Pollo Tropical owner hints at long-term IPO plans
Pollo Tropical has seen business improve under ARB’s ownership. | Photo: Shutterstock
Authentic Restaurant Brands (ARB), the owner of Pollo Tropical, Primanti Bros. and three other regional chains, sees a potential IPO in its future.
The Dallas-based company took the stage at the ICR investor conference Wednesday along with other privately held restaurant companies. During the Q&A-style session, CEO Alex Macedo said that in three to five years, Authentic would like to appear at ICR on Tuesday, when publicly traded chains make their investor pitches.
It was a notable update from a company that has taken a measured approach to growth up to this point. Founded in 2021 as a subsidiary of private-equity firm Garnett Station Partners, ARB has focused on acquiring high-performing regional chains, investing in their tech and operations, and growing them within their markets.
Those chains also include P.J. Whelihan’s, Mambo Seafood and Tavern in the Square, which it acquired last year. It operates 231 locations altogether.
Macedo said the company would like to add two or three more brands in the next three to five years, with a focus on concepts with strong unit economics and customer scores—brands that “people would be willing to tattoo on their arms,” Macedo said.
It does not restrict itself to any particular cuisine or region, though CFO Jon Howie said a pizza or barbecue chain would fit well within the current group.
The company’s strategy is unique. While many PE-backed restaurant brands aspire to national growth, ARB is strictly focused on expanding brands within their home markets. When it buys a brand, it keeps management in place and invests in G&A, an area where other firms typically look to cut.
It also connects the brand to its tech infrastructure to provide the operators with data and analytics they did not previously have access to due to their small size. The company uses this data to sharpen marketing and to identify areas where the restaurants can improve their margins.
ARB does not like to raise prices: Only three of its brands took price last year, and at less than half of the industrywide rate, Macedo said. It has also resisted discounting despite a widespread shift in that direction by other restaurants. “We haven’t discounted in any of our brands in the past two years,” he said.
The strategy has worked well so far. Pollo Tropical, a 122-unit South Florida fast-casual chain, was struggling when Authentic took over in 2023. Since then, it has simplified the menu and focused on operations. The chain’s NPS scores improved from the 30s to the 70s, and restaurant-level margins increased 7 points, to 28%. Authentic is now preparing to start growing the brand again, with its first new location planned for 2027.
Overall, Authentic’s five brands account for more than $1 billion in annual sales, and have average restaurant-level margins of 25%. If it can grow sales by 7% each year, “we can double the size of the business every four to five years without adding a new brand,” Macedo said.
“That said, I think we’re ready for the next one, and we’re looking.”
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