I agree that I think he is trying to protect shareholders. But I also think it's too little too late, with the toxic financing that he took earlier putting a massive ceiling on the share price.
Maybe one day Giggles will become profitable enough where the company buys back and retires shares, but that is a long shot. Moreover, the company is going to have to do more offerings in the future -- the number of restaurants that can be opened with $4M from this offering is limited, and there simply won't be enough funds to open new locations without an additional injection of capital later.
Even if they franchise, if the cost of opening a new location is $400-$500k with mall incentives, that is still a lot more than most other franchisee fees -- so I would presume that Giggles would have to fund some of the amount or be willing to accept that franchising is going to be a slow process.
Parsi/Gay most likely want the share price higher before they do their next round of financing. But here's the thing:
Dave and Busters has a market cap of $1.7B
Chuck e Cheese was sold for around $1.2B
Shake Shack has a MC of around $1.5B
If Giggles gets to become a $1B company one day, with 300M shares O/S, that's a cap of $4/share. Not bad especially from these prices, but how many other billion dollar public companies, especially in the restaurant industry, do you know that are trading for less than $5/share?
Parsi screwed everyone when he took the toxic money. Now he is trying to do right but it's too little too late.
News 
Market Data 
Discover 
AI
