Three years after Bastard Burgers opened in Luleå, venture capital firms were queuing up to join the international expansion of the burger chain. Valentum stepped in as financial advisor and when the dust had settled, it was Equip Capital who was finally chosen. This is the story of how five guys from Luleå managed to build a restaurant business that investors could not resist, and how they then settled on a partner with whom to take over the world.
It has hardly escaped anyone that the burger market in Sweden is getting crowded. New chains have popped up out of nowhere and together with the three giants you would imagine that the market and its customers are getting somewhat full. Such was the climate in which Bastard Burgers decided to open up a restaurant in Luleå, bravely coming to the conclusion that there was room for more. Many more.
“We wanted to make the best burgers in Sweden. To become a full-scale chain was never in the cards. But soon enough we realised that we wanted to open more restaurants—and that we could open more restaurants”, CEO and co-founder Simon Wanler says.
Profitability, scalability and external expertise
This is where the story of Bastard Burgers takes a different turn compared to those of may, if not most, restaurateurs choosing to expand. And the reason for this might simply be that the founders do not consider themselves restaurateurs, but entrepreneurs.
“I have owned companies before which have grown despite us not being fully prepared for what this entails. This time we wanted to get it right from start. So we built an organisation and a structure that could handle upscaling, and we quickly brought in external expertise to the board of directors”, Simon Wanler explains.
For example, the founders brought in Wilhelm Vintilescu as chairman. Vintilescu, who had been the CEO responsible for the international expansion of sports bar chain O’Learys, had a clear idea of how to make Bastard Burgers grow. They would quickly open 20-30 restaurants by themselves, then bring in an external partner to allow for international expansion. But realising such a plan is easier said than done.
“We have followed that plan almost word by word and our success comes down to having a clear growth strategy from the beginning. Our units have been profitable from the start, which has provided us with the cash flow needed to open the next restaurant, and so on. This structure meant leaving nothing to chance.”
Finding the RIGHT capital
The opening of the 29th restaurant came quicker than anyone had imagined. 29 restaurants in the black. It was time to find capital.
“We have very high ambitions. We believe we can build a global chain, but we also have a lot of respect for that involves. It’s a saturated market and we want to work fast. So we need capital, but most of all, the right capital. By that I mean a partner who’s been through this journey before, who shares our values and our love for—well, burgers”, Simon Wanler says.
The original plan was to handle the process internally, but a meeting with Valentum changed the minds of both founders and board members.
“In short, we were very impressed with how they work. We realised that with Valentum as advisor, the process of selling a company, which can be quite taxing, would be so much easier. And we were right. They prepared our pitch in an incredible way.”
Building a case
As advisor, Valentum helped Bastard Burgers to understand and prepare for the perspective of a potential investor, which includes analysing the market and the competition.
Gustaf Plyhm at Valentum explains how it became increasingly clear what a remarkable company Bastard Burgers was.
“Investors look for profitability, scalability and quality. In Sweden, many burger chains have opened 5-8 restaurants, but Bastard Burgers have managed to open 30 profitable units in a very short space of time. And in completely different locations—in cities, smaller towns, in exclusive locations and in shopping centres. It proves that they can handle a bigger expansion.”
“Through their large network, Valentum could reach relevant investors and partners. It has made an enormous difference”, says Simon Wanler.
“They reached out to 50-100 potential investors in Sweden and abroad, and they knew which ones would suit us, our values and our future plans. They have been with us every step of the way and have helped us to find both the right price tag and the right partner.”
“Because”, says Simon, “the choice wasn’t just about who was willing to pay the highest price.”
“Absolutely not. This is about who we want to continue our journey with. But having more interested investors gives us a clearer idea of our market value.”
Next stop: Norway
When the dust had settled, and all possible alternatives had been discussed, the choice fell on the Norwegian private equity firm Equip Capital. Equip had previously invested in Swedish salad concept Holy Greens, and had also carried out the expansion of Espresso House. With that in mind, and new capital, Simon is looking ahead.
“Focus is on Scandinavia at the moment and we are planning to open in Norway in 2020. And of course, a small detour to NY would be amazing. In the US there are tons of burger chains, but they’re either purely fast food or more fine dining. I think we can fill a gap between the two extremes.”
Bastard Burgers – Facts
Turnover: SEK 228 million
Employees: Approximately 400
Best-selling burger: London