Will Noodles Go Public This Year?


Plenty of good restaurant chains went public last year, but few of them were the high-growth concepts investors are drooling over and none were in the fast-casual sector that is leading restaurant industry growth. That will almost certainly change in 2013, and the most likely IPO will come from Noodles & Co.

Indeed, the Colorado-based chain is reportedly exploring a spring IPO, according to Financial Times and mergermarket.com. Of course, Noodles has toyed with the IPO route for years, having looked at one as far back as 2004. The company also looked at equities two years ago before ultimately selling to the private equity group Catterton Partners—a company that is no stranger to taking companies public. It recently took Bloomin’ Brands and Restoration Hardware public, for instance.

Regardless, there is considerable demand on the public markets for a fast casual chain, and the sense after this week’s ICR XChange investors’ conference was that at least one of them would go public this year, whether it’s Noodles or another concept.

The biggest reason is the wide gap in current sales performance between the predominantly fast casual concepts that dominated the “private day” of the conference and the public companies that made up the rest. Most of the public companies were fortunate to be able to predict any same-store sales growth this year at all.

The fast casual chains, meanwhile, were frequently reporting double-digit comp sales growth. Zoe’s Kitchen’s same-store sales have grown at least 11 percent a year in the past four years. Noodles’ sales growth is in the “high-mid single digits and it has had positive comps for 27 of 28 quarters. Smashburger’s same-store sales growth accelerated in the fourth quarter, when many other chains were facing a supposed sales “cliff” as they run into tough, weather-related comparisons. Wingstop, which didn’t present at the conference, said recently that its same-store sales last year rose 13.7 percent, including 15.8 percent in the fourth quarter. That is far outpacing the growth at Buffalo Wild Wings.

Some of these companies may not be able to ignore that gap for much longer. And those growth concepts that do could likely enjoy some strong demand from investors—consider Texas-based Chuy’s, the growth Mexican concept that is now trading 87 percent above its offering price.

In the past, restaurants were considered growth concepts if they could get 20-percent unit growth. Now, 10 percent is the magic number. “Only a handful of companies can grow units at 10 percent,” said Piper Jaffray analyst Nicole Miller Regan. “And they enjoy a high premium.”


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