Jersey Mike’s appears set to go public this week, and every indication suggests the fast-casual sandwich chain will have one of the biggest IPOs in industry history by just about every measure.
The New Jersey-based company last week said it wants to sell shares at $21 to $25, which at its peak would raise well over $1 billion between the company and its selling shareholders.
But demand for the offering is unsurprisingly strong: According to Bloomberg, the offering is oversubscribed by a factor of 10, which suggests the price of those shares will likely go up by the time many of you read this.
The largest initial fundraise for any IPO over the past 20 years belongs to Tim Hortons, which Wendy’s spun off in 2006 and raised nearly $600 million.
Chipotle went public that same year and raised just under $200 million, though subsequent secondary sales by primary shareholder McDonald’s would make its ultimate fundraise closer to $2 billion, which makes it the gold standard of industry offerings.
More recently, in 2021, Dutch Bros raised $484 million and Portillo’s more than $400 million. But for the most part, restaurant industry offerings tend to be more moderate than the mega-IPOs found in other industries like technology.
All of which makes Jersey Mike’s IPO this week that much more remarkable. Restaurant chains simply do not raise $1 billion in their first day selling stock to the public, and by all accounts the sandwich chain appears set to blow past that figure.
How much the stock ultimately goes for will go a long way toward determining the company’s valuation, but at this point it appears set to be well over $8 billion.
One way or the other, in other words, this is going to be the biggest IPO in industry history.
To be sure, how much a company trades for and raises this week matters for only so long. Companies go public, get investors excited, then report results that fall short of sky-high expectations. Valuations fall, which can lead to bad decisions and changes that make matters worse.
Most of the companies that have gone public since the dual 2006 spinoffs have underperformed, with most having either been taken private or with stock prices languishing at or below their initial offering price.
But Jersey Mike’s IPO is popular for all the right reasons. The company has stronger average-unit volumes than its competitors and consistently increasing same-store sales. It has a strong base of franchisees. It has a lot of white space, both in the U.S. and internationally.
At the same time, it’s large enough to have a substantial track record, giving it a unique combination of size and growth potential. Companies like that simply don’t go public very often, which is why it’s taking this step so soon after its sale to Blackstone, and why the intense demand is there now.