BIZMOLOGY — Shares of Chuy’s Holdings, operator of the funky Chuy’s “Tex-Mex” casual restaurant chain, debuted on the NASDAQ this week. The restaurant chain’s stock shook off the recent market malaise to close up about 15% on its first day of trading. Chuy’s Holdings intends to use the proceeds it raised through its IPO — around $75 million — to repay loans and for general corporate purposes.
The IPO’s initial success provides hope for other restaurant operators (and companies operating in other industries) planning to go public this year, including Sullivan’s Steakhouse parent company Del Frisco’s Restaurant Group, Dave & Buster’s Entertainment, and Carl’s Jr. parent company CKE Inc.
Chuy’s was founded in 1982 with one location on Barton Springs Road in Austin, Texas. The original restaurant remains in Austin, as does the company’s corporate headquarters, and most of its properties are located in Texas. However, Chuy’s now has 36 locations in Alabama, Florida, Georgia, Indiana, Kentucky, Oklahoma, and Tennessee, as well as the Lone Star State.
Chuy’s locations serve up a relatively affordable menu of enchiladas, fajitas, tacos, and burritos, as well as signature drinks like fresh-squeezed lime margaritas and Texas Martinis. Each restaurant offers patrons a funky, vibrant, and eclectic atmosphere, decked out with Mexican folk art, vintage hubcap-coated ceilings, and a shrine to the “King of Rock and Roll” Elvis Presley. Executives purposely avoid making any two Chuy’s locations exactly alike. And unlike many chains, Chuy’s owns and operates all of its restaurants and does not offer franchises.
The company has grown rapidly in recent years; the number of restaurants in its portfolio has increased from eight in 2007 to 36 in 2012. If all goes according to plan, Chuy’s will have 40 locations by 2016. Expansion plans have kept Chuy’s focused on major cities in Texas and the southeastern US. Going forward, it plans to open additional locations in new and existing markets. The chain’s newest location to date is in Gainesville, Florida.
Prior to going public, Chuy’s Holdings was majority-owned and controlled by Goode Partners, which remains the majority shareholder in the company. The private equity firm acquired its stake in Chuy’s in 2006. The original founders of Chuy’s, Mike Young and John Zapp, maintain minority stakes in the company.