Looking for a convenience store soda fountain business plan? You're in the right place.
A store that earns a third of its year in three summer months has to answer questions a year-round store never faces. How much cash carries it through January? What does the first winter lose? What happens if sales run a fifth short? A generic retail template will not show you what a sensible answer looks like.
In this article we'll walk through a complete sample plan for a retro soda-fountain convenience store in Bend, Oregon, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials, including a month-by-month first year.
Here's what you'll take away:
- The executive summary: see how to put a seasonal, mixed-model store on one page so a lender knows what you are asking for
- The SWOT analysis: learn how to name weather and tourism dependence honestly without putting a reader off
- The start-up budget: find out how much equipment, stock and reserve a fountain store needs before the first summer pays
- The first year, month by month: spot the winter months that lose money and plan cash around them
- The revenue mix: see how a counter, a grocery shelf and a gift wall earn at very different margins
- The five-year profit, cash flow and balance sheet: understand how stock, hires and pay raises show up in the numbers
- The downside case: have an answer ready for "what if sales run 20% short?", with the steps the owner takes
If you're planning a seasonal retail store, read this before you write your own. The business is fictional, so take what fits and change the rest.
In this plan
To turn this example into your own convenience store soda fountain business plan, use the convenience store soda fountain business plan template.
Grove Mead at a Glance
Grove Mead is a retro soda-fountain store in Bend, Oregon, opening on January 1, 2027 in a 1,800 square foot corner unit a short walk from downtown and the river path. It sells fountain sodas, floats, cones and shakes at a marble-topped counter, a shelf of groceries and camp supplies, and a wall of Oregon-made jams, candy and gifts. Founder Dana Whitcomb owns 65% and family investors own 35%.
The company raises $236,000: $61,000 of Dana's savings, $80,000 from family investors and a $95,000 community bank term loan. Of that, $114,000 buys equipment and build-out, $32,000 opening inventory, $35,100 pays for legal work, licensing, rent before opening and the launch, and $54,900 is held as a reserve.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $703,350 | $849,750 | $958,365 |
| Net income after start-up costs | ($4,711) | $76,339 | $88,428 |
| Closing cash | $89,239 | $165,777 | $238,732 |
Summer carries the year. June to August bring 36% of Year 1 revenue, and July sells about three times what January does. The four months from January to April lose $27,666 at the operating line, and the store covers its costs again from May.
A downside case is built in. If every month runs 20% under plan and Dana slows hiring, cuts marketing and her own pay and pays no distributions, year-end cash stays positive in every year and the lowest month in Year 1 still holds about $10,700. Spring balances after Year 1 are not modeled, and the plan arranges a $30,000 seasonal bank line as a backstop.
The pitch is narrow. A fountain counter that earns about 73% gross margin sits next to a grocery shelf that earns 35%, so the people who come in for ice and sunscreen walk past the cones. Grocery draws the traffic and the fountain earns the profit.
What Grove Mead Is
Legal name: Grove Mead, LLC, an Oregon limited liability company. Owners: Dana Whitcomb, 65%; family investors, 35%. Premises: 1,800 square feet of leased retail space, five-year lease with a five-year option. Start date: January 1, 2027. The build-out runs through the fall before. Hours: seven days a week, 8 a.m. to 8 p.m. from May to September and 10 a.m. to 6 p.m. the rest of the year, with no winter evening hours.
Why open in January
The lease is signed and the build-out starts in the fall, when the equity and the loan also close; the model books the funds in month 1. Opening in the quietest month spends part of the reserve on winter, and buys something in return: the crew learns the equipment and the schedule on about 29 fountain tickets a day before the summer crowd arrives in May. The $18,000 of pre-opening cost is about three months of rent ($12,600) plus $5,400 of hiring and training. No free-rent period is modeled.
Three counters, one register
| Counter | How it earns | Year 1 share of revenue |
|---|---|---|
| Fountain and ice cream | About $11.20 a ticket, 73% gross margin | 40.6% |
| Packaged grocery and convenience | About $12.60 a ticket, 35% gross margin | 36.7% |
| Local goods and gifts | About $31 a ticket, 50% gross margin | 18.5% |
| Group, lodging and event orders | About $195 an order, 56% gross margin | 4.2% |
Where the licenses come from
The store needs a food license for fountain service and packaged retail food, a city business registration if the city requires one, and a state business registration. Which agency issues the food license depends on the mix of prepared and packaged food, so Dana confirms the agency, the plan review and the timeline with the issuing office before the January opening. The store sells no alcohol, tobacco or lottery, which keeps three further licensing regimes out of the plan.
Bend's Visitors and Locals
A town that fills in summer
Bend draws hikers, cyclists, river floaters and skiers, and the plan treats summer as the busier season for a fountain. No visitor count is quoted. The curve in the model has the busiest month bringing three times the revenue of the quietest, because cold weather cuts cone and float sales more than it cuts grocery. Winter visitors are a modest lift, not the main trade, and locals carry the store from January to April.
What the curve costs
A store that must staff for July and pay rent in January has a fixed-cost problem. Rent and utilities are $63,900 a year whatever the weather. Payroll flexes with two summer crew who work May to September, so the cost base grows with the crowd.
Who else sells a cone or a bag of ice
| Alternative | What it offers | Why a customer picks it | How Grove Mead differs by design |
|---|---|---|---|
| Chain convenience stores | Long hours, drinks, snacks | Habit and location | A fountain counter and a seat |
| Supermarkets | Grocery and ice, often at lower prices | Weekly shopping | Walking distance from the trail and the hotel |
| Independent ice cream shops | Specialty flavors | The product itself | Groceries and camp supplies under the same roof |
| Gift shops and outfitters | Souvenirs and gear | Browsing time | A food reason to come in first |
| Coffee shops | Morning drinks | Routine | Sodas, floats and a late-afternoon trade |
The table describes categories, not named businesses. Prices and hours change often and are not quoted here.
SWOT
| Strengths | Weaknesses |
|---|---|
| Four revenue lines at different margins | A third of revenue lands in three months |
| Owner on the floor most days | Refrigeration and fountain equipment are costly to repair |
| Family investors who accept a slow first year | One location and one lease |
| Opportunities | Threats |
|---|---|
| Lodging and rental partners sending guests | A poor weather or smoke summer |
| Local goods sold at a higher margin | Wage, dairy and rent inflation |
| A winter locals' trade | A chain opening nearby |
Who Walks In
Visitors at the counter
Families and couples on a day out, mostly on foot or by bike. They are the largest group at the fountain in summer. They buy a float, a cone or a shake, and often a gift jar on the way out.
Locals in the off-season
Residents who come for an after-school treat, ice and groceries on the way home, and a Friday afternoon treat in winter. They keep the store open from January to April and are the reason a punch card is worth printing.
Lodging and rental guests
Hosts of vacation rentals and small hotels order welcome baskets and guest vouchers. Year 1 holds 150 such orders at $195, about three a week.
What customers ask
A short wait at the counter, a seat, and a local product they cannot get at a chain.
How a Sale Happens
The fountain line is longest between 2 and 5 p.m., and in July the counter rings about 116 fountain tickets a day, roughly 10 an hour across the 12-hour summer day and higher in the afternoon peak. The plan keeps that count deliberately low. Grocery tickets lead in the early evening. The lead works the counter and Dana runs the register and orders.
Pricing
The counter prices to about $11.20 a ticket, which is one and a half items at about $7.50 each, a plan figure in line with floats and shakes at a tourist-town counter rather than a market quote. A 27% cost of goods leaves about $8.18 of gross profit a ticket. Grocery runs a modest tourist-town premium over a chain. Gifts and local goods carry about 50% gross margin. Prices rise 3% a year from Year 2.
Year 1 tickets
| Counter | Year 1 tickets | July a day | January a day |
|---|---|---|---|
| Fountain | 25,500 | 116 | 29 |
| Grocery | 20,500 | 78 | 34 |
| Local goods | 4,200 | 16 | 6 |
Group and event orders add 150 orders. These are invented figures for the example, not market benchmarks.
Marketing Plan
What the budget buys
Year 1 marketing is $26,000: $9,000 of launch spend from start-up capital plus $17,000 of running costs, which is 3.7% of Year 1 revenue. Across about 50,200 tickets that is roughly 52 cents a ticket. The share falls to 1.7% of revenue by Year 3 as launch spend ends and repeat trade and lodging referrals take over; running costs alone are 2.4% of revenue in Year 1 as repeat trade and lodging referrals take over.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Signage and window graphics (launch) | $4,000 | A storefront that reads as a soda fountain from the sidewalk |
| Website and menu photography (launch) | $2,500 | Search listing and a menu page |
| Hotel and rental introductions (launch) | $2,500 | Welcome-basket samples to 40 hosts |
| Google Business profile and local search | $4,500 | Found on "ice cream near me" searches |
| Lodging and rental guest vouchers | $4,000 | A cone voucher in welcome packs |
| Social media and local photography | $2,000 | A steady supply of fountain photos |
| Race and market sponsorships | $2,500 | A table at local events |
| Print and map ads | $1,000 | Visitors holding a paper map |
| Punch card | $1,500 | Repeat locals in winter |
| Winter locals' afternoons | $1,500 | A reason to come in January |
Milestones
- January 2027: doors open, menu boards up.
- May 2027: summer crew starts; June is the first full month of summer trade.
- December 2027: 12 months of tickets and the first year-end inventory count.
Running the Counter
The unit
1,800 square feet at about $28 a square foot a year, covering rent, shared charges and property tax ($50,400 in Year 1). About 600 square feet is the fountain and seating, 900 is shelving and the gift wall, and 300 is back room and cooler.
Inventory and suppliers
Inventory turns 7.2 times on year-end balances in Year 1 and 9.8 times by Year 5, because the $32,000 opening order is a fixed base. Dairy, syrups and cones come from regional food distributors on short terms, grocery from a wholesale club or a convenience distributor, and local goods from small producers who sell to the store at wholesale. Supplier balances average about 9 days in the model: the plan expects dairy and syrup distributors to allow two to three weeks if they agree terms, while grocery and local producers are paid on delivery.
Equipment and food safety
Fountain back bar, dipping cabinets, blenders and an ice machine make up $58,000 of the $114,000 of equipment and build-out. Service and repairs are budgeted at $3,000 in Year 1 and $6,500 by Year 5. Food handlers hold cards and the store is inspected under its food license.
Insurance and software
General and product liability, property and business interruption are budgeted at $9,500 in Year 1. Workers' compensation sits within the on-cost percentage. Point of sale and accounting software is $4,200.
Staffing
Three on payroll at launch (Dana, a lead and a half-time attendant), two summer crew each May to September at about 30 hours a week, a second attendant from month 25, in January ahead of the third summer, and a full-time assistant manager and buyer from month 37, after a Year 3 of $958,365 in revenue. The assistant manager takes over ordering, lodging accounts and the summer close so Dana can leave the floor. The downside case shows which hires are delayed.
The People Behind the Counter
Dana Whitcomb, founder and owner-operator
Dana has eight years in food service and retail management in Central Oregon, the last four running a seasonal ice cream and candy store. She draws $54,000 and invests $61,000 of savings. She owns 65%, reflecting her cash and her full-time work.
Where the team is thin
Dana has not signed a lease or ordered a fountain build-out before. The plan covers this with a fixed spring inventory-order calendar, an equipment service contract and a lease review by a lawyer.
If Dana is out
The fountain and floor lead can run the store for a week or two, and the assistant manager joins in month 37 to take over ordering.
Family investors
Family members hold 35% for $80,000. They are not in the store. They receive distributions only from Year 3 and only below net income, and Dana holds an option to buy them out at an independently valued price after Year 5.
The bank
The loan carries a personal guarantee from Dana, quarterly accounts and limits on distributions in a weak year. A $30,000 seasonal credit line from the same bank is part of the plan and is not drawn in the base case. The seven-year loan sits inside the ten years of lease and option.
Grove Mead in numbers
The tables below come from a single five-year model with monthly detail for 2027 and one column per year after that. Funding and the counter and shelf figures come first so each result traces back to a stated input.
Equipment, inventory and who funds them
| Use of funds | Amount |
|---|---|
| Opening inventory: groceries, camp and trail goods, local products, syrups, dairy and cones | $32,000 |
| Fountain back bar, dipping cabinets, shake and blender stations, reach-in coolers, ice machine | $58,000 |
| Retro build-out: counter, stools, tile, lighting, signage and shelving | $48,000 |
| Point of sale, menu boards, security cameras | $8,000 |
| Business license, food service license and plan review, signage permit | $2,600 |
| Legal: LLC, investor agreement, lease review | $5,500 |
| Rent for the final build-out months, hiring and training | $18,000 |
| Launch: website, signage, hotel and rental-company introductions | $9,000 |
| Cash reserve for the first winter and the inventory build before summer | $54,900 |
| Total uses | $236,000 |
| Source of funds | Amount |
|---|---|
| Dana Whitcomb's savings | $61,000 |
| Family investors (35% of the company) | $80,000 |
| Community bank term loan | $95,000 |
| Total sources | $236,000 |
The company raises $236,000. Dana Whitcomb puts in $61,000 of savings, family investors put in $80,000 for 35% of the company, and a community bank lends $95,000 over seven years at 9.75%, interest-only for the first 12 months. Dana holds 65% for her cash and her full-time work in the store. The lease and build-out start in the fall before opening, so the equity and loan close then; the model books all funds in month 1. The bank takes a personal guarantee from Dana and a lien on the fountain equipment, and whether the family investors also guarantee is a point for the loan negotiation. The rate is an illustration for this example, not a quoted rate. Equipment and build-out come to $114,000, opening inventory to $32,000 and expensed start-up costs to $35,100, of which $18,000 is about three months of rent before opening ($12,600) plus $5,400 of hiring and training. The remaining $54,900 is a reserve. Month-end cash in Year 1 bottoms out at about $19,700 in April after setting aside three days of sales for receivables, following the store loses money through winter and buys stock for summer. In the 20% downside case the low is about $10,700 on the same basis in May, so the reserve is sized to the trough and not to the year-end balance, which falls at the seasonal high.
Counter, shelf and lease figures
- The fountain counter rings 25,500 tickets in Year 1 at an average of $11.20, about 1.5 items a ticket across fountain sodas, floats, cones and shakes. July runs at about 116 tickets a day and January at about 29. Tickets rise to 34,500 by Year 5.
- Packaged grocery and convenience rings 20,500 tickets at $12.60: drinks, ice, snacks, sunscreen, batteries and camp supplies. That is about 56 tickets a day across the year, 78 in July and 34 in January. The store sells no tobacco, lottery or alcohol, so grocery is a traffic line at a 35% margin and the fountain is the profit engine.
- Local goods and gifts ring 4,200 tickets at $31, and group, lodging and event orders number 150 at $195: snack coolers for guided trips, welcome baskets for vacation rentals and ice cream socials for lodging guests. All local goods are bought at wholesale, with no consignment. Prices rise 3% a year from Year 2.
- Cost of goods runs at 27% on the counter, 65% on grocery, 50% on local goods and 44% on group orders. Blended gross margin is 54.1% in every year; the 65% grocery cost relies on buying part of the shelf from a wholesale club and local distributors rather than one convenience distributor. Cups, cones and napkins sit inside the counter figure. A 27% cost on a $11.20 ticket leaves about $8.18 of gross profit a ticket.
- Seasonality is built into Year 1 by month. June to August bring 36% of Year 1 revenue and January and February 8.6%. July revenue is about three times January. Cold weather cuts cone and float sales more than it cuts grocery, and the plan treats winter visitors as a modest lift. Years 2 to 5 are shown as annual totals only, so spring troughs after Year 1 are not shown.
- The store opens seven days a week, 8 a.m. to 8 p.m. from May to September and 10 a.m. to 6 p.m. the rest of the year, with no winter evening hours. Two summer crew work about 30 hours a week each at about $17.30 an hour, which is $2,250 a month each for five months. The $27,000 in the staffing table is that monthly rate annualized.
- Payroll adds 27% to wages for payroll taxes, workers' compensation, paid leave and health contributions (15% for part-time roles). Wages are launch rates, and 3% pay raises are charged as a separate line from Year 2. The lead is paid $44,000 and the assistant manager $48,000, both set above the Oregon regional minimum wage, which changes each July. Dana draws $54,000.
- Rent covers 1,800 square feet at about $28 a square foot a year including shared charges, rising 3% a year under a five-year lease with a five-year option; the build-out is depreciated over ten years to match the lease and option together. No free-rent period or landlord allowance is modeled. Refrigeration makes utilities heavy at $13,500 in Year 1. Equipment service and replacement are budgeted as running costs.
- Card fees run at 2.6% of counter, grocery and goods sales, and spoilage, melt and shrink at 1.8%. Supplier balances average about 9 days: the plan expects dairy and syrup distributors to allow two to three weeks if they agree terms, while grocery and local producers are paid on delivery. Sales settle in about 3 days across all sales, a simplification that treats lodging accounts as near-cash.
- Income tax is modeled at the 21% federal corporate rate plus a 6.6% state planning rate, as a cautious convention. An LLC with owner-operators would usually pass profit through to the owners' returns, which would change the tax line, so the election belongs with a CPA. The Oregon rate and minimum tax are set by the Oregon Department of Revenue and may change. The model computes tax on trading profit before the $35,100 of start-up costs and does not carry those costs forward as a loss, so Year 1 shows tax despite a loss after start-up costs; a CPA may treat them differently. Sales pass $1 million in Year 4, which may bring the Oregon Corporate Activity Tax threshold into play; a CPA can check it against the current rule.
- Owner distributions of $15,000, $30,000 and $45,000 in Years 3 to 5 stay below net income and are split 65/35 between Dana and the family investors. The operating agreement gives Dana an option to buy out the family investors at an independently valued price after Year 5. The bank loan runs its full term, and the loan agreement is expected to restrict distributions in a weak year. A $30,000 seasonal credit line from the same bank is part of the plan and is not drawn in the base case.
Revenue by counter
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Fountain and ice cream counter | $285,600 | $334,544 | $374,286 | $406,320 | $434,897 |
| Packaged grocery and convenience | $258,300 | $304,983 | $334,184 | $356,601 | $374,389 |
| Local goods and gifts | $130,200 | $166,036 | $194,039 | $223,572 | $251,214 |
| Group, lodging and event orders | $29,250 | $44,187 | $55,856 | $63,925 | $70,232 |
| Total revenue | $703,350 | $849,750 | $958,365 | $1,050,418 | $1,130,732 |
| Growth on prior year | – | 21% | 13% | 10% | 8% |
The fountain counter is 41% of Year 1 revenue and 38% of Year 5, and earns about 73% gross margin against 35% on grocery. Grocery is 37% of Year 1 revenue and brings in the people who would not stop for a milkshake. Local goods grow fastest of the retail lines, from 19% of revenue to 22%, and group orders from 4% to 6% on a small base. Growth is 21% in Year 2 as the first full season repeats, then slows to 13%, 10% and 8%.
Twelve months, January to December
| Month | Fountain and ice cream counter | Packaged grocery and convenience | Local goods and gifts | Group, lodging and event orders | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $9,951 | $13,164 | $6,069 | $907 | $30,091 | ($9,997) |
| Feb 2027 | $10,252 | $13,562 | $5,731 | $934 | $30,479 | ($9,787) |
| Mar 2027 | $14,071 | $16,109 | $6,973 | $1,322 | $38,475 | ($5,463) |
| Apr 2027 | $17,355 | $17,030 | $7,938 | $1,779 | $44,102 | ($2,419) |
| May 2027 | $22,213 | $20,344 | $10,160 | $2,411 | $55,128 | $3,543 |
| Jun 2027 | $31,594 | $25,161 | $12,566 | $3,521 | $72,842 | $13,123 |
| Jul 2027 | $40,338 | $30,347 | $15,815 | $4,431 | $90,931 | $22,906 |
| Aug 2027 | $39,199 | $30,376 | $15,862 | $4,328 | $89,765 | $22,275 |
| Sep 2027 | $29,600 | $25,683 | $12,827 | $3,194 | $71,304 | $12,291 |
| Oct 2027 | $24,122 | $23,566 | $12,505 | $2,473 | $62,666 | $7,620 |
| Nov 2027 | $21,777 | $21,479 | $11,494 | $1,889 | $56,639 | $4,361 |
| Dec 2027 | $25,128 | $21,479 | $12,260 | $2,061 | $60,928 | $6,680 |
January and February are the trough at about $30,000 of revenue each. Sales climb through spring and peak in July at $90,931, then fall back through the fall with a small lift in December. EBITDA is negative from January to April and positive from May to December, and the four months from January to April lose $27,666 between them. Month-end cash is lowest in April, at about $19,700 once three days of sales are set aside for receivables, after the winter losses and the spring inventory build.
Staffing schedule and hiring
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and owner-operator | $54,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Fountain and floor lead | $44,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Counter attendant, year-round (part time, 26 hours a week) | $23,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Summer counter crew, two people (May to September) | $27,000 | Month 5 | – | – | – | – | – |
| Second year-round counter attendant (part time) | $23,000 | Month 25 | – | – | 0.5 | 0.5 | 0.5 |
| Assistant manager and buyer | $48,000 | Month 37 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $176,785 | $176,785 | $203,235 | $264,195 | $264,195 |
Dana, a fountain and floor lead and a part-time attendant open the doors, about 100 to 110 paid hours a week across a 56 to 84 hour open week. Two summer crew work May to September every year, and the table shows them as zero at year end because December is outside the season. A second part-time attendant joins in month 25, in January ahead of the third summer, and a full-time assistant manager and buyer in month 37, after a Year 3 that reaches $958,365 of revenue, so Dana can step off the floor and into ordering and the lodging accounts. Part-time roles show as 0.5 and carry the salary actually paid, although the attendants work 25 to 26 hours a week, so true headcount is a little higher than shown. Headcount at year end is 2.5 in Years 1 and 2, 3 in Year 3 and 4 from Year 4. Revenue per full-time equivalent uses year-end headcount, so it excludes the summer crew and overstates productivity in the peak months.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $703,350 | $849,750 | $958,365 | $1,050,418 | $1,130,732 |
| Cost of goods (ice cream, syrups, dairy, cups and cones, wholesale grocery and gift inventory) | ($322,977) | ($390,204) | ($440,079) | ($482,350) | ($519,230) |
| Gross profit | $380,373 | $459,546 | $518,286 | $568,068 | $611,502 |
| Payroll incl. on-costs | ($176,785) | ($176,785) | ($203,235) | ($264,195) | ($264,195) |
| Rent | ($50,400) | ($51,900) | ($53,500) | ($55,100) | ($56,700) |
| Utilities | ($13,500) | ($14,000) | ($14,400) | ($14,800) | ($15,300) |
| Marketing | ($17,000) | ($16,000) | ($16,000) | ($17,000) | ($17,000) |
| Insurance | ($9,500) | ($10,200) | ($10,800) | ($11,400) | ($11,900) |
| Professional fees | ($5,500) | ($5,800) | ($6,200) | ($6,500) | ($6,800) |
| Software subscriptions | ($4,200) | ($4,500) | ($4,800) | ($5,000) | ($5,200) |
| Card processing fees (2.6% of counter, grocery and goods sales) | ($17,527) | ($20,945) | ($23,465) | ($25,649) | ($27,573) |
| Spoilage, melt and shrink (1.8% of counter, grocery and goods sales) | ($12,134) | ($14,500) | ($16,245) | ($17,757) | ($19,089) |
| Equipment service and repairs (fountain, freezers, ice machine) | ($3,000) | ($4,500) | ($5,500) | ($6,000) | ($6,500) |
| License renewals, health inspections and food-handler cards | ($1,800) | ($1,900) | ($2,000) | ($2,100) | ($2,200) |
| Cleaning, uniforms, phones and small supplies | ($3,600) | ($3,900) | ($4,200) | ($4,400) | ($4,600) |
| Fixture refresh and equipment replacement | $0 | ($2,000) | ($3,000) | ($4,000) | ($5,000) |
| Bad debt allowance (lodging and event accounts) | ($293) | ($442) | ($559) | ($639) | ($702) |
| Annual pay raises (3% a year) | $0 | ($5,304) | ($12,377) | ($24,498) | ($33,159) |
| EBITDA | $65,134 | $126,870 | $142,005 | $109,030 | $135,584 |
| Depreciation | ($14,686) | ($14,686) | ($14,686) | ($14,686) | ($14,686) |
| Interest | ($9,262) | ($8,725) | ($7,475) | ($6,098) | ($4,581) |
| Income tax | ($10,796) | ($27,121) | ($31,416) | ($23,133) | ($30,491) |
| Net income before start-up costs | $30,389 | $76,339 | $88,428 | $65,113 | $85,826 |
| Start-up costs expensed at opening (legal, licensing, rent before opening, launch) | ($35,100) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($4,711) | $76,339 | $88,428 | $65,113 | $85,826 |
Year 1 earns $30,389 before start-up costs and loses $4,711 after them. EBITDA is $65,134, less $14,686 of depreciation, $9,262 of interest and $10,796 of income tax. Year 2 earns $76,339 once the first full season repeats, after $27,121 of income tax, and Year 3 earns $88,428, a 9.2% net margin, the widest of the five years. Year 4 falls to $65,113, a 6.2% net margin, on that first full year of salary and accumulated pay raises of $24,498, and Year 5 recovers to $85,826, a 7.6% margin. A 7.6% margin is what this plan reaches with a full-time assistant manager. Payroll including pay raises runs at 25% of revenue in Year 1, 21% in Year 2, 22% in Year 3, 27% in Year 4 and 26% in Year 5.
Cash through the seasons
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($32,761) | $88,790 | $101,456 | $78,394 | $99,285 |
| Fountain equipment, build-out and point of sale | ($114,000) | $0 | $0 | $0 | $0 |
| Funding received | $236,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($12,251) | ($13,501) | ($14,878) | ($16,395) |
| Owner distributions | $0 | $0 | ($15,000) | ($30,000) | ($45,000) |
| Net change in cash | $89,239 | $76,539 | $72,955 | $33,516 | $37,891 |
| Closing cash | $89,239 | $165,777 | $238,732 | $272,248 | $310,139 |
Operations use $32,761 of cash in Year 1: $44,919 goes into inventory (the $32,000 opening order plus $12,919 of stock growth) and $35,100 into start-up costs, and trading before those two items contributes about $47,300. Closing cash is $89,239 at the end of Year 1 and above $165,000 from Year 2. These are year-end balances, which fall at the seasonal high, so Years 2 to 5 would dip below them each spring; only Year 1 is shown monthly. Principal repayments start in month 13. Distributions begin in Year 3 and reach $45,000 in Year 5. Cash still builds to $310,139 by Year 5; the owners could pay more out or prepay the loan, a choice the plan leaves open.
Balance sheet and inventory on hand
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $89,239 | $165,777 | $238,732 | $272,248 | $310,139 |
| Accounts receivable | $5,781 | $6,984 | $7,877 | $8,634 | $9,294 |
| Inventory on hand (grocery, gifts, ice cream and fountain supplies) | $44,919 | $47,608 | $49,603 | $51,294 | $52,769 |
| Fountain equipment, build-out and point of sale (net) | $99,314 | $84,629 | $69,943 | $55,257 | $40,571 |
| Total assets | $239,253 | $304,998 | $366,155 | $387,433 | $412,773 |
| Supplier balances (accounts payable) | $7,964 | $9,621 | $10,851 | $11,894 | $12,803 |
| Community bank loan | $95,000 | $82,749 | $69,248 | $54,370 | $37,976 |
| Paid-in capital | $141,000 | $141,000 | $141,000 | $141,000 | $141,000 |
| Retained earnings | ($4,711) | $71,628 | $145,056 | $180,169 | $220,995 |
| Total liabilities and equity | $239,253 | $304,998 | $366,155 | $387,433 | $412,773 |
Break-even and cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | 9.3% | 14.9% | 14.8% | 10.4% | 12.0% |
| Net margin (before start-up costs) | 4.3% | 9.0% | 9.2% | 6.2% | 7.6% |
| Payroll incl. pay raises as share of revenue | 25% | 21% | 22% | 27% | 26% |
| Revenue per full-time equivalent at year end | $281,340 | $339,900 | $319,455 | $262,605 | $282,683 |
| Average monthly revenue | $58,613 | $70,813 | $79,864 | $87,535 | $94,228 |
| Monthly revenue needed to cover operating costs | $48,576 | $51,263 | $57,982 | $70,734 | $73,335 |
| Debt service cover (EBITDA / interest + principal) | 7.0x | 6.0x | 6.8x | 5.2x | 6.5x |
Year 1 averages $58,613 a month against $48,576 needed to cover operating costs, before interest and depreciation. Debt service cover is 7.0x in Year 1 while the loan is interest-only, 6.0x in Year 2 when principal starts, and does not fall below 5.2x, the Year 4 low after the assistant manager arrives. Inventory is $44,919 at the end of Year 1, $49,603 at the end of Year 3 and $52,769 at the end of Year 5, which is 7.2, 8.9 and 9.8 turns on year-end inventory. Those turns rise because the $32,000 opening order is a fixed base and only 4% of each year's cost of goods is added to it.
Sales 20% under plan in every year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $562,680 | $679,800 | $766,692 | $840,334 | $904,586 |
| Net income before start-up costs | ($11,782) | $29,693 | $41,337 | $25,921 | $16,432 |
| Net income after start-up costs | ($46,882) | $29,693 | $41,337 | $25,921 | $16,432 |
| Closing cash | $51,799 | $82,676 | $124,270 | $149,213 | $163,251 |
This case cuts every month of every year by 20%, which is a harsher case than one weak summer (a 20% summer shortfall is about a 7% annual hit). The response: the second part-time attendant starts six months later, in month 31, the assistant manager starts six months later, in month 43, marketing falls 20%, Dana takes a 20% pay cut, inventory is held at 3% of cost of goods instead of 4% (a lever worth only a few thousand dollars a year) and no distributions are paid. Card fees, spoilage and bad debt fall with sales. The store loses money in Year 1 and earns a profit from Year 2, and net income is below the base case in every year. Year-end cash stays positive, with a lowest figure of $51,799 at the end of Year 1. Month-end cash in Year 1 bottoms out at about $10,700 in May (after three days of receivables), the tightest point in the case, and Year 1 EBITDA covers interest about 1.3 times. Year-end is the seasonal high and spring balances after Year 1 are not modeled; the lowest Year 1 point is expected to be the tightest, which this plan cannot show without monthly detail for later years, and the $30,000 seasonal credit line the plan arranges with the bank is a backstop that the case does not draw. Equity ends Year 1 at $94,118.
Sources
- Ticket counts, prices, margins and seasonality are invented figures for this example business. No market statistic is quoted.
- Internal Revenue Code section 11: the federal corporate income tax rate is a flat 21%, the rate the model applies.
- Oregon Department of Revenue, corporate excise tax and minimum tax: the 6.6% state rate is a planning figure and the current rate may differ.
- Oregon Bureau of Labor and Industries, minimum wage: sets rates by region and adjusts them each July. No rate is quoted.
- State and county food-license authorities: the issuing agency for a combined fountain and packaged-food store depends on the mix of prepared and packaged food. The plan names no agency or fee.
- Oregon Department of Revenue, Corporate Activity Tax: applies above a commercial-activity threshold that is not quoted here. Year 4 sales pass $1 million.
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