Looking for a Mexican restaurant business plan? You're in the right place.
A sit-down restaurant has to answer questions that a taqueria never faces. How much does the build-out cost before the first plate goes out? What do rent, payroll and a liquor license do to the first year? What happens in July, when half the town leaves? A menu and a floor plan will not answer any of those.
In this article we'll walk through a complete sample plan for a regional Mexican restaurant in Eugene, Oregon, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, the five-year financials, with a downside case at the end.
Here's what you'll take away:
- The executive summary: see how to put the room, the raise and the first three years on one page, so a lender knows what you are asking for within a minute
- The SWOT analysis: learn how to state a labor-heavy model and a slow summer plainly, so a lender sees them first from you
- The start-up budget: find out how much goes to build-out and equipment, how much to licensing, and how large a reserve three months of pre-opening cost really needs
- The first year, month by month: spot the months that lose money before they arrive, and plan cash around the university calendar
- The staffing and prime-cost tables: understand how food cost and payroll together decide whether a full dining room makes a profit
- The downside case: have an answer ready for the "what if covers run 20% short?" question, along with the steps the owners take in response
If you're planning a restaurant with a bar, read this before you write your own. The restaurant is fictional, so take what fits your concept and change the rest.
In this plan
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Westwood Terrace in Brief
Westwood Terrace is a sit-down regional Mexican restaurant that opens on 1 April 2027 in a leased 4,400 square foot space in west Eugene, Oregon. Chef-owner Marisol Delgado cooks from scratch: salsas, tortillas pressed daily from masa, and moles, adobos and braises that cook for hours. General manager Ben Hartley runs the floor, the bar and the books. The menu is built around the cooking of a few Mexican regions, with a margarita and tequila list that sells next to it.
The restaurant raises $1,010,000: $200,000 from the two owners, $350,000 from seven local investors and a $460,000 bank term loan. Of that, $492,000 builds out the room and equips the kitchen and bar, $82,000 pays for licensing, legal and design fees, launch marketing and opening-week food, and $436,000 stays in the bank as a reserve.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $1,098,000 | $1,789,700 | $1,993,400 |
| Net income after start-up costs | ($297,820) | $47,158 | $126,045 |
| Closing cash | $244,140 | $269,106 | $320,967 |
Year 1 holds three months of build-out and training with no sales, then nine months of trading. The restaurant earns an operating profit in May and June, loses a little in July and August when the university is out for the summer, and ends December 2027 with $173,000 of monthly revenue. Year 2 is the first profitable year, at a 2.6% net margin, and Year 3 reaches 6.3%. By Year 3 direct costs are 28.4% of revenue and payroll with pay raises is 38.5%, so prime cost is 66.9%, which leaves little room for error.
The margin is thin, and the plan says so. If covers and checks run 20% under forecast and Ben and Marisol respond by trimming hours, hires, marketing and their own pay, the restaurant still ends every year with cash in the bank, but Year 3 profit is close to zero and debt service cover falls under 1.25x in Years 2 and 3. A 10% revenue miss with no response takes cash below zero in Year 3. The stress-test section near the end gives each case and the questions a lender would still ask.
The Restaurant, the Room and the License
Legal name: Westwood Terrace, LLC, an Oregon limited liability company. Owners: Marisol Delgado (26%), Ben Hartley (18%) and seven investors (8% each). Premises: 4,400 square feet of leased second-generation restaurant space in west Eugene, with 120 indoor seats, a 12-seat bar, a 30-seat patio and parking. Opening date: 1 April 2027. Build-out and hiring run from January. Stage: pre-opening. The lease is in negotiation, with a landlord allowance toward the build-out already in the $300,000 figure.
What the restaurant is for
A neighborhood table for dinners that take an evening: food made from scratch in a kitchen guests can see into, and a bar that pours a tequila list worth lingering over, in a town where a sit-down Mexican dinner competes with plenty of counter-service options.
Targets for the first two years
- 18,515 dinner covers in the opening nine months, rising to 28,741 in Year 2.
- A profit after tax in Year 2, and a net margin above 6% in Year 3.
- A catering and private-events line of 88 events in Year 2.
- Loan balance down to $379,731 by the end of Year 2, with the first $20,000 of distributions paid that year.
Four ways the money comes in
| Line | How it earns | Year 1 share of revenue |
|---|---|---|
| Dining room food | Lunch Thursday to Sunday, dinner Tuesday to Sunday | 50% |
| Bar | Margaritas, tequila flights, beer and wine, plus a weekday happy hour | 28% |
| Takeout and delivery | Online ordering, phone orders and third-party apps | 12% |
| Catering and private events | Platters, department lunches, rehearsal dinners, back-room buyouts | 10% |
Licensing and inspection
Selling spirits, beer and wine for consumption on the premises needs a license from the Oregon Liquor and Cannabis Commission. The start-up budget sets aside $14,000 for license and permit costs, plan review and the sign permit; that is a planning figure, and cost and processing time vary by license type and location. Both need confirming with the commission and the city before a lease is signed, because a late license would hold back the bar, which brings in more than a quarter of revenue. Food service is licensed and inspected through the county health program, and servers and bartenders typically need alcohol service permits. Oregon licensees appear to buy spirits through state-authorized liquor stores rather than a distributor, so the buying terms for tequila may differ from states that use distributors; the bar's 23% direct-cost rate allows for that and is a planning figure to check against the commission's current rules.
Eugene's Table
A university town with a school-year pulse
Eugene is home to the University of Oregon, and a restaurant here lives on its calendar. Fall, winter and spring terms fill tables and the bar from late September through May. June brings graduation weekends and then a quiet summer. May carries Cinco de Mayo and end-of-term parties. The seasonal index in the model is 1.0 for an average month, 1.15 in May, 0.80 in July and 0.78 in August, and 1.19 in December for holiday parties. Local population and spending statistics are left out; a plan for a real site would add current figures from the city and county.
What a guest could choose instead
| Alternative | What it offers | Why a guest picks it | How Westwood Terrace differs by design |
|---|---|---|---|
| Other sit-down Mexican restaurants | Familiar combination plates, a full bar | Habit, price, a long-standing neighborhood spot | A smaller regional menu cooked from scratch and a tequila list with a story behind each bottle |
| Taquerias and counter-service burrito shops | Fast, cheap, filling | A $12 lunch in 15 minutes | Table service and a room for a two-hour dinner |
| Brewpubs and bars with a Mexican item or two | A beer list with tacos on the side | The beer is the draw | A kitchen that is the draw and a bar built around it |
| Casual-dining chains | Predictable menu and large portions | Gift cards, kids' menus, no surprises | Local ownership, made-from-scratch tortillas and salsas |
| Cooking at home | Cost and convenience | A weeknight with no plans | A meal that is hard to repeat at home: braises, moles, fresh masa |
The table describes categories and how this restaurant positions itself, not a ranking. Named competitors are left out; each publishes its own menu and prices.
SWOT
| Strengths | Weaknesses |
|---|---|
| A chef-owner who cooks, with a manager who has run a bar | Two owners and little depth behind them in Year 1 |
| Scratch kitchen with a defensible food cost | Labor-heavy: Oregon does not let tips count toward the minimum wage |
| A bar that brings in 28% of Year 1 revenue at a 23% direct cost | Opening at month 4 means three months of cost with no sales |
| Four revenue lines that peak at different times | Summer revenue falls with the students away |
| Opportunities | Threats |
|---|---|
| Catering for campus departments, offices and weddings | Rising food and labor costs outrunning menu prices |
| Cinco de Mayo, graduation and holiday-party peaks | A new Mexican concept opening nearby |
| A loyalty list that fills the quiet weeknights | Liquor license delays pushing the bar opening back |
| Patio seating from May to September | Wet weather and a slow September |
Who Eats Here, and When
The Friday dinner party
Four to six people, usually a family or a mix of friends, who book ahead and order a round of margaritas, a few shared starters and entrees. This table is the largest check in the house, and Friday and Saturday dinners carry the volume: 135 to 150 covers in Year 3 against 70 to 90 on a weeknight.
The graduate student and the staff member
Lunch Thursday to Sunday and the Tuesday to Friday happy hour draw campus staff, graduate students and nearby office workers. The happy hour averages 40 bar-only guests a day in Year 3 at $15.00 each. They are the first to leave in July and August.
The family on a Sunday
Early dinners with children, a lower alcohol check, and the strongest repeat habit of any group. The kitchen keeps a short children's menu that uses the same house tortillas and beans.
The host with an event
A department lunch for 25, a rehearsal dinner for 40, a retirement party in the back room. The average event is worth $2,270 in Year 3 and is booked by the coordinator, so it does not depend on the weather or the football schedule.
What guests ask of the room
That the food tastes made by hand, that the first drink arrives quickly, that a table for six can be had on a Friday, and that a receipt does not hold surprises.
Filling Seats and Trays
The numbers a month has to hit
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Dinner covers | 18,515 | 28,741 | 30,576 | 31,799 | 32,716 |
| Lunch covers | 5,783 | 8,977 | 9,550 | 9,932 | 10,218 |
| Happy-hour bar guests | 5,029 | 7,806 | 8,304 | 8,636 | 8,885 |
| Takeout orders | 4,723 | 7,332 | 7,800 | 8,112 | 8,346 |
| Catering and private events | 52 | 88 | 100 | 104 | 107 |
How the first nine months ramp
Volume opens at 64% of its mature level in April and builds to 92% by December. The first weeks run on curiosity and the opening promotion. The first real test is May: Cinco de Mayo falls on a Wednesday in 2027, so the restaurant schedules a tequila dinner on the Saturday and a patio weekend around it, and the month reaches $123,900 of revenue.
Pricing
Dinner entrees are set between about $18 and $30, margaritas between about $12 and $15 and tequila flights at around $24. These are planning figures for this example. The average dinner cover is $36.20 in Year 1 ($24.60 of food and $11.60 at the bar) and $39.20 in Year 3 ($26.60 and $12.60). Menu prices rise about 4% a year from Year 2.
Getting the tray business
Catering earns less per hour of kitchen time than a full dining room, but it fills the weekday gaps. The coordinator, hired in month 7, works a list of campus departments, offices, event planners and wedding venues, and sends tasting trays to the first ten. The goal is 52 events in the nine open months of Year 1.
Keeping guests
The restaurant collects an email or text address at the table, sends a monthly note with the tequila of the month and the next dinner, and sets aside a table or two on weeknights for the list. The target is 3,000 members on that list by the end of Year 1.
What the Marketing Budget Buys
The Year 1 budget is $78,000: $30,000 of launch spend paid from start-up capital and $48,000 of running cost. That is 7.1% of Year 1 revenue, and it falls to 3.0% in Year 3 and 2.8% in Year 5 as the restaurant fills on repeat guests. Spread over about 34,000 visits in Year 1 (covers, bar-only guests and takeout orders), it comes to about $2.30 a visit.
| Item | Year 1 spend | What it is expected to do |
|---|---|---|
| Brand, website and menu photography (launch) | $11,000 | A site that takes reservations, online orders and catering requests |
| Opening-month promotion and preview dinners (launch) | $9,000 | Fill the room for the first four weeks and seed local word of mouth |
| Press, creator tastings and a community event (launch) | $6,000 | Local coverage and a first set of reviews |
| Paid social and search, first eight weeks (launch) | $4,000 | Reach people searching "Mexican restaurant Eugene" and "happy hour" |
| Paid social and search, running | $11,000 | Steady weekday traffic and catering inquiries |
| Campus and community sponsorships and print | $8,000 | Student-run events, club nights, community theater programs |
| Tequila dinners, Cinco de Mayo and holiday events | $9,500 | Fill the highest-margin nights |
| Catering outreach | $6,000 | Tasting trays for offices, departments and venues |
| Email, text club and gift cards | $5,500 | The repeat guest base |
| Third-party app promotions | $4,000 | Takeout orders at the start of each term |
| Website upkeep and photography refresh | $4,000 | Seasonal menus and patio photos |
Dates to hit
- April 2027: doors open, first preview dinner in the first week.
- May 2027: first Cinco de Mayo, with the tequila dinner and patio weekend.
- September 2027: term starts and the catering list gets its first campus bookings.
- December 2027: holiday parties and $25,200 of event revenue in the month.
Behind the Pass
The space
4,400 square feet at about $26.80 a square foot a year all-in ($118,000 in Year 1), on a ten-year lease with a renewal option and a personal guarantee. The room seats 120, the bar 12 and the patio 30. A closable back room holds 24 for events. The $300,000 build-out figure is net of a landlord allowance and covers the bar, the patio and the dining room finish; it works out to about $68 a square foot, a planning figure that written contractor bids would replace.
A day in the kitchen
The prep and tortilla cook starts at 7 a.m., soaking beans and making the day's masa. The line opens at 11 for Thursday to Sunday lunch, and Tuesday to Sunday dinner service runs from 4 p.m. to 9. Braises and sauces are made in batches and finished to order. Tortillas are pressed to order from fresh masa.
Menu, food cost and what goes wrong
The menu is deliberately compact. Fewer ingredients mean less waste and a tighter food cost. The model carries dining-room food at 30%, and Ben watches proteins, cheese and avocado weekly because prices move with the market. Portion weights, a waste log and a weekly food-cost report are Ben's Monday task.
Suppliers and stock
A broadline distributor for dry goods and dairy, a local produce supplier and a masa supplier, typically on 14 to 30 day terms, with spirits bought through the state-controlled channel for cash. The model carries stock equal to about two weeks of direct costs and blended payables of 18 days.
Who is on the schedule
Five full-time people at opening: Marisol and Ben, a lead cook, a line cook and the prep and tortilla cook. Part-time hours make up the rest: a weekend line cook, three dishwashers, seven servers, three bartenders and two hosts and runners, with a coordinator added in month 7, a fourth bartender in month 10 and an eighth server in month 15. Hours are scheduled from forecast covers each week, not from a fixed roster, and the financial plan sets them against the hours each shift needs.
Insurance and food safety
General liability, liquor liability, property and business interruption, workers' compensation, employment-practices cover and cyber, budgeted at $24,000 in Year 1. Staff hold the food handler cards and alcohol service permits Oregon is understood to require, and the kitchen follows a written temperature and allergen log. Requirements need confirming with the county health program and the liquor commission.
Technology
A point-of-sale system with online ordering and a reservation platform, shared across the dining room, bar and takeout. Software is $13,000 in Year 1 and $15,500 by Year 5. Card processing and platform fees are budgeted separately at $28,500 in Year 1, about 2.6% of sales.
Who Runs Westwood Terrace
Marisol Delgado, chef-owner
Marisol has fifteen years in restaurant kitchens, the last six as executive chef of a 140-seat regional Mexican restaurant in the Pacific Northwest, where she ran the kitchen and set the food cost. She and Ben each put in $100,000 of savings; her larger ownership share reflects the recipes and the kitchen she brings. She takes a $60,000 salary.
Ben Hartley, general manager and partner
Ben has twelve years in restaurants, ending as general manager of a casual-dining flagship. He built its bar program and wrote its schedules. He takes a $54,000 salary. He handles the bar, the floor, hiring, payroll and the books.
Where the team is thin
Neither owner has opened a restaurant of their own, and neither has run a catering book. The gaps are covered by a coordinator in month 7, a part-time bookkeeper on the professional-fees line, and two advisers who review the numbers each quarter: a retired restaurateur and a CPA with restaurant clients.
If one of them is out
The lead cook can run the line and the recipes are written down. Ben's tasks are listed in an operations book that the assistant manager, hired in month 38, takes over in part. The owners carry key-person life and disability cover.
Ownership and the bank
Marisol holds 26%, Ben 18% and each of seven investors 8%. The investors put in 64% of the equity cash ($350,000 of $550,000) for 56% of the shares, and the two owners take 44% for 36% of the cash plus the recipes, the kitchen and the daily work. Both owners guarantee the bank loan personally. The loan carries a covenant to deliver quarterly accounts and a minimum debt service cover.
Five Years of Westwood Terrace in Numbers
The model behind these tables runs five years, month by month through the opening year and by year after that. The planning figures come first so each line of the statements can be traced to a stated reason. Stress tests, a two-month opening slip and the questions a lender would still ask follow the tables.
Build-out, equipment and the reserve
| Use of funds | Amount |
|---|---|
| Build-out of 4,400 square feet of second-generation restaurant space, net of landlord allowance: patio, bar, dining room | $300,000 |
| Kitchen: hood and fire suppression, flat-top and range, tortilla press and comal line, walk-in cooler, reach-ins, dish machine | $118,000 |
| Dining room and patio furniture, bar back-bar and glassware, smallwares | $56,000 |
| Point-of-sale, reservations, sound and signage | $18,000 |
| Liquor license application and fees, food permits, plan review, sign permit | $14,000 |
| Legal: lease, entity, loan documents; design and permit drawings | $26,000 |
| Launch: brand, website, opening-month promotion, neighborhood preview dinners | $30,000 |
| Menu testing, training meals and the soft-open week before the doors open (food and beverage cost only) | $12,000 |
| Cash reserve for the first summer, build-out contingency and the opening pantry and bar stock | $436,000 |
| Total uses | $1,010,000 |
| Source of funds | Amount |
|---|---|
| Marisol Delgado and Ben Hartley, savings | $200,000 |
| Seven local investors, $50,000 each | $350,000 |
| Bank term loan (7 years, interest only for the first 6 months; SBA-style guarantee if the program allows) | $460,000 |
| Total sources | $1,010,000 |
Equity is $550,000, or 54.5% of the $1,010,000 raised: $200,000 of savings from Marisol and Ben ($100,000 each) and $350,000 from seven local investors at $50,000 each. A bank term loan covers the remaining $460,000 over seven years at 10.5%, interest only for the first six months, secured by a personal guarantee from both owners and a lien on the kitchen equipment. The rate and terms are planning figures for this example; an SBA-guaranteed loan could be priced differently, and current lender terms need confirming. Of the total, $492,000 goes into the room, kitchen and bar, $82,000 into licensing, legal and design fees, launch marketing and opening-week food, and $436,000, or 43% of the raise, stays in the bank. Counting four days of card and invoice receivables as not yet in hand, month-end cash is lowest at about $156,000 at the end of August 2027 on the model's even monthly spread, so the reserve is sized against two shocks rather than the base path. Moving the opening from April to June 2027 leaves about $41,000 at the August low, and a 25% build-out overrun ($75,000) alone leaves about $81,000. The reserve does not absorb both at once, which would leave cash about $34,000 below zero; a standby line is the remedy and is listed among the lender questions. The loan is not prepaid, because the cash is needed through Year 2.
Covers, checks and tray orders: the planning figures
- Dinner service runs Tuesday to Sunday, about 26 nights a month, and lunch Thursday to Sunday, about 17 days a month. Year 3 averages 98 dinner covers a night and 46 at lunch. Seating is 120 in the dining room, 12 at the bar and 30 on the patio. Friday and Saturday dinners run to roughly 135 to 150 covers, a little over one turn of the 132 indoor seats, while weeknights run 70 to 90.
- Dinner food averages $26.60 a cover in Year 3 and lunch $18.40; Year 1 starts at $24.60 and $17.00, with entrees between about $18 and $30. These are planning figures for this example, not a survey of local menus. Prices rise about 4% a year from Year 2, a little ahead of the 3% pay raises because scratch-kitchen ingredients and rent climb too. Oregon is understood to levy no general sales tax, so menus carry no tax line; the Department of Revenue should confirm this.
- The bar adds $12.60 per dinner cover and $3.60 per lunch cover in Year 3, plus a Tuesday to Friday happy hour that draws 40 bar-only guests a day at $15.00. Bar sales are 27% of Year 3 revenue and 55% of dining-room food sales.
- Takeout and delivery average 25 orders on each open day in Year 3 at $29.90, or 7,800 orders. About one order in five comes through a third-party app at a 25% commission, which is budgeted as its own line ($11,700 in Year 3).
- Catering and private events run at 100 events in Year 3 at an average of $2,270: department lunches, rehearsal dinners, holiday parties, platters and back-room buyouts. May runs at 1.35 times the average month for Cinco de Mayo and end-of-term parties, and December at 1.6 times.
- The seasonal index is 0.78 in August, 0.80 in July, 1.15 in May and 1.19 in December, and averages 1.0 across the year. Volume opens at 64% of the mature level in April and reaches 92% by December. Years 2 to 5 sit at 94%, 100%, 104% and 107% of the Year 3 level.
- Direct costs are 30% of dining-room food sales, 23% of bar sales, 33% of takeout (packaging included) and 30% of catering, or 28.4% of Year 1 revenue. The engine applies that Year 1 blended rate to every later year, so a single line's own percentage holds only in Year 1. Scratch cooking from dried beans, rice, masa and house-made salsa holds the food line down, while proteins, cheese and avocado keep it from falling lower. The bar line allows for Oregon licensees buying spirits at state-authorized liquor stores rather than from a distributor, which the liquor commission should confirm.
- The Oregon Bureau of Labor and Industries lists $15.55 an hour as the standard-region minimum wage for 1 July 2026 to 30 June 2027 (the Portland metro rate is $16.80) and states that tip credits are illegal, so tips come on top of wages and are not in the model. Eugene sits in Lane County, which the page does not list as a Portland-metro or nonurban county, so the standard rate is used. The minimum is indexed to inflation and rises each 1 July, so the rate after June 2027 is not yet known. Servers and dishwashers are budgeted at $18,500 a year (about 1,170 hours at $15.81), bartenders at $19,000 (1,200 hours at $15.83) and hosts and runners at $16,000 (1,000 hours at $16.00). Those rates sit 26 to 45 cents above the floor, so a July 2027 increase could push some of them up; the 10% wage case in the stress tests covers that.
- The owners' salaries ($60,000 and $54,000) and the assistant manager's $46,000 are above the $35,568 annual exempt-salary figure the same BOLI page gives (the federal $684 a week), provided the roles meet the duties test. Hourly cooks are scheduled at 40 hours a week because overtime above 40 hours is paid at 1.5 times under federal rules, with Oregon's rules to be confirmed; no overtime is budgeted.
- Payroll adds 27% for full-time staff and 15% for part-time staff for payroll taxes, workers' compensation, state paid-leave contributions and part of health cover; these are planning figures. Employer Social Security and Medicare tax of 7.65% on tips is charged as its own line, with tips taken at 16% of dining-room and bar sales, which works out to 1.22% of those sales ($18,800 in Year 3). The federal credit for that tax is not modeled. Pay raises of 3% a year are charged as a separate line from Year 2, and the staffing table and the profit and loss can differ by $1 because of rounding.
- Hours against need, at Year 3 volumes. The kitchen needs roughly 200 hours a week across line, prep and tortilla work; the schedule supplies about 193 (three full-time cooks at 40 hours, the part-time line cook at about 23, and Marisol at about 50), so coverage is tight and a sick call has no cover. Eight part-time servers supply about 180 hours a week against roughly 175 wanted, three dishwashers about 68 against 68, and four bartenders about 92 against roughly 90. Hosts and runners supply about 38 hours against about 45, and servers fill the gap. Year 1 runs one server short of Year 2 and a bartender short until month 10, which the lower volume allows. In all, the Year 3 crew works about 33,900 paid hours, or 16 full-time equivalents, which is $59 of revenue per paid hour.
- Rent is $118,000 in Year 1 for 4,400 square feet, about $26.80 a square foot all-in, rising 3% a year; the lease is unsigned, so this is a planning figure. Utilities start at $44,000 because the kitchen runs on gas and electric. The equipment reserve begins in Year 2 and grows to $22,000 by Year 5. Rent is charged from January even though a landlord might grant free rent during the build-out.
- Card processing and reservation-platform fees are set at about 2.6% of sales, a planning figure that includes the tips that run through the card. Oregon's corporate activity tax is estimated from the Department of Revenue formula (a $250 base plus 0.57% of commercial activity above $1 million, after a 35% subtraction for labor or cost inputs), which gives nothing in Year 1 and $3,600 to $6,300 in Years 2 to 5.
- Receivables average 4 days, from catering invoices and card settlement lags. Supplier payables average 18 days, a blend of suppliers on 14 to 30 day terms and spirits bought for cash, and stock on hand equals about two weeks of direct costs.
- Tax is charged at the federal corporate rate of 21% (26 U.S.C. 11(b)) plus a 6.6% state rate that is a planning figure, with the Year 1 loss carried forward. The engine's tax base leaves out the $82,000 of start-up costs, which overstates tax in the later years, and it does not apply the federal limit that lets a loss carryforward offset only 80% of taxable income, which understates tax in Years 2 and 3. The owners would likely choose pass-through treatment in practice, which moves the tax to their personal returns, and an accountant should confirm all of it.
- Distributions begin at $20,000 in Year 2 and reach $100,000 in Year 5. Each is below that year's net income and below operating cash flow after loan principal. Together they come to $270,000 against cumulative net income of $144,236 after start-up costs, so $125,764 of the distributions is a return of capital, and cumulative distributions run ahead of cumulative net income in every year from Year 2 to Year 5.
Revenue by line: table, bar, takeout and tray
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Dining room: lunch and dinner food | $553,800 | $894,700 | $989,000 | $1,070,500 | $1,145,600 |
| Bar: margaritas, tequila flights, beer and wine | $304,300 | $491,500 | $544,200 | $588,000 | $632,000 |
| Takeout and delivery orders | $130,700 | $211,200 | $233,200 | $252,300 | $269,600 |
| Catering and private events | $109,200 | $192,300 | $227,000 | $245,400 | $262,700 |
| Total revenue | $1,098,000 | $1,789,700 | $1,993,400 | $2,156,200 | $2,309,900 |
| Growth on prior year | – | 63% | 11% | 8% | 7% |
The dining room carries half of Year 1 revenue, but the bar does the work on margin: margaritas and the tequila list bring in 28% of Year 1 revenue at a 23% direct cost. Takeout is the steadiest line through the summer and catering the most uneven, with May and December carrying a heavy share. Year 1 revenue of $1,098,000 covers nine trading months, so the 63% jump to $1,789,700 in Year 2 is mostly three more months of trading.
The opening year, month by month
| Month | Dining room: lunch and dinner food | Bar: margaritas, tequila flights, beer and wine | Takeout and delivery orders | Catering and private events | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $0 | $0 | $0 | $0 | ($74,633) |
| Feb 2027 | $0 | $0 | $0 | $0 | $0 | ($74,633) |
| Mar 2027 | $0 | $0 | $0 | $0 | $0 | ($74,633) |
| Apr 2027 | $51,200 | $28,100 | $11,100 | $6,300 | $96,700 | ($5,412) |
| May 2027 | $63,100 | $34,700 | $13,500 | $12,600 | $123,900 | $14,058 |
| Jun 2027 | $54,300 | $29,800 | $13,000 | $10,500 | $107,600 | $2,390 |
| Jul 2027 | $47,600 | $26,100 | $12,600 | $8,400 | $94,700 | ($6,844) |
| Aug 2027 | $48,200 | $26,500 | $13,100 | $6,300 | $94,100 | ($7,273) |
| Sep 2027 | $61,600 | $33,800 | $15,100 | $10,500 | $121,000 | $11,983 |
| Oct 2027 | $72,400 | $39,800 | $16,800 | $14,700 | $143,700 | $28,232 |
| Nov 2027 | $72,000 | $39,600 | $17,000 | $14,700 | $143,300 | $27,946 |
| Dec 2027 | $83,400 | $45,900 | $18,500 | $25,200 | $173,000 | $49,206 |
The doors open in April, so January to March show cost and no sales. The monthly view spreads payroll, rent, insurance and the other annual operating costs evenly, so each of the three months carries $74,633 of cost, a little more than would fall due before opening, and it has no receivables timing. Operating profit before depreciation and interest turns positive in May ($14,058) and June ($2,390), slips below zero in July and August with the students away, and climbs from September to $49,206 in December. Month-end cash is lowest at $156,000 in August 2027, counted after setting aside receivables; a Year 2 summer trough is not modeled.
Kitchen, floor and bar staffing
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and chef-owner (Marisol Delgado) | $60,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| General manager and partner (Ben Hartley) | $54,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead cook (kitchen shift lead) | $42,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Line cook (full time) | $37,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Prep and tortilla cook (full time) | $35,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Line cook (part time, weekends and lunch) | $20,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Dishwashers (three, part time) | $18,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Servers (seven, part time, tipped) | $18,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Bartenders (three, part time) | $19,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Bartender (fourth, part time) | $19,000 | Month 10 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Hosts and food runners (two, part time) | $16,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Catering and events coordinator (part time) | $22,000 | Month 7 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Servers (one more, part time, tipped) | $19,500 | Month 15 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Catering cook and driver (part time) | $22,000 | Month 20 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Assistant manager (full time) | $46,000 | Month 38 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $565,293 | $704,039 | $722,535 | $776,087 | $780,955 |
Marisol and Ben are salaried from January and sit in every payroll line. Kitchen, floor and bar staff start in month 3 for training before the April opening: seven servers, three dishwashers, three bartenders and two hosts and runners among them, though the table below marks each part-time line as one half position whatever its headcount. A catering and events coordinator joins in month 7, a fourth bartender in month 10, an eighth server in month 15, a catering cook and driver in month 20, and a full-time assistant manager in month 38 to take closing shifts off Ben. Payroll with on-costs is $722,535 in Year 3, with $44,002 of pay raises on top. Counted in paid hours, the Year 3 crew is about 16 full-time equivalents, or about $122,000 of revenue each, well below the revenue-per-position figure in the ratios table, which counts a part-time line as half a position regardless of its headcount.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,098,000 | $1,789,700 | $1,993,400 | $2,156,200 | $2,309,900 |
| Direct costs (food, tequila, beer and wine, packaging and catering supplies) | ($312,020) | ($508,581) | ($566,467) | ($612,730) | ($656,407) |
| Gross profit | $785,980 | $1,281,119 | $1,426,933 | $1,543,470 | $1,653,493 |
| Payroll incl. on-costs | ($565,292) | ($704,039) | ($722,535) | ($776,087) | ($780,955) |
| Rent | ($118,000) | ($121,500) | ($125,200) | ($129,000) | ($132,800) |
| Utilities | ($44,000) | ($48,000) | ($50,000) | ($51,500) | ($53,000) |
| Marketing | ($48,000) | ($58,000) | ($60,000) | ($62,000) | ($64,000) |
| Insurance | ($24,000) | ($26,000) | ($28,000) | ($29,500) | ($31,000) |
| Professional fees | ($11,000) | ($11,000) | ($11,500) | ($11,500) | ($12,000) |
| Software subscriptions | ($13,000) | ($14,000) | ($14,500) | ($15,000) | ($15,500) |
| Card processing and reservation-platform fees (about 2.6% of sales) | ($28,500) | ($46,500) | ($51,800) | ($56,100) | ($60,100) |
| Cleaning, linen, grease trap and pest control | ($16,000) | ($20,000) | ($21,000) | ($22,000) | ($23,000) |
| Repairs, equipment service and smallwares and glassware replacement | ($6,000) | ($15,000) | ($19,000) | ($22,000) | ($25,000) |
| Third-party delivery and online-ordering commissions | ($6,500) | ($10,600) | ($11,700) | ($12,600) | ($13,500) |
| Music licensing, permits, dues and license renewals | ($4,200) | ($4,600) | ($4,800) | ($5,000) | ($5,200) |
| Equipment replacement reserve | $0 | ($10,000) | ($16,000) | ($19,000) | ($22,000) |
| Employer payroll tax on tips (7.65% of tips, tips taken at 16% of dining-room and bar sales) | ($10,500) | ($17,000) | ($18,800) | ($20,300) | ($21,800) |
| Oregon corporate activity tax (formula from the Department of Revenue, planning estimate) | $0 | ($3,600) | ($4,600) | ($5,400) | ($6,300) |
| Bad debt allowance (event deposits and catering invoices) | ($600) | ($1,500) | ($2,000) | ($2,200) | ($2,400) |
| Annual pay raises (3% a year) | $0 | ($21,121) | ($44,002) | ($71,964) | ($98,017) |
| EBITDA | ($109,612) | $148,659 | $221,496 | $232,319 | $286,921 |
| Depreciation | ($58,457) | ($58,457) | ($58,457) | ($58,457) | ($58,457) |
| Interest | ($47,751) | ($43,044) | ($36,994) | ($30,277) | ($22,820) |
| Income tax | $0 | $0 | $0 | ($26,468) | ($53,907) |
| Net income before start-up costs | ($215,820) | $47,158 | $126,045 | $117,117 | $151,736 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($82,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($297,820) | $47,158 | $126,045 | $117,117 | $151,736 |
Year 1 loses $215,820 before start-up costs and $297,820 after them: three months of rent and payroll with no sales, then nine months at 64% to 92% of mature volume. Year 2 earns $47,158, a 2.6% net margin, and Year 3 $126,045, a 6.3% margin on an 11.1% EBITDA margin. Year 4 nets 5.4% and Year 5 6.6%. Net income dips in Year 4 because income tax starts at $26,468 as the carried-forward loss runs out, and because the assistant manager and compounding raises arrive. Direct costs hold at 28.4% of revenue and payroll with raises falls from 51% in Year 1 to 38.5% in Year 3, so prime cost (direct costs plus payroll) is 68.9% in Year 2, 66.9% in Year 3, 67.7% in Year 4 and 66.5% in Year 5. That is above the 60% to 65% range operators often aim for (a rule of thumb, not a sourced figure), which is why the margin is thin and why the stress tests matter.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($248,490) | $99,865 | $182,809 | $174,221 | $208,916 |
| Dining room build-out, kitchen line, bar and patio fit-out | ($492,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,010,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($25,371) | ($54,899) | ($60,949) | ($67,666) | ($75,123) |
| Owner distributions | $0 | ($20,000) | ($70,000) | ($80,000) | ($100,000) |
| Net change in cash | $244,140 | $24,967 | $51,860 | $26,556 | $33,793 |
| Closing cash | $244,140 | $269,106 | $320,967 | $347,523 | $381,316 |
Year-end cash never falls below $244,140 and peaks at $381,316 in Year 5. Distributions are $20,000 in Year 2, $70,000 in Year 3, $80,000 in Year 4 and $100,000 in Year 5. Each is below that year's net income, and below operating cash flow after loan principal ($44,966, $121,860, $106,555 and $133,793). Over five years they total $270,000 against cumulative net income of $144,236, so $125,764 is a return of capital and retained earnings stay negative throughout.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $244,140 | $269,106 | $320,967 | $347,523 | $381,316 |
| Accounts receivable | $12,033 | $19,613 | $21,845 | $23,630 | $25,314 |
| Food, tequila, beer and wine stock on hand | $12,481 | $20,343 | $22,659 | $24,509 | $26,256 |
| Dining room build-out, kitchen line, bar and patio fit-out (net) | $433,543 | $375,086 | $316,629 | $258,171 | $199,714 |
| Total assets | $702,196 | $684,149 | $682,099 | $653,833 | $632,600 |
| Supplier and distributor balances owed | $15,387 | $25,081 | $27,935 | $30,217 | $32,371 |
| Bank loan | $434,629 | $379,731 | $318,782 | $251,116 | $175,994 |
| Paid-in capital | $550,000 | $550,000 | $550,000 | $550,000 | $550,000 |
| Retained earnings | ($297,820) | ($270,663) | ($214,618) | ($177,500) | ($125,764) |
| Total liabilities and equity | $702,196 | $684,149 | $682,099 | $653,833 | $632,600 |
Margins, payroll share and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -10.0% | 8.3% | 11.1% | 10.8% | 12.4% |
| Net margin (before start-up costs) | -19.7% | 2.6% | 6.3% | 5.4% | 6.6% |
| Payroll incl. pay raises as share of revenue | 51% | 41% | 38% | 39% | 38% |
| Revenue per full-time equivalent at year end | $129,176 | $188,389 | $209,832 | $205,352 | $219,990 |
| Average monthly revenue | $91,500 | $149,142 | $166,117 | $179,683 | $192,492 |
| Monthly revenue needed to cover operating costs | $104,261 | $131,836 | $140,331 | $152,638 | $159,090 |
| Debt service cover (EBITDA / interest + principal) | -1.5x | 1.5x | 2.3x | 2.4x | 2.9x |
Compare the last two revenue rows: costs are covered when average monthly revenue exceeds the needed figure. Year 1 averages $91,500 against $104,261 needed, so it loses money even with the reserve; Year 2 averages $149,142 against $131,836 and Year 3 $166,117 against $140,331. Debt service cover is negative in Year 1, when the reserve and the owners' guarantees carry the bank, then 1.5x in Year 2, 2.3x in Year 3 and 2.9x in Year 5. Year 2 clears a typical 1.25x test by a thin margin.
If covers run a fifth short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $878,400 | $1,431,760 | $1,594,720 | $1,724,960 | $1,847,920 |
| Net income before start-up costs | ($312,346) | ($67,159) | $9,784 | $42,948 | $58,173 |
| Net income after start-up costs | ($394,346) | ($67,159) | $9,784 | $42,948 | $58,173 |
| Closing cash | $149,440 | $81,239 | $82,178 | $94,835 | $105,320 |
This case cuts every revenue line by 20% in every year, and the owners respond in order. In June, after two months of trading, part-time hours fall 12% with covers. In July, Ben and Marisol each take a 20% pay cut that stays for the rest of the case. The coordinator starts in month 13 instead of month 7, the assistant manager in month 44 instead of 38, and the extra server and the catering cook are not hired. From Year 2, marketing falls 20%, the equipment reserve a quarter, repairs 10%, cleaning 5% and utilities 4%; Year 1 cost lines are left untrimmed. Card fees, delivery commissions, tip payroll tax, the activity tax and bad debt fall with sales in every year. Distributions are $0, $0, $5,000, $20,000 and $30,000, about half of each profitable year's downside net income. On those terms year-end cash never falls below $81,239 (Year 2), Year 1 equity is $155,654, and the lowest month-end cash in the opening year is about $114,000 in September 2027, on the same basis as the base case. Year 2 loses $67,159 and Year 3 earns $9,784, a 0.6% margin, so Year 3 is barely break-even. Debt service cover is negative in Year 1, then 0.35x, 1.07x, 1.34x and 1.42x in Years 2 to 5. A 1.25x covenant would be breached in Years 2 and 3. The owners would ask the bank for no cover test until the end of Year 3, a longer interest-only period, and a $75,000 standby line. Year 2 closes with about three weeks of operating costs in the bank, and a summer trough inside Year 2 is not modeled, so the case is demanding: cutting hours only works if shifts are built from forecast covers.
Stress Tests and What a Lender Would Still Ask
Sensitivities
Each case changes one input and leaves the rest of the base case alone, distributions included. In the revenue and bar cases volume falls, so direct costs and the lines that move with sales (card fees, delivery commissions, tip payroll tax, the activity tax and bad debt) fall with it, while wages, rent and other fixed lines stay put. The direct-cost case adds three points to every line's percentage with prices unchanged. The wage case raises every role, owners included, by 10%, and the raise line grows with it. The rent case raises rent 10% in every year. The build-out case adds 25% ($75,000) to the build-out and takes it from the reserve.
| Case | Year 2 net income | Year 2 cover | Year 3 net income | Year 3 cover | Year 5 closing cash |
|---|---|---|---|---|---|
| Base case | $47,158 | 1.52x | $126,045 | 2.26x | $381,316 |
| Revenue 10% lower | ($73,034) | 0.29x | ($7,758) | 0.90x | ($163,999) |
| Direct costs 3 points higher | ($6,533) | 0.97x | $66,243 | 1.65x | $175,054 |
| Wages 10% higher | ($25,358) | 0.78x | $49,391 | 1.48x | $83,289 |
| Rent 10% higher | $35,008 | 1.39x | $113,525 | 2.13x | $335,089 |
| Bar volume 15% lower | ($6,356) | 0.97x | $66,815 | 1.66x | $176,516 |
| Build-out 25% over | $39,658 | 1.52x | $118,545 | 2.26x | $316,146 |
| Opening two months late | $55,348 | 1.60x | $126,043 | 2.26x | $313,446 |
| Late opening and build-out 25% over | $47,848 | 1.60x | $118,543 | 2.26x | $248,277 |
The restaurant is fragile to revenue and to labor. A 10% revenue miss with no response puts Years 2 to 4 in the red, drops cover below 1x and takes year-end cash below zero in Year 3 (to ($5,360)), then to ($163,999) by Year 5. The owners would stop distributions first, which adds $270,000 over five years and leaves Year 5 cash at $106,001, but the restaurant would still be losing money in Year 3. Three points on direct costs, a 10% wage rise or a 15% weaker bar each push Year 2 into a small loss with cover under 1x. Rent is the least sensitive input.
The two-month opening slip
In the slip case the opening moves from 1 April to 1 June 2027. Every revenue ramp and every hire after the owners moves two months, while rent, utilities, insurance and the owners' pay carry on; seasonality stays tied to the calendar, so June opens at the 64% ramp on June's index. Year 2 onward is left as planned apart from hires moving with the opening. Year 1 revenue falls to $802,900, the Year 1 loss after start-up costs deepens to ($408,624), and year-end cash is $135,789. Month-end cash, counted after receivables, bottoms at $41,044 at the end of August 2027, so the reserve covers a two-month slip. With a 25% build-out overrun on top, the same month falls to about ($33,956): the reserve covers either shock but not both. A slip of three months or more has not been modeled.
What a lender would still ask
- The lease and the guarantee. The lease is unsigned. A lender would want the term, the rent steps, the landlord allowance in writing, any free-rent period (the model charges rent from January) and a cap on the personal guarantee.
- Build-out bids. The $300,000 net build-out and $118,000 kitchen package are planning figures. Three written contractor bids, and a plan review date, would replace them.
- The permit and license timeline. The model has the doors open on 1 April 2027, three months after the build-out starts. The liquor license, plan review and health inspection set the real date, and the two-month slip case shows the reserve holding only if the build-out stays on budget.
- Covenants. Cover is 1.5x in Year 2 in the base case and 0.35x in the downside, which breaches a 1.25x test in Years 2 and 3. The owners would ask for no cover test until the end of Year 3, a longer interest-only period, and a $75,000 standby line to cover a slip combined with an overrun.
- Owner track record. Neither owner has opened a restaurant of their own or run a catering book, and a lender would ask for references from each owner's former employers.
- The reserve against the low. The reserve is $436,000 against a base-case low of about $156,000, a slip-case low of $41,044 and a slip-plus-overrun low below zero.
- Pay near the wage floor. Several part-time rates sit 26 to 45 cents above Oregon's standard minimum for the year to June 2027, which is indexed and rises each 1 July. The 10% wage case shows what that costs.
- The investor return. Seven investors put in $350,000. Total distributions of $270,000 over five years exceed cumulative net income of $144,236 by $125,764, so part of what they receive is their own capital coming back, and the loan balance still stands at $175,994 at the end of Year 5.
- The equity split. Investors put in 64% of the equity cash for 56% of the shares; a lender or an investor may test that against the owners' contribution.
Sources
- Oregon Bureau of Labor and Industries, oregon.gov/boli minimum wage page: the $15.55 standard and $16.80 Portland-metro hourly rates for 1 July 2026 to 30 June 2027, the statement that tip credits are illegal, and the $35,568 exempt-salary figure. The rate after June 2027 is not yet published.
- Oregon Department of Revenue, Corporate Activity Tax: the $250 base plus 0.57% of commercial activity above $1 million, with a 35% subtraction. The yearly figures in the model are the plan's own estimate from that formula.
- 26 U.S.C. 11(b), law.cornell.edu: the 21% federal corporate rate.
- Oregon Liquor and Cannabis Commission, oregon.gov/olcc: license categories, fees, server permits and liquor-store purchasing. Current fees and processing times need confirming before the figures here are relied on.
- Oregon Department of Revenue, oregon.gov/dor: business tax rates. The 6.6% state rate in the model is a planning figure.
- Oregon Health Authority, oregon.gov/oha: food service licensing and food handler requirements, administered with county health programs.
- Restaurant margin and market statistics are not quoted; the cost percentages, rent, card fees and the tip rate are planning figures for this example.
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