STARTING A CATERING BUSINESS IN THE OIL AND GAS SECTOR IN UGANDA

By: wmutenza0 comments

Introduction

The Oil and gas sector is a new and growing sector In Uganda with a high demand for quality catering services.

Caterers supply food to oil workers located on oil fields which tend to be isolated away from normal towns. It will require mobility and portable services. Establishing a modern Catering service can prove to be a profitable business. The establishment of this project requires a total fixed cost of US$25,000 with a working capital of about US$40,000 – sufficient for two months operating costs. Generating revenue of 563,160 in the first year of operation.

The project has a payback period of 1year and 3months with a 36% profit margin.

Production Capacity, Technology &Process

The production process involves preparation of both Local and international Foods such as sandwich, Beef burgers, Fried chicken, chips, spaghetti, Pizza, Matooke, Rice, Yams, Cassava, Boiled Irish Potatoes, Posho with all Stews and Snacks such as Chips, Chicken, Fish among others and Beverages.

The production will serve 400 clients daily for breakfast, Lunch and supper. Investment Scale, Capital Requirements & Equipment A typical oil well team will consist of anywhere up to 200 – 400 people.

This plan is based on serving two sites with a total of 400 people to feed. Capital requirements are estimated at US$25,000

Capital Investment Requirements in US$

Capital investment item Units Qty @ Total
Blenders No 6 50 300
Fridges No 3 400 1200
Cutlery Sets 60 20 1200
Furniture No 1000 1,000
Cooking Equipments No 3000 3000
Music System, TV & Computer No 3 400 1,200
Food warmers, No 6 110 660
mixers &flasks 10 30 300
Delivery Van No 1 7,000 7000
Bouquet set Sets 5 350 1750
Gas and water tanks No 2 2000 2000
Decoration materials, empty crates No 550 550
Standby generator No 1 800 800
Plates and other kitchen equip 4000 4,000
Total 24,960

Production and Operating Costs

Cost Item Units Unit Qty/ Pdn cost/day Pdn cost/Mnth Pdn cost/Yr
Food Items Bchs 300 7,800 93,600
Sauce Items Kgs 140 3,640 43,680
Beverages (water,soder etc) Cts 200 5,200 62,400
Spices, Cooking oil, Sugar etc(seasonings) Kgs 30 780 9,360
Other materials 20 520 6,240
Subtotal 690 17,940 215,280
General Costs (Overheads)
Labour 500 6,000
Utilities 400 4,800
Gas & Charcoal 300 3,600
Uniforms 40 480
Cleaning & Toiletries 200 2,400
Miscellaneous expenses 100 1,200
Depreciation 520 6,240
Subtotal 2,060 24,720
Total Operating Costs 20,000 240,000

 

1) Production costs assumed 312 days per year with daily capacity of selling 130plates of food, 150 bottles of beverages &80 cups of tea. 2) Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets. 3) Direct costs include: materials, supplies and other costs that directly go into production of the product. 4) Total monthly days assumed are 26-days. All costing is in US Dollars

Project Product Costs and Price Structure

Item Qty/ day Qty/yr @ Pdn cost/ yr UPx T/rev
Foods 400 124,800 1.03 128880 3.5 436,800
Beverages 330 102,960 0.44 45680 0.5 51,480
Tea 300 93,600 0.46 42608 0.8 74,880
Total 1030 98,676 563,160

Profitability Analysis Table

Profitability Item Per Day Per Month Per Year
Revenue 1805 46,930 563,160
Less: Pdn & Operating Costs 769 20,000 240,000
Profit 1036 26,930 323,160

Market Analysis

The market readily exists as the Oil sector has taken an expanding trend in Uganda with outside catering services being the most suitable arrangement for the supply of food to the workers, the business is a viable venture. Government facilities and incentives The government actively encourages Ugandans to participate in the oil sector by providing support services such as catering. .

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