INVESTMENT SUMMARY
Acquisition Value
R5,850,000: Business Value (Selling Price)
R150,000: Stock (Provision)
R6 Million: Total Acquisition Value (Excluding Working Capital)
Profitability
R2,5 Million: Net Profit (EBITDA) per Annum
R208,000: Net Profit (EBITDA) Average per Month
Investment Returns
2.3 x: PE Ratio (Price Earnings Ratio, Before Tax)
43%: ROI (Return on Investment, Excluding Stock)
28 x: MPB (Months’ Pay Back)
1. BACKGROUND HISTORY
The business was established more than 26 years ago in a very prominent shopping mall in Pretoria. The focus on customer care and good service, combined with value for money in a clean and safe environment, differentiates the business with distinction. The business has a simplistic menu that caters to everyone's needs and specialize in Breakfasts, Toasties, Tramezzini`s and Light Meals. The business hours are favorable for someone looking for comfortable working hours, between 8:00am and 7:00pm on weekdays. The owner is currently involved in the business on a very limited basis. There is reliable management with many years of experience and who will remain in the business after the owner sell the business. The owner want to retire and exit permanently from the industry after many successful years. He is willing to remain in the business after it has been handed over for a few months to make sure of a smooth transition.
2. STAFF AND WORK FORCE
There are 16 permanent employees on the payroll of which most have many years of experience and the management consist of two Managers and a General Manager with extensive knowledge and experience of the industry and who carries out control and day to day planning.
3. OPERATIONAL
The business is not linked to a franchise for the past couple of years, which offers a tremendous advantage as there are no advertising fees and royalties, which give the business a competitive edge over competitors because the business has the ability to generate much better margins. The reliable point of sale systems and financial system are very efficient when it comes to reporting and control in the business and is most probably one of the best operating systems in the industry. The mall constantly revamps and do upgrades and the latest addition is a complete, constant power supply during load shedding.
4. MARKETING AND CUSTOMERS
The business is established in one of the most famous and busy shopping malls in Pretoria. The Mall not only serves the local market but is also a shopping destination for neighboring towns and regions outside Gauteng. The local support and clients come from the surrounding neighborhoods in a radius of approximately 15 km around the business. The waiters are well trained and very friendly, their client service skills are excellent.
5. FINANCIAL OVERVIEW
A comprehensive financial overview was carried out over the financial system, latest Annual Financial Statements and Management Accounts. The relevant source documents were confirmed against operational expenditure.
5.1. Analysis
5.1.1 Sales
Average annual sales revenue has increase dramatically over the past three years with more than 20%. The growth in sales revenue can be attributed to the growth in population in the area with new residential areas.
5.1.2 Gross Profit
The gross profit represents a solid income for the business and generated a gross margin between 60% to 62%. Control over Food Cost and two menu increases per year, contribute to keep Cost of Sales under control. The maintenance of proven systems and control systems is applied daily by management to ensure minimum losses.
5.1.3 Operational Expenses (OPEX)
The operational expenses of the business are relatively low at a 41% benchmark, Premises lease cost, Water & Electricity and Salaries are some of the highest expenses.
5.1.4 Net Profit (EBITDA)
The Net Profit (EBITDA) was calculated after deducting certain Non-Operational Expenses (NOE’s). The combined adjusted monthly Net Profit (EBITDA) average more than R200,000 per month.
5.1.5 Price Valuation Analysis
The proposed price valuation was calculated against industry benchmarks and considering that the business has a good historical growth trend and successfully well-established over so many years.
IMPORTANT NOTE
There are certain terms and conditions and requirements in terms of our agreement with the seller under which we are restricted to introduce a potential purchaser/investor, no detailed operational/financial information will be disclosed without the required documentary and source documents being processed according to the seller's criteria.
