2019 Report Chicago Steak Company
Filed on April 28, 2020
Dear investors,
Our brand’s credibility is great and continues to grow. We are beginning to pickup social media influencers to spread our name. Key channel partners are excited to continue working with us and even reaching out to us for options to deepen our product offering with them. As we foster these relationships we will focus on increasing profit margins within the segment. Additionally, we are revamping our blog strategy to turn the growth trend back in a positive direction. We have an aggressive growth strategy for the year and have plans that include influencers, affiliates, Facebook segmentation, and piloting new technologies like SMS marketing. With the turn in profitability we were able to achieve in 2019 we are excited as we look toward 2020.
We need your help!
We still need help developing a grass roots referral marketing program. We think we need to use company ambassadors to go out to events and showcase our product. We also need to develop an effective Public Relations campaign. We have a strong brand presence online and have a great deal of marketing behind the brand. However we need to find other ways to spread the brand and find lower ways to acquire new customers since our CPA is too high.
Sincerely,
How did we do this year?
☺ The Good
Monetization of Steak University Traffic thru strategically placed advertisements on the blog.
Migrating email platforms to Klaviyo and working with email strategist to focus on behavior triggered automation flows.
The move to the new fulfillment facility has allowed us to keep costs in check while enabling YOY sales growth.
☹ The Bad
Updates to Google Algorithms caused Steak U organic traffic to suffer. We are working on new strategies to change the trend.
Channel partners like Costco have been great for sales growth, but the profitability is minimal.
Our site is built on a Magento platform which is sun-setting. This forced upgrade will come at a significant cost.
2019 At a Glance
January 1 to December 31
$3,384,578 +6%
Revenue
$44,814 +102%
Net Profit
$861,781 [6%]
Short Term Debt
$0
Raised in 2019
$1,001,130
Cash on Hand
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We sell and deliver the most premium cuts of beef worldwide. Our steaks are sourced exclusively from Mid-West raised heritage cattle, giving our steaks the prized marbling, and flavor that only come from superior growing conditions and bloodlines. These steaks are certified USDA Prime, meaning we only sell the top 2% of all beef. This dedication to quality has won us the People's Choice Award at the Great Steak Debate, and secured partnerships with Neiman Marcus and 5 star restaurants.
We've been selling the best steaks in the U.S. since 2008. We did over $2.3 million in sales last year and now we're ready to scale and bring out a new selection of products. Not only are we exploring new cuts (such a Wagyu beef) but we're on the cusp of launching a second brand, Maine Lobster House. Our goal is to become the one-stop-shop for premium cut-to-order beef, lobster, and gourmet cheese across the U.S.
Milestones
Chicago Steak Company, Inc. was incorporated in the State of Maryland in October 2007.
Since then, we have:
- Winner of People's Choice Award at The Great Steak Debate 2015
- $2.7 million in sales in 2016
- USDA Prime certified; only sell top 2% of all beef
- Launching spin-off brand Maine Lobster House
Historical Results of Operations
- Revenues & Gross Margin. For the period ended December 31, 2019, the Company had revenues of $3,384,578 compared to the year ended December 31, 2018, when the Company had revenues of $3,202,193. Our gross margin was 34.89% in fiscal year 2019, compared to 33.79% in 2018.
- Assets. As of December 31, 2019, the Company had total assets of $1,060,499, including $1,001,130 in cash. As of December 31, 2018, the Company had $1,086,011 in total assets, including $1,019,592 in cash.
- Net Income. The Company has had net income of $44,814 and net income of $22,187 for the fiscal years ended December 31, 2019 and December 31, 2018, respectively.
- Liabilities. The Company's liabilities totaled $925,042 for the fiscal year ended December 31, 2019 and $780,008 for the fiscal year ended December 31, 2018.
Liquidity & Capital Resources
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Chicago Steak Company, Inc. cash in hand is $1,001,130, as of December 2019. Over the last three months, revenues have averaged $672,020/month, cost of goods sold has averaged $417,312/month, and operational expenses have averaged $615,979/month, for an average burn rate of $361,271 per month. Our intent is to be profitable in 0 months.
There have been no material changes since the date that our financials cover.
- Net Margin: 1%
- Gross Margin: 35%
- Return on Assets: 4%
- Earnings per Share: $1.22
- Revenue per Employee: $199,093
- Cash to Assets: 94%
- Revenue to Receivables: ~
- Debt Ratio: 87%
We Our 112 Investors
Thank You For Believing In Us
Thank You!
From the Chicago Steak Company Team
Vice President
Matt brings to this role 11 years of restaurant management, marketing, and technology expertise to oversee customer service initiatives, marketing and advertising, budgeting, and product curation.
President
Tom has overseen more than $72,000,000 in food product purchases and $500,000,000 in B2C sales, and has 22 years of experience in ecommerce, online marketing, and managing multimillion dollar brands.
Philippe Bind
Corporate Chef
A professionally trained chef, Philippe has been instrumental in the evolution of Steak University, a robust online guide that features cooking recipes, videos, educational articles, and reviews.
David Artino
Business Development
Specializing in large account relationship building, David has brought on major partners like Costco, Neiman Marcus and more.
Karen Robinson
Director of Preferred Clients
Karen’s heart for this company shows in everything she does and she handles some of our largest clients and is key in fostering and deepening those relations.
Cyndi Aleman
Preferred Client Team
Cyndi’s personality and cheer is contagious and she brings a great ‘caring touch’ to everyone she interacts with.
Daniela Chambers
Preferred Client Team and Social Media Manager
Daniela’s dedication to this brand is unwavering and she has been instrumental in growing our social media presence.
Nicole Orellana
Preferred Client Team and Accounts Receivable
An ambassador for the brand, Nicole works with some of our major corporate clients on the sales front while keeping things in order on the AR side.
Mattie Nash
Graphic Designer
Mattie has been instrumental in the rebranding process of the Chicago Steak Company website. She also manages all Email Marketing and promotional collateral for CSC.
Andrew Morgan
Amazon Sales Manager
With nearly a decade of experience building Amazon accounts for multiple start-up brands, Andrew has been key in establishing our product line on Amazon.
Neil Flinchbaugh
Content Writer
As one of the preeminent marketing copywriters in the country, Neil has worked with many of the largest and most successful companies in the world.
Josh Barbour
Videographer and Photographer
Josh’s passion and creativity shine through in all the video & photography work he does for the brand.
Mark Kranenburg
Steak University Host
Mark’s personality is second to none as he engages audiences in our Steak University TV segments.
Steven Brown
Analytics and Digital Marketing Manager
With a passion for analytics and his analysis, Stephen’s management of our marketing efforts has yielded higher sales and decreased costs within the first year.
Details
The Board of Directors
| Director | Occupation | Joined |
|---|---|---|
| Tom Tsitouris | President @ Chicago Steak Company | 2007 |
| Matt Crowley | Vice President @ Chicago Steak Company | 2007 |
Officers
| Officer | Title | Joined |
|---|---|---|
| Tom Tsitouris | President, Treasurer | 2007 |
| Matt Crowley | Vice President, Secretary | 2007 |
| Holder | Securities Held | Voting Power |
|---|---|---|
| Tommy Tsitouris | 18,675 shares | 51.0% |
| Matt Crowley | 7,325 shares | 20.0% |
Past Equity Fundraises
| Date | Amount | Security | Exemption |
|---|---|---|---|
| 02/2018 | $82,780 | 4(a)(6) |
Outstanding Debts
None.Related Party Transactions
None.Capital Structure
| Class of Security | Securities (or Amount) Authorized |
Securities (or Amount) Outstanding |
Voting Rights |
|---|---|---|---|
| Common Stock | 100,000 | 36,620.20 | Yes |
| Securities Reserved for Issuance upon Exercise or Conversion |
|
|---|---|
| Warrants: | 0 |
| Options: | 0 |
Form C Risks:
If an issue develops with FedEx or UPS, it can cause trouble with the distribution of the product.
If a major storm or other “act of god” were to disrupt the UPS or FedEx delivery network, it would cause significant loss of products.
Management: should any health or personal issues arise in the Management Team at Chicago Steak Company it could cause a disruption in business activities.
Change of attitude: if the attitude of the American public turns negative toward Beef/Red Meat it could cause a decrease in business activity.
Chicago Steaks recently converted from an S-Corp to a C-Corp.
Supplier: should any issue arise with our supplier that prohibits them from supplying & fulfilling orders, it would cause disruption in the business activities.
Competition: should new competitors enter the market it could cause a cannibalization of the company’s market share.
Mad Cow Disease: If (BSE) Bovine Spongiform Encephalopathy reoccurs in the US it could cause a crash in the beef/cattle market.
Transportation Costs: if the price of Gasoline increases it would cause our delivery cost to increase and we would need to pass that cost on to the customer. This may result in people electing not to buy our product.
Economy: if the economy in the US should enter a recession or downturn it could cause customers not purchase a luxury good item.
Description of Securities for Prior Reg CF Raise
Additional issuances of securities. Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured. The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.
Issuer repurchases of securities. The Company may have authority to repurchase its securities from shareholders, which may serve to decrease any liquidity in the market for such securities, decrease the percentage interests held by other similarly situated investors to the Investor, and create pressure on the Investor to sell its securities to the Company concurrently.
A sale of the issuer or of assets of the issuer. As a minority owner of the Company, the Investor will have limited or no ability to influence a potential sale of the Company or a substantial portion of its assets. Thus, the Investor will rely upon the executive management of the Company and the Board of Directors of the Company to manage the Company so as to maximize value for shareholders. Accordingly, the success of the Investor’s investment in the Company will depend in large part upon the skill and expertise of the executive management of the Company and the Board of Directors of the Company. If the Board Of Directors of the Company authorizes a sale of all or a part of the Company, or a disposition of a substantial portion of the Company’s assets, there can be no guarantee that the value received by the Investor, together with the fair market estimate of the value remaining in the Company, will be equal to or exceed the value of the Investor’s initial investment in the Company.
Transactions with related parties. The Investor should be aware that there will be occasions when the Company may encounter potential conflicts of interest in its operations. On any issue involving conflicts of interest, the executive management and Board of Directors of the Company will be guided by their good faith judgement as to the Company’s best interests. The Company may engage in transactions with affiliates, subsidiaries or other related parties, which may be on terms which are not arm’s-length, but will be in all cases consistent with the duties of the management of the Company to its shareholders. By acquiring an interest in the Company, the Investor will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.
Minority Ownership
An Investor in the Company will likely hold a minority position in the Company, and thus be limited as to its ability to control or influence the governance and operations of the Company.
The marketability and value of the Investor’s interest in the Company will depend upon many factors outside the control of the Investor. The Company will be managed by its officers and be governed in accordance with the strategic direction and decision-making of its Board Of Directors, and the Investor will have no independent right to name or remove an officer or member of the Board Of Directors of the Company.
Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured.
The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.
Exercise of Rights Held by Principal Shareholders
As holders of a majority-in-interest of voting rights in the Company, the shareholders may make decisions with which the Investor disagrees, or that negatively affect the value of the Investor’s securities in the Company, and the Investor will have no recourse to change these decisions. The Investor’s interests may conflict with those of other investors, and there is no guarantee that the Company will develop in a way that is optimal for or advantageous to the Investor. For example, the shareholders may change the terms of the operating agreement for the company, change the terms of securities issued by the Company, change the management of the Company, and even force out minority holders of securities. The shareholders may make changes that affect the tax treatment of the Company in ways that are unfavorable to you but favorable to them. They may also vote to engage in new offerings and/or to register certain of the Company’s securities in a way that negatively affects the value of the securities the Investor owns. Other holders of securities of the Company may also have access to more information than the Investor, leaving the Investor at a disadvantage with respect to any decisions regarding the securities he or she owns. The shareholders have the right to redeem their securities at any time. Shareholders could decide to force the Company to redeem their securities at a time that is not favorable to the Investor and is damaging to the Company. Investors’ exit may affect the value of the Company and/or its viability. In cases where the rights of holders of convertible debt, SAFES, or other outstanding options or warrants are exercised, or if new awards are granted under our equity compensation plans, an Investor’s interests in the Company may be diluted. This means that the pro-rata portion of the Company represented by the Investor’s securities will decrease, which could also diminish the Investor’s voting and/or economic rights. In addition, as discussed above, if a majority-in-interest of holders of securities with voting rights cause the Company to issue additional stock, an Investor’s interest will typically also be diluted. Based on the risks described above, the Investor could lose all or part of his or her investment in the securities in this offering, and may never see positive returns.
The securities offered via Regulation Crowdfunding may not be transferred by any purchaser of such securities during the one year period beginning when the securities were issued, unless such securities are transferred:
- to the issuer;
- to an accredited investor ;
- as part of an offering registered with the U.S. Securities and Exchange Commission; or
- to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.
Valuation Methodology for Prior Reg CF Raise
The initial amount invested in a SAFE is determined by the investor, and we do not guarantee that the SAFE will be converted into any particular number of shares of Preferred Stock . As discussed in Question 13, when we engage in an offering of equity interests involving Preferred Stock , Investors may receive a number of shares of Preferred Stock calculated as either (i) the total value of the Investor’s investment, divided by the price of the Preferred Stock being issued to new Investors, or (ii) if the valuation for the company is more than $10 million , the amount invested divided by the quotient of (a) the Valuation Cap ( $10 million ) divided by (b) the total amount of the Company’s capitalization at that time. Because there will likely be no public market for our securities prior to an initial public offering or similar liquidity event, the price of the Preferred Stock that Investors will receive, and/or the total value of the Company’s capitalization, will be determined by our board of directors . Among the factors we may consider in determining the price of Preferred Stock are prevailing market conditions, our financial information, market valuations of other companies that we believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant. In the future, we will perform valuations of our stock (including both common stock and Preferred Stock) that take into account, as applicable, factors such as the following:
- unrelated third party valuations;
- the price at which we sell other securities in light of the relative rights, preferences and privileges of those securities;
- our results of operations, financial position and capital resources;
- current business conditions and projections;
- the marketability or lack thereof of the securities;
- the hiring of key personnel and the experience of our management;
- the introduction of new products;
- the risk inherent in the development and expansion of our products;
- our stage of development and material risks related to our business;
- the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given the prevailing market conditions and the nature and history of our business;
- industry trends and competitive environment;
- trends in consumer spending, including consumer confidence;
- overall economic indicators, including gross domestic product, employment, inflation and interest rates; and
- the general economic outlook.
Company
Chicago Steak Company, Inc.- Maryland Corporation
- Organized October 2007
- 17 employees
Rockville MD 20850 http://www.mychicagosteak.com
Business Description
Refer to the Chicago Steak Company profile.
EDGAR Filing
The Securities and Exchange Commission hosts the official version of this annual report on their EDGAR web site. It looks like it was built in 1989.
Compliance with Prior Annual Reports
Chicago Steak Company has previously not complied with the reporting requirements under Rule 202 of Regulation Crowdfunding.
They failed to submit an annual report in the past.
All prior investor updates
You can refer to the company's updates page to view all updates to date. Updates are for investors only and will require you to log in to the Wefunder account used to make the investment.
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