Question

TGI Fry-Day's Case Study Fred Franks is an aspiring entrepreneur. His dream is to open a restaurant that deep-fries everything. Deep-fried Twinkies, deep-fried hotdogs, and deep-fried salads were just some of the dishes he wanted to serve. Always a marketing genius, Fred wanted to call his restaurant TGI Fry-Days. He recognized another company was called TGI Fridays, so he made sure to have a very good (and expensive) lawyer Fred had S 100,000 in his bank account, so in order to start TGI Fry-Days, he needed to borrow money. His bank asked for a full business plan with projected startup costs, pro forma income statement, and pro forma cash flow statement (no pro forma balance sheet needed) Complete all the financial statements for Fred (do not need a balance sheet) 1. 2. How much income will Fred make Y1? What advice do you have for Fred about his summer vacation? 3. 4. Fred's favorite two days of the year are Valentine's Day (M2) and Halloween (M10). He wants to hold a special promotion on either Valentines or Halloween. If he has a Valentines Event, he estimates it would cost $ 3,000 in additional marketing and $ 5,000 in new signage, furniture, and equipment. If he has a Halloween Event, he estimates it would cost $ 5,000 in additional marketing and $ 10,000 in new signage, furniture, and equipment. Neither event would bring in more revenue, but Fred doesn't care because he loves both holidays. Which event do you recommend? Valentine's Day, Halloween, or both? Why

Answer 1

Solution:
Proforma Start up cost. These are mainly the start up funds he would be needed:
Kitchen equipment	150000
Furniture and Fixtures	80000
Signage	10000
Initial working capital	10000
Total Initial start up cost	250000
Funded by:
Own Capital	100000
Bank Loan	150000

Please see attached sheet below for detailed solution
Solucion: Proforma Start up cost. These are mainly the start up funds he would be needed: Kitchen erment Furniture and Fixtures Signage Inicial wux king capital Tool Initial start up is. Funded by Own Capitel Derik luar 150000 90:00 10000 10500 250000 LCOSCO 1509CO Proforma Income Statement Month wise Description M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 Total Revenue from sale 30000 40000 40000 55000 55000 55000 20000 60000 6000 6000 6.000 60 595000 Tocal RevenueIA) 20000 4000 40000 55000 550 55000 20000 GOCO SCOnC GOCOD 60000 SCOOC595009 Less: Expenses Wage-25% of revenue Case of goxid: sald-33% Marketing G& A Insurance Lecle 10000 13200 2000 50CO 7500 9900 2900 5200 SCO 2500 6300 1500 2012 15000 1920 4000 5000 10000 1.3202 2009 SCOO 500 2COO 6009 2500 042 13759 18153 2009 SCOO 505 2009 13750 18150 2000 5000 500 2000 6900 1500 1012 500 2000 13750 18:50 2000 SOCO 5CO 2500 Gaco 1500 1012 5000 6600 7000 5000 500 2000 6200 2500 2042 15005 1900 2000 500 500 2009 6C0O 2500 2042 500C 9996 200C 5000 50C 205C 600C 150C 1012 15C0O 19000 2009 5609 500 zoo 6609 2500 2042 500 505C 148759 9896 196353 400C 2009 (Assuming M11 and M17 are: Nov/Dec) 5000 69009 SOCCOD 2050 24009 603672002 150C 18000 1012 12504 Rounded off Res. 6005 2009 600D 1500 2012 6300 15CO 10-12 Interest on loan Depreciacich-see noe 2500 C4Z Tocal Cos: 131 3514242424124249942 49942 49912 2964252842528125284254342 513-12 565€01 Profit X-B) -51-12 212 1212 5058 5058 5058 -26-12 7158 7152 7 158 5158 5152 29396 He will eam $ 29,396 in Y1 Depreciation Callation Monthly Drp 625 Resirkal Value Assuming NI! 150500 20300 100CO 240000 Palance life. 15000 8900 13000 24000D Annial Dep 7500 4000 Kilciell equineril furniture and fixtures Signage Teval 20 20 10 3333333 000 23.13333 12500 10.11.667

Proforma Cash Flow Description M1 M2 M3 M4 958 M5 M6 M7 M8 894 4174 9232 14290 M9 4648 M10 M11 1806 18964 26122 M12 31280 609 Opening Cash balance Add: Own luriding Add: Bank Loan Leess: Ki.chen Equipment Less: Fumiture and Fixtures Less: Signage 0 LCOSCO 150500 -150.00 -20000 -10000 Add: Revenue of the month Add: Depreciation-non cash item -51-12 2012 --212 2012 12 12 1012 5058 2012 5058 2012 5958 1012 -96-12 2012 7158 2012 7 158 1012 7 158 2012 5158 2012 5152 10:12 4900 2001 2000 4900 2009 290 4609 2009 2006 4009 2008 2090 Adjustment of legal fee as paid every 3 months Clessing Cash bilan 1600 25 RB44174 993714790 46.48 11906 1964 261231280 3. Advice on Summer Vacation sold is lower the revenge and here it would be serie Though he is having ana in 7 when he in on sur mer vacation but us che vcristale cost of wings and ta continue with operation in M7 4. Additional Expense on favourite days M2 8900 15000 MLC As he has low cash flow in M2 and therefore it should prefer Halloween day in Mio when he has sufficient cash flow