How to create a financial forecast for a gastro pub?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your gastro pub.
Putting together a gastro pub financial forecast may sound complex, but don’t worry, with the right tool, it’s easier than it looks, and The Business Plan Shop is here to guide you.
In this practical guide, we'll cover everything you need to know about building financial projections for your gastro pub.
We will start by looking at why they are key, what information is needed, what a forecast looks like once completed, and what solutions you can use to create yours.
Let's dive in!
Why create and maintain a financial forecast for a gastro pub?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your gastro pub and ensure that it can be financially viable in the years to come.
A financial plan for a gastro pub 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 gastro pub 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 gastro pub'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 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.
What information is used as input to build a gastro pub financial forecast?
A gastro pub's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing gastro pub, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for a gastro pub startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the gastro pub running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your gastro pub's financial forecast.
The sales forecast for a gastro pub
From experience, it is usually best to start creating your gastro pub financial forecast by your sales forecast.
To create an accurate sales forecast for your gastro pub, you will have to rely on the data collected in your market research, or if you're running an existing gastro pub, 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:
- Seasonal Demand: As a gastro pub, your business may experience fluctuations in the number of monthly transactions based on seasonal demand. For example, during the summer months, more customers may visit your pub for outdoor dining and drinks, while in the winter months, indoor dining and cozy atmosphere may attract more customers.
- Menu Changes: Introducing new and innovative dishes or changing the menu frequently can affect the average price of your dishes and drinks. For instance, adding high-end or unique ingredients to your menu may increase the average price of your dishes, while removing popular items may decrease it.
- Economic Factors: Economic factors such as inflation, changes in consumer spending habits, or overall economic conditions can impact your business's average price and monthly transactions. For example, during an economic downturn, customers may be more price-sensitive and opt for cheaper options, affecting your average price and number of transactions.
- Competition: The presence of other gastro pubs or restaurants in your area can also affect your business's average price and number of transactions. If there is stiff competition, you may need to adjust your prices to stay competitive, or offer unique dishes or experiences to attract customers.
- Special Events or Holidays: Hosting special events or offering holiday-themed menus can also affect your business's average price and monthly transactions. For example, during holidays or special events, you may offer special dishes or packages at a higher price, which can increase your average price for that month.
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.
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 operating expenses for a gastro pub
The next step is to estimate the costs you’ll have to incur to operate your gastro pub.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your gastro pub's operating expenses should normally include the following items:
- Staff costs: This includes wages, salaries, and benefits for all employees, including chefs, servers, bartenders, and kitchen staff. You may also need to budget for overtime pay and training costs.
- Food and beverage costs: This covers the cost of ingredients and supplies needed to create your menu items, as well as the cost of purchasing and stocking beverages.
- Rent or lease payments: This is the cost of renting or leasing the space for your gastro pub. It may also include additional costs such as utilities and maintenance fees.
- Accountancy fees: You will likely need the services of an accountant to help with bookkeeping, tax preparation, and financial analysis.
- Insurance costs: This includes general liability insurance, property insurance, and workers' compensation insurance to protect your business and employees.
- Marketing and advertising expenses: This covers the cost of promoting your gastro pub through various channels, such as social media, print ads, and events.
- Software licenses: You may need to purchase licenses for software such as point of sale systems, reservation systems, and accounting software.
- Banking fees: This includes transaction fees, account maintenance fees, and any other fees associated with your business bank account.
- Cleaning and maintenance costs: This covers the cost of keeping your gastro pub clean and well-maintained, including hiring cleaning services and purchasing cleaning supplies.
- Utilities: This includes the cost of electricity, water, gas, and other utilities needed to run your gastro pub.
- Licenses and permits: You may need to obtain various licenses and permits, such as a liquor license and food service permit, in order to operate your gastro pub.
- Credit card processing fees: If you accept credit and debit card payments, you will need to budget for processing fees charged by the payment processor.
- Repairs and maintenance: This covers the cost of repairing and maintaining equipment, furniture, and fixtures in your gastro pub.
- Professional services: This may include fees for legal advice, consulting services, or other professional services needed to run your business effectively.
- Entertainment and events: If your gastro pub hosts live music or other events, you will need to budget for the cost of booking performers and promoting the events.
This list is not exhaustive by any means, and will need to be tailored to your gastro pub's specific circumstances.
What investments are needed to start or grow a gastro pub?
Your gastro pub financial forecast will also need to include the capital expenditures (aka investments in plain English) and initial working capital items required for the creation or development of your business.
For a gastro pub, these could include:
- Kitchen Equipment: This includes items such as stoves, ovens, grills, fryers, and refrigerators. These are essential for any gastro pub as they are used to prepare and store food. Make sure to invest in high-quality equipment to ensure efficient and safe food preparation.
- Furniture and Fixtures: This includes tables, chairs, bar stools, and other furnishings for your dining and bar areas. These items not only provide comfort for your customers, but they also contribute to the overall ambiance and aesthetic of your gastro pub.
- Point of Sale (POS) System: A good POS system is crucial for any gastro pub as it helps with order taking, inventory management, and tracking sales. Look for a system that is user-friendly, reliable, and has the capability to integrate with other software such as accounting or reservation systems.
- Bar Equipment: This includes items such as beer taps, kegerators, and glassware. These are essential for any gastro pub with a bar as they are used to serve and store beverages. Make sure to invest in quality equipment to ensure the proper serving and storage of drinks.
- Outdoor Seating: Depending on the location and climate of your gastro pub, investing in outdoor seating can be a great addition. This includes items such as patio furniture, umbrellas, and heaters. Outdoor seating can attract more customers and increase revenue, especially during warmer months.
Again, this list will need to be adjusted according to the size and ambitions of your gastro pub.
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 gastro pub
The next step in the creation of your financial forecast for your gastro pub 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 gastro pub?
Now let's have a look at the main output tables of your gastro pub's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your gastro pub's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a gastro pub should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
Your gastro pub'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 projection
The cash flow forecast of your gastro pub will show how much cash the business is expected to generate or consume over the next three to five years.
There are multiple ways of presenting a cash flow forecast but from experience, it is better to organise it by nature in order to clearly show these elements:
- Operating cash flow: how much cash is generated by the gastro pub's operations
- Investing cash flow: what is the business investing to expand or maintain its equipment
- Financing cash flow: is the business raising additional funds or repaying financiers (debt repayment, dividends)
Your cash flow forecast is the most important element of your overall financial projection and that’s where you should focus your attention to ensure that your gastro pub is adequately funded.
Note: if you are preparing a financial forecast in order to try to secure funding, you will need to include both a yearly and monthly cash flow forecast in your gastro pub's financial plan.
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.
Which tool should you use to create your gastro pub's financial forecast?
Using the right tool or solution will make the creation of your gastro pub's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your gastro pub's projections
The modern and easiest way is to use an online financial forecasting tool 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 projection software for free by signing up here.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional gastro pub financial projection.
As you can imagine, this solution is much more expensive than using software. From experience, the creation of a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to start around £700 or $1,000 excluding taxes.
The indicative estimate above, is for a small business, and a forecast done as a one-off. Using a financial consultant or accountant to track your actuals vs. forecast and to keep your financial forecast up to date on a monthly or quarterly basis will naturally cost a lot more.
If you choose this solution, make sure your service provider has first-hand experience in your industry, so that they may challenge your assumptions and offer insights (as opposed to just taking your figures at face value to create the forecast’s financial statements).
Why not use a spreadsheet such as Excel or Google Sheets to build your gastro pub's financial forecast?
Creating an accurate and error-free gastro pub 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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
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 gastro pub.
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 gastro pub. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
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.
Also on The Business Plan Shop
- Example of financial projections
- How to create a sales forecast for a business?
- Example of financial forecast for business idea
Know someone who runs or wants to start a gastro pub? Share our financial projection guide with them!