CEO.CA caught up with co-founder and CEO Andrew Barnes, and co-founder & COO Amrit Maharaj of Coho Collective Kitchens in an AMA session on 30th May to answer questions about the company. Learn more about Coho Collective Kitchens at www.cohocommissary.com. The following is the AMA:
Question: Why should investors be paying attention to Coho – what is the opportunity?
Answer (by Andrew Barnes):
Coho is Canada’s fastest growing Shared Kitchen company, having reported a 59% CAGR over the last three years. We are operating in a blue-sky industry, and have nothing but opportunities ahead. Between the Coho management team and our exceptional board, we are confident in our ability to scale this organization and provide the potential for substantial returns. With the consideration of the recently announced acquisition of Purebread, we have forecasted a revenue growth to over $58M by the end of FY26. Coho has a lot of interesting acquisitions and projects in the pipeline and we are excited for the future of this business.
Question: How is the profitability across the numerous coho sites, and are you planning on opening more locations? If so, what are the timelines?
Answer (by Andrew Barnes):
Coho’s operating locations can yield as high as 40% EBITDA. As we have opened 6 locations in the last year, we still have some opportunity in two of our locations to reach full capacity but they are well on their way. That said, we have just announced the successful openings of two new locations in Vancouver, and we are pleased to say that they were filled to capacity at opening. Coho’s most exciting project in current development is in Richmond, BC and will be Canada’s largest facility at over 27k square feet, nearly three times the size of Coho’s largest existing facility. We also will be opening a larger facility in Victoria, BC this year as well. Rest assured, we have many projects in the pipeline that we’ll communicate with the market as we get closer. Our forecast shows doubling our locations again by the end of 2026.
Question: You operate across numerous market segments - which segment is growing fastest, and what is driving the growth?
Answer (by Amrit Maharaj):
The Shared Kitchen facilities are the bread and butter of our business, particular in major metropolitan centres. We're seeing increased customer demand, market share, and revenue in this segment. With hundreds of companies on our waitlist in Vancouver alone, we have over $3.1M of revenue awaiting for space in Vancouver. We're dedicating resources and investments to strengthen our presence here. Where we are adding speed is shifting our focus from building “ground up” locations to finding turnkey solutions (for example taking over old food production facilities, catering facilities, and of course facilities from competitors in the space). Our most recent location that we opened in Vancouver, was opened within weeks of signing the lease.
Question: You mention that you are looking at signing new leases for turnkey facilities - how does Coho protect against the risk of rising rents at these facilities?
Answer (by Amrit Maharaj):
As we represent many small businesses, we take our lease security very seriously. We secure long-term lease agreements with favorable terms for stability. These can range from 10 to 20 years. We, of course, include escalation clauses within Coho’s membership agreements to adjust fees based on factors like inflation. New members arriving at the facility will also be subject to most recent pricing should unexpected cost increases occur. Coho operates at an 88% Gross Margin, something that allows us to ensure pricing is appropriate for our members and our business alike. Finally, we are also consistently managing costs proactively, closely monitoring and controlling expenses. These measures help us maintain healthy margins and operational stability. In Q3 alone we just reported 56% growth while reducing expenses by 17%.
Question: Is there a plan to grow nation-wide or will you be focused on Vancouver & British Columbia in the short-term?
Answer (by Amrit Maharaj):
We absolutely plan on growing nationwide - the Shared Kitchen opportunity and lack of demand exists across North America, and with our systems, we are best positioned to capture this growth. Within Canada, the immediate focus will be the Greater Toronto Area and in Alberta. We have launched marketing campaigns in both regions and received incredible interest from prospective clients. Furthermore, while we can’t announce the timeline yet, we have clear plans in both regions to help grow the business. That said, consistent demand still exists in Vancouver, we will continue to look for opportunities locally, that will continue to help the company to scale.
Question: Tell us about the strategy for Purebread - How will Coho grow the Purebread brand?
Answer (by Andrew Barnes):
Purebread has a strong reputation and customer base, and we want to leverage that. Maintaining separate entities allows us to preserve Purebread's unique identity while unlocking opportunities (both revenue and synergistic) through collaboration. We'll capitalize on the strengths of both Coho and Purebread, tailoring our strategies for each brand's expansion. Thankfully, the companies will marry very well together, allowing for future opportunity for co-location, and cross Canada expansion in the same regions. One of the biggest opportunities is Purebread opening in previous Starbucks locations - Purebread have had great success in this model already, and there are over 300 Starbucks that have been closed across Canada in the last few years.
Question: Will Purebread management remain active in running that business going forward?
Answer (by Andrew Barnes):
Absolutely! Purebread management will continue to play an active role in running the company. We have invested in this business because we believe strongly in the team that Paula and Mark Lamming (the founders) have built. Paula and Mark themselves have committed to working with Coho and have signed full-time consultant agreements to help continue to expand the brand this year, and help with a rock-solid transition plan. The overall team lives and breathes Purebread, their passion, and deep understanding of the brand and industry is crucial for maintaining Purebread's success.
Question: How will coho manage the increased debt taken on as part of this deal?
Answer (by Andrew Barnes):
We are very excited about BMO’s contribution to this financing as they are coming in with over $5.8M committed funding, at senior debt levels. Receiving such a considerable commitment will help existing shareholders position in the Coho Stock. To be clear, the debt secured for this deal is 100% based on the security of Purebread’s existing financial performance. Purebread has built an amazing, profitable organization, and the secured debt is well managed within their existing cashflow. Of course with Purebread’s growth ahead, including the addition of the Vancouver International Airport location within the month, additional revenue and profit will further support the business.
Question: In addition to the debt component of the deal, will you need to raise more money in the future?
Answer (by Amrit Maharaj):
Coho and Purebread are focused on profitable and sustainable growth. We see a huge opportunity for both organizations. As we continue to grow and pursue our expansion plans, raising additional funds may be necessary to help accelerate growth or complete valuable acquisitions. We'll assess the need for capital and explore different funding options. Our priority outside of running high quality operational businesses, is to secure the resources needed to support our growth trajectory.
Question: Will coho be pursuing expansion-focused growth or acquisition-focused growth – are there more acquisitions in the pipeline?
Answer (by Amrit Maharaj):
We will be pursuing a balanced approach that combines both expansion-focused growth and acquisition-focused growth. While expanding our existing operations and opening new locations remains a priority, we also see potential opportunities for strategic acquisitions that align with our company. We believe that a mix of organic growth and targeted acquisitions can fuel our expansion, enhance market presence, and allow us to do so sustainably. As for future acquisitions, we continuously evaluate potential opportunities that fit our growth criteria. We are looking for companies that help support our mission to Supercharge Food Businesses. This will include identifying companies from across the food value chain, all the way from producers to the end consumer.
Question: Is there anything else you'd like to share before we wrap up?
Answer (by Andrew Barnes):
Just our excitement about Coho and the Purebread story, and our unwavering commitment to delivering value and sustained growth. Our strong business, hardworking team, and market position are setting us up well for future success. We have the ability to continue to scale both businesses and do so on a national scale. We appreciate the support and confidence of our investors as we continue to drive our vision forward. We look forward to providing regular updates on our progress and achievements.
