CAVA Earnings: Strong Revenue Growth and New Menu Innovation Amid Consumer Pressures
- Hardik Shah
- 2 days ago
- 4 min read
TL;DR
Revenue Strength: 20% year-over-year growth to $289.8M, driven by 17 new restaurants and steady same-store sales.
Margin Trends: Restaurant-level profit margin at 24.6%, slightly lower due to tariffs, labor, and delivery mix.
Forward Outlook: Full-year guidance trimmed modestly amid macro headwinds; new menu items and tech upgrades to sustain growth.
Business Overview
CAVA Group (NYSE: CAVA) operates a rapidly growing Mediterranean fast-casual restaurant chain known for its healthful, flavorful offerings. As of Q3 2025, the company runs 415 restaurants across 28 states and Washington, D.C., reflecting a 17.9% year-over-year increase in unit count. The brand continues to benefit from structural tailwinds in the health and wellness category and growing consumer demand for fresh, globally inspired food. Its digital channel accounts for 37.6% of total revenue, underscoring strong engagement through off-premise and app-based ordering.
CAVA Earnings
CAVA reported revenue of $289.8 million, up 20.0% year-over-year, driven by 1.9% same-restaurant sales growth and the addition of 17 net new locations.
Average Unit Volume (AUV): $2.9 million, consistent with prior quarters.
Restaurant-Level Profit: $71.2 million, up 15.1%, representing a 24.6% margin (down from 25.6% a year ago) due to higher food and packaging costs tied to tariffs, increased delivery mix, and wage investments.
Adjusted EBITDA: $40.0 million, up 19.6% from last year, maintaining a 13.7% margin.
Net Income: $14.7 million, or 5.0% of revenue, compared with $18.0 million a year ago, largely reflecting a higher tax rate and depreciation expense.
Free Cash Flow: $23.3 million year-to-date, with $144.5 million in operating cash flow.
Balance Sheet: The company remains debt-free with $387.7 million in cash and investments, providing ample liquidity to fund expansion.
Forward Guidance (Updated FY25)
Same-Restaurant Sales Growth: Revised to 3%–4% (from 4%–6%)
Restaurant-Level Profit Margin: 24.4%–24.8% (previously 24.8%–25.2%)
Adjusted EBITDA: $148–$152 million (down slightly from $152–$159 million)
CFO Tricia Tolivar noted the moderation reflects “broader macroeconomic pressures,” but emphasized the company’s resilience:
“Our two-year same-restaurant sales stack accelerated by 350 basis points to 20%, underscoring the resilience of our brand and the strength of our guest engagement.”
Operational Performance
CAVA’s new restaurant productivity remains above 100%, with the 2025 cohort trending above $3 million in AUV—evidence of strong brand portability and scalability.CEO Brett Schulman highlighted Project Soul, the company’s new restaurant design prototype emphasizing natural light, greenery, and softer seating, rolling out systemwide in 2026.
CAVA also advanced its digital and operations tech stack, deploying a new kitchen display system (KDS) to over 200 restaurants (350 expected by year-end). According to Schulman,
“Restaurants with the new KDS are experiencing higher guest satisfaction scores driven by improved order accuracy and proactive order notifications.”
Market Insights
The company continues to navigate a “discount-heavy environment”, which Schulman described as the most intense since the Great Recession. Despite that, CAVA remains focused on experience and value over discounting:
“Our value proposition is holistic — rooted in exceptional guest experiences and differentiated Mediterranean cuisine.”
CAVA continues to underprice its category peers, taking less than half the cumulative price increases of the broader restaurant industry since 2019, while maintaining healthy transaction growth.
Consumer Behavior & Sentiment
CAVA acknowledged pressure among younger consumers (ages 25–35), particularly from inflation and student loan repayments. Schulman stressed that this segment remains engaged but is “visiting less frequently.” Nonetheless, loyalty engagement is rising:
The Rewards Reimagined program grew 36% in membership year-over-year.
New tiered status levels (Sea, Sand, and Sun) and status matching are deepening engagement and driving repeat visits.
“Guests who tried our new chicken shawarma through the loyalty program are visiting more frequently than those who haven’t — proof of how innovation and personalization drive loyalty,” Schulman noted.
Strategic Initiatives
CAVA is executing across four key strategic pillars:
Menu Innovation: Chicken Shawarma exceeded expectations; a salmon launch is planned for spring 2026 after strong pilot results.
Technology Enablement: Expanded use of KDS and TurboChef ovens to streamline kitchens.
People Development: The Flavor Your Future program and new Assistant General Manager role aim to build the next generation of leaders as the company scales toward 1,000 restaurants by 2032.
Catering Expansion: Currently testing in Houston, with plans to add a second market in 2026.
Capital Allocation
CAVA maintains a conservative balance sheet with no long-term debt and strong liquidity to fund growth. While the company does not currently pay dividends or conduct share repurchases, management reiterated its priority on reinvesting in growth, team development, and technology to sustain long-term brand equity.
The Bottom Line
CAVA’s Q3 2025 performance reinforces the resilience of its Mediterranean fast-casual model. Though same-restaurant sales growth moderated amid consumer pressures, unit expansion, innovation, and digital engagement continue to fuel momentum.
Investors should watch for:
Traffic trends in early 2026 as macro pressures persist.
Salmon rollout and catering expansion as new growth levers.
Margin recovery as cost pressures normalize and sales leverage improves.
With durable category leadership and strong balance sheet flexibility, CAVA remains well positioned for disciplined, long-term growth.
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