In January, The Grilled Cheese Truck, Inc. became the world’s first publicly traded food truck business (ticker symbol: GRLD).
Its early valuation of $108 million is based on 18 million shares that started trading at around $6. For less than the price of a Plain and Simple Melt off the lunch truck’s menu, you can now own a piece of the company.
By all accounts The Grilled Cheese Truck makes a pretty darned good grilled cheese sandwich, and who doesn’t love grilled cheese? But before you put your lunch money into a brokerage account, let’s do a little reality check on what it means to have a $100 million valuation in something called ‘the mobile gourmet grilled cheese space.’
The company owns four licensed catering trucks, a whole lot of cheese, and not much else. In the SEC documents filed ahead of the public offering, GRLD claimed assets worth $1 million while owing nearly $3 million against them. If those were my trucks, I’d be looking out for the repo man. Their track record in sandwich slinging is even more dismal. The financial statements they filed showed that their best stretch was the third quarter of 2014 when the company lost more than $900,000 on sales of $1 million. For the first nine months of the fiscal year, GRLD reported a total loss of $4.4 million on $2.6 million in sales.
Once you get past the woeful fundamentals, GRLD still isn’t looking so hot.
None of its sandwiches showed up last April (a.k.a. National Grilled Cheese Sandwich Month) when Women’s Day paid tribute to the 10 greatest grilled cheese sandwiches. Nor were they cited by Zagat on its list of 30 Awesome Grilled Cheese Sandwiches around the U.S. The Grilled Cheese Truck didn’t even make the cut when Mobile Cuisine named the 2014 Grilled Cheese Food Truck Of The Year and its four runners up.
Before you plunk down cash for shares, you might want to talk to some Cereality franchisees, or more accurately, former franchisees. Every one of their businesses has failed. Like grilled cheese sandwich trucks, the cold cereal cafés were based on a single, universally loved dish that most people already prepare at home. A decade ago more than 6,000 potential investors lined up for the opportunity to buy into a franchise concept that USA Today described as “so absurdly simple, self-indulgent… well, how can it fail?” Well, it did, after each owner had ponied up franchise fees and startup costs ranging between $145,650 and $461,300. Cereality is currently in retrenchment mode, down to just two company-owned outlets; one an airport kiosk and the other located inside a hospital cafeteria.
When it comes to grilled cheese sandwiches, I’d pass on Wall Street and stick to lunch. But if you really want a wild ride, Cereality is still looking for a few new franchisees.