Cava Group is planning to offer 14.4 million shares priced at $19 to $20 each, for a valuation of $2.2 billion.
Cava Group, the Mediterranean-focused fast-casual restaurant chain, raised the proposed price range for its initial public offering on Monday as it gears up for a deal that’s expected to start trading on Thursday.
The company is planning to list on the New York Stock Exchange under the ticker CAVA. JPMorgan, Jefferies and Citigroup are lead underwriters in a team of 10 banks working on the deal.Bill Smith, co-founder and chief executive of Renaissance Capital, a provider of IPO exchange-traded funds and institutional research, said an office straw poll about Cava’s food was mostly positive.
The company has grown its network of restaurants to 263 in the first quarter of 2023 from 22 in 2016, after acquiring rival Zoës Kitchen in 2018 in a $300 million deal. After converting a number of the Zoës Kitchen restaurants into Cava restaurants, “we expect that the capital expenditure requirements to open a new restaurant will be significantly higher than we have experienced in the past few years,” the prospectus says.
“Cava Group is not currently profitable and its path to profitability is nonexistent as the company spends money it doesn’t even have to open more stores,” Trainer wrote.New Constructs estimates that Cava’s net operating profit after tax margin is negative 3%. Chipotle, by contrast, is a positive 14%.
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