A customer exits a Cava restaurant in New York City on June 22, 2023.
Brendan McDermid | Reuters
Cava on Thursday reported better-than-expected sales in its latest fiscal quarter, shaking off the malaise the broader restaurant industry has felt as consumers have cut back on dining.
The Mediterranean chain said its same-store sales grew 10.8% in the three months that ended April 20, lifted by traffic growth of 7.5%. Analysts surveyed by StreetAccount were projecting same-store sales growth of 10.3%.
“When we look at our consumers in the quarter, we saw an increase in premium attachment on higher priced items, like our pita chips or amazing housemade juices. We also saw that our per person average continued to increase, and then when we look at our results, there’s positive traffic across all of our geographies, across all of our income cohorts, as well as the different formats of our restaurants and dayparts,” Chief Financial Officer Tricia Tolivar told CNBC.
She added that diners have been trading up from fast food and down from casual-dining restaurants into Cava’s bowls and pitas, a trend the company has seen for several quarters.
Elsewhere in the restaurant industry, companies have been reporting very different behavior from consumers, although many companies’ results did not include any time in April, when the industry’s sales and traffic performance improved.
Fast-casual rival Chipotle said its transactions fell 2.3% in the first quarter as consumers pulled back their spending in February, spooked by economic uncertainty. Sweetgreen reported its first quarterly same-store sales decline since it went public in 2021. McDonald’s CEO Chris Kempczinski said fast-food industry data showed both low- and middle-income consumers spending less. The burger giant said U.S. same-store sales declined 3.6% for the first quarter.
Despite the strong quarterly performance, Cava reiterated its same-store sales forecast, sticking with its projections of a 6% to 8% increase. The chain said last quarter that it is expecting slower growth in the back half of its fiscal 2025.
The stock fell 5% in extended trading. As of Thursday’s close, Cava shares have slid 11% so far this year, hurt by investor concerns over its conservative outlook for the fiscal year and the economic fallout from the Trump administration’s tariffs.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 22 cents. That may not compare with the 14 cents per share expected by LSEG.
- Revenue: $332 million vs. $327 million expected
The company reported fiscal first-quarter net income of $25.71 million, or 22 cents per share, up from $13.99 million, or 12 cents per share, a year earlier. Cava reported an income tax benefit of $10.7 million related to stock-based compensation, which boosted its earnings this quarter.
Net sales climbed 28% to $332 million. On a 12-month trailing basis, Cava’s revenue has surpassed $1 billion, representing a major milestone for the company.
The company did raise some of its projections for the fiscal year.
Cava now anticipates adjusted earnings before interest, taxes, depreciation and amortization of $152 million to $159 million, up from its prior forecast of $150 million to $157 million. The company also plans to open between 64 and 68 new locations, higher than its previous outlook of between 62 and 66 restaurant openings.
