Emerging ConceptsRestaurant Industry Insights

Is 2023 the Year of the Restaurant IPO?

What happens when a restaurant that’s been operating at a loss for several years goes public? If you’re the restaurant chain Cava Group Inc., your shares rise 99%, creating one of the best trading debuts since 2021 and the sixth-largest of 2023. 

What prompted the explosion? 

Cava, a Mediterranean restaurant chain, demonstrated strong growth, shrinking losses, and incredible potential. Its success may have been all the Gen Restaurant Group, parent of Gen Korean BBQ, needed—a little shove into the New York Stock Exchange. It raised $43.2 million through its IPO on June 28, almost doubling the company’s expectations. 

How did restaurants become the new darling on wall street?

Investors’ faith in restaurants is really nothing new. From 2011-2015, dozens of restaurants hit the New York stock market, a period some analysts referred to as the restaurant IPO craze. In 2021, five restaurants made their initial public offering. These included Dutch Bros, First Watch, Krispy Kreme, Portillo’s, and Sweetgreen. 

Let’s explore the latest IPO successes and what it means to the industry at large. 

Cava Explodes

According to analysts pre-IPO, Cava’s challenges with unit economics and margins led to cautious speculation. Combined with increasing construction and real estate costs, and ongoing inflation, some believed it was the wrong time for the brand to go public. The saving grace, they suggested, would be a strong growth story. 

Apparently, the “strong growth story” won out. Cava stock began trading on June 15, priced at $22 per share. Trading opened at $42, giving investors an immediate 91% gain. The brand raised $318 million. As of July 4, the stock price was $39.48.

Cava’s Beginnings & Trajectory

Cava’s humble beginnings started when three first-generation Greek friends opened their first restaurant in 2011 in Bethesda, MD. Today, it’s grown to 263 restaurants, and in 2018, the brand bought 250-unit Zoe’s Kitchen. Since then, they have been converting them into Cava locations. This acquisition is one of the many reasons investors took a liking to this forward-thinking brand. 

It’s a brand focused on sustainable sourcing, fresh ingredients, and caring for its employees. Sound familiar?

Cava has also strategically delivered multiple streams of revenue, an important consideration in today’s ever-changing economy. It sells dressings, dips, and spreads at numerous markets, including Whole Foods Market and Safeway. It also segued into the drive-thru format and dipped its toes into Cava digital kitchens. In 2021, they launched their catering division. It’s clear that this is a brand unafraid of change.

But the key to its IPO success may very well lie in its aggressive growth plan. Their S-1 filing made it clear they’ve established themselves as “the only national player at scale in the fast-growing Mediterranean category.” It grew from 22 restaurants in 2016 to 263 units as of Q1 2023. They plan on opening 34-44 new restaurants in the remainder of 2023 and have 100 units waiting in the wings. They see the potential for over 1,000 within the next decade.

Same-store sales rose over 28% in the first quarter. Total revenue reached over $564 million in fiscal 2022. Despite these numbers, Cava has been operating in the red since 2016. These losses, however, have shrunk year over year. 

Is Fogo de Chão Next?

This upscale Brazilian steakhouse chain has seen steady growth in traffic since the pandemic lost its hold, didn’t succumb to widespread labor shortages, and managed to navigate increasing costs without raising menu prices to the point of affecting demand. 


The expanding brand suggests its success likes in above-average wages and menu flexibility. Today, they have 74 locations globally, with 58 in the U.S. The U.S.-based Brazil eateries are company-owned. And rumor has it they are considering going public again.

According to Restaurant Business, the brand has shown strong financial performance, with total revenue increasing almost 43% year-over-year, reaching $517 million for the 12 months ending in Q3 of 2022. Additionally, the average unit volume jumped to $10.1 million compared to $7.9 million last year. 

The Texas-based chain first went public in 2015 but struggled to win investors. Ultimately, it sold to the private-equity group Rhone Capital for $560 million. 

Other restaurants considering issuing an IPO include Panera Bread, Fat Brands, and Twin Peaks.

What Do These Successes Say About the Restaurant Industry?

The restaurant industry offers a solid opportunity for investors. The challenge for some private equity firms is their lack of knowledge about the sector and understanding of the factors that shape growth and expansion plans. 

At Emerging Concepts, we understand all aspects of the industry, helping leading restaurant brands and entertainment concepts expand successfully, reach their financial goals, and hit their target markets. In addition to EMERGING’s real estate division, we provide full-service supply chain management, location performance analysis, technology assessments, a 3 to 5-year strategic plan, and much more. 

Are you ready to take your brand to the next level? To learn more about partnering with our team of experts or to schedule a consultation, contact EMERGING today.

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