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Why an Increasing Number of Restaurants Are Going Public

Since 2010, 11 chain restaurants have gone public.

Shake Shack/Facebook

A growing number of smaller restaurant chains are going public, and it doesn't look like that trend is going to stop anytime soon. According to Nation's Restaurant News, despite recent volatility in the stock market, investment bankers "expect the flow of restaurant IPOs to continue." This is because investors are giving owners of restaurant chains incentives for taking their companies public by placing a "hefty price tag" on them, giving them large valuations.

When restaurant valuations were "cut in half" from 2006 to 2010 there were zero restaurant IPOs. However, since then, valuations have increased and 11 chains have completed IPOs. Many more have also announced their intention to follow suit.

Just this year alone, at least half a dozen concepts have filed to go public. This includes adult arcade and restaurant Dave & Buster's, chicken chain El Pollo Loco, and burger concept Habit Burger. It appears that there are many more IPOs on the way. Burrito concept Cafe Rio may soon go public and just last month, it was revealed that popular burger chain Shake Shack was filing for an IPO and is rumored to be seeking a one billion dollar valuation.

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