Shares of Fogo de Chao Jump in Trading Debut

Investors snatched up shares of Brazilian steakhouse chain Fogo de Chao in its trading debut Friday, making it the latest in a string of restaurant initial public offerings to jump out of the gate.

Fogo shares opened at $26, 30% above their IPO price of $20, which was above the company's expected range of $16 to $18. At the $26 level, the company's market value would be roughly $708 million, not including additional shares that could be sold under a so-called overallotment option.

Shares trade on the NYSE under the ticker symbol "FOGO."

Recent restaurant IPOs have been cheered by investors. Shares in Wingstop surged 61% when the chicken-wing chain went public last Friday; shares in burger joints Shake Shack Inc. and Habit Restaurants Inc. more than doubled in their recent debuts, while Bojangles Inc. shares rose 40% out of the gate when the chicken-and-biscuit purveyor went public last month.

Still, some chains haven't been a sure bet after their initial pop. El Pollo Loco, which went public at $15 a share last July, jumped more than 60% on its first day of trading and was briefly above $40 per share in early August—but it closed Thursday at $20.87, below its first-day close and down sharply from its peak.

Dallas-based Fogo de Chao, founded in 1979 by brothers in Porto Alegre, Brazil, straddles the fast-casual and casual segments. Fogo is known for its grill-to-table meats and extensive buffet that features a variety of vegetable sides and desserts. It also offers table service and a full bar, and the dé cor is characteristic of a more upscale restaurant.

For 2014, the chain reported $262 million in revenue, up 20% from a year earlier. In its most recent quarter, Fogo reported a 0.5% increase in same-restaurant sales, compared with a 2.6% average increase in casual chains and a 6.5% rise in fast-casual restaurants, according to a report by Sterne Agee CRT.

Write to Lisa Beilfuss at [e-mail]

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