Essence Premium Catering Business Plan — Executive Summary
Contract feeding and events catering in Ekurhuleni: R7.94m deployed, 900,500 meals a year by Year 5, R31.82m revenue at a 6.6% EBITDA margin.
Executive Summary
Jump to section
- Overview & contents
- i. Important Notice
- 1. Executive Summary
- 2. Why Ekurhuleni
- 3. The Market and the Segment Trap
- 4. Contribution by Segment
- 5. SWOT and Competitive Position
- 6. Winning and Keeping Contracts
- 7. Tendering Into the Public Sector
- 8. Unit Economics and Prime Cost
- 9. Working Capital
- 10. The Five-Year Build and Its Gates
- 11. Funding
- 12. People and Production
- 13. Food Safety and Compliance
- 14. Financial Projections
- 15. Break-Even
- 16. Sensitivity and Scenarios
- 17. Risk Management
- 18. Implementation Timeline
- 19. Returns
- 20. Key Performance Indicators
- 21. Key Assumptions
- 22. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 1.1 The proposition
- 1.2 Four things an investor must understand
- 1.3 Headline numbers
- 1.4 Investment conclusion
1.1 The proposition
Essence Premium Catering is a contract catering business in Ekurhuleni, feeding factory and warehouse staff, institutional clients and events from a single production kitchen.
It grows from 308 meals a day to 900 500 meals a year, taking revenue from R3.55 million to R31.82 million at an EBITDA margin of 6.6 per cent. Total capital deployed is R7.94 million, of which the founder contributes R2.15 million.
|
R31.82m Year 5 revenue |
R2.11m Year 5 EBITDA |
6.6% EBITDA margin |
R2.15m Founder cash |
1.2 Four things an investor must understand
- Contract catering is a thin-margin volume business. EBITDA reaches 6.6 per cent by Year 5. That is normal for the sector and it is not a restaurant business. The money is made on repetition, contract retention and food cost control, not on any single meal.
- Prime cost is 72.1 per cent and the selling price is contractually fixed. Unlike a restaurant, a caterer cannot reprice a menu when beef goes up. The contract price is set annually. Food cost discipline is therefore not a management preference; it is the only lever available between price reviews, and one percentage point at Year 5 volume is R318 000.
- Break-even is 86.7 per cent of Year 5 revenue once finance cost is included. The business does not cover its cost base until Year 3. Losing one large contract in Year 4 takes it back below break-even, which is why customer concentration is the risk that matters most.
- Public sector work pays at 68 days against 32 for private clients. The debtor book reaches R3.05 million by Year 5. In catering you buy food weekly and pay wages weekly; you are financing the client either way.
1.3 Headline numbers
|
R’000 unless stated |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Meals served |
80 000 |
189 500 |
455 300 |
687 700 |
900 500 |
|
Meals per operating day |
308 |
729 |
1 751 |
2 645 |
3 463 |
|
Event covers |
1 200 |
2 800 |
4 600 |
6 400 |
8 200 |
|
Government share of meals |
0.0% |
0.0% |
30.5% |
34.4% |
34.8% |
|
Government share of revenue |
0.0% |
0.0% |
6.9% |
8.2% |
8.3% |
|
Revenue |
3 546 |
8 304 |
15 485 |
23 335 |
31 819 |
|
Food and consumables |
(1 577) |
(3 681) |
(6 985) |
(10 462) |
(14 098) |
|
Gross profit |
1 969 |
4 623 |
8 500 |
12 873 |
17 721 |
|
Operating costs |
(1 769) |
(3 631) |
(6 548) |
(9 636) |
(12 767) |
|
Contribution |
200 |
991 |
1 953 |
3 238 |
4 954 |
|
Overhead |
(676) |
(1 134) |
(1 728) |
(2 270) |
(2 844) |
|
EBITDA |
(476) |
(143) |
225 |
968 |
2 110 |
|
EBITDA margin |
-13.4% |
-1.7% |
1.5% |
4.1% |
6.6% |
|
Prime cost |
74.7% |
73.7% |
73.9% |
73.1% |
72.1% |
|
Profit / (loss) after tax |
(931) |
(919) |
(894) |
(460) |
363 |
|
Closing cash |
455 |
633 |
1 403 |
1 429 |
1 211 |
1.4 Investment conclusion
|
Measure |
Value |
Basis |
|---|---|---|
|
Founder equity |
R2.15m |
At inception |
|
Growth equity |
R2.10m |
At the kitchen capacity step in Year 3 |
|
Total equity subscribed |
R4.25m |
|
|
Loans and facilities |
R8.89m |
SEDFA, equipment finance and a contract-backed working capital facility |
|
Year 5 EBITDA |
R2.11m |
At a 6.6% margin |
|
Net debt at Year 5 |
R5.64m |
Loans outstanding less cash |
|
Project IRR at a 6.0x exit |
19.4% |
On free cash flow with a terminal enterprise value |
|
Equity IRR at a 6.0x exit |
13.1% |
On the two subscriptions, a 1.65x multiple |
|
Terminal value as a multiple of revenue |
0.40x |
A conventional basis on which contract caterers transact |
|
Exit multiple at which equity is returned |
4.69x |
Applied to Year 5 EBITDA |
|
First profitable year |
Year 5 |
EBITDA turns positive in Year 3 |