CAVA Lowers Annual Forecast Amid Consumer Spending Decline
CAVA has recently revised its annual forecast due to the impact of declining consumer spending in the fast-casual segment. On Tuesday, the company reported a mere 1.9% increase in same-store sales for the third quarter, alongside a 20% rise in revenue. Both figures fell short of Wall Street expectations, and customer traffic remained unchanged.
CAVA’s Market Position and Growth
Despite the challenges, CAVA’s CEO, Brett Schulman, noted significant market share gains since 2019, primarily due to competitive pricing. The company’s performance has surpassed the Consumer Price Index by nearly 10%. In comparison, third-quarter revenue has nearly doubled compared to the same period in 2024, reflecting strong growth over the past two years.
Quarter Highlights
- New Product Launch: CAVA introduced Chicken Shawarma in September, meeting performance expectations.
- Salmon Test: The company is experimenting with salmon options, showing positive early results.
- Rewards Program: Membership in CAVA’s rewards program has increased by 36% following its relaunch.
- Kitchen Improvements: A new kitchen display system is set to enhance efficiency in over 350 locations by year-end.
- Cooking Technology: All restaurants are now fitted with TurboChef ovens, promoting consistency and faster cooking times.
Financial Outlook and Challenges
Despite recent growth, CAVA is experiencing what executives refer to as sales “moderation.” CFO Tricia Tolivar indicated that external economic pressures are particularly affecting younger consumers, a key demographic for the brand. As a result, CAVA revised its full-year same-store sales forecast to a modest increase of 3% to 4%, down from an initial range of 4% to 6%.
Expected restaurant-level profit margins have also been adjusted, now estimated between 24.4% to 24.8%, compared to the previous forecast of 24.8% to 25.2%. Following the earnings report, CAVA’s stock price declined almost 5%.
CAVA Q3 Performance Summary
| Metric | Q3 Result | Change Year-over-Year |
|---|---|---|
| Revenue | $289.8 million | 20% growth from $241.5 million |
| Same-store sales growth | 1.9% | N/A |
| Average unit volume | $2.9 million | Increase from $2.8 million |
| Restaurant-level profit | $71.2 million | 15.1% growth |
| Restaurant-level profit margin | 24.6% | N/A |
| New restaurant openings | 17 | Year-over-year growth of 17.9% |
As CAVA navigates these market conditions, the focus remains on innovation and customer engagement to sustain growth amidst broader economic challenges.
