Here's why I think this is a fundamental growth story..
GRIL is a healthy QSR with 39 locations and a big growth initiative with the military. A major investor got involved after they failed to complete a reg A ipo back in late 2017; the investor stepped in and reorganized it, recapitalizing the company, shifting the strategy and replacing the entire management team. The Previous IPO was $50mm pre-money with $6mm of debt, this time out it is $30mm pre and the investor added $9mm of equity and the company is DEBT FREE.
They brought in a very accomplished management team, lead by Mike Roper, who was the former COO of Quiznos, responsible for 4000 franchise openings and after a PE sale of Quiznos, he became the CEO of a regional Tex Mex chain called Taco Bueno, where he turned around a 50yr old brand with 10yrs of declining same store sales. After 4 years of record EBTIDA, and an appearance on Undercover Boss, he sold the company to TPG. They hired Mike and his team after their garden leave following the sale of Taco Bueno.
Mike joined concurrent with a 7 figure investment... He has turned around the brand, resolved lawsuits relating to previously shuttered locations, bought in several franchises to be company owned, created an additional concept that is less testosterone driven, called Healthy Joe's which is currently open in Tribeca, and opened 5 military base locations, with another 3 currently under construction. GRIL was selected by the Army and Airforce Exchange as a healthy food alternative as part of Operation Live Well and the Healthy Army Initiative, and has begun to roll out to what can be a several hundred location opportunity. The proceeds from the ipo will further their push into "non-traditional" locations, resulting in another 18 military base locations, several universities and an interesting asset-light model where they are partnering with cloudkitchen, a delivery only concept founded by the former founder of Uber.
The company's total locations will grow from 39 to almost 80 prior to the end of this year. Revenues should triple 2019 to 2020 from $6 to 18mm, but will exit the year on a run rate in excess of $30mm, with run rate EBITDA in the 5-6mm range and poised to nearly double locations y/y again in 2021.
The investor has agreed to a full year minimum lock up on all of their shares, which collectively account for approximately 2/3 of the outstanding shares on a pre-money basis. They have brought several veterans groups into this IPO and we will be creating a veterans franchise program, that will not only expedite franchise growth, but do so in a socially conscious way as a means to thank our troops for their service and patronage. They think this will allow them to do well while doing good and believe that this concept will garner national media attention, following our opening on West Point campus in the next 60 days, where they will be the only non-military owned purveyor of food on campus. This is a linear growth story where they expect to have store openings and other investor driven communications on an almost weekly basis.
I hope the story makes more sense to you now..
