How to create a financial forecast for a Nigerian restaurant?

Creating a financial forecast for your Nigerian restaurant, 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 Nigerian restaurant 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 Nigerian restaurant?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your Nigerian restaurant and ensure that it can be financially viable in the years to come.
A financial plan for a Nigerian restaurant 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 Nigerian restaurant 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 Nigerian restaurant'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 Nigerian restaurant financial forecast?
A Nigerian 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 Nigerian 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 Nigerian 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 Nigerian 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 Nigerian restaurant's financial forecast.
The sales forecast for a Nigerian restaurant
The sales forecast, also called topline projection, is normally where you will start when building your Nigerian restaurant financial forecast.
Creating a coherent sales projection boils down to estimating two key drivers:
- The average price
- The number of monthly transactions
To do this, you will need to rely on historical data (for an existing business), market research data (for both new and existing Nigerian restaurants), and consider the elements below:
- Increased demand for Nigerian cuisine: As more people become interested in trying new and exotic foods, the demand for Nigerian cuisine may increase. This could lead to an increase in the average price of your dishes as well as the number of monthly transactions, as more customers are willing to pay for the unique dining experience your restaurant offers.
- Fluctuations in the cost of imported ingredients: Many Nigerian dishes require specific ingredients that may need to be imported. Fluctuations in the cost of these ingredients, due to factors such as exchange rates or availability, could affect your average price and the number of monthly transactions. For example, if the cost of a key ingredient increases, you may need to raise your prices, which could deter some customers from dining at your restaurant.
- Tourism seasonality: The number of tourists visiting your area can have a significant impact on your business. During peak tourism season, your restaurant may experience a surge in customers, leading to higher average prices and more monthly transactions. However, during low season, you may need to adjust your prices and marketing strategies to attract locals and maintain a steady number of transactions.
- Competition from other Nigerian restaurants: As the popularity of Nigerian cuisine grows, more restaurants may start offering similar dishes in your area. This could lead to increased competition and the need for you to differentiate your restaurant by offering unique dishes or enhancing your dining experience. Failure to do so could result in a decrease in average prices and the number of monthly transactions.
- Changes in dietary trends: With the rise of health-conscious consumers, dietary trends can have an impact on your business. For example, if there is a shift towards plant-based diets, you may need to adapt your menu to offer more vegetarian and vegan options. This could affect your average price and the number of monthly transactions, as customers may be willing to pay more for healthier dishes.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 Nigerian restaurant
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your Nigerian 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 Nigerian restaurant will include some of the following items:
- You will need to budget for staff costs, including salaries, wages, and benefits for your kitchen and wait staff.
- Accountancy fees will be necessary for proper financial management and tax preparation.
- Insurance costs, such as liability insurance, are important to protect your business and employees.
- Software licences for point-of-sale systems, inventory management, and accounting software will help streamline your operations.
- Banking fees, such as transaction fees and account maintenance fees, are necessary for managing your restaurant's finances.
- Food and beverage costs, including ingredients and supplies, will vary depending on your menu and suppliers.
- Rent or lease payments for your restaurant space will be a significant expense.
- Utility costs, such as electricity, gas, and water, will be ongoing expenses for your restaurant.
- Marketing and advertising costs will help promote your restaurant and attract customers.
- Cleaning and maintenance supplies, as well as services, are necessary for keeping your restaurant clean and well-maintained.
- License and permit fees, such as for food service and alcohol sales, will need to be included in your budget.
- Credit card processing fees will be incurred for customers who pay with credit or debit cards.
- Waste removal and disposal costs, including for food waste, will need to be budgeted for.
- Uniform costs for your staff, if required, will need to be factored into your expenses.
- Training and development costs for your staff, including for food safety and customer service, are important for maintaining a high-quality restaurant.
This list will need to be tailored to the specificities of your Nigerian restaurant, but should offer a good starting point for your budget.
What investments are needed to start or grow a Nigerian restaurant?
Your Nigerian restaurant 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 Nigerian restaurant, these could include:
- Kitchen Equipment: This includes items such as stoves, ovens, grills, fryers, and refrigerators. These are essential for the preparation and storage of food in a Nigerian restaurant.
- Furniture and Fixtures: This includes tables, chairs, booths, and other furnishings for the dining area. These items should be durable and comfortable to create a welcoming atmosphere for your customers.
- POS System: A point-of-sale (POS) system is necessary for tracking sales, managing inventory, and processing payments. This is a crucial investment for any restaurant, including a Nigerian one.
- Decor and Aesthetics: To create an authentic Nigerian dining experience, you may need to invest in traditional decor and artwork. This can include items such as wall hangings, African drums, and other cultural elements.
- Renovations and Construction: If you are starting a new restaurant or renovating an existing one, you may need to allocate funds for construction and renovation costs. This could include building or remodeling the kitchen, dining area, and restrooms.
Again, this list will need to be adjusted according to the size and ambitions of your Nigerian 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 Nigerian restaurant
The next step in the creation of your financial forecast for your Nigerian 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 Nigerian restaurant?
Now let's have a look at the main output tables of your Nigerian restaurant's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your Nigerian restaurant is likely to be in the years to come.

For your Nigerian restaurant to be financially viable, your projected P&L should ideally show:
- Sales growing above inflation (the higher the better)
- Profit margins which are stable or expanding (the higher the better)
- A net profit at the end of each financial year (the higher the better)
This is for established Nigerian restaurants, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your Nigerian restaurant'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 projected cash flow statement
A projected cash flow statement for a Nigerian restaurant is used to show how much cash the business is generating or consuming.

The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your Nigerian restaurant's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the Nigerian restaurant is appropriately capitalised.
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 Nigerian restaurant's financial forecast?
Creating your Nigerian 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 forecasting software to build your Nigerian restaurant'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.
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 Nigerian 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 Nigerian restaurant's financial forecast?
Creating an accurate and error-free Nigerian restaurant 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
- 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 Nigerian 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 Nigerian 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 revenues for a business?
- Financial forecast for a business idea
Know someone who owns or is thinking of starting a Nigerian restaurant? Share our forecasting guide with them!