Sep 17, 2017

Automated Kiosk (Frozen Yogurt or Other) Financial Model

The craze of frozen yogurt or "froYo" hit pretty big in the past couple of years. It has died down somewhat, but the business model is interesting and there have been a few franchisors that popped up who specifically sell automated robotic like kiosks that you can invest in and put at various locations in your area.

*Model will be e-mailed to you after purchase.

Automated kiosks require less cash to start so you can still get some exposure to the space without as much risk. There is plenty of room to scale up as you build a cash reserve. The functional of the kiosks is pretty simple. You have a credit card swiper and then someone has to re-fill the machines ever 60 - 100 uses. They are building newer models that can go up to 150 uses before a re-fill is required.

Normally this comes with some kind of franchise fee, but that is often minimal compared to the equipment cost. Fees of $2,500/unit are common and the actual cost to buy a unit is upwards of $30,000. In order to help you plan out scaling and profitability analysis, I put together a 3-year financial model that has logic specifically for an automated kiosk stand.

This model would also be functional for a wide variety of kiosk concepts outside of frozen yogurt and as technology evolves who knows what kinds of automation will come through. The most impressive part to me is the ability to plan out scale and see the impact on cash flow. It will give you a good picture of the kind of sales and cost structures you need in order to reach the ability to start investing in more units.

The basic logic would be entry of the amount of units and their costs. Up to 5 fields are available to plan out future unit expansion in a given month over the 3-year plan. There is logic to plan out financing if you want to go that route and then after entering all the running cost fields such as electricity, re-fill labor, and repair/maintenance provisions, you can see the cash requirements as well as returns on those cash requirements over the 3 years.

Within the running costs section of the business model there are open fields that can have any sort of line item and a relative monthly cost over the 3 years.

There are a lot of key performance metrics that display once you have built your business case including revenue per serving type, cost of goods sold breakdown, overall cost breakdowns, and the revenue required to break even each year given the fixed and variables expenses.

Finally, there is a DCF (discounted cash flow) valuation on the 3 years this financial model is designed to represent. It simply takes the net cash flow before tax and discounts it back to the present value and looks at the ebitda / revenue multiple in order to get a terminal value. That is also discounted back. Add both together and it shows the overall enterprise value with the scope of 3 years.

You may just want to use the model to see how much burn you can stand given various sales ramping goals and what kind of sales volume you need in order to turn a profit given all the revenue and expense assumptions.

One of the most important aspects of any financial model, including this one, is the ability to have some kind of sensitivity functionality. To accomplish that, you will see a global assumptions tab that has a cell to pick High, Low, or Base and from that it will change the unit sales volume by an entered %. So, you can say here is my expected sales and then look at what the project does if you go up or down by x%. Changing the sensitivity will effect the entire model and all summaries.

Here is the instructional overview:

In general, you will go to each of the light yellow tabs and enter the assumptions into the light yellow cells that are relevant and match your projection / scaling plan.

The blue tabs are all summary (light and dark tabs) so after you build your case, that is where all the visuals and reports come through at.

The 'Startup Costs' tab allows the user to define their starting amount of units and the cost to acquire those units. Also, the user can define units planned on being added at up to 5 different times over the course of the 3 years and those relevant costs.

**If you are renting, you would just put 0 in for unit costs and then enter the rent as one of the fixed monthly costs on the 'running costs' tab.

The 'Base Revenue and 'Revenue' tabs are there so the user can have sensitivity functionality. You simply define your base in 'base revenue' and then depending on what you put in the 'Global' tab cell C10 and C11 the 'Revenue' tab will adjust the unit daily sales up or down by the % in cell C11.
The 'Financial Summary' tab is the most important summary tab as it shows how much cash you need to get the operation going, how much debt you have at the end of the 3 years, and all the primary high level key financial metrics.

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