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CAULI & RICE

Building the 1st & Largest Cauliflower Rice Chain Store in the Region

COMPANY DETAILS

SUMMARY

Cauli & Rice is both an online and offline restaurant that uses food, technology and data to solve a pressing issue in Malaysia – an obese nation, with our Cauliflower Rice. We are the 1st and only business in Malaysia that specialises in preparing and retailing cauliflower rice in Malaysia with Malaysian flavours since 2020.

Our business model is scalable that harnesses the power of technology and digitalisation to offer meals that not only do good for the society, taste good, but at the same time maximise productivity and efficiency of both our physical assets and human capital with 2 other in-house virtual brands.

Our company is currently at a growth stage :

  • Quality Sales CAGR at 55% in 2020 – 2022E
  • Served nearly 40,000 bowls/year vs 15,000 bowls/year before
  • Above average repeat ordering rate at 29% vs industry average of 24.5%

We are excited to offer an opportunity to investors and customers who share the same vision as us, who believes in both healthier physical and mental living is the way to go and to be part of our growth story. We are seeking to raise RM1.5mn in exchange of 12.5% of our company’s equity. We seek to use the investment to expand our geographical footprint so that we can be part of the solution to reverse the obesity trend in Malaysia, 1 bowl at a time.

  • Minimum investment of RM2,100/block with 40 shares
  • Valuation of RM10.5mn - 50% discount to EBITDA multiple valuation at RM20.8mn and 25% discount to our intrinsic value of RM14.1mn as valued by Equidam

Schedule to speak privately via Google Meet or face to face with our CEO & co-founder, Kenneth Lai directly if there are further questions.

https://forms.gle/gfHpJVeUownC3YAR9

Problem

There are 3 pressing problems that we are looking to solve :

Problem No. 1

Our nation is fat - Exessive sugar intake is taking a toll on our nation's health. There are more than 50% of Malaysian adults that are obese and obesity has reached an 'alarming level', as warned by Ministry of Health in March 2022. When a nation is unhealthy, it increase the healthcare bill the government is footing on the rakyat through various forms of expenditure and subsidies. Source : TheStar

Problem No. 2

Traditional F&B restaurant has high risk - Social media helps, but huge investment cost and underutilisation of assets and human capital is a common issue faced by business owners. 

Problem No. 3

Malaysian food identity is little known internationally. Malaysia has extremely good flavours but the flavour identity is incomparable to Thailand, South Korea or India, for example. There is so much potential but the pride and identity to Malaysian flavours can be made stronger internationally. 

Solution

Combining the problems listed above, we present the solution in Cauli & Rice:

  1. Going mainstream with Cauliflower Rice. Cauliflower rice is essentially cauliflower, shredded into bits and pieces that resembles rice. It can serve as a substitute to normal rice. Nutrient comparison table as stated below:

    Nutrients Cauliflower Rice (100g) White Rice(100g) Difference
    Calories 25 130 -81%
    Carbohydrates, g 5 28 -82%
    Protein, g 1.9 2.7 -30%
    Fiber, g 2 0.4 +400%
    Potassium, mg 299 35 +754%
    Sodium, mg 30 1 +2900%

    It has 81% lesser calories, 83% lesser carbohydrates and close to 400% more fibre compared to white rice. It is an extremely underrated superfood. Our Signature Bowls with 100% Cauliflower Rice have an average calorie count of 264kcal, making it an ideal source of food for people looking to watch their calories intake while still getting a satisfying meal.
  2. Building virtual brands on top of physical brands. We believe the importance of physical branding as it helps with building brand equity. On top of building the physical brand of Cauli & Rice, we are also building 2 virtual brands at the same locations or kitchens we operate. The rise in delivery orders and the change in consumer trend is certain. Building delivery or virtual brands allow us to first incubate the brands, perfect the offering and gain consumer confidence before investing further into it. The brands operated by us alongside Cauli & Rice are M Fried Chicken and Aunty Sam Satay. We are able to cross use our ingredients, maximise the capacity utilisation on our equipment, real estate, and manpower. Thus, reducing inefficiency and productivity loss on our fixed assets and human capital.

  3. Incorporating Halal Malaysian Flavours. Bringing pride and identity back to our Malaysian food by incorporating a majority of Malaysian inspired flavours and spices into our offerings. Our core focus when we create and launch new products will is always to have something about it be related to Malaysian favourites that are Halal. With this, when expand internationally we will able to bring pride to our national flavours of Malaysia. Our best-selling flavour is the Malaysian Curry Caulirice Bowl. Moreover, our last Raya Exclusive flavour also centred around Rendang. 

Traction
  1. Key Operating Metrics. Our sales grew at 153% CAGR in 2020-2022E despite the pandemic, reaffirming the resilience of our business model and the traction we gained with our offerings despite the economic calamity brought by covid-19. With the economy largely reopening, we are expecting a stronger and higher quality revenue moving forward.


  2. EBITDA margin. EBITDA margin has turned positive and gained traction over the past few months since the reopening of economy at our latest physical retail location in Gamuda Walk Mall, Kota Kemuning. Margins are a lot healthier when there is a lesser reliance on food aggregators.


     
  3. Reviews. We pay a lot of attention not just to our top & bottom line but also satisfaction by the customers. We have gained a small but growing social media following with an average rating of 4.7/5 on reviews on platforms such as Google, Facebook, GrabFood, ShopeeFood and the MAE app review system on our offerings.


     
  4. Cauliflower rice is gaining traction in Malaysia. We see huge potential in our merchandise penetrating the market with ample room for price increase to capture higher margin and coexisting with other brands in the near term. Currently there are only 2 other established brands that retail raw and chilled/frozen cauliflower rice in most large chain supermarkets in the local market.

Customers

Currently we have almost 80% of our customer base consisting of individuals identifying as females while the remaining 20% are male. Our target audience for cauliflower rice is for all adults of all mature ages who are currently consuming rice as part of their daily diet. Lower hanging fruits are customers who are already generally healthy and conscious with their food intake. We find a huge untapped market of people who critically need rice substitutes, eg diabetic and obese customers. This will be our next leg of growth when Malaysians are further educated on the benefits of this superfood.

With the information in our database, we can create more effective campaigns and promotions that drive sales. We are currently working with fitness centres and beauty salons to offer benefits and incentives for their members and customers, thus acquiring more new customers to our establishment. With the execution and implementation of our expansion plan in more locations, we will be able to build further brand equity and acquire customers organically.

It is to be noted that all current ingredients used are from Halal certified sources, funds raised will be used to hire and build a Halal Executive team to assist in obtaining an official Halal status for the company which would undoubtedly give better assurance to the larger addressable market in Malaysia & overseas.

Business Model

Our business model of revenue generation is recurring by nature. Our revenue of RM20mn by 2025 is based on conservative estimates of:

  • Average spending per pax. RM25/pax - with other spending in-store and consistent inflation year-on-year basis, this number has more upside than downside potential.

  • Seats. Depending on the size of the lot and the area we are serving. A medium size lot is estimated to have 50 seats.

  • Seat turnover/day. 2x seat turnovers during lunch & dinner each and 0.5 during non-peak hours

  • No. of outlets. 10-15 would be the optimal number of physical presence for a sustainable and long term business model.

The current model doesn’t include our newly launched vertical of Merchandise business segment as it is too premature to estimate. However, each sale already contributes positively to our earnings with very promising growth rates.

Over the longer term over and beyond the next 5 years, we want to grow our Merchandise business segment to contribute to over 40% of our total company sales. There are numerous benefits of doing so:

  • In preparation for another pandemic. Merchandise sales exploded throughout the covid-19 pandemic with sellers on various platforms selling their merchandise. Merchandise introduces a healthy product mix to our offerings that is able to make our company more resilient should there be another pandemic (resulting in more hard lockdowns).

  • International reach. With merchandise we are able to target both local and export markets for a higher volume and sales without the need for huge capital outlay.

  • Vertical expansion for higher national food security. Malaysia is still a net food importer with imports of RM55.5bn vs RM33.8bn of food exports in 2021. Expanding vertically enables us to better achieve better national food security by relying lesser from imports.  

  • Higher margin. Margins are higher and more consistent with the ability to scale much more effectively. Oldtown Berhad was taken private in 2018 for RM1.47bn with its more profitable segment being the Merchandise segment. Our current Gross Profit margin stands at 60%-64%. With introduction of Merchandise, we believe additional 3% margin is attainable over the long term.

MARKET

Our target market is the current rice eating community in the region. While having rice is a deeply rooted culture for many parts in the world especially Asia with almost 90% of global rice produced consumed here, ASEAN countries takes up almost 22% of global consumption. 

Should only 0.1% of the rice eating community converted into having cauliflower rice, we estimate we will be looking at a US$2.4bn industry in Malaysia alone. At a larger scale to ASEAN region we will be looking at an industry of US$809bn with current estimates and price.

Competition

The cauliflower rice market is currently a relatively uncontested market in Malaysia with Cauli & Rice perhaps the 1st and only company that specialises in the Cauliflower rice market. There are other food establishments in Malaysia that offer cauliflower rice, such as Agrain, La Juiceria Superfood & Rawsome, that are notable for offering the product as one of their many offerings, but none specialises in it like us. Therefore, we believe that we can compete effectively in this market.

Data & Analytics driven. Digitalising our operations enables us to collect daily operation data that offers us insights into areas that allows us to make better business decisions.

High Malaysian Standard. We believe the Malaysian consumers have extremely high standard for food as there are many food options available in the market. With this Malaysians would generally prefer with the one that specialises in it.

Competition is good for business. We welcome competition in the market as the more players are there in this field, the greater the awareness we can create together to the public in educating the benefit of this superfood. Thus making the market bigger and benefiting the larger population and business owners.

3 years head start. We have been specialising this for the past 3 years with deep product and industry knowledge that caters to the market.

Halal ingredients and sources. All ingredients are already from Halal sources with the brand potentially to be officially Halal certified with other proper steps taken.

Funding

The Offer. We are seeking to raise RM1,499,400 in exchange of 12.5% of our company’s equity.

We are offering our business at RM10.5mn valuation, a 52% discount based on EBITDA multiple valuation of RM22mn and 29% discount from our intrinsic valuation as valued by Equidam. Our intrinsic value of RM14.7mn is calculated through a combination of Qualitative methods, Venture Capital Method and Discounted Cash Flow Methods.

The full report can be assessed here: https://drive.google.com/file/d/1JP-ioqckPydRZqz-4m_RLMYeE8aldn6n/view

Funds Utilisation. 70% of the raised funds will be used for geographical expansion. This will allow us to access a wider reach of customers though increasing our physical locations to offer quality meals to people. Marketing, Branding and Working Capital will be allocated with 10% each. While improving Central Kitchen and HQ capabilities, ie Halal executive team will be allocated with 5% each.

Vision
  • We want to make positive change to the Malaysian diet with every bowl we serve.

  • We want to eventually make Malaysian flavours internationally recognisable.

  • We want to build the 1st and largest cauliflower chain store in Malaysia and in the region, profitably.

Key Milestone & Future Roadmap

Team

Kenneth Lai Kar Mun, CFA, CEO & co-founder 

  • 10 years in both traditional & online F&B industry

  • Primarily responsible for strategy planning, strategy execution, business development & marketing

  • Managed to grow sales to over RM20mn at its peak from previous and currently still operating F&B venture – GO Noodle House

  • Returned over 65% of ROI to previous F&B investors

  • Bachelor Degree of Mechatronics Engineering from Monash University, CFA Charterholder

Johnson Chong Zhuang Shen, COO & co-founder

  • 10 years in both traditional & online F&B industry

  • Managed and grew over 200 headcounts at its peak of currently still operating F&B venture

  • Expert in cost control & possesses excellent problem solving skills

  • Strong crisis management capability – 0 outlet closure during the pandemic

  • Bachelor Degree of Mechanical Engineering from Monash University

Bong Kah Hui, Head Chef

  • 16 years in the F&B industry

  • Developed 3 brands & over 20 menu items in the span of 3 years

  • Primarily responsible for quality control and menu development

  • An inspiring, respected & compassionate leader to his team members

Intan Syahirah, Senior Chef

  • 6 years in the F&B industry

  • Former experience includes hotel’s F&B operation involving bakery & cold kitchen

  • Responsible for menu development & execution

  • Diploma in Culinary Arts from Kolej Vokasional Besut

Press

BFM

https://www.bfm.my/podcast/enterprise/open-for-business/ent-ofb-head-in-the-cloud-kitchen

Vulcan Post

https://vulcanpost.com/741828/cauli-rice-healthy-restaurant-malaysia/

Oriental Daily

https://ufood.orientaldaily.com.my/index.php/article/290186

New Straits Time

https://www.nst.com.my/lifestyle/heal/2022/01/767544/caulirice-switch-healthier-option

The Happy Hormones

https://www.happyhormones.my/health/cauliflower-rice-malaysia/

Gemspot

https://www.youtube.com/watch?v=RGbQMxyfVmA&t=13s

Disclaimers
  • No shares will be allotted or issued based on this document after six months from the closing of the offer period.
  • This issue, offer or invitation for the offering is a proposal not requiring authorisation of the Securities Commission under section 212(8) of the CMSA 2007.
  • This document has not been reviewed by the Securities Commission Malaysia. The Securities Commission does not recommend nor assumes responsibility for any information including any statement, opinion or report disclosed in relation to this fund raising exercise and makes no representation as to its accuracy or completeness. The Securities Commission expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the information disclosed.

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