Situation

Since inception, Local Kitchens evolved from a house of brands leveraging chef partners to its own “Culinary Collective,” co-developing menus and storytelling with chef partners. This approach built Local Kitchens’ own brand equity and improved gross margins. The Company expanded aggressively, raising venture capital and venture-debt to fund new locations throughout the San Francisco Bay Area as well as in Sacramento and Los Angeles. 

Capital constraints prompted the Company to seek a path to maximize value for stakeholders and preserve the best-performing locations.

Engagement

Local Kitchens engaged G2 Capital Advisors (“G2”) as its financial advisor to conduct a rapid assessment of strategic alternatives and liquidity. G2 moved quickly to build a 13-week cash flow projection and guide management on extending the liquidity runway. At the same time, G2 advised pursuing an accelerated sale process to be effectuated ultimately through an assignment for the benefit of creditors (“ABC”), which would allow a buyer to acquire the business without undesired locations or other legacy liabilities.

With stakeholders aligned on the path forward, G2 launched the M&A sale process, driving a fast-paced, tightly coordinated effort. The process played out over a compressed timeline allowing the company to maximize value considering liquidity constraints. G2’s narrative highlighted the go-forward potential of the business at the established and performing restaurants.

Outcome

The process culminated in the sale of all of Local Kitchen’s assets to an investor group, simultaneous with effectuating an ABC process with a G2-owned special-purpose entity serving as Assignee. G2 executed the sale effort in just over six weeks, from launch to close. The transaction allowed the buyer to move forward with profitable restaurants free from legacy liabilities. For the Company, the acquisition preserved nearly 100 jobs and maximized value for stakeholders while the ABC allowed for a responsible wind up of obligations.

“G2’s rapid execution, calm advice, and breadth of experience were invaluable to driving a challenging situation to a positive outcome that preserved jobs, the Local Kitchen brand, and value for stakeholders,” said Local Kitchens former CEO Jay Gentile.

“The Local Kitchens engagement tapped into several of G2’s capabilities, from advisory on restructuring alternatives, to liquidity management, to executing a rapid sale process, to our fiduciary services in the ABC phase,” said G2 Capital Managing Director Nate McOmber.