Rubio’s Restaurants Hopes High Tech Isn’t Only Fish in IPO Sea
Are investors beginning to look at other industries besides those highflying technology-related initial public offerings?
If so, it could mean big things for an upcoming IPO from a fish taco chain based in Carlsbad.
So far this year, the market for IPOs has been two-tiered, with seemingly anything “dot-com” seeing big per-share price jumps on the first day, and anything non-tech providing lackluster returns at best.
But last week, with tech stocks falling dramatically Monday, investors’ sights seemed to be widening.
While tech IPOs returned to their winning ways--for example, Santa Monica’s Launch Media Inc., an online site for new music, rose 29% in its first trading day Friday--a non-tech offering surprised analysts with its strong showing.
Buca Inc., which runs the Minneapolis-based Buca di Beppo chain of restaurants specializing in home-style southern Italian food, completed a $36-million IPO on Wednesday through underwriter U.S. Bancorp Piper Jaffray. Its shares, priced at $12, surged 52% in their first trading day to $18.25.
“Buca was such a surprise on the street,” said David Menlow, head of IPO Financial Network, a New Jersey data firm. “I think it shows it’s not all about tech anymore. Hopefully, we’ll see less emotionalism and more scrutiny of these offerings.”
Buca’s launch reminded some of the strong debut by another restaurant stock, Phoenix-based P.F. Chang’s China Bistro Inc., which went public Dec. 4 through underwriter Donaldson, Lufkin & Jenrette. That stock, which went public at $12 and closed at $18.50 in its first trading day, now trades at $25.13.
While some non-tech IPOs have floundered--such as Korn/Ferry, the Los Angeles-based executive management search firm, and Del Monte, the San Francisco food company--hip restaurant chains have been winners of late.
The trend, says Menlow, bodes well for a California company called Rubio’s Restaurants Inc.
“Rubio’s is a stock people will start to go over to, thinking, ‘I can’t miss out on three in a row,’ ” said Menlow, referring to the hot starts for P.F. Chang’s and Buca.
“It’s a coattails thing. I think it will be very good news for Rubio’s,” added Tom Taulli, IPO specialist and author. “What’s going on is that IPOs have such prominence right now, and investors are looking at all types of IPOs--not just tech.”
Rubio’s was born when Ralph Rubio tasted fish tacos on a spring break trip to Baja California in 1978 and got the recipe from a vendor named Carlos. He later persuaded his businessman father to join him in launching the first Rubio’s restaurant at the site of a failed hamburger joint in San Diego.
Ralph, the firm’s president and chief executive, and his father, Rafael, who is chairman, together own nearly 40% of the company. If the 2.25 million shares price at the expected $10, they could gross about $22.5 million.
Rubio’s is also known for its mascot, a smiling fish named Pesky Pescado. The tacos contain shredded cabbage, salsa, a white sauce, a strip of fish and a slice of lime.
The company, which has 64 restaurants under the name Rubio’s Baja Grill, plans to open 28 next year and 36 in 2000. Most of its eateries are in California, but it also has six in Arizona, four in Las Vegas and one in Denver.
The company reported $44.7 million in sales last year, a 52% increase from the previous year, according to its securities filings. The growth came mainly from adding new stores. It reported a profit of $915,288 in 1998, versus a loss of nearly $1 million the year before.
The company, which has 1,700 employees, plans to use the IPO proceeds to open more stores and pay off loans.
The Rubio’s IPO will be closely watched on Wall Street because it will be one of the first offerings underwritten by Thomas Weisel Partners, the San Francisco investment bank started last year by Thomas Weisel, founder of Montgomery Securities. The company will trade under the symbol RUBO on Nasdaq.
Meanwhile, in a lackluster IPO debut Friday, shares of Statia Terminals Group, an oil and gas company based in the Netherlands, dropped $1.63 to $18.38 on Nasdaq. At least 2.94 million shares changed hands in the deal underwritten by Bear, Stearns & Co., known for several successful Internet IPOs last year, including Theglobe.com.
But New York-based Thestreet.com could be a blockbuster in its estimated $80-million deal as early as this week, Taulli and other analysts said.
Remember that initial public offerings are highly speculative and suitable only for aggressive investors. Debora Vrana covers investment banking and the securities industry for The Times. She can be reached by e-mail at debora.vrana@latimes.com or by mail at Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053.
