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Passively Owned Catering Business Since 1986

Corporate catering with reoccurring client base!

CASH FLOW
$637,372

Specifications

  • Price
    $2,350,000

  • Revenue
    $3,777,228

  • Reason for Sale
    Exit strategy

  • Location
    Toronto, Ontario

  • Service Area
    Greater Toronto Area

  • Lease
    4,400 sq. ft.: Fully operational catering kitchen, pastry kitchen, refrigerators and freezers, loading bays with garage doors, storage, private offices

  • Intangible Assets
    Excellent reputation, glowing social media reviews, long-term relationships with many large corporations within Toronto and beyond, many venue relationships

  • Equipment
    Refrigerators, freezers, convection ovens, stoves, kitchen equipment and tools, racks and storage equipment

  • Employees
    9: General Manager, chefs, sales; Contracted workforce: Waitstaff, culinary support staff, bartenders

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. 

Business Highlights

  • 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

Financial Highlights

  • 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 StatementP&L StatementNotes
2018
GROSS SALES$3,777,228
Net Income Shown on Financial Statement$403,860
ADDBACKS
Compensation to Owner$75,000
Amortization$18,738
Meals & Entertainment$15,141
Contributions/Donations$10,095
Cell Phone$1,500
Owner's Medical Insurance$3,439
Auto & Travel$11,875Personal
Advertising & Promotions$26,10075% Personal
Office & General$41,92575% Personal
Nononward going salary$30,000Relative - Driver
TOTAL ADDBACKS$233,813
Seller's Cash Flow = Total Addbacks + Net Income$637,673
Profit Margin16.88 %
  • 2018 Profit margin: 17%

Clients and Services

Clients:

  • Corporations
  • Local businesses
  • Individuals throwing private parties

Catering:

  • Corporations
    • Events
    • Conventions
    • Lunches
    • Parties

       

  • Private parties
    • Weddings
    • Anniversaries
    • Birthday parties

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Employees

Total employees: 9

  • General Manager
  • Chefs
  • Sales representatives

Contracted workforce: Varies by event

  • Wait staff
  • Culinary support staff
  • Bartenders

Growth Opportunities

  • Advertise to draw in new clients
  • Build lunch catering opportunities
  • Engage on social media
  • Grow venue relationships

Valuation Details

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.

Funding Example

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.

Purchase Price:

$2,350,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

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: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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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.