Financing

A. Sources of Capital
The financial management is one of the most important aspect in establishing a food
service. The financial management revolves around (1) planning a budget, (2)
establishing a system of records that provides financial operating data, (3) using records
to prepare financial reports, (4) review and evaluate data from the records and reports by
comparing them with budgeted figures, and (5) knowing what kinds of corrective action
to be taken to keep financial operations in line with pre-established (Payne-Palacio and
Theis, 2010). The funding of the Thinking Cup will be coming from the investors that
will be interested in the business. Five investors are targeted for the project with an
initial investment of 200,000 each to make up a capital fund of PhP 1, 000,000. This
fund, however, will be subjected to sourcing and costing of the project including the
rental, furniture and equipment, pre-operating expenses, recipe standardization, salaries
expenses, marketing expenses, and utilities and other expenses.

B. Project Cost Estimate

Project Cost Estimates

1. Building and Rent 200000
C. Sales
2. Construction Cost 150000
3. Furnitures, Fixtures and Equipment 358,559
4. Pre Opening Expenses 5300
Recipe Standarization 20,000
Working Capital 30000
Miscellaneous
Internet Connection 5,000
Fixed Capital Outlay 928859
Forecast
X

Assumptions:
30 seating capacity
Static/A la Carte menu
250 Operating Days assuming:
 23 Holidays
52 Sundays
20 days Christmas Break
20 days Midyear Break
Total 115 days

D. Annual Income and Expense Statement

Estimated Gross Sales 4425000

Less: 12% Vat 531000
Net Sales 3894000
Less: Food and Beverage Cost 1557600
(40%)
Gross Profit 2336400
Less: Operating Expense
Labor Cost 728000
Overhead Cost
Building and Rent 440000
Water 12000
Electricity 36000
WiFi 36000
Gas
Construction Cost 150000
Equipments 358,559
Food Cost 100,000
Business Permits 5300
Recipe Standarization 20,000
Marketing Cost 10000
Total 1167859
Total Operating Expense 1895859
Net Profit 440541

Included in the income and expenses statement were Labor Cost, Construction and
Renovation Cost, Marketing Cost, Food Cost, and Overhead Cost. Overhead cost includes
equipment and utensils expenses, employees’ uniforms, and permits.

E. Return of Investment and Payback Period

 Return of investment may be computed by dividing Net Profit by the invested capital.
The solution is as follows:

ROI = (Php 440,541 / 1,000,000) x 100%

= 44.05%

The computation resulted to positive results which means that the proposed
business is feasible. For the first year, the business will be able to earn 44.05% of its
invested capital.

Payback period is computed as capital invested divided by net profit.

Payback Period = 1,000,000 / 440,541

= 2.2 years or 26 months ~ / 2 years and 2 months

Based on the computation of payback period, the initial investment of Php

1,000,000 will return after approximately 26 months of operating business with the
assumption that the business will grow and is patronized by the market.

Appendix X. Operating Expense and Labor Cost for One Month

Expense Amount
Internet 5000
Electricity 10000
Water 3000
LPG( Two tanks) 5000
Wages (5 employees) 52000
Food Cost 100000
Total 175000
Appendix X. Furnitures, Equipments and Utensils
Kitchen
Gas range 1 52,000
Refrigerator 1 47,000
Chest Freezer 1 31,000
Blender 2 10,000
Stainless Steel Prep table 2 8,000
Digital Weighing Scale 2 190
Electric Kettle 2 4,400
Chopping Board (set) 8 5,200
Knife Set 2 5,000
Kitchen Knife 6 250
Liquid Measuring Cup 2 270
Solid Measuring Cups 3 140
Measuring Spoons 3 330
Mixing Bowls (set) 3 1,300
Espresso Machine 1 68,000
Non-Stick Pan 2 2,000
Sauce Pot 2 2,000
Griddle 2 22,000
Drink Dispenser 1 27,000
Rice Cooker 1 7,500
Spoons and Forks(Set of 24) 3 384
Glasses (set of 6) 7 750
Cups and Saucers (set of 6) 7 2,093
Dining
Table with 4 chairs 8 5,400
High Stool Chairs 6 1,800
Cash Register 1 5253.75
Air Conditioner 1 28,798
Maintenance/ Sanitation
Two Compartment Sink 1 13,000
Dish Rack 2 3,000
Garbage Cans 3 1,500
Brooms and Mops 2 1,000
Cleaning Materials (Soaps, Rags 1,000
etc.)
Tissues 1,000
Total 358,559
Appendix X. Project Cost Estimate
Expanded ComputationXProject
Cost EstA1:C33imates
Quantity Price
1. Building and Rental 200000
2. Construction Cost 150000
3. Furnitures, Fixtures and
Equipment
Kitchen
Gas range 1 52,000
Refrigerator 1 47,000
Chest Freezer 1 31,000
Blender 2 10,000
Stainless Steel Prep table 2 8,000
Digital Weighing Scale 2 190
Electric Kettle 2 4,400
Chopping Board (set) 8 5,200
Knife Set 2 5,000
Kitchen Knife 6 250
Liquid Measuring Cup 2 270
Solid Measuring Cups 3 140
Measuring Spoons 3 330
Mixing Bowls (set) 3 1,300
Espresso Machine 1 68,000
Non-Stick Pan 2 2,000
Sauce Pot 2 2,000
Griddle 2 22,000
Drink Dispenser 1 27,000
Rice Cooker 1 7,500
Spoons and Forks(Set of 24) 3 384
Glasses (set of 6) 7 750
Cups and Saucers (set of 6) 7 2,093
Dining
Table with 4 chairs 8 5,400
High Stool Chairs 6 1,800
Cash Register 1 5253.75
Air Conditioner 1 28,798
Maintenance/ Sanitation
Two Compartment Sink 1 13,000
Dish Rack 2 3,000
Garbage Cans 3 1,500
Brooms and Mops 2 1,000
Cleaning Materials (Soaps, Rags 1,000
etc.)
Tissues 1,000
Total 358,559
4. Pre Opening Expenses
Permits
Barangay Permit 300
DTI Permit 1,000
Sanitary Permit 1,000
Mayors Permit 1,000
Fire Safety Permit 1,000
Business Permit 1,000
Total 5300
Promotional Material 10,000
Recipe Standarization 20,000
Working Capital 30,000
Miscellaneous
Internet Connection 5,000
Fixed Capital Outlay 958,859