Pumpkin's expansion comes at a cost

The mood at today's Pumpkin Patch Ltd [PPL.NZX] AGM seemed a little dire.

Talk of extra expenses due to expansion seemed the main theme of the day and a weaker US dollar and stronger Kiwi having a big impact on profit repatriated back to New Zealand.

The "Patch" is expecting earnings growth to come from local markets, increased interest charges, store opening costs and market development costs in the USA and UK continue to have an impact the on the company's results short to medium term.

Like Burger Fuel Worldwide Ltd [BFW.NZX] the initial costs of establishing a sustainable global brand are a necessary evil and in my opinion will increase before they start to decline. If you are invested in Pumpkin Patch to make a buck short term unfortunately the big bucks for this investment are more likely to be realised long term.


A 3,200 ft² shop at 77 Clarence Street, Kingston, UK
leased to Pumpkin Patch Ltd on a new 10 year lease
at a headline rental of £333,330 p.a.x.


If you unhappy with that as an investor then clearly you should have your money elsewhere.

Quite often, when establishing a brand such as this, companies make losses, so it is to the credit of the management of Pumpkin Patch that as yet this hasn't been the case.

Carefully building up a profitable Australasian business before moving to new overseas markets has put the company in a great position to use cash flow to allow them to borrow to grow their new business.

Michael Hill International Ltd [MHI.NZX] has used the same strategy in building their brand in Canada and like PPL they are still running at a loss there.

Store numbers are now at 200 and management look to add around 20 new stores this financial year, down from last years 35 stores, so associated costs should be ameliorated.

The only real threat seems to be from the currency swap from the strong Kiwi dollar if it continues long term but it is something management will have to deal with if it stays strong, perhaps make it a side issue and not give it the significance they seem to every reporting season, simply because there is nothing they can do about it.

Short to medium term though shareholders like me could be in for a bumpy ride.

The market punished the gloomy outlook by cutting the share price by 16c to NZ$2.72 on good volume.


Disc I own PPL shares in the Share Investor Portfolio




Pumpkin Patch @ Share Investor

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c Share Investor 2007

Friday Brief

Took a small holding of a new company to the portfolio, Micheal Hill International(MHI) the New Zealand Jewelry chain, with stores in NZ, Australia and Canada.

Having been watching this one for a while and it wasn't getting any cheaper so I thought I would take the plunge before a 10 for 1 share split on Nov19.

The company has aspirations to be a global player and it is very well run and has a great attitude to capital management and prudent expansion.

I would group it with my recent additional purchases of Pumpkin Patch(PPL) as giving exposure to a global market for the long term portfolio for good long term returns.

Just an update on Burger Fuel(BFW)

An indicator of how crowded the gourmet burger market is in Sydney where BFW has two stores. A link to a critique of the food served at Burger Fuel and five other competitors

Shares are still languishing and they finished the day at 65c today. I missed this one but they opened a new store in Napier, a small town on New Zealand's North Island East Coast.


Here's the story:

BurgerFuel Opens Napier Store

Wednesday, 31 October 2007, 1:29 pm
Press Release: BurgerFuel BurgerFuel Worldwide Press Release – For immediate release

30 October 2007

BurgerFuel Opens Napier Store

Only a few weeks after opening its second Australian store in King’s Cross, BurgerFuel has opened another new store in Napier. BurgerFuel on Carlyle Street marks the 24th store for the company, with 22 across the North Island and 2 in Sydney, Australia.

Since listing on the NZAX in August, the company has opened a mix of both company owned and franchised stores.

The local franchisee for Napier is Andrew Coombe. Andrew is formerly a fire chief, who is going from fighting fires to fuelling the flames at BurgerFuel. The Napier store is in the new complex on Carlyle Street, on the site of the old Shell station. Andrew and his wife Anne are providing a new fuel stop for the people of Hawke’s Bay with the gourmet burger experience they both became addicted to, whilst working in Auckland.

The opening of the Napier store is seen as strategically important to BurgerFuel says Chris Mason CEO “We want people to enjoy a visit to BurgerFuel – wherever they may be. Our commitment to the provinces is just as important as city locations. As BurgerFuel increases store numbers, so too does our customer base grow. Eventually everyone should have access to New Zealand’s best gourmet burger”.

No Friday Free for all column this week but it will be back next week.


C Share Investor 2007

Pumpkin Patch VS Burger Fuel

Sitting in the Takapuna KFC today eating my 3 piece quarter pack I got to thinking about brands again.

Putting the Colonel's badly run brands in this country aside I would like to discuss two up and coming brands that have their genesis in New Zealand and both with ambitions on a global scale.




Pumpkin Patch(PPL) the trendy kids wear manufacturer and retailer and Burger Fuel (BFW) the trendy Gourmet Burger maker share few traits with the well established KFC brand as operated in NZ.

Both PPL and BFW are in the infant stage as far as size and brand awareness go, although Pumpkin Patch seems to have a very high brand recognition even in areas where they don't have stores and one could assume on that fact alone it could become a true global brand.

BFW are well established in New Zealand, with two stores in Australia and the brand is seen as the place to buy quality fast food.

PPL are similarly ensconced in NZ and Australia and have a small presence in the US and UK. They are represented in other international markets via department stores and mail order.

PPL have a total of just over 200 stores and BFW just over 20 and both had their beginnings in the early 1990s.

Both companies have had their images carefully nurtured over the last 15 years or so and that attention to the brand has paid off and will continue to sustain growth as they look to go global.





While BFW only listed this year PPL got the jump in 2004 and has grown substantially since then, entering the US West Coast and now in Texas and New York.

The biggest risk for PPL is the cost factor, as they expand from a small base, likewise ,BFW will struggle as they enter new markets. This is likely to be ameliorated as economies of scale kick in and the brand gets additional awareness.

Strong branded companies like Starbucks have expanded this way. From their local area of Seattle they quickly spread their well managed brand across the US States and then globally.

Burger Fuel and Pumpkin Patch will attempt something similar in reverse. Probably harder to achieve than Starbucks but with their strong brands both these companies have a great shot.

The US market is arguably the most important market for both companies and the scale and exposure that will be available to them will either make or break them.

The cost of expansion will be high and must be done carefully and with much thought and planning. Getting it wrong in the US could well mean the death of either company. It is a very competitive market and there are giants there ready to match your product.

Thankfully, as management of Burger Fuel and Pumpkin Patch have been careful to keep their brands as strong as they are, as they have grown, this has given them an edge as they expand overseas and any company with an edge on the competition through strong brands and therefore brand recognition will have a better chance of surviving in a though market like the USA.

The possibilities for growth of these companies is truly mind boggling.

With around 100 Pumpkin Patch stores in Australia and a population of 20 million, it doesn't take much to extrapolate the figures in the US alone, with a population of 300 million.

The possibilities in India and China, while probably many years down the track, is enough to make ones eyes water.

Burger Fuel's future growth story isn't as easy to gauge as they have just started their foreign expansion although it will probably be tougher for them to expand than PPL as the fast food sector in which they operate in has a lot more competition. Their strong brand and differentiation to the competition will make this task easier however.

While not guaranteed global success and the associated riches that would surely follow, Pumpkin Patch and Burger Fuel have put their global expansion plans squarely in the hands of two very strong brands in the markets in which they currently operate.

Their success will hang largely on how new consumers respond to their carefully crafted brands and the backup management give them.


Disclosure I own PPL Shares



Burger Fuel Worldwide @ Share Investor


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Discuss BFW @ Share Investor Forum - Register free 




c Share Investor 2007

Marketing Burger Fuel's Future

The opening of a new Burger Fuel Worldwide [BFW.NZ] outlet in Sydney a couple of days ago shows me that Directors at Burger Fuel are great marketers.

Their style of marketing clearly didn't and doesn't suit their IPO as it was a dismal failure but the siting of the new Sydney store under the coke sign at Kings Cross, the 24hr sex and nightclub area of Sydney, is marketing genious in my humble opinion.




Site of the New Sydney Burger Fuel Outlet
Josef Roberts was the founder and CEO of the Red Bull energy drink business in Australia and New Zealand and as a director of Burger Fuel he is clearly using his marketing experience to catapult the company's image, food and brand into the realms of an Australian household name, just as he has done with Burger Fuel in New Zealand.

By putting their second OZ outlet into such a vibrant and tourist dominated strip, in the "Cross" Roberts will be able to further leverage the brand and expose it to foreigners of dozens of different countries which will clearly make it easier for the company to expand into other overseas markets.

Getting a spot under the Coke sign has got to be the coup de grace!

The energy that Josef Roberts put into Red Bull, pun intended, made the brand a very successful one in this part of the world and the fact that the parent company bought it back means that large corporations value the expertise of individuals such as Roberts.

Roberts clearly loves the company he works for and the time, effort ,care and passion taken to make Burger Fuel a brand in New Zealand means that success in other territories is more likely to happen.

If you look at a company such as Restaurant Brands Ltd [RBD.NZ] , the operator of the KFC, Pizza Hut and Starbucks in New Zealand you will see what not to do with brands. This company had almost run its 3 brands into the ground because of neglect and lack of care.

If Roberts and his mates at head office can keep the enthusiasm and care for their brand over the years then they are sure to go the way Red Bull did.

BFW shares closed up NZ 4c today to 65c on low volume.

Burger Fuel Worldwide @ Share Investor


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Discuss BFW @ Share Investor Forum - Register free







c Share Investor 2007

NZX Share Trades with Strings Attached

While trying to put a market order in today on the NZAX for Burger Fuel (BFW) it appears an individual cannot make his own mind up just what the market price for a particular share is on a given day.

I wasn't fully aware of this, only just in passing but for shares trading between 10c - $1 you have to bid a minimum of .7 multiplied by the closing price of the share on the previous day. Shares above $1 are multiplied by .8 , shares between 5-10c .6 and below 5c .5.

This little market manipulator came into force early July 2007 and really pumps my blood warmer than a ten year old relieving himself in a public pool on a cold Winters day!

I mean where do Mark Weldon and co get off, it is a Market Limit , what that means to this capitalist pig is that the market is supposed to decide what a share or company is worth on a given day, prospective shareholders are the market and it should be up to us to decide what value we place on a company.

I can understand why this little handbrake may have been applied-to stop a market from sliding too quickly on a bad trading day-but surely this kind of market manipulation must be open to all sorts of jiggery-pokery?

I'm quite sure the upper offer market limits are not enforced similarly so why the hell do weak companies need their hands held as their share prices get hammered on any given day?

Quite frankly they don't and Mark Weldon and the NZX board would be wise to take another look at this recent hamstringing of a so-called free share market and let the market decide what New Zealand listed companies are worth.

Incidentally, I wanted to bid $NZ .20c for 5000 BFW shares as the share price as of today has fallen almost 15% to .65c today. I have lowered my value of the company as I see further costs related to increased borrowing for the company and possible franchisees having an affect on medium term growth, expansion and obviously profit.


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c Share Investor 2007

Market Musings on the NZX

Market watchers in North America and Europe may well be asleep as I write this. If you were down in this part of the world you would be watching your portfolio drop once again after NZX investors took their lead from you who are asleep at present. The NZX is down 60 points as I write with the ASX down 165.



My portfolio is down almost 20% from this years highs and the bulk of that drop has been in the last two weeks.

Fear has gripped our market and our dollar cross with the US dollar has fallen from an all time high of over 81c to less than 70c as I write because foreign investors are moving their Kiwi investments offshore for "safer" risks.

I am not selling and will not sell but my main problem at the moment is when to buy more of what I already hold. There are 4 stocks out of the 11 that I hold that have fallen below their original purchase price but they seem to becoming cheaper and cheap by the day. I wait with my finger poised on the buy button on my computer screen.

One stock I am looking at more closely, now that the Summerset Retirement float has been cancelled today, is my holding in Ryman Healthcare (RYM) the Retirement home operator. It is looking tasty but could go lower.

Opportunities also abound in NZs Blue chips. Telecom New Zealand(TEL) is due a 14c dividend soon and is trading well down. Fletcher Building (FBU) has been given a right troweling as of late, with a 23c dividend due and Sky City Casino (SKC) has its chips down a few days before their full year announcement on Monday 21 August.

Auckland International Airport (AIA) has news that just over 6% of its shares have been purchased by Infratil (IFT) in conjunction with a Government Retirement fund, a potential blocker of a merger between AIA and Dubai International Aerospace. Strangely AIA shares are up today.

Steel and Tube (STU) the steel maker and supplier, have announced a 10% profit decrease today on increased business costs and increased revenue. A 14c dividend waits in the wings for STU shareholders.

Fisher and Paykel Appliances(FPA) has announced that they are moving their electronics division to Thailand. It will share a factory roof with the washer division that announced plans to move there earlier this year. 96 jobs will go from South Auckland with a saving to FPA of 6 million dollars.

Meanwhile the Labour Government is in trouble with its voters because the partially State owned and listed airline , Air New Zealand (AIR) has been carrying Australian troops to get them to theatres of war in the Middle East, something that cuts against the beliefs of Labour ministers and a minority of over vocal New Zealanders. The share price landed sharply.

On a much lighter and perhaps tasty note, for the third day in a row Burger Fuel(BFW) has failed to trade.



www.shareinvestorforum.com





  c Share Investor 2007

Burger Fuel: Beefing up store numbers

Your favourite search topic on the Share Investor Blog is "Burger Fuel" and far be if from me to care about being labeled a populist, but never mind I will wear that label with pride as long as the readers keep coming.

Here is a BFW update in week 3 of the companies listing on the NZAX.

Sellers are queuing up now at way below the NZ$ 1 IPO price with sellers at .80c and the first buyer at 60c , although 60c clearly values the company too high. No trades as yet today.

Getting closer to my entry price of below 30c but still no cigar.

News out today also that BFW have opened their 22nd store in Tauranga. Good on them for doing so and I hope the surfies down there get the munchies as often as they can, so as to frequent their local burger bar and boost the BFW share price.

It could definitely use the help.


Burger Fuel Worldwide @ Share Investor

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c Share Investor 2007

Burger Fuel's Daytime Drama

In the daytime soap opera that is the recent Burger Fuel(BFW)IPO, its first week as a listed company would have had it cancelled after its first episode.

After 5 days less than $NZ 10000.00 of stock has changed hands. In one day it was the NZX's biggest loser, the share price dropped 20% to 80c , on turnover of less than $1000.00. The very next day the show was resurrected, it was the NZ Share Market's biggest gainer, moving 25% to the previous high of one Kiwi Dollar-incidentally its listing price.

This moved the company Chairman to make a media comment:

"Company chairman Peter Brook said not much could be read into the share price change because there was very little liquidity in the stock.

"There are just not the shares out there to buy. I think if you wanted to buy 30,000 or 35,000 you would be paying $1.20 per share," he said".


Post listing media briefings from Burger Fuel have been strangely episodic when compared to life before the Burger Fuel listing and media circus kicked off but Brook was retrained in his comments. I mean fancy saying this "...not much could be read into the share price change...". Actually unless you have the mute button on with your back to the big picture I think the combo of the share price drop and low liquidity is telling us lots. Simply that the IPO was overpriced and the market has little confidence in Burger Fuel's prospects.

Josef Roberts and his team now have to prove themselves to the market. They failed to convince at the IPO and this last week market viewers were not really tuning in.

Burger Fuel is today sitting at a share price of 1 dollar with no shares traded. This values the company at 60 Million Kiwi Dollars, only 30m odd dollars less than Restaurant Brands(RBD), the NZX's other Fast Food stock. Remember RBD have sales of 300m VS BFW's 16m odd but the Burger Fuel Company will get its income mostly from franchise fees of which were around 3.5m. Not delicious figures.

With less than a third of the capital originally hoped for Burger Fuel must now change their initial plans, expensively mapped out in the $1.5M prospectus, expanding with less haste and relying more on Franchisees to stump up capital to expand store numbers and promised "global reach". In itself probably a better model than their initial plan of the company using their own capital to open new stores then selling them off to Franchisees. One positive in the myriad of negatives that swirl around this company.

Keep watching, Burger Fuels stock will be in low rotation with re-runs of the same volatile share price and rare glimpses of its star players, its execs only venturing out when a positive spin is needed or indeed if there is actually the possibility of a 10 season run.

I have a feeling there might be a cancellation after the first 1 or 2.



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Discuss BFW @ Share Investor Forum - Register free




c Share Investor 2007

Burger Fuel Listing 27th July 2007 (NZ time)

The story below from the NBR confirms that Burger Fuel is listing on Friday July 27.

After the big top up from its present owners and founders one can only guess that its appearance on the NZX today is going to be somewhat of an anti-climax.

It is a great little company but has been repeated often by myself and others, it overvalues itself and this overvaluing has led to the low interest in the IPO.

Had it been a lower valuation the market could have taken this IPO seriously and backed it fully.

As it is BFW is going to struggle today SP wise and will continue to struggle in the weeks and months to come.

Management have overestimated their abilities in a financial sense when it comes to the IPO, lets hope they havent done the same when it comes to future financial management projections.

Readers will have to ask themselves if founders have only managed to raise at best $5m NZ dollars of a sought after 15m, then the original plan is going to be somewhat constrained.

The reported $1.5m cost of the IPO is a laugh and there is no report yet as to whether that cost comes off the $5m raised. In the absence of further info we will be generous here and give them the benefit of the doubt until told otherwise.

With such a shakey start to its public life, Burger Fuel is going to struggle right from the get go. Not a good omen for its future.


The NBR Story

BurgerFuel to list after $2.7m top-up
NBR Staff


BurgerFuel will list on the NZAX on 27 July following a $2.75 million top-up from founders Chris Mason and Josef Roberts.

$5.25 million was raised from 2380 shareholders - although that also included shares bought by the founders from the public pool - making up the minimum $8 million equity sought.

The company originally hoped to raise $15 million for 26.7 percent of the company but the response to its "would you like shares with that?" campaign was unenthusiastic and the offer had to be extended.

The capital will be used to pay the upfront costs of more stores before these were on-sold to franchisees.

In Australia, BurgerFuel has one franchised store and hopes to franchise more as well as operating its own store due for construction soon in Sydney's Kings Cross.

Chairman Peter Brook said the company would look to roll out stores in other countries with local partners to reduce capital investment costs.

BurgerFuel is due to open in Tauranga and Napier soon to take the total store numbers to 24.



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Discuss Burger Fuel @ Share Investor Forum




c Share Investor 2007

Share Investor Interview: Josef Roberts, Senior Burger Fuel Director

Exclusive Interview with Josef Roberts, a director of Burger Fuel Worldwide [BFW.NZ] pre IPO and listing on the NZAX board of the New Zealand Stockmarket.

Burger Fuel IPO

New Zealand's fastest-growing gourmet burger chain BurgerFuel is putting its customers first as it plans to list on the NZAX after raising $15 million with an issue of 15 million shares at $1 each, with a one-for-five option to buy additional shares at the same price in 18-months' time. Minimum subscription is for $1000 worth of shares and options.

Funds raised from the issue will be used to fund the company's national and international growth aspirations, primarily in New Zealand, Australia, Europe and the United States. BurgerFuel currently has 19 outlets in New Zealand and one in Sydney.


This interview was conducted via email.



The Q & A

Share Investor

What exactly is the money raised to be used for?

Josef Roberts

Primarily securing and constructing new stores and expanding infrastructure to support growth. Although the construction costs of a franchisee owned store are paid for by the franchisee; capital is required to secure leases, make construction commitments and secure prime sites as they become available.

The stores built are then on-sold to franchisees. In this way capital can be recycled. In addition, however, it is possible that BFW could operate some stores until the appropriate franchisees are selected. In this case BFW would collect the revenue from those stores and could also elect to sell those stores on an earnings multiple, as opposed to a set franchise fee – so there are benefits – if a store is held and operated for a period of time by BFW.

Sometimes we have franchisees already signed and no site available and sometimes the other way around. Additional capital allows us to speed up store development by being able to proceed with immediately securing top locations as they become available and even operating them in the short term if necessary. However, we are primarily about franchising; this allows us to achieve much faster growth.

S.I. How was the value of the company at $60m arrived at?

J.R. Firstly, we have to remember that the $60 million valuation assumes a further $15 million in cash is raised in the IPO.

A company like ours is not so easy to value, as you know. A number of factors have to be taken into account such as the company investment to date, future earnings, growth capabilities, scalability, personnel and intellectual property - amongst other factors. The company has been extensively modeled under different scenarios to determine a valuation. Grant Samuel, the independent corporate advisory firm, analyzed the various scenarios and settled on a value that they considered to be achievable, based on our future growth potential and associated earnings.

Valuation ties into forecasts and as you know we are not providing those. Why? Well for a growth company like ours it is very difficult to confirm exactly where we will be in 12-months from now. As outlined on page 15 of the prospectus – there are 3 possible scenarios for expansion. Each would provide different financial outputs. If we were to make early predictions now and not achieve those predictions this could seriously impact on the company’s future share price. Accordingly, it is the most responsible approach to gain investment on the clear understanding that no projections are being provided.

Whilst we knew that this could make it harder for us to raise capital, we also believe in the fairness it gives investors up-front in accepting the terms we offer. We want them to assess the value and potential for themselves; which is what you guys are doing – even if this means they say “no thanks”.

The company intends to rely on continuous disclosure reporting to keep the market informed of key developments – such as yesterday’s announcement about our growth - already up 41%. Imagine what that would have done for our share price had we been listed?

We will have plenty of announcements to make in the future – because we are a high growth company and we operate very visibly. People can see progress and performance and this is what drives a share price – right?

To those who say the company is over-valued – they are entitled to their opinion. We know the value of what we have and we are confident in our ability to not only grow the company but also its share price. We have come to the market with an offer. If our offer is not acceptable – so be it – we stay private.

S.I. If you are opening company stores initially, how long do you intend to keep those stores?

J.R. As explained in question 1. However, in general only until the appropriate franchisee is appointed

S.I. The market is confused about what sort of company they might be investing in. Is it principally a franchisor or an owner of actual stores?

J.R. Principally a franchisor as explained in question 1, however, it is our view at this stage, that we should always own and operate at least one store long-term, in each country like we do in New Zealand and will do in Australia. This keeps us in touch with the reality of operations as well as providing a valuable training ground to personnel and franchisees in each local market.

S.I. Will stores be leased or owned outright?

J.R. Leased

S.I. Long-term, is the bulk of company revenue going to be based on royalty fees or revenue from store sales?

J.R. Answered in Q1. Also, please refer to page 54 of the prospectus – this sets out our revenue income. Clearly, you can see that royalty fees are the major on-going component, but up-fronts, transfer fees and income from our satellite kitchens also make substantial contributions.

S.I. There is similar competition from such outlets world-wide, most notably GPK in the UK, how well do you think you and/or your franchisees will do against this competition?

J.R. GPK is essentially a Wisconsin model. We think our track record in NZ in competing against Wisconsin speaks for itself. But we do not underestimate competition here or in other countries. In the end we are confident in our ability to compete with any gourmet burger offering.

What you have to understand with BurgerFuel is that we have strong operating systems that are scalable. We also have a strong brand that represents more than the sum of its parts. That is to say we have a defined culture – we don’t just make burgers – people eat BurgerFuel for the experience as well as the product and our culture. Once again, that’s either understood by investors or it isn’t.

S.I. It is nice to see owners retaining a stake in the business, so firstly why not float a larger stake if your intention is to expand quickly, wouldn’t it have been better borrow from banks, keep the company for yourselves if it is only a small 25% of the company going public?

J.R. We think that being listed will greatly assist us in expanding overseas as well as attracting franchisees – it’s as simple as that. Credibility toward securing leases, supply lines, staff, franchisees and other associated stake holders becomes easier if we are publically listed.

If people don’t want us listed here in NZ – I think you can work out for yourself what will happen. We will most likely continue as a private company and list further down the track in a different country or we may never list.

In respect of the 25% for $15 million, we have the ability to re-cycle capital (as explained in Q1). The options also provide for some future capital, as well as giving investors an incentive to invest now. If we asked for more now we would just be sitting on your cash – and you wouldn’t like that either Darren!

S.I. A related question to the above, why is the sunset clause on directors and founder owners for selling their shares such a brief one?

J.R. Yes, it could have been longer. Having said that, our aspirations are all about building a global brand. We are committed to doing that – I am personally doing this because I enjoy it and am passionate about growing BurgerFuel, just as I did with Red Bull in NZ and Australia. However, unlike Red Bull, this is a NZ brand. We feel it too can go global. It is my intention to be there when we open stores in the US, whether its next to the Viper room in LA, on the strip in Las Vegas or in Times Square I can’t say, but I want to be there for it. Chris is also a very passionate guy – he created this company and he loves it – it’s his life. We have everything to gain by building this up to be a huge company and increasing our own value as well as those of our partners (shareholders).

S.I. The decision to list on the NZAX instead of the NZX, why was that made when the disclosure rules of the NZX would give possible investors more confidence in their investments because as we know knowledge in investing is what it is all about?

J.R. The NZAX is designed for companies with high growth potential like us. They are not required to publish forecasts due to the fact that they are in a high growth phase and actual results could vary considerably.
We have come to the market with an offer on terms that we knew would not appeal to all investors – but they are our terms. We could have made grand projections now to attract investors (like other companies you know have) – but that is not how we do things.

As already outlined there are a range of scenarios for the way we can roll out and this goes to the heart of any projections we would have committed to. We want to be upfront about that. “Invest if you believe in us” – that is what our message is. People don’t have to invest. We would rather know that we have a certain style of investor. Like the franchisees that we select to become our partners – we want to attract investors who are there for the same reasons we are – because they are passionate about the company and believe that we can do it – (I can hear some of you laughing!!).

We’ve been criticised for targeting so called “naïve” investors. This is not the case at all. We want a big spread of investors including those who eat at our stores and take part in the ownership. Although these people may not be seasoned investors like yourselves, they should not be underestimated. They are the opinion leaders, they understand what makes a brand.

Our IPO advertisements are all about light hearted communication, boosting awareness and a bit of fun. This is who we are and this is how we do things. We polarize and we think that is important to build any strong brand or culture. It’s a mistake to try and be all things to all people.

We want a base of NZ investors who will review our business on a daily basis and tell us where we can improve. We think this is very important to our future. In this way, we have a constant R & D base assisting our international development. However, this offer is also for other serious investors who may not yet eat in our stores. We can see that by some of the larger amounts that are being applied for that also carry CSN numbers, that clearly, our growth potential and ability to drive the share price by announcements of progress and performance, is understood by some seasoned investors.

S.I. Finally, what or who was your inspiration to start the Burger Fuel company and did you intend to "go global" initially and where do you see your company in 10 years?

J.R. Chris knew he could make the world’s best burger and he knew he could come up with a scalable business model that could grow fast. He always wanted to take BurgerFuel global. For me; I invested for this reason. If you read the prospectus thoroughly you should get a strong sense of this. Just look at our trademark protection programme. This alone, demonstrates our vision in thinking global and acting to secure our intellectual property over the years.

Page 67 of the prospectus – clearly sums up where we see our company in the future.

S.I. Thanks for your time Josef and good luck for the future of Burger Fuel .


Burger Fuel Background

BurgerFuel started in 1995 when Chris Mason opened the company's first store in Auckland's Ponsonby Rd. It is the brainchild of founder and director Chris Mason, who met Josef Roberts when Roberts owned the Red Bull brand in New Zealand, and wanted to sell his drinks through Burger Fuel shops.

Roberts took Red Bull to Australia, and after selling the Australasian Red Bull franchise back to its original European owners, decided to join Mason and work to expand the business. He said both businesses were brand-driven. "But with Burger Fuel there is the prospect of exporting a Kiwi product globally."

Roberts said Burger Fuel eschewed private equity raising in favour of public listing because that would add to its credibility as it sought to roll out overseas.

Currently BurgerFuel serves over 35,000 burgers a week and has 20 outlets, with three more scheduled to open soon in New Zealand, including one in Queen St Auckland, and one planned for Kings Cross in Sydney.


Additional info from Josef Roberts unrelated to questions posed by Share Investor but furnished to us by him

This whole process reminds me of when I started Red Bull in NZ in 1996 and then Australia in 1999. When many laughed and mocked us for trying to sell a small, unusual tasting can of drink for an “outrageous” wholesale price of over $2.00! I was told “only Coca Cola can do something like this. Red Bull will never make it, it’s a fad drink that anyone can produce. This is destined to fail.”

Hmmmm!

Investors should look at the strong corporate governance and the people behind BurgerFuel. The advisors, the independent directors on the board – these are highly respected and experienced individuals who have chosen to join BurgerFuel. They did not need to. They have assessed the company’s prospects for themselves. Investors should take this into account.

We respect your community. We know that you guys carry huge influence. I bring you back to the fact that we have come to the market with an offer. Saying “here’s our price and terms”. If they are accepted – great we know we have the kind of partners (in the shareholders that buy in) that we want. If not – we will continue as a private company and still be successful.

Take a look at the total system sales growth figures from yesterday’s press release. Last year’s first quarter was a weekly average of $276,403, same period this year $390,379. Last week - $445,011.
We are growing anyway, but the IPO process alone has totally enhanced the value of the company even more. No one in New Zealand has not heard of BurgerFuel as a result of it. Remember, we’re a marketing company. Our campaign is all about growing the brand and selling burgers, as well as shares - and that’s what we’re doing.

Darren, best regards and thanks again for the time you have given us. We know this may not be everyone’s kind of investment and we respect that. We also respect you and your community’s views.

I would like to say one last thing though – if NZ continues to criticise companies and publish material so quickly before thoroughly assessing the offer – aren’t we somehow killing our own country? It’s amazing what gets published in the media without the prospectus even being read. There is in fact a lot of information in our prospectus for potential investors - it’s not just a pretty document.

New Zealand needs higher risk growth stocks (which is what we are) just as it needs the kinds of stocks that are like “watching paint dry”.

Would the last entrepreneur in NZ please turn the lights off when you leave? Australia, UK, USA – here we come!

Josef Roberts

Director

BurgerFuel Worldwide Limited


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c Share Investor 2007