Cava announced robust sales figures for its latest fiscal quarter on Thursday, outperforming the general trend of sluggishness seen across the restaurant sector as consumers increasingly reduce their dining expenditures.
The Mediterranean restaurant chain reported a 10.8% increase in same-store sales for the three months ending April 20, aided by a 7.5% rise in customer traffic. Analysts from StreetAccount had anticipated a slightly lower growth rate of 10.3%.
“Our analysis of consumer behavior during the quarter indicates a noticeable rise in premium spending on higher-priced items, such as our pita chips and delectable housemade juices. Additionally, we observed a continued uptick in our average spend per customer,” remarked Chief Financial Officer Tricia Tolivar in an interview with Finance Newso. She noted that the restaurant enjoyed positive traffic across various regions and demographics, as well as different restaurant formats and meal times.
Tolivar elaborated that customers have been shifting their preferences, moving away from fast food and casual dining and opting for Cava’s bowls and pitas — a trend that has persisted over several quarters.
In contrast, other entities within the restaurant industry have reported varying consumer patterns. Some companies did not include data from April, despite improvements in sales and traffic during that month.
Fast-casual competitor Chipotle reported a 2.3% decline in transactions for the first quarter, which they attributed to consumers tightening their wallets amid economic uncertainties in February. Likewise, Sweetgreen experienced its first quarterly same-store sales drop since becoming publicly traded in 2021. Additionally, McDonald’s CEO Chris Kempczinski pointed out that fast-food sector statistics indicate decreased spending among both low- and middle-income consumers, with the burger chain reporting a 3.6% decline in U.S. same-store sales for the first quarter.
Despite its strong quarterly performance, Cava maintained its guidance for same-store sales growth, projecting an increase of 6% to 8%. The company indicated expectations for a slowdown in growth in the latter half of fiscal 2025.
After the earnings announcement, Cava’s stock lost 5% in after-hours trading, contributing to an 11% decline in share value thus far this year, likely influenced by investor concerns about a cautious outlook for the fiscal year and potential impacts from tariffs imposed during the Trump administration.
Comparing Cava’s reported figures with Wall Street expectations based on LSEG analyst surveys:
- Earnings per share: 22 cents, exceeding the 14 cents per share forecast by LSEG.
- Revenue: $332 million, slightly above the expected $327 million.
For the fiscal first quarter, Cava reported a net income of $25.71 million, or 22 cents per share, a significant increase from $13.99 million, or 12 cents per share, during the same period last year. The company also recognized a tax benefit of $10.7 million related to stock-based compensation, which positively impacted this quarter’s earnings.
Net sales surged by 28% to $332 million. On a trailing 12-month basis, Cava has achieved revenues exceeding $1 billion, marking a significant milestone for the brand.
The company has also raised its fiscal year projections.
Cava now expects adjusted earnings before interest, taxes, depreciation, and amortization to range between $152 million and $159 million, an increase from its previous guidance of $150 million to $157 million. Furthermore, the company plans to open between 64 and 68 new locations, compared to its prior estimate of 62 to 66 openings.
