Teacherman1 (49.31)

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The Next Chipolte?

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July 15, 2012 – Comments (6)

Chuy Holdings, Inc.

This may be one to keep an eye on.

I read in the Austin American Statesman about a new IPO coming up for CHUY's TexMex restaurants which may be a growth story over the longer term.

Not suggesting anyone buy the IPO, but one to watch to see how things transpire.

The target offering price is in the $12 range.

Here is a link to the Prospectus/amended registration filed with the SEC.

http://www.sec.gov/Archives/edgar/data/1524931/000119312512299859/d204936ds1a.htm#toc204936_22

They had originally intended to file last year, but pulled it because of general market conditions at that time.

They have been around since 1982, and currently operate 32 restaurants, with plans to open 3 more by years end.

They have been financed by private equity, and after the IPO, Goode Partners LLC (which invested about $30M) will be about a 60% holder.

They have been showing annual growth, and are in several states.

They plan to use the proceeds to pay off term debt and to fund additional growth.

Their model is not to have a chain of identical outlets, but to operate "regional clusters of like outlets".

While their "home base" is in Texas, they are currently operating in Tenn, Ky, Ala, Ind, and plan to open locations in other areas.

This is not a recommendation, but simply a "heads up" for those who like the "growth potential" of the reataurant business.

Will provide more information as I have time to study it, but wanted to post something here other than "the sky is falling" and the "world is coming to an end".

Could be nothing, or could be an opportunity to get in early on the next "Chipolte".

Do your own DD and good luck if you decide to take a ride.

JMO and worth exactly what I am charging for it.

6 Comments – Post Your Own

#1) On July 15, 2012 at 1:31 PM, Teacherman1 (49.31) wrote:

Here is a link to their website to give you a little better feel for who they are.

http://www.chuys.com/

Note their statement that "If you've seen one Chuy's, you've seen one Chuy's"

They individualize each location.

Great food by the way.

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#2) On July 16, 2012 at 3:34 PM, ikkyu2 (99.45) wrote:

They are competing with Chipotle, and other fast Tex-Mex like Chevy's. I don't like that model. Think of all the individually owned and operated burger joints you see next to your local McDonalds.

...

I do like BWLD. Lot of growth in that niche.

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#3) On July 20, 2012 at 12:23 PM, Teacherman1 (49.31) wrote:

ikkyu2

I don't know if they will be able to compete with Chipolte or not, or even if they need to. There are some significant differences in their menus, even if some of the other things are similar.

I "earmarked" this only as something to keep an eye on.

I don't normally invest in the restaurant business, but if I were to do so, I would much rather be in one on its way up through expansion, then one that is approaching the saturation point because of the number of outlets and the "new" wearing off.

As long as same store sales are increasing at a reasonable rate, then Chipolte remains at least a "semi growth" stock, but once you reach a certain size, each new store has a more limited influence on the bottom line.

I don't know if Chuys will turn out to be an "investable" story or not, but I intend to keep an eye on them to see where they might go.

JMO and worth exactly what I am charging for it.

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#4) On July 22, 2012 at 7:04 PM, Teacherman1 (49.31) wrote:

Here is a link that gives more detailed information on the pending IPO.

www.nasdaq.com/markets/ipos/company/chuys-holdings-inc-861521-67870

Again, not suggesting anyone buy the IPO, but I think it is worth following to see where they might go from here.

JMO and worth exactly what I am charging for it.

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#5) On July 31, 2012 at 11:46 AM, Teacherman1 (49.31) wrote:

Unbelieveable.

They are up almost 40% since their IPO.

Way too rich for my blood at this point in their "business life cycle", but maybe one day I will look back and say, I should have bought.

Nah, just "new toy" surge.

It will get to this level for real one day, but it's not worth that now.

JMO and worth exactly what I am charging for it.

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#6) On August 09, 2012 at 1:10 PM, Teacherman1 (49.31) wrote:

Be careful with this one, if you are thinking about getting in.

They are a good company, but this price is not justified at all.

The PE firm that holds the majority of the stock will be able to "cash out" after the first of the year, and if they do, it will likely drop like a rock.

At least you will get to have a couple of quarters to see how they perform before that can happen, but you don't want to get caught if it does.

If you just have to have it, "hoping" that it really is the next Chipolte's, then I would suggest you go in light until you see how management is able to execute their longer term plans.

Not trying to "bad mouth" them, but they haven't earned this price yet.

JMO and worth exactly what I am charging for it.

Their food is great, by the way.

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