Restaurant Chain Cava’s Strong Market Debut Adds Spice to Bland IPO Market

“Fast-casual” Mediterranean restaurant chain Cava Group’s IPO began trading Thursday, marking just the 10th company to go public in 2023 while potentially giving a boost to other restaurant stocks.

Shares of the Washington, DC-based restaurant chain opened at $42 on the NYSE, nearly double the IPO price of $22, which was above its projected range of $19 to $20. The stock closed at $38.15 on Friday, down 13%, after skyrocketing as much as 117% on Thursday.

It succeeded on the fundraising side as well, with the company selling 14.44 million shares for $318 million. Based on more than 111 million outstanding shares, it was initially valued at $2.45 billion.

Cava has yet to make a profit, though the chain reported its net loss of $2 million in the first quarter had shrunk from $20 million from the prior year, and same-store sales grew 28%. Cava had 263 restaurants across 22 states at the end of the first quarter this year, with another 34 to 44 units planned before the end of 2023.

Cava’s IPO is the sixth largest on a US exchange so far this year. The largest was the J&J spinoff of Kenvue, a consumer health company that made its public debut at $4.37 billion.

Since Cava went public with its plans for an IPO last month, Panera Brands has made moves to prepare for a potential IPO. The 32-unit Gen Korean BBQ also hopes to raise $25 million with an IPO, and Fat Brands said it plans to spin off its Twin Peaks brand with a public offering.