A chance opportunity to take its brand of pub-style restaurants to Washington’s Dulles International Airport in 2006 changed the course of The Firkin Group of Pubs’ long-term strategy. For 30 years, Toronto-based Firkin has operated over 25 pubs in Ontario, however with increased saturation in the restaurant market, and a lack of new franchisees, Firkin saw an opportunity to shift its business model.
“We hadn’t considered operating in airports, but the first location was so profitable that we began to see it as a viable growth strategy,” shares Firkin CFO, Sheelah Stover.
After considerable research and networking with the airport industry, Firkin secured a second US location in the Baltimore airport.
“We felt lucky to secure a location because it’s so coveted,” Sheelah explains. “Airport restaurants have a steady flow of captive customers, less competition and they don’t need to focus so much on discounts – all of which are challenges at our traditional restaurants.”
Thanks to the success of the first location, the Baltimore airport agreed to additional concepts. Firkin now operates two locations, with four more in the works over the next 18 months, including a full-service Mexican restaurant, coffee bar, ice cream shop, and food court salad bar. The concepts will feature a quality dining experience, setting them apart from the generic, limited food-fare that comes standard in airports.
“We’re seeing a movement to create enjoyable, local experiences at airports. Good food plays a huge role in creating a warm and comfortable environment, and our goal is to provide travelers with exceptional meals and a positive experience,” says Sheelah.
However, Firkin suddenly had a new challenge; finding capital to build its new airport restaurants. The team quickly realized that traditional lending wasn’t going to be an option due to the nature of the business.
“We talked to a lot of lenders who liked our business, but couldn’t finance us based on the future potential of the new concepts,” Sheelah says. ”We were prepared to explore private equity if necessary, but we didn’t really want to go that route.”
After months of searching for a financial partner, Firkin was introduced to David Hastie, Regional Director, Ontario, at First West Capital. “We immediately clicked with David, he understood our vision right away,” explains Sheelah. “He partnered with us to finance our growth with care and urgency, and created a customised subordinated debt solution which allowed us flexibility without diluting equity.”
David acknowledges it’s common for businesses to face financing gaps when they’re pursuing new business opportunities because it can appear risky to lenders. Sheelah recommends other businesses look outside the box when it comes to financing. “Finding the right long-term financial partner was our biggest challenge to achieve growth. David was able to mitigate that hurdle because he was engaged with our business and saw opportunity where others saw risk.”
“Firkin is a great example of an established business successfully diversifying in order to maintain its growth trajectory. The capable and experienced management team had a strong vision, which allowed them to gain a foothold in a profitable niche in the restaurant market,” says David. “We’re thrilled to enable growth for the Firkin Group, they have a very exciting future.”
Beyond its growth in Baltimore, Firkin plans on expanding into other major US markets such as New York, Miami, and Orlando airports over the next ten years. “In addition to our traditional pubs and restaurants in Ontario, we plan to leverage the success in Baltimore and replicate it. In Canada, we’re testing our concept in the Halifax airport and will start looking at other markets like Vancouver, Calgary, and Edmonton in the near future,” says Sheelah. “We look forward to working together with David as we grow.”