Burger Fuel salvages share offer

Burger Fuel will resort to franchising to pay for expansion plans after its two directors have had to shell out $2.75 million to salvage its first share offer.

The company announced that its initial public offering, extended by a week after missing the $8 million minimum subscription, had received applications for $5.25 million of shares, leaving founding directors Chris Mason and Josef Roberts to come through on a guarantee and buy $2.75 million worth of shares to meet the minimum mark.

Mr Roberts said the financial commitment left him "a bit short" but refused to be dragged down by the lacklustre result.

"I'm happy. The process is a huge one, we've had an initiation into public life, it's been a long haul, but we're happy we are listed. Now it's about getting stuck into the business," he said.

The gourmet burger chain took an experimental road to listing on alternative stock exchange NZAX, promoting its shares through "ambassadors" in its outlets.

Mr Roberts said the over-the-counter share-selling method had allowed their customers to get on board.

"We took it to the street, we've proven we can do it in a certain way. We're on the board and we can move to the next level if we prove ourselves."

The IPO had an initial goal of raising $15 million to finance a rollout of stores in Australia and globally.

Chairman Peter Brook said the company was planning to review its expansion strategy now the final result of the share offer was clear.

"We're happy with what we have got and have enough capital to do what we want to do initially, and we have other options down the track," he said.

The company would build new stores on a franchising basis, allowing them to recycle the capital involved in setting up stores as they sold them to franchisees.

At present there is one franchised store out of 21 in New Zealand with one under construction, and one in Australia.

The company sold 1.5 million burgers last year.

Total revenue was $16.5 million.

Mr Brook said they were confident about their place in the gourmet fast food market and had potential to expand overseas on the success they had achieved in New Zealand.

The company lists on the NZAX today.