Learn more about convertible campaigns.
This investment round is being raised by way of a convertible instrument.
The key terms that apply to the Hummus Bros convertible are as follows:
► Discount – conversion at a 25% discount to the valuation set by a Trigger Event.
► Valuation cap of £9,000,000
► Conversion is triggered by ("Trigger Events"):
◆ An Equity Fundraise – defined as the Company raising investment capital of at least £250,000 from one transaction or a series of transactions, in exchange for the issue of Ordinary Shares. The Seedrs fund raise does not count as a transaction;
◆ A Change of Control of the company (transfer of more than 50% of the share capital); or
◆An IPO – being a listing of the company’s shares on a recognised stock market or secondary market.
►Longstop Date is 12 months from the date of the convertible agreement.
If conversion has not been triggered by the longstop date shares will be issued on the longstop date at a valuation based on the lower of (i) a pre-money company valuation of £6,000,000; or (ii) the price for any share issued after the date of the convertible agreement. The convertible would also convert to equity at this price in the event of winding up or liquidation of the company.
We currently operate 6 high street locations and 40 popups a month in canteens of large offices such as Goldman Sachs, PWC or Morgan Stanley.
We serve healthy & tasty Mediterranean food including hummus bowls topped with mouthwatering toppings such as beef stew, sauteed chicken, guacamole or falafel and accompanied by pitta bread. We also serve home made soups, quinoa-based dishes, salads and desserts.
We intend to expand further by opening more high street locations, operate more canteens and sell our preservative-free hummus in supermarkets. To do this we would use High Pressure Processing (HPP) technology which extends the shelf life of the product without changing our award winning recipe. We found that there is a lack of hummus brands in supermarkets, only the supermarkets' own label. We believe that we could capture a significant share of this £150m market and grow it by offering our better quality hummus.
Over the past few years we have observed the popularity of Mediterranean food and hummus in particular increase significantly. We have been making our food available by first opening high street restaurants and more recently directly in canteens of large offices around London. We are now looking to make our hummus available in supermarkets.
Our menu offers healthy options including ones for vegans and vegetarians as well as for our customers that have food intolerances to gluten, lactose or nuts.
We are hoping to make our wholesome, freshly-made, preservative-free food available more widely so that more people can adopt a healthy diet.
Substantial accomplishments to date
Over the past 10 years we have had a number of accomplishments.
We have opened 6 high street locations and operated 490 popups in corporate restaurants in 2016.
We have been named one of Time Out's Top 50 restaurants in London as well as regularly featured in their Top Cheap Eats. Hummus Bros has been featured in a number of publications such as the Evening Standard, The Drum, The Telegraph, The Financial Times, etc (our press coverage is available at www.hbros.co.uk/press).
In 2014 we released our first cook book packed with 60 of our best recipes.
In December 2016 we were granted an alcohol licence for our Soho branch.
We have also launched a number of new products such as our wraps, soups, Shakshuka and quinoa.
In 2016 we turned over £2.59m* from our six restaurant locations, popups in corporate restaurants and deliveries to offices around London. These all operate predominately on week days at lunchtime.
We are looking to continue innovating with new products and how these are delivered to our customers to increase the revenue from all our current channels.
We are hoping to increase our turnover over the next 12 months by opening 1-2 more high street locations and increasing the number of popups that we operate.
*Source: unaudited management accounts.
Use of proceeds
We have opened 6 branches over the past 10 years which have cost as low as £75k to acquire and refurbish (depending on the size of the unit and the rent).
We'd expect to use up to £125,000 of the proceeds to open one more branch.
The maximum we will seek is £500,000 in which case we will open up to 3-4 more branches (£400,000) and move forwards with a launch of Hummus Bros branded products in supermarkets.
The business currently has a £25,000 bank loan as well as a £176k bond repayable in 2020. None of the funds raised will be used to repay these debts.
Please note that the company has classes of shares that rank in preference to the shares that Seedrs investors will receive. Shareholders with these shares will first receive the amount they invested and will then participate in the distribution of any funds remaining. The amount invested in these shares is worth £306,605.
For our restaurants, we have observed that our target market is urban professionals between the ages of 23 and 40 that are looking to eat a quick & healthy meal at lunchtime.
For our corporate popups and corporate deliveries our target market is large companies based in central London predominantly in technology and financial services.
Characteristics of target market
The eating out market in the UK has been valued in excess of £82.5bn and growing at 3% annually. Emerging fast food concepts, coffee shops and further proliferation of street food movement could drive the market over the next year.
We have been observing that demand for healthy, Mediterranean lunch options has been growing rapidly as well as meals that are suitable for customer with food intolerances or special dietary requirements.
Finally another trend has been emerging: flexegetarianism which refers to people looking to reduce the amount of meat they consume.
We currently have three channels to bring our products to market:
1. High street restaurants - we have 6 branches on busy high streets (Wardour Street, Southampton Row, Cheapside, Exmouth Market, Gray's Inn Road and Eastcheap) that we market by sampling our product outside our unit, providing our customers with a pre-ordering mobile app, working on PR initiatives with our partners, suppliers and landlords, training & incentivising our staff to provide good service to ensure customers return, as well as developing new healthy Mediterranean products.
2. Mini-Hummus Bros in Corporate Restaurants - we have developed relationships with 5 of the main caterers who operate across many of the large corporate restaurants in London.
3. Corporate deliveries - we work with a number of logistics partners that provide us with catering opportunities and help promote our brand.
We are looking to develop all three as well as explore other channels such as supermarket retail products.
We believe we succeed against our competition by constantly innovating with our product and the way we deliver it.
We also encourage customers to give us feedback so that we can constantly improve our standards. This could help us with identifying trends early on and stay ahead of our competition.
Examples of innovation over the past 10 years include:
- Offering a product that was different from anything served on the high street.
- Being one of the first quick service restaurants to offer a pre-ordering app and self-checkout tills that allow users to jump the long queue that forms between 12noon and 2pm on a daily basis.
- Training our staff to know what all our products contain in order to advise customers who have food intolerances on what they can eat.
- Publish the nutritional information regarding all our dishes several years ago.
- One of the first businesses in Europe to be on Four Square.