5-year projection (See Week 6 Lesson for details) for your business. It is critical to include units, dollars, and assumptions in your projection.  the sales projection in a narrative that includes the description of the units you plan to sell, the services (amount of them) you plan to provide, and your growth projections of these numbers. Document all assumptions and provide external source information for all assertions.

Include a graphical representation that shows when your company will start making a profit and the break-even point.

5-year projection plan for Bagel Bliss Café 

 

As part of the business plan preparation process, a financial projection is important. This stage of the business plan involves determining the total project cost, choosing financing sources, and presented here are the first five years' financial projections for the company, including growth, break-even points, gross profit margins, and net income. The bakery market is expected to grow at a CAGR of 2.6% from 2021 to 2028. (Mordor Intelligence, 2021). According to the market size of the doughnut store sector in the United States reached 7.26 billion U.S. dollars in 2021, reflecting an increase over the previous year's size of 7.16 billion U.S. dollars. According to Statistica, the sector was forecast to grow to 7.53 billion in 2022.  This statistic shows the brands of donuts / doughnuts eaten most often in the United States in 2020. The data has been calculated by Statista based on the U.S. Census data and Simmons National Consumer Survey (NHCS). According to this statistic, 63.83 million Americans consumed Dunkin' Donuts in 2020. (Published by Statista Research Department & 23, 2022) I have analyzed the market demographics, so my financial goals for Bagel Bliss are discussed in detail of the costs of supplies, bills, and salaries that are necessary to operate Bagel Bliss for a 5-year projection. Apart from rent, I also need to pay for other utilities & bills like electricity, gas, water and internet service which would cost somewhere around $1,000 - $2,000. Hence, the total rent and bills which I will end up paying would be around $4,750 - $5,750 per month.  

 So, assuming I hire 5 employees with myself as the manager, I should expect to spend around $15,000 - 20,000 per month on salaries (including taxes and benefits). Below are the financial projections for Bagel Bliss. These projections are based on a 1250 sq feet building and 5 employees. Disclaimer: These projections are subject to change and are based on market conditions and other factors. 

 

Income Statement 

		FY 1	FY 2	FY 3	FY4	FY5
Revenues
	Total Revenues	$162,000	$270,000	$396,000	$540,000	$702,000
Expenses & Costs
	Cost of goods sold	$64,800	$142,871	$157,501	$173,629	$191,409
	Lease	$50,000	$51,250	$52,531	$53,845	$55,191
	Marketing	$10,000	$8,000	$8,000	$8,000	$8,000
	Salaries	$157,015	$214,030	$235,968	$247,766	$260,155
	Initial expenditure	$10,000	$0	$0	$0	$0
	Total Expenses & Costs	$291,815	$416,151	$454,000	$483,240	$514,754

These assumptions will be used to determine Bagel Bliss Cafe's 5-year growth. 

General Assumptions	Year 1	Year 2	Year 3	Year 4	Year 5
Glazed	40%	38%	36%	33%	30%
Specialty donuts	25%	27%	28%	28%	30%
Filled	20%	21%	22%	23%	25%
Cake	10%	9%	9%	8%	7%
Assorted Bagels	5%	5%	6%	7%	8%

Additional assumptions include no commissions and Returns/Allowances of 3%. The COGS for specialty drinks is 35%; for other drinks, it is 70%; for food is 5%; and for other items, it is 85%. During the first year, total gross profits are projected to increase from $ 13,500 in month one to $15,531 in month twelve. The five-year period's total gross profit will increase from $162,000 in 2023 to $1,758,000 by 2028. 

SECTION J. SALES FORECAST  

Bagel Bliss will have a sales forecast of 100 donuts/bagels per day with an average price of $2-$2.50 and 100 specialty and coffee-based drinks per day with an average price of $5.50 per drink. I will forecast my specialty drinks from my other drinks, donuts, and bagels using my (POS) system to track sales data and identify customer behavior trends.  Bagel Bliss's goals would give total net revenues of $450 daily. If Bagel Bliss serves 50 people daily, it will need to sell about $2.50 per person per day for the first year to generate $162,000 in gross revenues. With inflation on the rise, prices can increase up to $5.00/per/person in 2-5 years. Dunkin' Brands had a net income of approximately 242.02 million U.S. dollars in 2019. As of 2018, the company had 1.32 billion U.S. dollars in revenue and approximately 60 locations worldwide.  According to Forbes, Dunkin' Brands hopes to achieve a 6% growth in Dunkin' Donuts stores in the U.S. and a comparable store growth of 2-4% in the region (Team 2019). To compete with our competitors, Bagel Bliss plans to grow by using Facebook, Instagram, and Twitter for marketing, offering discounts and promotions to attract new customers, and ensuring that my products are fresh and delicious and that we use high-quality ingredients. 

The following outlines the 5-year projection of the unit revenue for Bagel Bliss and the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan. This projection assumes that the business will grow at a rate of 10% per year, 50 customers per day, average order total of $10.00 and yearly lease- $44,520.   

Year 1 

Units: 100 bagels and 100 donuts per day 

Services: Breakfast and lunch 

Average price per bagel: $2.50 

Average price per donut: $2.00 

Average number of customers per day: 50 

Average revenue per day: $250 + $200 = $450 

Average revenue per month: $450 * 30 = $13,500 

Total revenue for the year: $13,500 * 12 = $162,000 

Year 2 

Units: 150 bagels and 150 donuts per day 

Services: Breakfast, lunch, and catering services 

Average price per bagel: $2.75 

Average price per donut: $2.25 

Average number of customers per day: 75 

Average revenue per day: $412.50 + $337.50 = $750 

Average revenue per month: $750 * 30 = $22,500 

Total revenue for the year: $22,500 * 12 = $270,000 

Year 3 

Units: 200 bagels and 200 donuts per day 

Services: Breakfast, lunch, catering services, and online store 

Average price per bagel: $3.00 

Average price per donut: $2.50 

Average number of customers per day: 100 

Average revenue per day: $600 + $500 = $1,100 

Average revenue per month: $1,100 * 30 = $33,000 

Total revenue for the year: $33,000 * 12 = $396,000 

Year 4 

Units: 250 bagels and 250 donuts per day 

Services: Breakfast, lunch, catering services, online store, and food truck services 

Average price per bagel: $3.25 

Average price per donut: $2.75 

Average number of customers per day: 125 

Average revenue per day: $812.50 + $687.50 = $1,500 

Average revenue per month: $1,500 * 30 = $45,000 

Total revenue for the year: $45,000 * 12 = $540,000 

Year 5 

Units: 300 bagels and 300 donuts per day 

Services: Breakfast, lunch, catering services, online store, food truck services, and franchise opportunities 

Average price per bagel: $3.50 

Average price per donut: $3.00 

Average number of customers per day: 150 

Average revenue per day: $1,050 + $900 = $1,950 

Average revenue per month: $1,950 * 30 = $58,500 

Average revenue per year: $ 58000*12= $702,000 

Total revenue for the year (assuming two franchises): ($58,500 * 12) + ($58,500 * 2 *12) = $1,758,000 

 

Bagel Bliss sales forecast and breakeven analysis  

Sales Forecast 

Units: 100 bagels and 100 donuts per day 

Services: Breakfast and lunch 

Average price per bagel: $2.50 

Average price per donut: $2.00 

Average number of customers per day: 50 

Average revenue per day: $250 + $200 = $450 

Average revenue per month: $450 * 30 = $13,500 

Total revenue for the year: $13,500 * 12 = $162,000 

Breakeven Analysis 

Fixed Costs: 

Rent: $2,000/month 

Utilities: $500/month 

Salaries: $3,000/month 

Insurance: $1,000/month 

Total fixed costs: $6,500/month 

Variable Costs: 

Cost of goods sold (COGS): 40% of sales revenue ($64,800/year) 

Total variable costs: $64,800/year 

Breakeven point: 

Breakeven point in units = Fixed costs / (Average price per unit - Variable cost per unit) 

Breakeven point in units = $6,500 / ($2.25 - $1.62) 

Breakeven point in units = 5,200 units/year or 14 units/day 

 

 

Financial Summary 

Our strong value proposition, targeted customer segments, and multiple channels for reaching our target audience position us well for success in the highly competitive bakery industry. Our commitment to high-quality custom drinks, donuts, and bagels, excellent customer service, and attention to detail make us confident that we can become the premier bakery in Cleveland, Ohio for all special events.