Mainstreet Junction Business Plan — Break-Even Analysis
Cash break-even at 324,000 litres a month against 340,000 at opening — and what that narrow gap means for the ramp.
Break-Even Analysis
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- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. How Fuel Retail Economics Actually Work
- 3. The Business and Its Revenue Streams
- 4. Market and Site Analysis
- 5. SWOT and Competitive Position
- 6. Regulatory Pathway and Licensing
- 7. Operations Plan
- 8. Management and Organisation
- 9. Capital Requirement and Funding Structure
- 10. Financial Projections
- 11. Break-Even Analysis
- 12. Debt Service and Working Capital
- 13. Investment Returns
- 14. Sensitivity and Scenario Analysis
- 15. Risk Management
- 16. Implementation Timeline
- 17. Exit Options for Investors
- 18. Key Performance Indicators
- 19. Key Assumptions
- 20. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Depreciation Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 11.1 What the traffic study must demonstrate
- 11.2 Unit economics per litre
|
Litres per month |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Planned throughput |
340 000 |
400 000 |
440 000 |
464 900 |
480 000 |
|
Accounting break-even: opex, depreciation and interest |
351 998 |
334 632 |
300 996 |
272 133 |
245 988 |
|
Headroom on the accounting measure |
-3.5% |
16.3% |
31.6% |
41.5% |
48.8% |
|
Cash break-even: opex and full debt service |
317 638 |
350 601 |
324 472 |
303 267 |
284 956 |
|
Headroom on the cash measure |
6.6% |
12.3% |
26.3% |
34.8% |
40.6% |
|
Blended margin, R a litre |
2.814 |
2.955 |
3.102 |
3.258 |
3.420 |
|
Non-fuel gross profit, R’000 |
6 976 |
8 398 |
9 769 |
11 083 |
12 408 |
These two lines are the most important numbers in the plan. They assume the non-fuel streams perform as modelled — if shop gross profit disappoints, the fuel break-even rises accordingly, because every rand of non-fuel gross profit that fails to arrive must be replaced by roughly 320 litres of additional throughput.
11.1 What the traffic study must demonstrate
|
Threshold |
Litres per month |
Why it matters |
|---|---|---|
|
Fuel Retailers Association viability threshold |
300 000 |
Industry commentary places the line at which a station is viable at above this level |
|
RAS benchmark service station |
233 000 |
The volume on which the regulated margin is calculated |
|
Year 1 cash break-even |
317 638 |
Covers operating costs and debt service in the opening year |
|
Year 1 planned throughput |
340 000 |
6.6% of headroom — the tightest point in the projection |
|
Recommended diligence threshold |
400 000 |
Roughly 25% headroom over the Year 1 cash break-even |
|
Year 5 planned throughput |
480 000 |
Roughly double the RAS benchmark station |
An investor should require the traffic study to demonstrate a defensible path to at least 400 000 litres a month before committing capital, giving roughly 25 per cent headroom over cash break-even rather than the 6.6 per cent the opening year provides. That is not a conservative preference; it is the difference between a project that can absorb a slow ramp and one that cannot.
11.2 Unit economics per litre
|
Per litre pumped, Year 3 |
R |
Note |
|---|---|---|
|
Average pump price |
27.699 |
Gazetted monthly by pricing zone; the retailer has no discretion on petrol |
|
Cost of product |
(24.597) |
Basic Fuel Price plus levies, distribution and wholesale margin |
|
Fuel gross margin |
3.102 |
R3.47 on petrol and R2.70 on diesel, blended at 52/48 |
|
Non-fuel gross profit per litre pumped |
1.851 |
The shop, car wash, services and QSR rental, spread across throughput |
|
Total gross profit per litre pumped |
4.953 |
|
|
Operating costs per litre pumped |
(2.981) |
R15.74m across 5.28 million litres |
|
EBITDA per litre pumped |
1.972 |
|
|
Debt service per litre pumped |
(1.157) |
R6.11m across 5.28 million litres |
|
Free cash per litre pumped |
0.815 |
Before tax, working capital and maintenance capital |
The per-litre view is the most useful single frame for a fuel retailer, because it converts every decision into the same unit. Non-fuel gross profit of R1.851 a litre pumped is worth 60 per cent of the fuel margin itself — which is the arithmetic behind the assertion in Section 2 that the shop, not the pumps, is where the return is earned. It is also why a percentage point of shop conversion is comparable in value to 60 000 litres of throughput: both arrive at the same place.