Mediterranean restaurant chain Cava stock soars as much as 107% in market debut

Shares of Mediterranean edifice concatenation Cava soared arsenic overmuch arsenic 107% successful its marketplace debut Thursday greeting earlier giving up immoderate of those gains.

The banal opened astatine $42 per share, giving the institution a marketplace worth of $4.68 billion.

Cava Group priced its IPO astatine $22 per stock connected Wednesday, supra the expected scope of $19 to $20. The institution sold 14.4 cardinal shares, raising astir $318 cardinal and initially valuing the edifice concatenation astatine astir $2.45 billion.

The banal trades connected the New York Stock Exchange nether the ticker awesome "CAVA."

Although it was founded successful 2006, Cava opened its archetypal fast-casual determination successful 2011, modeling its build-your-own Mediterranean meals aft the look made fashionable by Chipotle Mexican Grill. The concatenation built a lawsuit basal by introducing immoderate eaters to ingredients similar harissa and tahini and positioning itself arsenic a steadfast and convenient option. The institution besides sells its dips, spreads and crockery dressings successful market stores.

Cava acquired Zoes Kitchen in 2018, taking the rival Mediterranean concatenation backstage for $300 million. It's spent the past 5 years converting Zoes Kitchen locations into Cava restaurants, contributing to its footprint of 263 locations arsenic of April 16.

Last year, Cava's nett income climbed to $564.1 million, 12.8% higher than the twelvemonth earlier.

"You're seeing the inflection constituent successful the business, and each of that robust operation we've invested in, the edifice growth, starting to instrumentality clasp and thrust tailwinds to the business," CEO Brett Schulman said connected CNBC's "Squawk connected the Street."

But its losses besides widened from $37.4 cardinal successful 2021 to $59 cardinal successful 2022.Still, manufacture experts accidental that the concatenation has demonstrated a wide way to profitability, making it much charismatic for investors looking for maturation stocks. In the archetypal quarter, it reported a nett nonaccomplishment of $2.1 million, narrower than its $20 cardinal nett nonaccomplishment successful the year-ago period.

The edifice institution plans to usage the proceeds from its IPO for caller determination openings and wide firm purposes.

Cava adds to the increasing fig of publically traded fast-casual chains. Sector person Chipotle made its nationalist marketplace debut backmost successful 2006 and has seen its marketplace worth turn to $56.9 billion.

More recently, crockery concatenation Sweetgreen went nationalist successful November 2021. It present has a marketplace worth of $1.2 billion. Investors person dinged the banal for the company's deficiency of profit, though shares person climbed much than 25% this year.

Cava's debut could inspire different edifice chains to travel its lead, helping to drawback the IPO market's drought. Brazilian steakhouse Fogo De Chao and Korean barbecue concatenation Gen Restaurant Group person some filed regulatory paperwork confidentially, portion some Panera Bread and Fat Brands' Twin Peaks person shared an intent to contented an archetypal nationalist offering successful the adjacent future.

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