CAVA Group, Inc. (NYSE: CAVA) had an impressive public debut on Thursday as it entered the New York Stock Exchange, capturing the attention of Wall Street investors who were eager to get in on the action.
The Mediterranean fast-casual restaurant chain’s shares closed at $43.30, placing a valuation of approximately $4.8 billion on the company. This is nearly double the offering price of $22 per share set on Wednesday, which initially valued CAVA at $2.5 billion.
Initially, Cava had sought a common stock price offering ranging from $17 to $19 per share, which would have valued the company at around $2.1 billion. However, on Monday, the range was increased to $19 to $20 per share.
Cava’s IPO ranks as the sixth largest on a US exchange this year, with the largest being the consumer health company, Kenvue Inc. (NYSE: KVUE), which made its public debut at $4.37 billion on May 3.
The restaurant chain has experienced impressive growth, with same-store sales increasing by 14.2% year-over-year in 2022. In the first quarter of 2023 alone, Cava saw a remarkable sales increase of 28.4%. While the company reported a net loss of $37.4 million in fiscal year 2021, this loss widened to $59.00 million in 2022.
Cava has outlined plans to utilize the proceeds from the IPO for opening new restaurants and general corporate purposes, including paying back a loan used to finance its second production facility in Verona, Virginia, which began construction in 2022.
The chain currently operates 263 Cava restaurants, with plans to open 34 to 44 new Cava locations and convert eight remaining Zoes Kitchen locations into Cava restaurants by the end of 2023. By 2032, the company aims to operate 1,000 locations across the United States.
CAVA’s successful public debut follows in the footsteps of Sweetgreen, Inc. (NYSE: SG), another food chain that went public in 2021. Sweetgreen experienced a surge in share price during its IPO, reaching $52 per share from its offering price of $28 per share. However, Sweetgreen’s current trading price is below the offering price, largely due to its lack of profitability.
Following Cava’s debut, Sweetgreen’s shares saw a modest increase in early market trading, reaching over $11 per share after a dip to around $6 earlier this year.
