The example below uses the Base scenario of the full-service restaurant model: one alcohol-free U.S. restaurant with 80 seats, opening in March 2027, with a January 2027–December 2031 forecast. Its values are planning assumptions and calculated results for that case. They are not a national opening-cost average or a recommended reserve for every restaurant.
What does your opening budget include?
Start by naming the budget’s boundary. A construction-and-equipment total may exclude pre-opening payroll, marketing, financing fees, and the cash needed while sales develop. The SBA recommends separating one-time expenses from monthly expenses when estimating startup funding. That separation helps reveal both the amount and timing of the requirement. SBA’s startup-cost guidance.
In this case, initial capital expenditure, or CAPEX, is $442,200. The model assumes a reusable fitted shell and includes fitout, equipment, fixtures, installation allowances, and a spent construction contingency. It also includes operating expenses and working-capital timing elsewhere. Initial CAPEX is therefore a defined use of money within the plan, rather than the total funding needed to carry the business through its opening period.
On a narrow screen, scroll within the table to read all columns.
| Category | Case treatment | How to read it |
|---|---|---|
| Initial capital spending | $442,200 in January–February 2027. | Includes the $40,200 build contingency. |
| Pre-opening and operating expenses | Dated expense and payroll schedules, including costs before March opening. | Already flow into the cash calculation; do not add them again to its shortfall. |
| Working capital | Two receivable days, seven inventory days, and zero payable days. | Cash timing assumptions within the forecast. |
| Retained cash target | $90,000 at the projected low point. | An additional chosen liquidity target, not a spent budget line. |
| Later replacement spending | $15,000 in January 2030. | Included in the five-year cash forecast, outside initial CAPEX. |
The table is a classification of cash needs, not a set of amounts to add together. Several rows feed the same forecast, and the reserve is a desired remaining balance.
Why contingency and retained cash do different jobs
The model’s $40,200 build contingency equals 10% of $402,000 of initial capital uses. It is scheduled as spending, bringing total initial CAPEX to $442,200. In that calculation, the contingency money leaves the business.
The $90,000 reserve target has a different job: it is the amount the funding calculation seeks to leave available at the forecast’s lowest cash point. It is an analytical selection for this case. The evidence does not establish it as a restaurant industry standard or as a fixed number of months of expenses.
When preparing your own plan, state which uncertainty each allowance addresses. A construction allowance addresses the project scope and spending estimate. A retained reserve provides room around the modeled cash path. If actual fitout costs exceed the allowance, the cash path changes and the funding requirement needs recalculation.
Find the cash trough before sizing equity
The cash trough is the lowest balance across the forecast months under a specified funding treatment. In this case, the calculation includes the selected $200,000 loan and its debt service, while excluding owner equity. That produces a low point of −$426,186 in June 2027.
This is a hypothetical balance used to size the equity input. It already incorporates operating losses, interest, working capital, and the scheduled spending. Adding those items again would duplicate uses of cash. Adding the loan again would duplicate a funding source.
The model then adds enough equity to cover that shortfall and preserve the selected reserve, rounding the contribution upward to the next $1,000.
On a narrow screen, scroll within the table to read all columns.
| Step | Amount or calculation | Meaning |
|---|---|---|
| Cash trough before equity | −$426,186 | June 2027; loan and debt service already included. |
| Cover shortfall and target reserve | $426,186 + $90,000 = $516,186 | Equity requirement before rounding. |
| Round equity upward | $517,000 | Next whole $1,000. |
| Funded minimum cash | −$426,186 + $517,000 = $90,814 | Projected remaining cash in June 2027. |
| Total January funding | $517,000 equity + $200,000 debt = $717,000 | Total sources contributed at the start of this case. |
The $814 above the target comes from rounding. It is not an extra contingency assumption. Likewise, the $717,000 total is the financing selected for this specific operating case; it should not become a generic price tag for opening an 80-seat restaurant.
Read the months between funding and recovery
- January 2027: equity and debt arrive; premises, administrative, and early staffing costs begin.
- March 2027: the restaurant opens and guest revenue begins under the assumed ramp.
- June 2027: projected funded cash reaches its minimum of $90,814.
- December 2027: projected year-end cash is $153,956.
The year-end balance alone would hide the lower balance reached earlier. A review should identify the low month, what payments cause it, and whether the expected funding arrives before those payments. An annual total cannot answer those timing questions.
Keep financing visible as a separate source of cash. The SEC distinguishes cash from operating, investing, and financing activities, including borrowing and loan repayment. A loan receipt increases available cash without being customer revenue. SEC’s financial statement guide.
Test whether the reserve survives a different case
The workbook’s Low money scenario produces minimum cash of −$220,200 with funding held fixed. That scenario applies revenue at 0.90 times Base, food costs at 1.08 times, and variable expenses, fixed expenses, and payroll at 1.05 times. It changes financial amounts; it does not simulate a different staffing schedule or physical restaurant layout.
The negative result identifies an unresolved financing gap within that scenario. The workbook does not automatically raise extra equity or arrange a credit facility. Increasing the funding input could change the cash balance, but the availability and terms of that money remain separate questions.
For your own case, gather dated premises and equipment quotes, staff start dates, supplier payment terms, loan terms, expected collection delays, and a defensible demand ramp. State the reason for the reserve you choose. Recalculate after changing the opening date, lease requirements, scope of work, or sales case; this model assumes no refundable landlord deposit.
Use the assumptions review guide to keep those selections traceable. Then distinguish cash sufficiency from the later milestones in restaurant break-even versus payback. The restaurant format comparison helps identify whether this seated-service case fits the operation you intend to fund.
