CAVA PRE-IPO DECK
EVENT DETAILS:
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Washington, D.C.-based Cava Group Inc. had confidentially filed for an IPO but on Friday officially filed the S1. CAVA is a Mediterranean fast-casual concept that was founded 12 years ago and ended the first quarter with 263 restaurants across 22 states. Cava was born as the fast-casual spinoff of a full-service restaurant called Cava Mezze, developed by three friends who were the children of immigrants from Greece: Ted Xenohristos, Ike Grigoropoulos, and Dimitri Moshovitis. They opened Cava Mezze in Rockville, Md., in 2006, and the concept was a hit. The three partners later began selling some of their signature dips and spread in local grocery stores, bringing now CEO Brett Schulman in to grow that business.
The concept positioning changed significantly in 2018 when Cava acquired the then-publicly traded Zoe’s Kitchen chain in a $300 million deal funded by former Panera Bread CEO Ron Shaich’s Act III Holdings. Since then, Cava has converted 145 Zoe’s locations, which has helped the brand move into the South. Cava has evolved into a multi-channel brand, including delivery, catering, and the CPG revenue streams. Cava’s health-focused menu has had broad appeal, in particular drawing in Gen Z and Millennial diners. Unlike many fast-casual chains with one-day part, Cava has a reasonably even split between lunch (55%) and dinner (45%). Last year about 65% of sales came from in-restaurant orders, and 35% were digital and continue to grow. Cava said sales through digital channels increased 51% last year, and digital orders tend to have a 27% higher average check. The average unit volume in 2022 was $2.3 million. Despite the inflationary climate last year, Cava grew its restaurant-level margins to 20.3%, though menu price increases were kept to less than 5%.
In its preliminary prospectus filed with the U.S. Securities and Exchange Commission, Cava said it grew revenues to $564 million in fiscal 2022, up 12% YoY. Unit growth in 2022 was 44% and 11% in 1Q23, with another 34 to 44 net new Cava locations estimated to open in 2023. The company reported a net loss of $59 million in 2022, but in 1Q23, the net loss had shrunk to $2 million, compared with a loss of $20 million in 1Q22. Same-store sales for the chain were up 14.2% in fiscal 2022 YoY and up 28.4% in 1Q23.
The Basic company/concept positioning:
- Differentiated Fast Casual lifestyle brand with a desirable and loyal Customer Base
- The Food – simple, fresh & on, trend
- Delivering Mediterranean-inspired dishes/experiences with a Southern influence
- Diverse Revenue Mix Provides multiple layers for Growth
- Attractive Unit Economic Model with proven portability and significant unit growth
ON THE CALL, WE WILL COVER THE FOLLOWING:
- The current setup for the restaurant industry
- Growth Drivers & Footprint
- CAVA differentiated menu & daypart focus
- Unit Economics
- Peer Comparison
- Margin Leverage
- Income statement/Balance Sheet/Cash flow (estimates)
- Valuation
