Cava, a fast-casual Mediterranean restaurant chain, is faring better than its rivals.
Cava went public last June in one of the hottest IPOs of 2023. And the glint of its IPO halo helped boost sales all year, according to the company.
“The IPO certainly shined a brighter light and brought increasing awareness to who we are and the category we are creating and defining in Mediterranean [cuisine],” CEO Brett Schulman told Quartz. The company reported restaurant-level profit growth of 70% in the fourth quarter — news that sent its stock up 12% in Tuesday trading, at one point hitting an all-time high share price of $58.
That’s better than rivals Shake Shack, Sweetgreen, and Chipotle have performed as of late. While CAVA reported same-restaurant sales growth of 18% for the full year, Chipotle and Shake Shack sales grew much less (8% and 4%, respectively). Sweetgreen doesn’t report earnings until Feb. 29, but its stock performance has been much worse than Cava’s so far. Sweetgreen has not been profitable since it went public in 2021.
Cava’s chief said part of the reason it’s been able to draw customers despite still-high food inflation is that it’s only modestly hiked prices ( between 2.5% to 3% in 2023), and that no further price increases are planned in 2024.
Cava was an IPO success in 2023
Cava was one of the highest-performing IPOs of last year, even as the IPO market continued to shrivel. The number of IPOs in 2023 (153) is a drop from that of 2022 (175) and a marked decline from the more than 1,000 IPOs in 2021.
With stock climbing 117% in its market debut, Cava raised over $300 million during its first day of trading. While shares receded after the initial hype, they’ve been on a steady rise since last September.
While fewer companies are going public after the IPO frenzy of 2020 and 2021, Cava is among a group of newly-public companies that are actually profitable. The IPOs of the pandemic era — including Allbirds, Sweetgreen, Casper Sleep, Rent the Runway, and Robinhood — were mostly money-losers. But more companies that went public in 2023 — including Instacart, Birkenstock, Arm, and Cava — have recorded profits.
The fast-casual chain has also been gaining more notice simply because it’s expanding its footprint. CAVA opened 72 new restaurants in 2023 and expects to open between 48 and 52 more in the coming year.