Photo credit: www.cnbc.com
Twin Peaks, a sports bar chain based in Louisville, Kentucky, is set to begin trading on the Nasdaq under the ticker “TWNP” this Thursday. This marks the first restaurant initial public offering (IPO) of the year, serving as a possible indicator for other companies considering a public launch.
The IPO landscape has faced challenges over the past few years, particularly for businesses in the consumer sector. Factors such as escalating inflation, rising interest rates, cautious consumer spending, and fears of decreased valuations have deterred many firms from pursuing public offerings. Consequently, some have opted for acquisitions rather than exploring the public markets. Notably, even successful IPOs like that of Cava have not spurred similar moves from other companies.
Despite this, there is a growing sense of optimism that the IPO market will recover in 2024.
“The prior year saw more activity than 2023, and we anticipate 2025 to be even busier with IPOs compared to 2024,” stated Nick Einhorn, vice president of research for Renaissance Capital, an organization specializing in pre-IPO analytics and IPO-focused exchange-traded funds. “This could also mean more openings for consumer IPOs.”
However, Twin Peaks is not the first food industry company to venture into public trading this year, and its entry might not instill confidence in the market.
Recently, Smithfield Foods, a subsidiary of WH Group based in Hong Kong, began trading but faced a disappointing debut, with shares dropping 7% from its initial price of $20. This downturn followed a reduction in its share offering, reflecting ongoing operational challenges including international trade tensions and potential increases in labor costs.
In contrast, Twin Peaks holds an estimated equity valuation of between $1.04 billion and $1.28 billion and operates 115 locations, according to investor documents from its parent company, Fat Brands. The company is undergoing a spin-off from Fat Brands, which aims to utilize the IPO proceeds to reduce its existing debts. Notably, Fat Brands and its chairman, Andy Wiederhorn, faced legal troubles last year concerning allegations of fraudulent financial activities, which they deny.
Panera Brands
In New York’s Queens borough, Panera Brands, which includes Panera Bread and Einstein Bros. Bagels, has been exploring options to go public. After JAB Holding bought Panera Bread in 2017 for $7.5 billion, there were efforts to relaunch the company onto the public stage. In 2021, a collaboration with a special purpose acquisition company led by Danny Meyer was initiated but later dissolved due to prevailing market uncertainties.
In December 2023, Panera Brands confidentially filed for an IPO, but leadership changes and a decline in consumer spending appear to have delayed further action. The company faced additional scrutiny due to safety issues surrounding its Charged Lemonade product, which was linked to multiple wrongful death lawsuits, prompting Panera to remove it from menus.
As changes in leadership continue, including the recent resignation of the CEO, Panera’s efforts to enter the public market seem unlikely in the near term.
Fogo de Chao
Fogo de Chao, a Brazilian steakhouse chain, has been positioned for an IPO since Bain Capital’s acquisition announcement a year and a half ago. Having previously filed for a public offering in 2021 but missing the opportunity, the chain operates more than 100 establishments worldwide, with plans to open an additional 15 restaurants this year.
CEO Barry McGowan expressed a readiness to launch an IPO when market conditions become favorable, highlighting the importance of timing and confidence in consumer markets.
While the company is prepared to go public when the circumstance permits, McGowan mentioned a reluctance to file multiple times unnecessarily, indicating a cautious approach toward their IPO ambitions.
Inspire Brands
Inspire Brands, the parent company of several well-known restaurant chains including Arby’s and Dunkin’, was formed by Roark Capital through a series of strategic acquisitions and has become a formidable player in the industry, boasting over 32,600 restaurants globally with a combined revenue of around $30 billion.
A year ago, there were discussions surrounding a potential IPO that could value Inspire at $20 billion; however, no significant steps have been taken since then. Analysts continue to see Inspire as a serious contender for an IPO in the near future, given the pressures from private equity stakeholders who typically seek exit strategies through public offerings.
In contrast to other potential IPO candidates experiencing executive instability, Inspire Brands maintains a stable leadership structure, with CEO Paul Brown at the helm since 2018, showcasing a solid foundation that could facilitate a successful public offering when the conditions align favorably.
Source
www.cnbc.com