Mediterranean restaurant chain shares Digging it shot up as much as 117% on its market debut on Thursday.
The company’s shares closed at $43.78 per share, up from its initial trade of $42 per share. Its closing price gives it a market value of $4.88 billion and makes it the highest-performing initial public offering this year for companies valued at more than $500 million.
Cava Group priced its initial public offering at $22 a share on Wednesday, above the expected range of $19 to $20. The company sold 14.4 million shares, raised nearly $318 million, and initially valued the restaurant chain at approximately $2.45 billion.
The shares are listed on the New York Stock Exchange under the ticker symbol «CAVA».
Though founded in 2006, Cava opened its first fast-casual restaurant in 2011, modeled after its Mediterranean meals prepared according to the formula popularized by chipotle mexican grill. The chain built a customer base by introducing some consumers to ingredients like harissa and tahini and positioning itself as a healthy and convenient option. The company also sells its dips, spreads, and salad dressings in supermarkets.
Cava acquired zoe kitchen in 2018, privatizing the rival Mediterranean chain for 300 million dollars. It has spent the last five years converting Zoes Kitchen locations into Cava restaurants, contributing to its footprint of 263 locations as of April 16.
Last year, Cava’s net sales amounted to $564.1 million, 12.8% more than the previous year.
“You’re seeing the inflection point in the business, and all of that strong structure that we’ve invested in, the growth of the restaurant, starts to take hold and drive the business forward,” CEO Brett Schulman said on the CNBC show.squawk in the street.”
But its losses have also widened from $37.4 million in 2021 to $59 million in 2022. Still, industry insiders say the chain has demonstrated a clear path to profitability, making it more attractive to investors than They look for growth stocks. In the first quarter, it reported a net loss of $2.1 million, lower than its net loss of $20 million in the same period a year earlier.
The restaurant company plans to use the proceeds from its initial public offering for opening new locations and general corporate purposes.
Cava joins the growing number of publicly traded fast casual chains. Industry leader Chipotle made its public market debut in 2006 and has seen its market value grow to $56.9 billion.
Most recently, the Sweetgreen salad chain went public in November 2021. It now has a market value of $1.2 billion. Investors criticized the stock for the company’s lack of earnings, even though the shares are up more than 25% this year.
Cava’s debut could inspire other restaurant chains follow suit, helping to break the IPO market drought. Brazilian steakhouse Fogo De Chao and Korean barbecue chain Gen Restaurant Group have confidentially filed regulatory filings, while both bread bread maker and fat marks’ Twin Peaks has shared the intention to issue an initial public offering in the near future.