Shares of Kava Group jumped more than 90% after the stock debuted on the New York Stock Exchange on Thursday.
Cava (ticker: CAVA ) shares opened at $42 a share and last traded at $42.64, up 93% from its initial public offering price of $22. The Mediterranean fast-casual restaurant’s initial public offering of 14.4 million shares was priced Wednesday. The IPO valued the company at $2.5 billion.
Cava said it plans to use the proceeds from its public offering to fund new restaurant openings. The company currently has restaurants in 22 states.
Cava was founded in 2010. Customers can order Mediterranean-style food options such as falafel, tzatziki and lamb-filled pitas, bowls and salads.
The IPO market has been historically slow this year amid decades-high inflation, rising interest rates and fears of a recession. Excluding SPACs and spinoffs, eight U.S. IPOs of more than $25 million have been completed this year, Goldman Sachs analyst David Kostin wrote in a research note this week.
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In an interview Baron, Cava Chief Financial Officer Tricia Toliver said the company is in a strong position and now is the right time to go public.
“We’ve invested in the infrastructure that will allow us to grow. We’ve had tremendous growth over the last few years and we expect to continue to grow in the future, and we feel we’re well positioned to do that,” Toliver said. “It’s a perfect time for us to go public, and the market seems to have embraced that.”
Several restaurant chains are looking to go public this year. Panera is known for serving bread, soups and sandwiches. Easily announced in May In May it was preparing for its IPO with new leadership. There is also Fogo Hospitality, the parent company of the Brazilian-style steakhouse chain Fogo de Sao. Getting ready to go publicAccording to The Wall Street Journal.
It’s a tough IPO market, but it’s also a tough consumer environment. Consumer confidence fell last month as inflation continued to pinch people’s pockets. But Tolliver said Cava is in a strong position to offset these inflationary pressures.
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“We’ve been very careful about our menu price increases, especially since we’ve done less than 5% of restaurant menu prices over the last two years, and we’re reinforcing value for our guests and making us an even more, favorable choice,” he said.
The company’s method of attracting customers seems to be working. According to location analytics company data Placer.aiKava’s year-over-year monthly visits to a location have increased since January 2023.
“It’s an especially impressive achievement in light of the chain’s continued expansion, and a sign that new locations are driving traffic in the current economic environment,” Placer.ai’s Ezra Carmel wrote in a research report.
Write to Angela Palumbo at [email protected]
