(CTN News) – Cava is preparing to debut publicly Thursday. Other restaurant chains will closely monitor Cava’s progress as they decide whether to follow in Cava’s footsteps.
There has been a slowdown in the initial public offering market during the past 18 months since the financial crisis. A limited number of U.S. companies have raised money through an initial public offering, wary of a volatile market shaken by the conflict in Ukraine, inflation, rising interest rates and fears of a recession.
In this year’s 44 IPOs, only 20 were for companies based in the United States, according to Renaissance Capital, which tracks IPOs and their performance on the stock market.
There is a possibility that Cava’s initial public offering could help break this drought, as a number of restaurants are watching to see how the chain fared as they contemplate going public themselves.
It is likely that Cava’s successful IPO will lead to more restaurant IPOs in the future, according to Matt Kennedy, senior strategist at Renaissance Capital.
As a result, it will demonstrate the interest of investors in the space, as well as the possibility for companies to obtain a certain valuation in the public markets.”
Cava priced its IPO on Wednesday evening at $22,
Valuing the company at $2.5 billion. Initially, the company intended to price its common stock offering at $17 to $19 per share, giving it a valuation of $2.12 billion, before increasing the price range to $19 to $20 per share.
Under the ticker CAVA, the company will be listed on the New York Stock Exchange.
According to Kennedy, Cava’s decision to raise its IPO price range points to the success of the company’s IPO.
I believe that this is good news for restaurant companies planning to go public in the near future.
Both Fogo de Cho and Gen Restaurant Group have filed regulatory paperwork confidentially, while Panera Bread and Fat Brands’ Twin Peaks have indicated their intention to file for an IPO in the near future.
Considering that no one wants to be the first to go public, I believe we tend to see companies in the same sector go public in batches.
Kennedy believes that the window to go public can close much more quickly than it opens. The sudden volatility in the market may frighten investors as well as private companies hoping to attract them.
In spite of the fact that the window for future restaurant IPOs remains open, those companies may not see the same level of investor interest as Cava, which reported same-store sales growth of 28% in the first quarter.
The Mediterranean chain is still unprofitable, but it is narrowing its losses and appears to be on the verge of achieving a positive net income by the end of 2022, when it is scheduled to go public.
Kevin McCarthy, managing director at Neuberger Berman, commented, “[Cava] came to market earlier than most because it is a high-quality name.”.