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Business Analysis Tool Business Analysis Tool Document Transcript

  • Business Analytics Tool This information is bound by the Non-Disclosure Agreement you have signed. This information may not be reproduced, faxed or otherwise supplied to any party. We Sell RestaurantsTM aggressively pursues violators of this agreement. Report Prepared for: Sample Restaurant Industry Trends 2007 Restaurant Industry Overview Sales: $537 billion Locations: 935,000 — serving more than 70 billion meal and snack occasions Employees: 12.8 million — the industry is the largest employer besides government Restaurant Industry Sales $536.9 $600.0 $500.0 $322.5 Billions of current $400.0 $199.7 dollars $300.0 $200.0 $42.8 $100.0 $0.0 The We Sell Restaurants Business Analysis2007* 1970 1987 1997 Tool *Projected provides you with an Overview of Industry Trends and Sales Eating Establishment 2007* Estimated Sales (Billions) Restaurant Industry sales by Type of Restaurants$363 Type of Places Outlet Drinking Places $16 Managed Services $36 Lodging-place restaurants $27 Retail, Vending, $49 Recreation, Mobile $46 Total Commercial $491 Restaurant-industry sales are forecast to advance 5% in 2007 and equal 4% of the U.S. gross domestic product. Average unit sales in 2004 were $795,000 at full service restaurants and $671,000 at limited-service restaurants. The average household expenditure for food away from home in 2005 was $2,634, or $1,054 per person. More than seven out of 10 eating-and-drinking places are single-unit (independent) operations. Numbers at a Glance $1.5 billion — Restaurant-industry sales on a typical day in 2007 57 percent — Percent of consumers who would use delivery to their home or office if offered by table service restaurants. The We Sell Restaurants Business Analysis Tool Four out of five — consumers agree that going out to a restaurant is a better way to use their leisure time than cooking and cleaning up features Numbers at a Glance that paint a picture of 38 percent — Percentage of table service-restaurant operators who the restaurant industry - a what’s happening in anticipate that takeout will represent in both larger proportion of their total sales in 2007 Georgia and Florida 37 percent — Percent of consumers who have used curbside takeout at a table service restaurant. 59 percent — Percent of table service restaurant operators that offer televisions for customer entertainment. The Restaurant Industry by State Georgia Florida Locations 14,843 29,729 Sales $12.6 billion $24.0 billion Employment (estimate 2006) 366,000 837,300 Jobs Added 2006-2016 (est.) 61,800 178,900 Copyright We Sell RestaurantsTM All Rights Reserved
  • Business Analytics Tool This information is bound by the Non-Disclosure Agreement you have signed. This information may not be reproduced, faxed or otherwise supplied to any party. We Sell RestaurantsTM aggressively pursues violators of this agreement. Report Prepared for: Sample Restaurant Restaurant Financial Data There are a number of questions the buyer should assess for himself when reviewing the financial statements of a business offered for sale. These questions are based on common United States accounting practices and methods. Some of the focus areas would typically include: Profits & Profit Margin, Sales, Food Costs and Labor Costs. Profits & Profit Margin The We Sell Restaurants Are profitability trends favorable in this restaurant? Business Analysis Tool Discusses The company's net profit margins are compared to competitors in thefor the No profit statistic Industry. Key Financial Indicators industry. Restaurant is more important than the net profit margin -- it is crucial in the short and long run. The other variable to considerThis profit dollars. If shows buyers what remain should is net document sales decrease and expenses they focus on constant, there is risk to net profit dollars. In particular, restaurants are vulnerable to shifts in sales if they do not control food costs. and why. Sales The Business Analysis Tool is THE Restaurant Brokerage standard Are sales growing and satisfactory? for Restaurant Listing Presentations. It is Sales changes in themselves are typically by vital analytical points. Profitability trends areto our sellers and prepared not our qualified staff at no cost more important. Still the clear goal over time is to increase sales since the cost of doing business almost always goes up over the long provided to all Qualified Buyers on each listing. run. Expenses Is the company controlling expenses effectively? Key variables specific to the restaurant industry include Food Costs and Labor Costs which can dramatically impact the company's profit. Both of these variables will be compared to industry standards to provide a snapshot of this company's operating profitability and opportunity. Industry Comparisons Is the company operating at, below, or above industry standards? Industry specific comparison are helpful in understanding the efficiency of a restaurant as well as opportunity for improvement. The information included in the following comparative financial evaluation is presented only for supplementary analysis and discussion purposes. Such information is presented for a buyer's review only and is not intended for third parties. Accordingly, we do not express an opinion or any other form of assurance on the supplementary information Copyright We Sell RestaurantsTM All Rights Reserved
  • Business Analytics Tool This information is bound by the Non-Disclosure Agreement you have signed. This information may not be reproduced, faxed or otherwise supplied to any party. We Sell RestaurantsTM aggressively pursues violators of this agreement. Report Prepared for: Sample Restaurant Income Statement Data Sample Restaurant The source of this data is: P&L Provided by Sample Restaurant These figures have been provided by the owner/seller of this restaurant. We have depended on the seller for providing true and accurate data. We Sell RestaurantsTM Inc. does not warrant or verify the source of this data. PARTIAL YEAR YEAR 2008 % of Sales 2007 % of Sales 2006 % of Sales Gross Revenue $1,825,000 $1,752,633 $1,761,183 Food Costs $301,780 16.5% $283,688 16.2% $277,156 15.7% Alcohol Costs $268,711 14.7% $260,453 14.9% $256,266 14.6% Other in COGS $24,132 1.3% $26,344 $34,029 1.9% Total COGS $594,623 32.6% $570,485 32.6% $567,451 32.2% Gross Profit Margin $1,230,377 67.4% $1,182,148 67.4% $1,193,732 67.8% Rent $129,000 7.1% $129,462 7.4% $121,197 6.9% Labor Cost $368,000 20.2% $352,828 20.1% $405,337 23.0% Other Expense $561,000 30.7% $541,219 30.9% $542,241 30.8% Net Profit Margin $172,377 9.4% $158,639 9.1% $124,957 7.1% Owner Salary $9,000 0.5% $9,000 0.5% $7,383 0.4% Benefits $5,800 0.3% $5,562 0.3% $10,741 0.6% Interest Exp. $6,400 0.4% $6,300 0.4% $14,976 0.9% Depreciation & Amort. $18,754 1.0% $21,735 1.2% $24,194 1.4% Other $11,908 0.7% $9,813 0.6% $5,795 0.3% Total Add Backs $51,862 2.8% $52,410 3.0% $63,089 3.6% Owner Benefit $224,239 12.3% $211,049 12.0% $188,046 10.7% The Gross Profit Margin for this restaurant is: Profit Margin Industry Comparison 67.4% 80.0% The We Sell Restaurants Business Analysis Tool 70.0% The industry standard is 54.9% 60.0% captures the seller’s Profit and Loss statement is $1MM or less for a restaurant with sales an 50.0% 40.0% easy to understand format. The industry standard is 56.7% 30.0% for a restaurant with sales of $1MM-$10MM 20.0% 10.0% Buyer can easily understand the seller’s operating this restaurant is: The Net Profit Margin for costs 9.4% 0.0% Subject Gross and whether theyNet Industry Gross Subject Net Profit Industry are in line with Industry standards. Profit margin Profit Margin margin Profit Margin The industry standard is 10.0% for a restaurant with sales $1MM or less The We Sell Restaurants Business Analysis Tool shows The industry standard is 12.0% sellers at a glance what a restaurant is worth and $1MM-$10MM for a restaurant with sales of exactly why. CALCULATING "ADD BACKS" Add backs refer to typical expense and/or non-cash item "added back" to the net profit to calculate the total owner benefit. Such items would be fully documented on the Profit & Loss statement and could include any personal expenses paid for by the business. This could include items like: owner compensation, owner insurance paid by company, owner car expense paid by company, plus depreciation and amortization. Copyright We Sell RestaurantsTM All Rights Reserved
  • Business Analytics Tool This information is bound by the Non-Disclosure Agreement you have signed. This information may not be reproduced, faxed or otherwise supplied to any party. We Sell RestaurantsTM aggressively pursues violators of this agreement. Report Prepared for: Sample Restaurant Industry Comparisons Food Costs A profitable restaurant typically generates a 28%-35% food cost. Coupled with labor costs, these expenses consume 50-75% of total sales. Because of the impact food cost make on an operation, food cost is one of the first things to examine. Beyond the bottom line, food cost also reflects an operation's food quality, value provided to the customer, and management skill level. High food costs in a restaurant available for sale signals an opportunity for correction and greater profit dollars delivered to a strong operator. The We Sell Restaurants Business Analysis Tool compares the restaurant for sale with industry Food Cost Comparison to Industry Averages CALCULATING FOOD COSTS standards by restaurant type. is based on the Uniform The industry standard 35% System of Accounts for Restaurants (a handbook 30% available from the National Restaurant Association) Key Financial Indicators Like Food Costs are Food Cost=Cost of Food/Sales 25% 20% compared for the Buyer. 15% Sample Restaurant has a Food Cost of 32.6% 10% The Industry Average for Food Cost by Restaurant Type 5% 0% Fine Dining Pizza/Italian American Casual Subject Property Fine Dining 35% Cost of Food Sales/Food Sales Pizza/Italian 29% American Casual 32% Rent Physical location is very important to the restaurant owner. The length and value of the lease and its cost as a percent of total sales is a key indicator. In large markets such as Atlanta, rising rent costs in the past decade have made this variable even more important. Competition to be in the most desirable parts of the dining scene such as Buckhead or Midtown has driven rents to all time highs with no end in sight. For these reasons, an acquisition of an existing business may be the only way to gain a space in this highly competitive marketplace. Evaluation of a property should include some subjective consideration of the lease and location. The We Sell Restaurants Business Analysis Tool New restaurant leases in Metro Atlanta have rents averaging as high as $40.00 per square foot and in Buckhead or Midtown, even higher. A restaurant buyer will, in most cases, have to obtain a new lease. provides an analysis and overview of the Rent, We Sell Restaurants assists in the process to obtain a lease comparable to the prior lease in place. Terms of the Lease, and Renewals plus Up to Date Industry Comparison on Rent CALCULATING RENT COSTS Information on rents and leasing. Market Rent Cost=Annual Rent Expense/Sales 10% Sample Restaurant has a lease consisting of: 9% 8% 10789 Monthly Rent 7% 6500 Square Footage 6% 5% 12/31/10 Lease Expiration Date 4% 7 yr option Terms & Options 3% 2% 1% Annual Rent Expense WILL ALWAYS include CAMS or 0% Industry Average High Industry Average Low Subject Property Common Area Maintenance Charges Rent as a Percent of Sales Copyright We Sell RestaurantsTM All Rights Reserved
  • Business Analytics Tool This information is bound by the Non-Disclosure Agreement you have signed. This information may not be reproduced, faxed or otherwise supplied to any party. We Sell RestaurantsTM aggressively pursues violators of this agreement. Report Prepared for: Sample Restaurant Labor Costs A profitable restaurant typically generates a 25% or lower labor cost. Coupled with food costs, these expenses consume 50-75% of total sales. Because of the impact labor costs make on an operation, they are also important to examine. Beyond the bottom line, labor cost also reflects an operation's management skill level. High labor costs in a restaurant available for sale signals an opportunity for greater profit dollars delivered to a strong operator. CALCULATING LABOR COST The industry standard is based on the Uniform System of Accounts for Restaurants (a handbook available from the Association). the National Restaurant Association). The We Sell Restaurants Business Analysis Tool recaps Labor, a key component of costs and Labor Cost compares the restaurant listing to the industry. Labor Cost = Cost of Labor/Sales 25% Owner Compensation is NOT included in Labor Costs Family members paid a salary WILL be included in Labor Costs 20% In this example, Sample Restaurant 15% has a labor cost of 20.2% 10% The Industry Average is 25.0% 5% 0% Industry Average Subject Property Cost of Labor/Sales READER: Financial analysis is not a science; it is about interpretation and evaluation of financial events. Therefore, some judgment will always be part of our reports and analyses. Before making any financial decision, always consult an experienced and knowledgeable professional. Copyright We Sell RestaurantsTM All Rights Reserved
  • Business Analytics Tool This information is bound by the Non-Disclosure Agreement you have signed. This information may not be reproduced, faxed or otherwise supplied to any party. We Sell RestaurantsTM aggressively pursues violators of this agreement. Report Prepared for: Sample Restaurant Subject Business Information Operating Days M T W T F S S Operating Hours 11a-2a 11a-2a 11a-2a 11a-2a 11a-2a 11a-2a 11a-Midnite The seller has indicated a willingness to sign a non compete agreement. This agreement shall cover 3 Miles and 3 Years Financing of this business may be affected by the following YES NO Seller Financing Available 0 The We Sell Restaurants Business Analysis X Pre-Qualified for Loan X Tool tells you everything you want to know 0 about the restaurant including franchise The Number of Employees currently operating the business include (aside from Owner) 4 Full Time 33 Part Time costs, financing availability, staffing hours and The owner works approximately 0 more. hours in the business each week The owner is selling this business due to: Other Franchise Fees Yes No Royalty Adv/Mktg Transfer Business is a Franchise X 3.75% 2.00% $17,500 Business is Home Based X Business is Relocatable X Business Name: Sample Restaurant Business Phone: 404 555 1212 Business Web Address: www.samplerestaurantname here Business Address: 000 We Sell Restaurants Road Business City: Atlanta Business Zip Code: 30003 County Fulton State/Province: GA The sale of alcohol may be affected by the following: Yes No Management Agreement OK X Current alcohol license in place X This business is offered at $595,000 Contact one of the professional business brokers at We Sell Restaurants to place this opportunity under contract. The knowledgeable, professional team has the resources to assist you in this purchase by: Writing the contract Coordinating the Due Diligence process Coordinating your Information for the Landlord Working with the Closing attorney to protect your interests If you have questions regarding this document, contact our office at 404 513 5378 Copyright We Sell RestaurantsTM All Rights Reserved