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Thursday, Aug 11, 2022

Brea’s Reborn Coffee Brews Up IPO Plans

Reborn Coffee Inc. says it strives to make customers feel “reborn” after drinking a cup of its coffee.

Now, it aims to be reborn as a public company.

The Brea-based coffee roaster and retailer, known for its award-winning cold brew and with a handful of locally based retail locations, filed plans for an initial public offering on Dec. 29.

The exact amount of proceeds the modestly-sized IPO, underwritten by EF Hutton, plans to raise hasn’t been specified. Filings with the Securities and Exchange Commission suggest that up to $40 million could ultimately be raised, when factoring in warrants that will be issued alongside $15 million or so of common stock.

The company’s raised only a few million dollars since its 2014 founding, filings indicate.

The company plans to list its common stock under the symbol “REBN” on the Nasdaq Capital Market.

7 Spots to 47

As of Sept. 30, 2021, the company counted seven company-operated locations, with six in Southern California.

Local cafés are along Imperial Highway in Brea, El Toro Road in Laguna Woods, and Coast Highway in Corona del Mar. A lease for a new spot in Huntington Beach, along Brookhurst Street, was struck late last year, but has yet to open, according to Reborn.

The company said it intends “to operate over 47 corporate-owned locations by year end 2022,” and will be looking to expand outside the state. It will also begin franchising efforts this year, it said.

Locations, when up and running, are expected to bring in around $300,000 a year on average, it said in its IPO paperwork.

The company had a total of 75 employees, 51 of whom were part-time, as of late last year.

Revenue for the nine-month period ended Sept. 30 grew to $1.6 million, up from $485,000 in 2020, while its net loss also grew to $2.6 million from $1.1 million the prior year.

The IPO filings show the company counted an accumulated deficit around $7 million as of late last year. Its auditors in 2020 noted questions about the firm’s ability to continue as a going concern, given its level of losses.

Best Joe

“We’re not looking for fame and fortune,” Jay Kim, who has served as Reborn’s CEO since its inception, said on the company’s website. “We simply want to serve our iteration of what we believe is the best cup of joe and bring the world closer, one Reborn community at a time.”

Kim, 59, previously founded the global frozen yogurt chain Tutti Frutti and bakery-café franchise O’My Buns under the parent company Wellspring Industry.

In 2017, Kim sold Wellspring and its assets to focus his efforts on Reborn Coffee, the company said in the prospectus.

Inflation Brewing

Reborn Coffee’s products include whole bean coffee, pour-over packs, and cold brew packs, and more.

Its website notes an additional treatment process called “green bean conditioning” and an “entirely new concept” called “germinated coffee” as standout features.

On Jan. 3, Reborn Coffee announced a catalogue-wide price increase, citing pandemic-fueled spikes in the costs of raw coffee beans, shipping and labor.

Reborn’s announcement follows a “10-year high” on all coffee products, according to Forbes. In 2021, coffee prices surged higher than any other commodity.

The markups compelled Reborn to make “companywide changes” and choose “higher quality coffee.”

2022 Plans

Earlier this year, Reborn Coffee plans to enter the grocery market with bulk sales of roasted beans, in-store kiosks, and prepackaged products, while it also begins franchising its retail stores and kiosks.

“We believe that our team’s prior experience building a large, global foodservice business will allow us to rapidly scale our future franchise effort,” the company said in the IPO filing.

It then plans to launch a school to educate “baristas and coffee connoisseurs.”

The U.S. retail coffee market is expected to reach $47 billion by 2022, according to IBS. 


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