IPOBoutique Brief 1.29.2015 – #TBT –The Fast-Casual Frenzy

Friday’s IPO–Shake Shack (NYSE: SHAK)–will likely be the deal of the week. We were quoted in an Investors.Com article about why the deal is so hot.

“It’s a fast-growth story,” said Jeff Zell, research analyst at IPOboutique. “Almost all of the fast-casual restaurant deals in the past year have all popped above their offering price.”

With that being said, we wanted to look back at how the fast, casual restaurants and/or the burger-spots have got to the point where they are today.  And you have to think it has something to do with the impressive performance of Chipotle (NYSE: CMG).

In January of 2006, Chipotle priced its deal at $22.00 and opened for trading at $45.00. The Wall Street Journal said the deal was “spicier than a three-alarm, hot sauce.”  What makes the deals that are coming to market now even more enticing is the way that Chipotle followed thru on their expansion promise. In 20 years, the company now has more than 1,600 stores and the stock price has soared to $717/share…or more than 30x the original IPO price.

A $10,000 investment in Chipotle at the IPO price is worth $325,909!

So if you are wondering why company’s like The Habit (Nasdaq: HABT), Zoes Restaurant (NYSE: ZOES) or even El Pollo Loco (Nasdaq: LOCO) have fared well, look no further than Chipotle.

But the question for some investors isn’t about an expansion/growth plan…but if the market in this arena is already matured or over-saturated.

Investors will answer that question for Shake Shack on Friday.