Looking for an Italian restaurant business plan? You're in the right place.
A full-service restaurant plan has to answer the questions a lender, a landlord and a partner will ask. What does it cost to open the doors, and how much cash is left when the first slow summer arrives? How many covers a night does the room need to turn a profit? What happens to the wine list and the party room if sales run short? A blank template will not show you what a sound answer looks like.
In this article we walk through a complete sample business plan for a family Italian restaurant in Phoenix, Arizona, section by section. We cover the executive summary, the SWOT analysis and, above all, the financials.
Here's what you'll take away:
- The executive summary: see how to put a whole restaurant, its ask and its first three years on one page
- The SWOT analysis: learn how to name a single-location, single-chef business's weak points plainly
- The start-up budget: find out what a build-out, a kitchen line and a first-summer reserve add up to, so you can see the gap before the doors open
- The first year, month by month: spot the slow summer and the pre-opening months before you are in them, and plan cash around them
- The party-room line: see how to count events, set a price and use a second revenue stream to fill the quiet nights
- The five-year profit, cash flow and balance sheet, with prime cost: understand how food cost and payroll decide whether a restaurant makes money
- The downside case: have an answer ready for "what if sales run 20% short?", with the steps the owners take in response
If you're planning a restaurant of your own, read this before you write yours. Northfield Spring is fictional, so take what fits and change the rest.
In this plan
To turn this example into your own italian restaurant business plan, use the italian restaurant business plan template.
Executive Summary
Northfield Spring is a full-service family Italian restaurant opening on March 1, 2027 in a leased, second-generation restaurant space in Phoenix, Arizona. It serves dinner Tuesday to Sunday and lunch on Saturdays and Sundays: red-sauce classics and regional dishes, a short wine and beer list, and a 40-seat party room that takes bookings and catering orders. Chef Elena Vitale and general manager Tom Reyes own the restaurant with three local investors.
The restaurant needs $950,000: $280,000 from Elena and Tom, $220,000 from four investors and a $450,000 bank term loan. Build-out, contingency and equipment take $517,000, legal, licensing, launch, training and build-out rent take $134,000, and the remaining $299,000 sits in the bank as a reserve for the first summer, the lease deposit, the opening pantry and the wine stock.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $1,249,900 | $1,860,500 | $2,049,200 |
| Net income after start-up costs | ($285,902) | $92,734 | $137,304 |
| Closing cash | $184,756 | $303,995 | $377,967 |
Year 1 is ten selling months, not twelve. January and February go to build-out sign-off, hiring and training, and the first summer arrives four months after the doors open, when the plan expects Phoenix trade to be at its slowest. Operating profit is positive in March and April, about zero in May, negative from June to August and positive again from September to December. The first full year, Year 2, is the first profitable one. Prime cost, the sum of food and drink cost and payroll, drops from 74% of sales in Year 1 to 65% in Year 3.
A second case cuts every revenue line by a fifth. The partners answer by holding back the assistant manager, the catering driver and two servers, trimming part-time hours and marketing, taking pay cuts and pausing distributions. That version loses money through Year 2, and the bank balance still stays above zero at every year end.
Northfield Spring at a Glance
Legal name: Northfield Spring, LLC, an Arizona limited liability company. Owners: Elena Vitale, chef, and Tom Reyes, general manager, with four minority investors. Premises: about 5,000 square feet leased, with a 110-seat dining room, a bar and a separate 40-seat party room. Hours: dinner Tuesday to Sunday from 5:00 p.m., lunch on Saturdays and Sundays from 11:30 a.m. Stage: pre-opening. The lease is signed in autumn 2026, the build-out runs through February and the menu is drafted. The March 1 opening depends on plan review and the liquor license arriving on time.
What the restaurant is for
A table of four or six that wants a real dinner without a special-occasion price. Northfield Spring cooks the dishes people ask for by name (baked pastas, braised meats, veal and chicken cutlets, a garlic-and-tomato sauce that takes all day), pours a wine and beer list that stays short on purpose, and gives a family a room of its own for a birthday or a team dinner.
The menu at a glance
| Revenue line | Typical price | Share of Year 1 sales |
|---|---|---|
| Dinner food and soft drinks | Entrees about $19 to $32, a starter and a shared dessert on most tables | 64% |
| Wine and beer | Glasses $9 to $13, bottles $34 to $70, drafts $7 | 18% |
| Weekend lunch | About $27.50 a guest with a drink | 10% |
| Party room and off-site catering | About $2,550 an event | 8% |
Where it expects to be in two years
- 124 dinner covers a night in December 2027, the first holiday peak.
- 105 covers a night averaged over 2028, with the party room booked about 57 times in the year.
- Operating costs covered in each month from September to December 2027, and a net profit in 2028.
- An events coordinator in month 9 and a catering prep and driver position in month 20.
Alcohol and permits
The restaurant sells wine and beer under a state restaurant-class liquor license. The class, the application process, any food-sales requirement attached to the license and the timing are set by the state, and the partners confirm them with the Arizona Department of Liquor Licenses and Control and a lawyer before the lease is signed. The plan budgets $16,000 for the license application, food permits, plan review and sign permit as a planning figure. If the restaurant had to buy an existing license from a current holder, the cost could be materially higher than that figure, and the lender would see it before the lease is signed. Food service is permitted and inspected locally, so the restaurant also confirms Maricopa County and City of Phoenix requirements before construction starts.
Where Phoenix Eats Out
A crowded category with a seasonal pulse
Table-service restaurants compete for the same evenings, and the plan quotes no market-size statistic. The forecast is a count of covers set against a 110-seat room. Phoenix adds a pattern of its own: the plan expects winter and early spring to be the busy months and the summer heat to keep some diners at home. The plan's seasonal index, 1.22 at the peak and 0.70 in July, is a planning figure, and each year's total is checked against what the room can seat.
The prime-cost test
Lenders and operators both look at prime cost: what goes on the plate and in the glass, plus every payroll dollar, as a share of sales. About 60% to 65% is the range most owners aim for. That is a trade rule of thumb with no dated source, so it serves here as a yardstick and no more. Northfield Spring comes in at 74% in Year 1, 66% in Year 2 and about 65% from Year 3 to Year 5. The first year runs hot because a crew sits on the books for two months before any sale and then meets the summer dip. Rent takes 13.6% of Year 1 revenue and 8.8% by Year 3.
Who a table might choose instead
| Alternative | What a guest gets | Where Northfield Spring differs |
|---|---|---|
| National casual Italian chains | A familiar menu and a large footprint, often with set promotions | Dishes cooked in a kitchen one chef runs, and a room that knows regulars |
| Pizzerias and counter-service pasta shops | Fast, cheap, easy takeout | A server, a wine list and a table that stays as long as the family does |
| Independent upscale Italian restaurants | Some run tasting menus and higher checks for a smaller crowd | Portions for sharing and a check closer to $44 a head |
| Steak and Mexican restaurants nearby | Other cuisines at similar prices | A family-style Italian menu and a party room |
| Hotel and resort dining | Convenience for visitors | Neighborhood prices and a regular's welcome |
Each row sketches a category of alternative, not a ranking. No individual restaurant is named, because the plan holds no sourced facts about any one of them.
SWOT
| Strengths | Weaknesses |
|---|---|
| A working chef-owner who sets the menu and runs the line | One location, one kitchen and one chef |
| A room that serves a Tuesday family dinner and a 40-person party | Summer sales that run well below winter |
| Pasta-and-sauce costs that leave room to price fairly | A new brand with no repeat guests on day one |
| Opportunities | Threats |
|---|---|
| Party and catering bookings from offices, schools and clubs | A chain opening nearby with a larger marketing budget |
| Winter visitors who want a place that feels local | Cheese, olive oil and flour costs that rise before the menu can |
| Weekend lunch as a second daypart | Hiring and keeping line cooks and servers |
Who Fills the Tables
Families on a weeknight
Parents with children, often with a grandparent, who want dinner without a long wait. They order two entrees to share and a kids' plate, and they come back on a Tuesday because the table is easy.
Couples and small groups at the weekend
Friday and Saturday nights are the peak at about 160 covers. Guests book ahead, linger over wine and bring friends the next time.
The party host
An office manager, a club secretary, a parent planning a graduation or a retirement dinner. They want a room, a fixed price and one person to deal with. They book weeks ahead and are less sensitive to the weekend crowd.
The winter visitor
A resident of another city or country who spends the cold months in Phoenix and eats out often. This guest is part of the January-to-April peak the plan expects and wants a place that is not a chain.
Why a table returns
A short menu done well, a server who remembers a name, a price that reads as a family meal, and a loyalty list for the party room's repeat hosts.
How the Room Fills
The count for the opening year
| Year 1 | |
|---|---|
| Open dinner nights (March to December) | 260 |
| Dinner covers | 22,689 |
| Average dinner covers a night | 87 |
| Weekend lunch covers | 4,694 |
| Party and catering events | 39 |
| Dinner check per guest, food and drink | $45.00 |
Year by year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Dinner covers a night, open months | 87 | 105 | 110 | 113 | 116 |
| Weekend lunch covers a day | 54 | 65 | 68 | 70 | 71 |
| Party and catering events | 39 | 57 | 68 | 72 | 75 |
Year 2 grows 49% on Year 1 because Year 1 is ten selling months at a ramp that starts at 70% of the mature rate. Growth then slows to 10%, 6% and 6% as the room fills and price rises of about 3.5% a year carry most of the increase. Peak Fridays and Saturdays turn the 110 seats about 1.5 times, and a little over 1.7 times in the seasonal peak, so after Year 3 growth comes from the party room and weekend lunch more than from peak nights.
Pricing
Menu prices rise about 3.5% a year, a little ahead of pay raises, to pass food costs through. Entrees sit mostly between $19 and $32, so a family of four spends about $180 to $200 at dinner with a bottle of wine, before tax and tip, and the party room's average event is $2,550 in Year 1.
Bringing in the party room
Party bookings are the line the owners can steer. The room is quiet on Tuesday to Thursday evenings and through the summer, and a booked party fills both. The events coordinator joins in month 9 so that Tom stays on the floor.
Where the Marketing Dollars Go
What $60,000 buys
Year 1 marketing totals $60,000, of which $26,000 is launch spend paid out of the start-up capital and $34,000 is running spend. That is 4.8% of Year 1 revenue; operating spend alone falls to 1.8% by Year 3 as regulars carry more of the load. Spread across about 27,400 dinner and lunch covers, Year 1 costs about $2.19 a cover.
| Channel | Year 1 spend | Job it has to do |
|---|---|---|
| Brand, website and online reservations (launch) | $7,500 | A menu, a booking page and a party-room inquiry form that work on a phone |
| Neighborhood preview dinners and opening-month promotion (launch) | $12,500 | Two preview weekends and a first month of word of mouth within about five miles |
| Signage, photography and printed menus (launch) | $6,000 | A visible sign and a menu that matches the website |
| Local search and social ads | $8,500 | Searches such as "Italian restaurant near me" and party-room inquiries |
| Listings, reviews and email list | $3,500 | Correct hours, fresh photos and a reply to each review |
| Reservation platform and email club | $4,500 | Repeat bookings and birthday reminders |
| Party-room outreach | $6,000 | Packets to nearby offices, schools, churches and clubs |
| Fundraiser nights and neighborhood sponsorships | $5,500 | A local name and a stream of first-time guests |
| Winter-season promotions | $3,500 | Concierge and community-association visits before the January peak |
| Menus and loyalty cards | $2,500 | A card and a thank-you for the party room's repeat hosts |
Milestones
- January 2027: lease signed, hiring starts, reservations page live.
- March 2027: doors open after two preview weekends.
- June 2027: first summer, with a prix fixe family night on Tuesdays.
- October 2027: holiday party bookings open.
- December 2027: 124 covers a night and $183,900 of revenue in the month.
How a Night Runs
The space
About 5,000 square feet in a former restaurant, at an all-in rate of about $34 a square foot ($170,000 in Year 1), on a ten-year lease with two renewal options and a personal guarantee. The space already has a grease trap and the electrical and gas service a restaurant needs, which keeps the build-out to $270,000 net of a landlord allowance. The dining room seats 110, and the party room has its own entrance and a service door to the kitchen.
The line and the pass
Elena runs the pass on Friday and Saturday and the sous chef covers the other nights, with two full-time cooks on the line and a prep cook in the morning. Sauces are made daily from tomatoes, onions and garlic, and fresh pasta is made in-house for the baked dishes and shipped in dried for the rest. Orders go to the kitchen from a point-of-sale system that also tracks each table's reservation.
Suppliers and stock
Produce, dairy and dry goods come from a restaurant-supply distributor, with a regional meat supplier and a wine and beer distributor. Distributors are paid in about 18 days. The plan holds direct costs at about 28% of food and drink sales and reviews menu prices each quarter against cheese, olive oil and wheat prices.
Who is on the schedule
Five full-time people and seventeen part-time staff at opening. A part-time events coordinator, two more servers and a catering prep and driver position are added as bookings grow, and an assistant manager joins in month 44. Each hire follows revenue, and the downside case shows which are dropped.
Insurance and food safety
General liability, liquor liability, property and business-interruption cover, budgeted at $20,000 in Year 1. Workers' compensation sits inside the payroll on-cost. A written food-safety plan covers allergens, cooling and hot-holding, and the party-room buffet line, and the managers complete food-handler manager certification wherever the local rules ask for it.
Elena, Tom and the Crew
Elena Vitale, chef and managing partner
Elena has cooked in Phoenix restaurants for fifteen years, the last six as a chef at a mid-size Italian restaurant, and she has not owned a restaurant before. She takes a $66,000 salary and builds the menu. Her savings and a home-equity draw are part of the $280,000 the two partners invest.
Tom Reyes, general manager and partner
Tom has twelve years in front-of-house roles, from server to general manager of a hotel restaurant. He takes a $60,000 salary, runs the floor, the bar and the party-room bookings, and manages the books until a bookkeeper's retainer takes over.
Where the team is thin
Neither partner has owned a restaurant, signed a build-out contract or run a party room. Three hires close those gaps: a general contractor on a bid with a fixed price, an accountant who works with restaurants on a monthly retainer, and a part-time events coordinator from month 9.
If one of them is out
The sous chef can run the line for a night, and from month 44 the assistant manager can open and close the building. Until then the senior server and the sous chef cover short absences between them.
Advisers and ownership
A restaurant accountant, a lawyer for the lease, the liquor license and the loan documents, and an insurance broker. The four investors get a monthly report and take no part in running the room. Elena and Tom hold the majority of the membership interests, and the bank loan carries both partners' personal guarantees and a lien on the equipment.
The numbers behind the dining room
A single five-year model sits under every table here: monthly through the opening year, annual afterward. Covers, checks and events come first because each revenue line is a count multiplied by a price.
What it takes to open the doors
| Use of funds | Amount |
|---|---|
| Build-out of a 5,000 square foot second-generation restaurant space, net of landlord allowance | $270,000 |
| Kitchen: hood and fire suppression, ranges, pizza and bread ovens, walk-in cooler, reach-ins, dish machine, pasta equipment | $140,000 |
| Dining room and party room furniture, bar fit-out, glassware and smallwares | $58,000 |
| Point-of-sale, reservations, sound and signage | $22,000 |
| Liquor license application, food permits, plan review and sign permit | $16,000 |
| Legal: lease, entity, loan documents; architect and permit drawings | $24,000 |
| Launch: brand, website, opening-month promotion, neighborhood preview dinners | $26,000 |
| Training meals, menu testing and the soft-open week before the doors open | $30,000 |
| Rent and utilities during the build-out, before the January start of the model | $38,000 |
| Construction contingency, about 10% of the build-out | $27,000 |
| Cash reserve for the first summer, including the lease deposit, the opening pantry and wine stock | $299,000 |
| Total uses | $950,000 |
| Source of funds | Amount |
|---|---|
| Elena Vitale and Tom Reyes, savings and a home-equity draw | $280,000 |
| Four local investors, $55,000 each | $220,000 |
| Bank term loan (10 years, interest only for the first 6 months; SBA guarantee if the program allows) | $450,000 |
| Total sources | $950,000 |
The restaurant raises $950,000 in three pieces. Elena and Tom contribute $280,000 and four local investors $55,000 each, so equity is $500,000, 53% of the total. The bank lends $450,000 for ten years at a 10.5% rate used for planning, paying interest only for six months; an SBA guarantee is possible if the lender and the program agree. Rates and terms are the lender's to set, and the loan would be backed by both partners' personal guarantees and a lien on the kitchen equipment. The reserve is $299,000, 31% of the raise, and it includes the lease deposit and the opening pantry. It is large beside a base case whose month-end cash bottoms out near $77,000 in September, and that is deliberate: the revenue-short case dips to about $28,000 to $39,000 in the same month, depending on how receivables and stock timing are counted, and its lowest year-end balance is $75,236. Start-up costs also include $38,000 of rent and utilities paid during the build-out and a $27,000 construction contingency, about 10% of the build-out. The doors open on March 1 only if the lease is signed in the autumn of 2026 and plan review and the liquor license come through on time, which is a risk the plan states and does not remove.
Covers, checks and events: the planning figures
- The dining room seats 110 and opens Tuesday to Sunday, 26 nights a month and 312 a year, with the doors opening on March 1, 2027. Year 1 books 22,689 dinner covers, an average of 87 across 260 open nights. The pattern at maturity is about 160 covers on Fridays and Saturdays, 100 on Sundays and 80 from Tuesday to Thursday, which averages 110 a night in Year 3. Years 2 to 5 average 105, 110, 113 and 116.
- Peak nights are the capacity test. A Friday or Saturday at 160 covers turns the 110 seats about 1.5 times, and in the seasonal peak the same nights run near 190, a little over 1.7 turns. The plan treats that as the ceiling and lets the party room and weekend lunch, not more peak-night volume, carry growth after Year 3.
- A seasonal index carries each month of the first year: 1.22 in February and 1.20 in December at the top, 0.70 in July at the bottom. It is a planning pattern for a city where winter visitors and mild weather are expected to lift demand and summer heat to lower it, not a published statistic. Ramp in the opening months sits on top of it, so Year 1 covers climb from 70% of the mature rate in March to 94% in December.
- Dinner food and soft drinks average $35.00 a cover in Year 1, $37.50 in Year 3 and $40.20 in Year 5, with wine and beer adding $10.00, $10.70 and $11.50. That makes a $45.00 dinner check per guest in Year 1 before tax and tip, a mid-ticket price for a table-service room. Figures are net of sales tax, and tips pass through to staff.
- Weekend lunch runs on Saturdays and Sundays, about 8.7 open days a month. It averages 54 covers a day across the open months of Year 1 and 68 in Year 3, at $27.50 a cover including drinks, rising to $29.50. Lunch is the lightest-drinking daypart, so it is one line.
- The party room seats about 40 and is booked for family occasions, team dinners and school and club events, with off-site catering trays counted in the same line. Year 1 books 39 events from March, then 57, 68, 72 and 75. The average event is $2,550 in Year 1 and $2,730 in Year 3, about 40 guests at roughly $64 a head with drinks. Menu prices rise about 3.5% a year, a little ahead of wages, to pass through food costs.
- Direct costs run at 29% of dinner food, 28% of wine and beer, 29% of lunch and 30% of party and catering sales, a blend of 28.9% of revenue in every year. Owners often quote 28% to 35% of food sales as the normal band for food cost. A menu built on pasta and house sauces sits near the bottom of it because flour and tomatoes cost little against the plate price, while veal, seafood or imported cheese would push it up. Paper, chemicals and to-go packaging are a separate operating-supplies line at about 1.5% of sales.
- Payroll including pay raises is 45% of revenue in Year 1, which carries the crew through the pre-opening and summer-dip months, then 38%, 36%, 36% and 37%. Add 28.9% of direct costs and prime cost is 74%, 66%, 65%, 65% and 65%. Both partners draw a salary, $66,000 for Elena and $60,000 for Tom, that is already inside payroll, and no wage is cut to reach the result. There is no assistant manager until month 44, so a senior server opens and closes the floor and Tom covers the rest.
- On-costs add 27% to full-time wages and 15% to part-time wages, covering payroll taxes, workers' compensation, paid sick time and a small health stipend. Each of eight servers is budgeted at about 1,000 hours a year at a $13 cash wage, tipped, and hosts at about $13.50. The state minimum and tipped-wage schedule may change from year to year, so the figures are checked at the time of hiring.
- Rent is 5,000 square feet at about $34 a square foot all-in, which is $170,000 in Year 1, 13.6% of revenue, and 8.8% by Year 3. The rate is this plan's own figure and no broker has quoted it. Utilities of $48,000 carry the ovens, the hood make-up air and Phoenix summer cooling. The $270,000 build-out is shown after a landlord allowance that is still to be negotiated; if the allowance is smaller, the shortfall comes out of the $27,000 contingency and the reserve.
- Card processing and reservation-platform fees are about 2.5% of revenue, $31,000 in Year 1 and $51,000 in Year 3. Repairs and glassware replacement rise from $9,000 to $20,000 as warranties lapse, and an equipment reserve starts at $9,000 in Year 2. Insurance is $20,000 in Year 1 and includes liquor liability, a package a broker's quote would replace. Takeout orders are counted inside dinner covers, so there is no separate delivery line.
- Receivables average 3 days: almost every sale settles by card and party deposits arrive ahead of the event. Stock covers about 18 days of direct costs, wine cellar included, and distributors are paid in 18 days.
- The tax line applies the 21% federal corporate rate and a 4.9% planning rate for Arizona, which may have moved. Year 1's loss is carried forward, and the $134,000 of start-up costs stays outside the tax base, a shortcut an adviser would treat differently. If the LLC elected pass-through treatment, the tax would fall on its members and not on the company. Distributions of $90,000, $150,000 and $200,000 in Years 3 to 5 total $440,000, below the $528,104 earned in Years 2 to 5, and are paid only out of cash the balance sheet shows to be spare. An investor agreement would set their terms, and a lender would likely cap them.
Where the dollars come from
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Dinner: food and soft drinks | $794,300 | $1,180,300 | $1,287,000 | $1,364,900 | $1,448,600 |
| Dinner: wine and beer | $226,800 | $337,500 | $367,200 | $390,500 | $414,400 |
| Weekend lunch | $129,100 | $192,200 | $209,400 | $221,900 | $235,500 |
| Party room and off-site catering | $99,700 | $150,500 | $185,600 | $203,400 | $219,400 |
| Total revenue | $1,249,900 | $1,860,500 | $2,049,200 | $2,180,700 | $2,317,900 |
| Growth on prior year | – | 49% | 10% | 6% | 6% |
Dinner food brings in 64% of sales in Year 1 and 63% in Year 3, wine and beer 18% in both years, weekend lunch 10% in both, and the party room and catering 8% then 9%. Revenue grows 49% in Year 2, because Year 1 is ten open months at a building ramp, then 10%, 6% and 6%. The party line has the most room to move: it fills Tuesday-to-Thursday evenings and the quiet summer weeks, when the main dining room is least busy.
The first twelve months, season by season
| Month | Dinner: food and soft drinks | Dinner: wine and beer | Weekend lunch | Party room and off-site catering | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $0 | $0 | $0 | $0 | ($77,606) |
| Feb 2027 | $0 | $0 | $0 | $0 | $0 | ($77,606) |
| Mar 2027 | $82,700 | $23,600 | $13,400 | $5,100 | $124,800 | $11,129 |
| Apr 2027 | $74,600 | $21,300 | $12,100 | $7,700 | $115,700 | $4,658 |
| May 2027 | $70,000 | $20,000 | $11,400 | $7,700 | $109,100 | ($34) |
| Jun 2027 | $61,700 | $17,600 | $10,000 | $5,100 | $94,400 | ($10,486) |
| Jul 2027 | $57,500 | $16,400 | $9,400 | $5,100 | $88,400 | ($14,752) |
| Aug 2027 | $61,300 | $17,500 | $10,000 | $7,700 | $96,500 | ($8,993) |
| Sep 2027 | $74,000 | $21,100 | $12,000 | $10,200 | $117,300 | $5,796 |
| Oct 2027 | $94,600 | $27,000 | $15,400 | $12,800 | $149,800 | $28,904 |
| Nov 2027 | $105,000 | $30,000 | $17,100 | $17,900 | $170,000 | $43,267 |
| Dec 2027 | $112,900 | $32,300 | $18,300 | $20,400 | $183,900 | $53,150 |
January and February are pre-opening months. The model spreads annual costs evenly, so each month shows about $78,000 of operating loss against no sales, more than a true pre-opening month would carry; the real pre-opening spend sits in the start-up costs above. The doors open in March at $124,800, ease through the summer to $88,400 in July, and rise from September to a December peak of $183,900. EBITDA, the operating profit before depreciation and interest, is positive in March and April, about zero in May, negative from June to August and positive again from September to December. The low point for month-end cash is Sep, at about $77,000, with three days of card settlement still in transit.
Who is on the schedule
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and executive chef (Elena Vitale) | $66,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| General manager and partner (Tom Reyes) | $60,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Sous chef | $52,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Line cook 1 (full time) | $39,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Line cook 2 (full time) | $39,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Prep and weekend-lunch cook (part time) | $24,000 | Month 2 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Dishwasher 1 (part time) | $17,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Dishwasher 2 (part time) | $17,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Dishwasher 3 (part time, weekends) | $9,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 1 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 2 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 3 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 4 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 5 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 6 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 7 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 8 (part time, tipped) | $13,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Bartender 1 (part time) | $18,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Bartender 2 (part time) | $18,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Host and food runner 1 (part time) | $13,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Host and food runner 2 (part time) | $13,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Host and food runner 3 (part time) | $13,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Party-room events coordinator (part time) | $26,000 | Month 9 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 9 (part time, tipped) | $13,000 | Month 14 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Server 10 (part time, tipped) | $13,000 | Month 14 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Assistant manager (full time) | $46,000 | Month 44 | – | – | – | 1 | 1 |
| Catering prep and driver (part time) | $20,000 | Month 20 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Total payroll incl. on-costs | $561,774 | $677,787 | $693,695 | $718,037 | $752,115 |
The opening crew is five full-time people, who are Elena, Tom, a sous chef and two line cooks, and seventeen part-time staff: a prep cook, three dishwashers, eight servers, two bartenders and three hosts and food runners. The kitchen starts in month 2 for menu testing and the front of house in month 3, with the training cost carried in the $30,000 of pre-opening spend. A part-time events coordinator joins in month 9, two more servers in month 14, a catering prep and driver position in month 20 and a full-time assistant manager in month 44. Each person is a line in the table, and a part-time role counts as 0.5 of a full-time equivalent. The payroll total is before the annual 3% pay raises, which appear as their own line in the profit and loss. Elena's and Tom's salaries begin in month 1 and are inside the costs, so every profit figure is net of both partners' pay.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,249,900 | $1,860,500 | $2,049,200 | $2,180,700 | $2,317,900 |
| Direct costs (food, wine, beer and catering supplies) | ($361,200) | ($537,653) | ($592,184) | ($630,185) | ($669,834) |
| Gross profit | $888,700 | $1,322,847 | $1,457,016 | $1,550,515 | $1,648,066 |
| Payroll incl. on-costs | ($561,774) | ($677,787) | ($693,695) | ($718,037) | ($752,115) |
| Rent | ($170,000) | ($175,100) | ($180,400) | ($185,800) | ($191,400) |
| Utilities | ($48,000) | ($49,500) | ($51,000) | ($52,500) | ($54,000) |
| Marketing | ($34,000) | ($36,000) | ($37,000) | ($38,000) | ($39,000) |
| Insurance | ($20,000) | ($21,500) | ($23,000) | ($24,500) | ($26,000) |
| Professional fees | ($9,000) | ($9,000) | ($9,500) | ($9,500) | ($10,000) |
| Software subscriptions | ($11,000) | ($11,500) | ($12,000) | ($12,500) | ($13,000) |
| Card processing and reservation-platform fees | ($31,000) | ($46,000) | ($51,000) | ($54,000) | ($56,500) |
| Operating supplies (paper, chemicals, to-go packaging, small items) | ($18,500) | ($27,500) | ($30,000) | ($32,000) | ($33,500) |
| Cleaning, linen, grease trap and pest control | ($15,000) | ($19,000) | ($20,000) | ($21,000) | ($22,000) |
| Repairs, equipment service and smallwares and glassware replacement | ($9,000) | ($16,000) | ($20,000) | ($23,000) | ($26,000) |
| Music licensing, permits, dues and license renewals | ($3,500) | ($4,000) | ($4,200) | ($4,400) | ($4,600) |
| Equipment replacement reserve | $0 | ($9,000) | ($15,000) | ($18,000) | ($21,000) |
| Bad debt allowance (party deposits and catering invoices) | ($500) | ($1,200) | ($1,500) | ($1,700) | ($1,900) |
| Annual pay raises (3% a year) | $0 | ($20,334) | ($42,246) | ($66,581) | ($94,397) |
| EBITDA | ($42,574) | $199,426 | $266,475 | $288,997 | $302,654 |
| Depreciation | ($62,386) | ($62,386) | ($62,386) | ($62,386) | ($62,386) |
| Interest | ($46,942) | ($44,307) | ($40,919) | ($37,158) | ($32,982) |
| Income tax | $0 | $0 | ($25,866) | ($47,119) | ($51,554) |
| Net income before start-up costs | ($151,902) | $92,734 | $137,304 | $142,334 | $155,732 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($134,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($285,902) | $92,734 | $137,304 | $142,334 | $155,732 |
Year 1 loses $151,902 before start-up costs and $285,902 after the $134,000 of legal, licensing, launch, training and build-out rent expensed at opening. Year 2 is the first profit, $92,734, and it pays no income tax because Year 1's loss absorbs it. Net income is $137,304 in Year 3, a 6.7% margin before start-up costs, then $142,334 and $155,732. The EBITDA margin reaches 13.0% in Year 3 and holds near 13%, with pay raises of $94,397 by Year 5 matched by price rises and a slow gain in covers.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($234,037) | $149,980 | $198,101 | $203,613 | $216,963 |
| Dining room build-out, kitchen line, bar and party-room fit-out | ($517,000) | $0 | $0 | $0 | $0 |
| Funding received | $950,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($14,207) | ($30,741) | ($34,129) | ($37,890) | ($42,066) |
| Owner distributions | $0 | $0 | ($90,000) | ($150,000) | ($200,000) |
| Net change in cash | $184,756 | $119,239 | $73,972 | $15,723 | ($25,103) |
| Closing cash | $184,756 | $303,995 | $377,967 | $393,690 | $368,587 |
Closing cash is $184,756 at the end of Year 1 and peaks at $393,690 in Year 4, then eases to $368,587 in Year 5 after $440,000 of distributions across Years 3 to 5. Year 1 operations use $234,037 of cash, and that figure includes the $134,000 of start-up costs expensed at opening. Loan principal begins in month 7, so repayments rise from $14,207 in Year 1 to $30,741 in Year 2. Year-end cash in Year 5 is about 2.2 months of operating costs. The monthly view and the annual statements differ by about $10,000 in Year 1 because the annual figures net out receivables and stock.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $184,756 | $303,995 | $377,967 | $393,690 | $368,587 |
| Accounts receivable | $10,273 | $15,292 | $16,843 | $17,924 | $19,051 |
| Food, wine and beer stock on hand | $18,060 | $26,883 | $29,609 | $31,509 | $33,492 |
| Dining room build-out, kitchen line, bar and party-room fit-out (net) | $454,614 | $392,229 | $329,843 | $267,457 | $205,071 |
| Total assets | $667,704 | $738,398 | $754,262 | $710,580 | $626,201 |
| Supplier and distributor balances owed | $17,813 | $26,514 | $29,204 | $31,078 | $33,033 |
| Bank loan | $435,793 | $405,052 | $370,923 | $333,033 | $290,967 |
| Paid-in capital | $500,000 | $500,000 | $500,000 | $500,000 | $500,000 |
| Retained earnings | ($285,902) | ($193,169) | ($145,865) | ($153,530) | ($197,798) |
| Total liabilities and equity | $667,704 | $738,398 | $754,262 | $710,580 | $626,201 |
Prime cost, margins and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -3.4% | 10.7% | 13.0% | 13.3% | 13.1% |
| Net margin (before start-up costs) | -12.2% | 5.0% | 6.7% | 6.5% | 6.7% |
| Payroll incl. pay raises as share of revenue | 45% | 38% | 36% | 36% | 37% |
| Revenue per full-time equivalent at year end | $89,279 | $120,032 | $132,206 | $132,164 | $140,479 |
| Average monthly revenue | $104,158 | $155,042 | $170,767 | $181,725 | $193,158 |
| Monthly revenue needed to cover operating costs | $109,148 | $131,668 | $139,535 | $147,854 | $157,686 |
| Debt service cover (EBITDA / interest + principal) | -0.7x | 2.7x | 3.6x | 3.9x | 4.0x |
The two bottom rows of the ratios table carry the test. Year 1 averages $104,158 a month against the $109,148 needed to cover operating costs, so the restaurant lands just short of its running costs in a year that includes two months with no sales. Year 2 averages $155,042 against $131,668, and Year 3 $170,767 against $139,535, which is 22% above the line. Debt service cover is negative in Year 1, when interest and principal are paid out of a loss and the reserve fills the gap, then 2.7x in Year 2 and 3.6x in Year 3.
A quiet dining room: revenue 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $999,920 | $1,488,400 | $1,639,360 | $1,744,560 | $1,854,320 |
| Net income before start-up costs | ($252,978) | ($38,091) | $30,665 | $71,654 | $116,132 |
| Net income after start-up costs | ($386,978) | ($38,091) | $30,665 | $71,654 | $116,132 |
| Closing cash | $85,792 | $75,236 | $132,888 | $188,153 | $243,681 |
Here every revenue line is 20% lower in every year, which puts Year 3 at about 88 dinner covers a night. The partners respond with these moves: no assistant manager, no catering driver and no two extra servers; part-time hours down 10%; marketing down 20%; a point off direct costs from a tighter menu; half the equipment reserve and slimmer repairs and utilities; a 20% pay cut each for Elena and Tom; and no distributions until Year 4, when they restart at under half the base figure. With those steps the restaurant closes every year with cash, never below $75,236, loses money through Year 2 and earns a profit from Year 3. The monthly low is about $38,600 in September 2027 on the model's monthly view, or roughly $28,000 once receivables and stock timing are netted, so the reserve is used for most of that summer. Year 1 ends with equity of $113,022, so thin that the partners would open a conversation with the bank about its loan covenant before the date arrived. Debt service cover in Year 2 is 0.9x, so the partners would ask the bank to waive the covenant test for that year. Both net income and closing cash stay under the base case every year.
Sources
The pages below are where each rule is confirmed. The plan takes no fee, rate or threshold from them beyond the planning figures it labels as such.
- Arizona Department of Liquor Licenses and Control, liquor license classes and applications. The class, cost, process and any food-sales requirement are confirmed with the department and a lawyer before the lease is signed.
- Maricopa County Environmental Services Department, food establishment permits, plan review and inspections. The partners confirm the current rules and fees before construction begins.
- City of Phoenix, zoning, permitting and business licensing. The restaurant confirms the requirements for its address before it signs the lease.
- Arizona Department of Revenue, transaction privilege tax and corporate income tax. The model applies a 4.9% planning rate for state income tax; the rate may have changed since.
- Industrial Commission of Arizona, minimum wage and earned paid sick time. Tipped staff are budgeted at about $13 an hour in cash wages and compared with the schedule in force on each hire date.
- SBA, 7(a) loan program. The 10.5% rate and the 10-year term are this plan's figures, and each lender sets its own.
- The model charges federal corporate income tax at 21%.
- The 60% to 65% prime-cost range and the 28% to 35% food-cost range are trade rules of thumb with no single source.
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