GRAND RAPIDS — The company that owns and operates the HopCat craft beer bar chain has secured another $6 million in capital it will use to open three to four more locations in 2019 and 2020, MiBiz has learned.
In confirming BarFly Ventures LLC’s latest round of fundraising, founder and owner Mark Sellers told MiBiz approximately $5 million of the funding came from one new investor while $1 million came from Sellers himself. The company is still in the process of raising another $1 million from existing investors to reach its $7 million goal.
The company previously announced plans to open a HopCat location early this year at 84 W. Eighth St. in downtown Holland. Sellers declined to disclose other potential markets for the chain, but added that new locations cost “a couple million to open” because of their differing sizes and unique, “crazy” design.
BarFly Ventures also owns and operates Stella’s Lounge, Grand Rapids Brewing Co. and The Waldron Public House in Grand Rapids.
The expansion of the HopCat brand started in 2013. Since then, the company has opened 17 pubs in markets throughout the Midwest and Southern U.S.
BarFly’s latest round of fundraising comes as the company this month switched certain management and administrative positions, laid off employees, and closed its location in the Lincoln Park neighborhood of Chicago, which opened in 2016.
The management shakeup and Chicago closure affected about 35 employees, according to Sellers.
“This (investment) deal was in the works long before those other decisions were made,” Sellers said, adding that “we’ve come a long way since (opening in Chicago) in terms of our sophistication of how to pick locations and the data we look at and the decision-making process.”
To choose markets in 2019 and 2020, the company will use a software program to collect data from other HopCat locations to estimate revenue at possible new sites based on building size, demographics and competitor sales.
“In the old days, we used to just do a gut feeling kind of thing when we signed a lease. Now, we do a lot more analysis,” he said. “That is amazingly helpful in making decisions.”
The company just completed its 11th consecutive year of increasing sales and profits, according to Sellers. BarFly declined to disclose annual revenues, but Sellers noted the company grew at a compound annual growth rate of 42 percent over the period.
“We’re firing on almost all cylinders right now. Things are pretty good,” he said. “I’m pretty excited about the future.”
Sellers expects BarFly will continue growing at nearly the same rate, at least in the short term.
“We’re still going to be double-digit (growth) for the next few years for sure,” he said. “And I don’t really have a plan past that.”