Shares of Cava Group closed up 99%, nearly doubling in value after the stock debuted on the New York Stock Exchange on Thursday.
Shares of Cava (ticker: CAVA) opened at $42 a share, closed at $43.78, and continued to rally after hours, from its initial public offering price of $22. The Mediterranean fast food restaurant’s initial public offering of 14.4 million shares was priced on Wednesday. The IPO valued the company at $2.5 billion.
Kava said it plans to use the proceeds from its public offering to finance the opening of new restaurants. The company currently has restaurants in locations across 22 states.
Cava was founded in 2010. Customers can order pizza, bowls and salads filled with Mediterranean-style food options such as falafel, tzatziki, and lamb.
The IPO market has been historically slow this year amid decades-high inflation, high interest rates, and fears of a recession. Only eight initial public offerings worth more than $25 million have been completed this year, Goldman Sachs analyst David Kostin wrote in a research note this week, excluding SPACs and subsidiary companies.
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In an interview with barons, The company was in a strong position, said Cava CFO Tricia Tolivar, and it was the right time to go public.
“We’ve invested in the infrastructure that allows us to grow. We’ve had tremendous growth over the past few years and we still expect to grow in the future, and we feel well positioned to do so,” Tolivar said. We can go public, and the market seems receptive to it.”
Several other restaurant chains are looking to bring it to the public this year. Panera bread is known for providing soups and sandwiches, Announced in may ease In May it was preparing for an IPO with new leadership. Fogo Hospitality, the parent company of Brazilian steakhouse chain Fogo de Chão, was as well Preparing for the audienceAccording to The Wall Street Journal.
It’s a tough IPO market, but it’s a tough consumer environment. Consumer confidence fell last month as inflation continued to thin people’s pockets. But Tolivar said Cava was in a strong position to offset these inflationary pressures.
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“One of the things we’ve been very thoughtful about our menu price increases, particularly over the last couple of years where we’ve been less than 5% in restaurant menu price increases, really strengthen our value proposition for our guests, and make us a more preferred option.”
The company’s method of attracting customers seems to be working. According to data from the site analytics company Placer.aiKava’s annual monthly visits to each location have increased since January 2023.
“A particularly impressive feat in light of the chain’s continued expansion, and an indication that new locations are driving traffic despite the current economic environment,” Placer.ai’s Ezra Karmel wrote in a research report.
Write to Angela Palumbo at [email protected]
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