Chilango have issued a new bond - this time on their own. Burrito Bond 1 was issued through Crowdcube in 2014 and is now due for repayment. As the company is someway off all of its targets, this new bond will do the trick.
Chilango had 6 restaurants when they issued the first bond in 2014 and had a total of 10 ready to go by the end of that year. Now they have 12 - 4 years later. Revenue for FY 2017 was a mere £10m compared to the projected ~ £20m (date changes make a like for like difficult). No profits were due and no profits have been delivered but the losses have been considerably higher than anticipated - aided by the slow progress and closure of one unit. Losses of around £250k have turned into losses of £1.4m.
Chilango also raised £3.7m on Crowdcube from over 2000 investors, in 2015. Maybe the lack of progress has meant that a new equity round was going to be hard work. According to the accounts to YE March18 they raised around £1m in the year and another £28k after YE.
Since the 2014 success, the company has lost its battle with HMRC over a £700k vat bill, lost one of outlets and its central kitchen and pivoted the whole concept, costing many millions. You can read about all of this here. Reviews of their food are stubbornly stuck at average.
In an amusing twist, the company's auditors are Grant Thornton, whom you may remember recently missed a £20m hole in Patisserie Valerie's accounts. Room for a few burritos there.
The current balance is in the red and company as at 31 March 2018 was short on cash with heavy debts and still struggling to break even.
In the Bond Offer document back in 2014, they told investors -
Q - What happens if you can’t open any new restaurants?
A - Although our plan is to open new restaurants, if we can’t our existing financial position would be strengthened as our current restaurants continue to mature.
Well that didnt work too well. They forgot about closures, bad choices and rising costs.
Given the above, what are their chances of raising more on this new bond?
Well as with almost all things to do with ECF, astonishingly, they have, after just a day or so hit their minimum £1m target. Of course none of the information above was readily available to investors.
On she sails.
I think they only did one equity raise on CC in 2015, unless I'm mistaken the 2m in 2104 refer to the minibond. The last 2 years revenues grew barely above inflation and losses continue to be around £1m. Their first minibond just got due for repayment, so I guess they are in urgent need of cash. What a pity they didn't return to CC, would have loved to ask some questions in the forum.
ReplyDeleteThanks - now corrected.
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