TGI Fry-Day's Case Study Fred Franks is an aspiring entrepreneur. His dream is to open a restaurant that deep-fries everything. Deep-fried Twinkies, deep-fried hotdogs, and deep-fried salads were just some of the dishes he wanted to serve. Always a marketing genius, Fred wanted to call his restaurant TGI Fry-Days. He recognized another company was called TGI Fridays, so he made sure to have a very good (and expensive) lawyer Fred had S 100,000 in his bank account, so in order to start TGI Fry-Days, he needed to borrow money. His bank asked for a full business plan with projected startup costs, pro forma income statement, and pro forma cash flow statement (no pro forma balance sheet needed) Complete all the financial statements for Fred (do not need a balance sheet) 1. 2. How much income will Fred make Y1? What advice do you have for Fred about his summer vacation? 3. 4. Fred's favorite two days of the year are Valentine's Day (M2) and Halloween (M10). He wants to hold a special promotion on either Valentines or Halloween. If he has a Valentines Event, he estimates it would cost $ 3,000 in additional marketing and $ 5,000 in new signage, furniture, and equipment. If he has a Halloween Event, he estimates it would cost $ 5,000 in additional marketing and $ 10,000 in new signage, furniture, and equipment. Neither event would bring in more revenue, but Fred doesn't care because he loves both holidays. Which event do you recommend? Valentine's Day, Halloween, or both? Why Fred's Available Sources of Financing $ 100,000 $150,000 $1,500 per month Personal Bank Account: Bank Loan: Interest on the Loan Things Fred Would Need. Useful Life Cost Kitchen Equipment $150,000 $ 80,000 $10,000 $ 10,000 20 years 20 years 10 years Furniture &Fixtures Signage Working Capital Revenue Forecast Ml: $30,000 M2 & M3: $40,000 per month M4 M6: $55,000 per month M7: $20,000 (taking a summer vacation with his family) M8 M12: $60,000 per month Variable Expenses: Wages: 25% of Revenues Cost of Goods Sold (food): 33% of Revenues Marketing: $2000 a month, except November & December (Holiday Season): $4,000 a month No Taxes. Consider TGI-Frydays to be an LLC Other Expenses (alphabetical order) G&A $ 5,000 a month 500 a month 2,000 a month, but paid as $6,000 every 3 months (starting M1) $ 6,000 a month Insurance Legal Fees Rent