P.F. Chang’s has reportedly joined a host of chains interested in filing an IPO, according to Bloomberg.
The media outlet said Thursday afternoon that the full-service chain is in early discussions with advisors and could be worth at least $1 billion. CEO Damola Adamolekun said during a Bloomberg radio interview last month that an IPO is a “viable alternative” for capital.
The IPO could happen as soon as this year. The chain was founded 28 years ago by Paul Fleming and Philip Chiang, and oversees more than 200 restaurants and 90 franchised locations across two dozen countries.
P.F. Chang’s has exchanged hands a couple of times in the past decade. In 2012, the brand, along with Pei Wei, was sold to Centerbridge Partners for $1.1 billion. Prior to the transaction, P.F. Chang’s saw a 42 percent drop in Q1 profit and was “fighting to recover from ill-timed price increases,’ Reuters reported at the time. After Centerbridge split P.F. Chang’s operations from Pei Wei, it revealed in July 2018 that it was exploring a sale.
Six months later, Bloomberg reported P.F. Chang’s had agreed to be sold to TriArtisan Capital Advisors for roughly $700 million. When P.F. Chang’s changed leadership a couple of years ago, it was saddled with more than $675 million in total debt. The brand’s liabilities included about $375 million of secured debut, including $5 million of capital leases, a $317 million first-lien term loan, $25 million of revolver borrowings, and $28 million of secured notes provided by the sponsor. Bloomberg also said the brand’s borrowings included $300 million of unsecured bonds.
The chain made headlines in early 2020 when it told the Chicago Sun Times that it was preparing to open a “P.F. Chang’s To Go” unit that focused on carryout, catering, and delivery. The concept offers from-scratch, in-house cooking and a pared down version of the full-service menu. As of June, there are five to-go restaurants in New York City, three in Chicago, and two more in Irving, Texas, and Orlando, Florida. P.F. Chang’s plans to have more than 50 To Go locations, including Colorado, Florida, Texas, New York, Louisiana, Nevada, and Arizona, by the end of 2022. More than 20 are already underway.
In recent months, P.F. Chang’s has faced its share of labor issues, just like many others in the industry. Adamolekun told Yahoo! Finance in early July that the chain had about 2,000 openings. Attracting workers requires a balance of compensation and culture, the CEO said.
“Our marketing team has gotten involved on the recruiting side, putting ourselves out there on social media, et cetera, to let folks know about what we’re doing and the exciting story that’s going on here and how attractive it is to work for P.F. Chang’s,” the executive said during the interview. “Even in a tight labor market, there are people looking for work. And we want to get as many of those people as possible.”
Several chains have turned to IPOs in recent months. On the quick-service side, Krispy Kreme entered the stock market on July 1 after a five-year absence. The doughnut chain will soon be followed by Dutch Bros Coffee, Sweetgreen, and Portillo’s. Other chains that have reportedly explored an IPO, but haven’t filed yet, include Torchy’s Tacos and Panera.
On the full-service side, private equity firm L Catterton, the owner of bartaco and Barcelona Wine Bar, is reportedly interested in going public. The company has a majority investment in Anthony’s Coal Fired Pizza & Wings, Uncle Julio’s, and Primanti Bros, and a minority stake in Noodles & Company, Chopt, and Hopdoddy Burger Bar. California Pizza Kitchen is also seeking either an IPO or sale.
In February, Fertitta Entertainment, which includes Golden Nugget Casinos and Landry’s, agreed to join special acquisition company Fast Acquisition Corp. and go public in a deal that will value the company at $8.6 billion.