On Tuesday, Dig Inn, which operates 10 locations in New York City and brands itself as a "farm to table" concept serving healthy seasonal fare, announced a $15 million Series C funding round. The consortium providing Dig Inn's cash injection was led by Wexford Capital. It also includes Monogram Capital Partners, the founding partner of Riverwood Capital and former Flextronics (FLEX) CEO Michael Marks, and existing Dig Inn investor Magnus Hoglund.
The company declined to disclose what the fresh round of funding valued the business at, instead saying it projects a year end 2014 sales run rate north of $35 million.
Must Read: Top Ways Struggling McDonald's is Trying to Reinvent Itself
"We are looking at [expanding in] Manhattan proper, Brooklyn, suburbs around New York, and maybe Connecticut," Dig Inn Founder Adam Eskin told TheStreet regarding planned uses for its new funds. Other funds will be allocated towards building out the company's team and infrastructure to support national rollout ambitions. In an interview with TheStreet in July, Eskin said that Dig Inn could have 75 locations within a few years.
Dig Inn's latest round of funding highlights what has been considerable interest on the part of a range of investors for new, fast-casual restaurant concepts that offer a healthier take on the simple pizza pie or higher quality ingredients in burgers.
Better burger and shake joint Shake Shack divulged plans earlier this month for an initial public offering in 2015; the company said Tuesday it plans to raise up to $80 million in its IPO, which would value the firm at up to $568 million. Shack Shack ignites grills at 61 restaurants globally each day that have the feel of an upscale local bar.
Must Read: 3 Reasons Why Chipotle Will Have Trouble Repeating Its Success in 2015
In August of 2014, Buffalo Wild Wings (BWLD) announced a majority investment in Rusty Taco, which owns and operates nine restaurants in Denver, Minneapolis and Dallas. Rusty Taco, known as a fast-casual restaurant, specializes in street-style tacos made fresh and from scratch. The undisclosed amount invested in Rusty Taco by Buffalo Wild Wings followed it taking a minority stake in PizzaRev, an artisanal fast casual pizza concept where people build their own pies. There are 23 existing PizzaRev's now in operation in California, Minnesota, Utah and Texas. Another 10 are listed as coming soon on the PizzaRev website, including in new markets Missouri, Nebraska and South Dakota.
Seven restaurant companies have gone public from 2013 and 2014, averaging first-day increases in their stock prices of 68.9% according to Restaurant News. Five of those seven restaurant operators debuted on the market in 2014, raising a combined $486 million, per Reuters data.Dig Inn's most recent location in New York City is its first to serve beer and wine on tap in partnership with local businesses, in addition to an affordably priced menu, 70% of which is vegetables. The alcohol focus stands to put the upstart into direct competition with beer and appetizer slingers kings Applebee's, Buffalo Wild Wings, TGI Friday's, and Chili's, which is owned by Ignite Restaurant Group ( IRG) , as Dig Inn expands into suburban markets.
The business models of Dig Inn and other newcomers to the fast-casual space are similar to juggernaut Chipotle, which boasts over 1,700 company-owned locations globally and has its sights set on opening close to 200 new spots in 2015.
For instance, Dig Inn and PizzaRev send hungry customers down an assembly line, allowing them to build their meals consisting of locally sourced ingredients in much the same fashion as Chipotle. Like Chipotle, Dig Inn is keen on owning all its restaurants instead of franchising in order to maintain a workplace culture that it feels is integral to its past and future success.
Must Read: Whole Foods CEO: Why We Aren't Afraid of Competitors in 2015
"We are devoting considerable effort to how we maintain the culture that we have, a small scrappy startup perspective, a group willing to roll up our sleeves and get things done," said Eskin. Those words echo those offered by Chipotle co-CEO Monty Moran last summer. "We think that the people culture and food culture, as well as the unit economic model, are what yields the extraordinary success that we've had, and are keys to any concept going forward," stressed Moran in an Aug. 27 interview with TheStreet.
Not surprisingly, Eskin said he was skeptical of efforts by McDonald's to turn around its struggling U.S. business with renewed marketing efforts emphasizing health, as well as a build-your-own-burger platform. "I would question the viability of a company like McDonald's sort of repositioning itself in an authentic way from a brand perspective."