Are school lunches and stadium food worth $1 billion?

Ann Heppermann Nov 28, 2013
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Are school lunches and stadium food worth $1 billion?

Ann Heppermann Nov 28, 2013
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Food concession company Aramark is expected to launch its roadshow next week, as it prepares for what could be a $1 billion initial public offering.  The purveyor of hot dogs in stadiums and on college campuses is heavily leveraged and some wonder if it is really a billion dollar business.

University of Florida finance professor Jay Ritter doesn’t know if he’s ever eaten an Aramark hot dog. But if he did, it was probably at the stadium where the Gators play football.

“I’m sure I have although,” he adds. “I’m more focused on the game than who owns the concession stand.”

Ritter is an IPO specialist.  He says, while Aramark’s hot dogs may not be memorable, what’s noteworthy is that it’s one of only a few companies to go public three times.

“There have been three other companies that have gone public, then gone private, gone public, gone private and then gone public again,” Ritter says.

One reason Aramark is going public this time is debt — the company is carrying nearly $6 billion.

Which, according to supermarket guru Phil Lambert, “It’s larger than probably it should be.”

Debt is one of the company’s problems, but, Lambert says, another more entrenched issue for Aramark is that people are eating out less and skipping the concession stand altogether.

“People just aren’t willing to spend that $10 for a hot dog anymore,” he says.

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