General Assembly Provides Corporate Update And Preliminary Fourth Quarter 2021 Revenue

General Assembly Holdings Ltd. has provided a corporate update to investors. GA Pizza will host a webinar to discuss the company's 2022 outlook on Feb. 15, 2022. Details are provided below.

"The culture of GA Pizza has always been about innovation and expansion," said Ali Khan Lalani, founder and chief executive officer of GA Pizza. "We expanded from operating a fast-casual restaurant to launching the world's first direct-to-consumer pizza subscription service. That successful model helped us evolve into the omnichannel CPG [consumer packaged good] brand we are today. Despite pandemic-related challenges, based on preliminary results, during the fourth quarter we generated total revenue of $1,075,581, a 49-per-cent increase versus the same period last year, with the wholesale business showing an increase of 103 per cent year-over-year.

"With the early success of our premium, naturally leavened frozen pizzas in the wholesale grocery channel and recognizing the potential to recraft the frozen pizza category, we wanted to share with investors the growth opportunities that we expect for the coming year."

Retail: The clear path for growth

GA Pizza is currently available in over 100 stores, mostly in and around the Greater Toronto Area. The majority are specialty stores, with the remainder in the food, drug and mass (FDM) category. Early indications at FDM retailers are strong, with velocities in line with frozen aisle averages, despite the company's limited brand awareness in retail.

In the months ahead, GA Pizza expects to announce several retail partnerships with major FDM banners, with GA Pizza products listed for both in-store shopping and retailer-branded direct-to-consumer (DTC) delivery. This will further the company's efforts to expand across Canada in 2022. To help investors better understand GA Pizza's progress to date and longer-term opportunities, the company is introducing a new formal reporting measure.

Retail doors: During the fourth quarter of 2021, the company successfully increased the size of its retail footprint by 27 per cent, from 98 total doors at the end of Q2 2021 to 124 at the end of Q3 2021. By the end of 2022, the company expects its frozen pizzas to be available in over 400 stores.

Production: Innovation-driven capacity to scale

In September, 2021, GA Pizza opened a new bespoke, purpose-built master production facility called Marycroft in Vaughan, Ont., which now supplies its retail and DTC channels. Currently, the Marycroft facility produces up to 100,000 pizzas per month, with approximately 150,000 per month expected by the end of Q2 2022 and 200,000 per month by the end of 2022. Within its current footprint, the Maycroft facility has the space to increase capacity over time to supply the growing demand for the company's premium frozen pizzas in retail. Over the coming quarters, GA Pizza expects to continue to update investors on its progress toward its production goals and is introducing one new metric to watch:

  • Billed-to-baked ratio: During Q3 2021, the company sold 136,000 pizzas versus total production in the quarter of 120,000 pizzas, representing a billed-to-baked ratio of 113 per cent, with better-than-expected sales being filled from prebuilt inventory. This ratio is expected to fluctuate in the upcoming quarters based on the new retail relationships introduced in a given period, as these typically bring large initial orders. This ratio should stabilize as the business grows in scale at retail.

The current cost to manufacture pizzas at the Marycroft facility remains high due to the company being at the early stages of its revenue growth plan. The company expects the cost per unit to produce pizzas to decrease as the Marycroft facility increases output and optimizes processes, allowing for more aggressive retail pricing without sacrificing margins.

GA Pizza also has a good manufacturing practice (GMP) audit scheduled for the Marycroft facility in Q2 2022. The company is also pursuing a global food safety inspection (GFSI) audit, a benchmark required to meet U.S. Food and Drug Administration (FDA) standards and that many large multinational retailers mandate. The company expects the successful completion of these important regulatory steps will open a new tier of retail doors for the company in the future.

DTC: The key to product discovery and brand building

GA Pizza started with a first-of-its-kind pizza subscription model but has since introduced both one-time purchase and gifting options. Demand remains strong for the DTC offering, driven by the expansion of markets served in Ontario and the addition of British Columbia's Lower Mainland. GA Pizza's convenient e-commerce platform (backed by a user-friendly website) and strategic marketing efforts make the consumer play a significant role in the DTC channel for the company, serving as an essential tool for product discovery and brand building. As the company's distribution model has evolved, so has its go-to-market strategy within the DTC business, with the focus now turning to cost-effective customer acquisitions. This should lead to more profitable growth over the coming quarters.

Other opportunities identified for growth and margin expansion:

  • Restaurant: The company continues to innovate at its flagship restaurant to diversify revenue streams, amid continuing pandemic restrictions. This includes more efficient takeout and delivery service and incremental revenue opportunities (such as a new general store shopping experience). The company is also exploring potential opportunities to grow the GA Pizza footprint in a strategic and sustainable manner. The company should have more to share on this in the second half of 2022;

  • Product innovation: The company was built on its chef's innovation, which continues as its research and development team explores new product opportunities. The company is developing a plant-based pepperoni and updating its plant-based margarita frozen pizza, and workshopping dough- and sauce-specific stock-keeping units (SKUs);

  • Brand partnerships: GA Pizza is exploring high-level brand partnerships, including the possible development of co-branded products;

  • Leadership: GA Pizza has been strategically bolstering its leadership ranks, adding four key executive positions earlier this year;

  • Margins: The company has secured a permit for a Canadian Dairy Commission rebate, which should positively impact on restaurant margins. Additionally, as the business scales in the wholesale channel and the incremental cost per pizza decreases, gross margins are expected to increase accordingly.

Preliminary fourth quarter revenue:

  • Achieved fourth quarter revenues in 2021 of $1,075,000, a 49-per-cent increase compared with the fourth quarter of 2020, but down 17 per cent versus the third quarter of 2021. The decrease versus last quarter was due to the company refocusing its growth efforts toward wholesale, which is expected to generate meaningful growth in 2022;

  • DTC fourth quarter revenues in 2021 increased by 273 per cent to $617,000 year-over-year, but were down 25 per cent versus the third quarter of 2021, due to the company refocusing its efforts on the higher-margin wholesale channel;

  • Wholesale fourth quarter revenues in 2021 grew 103 per cent to $247,000 versus the fourth quarter of 2020, but were down 21 per cent versus the third quarter of 2021 as the company had benefited from a large initial inventory purchase in the prior quarter. This revenue line is expected to increase in the coming quarters as new large retailers come on-line;

  • Restaurant fourth quarter revenues in 2021 decreased by 51 per cent to $211,000 year-over-year, but showed an increase by 40 per cent versus the third quarter of 2021. Despite reopening its newly renovated flagship restaurant, the COVID-19 Omicron variant led to more restaurant closures, limiting restaurant revenue generation for the quarter.

"As we start taking advantage of the most high-potential opportunities before us -- including the rapid expansion of our retail footprint -- we're redefining how we measure success," said Mr. Lalani. "I am looking forward to sharing our progress through our new suite of strategic key performance indicators (KPIs) in the coming quarters."


GA Pizza founder and CEO Mr. Lalani will further discuss GA Pizza's commitment to innovation and share more on his outlook for 2022 in a webinar on Feb. 15, 2022. All potential and current investors are encouraged to attend.

What: GA Pizza: CEO outlook webinar

Who: Mr. Lalani, founder and CEO of GA Pizza

When: Tuesday, Feb. 15, 2022, at 12 p.m. EST

Register: On-line

About General Assembly Holdings Ltd.

GA Pizza began its life as a fast-casual pizza restaurant in the heart of Toronto. Four years later, it also offers a freezer-to-table consumer packaged goods line and a revolutionary direct-to-consumer e-commerce experience -- not to mention a pizza box with more than one pizza in it. The company's ambition? Make delicious pizzas available to everyone, everywhere. GA Pizza is always working to take pizza to new heights -- from showing the world that better pizza is possible, to finding new spaces and places to deliver unrivalled pizza experiences.