Shake Shack Inc, a burger chain, has filed for its very first initial public offering. The company started out as a hot dog venture In the Madison Square Park of New York, and today it had grown into this big chain. The timing for the filing of IPO could not have been better, for the offerings by restaurants have proved to be quite popular among the investors these days.
Shake Shack was established back in 2001 by Daniel Meyer. The venture got popular due to its mega size shakes and Shackburgers, which come with a hot dog and flat top. This restaurant has developed quite a following during the past decade.
The Union Square Hospitality Group LLC (USHG) of Meyer runs some other famous eateries too, including Gramercy Tavern, Blue Smoke, and Union Square Cade. These eateries will not be offered in the first IPO of Shake Shack.
It is important to mention here that the initial public offerings by eateries are getting quite successful. Earlier this year, Zoe’s Kitchen Inc. (NYSE:ZOES) and El Pollo Loco Holdings Inc (NASDAQ:LOCO) had also gone public. Although Zoe’s Kitchen saw a shaky year, but the stocks of the company are trading at double the price that they offered during IPO. Similarly, the stocks of El Pollo are being traded at 38 percent higher than their IPO prices.
Moreover, the stocks of Habit Restaurants Inc (NASDAQ:HABT), a burger chain, went up by 100 percent during the last month. According to the reports, Shake Shack had hired some managers in the months of August to plan out its first public offering and to file all the papers.
Shake Shack’s investors include USHG- which is the majority owner- Leonard Green & Partners- a private equity company- and Select Equity Group- a fund sponsor company that is owned by its employees.
Shake Shack owns 63 restaurants. Where most of its operations are restricted to the east coast of United States, the restaurant also acquires some outlets in the major international locations, including Dubai, Istanbul and London. According to the management of Shake Shack, the company will be using the income from its IPO to buy some common stocks in SSE Holdings LLC. SSE Holding LLC will be supporting Shake Shack financially, as it has been doing since its inception.
The preliminary reports released by the restaurant suggest that Morgan Stanley, J.P. Morgan, and Goldman Sachs will be its financial consultant for this offering. The IPO filling of the company does not suggest as to how many shares the company plans on selling and at what price. But rumors have it that the company wants to generate around $100 million through its first offering.
But then again, the final size of the offering cannot be determined yet, for most of the companies write different sizes in order to check for the registration fees. The net income of the company, for the year 2014, was down by 20 percent on yearly basis. The revenues, on the other hand, increased by 41 percent and reached to $83.76 million.
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