London-based burrito concept Chilango is ramping up its expansion plans with the launch of a funding round via online platform CrowdCube to raise £1m to enable its next phase of growth.
The cash is being raised to open restaurants in the UK and internationally under franchise with an initial focus on Dubai and the Middle East.
Chilango has said it will reach more than 50 restaurants in the next five years in London and in cities around the UK. The first stage will be to use the £1m to fund the launch of three UK restaurants – with the first due to open on Soho’s Brewer Street in January.
Co-founder Eric Partaker told M&C the company is set up geographically and organisationally to cover the whole country to enable Chilango to reach its target number of restaurants.
Partaker said the majority of new restaurants will be outside of London, but envisages two to three opening each year in the capital.
“We only have 10 restaurants in a city of seven million people; how many Prets are there? Everywhere there’s a successful Pret there’s no reason there can’t be a Chilango.”
The Partaker and Dan Houghton-led company has said it is looking at 20 UK cities and is understood to be close to securing a site in Manchester for its first regional opening.
To strengthen the management team Simon Kossoff, chairman of Carluccio’s restaurants; Don Henshall, former chief executive of Krispy Kreme UK and currently chief executive with Farrow & Ball and Chris Moore, former chief executive of Domino’s Pizza UK have all joined as the board as non-executive directors.
Chris Moore said: “I always look for passion in the entrepreneurs I invest in, and Eric Partaker and Dan Houghton have it in spades, and they also get the importance of building a brand. Creating a company that engenders loyalty is part of that, and Chilango’s staff, investors and guests all become advocates, so that’s why crowdfunding works perfectly for these guys.”
On international brand development, Partaker said Chilango will work with franchise partners to establish the restaurants in new countries and territories. There has already been significant interest in franchising the brand from partners in Dubai and countries in the Arabian Peninsula with whom Chilango has developed relationships with.
Partaker said he would not rule out franchising in the UK but feels the company has sufficient experience operating restaurants here that it is less necessary to work with partners.
Last year the group raised £2.3m with a mini-bond to open its latest three London restaurants. The fundraising campaign raised the profile of the restaurant and attracted more than 700 people to invest in the Burrito Bond.
After five years, Chilango’s exit strategy will come via private sale or IPO.
The first Crowdcube campaign offered investors 8% pa return over four years with minimum investment of £500. As part of this round, investors can become involved from just £10. The Burrito Bond has already paid out £130k to its investors in its first two interest payments.
The campaign has raised more than 65% of its target in the first 24 hours, which co-founder Partaker told M&C is largely due to the interest gained when through the Burrito Bond campaign. Many of the investors are the same people who invested in 2014.
He said: “We had more than 700 Bond holders and other equity investors who had approached us through the years; we have a lot of brand ambassadors.”