Richard John “R.J.” Brandes made a fortune in real estate finance in the 1990s. Since then, he’s pursued a passion,horses,and a side project: wrangling shopping carts at Irvine’s Gatekeeper Systems Inc.
The company, which makes an electronic gadget that keeps shopping carts from leaving a store’s parking lot, has yearly sales of about $30 million.
Brandes is chairman and majority owner.
Customers include Wal-Mart Stores Inc., Costco Wholesale Corp., Target Corp. and other big retailers.
Seventeen of the top 20 global retailers are customers, according to Gatekeeper. Any retailer who uses shopping carts is a potential customer, the company says.
Gatekeeper got its start in 1996. Two years later, Brandes’ Belgravia Investors bought the company. Gatekeeper President Michael Lawler cofounded Belgravia Investors with Brandes.
Both declined to talk for this story.
In 1984, Brandes started Belgravia Capital Corp., a commercial real estate finance and mortgage company. In 1997, he sold Belgravia Capital to Finova Group Inc. in a deal reported to be worth $90 million.
Around that time, he also sold Belgravia Financial Services LLC, a lender to mobile home buyers, to Ford Motor Credit Co. for undisclosed terms.
Brandes went on to buy Blenheim Farms, a home and 17-acre horse park in San Juan Capistrano that hosted the 2000 Olympic equestrian trials.
He recently put the estate up for sale for $40 million.
Brandes is in a fight with Joan Irvine Smith, another horse enthusiast and partner in the adjacent 40-acre Oaks Blenheim Rancho Mission Viejo Riding Park, which the two formed in 1998.
Smith sued Brandes last month, alleging he diverted money from the venture.
At Gatekeeper, Brandes funded the company’s growth until it went public on a section of the London Stock Exchange in 2004.
The listing gives the company a sort of split personality. The headquarters is in Irvine, but much of the financial reporting is handled like companies do across the pond. Revenue is referred to as “turnover,” which is British parlance. And results aren’t reported quarterly, but at six and 12 months, as is the case in Europe.
Gatekeeper counts Britain’s Tesco PLC and J Sainsbury PLC as customers. The company has offices in France, Canada and Hong Kong.
North America makes up the bulk of sales at $21.5 million last year. Europe was responsible for the rest at $8.1 million.
Gatekeeper lost money in 2004 but has been profitable and growing since then.
Last year, the company had a pretax profit of $3.3 million, up 27% from 2005. Sales in 2006 were up 46%.
The company is looking to grow through acquisitions as well as on its own.
In May, Gatekeeper bought advertising handles and locks for shopping carts from Spain’s Hipersystems SI. Terms weren’t disclosed.
Used in Spectrum
Locally, Target uses Gatekeeper’s device at its Irvine Spectrum store.
Target has been using Gatekeeper for several years and pays $30,000 to $60,000 per store depending on the number of carts it has, according to spokeswoman Ana Williams.
The retailer has been upping its use of Gatekeeper’s products, she said.
Carts taken or misplaced from stores require retailers to pay people to round them up and return them.
The problem of stray carts varies from store to store, but is most common where people have incentives to bring them home or to bus stops.
It does have an impact on the bottom line. A new cart costs $70 to $100, and retailers lose out on business when they don’t have enough carts available for shoppers.
Some cities have deemed stray carts a public hazard and charge retailers fees when identifiable carts are found outside of lots.
Gatekeeper’s GS2 System uses a chip embedded in locking wheels that are triggered by an antenna.
When someone tries to move a cart off a lot, the wheels freeze and make it hard to move. Lot perimeters often are marked as to not surprise shoppers.
Gatekeeper also offers its CartManager system, which cuts down on cart retrieval with a motorized cart that pushes a line of carts back to a docking station.
The company says the system can reduce the labor hours retrieving carts from lots by half.
Another device, Purchek, is designed to prevent shoplifters from taking carts containing unpaid items outside the store.
Gatekeeper competes with San Diego-based Carttronics LLC, which also uses wheel-locking technology.
