Cava earnings beat but conservative outlook weighs on shares

Cava (NYSE:CAVA) reported strong first quarter financial results that beat Wall Street expectations, but shares fell almost 5% as the fast-casual Mediterranean restaurant brand maintained its cautious outlook for the full year.

The company expects same-store sales growth of 6% to 8% and restaurant-level profit margins in the range of 24.8% to 25.2%, unchanged from prior forecasts.

For Q1, Cava reported year-over-year revenue growth of 28.2% to $328.5 million.

Same restaurant sales growth included a 7.5% increase from guest traffic  and 3.3% increase from menu price and product mix, totalling 10.8% ahead of the 10% consensus.

Earnings per share were $0.22, topping estimates of $0.15.

The company opened 15 new restaurants during the period, bringing the total to 382 across 26 states and the District of Columbia.

"In spite of economic uncertainty and challenging weather, Cava's first quarter results demonstrate the continued strength of our category-defining brand,” CEO Brett Schulman said in a statement.

“I’m proud to say that on a trailing twelve-month basis, we have now surpassed a billion dollars in revenue – a milestone that is a testament to Mediterranean becoming the next large-scale cultural cuisine category, a category we have firmly established our leadership in.”

Resilient demand

Analysts at Jefferies repeated their ‘Buy’ rating on Cava and $125 price target following the release of its earnings, citing encouraging traffic and demand resiliency.

Shares of Cava traded down 4.9% at about $94 on Friday morning.

They noted that despite broader macro concerns, customer behavior remains strong, aided by Cava’s value proposition, digital engagement with 8 million loyalty members, and menu innovation.

“We see a buying opportunity in stock given high degree of visibility into near-term trends, with relative outperformance and positive traffic momentum warranting a premium multiple, particularly in the current environment,” they wrote.

“Cava remains in early stages of compelling growth, including at the high-end of 25% to 30% algorithm in 2026, with a good degree of visibility also into long-term targets.”

They see upside to 2025 sales and margins and believe Cava’s model supports a premium valuation, with long-term potential for 3,000 restaurants.