PREDUZEĆE ZA TRGOVINU I USLUGE CIG DOO BEOGRAD

Rating Action and Rationale

• EthiFinance Ratings initiates the long-term rating of CIG D.O.O BEOGRAD, assigning a B+ rating with a Stable outlook. EthiFinance Ratings also initiates the rating of the upcoming CIG €2m bond, assigning a BB- rating.
• CIG is a 100% privately-held Serbian group specializing in restaurant management and mobile food services. The company operates a diverse portfolio of seven distinct brands across eleven locations, with nine of them in the Belgrade metropolitan area.
• This rating is mainly supported by: (i) a stable competitive position supported by the group´s vertical integration, which is uncommon among Serbian operators and provides cost and quality benefits; (ii) demonstrated margin expansion and structural profitability improvement, with adjusted EBITDA rising from €1.7m in 2023 to €2.6m in 2024 (+57.3%) and €2.9m in 2025 (+11.1%) and the adjusted EBITDA margin from 11.3% in 2023 to 17.4% over the same period; (iii) a multi-brand portfolio architecture spanning seven differentiated concepts (Monument, Just Burger, M Café, Monument Nutritive, Monument at Ruški Car, Liga Pub, and Nacionalna Klasa) across eleven locations, allowing multiple formats to coexist within the same location without material cannibalization and while capturing several consumer profiles; iv) a sector with high margins, solid barriers to entry and market growth prospects, that help to mitigate the inherent volatility and seasonality of the segment and support Belgrade´s hospitality sector in the long-term; (v) the planned corporate bond issue, which will lengthen the Group's debt-maturity profile, increase the share of fixed-rate funding, refinance outstanding short-term bank debt and finance three identified expansion projects (the new 500 m² Monument flagship on Admirala Geprata street, the Nacionalna Klasa event centre at Ušće, and the acquisition of operating units within Belgrade shopping centres).
• On the other hand, the rating is constrained by: (i) limited scale and a single-city footprint, with FY25 consolidated turnover generated almost entirely within the Belgrade metropolitan area, leaving the Group fully exposed to Belgrade-specific demand, regulatory or competitive shocks; (ii) elevated adjusted leverage, with Adjusted NFD/EBITDA rising from 2.5x in 2023 to 4.4x in 2025 following the capitalization of leases, customer advances and overdue payables; (iii) a weak capitalization profile, with adjusted equity diluted by an EthiFinance-driven a 75% impairment on VG Ranch PPE, a 100% impairment on VG Ranch biological assets, and the removal of the non-controlling interest in VG Ranch, resulting in an Equity/TFD ratio averaging only 5,5% over 2024-2025; (iv) an ownership and governance concentration, with 100% of share capital held by Mr Vladimir Gajić with the Group's core brands ("Monument", "Nacionalna Klasa" and "Liga Pub") owned personally by the founder rather than by CIG itself, creating structural dependence on continued licensing, key-person risk and limited visibility on the shareholder's separate equity-injection capacity in stress.
• The Stable outlook reflects our expectation that CIG will execute its bond-financed expansion plan while preserving its track record of profitability and maintaining leverage at levels consistent with the current rating category. We forecast the leverage ratio to remain stable around 4.2x through 2028 as new venues mature and EBITDA expands. We also expect organic top-line growth in the 4-6% range, in line with management’s trajectory and consistent with the favorable macroeconomic and sectoral tailwinds in Serbia and the Belgrade hospitality market.
• Under our methodology, the company operates in the Hotels, Restaurants & Leisure sector, specifically in the Restaurants sector. Regarding ESG-related risks, we believe this sector carries medium-to-low ESG risks under our methodology (sector heatmap score between 2 and 3). This results in a sector assessment which is not impacted by industry-related considerations. At a company level, based on available ESG data provided by the company for the 2025, we assess the company´s ESG profile as neutral (ESG score between 1.5 and 3.5). This results in an overall ESG assessment that is impacted by the industry-related negative adjustment to the business risk profile.
• The recovery of the contemplated €2m secured bond is superior, backed by a collateral package comprising the land and building in Admirala Geprata in Belgrade, and two apartments in Kopaonik and Jahorina, with a total appraised value of €2m. This translates into a positive recovery assessment with one-notch impact on the instrument rating, resulting in a BB- rating for the bond.

Company Description

CIG d.o.o. Beograd was founded in 1995 and is fully owned by its founder, Mr Vladimir Gajić. The Group´s commercial activity is concentrated in the city of Belgrade, Serbia, with selective expansion into other parts of the country. The company is the parent of the Monument Group, a Serbian urban-hospitality platform that operates eleven restaurant locations under seven brand concepts targeting different price points and cuisines. The Group also fully owns Nacionalna Klasa d.o.o. (which runs the Group’s traditional Serbian-cuisine restaurants in Belgrade-Ušće, Kopaonik and Niš) and holds 50% of the dormant VG Ranch d.o.o. (registered for grape-wine production). 

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Ownwership structure CIG doo

Source: Serbian Business Register Agency

• CIG d.o.o: operator of the Monument-branded restaurant network, which is the Group´s flagship concept and principal revenue contributor (approximately 80% of consolidated turnover in FY25). The Monument brand, launched in the early 2000s, positions itself as a mid-market urban casual-dining concept based on Mediterranean cuisine. Around this anchor, CIG has developed five further sub lines:
  • Just Burger: A fast-casual gourmet-burger concept.
  • M Café: A coffee-and-patisserie format located at Belgrade Nikola Tesla Airport.
  • Monument Nutritive: A healthier sub-line.
  • Monument at Ruski Car: A destination flagship located inside the historic Ruski Car building in central Belgrade.
  • Liga Pub: A sports-and-music pub format operating at Big Fashion shopping centre and on Obilićev Venac. 

• Nacionalna Klasa d.o.o: established in 2016 and 100% owned by CIG, is the Group's traditional-Serbian-cuisine arm and accounted for approximately 20% of consolidated turnover in 2025. The brand was created to complement the Monument concept. Operationally, Nacionalna Klasa runs at a structurally higher gross margin than the Monument brands (71.3% against 62.8% for the parent) but with a lower reported EBITDA margin once it accounts for the heavier related costs (music, marketing and event-related production costs).
• VG Ranch d.o.o: Non-operational entity with no activity since it was established in 2022. Registered in Irig (Vojvodina region), was conceived as the Group's wine-production project. CIG holds a 50% interest in the entity, which was intended to develop a vineyard and wine production capability that would supply the Group's restaurants with a proprietary house-wine offering. 

In FY25 the Group reported consolidated revenues of €16.8m (+5.7% YoY), and an Adjusted EBITDA of €2.9m (17.4% margin). The EthiFinance Ratings net adjusted leverage ratio (Adjusted Net Financial Debt / Adjusted EBITDA) stood at 4.4x year-end (vs 4.3 in FY24). The interest coverage ratio closed the year at 5.7x (vs 6.5x in FY24).

Fundamentals

Business Risk Profile

Industry Risk Assessment

• Industry backed by positive economic outlook, supported by economic tailwinds and EXPO 2027 momentum, with a favorable impact in Serbia´s hospitality.

The Serbian restaurant industry is currently benefiting from a favorable macroeconomic outlook. Real GDP grew by 2% in 2025, and 3.9% in 2024, one of the strongest rates in Europe, placing the economy 18% above its pre-pandemic level, with multilateral institutions as IMF, World Bank, EBRD and NBS converging on projections of 3.5-4.5% growth in 2026-2027, with the upper end of that range expected in 2027 in connection with EXPO 2027 in Belgrade. The composition of growth is particularly supportive for discretionary consumption sectors: domestic demand and household consumption are the principal drivers, real wages grew 8.5% year-on-year in January 2026, employment reached 50.5% with unemployment at 8.9%, and inflation has decelerated within the National Bank's target band to 2.7%. These tailwinds are reinforced by record FDI inflows of €3.2 billion in 2024 and by a strong tourism recovery in the Belgrade region, where arrivals reached 1.8 million in 2025 (+18.6% YoY, of which 1.6 million foreign), supporting both leisure and business travel demand.

• High margins, solid barriers to entry and market growth prospects mitigate the inherent volatility and seasonality of the segment and support Belgrade´s hospitality sector in the long-term.

The hospitality sector in Serbia, particularly within the Belgrade region, is characterized by robust growth and resilience, evidenced by a real turnover increase of 10% in 2025 and further supported by the positive macroeconomic projections mentioned before. Profitability within the industry remains strong for established players, as demonstrated by the steady improvement of consolidated gross margins which reached nearly 65% for top-tier groups by 2025, reflecting significant pricing power and efficient cost management despite broader inflationary pressures. While the sector faces inherent volatility from seasonal demand fluctuations and sensitivity to energy and food price shifts, leading companies have mitigated these risks through strategic brand diversification and proactive price adjustments. Significant barriers to entry exist in the form of high capital requirements for prime real estate (albeit partly mitigated by the use of leases), the necessity for strong brand reputation to maintain customer loyalty, and the complex logistical needs of vertically integrated operations. Overall, growth prospects remain highly favorable, driven by a substantial rise in tourism within key urban hubs and projected sector-wide revenue expansions of approximately 5% annually through 2031.

• Sector with medium to low ESG risks, with no impact on the final score.

The Hotels, Restaurants & Leisure sector has medium to low ESG risks under our methodology (sector heatmap score between 2 and 3). This results in a sector assessment which is not impacted by industry-related considerations. Regarding environmental factors, the sector has a medium impact on climate, mainly linked to scope 3 emissions generated by travel or construction of large infrastructures. Resources can have a limited impact on financials as scarcity in local areas can affect companies (eg water). The impact on pollution is also limited, except for the cruise and hotels industries where waste issues exist. However, the sector can have a negative impact on consumers linked to malpractices such as overbooking, poor quality of service, noise, etc. Regarding communities, tourism can be an important source of revenues and local communities can benefit from this industry.

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Competitive Positioning

• Vertical integration and a diverse brand portfolio provide notable operational strengths. Despite its limited scale, these factors, combined with prime locations, sustain a respectable competitive standing within the market.

CIG d.o.o. has built three genuine and reinforcing sources of competitive advantage that distinguish it within the Belgrade hospitality market, although these strengths remain constrained by its limited scale and local footprint.

The first and most operationally significant is vertical integration. CIG has run its own bakery and confectionery for approximately twenty years and more recently established an in-house butchery dedicated exclusively to supplying its Monument-branded restaurants. The integration is staffed by qualified professionals and supplies meat, bread, pastries and ice cream centrally to the network. This configuration is uncommon among Serbian operators of comparable scale, where most independent restaurants rely entirely on third-party suppliers. This vertical integration provides three concrete benefits: i) cost control through the elimination of supplier margins on the highest volume categories; ii) ingredient consistency across the multi-location network and; iii) quality assurance that supports the brand's positioning. This structural advantage led an improvement in gross margin from 59.5% in 2021 to 65.8% in 2025. Replicating this capability would require significant capital investment, creating a meaningful barrier for new entrants and smaller operators.

The second is the Group's multi-brand architecture, which has been deliberately constructed to allow several formats to coexist within the same area without significant cannibalization. 

This breadth of formats is rare among Belgrade restaurant groups and provides a degree of business diversification: it captures multiple consumer profiles within a single mall or neighborhood, provides natural hedging against shifts in consumer taste, and creates negotiating leverage with shopping center landlords who can be offered multiple complementary tenants from the same operator.

The third source of competitive advantage is the prime location footprint, reflecting its footprint across key commercial areas in Belgrade. CIG has secured presence in essentially every premium venue for a mid-market casual-dining operator: the four leading shopping centers, the only one international airport (Nikola Tesla via the M Café brand), the historic city center and the central pedestrian street network. New entrants attempting to replicate this footprint would face the absence of available premium space.

Benchmarked against four Belgrade-based competitor groups, CIG presents the profile of a profitable and more conservatively financed mid-market operator that compares favorably across some quantitative dimensions. The principal qualitative gap to emerge from the comparison is the absence of a true premium segment within CIG's portfolio of the kind operated by competitors such as Tri Šešira (founded 1864 in Skadarlija) within the Eureka Bar group and Ambar Belgrade (whose Washington DC sister holds Michelin recognition) within the Squadra cluster, leaving the highest-margin tier of the Belgrade dining market outside of the Group's portfolio.

Competitor I (Eureka bar dooo + UPD Stari Grad ad): The Eureka Bar group, founded in 2011, is the operator of the well-known "Boutique" restaurant brand in central Belgrade. The group also provides full-service catering for private celebrations and operates Boutique Academy, a training program for bartenders, waiters and chefs. 

Competitor II (Smokvica doo): Smokvica, founded in 2010, operates five restaurant locations across Belgrade. The group has extended its offering vertically by providing bed-and-breakfast accommodation in two of its locations and horizontally by offering catering services with a wide range of food and drinks, together with event hosting at its Smokvica Airport City and Smokvica Ada locations. 

Competitor III (Squadra group doo + Tres montana dooo + Good mood doo + Balkan Concept doo): The Squadra cluster operates three differentiated concepts that together represent the most internationally connected operator in the peer set: i) TORO Latin GastroBar is a creative blend of Pan-Latin styles and flavours; ii) Ambar Belgrade, operates a modern Balkan-cuisine concept and; iii) Burrito Madre is a 15-location Mexican fast-food chain across prime Belgrade locations.

Competitor IV (Kapitalac doo + Pizzagram doo + Royal restorani doo + Azimen doo + Krimar doo + Wine Time doo): The Kapitalac cluster, operates the broadest portfolio in the peer set across five distinct concepts: i) Lovac is a hunting-themed traditional Serbian restaurant; ii) Sakura is an Asian-fusion restaurant in the prime Beton Hala location; iii) Lavash is a Balkan concept blending oriental dishes with ethno music; iv) Cantina de Frida, operates a Mexican-Mediterranean fusion concept and; v)Pizzagram is a modern Roman-style pizza.

• High concentration risk from a significant dependency on a limited number of key suppliers and onerous switching costs associated with supplier transitions. Geographic diversification is limited, with a heavy revenue concentration within the Belgrade metropolitan area.

Supplier diversification is supported by long running relationships with multiple Serbian and international vendors, complemented by in-house production of meat, bakery and confectionery items that reduces external supplier dependence on the highest volume categories. 

The CIG doo Group faces a significant concentration of risk in its beverage-industry relationships, characterised by a single counterparty that operates simultaneously as a major supplier and as the largest revenue-paying client of the Nacionalna Klasa subsidiary. Coca-Cola HBC supplies the Group with soft drinks, juices, mineral water and coffee, while at the same time paying CIG in advance for in-restaurant marketing services, exclusivity rights and product-placement activity across the eleven Monument Group locations. This second leg of the relationship is what generates the €949k of received advances on the balance sheet at end-2025, representing cash already received against future period service-delivery obligations that CIG must continue to perform.

This dual role creates concentrated exposure on both sides. A deterioration of the supplier leg would require CIG to find alternative beverage suppliers, which is feasible but operationally disruptive. A deterioration of the client leg would remove a meaningful and high-quality recurring revenue stream and could trigger contractual exit costs, a risk that is not hypothetical, given that the Group's 2024 switch from the Atlantic-Barcaffe arrangement to the broader Coca-Cola HBC marketing partnership triggered a €160k contractual penalty payable by CIG. The Group is therefore both financially leveraged to its primary beverage partner through the advanced balance and structurally restricted in its ability to renegotiate or replace the relationship without incurring real capital outflows.

Geographic diversification is weak, with the majority share of consolidated revenue generated within the Belgrade metropolitan area, with the Niš and Kopaonik locations of Nacionalna Klasa contributing only modestly. The Group exited