CAVA Group, which owns Mediterranean fast casuals CAVA and Zoës Kitchen, is considering going public.
The company announced Monday that it confidentially filed an IPO. The total number of shares to be offered and the price range of the proposed IPO hasn't been determined yet.
In 2018, CAVA purchased Zoës Kitchen—publicly traded at the time—for $300 million. The acquisition was financed through a significant investment from Act III Holdings, the investment firm created by Ron Shaich, founder and former CEO of Panera Bread.
When the deal finalized, CAVA had about 70 locations while Zoës had roughly 260. But in the five year's since, CAVA has converted several Zoës restaurants into CAVA. By early last year, CAVA had 160 restaurants. CEO Brett Schulman told QSR in February 2022 that it planned to convert 55 Zoës units in 2021 and 60-plus in 2022.
CAVA opened 83 locations in 2022 (including conversions of Zoës Kitchen venues) in seven new states and 10 fresh markets. It also debuted seven digital drive-thru pick up lanes to bring its total to 17.
Through conversions, CAVA has found an easier growth vehicle as opposed to battling for real estate.
“It allows us to rapidly expand in these cities that we had been touring and trying to line up high-quality sites—it is a challenge to be able to line up that many in a short period of time,” Schulman told QSR about a year ago. “We can rapidly expand into markets we’ve been trying to bring CAVA to for a number of years. And overall, grow our business on a more compressed timeline.”
Plenty of private dollars have flowed to CAVA in recent years. In December 2019, the chain revealed a $40 million funding round. In April 2021, it announced a $190 million investment, led by T. Rowe Price Group; it reportedly increased CAVA's value to almost $1.3 billion.
A portion of the nearly $200 million capital injection has been used to implement next generation technologies. Prior to COVID, CAVA's digital platforms mixed 20 percent and as high as 50 percent in some urban locales. During the peak of the pandemic, it reached 70 percent. In terms of percentages, matters have moderated some, down to about 40 percent as of early 2022. But when looking at absolute dollars, digital sales remain sticky, and combined with rising in-store sales, numbers are pushing past 2019 marks. CAVA launched a new app in December 2021, and the chain began opening drive-thru digital pickup windows in 2019. Today, roughly 63 percent of the brand's sales are dine-in.
In 2021, the IPO market was hot with five major companies going public Krispy Kreme, Dutch Bros Coffee, Portillo's, First Watch, and Sweetgreen. Panera Brands (Panera, Einstein Bros. Bagels, and Caribou Coffee) had similar plans, but called them off last year because of "deteriorating capital market conditions." Fogo de Chão and MOD Pizza filed for IPOs, but haven't moved forward yet.