**Cava IPO: Shares Double in Debut, Raises $318 Million**
Fast-casual restaurant chain Cava experienced a successful trading debut, surpassing its initial public offering (IPO) target by raising $318 million. The company’s shares opened at $42 and soared as much as 113%, reaching a market value of $4.6 billion. Cava sold over 14 million shares for $22 each, exceeding the elevated price range of $19 to $20.
**Cava’s IPO Among the Largest in 2023**
Cava’s IPO stands out as one of the few bright spots in a lackluster year for listings on US exchanges. It is currently ranked as the sixth-largest IPO in 2023, excluding greenshoe shares, according to Bloomberg data.
**Cava CEO’s Perspective on Market Acceptance**
Cava’s Chief Executive Officer, Brett Schulman, expressed his satisfaction with the market’s response to the company’s growth story. Schulman stated that the market welcomes long-term sustainable growth stories, especially those that establish a dominant leadership position in a particular category, such as Cava in the Mediterranean cultural cuisine sector.
**Impressive First-Day Performance**
Cava’s debut witnessed a significant first-day increase of 91%, representing the best debut since July 2021 for a US-listed company that raised over $100 million. Despite concerns from analysts regarding Cava’s valuation compared to industry rivals like Chipotle Mexican Grill Inc., Schulman remains confident in the company’s restaurant-level margins, considering Cava’s relatively early stage of growth.
**Optimistic Outlook for IPO Market**
Cava’s successful IPO indicates that the IPO market may be gradually reopening after a prolonged period of limited activity. Furthermore, the pricing of Cava’s IPO above the elevated initial range suggests that other companies, including Fogo de Chao Inc., Fat Brands Inc.’s Twin Peaks sports bar business, and Panera Bread Co., may proceed with their plans to go public.
**Positive Sentiment for High-Quality US Specialty IPOs**
Josef Schuster, founder and CEO of IPOX Schuster, highlights the improved sentiment for higher-quality US specialty IPOs following Cava’s well-received IPO. The combination of online and offline strategies in fast-growing niche industries has increased the attractiveness of these types of deals.
**Strong Performance and Growth of Cava**
Cava’s revenue has consistently increased while its losses have significantly decreased year over year. In the 16-week period ended April 16, the company reported a net loss of $2.1 million on revenue of $203 million, compared to a loss of $20 million on revenue of $159 million in the same period the previous year.
Additionally, Cava has expanded its number of restaurants from 22 in 2016 to 263 at present. The company plans to utilize the proceeds from its IPO to open more restaurants and aims to reach over 1,000 locations within the next decade.
**Key Players in the Offering**
Leading the offering were JPMorgan Chase & Co., Jefferies Financial Group Inc., and Citigroup Inc. Cava’s shares are currently trading on the New York Stock Exchange under the symbol CAVA.