Friday, July 24, 2015

Giggles N’ Hugs, Inc. (GIGL) Veteran Management Team Key to Success of Unique Restaurant Model

Rapidly accruing consumer consciousness regarding the state of the food supply, more and more enabled by the dissemination and circulation of information in our increasingly Internet-connected society, has triggered a sea change in consumption habits among an increasing number of Americans. Concerns over the environmental and long-term health impact from sources such as the now ubiquitous use of animal antibiotics, mounting volumes of pesticides, and genetically modified organisms (GMOs), have collectively initiated a radical shift toward clean foods. And the growth of the clean food market isn’t isolated to the U.S., given that the organic industry was conservatively valued at upward of $35 billion last year domestically, but over $63 billion worldwide.

Data points from sources such as the Centers for Disease Control (CDC) indicating that as of 2013 alone some 1.1 billion pounds of active pesticide ingredients were being used annually are just the tip of the iceberg; and this massive consumer shift has been a long time coming. As early as 1983, the National Center for Genetic Resources Preservation reported that as much as 93 percent of seed varieties were extinct and that we have become dependent on a tiny handful of commercial strains of staple fruit and vegetable crops.

The World Health Organization (WHO) recently flagged a single strain of salmonella bacteria traced to beef and pork that was sold at live animal markets, as becoming increasingly resistant to antibiotics due to their over-use. This analysis by the WHO has been confirmed by CDC data showing an alarming 50 percent jump from 2009 to 2013 in terms of overall resistance to four classes of antibiotics by this strain - antibiotics which had worked just fine four years prior.

Little wonder then at the growth projections put forth by sources such as the Nutrition Business Journal indicating a robust 9.4 percent growth rate for organic foods, which dwarfs the projected growth for conventional food and beverages.

While the 2015 Organic Market Report by the Soil Association indicated just 4 percent growth last year for organic products, the space has seen a whopping 3,400 percent rise over the past 25 years, and the Organic Trade Association estimates from reports it has gathered, that around 81 percent or more of the U.S. population is now purchasing organic foods at least some of the time. Indeed, broader analysis by Information Resources, Inc. and natural products industry analysts at SPINS (Natural, Organic and Specialty Products Industry) shows a 13.5 percent uptick last year in natural/organic retail sales to around $81.3 billion.

It is into this white-hot consumer market that Giggles N’ Hugs, Inc. (OTC: GIGL) has stepped with a bold new business model that takes family-friendly dining to the next level. Combining top quality gourmet organic foods and a menu that caters to children ages one to 10, with active play and entertainment for children, Giggles N’ Hugs is reminiscent of brands like Chuck E. Cheese, but with a decided emphasis on being higher-end and uniquely healthy.

With three locations currently operating in high-profile It is into this white-hot consumer market that Giggles N’ Hugs, Inc. (OTC: GIGL) has stepped with a bold new business model that takes family-friendly dining to the next level. Combining top quality gourmet organic foods and a menu that caters to children ages one to 10, with active play and entertainment for children, Giggles N’ Hugs is reminiscent of brands like Chuck E. Cheese, but with a decided emphasis on being higher-end and uniquely healthy.

malls throughout one of the most clean food-minded cities on earth, Los Angeles, Giggles N’ Hugs provides an enticing option to parents which allows them to relax and enjoy premium organic dining while children cavort in the lovingly furnished play area attended by trained aides, and also distracted by entertainment offerings like live puppet shows. Giggles N’ Hugs is the perfect place for birthday parties and one of the key perks to the company’s restaurant model is its child drop-off service, which lets parents leave their kids to play safely while they go shopping in the mall. This is the first and only restaurant in LA to offer such a service, and it has quickly won the company accolades and repeat business from many families.

This brilliant restaurant model has naturally led to some impressive financial results for the company, which recently posted 1Q revenues for this year that were up 11.7% YOY to $0.9 million, even as costs and operating expenses diminished by 6.9 percent over the same time frame. And this financial performance is fast on the heels of a banner 2014 as well, which saw revenue hit a record $33 million, as parents in the LA area flocked to the company’s innovative restaurants with their kids, including celebrities like Adam Sandler, Ben Affleck, and Halle Berry, and the company received widespread attention from major media sources such as Bloomberg Businessweek, People, and Us Weekly.

The brains behind this operation are the real secret of Giggles N’ Hugs’ success of course, with such seasoned industry veterans as former VP of Operations for California Pizza Kitchen, John Kaufman, on board. Kaufman was recently appointed to the role of interim-president at Giggles N’ Hugs and brings an impressive 33 years of experience in the industry with him to the post, having overseen much of California Pizza Kitchen’s growth, from two locations to over 70, and having been the president and COO over at Koo Koo Roo, which focuses on health-conscious rotisserie and skinless charbroiled chicken, as well as turkey burgers, and sides.

At the helm of the ship is Joey Parsi, the founder and CEO of Giggles N’ Hugs, who has spent over two decades on Wall Street at top firms like TD Waterhouse and Sutro & Co., managing in excess of $350 million in assets. Under Parsi, in the role of chief business development officer, is another industry titan, Philip Gay, CPA. Philip has over two decades in the game and has held a number of top management positions at leading industry players, having been CFO at Wolfgang Puck Food and California Pizza Kitchen, where he worked alongside his once again colleague, Kaufman. A former president and CEO at the Grill Concepts, Inc. family of restaurants, as well as CEO and COO at Diversified Food Group, a multi-faceted foods company engaged in everything from import/export, to custom manufacturing, Gay brings a mountain of experience with him to Giggles N’ Hugs, and has been one of the company’s leading minds throughout its ongoing fruition.

In the current COO slot for Giggles N’ Hugs is a man with 20+ years of frontline operations management experience, Sean Richards. Richards has seen it all, having served in such intense roles as regional director for Hootwinc, LLC, where he operated seven Hooters restaurants, as well as a casino and two bars. Managing such lively and storied venues as The Viper Room on LA’s Sunset Strip, or the trendy LA Mexican cuisine eatery/bar with a rock ‘n’ roll vibe that specializes in tacos and margaritas, the Pink Taco. Richards has also been the general manager at venues like the House of Blues, Planet Hollywood, and the Hard Rock Cafe. Richards has really gone from the frying pan into the fire so to speak with his appointment at Giggles N’ Hugs in 2010, going dealing with difficult to please and oftentimes just difficult patrons at locations like bars and casinos, to handling really rough customers, like toddlers and preteens.

Rounding out the Giggles N’ Hugs lineup on the company’s advisory board, is veteran kid wrangler Joan Barnes, the co-founder and former CEO of noted San Francisco-based Gymboree Corp. (NASDAQ: GYMB), which was acquired by Bain Capital in 2010 and currently operates over 1,200 specialty children’s apparel retail stores throughout North America, as well as over 650 of their Play and Music centers. Barnes opened her first commercial children’s workout center way back in 1976 and helped grow the Gymboree brand to over 400 locations before selling for $1.8 billion (approximately 20 times revenue) and also founded Yoga Studio, before selling to privately-held yoga studio chain YogaWorks in 2008.

Giggles N’ Hugs, which has been voted LA’s number one family restaurant, indoor play space and kids party place by hip, family-centric LA event watchers Red Tricycle, has the kind of deep management bench needed to take their ingenious model nationwide, and investors should take note of the prime, underlying dynamics that will fuel its continued expansion.

For more information visit www.gigglesnhugs.com/investor-relations/

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