Food Truck Enterprise: Business Valuation & Expansion Planning
Our client is a vegan and vegetarian Indian food stand based in California that has been serving traditional indicate cuisine in the Bay Area for over two years. They experienced rapid growth after a one-time collaboration with a prominent food and culture influencer, which sparked a demand for an expansive menu from customers and an interest in investment opportunities by local investors.
Our client by the numbers
$197K
Annual Revenue (2023)
64%
Net Income Margin
3
Years in Business
$1.35M
Business Valuation
1
Locations/Foodtruck
Key areas we addressed
All existing business functions including Sales, HR, Customer Service, Supply Chain & Marketing to assess SOP and efficiency levels.
Long term financial, operational, and growth strategies with expansion and it's potential impact current business operations
The feasibility for expansion across the local market and the probability of success with a 5-location expansion strategy implemented over 1-year period.
Key components of the business including all assets and ownership structure to determine an intrinsic and SDE Valuation
Our Strategy & Execution
01
Comprehensive Operational Diligence
Our team conducted a comprehensive assessment of their current business model and operations to evaluate their SOPs and the level of improvement that may be required prior to seed investments. We compiled a business plan that included growth strategy & expansion planning that will be vital for seed investment opportunities.
02
Financial Due Diligence
A comprehensive financial analysis was conducted to obtain an in-depth understanding of their most integral KPIs. Without an initial mechanism in place to streamline their financial management and bookkeeping, our team performed extensive financial diligence to obtain and categorized 3 years of revenues and expenses. Financial statements with automations were built to support bookkeeping needs in the short term. Our team also created a KPI dashboard via Google Sheets that updates automatically based on monthly recording of revenue and operational costs. This analysis was an integral step in estimating their current valuation in the market.
03
Business Valuation
ur team followed up with an estimated business valuation based on 3 years of financial data and applicable market assumptions. We leverage 0.65 beta for the restaurant and dining industry, a long-term risk free interest rate of 4% and leveraged assumptions for depreciation and amortization in determine a business valuation of 1.35M.
04
Expansion Funding Strategy
Based on our clients desire to open 5 new locations simultaneously within a year, we presented two options to raise capital: Loan Investment vs Seed Funding. Based on the estimated investment needed to open 5 locations and their revenue expectations, our client would require at least $200k in funding:
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Loan Investment: Investment of $35k - $50k per location, for 20-30% simple interest spread over a year.
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Seed Funding: Investment totaling 200k for 20% equity stake with the option to buyback after 5 years.