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Cava Group (NYSE:CAVA) opened for trading on Thursday at $42 per share. The Mediterranean fast-casual restaurant had priced its IPO at $22 per share on Wednesday, which was a boost from the initial $17 to $19 range.
Cava (CAVA) plans to use proceeds from the offering of 14.44M shares to fund future new restaurant openings, with any remaining proceeds for general corporate purposes, which may include the repayment of its delayed draw terms loans used to finance construction and capital expenditures for its new production facility in Virginia.
In the S-1 filing, Cava Group (CAVA) noted that over the past 12 years it has established itself as the only national player at scale in the fast-growing Mediterranean category, with more than twice the number of restaurants compared to the next largest competitor in the category. Total revenue rose to $564M in FY22 from $45.4M in FY16 for a 52.2% compound annual growth rate. Last year, the chain saw same-restaurant sales growth of 14.2% to easily top the restaurant industry average. In terms of margins, CAVA said it successfully managed through the mid-to-high-single digit inflationary environment and was able to expand CAVA restaurant-level profit margin to 20.3% in fiscal 2022, despite only increasing in-restaurant menu price by less than 5%.
The company also noted it has a strong Millennial and a growing Gen Z contingent of customers. Looking ahead, Cava (CAVA) plans to open between 60 and 70 new stores in 2023, with a 15% target for annual store growth to take it up to 1,000 total stores by 2032.
A very broad sampling of Cava (CAVA) competitors includes Noodles (NDLS), Sweetgreen (SG), Yum! Brands Inc. (YUM), Starbucks(SBUX), Chipotle (CMG), El Pollo Loco Holdings (LOCO), Fiesta Restaurant Group (FRGI), Cheesecake Factory (CAKE), Shake Shack Inc. (SHAK), Panera, Veggie Grill, Just Salad, and Jason’s Deli. The stock that has moved up the most in anticipation of the Cava public debut is Sweetgreen (SG) with a 7% gain over the last week.
Other restaurant chains reported to be considering an IPO in 2023 include Panera and Fogo Hospitality, both of which traded publicly in the past.