Own a piece of Holy Smoke

[TomcoPDR]

Not sure to put this in the food thread or real estate... Anyone looked into owning a piece of a Cgy restaurant? :D

Beyond restaurant ballers, time to hedge your family food chain enterprise.

https://investinholysmoke.com/

[R!zz0]

Holy smoke that's a good website.

[ExtraSlow]

I enjoy holy smoke, visit reasonably often.

Wonder how they decided on the valuation? Does it just coast half a million to start up a restaurant like that? Are they assuming a certain amount of future profit? Are the investors on the hook for losses?

[lilmira]

I can get discount at midnapore? pass

[R-Audi]

Looks like it is going in where Little Caesars was/is..

Id expect at least $250-350k for buildout/smoker/fridge etc... depending on what remains from LC that is usable... I havent been to that location so its tough to say. They would likely also have a deposit and ~6-12 months rent budgeted in there. Id guess that there is some 'profit' or franchise fee built in for the original owners... or perhaps they get a bit of a free ride as its their business name/rep/recipe.

[ExtraSlow]

Originally posted by R-Audi
Looks like it is going in where Little Caesars was/is..

Id expect at least $250-350k for buildout/smoker/fridge etc... depending on what remains from LC that is usable... I havent been to that location so its tough to say. They would likely also have a deposit and ~6-12 months rent budgeted in there. Id guess that there is some 'profit' or franchise fee built in for the original owners... or perhaps they get a bit of a free ride as its their business name/rep/recipe.
Yeah, seems like there isn't enough in there for much operating costs for the first little bit, and also probably not enough for any profit going back to the Franchise owners.

[jwslam]

I spend $1,500 on much dumber sh*t. This is a good deal if I lived closer to Midnapore and could actually make use of the discount card.

[ercchry]

Shareholders will never see dividends, they'll run it at a loss forever... any actual profits will be paid out to HS in the form of inflated salaries and retaining a majority there will be nothing these 250 "owners" can do about it

Not to mention their BBQ has been pure shit since about a year into the original location

[spikerS]

Originally posted by jwslam
I spend $1,500 on much dumber sh*t. This is a good deal if I lived closer to Midnapore and could actually make use of the discount card.

Yeah, i guess if you got $1000 or $1500 burning a hole in your pocket, the novelty of this idea is kinda fun...

But looking at the business side of it, potentially, if all "investors" got the $1500 package, they get 15% off, so to realize their return, they would have to spend $10,000 there to get their return on their $1500 investment.

Second part of it is, this initial investment. are there dividends on it? how does one of these people cash out? their valuation of the company is $750,000 as rough maximum...being as all 250 "investors" will be minority share holders, they have no influence over business direction.

I don't think it's a good deal, one way or the other with the information I saw. However, it might be a good way to impress some random chick you take there for a date, it might get you past second base.

[dirtsniffer]

It says right on the page that there is dividends?

[R-Audi]

I think they would be better off doing something like the Village Brewery... larger chunk of cash to become a 'Baron' but you get a few cases of beer a month (or whatever it is) for as long as you own your stock. A 10-15% discount is kinda shitty depending on the dividends.

[Xtrema]

Originally posted by dirtsniffer
It says right on the page that there is dividends?

Surplus cash flow*

It's easy to make surplus cash flow disappear in a restaurant. You will end up seeing owner hiring cousins to clean windows for $10K and such.

[ExtraSlow]

There could be dividends, but none are guaranteed, and no rate of return is discussed (or expected probably).

Seems like this would be a "fun" investment, but not a real profitable one.

[spikerS]

Originally posted by dirtsniffer
It says right on the page that there is dividends?

*surplus cash flow...

How exactly is "surplus" figured out?

Like I said, a novelty for sure if you have an extra $1000 burning a hole in your pocket, but, that's it.

[taemo]

hard to invest on something like this without seeing their financial performance :dunno:

if they can prove that they can operate at a profit and pay dividend continuously on a monthly or quarterly basis, why not.

but then it seems like you'll always be locked at 1% or 1.5% so not really worth it in either other than bragging rights if you can go there frequently.

[BavarianBeast]

Haha. Bit of a joke if you ask me. Can imagine they have pretty tight margins and with a $1500 max investment, your going to see what, like $50 in dividends a year?

[ercchry]

Some of you suck at math... they're raising $250k, they want 250 people to own 50% (let's be honest, 49.9%)

Evaluation is $500k (if they're renting the building this is inflated by about 5-10x based on what turnkey restaurants sell for)

Capping investment at $1500 means each person will own 0.2-0.3% of the business

Like I already stated before they will NEVER pay a dividend... if they actually were looking for proper investors they would of approached the kind who fund these sorts of deals, this is just crowdfunding dressed up as an investment to give suckers the warm and fuzzies. If they wanted funding they could of even got a business loan, probably would of only had to come up with $125k to get $500k total

[ercchry]

I bet what really gets them hard about this concept is the "250 built in customers" markup on food is in the 3-4x range... what's 10-15% off when you just guaranteed a customer base for years to come?

I hope I ends up being a shift in customer base instead of an expansion

[spikerS]

Originally posted by ercchry
Some of you suck at math... they're raising $250k, they want 250 people to own 50% (let's be honest, 49.9%)



But if they have 250 people wanting the $1500 package, that valuation becomes $750k, not $500k...

*edit* just saw where they actually put a $250k amount they want to raise. so $500/share, and you can buy a max of 3 shares kinda thing.

[suntan]

Originally posted by ercchry
would ofFailing grade 6 grammar, your argument is invalid.

[Disoblige]

If you eat there 5 days a week, for 2 years straight, on an average cost of $20 per visit, you can get your $1500 back with that 15% discount. :rofl:

[ercchry]

Originally posted by suntan
Failing grade 6 grammar, your argument is invalid.

Sorry, not having a general arts degree and instead focusing on math and sciences as afforded me the opportunity to have just rolled out of bed at this hour on a Wednesday :rolleyes:

[jwslam]

Originally posted by suntan
Failing grade 6 grammar, your argument is invalid.
I've lost count of how many times I've tried to correct him...

[sputnik]

Originally posted by ercchry
Shareholders will never see dividends, they'll run it at a loss forever... any actual profits will be paid out to HS in the form of inflated salaries and retaining a majority there will be nothing these 250 "owners" can do about it

My thoughts exactly.

Restaurants are notorious for running at a loss and profits disappearing out the back door.

Aside from inflated salaries and unnecessary spouses on the payroll, you can also have the owners to over purchase meat and supplies that go to their personal residences and the shareholder will be none the wiser. I wouldn't be surprised to see a couple company cars used for "promotional purposes" because there happens to be a decal in the rear window.

There are just WAY too many ways for these guys to screw over the shareholders.

[sputnik]

Originally posted by taemo
hard to invest on something like this without seeing their financial performance :dunno:

The whole agreement is dumb. All the shareholders own is a share in a single location.

Where is the potential for any growth?

It would be one thing if they sold off 50% of the Holy Smoke brand and then you become a shareholder in the growth of the name and all of the future franchises, but owning a single restaurant location is just an investment in something that will eventually close down and never turn a profit.

[sputnik]

Originally posted by Disoblige
If you eat there 5 days a week, for 2 years straight, on an average cost of $20 per visit, you can get your $1500 back with that 15% discount. :rofl:

Except for the fact that the $20 of food you purchased probably only cost the company (and shareholders) $6-10.

So the more you spend, the more you actually lose since you are just feeding the profit margin minus 15%.

[R-Audi]

Dont you guys think they would disclose more information in their investment package to safe gaurd against these scam theories?

Cant imagine them not disclosing sales of other stores, having rules in place about advertising/company cars/wages etc. It may not be a great investment, but its certainly not going to be a scam. They will be goverened by the Alberta Securities comission, as mentioned at the bottom of the website.

[AndrewMZ3]

The $1500 max investment is an ASC limit. If you're an accredited investor you can invest more.

[jwslam]

Good morning everybody!
I apologize for not sending you individual e-mails but the trickle has turned into a flood. As requested, here is the package.

I have also included a brochure that we have at our Manhattan Store to give you a little more color in case you have not already seen it – it highlights the “extra Perk” for an owner as well as gives an overview.


If you decide to participate in the offering, just for clarity (I apologize, the forms are long despite being 'shortened' by the Government!) please note:

The documents you need to sign are in the smaller file “Subscription Agreement 45-517….”; In addition to the Subscription Agreement, there are three more Exhibits/Agreements you need to fill out and return, with signatures on pages 3,4,10 and 11;
These can be scanned, or you are welcome to make an appointment and we can do it in person;
The maximum investment is $1500 per person (Alberta Securities Commission rule!)- in other words in a household, the wife, husband (partner) and any adult children would each be able to invest up to $1500, however there are exemptions for friends and family, and wealthy investors;
We can accept checks, e-mail transfer, Debit or VISA – any checks should be made out to Holysmoke Midnapore Holdings Ltd.; and
Debit or VISA payments must be made in person at the Holysmoke Manhattan Road SE location.

Also, anyone who becomes a shareholder of Holysmoke Midnapore will be contacted first for any future offerings! - they will be given an opportunity to invest (until it is sold out of course) before it is released to the public. And we are close to having another deal for a new restaurant on 17th Ave SW…

Do not hesitate to contact me if you have any questions! I may run an information/ Q&A session at the Manhattan Rd store at some point soon if there is demand.



Alec Ferguson
Holysmoke BBQ
#4, 4640 Manhattan Rd SE
Calgary, AB T2G 4B5

[jwslam]

Use of funds

[jwslam]

Forecast

They're selling up to 50,000 common shares @ $5/each

[blitz]

Originally posted by R-Audi
Dont you guys think they would disclose more information in their investment package to safe gaurd against these scam theories?

Cant imagine them not disclosing sales of other stores, having rules in place about advertising/company cars/wages etc. It may not be a great investment, but its certainly not going to be a scam. They will be goverened by the Alberta Securities comission, as mentioned at the bottom of the website.

It's not an actual scam, it's just a clever way of getting interest free money for a long period of time.

[R-Audi]

Seeing the $24k in executive pay and $49k in Licensing royaties would make me pause......They own 50% yet still want a license fee. Also dont like that 36k is going towards debt... new restaurant should not have any debt!

[ercchry]

Those 250 investors will have to eat there 5 days a week to hit those revenue goals :rofl:

[LLLimit]

.

[Sugarphreak]

...

[flipstah]

I like how they assume investors automatically mean customers.

I love money, but not necessarily meat.

[ercchry]

Originally posted by flipstah
I like how they assume investors automatically mean customers.

I love money, but not necessarily meat.

You love meat :poosie:

Anyone else thing the staffing costs are pretty high? The manhattan location only ever has two to three people working at a time... don't think running cash or plating meat is a six figure job

That's over 14 $15/hr full time employees

[lilmira]

Too much smoke with not enough meat?

Perhaps money will be better spend on a big green egg. You'd still have money left to buy meat. Trade the end product with your friends and neighbours for booze. And you'll have total control of your investment. ;)

[hks]

Pretty cool, but would have to see previous years financials and their assumptions to determine if their forecasts are reasonable.
Their SE location has a 4.5/5 rating with almost 1500 votes on zomato which looks promising.

[Buster]

If the performance of their existing locations is not sufficient to be able to utilize debt capital, then that means the new project is a bad idea for investors.

Assuming that they can raise debt, but this is their preferred option, then that means that they expect investor returns (ie what the founders are giving up) to be less than their cost of debt. Given that this is risk capital for the investors, that means that the founders are not expecting (or will never be willing) to give the investors more than 4-7% ROI.

Either of these scenarios indicates that an investor should laugh at them and walk away.

The first question that any investor should ask themselves in these situations is "why am I getting access to this investment". There are ALWAYS people who have looked at any investment you might do and rejected it for one reason or another. So you can assume that you aren't the smartest person at the table - but the game is to ensure you aren't the dumbest, either. This kind of investment literally puts you at the end of the investment opportunity food chain.

[canadian_hustla]

Memorandum found on google! (Pdf goes right to download)

clicky (https://www.google.ca/url?sa=t&source=web&rct=j&url=https://websites.godaddy.com/blob/4600e468-7371-4985-8ce3-514b8b12eb96/downloads/Holysmoke%2520BBQ%2520Midnapore%2520Offering%2520Memorandum_8133289_6AF.pdf%3F04ae7d60&ved=0ahUKEwi5iKT9iP3SAhWr6IMKHQyzC0IQFggmMAQ&usg=AFQjCNEcg7CCfdPA7x6AClJnlYb3C9EBvQ)

Imo i am not really sure if i would want to invest in this. While i like that the startup costs are super low, (read the memorandum.. they are going to be leasing a space of a former restaurant. So equipment already on site.), and ebita multiple seems fair market value, but i do see issues as follows:

(Disclaimer - i used to finance restaurants (bank job) for a living)

1. There is pretty much no exit strategy,

2. the dividends are miniscule; and that is even if hey were to hit proforma sales from day 1. It would be helpful to see the f/s for their other restaurants

3. Restaurant business is highly risky and capital intensive, 80% fail within the first 5 years. Trust me i have financed my share of dogs lol

4. Why are they not getting a canada small business loan for the equipment and ti's? 90% LTV, prime+3%

5. Imo seems like a 0 equity deal. Investors take all the risk... i didnt see the uses of funds (if any) for the owners

EDIT : owner equity is $50k via sale of existing restaurant equipment. $50k BV or MV?

6. Why consolidate debt from an existing restaurant? This scares me

7. I would like to know more about the lease (i think its 10 yrs), step ups?

8. Investors will own approx 50%. What does approx mean? What if 49.9% = no control?

9. 4% royalty on sales... if i was a betting man i would think that this opportunity is a test to see if they can partially franchise, start locally and perhaps expand provincially or federally

10. Going back to 2., what happens if the restaurant loses money? Is there risk of additional cash calls?

11.imo i am not a lawyer but i would think the investors should form a LP and the LP company should register a GSA covering PAP on all the assets of this location to protect their interests.

Neat idea though

[secol]

haven't looked into this too much, but reminds me of choklat

https://www.reddit.com/r/Calgary/comments/5xtm41/looking_for_people_whove_invested_in_choklat/?st=j0wg2c4v&sh=b2630c70

[suntan]

Originally posted by secol
haven't looked into this too much, but reminds me of choklat

https://www.reddit.com/r/Calgary/comments/5xtm41/looking_for_people_whove_invested_in_choklat/?st=j0wg2c4v&sh=b2630c70 LOL, I know Brad Churchill. He's like the white Nenshi.

[sputnik]

Originally posted by blitz


It's not an actual scam, it's just a clever way of getting interest free money for a long period of time.

:werd:

[suntan]

I guess no one here has any equity investments whatsoever.

[jwslam]

We have a few exciting updates!

-we have found a very experienced Texas born chef to help us expand the menu;
-We added a big benefit to the discount – we are now including a 10% discount to Holysmoke Manhattan & Holysmoke 16th with the Holysmoke Platinum Card!!

We are having fairly good uptake in a short time – it looks like we have interest from over 100 shareholders so far. I wanted to give you a heads up we may cut off the offering early (within the next 2 weeks or so) and to see if you have interest in participating. As a reminder the minimum investment is only $500 ($1500 max) and we can accept Debit or Visa.

[bourge73]

Not going too well hey .... shocking

[jwslam]

Originally posted by bourge73
Not going too well hey .... shocking
Edited my post

[bourge73]

Originally posted by jwslam

Edited my post
:rofl: FKR

[Strider]

A new one - clicked to the website after I saw "Craft Nachos" on the Calgary Deals and Discounts thread and had to know wtf that's supposed to mean

http://www.madisons1212.com/
"COMMUNITY FUNDED × COMMUNITY FOCUSED"
Anyone want give up their email address and to find out what it costs to get "#nachos4life"?

[ercchry]

A new one - clicked to the website after I saw "Craft Nachos" on the Calgary Deals and Discounts thread and had to know wtf that's supposed to mean

http://www.madisons1212.com/
"COMMUNITY FUNDED × COMMUNITY FOCUSED"
Anyone want give up their email address and to find out what it costs to get "#nachos4life"?

Walked by here the other day going to WOP... looks like it’s going to be a pretty sweet patio destination next year