Quesadilla Gorilla, Inc. seeks to raise $500,000 selling small business bonds to develop franchises while giving community members a return on their investment
VISALIA – Most small businesses understand the importance of being invested in their community, but Visalia’s Quesadilla Gorilla has also found a way to have their community invest in their business.
Named one of the fastest growing businesses in the nation by Fortune Magazine just three years ago, Quesadilla Gorilla has continued to expand at a record pace. Since opening in 2013, the company has grown at a rate of 7,547%, going from a single location in downtown Visalia to six by the end of this year and three mobile catering units. The next step in the company’s growth is to develop a franchise model, and for that, it needs a little help from the community.
Known for contributing to local causes, husband and wife owners Miguel and Mikayla Reyes have a strong bond with their staff and customers and are now selling financial bonds to anyone interested in investing in their company’s strong returns. Quesadilla Gorilla, Inc. is using the crowdfunding platform SMBX, the first small business bond marketplace. The company is seeking to sell 50,000 units of bonds to raise $500,000 by June 10, 2022 and has already raised over 30% of its goal, or about $156,000. The bond will be repaid to investors over 7 years at 7.5% interest. The owners plan to use 40% of the money to develop franchise rights and market franchise leads, 30% for a new food truck, 20% for equipment at its new Tulare location and 6.5% on improvements at its Fresno store. The SMBX takes a 3.5% share of the proceeds in fees.
“Quesadilla Gorilla is food fast, not fast food,” according to its pitch to investors on theSMBX.com. “We’re all about building relationships, and leveraging two important things to do it: Quesadillas and our Environments. Each store is crafted to provide a welcoming and comfortable space for everyone, no matter what. Whether it’s a first date, a quick lunch stop, or a family outing, our space is your space.”
Miguel said its Tulare space will be shared with Component Coffee Lab at the corner of Hillman Street and Leland Avenue. He said the company plans to shift more to franchises and has plans to develop a franchisee and new hire training center in Visalia called ‘Dilla University but will retain rights to its six corporate locations and possibly add one corporate store per year.
The Reyeses first attempted crowdfunding in 2015 through more popular sites such as GoFundMe and Indiegogo in an effort to raise funds to purchase a new food truck to expand their business. Miguel said they were only able to raise a few thousand dollars toward their goal of $150,000.
“We didn’t have much success,” Miguel said. “A few people were willing to give us money but it was more of a donation than an investment because there was no return on their money.”
While attending a special business course to help Latino owners grow their small businesses through Stanford University, Miguel was introduced to SMBX, the first marketplace for issuing and buying small business bonds. Unlike donations to nonprofits, buying shares in publicly traded companies or purchasing ownership stakes in a private business, bonds allow small businesses to raise needed capital without giving up ownership while also offering investors a return on their funding with interest.
“It’s safer than investing in the stock market and allows local people to invest in their community,” Miguel said. “Rather than having a bank collect interest, people in our community get the interest.”
The bond market has already been proven successful for Quesadilla Gorilla. Just last year, the company met its goal of raising $165,000 using SMBX. Miguel said the company used the money to open a new location in San Luis Obispo and begin work to open a fifth location in Three Rivers, which is expected to open in the next month. He also used the money to install a full bar into its Hanford location and invest in new technologies which shortened his training time from one to two months down to one week.
“Many people said they wished they would’ve have known about the bonds because they would have invested,” Miguel said. “That’s why I feel so confident this time after sending out mailers and doing a marketing campaign.”
Buying bonds from small businesses isn’t without risk. The bonds sold through SMBX are unsecured, are not guaranteed by SMBX, Quesadilla Gorilla, or any other bank, and are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. The marketplace offers the following disclaimer: “A crowdfunding investment involves risk. You should not invest in any bonds in this offering unless you can afford to lose your entire investment.”
The primary role of the marketplace is to provide the portal for investment purchases and to ensure investors comply with government regulations. SMBX does not offer investment advice or recommendations, solicit purchases or buy investments, or hold or manage investor funds.
If the company were ever to declare bankruptcy, these bonds would be paid after any primary debts to lenders, such as direct loans from banks, credit companies and other financial institutions.
With annual revenue of $2.6 million in 2021, Miguel says his company is as safe a bet as any. As of Feb. 28, the company had nearly $400,000 in total assets, $75,000 in cash with annual revenue of about $420,000 with 10 months to go in the year. Anyone interested in purchasing small business bonds from Quesadilla Gorilla can find them on the SMBX under the abbreviation “GRLA”.
“Every investment is a risk,” Miguel said. “People lose thousands in the stock market every day and often you don’t know why. This is a more straightforward investment and a great place for people to invest in things they know.”