S&P assigns Raising Cane’s notes B

S&P said it assigned Raising Cane’s Restaurants LLC’s planned $500 million of senior unsecured notes B issue-level and 6 recovery ratings. The 6 rating indicates negligible recovery (0-10%; rounded estimate: 0%) in default. The agency also assigned the issuer a BB- issuer credit rating. The outlook is stable.

“Our ratings reflect the company's solid operating performance and expanding share in the fast-growing chicken segment of the quick-service restaurant (QSR) industry. Raising Cane's is a single-concept restaurant company with a limited menu offering of fried chicken finger meals operating in the intensely competitive quick service restaurant (QSR) industry,” S&P said in a statement.

However, “Raising Cane's operates 92% of its restaurants, which exposes the company to greater volatility related to input costs such as chicken and labor compared to industry peers who follow a franchisor model. These pressures emerged in 2021 and persisted in 2022, with elevated chicken prices, higher wage rates, and delayed menu price increases pressuring profitability and causing S&P Global Ratings' adjusted EBITDA margin to compress 300 basis points (bps) last year,” the agency added.

Raising Cane’s plans to use the proceeds to partially pay down borrowings under its $1.2 billion revolving credit facility.

S&P said it expects the chain to continue expanding while keeping its S&P Global Ratings-adjusted leverage at around 4x.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.