How to create a financial forecast for a Peruvian restaurant?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your Peruvian restaurant.
Putting together a Peruvian restaurant 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 Peruvian restaurant.
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 Peruvian restaurant?
The financial projections for your Peruvian restaurant act as a financial blueprint to guide its growth with confidence and ensure its long-term financial viability.
To create them, you will need to look at your business in detail - from sales to operating costs and investments - to assess how much profit it can generate in the years to come and what will be the associated cash flows.
During challenging market conditions, maintaining an up-to-date financial forecast enables early detection of potential financial shortfalls, allowing for timely adjustments or securing financing before facing a cash crisis.
Your Peruvian restaurant's financial forecast will also prove invaluable when seeking financing. Banks and investors will undoubtedly request a thorough examination of your financial figures, making precision and presentation essential.
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 needed to build a Peruvian restaurant financial forecast?
The quality of your inputs is key when it comes to financial modelling: no matter how good the model is, if your inputs are off, so will the forecast.
If you are building a financial plan to start a Peruvian restaurant, you will need to have done your market research and have a clear picture of your sales and marketing strategies so that you can project revenues with confidence.
You will also need to have a clear idea of what resources will be required to operate the Peruvian restaurant on a daily basis, and to have done your research with regard to the equipment needed to launch your venture (see further down this guide).
If you are creating a financial forecast of an existing Peruvian restaurant, things are usually simpler as you will be able to use your historical accounting data as a budgeting base, and complement that with your team’s view on what lies ahead for the years to come.
Let's now zoom in on what will go in your Peruvian restaurant's financial forecast.
The sales forecast for a Peruvian restaurant
From experience, it usually makes sense to start your Peruvian restaurant's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your Peruvian restaurant (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your Peruvian restaurant's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
- Rising popularity of Peruvian cuisine: As more people become aware and interested in Peruvian cuisine, your restaurant may see an increase in both the average price of dishes as well as the number of monthly transactions.
- Limited competition in the area: If your restaurant is one of the few Peruvian restaurants in the area, you may be able to charge higher prices and attract more customers, leading to higher average prices and monthly transactions.
- Availability of unique ingredients: If your restaurant is able to source unique and authentic Peruvian ingredients that are not readily available elsewhere, you may be able to charge premium prices and attract customers looking for an authentic experience.
- Tourism in the area: Depending on the location of your restaurant, an increase in tourism may lead to higher demand for Peruvian cuisine and an increase in the average price and number of transactions at your restaurant.
- Economic conditions: In times of economic growth, people may be more willing to spend more on dining out, potentially leading to higher average prices and monthly transactions at your restaurant.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
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 Peruvian restaurant
The next step is to estimate the costs you’ll have to incur to operate your Peruvian restaurant.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your Peruvian restaurant's operating expenses should normally include the following items:
- Staff costs: This includes salaries and wages for all employees, including cooks, servers, and kitchen staff. It also includes any related expenses such as payroll taxes and benefits.
- Food and beverage costs: This includes the cost of all ingredients and beverages used in your dishes and drinks, as well as any packaging or containers.
- Rent and utilities: This includes your monthly rent for the restaurant space, as well as any utilities such as electricity, water, and gas.
- Accountancy fees: You may need to hire an accountant to help with your financial records, taxes, and other financial matters.
- Insurance costs: You will need to have insurance to protect your business and employees in case of accidents or other unforeseen events.
- Marketing and advertising: You will need to promote your restaurant to attract customers, which may include expenses for advertising, promotions, and social media marketing.
- Equipment and supplies: This includes the cost of all kitchen equipment, dining room furniture, and other restaurant supplies such as plates, utensils, and cleaning supplies.
- Software licenses: You may need to purchase software for your restaurant, such as a point-of-sale system, reservation system, or accounting software.
- Banking fees: You will need to pay fees for bank services such as processing credit and debit card payments, wire transfers, and account maintenance.
- Waste disposal: You will need to pay for regular waste removal services for your restaurant, including garbage and recycling.
- Cleaning and maintenance: This includes the cost of cleaning services for your restaurant, as well as any repairs or maintenance needed for equipment and the physical space.
- Licenses and permits: You will need to obtain various licenses and permits to legally operate your restaurant, which may include fees and renewal costs.
- Professional fees: This includes any fees for legal services, consulting, or other professional services related to your restaurant.
- Credit card processing fees: You will need to pay fees for processing credit and debit card payments from customers.
- Training and development: You may need to invest in training and development programs for your staff to improve their skills and knowledge.
This list is not exhaustive by any means, and will need to be tailored to your Peruvian restaurant's specific circumstances.
What investments are needed to start or grow a Peruvian restaurant?
Your Peruvian 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 Peruvian restaurant, these could include:
- Kitchen equipment: This includes items such as ovens, stoves, grills, fryers, and other cooking equipment necessary for preparing traditional Peruvian dishes. These items can be expensive but are essential for a Peruvian restaurant to function.
- Furniture and decor: A Peruvian restaurant should have a unique and inviting atmosphere that reflects the culture and cuisine of Peru. This may include purchasing tables, chairs, decorative items, and artwork to create an authentic dining experience for your customers.
- Bar equipment: If your Peruvian restaurant will serve alcoholic beverages, you will need to purchase bar equipment such as a bar counter, stools, glassware, and other necessary items. This can be a significant expense, but having a well-stocked bar can also generate additional revenue for your business.
- POS system: A Point-of-Sale (POS) system is essential for any restaurant, including a Peruvian restaurant. This system allows you to track sales, manage inventory, and process payments. You will need to invest in a reliable and user-friendly POS system to efficiently run your restaurant.
- Outdoor dining area: If your Peruvian restaurant has outdoor seating, you may need to invest in outdoor furniture, heating lamps, and other equipment to provide a comfortable dining experience for your customers. This can be a valuable addition to your restaurant, especially during warmer months.
Again, this list will need to be adjusted according to the size and ambitions of your Peruvian 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 Peruvian restaurant
The next step in the creation of your financial forecast for your Peruvian 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 Peruvian restaurant?
Now let's have a look at the main output tables of your Peruvian restaurant's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your Peruvian restaurant's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a Peruvian 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 Peruvian 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 Peruvian 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 Peruvian 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 Peruvian 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 Peruvian 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 Peruvian restaurant's financial projections?
Building a Peruvian restaurant 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 forecasting software to build your Peruvian 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 Peruvian 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 Peruvian restaurant's financial forecast?
Creating an accurate and error-free Peruvian 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 Peruvian 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 Peruvian 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 create a turnover forecast for a business?
- Financial forecast for a business idea
Know someone who owns or is thinking of starting a Peruvian restaurant? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
