Two small Orange County companies targeting coffee and ramen customers defied the down market for IPOs last year, and made their way to Wall Street in the latter part of 2022.
Wall Street’s yet to show the duo much love.
Brea-based Reborn Coffee Inc. (Nasdaq: REBN) and Buena Park ramen chain Yoshiharu Global Co. (Nasdaq: YOSH) have both seen their stocks fall by more than 60% since their respective initial public offerings.
Still, executives at the two companies remain upbeat, announcing big expansion plans fueled in large part by the proceeds from the IPOs.
“We are aggressively moving forward on strategically expanding our footprint in existing and new markets in California, the U.S. and globally,” Reborn founder and Chief Executive Jay Kim said in a Jan. 5 statement about new retail stores being planned.
Shares in Reborn, which began trading last August at $5 apiece, are off 76% at $1.20 apiece and a $16 million market cap at press time.
Shares of Yoshiharu, which went public last September at $4 each, have fallen 60% to $1.59 a share and a $20 million market cap.
While the market was tough last year on IPOs, with domestic IPOs off some 90% from 2021 levels, Reborn still managed to raise $6.2 million while Yoshiharu raised about $16 million.
Yoshiharu was founded in 2016 by Chairman and CEO James Chae, a Korean immigrant who previously spent two decades in financial and retail services.
The chain is best known for its Tonkotsu Black ramen—made from slow-cooked pork bone broth and topped with chashu, also known as braised pork belly. Beyond ramen, the restaurant also serves sushi, rice bowls, bento boxes, and karaage chicken, also known as Japanese fried chicken.
The company faced bruising challenges due to COVID-19 as its sales fell 22% to $3.2 million in 2020; it then rebounded by doubling to $6.5 million in 2021.
However, its third-quarter sales for the period ended Sept. 30 fell 3.8% to $1.77 million.
Last September when Yoshiharu went public, it launched a “refreshed menu” that boosted sales by 35% on average per store in one month’s time, the company said.
“While Q3 is typically our slowest quarter in terms of restaurant traffic and sales, we spent much of the period preparing for growth through the refurbishment of our restaurant interiors, the development of our new menu, and working to launch additional locations,” Chae said in a statement.
In the past year, it’s expanded from six to 13 locations, with local spots in Orange, Orchard Hills in Irvine, and Buena Park’s The Source. Chae anticipates doubling its number of Yoshiharu restaurants by the second half this year. Spots in San Clemente, Laguna Niguel and Garden Grove are in the works, it says.
“As demand continues to grow for authentic Japanese ramen, we look forward to expanding our presence and delivering best-in-class service and products to a larger customer base,” he said.
In the long term, Yoshiharu aims to open at least 250 restaurants in the U.S. and 750 overseas, using revenue generated by existing restaurants, a potential franchise program and through shares and debt financings, filings indicate.
The last Orange County-based restaurant chain to go public was Irvine’s Kura Sushi USA (Nasdaq: KRUS) in 2019; the company, which has a $538 million market cap, is expected to boost sales 31% this year to $185.2 million.
Reborn Coffee says its mission is “to introduce a new wave of coffee.”
Known for its cold brew, the company says it strives to make customers feel “reborn” after drinking a cup of its coffee. It reported third-quarter sales climbed 22% to $800,000. Local locations are in Corona del Mar and Laguna Woods.
Reborn, like Yoshiharu, will also be adding new locations to its footprint. On Jan. 5, the company, which currently has 10 stores, announced plans to operate as many as 14 stores, including a pair of new locations in Irvine. It eventually wants to own 40 retail locations.
The chain is particularly bullish about Irvine, noting it’s home to over 100 global corporations, diverse and multilingual communities and a leading university.
University students are one of Reborn’s target markets, since they are “especially attracted to on-the-go and premium options,” Reborn CEO Kim said.
It’s already making global plans, saying it will open in Daejeon, South Korea, which officials note is the country’s fifth-largest metropolis.
The company has big expansion plans for that country, saying it’s taken steps with the Korea Fair Trade Commission to launch a franchising program.
“We are aggressively moving forward on strategically expanding our footprint in existing and new markets in California, the U.S. and globally,” Kim said.
The company also intends on expanding its menu offerings, by adding macaroons and cookies manufactured in-house.
Kim, who has a B.S. in chemical engineering from California State University, Long Beach, was the owner of Coffee Roasters in Riverside from 2002 to 2007.
He also founded Wellspring Industry Inc., which created the yogurt distribution company Tutti Frutti and the bakery-café franchise O’My Buns. Tutti Frutti grew to approximately 700 “agents” worldwide that offered self-serve frozen yogurt. Kim sold the majority ownership of Wellspring to group of investors in 2017 to focus his efforts on Reborn Coffee, which he founded in 2014.
“We’re not looking for fame and fortune,” Kim said on the company’s website. “We simply want to serve our iteration of what we believe is the best cup of joe and bring the world closer, one Reborn community at a time.”