BurgerFi International gains significant new shareholder, private equity firm L Catterton, as well as a new brand it intends to franchise as part of its $ 161.3 million acquisition of Anthony’s Coal Fired Pizza & Wings. Executives are hopeful that both developments will cause the share price to rise, which peaked at $ 11.33 per share in July, but closed yesterday at $ 8.81.
“We don’t think the current share price adequately reflects the value of BurgerFi, let alone the addition of Anthony,” said BurgerFi CFO Mike Rabinovitch, whom he attributes in part to to the major volatility of last year in the PSPC market, or to a special target. acquisition company.
BurgerFi went public last December when it merged with a SPAC, Opes Acquisition Corp. It became the first restaurant franchise to do so successfully since Del Taco’s merger with Levy Acquisition Corp. in 2015.
Since BurgerFi’s public debut, the SPAC market has soared and fallen. In January 2020, approximately $ 1 billion was raised by new SAVS. That rose to $ 18 billion in October, the highest of last year. In February 2021, the amount raised exceeded $ 35 billion but fell to $ 6.1 billion in September, according to Dealogic and SPAC Research.
“Yes, there has been a cyclical reaction to PSPCs in the investment community, but the composition of shareholders of companies that have gone public with institutions, funds and banks is different from that of PSPC shareholders,” said Rabinovich.
He qualifies L Catterton’s continued involvement in the business as a vote of confidence. “I think this is the world’s largest private equity fund focused on the consumer space. They bought, sold and developed dozens of restaurant brands, ”he said.
“What’s very interesting about the way the business is structured is that the seller doesn’t come away with money. They take shares of our company in exchange for ownership of Anthony. They would only do that if they had a firm belief in it, ”he said, noting that L Catterton will sit on the board. “The amount of expertise and breadth of their experience will be a great complement” to the existing team.
Julio Ramirez, CEO and President of BurgerFi, has been a 26-year Burger King executive who joined BurgerFi in October 2020. “I joined the company two months before our IPO, the SPAC was already formed. I am very happy to have accepted the role. Anyone who’s gone public knows it’s very energizing, ”he said. “We have the heart of a lion even though we are a small business.”
BurgerFi has 116 locations in total, 22 businesses and the rest franchise. “Most of them are existing operators opening their second, or fifth, sixth, location. It’s the mark of a good brand, when existing operators grow, ”Ramirez said.
Anthony’s has 61 company-owned locations and the first franchise rollout for the South Florida-based brand is underway, Rabinovitch said. “One of Anthony’s amazing attributes is that they have high productivity in their locations: AUV $ 2.3 million per location, with very good operating margins of 19%; average sales per square foot approaching $ 700. These savings are such that they can grow.
Even more interesting, he said, “Anthony’s opened its first 1,700 square foot location against 3,200 square feet. This lower level investment to open a smaller store, which can turn into a less capital intensive growth strategy, or open up the franchise opportunity. He said they were evaluating the one small store to determine the “ideal spot” for franchise expansion.