Godfather’s Founder to Invest in Green Burrito : Stock: William M. Theisen will buy 1 million shares of GB Foods, help jump-start its franchise operations.
ANAHEIM — GB Foods Inc., the parent of the Green Burrito restaurant chain, said Friday that the founder of Godfather’s Pizza has agreed to invest $3.1 million in the company and oversee its franchising operations.
William M. Theisen, an Omaha businessman who founded Godfather’s in 1973 and oversaw its expansion to a chain of 950 restaurants, signed a letter of intent to purchase 1 million shares of GB stock at $3.06 each in a private placement. The agreement, to be made final Wednesday, also gives Theisen voting rights for five years on the 40% stock owned by the company’s three top executives.
Company officials predict that Theisen will help jump-start Green Burrito’s franchise operations, which have fallen short of expectations because of the lackluster Southern California economy and snags in cutting through local government red tape.
“He’s well regarded in the fast-food industry,†said Robert Gibson, executive vice president of GB Foods. “He’s been very successful in his franchising activity.â€
The company, based in Anaheim, could fall a bit short in its plans to open 30 new Green Burritos by year’s end. So far, 24 have opened. In all, GB Foods operates 11 company stores and has 53 franchised locations.
“I don’t know what the impact is going to be,†said David Rose, an analyst for L.H. Friend & Co. in Irvine. “It could be a plus, but they have got a lot more improvements to make. It’s going to take a lot more.â€
In fact, the company blamed part of its $98,868 loss in the third quarter to the delay in opening three new franchises. The results compared with a $81,339 loss for the same period a year earlier. Quarterly revenue increased 28% to $3.3 million from $2.6 million.
“(Theisen) is exactly what the company needs,†said Karey Worton, an analyst for Wasatch Advisors Inc., a Salt Lake City investment bank that owns 200,000 shares of GB Foods. “They have a great concept. But the problem has been that they are long on vision and short on execution. What they need is unit growth, a cookie-cutter concept.â€
Analysts say that Theisen could also help attract a more substantial joint venture with a national fast-food chain to open combined stores, where customers are given two menu selections. In August, a Green Burrito was placed in an existing Arby’s store in Long Beach, and volume in the combined restaurant has doubled. Arby’s has about 1,200 locations nationwide, Worton said.
“It’s a great store,†Worton said. “It’s exactly what the company needs.â€
Theisen, who approached the company about 90 days ago, also will become a director. The move gives him a major say in company operations along with Gibson, Chairman Ruben Rodriguez and Chief Executive Gary McArthur, who together own about 1.5 million shares of the 3.9 million now outstanding. Theisen also will get a five-year warrant to buy 1 million more shares at $5 each.
In Friday’s trading on the NASDAQ market, GB Foods closed at $6.88 a share, up 63 cents.
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