Small (36 restaurants) based in TX. Focused on freshness, funky style and value. $12.99 average ticket, big plates, sauces made every day, etc.
Books: Jefferies & Baird, Cover: KeyBanc, RayJay, & Stephens
Expansion now in the Southeast where there is lots of demand but not nearly as much supply as in TX.
Aspiration is to have restaurants that are unique and not “chainy” but heavily hand designed and crafted. Management works to maintain an irreverent style that stays true to their hippie roots. They still celebrate Elvis’s birthday across the restaurants.
[Place reminds me a bit of the best place for TexMex in NYC which is Tortilla Flats in the West Village.]
Growth is opening 7-8 restaurants this year and add 50-55 over the next 5 years.
Looks comparable (but smaller) to Bravo Brio $BBRG which went public in October 2010 at $14. The shares have since traded in a range between $15 and $24 and now sit at $18.
In the TexMex category Chuy’s is a little better and a little cheaper than Chipotle $CMG.
For 2011 revenues were 130M across 31 units. Same store sales growth has tended to be 5-8% better than industry averages. EBITDA margin has been consistent around 20%.
Cost of sales has been very steady at 27%. Little to know concentration in commodity mix – like milk and coffee for Starbucks.
Substantial tax credits and loss carry forwards supply additional investment capital through 2014 when they roll off.
Besides being an obvious play in retail and food/hospitality the company does connect into some more interesting trends like organic, local, more authentic consumer preferences.
Definitely a solid deal that offers good growth. This feels more like a BBRG than a CMG but it’s too early to tell. We suspect the stock will find a trading range and reward a strategy that varies position sizes regularly.
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