How to create a financial forecast for a grill restaurant?
Developing and maintaining an up-to-date financial forecast for your grill restaurant is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together a grill restaurant financial forecast then don’t worry as this guide is here to help you.
We'll cover everything from: the main objectives of a financial forecast, the data you need to gather before starting, to the tables that compose it, and the tools that will help you create and maintain your forecast efficiently.
Let's get started!
Why create and maintain a financial forecast for a grill restaurant?
In order to prosper, your business needs to have visibility on what lies ahead and the right financial resources to grow. This is where having a financial forecast for your grill restaurant becomes handy.
Creating a grill restaurant financial forecast forces you to take stock of where your business stands and where you want it to go.
Once you have clarity on the destination, you will need to draw up a plan to get there and assess what it means in terms of future profitability and cash flows for your grill restaurant.
Having this clear plan in place will give you the confidence needed to move forward with your business’s development.
Having an up-to-date financial forecast for a grill restaurant is also useful if your trading environment worsens, as the forecast enables you to adjust to your new market conditions and anticipate any potential cash shortfall.
Finally, your grill restaurant's financial projections will also help you secure financing, as banks and investors alike will want to see accurate projections before agreeing to finance your business.
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 grill restaurant financial forecast?
A grill restaurant'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 grill restaurant, 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 grill restaurant 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 grill restaurant 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 grill restaurant's financial forecast.
The sales forecast for a grill restaurant
From experience, it is usually best to start creating your grill restaurant financial forecast by your sales forecast.
To create an accurate sales forecast for your grill restaurant, you will have to rely on the data collected in your market research, or if you're running an existing grill restaurant, 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:
- Menu pricing: Your grill restaurant may experience changes in its average price due to fluctuations in the cost of ingredients, changes in menu items, and pricing strategies. For example, if the cost of beef increases, you may need to adjust your prices accordingly, which could affect your average price and overall sales.
- Seasonal demand: The time of year can greatly impact the number of monthly transactions at your grill restaurant. During the summer months, when people are more likely to grill outdoors, you may see an increase in business. On the other hand, the winter season may bring in fewer customers due to colder weather and less interest in grilling.
- Competition: The presence of other grill restaurants in your area can also affect your average price and number of monthly transactions. If you have many competitors offering similar dishes, you may need to adjust your prices to stay competitive. This could potentially lead to a decrease in your average price and an increase in transactions as customers may choose your restaurant over others.
- Customer preferences: Changes in customer preferences can also have an impact on your sales forecast. For example, if there is a growing trend towards healthier eating, you may need to adjust your menu to include more vegetarian or plant-based options. This could potentially attract new customers, but also affect your average price and number of transactions as these dishes may have a different price point.
- Economic conditions: Economic factors such as unemployment rates, inflation, and consumer spending can also affect your business's average price and number of monthly transactions. During a recession, customers may be more price-sensitive and opt for cheaper dining options, which could lead to a decrease in your average price and an increase in transactions. On the other hand, during times of economic growth, customers may be willing to spend more on dining out, which could lead to an increase in your average price and a decrease in transactions.
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 grill restaurant
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your grill restaurant on a daily basis.
Expenses normally vary based on how much revenue you anticipate (which is why, from experience, it is always better to start your forecast with the topline projection), and where your business is based.
Operating expenses for a grill restaurant will include some of the following items:
- Staff costs: This includes salaries and wages for your kitchen and wait staff, as well as any benefits or bonuses you may offer.
- Food and beverage costs: This includes the cost of all ingredients and beverages used in your menu items.
- Rent or lease payments: This is the cost of renting or leasing your restaurant space.
- Utilities: This includes electricity, gas, water, and other utility expenses for your restaurant.
- Equipment maintenance: This includes the cost of maintaining and repairing your grills, ovens, and other kitchen equipment.
- Marketing and advertising: This includes any costs associated with promoting your restaurant, such as advertising, flyers, and social media management.
- Accountancy fees: This includes the cost of hiring an accountant to help with your restaurant's financial management.
- Insurance costs: This includes the cost of insuring your restaurant against any potential risks or liabilities.
- Software licenses: This includes the cost of any software used in your restaurant, such as point of sale systems, online ordering platforms, and reservation systems.
- Cleaning and sanitation supplies: This includes the cost of purchasing cleaning supplies for your restaurant, such as dish soap, disinfectant, and trash bags.
- Food and beverage inventory: This includes the cost of purchasing and maintaining inventory for your food and beverage items.
- Uniforms: This includes the cost of purchasing and maintaining uniforms for your restaurant staff.
- Banking fees: This includes the cost of any fees associated with your restaurant's bank accounts, such as transaction fees and monthly account maintenance fees.
- Training and development: This includes the cost of training new employees and developing their skills in order to improve the overall performance of your restaurant.
- Waste disposal: This includes the cost of disposing of any waste produced by your restaurant, such as food waste and packaging materials.
This list will need to be tailored to the specificities of your grill restaurant, but should offer a good starting point for your budget.
What investments are needed to start or grow a grill restaurant?
Once you have an idea of how much sales you could achieve and what it will cost to run your grill restaurant, it is time to look into the equipment required to launch or expand the activity.
For a grill restaurant, capital expenditures and initial working capital items could include:
- Kitchen Equipment: This includes items such as grills, ovens, fryers, refrigerators, and other cooking and food storage appliances. These are essential for a grill restaurant to operate efficiently and produce high-quality food.
- Furniture and Fixtures: This category includes tables, chairs, booths, and other seating options for customers, as well as fixtures such as lighting, shelving, and decorations. These items not only provide a comfortable and inviting atmosphere for customers, but also contribute to the overall aesthetic of the restaurant.
- POS System: A Point of Sale (POS) system is a crucial investment for any restaurant, including a grill restaurant. This system allows you to efficiently process orders, track sales, and manage inventory. It also provides valuable data for making informed business decisions.
- Building Renovations: If you are starting a new grill restaurant, you may need to make renovations to the building to accommodate your specific needs. This could include installing ventilation systems, building a patio or outdoor dining area, or creating a bar area.
- Delivery Vehicles: If you plan on offering delivery services, you will need to invest in delivery vehicles to transport food to customers. This could include cars, vans, or bicycles, depending on the size and location of your restaurant.
Again, this list will need to be adjusted according to the specificities of your grill restaurant.
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 grill restaurant
The next step in the creation of your financial forecast for your grill restaurant 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 grill restaurant?
Now let's have a look at the main output tables of your grill restaurant's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your grill restaurant's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a grill restaurant 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 grill restaurant's projected balance sheet provides a snapshot of your business’s financial position at year-end.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business possesses including cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. They include accounts payable (money owed to suppliers), taxes payable and loans from banks and financial institutions.
- 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 grill restaurant 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 grill restaurant'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 grill restaurant 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 grill restaurant'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 grill restaurant's financial forecast?
Creating your grill restaurant's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial projection software to build your grill restaurant'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 grill restaurant 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 grill restaurant's financial forecast?
Creating an accurate and error-free grill restaurant financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection 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
- Having a financial forecast enables you to visualise the expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial projections up-to-date is the only way to get a view on what your grill restaurant future cash flows may look like.
- Using financial forecasting software is the mordern and easy way to create and maintain your forecasts.
This is the end of our guide on how to build the financial forecast for a grill restaurant, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or have any questions.
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 forecast
- How to project sales for a business?
- Example of financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
