KONA GRILL - Giggles N` Hugs

www.gigglesnhugs.com
Corporate Presentation
OTCQB: GIGL
Important Cautions Regarding ForwardLooking Statements
This presentation contains forward-looking statements. These statements relate to future events
or expectations regarding our future financial performance. These statements are only
predictions and involve risks and uncertainties, including, but not limited to the ability to open
the new location, fulfill the terms and obligations of the lease, and any other difficulties related
to risks and effects of legal and administrative proceedings and governmental regulation, future
financial and operational results, competition, general economic conditions, and the ability to
manage and continue growth.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual outcomes may vary materially from those indicated. Important factors
that could cause actual results to differ materially from the forward-looking statements we make
in this news release include market conditions and those set forth in reports or documents we
file from time to time with the SEC. We undertake no obligation to revise or update such
statements to reflect current events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
© 2013 Giggles N’ Hugs, Inc. – All Rights Reserved
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Overview
A pioneer concept in the family themed restaurant
industry with unique children’ play space
Organic & nutritious menu with a high quality menu
items made from local, fresh foods
Trained “aides” promote family-friendly feel and play
with kids
Multiple revenue drivers generate attractive storelevel profitability opportunities
Large mall operators have expressed keen interest in
rolling out the concept nationwide
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Who We Are…
Family restaurant that addresses an unmet need
for high-quality, healthy food in a safe, themed
entertainment environment for children.
2 locations with a third opening in the fall of 2013
and with significant interest from the largest global
mall developers who have contributed significant
cash and rent concessions.
Our “prototype” has been met with significant
patron adoption, good margins of profitability, and
widespread media coverage.
Revenues: 2011: $1,116,150, 2012: $1,348,691
2013 (6 months): $1,010,431
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Some of the Celebrity Clientele Generating
Positive Press Coverage
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Recent “Free” Press Coverage
Sampling of publications featuring stories on Giggles N’ Hugs…
Our History
Founded by CEO, Joey Parsi, and his wife, Dora Parsi, in response to frustration they experienced dining with
their children.
Recognized and addressed a substantial void in the market by opening the first Giggles N Hugs restaurant in
Brentwood, California in February 2008.
Brentwood was an immediate success, that enjoyed profitability and widespread media coverage.
Westfield approached them for an expansion proposal, including possible nationwide rollout.
In 2010, opened their second restaurant in the Westfield Century City Mall, with Westfield agreeing to pay 60%
of construction costs, with additional concessions.
Opened a second location in March 2013 in the Westfield Topanga Shopping Center, and on February 15, 2013
executed a lease for a third location in the Glendale Galleria Mall, slated to open in October of 2013.
The current landlords, Westfield and General Growth Properties, have offered very favorable tenant
improvement concessions and landlord financing on existing leases.
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Our Mission & Core Values
Smile and befriend the guest at ALL times
Deliver delicious nutritious food
Sincere hospitality & service excellence
Cleanliness & safety
Creating magical moments
Mission: “To satisfy every parent’s need
for a restaurant that serves healthy,
delicious food and caters to their
children's experience as much as their
own.”
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What Sets Us Apart?
Kid-friendly play area in a true restaurant
environment
Delicious, nutritious, organic menu catered
to young children (1-10) and
accommodative to parents
Entertainment, such as puppet shows &
themed nights
Trained “aides” assist with children’s
enjoyment while parents relax
Child drop-off service (while parents shop)
First and only restaurant to offer this
service in LA
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Multiple Revenue Streams
Admission fee for play area access
Food and Beverages
Birthday parties & private rentals
Drop-off service
Alcohol (beer & wine)
Branded In-store and retail outlet
merchandising (licensing & merchandising
model)
U.S. and International Franchising
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Where We Are Today…
Westfield Mall – Century City, CA
Opened Dec. 2010 – “Flagship location”
Annual run rate of $1.4 million in sales and $285,000 in EBITDA
(21% net operating margin)
6,100 sq. ft.
24% of households with children¹
21% of household income >$100k¹
Westfield Topanga Shopping Center – Canoga Park, CA
10-year lease signed – February 2012
Opened end of March 2013
5,900 sq. ft.
38% of households with children¹
30% of household income >$100k¹
Glendale Galleria (General Growth) – Glendale, CA
10-year lease signed – February 2013
Slated to open October 2013
6,000 sq. ft.
47% of households with children
23% of household income >$100k
¹Westfield February 2012 Demographic Report.
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Market Opportunity
While fast food restaurants offer cheap food in cookie-cutter
buildings, themed restaurants offer a good meal, as well as an
experience.
In 2011, there were 19.5 million kids’ parties at restaurants.¹
NPD CREST research finds that kids are eating more healthful
food options than ever before.¹
Children five or younger are most likely to influence restaurant
visits.²
The average visitor stay at a family entertainment center is 2.5
hours, and they typically visit up to 6 times per year.³
1) The NPD Group, “Better Deals and More Sophisticated Palates Contribute to Kids Meal Declines.” May 22, 2012.
2) “The New American Diner Study,” by Restaurants & Institutions. August 2007.
3) Family Entertainment Center White Paper by JamVentures Management, 2010.
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Expansion Goals
Backfill Southern California
market
Longer-Term Target markets:
Seattle, WA
Vancouver, B.C.
San Francisco, CA
East Coast
Evaluating multiple franchise
requests from around the U.S.
and the world
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The “Westfield Opportunity”
The Westfield Group is highly
interested in expanding Giggles N’
Hugs to all 55 of its U.S. mall locations
Offering to pay +60% of construction
costs (i.e., “Tenant Allowance Dollars”)
Negotiating deals on a per-location
basis
Also in discussions with other REITs
and major mall operators
Macerich Group (NYSE: MAC, $83B
market cap): 62 regional shopping
centers, 64M sq. ft. of gross leasable
area
General Growth Properties (GGP): 135
property portfolio
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Site Selection Strategy
Target:
High traffic, upscale retail centers &
shopping malls
Lifestyle/entertainment centers
Areas with children under the age of 10
Empirical site selection model
Rigorous ROI review
Prototype: 6,000 sq. ft. & 150 seats
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Planned New Store Rollout Schedule
The following is a diagram of the expected nationwide new store rollout schedule for current year
2013 through the end of 2017. The flagship store in Century City has been in existence since
December 2010.
Q1
Q2
Q3
Q4
Projected Cumulative Stores
2013 (A*)
2014
2015
2016
2017
1 (Topanga*)
0
0
1
3
0
1
1
1
6
2
2
3
1
14
3
3
3
2
25
4
4
4
4
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The Topanga location showed solid results in its first quarter of operation. This is a testament to
a well chosen location and the strength of the Giggles N’ Hugs brand.
Three Months Ended June 30, 2013
Revenue
Total Cost & OP EX
EBITDA margin
Topanga
$374,459
($312,054)
16.666%
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Target Economics of a Single Store
The following analysis shows the
expected economics of an average
single store, based upon our 6,000
square foot, 150-seat prototype
within the target demographic. Based
on our ability to command tenant
improvement funds of $450,000 per
location, the payback period on a per
asset basis is projected to be
approximately two years.
INITIAL INVESTMENT
Build-Out Investment
($985,000)
Pre-Opening Expenses
($240,000)
Total Initial Investment
($1,225,000)
Tenant Improvement Funds
Total Company Cost
RETURN ON A NEW STORE IN ITS FIRST FOUR YEARS
YEAR 1
YEAR 2
YEAR 3
YEAR 4
Revenue
$1,743,000
$1,893,200
$1,950,000
$2,008,000
Costs
($1,415,020)
($1,518,937)
($1,520,340)
($1,570,670)
$327,980
$374,262
$429,660
$437,330
18.81%
19.76%
22.03%
21.77%
Corporate Op. Costs
($50,000)
($50,000)
($50,000)
($50,000)
EBITDA
$277,980
$324,262
$379,660
$387,330
Initial Investment
Cumulative EBITDA
($496,020)
($171,757)
$207,902
$595,232
Store Net Profit
Gross Margin
$450,000
($775,000)
Payback (Years)
2.14
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Licensing & Merchandising Strategy
TLS Sample Clients
Signed agreement with The Licensing Shop
(TLS) to extend the Giggles ‘N Hugs
restaurant experience into “on-brand”
products
TLS specializes in the strategic development
of consumer products
Expertise:
Extending brands into licensed products
Creating new revenue streams
Reaching new customers
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Multiple Retail Revenue Initiatives
We plan to sell our branded merchandise in-store
as well as to top tier retail outlets
Further expansion opportunities into organic, highquality clothing & food line
Top-tier retail targets – Nordstrom, Bloomingdales,
Whole Foods, etc.
Examples:
Food products (i.e., Frozen Pizzas with Mom’s
Tricky Treat Sauce, Mac N Cheese with Mom’s
Tricky Treat Sauce and Chicken Littles with Flax
Seed)
High-quality children’s apparel and accessories
Drink ware/snack cups (BPA Free)
Coloring books & stickers
Children’s Vitamin Water
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Management
Joey Parsi – Founder, President & Director
Founded GIGL in 2007
20+ year career on Wall Street
Lehman Brothers
Sutro & Co.
Investment advisor at TD Waterhouse (managed $350M+ in assets) & StockCross Financial Services
Sean Richards – COO
Joined GIGL in 2010
20+ Years of operations management experience.
Regional Director at Hootwinc, LLC (overseeing operations of 7 Hooters restaurants, 1 casino & 2 bars)
General Manager of The Viper Room & Pink Taco
General Manager of the House of Blues, Planet Hollywood & Hard Rock Café
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Advisory Board
Joan Barnes – Advisory Board Member
Philip Gay, CPA – Advisory Board Member
Joined GIGL August 2012
+25 years experience operating restaurant concepts
Co-founder and former CEO of Gymboree
Former president & CEO – Grill Concepts, Inc.
Responsible for growing brand to 400 play centers
Former CFO – California Pizza Kitchen & Wolfgang Puck Food
Sold company for$1.8 billion or ~20x revenue
CEO & COO – Diversified Food Group
Founder and former principle owner of YOGA STUDIO,
sold to Yoga Works in late 2008
Former CEO – Color Me Mine
Managing Director of Triple Enterprises
Glenn Golenberg, CPA – Advisory Board Member
35 years of investment banking, private equity & financial restructuring experience
Co-founder and Managing Director of Golenberg & Company
Managing Director of Bellwether Group
Advisor to 200+ transactions & arranged financings in excess of $1 billion
Chairman and Director of numerous publicly and privately held companies and committees including The Finance Committee and
Investment Committee of Cedars-Sinai Hospital
Executive board of the Wharton Graduate School of the University of Pennsylvania where he received his MBA
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Key Take-Aways
A pioneer concept in the children’s themed restaurant industry
Organic & nutritious menu with versatility and depth
Trained “aides” promote family-friendly feel
Multiple revenue drivers generate attractive store-level profitability
opportunities
Large mall operators have expressed keen interest in rolling out the
concept nationwide
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Giggles N’ Hugs Contacts
Giggles N’ Hugs, Inc.
10250 Santa Monica Blvd., #155
Los Angeles, CA 90067
Tel (310) 553-4847
Company Contact
Joey Parsi, Founder and CEO
Tel (310) 780-0770
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Appendix: Awards & Accolades
Rated among best family & kid-friendly
restaurants by CitySearch and GoCityKids
Voted the #1 birthday party place in Los
Angeles by Nickelodeon
Voted “Best Pizza in Los Angeles” by
Nickelodeon
“Treat your children like the stars they are with redcarpet-worthy fun. Giggles ‘N’ Hugs, Tinseltown’s
favorite tot hotspot, is where playtime, healthy food
and happy families converge.” — L. Souris Hong-
Porretta, Gilt City Editor
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Appendix: What Our Customers Say…
“I am a big fan of Giggles. This indoor playground has
everything it takes for a great time: food, beer, wine, coffee,
cookies, delicious, healthy pizza, not greasy and thick. What
else do I need? Oh I forgot they also have complimentary wifi.
A big plus!” – 5/2/12
“I love this place and so do my kids. Having two little ones to
impress often makes it difficult unless you want to go to
Chucky Cheese LOL...this place is perfect and the food is very
good. Highly recommended.” – 5/15/12
“This place is wonderful! We had a great time when we went
to check it out. It's kid friendly. The staff was really nice. I'm
looking forward to different promotions they might have
coming up, including the Easter Brunch. I would highly
recommend this place to anyone I know with kids.” – 4/7/11
Appendix: Organic & Nutritious Menus
for Both Children & Adults
Adult Menu
Children’s Menu
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Appendix: Some of Our Most Popular
Menu Selections
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