The Quesadilla Gorilla food truck in Three Rivers would be expanded under a plan that includes selling bonds for the business. Photo contributed
Written by Edward Smith
A local restaurant is fundraising to expand an existing location and possibly open a new location using a unique method — small business bonds.
Quesadilla Gorilla is offering the bonds for sale to fund expansion of a Three Rivers location and possibly open a fifth location for the Visalia-based chain.
Miguel Reyes, co-owner of Quesadilla Gorilla, said that selling bonds to the public was a way to get the public involved, with the interest payments going to community members.
“It’s a great way to get the community behind us and invest in something local,” Reyes said.
Reyes found out about the fundraising method through a webinar hosted by Stanford University.
Quesadilla Gorilla held its IPO at the beginning of November and now has 17 days left in the fundraiser.
So far the eatery — with locations in Visalia, Fresno, Three Rivers and most recently Hanford — has raised more than $107,000 with a maximum goal of $165,000, according to SMBX, the hosting website for the bond offering.
Title III of the 2016 JOBS Act opened up rules regarding public financing for small business.
Ben Stein, director of business development with San Francisco-based SMBX, said debt-financing such as bonds opens access to capital for small businesses that might not be able to afford legal fees associated with drawing up plans for an equity raise.
“Because we’re working on the debt side, it opens up access to capital because more people can invest,” Stein said.
Reyes and his wife, Mikayla, co-owner of Quesadilla Gorilla, opened two new locations this year. The Hanford one opened in November, only days before the couple had their second child.
Reyes says money from the sale will go toward building out their Three Rivers location. Earlier in the year, the engine on their food truck blew out. It was going unused until somebody told them about a spot in Three Rivers, the Tulare County town on the way to Kings Canyon National Park.
They had the food truck towed to the spot and made it a permanent fixture there in the town.
“We pretty much built an outside restaurant around it,” said Reyes. It became one of their busiest locations over the summer with travelers going through on their way to the national forest.
Reyes wants to keep the outdoor model but add two shipping containers to include a 20-beer tap system in one and use the other to expand seating and add a dessert concept with soft-serve ice cream and churros. He also wants to turn it into more of a venue, offering live music and other food trucks to turn the location into an attraction.
Reyes is also contemplating a fifth location with his eyes on Clovis, Tulare or even as far as the Central Coast. If they pulled the trigger on the fifth location, he hopes to be open by September 2021.
Reyes says part of the plan for the restaurant has been to grow every year.
In 2019, Quesadilla Gorilla was named No. 3 on Fortune Magazine’s 100 Fastest-Growing Inner City Businesses with a 995% growth rate.
Despite the pandemic, the “grab-and-go” model for Quesadilla Gorilla adapted pretty well to shelter-in-place orders that shut down dine-in restaurants across the state.They have had delivery for some time and so customers were familiar with using it. And with banks busy dispersing PPP, Reyes said selling bonds was a lot easier than compiling the paperwork for a bank loan.
He has a good relationship with his bank, he said, but at 6% interest for the bonds, the price was comparable to the 7% he pays for the SBA loan.
“We were always looking to try to grow every year, and going through a bank can be difficult,” Reyes said. “It can be a long process getting the paperwork.”