Catering Company - Bad target for a Search?

by a searcher from University of Virginia-Darden - Darden School of Business

5 years ago

Reviewing an opportunity in the catering space, has consistently had ~$600K in  EBITDA and ~$2M in revenue with strong relationships in the local wedding space.  I haven't seen a lot of interest from Searchers in Caterers and am wondering why, do people group them with Restaurants or not see any ability to scale?  Would greatly appreciate anyone's thoughts!

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searcher from University of Colorado at Boulder - Leeds School of Business

I purchased a wedding catering company. We have a negative cash conversion cycle, can forecast confidently more (weddings book 6-18 months ahead of the event) than a year in advance, have WAY better margins than restaurants. That being said, we have minimal recurring revenue so doesn't fit your traditional search criteria

1 year ago | like reply | 0 likes

searcher from University of California, Berkeley - Haas School of Business

Restaurants have relatively high fixed costs as a % (rents and labor). Catering has more variable costs. I'd view them quite differently. If helpful, you can look at metrics of public comps like Compass Group vs restaurant groups.

2 years ago | like reply | 0 likes

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