According to National Restaurant Association data, restaurants gobble up around 47 percent of all consumer food spending, doing some $709 billion each year in sales, and providing employment for over 14 million Americans. However, while there has been a great deal of innovation in the fast-casual segment in recent years, an overly saturated market has left operators desperately searching for new recipes to success, and the casual dining end of the market remains largely dominated by entrenched brands such as Luby’s (NYSE: LUB) Fuddruckers, or Darden Restaurant’s (NYSE: DRI) Olive Garden.
The heavily consolidated casual dining market is ripe for the kind of disruption we have seen in fast-casual in recent years. Where the likes of Luby’s Koo Koo Roo chicken, or innovator Chipotle Mexican Grill (NYSE: CMG), have successfully blended together speed, affordability, and healthier organic options in order to capture increasing market share. Healthier food choices are one of the major driving factors in the market today and any models which seek to prosper in the casual dining segment are most likely going to have some or all of their menu’s emphasis focused in this direction.
Up-and-comer Giggles N’ Hugs (OTCQB: GIGL) is a good example of this, blending together a Gymboree-like, kid-focused play area and delicious, organic casual dining for parents. This is an entirely new approach to family dining which has its origins in the founder’s attempt to find a casual dining restaurant they could take their young daughter to, secure in the knowledge that they could get healthier and even organic food options, and not have to spend the entire time managing their child’s behavior. At Giggles N’ Hugs kids can act their age, running around and playing in the 2,000 square foot plus play area located at each restaurant, safe under the watchful gaze of parents and restaurant staff who are dedicated to being attendees.
And GIGL has first-mover advantage here as one of the first and only children’s play center/restaurant to bring together high-end, organic food, with an upscale décor and family-friendly play area geared towards kids under 10. The company even offers parents a child drop off service so they can shop while the kids enjoy themselves stomping around at Giggles N’ Hugs in the play area.
The restaurant is split into two sections, one for dining and one for play, each section designed and constructed to be fit for purpose. Diverse revenues streams for the business include the typical restaurant side sales like food and beverage, as well as beer and wine – but are massively augmented by birthday party sales, retail item sales, play area fees, and membership subscriptions on the play area side. In fact, private party sales were up 3.4 percent year-over-year according to GIGL’s Q2 financial data released in August, reflecting steady growth of the company’s most lucrative offerings across its existing footprint of three locations at some of LA’s top malls.
One big secret to the company’s success has been that Giggles N’ Hugs is quite a deal for parents when it comes to hosting birthday parties for the kids, delivering more for less than competitors, with around a $350 price tag on birthday parties that includes everything the competition does, and many things they don’t. With a price point less than the average Chuck E. Cheese (the low end of the market), but sumptuous organic menu options sourced from locally-grown produce where possible, and gluten free choices, as well as a huge play area designed to captivate and enthrall young kids with its thematic elements, it is little wonder that GIGL continues to win over customers and the media alike.
From A-list celebrities bringing their kids for birthday parties or play at Giggles N’ Hugs locations, to major media sources (including some of LA media’s local kingmakers) running stories on the company’s success, GIGL has benefitted from a substantial amount of organic draw. The only cherry you can really put on this already highly successful cake is nationwide expansion and the company is currently busy leveraging an already well-established tenant relationship with major national mall owner/operator Westfield, to this very end.
A solid success story across its existing footprint and now a big opportunity to expand nationally and internationally, are very good indicators for GIGL shareholders moving forward. Interested investors should take note of the company’s potential, and the potential of the restaurant model the company has created to become increasingly dominant within its niche, fueled by a lack of real direct competition for its product/services mix, and a brilliant execution that is empowered by management’s extensive collective experience in the restaurant game
Take a closer look, visit www.gigglesnhugs.com
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