CAVA Group Inc. (NYSE: CAVA) is slated to deliver its next earnings report after today’s market close, with expectations pointing to a softer bottom line in its second quarter of fiscal 2025 despite stronger top-line growth. Analysts anticipate earnings of $0.13 per share, down from $0.17 in the same quarter a year earlier, even as revenue is expected to rise to about $285.23 million, a 22.2% year-over-year increase.
Investors may focus on whether higher sales can translate into sustainable margins as costs rise. The revenue outlook underscores continued demand and an aggressive expansion plan, but margin dynamics will be closely watched to see if pricing and mix adjustments can offset pressure from ingredient, labor, and occupancy costs.
CAVA’s stock has logged a challenging year-to-date performance, slipping roughly 27% since the start of the year and about 6% over the past 12 months. Early trading today shows some strength, with shares up around 2.3%.
A look at the most recent quarter provides context for the current quarter’s outlook. In Q1, CAVA posted net sales of about $332 million, up 28% from a year earlier, driven by a 10.8% rise in same-restaurant sales. The gains were supported by a 7.5% increase in guest traffic and a 3.3% contribution from menu pricing and product mix adjustments. The company reported a robust restaurant-level profit margin of 25.1%, improving from 22.4% in the prior quarter, and surpassed $1 billion in trailing twelve-month revenue.
CAVA’s expansion momentum remains a central theme. During Q1, the company opened 15 new restaurants, bringing the total footprint to 382 locations across 26 states and the District of Columbia. Management has raised its 2025 new-restaurant openings guidance to a range of 64 to 68 locations, up from the previous projection of 62 to 66.
Analysts have offered a mixed read on valuation and growth drivers. Wedbush’s Nick Setyan recently raised the price target to $90 with an Outperform rating, citing realistic long-term revenue and unit growth targets. Argus’s Christine Dooley has a more bullish stance, lifting the target to $105 and reiterating a Buy rating on the back of CAVA’s innovation and expansion plans. JP Morgan has trimmed expectations, moving to Neutral from Overweight with a $77 target, highlighting valuation concerns. UBS has been more aggressive, lifting its target to $196 while keeping a Neutral stance.
Beyond the numbers, questions persist about the durability of premium pricing as the fast-casual segment becomes more crowded. The near-term path to margin expansion will likely hinge on a combination of menu optimization, continued traffic gains, and successful scaling of new locations. While the brand’s strength and rapid store rollout are clear, sustaining profitability as costs rise and new markets mature remains a critical focal point.
What to watch in the upcoming report:
– Margin trajectory: how operating and restaurant-level margins perform as costs evolve and scale benefits unfold.
– Unit economics: incremental profitability of new openings and how well they contribute to overall margin.
– Guest metrics: trends in traffic, frequency, and average ticket in the current quarter.
– Cost controls and mix: the impact of pricing actions and product mix on margins amid inflationary pressures.
Summary and outlook: CAVA continues to push growth through a swift expansion program and menu/mix optimization, with revenue poised to outpace prior-year levels. The upcoming earnings release will be a key read on whether the company can translate top-line strength into meaningful margin improvements, a crucial factor for the stock given the recent valuation debates. If CAVA can demonstrate sustained margin gains and strong unit economics alongside continued demand, it could bolster confidence in its long-term growth trajectory. In the nearer term, investors will be weighing the balance between rapid expansion, cost pressures, and the potential for margin restoration.
Additional context for readers: The fast-casual space remains competitive, and market conditions can shift quickly. While the near-term outlook carries some caution regarding profitability, CAVA’s scope for gains in store footprints and guest engagement keeps the growth narrative intact. Investors should consider both the earnings snapshot and the longer-term trajectory when assessing the stock.