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Mon 16th Jun 2014 - Breaking News - River Cottage Canteen launches £1m mini-bond
River Cottage Canteen launches £1m mini-bond: River Cottage Canteen has issued a £1m mini-bond, paying 7% interest, through crowd-funding website Crowdcube to enable expansion of the brand to large footfall sites in prime locations. Launched in 1998 by food writer and chef Hugh Fearnley-Whittingstall, River Cottage is a pioneer of seasonal, local, organic and wild food. It operates an award-winning cookery school and three Canteens in the South West. So far, 26 investors have pledged £252,000. In its prospectus, the company states: “River Cottage Canteen annual sales rose to £4m this year, over 3.5 times 2011 sales of £1.1m. Over this period the group has expanded from one store to three whilst also building up a head office team to oversee further growth. In this last year the average Canteen produced sales of over £1.3m, with the busiest restaurant achieving just over £1.6m. Each restaurant is on target to pay back opening and design costs within three and four years of trading. The first canteen to open was in Axminster and although only a small town the site has traded at over £1m per annum from its first year of opening. Sales are boosted by the in-store deli and a close working relationship with Park Farm just down the road. The Plymouth canteen opened in November 2011 and is our largest Canteen, with the added benefit of external seating in the magnificent Royal William Yard. We opened our third canteen in Bristol at the end of February 2013 and the first year of trading has been very promising with income hitting £1.3m and producing a ROCE for the site of 29%. Our total debt, adjusted for cash in the bank, at the end of March 2014 was £277,000, of which £176,000 is related to short-term loans for each of the existing Canteens and £101,000 of overdraft and cash balances. The River Cottage Bond will enable the Canteen business to grow and will also offset the need for future short-term bank borrowing.” The company added: “Over the last seven years the Canteens have evolved from an ambitious idea into a unique group of popular and independent restaurants embedded in their communities. Each opening has been accompanied by a high level of media attention and local interest. The canteens have served over 300,000 guests since the beginning of 2013 and we are keen to continue to expand. The River Cottage Bond will help us to take our Canteens to more towns and cities in the UK. And whilst we are ambitious, we should also emphasise that we’re not in a rush. We are growing organically and care needs to be taken for each new opening to be a success. In addition to identifying the correct sites, we also need to set up a strong supplier network and train staff. When we began our growth plans concentrated on the South West, where we were looking for attractive and stimulating buildings relatively close to our Devon headquarters. This has allowed us to progressively develop management systems and supply relationships close to home. Now that this process is firmly established, the Canteens are ready to expand further and actively consider sites in the South and South East. This is a logical extension of the initial territory and an area where, due to television coverage, the brand is already very well known. The Axminster and Bristol Canteens largely compete with local independent restaurants and gastro pubs, as there are few branded operators nearby. Whilst initially we were happy to avoid expensive prime locations where these chains normally gather, opening in Plymouth has shown us that the Canteen trades well against them. When the Plymouth Canteen opened originally there were very few restaurants in the area. They have since flocked in as momentum has built and the Canteen now trades close to the likes of Bistrot Pierre, Wagamama and Las Iguanas. As a result of this success, in the next phase of expansion we are also looking at sites where branded operators congregate and higher footfall can be expected. To make this more economically feasible we have developed a model for smaller footprints. This will substantially widen the range of sites that we can consider and improve the prospects for delivering the expansion plan. The River Cottage Bond should help us to grow from three sites this year to seven by 2018, and we are hoping to launch one new Canteen each year. We plan to use part of the money from the bond to fund some of the capital cost of opening in Winchester, and the remainder will be used to reduce bank borrowings until we are ready to open Canteen number five.” Perks for investors who pledge a minimum of £500 include: Free access to our eight online course (worth £160), 10% off cookery school courses and events at River Cottage HQ; 10% off Canteens in Axminster, Bristol and Plymouth; Access to exclusively-signed River Cottage books; the opportunity to join Hugh Fearnley-Whitingstall at special events; front of the queue access for exclusive events and filming.
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