Nothing can be more frustrating for an individual entrepreneur than creating a compelling a realistic sales forecast. In the restaurant world, this can be particularly confusing because of the variety of menu items (appetizers, salads & soups, entrées, drinks, liquors, wines, etc.) and the extreme variety of price and cost on these items. When developing a client's restaurant business plan we use a simple approach and suggest that you should, too. Otherwise, the sales forecast can become so confusing that even an economist would have a difficult time figuring it out, not to mention a loan officer. For a restaurant business plan we suggest that you use no more than four line items in your sales forecast: food, non-alcohol drinks, beer/wine/liquor, and other (gift certificates, merchandise, etc.).
The first thing that you must do is to develop a unit sales projection. It's easier to break items down into average units to account for daily, weekly, monthly and/or yearly sales of that particular unit. Generally speaking, in a restaurant business plan we like to calculate the entrées unit sales first, thus we can calculate all other units as a ratio of entrées. For example: we could assume that for every ten entrées sold, two units of beer/wine/liquor would be sold—a ratio of 5:2.
The next step is to calculate the average price for each unit category, or how much will the customer pay for your product. This is fairly simple in a restaurant business plan. Take your menu and assign the price to each item respective to its unit category. Then add all the prices together and divide it by the number of items—giving you your average prices. Entrée example: Veal Parmesan is $19.50, Pork Chops is $18.50 and Spaghetti with Meatballs is $12.50, then your average entrée price is $16.85.
Now that you are an expert on developing unit sales and average pricing for your restaurant business plan's sales forecast, you can calculate your costs or cost-of-goods-sold (COGS). This is a little trickier because there are so many ingredients and variety of products to take into consideration. When writing a business plan for a start-up restaurant you might just want to use a general percentage based on your consultant's advice. Typically speaking, if you have a menu that is light on the proteins (steaks, burgers, fish, chicken, etc.) you would likely have a lower COGS (maybe 23–27%). If you are opening a high protein restaurant—a steakhouse, seafood restaurant, etc.—you might want to consider using a higher COGS (maybe 28–35%).
Lastly, you compile the units you expect to sell per day, taking into consideration daily variance (slow days and heavy days), and use your weekly units to add up monthly units. Once you have your first month figured out you can use that to develop your first year of sales. Remember to account for seasonality of restaurants in your area. This varies from region to region based on tourism, local attractions, weather, etc.