Honeybee is raising funds through common equity at $1.20 a share. Its pre-money valuation for this round comes in at $12 million. The company is taking in revenue through its pilot location, even during a pandemic that has been devastating for the food service industry overall. Overall, the valuation isn’t unreasonable, and the price score for Honeybee is above average as a result.

Honeybee’s target market extends to two markets, one contained within the other — the vegan food market and the fast-food market overall. The vegan food market is expanding at a rapid pace. The global market was valued at $14.2 billion in 2018 and is expected to reach $31.4 billion by 2026, growing at a CAGR of 10.5% during that interval. This growth is largely being driven by rising levels of health awareness. Veganism is particularly prominent in California, which is likely why Honeybee has opened its initial locations there.

Honeybee isn’t strictly targeting vegans, however. Its menu is full of items that, while ostensibly plant-based, aren’t much healthier than fare from its mainstream competitors. While Honeybee does hope to draw from the vegan market, it also hopes to access part of the regular fast-food market. Fast food was valued globally at $647.7 billion in 2018 and is expected to reach $931.7 billion by 2027, growing at a more sedate CAGR of 4.6%. Although the fast food market is quite large, it is highly unlikely that Honeybee would be able to secure a major portion of it.

Balancing the market size and growth of vegan food and fast food, Honeybee Burger faces a niche, but growing market. Thus, it scores just slightly above average in the market metric.

Honeybee’s leadership team checks all the right boxes for what investors should want from an all-vegan franchise. Co-founder, CEO, and Director Adam Weiss holds an MBA from UCLA. Weiss has extensive experience backing companies from a leadership position, working with hedge funds and in investment and leadership roles for the last two decades. Honeybee has been borne out of his startup angel investment company Virtuous Food. Virtuous Food also brought Plantible Foods into being, which was also focused on plant-based food distribution. While Weiss doesn’t appear to have any particular expertise in the food service industry as a whole, he does have a long record of working to develop businesses which will serve him well in his role.

Co-founder and Hospitality Partner Jeremy Adler brings the more specific service-industry expertise to the table. Adler, who has a BS in hospitality from Cornell, worked his way up through the restaurant business. He took on managerial roles, eventually becoming general manager at a rustic west Hollywood restaurant called the Eveleigh. From that point, he shifted into a consultant role, eventually joining Weiss in developing Virtuous Food. Adler brings experience from all levels of the food service business. 

Finally, Operations and Execution Partner Brian Cikigil represents the third leg of Honeybee’s main triad. He holds a Bachelor of Science in marketing from St. Thomas Aquinas College. After getting started in marketing, investment management, and proposal management, he spent a number of years working in various financial markets before joining his colleagues at Virtuous Foods and helping to develop the infrastructure of Honeybee.

The Honeybee team appears to have been working together since before the company was officially incorporated, and its members look well-positioned to use their varied experiences to help the franchise grow. Honeybee’s team score is its highest across all five metrics in reflection of this strength.

In an exceptionally crowded marketplace, Honeybee is attempting to stand out by playing up its cultural awareness and appealing to sustainability principles of consumers. The company doesn’t have any patented technology or technique of its own. Honeybee uses plant-based food from companies like Impossible or Beyond Meat for its products, and in a certain sense, it’s just one more LA restaurant.

What sets Honeybee apart is a little trickier to quantify. Adapting to a changing marketplace, Honeybee is establishing “cloud kitchen” locations, which are basically “just the kitchen” portion of a restaurant. Basically, it receives the order, cooks it, and sends it out the door for delivery — efficient and well-suited to an industry increasingly dependent on delivery and takeout options. Honeybee is also smartly adapting older, vacant buildings for its sites rather than building from the ground up. Costs are high, but it is doing what it can to be capital-efficient.

Finally, Honeybee’s menu and marketing play up its health- and environment-conscious mission to the max, drawing in as much of its target audience as possible. This makes it unlikely to suffer the mistakes of more established brands that dip their toe into culturally-liberal messaging, only to be criticized by consumers sensing hypocrisy.

By positioning itself within the broader fast food industry, Honeybee will face competition from major incumbents. Because the company is not developing its own food products, it also has low defensibility. If either a known fast food name pivots to plant-based food or another company arises with an all plant-based menu, Honeybee’s current distinction could fade. However, given the company’s early movement as an all plant-based fast food chain, its differentiators score is above average.

The first brick-and-mortar Honeybee Burger was opened in 2019. However, in order to scale the company and take the fast food chain nationwide, Honeybee Burger Inc. was formed in early 2021. Honeybee Burger Inc. owns 75% of the original Honeybee Burger, with the final quarter belonging to legacy investors. This situation has created a difficulty in assessing Honeybee’s financial performance. Because Honeybee Inc. is so young, it technically has no revenue at this time. However, the original Honeybee Burger has been in operation for two years, and it has seen success. According to the video on the company’s StartEngine raise page, the first store location was profitable in 2020. Furthermore, the video claims that Honeybee Burger has seen $1.9 million in sales since it opened in mid-2019. These numbers are impressive, but they are also unaudited and cannot be independently verified at this time. 

Beyond financials, Honeybee has had other signs of success. The chain was named as one of the “14 Essential Vegan Restaurants in Los Angeles” by Eater Los Angeles, and its Los Angeles location has 4.5 stars on Yelp. The company has also developed a healthy social media presence, with more than 17,000 Instagram followers. 

If the company’s claims of $1.9 million in sales is accurate, then Honeybee is doing quite well. The pilot location has attracted positive press and customers seem to enjoy the food. However, because that sales figure is unverifiable at this time, the performance score for Honeybee is slightly below average.

Honeybee’s operations have thus far been limited to two small locations in California. The biggest question facing investors is how scalable Honeybee’s business will prove to be. Environmental conscientiousness has served it well so far. Will it be able to maintain that authentic brand-awareness as it expands across the LA area and beyond?

It’s one thing to manage a couple of restaurant locations, but it’s another thing entirely to expand those locations into a region-spanning franchise. That is what Honeybee will need to do to achieve its ambitious, culture-altering aims. Investors should also watch the restaurant space as a whole to see how other franchises are adjusting to cultural and economic shifts. As franchises shift to more eco-friendly yet cut-throat business models, Honeybee might find its unique draw challenged by other competitors in the vegan food space.

While the pandemic has been absolutely devastating for the food-service industry, those businesses that have survived are in a marvelous position to utilize their success for continued growth. As consumers emerge back onto the restaurant scene, hungry to get back to normal, Honeybee has the allure to welcome back those eager customers.

Plant-based food has been growing in popularity recently, and Honeybee is in the right location for its message. In a few years, consumers could see a number of locations springing up, with a respectable portion of the local market captured. The team at Honeybee has a good combination of business skill and restaurant experience and has led the company successfully thus far through COVID-19. The company is also offering a reasonable price for investors in this round.

Honeybee Burger is an emerging quick-serve restaurant franchise operating out of LA. This startup, through inclusive and culture-conscious messaging, is attempting to bring plant-based American fare to the fore. Thus far, Honeybee has opened a pilot restaurant and a “cloud restaurant” location which is entirely dedicated to production and delivery. Its menu is full of unique and innovative plant-based options from the likes of Impossible Foods and Beyond Meat.

It remains to be seen just how scalable Honeybee will prove to be as it seeks to open more locations and grow into a proper franchise, and its financial paperwork doesn’t seem to back up its financial claims on the raise page. However, the company claims its pilot location has been profitable even in a devastating pandemic, and it has shown great skill at both being capital-efficient and building a culture-conscious brand. Therefore, Honeybee Burger is a Neutral Deal.

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Analysis written by Benjamin Potts.