Mon 22nd Feb 2016 - Italian Job launches £350,000 crowdfunding drive for second site, plans to open one pub annually until 2020 Italian Job launches £350,000 crowdfunding drive for second site, plans to open one pub annually until 2020: The UK’s first Italian craft beer pub has launched a £350,000 fund-raising drive on crowdfunding platform Crowdcube to open another site to add to its existing Chiswick venue and plans to open one pub annually over the next five years. The Italian Job is the first of its kind in the UK, offering a choice of 12 rotating beers on draught and a diverse bottled beer selection as well as wine, spirits and a range of Italian street food and specialties. Now it is looking to raise £350,000 in return for a 17.5% equity stake in the company. The pitch states: “The investment through Crowdcube will be used to take over the lease of a new pub ideally in east London. The lessons learnt during the first year of operation are: we have decided to refurbish an old pub to spread the cost of refurbishment over six months and avoid large up-front costs in term of premium and rent deposit. However the cost of a complete makeover can be much higher. The main room of the current pub is quite small, therefore we cannot fully benefit from demand at the weekend. We have found that many customers are not able to get to the bar to order a beer during peak times on a Friday and Saturday. We know that the east London demographic is younger, drink more and is more passionate about craft beers than in Chiswick, allowing us to fully benefit from our competitive advantage and uniqueness of our concept. Our target pub will have about 80 covers and can accommodate over 100 people at peak times. We are looking for a unique venue with outside space and ideally a late licence to benefit from the younger demographic of our desired areas. We are looking to pay a premium in order to minimise refurbishment expenses and to be able to open by the summer 2016. We are already exploring some interesting locations. We currently serve over 900 beers a week in the small pub we have refurbished in Chiswick, with just 30 covers and 500 square foot between our dining room and outside terrace. During 2015 we surpassed £250,000 in revenue just from normal pub operations from our opening date of 13 February 2015. In addition to increased revenues from our pub operations in 2016, we also expect to generate revenues from pop-up events held during the summer. Beer is our best selling product and we expect higher revenues and margins in 2016 through increased volumes and beer prices at the pub. In 2015, we kept prices for our best selling beer at £5 a pint to grow awareness of the quality of our product, though we believe our customers are not overly price sensitive as our competitors sell Italian craft beer for between £6 and £9.50 a pint. As of the end of January 2016, we have raised £300,000 in equity from our current shareholders. NatWest has provided a £20,000 overdraft facility since February 2015. The Italian Job is planning to open a major pub per year for the next five years in London. Subject to meeting performance targets of new sites as planned, our strategy is to expand through the opening of additional pubs funded through free cash flow. We will consider a trade sale after operating six pubs by 2020, targeting an eight times return on the initial investment. On top of the opening of our own pubs in London, we will consider an international expansion through franchises. We have already been approached by an operator in the UAE. This expansion programme could be brought forward through further equity/debt funding. International expansion is possible through the opening of more facilities either on a wholly owned basis or a franchise/licensing basis. The speed at which the business can be expanded more aggressively through these routes is dependent on the availability of further funding. We know that there is a strong interest in acquiring pubs from the larger operators, through we perceive ourselves as sitting both in the pub and casual dining sectors. Analysing data from the recent deals in the UK, mergers and acquisitions trailing Ebitda multiples are typically in the range of 7.5x to 12.5x, with an average of circa 9.5x. Recent multiples reportedly paid range from ASK/Zizzi at 7.5x through to PizzaExpress at 9.5x and Côte at 15x. At an average of £1.2m revenue a pub and with a 23% expected Ebitda, we can estimate an exit at year five at 7.9 times the current valuation. This doesn’t include the opportunity of expansion through franchises, which could add to the overall return.” The Italian Job is a joint venture from the founders of Birrificio del Ducato, today’s most rewarded Italian brewery, and Marco Pucciotti who owns several pubs and restaurants in Rome including Hop & Pork and Epiro. The Italian Job expects to make a pre-tax loss of £71,464 in the 12 months prior to the fund-raise before making a profit of £52,697 at the end of this year, rising to £215,829 at the end of 2017 and £408,347 in 2018.