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Habit Burger Grill parent files for $86.3M IPO

Habit Burger Grill parent files for $86.3M IPO

Chain is first better-burger player to attempt to go public

The Habit Restaurants Inc., parent of the Habit Burger Grill chain, filed for an initial public offering Thursday, with a goal of raising $86.3 million, proving recent rumors true.

The company did not reveal how many shares it plans to sell, or on which exchange its stock will be listed, though it intends to use the ticker symbol “HABT.”

Known for its char-grilled burgers, sandwiches and salads, 98-unit Habit Burger is the first fast-casual better-burger concept to plan a public debut. It is also one of the smallest of restaurant chains to attempt an IPO in recent years.

Fifty-three-unit Shake Shack is also reportedly mulling an IPO this year, and officials at Smashburger, which plans to surpass 300 units in 2014, have said for some time that an IPO may be in its future.

Irvine, Calif.-based Habit Burger was founded in Santa Barbara, Calif., in 1969. Greenwich, Conn.-based private-equity firm KarpReilly LLC acquired a majority stake in the chain in 2007, and industry veteran Russ Bendel was named chief executive the following year.

Bendel reworked Habit Burger into a more contemporary brand while maintaining the concept’s focus on quality food.

The chain grew from 26 units in three California markets in 2009, to 98 units across 10 markets in four states as of August this year, according to filings with the Securities and Exchange Commission.

The company has had 42 consecutive quarters of positive same-store sales growth, primarily due to increases in traffic. For the July 1-ended second quarter, same-store sales rose 6.1 percent year to date, following a 3.6-percent increase in same-store sales for fiscal 2013.

Company-owned restaurant average unit volumes have increased from about $1.2 million in 2009 to about $1.7 million as of July, rising nearly 34 percent, the company said.

Between 2009 and 2013, net income increased from $0.1 million to $5.7 million, and revenue rose from $28.1 million to $120.4 million, according to SEC filings.

Habit Burger’s prices are somewhat lower than the fast-casual average, with an original Charburger with cheese starting at $3.50. The average check is about $7.44, which falls below fast casual’s typical $8-to-$12 range.

Unlike many burger chains, women make up about 45 percent of Habit Burger’s customer base.

Earlier this year, consumers selected Habit Burger as their favorite burger chain, according to a survey in Consumer Reports, beating cult favorite In-N-Out Burger.

The company expects to open 23 to 25 restaurants before the end of fiscal 2014, and another 26 to 28 units next year.

The first location on the East Coast opened in August in New Jersey. Company officials project Habit Burger could grow to more than 2,000 locations domestically.

Most of the chain’s growth will come from company-owned restaurants, but Habit Burger launched a franchising program last year. The first franchised location is expected to open in 2015, although there is one licensed unit at the University of Southern California in Los Angeles.

Habit Burger joins a number of restaurant chains that have gone public this year, including Dave & Buster’s, El Pollo Loco, Papa Murphy’s and Zoe’s Kitchen Inc.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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