Sumptuous Cuisine Catering
Financial Plan
Sumptuous Cuisine Catering will fund its expansion largely though its own cash reserves and a loan for the purchase of The Sumptuous Ballroom.
The funds needed include:
- $2 million for purchase of The Sumptuous Ballroom
- $100,000 for improvements
- $50,000 for equipment for the ballroom
- $82,500 for marketing devoted to The Sumptuous Ballroom acquisition
Sources for the funds include:
- $1.6 million mortgage
- $270,000 in convertible debt from investors for an equity stake of 10% in Sumptuous Cuisine Catering (diluting the current ownership equally) and 10% interest paid over three years. Likely investors include family and angel investors interested in lower risk than in a start-up firm, along with some guaranteed returns
- $300,000 in cash reserves of Sumptuous Cuisine Catering
- Cash flow surpluses in the later half of 2010 to make up the remainder
The business will return to stronger profits and gross margins after the acquisition.
Important Assumptions
The table below presents the assumptions used in the financial calculations of this business plan.
Break-even Analysis
Due to the high fixed costs of the venue, the monthly break even is rather high, as shown below. This would be approximately 9-10 events at $10,000 per event. Revenue is higher for The Sumptuous Ballroom events due to the ballroom rental fee and greater leverage to provide additional services to clients, than for revenue from off-site events.

Break-even Analysis | |
Monthly Revenue Break-even | $93,206 |
Assumptions: | |
Average Percent Variable Cost | 10% |
Estimated Monthly Fixed Cost | $84,264 |
Projected Profit and Loss
Gross margins will improve for the business as ballroom rentals build as a revenue stream. Facility rentals do not have a direct cost of sales, although higher fixed costs are associated with The Sumptuous Ballroom than with the core business.
Subcontracted services are the other major cost of sales category, and incur a higher cost of sales, at 80% of subcontracted services sold, than other categories. These services (like floral design, rental furniture, etc.) are discounted by the vendors because of their relationship with Sumptuous Cuisine Catering. The effect is that Sumptuous Cuisine Catering bills these services on to clients at the vendor’s advertised rates and takes their margin of 20% on those revenues.
Marketing will be higher in the first year to accommodate the additional marketing activities described in the marketing strategy and milestones table. Depreciation will be for the existing equipment in the catering kitchen and for the installed sound and networking equipment in the venue.
Rent is for the catering kitchen and office only, as the ballroom will be purchased by the business. Utilities will be much higher than previously due to the high electric, heating, and air conditioning costs of the new space compared with the kitchen and office alone. Insurance also must increase significantly from previous levels due to the need for general liability for the space and guests.
Payroll taxes are 15% of payroll (which includes the event staff cost of sales) and employee benefits (including health insurance, 401K contributions for employees who with tenure over 2 years, vacation and sick pay) are 10% of payroll and event staff costs.
Office expenses cover maintenance of computer equipment and sundry supplies for the office. Facility cleaning and maintenance includes a budget for $200 of maintenance and an estimate for cleaning which will grow as use of the ballroom scales up. Cleaning will be provided by an outside vendor and managed by the Facility Manager.




Pro Forma Profit and Loss | |||
2010 | 2011 | 2012 | |
Sales | $2,251,998 | $2,752,086 | $3,346,846 |
Direct Cost of Sales | $216,056 | $261,259 | $316,101 |
Event Staff | $382,840 | $467,855 | $568,964 |
Subcontracted Services | $283,841 | $340,609 | $408,730 |
Total Cost of Sales | $882,736 | $1,069,723 | $1,293,795 |
Gross Margin | $1,369,262 | $1,682,363 | $2,053,051 |
Gross Margin % | 60.80% | 61.13% | 61.34% |
Expenses | |||
Payroll | $474,000 | $540,480 | $609,845 |
Marketing/Promotion | $106,000 | $100,000 | $100,000 |
Depreciation | $28,000 | $28,000 | $28,000 |
Rent | $24,000 | $25,200 | $26,460 |
Utilities | $7,959 | $9,000 | $10,000 |
Insurance | $36,000 | $37,440 | $38,938 |
Payroll Taxes | $128,526 | $151,250 | $176,821 |
Employee Benefits | $85,684 | $100,833 | $117,881 |
Office Expenses | $6,000 | $6,500 | $7,000 |
Facility Cleaning & Maintenance | $115,000 | $137,804 | $167,542 |
Total Operating Expenses | $1,011,168 | $1,136,508 | $1,282,487 |
Profit Before Interest and Taxes | $358,094 | $545,855 | $770,564 |
EBITDA | $386,094 | $573,855 | $798,564 |
Interest Expense | $181,222 | $171,000 | $160,333 |
Taxes Incurred | $53,061 | $112,457 | $183,069 |
Net Profit | $123,810 | $262,399 | $427,162 |
Net Profit/Sales | 5.50% | 9.53% | 12.76% |
Projected Cash Flow
The projected cash flow table and chart show the business’s investment in The Sumptuous Ballroom, a $2 million purchase. The asset will be purchased with 20% down and a $1.6 million 15-year mortgage. An additional $270,000 in convertible debt will be raised at 10% interest for three years.
In addition to this investment, $50,000 in depreciable assets will be purchased (sound system, office set-up for the facility). Small investments in replacing these assets and augmenting them with strategic purchases will be made in future years. Current assets ($100,000) purchased will include signage and improvements to the venue.
The business will reach cash flow break-even in July 2010.

Pro Forma Cash Flow | |||
2010 | 2011 | 2012 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $1,125,999 | $1,376,043 | $1,673,423 |
Cash from Receivables | $1,055,339 | $1,336,295 | $1,626,150 |
Subtotal Cash from Operations | $2,181,338 | $2,712,337 | $3,299,573 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $180,160 | $220,167 | $267,748 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $1,870,000 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $4,231,498 | $2,932,504 | $3,567,321 |
Expenditures | 2010 | 2011 | 2012 |
Expenditures from Operations | |||
Cash Spending | $474,000 | $540,480 | $609,845 |
Bill Payments | $1,508,109 | $1,928,419 | $2,254,866 |
Subtotal Spent on Operations | $1,982,109 | $2,468,899 | $2,864,711 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $180,160 | $220,167 | $267,748 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $106,668 | $106,668 | $106,668 |
Purchase Other Current Assets | $100,000 | $0 | $0 |
Purchase Long-term Assets | $2,050,000 | $5,000 | $5,000 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $4,418,937 | $2,800,734 | $3,244,127 |
Net Cash Flow | ($187,439) | $131,771 | $323,194 |
Cash Balance | $112,561 | $244,331 | $567,526 |
Projected Balance Sheet
The balance sheet shows the increasing strength of the business as its mortgage is paid off and profits are earned from the expansion of the business. Accounts payable will rise significantly from previous levels due to the added expenses taken on by the business when The Sumptuous Ballroom opens.
Pro Forma Balance Sheet | |||
2010 | 2011 | 2012 | |
Assets | |||
Current Assets | |||
Cash | $112,561 | $244,331 | $567,526 |
Accounts Receivable | $178,994 | $218,742 | $266,015 |
Inventory | $11,664 | $13,163 | $15,936 |
Other Current Assets | $102,500 | $102,500 | $102,500 |
Total Current Assets | $405,719 | $578,737 | $951,976 |
Long-term Assets | |||
Long-term Assets | $2,140,000 | $2,145,000 | $2,150,000 |
Accumulated Depreciation | $68,000 | $96,000 | $124,000 |
Total Long-term Assets | $2,072,000 | $2,049,000 | $2,026,000 |
Total Assets | $2,477,719 | $2,627,737 | $2,977,976 |
Liabilities and Capital | 2010 | 2011 | 2012 |
Current Liabilities | |||
Accounts Payable | $163,743 | $158,031 | $187,776 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $163,743 | $158,031 | $187,776 |
Long-term Liabilities | $1,763,332 | $1,656,664 | $1,549,996 |
Total Liabilities | $1,927,075 | $1,814,695 | $1,737,772 |
Paid-in Capital | $200,000 | $200,000 | $200,000 |
Retained Earnings | $226,833 | $350,643 | $613,042 |
Earnings | $123,810 | $262,399 | $427,162 |
Total Capital | $550,643 | $813,042 | $1,240,204 |
Total Liabilities and Capital | $2,477,719 | $2,627,737 | $2,977,976 |
Net Worth | $550,643 | $813,042 | $1,240,204 |
Business Ratios
The table compares the business ratios of Sumptuous Cuisine Catering to caterers in the $1 million to $5 million revenue category. Caterers with banquet halls are covered by NAICS industry code 722320, or SIC code 5812.
Ratio Analysis | ||||
2010 | 2011 | 2012 | Industry Profile | |
Sales Growth | 50.13% | 22.21% | 21.61% | 1.65% |
Percent of Total Assets | ||||
Accounts Receivable | 7.22% | 8.32% | 8.93% | 3.53% |
Inventory | 0.47% | 0.50% | 0.54% | 6.34% |
Other Current Assets | 4.14% | 3.90% | 3.44% | 43.25% |
Total Current Assets | 16.37% | 22.02% | 31.97% | 53.12% |
Long-term Assets | 83.63% | 77.98% | 68.03% | 46.88% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 6.61% | 6.01% | 6.31% | 25.40% |
Long-term Liabilities | 71.17% | 63.05% | 52.05% | 73.91% |
Total Liabilities | 77.78% | 69.06% | 58.35% | 99.31% |
Net Worth | 22.22% | 30.94% | 41.65% | 0.69% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 60.80% | 61.13% | 61.34% | 58.06% |
Selling, General & Administrative Expenses | 55.30% | 51.60% | 48.58% | 23.02% |
Advertising Expenses | 4.71% | 3.63% | 2.99% | 1.74% |
Profit Before Interest and Taxes | 15.90% | 19.83% | 23.02% | 6.52% |
Main Ratios | ||||
Current | 2.48 | 3.66 | 5.07 | 1.25 |
Quick | 2.41 | 3.58 | 4.98 | 1.00 |
Total Debt to Total Assets | 77.78% | 69.06% | 58.35% | 99.31% |
Pre-tax Return on Net Worth | 32.12% | 46.11% | 49.20% | 4325.19% |
Pre-tax Return on Assets | 7.14% | 14.27% | 20.49% | 29.65% |
Additional Ratios | 2010 | 2011 | 2012 | |
Net Profit Margin | 5.50% | 9.53% | 12.76% | n.a |
Return on Equity | 22.48% | 32.27% | 34.44% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 6.29 | 6.29 | 6.29 | n.a |
Collection Days | 44 | 53 | 53 | n.a |
Inventory Turnover | 24.00 | 21.05 | 21.73 | n.a |
Accounts Payable Turnover | 9.90 | 12.17 | 12.17 | n.a |
Payment Days | 28 | 31 | 28 | n.a |
Total Asset Turnover | 0.91 | 1.05 | 1.12 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 3.50 | 2.23 | 1.40 | n.a |
Current Liab. to Liab. | 0.08 | 0.09 | 0.11 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $241,975 | $420,706 | $764,200 | n.a |
Interest Coverage | 1.98 | 3.19 | 4.81 | n.a |
Additional Ratios | ||||
Assets to Sales | 1.10 | 0.95 | 0.89 | n.a |
Current Debt/Total Assets | 7% | 6% | 6% | n.a |
Acid Test | 1.31 | 2.19 | 3.57 | n.a |
Sales/Net Worth | 4.09 | 3.38 | 2.70 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |