According to TechSci’s recent forecasts on the organic food market, the sector is set to hit $45 billion in the next five years, as the consumer trend towards health consciousness continues to solidify, driven by a growing acceptance that a diet consisting of chemical-free, non-GMO, freshly prepared ingredients has tremendous health benefits. Having already seen 11 percent YOY growth to around $40 billion last year, organic food is experiencing tremendous sales penetration across the country according to the Organic Trade Association, even in spite of supply shortages, and this is particularly so in select regions like the West Coast. This increasingly prevalent healthy eating culture still has considerable room to grow however, with organic sales currently accounting for only 4% of total food sales and organic agriculture currently representing less than 1 percent of all cropland in the United States.
At the same time, the roughly $710 billion restaurant industry, which saw 3.8 percent sales growth last year, has increasingly become a leading devourer of consumer’s food dollar, now accounting for around 47 percent of all food spending. These combined metrics have fueled the rise of restaurants that cater to consumers who want to eat healthier, but there has been a decided lack of variety in the sector until more recently, with the vast majority of operators being boutique venues with limited menus that cater only to upscale niche markets. This is a major reason sector players like Chipotle Mexican Grill (NYSE: CMG) have been able to make a killing, stepping in and feeding the mass market’s growing taste for organic produce, as well as free range meats that aren’t pumped full of antibiotics.
One of the more attractive plays in this market is first-of-its-kind family restaurant brand, Giggles N’ Hugs (OTCQB: GIGL), which offers a unique combination of a large organic menu of gourmet quality food served in a relaxed atmosphere and a large, active play area for the children of restaurant goers. This approachable, yet premium-quality combination of an organic menu with a sizeable kid-friendly play area that is attended by trained aides, allows GIGL locations to not only court the growing consumer market that is on the lookout for healthy, delicious menu options, but simultaneously generate multiple revenue streams by offering features like hosted birthday parties, and a child drop-off service so parents can go focus on shopping.
With three locations currently in some of LA’s most prime demographic areas, including Century City (Westfield Mall), Glendale (Glendale Galleria) and Topanga (Westfield Topanga Shopping Center), Giggles N’ Hugs’ presence in upscale malls and shopping areas has quickly differentiated its restaurants within the organic sector. The company really stands out to parents in these communities who want to get in a day’s shopping, because Giggles N’ Hugs is the first restaurant in LA to offer a child-drop off service. Children are well-entertained too, with activities every half hour, including everything from arts and crafts, to appearances by staff dressed up as some of their favorite characters, and even events like karaoke, live puppet shows and dance parties, all forming an excellent complement to the custom built play area full of themed ball pits, swings, slides, and things to climb on or explore.
This superb model has enabled GIGL to attract the attention of some of the biggest mall owners in the country, who are keen to see Giggles N’ Hugs restaurants crop up at their establishments, in large part because of the incredible synergy the model represents, both for mall-going parents, and other stores in the mall. Far more than just another organic restaurant, each Giggles N’ Hugs is like a healthy version of Chuck E. Cheese’s, only with trained staff to attend to the children and healthy exercise-focused play, instead of just video and ticket redemption games. Hence the success of the company’s ongoing negotiations with sector operators like North American mall giants General Growth Properties (NYSE: GGP) and Simon Property Group (NYSE: SPG), as well as Westfield Group (ASX: WDC), which has a sizeable presence in North America and Europe, as well as Australia and New Zealand (Scentre Group division). The low hanging fruit on the West Coast, such as the San Francisco and Seattle markets, make ideal expansion targets for the company, and regional receptivity to organic foods will no doubt help drive GIGL’s success at opening new locations throughout such markets.
GIGL is on track to meet its expansion target of having 12 more company-owned locations by the end of 2017 and the unique mix of offerings the brand presents is helping the company to secure substantial rent discounts and tenant allowances. Moreover, this model naturally lends itself to regions around the world that, unlike sunny LA, are more prone to experience the kind of weather patterns that drive large birthday parties indoors. By tapping former Westfield senior executive Todd Star, who has over a decade under his belt handling leasing for Westfield, GIGL is in a prime position to successfully execute high value expansion deals with major mall owners like those mentioned above. Star’s impressive resume, consisting of over three decades of experience in multiple areas of real estate, make him the perfect tool for GIGL’s utility belt, when it comes to achieving the growth objectives it has set, and negotiating the best deals in select expansion target markets.
The company has seen a massive media presence crop up in recent months as well, being featured everywhere from major finance publications like Bloomberg Businessweek, Forbes and The Wall Street Journal, to trendy style publications like Perez Hilton and Us Weekly, further accelerating the brand presence Giggles N’ Hugs has already managed to establish among consumers. Having posted a strong Q1, including an 11.7 percent YOY revenue increase to just under $1 million, largely on the strength of factors like a nearly 7 percent YOY reduction in total costs/operating expenses, and consistent 21 percent net operating margins at its flagship Century City location – Giggles N’ Hugs really is the portrait of a successful hybrid restaurant concept, with intelligently chosen locations, and a proven ability to deliver end-user resonance.
Get a closer look at the company by visiting www.gigglesnhugs.com
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