Cava (CAVA) on Thursday made its public debut on the New York Stock Exchange, and it looks like Wall Street investors want, at least initially, to take a big bite.
Shares of the Mediterranean fast-casual restaurant chain closed at $43.30, valuing the restaurant chain at roughly $4.8 billion. That's almost twice what the company priced on Wednesday evening at $22 per share, which valued the company at $2.5 billion.
Cava initially sought a common stock price offering for between $17 and $19 per share, which valued Cava as a roughly $2.1 billion business; it then raised that range to $19 to $20 last Monday.
Cava's IPO is the sixth largest on a US exchange so far this year. The largest? On May 3 J&J spinoff Kenvue (KVUE), a consumer health company, made its public debut at $4.37 billion.
Last year, Cava saw same-store sales grow 14.2% year-over-year. In Q1 of 2023 alone, the company saw sales increase 28.4%.
In fiscal year 2021, the company posted a net loss of $37.4 million, which widened in 2022 to a net loss of $59.00 million.
Yahoo Finance asked cofounder and CEO Brett Schulman when he expects Cava to turn profitable. His response, in part: "We're focused on our long-term growth, we've got a tremendous unit economic profit engine...in Q1 alone, we generated $50 million at the restaurant level, that's compared to $91 million all of last year, so very healthy margins at the restaurant level and that's kind of the lifeblood, the oxygen of our business."
Cava said in the S-1 filing that it plans to use the proceeds to open new restaurants and for general corporate purposes such as the payback of a loan used to finance its second production facility in Verona, Virginia, which broke ground in 2022.
The chain opened its first fast-casual concept back in 2011. As of April 16, there are 263 Cava restaurants. Since it acquired the Mediterranean fast-casual chain Zoes Kitchen for $300 million back in August 2018, it has successfully converted 145 Zoes Kitchen locations into the Cava brand. Throughout the rest of 2023, it plans to open between 34 to 44 new Cava locations and open another eight converted Zoes (the remainder of the locations). By 2032, the company said it plans to operate 1,000 locations in the US.
Cava is the first food chain to go public since Sweetgreen (SG) made its debut in 2021. Back then, shares of the salad chain surged in its public debut to $52 per share from its offering price of $28 per share. The chain, however, is now trading well below its offering price, largely because it isn't yet profitable.