Conclusion and Recommendation

Jump to section

• Overview & contents
• i. Important Notice and Basis of Preparation
• 1. Executive Summary
• 2. The Operating Model
• 3. Licensing, Food Safety and Trading Rights
• 4. Market and Customers
• 5. SWOT and Competitive Position
• 6. Operations and Team
• 7. Financial Plan
• 8. Break-Even and Debt Service
• 9. Investment Analysis
• 10. Sensitivity and Scenario Analysis
• 11. Risk Analysis
• 12. Implementation Roadmap
• 13. Key Performance Indicators
• 14. Key Assumptions
• 15. Conclusion and Recommendation
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Truck-Day and Trading Schedules
• C. Appendix C: Funding, Debt and Working Capital Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

Streetfire Kitchens is a fleet of food trucks operating from a licensed commissary, selling into weekday street trade, weekend markets and private events. Its economics reduce to a single unit: a truck trading for one day, earning R11 245 of revenue and R3 704 of contribution at the mid-plan mix.

At maturity the fleet works 1 306 truck-days, serves 139 198 covers and generates R19 094 620 of revenue and R2 736 480 of EBITDA on R4 253 000 of invested capital, returning 18.4 per cent at project level and 4.6 per cent to equity.

15.1 What the numbers support

▪ A viable business at fleet scale. Break-even falls from 100 covers per service on three trucks to 83 on five, giving a margin of safety of 46.8 per cent at full fleet.

▪ Genuinely attractive cash characteristics. About 77 per cent of revenue settles at the point of sale and working capital peaks at R144 127 — under 1 per cent of revenue. This venture does not finance its customers.

▪ Security a financier can act on. Asset finance secured on vehicles with an active second-hand market, at 96 per cent advance on the launch trucks and 70 per cent on the additions.

▪ A controllable growth path. The fleet can be scaled one truck at a time once the model is proven, and reduced the same way if it is not — which is what makes the downside recoverable.

15.2 What the numbers do not support

▪ A single truck as an investment. One truck carrying the full structure loses R1 363 975 a year. Run lean by an owner it earns about R502 248. It is a good job and a poor investment.

▪ Funding the fleet before the covers are counted. Headroom at launch scale is 6.2 per cent. Adding trucks to a proposition that does not draw a queue multiplies the loss.

▪ Year 1 or Year 2 covenants. Cover of negative 2.22 times and negative 0.66 times will breach a standard test. Covenants must first be tested at the end of Year 3.

▪ A strong equity return on this structure. Equity returns 4.6 per cent against a project return of 18.4 per cent, because equity funds the two loss-making years that no financier will lend against.

15.3 Recommendation

On those conditions this is a sound operating business with a modest equity return and an unusually controllable risk profile. It is not a high-return investment and this plan does not present it as one. What it offers is a real trading business in a large and durable market, with hard assets, immediate cash settlement and a growth path that can be taken or halted one truck at a time — provided the covers are counted before the fleet is bought.