Once, an editor at Restaurant Finance Monitor said that “If you were unemployed last month and this month you get a job, one of the first things you’re going to do is what? Go out and eat.” Restaurants, therefore, are likely to be the first ones to gain from improving economy and employment trends.

With more people choosing to dine out these days, it is needless to say that the restaurant industry is poised to benefit. As the economy recovers, fast-food restaurants will likely need to step up their game. From menu innovation to introducing digital platforms to providing healthy food, all these initiatives are targeted toward meeting consumer preferences. This, however, requires substantial capital.

While the big players are already sitting on a cash pile, the new entrants need to infuse capital into their business from time to time. An Initial Public Offering (IPO) of common stock thus acts as a medium for the relatively new players to raise additional funds.

Will the Current Market Turmoil Affect Impending IPOs?

While most of the restaurant stocks that debuted on the market recently traded much higher than the expected range after their IPOs, the recent turmoil owing to the Chinese stock market debacle could have an impact on the timing and valuation of future restaurant IPOs.

However, some market analysts say that it is too early to believe that the shaky market would cast a shadow on the IPO market. They expect the industry’s strong fundamentals and sales initiatives undertaken by the restaurants to steer them through tough times.

5 Restaurant Stocks that Exceeded Expectations After IPO

Wall Street has shown an increasing appetite for restaurant companies as of late. There have been a number of IPOs in the restaurant industry since the beginning of 2014, and the majority of them have been rather successful. Here we look at the performance of five restaurant stocks that have lived up to market expectations since they began trading.

Based in Texas, Zoe’s Kitchen, Inc. (ZOES – Snapshot Report) began trading on the NYSE in April 2014. Since then, the company has posted seven quarterly results. This fast casual Mediterranean cuisine restaurant has surpassed the Zacks Consensus Estimate for earnings in six quarters while matching the same in one. Over the trailing four quarters, the company has a positive earnings surprise of 97.92%. The company’s efforts to develop new menu items and its aggressive marketing campaigns to promote these contributed to growth. Zoe’s Kitchen is a Zacks Rank #2 (Buy) company.

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