Tazinos offers shares to fund an expansion
Menomonee Falls – Chicken bacon ranch or baked ‘tater pizza, creamy cucumber salad, and garlic and lemon butter bow-tie pasta are among the many choices at Tazinos’ all-you-can-eat restaurants.
Now the small Oak Creek-based chain is adding another option: shares of its stock.
Tazinos Inc. on Monday began trying to sell as many as 1 million shares to raise as much as $1 million that would fund the development of two more restaurants in the Milwaukee area.
“Do you want to own a slice,” ask brochures at tables of all three Tazinos restaurants – in Menomonee Falls, Oak Creek and Pleasant Prairie.
The company was founded in 2007 by Jim Purcell, a Michigan native who moved to Wisconsin to run PepsiCo Food System’s second-largest distribution center. From a family that lived in a farming area and owned restaurants, Purcell learned more about the business by supplying meat, cheese, napkins and supplies to Taco Bell, Pizza Hut and other restaurants.
The result is Tazinos, which Purcell says is trying to create an “all-inclusive family experience.”
Adults pay $6.99 at lunch and $7.99 at dinner for all-you-can-eat pizza, salad, pasta, soup and desserts. If any of the chain’s 17 pizza types aren’t on the counter, customers can request they be made on the spot, Purcell said.
Although the chain doesn’t advertise itself as healthy, Purcell says he’s focused on providing the best, least-processed ingredients. That means the pizza dough is made in each store every day with unbleached, unbromated flour, the tomato sauce comes from local grower/manufacturers, and there’s no modified food starch in the cheese and bread, he said.
“No high fructose corn syrup, no MSG, no trans-fat and the lowest sodium possible. I thought it would be a sustainable business model, and that’s how we eat at home,” Purcell said.
It’s “very smart” for Tazinos not to try to market the healthy aspect because consumers often equate healthy with bad-tasting, said Darren Tristano, an executive vice president at Technomic Inc., a Chicago food industry consultant.
Rather, the chain can teach people about its food as they come through the doors, Tristano said.
Tazinos’ offering document values the company at $3.5 million before the offering. It has no long-term debt, and revenue for the 10 months ending Oct. 31 will be up 31%, to $1.5 million from $1.1 million a year earlier, according to the document.
The company lost $569,775 for that period, compared with $997,542 a year earlier, the document says.
“The individual restaurants are profitable, but the corporate overhead required to grow and to potentially take it to franchising requires the investments in computer systems software and product development to grow the brand,” said Purcell, who owns 79% of the company.
Tazinos, which has 72 employees, tried to get bank financing, but banks are lending only to existing customers or companies that have been in business for long periods of time, Purcell said.
So the company turned to its customers and other individuals.
Private offerings typically require that investors have a net worth of at least $1 million, not including their home. But the state allows companies doing offerings to sell shares to no more than 100 investors who have either a net worth of at least $125,000 or annual income of at least $45,000.
Tazinos won’t pay a dividend, and there’s no public market for its shares. The money would allow Tazinos to open two more restaurants and put it in a good position to begin selling franchises, Purcell said.
In the competitive arena of franchise restaurants, it’s important to gain brand recognition and maintain quality as a company grows, Tristano said. Ceci’s, a lower-cost pizza buffet restaurant, has one store in the Milwaukee area, and it will be important for Tazinos to grow quickly before Ceci’s puts more stores in the market, he said.
Tazinos has already sold 20% of the available shares, said Michael R. Palmisano, a senior vice president and investment adviser in Allied Beacon Partners’ Milwaukee office. Palmisano said he agreed to work on the deal because of the company’s lack of debt and his confidence in management.
He also has a soft spot for the salad bar and certain Tazinos pastas. Purcell understands that quite well.
“If food is really important to people, then this business model is going to work – and it’s going to work better and better over time,” Purcell said.