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Grill It: What's Wrong With Healthy?

|About: Grillit, Inc. (GRLT)

On a recent trip to Nashville I found myself looking for a quick bite to eat before heading into the next meeting. The usual fast food burger joints are more my style in these situations, but noticing a line of people working their way into a Grill It (OTCPK:GRLT) on Church Street caught my attention. Short on time to drive around, I lined up like everyone else and decided to give it a try. Mind you, the 40-something crowd that I belong are not usually keen on much that says "healthy", and my taste buds were appropriately adjusted to cardboard flavored chicken. I knew there was the usual spots out by the airport, so I decided to hang in there and try to curb my hunger here.

Surprise. Wow. Incredible. This was not what I was expecting. The line moved quickly, the folks were very nice, and healthy tasted well, tasty. Everything seemed fresh, and the portions were more than I bargained for. I needed to know more about this place that snuck up on me in the south, and so I did.

Grill It is a fast casual dining restaurant firm that has begun to garner some attention lately, warranting a deeper look. They operate a couple of company owned restaurants, but more interestingly they have recently gone public, raising capital to expand these restaurants across the country.

This is nothing new. The concept is not new. What is new is the food: providing a healthy alternative in a casual setting with a Latin-Caribbean fusion. The company promises a low sodium, low sugar lunch and dinner for a decent price, using local grower's produce with no MSG to bring a fresh product to market every day. They have certainly hit all of the right buttons for today's health conscious consumer, and their two company owned restaurants in the Miami area have proved over the last couple of years that they are on to something. By most accounts the service is excellent, the food is even better, the regulars are coming back, and more people are becoming regulars. And they have created quite a fuss.

After taking the company public, the stakeholders made a decision to build on its local success by trying to grow out of the local market with a steady but achievable goal, increasing their company owned stores while offering a franchising program to reach more markets quicker. In late July, Grill It brought on a heavy hitter to help achieve those goals, Mr. Ghazi Hajj.

Mr. Hajj now serves as the CEO, and brings a wealth of successful experience. He has participated on both sides of the equation, running the Franchising Program for companies such as Little Caesars and Quiznos, which includes learning the franchisee side of the business by owning and operating 36 Little Caesars restaurants. This substantial upgrade in management got the attention of those that pay attention, and just to be sure, the company rolled out a very energetic awareness program.

Taking what had already been put together, Mr. Hajj's team completed the agreements with some of the franchisees that were in place, created a Master Franchise Plan, streamlined the process and began building a program modeled after success stories such as Chipotle's restaurants. He announced a plan to open another 19 company-owned restaurants over the next three years while building the franchise model with another 58 franchise stores opening in the next five years. He steered the sale of territories for the franchisees, and began entertaining potential candidates to take a look at this new opportunity. The company is targeting existing facilities that can be retrofitted to a Grill It restaurant which is more economical and quicker to market, and there are many potential franchisees that will follow the story as it unfolds. And they will follow Mr. Hajj. Because they know him, and they know that if he puts his name on it, he may be on to something.

Instead of using the public stock to raise necessary capital, Mr. Hajj sought and received a line of credit to finance the plan, putting together a $3 million revolving credit facility with TCA Global. The cost of opening a store is less than $200,000 for either a company-owned or franchisee, so the line of credit seems sufficient. In a very short period of time, Mr. Hajj has put Grill It on the map, and the market responded.

There are many kinds of investors, from the institutional to the day trader. Their methods of finding the right investment are as varied as the people doing the investing. While they all have a common goal, making a profit, they all take different paths to get there, and buying stock in a publicly traded company is one of the easiest paths to make that happen. Each investor reacts to news and opportunities in different ways, but the result of naming Mr. Hajj as the CEO and Chairman of Grill It sent the company's equity valuation on a wild ride, moving from as little as .25 per share to over $5.00 per share in just over a few weeks. As markets do, the ups and downs of the stock started to level off, and it now trades at a very steady price around $1.25 per share. This always makes it hard to find the entry point of an interesting stock, but it seems that point is starting to expose itself as the company works to execute its business plan. Everyone makes their own decisions, and the market price tells us about those decisions.

I found an article asking if the market cap for Grill It is fair. The more experienced investor knows the answer to that question. Who knows? It is the rare company that is valued by any fundamental basis, whether it be large or small, profitable or not. This is a penny stock, new to the public markets and it has a story to tell. Those that buy into this company will find their purchase point and hope to take a ride to the top with Mr. Hajj. Certainly no guarantees thereā€¦but who offers guarantees with investment opportunities? Our own government has been trying to default on the only sure bet for 3 or 4 years now.

The decision to be made for Grill It has nothing to do with its fundamentals. It doesn't have any. It is a new offering on the OTC. It is a great idea in my opinion, and is being led by a guy who knows what he is doing. We will not know the answer as to its success for some time to come. Anyone who professes to know beyond that is not being honest. What we do know is that this company has a good product that resonates to its target market, and to expand that product to other markets it went public and brought in a team that knows what they are doing, and that team was willing to put their reputation on the line because they must believe that they are on to something. There is a track record to learn, know and understand, and there is a ground floor opportunity. An opportunity is just that, and the results are realized sometime in the future, good or bad. Some will pump the stock for their own reasons; some will try to pick it part based on its "fundamentals" for their own reasons; and the savvy investor will not listen to any of this noise. The savvy investor will look at the total story, the product and the management team to determine if the opportunity is worth grabbing. For me, a chance meeting over on Church Street tells the story that I want to hear: great food delivered in enough time to let me eat and relax. Yeah, it's healthy and I know that's important. Bring one to my neighborhood in St. Louis and I will be the healthiest guy in the fantasy football league. I will be digging a little deeper and see how the company really compares to the story. Stay tuned.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.