Restaurant Chain CAVA To Start Trading On NYSE Today: What You Should Know

Washington D.C.-based CAVA Group, Inc. CAVA is scheduled to start trading on the New York Stock Exchange on Thursday.

What Happened: CAVA, a Mediterranean fast-casual restaurant chain, which has about 263 locations across the U.S., has priced its initial public offering of 14.44 million shares at $22 per share, up from the $19-$20 range it announced initially.

At the offer price, the IPO will likely raise gross proceeds of about $318 million for the company.

The company said it has granted the underwriters a 30-day option to purchase up to an additional 2.17 million shares. The offering is expected to close on June 20, subject to customary closing conditions.

The shares will begin trading on the NYSE on Thursday under the ticker symbol ‘CAVA'

CAVA said it intends to use the net proceeds from the offering to fund new restaurant openings and any remaining proceeds for general corporate purposes. The company is currently constructing a new production facility in Verona, Virginia.

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CAVA's Financials: CAVA said in the S-1 prospectus it filed with the SEC that its revenue has increased from $45.4 million in the fiscal year 2016 to $564.1 million in the fiscal year 2022, marking a compounded annual growth rate of 52.2%, For the first quarter of 2023, revenue rose 27.7% year-over-year to $203.1 million.

Same restaurant sales for its namesake outlets was 28.4% for the first quarter, an improvement from 14.2% for 2022.

The company reported a net loss of $59.4 million for 2022, wider than the previous year's loss of $37.4 million. The adjusted EBITDA for the year came in at $12.6 million. CAVA's loss for the first quarter of 2023 was $16.7 million.

Why It's Important: CAVA‘s IPO comes amid a time when the IPO market continues to remain lukewarm amid economic uncertainties. Analysts were of the view the IPO valuation is high on some metrics compared to peers such as Chipotle Mexican Grill, Inc. CMG, Bloomberg reported.

The report also noted that CAVA could face the same predicament as restaurants such as Portillo's, Inc.PTLO and Sweetgreen Inc. SG. The latter two saw a surge in stock price on listing but have seen them come sharply off these levels since then.

At the IPO price, CAVA's valuation is at $2.45 billion based on the 111.39 million number of outstanding shares the company provided in its S-1 filing.

CAVA's IPO is the sixth largest debut in the U.S. this year, Bloomberg noted.

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