McDonald's Franchisee IPO: Arcos Dorados

(Arcos Dorados IPO report updated with additional detail.)
NEW YORK (TheStreet) -- Arcos Dorados Holdings , McDonald's South American franchisee, began trading on the New York Stock Exchange Thursday, and the stock gained more than 25% in its first hours.

Shares of Arcos Dorados, which means "Golden Arches" in Spanish, were 0.5% lower at $21.09 Friday morning after soaring 24.7% in its Thursday debut.

On Wednesday the McDonald's franchisee priced its IPO of 73.5 million shares at $17 each, above the $13 to $15 originally anticipated, valuing the company at around $1.25 billion.

Arcos Dorados' boisterous opening prompted stake-owning investment groups to unload more shares than initially planned -- about 64 million shares, compared with 50 million.

Argentina-based Arcos Dorados is McDonald's largest franchisee by sales and number of locations. As of the end of 2010 it operated 1,755 restaurants in 19 countries, including in its native Argentina, Mexico and Brazil.

Arcos Dorados originally planned to to sell around 62.5 million shares in the $13 to $15 range, using around $150 million of the net proceeds for capital expenditures like opening new restaurants and remodeling existing ones, according to early reports in March.

In 2010 it grew revenue 14.1% year-over-year to $3.02 billion. Net income soared 32.2% to $106.3 million. Arcos Dorados accounts for around 5% of global dollars spent at McDonald's restaurants.

McDonald's shares traded less than 0.1% lower at $76.85 Thursday morning.

A number of restaurant and food-service IPOs are currently in the works, including Crumbs cupcake chain, the IPO of which is expected to draw $66 million, and Dunkin' Donuts.

For Arcos Dorados and other upcoming IPOs, international markets represent huge expansion potential for U.S.-based restaurant companies.

In early March, before the devastating earthquake and tsunami hit, McDonald's Japan said that same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- jumped 4.3% last month, the third consecutive monthly gain.

In February McDonald's reported strong January same-store sales on strength in China and Europe.

"China is a major focus and the stock has a potential longer term to have a higher multiple as the China story unfolds, similar to what Yum! Brands has benefited from in the last couple of years," Oppenheimer analyst Matthew DiFrisco said in recent appearance on CNBC, commenting on McDonald's quarterly earnings.

Other U.S.-based food and beverage companies who have made moves to expand globally include Yum!, Cheesecake Factory and Starbucks .

-- Written by Miriam Marcus Reimer in New York.

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