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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