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Restaurant - Dessert Bar and Bakery
Business Plan

Rutabaga Sweets

1.0 Executive Summary
Highlights
2.0 Company Summary
3.0 Products and Services
4.0 Market Analysis Summary
5.0 Competitive Edge
6.0 Management Summary
7.0 Financial Plan
7.1 Important Assumptions
General Assumptions
7.2 Break-even Analysis
Break-even Analysis
Break-even Analysis
7.3 Projected Profit and Loss
Profit and Loss
Profit Monthly
Profit Yearly
Gross Margin Monthly
Gross Margin Yearly
7.4 Projected Cash Flow
Cash Flow
Cash
7.5 Projected Balance Sheet
Balance Sheet
7.6 Business Ratios
Ratios
7. Financial Plan
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7.0 Financial Plan[back to top]

It is key to our financial success to grow Rutabaga Sweets not just as a dessert bar, but as a company.  We are looking for an investment of $300,000 seed money with the hopes of eventually selling an established chain of dessert bars or establishing our company as a gourmet franchise.  This means we must always be reinvesting in the future of Rutabaga Sweets.

7.1 Important Assumptions[back to top]

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

  • We assume a slow-growth economy, without major recession.
  • We assume of course that there are no unforeseen changes in technology to make products immediately obsolete.
  • We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.

General Assumptions
 FY 2003FY 2004FY 2005
Plan Month123
Current Interest Rate10.00%10.00%10.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate30.00%30.00%30.00%
Other000

7.2 Break-even Analysis[back to top]

For our break-even analysis, we assume running costs including our full payroll, rent, and utilities, and an estimation of other running costs. Payroll alone, at our present run rate, is only about $4,000.

Margins are harder to assume that far in the future.

Break-even Analysis
  
Monthly Revenue Break-even$13,251
  
Assumptions: 
Average Percent Variable Cost19%
Estimated Monthly Fixed Cost$10,689

Break-even Analysis

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7.3 Projected Profit and Loss[back to top]

An important assumption when calculating our P&L is the increase in sales from year to year.  We are basing our assumptions on the financial success of Finale Dessertery in Boston, Massachusetts.  They reported a 50% increase in sales the second year of business followed by a 30% increase the next year.  We feel Rutabaga Sweets can match, if not beat those sales, considering the National Restaurant Association's analysis of the Bureau of Labor Statistics Consumer Expenditure Survey states that Washington DC households spend the most at restaurants per year.

It is also vital that we hold our food cost at 20% and 15% respectively for dine-in desserts and POP, carry-out and weekly lessons.  That will assure our gross margin remains high.

Pro Forma Profit and Loss
 FY 2003FY 2004FY 2005
Sales$166,150$241,525$312,751
Direct Costs of Goods$32,123$47,232$60,499
Other Production Expenses$0$0$0
 ------------------------------------
Cost of Goods Sold$32,123$47,232$60,499
    
Gross Margin$134,028$194,293$252,252
Gross Margin %80.67%80.44%80.66%
    
    
Expenses   
Payroll$50,063$54,019$60,387
Sales and Marketing and Other Expenses$2,300$2,500$2,500
Depreciation$0$0$0
Leased Equipment$0$0$0
Utilities$6,000$6,000$6,000
Insurance$2,400$2,400$2,400
Rent$60,000$60,000$60,000
Payroll Taxes$7,509$8,103$9,058
Other$0$0$0
 ------------------------------------
Total Operating Expenses$128,272$133,022$140,345
    
Profit Before Interest and Taxes$5,755$61,271$111,907
EBITDA$5,755$61,271$111,907
Interest Expense$0$0$0
Taxes Incurred$1,727$18,381$33,572
    
Net Profit$4,029$42,890$78,335
Net Profit/Sales2.42%17.76%25.05%

Profit Monthly

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Profit Yearly

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Gross Margin Monthly

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Gross Margin Yearly

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7.4 Projected Cash Flow[back to top]

Being a quick-service oriented business, our cash flow depends on sales assumptions.  It is critical to keep our food cost low. We also need to be careful to balance slow (non-holiday) months with busy months with big holidays such as Christmas, Valentine's Day and Mother's Day.

Pro Forma Cash Flow
 FY 2003FY 2004FY 2005
Cash Received   
    
Cash from Operations   
Cash Sales$166,150$241,525$312,751
Subtotal Cash from Operations$166,150$241,525$312,751
    
Additional Cash Received   
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
Subtotal Cash Received$166,150$241,525$312,751
    
ExpendituresFY 2003FY 2004FY 2005
    
Expenditures from Operations   
Cash Spending$50,063$54,019$60,387
Bill Payments$104,118$146,159$173,213
Subtotal Spent on Operations$154,181$200,178$233,600
    
Additional Cash Spent   
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
Subtotal Cash Spent$154,181$200,178$233,600
    
Net Cash Flow$11,969$41,347$79,151
Cash Balance$30,969$72,316$151,467

Cash

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7.5 Projected Balance Sheet[back to top]

The balance sheet is quite solid. We do not project any real trouble meeting our debt obligations - as long as we can achieve our specific objectives. We realize we've projected aggressively, but are confident the location we've chosen for Rutabaga Sweets, as well as the dessert bar concept itself , will be very successful.

At this point we haven't included any assets or depreciation in our calculations.  Whether we purchase new or used kitchen equipment will determine those numbers at a later date.

Pro Forma Balance Sheet
 FY 2003FY 2004FY 2005
Assets   
    
Current Assets   
Cash$30,969$72,316$151,467
Inventory$3,834$5,637$7,220
Other Current Assets$0$0$0
Total Current Assets$34,802$77,953$158,687
    
Long-term Assets   
Long-term Assets$0$0$0
Accumulated Depreciation$0$0$0
Total Long-term Assets$0$0$0
Total Assets$34,802$77,953$158,687
    
Liabilities and CapitalFY 2003FY 2004FY 2005
    
Current Liabilities   
Accounts Payable$11,774$12,034$14,434
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
Subtotal Current Liabilities$11,774$12,034$14,434
    
Long-term Liabilities$0$0$0
Total Liabilities$11,774$12,034$14,434
    
Paid-in Capital$300,000$300,000$300,000
Retained Earnings($281,000)($276,971)($234,082)
Earnings$4,029$42,890$78,335
Total Capital$23,029$65,918$144,253
Total Liabilities and Capital$34,802$77,953$158,687
    
Net Worth$23,029$65,918$144,253

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