KLE to raise fresh capital
Published:Wednesday | March 11, 2020 | 12:19 AMKarena Bennett/Business Reporter
KLE Group, operator of the Usain Bolt Tracks and Records restaurants, is looking to a mix of fresh capital and new partnerships to fuel its growth plans.
The company is pushing ahead with plans to grow UBTR internationally, notwithstanding its recent pullback in Jamaica.
KLE Group CEO Gary Matalon disclosed plans to raise capital for the company with the release of the company’s yearly earnings report, which did not indicate a fundraising target, only that it would be “significant”.
The funds are also expected to finance expansion of ‘“corporate-owned” UBTR restaurants in Jamaica, an indication that it won’t be pursuing any more franchises in its home market for now, and that any new addition to the local UBTR chain would be run by KLE itself.
In January, KLE took full control of the two UBTR franchises operated separately by partners in Montego Bay and Ocho Rios. That left just one restaurant still standing – the flagship eatery at Market Place in Kingston that KLE operates.
Matalon is now focused on brand modernisation and expansion of the UBTR network under the corporate-owned model, while some of the funds to be raised will be used to recapitalise the company and retire long-term debt.
It’s unclear whether the company is looking to raise debt or equity from the capital market, or a mix of both.
“At this stage, we are still exploring all options available. I can’t give any details as we would have to communicate with the JSE and shareholders before we say anything publicly about what direction the company takes,” he told the Financial Gleaner.
Reviewing franchise model
Matalon is also reviewing Tracks and Records international franchise model in the United Kingdom to position the restaurant for more sustained traffic; and is in discussion with potential investors for restaurants in North American markets, the immediate two being Toronto, Canada and South Florida in the United States.
“This investor profile requires a different level of support than the smaller single unit franchisee. On top of this, we are zeroing in on two additional markets to move in while the UK market penetration continues,” Matalon said.
“South Florida and Toronto have always been prioritised, given our learnings from the UK’s first location and combination of the market profiles, as well the potential the new markets bring,” he said.
The UBTR restaurant in the UK operates from 94 Middlesex Street in London. Matalon said that while the location has proven profitable, its current outlook as a ‘destination spot’ primarily from people of Jamaican and Caribbean heritage, is not sustainable for long-term growth.
For its financial year ending December 2019, KLE collected $30 million in revenue and booked losses of $16.8 million, but that was an improvement over the $25.7 million of losses in 2018.