CAVA Earnings: Growth Momentum Despite Macro Headwinds and Menu Laps

TLDR

• Revenue Strength: Revenue rose 20.3% YoY to $278.2M, driven by new restaurants and modest same-restaurant sales growth of 2.1%.

• Margin Trends: Restaurant-level margin held at 26.3% despite input cost pressures from steak launch; Adjusted EBITDA climbed 22.6% to $42.1M.

• Forward Outlook: 2025 guidance sees 4–6% same-restaurant sales growth and 68–70 new openings, supported by menu innovation and operational tech upgrades.

---

Business Overview

CAVA Group, Inc. (NYSE: CAVA) is a category-defining Mediterranean fast-casual restaurant brand with 398 locations across 27 states and Washington, D.C. The company blends bold flavors with a health-forward focus, targeting the large and growing limited-service restaurant and wellness segments. With a loyal and demographically diverse customer base, CAVA leverages strong culinary credibility and a differentiated in-store and digital experience to expand nationwide.

“We’re defining a category with powerful long-term tailwinds in Mediterranean… and a leadership position that is difficult to replicate.” – Brett Schulman, Co-Founder & CEO

Cava Earnings

• Revenue: $278.2M, up 20.3% YoY, fueled by 75 net new openings over the last 12 months and positive menu mix/pricing impact.

• Same-Restaurant Sales: +2.1% YoY, tempered by lapping the 2024 steak launch and “honeymoon” dynamics from new high-volume stores.

• Restaurant-Level Profit: $73.3M, up 19.6% YoY; margin slightly eased to 26.3% from 26.5% last year.

• Adjusted EBITDA: $42.1M (+22.6% YoY), driven by strong new unit performance and G&A leverage.

• Net Income: $18.4M, or $0.16 per diluted share, versus $16.8M adjusted net income last year.

• Digital Mix: 37.3% of total revenue.

• Cash Flow & Liquidity: $98.9M YTD operating cash flow, $21.9M free cash flow; zero debt and $385.8M in cash and investments.

Forward Guidance

• Net New Openings: 68–70 for FY 2025 (raised from 64–68).

• Same-Restaurant Sales Growth: 4–6% (down from prior 6–8% to reflect steak lap impact).

• Restaurant-Level Margin: 24.8–25.2%.

• Adjusted EBITDA: $152–$159M.

• Risks & Opportunities: Macro headwinds, potential tariff impacts, and competitive intensity balanced by strong menu pipeline (chicken shawarma, cinnamon sugar pita chips, salmon testing) and loyalty program enhancements.

“This is a marathon, not a sprint… we want to be positioned to deliver on our long-term strategic plan.” – Brett Schulman

---

Operational Performance

CAVA opened 16 net new restaurants in Q2, entering Pittsburgh and Michigan for the first time. New units are averaging above $3M in first-year sales, surpassing the $2.3M target, with year-one cash-on-cash returns exceeding 40%.Operational investments include:

• Connected Kitchen Initiative: Expanded kitchen display screens to 95 stores (targeting 270 by year-end).

• TurboChef Ovens: Systemwide rollout for faster, more consistent prep.

• AI Camera Vision: Expanding to 21 more locations to optimize food production and reduce waste.

• Hyphen Automation Pilot: Testing automated make lines to boost speed and free staff for guest interaction.

Market Insights

Mediterranean cuisine continues to benefit from strong consumer adoption and generational health/wellness trends. CAVA faces typical restaurant industry competition but sees no notable competitive weakness in core markets like New York. Marketing spend remains modest, but scale now allows for more regional and media-mix investments, including outdoor and OTT advertising.

Consumer Behavior & Sentiment

Despite a soft macro backdrop, CAVA reports no signs of trade-down or check management. Net Promoter Score (NPS) ranks #2 in the limited-service restaurant category, and value perception continues to improve. Engagement initiatives—like the limited-edition “pita chip plushie” tied to the Harissa meal—drove record app downloads and digital revenue days.

Strategic Initiatives

• Menu Innovation: Company-wide chicken shawarma launch in early fall; cinnamon sugar pita chips debut this fall; salmon in market test.

• Loyalty Program: Tiered rewards structure launching later this year to boost high-value guest engagement.

• Talent Development: Equity grants for general managers starting 2026; rollout of assistant GM role in two-thirds of restaurants to support high volumes and pipeline growth.

“This protein is our modern take on a Mediterranean classic… delivering one of the region’s most iconic flavors.” – Brett Schulman, on chicken shawarma launch

Capital Allocation

With no debt, robust cash reserves, and strong free cash flow, CAVA is positioned to fund rapid unit growth and operational innovation without compromising balance sheet strength.

The Bottom Line

CAVA’s Q2 performance underscores the strength of its category leadership and growth model, even as it navigates tough YoY comparisons and macro noise.

Investors should watch:

1. The impact of fall menu launches on traffic and mix.

2. New unit productivity sustainability above $3M AUV.

3. Marketing leverage potential as scale builds in key markets.

The combination of disciplined innovation, operational tech investment, and strong financial flexibility supports CAVA’s path toward its 1,000-restaurant goal by 2032.

--

Stay informed. We break down earnings, trends, and policy shifts shaping consumer staples and adjacent industries — no paywalls, no newsletters, just actionable insights wherever you scroll. Follow us on LinkedIn and X for more.