For those of our readers who may not be familiar with Chilango, could you tell us a bit about the business?
Chilango is an award-winning chain of quick-service Mexican restaurants with locations throughout the UK. We’re backed by CEOs and executives, both past and present, from many of the world’s top food brands. All of our 11 restaurants are profitable, and our like-for-like sales are a strong 5.3%. Our newest bond, Burrito Bond 2, offers an 8% rate of interest. The funds will help us continue our growth ahead.
You have backing from some heavy hitting investors including CEO of Domino’s Pizza UK, the former VP of Marketing McDonald’s UK, and the former MD of Itsu. What is it that makes you appealing to them?
That’s a great question and you can hear each of them explain why they invested in our short video interviews at our bond website. Their investment rationale ranges from their belief in the food quality and the brand, as well as the industry-leading profitability of our restaurants, and the strength of our management team.
Can you tell us a bit more about the Burrito Bond 2?
First off, we’re an experienced bond issuer with an 11-year operating history and steady growth. We’re also proud to say we have a perfect payment history on our first bond. Burrito Bond 2 is a very straightforward idea – you loan money to Chilango and we agree to pay you 8% interest semi-annually until you redeem your bonds after the 4-year maturity.
Funds will be used to open new restaurants at an approximate cash outlay of £500,000 per restaurant, as well as refinance existing debt. When the Burrito Bonds are redeemed, the full amount of your initial investment will be repaid without any deductions or charges.
We’re also offering plenty of free food rewards. The most popular is the Chilango Black Card which entitles the holder to one free meal per week for the next 4 years, in exchange for an investment of £10k. The minimum investment in the round is £500.
This is the second Burrito bond you’ve issued, how did you use the money raised from the first bond?
Proceeds from the first bond helped us open several new restaurants.
How much are you looking to raise with this bond and what are your plans for the funds raised?
Well, the initial target was £1 million which we smashed through in just 24 hours. We’ve currently raised over £2.8 million from over 500 investors. We have several property opportunities we’d like to take advantage of, so we’ve adjusted our initial target up to £3 million to accommodate the incredible demand for the offering. Funds will be used for a combination of refinance, new restaurants, and sales-additive capital improvements to our existing estate.
Who can invest and is there a minimum or maximum investment?
Anyone that passes our investor suitability assessment at our site. £500 min. No max.
When can investors expect to see a return on their investment?
See above. Interest paid semi-annually. 8% per year.
Mini bonds have somewhat of a mixed reputation, what made you choose to raise funds this way?
Ever since the huge success of our first bond we’ve received countless requests to offer another. We’re proud of our perfect payment history with Burrito Bond 1 and look forward to welcoming more investors to Burrito Bond 2, on the back of current results which are the strongest in the company’s 11-year history.
Mini-bonds such as this are unprotected, so the investors need to know that Chilango is in good shape. The restaurant business has recently shown again just how competitive it can be. What can you tell us about the current performance of the Chilango business?
– Net sales of £10.3m in previous Fiscal Year (FY)
– Over £2m in restaurant EBITDA expected current FY
– 5.3% positive like-for-like sales
– 100% of restaurants profitable
– 11-year operating history with steady growth
– Experienced bond issuer with perfect payment history
Do you feel that the 8% fairly reflects the risk to the investors?
Yes, and given we smashed through our initial £1 million target in just 24 hours, with over £2.8 million and counting from over 500 private investors, I’d say the market agrees.
You’ve raised the target from £1m to £3m – is this due to the demand and if so, what is the maximum you would increase this target to?
As we’re using funds for a combination of refinance and growth, the maximum we’re allowed to raise is £7.5 million. We may increase the capacity beyond the £3m, while the bond is still live, and I reckon we’ll end up somewhere between £3.25m and £3.5m.
The referral scheme sounds interesting, can you tell us more about it?
Aside from the various referral rewards you can find at our site we’ve also added a new referral incentive. Refer just a single person and you’ll pick up 10 free meals and a 10% discount on all Chilango meals through our app, while your capital remains in the bond.
Would you consider listing in the future to allow keen investors to take a share in the company?
Possibly. But for now, it’s just Burrito Bond 2.
If any investors want to get involved with this opportunity, how should they go about it?
Just head over to our bond site, watch the pitch video and then click the Invest Now button to receive access to our full presentation.