We estimate that the net proceeds from the sale of shares by us in this
offering will be approximately $69.0 million, after deducting underwriting
discounts and commissions and estimated expenses, based upon the initial
public offering price of $13.00 per share. We intend to use the net proceeds
received by us from this offering to repay outstanding borrowings under our
senior secured credit facility.
On May 24, 2011, we entered into our senior secured credit facility, which
bears interest at a variable rate based on prime, federal funds or LIBOR plus
an applicable margin based on our total leverage ratio. Our interest rate at
March 25, 2012 was 8.5%. The senior secured credit facility matures on May
24, 2016 or sooner upon the occurrence of an event of default.
We used the following amounts of the net proceeds from our senior secured
credit facility as follows:
. approximately $20.8 million to repay all outstanding loans and accrued
and unpaid interest, servicing fees, commitment fees and letter of credit
fees under our credit facility with Wells Fargo Capital Finance, Inc.;
. approximately $10.1 million to repay the outstanding principal, interest
and expenses under our credit facility with HBK Investments L.P.;
. approximately $1.6 million to pay the expenses of the lenders; and
. approximately $20.0 million to pay a dividend of $19.0 million to our
common and preferred stockholders and other special cash bonus payments to
certain members of management.
On March 21, 2012, we entered into a credit facility amendment to increase
the available amount under the facility from $67.5 million to $92.5 million.
In connection with the amendment, we borrowed an additional $25.0 million
under the term A loan facility of our senior secured credit facility. We
used the net proceeds from the amendment and the additional borrowings under
the term A loan facility as follows:
. approximately $22.4 million to repurchase shares of our common stock, series
A preferred stock, series B preferred stock, and series X preferred stock on
April 6, 2012;
. approximately $2.0 million to pay the termination fee to terminate the
advisory agreement with our Sponsor; and
. approximately $0.6 million to pay transaction costs related to the credit
facility amendment and the stock repurchase.
Additionally, we increased our borrowings under our revolving credit facility
by $2.3 million to fund new restaurant capital expenditures. On March 28 and
May 11, 2012, we also borrowed $2.0 million and $2.5 million, respectively,
under our delayed draw term B loan. Our interest rate at May 15, 2012 was
8.5% under our delayed draw term B loan. We used these borrowings to fund
new restaurant capital expenditures and to repay $1.5 million outstanding
under our revolving credit facility.
The amounts and timing of our actual expenditures will depend on numerous
factors, including the status of our expansion efforts, sales and marketing
activities and competition. Accordingly, our management will have broad
discretion in the application of the net proceeds, and investors will be
relying on the judgment of our management regarding the application of the
proceeds from this offering.
The restaurant business is intensely competitive with respect to food quality,
price/value relationships, ambience, service and location, and is affected by
many factors, including changes in consumer tastes and discretionary spending
patterns, macroeconomic conditions, demographic trends, weather conditions,
the cost and availability of raw materials, labor and energy and government
regulations. Our main competitors are full service concepts in the
multi-location, casual dining segment in which we compete most directly
for real estate locations and customers, including Texas Roadhouse,
Cheddar’s Casual Cafe and BJ’s Restaurants. We also compete with other
providers of Tex Mex and Mexican fare and adjacent segments, including
casual and fast casual segments. We believe we compete favorably for
consumers on our food quality, price/value and unique ambience and
experience of our restaurants.
Company Description
Chuy’s is a fast-growing, full-service restaurant concept offering a
distinct menu of authentic, freshly-prepared Mexican and Tex Mex inspired
food. We were founded in Austin, Texas in 1982 by Mike Young and John Zapp
and, as of March 25, 2012, we operated 32 Chuy’s restaurants across Texas,
Tennessee, Kentucky, Alabama, Indiana, Georgia and Oklahoma with an average
unit volume of $5.0 million for our 18 comparable restaurants for the twelve
months ended March 25, 2012. Our restaurants have a common décor, but we
believe each location is unique in format, offering an “unchained” look and
feel, as expressed by our motto “If you’ve seen one Chuy’s, you’ve seen one
Chuy’s!” We believe our restaurants have an upbeat, funky, eclectic, somewhat
irreverent atmosphere while still maintaining a family-friendly environment.
We are committed to providing value to our customers through offering generous
portions of made-from-scratch, flavorful Mexican and Tex Mex inspired dishes.
We believe our employees are a key element of our culture and set the tone for
a fun, family-friendly atmosphere with attentive service.
We have grown the total number of Chuy’s restaurants from eight locations as
of December 30, 2007 to 32 locations as of March 25, 2012, representing a
compound annual growth rate of 38.6%. We have opened five restaurants
year-to-date in 2012, and plan to open an additional two to three restaurants
by the end of the year. From fiscal year 2007 to the twelve months ended
March 25, 2012, our annual revenue increased from $42.1 million to $138.9
million and our Adjusted EBITDA increased from $5.7 million to $20.6 million,
representing compounded annual growth rates of 32.4% and 35.3%, respectively.
Over the same period, our net income (loss) increased from ($0.9 million) to
$2.6 million. For fiscal year 2011, our net income was $3.5 million and for
the thirteen weeks ended March 25, 2012, our net income was $0.4 million.
Our change in comparable restaurant sales has outperformed the KNAPP-TRACK™
index of casual dining restaurants for each of the last five years. In our
most recent quarterly period ended March 25, 2012, comparable restaurant
sales increased 2.6% over the same period from the prior year. We believe
the broad appeal of the Chuy’s concept, historical unit economics and
flexible real estate strategy enhance the portability of our concept and
provide us opportunity for continued expansion.
We offer the same core menu during lunch and dinner, which was created using
recipes from families and friends of our founders, and includes enchiladas,
fajitas, tacos, burritos, combination platters and daily specials,
complemented by a variety of appetizers, soups and salads. Each of our
restaurants also offers a variety of homemade sauces made from scratch
daily in every restaurant, including the signature Hatch green chile and
creamy jalapeño sauces, all of which provide our customers with an added
ability to customize their orders. Our menu offers considerable value
to our customers, with only three out of 49 menu items priced over $10.00.
We also offer a full-service bar in all of our restaurants providing our
customers a wide variety of beverage offerings, featuring a selection of
specialty cocktails including our signature on-the-rocks margaritas made
with fresh, hand-squeezed lime juice and the Texas Martini, a made-to-order,
hand-shaken cocktail served with jalapeño-stuffed olives. For the twelve
months ended March 25, 2012, alcoholic beverages constituted 19.5% of our
total restaurant sales.
While the layout in each of our restaurants varies, we maintain
distinguishable elements across our locations, including hand-carved,
hand-painted wooden fish imported from Mexico, a variety of vibrant Mexican
folk art, a “Nacho Car” that provides complimentary chips, salsa and chile
con queso in the trunk of a classic car, vintage hubcaps hanging from the
ceiling, colorful hand-made floor and wall tile and festive metal palm trees.
Our restaurants range in size from 5,300 to 12,500 square feet, with seating
for approximately 225 to 400 customers. Nearly all of our restaurants feature
outdoor patios. We design our restaurants to have flexible seating
arrangements that allow us to cater to families and parties of all sizes.
Our brand strategy of having an “unchained” look and feel allows our
restaurants to establish their own identity and provides us with a flexible
real estate model, which includes ground-up prototypes and conversions of
existing structures. Our restaurants are open for lunch and dinner seven
days a week, serving approximately 7,500 customers per location per week
or 400,000 customers per location per year, on average.
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Our principal executive office is located at 1623 Toomey Road, Austin, Texas
78704 and our telephone number is 1-888-HEY-CHUY. Our website address is
www.chuys.com.