Moma Monaz’s primary source of revenue is the sale of food and beverages to customers. It will constitute nearly the entirety of the restaurant’s earnings, though there may be some minor miscellaneous income. With regard to inventory, the restaurant will maintain a steady supply of non-perishables, particularly alcohol, and source food ingredients daily without storing much. However, the costs are substantially more complicated, consisting of a variety of categories. It will employ the equivalent of five full-time people by having workers work in shifts, who are assumed to be working at $13 per hour for 8 hours a day. These workers will likely be students who are working while studying, and therefore, PAYE has to be taken into account. On the other hand, there is no need to consider superannuation.
As mentioned above, the author expects the average cost of a meal at Moma Monaz to be $15, increasing to $30 if the customer is drinking. The first price is enough to include two menu items, which are generally priced at approximately $6, and a drink such as Coca-Cola or a coffee. Since tapas are usually not large or highly filling, the customer will generally order two, thus forming the price. When drinking, they will still buy the tapas to eat them as snacks, possibly eating more than two. Additionally, they will consume beer or other beverages, incurring additional charges and raising the bill substantially. With that said, to preserve order in the restaurant, the staff will refuse to serve drinks to excessively inebriated customers. As such, there should be no binge-drinking incidents, even though they may increase the restaurant’s profits. The business’s sales are expected to grow by 5% monthly during the first year, 5% quarterly in years 2 and 3, and stabilize at 1% annual growth afterward.
Many customers will pay via card, which is why bank charges and credit card commissions have to be considered. The first of these costs is fixed, while the second is variable at approximately 2% due to the 1.3-3.4% range of fees for different banks (Daly, 2020). The restaurant will occasionally provide live entertainment and have promotions that lower the prices of specific items, which are fixed and variable costs. Electricity, gas, and water should be considered mostly fixed costs, which are substantial for a restaurant due to its heavy usage of all three. Rent is another fixed cost, and the business will leave a three-month security deposit as part of the agreement. As mentioned above, Moma Monaz will not engage in costly advertising, incurring fixed costs to maintain its website, sign, and online presence. Lastly, cleaning, waste removal, maintenance, business insurance, and other minor costs are all fixed.
Lastly, the fixed assets should be considered with prices assigned to them. The computer, along with the necessary peripherals, should cost approximately $1,000. The restaurant remodeling should cost $200,000, and the furniture will amount to $25,000, forming the $225,000 figure mentioned above. The kitchen equipment will cost $50,000, and the leasehold’s value will amount to approximately $200,000. Additionally, it is necessary to consider depreciation, which will affect every fixed asset except for the leasehold, which is nevertheless amortized at a similar rate. The author will assume the depreciation rate to be 10% annually, with the value declining exponentially rather than linearly. The reason is that as facilities that work with food, restaurants are more prone to decay over time than other types of buildings and equipment.
Reference
Daly, L. (2020). Average credit card processing fees and costs in 2020. Fool. Web.