MFN SAFE + 10% of Gross Revenues (1.5X payback multiple)
Hybrid agreement. Investors invest in a Future Equity Agreement (with Most Favored Investor clause) and a Revenue Share Agreement (10% of Gross Revenues with 1.5X payback multiple).
Future Equity Agreement with Most Favored Investor clause means if a future investor gets a better before the SAFE converts, your contract matches those terms.
The company will pay 10% of Gross Revenues each quarter until 100% of your principal is returned plus 50% on top.
|1||Return on Investment - Revenue Share Note (1.5X Multiple) + SAFE Note|
|2||Social Impact - Goal to invest 20% of corporate profits back into communities|
|3||High Growth Potential - Potential expansion through franchise model and grocery stores|
|4||Strategic Location - 5 Mi. Radius Population: ~343,336; Median HHI: ~$94,290; ~100,345 Cars/Day|
|5||Unique Concept - Combines growing categories (bao, boba tea, beer) with globally inspired flavors|
Bao Bros. has an incredibly unique concept, giving a traditional Asian dish a new twist with a fusion of flavors and presenting a new option for those with dietary restrictions (vegetarians, etc.). The combination of the revenue share note and the SAFE note is also remarkable (especially considering the revenue share note comes with a personal guarantee). The concept has significant room for expansion, and its reassuring that early investors can share in all of the upside potential.
I've personally known the founder, Chris Garcia, for quite some years now. As an individual he is intuitive and a go-getter. He is a hard worker and I have always seen him excel in overcoming all of the obstacles that he faces. He has done his research and even traveled to numerous Asian countries/communities to ensure he produces a high quality product. The company has already demonstrated an ability to adapt within their industry by focusing on partnerships with 3rd party delivery services and streamlining to-go ordering.
I've spent almost my entire life in the area the restaurant will be located, and I can attest to the favorable demographics of the community (high income, densely populated, etc.). Considering the concept is one of a kind in this area, it's all but certain to easily spread by word of mouth for many to come and try.
I have no doubt this restaurant will thrive not only because of the unique concept but because of the heart and meticulous planning Chris has put in to ensure it will be a great restaurant for this community and many others to enjoy.
When Passions Collide
I've always had a passion for food and empowering others. Food has the power to bring people from all different walks of life together. My first job at the age of 15 was a busboy in a local country-style restaurant. It was there I learned the value of a dollar and started to develop a love for the industry. Since then I've been a cashier, waiter, barista, line cook, and even General Manager of all kinds of different restaurants from food trucks to fine dining. My perspective has changed a great deal over the years, but one thing that never changed was my love for sharing great food with people. Fast forward 11 years into the future and the passions have finally had a full on collision to manifest themselves into Bao Bros. Bistro.
Why does it all matter?
There are so many great flavors in the world, but oftentimes we are forced to choose between a set of dining options that could be boiled down to burgers, chicken, or pizza. Fact: over 30% of all quick service restaurants are burger focused. Now I love a juicy burger just as much the next guy, but do we really need that many burger joints? I'm on a mission to take my favorite sandwich (the bao bun) discovered during my time living in Hong Kong and pack it with flavors that showcase the amazing diversity of the country (and world) we live in.
What's this "empowering" stuff all about?
As I mentioned earlier, aside from food I've always been passionate about empowering others. At its most basic level empowering literally means "to give power to". So how do you give power to historically low wage employees and communities? Simple, invest in them. Investments of time will be as direct as training and development (for employees) and volunteering (for communities). Monetary investments for us will be done through profit sharing. Employees who understand the direct connection between their efforts to drive sales and control costs, their paycheck, and the profits the business earns are more likely to act like owners. When employees act like owners, everyone wins.
From Dream to Reality
After more than ten years of dreaming and planning for the restaurant we finally started construction in late April of this year. The team has grown to encompass a talented former GM of Panera Bread and a chef with over 40 years of global experience, but the mission is the same: to be the leading fast casual bao restaurant in the US powered by our people and our products.
A Community of Support
We already have over 1,700 combined followers on Instagram and Facebook and that number is growing daily. As a product of the community we are located in, we also have strong connections to local schools, businesses, churches, and many other institutions in the area that are all excited to be a part of our story and watch us grow.
Bao Bros. Bistro has financial statements ending December 31 2019. Our cash in hand is $70,920.96, as of July 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $800/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We sell delicious fresh food and drinks that all kinds of people can enjoy for lunch and dinner. We also give back to the people who work for us and do our part to take care of our communities.
In year one, we hope to establish a superior value proposition in the marketplace through our unique products and commitment to hospitality. In years 1-3 we hope to expand into additional profitable markets through a franchise model that is accelerated by partnerships with investors and franchise brokers. In year 3 and beyond we hope to get select products (sauces, closed buns, etc.) into new channels (supermarkets, airports, college campuses, etc.). These future events cannot be guaranteed.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
Bao Bros., LLC was incorporated in the State of Texas in February 2019.
Since then, we have:
Historical Results of Operations
Our company was organized in February 2019 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 6 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 24 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Bao Bros., LLC cash in hand is $70,920.96, as of July 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $800/month, for an average burn rate of $800 per month. Our intent is to be profitable in 3 months.
Since the start of 2020 we've had an increase in our fixed assets as we've begun to pay for the build out to the space. Aside from that not much has changed with regard to revenue or expenses. We expect it to cover approximately $67,354 to open, and we hope to begin generating revenue within 30 days after opening.
We have adjusted revenues to include a 6 month ramp up period in our sales to account for the unique circumstances of the current business landscape. That being said we anticipate revenues and expenses for the first 6 months to total ~$343,701 and ~$260,764 total, respectively. We have a location secured and are currently undergoing buildout.
We have other sources of capital to rely on. Both partners still have funds in accounts (brokerage, 401K, personal checking/saving) that can and will be invested in the business if needed.
The Company has had no operations to date, and can make no assurances that its financial projections will be accurate or that its operations will ever be profitable. The amount of the notes represents the amount of funds needed by the Company for construction and equipment.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
Limitations exist on the transferability of Notes so that the investment may not be readily disposed of, and therefore investors must be able to bear the economic risk of the investment for an indefinite period of time.
Two members in the LLC currently own 100% of the Company and control the management and operations of the Company, and holders of the Notes will not have a vote in the management of the Company.
Although the Members of the LLC have experience in sales, marketing, restaurant management, and people leadership they have no past experience in owning and managing a business similar to the Company.
Amounts used in the financial projections are assumptions based on our best estimate of the sales and contracts to be obtained with clients and providers, but cannot be guaranteed.
Inability to reach the assumptions of the financial projections could result in insufficient capital to meet the Company’s expenses, resulting in bankruptcy.
There are other risks outside of the Company's control such as natural disasters as well as government orders to cease operations for extended periods of time in the interest of public health.
Temporary Rule 201(z)(2) provides temporary relief from certain financial information requirements by allowing issuers to omit the financial statements required by Rule 201(t) in the initial Form C filed with the Commission. This offering has commenced in reliance of Temporary Rule 201(z)(2).
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