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The Good Egg

Platform:
Crowdcube
Stage:
Expansion
Industry:
Food & Drink
Location:
UK - South East
Date Rated:
29/09/17
Raise:
£500,000
Equity:
18.18%
Valuation (Pre Money):
£2,250,275
Industry: Food & Drink
Location: UK - South East
Platform: Crowdcube
£500,000 Expansion
Valuation: £2,750,275
Date Rated: 26/09/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: EIS

Business Summary

The Good Egg serves up Jewish deli and Israeli-inspired brunches, bagels, pitas and small plates alongside a drinks menu of classic American cocktails, craft beers and natural wines.The Good Egg currently serves an average 1200 customers a week in its first location and has secured a 100+ seater site in the heart of Soho in London's West End for its second. This round of investment will be used to fund pre-opening costs and working capital.

Financial Overview

Sep-20
Date (y/e) Sep-16 Sep-17 Sep-18 Sep-19 Sep-20
Sales Sep-16£695,710 Sep-17£815,828 Sep-18£2,792,160 Sep-19£4,781,223 Sep-20£5,160,279
Gross Profit Sep-16£476,793 Sep-17£589,897 Sep-18£1,969,634 Sep-19£3,444,513 Sep-20£3,747,398
GP as % sales Sep-1669% Sep-1772% Sep-1871% Sep-1972% Sep-2073%
Overheads Sep-16£490,419 Sep-17£603,284 Sep-18£1,998,009 Sep-19£2,967,546 Sep-20£3,088,926
Operating Profit Sep-16-£13,626 Sep-17-£13,387 Sep-18-£28,375 Sep-19£476,967 Sep-20£658,472
OP as % sales Sep-16-2% Sep-17-2% Sep-18-1% Sep-1910% Sep-2013%
Closing Cash Sep-16£61,385 Sep-17£47,759 Sep-18£360,542 Sep-19£837,509 £1,495,981

Note: This financial information has been sourced from the company on 28/09/2017. Financial data is NOT verified by Wheatfromchaff Ltd.
59%
SKILLS:
EXPERIENCE:
COMMITMENT:
The Founders have proven product development skills and they have a supporting operational team to help manage the business.
The first site has given the management team relevant start-up experience and they have industry advisors onboard but the rollout will be a completely new challenge for them.
No directors pay, dividends or non-exec salaries have been paid to date, yet most of the management team seems to be full-time since inception.
53%
MARKET:
PRODUCT:
COMPETITION:
Brunch is increasing in popularity and is experiencing fast growth in the industry. Furthermore, the location of the second site should provide the company a large addressable market.
The number of weekly customers, strong network of followers and many supportive testimonials shows there is a real demand for this concept and the team has already secured the second location.
The market is extremely competitive as there are many players with brunch offerings, however, the company has a strategic location that should help to gain market share.
48%
PROFITABILITY:
CASHFLOW:
RETURNS:
The forecast has reasonable growth assumptions and the team will distribute costs between the sites to improve current profit margins but it will be difficult to increase them much further thereafter.
The company will face considerable upfront expenditure and has only modest headroom to protect against any revenue shortfall unless the intended overfunding is achieved.
If an exit is achieved with the expected three sites, a potential two-fold return for investors in this round seems realistic but not that appealing given the execution risk.


Conclusion

Although the company is behind their previous plan given the delays fitting out the first site, it has now gained strong commercial traction and relevant brand awareness and is also ahead of the targeted weekly revenue of £12k achieving £16-£18k. Therefore, the Founders have demonstrated they can build a competitive business and the second site seems to be in an ideal location. That said any F&B roll-out still represents a major challenge.

Investors should note that a further funding round to fund the third site is likely and a minimum investment of £10k is required to secure pre-emption rights.

Related Links

Crowdcube Pitch

thegoodeggn16.com

 

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The Ratings we publish have been approved and issued at Financial Promotions in the United Kingdom by Wheatfromchaff in the United Kingdom who is Authorised and Regulated by the Financial Conduct Authority FRN: 751017. Wheatfromchaff Limited registered office is Kilver Court, Kilver Street, Shepton Mallet, Somerset, BA4 5NF and telephone number +44 (0) 1749 347 577. Telephone calls may be recorded. VAT No: 214 0196 49

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