This has been a big year for a handful of restaurant chains, and not because of the impact of the pandemic or labor and supply chain shortages. For the first time since 2015, more than five restaurant companies have gone public in one year. Rumors have also circulated that California Pizza Kitchen and P.F. Chang's are considering IPOs.
While not all of the newly minted public companies have secured immediate financial success, investors have been particularly bullish on Dutch Bros, First Watch and Portillo's, which have secured stock prices above their initial offerings. Pre-pandemic, investors weren't too interested in restaurant IPOs, but with valuations increasing alongside diner demand for eating out, investor appetites have changed, according to Quartz. Low interest rates are also leading many private equity firms to go public and cash out.
Check out how this year's restaurant IPOs have performed.
Launch date: July 1
IPO price: $500 million
Performance so far: The company, which returned to the public markets after five years, ended up selling shares at $17 per share. This was far below its original estimate of $21 to $24 per share, which would have raised $640 million for a valuation of $4 billion. Instead, the company received a valuation of $2.7 billion. The company's stock price hasn't done much better since its IPO, falling to below $13 per share at the end of October before rising to $16 as of Dec. 20.
Investors started to change their minds after Krispy Kreme reported Q3 2021 revenue that beat its target by $5.13 million. Shares went up 4.8% following its earnings release in November. Krispy Kreme expects to finish its first year as a public company with net revenue of $1.34 billion to $1.38 billion, growing 19.4% to 23% year-over-year, according to its earnings release.
Among its achievements during the quarter, the company increased access to its doughnuts through its hub-and-spoke manufacturing and distribution model. Krispy Kreme grew its points of access to over 10,000 during the quarter, a 46% increase year-over-year. This was led by investments in the U.S. and Canada, where it increased its points of access by 75%, Krispy Kreme CEO Michael Tattersfield said during the company's November earnings call. Increasing access allows the company to provide more fresh doughnuts daily and unlock additional capital growth.
Launch date: Sept. 15
IPO price: $484.2 million
Performance so far: Ever since Dutch Bros raised its expected IPO share price to $23 per share compared to its expected range of $18 to $20 per share, its stock price has only gone up, reaching a high of $76 per share at the end of October, though it has since fallen to $47 a share, as of Dec. 20. By mid-October, the company had a market capitalization of $9 billion, higher than the combined capitalizations of Shake Shack, Jack in the Box and Dave & Buster's, according to Seeking Alpha. Analysts have been optimistic about the chain's small store footprints, lack of dining room space and beverage-only menu, which help create better store-level margins.
During the third quarter, Dutch Bros surpassed 500 shops with the opening of 33 new units, and the company expects to open another 30 locations during the fourth quarter, according to an earnings release. The company believes it has the potential to operate 4,000 locations across the country within the next 10 to 15 years, Dutch Bros CEO and President Joth Ricci said during a November earnings call, adding that it has reached less than 15% of its full brand penetration.
"Numbers have shown the brand translates well across regions and we look forward to our continued expansion," Ricci said. "In fact, our average unit volume in the most recent states we entered are well above our system average. And that is in spite of very little marketing in those markets."
Launch date: Oct. 3
IPO: $170 million
Performance so far: After the company's IPO price went live at $18 per share, stock prices rose to over $20 per share and have hovered around that price ever since. Analysts have remained positive on the full-service restaurant's focus on breakfast, which is the industry's largest growing daypart. The company also tends to have low staff turnover since its staff members only work daytime shifts.
First Watch's momentum continued into the third quarter, with the company reporting same-store sales growth of 46.2% compared to Q3 2020 and 19.7% compared to Q3 2019, according to the company's earnings release. Same-store traffic grew 40.1% compared to Q3 2020 and 4.8% compared to Q3 2019.
Launch date: Oct. 21
IPO price: $405 million
Performance so far: Portillo's starting stock price was $20 per share, but by the end of its first day as a public company, its stock price closed at $29. It has since largely traded up, reaching a high of $54 per share in mid-November and hovering around $30 during December.
The company's successful IPO has given it more financial flexibility and improved capital, Michael Osanloo, president and CEO of Portillo's, said in an earnings release. The company will use a two-pronged strategy to take advantage of white space opportunities across the U.S., focusing on expanding its core markets in the Midwest and then marketing major national markets, he said. The company's earning results will help support and possibly attract new operators. Its same-store sales increased 6.8% during Q3 2021 compared to the previous year’s quarter due to a 7.9% boost in average check, which was offset by traffic declines. Average check went up because of increases in menu prices, a mix of items sold and more items per order, CFO Michelle Hook said during an earnings call in November.
Date: Nov. 18
IPO price: $364 million
Performance so far: Prior to Sweetgreen going public, its profitability came into question. Its S-1 filing revealed that it's been running in the red since 2014, with losses reaching $141 million during the fiscal year ending Dec. 27, 2020. But in 2018, CEO Johanthan Neman had said on a podcast the company was profitable.This recent S-1 information could be critical in determining Sweetgreen's success as a public company. However, DoorDash debuted as a public company without showing a history of profitability and its stock price has largely trended upwards since it went public at the end of 2020.
This profitability issue didn't seem to deter investors on Sweetgreen's IPO day, with shares debuting at $28, higher than the company's original estimate of $23 to $25 per share price. Shares increased 76% on its first day of trading, closing at $49.50 per share. Following the quiet period of the company's stock, several analysts put forward buy ratings and an analyst at Goldman Sachs expects the chain to have a lot of opportunities for development. But one analyst at Hedgeye expects the company's stock performance to mediate within three to six months following the initial hype.