Monday Morning Scoop - Mediterranean Fast-Casual Chain Cava Files To Go Public, Targets 1,000 Store Openings
Mediterranean Fast-Casual Chain Cava Files To Go Public, Targets 1,000 Store Openings
Fast-casual Mediterranean restaurant chain Cava has filed an initial public offering as it seeks to nearly quadruple its locations to 1,000 within the next decade.
Cava’s revenue rose 12.8% in 2022 and is on track to rise further this year, according to the IPO filed with the Securities and Exchange Commission on Friday. Its revenue went from $112M in Q1 2022 to $197M in Q1 2023, a 76% increase.
Cava Group was founded in 2006 and opened its first “chef casual” location in 2011, its co-founders wrote in the SEC filing. It is often referred to as “the Chipotle of Mediterranean food,” since it has a similar build-your-own meal concept.
Cava acquired rival Mediterranean chain Zoes Kitchen in 2018 for $300M, CNBC reported. It closed the final Zoes restaurants in March and plans to reopen them by this fall as Cava locations. The acquisition helped Cava expand especially in Sun Belt and suburban markets, its co-founders said in the filing.
Despite the growth, Cava has yet to turn a profit. Its net loss was $37M in 2021 and $59M in 2022, according to the SEC filing. CNBC reported that its narrower loss of about $2.1M in the first quarter of this year and its sales increase show that it is getting closer to becoming profitable.
The company had 263 locations, primarily in suburban areas, open as of April 16. It plans to open 34 to 44 new restaurants by the end of the year, and it anticipates it could have as many as 1,000 U.S. locations by 2032, the SEC filing states. It currently operates in 22 states and Washington, D.C., but is looking to expand into more markets, including in the Midwest.
Cava is performing well against competitors like Sweetgreen, which reported $470.1M in revenue in 2022 to Cava’s $564.1M, CNBC reported. Sweetgreen, a salad chain, went public in 2021 and has a market value of $1.06B, according to the news outlet.
Cava going public would be the first restaurant to do so in over a year, CNBC reported. Restaurant IPOs ground to a halt in 2022 due to market turbulence influenced by the war in Ukraine, inflation and rising interest rates. But investors are showing interest in restaurant stocks, with Chipotle’s shares climbing 51% this year and Sweetgreen’s rising 10%, according to CNBC.
By: Maddy McCarty