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Morning Briefing for pub, restaurant and food wervice operators

Thu 16th Apr 2015 - BrewDog founder – shareholders seen 525% value increase in three years
BrewDog founder – shareholders seen 525% value increase in three years: BrewDog founder James Watt has reported that shareholders who invested in 2012 have seen their shares increase in value by 526%. Watt also suggested that BrewDog’s growth trajectory should mean its value is comparable to Shake Shack , which was valued at $1.6 billion in it recent IPO. Watt told shareholders: “Valuing a company that is growing as fast as BrewDog is always tough. Conventional metrics such as multiples of turnover or profit don’t really make sense when both of these figures are moving so fast that they are practically doubling year on year. With a fast growth company you are valuing the growth potential much more than you are valuing the conventional metrics and assets. Other fast growth companies use a free cash flow valuation model and this is what we have used to help us price our previous Equity for Punks share offerings and when assigning a value to BrewDog in the past. An example of a fast growth company that recently went public is Shake Shack – the chain of 63 burger restaurants that started in New York. Their recent share offer was fully subscribed and the US stock market valued them at $1.6 billion. They have 63 restaurants compared to our 30 bars. However in 2014 we made much more profit than them, grew much faster than them, opened in more new markets than them and our sector (craft beer) is growing much faster than theirs. Oh, and we have an awesome brewery too. If the US stock market values Shake Shack at $1.6 billion then we will let leave it up to our investors to decide what BrewDog is potentially worth. We feel a huge responsibility towards our awesome Equity Punks. Due to their investment, it’s no exaggeration to say they are the core of our business. Those who invested in Equity for Punks II, which closed in January 2012, saw the value of their investment increase by 526%, or over five times, on our trading platform in November 2014. A pretty phenomenal return by any measure in less than three years. But as well as giving them a great financial return, we want our Equity Punks to have a front-row seat to the craft beer revolution. The input that they have is central to our growth; the ideas shared and questions raised on the Equity For Punks forum are vital to how we develop as a company. Also, in Beatnik Brewing Collective they have their own bespoke brewery operation, as well as other cool perks like a beer on their birthday and the soon-arriving curated BottleBox beer club. In terms of fulfilling our growth potential, we are just getting warmed up. We are just commissioning our new canning line, continuing to add capacity to our Ellon brewery and we currently have ten (yes, ten!) new BrewDog bar sites at various stages of licensing, planning and fit-out (more details on these soon).”

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