Cava Group Inc, the fast-casual restaurant chain, beat its target fundraising by raising $318 million in its initial public offering (IPO), making it the largest listing on a US exchange in weeks.
According to a company statement on Wednesday, the company sold over 14 million shares at a price of $22 each, after initially pricing them at $19 to $20, a range it had elevated earlier. At the IPO price the company’s market valuation stands at $2.45 billion based on the outstanding shares it listed in its filing with the US Securities and Exchange Commission.
According to data compiled by Bloomberg, the Mediterranean restaurant’s IPO is the sixth-largest on a US exchange this year.
Even as analysts, including Bloomberg Intelligence’s Michael Halen and New Constructs Chief Executive Officer David Trainer, expressed skepticism over the initial valuation, the company yielded a strong pricing. Both analysts noted the company’s valuation on some specific metrics was far above that of peers, such as Chipotle Mexican Grill Inc, highlighting sagging restaurant-level margins. Some analysts are drawing parallels between Cava and other restaurant companies, such as Portillo’s Inc. and Sweetgreen Inc., both of which saw enthusiastic trading debuts followed by slumps in their prices over time.
So far the largest US listing this year has been Johnson & Johnson consumer spinoff Kenvue, with a $4.37 billion IPO May 3rd. $4 out of every $10 raised on US exchanges was raised by Kenvue during what is on track to be the slowest year since at least 2009.
Year over year Cava’s revenue has grown while its losses have shrunk. It had a net loss of $2.1 million off revenue of $203 million for the 16-week period ending April 16th, compared with last years figures. where it had a loss of $20 million on revenue of $19 million, according to the filing.
The Washington-based restauranteur now has 263 restaurants, compared to the 22 it had in 2016. The company plans to use its IPO cash to open more restaurants, and see the potential for over 1,000 more in the next decade.
JPMorgan Chase & Co., Jefferies Financial Group Inc. and Citigroup Inc. led the offering. The company will began trading Thursday under the ticker symbol CAVA.
