J. Alexander’s Holdings Inc. has filed its registration for an initial public offering with the Securities and Exchange Commission, just two years after Fidelity National Financial Inc. took the Nashville-based upscale casual dining chain private.
The company wants to raise $75 million in the proposed IPO, according to documents filed with the SEC this week. Funds will be used to pay off $34.6 million in long-term debt and to fund its growth, according to the filing.
A number of restaurant chains are getting in line to go public, with investors giving strong valuations to growth concepts. J. Alexander’s is the second chain to file IPO documents in the past week alone, following the Habit Burger filing two weeks ago. Other chains are reportedly considering offerings, including the Texas-based chicken wing concept Wingstop.
J. Alexander’s is not new to the public markets. The chain was publicly traded until two years ago, when Fidelity took it private through its subsidiary, American Blue Ribbon Holdings — which owns O’Charley’s, Village Inn, Baker’s Square, Ninety Nine Restaurants and Max & Erma’s.
Last year, Fidelity spun off J. Alexander’s and another one of its acquisitions, Stoney River Steakhouse and Grill, into their own unit. J. Alexander’s closed three locations, in Chicago, Orlando and Scottsdale, Ariz. That gives the chain 30 locations, plus its 10 Stoney River units.
Both chains operate in a more upscale market. J. Alexander’s average check was $29.45 in the first nine months of the year, while the average check at Stoney River was $44.83. Chains that operate in the upscale casual market have performed better than their mid-market cousins in recent years, thanks to a strong economy for higher-end consumers.
Though the company has closed underperforming units in recent years, J. Alexander’s did start plotting growth in 2012 and is planning to open its first new unit in Columbus, Ohio, toward the end of this year. “We believe there are significant opportunities to grow our concepts in both existing and new markets nationwide,” the company said in its SEC filing.
J. Alexander’s reported an adjusted EBITDA of $17.7 million in 2013, according to SEC documents, and $15.8 million in the first nine months of this year. Same-store sales at the chain rose 5 percent last year and 2.6 percent in the first nine months of this year.
Net sales for the first nine months of the year were up 7.8 percent, to $148.9 million. Much of that increase, $5.9 million, came from the addition of Stoney River to the unit. Another $5.3 million came from additional sales at J. Alexander’s locations.
Rising beef costs are among the biggest issues the chain currently faces. Beef costs are up 8 percent so far this year, according to the SEC filing, and the company predicts those costs will keep increasing in the next 12 to 18 months. Still, restaurant operating profit margins at J. Alexander’s were 13.2 percent in the first nine months of the year, compared with 10.6 percent last year. Guest counts in the first nine months were up 1.2 percent.
Stoney River has eliminated a policy of price breaks that has turned off some customers. In the first 31 weeks of the year, its average check rose 13.8 percent, but guest counts fell 12.8 percent. The company attributed the decrease to the elimination or reduction of discounts and coupons.
Contact Jonathan Maze at [email protected].
Follow him on Twitter at @jonathanmaze
