The parent to the Checkers and Rally’s drive-in chains is preparing for an initial public offering later this year, three sources have told Reuters.

Tampa, Fla.-based Checkers Drive-In Restaurants Inc. is owned by New York City-based private-equity group Wellspring Capital Management LLC, which acquired the brands in a June 2006 deal estimated at $188 million. The company has about 800 drive-in restaurants in more than 25 states.

Mark Semer, a Wellspring spokesman at Kekst and Company, said Wednesday that the company could not comment on the report. A message left at Checkers headquarters was not returned.

The company reportedly has hired investment banks Piper Jaffray and Jefferies & Co. as part of the IPO process, Reuters reported.

Checkers’ reported IPO comes nearly a year after Wellspring tried to sell the company, but that plan was pulled in October, sources at PEHub.com said at the time.

In Nation’s Restaurant News’ recent Top 100 census, Checkers alone had 488 units and ranked No. 89 in U.S. systemwide sales, down from No. 88 in the prior year. Sales for the Checkers brand in 2012 rose to $446.1 million from $358.3 million in 2011. Checkers ranked No. 61 among chains in growth of U.S. systemwide sales, increasing 3.72 percent over the prior year.

Sales for 288-unit Rally’s, which were in the Second 100 census, were $249.5 million in 2012, an increase from $239.1 million in the prior year. U.S systemwide sales in 2012 grew 4.35 percent from 2011.

In October, Jennifer Durham, Checkers vice president of franchise development, told NRN that a new restaurant layout — the first in the company’s 25-year history — helped increase sales and traffic in test units.

Checkers initially tested the new design in Mobile, Ala., starting in November 2011. Durham said the restaurant did about $750,000 in annual sales before the redesign, jumping to $1.2 million with the new model. At the time, the company planned to redesign seven more corporate locations during 2013.

A number of restaurants chains have gone public in the past year. Most recently, Broomfield, Colo.-based Noodles & Company went public in June, initially pricing at $18 a share, but quickly jumping more than 100 percent to $35 a share on its first day of trading. On Wednesday at 12:30 EST Noodles & Company was trading at about $45.29 a share.

In August, Chicago-based Potbelly Corp. filed a prospectus for a $75 million IPO.

Other IPOs in the past year include Tampa, Fla.-based Bloomin’ Brands Inc., parent to Outback Steakhouse, as well as Austin, Texas-based Chuy's Holdings Inc. and Southlake, Texas-based Del Frisco's Restaurant Group Inc.

Contact Ron Ruggless at ronald.ruggless@penton.com.
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