Fast casual eatery Cava is reportedly set to begin promoting its initial public offering (IPO).
Executives from the Mediterranean-themed restaurant chain plan to begin a roadshow to attract investors as soon as Tuesday, the Wall Street Journal reported Sunday (June 4).
The report, citing people familiar with the matter, said the company hopes to sell shares at between $17 to $19 a piece, which would value Cava at $2.2 billion.
When contacted by PYMNTS, Cava declined to comment.
Cava, which has more than 260 locations across 22 states and Washington, D.C., filed to go public via IPO with the Securities and Exchange Commission (SEC) last month.
The company noted in its filing that it had seen an increased “emphasis on combined quality and convenience,” an advantage for fast-casual eateries that offer higher-quality foods than their quick-service restaurant (QSR) counterparts and more convenience than dine-in brands.
“Modern consumers expect to be able to customize where, when and how they enjoy their food, without compromising the quality of their food or experience,” the company said in the filing. “Whether it is an in-restaurant order, an order picked up in-restaurant, a drive-thru pickup order or a delivery order, Cava’s easy and quick access has been key to our success and is expected to strengthen as we further enhance channels of access for our guests.”
As PYMNTS reported at the time, Cava is among a number of fast casual brands that are experiencing a resurgence, with restaurants in this space “performing significantly better than other kinds of restaurants on the stock market throughout 2023. For instance, Chipotle Mexican Grill has seen a 62% increase in its stock price since the start of the year, and Shake Shack has seen a 57% increase.”
By contrast, fast food giant Yum Brands – which owns Pizza Hut, Taco Bell and KFC – has seen its stock price rise just 3% over the last year, while McDonald’s has reported an 8% increase, and Starbucks a 1% decrease.
PYMNTS used Cava’s IPO to illustrate a challenge facing smaller chains: without the extensive digital platforms that major restaurants have built to compete with third-party restaurant aggregators, smaller chains are left in a bind.
In its SEC filing, Cava acknowledged that “substantially all” of its delivery sales, including those that are placed through direct ordering platforms, are carried out by third-party aggregators’ drivers, leaving the restaurant highly dependent on these companies.
“The third-party food delivery service industry has been consolidating and may continue to consolidate, which may give third-party delivery companies more leverage in negotiating the terms and pricing of contracts, which in turn could negatively affect our profitability,” the company said in its filing.
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