BBQGuys CEO on SPAC deal, grilling trends

Yahoo Finance's Brian Sozzi, Myles Udland, and Julie Hyman speak with BBQGuys CEO Russ Wheeler about the company's $963 million SPAC deal, outlook, and much more.

Video Transcript

MYLES UDLAND: All right, beautiful weekend incoming here in the New York City area. I will certainly be out with the new Weber Genesis, getting after it with some burgers and dogs. Joining us now to talk more about the grilling season and really just the-- you know, we could do puns on this all day, but we can't get around the hot grilling market right now. We're joined by BBQGuys CEO Russ Wheeler. Company set to go public via a SPAC combination with Velocity Acquisition Corp.

Russ, thanks so much for jumping on this morning. Congratulations on the deal. Let's just start with some of the financials here. We love to have SPACs on that are making money top and bottom line. Guys grew 70% in 2020. Talk a little bit about the trajectory of the business as we've gotten into 2021, where demand for outdoor living, as your company certainly knows, remains quite high.

RUSS WHEELER: Well, thanks, Myles, for having me. It's good to be here today. As you said, 2020 was a great year for us. We saw a lot of growth. And we had good strong demand heading into '21 as well. So we're seeing that the business continues to accelerate and that, you know, while there was a COVID bump, we certainly think that these tailwinds are here to stay.

BRIAN SOZZI: Russ, I was surfing around the internet. I can't seem to find a site that does and looks exactly what you do. Who do you think some of your competitors are?

RUSS WHEELER: Well, Brian, you make a very good point because we really are kind of unique in this specialty space. We're the category experts for everything you need for outdoor living. So that's the opportunity we have to really try to help the customer with whatever they're looking for. And we like to say we sell projects, not products. And so when you come into our ecosystem, we can help you from everything from upgrading your grill, like your Weber Genesis you were talking about, or we can do a complete online outdoor kitchen design and really solve it.

So when you look at companies like Home Depot, Wayfair, Lowe's, Amazon, they're all great companies. But we don't and we certainly don't try to beat them at what they're good at. We really try to stick to what we're good at that's really giving this solution.

MYLES UDLAND: Yeah, and Russ, I wanted to talk a little bit more about the relationship that you have with a couple of these other brands. Of course, we know that Weber and Traeger are both set to go public on their own. And there's been a lot of talk about their products, and just what your relationship is as a middle man of sorts. You guys have your own grills, but certainly you seem more than happy to play nice with everybody who's in the space right now.

RUSS WHEELER: Right, that's a great way of putting it. We certainly do play nice. They're great brand partners of ours. And they-- you know, Webers and Traeger are two of our best brands. We're thrilled about all the excitement around the category, you know, with Weber and Traeger both coming out. Same with us. So we just think that just puts more excitement around the category. There's a Weber right there.

JULIE HYMAN: Hey, Russ, it's Julie here. I want to ask about the history of the company a little bit because it's fascinating to me that this was a bricks and mortar retailer originally, down in Baton Rouge. And it's my-- you guys are online only pretty much now, right? You don't have stores anymore. And it seemed like you guys were sort of on the early wave of that kind of transition. What drove that?

RUSS WHEELER: Hi, Julie. Yep, so we started about 20 years ago in Baton Rouge as a brick and mortar barbecue store. And what we did is over the years, early in 2000, we launched our first website, and then our first own brand in 2013, which is Blaze, which is the higher end gas grill. So as we start-- as we continue to evolve, we still do have our showroom in Baton Rouge, so-- and the way we know that's really good is because when you look at our sales by state, Baton Rouge-- Louisiana always overpenetrates.

And we're going to be testing that in Atlanta as well. We're going to be opening a design center in Atlanta for our professional customers. When we say professional, we're talking about custom builders, remodelers, you know, interior designers, and architects. We're going to have a design center in Atlanta to go after that Atlanta professional market, similar to what we've done and continue to do in our Baton Rouge headquarters.

BRIAN SOZZI: Russ, coming into the segment, Julie voiced a potential concern around tong shortages. Are you seeing shortages in tongs, you name it, right now?

RUSS WHEELER: Not in accessories. There's certainly supply chain challenges, just like earlier with Whirlpool. And, you know, I know that brand from my old days at Build. The supply chain has been challenging, for sure. But we were fortunate, Q3 and Q4 of '20, we were very aggressive in our inventory, which allowed us to really roll into '21 in a good position. And February, March kind of got tight. You know, it was kind of the worst months.

But we're starting to see-- what do you call it-- the new normal for supply chain. Product is flowing through the supply chain. And, you know, [INAUDIBLE] prices are going up, and you were talking about that as well. Prices are going up, you know, with stainless steel and other things. But again, people are more interested in getting it quick, like you were talking about with your dishwasher, then paying 5% more for it. So we're not seeing it hurt the demand any. And we think it'll start to loosen up, you know, in '22 with all this additional capacity that's being built. And it will be coming on.

MYLES UDLAND: Yeah, Russ, I'll say I was quite lucky. I was in a mom and pop hardware store. They had a fully assembled Weber. They had, like, two. And I just took the one that was already assembled. Otherwise, I'd probably still be waiting for that.

I want to switch gears a little bit and talk about some news that came out right before the SPAC announcement. As a Giants fan, had to notice. Working with the Manning family, just want to talk a little bit about the work you guys are doing with them and how you think about pulling the levers on marketing now that you're going public, you've seen a lot of growth, and, you know, it's a growing category and how you think about ways that you can build your brand within that.

RUSS WHEELER: Well, first, we want to grow our brand profitably. So we've always been a really-- had really strong growth, but it's really strong profitable growth. So the partnership with the Mannings is really great. You know, they were investors in the company from the beginning. So they've been with us since we started this journey, you know, well over a year ago. And then we-- then they evolved into brand ambassadors. And they're just-- they really fit our brand well.

They're from Louisiana, from New Orleans. You know, we have deep Louisiana roots. And it's about family. Barbecue and outdoor living is about family, friends, and creating memories. And there just couldn't be a better partner than the Mannings. And Eli-- they're so genuine and authentic. What you see is really that. So as we start to do these brand building campaigns, we launched the one you just showed there, Born to Grill. That's got a lot of excitement around that.

And we just actually filmed our last commercial in New Orleans with the whole Manning family. So now Payton and Cooper are joining. We had Archie and Eli first. But we're going to have all the brothers and Archie in our next campaign that's being launched, heading into football season, which we're excited about the fall.

BRIAN SOZZI: Russ, help investors get to know you. You won-- that is likely to grill up a Beyond Meat burger or a tomahawk steak. And why are you in this industry?

RUSS WHEELER: Well, first of all, the industry's incredibly fun. You know, we have a fantastic team. You know, again, we built the business in Baton Rouge, Louisiana. And when we say we have these category experts that can help you, when we're training, we do something called PGT, which is Paid Grilling Time.

So when you're training, we're getting you out there on the grills. And our folks that are really the pit masters-- but I'm not a pit master-- they're teaching you how the grill. Like, what is this? What is a Weber gas grill? What does a Traeger pellet grill do? What is a Kamado Joe ceramic? So they're really getting educated so they can really help the customers where they're doing, but we have a lot of fun along the way.

And, you know, I like a little bit of everything. You know, we do have tomahawks. We actually launched our new consumables program. So we sell high end proteins, everything from tomahawks to fillets to what we're calling battle boxes. The battle box, I actually had one just come in that we're going to grill this weekend. It's, like, wagyu beef patties. It's steakhouse burgers and bison. So we're going-- we'll have a little cook-off with those this weekend.

MYLES UDLAND: Yeah, a little bit of a Mountain West feel for you guys as we head into this weekend. You know, Russ, I love my-- I got a great job. I sit here. I ask questions-- interesting people like you. I need to find how to get some paid grilling time into this thing because I--

RUSS WHEELER: Come down to Baton Rouge. We'll hook you up.

MYLES UDLAND: That's right. I am not doing enough to get the consumption going on this desk as well. All right, I'll leave it there. Russ Wheeler, CEO of BBQGuys. Russ, appreciate the time this morning. I know we'll be in touch as you guys go through your merger process.

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