Cava Group shares closed up 99%, nearly doubling in value after the stock made its trading debut on the New York Stock Exchange on Thursday.
Cava (ticker: CAVA) shares opened at $42 a share, closed at $43.78, and kept rising after hours, from its initial public offering price of $22. The Mediterranean fast-casual restaurant’s initial public offering of 14.4 million shares was priced Wednesday. The IPO valued the company at $2.5 billion.
Cava...
Cava started trading on the New York Stock Exchange Thursday.
Mario Tama/Getty Images
Cava Group shares closed up 99%, nearly doubling in value after the stock made its trading debut on the New York Stock Exchange on Thursday.
Cava (ticker: CAVA) shares opened at $42 a share, closed at $43.78, and kept rising after hours, from its initial public offering price of $22. The Mediterranean fast-casual restaurant’s initial public offering of 14.4 million shares was priced Wednesday. The IPO valued the company at $2.5 billion.
Cava said it plans to use the proceeds from its public offering to fund new restaurant openings. The company currently has restaurants in locations across 22 states.
Cava was founded in 2010. Customers can order pitas, bowls and salads filled with Mediterranean-style food options like falafel, tzatziki and lamb.
The IPO market has been historically slow this year amid decades-high inflation, rising interest rates, and fears of a recession. Goldman Sachs analyst David Kostin wrote in a research note this week that there have been just eight U.S. IPOs greater than $25 million completed this year, excluding SPACs and spinoffs.
In an interview with Barron’s, Cava Chief Financial Officer Tricia Tolivar said the company was in a strong position, and this was the right time to go public.
“We’ve invested in infrastructure that allows us to grow. We’ve had tremendous growth over the past few years and continue to expect to grow into the future, and we feel like we’re well-positioned to be able to do that,” Tolivar said. “This was a perfect time for us to be able to go public, and it appears that the market was receptive to it.”
Several other restaurant chains have been looking to go public this year. Panera Bread, known for serving soups and sandwiches, announced in May that it was preparing for its IPO with new leadership. Fogo Hospitality, the parent company of Brazilian-style steakhouse chain Fogo de Chão, also has been preparing to go public, according to The Wall Street Journal.
It’s a tough IPO market, but it’s a difficult consumer environment. Consumer confidence fell last month as inflation continues to pinch people’s pockets. But Tolivar said Cava has been in a strong position to offset these inflationary pressures.
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“One of the things we’ve been is very thoughtful about our menu price increases, particularly over the past couple of years where we’ve done less than 5% in restaurant menu price increases, and really reinforcing our value proposition for our guests, and making us an even more, favorable choice,” she said.
The company’s method of attracting customers seems to be working. According to data from location analytics company Placer.ai, Cava’s year-over-year monthly visits per venue have risen since January 2023.
“A particularly impressive feat in light of the chain’s continued expansion, and an indication that new locations are driving traffic despite the current economic environment,” Placer.ai’s Ezra Carmel wrote in a research report.
Write to Angela Palumbo at angela.palumbo@dowjones.com