(Bloomberg Opinion) -- Here in Germany one way to show off to the neighbors is by purchasing an expensive grill made by Weber Inc. As one expert in this documentary put it, “While I might not yet be able to afford a Porsche for the driveway, at least I’ve got one on my deck.”
Weber has an impressive 44% share of the German barbecue market, compared with almost one-quarter in the much larger U.S. market and globally. Germans are so proud of their deluxe machines they may not realize they’re manufactured in Illinois. The nearly 70-year-old American firm is controlled by BDT Capital Partners, the Chicago-based investment firm led by Byron Trott, which acquired a majority stake in 2010.
The company is poised to let the investing public own a slice too. It’s filed for a stock market listing that might value the business at as much as $6 billion, Bloomberg News reported. It’s not alone in looking to cash in on the pandemic-fueled outdoor cooking craze. American wood pellet grill manufacturer Traeger Inc. and the fire pits specialist Solo Stove are also planning initial public offerings. (So far only Weber and Traeger have filed prospectuses.)
Meanwhile, BBQGuys, an online grill retailer part-owned by American football royalty Eli and Peyton Manning, is reportedly eyeing a deal with a blank-check firm.
With restaurants closed during lockdown, people poured money into their homes and gardens and got more adventurous with cooking. The backyard became a second living room and sanctuary. Now, they’re eager to show it all off with guests gathered around their new barbecue. Weber’s sales jumped 18% to $1.5 billion in the most recent fiscal year, while Traeger’s rose 50% to almost $550 million.
Recent growth rates have been even more extreme. Traeger’s revenues doubled in the first quarter compared to the same period a year ago, while Weber’s haul leapt more than 60% in the six-month winter period.
The question is whether this is all a pandemic one-off, or if the twin obsessions of foodie culture and outdoor living can keep enticing people to shell out almost as much on a barbecue as others would on a second-hand car. Weber’s growth was less impressive in the five years immediately preceding the pandemic and revenue fell slightly in 2019.
Besides being status symbols — a top of the range Weber can cost almost $4,000 — premium grills inspire fierce devotion. Traeger’s foodie fans use their grills at least once a week on average, sport Traeger tattoos and have named their children after the brand, its boss says. Weber has grill academies where customers can hone their skills.
Both companies have expanded their potential customer base with connected devices that make it easier for the uninitiated to show off like true “pitmasters.” Grill aficionados can monitor cooking via their smartphone and get notifications when their steak has reached a perfect medium-rare. Some let you select a recipe from an app that then semi-automates the cooking process, allowing the cook to retire to their hammock or gossip with guests.
Once hooked, it’s seemingly not enough to have just one grill anymore, especially with so many cooking styles to choose from — gas, charcoal, electric, smoker, wood pellet or egg-shaped kamado. Nearly one-third of U.S. grill-owning households have multiple devices, Traeger says.
There’s the recurring revenue to be made from branded BBQ accessories from cookware, cleaning tools and weather-proof covers to cookbooks, sauces and marinades. These extras comprise around one-quarter of Weber’s and Traeger’s sales.
Trott, a former Goldman Sachs banker, hasn’t disclosed the price at which BDT bought into Weber. But it’s likely to have been extremely lucrative investment. A $6 billion valuation would equate to a punchy 40 times multiple of the last 12 months’ earnings. Weber kicked out a $261 million special dividend this year and more than $400 million of dividends in 2018, according to the prospectus.
Weber’s long-term debt has risen to about $1.2 billion or almost 5 times trailing earnings before interest, taxes, depreciation and amortization. Some of the IPO proceeds will be used to pay down borrowings.
It’s difficult to know if Covid has permanently changed people’s attachment to their gardens and outdoor cooking. For now though sales are sizzling and you can’t blame Trott for striking while the iron’s hot.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.
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