Benito’s Hat, which yesterday announced £1m of fresh investment, is in advanced negotiations on a site in St Albans and is close to securing a franchise partner that would allow the brand to grow in the UK and internationally.

Managing director Michael Pearson told MCA that adding a franchise element to the business would give existing backers Calculus, who provided the bulk of the new funding, a more attractive exit when the time was right.

He said that growth would come from a combination of company-owned and franchised stores, and through both its new smaller A1-focussed format and its traditional A3 model. The group has secured a site at the O2 for the latter, which will open in Q1 next year and will be a flagship site for the group, Pearson said.

Other focusses for expansion include Bath, Reading, Guildford and Watford. The group is aiming double its eight-strong company-owned estate over it next three-year growth plan alongside franchised expansion.

Pearson said the smaller format, which has so far been tested in Oxford and Leicester, allowed more capacity for delivery. He said the third party side of the business – combining delivery, events and pop-ups currently accounted for around 20% of sales.

The £1m of fresh funding for the group all came from existing investors, with Calculus as the lead. Pearson said he did not expect to return to his backers for further investment.

He said: “Calculus have been a very supportive backer. They have been with us for four years and they’ve bought into our vision for the next stage of growth. At some point they will want an exit and one of the attractions of adding a franchise element to the business model is that it drives EBITDA multiple when we come to the point of a buyout.”

On the search for the right franchise partner, he said: “We have been in conversation with a potential partner for six months and we are at a well advanced stage. It’s an international business that operates in a particular segment.”