Honeygrow, a three-year-old chain of 4 "fast-casual" meat-and-veg stir-fry/salad/fruit-plate restaurants targeting affluent and college neighborhoods for $8-15 lunches, says it has raised $20 million in new investment money from Scott Miller's $1.6 billion-asset Conshohocken investment firm, Miller Investment Management, and from previous investors including Brook Lenfest (a son of Inquirer owner Gerry Lenfest).
The new round of investors spent another $5 million buying shares from friends and family who funded the first stores. The $20 million will pay for new managers, labor-reducing technology (ordering is already digital), and new stores, Honeygrow says. The chain, founded by Justin Rosenberg and David Robkin, is in Center City, Bala Cynwyd, Radnor and Cherry Hill, and plans sites in Hoboken, Wilmington, and at the University of Pennsylvania and the University of Delaware this year.
At that price, Honeygrow investors are betting on acceleration. Compare, for example, to the lower price a larger Conshohocken-based, vegetable-focused chain, SaladWorks, fetched just last Friday: New York buyout investor Centre Lane Partners agreed to pay $16.9 million for the 108-store SaladWorks chain, buying out founder John Scardapane, investor Vernon Hill (of Commerce, Metro and First Republic banks), and other creditors; and pledged close to $2 million, to help update and grow SaladWorks stores and products.
Is Honeygrow worth so much more per store? "Everyone wants to be the next Chipotle," and Honeygrow could have a shot, Andy Greenberg, partner at investment bank Fairmount Capital Partners (and private-equity valuation tracker through GF Data Resources) told me. "You make money by investing in the A-plus properties," and Honeygrow "hits a lot of current hot buttons -- quality fast casual, healthy living, urban hipness." Saladworks, which operates on a larger scale through franchisees, isn't all that; though it could also be a moneymaker for its bargain-priced buyer, "with a lot of thoughtful operational management."
Is Honeygrow ready to scale up fast? "We have worked out our systems on the store side and the corporate level to creat that foundation needed for intelligent growth," cofounder Rosenberg told me. Local, regional, national? Philly is home, and "if we have a great opportunity in Haddonfield, we would do it." The team is also scouting sites in metro D.C. and New York: Amtrak country: "We are not looking to jump to California anytime soon."
Rosenberg worked previously at mall-owner PREIT, on the asset-management side. He studied history and Spanish at Penn State, got his MBA-Finance at Temple, and drafted a restaurant business plan stressing "food, design, simplicity." He spent time in a friend's Washington, D.C. restaurant figuring out efficient food prep. He talked, by his count, to 93 investors before partnering with Robkin, a very-much-recovered accountant.
Robkin sold his Philly firm to national auditor Grant Thornton back in 1995, and went into the venture capital business with Liberty Venture Partners, whose tech picks did no better than a lot of others in the dot.com boom and bust. He was more successful helping Stephen Starr finance Buddakan and other big-ticket restaurants. And he's a longtime partner in Entertainment Services Unlimited, the Voorhees partnership (with Larry Mazer) that reps Philadelphia (and Nashville) music acts.