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Tue 4th Apr 2017 - Award-winning Chilli Pickle seeks to add four sites with crowdfunding push
Award-winning Chilli Pickle seeks to add four sites with crowdfunding push: Award-winning Indian restaurant The Chilli Pickle, based in Brighton, has launched a crowd-funding campaign on the Growthdeck platform to raise £700,000 to open four more sites in the south east – 23% of the company’s equity is being offered. The first site was established in 2008, moving in 2011 to a much larger 115-cover site in Brighton’s Jubilee Street. The single site operation, owned by Alun and Dawn Sperring, generates more than £2.2m of sales and is profitable with circa £300,000 of takeaway sales. Kevin Bacon, Growthdeck sector expert, is to join the board as executive chairman. He said “few independent, single site provincial restaurants achieve this level of sales”. The first new opening is planned for summer 2017 (subject to completion of contracts). The Chilli Pickle has been consistently recognised at the National Restaurant Awards 2011-16 Top 100 UK Restaurants and other awards including a Michelin Bib Gourmand for eight years running and won best delivery service at the British Curry Awards three years running. It consistently attracts very high customer ratings on TripAdvisor and other online sites and is highly rated by restaurant critics – it received five stars from food critic Tom Parker Bowles in the Daily Mail. Investors have been told a sale of the business is expected in mid-2021 with five sites generating £1.3m Ebitda before central costs with the eventual buyer assumed to pay nine times site Ebitda. It stated: “Buyers would have the opportunity to scale further and could be a larger restaurant group (eg The Restaurant Group, Compass, Whitbread et al) or a mid-market private equity house with experience in the hospitality sector. Based on the assumptions below, investors in Chilli Pickle are offered the prospect of a 5.3 times money return (57.5% internal rate of return (IRR) – increasing to 7.6 times (65.8 IRR) after taking account of initial 30% income tax relief. The amounts subscribed for ordinary and A ordinary shares will be returned to holders prior to the distribution of any exit proceeds to equity holders. This means that if the company is sold for only £833,000, all shareholders would recover the full cost of their investment.” So far, £201,000 has been raised towards the £700,000 total. The pitch states: “The business is run by husband and wife team, Alun and Dawn Sperring, who travel to India every year for new inspiration and ideas. An experienced chef, Alun has cooked all over the world at top hotels and restaurants (eg Intercontinental Vienna, Four Seasons London, Cinnamon Club London and the QE2 cruise ship). Chilli Pickle has an innovative menu of kebabs, regional curries, street food and biryanis. It specialises in “Thali trays”, which feature a main curry and a range of accompaniments, including snacks, pickles, salad, rice and bread. It also offers some unusual meat, not common in other Indian restaurants, including oxtail and venison curries and slow-cooked pork belly vindaloo. In 2013 Chilli Pickle launched a takeaway service which now accounts for 15% of the restaurant turnover (as per management accounts). Deliveroo operates the home-delivery service, replacing Chilli Pickle’s own-delivery last year. Pricing reflects the premium quality of the Chilli Pickle food. For example, main courses typically cost £13 to £15, resulting in an average customer spend of £29 dinner, £17 lunch and £15 takeaway. Chilli Pickle attracts consistently high satisfaction scores on TripAdvisor – averaging 4.5 out of five, and with over 82% of reviewers rating Chilli Pickle as excellent or very good. The Chilli Pickle concept is established and now ripe for roll-out. It is planned to open four new 80 to 120-cover restaurants in south east market towns over the next three years, with the Brighton hub acting as an academy for new managers and chefs. In preparation for the expansion programme, Chilli Pickle has terminated its outsourced financial management service, and recruited an experienced full-time financial controller. Although this increases central costs, it is a prudent move. The first new site is planned to be a new-build unit in the centre of a market town. Chilli Pickle is finalising design plans to fit-out a 95-cover restaurant at a total cost of circa £700,000, of which circa 40% will be funded by the landlord. Chilli Pickle expects to open this site in June/July. Chilli Pickle is considering Tunbridge Wells, Worthing, Winchester, Hastings and Oxford as possible locations for the additional three new sites. These units are forecast to open in June 2018, June 2019 and January 2020. In addition to the planned new restaurants, Chilli Pickle has the prospect of a collaboration with Deliveroo, at a new Roobox in Hove, near Brighton. The Roobox concept is based on Deliveroo offering a fully equipped kitchen on a concession basis to selected takeaway operators. This offers the prospect of Chilli Pickle building a home-delivery service in Hove, with no requirement for capital expenditure or other investment. This additional business line could be operational in the next two to three months.” The first site in Brighton has a site Ebitda of £154,000 and the company has £231,000 cash at the bank.


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