Cava Files for IPO as Revenues Rise
A person walks past a chain of Cava restaurants on February 6, 2023 in Pasadena, California.
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Mediterranean restaurant chain Cava saw its revenue rise 12.8% in 2022, according to regulatory filings released on Friday when it went public through an initial public offering.
It plans to trade on the New York Stock Exchange using the symbol “CAVA”.
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Cava Group was founded in 2006 and opened its first fast-casual establishment in 2011, modeling its buildable Mediterranean dishes after the formula made popular by Chipotle Mexican Grill. It acquired Zoes Kitchen in 2018, privatizing the rival Mediterranean chain for $300 million.
Over the past five years he has converted the Zoes footprint into new Cava locations. The last eight Zoes restaurants, which closed in March, will open this fall as Cava units.
Last year, the company’s net sales reached $564.1 million, up 12.8% from the previous year. For comparison, the rival fast-casual chain sweetgreen reported 2022 revenue of $470.1 million. The salad chain went public in November 2021 and has a market value of $1.06 billion.
But Cava’s regulatory filings showed it’s still not profitable. Its losses have gone from $37.4 million in 2021 to $59 million in 2022.
Still, the company showed signs of moving towards profitability. Its net loss in the 16 weeks ended April 16 was just $2.1 million, less than its net loss of $20 million in the year-ago period. Its sales also picked up, rising 27.4% to $196.8 million at the same time.
Cava’s same-store sales climbed 28.4% in the first quarter. Its 3.7 million loyal members accounted for a quarter of those sales, according to the filing.
The company has 263 locations open as of April 16 and expects to open 34 to 44 new units by the end of the year. Over 80% of Cava locations are in suburban areas. It predicts it could have as many as 1,000 locations in the United States by 2032 as it diversifies into new regions, such as the Midwest.
Like other fast-food chains Chipotle and Sweetgreen, Cava leaned into drive-thru pickup lanes for digital orders.
The debut of cava on the market would end the long drought of restaurant IPOs, which began last year as war in Ukraine, inflation and rising interest rates led to conditions difficult market conditions. Even outside of the restaurant industry, companies once eager to go public, like Reddit and Impossible Foods, have held back, though J&J’s Kenvue spin-off has been a hit.
But investors may have an appetite for Cava shares, despite concerns about a possible recession this year hitting restaurant demand. Shares of Sweetgreen are up 10% this year, while those of Chipotle are up 51% in the same time.