Chanticleer Holdings Enters Into Franchise Agreement
Tuesday, January 03, 2017
The Fast food sector has retained its attractive valuation due to its staple nature. During these recent times, the industry has undergone a transformation with the introduction of fast-casual restaurants. These are the restaurants which serve fast food with upgraded ambiance. This unique feature helps them in gaining better margins, owing to mildly premium pricing.
Chanticleer Holdings Inc. (NASDAQ:HOTR) is one such company which owns various fast-casual brands such as Little Big Burger, Hooters and American Burger Company. The company has entered into a new franchise agreement with SCI-RESTON LLC for its burger innovation called Burgers Grilled Right or BGR. The company has signed a lease in Reston, Virginia for this purpose.
Under the terms of the deal, SCI-RESTON will receive the rights for developing up to three new franchises under a Multi-Unit Agreement. The main restaurant will be located close to the Town Center, which is widely considered to be one of the most influential markets in the country.
Chanticleer Holdings will get access to a lucrative market through this franchise arrangement. The company is currently focusing on developing a network for its BGR concept. It has opened several outlets in the recent past including the one in South Orange, New Jersey.
The Company is taking various other steps to augment its visibility. It is also focusing on other brands such as Little Big Burger as it opened a new outlet in Portland, Oregon. The company is also likely to get more aggressive in its expansion approach in 2017.
Chanticleer Holdings recently launched its new corporate website with a special focus on its Better Burger portfolio. It will help the company in generating better rapport with various stakeholders including clients and investors.
Chanticleer Holdings stock had a rough time in 2016 as its value tumbled more than 58%. The stock is deeply off its highs from the 2013-2015 time period. With that said, the company’s new endeavors may result in a stronger share price this year. It is also improving its financial performance as the company reported positive EBITDA for the second consecutive quarter in November. For the quarter ended September 20,2016, Chanticleer Holdings improved its revenue by 18.3% to touch $11 million. Its cost of sales dropped from 33.6% to 33.1%, highlighting the impact of cost cutting measures undertaken by the company.
While the fast-casual segment has picked up pace recently, it is still struggling to show healthy margins. Chanticleer Holdings is expected to boost up its position with the introduction of new offerings this year. We’ll be watching to see if it can deliver on its goals for 2017.
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