Revenue and Cost Planning for New Restaurant in Sydney

The assignment content discusses the financial activities of a restaurant for hospital in Sydney. To maintain operational activities, the top management assesses revenue from business and distributes resources accordingly to receive certain benefits during moments of crisis. The break-even analysis indicates that at this point, operating expenses incurred are $320000, long-term debt is $20000, and sales revenue generated is $650000, making the break-even point 52.30%. The cash flow statement shows a significant increase in sales turnover over three financial years, with a slight increase in expenses. To secure financing, the business will not pay dividends and will incur expenses to acquire assets and pay long-term debt. Tight control will be imposed by management to increase the rate of return.

Grant application or
business case

Table of Contents
1. Identification of the new project or service and supply.....................................................4
2. Preparation of the budget....................................................................................................5
3. Build-up of the budget from a zero-based..........................................................................7
4. A contingency plan for managing the financial needs.......................................................7
5. Break-even analysis............................................................................................................8
CONCLUSION........................................................................................................................11
References................................................................................................................................12

List of tables
Table 1: Zero-based cash budget................................................................................................6
Table 2: Cash budget..................................................................................................................7
Table 3: Cash flow statement.....................................................................................................9

1. Identification of the new project or service and supply
In the current scenario, the food industry is growing with rapid speed and having
significant contribution in the GDP and tourism activities of the nations. The planning of
business about food restaurant in hospital will require skilled human resources who can help
in the development of menu, planning of operations, preparation and delivery of the food.
The infrastructure and implementation of technical tools for taking the order and offering the
information to the customer. The prior planning of business and development of the roadmap
of the business would be beneficial for the management. The opening of the restaurant to
provide food in the hospital in Sidney, Australia would be the major task that will require
financial resources to establish the restaurant. For starting the business in Australia the option
of the opening of food restaurant in hospital would be more feasible (Fuller, 2016). The
supply of the services would be manageable as there are many vendors are available for
offering the raw material to prepare the food in hospital according to menu and requirements
of customers. The consideration of issues of economy, human resources and implementation
of technical resources would be the major concern of the management to meet the objectives.
Following are the key objectives of starting the new business:
To meet the needs of local and international customers.
To offer high-quality food and services.
To gain profit from the organization.
Reason for funding
The small business unit requires funds for managing the following operations in the
business which are playing vital role in the planning and implantation of business project,
Working capital: For starting the business sufficient amount of working capital is required
which is the major reason for funding. The working capital helps to maintain the health of the
business that can be gain from the external sources like banking institute and investors. A
loan can help the management to cover the short-term fund requirements of business to grow
to meet the needs of customers and supplier for food restaurants in hospital (Junior.et al.
2016). This kind of approach in funding of working capital will help the organization to gain
the advantage of new opportunities by investing in the development of new products and
services for customers.
Asset purchase: In the business of food restaurant in hospital, the funds are required for
purchasing of assets to prepare and deliver the food to the customers. The major assets of the

restaurant are furniture, determination of quality interior and ambience as well human
resources. In the current scenario, customer demands entertainment too with food so
implementation of equipment’s like music system, big projector screen as well development
of facilities would be requires funding. The setup of kitchen and machinery for preparing and
offering the food demand funds (Wray.et al. 2015).
Cash flow: the process of owning a business can be a roller coaster especially in a hard time
of slow demand and the weak economy. To survive in these conditions the management will
require funds to maintain the cost of the basic operations and pay to the human resources. For
that reason, owner of the restaurant will need funds to keep the ship afloat.
Inventory: For the food product and services business in hospital, inventory of the raw
material plays the critical role in the management of timely services (Malherbe, 2015). The
prior forecasting and availability of raw material are essential to meet the needs and demand
of the customer. This would be a major reason for funding in the business.
Location
For opening the restaurant in hospital the location Sydney is selected as there football
of international and local people is high that are looking for quality food and services to
spend some quality time with the friends and family members. The growth of food industry is
8% which indicates that business of food restaurant would have potential to grow with the
effectiveness.
Rational
According to analysis, the demand for quality food and services is high in the selected
region of Australia. The business process of food is beneficial for management as a demand
of verity food is increasing as people are investing on quality food and services that are
encouraging the food business. By considering information, the financial required are high
for the establishment of a restaurant as a development of infrastructure and recruitment of
skilled human resource will be important (Begenau, 2016). The major food business is also
having significant contribution in the GDP and attraction of tourist to the particular location.
2. Preparation of the budget
The budget has been prepared for the first financial year which consists of all related
activities regarding the operation of the restaurant in hospital in Sydney. This facilitates
corporation in integrating all related resources because right forecasting is done for the
material needed in the manufacturing of several products and services. On the other hand,
forecasting from the zero-based cash budget assists management of new restaurant to access
cost-effective sources and ensure the successful operation of the business for longer time

span. The budget of the business has been prepared in accordance with the outcome presented
in the cash flow statement. For this purpose, each year is considered as the financial year and
accordingly amount of revenue and expenses has been divided for each year. It is assumed
that amount of expenses will remain same in all months of the single financial year. This
helps management keep a record of the expenses in a more effective manner.
Table 1: Zero-based cash budget
Janu
ary
Febru
ary
Mar
ch
Apri
l May June July
Aug
ust
Septe
mber
Octo
ber
Nove
mber
Dece
mber
Reven
ue
Cash
balanc
e
2483
2.7
4966
5.3
7449
8
9933
0.7
1241
63
1489
96
1738
29
19866
1
2234
94
24832
7
27315
9
Sales
5416
6
5416
6
5416
6
5416
6
5416
6
5416
6
5416
6
5416
6 54166
5416
6 54166 54166
Total
reven
ue
5416
6
7899
8.7
1038
31
1286
64
1534
97
1783
29
2031
62
2279
95
25282
7
2776
60
30249
3
32732
5
Expen
ses
1833
3.3
1833
3.3
1833
3.3
1833
3.3
1833
3.3
1833
3.3
1833
3.3
1833
3.3
18333.
3
1833
3.3
18333
.3
18333
.3
Purch
ase 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
Loan
1666
.67
1666.
67
1666
.67
1666
.67
1666
.67
1666
.67
1666
.67
1666
.67
1666.6
7
1666
.67
1666.
67
1666.
67
Electri
city
bill
8333
.33
8333.
33
8333
.33
8333
.33
8333
.33
8333
.33
8333
.33
8333
.33
8333.3
3
8333
.33
8333.
33
8333.
33
Total
expen
se
2933
3.3
2933
3.3
2933
3.3
2933
3.3
2933
3.3
2933
3.3
2933
3.3
2933
3.3
29333.
3
2933
3.3
29333
.3
29333
.3
Surplu
s/
deficit
2483
2.7
4966
5.3
7449
8
9933
0.7
1241
63
1489
96
1738
29
1986
61
22349
4
2483
27
27315
9
29799
2
The above-mentioned budget shows that in every year the company will increase its revenue
because of its unique identity in the marketplace and meeting the expectations of customers.
However, loan or long-term debt will be paid on time every month so as to reduce the
financial burden. It aids to achieve the long as well as short-term objectives of the business as
management would be able to arrange other resources accordingly. The constant increase or
rise in the profitability of restaurant in hospital in Sydney shows that it can effectively

recover the cost of production and increase the overall rate of return. This aids to cater the
requirement of the business and shed light on its expansion for a long term.
3. Build-up of the budget from a zero-based
The budget for the second financial year has been prepared as follows where the
outcome generated from first financial year considered (Malherbe, 2015). This enables
management of restaurant in hospital in Sydney to estimate the requirement of the financial
resources and accordingly access suitable sources. However, the below-mentioned budget
reflects that company is not required to acquire the financial resources from any other party.
The most significant or crucial aspect is that firm has control over its expenses so that
accordingly revenue is increased. This, in turn, the company is ensuring consistent growth
and development in the marketplace. However, unfavourable condition might face when the
business
Table 2: Cash budget
January-March April-June July-
September
October-
December
Revenue
Cash balance 297992 348992 399992 450992
Sales 195000 195000 195000 195000
Total revenue 492992 543992 594992 645992
Expenses 60500 60500 60500 60500
Purchase 3500 3500 3500 3500
Loan 5000 5000 5000 5000
Electricity bill 75000 75000 75000 75000
Total expenses 144000 144000 144000 144000
Surplus/ deficit 348992 399992 450992 501992
The aforementioned budget is prepared on a quarterly basis in which in the first
quarter business get surplus worth 348992 because the cash balance of the previous year is
added in the revenue. In this manner, it becomes easy for the new restaurant in Sydney to
ensure smooth operation without acquiring the loan. Furthermore, revenue or rate of return
for the business is increasing in all the quarter. It proves to be effective in expanding the
business in the future time span and meeting the requirement of the business in the right
manner. Moreover, yearly expenses are divided per month so that it becomes easy for a

corporation to have right control over the expenses and accordingly overall performance of
the business can be managed in an effectual manner.
4. A contingency plan for managing the financial needs
For an implementation of new project or plan, there is need of contingency planning
that helps to deal with the unexpected situations as well maintaining the financial health of
the organization. For planning of financial needs for surviving in the crisis conditions would
be involve following steps:
Specific actions: The top amendment of an organization need to plan the specific actions for
fund management for future by considering the multiple scenarios using the contingency
planning. This kind of planning would involve opinion of stakeholder as well actions that
have been taken by the competitor organizations in these situations (Iacoviello, 2015). For
example, the organization will deposit some amount for the security of the business which
can be used in this kind of situations to run the business without interruption.
Adjustment in working capital: The contingency planning of business will involve the
adjustment in the allocation and utilization of working capital to meet the financial needs of a
particular situation. As the situation of business gets improved the management can increase
the bonus accruals (Sadgrove, 2016). The preferable actions need to be taken to mitigate the
situation of crisis. The prior adjustment by forecasting financial situations will be beneficial
for an organization to meet the objectives.
Assessment of revenue and resources allocation: the planning will be the focus on revenue
and cost of the operations to make changes in the financial activities to have sufficient funds
for maintaining the operational activities. The top management will assess revenue from the
business as well make the distribution of resources accordingly which will help to receive
certain benefits in the moment of crisis (Finch, 2016). For example, the management could
influence the prices of products and services to maintain the financial investment.
5. Break-even analysis
The break-even point indicates that point from where the ratio of profitability can be
derived. It assists corporation or management to under the situation of neither profit nor loss.
The restaurant for hospital in Sydney would accordingly make huge profitability which aids
to recover initial cost and meet the expectations of all related stakeholders. The below-
mentioned calculation reflects the break-even point. At this juncture, operating expenses
incurred from the first financial year is 320000 and long-term debt is 20000. On the other

hand, sales revenue generated from the first financial year is 650000. Owing to this, 52.30%
is considered as the break-even point.
Operating Expenses + Long-term debt/sales
(320000+20000)/650000=52.30%
The break-even analysis has been conducted from the outcome of the cash flow of
restaurant for hospital in Sydney. It is based on certain assumptions which are explained
below the table. The below-mentioned table reflects sales turnover is keep on increasing
which facilitate to cater the requirement of all related operational activities. However,
additional expenses such as VAT and interest-free borrowing are generated by the business.
In this manner, first financial year derived sales turnover worth 650000 whereas in the second
year it was 780000 and the third year contain sales turnover worth 936000. This amount of
sales turnover is considered as the final outcome or cash received for the respective financial
years. Furthermore, cash expenses are incurred in hiring the raw material, labour that
facilitates produce the final outcome for meeting the expectations of customers. However, no
any kind of long-term assets would be purchased in the first financial year but later it would.
Apart from this, a corporation will not pay the dividend because no such money has
been borrowed. Owing to this, financing aspect of the business is secured whereby it becomes
easy to meet the expectations of all related parties and increase the rate of return for the
corporation. Moreover, management of the business incur expenses in acquiring the assets
and paying the long-term debt so as to meet the short and long-term obligations on the right
time. The aspect of meeting the short-term obligation on the time is helpful to maintain the
successful operation of the business. This proves to be effective in deriving the valid outcome
and supporting all related stakeholders of the business. On the other hand, it might be
possible that cost of production increases with the variation in the cash expenses. For this
purpose, tight control will be imposed by the management of the business in order to increase
the rate of return.
Table 3: Cash flow statement
1st Year 2nd Year 3rd Year
Cash inflows
Operations
Cash Sales 650000 780000 936,000

CASH FROM
OPERATIONS 650000 780000 936000
Additional Cash
VAT and other taxes 0 0 0
Current Borrowings 0 0 0
Other Liabilities
(interest-free) 0 0 0
New Long-term
Liabilities 0 0 0
Sales Current Assets 0 0 0
Investment 0 0 0
CASH RECEIVED 650000 780000 936000
Expenditures 1st Year 2nd Year 3rd Year
Operations
Expenditures
Cash expenses 220000 242000 266200
Bill and other
payments 100000 300000 600000
OPERATIONS 320000 542000 866200
Extra Cash Spent
VAT and other taxes 0 0 0
Principal Repayment
on Borrowing 0 0 0
Other Liabilities
Repayments made 0 0 0
Long-term Liabilities
payments 20000 20000 20000
Current assets
Purchased 12000 14000 18000
Long-term Assets
Purchased 0 18000 18200
Dividend paid 0 0 0
CASH SPENT 352000 594000 922400
Net Cash Flow 298000 186000 13600
 The sales revenue of the business will be increased by 20% in each financial year

 The expenses incurred in the production phase will be increased through 10%
 Uniqueness in the products and services reduces the need for marketing
 There will be the high or large number of customers.
 The firm will outperform in the marketplace as it would offer varied range of products
and services
 The suppliers are easily approachable and they provide timely material of the
production of safe and quality products.
 The new service of product which is being offered by new restaurant would be
different from other competitors and perfectly meet the expectations of customers.
Owing to this, sales turnover will be increased continuously.
 The cost of production or indirect cost might increase due to a poor economic
condition. At this juncture, management might be in the need for acquiring sources.
Therefore, the new restaurant in Sydney considers both positive and negative outcome
and accordingly contingency plan has also been provided.
CONCLUSION
The aforementioned report concludes that management of new restaurant can easily
manage its profitability and expenses by having control over different business activities. It
can also be said that At this juncture, the price of products might be increased so as to recover
the cost and increase the rate of return from the business. Also, training can be provided to
personnel so they focus on the quality of products and services whereby sales can be
increased automatically.

REFERENCES
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cycle model.
Finch, B., 2016. How to write a business plan. Kogan Page Publishers.
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Press.
Iacoviello, M., 2015. Financial business cycles. Review of Economic Dynamics, 18(1),
pp.140-163.
Junior, E.L.C. and Morand, C., 2016. Interest of mate (Ilex paraguariensis A. St.-Hil.) as a
new natural functional food to preserve human cardiovascular health–A review. Journal
of Functional Foods, 21, pp.440-454.
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Sadgrove, K., 2016. The complete guide to business risk management. Routledge.
Wray, H.E., Grant, S., Kofman, E. and Peel, C., 2015. Family friendly? The impact on
children of the family migration rules: a review of the financial requirements.