Investors snatched up shares of Brazilian steakhouse chain Fogo
de Chao in its trading debut Friday, making it the latest in a
string of restaurant initial public offerings to jump out of the
gate.
Fogo shares opened at $26, 30% above their IPO price of $20,
which was above the company's expected range of $16 to $18. At the
$26 level, the company's market value would be roughly $708
million, not including additional shares that could be sold under a
so-called overallotment option.
Shares trade on the NYSE under the ticker symbol "FOGO."
Recent restaurant IPOs have been cheered by investors. Shares in
Wingstop surged 61% when the chicken-wing chain went public last
Friday; shares in burger joints Shake Shack Inc. and Habit
Restaurants Inc. more than doubled in their recent debuts, while
Bojangles Inc. shares rose 40% out of the gate when the
chicken-and-biscuit purveyor went public last month.
Still, some chains haven't been a sure bet after their initial
pop. El Pollo Loco, which went public at $15 a share last July,
jumped more than 60% on its first day of trading and was briefly
above $40 per share in early August—but it closed Thursday at
$20.87, below its first-day close and down sharply from its
peak.
Dallas-based Fogo de Chao, founded in 1979 by brothers in Porto
Alegre, Brazil, straddles the fast-casual and casual segments. Fogo
is known for its grill-to-table meats and extensive buffet that
features a variety of vegetable sides and desserts. It also offers
table service and a full bar, and the dé cor is characteristic of a
more upscale restaurant.
For 2014, the chain reported $262 million in revenue, up 20%
from a year earlier. In its most recent quarter, Fogo reported a
0.5% increase in same-restaurant sales, compared with a 2.6%
average increase in casual chains and a 6.5% rise in fast-casual
restaurants, according to a report by Sterne Agee CRT.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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