Financing

Will a restaurant chain go public in 2025?

The IPO market has been mostly frozen. But a weak market for mergers and acquisitions is also keeping struggling companies from going private. The new year could change that dynamic.
Panera Bread
Panera Bread has been waiting and preparing for an IPO for years. | Photo: Shutterstock.

The roster of publicly-traded companies has mostly remained frozen for years, save for the IPO of a company or two such as Cava and whatever chains Darden Restaurants opted to buy. This, even though several companies want to go public, and though a few public companies probably should go private. 

But that could change in 2025, at least based on comments at the Restaurant Finance and Development Conference on Tuesday. 

The mostly frozen IPO market could thaw next year, particularly if one or two of the bigger companies that want to go public finally pull the trigger. 

“There are a couple of big names that want to go public,” said Matt Pilla, senior managing director with Guggenheim Securities. “Several smaller names have been talking about it for a while. But if one of the big ones go, that could open it up for everybody.”  

The market for restaurant IPOs has been dry since 2021, when a flurry of companies such as Dutch Bros, Krispy Kreme and First Watch went public. But it froze late that year, as skyrocketing inflation hit profitability and led to soaring interest rates that reset the market for restaurant industry valuations. Public markets largely shied away from any IPOs, and particularly restaurants. 

That seemed to be thawing last year when Cava Group went public, followed by a small one in Gen Korean BBQ. But there have been none since then. 

“The window is not currently wide open,” said Damon Chandik, who heads restaurant investment banking for Piper Sandler. “But we always say that good companies can go in any market.” He expects some companies to go public next year.

Why could the market change? The market is more receptive to restaurants now. Expectations of sales improvement into next year, particularly in light of recent commentary from major fast-food chains of a turnaround in October, has improved valuations of publicly traded companies. 

A friendlier investment environment could certainly prompt some IPOs, particularly if sales results show improvement. 

There is desire on the part of some big companies to be interested in an IPO. Inspire Brands, for instance, has long been believed to be planning an initial public offering. Smaller companies, such as the planned Fat Brands spinoff of Twin Peaks, may also dive into the market. The JAB Holdings owned Panera Bread has been planning an IPO for years. 

On the other side of the coin, however, is a lack of go-private deals. Traditionally, when companies aren’t going public and there are lower valuations of publicly traded companies, private-equity groups step up and snap some chains at what they consider bargain prices. 

That isn’t happening this time. There have been a couple of strategic deals for publicly-traded restaurant chains, both involving Darden Restaurants, including its acquisition of Ruth’s Chris in 2023 and its purchase of Chuy’s this year. 

But numerous stand-alone companies, such as Noodles & Co., Denny’s, Cracker Barrel and others, that have seen valuations fall lately that might have made them ripe for a sale process. The market for acquisitions simply hasn’t been there for that to take place. 

“There are just different factors,” Chandik said. “You may have activist investors with a different agenda. Sometimes you have a board that likes being public and doesn’t want to do anything. But the biggest thing is that we don’t have many buyers out there. We used to have this group of private-equity guys that would do these value-type deals anytime a company hit a 6x multiple. I’ve lost a number of those bidders.”  

But there is a general sentiment that the market may be improving, and the appetite for deals on the part of some of those groups might grow for the sort of go-private deals of the past—particularly as interest rates come down. 

“As we move into 2025, the pace of go-private deals may accelerate,” said Josh Benn, global head of investment banking at Kroll. 

So expect some changes in the roster of public companies next year, unless something happens to freeze it all again. 

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