[ad_1]
A sign for Mediterranean restaurant chain Cava is displayed outside the New York Stock Exchange (NYSE) as the company goes public on June 15, 2023 in New York City.
Spencer Platt | Getty Images
A share of the Mediterranean chain of restaurants reward It rose as much as 107% on the market’s first Thursday morning before giving up some of those gains.
The stock opened at $42 per share, giving the company a market capitalization of $4.68 billion. After surging higher, shares are trading around $41, still more than 85% above their initial public offering price.
Cava Group priced the IPO at $22 a share on Wednesday, above the expected range of $19 to $20. The company sold 14.4 million shares, raising approximately $318 million, and initially valued the restaurant chain at about $2.45 billion.
The shares are traded on the New York Stock Exchange under the ticker symbol “CAVA”.
Although it was founded in 2006, Cava opened its first fast-casual location in 2011, modeling your build-your-own Mediterranean meals after the formula Chipotle Mexican Grill is known for. The chain has built a customer base by introducing some diners to ingredients like harissa and tahini and positioning itself as a convenient and healthy option. The company also sells dips, spreads, and salad dressings in grocery stores.
Cava acquired Zoes Kitchen in 2018, and the Mediterranean chain took private competition for $300 million. It’s spent the past five years turning Zoes Kitchen locations into Cava restaurants, contributing to a 263-location presence as of April 16th.
Last year, net sales of Cava rose to $564.1 million, up 12.8% from the previous year.
“You’re seeing the inflection point in the business, and all that strong structure that we’ve invested in, the growth of the restaurant, is starting to take hold and drive tailwinds into the business,” CEO Brett Schulman said on “Squawk on the CNBC.” street.”
But its losses also expanded from $37.4 million in 2021 to $59 million in 2022. Still, industry experts say the chain has shown a clear path to profitability, making it more attractive to investors looking for growth stocks. In the first quarter, it posted a net loss of $2.1 million, narrower than its net loss of $20 million in the year-ago period.
The restaurant company plans to use the proceeds from the IPO to open new locations and for general corporate purposes.
Cava adds to the growing number of publicly traded fast casual chains. Segment leader Chipotle made its public market debut in 2006 and has seen its market capitalization grow to $56.9 billion.
Recently, the Sweetgreen salad chain went public in November 2021. It now has a market capitalization of $1.2 billion. Investors have attacked the stock for the company’s lack of profitability, even though shares are up more than 25% this year.
Cava’s debut could inspire other restaurant chains to follow suit, helping to counter the IPO market drought. Brazilian steakhouse Fogo De Chao and Korean barbecue chain Gen Restaurant Group have confidentially filed regulatory papers, while Panera Bread and fat brands Twin Peaks has shared the intention to issue an initial public offering in the near future.
This is breaking news. . Please check back for updates
[ad_2]
