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We then estimated food sales for the first 10 years of operation on the basis of an annual increase in the average receipt per food cover in line with the estimated growth factor and past trends while allowing for the effect of variations in room occupancies.
Beverage revenue has been estimated at 30% per cent food sales which is comparable to actual operating results of similar properties. It is estimated that the lobby lounge will do the majority of beverage volume, but wine and liquor sales with dinner will also account for a significant portion of the beverage revenue.
Total food and beverage expenses have been estimated at 70% per cent for the stabilized occupancy level as appropriate to maintain a good level of quality and service. Food and beverage departmental profit was estimated to increase 5% precent over the 10 year period.
Food and beverage expenses include all those items associated with purchasing, storing, preparing and serving all food and beverage items.
This includes the cost of the items served, salaries, wages and benefits for all food and beverage employees and the cost of all operating supplies.
Telephone
For purposes of our analysis, telephone revenue has been assumed to equal telephone expense and has not been included in our projections.
Undistributed Operating Expenses
The general overhead items which cannot be properly charged to an individual department are classified as undistributed operating expenses. The amounts shown in our estimate reflect the actual circumstances outlined in our study.
Administrative and General:	Expenses	in this category have been projected
at 15% per cent of total sales at the 55% per cent occupancy level (the representative year level). A provision for management fees has been made within administrative and general expenses.
For the 10 year pro forma, these expenses were calculated from the base estimate with an approximate annual increment equal to the estimate growth factor after making an allowance for the estimated level of Occupancy, plus a first-year inefficiency factor of 5% per cent. This category includes expenses for administrative staff, data processing expenses, general insurance, administrative telephone expense, postage, provision for bad debts, trade association dues and other expenses normally associated with this classification.
Management Fees:	A management fee of 3% per cent of total sales was
incorporated into both the representative year statement and the 10 year pro forma.