Dry Fried Wing Company (OTCQB: EEDG) has issued the following statement from CEO and President James Boyd, regarding recent developments as well as a detailed plan for the companys future.
“The co-branding and licensing program that was launched by our Company in early December 2012 has already proven to be extremely successful in creating brand recognition and overwhelming market acceptance of our uniquely delicious Dry Fried Wings. To quickly establish what may be the best tasting product line in a very competitive market is a feat that required tremendous foresight, and will provide us with the optimum foundation as we build and grow into our future.
I have invested a considerable amount of time, reviewing our business model, reflecting on our competitive positioning, evaluating our service delivery system, establishing our equipment and small wares requirements, developing our product/food specifications, developing our purchasing and distribution processes, developing our pricing strategies, and formulating our marketing strategies, while reviewing the overall operational efficiency of our licensed units including their product quality, speed and accuracy of service, and restaurant cleanliness. As a result of these findings, I have already developed a new set of stringent standards and procedures that all existing and future licensed units must follow.
While it is important to bring the Dry Fried Wing concept to as many new guests as possible through the signing and opening of new venues, it is imperative that we choose and maintain a base of superior operators who will represent the brand well and protect the integrity of our concept. As our company transitions to a fully-scalable restaurant operation with an expanded menu, we will direct our field operations team to assess the quality, service, and cleanliness standards the buying public and local health departments require of all restaurant operators, and will immediately remove our products if our standards are not met. The safety and comfort of our guests are paramount to us, and I will do everything in my power to ensure our guests receive only the best in quality, service and cleanliness.
Additionally, I have refined our real estate and branding requirements, and have decided to limit our future licensing agreements to what we consider to be the major complimentary brands and world-class concessionaires in the marketplace. These are the sophisticated operators who are well trained, capitalized, and exhibit the highest standards in restaurant operations.
During the next 90 days, we will embark on a multifaceted strategy involving:
1. Capital Structure—Balanced mix of long term debt, specific short-term debt, common equity and preferred equity. In short, we have developed a comprehensive plan to finance our overall operations and growth by using different sources of funds that will minimize dilution without becoming over-leveraged.
2. Menu Development—We have recruited an executive chef to build on the already established Dry Fried Wings foundation and to include other proteins, salads, vegetables, side dishes and desserts that will appeal to a broad segment of our population seeking both flavorful and healthy choices. We must be sensitive to the changing needs and desires of our customers while preparing for the required laws governing menu nutrition labeling. Specialty beers, wines and frozen alcoholic and non-alcoholic beverages will be offered and should constitute approximately 15-20 percent of sales. Limited table service will be available along with takeout and delivery.
3. Prototype Design—Once we’ve completed our full menu plans, we will establish our overall design theme, then choose and position equipment that will produce a world-class finished product in under three-minutes. It is imperative that we design and build user-friendly, in-store kitchens with functionality and efficiency and an optimized layout and flow that can produce quality and quantity while keeping our labor investment to a minimum.
a. Venue Modeling—While the kitchen or engine will remain basically the same, the size of the lobby, the cooler/freezer and the dry storage capacity will vary depending on the venue (e.g., free-standing, airports, college campus, walk-up, etc).
4. Company Restaurant Development and Concept Validation—Our plan is to develop three prototype restaurants in the Atlanta Designated Metropolitan Area (DMA). We are analyzing demographic data to determine the best locations for our concept based on:
a. competitor concepts and sales volumes
b. trade area profiles, including customer demographics, day-part occasions, concept density
c. emerging trade areas and developments
d. consumer foodservice DMA spending levels (comparative analysis)
e. local labor costs, unemployment levels and skill pools
Development costs including furniture, fixtures and equipment for the first location will be in the $700,000 range with a target for the second and third locations to average $600,000. Unit sales are projected to range from $800,000 to $1.1 million. We will seed the market with Company units utilizing a “build and flip” strategy, selling the Company units to franchisees with additional development requirements while recouping our initial investments plus turnkey fees. We believe the Atlanta DMA can easily support 22 locations without cannibalizing sales. Our franchising focus will target cities in the Southeastern United States with a minimum commitment of three units per franchisee.
It is important to note that strategic buyers also look for businesses that will provide synergies to their existing business. In our case, we are developing a second major revenue stream in the form of spices, sauces, batters, breading and side items. Just as Al Copeland Enterprises provides spice packages to all 1800 plus Popeye’s locations, we will emulate that very successful business model by providing similar items to all franchised and licensed Dry Fried Wing units, as well as all acquired concept locations. Creating and acquiring synergistic and profitable new revenue sources will always be an integral part of our plans.
To that end, I have begun to utilize recent career connections I’ve made with some of the largest financial institutions in the world to assist in securing a synergistic acquisition we have recently targeted. Purchasing a well-established, profitable restaurant chain that is 90 percent franchised will yield immediate cash flow with enormous revenue growth, and will also enable us to increase our margins and spread our G&A, marketing and distribution costs across a large number of restaurants for the good of both concepts. The targeted concept also provides attractive growth opportunities, durable competitive advantages, and, of course, many new branded outlets for our Dry Fried Wings. Any acquisition we choose to pursue will be done to further enhance and greatly accelerate our long-range revenue and growth goals.
Every successful concept must start with a superior product and our Dry Fried Wings have proven to be just that. We also must deliver an experience that establishes an emotional connection with our guests. Our commitment to food quality can only be surpassed by our commitment to premier customer service and restaurant cleanliness. My pledge to all of our customers and shareholders is that we will offer a dining experience unmatched in the fast casual space.
Dry Fried Wing Company is a subsidiary of Energy Edge Technologies Corp., which has taken the preliminary steps for a name change to “Gourmet Wing Company”. We will be conducting an Investor Conference Call from 4-5 PM Thursday, March 28 to add further details to the topics referenced above and answer as many call-in questions as time will allow.