How to create a financial forecast for a food concession stand?
Creating a financial forecast for your food concession stand, and ensuring it stays up to date, is the only way to maintain visibility on future cash flows.
This might sound complex, but with the right guidance and tools, creating an accurate financial forecast for your food concession stand is not that hard.
In this guide, we'll cover everything from the main goal of a financial projection, the data you need as input, to the tables that compose it, and the tools that can help you build a forecast efficiently.
Without further ado, let us begin!
Why create and maintain a financial forecast for a food concession stand?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your food concession stand and ensure that it can be financially viable in the years to come.
A financial plan for a food concession stand enables you to look at your business in detail - from income to operating costs and investments - to evaluate its expected profitability and future cash flows.
This gives you the visibility needed to plan future investments and expansion with confidence.
And, when your trading environment gets tougher, having an up to date food concession stand forecast enables you to detect potential upcoming financing shortfalls in advance, enabling you to make adjustments or secure financing before you run out of cash.
It’s also important to remember that your food concession stand's financial forecast will be essential when looking for financing. You can be 100% certain that banks and investors will ask to see your numbers, so make sure they’re set out accurately and attractively.
Need a solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
What information is used as input to build a food concession stand financial forecast?
A food concession stand's financial forecast needs to be built on the right foundation: your assumptions.
The data required to create your assumptions will depend on whether you are a new or existing food concession stand.
If you are creating (or updating) the forecast of an existing food concession stand, then your main inputs will be historical accounting data and operating metrics, and your team’s view on what to expect for the next three to five years.
If you are building financial projections for a new food concession stand startup, you will need to rely on market research to form your go-to-market strategy and derive your sales forecast.
For a new venture, you will also need an itemised list of resources needed for the food concession stand to operate, along with a list of equipment required to launch the venture (more on that below).
Now that you understand what is needed, let’s have a look at what elements will make up your food concession stand's financial forecast.
The sales forecast for a food concession stand
From experience, it is usually best to start creating your food concession stand financial forecast by your sales forecast.
To create an accurate sales forecast for your food concession stand, you will have to rely on the data collected in your market research, or if you're running an existing food concession stand, the historical data of the business, to estimate two key variables:
- The average price
- The number of monthly transactions
To get there, you will need to consider the following factors:
- Location: The location of your food concession stand can greatly impact your average price and number of monthly transactions. If you are located in a busy tourist area, you may be able to charge higher prices and have more transactions. However, if you are in a less busy area, you may need to lower your prices to attract customers and may have fewer transactions overall.
- Weather: The weather can also play a significant role in your sales forecast. If you are operating during the summer months, you may see an increase in sales due to the hot weather and people being more inclined to purchase cold drinks and ice cream. However, if you are operating during the colder months, you may need to adjust your menu and prices to accommodate for the change in weather.
- Events and Festivals: Events and festivals in your area can have a big impact on your business's average price and number of monthly transactions. If there is a popular event or festival happening nearby, you may see an increase in sales as people are more likely to visit your food concession stand. On the other hand, if there are no events or festivals happening, you may see a decrease in both price and transactions.
- Competition: The level of competition in your area can also affect your business's sales forecast. If there are many other food concession stands in the same location, you may need to adjust your prices to remain competitive and attract customers. However, if you are the only food concession stand in the area, you may be able to charge higher prices and have more transactions.
- Menu Changes: Making changes to your menu can also impact your average price and number of monthly transactions. If you introduce new and popular items, you may see an increase in sales as customers are interested in trying them. However, if you remove popular items or change your prices drastically, you may see a decrease in transactions as customers may not be willing to pay the new prices.
Once you have an idea of what your future sales will look like, it will be time to work on your overhead budget. Let’s see what this entails.
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The operating expenses for a food concession stand
The next step is to estimate the costs you’ll have to incur to operate your food concession stand.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your food concession stand's operating expenses should normally include the following items:
- Staff Costs: Salaries and wages for your employees, including any benefits and payroll taxes.
- Food Supplies: The cost of purchasing ingredients and supplies for your menu items.
- Rent/Space Fees: The cost of renting a space or booth at a fair, festival, or event.
- Utilities: The cost of electricity, water, and gas for your concession stand.
- Equipment Rental: The cost of renting any necessary equipment, such as a grill or fryer.
- Marketing and Advertising: The cost of promoting your concession stand, including flyers, signage, and social media ads.
- Food Permits and Licenses: The cost of obtaining necessary permits and licenses to operate a food concession stand.
- Accountancy Fees: The cost of hiring an accountant to manage your financial records and file taxes.
- Insurance Costs: The cost of insuring your concession stand and equipment against potential damages or accidents.
- Software Licenses: The cost of any software or point-of-sale systems used to manage transactions and inventory.
- Banking Fees: The cost of maintaining a business bank account and any associated fees.
- Cleaning and Sanitation Supplies: The cost of purchasing cleaning and sanitation supplies to maintain a clean and safe concession stand.
- Inventory Costs: The cost of purchasing and restocking inventory for your concession stand, such as food and drink items.
- Repairs and Maintenance: The cost of repairing and maintaining any equipment or facilities used in your concession stand.
- Credit Card Processing Fees: The cost of fees associated with accepting credit or debit card payments.
This list is not exhaustive by any means, and will need to be tailored to your food concession stand's specific circumstances.
What investments are needed to start or grow a food concession stand?
Creating and expanding a food concession stand also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a food concession stand could include elements such as:
- Food Preparation Equipment: This includes items such as grills, fryers, ovens, and refrigerators. These equipment are essential for food preparation and storage, and are considered fixed assets as they have a long-term use in your concession stand.
- Point-of-Sale (POS) System: A POS system is crucial for efficiently processing orders and tracking sales. It typically includes a cash register, credit card reader, and software for inventory management and sales tracking. Investing in a good POS system can improve the overall operations of your food concession stand.
- Concession Trailer or Cart: This is the physical structure that will house your food concession stand. It can be a trailer that you can tow to different locations, or a stationary cart that you can set up in a specific spot. The type of concession trailer or cart you choose will depend on your needs and budget.
- Furniture and Fixtures: This includes tables, chairs, and other furnishings for your customers to sit and enjoy their food. It also includes fixtures such as lighting, signage, and shelving. These items are considered fixed assets as they have a long-term use in your concession stand.
- Start-up Costs: These are one-time expenses that are necessary to get your food concession stand up and running. They can include permits and licenses, initial inventory, and any renovations or modifications needed for your concession trailer or cart. These costs may vary depending on your location and the type of food you plan to serve.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your food concession stand.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
The financing plan of your food concession stand
The next step in the creation of your financial forecast for your food concession stand is to think about how you might finance your business.
You will have to assess how much capital will come from shareholders (equity) and how much can be secured through banks.
Bank loans will have to be modelled so that you can separate the interest expenses from the repayments of principal, and include all this data in your forecast.
Issuing share capital and obtaining a bank loan are two of the most common ways that entrepreneurs finance their businesses.
What tables compose the financial plan for a food concession stand?
Now let's have a look at the main output tables of your food concession stand's financial forecast.
The forecasted profit & loss statement
The profit & loss forecast gives you a clear picture of your business’ expected growth over the first three to five years, and whether it’s likely to be profitable or not.
A healthy food concession stand's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for an established food concession stand will look different than for a startup.
The projected balance sheet
Your food concession stand's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.
The cash flow forecast
Your food concession stand's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the food concession stand:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your food concession stand's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your food concession stand's financial plan - so that banks or investors can assess seasonal variation and ensure your business is appropriately capitalised.
Need a solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
Which tool should you use to create your food concession stand's financial projections?
Building a food concession stand financial forecast is not difficult provided that you use the right tool for the job. Let’s see what options are available below.
Using online financial projection software to build your food concession stand's forecast
The modern and easiest way to build a forecast is to use professional financial projection software such as the one we offer at The Business Plan Shop.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- You can easily track your actual financial performance against your financial forecast, and recalibrate your forecast as the year goes by
- You can create scenarios to stress test your forecast's main assumptions
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
- It’s cost-efficient and much cheaper than using an accountant or consultant (see below)
If you are interested in this type of solution, you can try our forecasting software for free by signing up here.
Calling in a financial consultant or chartered accountant
Enlisting the help of a consultant or accountant is also a good way to obtain a professional food concession stand financial forecast.
The downside of this solution is its cost. From experience, obtaining a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to cost a minimum of £700 or $1,000.
The indicative cost above, is for a small business, and a forecast is done as a one-shot exercise. Using a consultant or accountant to track your actuals vs. forecast and to keep your financial projections up to date on a monthly or quarterly basis will cost a lot more.
If you opt for this solution, make sure your accountant has in-depth knowledge of your industry, so that they may challenge your figures and offer insights (as opposed to just taking your assumptions at face value to create the forecast).
Why not use a spreadsheet such as Excel or Google Sheets to build your food concession stand's financial forecast?
Creating an accurate and error-free food concession stand financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.
Most entrepreneurs lack the expertise required to create an accurate financial forecast using spreadsheet software like Excel or Google Sheets. As a result, it is unlikely anyone will trust your numbers.
The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.
This is why professional forecasters all use software. With the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and updating your forecast as the year progresses is manual, tedious, error-prone, and time-consuming. Whereas financial forecasting software like The Business Plan Shop is built for this.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Use our financial projection templates for inspiration
The Business Plan Shop has dozens of financial forecast templates available.
Our examples contain a complete business plan with a financial forecast and a written presentation of the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own food concession stand, looking at our financial forecast template is a good way to:
- Understand what a complete business plan should look like
- Understand how you should model financial items for your food concession stand
Takeaways
- A financial projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your food concession stand.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a food concession stand. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
Need inspiration for your business plan?
The Business Plan Shop has dozens of business plan templates that you can use to get a clear idea of what a complete business plan looks like.
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