Taylor Gourmet Raises Initial $5.6 Million from KarpReilly Deal


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Ted Eytan

Investors are always on the lookout for the next growth brand. Obviously, every private equity firm, investment banker and advisor wants to find the next Chipotle when it’s still just the new hot spot down the street.

While few of those hot spots ever grow to the level of the fast-casual giant, that doesn’t stop millions from flowing into nascent concepts.

Advisors at Geraty Investments, a Minneapolis-based investment banking and advisory firm that prides itself on finding those emerging growth brands, thinks the East Coast hoagie shop Taylor Gourmet is one of those brands.

Geraty Investments advised owners David Mazza and Casey Patten leading up to a capital infusion from private equity fund KarpReilly, in what advisors called “a flagship deal.”

The KarpReilly injection was undisclosed in the investment announcement, but a Form D shows that Taylor Gourmet offered up $5.6 million in securities.

Tony Hondlik, director of banking at Geraty Investments said they’ve been working toward a private equity deal since the early days.

“We’re focused on concepts in the very early stage, and start talking these guys in the two-to-ten store range – get in early and get to know them. We get to know them and be and advisor to them for the first year or two – until they’re ready to raise their first institutional capital,” said Hondlik. “So with Taylor for example, we were there at store two.”

Taylor Gourmet launched in 2008 and now counts 10 locations in the D.C. area including an inline location at the Reagan National Airport. Many locations include the iconic garage door out front “to welcome in our neighbors.” D.C. neighbors like President Barack Obama, who has stopped in from time-to-time to grab sandwiches with Vice President Joe Biden and pick up lunch for Nancy Pelosi and John Boehner on The Hill. Obama is a fan of the turkey hoagies, by the way.

The concept’s fresh and local vibe isn’t just making politicians salivate.

“It seems like a lot of concepts we see getting funding today do have that element of fresh, made from scratch,” said Hondlik. “That’s, without question, is where the consumer is headed right now.”

He said that Taylor Gourmet’s focus on in-house roasted meat and cutting veggies every morning is a move that echoes the giant in the fast-casual segment.

“Look at Chipotle, even after so many years, they still put up great same store sales numbers, every time we go there is a line. And they’re not doing anything that special, but it’s consistent,” said Hondlik.

With a new capital injection, Taylor Gourmet is looking for new locations. While stakeholders are tight-lipped about the details, East Coast customers can expect the concept to grow “in a prudent way.”

 “We don’t like concepts to grow much faster than they can train their people for. Anyone can go open stores, but you can’t execute if you don’t have the right people,” said Hondlik. “We’ll typically look for concepts to grow in the 25-40% range.”

With that $5.6 million, Taylor Gourmet is looking to grow fast if that cash will be put toward new locations. Taylor Gourmet, KarpReilly and Geraty Investments, however, were unable to confirm any specific growth targets. 

As for how Geraty Investments found the concept so early, Sean Geraty, director of corporate development, said it really wasn’t that difficult.

“When you’re in the industry, it’s all you do. I’m constantly scouring the Internet, and when we’re traveling, we’re eating a lot of meals – I’ll say that,” said Geraty. “The best way to find these things is to say, let’s go travel and see where the lines are and who has the best food. It’s not rocket science.”

The lines out the door and healthy numbers make for strong growth potential.

“It is sort of a gut reaction initially. When we get to know a company and start advising them on stuff we look for unit-level economic indicators that say these guys are really nailing it,” said Geraty.

Keep an eye out for more from Taylor Gourmet in the very near future. 

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