CFGI’s Post

When compounding financial problems strike, what can a retailer do to get back on track? An organic grocery chain was dealing with liquidity issues, overdue payments and deteriorating vendor relationships. The situation became so serious that the retailer was having trouble meeting its payroll obligations. This is when CFGI stepped in to provide assistance. CFGI's approach was multifaceted, negotiating payment plans with vendors, assessing ways to optimize lease value and taking a SKU-level look at profitability. See how this process helped the business stabilize its financial situation: https://bit.ly/3FsttwT #CFGI #Payroll #Profitability #Grocery

Wilko has entered administration. Here are 5 reasons it failed. 1.  Product range was mismatched to their position as a high street store. DIY supplies and cheap homeware products tend to play in retail parks on the out-skirts of town. 2. Large expensive stores in expensive locations. Having large stores on the high street is expensive. When you’re a budget store with small margins you need to move a lot of volume to make up for this.   3. Increased competition from other budget-chains like Poundland and B&M.   4. Difficult trading conditions. Shoppers are spending less due to the cost of living crisis, inflation, COVID, etc. Keeping shelves stocked has also been difficult after COVID and Brexit.   5. Changing their leadership too often. Their top leadership roles of chief executive, managing director and chief finance officer have all changed hands multiple times in quick succession recently. Never a good sign.   Announcement article: https://lnkd.in/euNAVbWV Main source: https://lnkd.in/eCXgeY4r   #turnaround #administration #insolvency #restructuring #K2BusinessPartners

Another RECORD year! I'm super excited to announce that we have just released our year-end audited financial statements and MD&A for the period ending Sep. 30th 2023! Despite incredibly challenging economic conditions and a lot of challenges in the plant-based space, we still managed to post all time record revenue of $3.24M, an increase of 10% from the previous year. Furthermore, our cash used in operating activities fell over 50% from the year previous and our gross margin was 26% of revenue, an increase of 34% from the previous year. All in all, we're growing, becoming more efficient and using less cash to do it. I could not be more proud of our team for all of their hard work, especially Vasiliki McInnes (She/Her) and Katie McInnes for assisting with the audit. We look forward to another exciting year of growth, with new locations set to open nationwide in the coming months! Let's DO THIS! #financials #yearend #auditedfinancials #publiccompany #recordrevenue #stockmarket #franchise #plantbased #vegan #restaurant #fastfood

🍀Are VCs Gamblers or Investors?🍀 There are some things I find it hard to comprehend: 1) “The Singapore-based company, which describes itself as a tech-enabled coffee chain, had announced earlier in May that it had raised a total of US$50 million (S$68 million) for the business.” (a) What so tech-enabled about Flash Coffee? I have been there a few times and there was absolutely nothing tech about it. (b) If had raised US$50 million in May and this month, the company has closed? In 5 months, US$50 million has vaporised! That’s a rate of US$10 million/month. Where is all the money? 2) “Various venture capital funds including White Star Capital, Delivery Hero, Geschwister Oetker, and Conny & Co participated in the round, with some increasing their stake in the company, according to a Flash Coffee statement on its website in May. The new funds will be channelled towards accelerating the company’s mission to achieve group-level profitability,” the statement read.” (a) Some VCs actually increased their stake in a company which is losing, owed staff salaries, and staff going on strike. Did they even do their due diligence or are they just gambling? (b) “doubling down on technology and product innovation” • What technology and innovation do they have when they are selling something that any Tom, Dick and Harry can do it? At the end of the day, who are the winners and losers? 1) Losers: Those who passed their money to the VCs 2) Winners - Flash Coffee. The founder just need to close this business, start another one, and look for some gullible investors. I remember Charlie Munger has a simple framework to determine if any investment is a good investment. Imagine we have 3 baskets 🧺 which are follows: 1) Low Risk, High Return 2) High Risk, Low Return 3) High Risk, High Return. Which basket would Flash Coffee fall into? #GrowviaViA #ValueInvesting #ValueInvestingAcademy #Stocks

When UK supermarket giant Morrisons switched from PLC to PE ownership, the spotlight was cast on the treasury team as the new structure took shape. In this article, Luke Harris, Interim Head of Treasury, Morrisons, talks to TMI about people, processes, and technology. Read article: https://lnkd.in/eMGjSrth #treasury #treasurymanagement #corporatetreasury #retail #supermarkets #morrisons

CA was first to go to $20, but this is going to spread to the rest of the US in the coming years and that's ok. The truth is that it's all just math - not hard to overcome the adjustments to operating / pricing / tech / etc to navigate through this just like every other challenge brands face to maintain their economic promise to shareholders; while also maintaining their promise to consumers in their quality / value / service levels. Silver lining here is that a significant percent of customers just got a ~25% raise and they're sure to spend a material amount of that on food away from home. In fact, I'd expect in the shorter term (until the broader economy inflates up) that brands that threaded this needle right not only will flow healthy margins as they always have, but now on increased traffic. Everything is an opportunity in life depending on how you respond.

Bad Shepherd: the brewing company has gone into voluntary administration; the aim is a financial restructure of the business which will see it bounce back stronger; the business fell on hard times as a result of the pandemic; the business is continuing to trade and is business-as-usual for workers and customers; the owners are working with the administrator on a DOCA proposal to allow it to reset and avoid collapse; the company is the latest in a string of breweries to utilise voluntary administration and DOCAs to restructure and continue operating; many breweries are currently struggling with increasing debts stemming from the pandemic. Watch this space. If anyone can help in these tough situations it’s insolvency experts. Early professional advice is key for all stakeholders. https://lnkd.in/gZzDdymX

“Costs are like fingernails: they always have to be cut.” – Mr. Sicupira, Partner, 3G Capital 3G Capital is a private equity firm with which new Bunker customer Yann Schuermans shares his Brazilian roots. Yann also served as a GM for one of 3G’s biggest success stories:  AB InBev, a +$120b market cap company. How did Yann's time with AB InBev and 3G influence his approach towards finance? Read on. Prior to founding Baskit, Yann spent the majority of his career at Anheuser-Busch (“AB”). It's the world’s largest brewing company with a +$115 billion dollar market capitalization, +170k employees, and a presence across ~150 countries. He was a Director of Strategy and M&A, but also had served as a GM and Chief of Staff (spanning 2016 to 2021).  His first internship with AB was in 2011, where he got to know AB’s owners – fellow Brazilians at private equity firm 3G Capital, which had acquired AB in 2008 (for $52bn). 3G Capital is best known for specializing in large buyouts since inception, as well as partnering with Buffet’s Berkshire Hathaway.  3G first rose to prominence in the early 2010s off the back of huge buyouts across the beverage (AB InBev), fast-food (Burger King), and consumer food (Kraft-Heinz) sectors.  The Financial Times shared 3G’s keys to success in a 2017 article : "After 3G bought Heinz in 2013 with Mr. Buffett, profit margins rocketed by a remarkable 58 per cent within two years to 28 per cent. [...]  3G’s favoured approach to cost-cutting is “zero-based budgeting”: giving managers control of their budget and able to query every cost from scratch. As Mr. Sicupira once said: 'Costs are like fingernails: they always have to be cut.'" Zero-based budgeting is a technique where budgets begin literally on an empty sheet, and each and every expense must be justified.  Although an extremely effective cost control measure – it is brutally difficult to execute.  ZBB requires nearly prohibitively complex infrastructure that not only enables general ledger-level visibility (and efficient navigation), but also a painstakingly meticulous and time consuming cross-functional auditing and budgeting process. Beyond just visibility of costs and vendors, ZBB lays bare the accounting systems and journal entry hygiene for an organization -- empowering the controller to overhaul SOPs, rotate accountants across the GL, and refresh accuracy and monthly close speed moving forward. ZBB is typically perceived as too invasive until extreme economic shocks such as Covid or the recent interest rate-driven downcycle merits an extreme financial strategy revamp. But it shouldn't be. Bunker advances the CFO tech stack in a manner that equips modern, data-driven leaders like Yann to absolutely bulletproof their accounting and finance functions via an intense, data-engineering driven, single click GL drilldowns. Hit me up if you’re curious to learn more about how you can take, and keep, a scalpel to your own numbers.

$2Bn company? Although commendable👏🏿 growth being had, I can’t see a $2Bn valuation here and no media build up will help me get past a 62.5X multiple (not even half that). Comparisons (noting numbers are approximates only, from reported articles): -Craveable Brands (Red Rooster, Oporto, Chicken Treat, Chargrill Charlies) acquired for about $450M-$500M, we're looking at a 7.5 to 8.33x multiple based on their $60M EBITDA. -Retail Zoo (Boost, Betty’s Burger etc…) Acquired by Adamantem Capital at about $350M-$400M with a $40M EBITDA, giving us an 8.75 to 10x multiple. Stack these against the industry's stalwarts: -McDonald's: Holds an 17.94x EV/EBITDA ratio. -Domino's Pizza: Stands at 20.85x. -Chipotle Mexican Grill: A hefty 32.52x, yet still far from GYG’s ambitious multiple. Jason Andrew love to see one of your teardowns on this one. #mergersandacquisitions #Valuation #ipo #exit #franchisebusiness #foodservice #hospitality

The "Pizza Theory" of Business Valuation: As Children grow and learn that the size of a pizza does not depend on the number of slices it is divided into. However, when they grow up to become CFOs, they seem to follow a different rule: the more cuts, the better. Companies issue bonus shares to their shareholders to boost their total market value. For example, if a company has no debt and has a stated net worth of Rs 1,000 crore, the per share (slice) book value would be Rs 1,000. If the par value of each share is Rs 100, the paid-up equity capital would be Rs 100 crores and its reserves would be Rs 900 crores. The company earned post-tax profits of Rs 250 crore in 1996-97, resulting in a 25 percent return on assets. If Rs 1,000 crores were invested in long-term, high-grade bonds, they would yield only Rs 125 crores as post-tax income. Therefore, the company's intrinsic value should be Rs 2,000 crores, resulting in a per-share intrinsic value of Rs 2,000. The company's CFO now has a "bright" idea: by issuing bonus shares in the ratio of 1 share for every existing share, he can increase the total market value of the company. He believes that when the total number of outstanding shares doubles from 1 crore to 2 crore, so will not fall from Rs 2,000 to Rs1,000 per share, meaning that he can increase the size of the pizza by increasing the number of slices without any improvement in profitability or a fall in market rates of interest. An exception to the Rule: A profitable company declares a bonus issue, signaling its potential to pay higher dividends in the future. These higher dividends must come from higher profits unless fresh capital is issued. The stock price of a company can rationally rise on the announcement of a bonus issue if it is expected that profits will rise at a rate higher than the current expected growth rate. Source: Sanjay Bakshi(Article)