Citizens

Citizens

Growth Stage

One of the fastest growing specialty cafe & lifestyle brands

One of the fastest growing specialty cafe & lifestyle brands

Overview

Raised this Round: Raised: $1,238,856

Total Commitments ($USD)

Platform

Republic

Start Date

02/08/2021

Close Date

04/15/2021

Min. Goal
$25,000
Max. Goal
$1,238,856
Min. Investment

$100

Security Type

SAFE

Series

Series A

SEC Filing Type

RegCF    Open SEC Filing

Valuation Cap

$12,000,000

Discount

20%

Year Founded

2019

Industry

Food, Beverage, & Restaurants

Tech Sector

Non-Tech

Distribution Model

B2C

Margin

Medium

Capital Intensity

High

Location

New York, New York

Business Type

Life Style

Citizens, with a $12 million valuation cap, is raising funds on Republic. The company has developed an Australian cafe that combines a specialty coffee shop, cafe, and lifestyle brand in one. It focuses on seasonal and fresh menus, fresh Aussie coffee, and modern architectural store design. Justin Giuffrida and Andrew Geisel founded Citizens in December 2019. The current crowdfunding round has a minimum target of $25,000 and a maximum target of $1,070,000, and the funds will be used for national expansion across nine US markets, building a coffee roasting facility, and launching wholesale coffee distribution. Citizens has generated lifetime revenue of over $10 million. It has launched four profitable locations and corporate headquarters in less than four years.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$4,141,603

$2,201,700

COGS

$2,688,295

$1,259,629

Tax

$0

$0

 

 

Net Income

$419,818

$284,462

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$69,447

$95,922

Accounts Receivable

$26,878

$0

Total Assets

$1,050,117

$557,901

Short-Term Debt

$350,114

$167,133

Long-Term Debt

$176,653

$1,198

Total Liabilities

$526,767

$168,331

Financials as of: 02/08/2021
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Citizens Coffee 09/29/2024 StartEngine $25,592,500 $292,225 Equity - Common Active RegCF
Citizens 04/14/2021 Republic $12,000,000 $1,238,856 SAFE Funded RegCF
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Revenue History

Note: Revenue data points reflect the latest of either the most recent fiscal year's financials, or updated revenues directly from the founder, at each raise's close date.

Valuation History

Price per Share History

Note: Share prices shown in earlier rounds may not be indicative of any stock splits.

Employee History

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Synopsis

Travelers and cultural critics have long noted the difference between Australian coffee culture and American coffee culture. In 2016, Arielle Milkman of Eater wrote: “Where mass coffee consumption in the U.S. has long been connected with work and productivity, coffee culture in Australia is uniquely intertwined with leisure and relaxed beach-centric lifestyle. And slowly, as Aussie-inspired cafes sprout across the country, the U.S. is embracing a new laid-back coffee sensibility firmly rooted in superior brews.” 

Over the last several years, American cities have witnessed an increase in airy, thoughtfully-designed cafes that prioritize high-quality coffee, sit-down meals, and social connection over the standard Starbucks drink-and-go model. It’s leisurely to sit down for a weekend brunch or weekday cocktail with friends, and these cafes bring a quintessential millennial vibe to urban street corners. 

Citizens is an Aussie cafe chain furthering the popularity of these lifestyle-forward cafes. There are currently four Citizens locations around New York City, each offering a signature coffee menu, upscale dishes like granola bowls and avocado toast, and light cocktails in clean, aesthetically-pleasing spaces. Citizens’ first four locations were a strong success, even through COVID-19, so the company plans to expand nationwide. 

Citizens’ current Republic raise has been rated a Neutral Deal by the KingsCrowd investment team.

Next Section: Price

Price

Citizens is raising a Crowd SAFE at a $12 million valuation with a 20% discount. This price isn’t entirely unreasonable, particularly given Citizens’ 2019 revenues of $4.1 million and positive net income. The discount offered is also attractive for investors. Therefore, Citizens’ price rating is high. 

Next Section: Market

Market

More than 60% of Americans over 18 drink at least a cup of coffee roughly every day, according to a 2018 survey. Coffee chains are one of the main sources for meeting this demand. There are more than 35,000 coffee shops in the U.S., with a market value of $45.4 billion. There’s a large market of coffee drinkers for Citizens to serve, though there’s no shortage of competition for that morning cup of joe. Of course, Citizens really sits at the intersection of multiple restaurant segments: coffee shops as well as casual sit-down restaurants and even fast-casual concepts. The combination of these addressable markets is significant, perhaps even more so after a year that saw many restaurants and cafes close due to COVID-19. Citizens will undoubtedly find many willing customers in any cities that it expands to, so the company’s market rating is above average.

Next Section: Team

Team

Citizens was founded by two Australians, Andrew Geisel and Justin Guiffrida. It’s worth noting that the co-founders emphasize their “deep domain experience in the coffee industry, having led some of Australia’s premier brands” on Citizens’ raise page. However, investigation into their backgrounds doesn’t yield quite that level of expertise. 

CEO Guiffrida graduated with an accounting degree from Victoria University and spent roughly three years as an accountant and financial controller for two companies, including a restaurant business. COO Geisel holds a degree in architecture from Griffith University and spent three years as a full-time barista before founding Citizens. While the pair has been exposed to the restaurant and coffee industry in their short careers, they hardly have deep domain experience or a track record of entrepreneurial or brand-building leadership. Consequently, Citizens’ team score is its lowest across all five metrics. 

Next Section: Differentiators

Differentiators

Restaurant chains are rarely all that different from their competitors — it’s just a fact of the industry. Citizens does have a carefully-curated Aussie-inspired, easygoing vibe in its cafes and seems to be highly focused on design and aesthetics. Beyond that, though, Citizens’ menus seem to be no different from many other cafe or fast-casual restaurants. Therefore, the company’s differentiation score is quite low, as might be expected for most restaurant deals.

Next Section: Performance

Performance

At least based on financial data through 2019, Citizens is an extremely strong performer. After just three years of operations, the company generated $4.1 million in revenue in 2019, and even turned a profit with a net income of more than $400,000. Between 2018 and 2019, the company experienced almost 100% revenue growth. It’s very important to recognize, however, that Citizens is cagy about 2020 financial data. Virtually all restaurants struggled in 2020 thanks to the COVID-19 pandemic, and New York City was hit particularly hard. While Citizens cites some ancillary metrics about its improvements on things like average order value, it noticeably doesn’t address total 2020 revenues. 

That said, Citizens does seem to be a well-run business. The company reports that its unit volumes (more than $2 million) exceed standards set by Starbucks and other chains, and that its payback period for new locations is just 14 months. Citizens believes that it can leverage these advantages to expand efficiently in the wake of the COVID-19 pandemic, with record-low commercial real estate costs and decreased operating expenses. 

Overall, Citizens seems to have run efficiently and profitably over the last few years. Its performance rating is its highest score as a result. However, prospective investors should note the lack of 2020 financial data as they evaluate this deal.

Next Section: Other

Bearish Outlook

One of the main concerns about Citizens is certain inconsistencies or exaggerations on its Republic raise page, and the company’s lack of transparency about 2020 financial performance. Citizens’ founders really oversell their relative lack of experience. Revenue growth is also offered in an arguably misleading manner that prioritizes percentage change over raw data. It’s a major gap not to understand exactly how much revenue Citizens generated in 2020 and/or how much debt the company had to take on to survive during COVID-19 lockdowns in New York City. 

These concerns motivate a bearish outlook that Citizens’ growth plateaus because it is simply never able to recover from the impact of the 2020 pandemic. The company seems to be obscuring certain details in its raise materials, which might indicate that it’s in trouble. Even if it’s not, there’s no concrete evidence that Citizens’ founders have the expertise to steer the company toward a nationwide expansion, which is significantly more difficult than local operations. Therefore, it might be a bad time for investors to enter at a relatively high valuation. 

Next Section: Bullish Outlook

Bullish Outlook

While Citizens’ performance in 2020 is a bit mysterious, it’s undeniable that the company grew very rapidly and achieved meaningful success during its first three years of operations. Citizens cafes offer a carefully-designed aesthetic that draws loyal customers, and improvements on metrics like average order value and payback period give Citizens a unit economics advantage over other chains. Blockbuster restaurant concepts like Chipotle and Blue Bottle Coffee also started with a handful of locations, then grew steadily to build more and more of a brand name before achieving lucrative exits. With Citizens’ strong financial performance (at least through 2019) and focus on distinguishing itself from mainstream American coffee culture as much as possible, the company might have what it takes to follow in the footsteps of those restaurant success stories.

Next Section: Executive Summary

Executive Summary

Citizens is a high-end, Australian-inspired cafe chain with four locations in New York City. The company experienced strong success and growth during its first few years of operation, at least through 2019 until the COVID-19 pandemic intervened. Citizens’ focus on the unit economics of its restaurants is encouraging, and as long as payback periods remain short and Citizens’ founders continue to prioritize profitability, the chain could successfully scale nationwide. 

On the other hand, Citizens’ 2020 performance is a major gap in information. The company could have really faltered last year (as many restaurants did), which would make it a risky time for investors to get in at this high valuation. It’s also a small red flag that the company’s raise page oversells its founders’ experience and doesn’t offer straightforward revenue metrics. Therefore, Citizens has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com

Founder Profile

Citizens Co-founder Justin Giuffrida Wants to Disrupt Starbucks

Starbucks has held a a near monopoly on to-go coffee in the US for years. But when a big name gets comfortable, disruption is often not far behind. And a cafe competitor is approaching.

Citizens is an Australian-inspired cafe and coffee shop begun in New York City. The brand already has a strong social media following, and its four stores have weathered the pandemic skillfully. We reached out to co-founder and CEO Justin Giuffrida to learn about the company's goals for national expansion.

Note: This interview was conducted over phone and email. It has been lightly edited for clarity and length.

Read Founder Interview

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Citizens on Republic
Platform: Republic
Security Type: SAFE
Valuation: $12,000,000

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