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Freshii files for Canadian IPO

High-growth healthy chain expects to double in size by 2017

Freshii Inc., the 244-unit chain of health-focused restaurants, on Tuesday filed preliminary documents for an initial-public offering in its Toronto home.

The company plans to use funds raised in the offering to repay debt, buy back a master partner agreement in Chicago and fund the company’s growth, according to its filing with Canadian securities regulators.

Freshii has long been said to be considering a public offering, and was said to be talking to bankers both in the U.S. and in Canada in various reports over the past year.

The 11-year-old brand has been staking a position as a high-growth fast-casual chain that serves a variety of fresh, healthy food. “Imagine a world where every cluster of fast-food outlets also included a healthy restaurant serving fresh salads, hearty quinoa bowls, whole grain wraps and fresh pressed juices,” Matthew Corrin, who founded the chain in 2005 and is its CEO, wrote in the filing. “That is the future that we are aiming to create with Freshii.”

Freshii has used a primarily franchised business model and an attention-getting marketing strategy — which once included an offer to cobrand with McDonald’s Corp. locations and, more recently, awarded a franchise if the Chicago Cubs won the World Series. 

In recent years the company’s growth has accelerated, and securities filings suggest it expects that rapid pace to continue in the coming years.

Systemwide sales more than doubled from 2013 to 2015, from $29.1 million to $61.3 million, according to the filing. Earnings before interest, taxes, depreciation and amortization, meanwhile, increased from $1.9 million to $4.7 million, and over the past 12 months have been $7.1 million.

Same-store sales, meanwhile, have increased for 14 straight quarters and increased 8.2 percent in 2014 and 4.8 percent in 2015. Same-store sales have increased 6.4 percent so far this year. 

Unit count, meanwhile, has tripled, from 70 locations in 2013 to 244 locations now, and the company expects its unit count to blossom, to as many as 440 locations by the end of its 2017 fiscal year and as many as 840 by 2019. The company has focused some of its development on nontraditional locations, such as inside Target Corp. stores.

The company boasts a flexible real estate model that doesn’t require expensive kitchen equipment such as ovens, vents or grills, and can go into locations ranging from 300 square feet to 2,500 square feet. A typical store is 1,200 square feet and costs $260,000 to build with 40 percent cash-on-cash returns, according to the filing.

Revenue in 2015 was $11.1 million, up from $9 million a year earlier, while Freshii reported a net loss of $1.8 million, but that included a nearly $6 million in costs associated with a contract termination fee and a legal settlement, according to the filing.

Contact Jonathan Maze at [email protected]

Follow him on Twitter at @jonathanmaze

TAGS: Finance News
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