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SIC 5812 Eating and Drinking Places - Eating places

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Catering Business Plan

Catering For Kids

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Financial Plan

The Catering For Kids will finance growth through cash flow, grants and school district revenues. We recognize that this means we will have to grow more slowly than we might like but that no borrowing is necessary.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

• We assume direct food costs will be equal to or less than 30% of total direct costs.
• We assume a slow-growth economy, without major recession or crisis in food contamination.
• We assume that there are no unforeseen changes in government grant funding availability.
• We assume a continued interest in restaurant and hospitality services by students of the Chambers School. It has proved to be a highly popular program in the past and we have no reason to believe this situation will change.
• We assume a continued interest in using catering services by organizations and businesses in the Eugene/Springfield area.

8.2 Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years. We foresee slow but steady growth in demand for our services and consequent increase in operating expenses. During year one, Catering For Kids will serve its internal market only, as we ramp up to serving the external market in year two.

8.3 Break-even Analysis

Our break-even analysis is based on the ongoing costs we incur to keep Catering For Kids running. Fixed costs including the overhead for use of the commercial kitchen, utilities/contract services, payroll, and marketing costs. The payroll cost includes the salary for one permanent part-time staff person who will manage the operation of the catering business as well as instruct the student workers for the entrepreneurship portion of the curriculum. Marketing expenses will be kept to a minimum, primarily employing word-of-mouth and other inexpensive means. Our assumptions on the average unit revenue are based on the average price we will charge for our corporate boxed lunch, however this is not the only product that will be offered by Catering For Kids. The result of this analysis offers general insight regarding the number of boxed lunches we  must sell in order to maintain uninterrupted operation of the catering business each month.

8.4 Projected Surplus or Deficit

The surplus indicates positive revenues flowing into the Catering For Kids. Expenses will be minimal as we are able to rely on existing resources, including equipment and staff.

8.5 Projected Cash Flow

Cash flow projections are critical to Catering For Kids' success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month, and the other the monthly cash balance. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendix.

8.6 Projected Balance Sheet

Equipment in kitchen is not included in current assets as they are the property of the lessor. Any depreciation will be accounted for in that party's accounting records.

8.7 Standard Ratios

Standard business ratios, based on the NAICS code 722320, Caterers are included in the table for comparison. The ratios show a plan for balanced, healthy operations.