IPO News: CAVA Group set to go public. Here’s what you need to know

The restaurant industry is still recovering from the virus-induced slump and aligning itself with people’s new consumption habits. CAVA Group Inc., a fast-food brand that is specialized in chef-crafted dips and spreads, recently revealed plans to become a publicly listed company.

Ups Price Range

The restaurant chain, headquartered in Washington DC, this week raised the price target to the range of $19 per share to 20 per share from the $17-19 per share price it had set earlier. It is planning to offer around 14.4 million shares in the initial public offering. At the mid-point of the price range, the offering would yield proceeds of approximately $282 million.

The main underwriters of the offering are JP Morgan, Jefferies, and Citigroup. The company expects to list the stock on the New York Stock Exchange under the symbol CAVA. If everything goes as planned, the IPO would trigger more restaurant listings in the coming months and enable the company to become profitable.

Mediterranean Flavor

Established in 2006, CAVA Group is led by chief executive officer Brett Schulman, who is also one of the co-founders. It operates a chain of restaurants that offer Mediterranean flavors, serving customers through fast-casual restaurants and the company’s digital platform.

When it comes to expanding market share, CAVA Group will be competing with market leaders like Chipotle Mexican Grill. Currently, the company operates a total of 263 locations, compared to 22 restaurants in 2016. After the acquisition of Zoes Kitchen a few years ago, the company converted 145 Zoes locations into CAVA restaurants and opened 51 own restaurants during that period.

Revenue Rises

In fiscal 2021 and 2022, quarterly comparable restaurant sales increased steadily compared to the corresponding quarters in 2019, which is before the onset of the pandemic. In the sixteen weeks ended April 16, 2023, revenues increased to $203 million from $159 million in the same period of last year. Net loss narrowed sharply to $2.1 million or $1.30 per share from $20 million or $15.42 per share a year earlier.

In fiscal 2022, total revenues increased by 12% from the prior year to $564.1 million. However, net loss widened to $58.9 million from $37.4 million in fiscal 2021, mainly reflecting an increase in operating expenses.