Shake Shack Inc. filed for an initial public offering on Monday, the first step towards its much-anticipated debut on the public markets, and a pathway to bring their better burger recipe to a larger audience.
The company, launched by restaurateur Danny Meyer in 2004, filed to raise $100 million, though that is likely a place holder for purposes of the initial filing with the Securities and Exchange Commission.
The Deal reported in March that investors would line up for a Shake Shack IPO and that the timing was right for it, although, the New York-based chain denied at the time it had any plans to go public.
The company intends to list on the New York Stock Exchange under the ticker symbol SHAK.
Industry sources previously told The Deal that an IPO would be ideal while the chain's growth is strong, especially with current market conditions, where the demand for hot growth concepts is high.
Proceeds from the offering are going toward repaying borrowings, including about $21.9 million taken out to pay a distribution to certain original equity owners, as well as toward the opening new locations and renovating current ones.
Shareholders owning stakes greater than 5% in the company include Meyer, and Jeff Flug, president of Meyer's Union Square Hospitality Group LLC, Leonard Green & Partners LP, Select Equity Group LP and Alliance Consumer Growth LLC.
Shake Shack said it has a total of 63 locations in nine countries, with 36 of those restaurants located in the U.S. and 27 of them based overseas. All the overseas locations are licensed, in addition to five of its U.S. stores. The chain owns and operates 31 of its U.S. locations.
The restaurant chain had system-wide sales of $140 million in 2013, compared to $81 million in 2012. Of those totals, $79 million in sales were generated in 2013 by company-operated stores, while in 2012, that number stood at $56 million.
Sales generated at company-operated stores counts as part of revenue, whereas only a small percentage of sales of licensed operations collected as a royalty by Shake Shack is included in revenue, although it is mostly profit.
For the fiscal year ended Dec. 25, 2013, Shake Shack had about $82 million in revenue, compared to approximately $57 million for the same period a year prior. Net income for the most recent fiscal year, meanwhile, was above $5 million, compared to just above $4 million for the same period the year before. Adjusted Ebitda for the fiscal year ended Dec. 25, 2013, was more than $14 million, while Ebitda was over $9 million, compared to nearly $10 million in adjusted Ebitda and close to $7 million in Ebitda for the same period a year prior.
The company's total cash stood at about $6 million, while debt was over $5 million, as of Sept. 24.
Meyer's Union Square Hospitality Group launched the burger and milk shake concept as a kiosk in 2004 in New York City, slinging Chicago-style hot dogs, along with its famous shakes, burgers and frozen custard. Union Square Hospitality also operates New York eateries Blue Smoke, Gramercy Tavern and Union Square Cafe among others.
It competes with other rapidly expanding chains, such as Five Guy Enterprises LLC, Smashburger Master LLC and In-N-Out Burgers Inc.
Other restaurant chains that have gone public in recent months include Papa Murphy's Holdings Inc. (FRSH) - Get Freshworks, Inc. Class A Report , Potbelly Corp. (PBPB) - Get Potbelly Corp. Report , Zoe's Kitchen Inc. (ZOES) , the U.K.'s Just Eat plc and Noodles & Co. (NDLS) - Get Noodles & Co. Class A Report . Although, the stock price of Noodles, Potbelly and Zoe's Kitchen have all caused investors indigestion in recent months, Papa Murphy's has regained some of its valuation after dipping to a 52-week low of just above $8 per share on July 31.
Underwriters for the offering include JPMorgan Securities LLC, Morgan Stanley & Co. LLC, Goldman, Sachs & Co., Barclays Capital Inc., Jefferies LLC, William Blair & Co. LLC and Stifel, Nicolaus & Co. Inc. Legal advisers involved with the IPO include Latham & Watkins LLP and Fried, Frank, Harris, Shriver & Jacobson LLP.