the average customer visit the restaurant in a year?

  • What will the seating capacity of your restaurant be?

  • How many people are you expecting to come into your restaurant during business hours? During this assessment, you should consider the potential customers nearby, such as office workers, students, and families. Also, divide it into lunch and dinner sittings and on weekends and weekdays.

  • What restaurants are nearby? Do they serve the same cuisine as you, or do they have a completely different menu?

Your market analysis will also factor in the marketing strategies you intend to implement to make your restaurant known. Be it the cost of creating your website, advertising, or hiring people to help you distribute flyers on the street, include all marketing strategy costs in your budget.

Furthermore, you will need to create a detailed list of the necessary resources that will help keep the restaurant running daily. You should also ensure you factor in insurance, staff, and the cost of purchasing a liquor license if you want to create a budget that is as feasible as possible.


The Sales Forecast for your Restaurant


Setting out a sales forecast is the first step you should take when creating financial projections for your restaurant. And one of the ways you can start estimating your sales projections is by assessing the maximum capacity of your restaurant. Furthermore, when compiling this data, you need to remember and consider the following information:

  • The opening hours of the restaurant

  • The number of available seats

  • The duration of time each customer spends at the table (table turn time)

  • The amount of time it takes the kitchen to prepare the dishes, as well as the acceptable wait time before they get to the table

Once you have determined your maximum capacity, the next thing you should evaluate is the occupancy rate of your restaurant. The occupancy rate measures the percentage of tables customers occupy during peak and off-peak dining hours.

The next thing you should determine after evaluating your occupancy rate is the number of customers likely to enter your restaurant daily based on market research data. After assessing the number of customers that will likely visit your restaurant, the last part you should evaluate is your average revenue per guest. However, the assessment on this part will vary based on your menu prices and the customers your restaurant intends to serve.


There is plenty more to be explained here. If you happen to be thinking of opening a restaurant, I would advise you to speak with a professional first. It's a huge investment...spend a few bucks and put yourself on the right track first Cheers, and have a great weekend!

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