CAVA PRE-IPO DECK
We will host a PRE-IPO BLACK BOOK on June 6th @ 10 AM.
The Mediterranean-themed restaurant chain Cava Group (CAVA) is set to launch a roadshow for its initial public offering as early as Tuesday. Cava (CAVA) plans to sell shares for $17 to $19, which at the high end would value the fast casual eatery at $2.2 billion, according to the WSJ; CAVA is expected to start trading on the NYSE the following week. Using the assumption of 28 new stores and 11 Zoe's conversions for 16% unit growth and 13.8% same-stores sales growth (evenly split traffic and price) we get a $684 million estimate for 2023E revenues. The $2.2 billion valuation put it at 3.2x 2023 revenues right in line with the average of the group of CMG, PTLO, BROS & SHAK (excluding CMG the average is 2.3x).
EVENT DETAILS:
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The JOBS REPORT
The restaurant industry continued to expand payrolls at a moderate pace in May.
Restaurants and bars once again outpaced all other industry segments in creating jobs last month, adding 33,100 positions while the national unemployment rate inched upward to 3.7%. The latest data from the BLS released on Friday shows the U.S. economy as a whole added 339,000 jobs. Eating and drinking places accounted for roughly 1 of 10 of those new positions. May’s increase followed similar gains in March (32,900) and April (22,400). Restaurant employment growth during the last three months was down somewhat from the average monthly gains of 51,000 jobs during the previous 12 months. May marked the 29th consecutive month of employment gains in the restaurant industry – representing a total increase of more than 2.5 million jobs. Driven by the steady growth, the restaurant workforce is inching closer to a full recovery to pre-pandemic levels. As of May 2023, eating and drinking places were 51,700 jobs or 0.4% below their February 2020 employment peak. Although restaurant job growth slowed somewhat in recent months, retemtion rates are improving which is good for margins. An average of 4.8% of employees in the combined restaurants and accommodations sector quit their jobs in March and April, according to JOLTS data from BLS. That was a full percentage point below the average monthly quit rate of 5.8% during the previous 24 months (March 2021 – February 2023). In addition, it was just below 2019’s average monthly quit rate of 4.9%. If this trend holds, it could signal a return to more typical workforce churn in the hospitality sector, which would help ease the industry’s labor challenges.
Industry traffic
The Casual dining industry slowed WoW to (-6.9%) from (-4.7%), bring May to (-5.8%) slightly better than April of (-7.3%).
The Quick Service industry improved WoW to (-5.2%) from (-6.1%), bring May to (-4.9%) slightly worse than April of (-3.1%).
