How to create a detailed café financial forecast

First, build your financial forecast spreadsheet

To create your café's financial forecast, you need to build a spreadsheet that projects all your potential income and expenses for at least the first 12-24 months. This involves realistically estimating your sales based on customer numbers and average spend, and then subtracting all your costs—from coffee beans and rent to staff wages and marketing. This forecast is the most critical part of your business plan, essential for securing funding and proving your café is a viable idea.

Why your forecast is so important

A detailed financial forecast does more than just predict profit. It's a vital management tool that helps you:

• Prove viability: It shows whether your café idea can actually make money.
• Secure funding: Banks and investors will not consider funding you without a thorough forecast.
• Set goals: It provides clear revenue targets and spending budgets to keep you on track.
• Make decisions: It helps you decide on pricing, staffing levels, and when to invest in new equipment.

Step 1: Forecast your revenue

Forecasting revenue can feel like guesswork, but you can create a solid estimate by breaking it down. The standard model for a café is:

(Number of Customers x Average Spend) = Total Revenue

Start by estimating your daily customers, often called 'covers'. Be realistic and consider different trading patterns.

• Weekdays vs. Weekends: You will likely be busier on a Saturday than a Tuesday morning.
• Time of Day: Will you have a morning coffee rush, a steady lunch trade, or an afternoon lull?
• Location: A café near a train station has a different pattern to one in a quiet residential street.

Next, estimate the 'average spend per head'. What do you expect the average customer to spend? A simple coffee might be £3.50, but someone having coffee and a cake could be £7, while a lunch customer might spend £12. Find a sensible average.

Top Tip: It's always better to be conservative. Underestimate your revenue and overestimate your costs. A business that is profitable based on cautious numbers is a strong business.

Example Revenue Calculation

Let's imagine you estimate 60 customers on a weekday with an average spend of £8, and 90 on a weekend day with an average spend of £10.

Period	Calculation	Monthly Revenue
Weekdays (22 per month)	60 customers x £8 spend x 22 days	£10,560
Weekends (8 per month)	90 customers x £10 spend x 8 days	£7,200
Total Estimated Revenue		£17,760

Step 2: Project your costs

This is where you must be incredibly thorough. Missed costs can ruin an otherwise good forecast. Split them into three main categories.

1. Cost of Goods Sold (COGS)

These are the direct costs of the products you sell. For a café, this includes coffee beans, milk, bread, cakes, and all other food and drink ingredients. This is usually calculated as a percentage of your revenue. A typical COGS for a café is around 25-35%.

Example: If your monthly revenue is £17,760 and your COGS is 30%, your cost for ingredients will be £5,328.

2. Fixed Costs (Overheads)

These are the expenses you have to pay every month, regardless of how many customers you serve. They are predictable and should be easy to find.

• Rent & Business Rates: The cost of your premises.
• Staff Salaries: For permanent, salaried staff (e.g., a manager).
• Loan Repayments: If you have a business loan.
• Insurance: Public liability, employers' liability, etc.
• Software Subscriptions: For your till system, accounting software, etc.
• Utilities Standing Charges: The fixed part of your energy bills.

3. Variable Costs

These costs fluctuate depending on how busy you are. They go up as sales increase.

• Hourly Staff Wages: For part-time baristas and front-of-house staff. This is often your biggest single cost after rent.
• Utilities Usage: The cost of the electricity, gas, and water you use.
• Marketing & Advertising: Your budget for social media ads, flyers, etc.
• Packaging: Takeaway cups, lids, bags, and boxes.
• Waste Collection: Your commercial waste contract.
• Contingency Fund: Always add a buffer of 5-10% of your total costs for unexpected expenses, like an emergency plumber or broken equipment.

Step 3: Calculate your profit

Now you can put it all together to see your projected profit (or loss). The calculation is simple:

Total Revenue - (COGS + Fixed Costs + Variable Costs) = Profit / Loss

Lay this out month-by-month in your spreadsheet. This will show you how your profitability changes and highlight any months where cash might be tight, especially in the early days before you have built a regular customer base.