Income Projections (Restaurants)

Your income statements are also called profit and loss statements or operating statements. These are forecasting and budgeting tools that can be used for estimating income and anticipating expenses in the near-to-middle range future. For most restaurants, income projections covering the first three years are adequate.

Estimating income is an important aspect of the business plan. If you do not know how much you will be taking in, you do not know how much you can spend. Forecast your sales before you forecast your expenses. It could be calculated by figuring how many guests your restaurant has during a meal period, also known as covers, and multiplying that by the check average or the average amount that each guest will spend.

While anticipating expenses we need to understand that even before our restaurant’s doors open we incur expenses. In case you are not paying an rent, you bought the fridge, gas, papers, computers, so on and so forth. You invest even before you realise a single rupee in income, let alone profit. When forecasting expenses, you will anticipate every single thing that you spend on: cost of sales, salaries/wages, employee benefits, operating expenses, music/entertainment, marketing, utilities, general/administrative, repair/maintenance, occupancy, state and other income taxes.

We need to see expenses in terms of two components: fixed and variable costs. Expenses that we incur regardless of sale are fixed costs. Expenses that can be directly attributed to a particular sale are variable costs. We can work out income forecasts by projecting sales and reducing sales revenue by anticipated expenses.

Let us know in the comments’ section what you think about income projections.

Tweet

Share