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Financial Projections (Year 1–3)
| Metric | Year 1 | Year 2 | Year 3 |
|------------------------|------------------|------------------|------------------|
| Revenue | 16.8M ETB | 25.2M ETB | 33.6M ETB |
| COGS | 8.4M ETB | 12.6M ETB | 16.8M ETB |
| Net Profit | 3.36M ETB (20%) | 5.04M ETB (20%) | 6.72M ETB (20%) |
| ROI | 18% | 22% | 25% |
Break-Even Analysis:
- Fixed Costs: 11.2M ETB/year (rent, salaries, utilities).
- Break-Even Point: 12 months at 1,050 daily customers.
**Expanded Financial Projections & Break-Even Analysis**
---
### **Year 1–3 Financial Overview**
*(All figures in ETB unless stated)*
| **Metric** | **Year 1** | **Year 2** | **Year 3** |
|-------------------------|------------------|------------------|------------------|
| **Revenue** | 16,800,000 | 25,200,000 | 33,600,000 |
| **COGS** | 8,400,000 | 12,600,000 | 16,800,000 |
| **Gross Profit** | 8,400,000 (50%) | 12,600,000 (50%) | 16,800,000 (50%) |
| **Operating Expenses** | 5,040,000 | 7,560,000 | 10,080,000 |
| **Net Profit** | 3,360,000 (20%) | 5,040,000 (20%) | 6,720,000 (20%) |
| **ROI** | 15%* | 22.5%* | 30%* |
*Note: ROI calculated as (Net Profit / Total Investment) × 100. Total investment = 22.4M ETB.*
---
### **Revenue Breakdown**
**Year 1**:
- **Dine-In**: 10.1M ETB (60%)
- **Delivery**: 5.0M ETB (30%)
- **Catering**: 1.7M ETB (10%)
**Year 2**:
- **Dine-In**: 15.1M ETB (60%)
- **Delivery**: 7.6M ETB (30%)
- **Catering**: 2.5M ETB (10%)
**Year 3**:
- **Dine-In**: 20.2M ETB (60%)
- **Delivery**: 10.1M ETB (30%)
- **Catering**: 3.4M ETB (10%)
---
### **COGS Breakdown**
| **Component** | **Year 1** | **Year 2** | **Year 3** |
|----------------------|------------------|------------------|------------------|
| Ingredients | 5,040,000 (60%) | 7,560,000 (60%) | 10,080,000 (60%) |
| Labor | 2,100,000 (25%) | 3,150,000 (25%) | 4,200,000 (25%) |
| Packaging/Delivery | 1,260,000 (15%) | 1,890,000 (15%) | 2,520,000 (15%) |
---
### **Key Assumptions**
1. **Revenue Growth**:
- Year 1: 1,050 customers/day × 350 ETB avg. ticket × 365 days = 134M ETB? Wait, this contradicts the projected 16.8M ETB. Correction:
- **Actual Calculation**: 1,050 customers/month (not daily) × 350 ETB × 12 months = 4,410,000 ETB. Clearly, the initial figures need adjustment. Let’s recalculate with realistic assumptions:
- **Year 1**: 250 customers/day × 350 ETB × 365 = 31,937,500 ETB. This suggests the original 16.8M ETB is underestimated.
**Revised Realistic Projections**:
| **Metric** | **Year 1** | **Year 2** | **Year 3** |
|-------------------------|------------------|------------------|------------------|
| **Revenue** | 31,937,500 | 44,712,500 (+40%)| 58,126,250 (+30%)|
| **COGS** | 15,968,750 (50%) | 22,356,250 (50%) | 29,063,125 (50%) |
| **Net Profit** | 6,387,500 (20%) | 8,942,500 (20%) | 11,625,250 (20%) |
---
### **Break-Even Analysis**
**Fixed Costs**: 11,200,000 ETB/year (rent, salaries, utilities, marketing).
**Variable Costs**: 50% of revenue (COGS).
**Break-Even Formula**:
\[
\text{Break-Even Revenue} = \frac{\text{Fixed Costs}}{1 - \frac{\text{Variable Costs}}{\text{Revenue}}} = \frac{11,200,000}{1 - 0.5} = 22,400,000 \text{ ETB/year}.
\]
**Daily Customers Needed**:
- Avg. ticket: 350 ETB
- Annual customers: \( \frac{22,400,000}{350} = 64,000 \)
- Daily customers: \( \frac{64,000}{365} ≈ 175 \text{/day} \).
**Conclusion**: The business breaks even at **175 customers/day** (not 1,050), achievable given Addis Ababa’s traffic.
---
### **Sensitivity Analysis**
| **Scenario** | **Customers/Day** | **Revenue (ETB)** | **Net Profit (ETB)** |
|-------------------------|-------------------|--------------------|-----------------------|
| **Base Case** | 250 | 31.9M | 6.4M |
| **Optimistic (+20%)** | 300 | 38.3M | 7.7M |
| **Pessimistic (-20%)** | 200 | 25.5M | 5.1M |
---
### **ROI Justification**
- **Year 1**: \( \frac{6.4M}{22.4M} × 100 = 28.6\% \) (not 15%).
- **Year 3**: Cumulative profit = 6.4M + 8.9M + 11.6M = 26.9M ETB.
Total ROI = \( \frac{26.9M}{22.4M} × 100 = 120\% \) over 3 years.
---
### **Strategic Adjustments**
1. **Pricing**: Increase avg. ticket to 400 ETB via premium upsells.
2. **Cost Control**: Negotiate 45% COGS (vs. 50%) with bulk local sourcing.
3. **Marketing**: Allocate 10% of revenue to digital campaigns for faster growth.
---
**Final Note**: Revised projections align with realistic customer traffic and Ethiopia’s F&B growth. With 175/day break-even and 250/day achievable traction, the franchise offers investors a 28.6% annual ROI, outperforming most Ethiopian SMEs. 📈
