United States securities and exchange commission logo
March 3, 2023
Robert Bertram
Chief Legal Officer
CAVA GROUP, INC.
14 Ridge Square NW, Suite 500
Washington, D.C. 20016
Re: CAVA GROUP, INC.
Draft Registration
Statement on Form S-1
Submitted February
6, 2023
CIK No. 0001639438
Dear Robert Bertram:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Cover Page
1. We note your disclosure
on page 42 that upon completion of this offering, your executive
officers, directors,
and holders of 5% or more of your common stock will have substantial
control over you.
Please include comparable disclosure on your prospectus cover and in
your prospectus
summary, including the percent of your outstanding shares they will
own. Please disclose,
if applicable, whether you will be considered a controlled
company, and if so,
whether you intend to take advantage of the related exemptions.
Robert Bertram
FirstName LastNameRobert Bertram
CAVA GROUP, INC.
Comapany
March NameCAVA GROUP, INC.
3, 2023
March2 3, 2023 Page 2
Page
FirstName LastName
Summary
CAVA: Defining a Category, page 1
2. We note that the summary and business sections predominantly focus on
CAVA and its
business and operations and segment financial results. We also note
from Footnote 15 to
your interim results that Zoes Kitchen contributed significant
revenues to the company's
overall financial results, i.e. approximately $95 million for the
forty weeks ended October
2, 2022. We also note your disclosure that you intend to convert the
remaining Zoes
Kitchen locations by the Fall of 2023. Please revise the summary and
business sections to
more directly discuss the Zoes Kitchen business and operations and
segment financial
results. Please include enough information for investors can
appreciate the current
business and operations of this segment and the conversion plans.
Alternatively, please
advise why a more prominent discussion isn't appropriate given the
company's
offering timing and conversions completed in 2023.
3. We note your disclosure that we have established ourselves as the
only national player at
scale in the fast-growing Mediterranean category. Please disclose
how you define the
Mediterranean category.
4. To give investors context to understand your organic growth, where you
present CAVA
Restaurant Revenue, CAVA Same Restaurant Sales Growth and CAVA
Restaurant-Level
Profit and Margin in this section, please revise to also include
comparable figures for your
Zoe s Kitchen segment, and your consolidated revenues and net
losses. Please make
conforming changes in the summary throughout and your business section
as well. In this
regard, we note that your consolidated financial results as presented
in the included
audited and interim financial statements should be given equal
presentation, weight,
prominence and should be disclosed first prior to presenting any
segment results.
5. Please refer to your CAGR chart. Please revise to balance your CAGR
presentation with
your audited revenue and net income or losses for the same periods.
6. Here, and elsewhere in your filing, as applicable, where you state
that you anticipate
having more than 60 Net New CAVA Restaurant Openings in fiscal 2023,
specify how
many Zoes Kitchen conversions that figure includes.
Strong Financial Results Driven By Powerful Unit Economics, page 6
7. Please revise to present a more balanced presentation of the entire
company as it exists
today, not just CAVA restaurants or their performance. Please revise
to present a
consolidated presentation of the entire company, all restaurants and
your consolidated
financial results.
Robert Bertram
FirstName LastNameRobert Bertram
CAVA GROUP, INC.
Comapany
March NameCAVA GROUP, INC.
3, 2023
March3 3, 2023 Page 3
Page
FirstName LastName
Risk Factors
We may experience shortages, delays, or interruptions in the delivery of food
items and other
products..., page 30
8. We note your disclosure that recent supply chain disruptions have
increased some of your
costs and limited the availability of certain food items for your
restaurants and may
continue to do so. To the extent material, please quantify the impact
on your business and
explain whether any mitigation efforts introduce new material risks,
including those
related to product quality or reliability.
We may face increased food, commodity, energy, and other costs, page 30
9. We note your disclosure on page 60 that the company was impacted by
the current
inflationary environment. Please update this risk factor to identify
the principal factors
contributing to the inflationary pressures the company has
experienced, clarify the
resulting impact to the company, and identify the actions taken to
mitigate inflationary
pressures.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 58
10. On page 59 you disclose that for the forty weeks ended October 2,
2022, CAVA
Restaurant Revenue was $333.5 million, a 64.8% increase from $202.4
million of CAVA
Restaurant Revenue for the forty weeks ended October 3, 2021. Please
quantify here the
extent to which the CAVA Restaurant Revenue growth was attributable to
conversions of
Zoes Kitchen locations versus organic growth. Please also revise to
disclose comparable
figures for the Zoes Kitchen segment.
11. Please revise the graphic on page 59 to clarify, if true, that the
bars represent number of
CAVA restaurants. Please also revise the graphic to clarify the number
of Zoes Kitchen
restaurants which have been converted to date. Based on existing
disclosure, it appears
that over 125 restaurants are conversions with a number remaining to
be converted in
2023.
Key Factors Affecting Our Performance, page 60
12. To the extent material, please discuss whether supply chain
disruptions materially affect
your outlook or business goals. Specify whether these challenges have
materially
impacted your results of operations or capital resources and quantify,
to the extent
possible, how your sales, profits, and/or liquidity have been
impacted. Discuss known
trends or uncertainties resulting from mitigation efforts undertaken,
if any.
Key Performance Measures , page 61
13. Please specify how management uses the CAVA Same Restaurant Sales
Growth and
CAVA Restaurants and Net New CAVA Restaurant Openings metrics, as you
have done
Robert Bertram
CAVA GROUP, INC.
March 3, 2023
Page 4
for the other metrics listed in this section.
14. Please revise the table on page 62 to include, for any non-GAAP
financial measures, the
most directly comparable GAAP measures. Please also revise to include
comparable
information for the Zoes Kitchen segment.
CAVA Restaurant-Level Profit and CAVA Restaurant-Level Profit Margin, page 63
15. Please revise to disclose that the measure is not indicative of
overall results for the
company and that restaurant-level profit does not accrue directly to
the benefit of
shareholders because of corporate-level expenses excluded from the
measure.
Results of Operations, page 66
16. Please revise to quantify factors to which changes are attributed. For
example, you
disclose the increase in CAVA Restaurant Revenue was primarily due to
70 Net New
CAVA Restaurant Openings subsequent to October 3, 2021, as well as a
13.9% increase
in CAVA Same Restaurant Sales Growth. The increase in CAVA Same
Restaurant Sales
consists of 9.6% from menu price increases and product mix and 4.3%
from guest traffic
increases. Please also quantify the extent to which changes attributed
to new restaurant
openings resulted from Zoes Kitchen location conversions versus new
locations.
Liquidity and Capital Resources, page 82
17. We note your disclosure that following the completion of conversions
of all remaining
Zoes Kitchens, which you expect to complete by the fall of 2023, you
expect that the
capital expenditure requirements to increase and expand your CAVA
Restaurants will be
significantly higher than you have experienced in the past few years.
To give investors
context for this statement, please revise to specify how many of the
Net New CAVA
Restaurant Openings in each of 2021 and 2022 were Zoes Kitchen
conversions and how
many of the 60 new openings you anticipate for 2023 will be Zoes
Kitchen conversions.
CAVA: Defining A Category, page 89
18. In the graphic titled CAVA Restaurants, please clarify the purpose of
the two boxes below
the graphic labeled "$ Million CAVA AUV for Fiscal 2022" and "% CAVA
Restaurant-
Level Profit Margin for Fiscal 2022."
Business
Strong Financial
FirstName Results Driven
LastNameRobert By Powerful Unit Economics, page 94
Bertram
Comapany
19. NameCAVA
In your table titledGROUP, INC.
CAVA Restaurant Revenue, please indicate the extent
to which
March changes resulted
3, 2023 Page 4 from the conversion of Zoes Kitchen locations.
FirstName LastName
Robert Bertram
FirstName LastNameRobert Bertram
CAVA GROUP, INC.
Comapany
March NameCAVA GROUP, INC.
3, 2023
March5 3, 2023 Page 5
Page
FirstName LastName
New Restaurant Openings and Conversions, page 107
20. Please revise the table to show how many of the Net New CAVA
Restaurant Openings
were Zoes Kitchen conversions.
Underwriting, page 152
21. Please revise the table setting forth the underwriters compensation
to show separately the
amounts to be paid by the selling shareholders. Refer to Item 508(e)
of Regulation S-K.
General
22. Please file the consents of Kantar and Denison Consulting as exhibits
to your registration
statement, or tell us why you do not believe you are required to do
so. Refer to Rule 436
and Section 7 of the Securities Act.
23. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications. Please contact the staff
member associated
with the review of this filing to discuss how to submit the materials,
if any, to us for our
review.
You may contact James Giugliano at 202-551-3319 or Lyn Shenk at
202-551-3380 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Taylor Beech at 202-551-4515 or Donald Field at 202-551-3680 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade
& Services
cc: Kenneth B. Wallach