Tag Archives: BFI



Publicly held restaurant, franchising and retailing companies appear today, again tomorrow and Wednesday morning at ICR’s “must attend” conference, usually in Orlando but held virtually again this year.

Announcements have often preceded the public appearances and the news has sometimes been unsettling, stock prices  reacted accordingly. We provide below links to the news releases that have triggered the largest price changes.

BURGERFI (BFI – consolidating after acquiring Anthony’s Coal Fired Pizza – up 0.35%)


DUTCH BROS INC. (BROS – got hit early, closed up 2.88%)


CARROL’S RESTAURANT GROUP ((TAST – already at a multi-year low – up 0.34%)


NOODLES (NDLS – announces major multi-unit franchise agreement – up 6.33%)


FIRST WATCH RESTAURANTS, Inc. (FWRG – finding its footing after IPO – up 2.33%)


RCI Hospitality (RICK – presentation fine, just profit taking after recent run – down  3.58%)





Happy New Year!

Our objective is to provide some food for thought (no pun intended). We try to write about topics and provide editorial commentary that you won’t find elsewhere. Looking back over our more than 100 topical articles in the last twelve months, we enjoyed studying and discussing quite a few of the most newsworthy developments. Use the SEARCH function on our Home Page if you would like to review our (unfiltered) commentary regarding:

THEMES such as :

SPACs, the appeal (as suggested by the “players”), and the dangers (hardly ever discussed) of this type of financing.

The economics of third party delivery.

Individual analytical reports on the newest public restaurant companies, namely BurgerFi, Krispy Kreme, Dutch Bros., Sweetgreen, Portillo’s First Watch and Fogo de Chao (pending).

Tilman Fertitta’s attempt to come public through the FAST Acquisition (FST) SPAC


Inflation, past, current and future.


We don’t get paid for this, except in our own account, but our readers seem to value our opinion so we sometimes provide it. We hope to help our readers avoid predictable mistakes. We continue to be negatively inclined toward the SPAC space and BItcoin. Among the newly public restaurant companies, we might have helped you sidestep BurgerFi (BFI) as well as the Krispy Kreme (DNUT) and First Watch (FWRG) IPOs. Sweetgreen (SG) and Portillo’s (PTLO) were (and are) too rich for our blood, though we are admirers of Dutch Bros (BROS), closer to the IPO price than here in the 50s. As an update, and in full disclosure, we personally took a small position recently in Krispy Kreme, far more interesting in the mid-teens (with JAB buying it back) than it was at the $17 IPO (reduced from the originally contemplated $21-23).

Fundamentals, in a world of FOMO (Fear of Missing Out) and TINA (There is no Alternative), still matter. In terms of documenting that the equity market has not altogether given up on common sense,  we look back at our published analysis of the restaurant stock universe on 11/11/20, after the pandemic psychology had killed the stocks. We’ve provided the link just below to that report, where we pinpointed Papa John’s as an especially undervalued stock, considering the stock and the fundamentals at the bottom of the pandemic. Papa John’s (PZZA) was $77/share on 11/12/19 and today it is at $133 (up 73%). Every situation did not play out as expected, but we also pinpointed Wingstop (WING) at $129 and today it is at $172 (up 33%). The two stocks we suggested as most overvalued at that point (BJ’s and Shake Shack) have gone down, 15% and 10%, respectively, during the same time frame. “Paired trades” are difficult, especially over the short term, so it is gratifying that all four favorite positions (long and short) were profitable.



We are looking at a far different calendar ’22 than we anticipated a year ago, even six months ago. We expected ’21 to be the transition year, with a return to normalcy in calendar ’22, but now “not quite”. The staffing challenge in restaurants is worse than ever, even with a higher wage scale, and the timing of relief continues to be uncertain. Normal volatility in cost of goods has been exacerbated with supply chain distortions, with some products (just as with labor) sometimes unavailable at any cost. However, while a great deal of uncertainty still exists, there is far more clarity than 12-21 months ago. The country is more open for business, vaccines and treatments are now available and generally effective in avoiding the worst possible health consequences. Restaurant operators have learned to manage labor more efficiently, have simplified menus, and have enhanced their off-premise revenue base (with to-go, delivery, curbside pickup and/or ghost brands). While operational challenges accompany the new potential, because labor must be allocated among these new business segments and managed to avoid hampering the dine-in activities, in the best of circumstances operational margins could exceed pre-pandemic levels.

The stocks

Publicly held equities have cooled off from the inflated values of early 2021, a number of well established companies trading in the lower half of their historical valuation ranges. Among the restaurant IPOs of 2021, Krispy Kreme (DNUT)($18.58), after declining from the $17 IPO price to under $13, has recovered,  not in small part due to parent, JAB, buying back millions of shares of stock. Sweetgreen (SG)($31.48) is just above its $28 IPO price, after peaking the first day above $50. First Watch (FWRG)($17.43) came public at $18, traded just briefly to about $22, then bottomed below $16. Portillo’s (PTLO)($40.27) spiked to over $50, collapsed to the low 30s before recovering to the current level. Dutch Bros (BROS)($53.24) ran from its IPO price of $23 to about $75, fell back into the 40s before stabilizing here. The cooling process is also in evidence by the fact that there is no restaurant related SPAC that is trading at a material premium to its IPO price. Especially symbolic is the lack of premium for Danny Meyer’s USHG Acquisition Corp. (HUGS)($10.36), which has announced they will become a “cornerstone partner” with JAB controlled Panera. The uncertainty here is apparently the not yet disclosed relationship between HUGS’ capital and Panera’s valuation but the “smart money” is obviously not willing to bet that HUGS common stock will be compelling after the fact.

Our analysis going forward

For our investment purposes and yours we have updated our website. The “Corporate Descriptions” section now provides, at a glance, for every publicly held restaurant company, the most important parameters relative to current valuation.  For example:


From that starting point, our investment process consists of evaluating the current operating fundamentals, whether or not the “on the ground” developments will materially change the financial picture. As part of that summary, we provide a link to the most recent conference call transcript. We are in essence looking for operational inflection points that are not yet reflected in the stock market valuation.

These Corporate Descriptions will be kept current on a quarterly basis.

Further “bookkeeping” improvements

This website will also keep all of us posted, on a weekly basis, which companies are about to report earnings. In conjunction with this weekly update, we will also publish changes in analyst ratings, and a link to the most recent  publicly disclosed “data point”,  the relevant conference call transcript.

In Summary

We thank all of you for your past support and are looking forward to sharing with you a great 2022!

Roger Lipton




The summaries we show, while not complete in detail and involve a number of approximations, provide a good starting point for our own investment banking activities and will hopefully do the same for our readers.









BurgerFi International, LLC (BFI) became publicly held on December 17, 2020 by merging into OPES Acquisition Corp. (OPES). According to the release at that time:

“Established almost a decade ago, BurgerFi has nearly 125 restaurants domestically and internationally, with plans to continue expanding. The concept was chef-founded and is renowned for delivering an exceptional, all-natural premium burger experience in contemporary and sustainably designed restaurants. BurgerFi uses 100% all-natural American Angus beef with no steroids, antibiotics, growth hormones, chemicals or additives. The brand’s diverse menu offerings have broad appeal and emphasize the use of high quality, responsibly sourced ingredients in each recipe. In addition to Angus and Wagyu beef burgers and hot dogs, guest favorites include the award-winning VegeFi® burger, all-natural cage-free “Fi’ed” chicken sandwiches and tenders, and fresh-cut fries made with just potatoes and salt. BurgerFi placed in the top 10 on Fast Casual’s Top 100 Movers & Shakers list in 2020, was named “Best Burger Joint” by Consumer Reports and fellow public interest organizations in the 2019 Chain Reaction Study, listed as a “Top Restaurant Brand to Watch” by Nation’s Restaurant News in 2019, included in Inc. Magazine’s Fastest Growing Private Companies List, and ranked on Entrepreneur’s 2017 Franchise 500.”

More recently:

Articles we have written regarding BurgerFi can be found by way of the SEARCH function on our Home Page. The reported financials are obviously short term in nature and not necessarily indicative of future expectations. We have provided a quarterly summary below, to be updated over time.



The excitement in the marketplace relative to SPACs (Special Purpose Acquisition Corporations), as evidenced by the chart shown just below, has clearly abated (as we have repeatedly suggested over the last six months).


Readers can find more extensive discussions about the individual situations discussed below by using the SEARCH function on our Home Page.


Of the restaurant related SPACs:

The only completed deal, BurgerFi (BFI), is trading almost 50% down from its high and below the $10 IPO price of the original SPAC.

Fast Acquisition Corp II (FZT), (USHG), Tastemaker (TMKR) and Bite (BITE), are sitting on a total of almost one billion dollars (which can be leveraged), are looking for deals at an acceptable price, and one that will excite the shareholder base that has to approve the transaction. However, with the stock price below the $10 IPO level, the opportunity must be compelling, or the shareholders will choose to redeem their ($10/share) funding.

Do It Again (DOITU) and Sizzle (SZZLU) have yet to be funded.

Only Fast Acquisition Corp (FST) is trading above the IPO price, about 20% higher, with the Fertitta deal pending. Even here a great deal can happen in the marketplace by the time the SEC approves the proxy material and the shareholders vote.

Bottom Line: SPACs have been very productive for some, but, as usual, the “early adopters” will have been most fortunate. Later participants are finding that the process is riskier (because Sponsors have to fund the SPACs organizational expenses), the IPO process takes longer, the search process is tedious (especially when competing with many other bidders), and the business combination may or may not be approved by shareholders. Even then, long term success is not assured and the liquidity process for Sponsors is not always easy. Some Sponsors and SPAC investors will do just fine, and they likely will have earned it.

Roger Lipton






We have written periodically about this previously very hot segment, and our readers can use the SEARCH function on our Home Page to review our commentary. Suffice to say that great care should be employed while investing within this segment, not only when acquisitions have already been consummated but while the transaction is pending and even at the original IPO. At this point, the bloom is definitely coming off the SPAC rose.  The SPAC index, after rising from just over 500 in early November ’20 to almost 950 by mid-February ’21, has declined to 720 as this has written.

Fortunately, there has not been too much money lost (yet) for investors in the restaurant related SPAC space. There are eight SPAC transactions that have been in play over the last two years, only one of which (OPES/BurgerFi) has consummated a transaction. This means that shareholders who invested in the IPOs still have the opportunity to get their funds back if they don’t like the suggested transaction, and that could yet happen. Should that be the case, the Sponsors would lose their organizational investment, anywhere from a few hundred thousand to a few million dollars, but at least the public will not have been burned.

Of the seven SPACs that have not yet consummated a business combination, one (FST) has proposed an acquisition. Four sponsorship groups have raised their funds and are screening potential acquisitions, and two are trying to complete their IPOS. The following is a brief summary of each current situation, with an equally concise description of the Sponsors and management teams. This discussion is not designed to be exhaustive but rather to remind us who is involved in each situation. I say to the principals of the SPACs described below: please forgive me if I have not, in my attempt to be concise,  completely described your professional credentials. Each of you has accomplished far more than I have, too briefly, referenced below.

It is interesting that two of the six restaurant related SPACs that have been funded, and one of the two yet to be funded, have been spawned by entrepreneurs affiliated with &vest, a brand building group which, among other things, created Washington, DC based &Pizza. Doug Jacob, Steve Salis, Sandy Beall, Michael Lastoria, et.al., seem to have a good instinct for knowing how a great deal of money can be made.

😊 That said, I suspect that all of the Sponsors, as described below, will find that it takes a lot longer to cash out than they might have hoped. It’s one thing to ride the wave. It’s another to get to the beach, put  your feet up and enjoy a beer.

The One Consummated Transaction

BurgerFi (BFI) is the only publicly held restaurant company that has been spawned by a SPAC, OPES Acquisition Corp., when $115M was raised in March ’18 by a Sponsorship group out of Canada. After an acquisition search over two years, the Canadian group passed part of their sponsorship stake and the remaining process to a new Sponsorship group led by Florida based real estate entrepreneur, Ophir Sternberg. By that time, in the course of several time extensions, over half of the originally raised funds had been redeemed. More funds were raised, and the BurgerFi transaction was completed in December, 2020. We have described BFI on this website before, including operational details so far reported by the new Company. Our reports can be accessed with the SEARCH function on this website. BFI has traded above $16/share several times since the closing in December, but is now trading between $10-$11/share. Since there has been little news of note, other than management additions and first quarter, ’21 results, still inhibited in the waning days of Covid-19, we attribute the lackluster price action largely to reduced interest in SPACs in general.

The One Proposed Business Combination that is Pending

FAST Acquisition Corp (FST) raised $200M in August, 2020, with the sale of units consisting of one share and one-half a warrant . The Co-Chief Executive Officers were originally Sandy Beall (of Ruby Tuesday fame) and Doug Jacob (a brand builder and co-founder of &Pizza). Kevin Reddy, a restaurant veteran whose career has included executive positions at McDonald’s & Noodles, among many others, was Chairman.  The transaction proposed, with a preliminary proxy in process with the SEC, is the acquisition of Tilman Fertitta’s hospitality (restaurants, hotels & gaming) empire. This is a very large transaction ($6B of revenues) relative to the original ($200M) IPO, so $1.25B was raised privately (PIPE) to reduce Fertitta’s existing debt. The original Sponsor, Doug Jacob, along with his proposed executive team, have stepped aside in favor of Fertitta’s group. Fertitta will own 59% of the surviving Company, the PIPE shareholders will own 34.6%, the IPO shareholders 5.6% and Doug Jacob a little less than 1%. Jacob has obviously decided that he would rather own a very small sliver of a much bigger situation, handing over the corporate keys to an experienced entrepreneur, rather than having to manage the process himself. The good news is that the restaurant and hospitality industry is opening up as the pandemic runs its course, and the rebound in Las Vegas is especially apparent. Based on Fertitta’s empire returning to 2019 revenue levels, the case is made that profit margins will be improved as a result of efficiencies implemented during the Covid-19 pandemic. FST, post the merger, looks to have substantial upside if EBITDA and profits are generated as suggested. Since the deal was rumored in mid-January, FST has traded from about $10.25 to $12-13/share where it has fluctuated the last couple of months as presentations are made and papers are filed. Though the proxy material is no doubt complex, and the closing could yet take a few months, with FST trading at better than a 20% premium to the IPO price, it appears that shareholders will bless the deal. Considering Fertitta’s deal driven agenda, as demonstrated over thirty years in the public eye, FST will be an interesting situation to follow.

Four SPACs with Funds Raised

Tastemaker Acquisition Corp. (TMKRU) raised $276M on 1/8/21 with the sale of units consisting of one share and one-half a warrant. Tastemaker Sponsor LLC is owned by Pace, Phorzheimer and Golkin, further described as follows. The management team is led by Co-CEOs, Dave Pace and Andy Phorzheimer. Greg Golkin is President and Chris Bradley is CFO. Pace has been Board Chairman of Red Robin (RRGB), CEO of Jamba, Inc.(JMBA) as well as with Bloomin’ Brands (BLMN), Starbucks (SBUX), Yum Brands (YUM) and Pepsico  (PEP). Phorzheimer was co-founder of Barteca Holdings (operator of Bartaco Barcelona Wine Bar), which was sold to Del Frisco’s For $325M in June, 2018. He is currently an independent Board member at brands owned by L. Catterton, Brentwood Associates and Rosser Capital. Golkin has been Managing Partner at Kitchen Fund, an investor in growth restaurant brands, and an investor for many years in a variety of industries. Bradley has been a Managing Director at Mistral Equity Partners since 2008, previously an investment banker at Banc of America Securities. He is also CFO of Haymaker II (HYAC), a SPAC intending to acquire ARKO Holdings, Ltd., a convenience store operator, and previously served as CFO of Haymaker I, which combined with OneSpaWorld Holdings (OSW) in March, 2019. Hal Rosser, Founder and Managing Partner of Rosser Capital Partners, will serve as non-executive Chairman. There are highly qualified Directors, including Rick Federico, Starlette Johnson, and Andy Heyer. There has been no proposed business combination yet. The units trade at $10.00, the same as the issue price.

Bite Acquisition Corp (BITE) raised $200M on 2/12/21 with the sale of units consisting of one share of common stock and one-half a warrant. Bite’s Sponsor is Smart Dine, LLC, which is owned by various executives and directors of BITE, including Gomez, A.A. Gonzalez, Warschawski and J.M. Bernal, described further below. Rafael Felipe de Jesus Aguirre Gomez is Chairman, with over 35 years in food and beverage operations as Chairman of Mexican based Mesa Corporation. Alberto Ardura Gonzalez, CEO, has more than 35 years of experience in finance, with Merrill Lynch Mexico, Deutsche Bank in NYC as head of Latin America Capital Markets and Nomura Securities. CFO of BITE, Axel Warschawski has been in finance and private equity for over 15 years, as a VP for Mesa since 2013. Director nominees include Julia Stewart, Randall Hiatt, Joseph Essa and Juan M. Gonzalez Bernal, all with impressive credentials. No business combination has yet been proposed. BITEU currently trades at $9.88 per unit

USHG Acquisition Corp. (HUGS/U) raised $287M on 2/24/21 with the sale of units consisting of one share and one-third of a warrant.    HUGS’ Sponsor is USHG Investments, LLC,  an affiliate of Union Square Hospitality Group, LLC, which was founded and is still led by the legendary Danny Meyer. Within HUGS, certain of the directors, officers, and their affiliates own a portion of the Sponsor. The management team is led by Chairman, Danny Meyer. The CEO is Adam Sokoloff, who since 2019 has been the Managing Partner of merchant banking firm, Asgard Capital Partners. Prior to that, he spent several decades in investment banking activities, with firms including Bear Stearns, Drexel Burnham, Kidder Peabody and Leonard Green. Tiffany Daniel, CFO at HUGS, was a VP at Cole Haan, before that a VP at Tapestry, before that with other fashion brands as well as with private equity firm, Bruckmann, Rosser, Sherrill & CO. Directors include J. Kristopher Galashan, Lisa Skeete Tatum, Mark Leavitt, Walter Robb, Randy Garutti, Heidi Messer, and Robert K. Steele, all highly credentialed. No business combination has yet been proposed. HUGS/U currently trades at $10.09 per unit.

FAST Acquisition Corp. II (FZT/U) raised $230M on 3/15/21. Doug Jacob had so much fun taking FAST I public, he followed it up with another, in fact a couple of others. While Jacob is the founder of FAST II, Garrett Schreiber is the Sponsor and CFO of FAST II. We note that Mr. Schreiber, at the ripe old age of thirty, was CFO of FST (above), is also CFO of Velocity Acquisition Corp (referred to below), joined RBC Capital Markets as an investment banking analyst in 2014 (obviously at the age of about 23), so is obviously very talented.  Jacob and Schreiber are joined once again by Sandy Beall (as CEO), Eugene Remm (as Chief Brand Officer), Michael Lastoria (CEO of &Pizza) and Steve Kassin, all principals of &vest, which is referred to as a “hybrid investment fund sponsor/creative agency”. Separately, we note that this group has a third SPAC, selling $230M in February, 2021 in technology oriented Velocity Acquisition Corp. In addition, Kevin Reddy follows his involvement at FAST by being Chairman of the Board for FAST II. There are quite a few other individuals brought in by Jacob, all proven Brand builders in their previous affiliations. The acquisition search is aimed at hospitality in general (i.e. restaurants, hotels, entertainment, consumer brands) and associated technology, differentiated products and/or services with high revenue growth and at least $40 million of EBITDA. Again, the above description of the people and the strategy is just scratching the surface. We will all learn more over time. The IPO units (FZT/U) is trading at $9.98.

Two SPACS Not Yet Funded

Sizzle Acquisition Corp (SZZLU) – Filed on March 11, 2021 a registration statement to raise $143M, by way of the sale of units, consisting of one share of common stock and one-half a warrant. The Sponsor is VO Sponsor, LLC, owned by Steve Salis and Jamie Karson, described further below. Chairman and CEO is Steve Salis, with extensive experience in restaurants and hospitality in Washington, DC. Among other things, Salis was co-founder of &pizza in July 2011 and was CEO from 7/11 to 3/15. Jamie Karson is Non-Executive Vice Chairman and has worked closely with Salis in recent years. From ’01 to ’08 he was CEO and Chairman of the Board of Steve Madden, prior to that CEO and COO of Think Pink, which operated 5 Pinkberry restaurants in Connecticut. Grace Park, CFO, joined Salis Holdings in July 2020, having been Corporate Controller at Five Guys from 2016 to 2020. Prior to that she was with KPMG and Nestle.  Once SZZLU is funded, Daniel Lee will become Head of Business and Corporate Development. Mr. Lee has worked with Steve Salis, since 2018, before that in business planning and finance at a variety of firms. Also following the SZZLU funding, Karen Kelley, Warren Thompson, and David Perlin will become directors, all with high quality credentials. In addition: Carolyn Trabuco, Geovannie Concepcion, and Rick Camac will serve as strategic advisors. We have no knowledge of the currently anticipated funding date.

Do It Again Corp (DOITU) – Filed on March 2, 2021 a registration statement to raise $143M, by way of the sale of units, consisting of one share of common tock and one-third of a warrant. The Sponsor is Do It Again Sponsor LLC, of which Clifford Hudson is currently the sole owner. CEO and Chairman is Hudson, with Kathy Taylor as President and Scott McKinney as CFO. Cliff Hudson spent 35 years building Sonic Corp., selling SONC to Inspire Brands for $2.3B in December, 2018. Kathy Taylor was EVP and General Counsel at Thrifty Car Rental, leading to its sale to Chrysler Corporation. At that point, she and others purchased National Car Rental from General Motors, which was sold to Auto Nation. She has been involved in ownership and operation of a variety of other successful business, and is the former mayor of Tulsa, Oklahoma. Scott McKinney began his career as an investment banking analyst at AG Edwards & Sons and has completed over $20B of transactions in the retail space, working within firms including Barclays Capital and Lehman Brothers. Director Nominees include Sid Feltenstein, a very highly regarded veteran of restaurant operations and franchising, Kate Lavelle, also with extensive restaurant experience, and Scott McLain, with over 25 years of restaurant experience, including his stint as CFO at Sonic Corp.

CONCLUSION: Provided at the beginning of this article

Roger Lipton



It should be no surprise to anyone that SPACs, or “blank check” companies, have become very popular. About $80B was raised in 2020 for use by these investment vehicles, and just about the same amount in only two months this year.

There are five SPACs, formed by Sponsors that have a background in the restaurant industry, in total raising about $1B, which can support a cool $5B or more in acquisition activity.  BurgerFi has been brought public, FAST Acquisition Corp (FST) is working to merge with  Tilman Fertitta’s hospitality empire, Tastemaker  (TMKRU) and Union Square Hospitality (HUGSU) have raised  funds and are conducting their search. Cliff Hudson (ex-CEO of Sonic) is planning a $125M offering.


We’ve written before how Sponsors can make anywhere from 10x to 50x their investment over perhaps five years (hopefully less) with minimal risk if the SPAC funds are raised and if they have reasonable success managing the Business Combination (BC).

Public investors, typically at $10/unit, which consists of a share and some portion of a warrant, have an apparent “no lose” proposition because they can redeem their share for approximately $10 if they don’t approve of the BC. The Sponsor is given up to 24 months to complete a BC. Investors feel, therefore that they can “always” get their money back and they have substantial upside in the meantime because the SPAC Units often trade at a substantial premium to the $10 offering price well before the BC is completed. Before the BC comes to a vote, therefore, and redemption becomes an active  option, the SPAC investor has the opportunity to sell their shares into the marketplace, hopefully at a premium to the $10 issue price, and the warrant can be retained  as well.


We’ve said “always” and investors in may feel “always” because nobody in a bull market worries about  technicalities, but that does not mean “any time”. The redemption right is only effective at the time of the shareholder vote, 24 months down the road. Between now and then, the SPAC Unit trades like a closed end fund, at a premium or a discount to the issue price. While it is true that most SPACs are currently trading at a premium to the $10 issue price, there is something like $100 billion worth of SPACs that have not formally proposed their BC and therefore could trade at a discount rather than the premium most prevalent today. When we consider that, with the hundreds of billions of dollars chasing deals, at least $5B (with leverage) in the restaurant industry  alone, lots of SPAC Sponsors will propose an obviously high price to complete a deal before time runs out. If the marketplace doesn’t like the appearance of the proposal, the SPAC shares could quickly go to a discount and investors would have to wait for the formal vote before redemption could be requested.

We can provide a couple of examples of this phenomenon.


Fifteen years ago, prior to the ’08 –’09 financial crisis, a popular investment vehicle, Auction Rate Securities (ARS), became popular. Something like $200 billion of these securities were sold by underwriters, whereby investors could get a higher yield than was possible in money market funds. The ARS were invested in a variety of fixed income securities, including money market funds (who were guaranteeing $1.00/share) and a variety of other fixed income investments. There was an “auction” of each ARS portfolio every 7 to 35 days, whereby a new interest rate would be fixed. The underwriters “guaranteed” that an investor could “always” sell their ARS shares at $1.00/share, largely based on the fact that the ARS included (but was not limited to) money market funds.

In Feb’08, money market funds allowed their shares to “break the buck” because their portfolios were not liquid enough to meet redemptions, and the ARS market froze as well. Investors (including this writer) had their funds literally frozen, not redeemable at any price. There was an obscure technicality, under certain conditions, that allowed the ARS Sponsors to do this. As it turned out, the US Government guaranteed the hundreds of billions that had been invested in money market funds, which allowed the ARS Sponsors to redeem those shares, close to par value, as well. This process took about eighteen months. No harm, no foul, but it took a while.


More recently, on December 22nd, we wrote about the Grayscale Bitcoin Trust (GBTC, a closed end fund owning Bitcoin). GBTC was, on 12/22/20, trading at a 40% premium to the Bitcoins that were held. GBTC today trades at a 12% discount. Bitcoin has gone from $22.3k to $48.2K (up 116%) and GBTC has gone from about $30/share to $41/share (up only 28%). Investors obviously haven’t participated anywhere as much as they anticipated in the Bitcoin “play”.


A prospectus for a SPAC  typically runs 200 pages, and contains a great deal of legal jargon. Just as was the case with Auction Rate Securities fifteen years ago, there could be some basis by which redemption might not be as easy as it seems. (It’s always easier to get someone to take your money than to get it back.) Setting that possibility aside: redemption of shares, anticipated in the prospectus to be close to the $10 issuance price of the Unit, is typically offered along with the shareholder right to approve the proposed Business Combination.

Between now and then, however, the investor funds are “at risk”. They can sell at a premium to the $10 redemption price (which has so far most often been the case), but discounts are possible as well. Investors in SPACs should not risk any funds that cannot stay in place until the Business Combination is proposed and the redemption provision becomes effective.

Roger Lipton




Julio Ramirez – CEO

Prior to the business combination, OPES named Julio Ramirez Chief Executive Officer.

During his three decades at Burger King, which he left in 2011, Ramirez served as president of the Latin America/Mexico/Caribbean division, Senior Executive of Franchise Operations and Development in North America, and Executive Vice President/Chief Operations Officer.

As described in BFI’s summary of his qualifications, he is “highly regarded for his ability to build franchise relationships, having led Burger King’s field marketing across North America throughout the mid-1990s as part of Burger King’s successful “Back to Basics” campaign, which attained positive comparable sales for several years. In the early 2000s, he effectively managed over 1,100 franchisees in North American operations and led several key working committees, including franchise relations, operations technology and restaurant finance. He introduced the Burger King brand in over 10 countries throughout Latin America, effectively establishing the supply chain, selecting outstanding franchisees, and building a team that opened more restaurants than McDonald’s in 16 of 25 countries. In Brazil, for example, he developed a local team that assembled an effective supply source, signed ten franchisees in a regional network, opened an office in Sao Paulo and successfully launched the brand with an impactful marketing campaign—all of which resulted in Burger King’s first 60 Brazilian locations yielding annual sales substantially greater than the US average, in the face of tough local competition. In Mexico, he built a team that surpassed both MCD’s and KFC’s unit development, opening over 400 restaurants throughout the country.“

After three decades at Burger King (which is described below), in 2011 Ramirez founded JEM Global, Inc., a company that specializes in assisting quick-service and fast-casual brands with franchising and development efforts domestically and internationally. Ramirez consulted Dunkin’ Brands on its Brazil entry strategy and Buffalo Wings & Rings on its Mexico development strategy. He set up four new franchise groups in Mexico and Colombia for “100 Montaditos,” a Madrid-based Andalusian restaurant expanding into the Americas. He was also co-owner of Giardino Gourmet Salads, South Florida’s premier fast-casual concept, helping to grow the brand in Miami, Fort Lauderdale and Naples, Florida.

Jim Esposito – COO

Just yesterday, BFI announced the addition of Jim Esposito as chief operating officer, succeeding Nick Raucci who has left the company. In summary, Esposito has worked with Planet Fitness, Panera Bread, Papa Gino’s and Burger King.

Most recently, since 2016, he was Senior VP, in charge of corporate club locations at Planet Fitness. Prior to that, he spent a year at Panera Bread, working with a cross-functional team developing key initiatives. Prior to that he served as chief operating officer at Papa Gino’s and D’Angelo, and spent 11 years in a variety of operations positions with Burger King Corporation, including leading Burger King’s Global Restaurant Systems group.

We don’t know the exact years that Esposito was with Burger King, but it seems likely that he worked, in the overseas effort, there with new CEO, Ramirez, and that would speak well for their ability to get the job done at BurgerFi.

OUR VIEW of the management situation

We know neither of the gentlemen, and have no reason to question their credentials. We have a couple of natural concerns, however. First, BurgerFi is an earlier stage publicly held company than their experience has included so they have the typical challenge of matching investors’ short term requirements while not sacrificing longer term considerations. Secondly, a great deal of their time has been spent overseas. While expansion abroad is obviously an important long term opportunity, the priority at this point is expansion closer to home. On the positive side, it ought to be a lot easier to choose locations and supervise operations up and down I95, especially with the brand awareness in Florida, than all over the globe.


We have written about BurgerFi  (and the IPO/SPAC process) a number of times over the last six months and readers can access those articles using the SEARCH function on our Home Page.

BFI stock has moved up to the $15 level recently, no doubt because the Company has announced the 30% surge in new openings expected in 2021, the continued sequential improvement in same store sales, the management additions, and the ongoing marketplace love affair with SPAC business combinations.

As we have described in our previous reporting, the valuation of BFI, based on the currently outstanding 17.6M shares, and subtracting the $39 million of cash on the most recently reported balance sheet is about $217M. This is obviously a very high valuation for a Company with minimal historical EBITDA and big plans. More specifically, Adjusted EBITDA was $3.3M in ’19, projected to be $4.3M in ’20 (not going to happen, IMO, but not relevant at this point), projected in the last Investor Presentation to be $10.5M in’21. With the pandemic dragging on into ’21, we view it doubtful that $10.5M will be done this year, but, once again, investors don’t mind as long as it is going to happen at some point soon. Whenever the $10.5M of EBITDA develops, the $217M of current Enterprise Value seems to adequately value this emerging brand.

In terms of stock performance from here, investors should be aware that, with 17.6M shares outstanding and a current public float of about 6M shares, 27M more shares are in the process of being registered for sale, which includes founders’ shares and shares to be issued from exercise of private placement warrants. The warrants will bring in cash at $11.50 per share so we are not especially concerned about that dilution of the Enterprise Value. However, relative to supply and demand for the public shares, 27M newly registered shares is over four times the current float.

Most important of all, substantial dilution of current shareholders will occur from the contingent shares that will be issued to the original BFI shareholders when the stock hits $19, $22, and $25, and that is not very much higher than the current $15 price level. These  are not “earnout” shares because they have nothing to do with sales or earnings or cash flow, and the stock price might do amazing things, regardless of fundamentals. There are a total of 9.4M contingent shares potentially to be issued, obviously very substantial.


The possibility exists that the stock, in this speculative environment, could go above $25/share and there would be an additional $240M of Enterprise Value issued with no concurrent increase in current or future EBITDA. An optimist would suggest the possibility that operating results could improve substantially, perhaps exceed the $10.5M projected near term EBITDA by a lot. However, above $25/share with well over 25M shares to be outstanding in total, the expanded Enterprise Value would be approaching $700M. Investors would therefore need $35M to support a hefty 20x EBITDA multiple. That is…a long way from the current situation.

Roger Lipton