Mimi’s Cafe Plans $85-Million Offering as Investors Regain Appetite for IPOs
The company that owns Mimi’s Cafes, which serve up large portions of American comfort food in faux French country settings, filed plans Thursday to raise up to $85 million in an initial public offering.
Mimi’s Cafe Inc.’s shares are expected to fare well on Wall Street, analysts said, given investors’ renewed appetite for new offerings and the positive performance of restaurant shares despite the stock market downturn.
“You can really justify a restaurant IPO in this marketplace if you have the performance numbers, and it looks like Mimi’s does,” said Tom Taulli, author of the book “Investing in IPOs.”
With 81 restaurants in 10 states, Tustin-based Mimi’s revenue rose to $240.5 million in 2003 from $48.4 million in 1995, according to Securities and Exchange Commission filings. In the first three months of this year, Mimi’s revenue was $68.3 million, compared with $56.2 million in the same quarter in 2003, the filings said.
Mimi’s restaurants cater to families and senior citizens and draw patrons who spend an average of $9.49 per meal. Still, the elaborate New Orleans French Quarter theme at Mimi’s elevates it from Denny’s or Coco’s, said Randall Hiatt, a restaurant consultant in Costa Mesa.
“Mimi’s has been a real leader in creating a specialty-themed restaurant for family dining that’s still affordable,” he said. “They are really leaders in a new family restaurant category.”
The first Mimi’s was opened in Anaheim in 1978 by Thomas M. Simms, Mimi’s chairman, and his father, Arthur Simms, a longtime restaurateur who ran the MGM commissary during the 1950s, serving such stars as Clark Gable and Judy Garland.
The inspiration for the chain came from family restaurants the Simmses had visited in New Orleans. The interior of a typical Mimi’s resembles a French country home with dormer windows, bright awnings and stone walls. Favorite dishes include the “Famous” Chicken Pot Pie and Pot Roast.
Arthur Simms named the restaurants after a woman he fell in love with in a small French town during a celebration of the end of World War II. Simms flew spy missions for the U.S. Air Force out of London and into France during the war. He died in 2000 at age 82.
Analysts said the company had a strong chief executive in Russ Bendel, 49, who came on board as president in 2001, after roles at Marriott Corp. and casual Mexican food chain El Torito. Bendel was made chief executive this year after Thomas Simms, 55, resigned that post.
Mimi executives couldn’t comment on its IPO because of the SEC-imposed “quiet period” before any new stock offerings.
In the SEC filings, the company said Bendel made $286,000 last year, plus $50,000 in bonuses; Simms made $187,000 and $30,000 in bonuses.
It was unclear Thursday how many shares would be sold to the public or how much of the company would remain controlled by company insiders. Proceeds from the IPO would be used to pay for expansion and reduce debt, the filings said.
The 26-year-old chain has grown rapidly but remains profitable. Average sales at Mimi’s restaurants open at least one year climbed to $3.3 million in 2003 from $2.4 million in 1995, according to the filings.
Mimi’s has posted profit every year since 1999 except in 2003 because of $2.5 million in legal costs incurred in settling a suit stemming from alleged misclassification of managers as exempt from overtime.
In 1996, Stamford, Conn., investment firm Saunders Karp & Megrue bought a majority stake in Mimi’s in a restructuring.
Mimi’s has restaurants in Florida, but in no other states on the East Coast. This year it plans to expand into Nebraska and Missouri with nine outlets.
“It will be interesting to watch how well they do as they travel eastward,” said Janet Lowder, a restaurant consultant in Rancho Palos Verdes.
“Some restaurant concepts established in California do travel well.”
There can be dangers in a too-rapid expansion. Westchester-based California Pizza Kitchen Inc., for example, saw full-year profit in 2003 tumble more than 40% after sluggish results came in from new restaurants opened in more sparsely populated areas.
Restaurant IPOs in the last decade have done very well. Scottsdale, Ariz.-based P.F. Chang’s China Bistro Inc. went public in 1998 at $12 a share and has increased 700% since then. CPK, which went public in 2000, is up 36% from its offer price. And restaurant firms that have gone public in the last four years have risen on average 16%, according to New Jersey data firm Thomson Financial.
“Restaurant stocks can be cyclical due to the economy, as people tend to eat out less in a downturn,” said Barry M. Stouffer, restaurant analyst with Richmond, Va.-based investment firm BB&T; Capital Markets. “But when the recovery starts, they do well. The restaurant sector has been hotter than a firecracker of late.”
Once public, Mimi’s would trade under the symbol “MIMI” on Nasdaq. Piper Jaffray, CIBC World Markets and Banc of America Securities plan to underwrite the IPO, according to the SEC filings.
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Restaurant IPOs
Recent initial public stock offerings by restaurant companies:
*--* Offer Thurs. Percent Date Issue Headquarters price close change 8/2/00 California Pizza Kitchen Los Angeles $15.00 $20.43 +36% 3/1/01 AFC Enterprises Atlanta 17.00 21.5 +26 5/2/01 Briazz Seattle 8.00 0.15 -98 5/22/01 Smith & Wollensky New York 8.50 7.19 -15 12/10/01 Aramark Worldwide Philadelphia 23.00 28.69 +25 7/18/02 Red Robin Greenwood Gourmet Burgers Village, CO 12.00 29.00 +141 11/21/02 Cosi New York 7.00 5.65 -19 11/20/03 Buffalo Wild Wings Minneapolis 17.00 31.06 +83
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Source: Thomson Financial
