A banner for the Mediterranean restaurant chain Cava is displayed outdoors of the New York Stock Exchange (NYSE) as the corporate goes public on June 15, 2023 in New York City.
Spencer Platt | Getty Images
Shares of Mediterranean restaurant chain Cava soared as a lot as 117% in its market debut Thursday.
The firm’s inventory closed at $43.78 per share, up from its opening commerce of $42 per share. Its closing value offers it a market worth of $4.88 billion and makes it the top-performing IPO this 12 months for firms valued above $500 million.
Cava Group priced its IPO at $22 per share on Wednesday, above the anticipated vary of $19 to $20. The firm offered 14.Four million shares, elevating practically $318 million and initially valuing the restaurant chain at roughly $2.45 billion.
The inventory trades on the New York Stock Exchange underneath the ticker image “CAVA.”
Although it was based in 2006, Cava opened its first fast-casual location in 2011, modeling its build-your-own Mediterranean meals after the formulation made well-liked by Chipotle Mexican Grill. The chain constructed a buyer base by introducing some eaters to substances like harissa and tahini and positioning itself as a wholesome and handy possibility. The firm additionally sells its dips, spreads and salad dressings in grocery shops.
Cava acquired Zoes Kitchen in 2018, taking the rival Mediterranean chain personal for $300 million. It’s spent the final 5 years changing Zoes Kitchen areas into Cava eating places, contributing to its footprint of 263 areas as of April 16.
Last 12 months, Cava’s web gross sales climbed to $564.1 million, 12.8% increased than the 12 months earlier.
“You’re seeing the inflection point in the business, and all of that robust structure we’ve invested in, the restaurant growth, starting to take hold and drive tailwinds to the business,” CEO Brett Schulman mentioned on CNBC’s “Squawk on the Street.”
But its losses additionally widened from $37.Four million in 2021 to $59 million in 2022.Still, business consultants say that the chain has demonstrated a transparent path to profitability, making it extra enticing for buyers in search of development shares. In the primary quarter, it reported a web lack of $2.1 million, narrower than its $20 million web loss within the year-ago interval.
The restaurant firm plans to make use of the proceeds from its IPO for brand new location openings and basic company functions.
Cava provides to the rising variety of publicly traded fast-casual chains. Sector chief Chipotle made its public market debut again in 2006 and has seen its market worth develop to $56.9 billion.
More not too long ago, salad chain Sweetgreen went public in November 2021. It now has a market worth of $1.2 billion. Investors have dinged the inventory for the corporate’s lack of revenue, though shares have climbed greater than 25% this 12 months.
Cava’s debut may encourage different restaurant chains to comply with its lead, serving to to snap the IPO market’s drought. Brazilian steakhouse Fogo De Chao and Korean barbecue chain Gen Restaurant Group have each filed regulatory paperwork confidentially, whereas each Panera Bread and Fat Brands’ Twin Peaks have shared an intent to subject an preliminary public providing within the close to future.
