Update on Recent Fast Casual IPOs and Outlook on Fast Casual IPO Pipeline

On Friday 6/5/15, DTEA (DavidsTea) conducted an IPO, selling 5.1 mm shares for $19/share to raise $97 mm. On the first day of trading, DTEA jumped 42%, and about 7.5% on the second day of trading. DTEA will likely perform well in the public market, and so far it is showing strength.

The fast casual restaurant sector as a whole has been extremely hot over the past 2 years, and the investor enthusiasm surrounding these securities arguably began on the day of Noodles & Company’s IPO on June 28, 2013 when it skyrocketed 104% on its first day of trading. Here is a list of companies in the fast casual restaurant sector to have gone public since NDLS with their first day performances and performances since their IPOs, respectively:

  • PBPB – 119.8% – 1%
  • ZOES – 65% – 150%
  • LOCO – 60% – 38.5%
  • PLAY – 8% – 108%
  • HABT – 119.7%- 90%
  • SHAK – 118.6% – 266.6%
  • BOJA – 25% – 30.6%
  • DTEA – 42.1% – 51.6%

It can be seen that most of these IPOs performed well on the first day of trading, and even in the aftermarket they are still well above their IPO prices (with the exception of PBPB). The strong performances of these IPOs bodes well for the imminent Wingstop (WING) IPO this Friday, which is set to raise $75.4 mm. WING is similar to BWLD, which is up 1,234% since it November 2003 IPO, and WING is roughly the same size right now as BWLD was in 2003.

Private fast casual companies in the IPO pipeline include:

  • Smashburger
  • Jimmy John’s
  • Firehouse Subs
  • Five Guys
  • Cafe Rio (owned by KarpReilly, the same PE firm that spun-off HABT)
  • Whataburger
  • Jersey Mike’s
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