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Hot Plates

A few months ago, on the heels of Shake Shack’s IPO, we took a look at the quietly cooking-with-gas restaurant sector.

“Since 2012, 12 debuts from the space have raised a total of $1.3B in proceeds, with an average capital raise of $106.8M. Restaurant premieres have widely outperformed the broader IPO market over this timeframe, with the average debut returning 53.9% on its first day of trade, as compared to 15.3% across all IPOs during this period. Furthermore, none of the 12 restaurant IPOs to price since 2012 have ended their opening sessions in the red.”

Just last month, Southern fried-chicken chain Bojangles kept the momentum going and tomorrow night, a bird of a different (fried) feather is looking to keep things cooking. Popular fast casual restaurant chain Wingstop is slated to price an upsized, $98.6M IPO on the NASDAQ Thursday evening, with hopes of riding on the coattails of other recent high-performing restaurant IPOs. The chain is seeking to price its shares in a range of $16 to $18 per share, up from its initially-filed range of $12 to $14 per share.

Wingspot would join Bojangles, Shake Shack – which had the fourth-highest first-day pop of the past twelve months and posted an offer to current percent change of 264.8% – as 2015’s third restaurant IPO and the sixth since last June (including burger chain The Habit, which landed in November with a 119.7% opening day return, the third-highest opening day pop.) Adding to the restaurant sector’s feast is the Brazilian Steakhouse chain Fogo de Chao, which is expected to price its $75.0M IPO next week.

This ongoing trend can be traced all the way back to 2003, when Buffalo Wild Wings debuted. The wing chain saw a decent 35% boost on opening day but what’s truly impressive is the explosion in value the wing chain has experienced in the decade-plus since its debut, adding an astonishing 1,689.5% to its stock price. That’s a lot of chicken!

You probably need something to wash all those wings down, which brings us to another notable recent IPO. Canada-domiciled tea producer and retailer DavidsTea debuted last week and jumped more than 42% in its opening session, the third-highest first-day pop for a Canadian IPO in the U.S. DavidsTea marks the year’s second Canadian IPO, after Shopify, the first-ever Canadian e-commerce company to land on U.S. exchanges.

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