How's this for a marketing gambit? Fuddruckers Inc. founder Philip Romano is launching a Tex-Mex restaurant, and he's reserved 1 million shares of stock to give away to customers. Each customer who buys something to eat at the Texas Tortilla Bakery, in New York City's Greenwich Village, will receive a certificate for one share of Texas Tortilla Bakery Inc. stock. Every 100 certificates accumulated during the six months after the restaurant's August opening can be traded for a lot of 100 shares.
Admittedly, you'd have to consume a whole passel of enchiladas to get even one free lot -- about one meal every other day. "But it's critical we grab customers and get them addicted early on," Romano explains. Following the formula that made the Fuddruckers burger famous, the Texas Tortilla Bakery will offer "quality" fast food prepared in an open-style kitchen, with fresh produce stacked on the counters and homemade dough churned out beside the grill. But Romano felt he needed another hook in the crowded -- and jaded -- New York market.
There's some precedent for the idea. Romano may be the first to give away stock, but both Ben & Jerry's Homemade Inc. and Checkers Restaurant Group Inc. have marketed stock to customers. Then again, each of those companies had a few years of operating experience to trade on. "You have to have a store of goodwill to tap," says Brian Elkin, chairman and CEO of Checkers, which opened four restaurants before going public.
But that doesn't faze Romano, who argues that his tactic is cheaper than advertising and more dignified than giveaways. In addition, he notes, "it's pure capitalism." He plans to post the stock's current price next to the daily menu specials and put press releases with financials and company news on every table. His philosophy: "Let the customers see the business, let them see what it's worth, let them own it -- and then let them help it take off."
-- Elizabeth Conlin