Financial Elements of Opening a Restaurant

Essay by novaravenUniversity, Bachelor'sB, November 2008

download word file, 12 pages 3.0

This is a 10 page research paper over the financial elements of opening and operating a restaurant. It covers everything one needs to know before jumping into the restaurant business. It relies on 7 sources in APA format.

Financial Elements of Opening a Restaurant

The decision to open your own restaurant is an exciting one. You get to be your

own boss and you do not have to worry about making money for anyone other than

yourself. Being independent has its perks but it also has its costs-literally and

figuratively. One of the most important considerations are the financial aspects as they

will make or break your business. I will go over some of the key elements of financial

risks and rewards that you must be made aware of before making the leap into restaurant


Buying An Existing Restaurant

If you are looking to purchase a restaurant that is currently in operation, it is

imperative you do a financial analysis of the establishment.

If possible, hire an

experienced accountant to assist you with this process. Having a professional who is

familiar with the restaurant business will be able to recognize trends from their past and

help predict their future profit potential. One of the main aspects of your analysis should

be assessing all applicable tax filings that include:

Federal income & unemployment tax reports

State income & sales tax reports

FICA filings

Real and personal property tax reports

Workman's compensation reports

You may also be interested in looking at the balance sheet as they will uncover facts

about the following:

Accounts payable

Accounts receivable

Inventory amount

Inventory turnover

Net worth

Income Statement-This part of your research is of paramount importance as it will tell

you the cash flow you can reasonably expect after making payments on necessary...