IPic Entertainment closes its IPO

The movie theater-restaurant chain raised less than it originally planned.

IPic Entertainment, the movie theater-restaurant chain, closed its initial public offering on Thursday, having raised $15.1 million in gross proceeds with the sale of more than 800,000 shares at $18.50 a share.

The stock started trading on the Nasdaq stock exchange under the ticker symbol IPIC.

Its share price declined by 15% through early afternoon trading Thursday.

The Boca Raton, Fla.-based company also said that it closed a $2.5 million private placement from an affiliate of one of its existing investors, Regal Cinemas, which had previously invested $12 million at $18.13 per share.

The offering was considerably smaller than the $40 million that iPic initially said it planned to raise. The company said it had planned to sell more than 2 million shares.

The IPO was done under Regulation A+, a relatively new regulation that enables smaller companies to raise smaller amounts not only from institutional investors but also their own customers.

In iPic’s case, that meant the chain’s 1.8 million loyalty club members.

“Our goal was always to take the company public and turn our members into shareholders of the company,” iPic CEO Hamid Hashemi said in an interview with Restaurant Business. “They often ask for it. That’s what we accomplished.”

“This is just the beginning,” he added. “It’s the first step in a journey.”

IPic is the second restaurant company to close a Regulation A+ IPO, otherwise known as a mini IPO, after Fatburger owner Fat Brands last year.

IPic is part of a generation of companies such as Topgolf and Dave & Buster’s, among others, that seek to blend dining and entertainment.

The company operates 16 locations, 10 of which operate full-service restaurants in addition to movie theaters. More than half of the $69.4 million in revenues the company generated in the first half of 2017 came from the sale of food and beverage. Less than a third of its sales come from box office receipts.

The rest comes from special events and partnerships. Last year, the company began booking live shows and VIP events inside of its theaters, including comedy shows, magic shows and gaming events. “We did 30 shows,” Hashemi said. “We sold out every single show we put on.”

This year, the company has 300 such events booked. “We’re turning these auditoriums into performing theaters,” he said.

Both restaurant chains and movie theaters have struggled in recent years with a consumer that is as reluctant as ever to leave the house. Restaurant traffic, especially at dine-in focused casual-dining chains, has been weak for the past two years. Movie theater box office receipts, meanwhile, declined by 20% this past summer.

“It doesn’t matter what business you’re in today, the reality is we can all do great things at home—shopping at home, working at home, watching movies at home,” Hashemi said. “But we’re still social creatures. We crave to go out. We’ll do all those things if the experience is better than you can get at home.”

But Hashemi also considers his concept to be as much a time-saver as anything.

“We’re giving you back 30 minutes of your time,” he said, noting that 78% of people eat before or after a movie. “We create a destination that combines the two activities. That’s real valuable. Time is something we don’t have enough of.”

The company has received a number of investments from movie or theater related companies, including Village Roadshow and PVR Cinemas, the largest exhibitor in India. The Retirement Systems of Alabama has also provided equity and debt to the company.

IPic says it plans to use the funds to help fuel its expansion. The company has four locations under construction and 16 in its pipeline.

TriPoint Global Equities through its online division Banq was the lead selling agent for the IPO. Roth Capital Partners was the institutional book-running agent, and Telsey Advisory Group was the offerings co-manager.

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