Fast-Casual Brands Prepare IPOs as Sector Bounces Back

With fast-casual chains’ stocks outperforming the restaurant industry, more brands, including Panera and Cava, are looking to capitalize on the industry’s recovery.

Panera Brands, a group encompassing fast-casual bakery-café chain Panera Bread, Einstein Bros. Bagels and Caribou Coffee, announced significant moves Tuesday (May 23) on its path to going public via initial public offering (IPO). The company shared that current CEO Niren Chaudhary will become chairman as the bagel brand’s CEO José Alberto Dueñas takes over as CEO of the group, decisions made “in preparation” for the company’s “eventual IPO.”

“I believe that with this incredibly dedicated team and our great franchisee partners, we can … accelerate key growth-driving initiatives to prepare the company for a future public listing,” Dueñas said.

The announcement came just days after fast-casual Mediterranean brand Cava, which has more than 260 locations across 22 states and Washington, D.C., filed to go public via IPO with the Securities and Exchange Commission (SEC) Friday (May 19). In its form S-1, the company noted there has been an increased “emphasis on combined quality and convenience,” an advantage for fast-casual brands that offer higher-quality foods than their quick-service restaurant (QSR) counterparts and greater convenience than dine-in brands.

“Modern consumers expect to be able to customize where, when and how they enjoy their food, without compromising the quality of their food or experience,” the brand noted in the filing. “Whether it is an in-restaurant order, an order picked up in-restaurant, a drive-thru pickup order or a delivery order, Cava’s easy and quick access has been key to our success and is expected to strengthen as we further enhance channels of access for our guests.”

Fast-casual brands have been performing significantly better than other kinds of restaurants on the stock market throughout 2023. For instance, Chipotle Mexican Grill has seen a 62% increase in its stock price since the start of the year, and Shake Shack has seen a 57% increase.

In contrast, quick-service restaurant (QSR) giant Yum Brands, the parent company of Taco Bell, KFC, Pizza Hut and The Habit Burger Grill, has only seen 3% stock price growth over the course of the year so far. McDonald’s an 8% increase, and Starbucks a 1% decrease.

Casual dining brands have fared somewhat better, but not to the extent of fast casuals. Brinker International’s price has increased 19% year to date, and Darden’s 16%. 

Yet overall, fast-casual brands are increasingly facing competition from other kinds of food sellers, such as grocery stores, convenience retailers and direct-to-consumer (D2C) brands. Research from the latest edition of PYMNTS’ Connected Dining report, “Connected Dining: Ready-to-Eat Meals Are Eating Restaurants’ Lunch,” which drew from a survey of more than 2,300 U.S. consumers, found that many consumers are opting for other prepared meals options over restaurant dining.

Specifically, the study found that about six in 10 consumers had purchased a ready-to-eat meal from a store or eCommerce platform in the previous month, and 28% of those surveyed did so once a week or more.