Good Monday morning, one and all. Yes, it's another morning edition of the SmallCap Network newsletter, because sending it this afternoon just might be too late. The urgency is to introduce, or reintroduce, a small cap stock most of you may remember from about a year ago. It was a neat story then, but a couple of developments, new hires, and more progress in the meantime have made this stock worth revisiting now. Just to set the stage just a little.... Although it's often billed as a tough industry to make a buck in, restaurant startups aren't a lost cause. Many new eateries fail simply because (1) the location is wrong, (2) the menu is unappealing, (3) the concept is lacking, or (4) some combination of all three. If you can get those relatively simple things right, the odds of success in the restaurant business skyrocket. Well ladies and gents, there's a great restaurant concept that's grown quite nicely where it's established roots. Now with the process and product refined to perfection and a couple more proven industry experts on board, we suspect some major, rapid expansion is right around the corner. It's called Giggles N Hugs (GIGL), and this thing is nothing short of brilliant. What is Giggles N Hugs? The closest comparison is Chuck E. Cheese, though I'll confess the comparison makes me cringe because it paints the wrong picture of what Giggles N Hugs is. It's far more accurate to say Giggles N Hugs is what Chuck E. Cheese should have tried to become. Simply put, Giggles N Hugs is aiming for the 10-and-under market, but it fully understands in order to draw a crowd, it has to appeal to what parents want.... for themselves, and for their kids. This means a healthier menu, free wi-fi, and yes, even alcohol [the company imposes a two-drink maximum]. The menu includes gourmet salads, veggie wraps, and smoothies, while also offering indoor jungle gyms, puppet shows, and story-telling time. The restaurants also offer activities like magic shows, face painting, puppet shows, and more. The company even offers a dropoff service for parents who need a few hours alone to get some shopping done. The centerpiece of its success, though, is the healthy menu. Parents are more concerned than ever about making sure their kids eat good food, and that's exactly what Giggles N Hugs provides. Kids love it too, and they don't even realize they're eating healthy. As of right now, there are three Giggles N Hugs locations. All of them are at major malls in the Los Angeles area. And, all three have been smashing successes. Last year, Giggles N Hugs as a company generated $3.3 million in revenue, up 48% from 2013's top line. That growth has continued right through the first half of 2015 too. Over the course of the first two quarters of this year, sales of $1.75 million are running 6% ahead of last year's levels. The current market cap of only $6.6 million is nothing less than an outright bargain compared to those revenue levels. Fueling this growth - and evidence of just how hot these locales are - one only has to look at who loves to visit them and then spread the word about them. Arnold Shwarzenegger, Sandra Bullock, Heidi Klum, Halle Berry, Jack Black, Dustin Hoffman, Marisa Tomei, Adam Sandler, Dennis Quaid, Molly Ringwald, and Scott Baio are just a few of the dozens of high-profile folks who have been spotted at a Giggles N Hugs. It's the kind of publicity no amount of money could ever buy. The restaurants have also gotten the attention of kids' television network Nickelodeon. Nickelodeon, in fact, has named Giggles N Hugs the #1 birthday party place in Los Angeles. As compelling as the publicity-driven growth has been, we're even more impressed by the fact that at the same time the company has been growing the top line, it's also been lowering costs. In the first quarter it cut its operating costs by nearly 7% (which is huge for the restaurant business) and also managed to whittle down its long-term liabilities by almost 4%. This is where it gets interesting. Truth be told, when we last had GIGL on our list of Featured Stocks we were more focused on top line growth. In retrospect, we should have been looking for operational profits as well. Why? Because unlike so many small cap companies and so many other restaurants, Giggles N Hugs has 'em. In the last two quarters of last year and the first quarter of this year, the company was operationally profitable, while Q2 of this year was quite close. As the company continues to increase scale and discover where it can cut more expenses, we suspect operational profits will become the norm. Then again, we can't say we're entirely surprised. You may recall from last year how the payback on the investment of roughly $775,000 for new Giggles N Hugs restaurants usually happens right after the beginning of the third year. After that, margins can exceed 15%. This isn't just great by restaurant standards - it's great for any new business in any industry. Well, now the company's three restaurants are between two and five years old. Sure enough, earnings are starting to materialize. So, we have a proven concept, malls rolling out the red carpet to win the company as a tenant, a ton of celebrities helping promote the company, and a menu parents can feel good about. These are all encouraging enough on their own, but together they become a force to be reckoned with. Now what? Well, we had to tell you everything above so what we're getting ready to say made perfect sense. Based on what we know thus far, we have every reason to believe Giggles N Hugs is on the verge of entering a major expansion effort, and that growth could prove very beneficial for the stock. There are two key reasons we're inclined to expect big-time expansion soon. The first reason is, the company has said so. In some of its investor presentations recently made available, Giggles N Hugs says it's aiming to open nine more company-owned sites by the end of 2017. The time is certainly right for that growth. As you can tell from what was said above, Giggles N Hugs' management has clearly figured out and refined the store-building, marketing, and operational processes. Now it's time to replicate them elsewhere. It's also worth noting the company is open to franchising the concept to third parties as a means of growing its revenue base. The second reason I've got a sneaking suspicion the organization is on the verge of a major growth push is a couple of people they recently hired. Ever heard of California Pizza Kitchen? Those of you who know the California Pizza Kitchen story will also know the eatery has grown from one unit back in 1985 to more than 230 locations now, and generates estimated annual revenue north of $500 million thanks to its frozen-pizza licensing deal. A guy named Philip Gay was around for a big part of that growth, with his expertise (he's the former CFO of California Pizza Kitchen and Wolfgang Puck Food Company) helping to make California Pizza Kitchen the huge success it is today. Gay didn't do it alone, of course. There were a bunch of brilliant people working -- and leading -- California Pizza Kitchen over the past three decades, making it what it is now. One of those people was John Kaufman, the former Vice President of Operations for California Pizza Kitchen. Kaufman actually joined the California Pizza Kitchen team back in 1986 when there was still only one restaurant, and he was there for the first nine years of its initial growth. By the time he left in the mid-90's it had opened another 64 units. In fact, one could arguably say John Kaufman put the company on the growth trajectory that's helped make it such a popular chain today. He really is an all-star within the restaurant world. Care to guess where John Kaufman and Philip Gay are working now? Incredibly enough, it's Giggles N Hugs. Kaufman is now the President, and Gay is the CFO. Given both their backgrounds, it's difficult to think something significant isn't in the hopper... something that could be very exciting for the stock. I also love the fact that you can get into the stock right now just coming off of a fairly major low. As we always say, the time to step into a stock you like isn't when it's racing higher. There's more money to be made by getting in when nobody else is really thinking about it. The usual caveats apply of course. That is, never invest more in a speculative small cap than you can afford to lose, and make sure to do any further digging you need to do in order to get a good grip on the risk-versus-reward scenario. And, if you're going to get in, we suggest you use an intelligent entry limit and a stop-loss to protect yourself. You guys and gals should have a pretty good handle on the opportunity though, and there's no way of denying the marketability of the restaurants' concept. Well, you can own a sizeable stake in the concept for not a big investment. Like we said, a $6.6 million market cap is nothing for a company that could be generating more than that same amount of annual revenue in the foreseeable future. The fact that GIGL has a couple of restaurant-expansion veterans on hand just sweetens the treat, so to speak, as it points to big-time growth soon.