WASHINGTON – CAVA Group, Inc. (NYSE:CAVA) saw its shares rise nearly 10% after the fast-casual Mediterranean restaurant chain reported second-quarter earnings and revenue that beat analyst estimates. Comparable sales growth and new unit performance during the quarter also impressed.
The company posted adjusted earnings per share of $0.17, beating the consensus forecast of $0.10. Revenue rose 35.2% year over year to $231.4 million, beating expectations of $209.7 million.
CAVA’s same-restaurant sales growth was robust at 14.4%, including 9.5% visitor growth. Same-restaurant growth was well above consensus estimates of 7.4%.
The company opened a net 18 new restaurants during the quarter, more than the estimated 12 openings.
“We were pleased with comp strength and new unit performance, with the latter exceeding the company’s underwriting targets,” Stifel analysts said in a post-earnings note.
“We believe that confirmation of the performance of new units is a critical factor for the stock price, as unit growth will increase brand awareness and, in turn, increase revenue.”
Separately, Morgan Stanley analysts said the CAVA story “remains very strong,” highlighting that the company is “one of the few companies still generating impressive year-over-year traffic, sales and unit growth.”
“Apart from the legitimate valuation debate, which may become more prominent, the positives in the numbers here remain visible, and so we think this supports the stock market numbers, as we have seen with a number of others in the same boat this earnings season, where De fundamentals are good,” she added.
CAVA’s restaurant-level profit margin rose to 26.5% from 26.1% a year ago, despite higher labor costs and expenses related to the launch of grilled steak in June.
Looking ahead, CAVA has increased its expectations for the full year 2024. The company now expects adjusted EBITDA of $109 million to $114 million, up from its previous guidance of $100 million to $105 million.
“Our second quarter results continued to demonstrate the strength of our category-defining brand and our unique and compelling value proposition,” said Brett Schulman, co-founder and CEO.
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