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Our Fast Food Financial Model Structure covers all the essential aspects you need to consider when starting or scaling a Fast Food business. By following this structure, you can better understand your revenue streams, costs, and assets, helping you optimize profitability and strategically plan for growth.
\nFinancial planning is crucial when launching or expanding a fast food business. It provides a blueprint for understanding where your money comes from, where it goes, and how to make the best of it to grow your establishment. With careful planning, you can recognize potential new revenue streams, better manage costs, and ensure the sustainability of your business. This comprehensive financial model will serve as a foundation and guide, detailing the typical revenues, direct costs, types of employees, operating expenses, and assets needed for a successful fast food venture. However, it is important to adapt strategies, because the market can fluctuate unexpectedly. Although challenges may arise, the ability to pivot will determine success.
\nFood sales, the primary revenue stream, are calculated by multiplying the average price per item by estimated units sold per day. Beverage sales, however, stem from drinks; these are calculated by the sales price of beverages times units sold daily. Combo meals attract higher sales through bundled offers and are calculated as total combo meals sold times the average combo meal price. Online orders have grown in popularity—this revenue is determined by the average order value times the number of online orders. Event catering generates revenue from catering services, which is estimated by the average event cost times the number of events catered annually. Merchandise, on the other hand, consists of sales from branded items and is calculated as the unit price times the number of units sold.
\nThe cost of goods sold (COGS) encompasses direct costs associated with producing food and beverages; this includes costs of ingredients for meals and drinks, packaging expenses, and any supply wastage. However, one must consider that these figures can fluctuate. Although the base costs may seem stable, variations arise because of market demands and seasonal changes. This dynamic nature complicates budgeting, but understanding it is crucial for effective financial planning.
\nManagers oversee operations and manage staff; they also ensure quality standards are maintained. Chefs or cooks are responsible for food preparation and kitchen operations. Service staff take orders, handle transactions, and maintain customer satisfaction; however, they often face challenges. Delivery drivers perform the delivery of orders, which is crucial for online sales revenue. Although these roles vary, they are interconnected because each contributes to the overall success of the business.
\nKitchen equipment such as ovens, fryers, and grills, and other cooking appliances are essential. Furniture, which includes seating and tables, is necessary for customers. Vehicles are needed for delivery services; however, if not applicable, this may not be a concern. Point of sale systems consist of hardware and software that facilitate transactions but require careful consideration because they impact efficiency.
\nBank loans, traditional funding through loans with interest, can be quite burdensome; however, they serve as a common method of financing. Equity financing, raising capital by selling shares of the business, offers an alternative, but it may dilute ownership because investors expect returns. Crowdfunding, collecting small amounts of money from a large number of people, has gained popularity, especially via online platforms, although it often requires substantial marketing efforts to succeed. Grants, non-repayable funds provided by government or private organizations, can be advantageous because they do not require repayment, but they are often competitive and limited in availability.
\nA truly professional financial model for a fast food business relies on specific operating KPIs (key performance indicators) that reflect the operational aspects of the enterprise. These KPIs are crucial for understanding the dynamics of business and encompass several important metrics. For instance, daily footfall indicates the number of customers visiting the outlet each day; however, average transaction value reflects the average amount spent by customers in a single transaction. Although customer retention rate measures the percentage of repeat customers over a period, table turnover rate highlights the frequency with which tables are occupied, underscoring efficiency. Moreover, labor cost percentage reveals the proportion of income spent on employee salaries because food cost percentage denotes the direct costs of ingredients in relation to sales. Finally, online order volume captures the number of orders made through online platforms and advertising spend efficiency assesses the return on investment from money spent on marketing. This comprehensive set of KPIs is essential for assessing the health and performance of such a business.
\nDriver-based financial planning, a method of identifying key activities, is crucial for understanding which ‘drivers’ have the greatest impact on business results. This approach facilitates the development of financial plans centered around these activities. It aids in establishing relationships between financial outcomes and essential resources needed to achieve them—such as staffing, marketing budgets, and equipment. If you wish to learn more about driver-based financial planning, however, consider watching the founder of Modeliks explain its significance in the video below. Although some may question its effectiveness, this method proves valuable because it aligns financial strategies with operational realities.
\n\nThe objective or goal of financial forecast outputs is to enable you and your management team, board, or investors to quickly comprehend how your fast food business will perform in the future. However, you must also gain comfort that the plan is well thought through, realistic, and achievable. Although it’s important to understand what investment is needed to implement the plan, it is equally crucial to know what the return will be. To achieve these goals, here is a one-page template on how to effectively present your financial plan.
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Besides this one-page summary of your plan, you’ll need three projected financial statements:
\nA professional fast food financial model assists in systematically thinking through your business, recognizing the resources necessary to meet your objectives, setting targets, measuring performance, securing funding, and making informed decisions for managing and expanding your business. Through it, you can confidently navigate the complexities of the fast food industry and capitalize on the opportunities it presents. However, this process can be challenging because one must remain vigilant. Although there are many factors to consider, it is essential to maintain focus and adapt strategies as needed.
\nIf you need help with your financial plan, try Modeliks, a financial planning solution for SMEs and startups or contact us at contact@modeliks.com and we can help.
\nAuthor:
\nBlagoja Hamamdjiev, Founder and CEO of Modeliks, Entrepreneur, and business planning expert.
In the last 20 years, he helped everything from startups to multi-billion-dollar conglomerates plan, manage, fundraise, and grow.
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