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Cava may not be on-switch for consumer IPO market

Illustration: Aïda Amer/Axios

While Cava may have cracked the IPO market this week, the public equity markets for consumer-facing companies are unlikely to fully open until early 2024, industry sources say.

Why it matters: There is a long list of companies in consumer and retail patiently waiting to make their own public debuts.

What they're saying: "It’s certainly great to have green shoots with Kenvue and now Cava. It’s great to have those two data points," a veteran dealmaker tells Axios.

  • "There were several companies that were on the runway ready to launch their IPOs and had done 99% of the prep work and now just need to update the S-1 or roll things forward," the source says.

What's next: Korean barbecue chain Gen Restaurant Group aims to sell three million shares between $10 and $12 each, according to an amended S-1 filed with the SEC on Wednesday.

What we're watching: Companies at the top of bankers' list for going public include Savers Value Village, Steinway Musical Instruments (even though it recently pulled its registration), Fogo de Chao, 5.11 Tactical, Milan Laser, Claire's, and Yesway (it too has paused its IPO plans), per the source.

  • Theoretically, the above candidates should be ready to go by early next year, the source says.
  • That's "assuming a stabilized, benign market environment," the source adds.

State of play: Axios has previously reported that Rokt, Lovery, Hungryroot, and Chobani are all preparing for or eyeing IPOs.

  • Fat Brands says it aims to take Twin Peaks public within six to 12 months at an enterprise value of up to $1 billion, while Panera recently resurfaced its IPO plans.

Be smart: The market needs to see a half-dozen consumer retail IPOs out of the gate trade well, followed by positive first quarter earnings, to give public equity investors confidence, the source says.

  • Several companies went public during the IPO frenzy of 2021 that weren't ready to do so, a second source cautions.

The bottom line: It's "thrilling" that Cava is going well, but it's unlikely that its IPO is the switch that turns it all back on, the source says.

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