Streetfire Kitchens Business Plan — Financial Plan

Five-year projections with full income statement, cash flow and balance sheet: revenue to R19.09m and EBITDA to R2.74m.

Financial Plan

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7.1 Basis of preparation
7.2 Income statement
7.3 Fixed costs
7.4 Working capital
7.5 Cash flow
7.6 Balance sheet
7.7 Funding

7.1 Basis of preparation

▪ All figures are in South African Rand and exclude VAT. VAT registration is compulsory above R1 million of turnover, which the venture exceeds in Year 1.

▪ Revenue is built from truck-days, the mix of service types, covers per service and average spend. It is not a growth rate applied to an assumed base.

▪ Each truck trades 282 days a year less 5.5% lost to weather, breakdown and cancellation, giving 266 effective days, of which the plan achieves 78% in Year 1 rising to 98%.

▪ Prices escalate at 6.2% a year and food costs at 5.8%. Fixed and crew costs escalate at 5.5%.

▪ Crew is costed per service and therefore sits in variable costs. Only the central team, the commissary and per-truck ownership costs are fixed.

▪ Trucks four and five are added in Years 3 and 4 at R685 000 each, with 70% advanced as asset finance against the vehicle and the balance funded from operating cash flow.

▪ Depreciation is straight-line over four to ten years, with trucks over seven. Tax is at Small Business Corporation rates with assessed losses carried forward.

▪ Working capital assumes 21 debtor days on event and corporate revenue only, 9 days of stock and 14 days to pay suppliers.

7.2 Income statement

R	Year 1	Year 2	Year 3	Year 4	Year 5
Truck-days traded	291	586	902	1 163	1 306
Revenue	3 181 175	6 923 392	11 437 201	15 842 103	19 094 620
Food cost	(995 360)	(2 148 477)	(3 525 572)	(4 851 153)	(5 808 836)
Crew cost	(528 974)	(1 133 755)	(1 850 054)	(2 531 527)	(3 014 571)
Pitch fees and commissions	(214 472)	(464 199)	(764 088)	(1 054 640)	(1 266 770)
Other variable costs	(419 684)	(898 676)	(1 467 764)	(2 010 331)	(2 396 340)
Gross profit	1 022 686	2 278 286	3 829 723	5 394 452	6 608 103
Gross margin	32.1%	32.9%	33.5%	34.1%	34.6%
Fixed cash costs	(2 402 839)	(2 690 502)	(3 269 665)	(3 591 111)	(3 871 623)
EBITDA	(1 380 153)	(412 216)	560 057	1 803 341	2 736 480
EBITDA margin	-43.4%	-6.0%	4.9%	11.4%	14.3%
Pre-opening costs, non-recurring	(416 000)	—	—	—	—
Depreciation	(528 771)	(528 771)	(626 629)	(724 486)	(724 486)
Finance costs	(299 180)	(253 919)	(269 451)	(267 604)	(178 815)
Profit / (loss) before tax	(2 624 104)	(1 194 906)	(336 023)	811 251	1 833 179
Taxation	—	—	—	—	—
Profit / (loss) after tax	(2 624 104)	(1 194 906)	(336 023)	811 251	1 833 179
Cumulative profit / (deficit)	(2 624 104)	(3 819 010)	(4 155 033)	(3 343 782)	(1 510 603)
Food cost as % of revenue	31.3%	31.0%	30.8%	30.6%	30.4%
Crew cost as % of revenue	16.6%	16.4%	16.2%	16.0%	15.8%

No tax falls in the projection period. Losses of R2 624 104 in Year 1, R1 194 906 in Year 2 and R336 023 in Year 3 accumulate to R4 155 033 of assessed loss, which shelters the Year 4 profit of R811 251 and the Year 5 profit of R1 833 179 in full. R1 510 603 of assessed loss remains available at the end of Year 5 — a real asset against Year 6 and Year 7 earnings that no line of this plan values.

7.3 Fixed costs

Figure 13. The central fixed cost base, before per-truck costs.

Fixed cost	Annual	Note
Salaries and wages — commissary and management	1 370 999	6 central staff; crews are costed per service
Depreciation	528 771	Non-cash; added back in EBITDA
Commissary lease and municipal services	174 240	110 m² at R132/m² a month
Marketing, social media and photography	132 000
Commissary equipment maintenance and utilities	108 000
Public liability and product insurance	96 000
Accounting, payroll and audit	92 000
Compliance — Certificate of Acceptability, business licence, fire, gas CoC	74 000	Across the commissary and each truck
Administration, telephone and sundry	64 000
Point of sale, connectivity and software	58 000
Food safety training and certification	46 000
Total central fixed costs	2 744 010	of which cash R2 215 239
Plus per-truck ownership costs	R134 000 per truck	See Section 6.4

Figure 14. Gross profit against the fixed cost base.

Salaries are half the central base and the commissary lease a further 6 per cent. What matters is that almost none of this scales with a sixth truck: the head chef, the events coordinator, the bookkeeper and the kitchen serve five trucks as readily as three. That is the operating leverage the plan depends on, and it is visible in fixed costs rising only 61 per cent between Year 1 and Year 5 while revenue rises 500 per cent.

7.4 Working capital

R	Year 1	Year 2	Year 3	Year 4	Year 5
Event and corporate revenue invoiced	528 493	1 387 056	2 653 746	4 139 685	5 485 673
Trade receivables at 21 days	30 406	79 803	152 681	238 174	315 614
Stock at 9 days	24 543	52 976	86 932	119 617	143 232
Less trade payables at 14 days	(54 276)	(116 877)	(191 525)	(263 180)	(314 719)
Working capital employed	673	15 902	48 088	94 611	144 127
As a share of revenue	0.0%	0.2%	0.4%	0.6%	0.8%

The business does not finance its customers

Most food businesses fund a gap between paying suppliers and being paid. This one largely does not: about 77 per cent of revenue is settled at the point of sale by card or cash, and only event and corporate catering is invoiced. Working capital peaks at R144 127 — under 1 per cent of revenue — so the R350 000 facility is comfortable rather than stretched. The consequence is that growth is funded by capital expenditure on trucks rather than by working capital, which makes the funding requirement predictable. It also means that when trade is poor the pain arrives immediately in the bank balance rather than being masked by a debtors book, which is uncomfortable but honest, and it is what makes the trigger points in Section 11.3 usable in real time.

7.5 Cash flow

R	Year 1	Year 2	Year 3	Year 4	Year 5
Profit / (loss) after tax	(2 624 104)	(1 194 906)	(336 023)	811 251	1 833 179
Add back: depreciation	528 771	528 771	626 629	724 486	724 486
Add back: pre-opening costs funded at day zero	416 000	—	—	—	—
Movement in working capital	(673)	(15 229)	(32 186)	(46 523)	(49 516)
Cash generated from operations	(1 680 006)	(681 364)	258 420	1 489 214	2 508 149
Capital deployed	— (funded at close)	—	(685 000)	(685 000)	—
Asset finance drawn	— (drawn at close)	—	479 500	479 500	—
Debt capital repaid	(323 293)	(368 554)	(492 692)	(634 209)	(722 997)
Net movement in cash	(2 003 299)	(1 049 918)	(439 772)	649 505	1 785 152
Opening cash	3 784 000	1 780 701	730 783	291 011	940 516
Closing cash	1 780 701	730 783	291 011	940 516	2 725 668

Figure 16. Cash flow — two loss-making years before the fleet pays its way.

Opening cash after the launch capital programme and the pre-opening spend is R3 784 000. Operations consume R1 680 006 in Year 1 and R681 364 in Year 2, turn positive at R258 420 in Year 3 and reach R2 508 149 by Year 5. Closing cash reaches its low point of R291 011 at the end of Year 3, when the fourth truck is commissioned in the first year the business generates any operating cash at all. That trough is what the equity provision is sized against.

7.6 Balance sheet

R, at year end	Year 1	Year 2	Year 3	Year 4	Year 5
Trucks, commissary and equipment, net of depreciation	3 308 229	2 779 458	2 837 829	2 798 343	2 073 857
Stock	24 543	52 976	86 932	119 617	143 232
Trade receivables	30 406	79 803	152 681	238 174	315 614
Cash	1 780 701	730 783	291 011	940 516	2 725 668
Total assets	5 143 879	3 643 020	3 368 453	4 096 650	5 258 371
Share capital	5 900 000	5 900 000	5 900 000	5 900 000	5 900 000
Retained earnings / (accumulated loss)	(2 624 104)	(3 819 010)	(4 155 033)	(3 343 782)	(1 510 603)
Total equity	3 275 896	2 080 990	1 744 967	2 556 218	4 389 397
Asset finance — non-current	1 445 153	952 461	797 752	554 255	554 255
Asset finance — current	368 554	492 692	634 209	722 997	0
Trade payables	54 276	116 877	191 525	263 180	314 719
Total liabilities	1 867 983	1 562 030	1 623 486	1 540 432	868 974
Total equity and liabilities	5 143 879	3 643 020	3 368 453	4 096 650	5 258 371

Figure 17. Balance sheet — asset composition.

Net book value of the trucks, commissary and equipment declines from R3 308 229 to R2 073 857 as depreciation runs, stepping up in Years 3 and 4 when trucks four and five are commissioned. Total equity falls from R5 900 000 at inception to a low of R1 744 967 at the end of Year 3 and recovers to R4 389 397 by Year 5. Gearing peaks at 51.9 per cent at the end of Year 3 and falls to 16.5 per cent by Year 5 as the facilities amortise.

7.7 Funding

Source	Amount	Share	Terms
Promoter and investor equity	5 900 000	73.4%	Sized to carry two loss-making years without a further call
Asset finance at launch	2 137 000	NaN%	Five years at 14.00%, secured on the three launch trucks
Total at launch	NaN	100.0%
Asset finance, trucks four and five	959 000		70% advanced against each vehicle in Years 3 and 4
Working capital facility	350 000		Committed but barely used; working capital peaks at R144 127

Use of funds	Amount	Share
Food trucks — vehicle, conversion and kitchen fit-out, 3 at launch	2 055 000	NaN%
Commissary kitchen fit-out, cold rooms and equipment	1 180 000	NaN%
Generators, gas installation and certification	168 000	NaN%
Branding, signage and launch photography	128 000	NaN%
Professional fees, permits and certification	118 000	NaN%
Small wares, service equipment and stock containers	96 000	NaN%
Point of sale, tablets and connectivity	92 000	NaN%
Capital expenditure subtotal	3 837 000	NaN%
Pre-opening costs	416 000	NaN%
Working capital and contingency	3 784 000	NaN%
Total funding requirement	NaN	100.0%

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Next section8. Break-Even and Debt Service