Outback Serves an IPO; Benihana Asks for a Private Table


Outback steakhouseThe tables are turning in the casual dining industry. Outback Steakhouse is gearing up to go public. Benihana (BNHN) is looking for a way out.

Outback has been public before, thriving during the early 1990s when casual steakhouses were all the rage. Investors hopped on market leaders Outback and Lone Star Steakhouse, opening the door for other IPOs including LongHorn Steakhouse, Roadhouse Grill, and Texas Roadhouse (TXRH).

It didn't necessarily end well. Roadhouse Grill filed for bankruptcy. LongHorn Steakhouse was eventually acquired by Olive Garden and Red Lobster parent Darden (DRI). Outback and Lone Star Steakhouse went private.

Kangaroo Holdings -- the collection of private equity firms that acquired Outback in 2007 -- revealed in an SEC filing that it is considering taking the Australian-themed steakhouse public in the next two months.

Outback isn't just the namesake chain. Beyond the 963-unit Outback Steakhouse, the restaurant operator also owns Carrabba's, Bonefish Grill, Fleming's, and Roy's. After the healthy stock market bounce in recent months, it would seem to be a good time for a well-known consumer-facing company to say "g'day, mate" to Wall Street again.


It's a different scene at Benihana, the largest chain -- by far -- specializing in teppanyaki, where a chef prepares meals with artistic flair on iron griddles surrounded by patrons.

After unsuccessfully trying to sell itself off two years ago, Benihana is hoping to make the most of its buoyant share price by trying to cash out at a higher price. The stock has nearly doubled since bottoming out last summer. The company -- which also owns the trendy RA Sushi chain -- is exploring "strategic alternatives," which is a Wall Street euphemism for putting itself up on the bidding block. Whether a private equity firm wants to take its own sharpened knives to the Miami-based Japanese restaurant company or a larger restaurant operator wants to diversify its concept portfolio, it's a good time to punch out.

There should be healthier interest in Benihana now. The economy is showing more signs of life than when the company tried to smoke out a suitor two summers ago. It's truly an iconic brand that sets itself apart in casual dining. From Mad Men to The Office to the post-monologue skit in this month's Jonah Hill-hosted Saturday Night Live, Benihana usually nabs plenty of free publicity.

Check, Please

These are interesting times in the restaurant industry. Upscale steakhouse Del Frisco's filed initial paperwork to go public earlier this year, around the same time that rival chophouse Morton's was being acquired.

Investors should expect more chains changing hands in the coming months. Whether it's private equity firms hoping to cash in on prior acquisitions or publicly traded eateries looking to make the most of new stock highs, the tables are indeed turning.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Darden Restaurants.

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March 17 2012 at 8:28 PM Report abuse rate up rate down Reply

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