Question
A financial feasibility study is being carried out for a proposed new 120-seat restaurant. It will be open for both lunch and dinner from Monday
A financial feasibility study is being carried out for a proposed new 120-seat restaurant. It will be open for both lunch and dinner from Monday through Saturday and for dinner only on Sunday. For the sake of simplicity, assume a 52-week year. Seat turnover and average food check figures are estimated as follows:
Average Food
Turnover Check
Weekday lunch 1.50 $ 5.60
Weekday dinner 1.25 $10.50
Sunday dinner 1.75 $13.00
In addition, the restaurant has a small banquet room, and food revenue in this area is estimated at $14,000 a month. Alcoholic beverage revenue is estimated to be 12 percent of lunch food revenue and 30 percent of all food revenue. In the banquet room, alcoholic beverage revenue isforecast to be 40 percent of food sales revenue in that area. Food cost is estimated at 40 percent of total food sales revenue, and beverage cost is 30 percent of total beverage sales revenue. Wage cost for salaried personnel (manager, chef, hostess, head waitress, and cashier) is estimated at $300,000 per year. Wages for all other employees will be 15 percent of total annual restaurant sales revenue. Employee benefits (vacations, meals, etc.) are estimated to be 10 percent of total annual wages. Other operating costs are estimated at 12 percent of total annual sales revenue. Undistributed costs are forecast to be $130,000 per year. Prepare the restaurants pro forma income statement for the first year, rounding all figures to the nearest dollar. Ignore income tax.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started