Steakhouse chain operator Fogo De Chao sizzles in debutBrazilian steakhouse chain operator Fogo De Chao Inc became the latest restaurant operator to serve up a successful market debut as its shares rose as much as 32.7 percent in their first day of trading.
By: Staff Report, Reuters
Brazilian steakhouse chain operator Fogo De Chao Inc became the latest restaurant operator to serve up a successful market debut as its shares rose as much as 32.7 percent in their first day of trading.
Burger chain Shake Shack Inc, chicken-and-biscuits chain Bojangles Inc and chicken-wing chain Wingstop Inc have all had hugely successful debuts this year and are currently trading above their IPO prices.
Low gas prices and a brighter job market are encouraging Americans to dine out, giving restaurant chains the chance to cash in on the demand both in restaurants and the stock markets.
Fogo De Chao's stock hit a high of $26.55 on Thursday, well above its initial public offering price of $20, valuing the company at about at $723.6 million.
The chain specializes in fire-roasting meat using the centuries-old southern Brazilian cooking technique of 'churrasco'. It operates 26 restaurants in the United States, 10 in Brazil and one in Mexico.
The chain's a la carte seafood options are inspired by the kitchen tables of southern Brazil where families share fresh produce and seasonal salads grown locally.
Fogo De Chao swung to a profit of $17.5 million in fiscal 2014 from a loss of $937,000 a year earlier. Revenue rose nearly 20 percent to $262.3 million.
The company's IPO of 4.4 million shares priced at $20, above the expected range of $16-$18, and raised $88.2 million.
Private equity firm Thomas H Lee Partners will hold a 79 percent stake in the company, assuming the underwriters fully exercise their options.
Jefferies LLC and J.P. Morgan Securities LLC were among the underwriters of the offering.