Orange Leaf Holdings LLC is seeking takeovers as the self-serve frozen-yogurt chain plans for a potential initial public offering, said Chief Executive Officer Reese Travis.
An IPO is possible in 2015, though the Oklahoma City-based company may conduct the sale sooner if it finds an acquisition target that it could pay for with funds raised in public markets, Travis said in a telephone interview.
Orange Leaf’s IPO would follow offerings at restaurant chains Noodles & Co. (NDLS) and Potbelly Corp. (PBPB), which more than doubled on their trading debuts this year after raising a combined $232 million. The Bloomberg U.S. Quick Service Restaurant Index, which includes McDonald’s Corp. and Yum! Brands Inc. (YUM), had surged 34 percent in the year through yesterday, compared to a 18 percent gain in the Standard & Poor’s 500 Index.
“Investors are showing that there’s demand for these types of concepts,” Travis said. “The success of Noodles, the success of Potbelly and all other brands that are out there shows that the market is ripe for concepts like Orange Leaf.”
With more than 300 locations, Orange Leaf projects system-wide sales of $100 million this year, up from $80 million last year, Travis said. Its competitors include Pinkberry, which is backed by Maveron LLC, a venture-capital firm co-founded by Starbucks Corp. (SBUX) founder Howard Schultz.
TCBY Enterprises Inc., which stands for “The Country’s Best Yogurt,” was started in 1981 and has about 650 stores around the world. TCBY is a unit of Famous Brands International, which is owned by Z Capital Partners.
Orange Leaf had about 6.4 percent of the U.S. frozen-yogurt market as of October 2012, according to the latest industry report from IBISWorld, a market-research firm. Competitors TCBY and Pinkberry each held more than 16 percent each, the report showed.
Travis, 35, previously worked for hedge funds managed by Wexford Capital LP, covering oil and natural-gas services. He became an Orange Leaf franchisee before acquiring the company for about $5 million in 2010, he said.
He owns 75 percent of Orange Leaf along with another investor, whom Travis declined to identify. Travis’s friends and family members own the other 25 percent, he said.
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