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The market is starved for initial public offerings, and the folks at Cava are hoping a chicken shawarma bowl may just be the fix investors need.

A sort of Chipotle-but-make-it-Mediterranean fast-casual lunch chain, Cava is planning a roadshow to market a potential IPO that could launch on the New York Stock Exchange as soon as next week, according to The Wall Street Journal.

Pitas Over Profits

Cava, which launched in 2011, has a simple pitch to investors, whom it hopes to sell shares to at around $18 a piece: Its enterprise has exploded in recent years, now counting over 260 restaurants in over 22 states, while the group's said in filings that its aims to operate over 1,000 locations by 2032. That's a lot of growth... which may be a bit of a problem.

2023 has thus far offered little respite from last year's IPO draught, in large part because investors are still wary of companies prioritizing growth over profits. It's a class that Cava fits all too well:

  • Cava reported average sales of $2.4 million at its locations last year, making it solidly fast-casual middle class -- below Chipotle, Sweetgreen, and Panera, but better than Five Guys and Panda Express, per market research firm Technomic.
  • That wasn't enough to generate positive cash-flow. Last year, the restaurant group reported a net loss of $59 million, up from just $37 million a year prior.

Still, the drum beat of falafel bowl assembly lines continues forever apace -- and may just be leading Cava down a path toward profitability. In a recent securities filing, the group said restaurant-level profits have nearly doubled in the past two fiscal years. But is that enough to sell investors? Ask the Oracle of Delphi.

– Brian Boyle