Japanese pizza joint crowdfunds global strategy ahead of possible ASX launch
A vodka entrepreneur, a cryptocurrency expert and a herbal tea purveyor launched a popular restaurant in Melbourne — and decided to turn it into a potentially ASX-worthy hospitality business with equity crowdfunding.
A team led by vodka entrepreneur Dave Nelson and his co-CEO, crypto expert and former male-model Kyle Stagoll, launched an equity crowdfunding campaign on Birchal to raise $112,550-$550,000 to open a new restaurant in Sydney.
Mr Nelson says the idea is to create a hospitality company rather than a restaurant business.
If they receive the maximum amount — a feat no crowdfunding campaign in Australia has yet achieved — they plan to also open a Brisbane restaurant.
If they receive the minimum, they’ll need an extra $150,000 to cover the remainder of the Sydney costs.
The pre-money valuation is $3.5 million, a figure Mr Nelson says is based on money spent to date, future cash flow forecasts for the next 12 months, as well as intangibles such as the value of intellectual property and time already into the venture.
They are selling between 3 per cent and 13.6 per cent of the business to retail investors.
Is equity crowdfunding right for a restaurant?
Mr Nelson said restaurants were “almost the perfect model” for equity crowdfunding.
“It really works for restaurants because it’s a tangible product that people can use and be part of regularly,” he told Stockhead.
The new owners will get perks like 10-20 per cent off meals, concierge bookings, and a free dinner on their birthday.
All of which they hope will add up to a new client base and free word-of-mouth PR.
They have not yet decided on whether they will issued audited accounts or hold AGMs for their new investor base.
Under equity crowdfunding rules they are not obliged to for five years after becoming a public company.
That is if they get that far, however, in the notoriously risky restaurant business.
A study by hospitality consultant Perry Group International found that the majority of restaurants — as many as 90 per cent — close during their first year.
Of the ones that make it, 70 per cent won’t make it to five years.
Nobu for the common man
Sash, a Japanese pizza restaurant with Hawaiian and Peruvian leanings, launched in Melbourne in August last year.
The concept is for a company which can expand overseas via partnerships, franchises, or as company-owned ventures.
Mr Nelson says they have a plan to open 14 venues in six years.
They are exploring the Grill’d model of having part company ownership and part franchise ownership.
He says raising capital from an ASX listing isn’t out of the question if they decide to expand at home and overseas without partnering with other investors and companies.
What are you paying for?
According to the Sash offer document, the company made $1.6 million in sales in the 2018 financial year.
It made a $179,454 loss, which it says was because of start up and fit out costs before opening in August 2017.
At the end of June Sash had $542,625 in liabilities, but has debt financing arrangements with four companies totalling $731,000 over both restaurants.
The Melbourne site cost them $1.1 million to fit out and the Sydney site $950,000.
The document also indicates the founders have learned from their decision to put their Melbourne restaurant in a popular, but suburban area, in Windsor.
“We will only focus on locations in business districts or areas with strong tourist appeal, as we have seen the “suburban” marketplace quite affected by weather, season, local events etc,” it said.
The Sydney location is in Surrey Hills and is expected to open in October.