The Buzz

All markets and investing news all the time

Don't mess with Tex-Mex: Chuy's spikes 18% in market debut

July 24, 2012: 1:26 PM ET

Click the chart to track shares of Chuy's.

Shares of Tex-Mex restaurant chain Chuy's spiked as much as 18% Tuesday as they made their stock market debut.

Austin, Texas-based Chuy's (CHUY), which operates 36 full-service restaurants across the Lone Star State and the Midwest, raised $76 million in its initial public offering after pricing 5.8 million shares at $13 apiece, the high ends of its estimated range.

Chuy's boasts about having a broad customer base, with only three of the 49 items on its Tex-Mex menu priced over $10. But Chuy's also warned that, like others in the restaurant industry, it depends on consumer discretionary spending and if weak economic conditions continue or worsen, sales could slow.

Last Friday, shares of Chipotle Mexican Grill (CMG) plunged more than 20% after the company reported weaker-than-expected sales growth. Chipotle's same-store sales, a key measure of demand, grew only 8% during the quarter, compared with an expected increase of 10.2%.

Related: Chipotle: A spicy stock downgraded to mild

Chuy's revenue rose 28% to $37.5 million during the quarter ended March 25, driven by $7.7 million in incremental sale from  new restaurants. Same-store sales - which count sales at stores open a year or more - increased just 2.6%. And Chuy's overall profit declined 70% as the restaurant chain spent more money on training and staffing at new locations.

Fellow restaurant operator Del Frisco's is expected to price its initial public offering after the market close Thursday, and begin trading Friday under the ticker "DFRG." The high-end steakhouse is expected to price 7 million shares between $14 and $16 a piece.

Chuy's successful first day of trading is yet another sign that Facebook's (FB) botched debut didn't actually derail the IPO market, despite the fears. Since the social media giant went public on May 18, nine other companies have stepped into public realm, including tech firm Palo Alto Networks (PANW) and online travel site Kayak (KYAK), according to IPO research firm Renaissance Capital.

Fear & Greed
Sponsored by

To view my watchlist

Not a member yet?

Sign up now for a free account
Stupid Stock Move of the Day
#StupidStock Moves of the Day! $CAT $JOY up 4%? China rate cut may eventually help. But it's also reflection of weaker Chinese economy now.
Powered by WordPress.com VIP.
Follow

Get every new post delivered to your Inbox.

Join 242 other followers