The Financial Analysis part of the hospitality program consists of pro forma (projected) financial statements for the company. Before creating these statements, consideration shall be paid to the three basic concepts:

Investments

Probably the most relevant part of Financial Analysis section, a statement of how much capital the restaurant will have to start the project. The trouble is that too conservative of a projection will leave you with an investment amount that is either unattainable or too large (creating excessive interest), but overly conservative projection will leave you vulnerable to running out of funds during start-up activities.

In assessing the cost of capital expenditure, it is best to err on the high side. The attempt to create a comprehensive list of all capital expenditures that your restaurant will need even before it opens its doors. Go beyond the brick and mortar of the place and decoration, furniture, tabletop items, trays, and kitchen equipment. There are also software – restaurants generally use a POS (point of sale) software and software online, such transfer, credit card processing, and accounting. A rule-of-thumb is to include any single purchase is expected to serve at the restaurant for years. Build a buffer for unforeseen expenses, such as running out of money at this stage and try to secure another source of funding can be detrimental to the launch and long-term company.

operating costs and revenues

Operating primarily cogs (cost of goods sold) and labor costs for the restaurant. These costs can be determined accurately by surprise action begins because they aggregate the sum of how much it costs to produce the food you’re cooking and how much you have to pay staff. The problem, however, arises when media traffic to your restaurant will see the day to day and the average purchase per customer. Try to be as realistic as possible and take into account the type of customer you are trying to attract, what geographic area you are working in, and foot-traffic institution expected.

Cash Flow

The cash flow is the most important statement for operating the restaurant opens. When payments need to be made and the projection of future revenue transactions are key to generate reliable plans. While it may be necessary for other industries, restaurants often create unofficial worksheet tasks and monitors weekly movements of cash. This is primarily because the restaurants have many moving parts such as payroll, sales tax and delivery of products that can create fluctuations from week to week. For example, to reach the lowest price from suppliers, you can try to buy in larger quantities, which can put a strain on cash during the week as this large purchases fall, although they might represent equipment that will serve for weeks or months . Thus, the cash buffer is very useful to be protected from contraction for even a profitable restaurant.