Dive Brief:
- Fogo de Chao, the Brazilian steakhouse chain, declared its intent to go public on Tuesday. The number of shares that will be offered and the price range of the IPO haven't been determined. The company will trade on the New York Stock Exchange under "FOGO."
- The chain reported strong growth despite pandemic disruption in 2020. Average unit volumes were $7.9 million for the year ended in Q3 2021, according to an S-1 Form filed with the U.S. Securities Exchange Commission. Fogo plans to use IPO funds to pay down $344.2 million in debt, and aims to grow its 60-unit network by 300 stores in the next 20 years.
- This would be Fogo's second foray into the public markets. The chain was taken private in 2018 in a sale to private equity firm Rhone Capital for $560 million.
Dive Insight:
Though Fogo wasn't immune to the impact of the COVID-19 crisis, the casual giant was more nimble than many full-service competitors in updating operations to meet new consumer demands — investments that have paid off this year.
The chain recorded $296 million in revenue for the year ended in Oct. 3, 2021, according to its S-1 filing. Restaurant contribution margin was 30% in the 39 weeks ended Oct. 3, which is also consistent with its pre-pandemic performance.
Prior to the COVID-19 crisis, Fogo de Chao didn't offer off-premise service. But when dining room closures took effect, the company set up delivery with third-party partners in just three days, CEO Barry McGowan told Restaurant Dive in an interview earlier this year. This rapid pivot helped the chain return to 96% of pre-pandemic revenue with 60% capacity across its locations just seven months later.
Sales are still going strong, and are positive. Relative to 2019 numbers, Fogo reported 39% comparable sales growth as of October 2021 compared to negative 5% for October 2020.
"In recent years, we innovated differentiated, new revenue platforms to drive frequency across guest need states, including weekday lunch, dinner, weekend Brazilian brunch and group dining, plus Bar Fogo, full-service catering and takeout and delivery options," the company said in its S-1 filing. "Our revenue platform expansion has effectively generated new trial and increased frequency as evidenced by our six-year track record of consecutive year-over-year traffic growth through Fiscal 2019."
Going public could position Fogo for long-term growth and continued off-premise innovation and help the full-service chain maintain its health as diner demand for quick, off-premise meal occasions holds steady.
It's far from the only chain to do so this year — restaurants across segments are throwing their hats in the public ring in the hopes of more aggressive expansion and sales growth. Krispy Kreme, Portillo's, First Watch and Dutch Bros have also gone public in 2021, and Sweetgreen announced pricing for its initial public offering Thursday. Panera Brands also plans to go public.
