Financial Projections

Assumptions:

– The Barkade can have a capacity of 175 customers at any given time.

– The average customer will spend $20 on drinks and entertainment options per visit.

– The Barkade will be open for business 7 days a week.

– The cost of goods sold (COGS) for drinks and entertainment options will be 32% of the revenue.

– The Barkade will have a startup cost of $400,000 which will be financed through a combination of equity and debt.

Projections:

Year 1:

– Revenue: $1,292,573    – COGS: $408,010

– Gross Profit: $884,563   – Operating Expenses: $576,428

– Net Profit: $308,135

Year 2:

– Revenue: $1,635,978   – COGS: $494,713

– Gross Profit: $1,141,265   – Operating Expenses: $702,400

– Net Profit: $438,865

Year 3:

– Revenue: $1,766,856    – COGS: $565,393

– Gross Profit: $1,201,463   – Operating Expenses: $676,720

– Net Profit: $524,743

Explanation:

In the first year of operation, the Barkade is projected to generate revenue of $1,292,573 with a gross profit of $884,563 after a 32% margin of cost of goods sold. After subtracting operating expenses of $576,428 the net profit for the first year is projected to be $308,135.

In the second year of operation, we project an annual growth rate of 8% as well as adding a bartender to the evenings. These additions bring revenue to a projected increase to $1,635,978 with a gross profit of $1,141,265. Operating expenses are projected to increase to $702,400 due to a $75,000 bar addition resulting in a net profit of $438,865.

In the third year of operation, we project an annual growth rate of 8% again resulting in revenue projections increasing to $1,766,856, with a gross profit of $1,201,463. Operating expenses are projected at $676,720 due to adding another full-time staffed position to accommodate growth resulting in a net profit of $524,743.

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