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National Restaurant Association - Habit Burger CEO: IPO not the finish line

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Habit Burger CEO: IPO not the finish line

Habit Burger made headlines last year when the Irvine, Calif.-based fast casual chain’s share price doubled shortly after its November IPO. It was a big year for the chain, which also was selected as having the best-tasting burger in America by Consumer Reports.

But while the IPO was a major milestone for the chain, it was by no means the finish line, Habit Burger CEO Russ Bendel told attendees of the National Restaurant Association’s Finance Summit.

“It’s a great cause of pride and recognition for your group and its investors, but it’s just the starting point,” Bendel said. “Whether you’re public or private…there are always shareholders looking for the appropriate level of return. You have to take a much longer view of the horizon.”

The first Habit Burger was opened by two brothers in 1969. A majority stake was sold to the private equity firm KarpReilly in 2007, creating a partnership that Bendel said filled in a lot of the pieces the company needed to grow beyond a regional chain and, ultimately, into a publicly traded company.

 So what attracts private equity to a regional chain like Habit Burger? A number of factors, Bendel said.

  • A proven, profitable concept.
  • A flexible, open-minded management team that provides strong leadership.
  • Involvement by the founders and a willingness to maintain an ownership stake

For restaurants considering partnering with private equity firms, they should look for more than just the firm's ability to write a check, Bendel said.

“Do they understand the restaurant space?” Bendel said. “Have they done it before? What’s their history of success?” Restaurants that partner with private equity firms should be prepared for a long-term relationship, he said. Restaurants should look for partners that can help them scale their business and prepare it for stronger growth, he said.

“At the end of the day, you’re going to be partnered with these people for an extended period of time,” Bendel said. “Are they people you want to be partnered with? Not everything goes according to plans. Economic issues occur, and as we all know, it affects our business in a significant way. You trust each other, share a common plan, and are willing to be flexible as you go down that path.”

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