- Torchy's Tacos has reportedly hired Morgan Stanley and Bank of America Corp. for a proposed initial public offering, according to Bloomberg, which cited people with knowledge of the matter.
- The fast casual company, which has over 75 locations, could raise an estimated $300 million and have a valuation of $1 billion in a listing, according to Bloomberg. A Torchy's Tacos representative didn't respond to a request comment by press time.
- While the company hasn't yet made a final decision to go public and its plans could change, it could be one of just a handful of up-and-coming restaurant brands to go public within the last few years, including BurgerFi and Muscle Maker Grill.
Torchy's appears to be back on track following pandemic disruption, which initially led to 50% declines in sales and company furloughs, according to the Austin Business Journal. After securing a Paycheck Protection Program loan, the company was able to bring back 1,400 furloughed employees and hire 1,000 new staff members to support the chain's expansion plans. The pandemic also led the company to consider ghost kitchens and smaller units that would be 10% to 20% smaller, according to the publication.
An IPO could help Torchy's accelerate its growth strategy. In November, the company said it planned to expand into 10 states within the next four years, according to a press release. Last year, it opened 12 new restaurants in three states, and has two locations coming soon in Oklahoma and North Carolina, according to its website. Torchy's average unit volume is $3.8 million, which puts it above McDonald's 2019 AUVs of $2.9 million.
The fast casual chain also hasn't had trouble attracting capital, adding D1 Capital Partners, T. Rowe Price, Lone Pine Capital and XN to its list of investors in 2020. Its majority investor is General Atlantic, which initially invested in the company in 2017. This latest investment was worth about $400 million, according to Bloomberg.
If Torchy's went public, it would be the largest company to do so through a traditional IPO since Kura Sushi went public in 2019 and raised over $40 million during its IPO. Fat Brands raised $24 million during its 2017 IPO.
Correction: A previous version of this article misstated which restaurant company had the largest IPO in the last three years. Kura Sushi went public in 2019 and raised over $40 million during its IPO.