A lot of that selling was me. I'm out. I can see the writing on the wall -- Parsi has absolutely no credibility and no way to raise money.
Banks obviously won't lend to him, and now that interest rates are higher any money he can secure from a lender will be expensive to repay.
Shareholders don't trust him enough to continue to fund his operations.
Random investors aren't going to be conned into funding a single location -- the math doesn't justify the risk given his poor track record.
But the final straw for me was reading that he's spending $400,000/year (or more or less a location per year that could be expanded) on administrative costs. This never, ever should have gone public with only three locations -- but Parsi's ego wanted him to be able to say he's CEO of a public company.
I could look past Parsi's propensity to overpromise and underdeliver because the idea is solid, and I thought that Philip Gay as CEO would be able to leverage his professional network. But Gay is being paid in shares which further adds to the dilution, and I think the market responded appropriately when Parsi later announced he was returning as Co-CEO.
Either Parsi didn't have the foresight to properly vet Philip Gay's ability to handle the role full-time, or he knew in advance that this would be a part-time agreement and didn't convey that to the shareholders when he announced he was stepping down. Either way, it's a sign of incompetence at best and dishonesty at worse, and is par for the course with Parsi. I wouldn't trust this guy to watch my pets while I was out of town, and I sure don't trust him to run a company -- unless I were betting that he is going to run it into the ground.
The worst part? I'm sure Parsi could get malls to pay for a new location but he doesn't seem willing to put his restaurants in lower-tier malls. He wants to be in the premier malls (again, ego!) alongside Apple and Neiman-Marcus, but he fails to realize that these malls do not need to roll out the red carpet. They're doing fine. Its the less desirable malls that need an anchor tenant, but Joey thinks his brand value is higher than it really is, and this is why we haven't seen any expansion.
I can see this heading straight to Chapter 11 in due time. That, or the two stores will do just enough to keep the lights on while Parsi collects his salary. Think about it: $600,000/year is going toward financial administrative costs and Parsi's salary -- for two locations. How much net income are they bringing in that is going to the shareholders after these expenses? Hmmm....
And the biggest problem of all -- this idea is way too simple to replicate. Joey likes to brag about all the celebrities that have visited -- fair enough, but they aren't going to Giggles n Hugs because of Joey Parsi. Any competition in Los Angeles will do just as well. And its not like this is a difficult concept to replicate, either. Healthy food, a playground, some toys, rotating fun activities, and hire energetic, customer-friendly staff. Anyone can do it.
Good luck to all. I might re-enter when this bottoms out under .0005 for a quick flip. But I doubt it.
PS: Has anyone called him out for proof that Tanofran is renovating and that is why the deal fell apart? Because I can't find any recent news about widespread renovations. Also, the Westfield Century City Mall is more or less re-opened -- the fact that Giggles is no longer there speaks volumes. You'd think that if Giggles provided so much foot traffic, Westfield would be doing all it could to get Giggles back in there ASAP!
AI
