What Chain Could Go Public Next?


The 104-percent first-day return for Noodles & Company’s IPO late last month was the best performance by a restaurant IPO in at least a dozen years, and maybe longer. That kind of performance will almost certainly lead to more offerings—but which restaurant chains could be next to take the leap?

Valuations that companies are getting via IPO are now so strong that restaurant chains would be silly not to consider that route, given the gap between what an offering could bring and what a private equity or even a strategic buyer could provide. We cover the topic more in-depth in the upcoming issue of The Monitor, but thought we’d provide, mostly through pure speculation, a few companies we think could be good go-public candidates.

Papa Murphy’s. Like Noodles, Vancouver, Washington-based Papa Murphy’s was probably a good candidate to go public three years ago but instead was purchased by Lee Equity Partners. The 1,300-unit take-and-bake pizza chain is a stronger candidate now, and an offering could open the door for potentially valuable exit for Lee.

Potbelly Sandwich Works. The company has been said to be considering an offering but has yet to pull the trigger. If it does, the result could be interesting. The 270-unit Chicago-based chain would be the first sub sandwich chain on the public markets since Quiznos was taken private more than a decade ago.

Focus Brands. We keep hearing this company’s name bandied about in IPO speculation. Focus owns some well-performing brands, like the profitable Auntie Anne’s, Cinnabon, Carvel, Schlotzsky’s and the growing burrito chain Moe’s. It also has strong international growth. But its owner, Atlanta-based Roark Capital, has seemed reticent to use the IPO market for an exit.  

Wingstop. Since we’re on the topic of Roark, we might as well throw Wingstop up here. Like Papa Murphy’s and Noodles, this was an IPO candidate in 2010 when Roark bought it, and we’d have to believe the valuations would make an offering tempting. Plus, chicken wings are popular now, and it pays to strike when the iron is hot.

Smashburger. We think the Denver-based burger chain is targeting an ultimate IPO, but as its CEO, Dave Prokupek, recently told the Wall Street Journal, it has no need to do so right now. The 210-unit chain could probably use some additional growth, anyway. The chain hopes to have 300 locations by the end of next year.

Bojangles. Guess which chain added more units on a percentage basis last year? If you answered Bojangles, get yourself an extra biscuit. The Charlotte-based chain saw system sales grow 12.7 percent last year and unit count grow 5.9 percent. While it may be a bit soon—Advent International just bought it two years ago—we do know The Street loves those sorts of numbers.

Jimmy John’s, Culver’s, In-N-Out. Would these chains do well with an offering? Absolutely. Will they go public? Probably not. We only put them up there to make this point: many of the restaurant chains that would do well on the public markets won’t go simply because they’re owned by families or entrepreneurs who have little to no interest in giving up control. In-N-Out is a perfect example. It’s periodically the subject of go-public rumors, and its stock would explode on Wall Street for no other reason than the simple fact that numerous investors would love to own a piece of the company. But it remains perfectly content with being private, out of the limelight and the pressure and the cost associated with being public.

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