Cava files for IPO as revenue climbs

Cava files for IPO as revenue climbs

A person walks past a cava restaurant in Pasadena, California on February 6, 2023.

Mario Tama | Getty Images

Mediterranean restaurant chain Cava saw sales rise 12.8% in 2022, according to regulatory filings released on Friday, as it filed for its IPO in an initial public offering.

It plans to trade on the New York Stock Exchange under the ticker symbol CAVA.

Founded in 2006, Cava Group opened its first fast-casual location in 2011, creating its home-cooked Mediterranean dishes using the formula made popular by Chipotle Mexican Grill. The company acquired Zoes Kitchen in 2018, taking over the rival Mediterranean chain for $300 million.

In the last five years, Zoes’ presence has been transformed into new cava locations. The last eight Zoes restaurants that closed in March will open as cava restaurants in the fall.

Last year, the company’s net sales rose to $564.1 million, up 12.8% year-on-year. For comparison: competing fast-casual chain sweet green reported 2022 sales of $470.1 million. The salad chain went public in November 2021 and has a market value of $1.06 billion.

However, Cava’s regulatory filings showed that it’s still not profitable. His losses widened from $37.4 million in 2021 to $59 million in 2022.

Still, there are signs that the company is getting closer to profitability. The net loss for the 16 weeks ended April 16 was just $2.1 million, down from the net loss of $20 million in the same period last year. Revenue also increased, rising 27.4% to $196.8 million over the same period.

Cava’s same-store sales rose 28.4% in the first quarter. According to the data, the 3.7 million loyal members accounted for a quarter of these sales.

The company has 263 locations open as of April 16 and plans to open 34 to 44 new units by the end of the year. More than 80% of Cava’s locations are in suburban areas. It’s believed that the company could have as many as 1,000 locations across the U.S. by 2032 as it expands into new regions like the Midwest.

Similar to fellow fast-casual chains Chipotle and Sweetgreen, Cava relies on drive-thru pickup lanes for digital orders.

Cava’s market debut would break the long dry spell in restaurant IPOs that began last year when the war in Ukraine, inflation and rising interest rates led to difficult market conditions. Outside of the restaurant industry, companies like Reddit and Impossible Foods, which once wanted an IPO, have also held back, despite the success of Kenvue’s fork from J&J.

But investors could have an appetite for cava stocks despite fears that a possible recession this year could hurt restaurant demand. Sweetgreen’s stock is up 10% this year, while Chipotle’s stock is up a whopping 51% over the same period.