Shares of Noodles & Co (NASDAQ:NDLS) are soaring in their first day of trading on the Nasdaq. The IPO for the fast-casual restaurant opened for trading at $32 after pricing 5,357,143 shares at $18, above the expected $15-$17 range.
Most IPOs have struggled this week as recent volatility and declines in the stock market sapped investors’ risk appetite. The Standard & Poor’s 500-stock index is on pace to post its first monthly decline since October.
Morgan Stanley & Co. LLC and UBS Securities LLC are acting as joint book-running managers for the IPO. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Jefferies LLC, Robert W. Baird & Co. Incorporated and Piper Jaffray & Co. are acting as book-running managers for the IPO.
Fast-casual Restaurant Chain
Founded in 1995, Noodles & Co (NASDAQ:NDLS) is a fast-casual restaurant chain that serves classic noodle and pasta dishes from around the world with 345 locations in 26 states and the District of Columbia. Known as Your World Kitchen, Noodles & Company’s globally inspired menu consists of more than 25 fresh, customizable noodle bowls, salads, soups and sandwiches that are prepared quickly using quality ingredients. From healthy to indulgent, spicy to comforting, the menu provides favorites for everyone from kids to adults. Popular dishes include the sweet and spicy Japanese Pan Noodles, zesty Pesto Cavatappi and creamy Wisconsin Mac & Cheese.
Noodles Potential To Grow
The company and its bankers are emphasizing Noodles’ potential to grow its business with a national expansion led by former Chipotle Mexican Grill, Inc. (NYSE:CMG) executive Kevin Reddy, according to people familiar with the marketing effort. The company has 343 restaurants, comprised of 291 company-owned and 52 franchised locations, across 26 states and the District of Columbia, as of May 28, 2013.
Executives believe they can grow that tally to 2,500 in the next 15 to 20 years, according to securities filings.
Revenue and income from operations have grown from $170 million and $2 million in 2008 to $300 million and $16 million in 2012.
The company is backed by private-equity firm Catterton Partners and Canada’s Public Sector Pension Investment Board, which invests pension plans for the Royal Canadian Mounted Police and other government entities.
Peers Outperforming the Market
Noodles & Co (NASDAQ:NDLS)’ peers have outperformed the market this year. Chipotle Mexican Grill, Inc. (NYSE:CMG) is up 22 perent in 2013, while Chuy’s Holdings has gained 75 percent, compared with a 13 percent increase in the S&P 500. These so-called “fast casual” eateries, which combine elements of traditional fast-food and sit-down restaurants, have seen sales grow faster than other parts of the industry.