Emerging Brand Punch Bowl Social Pushes the Expansion Limits
Day one of the ICR Conference in Orlando this week featured the founders and CEOs of small, private chains you’ve probably never heard of. Most of them, after all, have fewer than 15 units. For now.
Consider Punch Bowl Social, a 10-unit restaurant/entertainment concept founded three years ago by Robert Thompson, a veteran Denver-based restaurateur who intends to add three more units this year and six in 2017.
The units, geared toward young urbanites, feature bowling, ping-pong, shuffleboard, karaoke and old-school games. Menu items made from scratch include trendy burgers, chicken sandwiches, soups, and late-night breakfast items. Craft beers and cocktails are also part and parcel.
“We have a natural connection to millennials,” Thompson declared during his half-hour presentation.
He also confessed he “needs to bring in sophisticated systems to keep the wheels on.” For help, he recently brought in experienced leadership, including a CFO, an EVP of operations, and a culinary director.
The company nearly doubled its sales last year, ringing up about $30 million and cash-flowing $7.2 million. The Denver unit, the system’s first, produced sales of $6.8 million, comping at 9% last year. Yet the Portland, Ore., unit racked up just $3.9 million, the lowest volume in the system. Thompson blamed a landlord-funded third-floor location for the poor showing.
Systemwide same-store sales growth was in line with industry averages at 2.5% in 2015. Store-level EBITDA stood at 22%, Thompson claimed.
Thompson typically seeks financing in partnership with real estate developers. Quicken Loans founder (and Cleveland Cavaliers owner) Dan Gilbert is a partner in downtown Detroit’s outpost. In Cleveland, the Fairmount Group is his landlord and an investor. According to the equity-based crowdfunding site Circle Up, Thompson has raised $1,850,000 of the $5 million he is seeking.
Although Punch Bowl Socials is chiefly an urban concept, Thompson hasn’t been afraid to test the suburbs with it. Early sales at a recently opened unit in Schaumburg, Ill., a suburb of Chicago, apparently have been strong. He projected $5.2 million by year end. Still, he noted that too many suburban units would likely dilute the brand, referring to the cache he has in Brooklyn and Austin.
“We’re an anti-Dave & Buster’s concept,” he boasted.