Industry News | May 15, 2015 | QSR Exclusive Brief

Wingstop, Bojangles' Hit Market Amid Wave of Restaurant IPOs

Bojangles' began trading on the NASDAQ Stock Market on May 8. image used with permission.

Quick-service brands Wingstop and Bojangles’ this month became the latest restaurant companies to go public, suggesting there continues to be great demand in the public markets for healthy-performing restaurants that have high growth potential.

One industry banker says the timing of both companies’ IPOs could not have been better, as the market for restaurant IPOs is strong.

“[It’s the] best restaurant IPO market in 15 years,” says Adam Birnbaum, a managing director at New York–based Grandwood Capital LLC.

Charlotte, North Carolina–based Bojangles’ began trading on the NASDAQ Stock Market on May 8 after pricing its shares at $19 per share, which was the high end of its pricing range. Bojangles’ is the second chicken chain that went public within the last year, following Costa Mesa, California–based El Pollo Loco. But Birnbaum says Bojangles’ stands out from its competition because of its successful breakfast program, which it sells all day. About 38 percent of Bojangles’ sales are derived from breakfast. Bojangles’ had 622 restaurants as of the end of 2014.

“Success of El Pollo Loco is an indication of the dearth and subsequent receptivity of restaurant chains and ones with a chicken orientation,” Birnbaum says. “[Bojangles’] does a disproportionate amount of breakfast business for a chicken-oriented concept. Breakfast is an under utilized daypart for most.”

Wingstop filed for an $86.3 million IPO on May 6. The Dallas-based wings brand has not yet indicated how many shares it will sell. Wingstop plans to list on the NASDAQ under the “WING” ticker symbol.

Atlanta-based private equity firm Roark Capital Group acquired Wingstop in April 2010 from Gemini Investors. Birnbaum says he is surprised Wingstop did not go public sooner given its success.

“Roark has done a great job with Wingstop,” he says. “[It’s] interesting they have not used the IPO route too often, despite their success.”

Wingstop generated about $9 million in net income in 2014 on $67.4 million in revenue. That compared with $7.5 million in net income on about $59 million in revenue it made in 2013. The brand operates 712 restaurants and eventually plans to expand to 2,500 restaurants in the U.S., according to its IPO filing.

This year has turned into another busy year for restaurant IPOs. Popular burger chain Shake Shack began trading earlier this year, while Brazilian steakhouse chain Fogo de Chao has its own IPO filing pending.

By Demitri Diakantonis

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