Passively Owned Catering Business Since 1986
Corporate catering with reoccurring client base!
Corporate catering with reoccurring client base! Earning over $3.7 million in revenue during 2018, this premier Toronto catering company exemplifies a conscientious approach to delicious food and refined service. Catering is mostly provided to corporate clients holding lunches, events, parties, and conventions with some individual clients throwing private events throughout the year. Menus are customized for each event and considerations can be made for any dietary restriction. The international approach allows for a great diversity in menu options including food from popular culinary cuisines including, but not limited to French, Italian, Chinese, Indian, and Thai. Service options include plated sit-down meals, food stations, items passed by waitstaff, grazing stations, buffets, and boxed lunches. The owner is semi-retired and oversees operations but is not involved in the day-to-day management.
The full-operational catering facility features a large kitchen, a pastry area, refrigerators and freezers, loading bays with garage doors, storage, and several private offices. The 4,400 square feet of space contains all necessary equipment and tools to bring the menu to life. The General Manager oversees operations, while the chefs develop menu items and direct the production staff. All culinary assistants, bartenders, and waitstaff are contracted, keeping employment overhead low. Four sales representatives develop relationships with clients and drive sales throughout the year. In order to continue growth, this sales team could develop targeted advertisements or seek to build the lunch catering opportunities available throughout the week.
- Year Established: Over 30 years in business!
- Location: Toronto
- Service Area: Greater Toronto Area
- Services: Catering: Corporate events, conventions, lunches, and parties; Private parties such as birthdays, anniversaries, weddings
- Clients: Large corporations to local businesses in the Toronto area, private parties for individual customers
- Lease: 4,400 sq. ft.: Fully operational catering kitchen, pastry kitchen, refrigerators and freezers, loading bays with garage doors, storage, private offices
- Reason for Selling: Exit strategy
- Employees: 9: General Manager, chefs, sales; Contracted workforce: Wait staff, culinary support staff, bartenders
- Seller Training Period: 90 days or as negotiated
- Growth Opportunities: Advertise to draw in new clients, build lunch catering opportunities
- Current Owners’ Responsibilities: Oversight
- List Price: $2,350,000
- Gross Sales:
- 2018: $3,777,228
- Cash Flow:
- 2018: $637,372
- Assets Included in Purchase*
- Equipment: Refrigerators, freezers, convection ovens, stoves, kitchen equipment and tools, racks and storage equipment
- Vehicles: Delivery vehicles
- Inventory: Ingredients are purchased as needed, based on the menu
- Intangible Assets: Excellent reputation, glowing social media reviews, long-term relationships with many large corporations within Toronto and beyond, many venue relationships
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Notes|
|Net Income Shown on Financial Statement||$403,860|
|Compensation to Owner||$75,000|
|Meals & Entertainment||$15,141|
|Owner's Medical Insurance||$3,439|
|Auto & Travel||$11,875||Personal|
|Advertising & Promotions||$26,100||75% Personal|
|Office & General||$41,925||75% Personal|
|Nononward going salary||$30,000||Relative - Driver|
|Seller's Cash Flow = Total Addbacks + Net Income||$637,673|
|Profit Margin||16.88 %|
- 2018 Profit margin: 17%
Clients and Services
- Local businesses
- Individuals throwing private parties
- Private parties
- Birthday parties
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Total employees: 9
- General Manager
- Sales representatives
Contracted workforce: Varies by event
- Wait staff
- Culinary support staff
- Advertise to draw in new clients
- Build lunch catering opportunities
- Engage on social media
- Grow venue relationships
The Firm used a cash flow valuation methodology to determine the purchase price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2018 cash flow was used with a prescribed multiple is 3.65. With this information, the computation is as follows:
$637,372 x 3.65 = $2,326,408
The fair market value found above positions the business list price at $2,350,000.
Purchase Price: $2,350,000
20% Buyer Down Payment: $470,000
15% Seller Financing: $352,500
65% Bank Loan: $1,527,500
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $6,572.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $20,074.
After business expenses and loan payments, a buyer with a 20% down payment of $470,000 would retain a profit of $317,630, which results in a 67% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $2,350,000 with the terms listed above, the coverage ratio is 1.99.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2018 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2018 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
This folder is empty.
Access to this Deal Room is restricted
Would you like to access the deal room?Yes, please
Already have an account? Log in here.
Print, sign and send to:210 N 78th St. 2nd Floor
Omaha, NE 68114
Or fax to: