Prepare a year trading cash budget:
Gary Hart needs to calculate how much working capital he will need in his first year as a restaurateur. An accountant friend recommends he budget his first year's cash flow from trading (the capital budget is being calculated separately).
Gary's restaurant is on the Margate sea front Gary's accountant friend suggests that he budgets to reach 75% capacity each day. The average income per table per day is expected to be £60. It is envisaged that 50% of the restaurant's customers will pay by credit card, cash in respect of which will be paid four weeks later. The remainder will pay by cash.
The total cost of all ingredients is calculated to be £17 per table. All ingredients will be paid for two weeks following receipt.
Gary will manage the restaurant, taking bookings and greeting customers. Kitchen staff salaries will be £57,200 p.a.; waiting staff £13,728 and social security costs and benefits will add another £20,800. All staff costs will be paid in arrears on a monthly basis. Utilities (water, gas and electricity) are expected to cost £2600 a quarter; payable by direct debit in the first week of the following quarter. Rent and council tax charges will be £40,000 and £8,000 respectively, both of which are payable at the beginning of each quarter.
To bring the business to the attention of the public in the first place, Gary has agreed to spend £12,000 on advertising in the first week to cover the first six months worth of promotion, but then to pay only £1,000 a quarter thereafter.