FINANCIAL MANAGEMENT PLAN

In Partial requirements for the subject

Financial Management

Kher’s Restaurant

Kher Besas

December 11, 2023

II. Introduction

Kher's Restaurant is a new restaurant located in Butuan City. The menu of Kher's Restaurant will
include bistro-type dishes that are authentically created and crafted by acclaimed Lendon Eballe. It will
be located in the trendy part of town, known as the Plaza. The restaurant will be surrounded by classy
art galleries, live theater, high-end restaurants and bars, and expensive shopping.
•Roles and Responsibilities

Kher’s Restaurant is owned and operated by fellow Butuan City natives and culinary enthusiasts, Chef
Lendon Eballe and Riza Mae Mesa. Both come with a unique skill set and complement each other
perfectly. They formerly worked together at another dining establishment and made a great team for
serving guests delectable food and wine while ensuring the highest level of customer service.

Chef Lendon will manage the kitchen operations of Kher's Restaurant. He will train and oversee the sous
chefs, manage inventory, place food inventory orders, deal with the local food vendors, and ensure the
highest customer satisfaction with the food.

Riza Mae will oversee front of the house operations, maintain and ensure customer service, and manage
all reservations. She will also be in charge of the bar and wine ordering, training of front of the house
staff, and will manage the restaurant’s social media accounts once they are set up.

•Information Management

Restaurants are built of complex systems for buying, storing, preparing and selling food. The well-being
of a restaurant depends on its management information systems, which coordinate everything from
scheduling personnel to customer service. Restaurant management information systems should make a
restaurant more profitable as well as a better place for customers to eat.

Point of sale systems

Every restaurant needs a strategy for taking orders, delivering information to the kitchen and charging
customers for their food. These systems can be as simple as handwritten notes or as complicated as
computer systems that Send to the kitchen and tally sales for each server. Simple systems are less prone
to technical difficulties, but they cannot process information as efficiently as smoothly functioning
computer systems. Restaurant point of sale systems should also include infrastructure for processing
credit card payments.

Communication systems

Restaurants depend on communicating information between different divisions, such as servers relaying
orders to kitchen staff and kitchen staff letting servers know that their orders are ready. In addition,
restaurant communication systems should enable staff to connect finished meals with the customers
who ordered them, and convey details about special requests and special needs. Restaurant
management must also develop information systems for communicating with both the front and the
back of the house about issues such as low stock on particular menu items or ingredients.

•Assurance

In order to ensure a safe & comfortable dining environment for our customers and staff well-being, we
have implemented precautionary measures.
 ✓Temperature taking of staff twice daily

✓Increased sanitation of all work and dining areas

✓Providing hand sanitizers at our restaurants

✓Replacing wet wipe with antiseptic wipe

✓Space out the distance between each table

•Budget

Financial Highlights

Kher's Restaurant is seeking 15,000,000 in debt financing to open its start-up restaurant. The funding
will be dedicated for the build-out and design of the restaurant, kitchen, bar and lounge, as well as
cooking supplies and equipment, working capital, three months worth of payroll expenses and opening
inventory. The breakout of the funding is below:

Restaurant Build-Out and Design – 300,000

Kitchen supplies and equipment – 300,000

Opening inventory – 100,000

Working capital (to include 3 months of overhead expenses) – 100,000

Marketing (advertising agency) – 100,000

Accounting firm (3 months worth and establishment/permitting of business) – 100,000

II. PROCEDURE

•Estimate Cost

Labor Cost

Salaries and hourly employee wages: 150,000

Overtime and bonuses: 30,000+

Payroll taxes: 30,000+

Health care: 30,000+

Vacation and sick days: 10,000+

Bonuses: 10,000+

Total labor cost= 260,000

Food cost = Beginning Inventory + Purchases – Ending inventory

February’s beginning food inventory = 4,000

February’s food purchases = 20,000

February’s food ending inventory =3,000

Total food costs = 21,000 (4,000 + 20,000-3,000)

Restaurant utility cost

Commercial electricity usage is 10.56¢/kWh

The monthly cost of electricity is 7000

The electricity cost per square foot per year is 290

The natural gas cost per square foot per year is 0.85

The POS System Cost

POS system costs typically include:

One-time hardware fees for cash drawers, POS display terminals, credit card readers, receipt and order
printers, wifi routers, and workstations. This costs anywhere from 300,000 for a handheld table to
800,000 for an advanced system. The final cost will depend on the vendor, the number of POS display
terminals and if you purchase extras like networking cables, receipt printers, and additional tablets

Monthly software subscription fees of 100,000 to 400,000/month depending on the vendor, chosen
package, and the number of terminals

Support and maintainaince—usually charged monthly or per call-out

Installation costs differ depending on scope, vendor, and the number of terminals

Training costs are between 100,000 to 600,000

•Investment Appraisal

Payback Period

My company invests 1,000,000 in a project which is expected to give a profit of 500,000 a year.

Year Profit Cumulative Profit

 1 500,000 500,000
2 500,000 1,000,000
3 500,000 1,000,000

Since the cumulative profit reaches 1,000,000 at the end of year 2, then the payback period is 2 years.

•Etablish Funding

Personal funds: The restaurant’s owner is willing to use their 500,000 in personal savings as a down
payment for the establishment.

Loan for a small business: The owner requests for a loan for a small business from a neighborhood bank,
and gets authorized for a loan of 500,000.

Crowdfunding: Through the creation of a crowdfunding campaign, the owner raises an additional 50,000
from family, friends, and the local community.

Investor: The owner approaches a potential investor who is intrigued by the idea of the restaurant and
offers them 150,000 in exchange for a portion of the company.

Partner: The proprietor identifies a business associate with restaurant experience who is prepared to
invest 150,000 in return for a stake in the company.

•Develop Budget

Income

Your projected revenue is simply the number of customers you serve per day, multiplied by your
estimated check average. This is a budget remember so we are going to work with average sale prices
for each menu category. For example: if we have 4 different burgers in this menu category, prices being
7, 8, 9 and 10; our average burger sale price is 8.50. You’ll need to create these averages for each
category to calculate your check average. For our purposes, it would be as follows:

Burgers: 7, 8,9, 10

Average sale price: 8.50

Fires: 2,4

Average sale price: 3.00

Beverages: 1, 3, 5

Average sales price: 3.00

Assumption

Kher’s Restaurant, we are going to attempt to sell every customer, a hamburger, fries and a drink. So our
sales assumption is that each customer will have a check average of 14.50. This check average would be
appropriate to associate to every customer in our Aggressive budget. We know not everyone is going to
get everything we offer so our Moderate budget could be reflected by say every customer purchasing a
burger and a drink. And our Conservative could be say only a burger. You will have to decide what it
most realistic for your concept.

Sales Forecast

Now that we have our check average calculated, we need to determine our sales forecast based on our
anticipated volume of customers. At this point, you should have some idea as to the size of your
restaurant so for our hamburger shop, I believe we will need about 1,500 square feet in total. If you are
not sure about the size you need for your concept, we suggest reading our blog post “How to Determine
Restaurant Size.” Based on the approximated size of the restaurant, we need to figure out the size of our
dining area to determine seating capacity. For our hamburger shop, we are going to use a ratio of 1 part
kitchen to 3 parts dining area since our food production needs are minimal. If you are not sure what the
ratio of kitchen to dining room is, we suggest reviewing our post “Restaurant Kitchen Size : An
Importance Aspect of Design.”

Based on our calculations, of 1 part kitchen to 3 parts dining area, that gives us an approximate seating
area of 1,125 square feet. The average square feet person ranges from 15-20 square feet per person,
with the higher number being more for a fine dining operation. For our purposes, we can use 15 square
feet per person, divided by 1,125 square feet of dining room, gives us roughly 75 seats. Since we have
not accounted for bathrooms, walk-ways and an ordering area (which will be lager for a burger shop), I
will error on the side of caution and say that we will estimate that we will have roughly 50 seats.

Customer Volume

Determining your potential customer volume is where your demographic research and operations
planning will come into play. For our hamburger shop, we intend to be open for lunch and dinner service
periods. Based on the type of location I think will be best, say in a high traffic area such as next to a
shopping mall or a Home Depot, where this is busy afternoon traffic from working people, I could also
estimate we will have a considerable number of take-out customers.

This is where some guesswork comes into play… I am going to estimate that based on my future
intended location (the exact location of your choice will have an impact on this guess), that 25% of my
customer volume will come from take-out customers. Remember, it is always better to error on the low
side with estimations so you can always see the worst-case scenario.

To summarize, my hamburger shop will have 50 seats and I believe that an additional 25% of sales will
come from take-out customers. I can how begin to approximate my sales volume based on number of
times I intend to “turn the tables” for each service period. Keeping in mind that I want to generate a
Conservative, Moderate and Aggressive restaurant budget, based on my average projected customer
volume, I my forecast would look something like this:

Conservative
Lunch Service: 62.5 customers X .5 table turns = 31.25 covers

Dinner Service: 62.5 customers x 1 table turns = 62.5 covers

Total Covers per day: 93.75

Moderate

Lunch Service: 62.5 customers X 1 table turns = 62.5 covers

Dinner Service: 62.5 customers x 1.5 table turns = 93.75 covers

Total Covers per day: 156.25

Aggressive

Lunch Service: 62.5 customers X 1.25 table turns = 78.125 covers

Dinner Service: 62.5 customers x 2 table turns = 125 covers

Total Covers per day: 203.125

If you are going to be a 7 day per week operation, you can now easily calculate your projected sales
volume based on the number of covers per day, multiplied by your estimate check average (based on
our conservative, moderate and aggressive assumptions noted above), that total then multiplied by
average number of days you will be open per month (30.42 for 7 days per week) to acquire a projected
monthly revenue figure for your restaurant budget.

Conservative

93.75 covers per day x 8.50 check average x 30.42 days per month= 24,240.94 income per month

Moderate

156.25 covers per day x 11.50 check average x 30.42 days per month= 54,660.94 income per month

Aggressive

203.125 covers per day x 14.50 check average x 30.42 days per month= 89,596.41 income per month

An average restaurant should expect at minimum, a 5% per month growth in revenue until you reach
your volume capacity; so, working backwards from our 12th month revenue projection, our estimated
income should look something like this:

Restaurant budget sales forecast

Ok, now let out a BIG sigh… The hard part is over! Now that we have our revenue projections, we can
start pulling information from our food cost analysis to begin filling in our expenses based on our food
and in our case, disposables percentages.

Restaurant budget market assumptions

Expenses
Food Supplies Cost

Use the food cost percentage from your menu analysis to take that percentage from your sales revenue.
This is your approximated food cost for the month.

84% food cost x 24,240.94 revenue= 4,820.07 food cost of goods sold

-Utilities

 Gas
 Electric
 Water/Sewer
 Telephone
 Internet
 Cable TV?

Fixed Business Operating

Every restaurant has a different marketing strategy, and each will cost a different amount of money so
you’ll need to write out this strategy. This is again, an operating budget; so it does not include the cost
of a building a website, but does include ongoing costs to maintain it.

•Financial Control

1.Payment Controls

Whether you are a small family owned restaurant, bar or an established food group, strategic use of
your Point of Sale system (POS) could result in significant benefits for your business. At its most basic
level, a POS system is a modern day cash register that records goods sold to and payments made by
customers. However, a POS system can do much more to assist management. It can generate data on
key business metrics such as best-selling products, daily sales reports, stock level warnings and
employee performance. It can also help in reducing human error and fraud. If optimised correctly, a POS
system can be utilised to send financial data directly to your in-house or outsourced accountant.

2. Purchasing Controls

The purchasing process is a highly cost sensitive activity for any restaurant or bar. Poor purchasing
practices can lead to cashflow issues, incorrect stock levels and balance sheet discrepancies. The Three-
Way Matching system is used by restaurants to maintain control over its food and beverage costs,
purchasing processes and accounts payable. It imposes a “checks and balances” system that requires
three purchase-related documents for every transaction – the restaurant’s purchasing order (formal
authorisation for an order), the vendor’s receiving report (proof of payment/delivery) and the vendors
invoice (the bill).

3. Food cost planning

A restaurant must be vigilant when calculating food costs to be able to forecast potential margins (gross
and net) and profits (gross and net) across each of its products. Any change in the cost of raw materials
is likely to have significant implications for a restaurant’s profitability. It is therefore crucial for a
restaurant to carefully plan its food costs and identify precisely what profit (or loss) it is making on each
product. Execution is even more important. Poor portion control, unanticipated wastage, stock
substitution or volatile food prices are all factors, specific to the restaurant industry, that can impact a
cost plan. By sticking to a food plan (or at least as closely as possible!) a restaurant will have a much
better chance of achieving its financial objectives for each reporting period.

4. Payment Reconciliations

Restaurants receive various forms of payment from different sources on a daily basis. Consumer
payments may include cash, credit card, debit card, authorized vouchers, money-off coupons or
payments through affiliates. A restaurant must have a rigorous payment process in place reconciling all
forms of payments received to be sure of its financial position. Otherwise, payments could be
overlooked, incorrectly recorded and/or misattributed and it could be difficult to identify where the
discrepancy is coming from. A knock-on benefit of having such a process in place is that it will help to
ensure the follow-on bank reconciliation process (i.e. the exercise of reconciling the difference between
accounting records and the bank in a given period) is receiving accurate information.

5. Inventory Management

Inventory management is having the right product, at the right time, in the right place, at the right cost
and in the right quantity. It is a critical activity across any business or industry that involves buying or
selling goods. The importance of inventory management is heightened however in the restaurant
business due to the perishable nature of the goods (i.e. food products) being bought and sold. Excess
inventory can lead to food wastage, storage issues and disposal costs. A restaurant should continuously
check that its purchase and inventory prices are in line with its recipe costs in order to maintain gross
profit margins. Frequent inventory counts will also ensure that food wastage is kept under control and
that tight controls are maintained across the range of food costs.