1. Papa Geo’s Restaurant Budget Proposal For 2012-2016
 BUSN-278
Budgeting and Forecasting sessionB
Professor Brandon Foor
DeVry University

2. Table of Contents Objectives Budget Preparation Financial Statements
Methods and Assumptions
Competition
Geographic Target
Sales Forecast
Capital Expenditures Budget
Cash Flow
NPV
Rate of Return
Payback Period
Pro Forma Income Statement
Pro Forma Cash Flow
Pro Forma Balance Sheet

3. Objectives
Papa Geo’s Restaurant will be a single-location, sit-down Italian restaurant located in Orlando, Florida. Our objective is to generate an income of at lest $40,000 per year, starting sometime in the second year of the operation, as well as profit that is at least 2% of sales
Restaurant targets middle to lower-middle class families with children, as well as adults and seniors,
Our Italian food will be served in buffet style
The company will operate from 10:00 am to 9:00 pm all 7 days a week
single-location, sit-down Italian restaurant
- goal is to generate an income of $40,000 per year,
---, as wells as profit that is at least 2% of sales.
middle to lower-middle class families with children, adults and seniors,
located in Orlando, Florida.
served buffet style,

4. Budget Preparation Five year planning horizon is used.
The initial up-front investment includes $900,000 investment.
In deciding on the initial investment, the Net Present Value (NPV) was calculated.
The discount rate for the required rate of return is 10%. Discount factors for a five year period were taken from present value tables.
This created the present value of cash inflows. The total was then taken and divided by the initial $900, investment.
The Rate of Return (ARR) was calculated simply by using the cash inflows for the 5 year period and adding in the depreciation for the equipment.
This amount was then divided by the initial investment.
The Internal Rate of Return (IRR) was figured by taken the initial investment and dividing it by the annual cash inflows.

5. Financial Statements
A Pro-Forma Financial statement is a financial statement that a company prepares to consider the effects of a potential activity.
Pro forma describes a presentation of data, typically financial statements, where the data reflect the world on an 'as if' basis.
That is, as if the states of the world were different from that which is in fact the case.
Including the first year well have positive ending balances.
Definition of pro-financial statement and pro- forma

6. Methods and Assumptions
Information is based on research on locations that sell the same products.
Italian buffet makes $9 billion sales in one year.
Assumption that amount sold in one year will be about 144,075.22

7. Competition
As of today there are only 2,728 Italian buffets in the whole United States.
Our price is lower then that fast food restaurants around us.
We are more clean and faster when it comes to seating down our customers for them to eat.
Also we have a vending machines to keep children busy while adults enjoy their meal.
-low price –
-cleanliness of the facility, the speed of getting their seat and food,
vending machines keep children busy .
2728 # of Italian buffets in U.S.

8. Geographic Target
The target is middle to lower- middle class families with children, as well as adults and seniors.
The area is within 15 minutes of the store has 10,000 families, mostly form lower to middle class neighborhoods.
Average family size is 4 people per household.
The lower to middle class population is growing at about 6% per year over the next five years in this area.
10,000 families lower to middle class neighborhoods.
Average family size is 4 people per household.
There is no direct competition; however, there are fast food restaurants like McDonald’s, Taco Bell and Wendy’s in the geographical target market. The lower to middle class population is growing at about 6% per year over the next five years in this area.

9. Sales Forecast Papa Geo’s Restaurant - 1st Year Forecast
Monthly Sales
Jan.-March
April-June
July-Sep.
Oct.-Dec.
Growth 0%
366%
100%
98%
Sales
$9,000.00
$42,000.00
$42,700.00
$41,993.00
Other
$3,006.00
$2,030.07
$1,500.00
$1,946.15
Monthly Totals
$12,006.00
$44,030.07
$44,200.00
$43,939.15
YTD Totals
$56,036.07
$100,236.07
$144,175.22
 Sales
$144,075.22
$148,397.47
$154,333.37
$162,050.04
$171,773.04
Total sales forecasted for 5 years
Year 1
Year 2
Year 3
Year 4
Year 5 3% 4% 5% 6%
$144,075.22
$148,397.47
$154,333.37
$162,050.04
$171,773.04

10. Capital Expenditures Budget
Equipment
$68,083.53
Miscellaneous
$4,810.00
Furniture/Fixtures
$397.00
Facility Costs
$45,000.00
$50,207.00
Capital Expenditures Budget   Equipment $68, Miscellaneous $4, Furniture/Fixtures $ Facility Costs $45,   $50,207.00

11. Capital Expenditures Budget
Total Capital Expenditure is $50,207
As stated we need to spend $68, on equipment that is needed to start the business.
We also are going to spend $4,810 on miscellaneous items such as dish sets, cups, silver ware, etc.
And as for the furniture/ fixtures the amount is $397 these are important because we need an office desk to be able to work on paper work such as applications, bills, payroll, etc.
The amount spent on the Capital Expenditure should cover the full five years
----cover five years
--how much was spent on each catagory

12. Cash Flow Budget Worksheet
Pap Geo’s Restaurant
2012
2013
2014
2015
2016
Total
Beginning Cash Balance:
$815,005
$827,682
$837,698
$711,768
$3,192,153
Cash Inflows (Income):
Loan Proceeds
900,000
Sales & Receipts
144,075
148,397
154,333
162,050
171,773
780,629
Total Cash Inflows:
$1,044,075
$148,397
$154,333
$17,988
$19,067
$1,680,629
Available Cash Balance:
$963,403
$982,015
$855,686
$730,835
Cash Outflows (Expenses):
Advertising
20,000
10,000
60,000
Health Insurance
5,000
25,000
Insurance
1,000
Interest
11.590
10.662
9.676
8.630
7.518
48.077
Payroll
80,000
400,000
Rent or Lease
10,0000
50,000
Utilities & Telephone
Renovations
15,000
Inventories
1,599
1,647
1,713
1,799
1,907
8,665
Equipment
68,084
Furniture
397
Credit card fees
400
412
428
450
477
2,166
Subtotal
$214,070
$119,721
$118,818
$117,878
$116,902
$687,388
Other Cash Out Flows:
Loan Principal
16,000
17,500
18,040
19,090
85,630
Owner's Draw
8,000
24,000
Subtotal:
$15,000
$16,000
$25,500
$26,040
$27,090
$109,630
Total Cash Outflows:
$299,707
$135,721
$144,318
$143,918
$143,992
$797,018
Ending Cash Balance:
$586,843
$3,778,995

13. Present Value of Cash inflows
NPV Analysis %
Year
Cash Inflows
Discount Factor
Present Value 1
815,005.00
0.9091
740,921.05 2
827,682.00
0.8264
683,996.40 3
837,698.00
0.7513
629,362.51 4
711,768.00
0.603
429,196.10 5
586,843.00
0.6209
364,370.82
3,778,996.00
2,847,846.88
Present Value of Cash inflows
Initial Investment
Net Present Value
900,000.00
1,947,846.88

14. Rate of Return Rate of Return
The Rate of Return is used to determine the rate allowed for the next five years to get the present value at a positive value.
Rate of Return
Total for equipment
68,083.53
Depreciation
13,616.71
Cash inflows
3,778,996.00
Initial Investment
900,000.00
ARR
4.18
Annual Cash Inflows
IRR
0.2382

15. Payback Period over 5 Years
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Capital Investment
900,000.00
Annual Cash Inflow
815,005.00
827,682.00
837,698.00
711,768.00
586,843.00
Payback Period
1.104
1.087
1.074
1.264
1.534
Total Payback
6.064

16. Pro-Forma Income Statement
Papa Geo’s Restaurant
For 2012 through 2016
(all numbers in $000)
REVENUE
2012
2013
2014
2015
2016
Gross sales
$144,075
$148,397
$154,333
$162,050
$171,773
Net Sales
Gross Profit (Loss)
$143,075
$139,617
$148,132
$154,015
OPERATING EXPENSES
Selling
Salaries and wages
$20,000
$20,,000
Advertising
20,000
10,000
10.000
Depreciation
13,287
10,629
8,504
6,803
5,443
Other
Total Selling Expenses
$53,287
$40,629
$38,504
$36,803
$35,443
General/Administrative
$60,000
Employee benefits
5,000
Insurance
1,000
Rent
Utilities
Interest
11,590
10,662
9,676
8,630
7,518
Furniture & equipment
397
Total
$88,987
$87,662
$86,676
$85,630
$84,518
Total Operating Expenses
$142,274
$128,291
$125,180
$122,433
$119,961
Net Income Before Taxes
$801
$11.327
$22,952
$31,582
$43,307
Taxes
160
2,265
4,590
6,316
8,661
NET INCOME (LOSS)
$641
$9,061
$18,362
$25,266
$34,646

17. Pro-Forma Income Statement
A Pro-Forma Financial statement is a financial statement that a company prepares to consider the effects of a potential activity.
Pro forma describes a presentation of data, typically financial statements, where the data reflect the world on an 'as if' basis.
That is, as if the states of the world were different from that which is in fact the case.
A Pro-Forma Financial statement definition.

18. Pro-Forma Cash Flow Statement
Pap Geo’s Restaurant
2012
2013
2014
2015
2016
Total
Beginning Cash Balance:
$815,005
$827,682
$837,698
$711,768
$3,192,153
Cash Inflows (Income):
Loan Proceeds
900,000
Sales & Receipts
144,075
148,397
154,333
162,050
171,773
780,629
Total Cash Inflows:
$1,044,075
$148,397
$154,333
$17,988
$19,067
$1,680,629
Available Cash Balance:
$963,403
$982,015
$855,686
$730,835
Cash Outflows (Expenses):
Advertising
20,000
10,000
60,000
Health Insurance
5,000
25,000
Insurance
1,000
Interest
11.590
10.662
9.676
8.630
7.518
48.077
Payroll
80,000
400,000
Rent or Lease
10,0000
50,000
Utilities & Telephone
Renovations
15,000
Inventories
1,599
1,647
1,713
1,799
1,907
8,665
Equipment
68,084
Furniture
397
Credit card fees
400
412
428
450
477
2,166
Subtotal
$214,070
$119,721
$118,818
$117,878
$116,902
$687,388
Other Cash Out Flows:
Loan Principal
16,000
17,500
18,040
19,090
85,630
Owner's Draw
8,000
24,000
Subtotal:
$15,000
$16,000
$25,500
$26,040
$27,090
$109,630
Total Cash Outflows:
$299,707
$135,721
$144,318
$143,918
$143,992
$797,018
Ending Cash Balance:
$586,843
$3,778,995

19. Pro-Forma Cash Flow Statement
“ The cash budget [beginning cash balance + anticipated receipts - expected disbursements = ending cash balance] will provide information about any need for working capital, such as a line of credit, short term financing, or an infusion of capital from the owners of the business.
The cash budget necessarily takes into account any payments on existing indebtedness, receipts of interest on customer financing arrangements, and any anticipated capital expenditures.”

20. Pro Forma Balance Sheet Years 1-5
Assets
2012
2013
2014
2015
2016
Current Assets:
Cash
$1,044,075
$963,403
$982,015
$855,686
$730,835
Total Current Assets
Fixed Assets:
Furniture
$397
Equipment
$68,083.53
Less: Acc. Dep.
($15,713)
Total Fixed Assets
$64,067
Total Assets
$1,160,909.53
$1,011,757
$1,030,369
$904,04
$779,289
Liabilities and Capital
Current Liabilities:
Accounts Payable
$2,666
Accrued Payroll Payable
$80,0000
$80,000
Insurance Payable
$1,000
Interest Payable
$11,590
$10,662
$9,676
$8,630
$7,518
Total Current Liabilities
$95,256
$94,328
$93,342
$92,296
$91,184
Long Term Liabilities
Notes Payable
$233,631
$215,771
$196,283
$175,021
$151,821
Total Long-Term Liabilities
Capital
Owner's Equity
$125,000
Total Capital $0
Total Liabilities and Capital
$453,887
$310,099
$289,625
$267,317
$243,005
Net Worth
$67,373
$165,650
$233,642
$319,533
$426,872

21. Works Cited
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Manta Website Retrieved from: emp_pie on 5/12/2012  
Vince’s Restaurant and pizza Retrieved from, buffet.htm on 5/12/2012  
Mohammed Rafi, How Do Restaurant Buffets Make Money, February 27,2007 Retrieved from restaurant-buffets-make-money.htm , on 5/12/2012  
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Katom Restaurant supply, Inc. website, Retrieved from
conveyor-ovens.html, on 5/17/2012
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Investopedia website, Retrieved from on 5/26/2012 
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