The fast-casual sphere has shown solid growth in consumer and investor demand. When Zoës Kitchen Inc. first graced the New York Stock Exchange last April with an initial public offering of $87.5 million, industry experts saw this strong entry as an indicator of financial shifts in the limited-service restaurant industry.
This prediction was further bolstered toward the end of 2014, when another fast casual made a stunning debut. Habit Restaurants LLC, the operator of Habit Burger, saw an initial offering of $100 million. And then the West Coast Mexican chicken chain El Pollo Loco priced 7.4 million shares and brought in $107 million.
John Gordon, principal with Pacific Management Consulting Group in San Diego, believes the public hunger for restaurant stock, especially fast casual, is unquestionable. New brands, he said, drive the marketplace by driving excitement. As more limited-service brands choose to meet investment demand with IPOs, there will be a greater temptation for smaller players to enter the market.
However, going public too soon will be more detrimental than not going public at all, he warned. He advised that an IPO must hover between $80 to $100 million in order to be viable. Read More