Shares of Cava Group, the fast-casual Mediterranean food chain, experienced a notable surge today following the release of its third-quarter earnings report, which exceeded analyst expectations. As of 10:30 a.m. ET, the stock was up 11%, part of a larger upward trend that has developed since last year due to Cava’s appealing Chipotle-like business model.
Cava demonstrated strong performance, with same-store sales soaring by 18%, attributed to a 13% increase in customer traffic. This resulted in a 39% revenue increase, totaling $243.8 million, which surpassed the consensus estimate of $233.6 million. Additionally, average unit volumes rose from $2.6 million to $2.8 million, indicating that individual restaurant performance is becoming more robust, while the restaurant-level profit margin was reported at 25.6%, placing Cava alongside leading operators like Chipotle.
On the profitability front, Cava’s net income saw significant growth, nearly tripling from $6.8 million to $18 million, and earnings per share rose from $0.06 to $0.15, exceeding the expected $0.11. CEO Brett Schulman emphasized the strength of Cava’s brand and the increasing popularity of Mediterranean cuisine, noting, “Our third-quarter results demonstrate the strength of our Mediterranean category-defining brand and the broad appeal of our unique value proposition, creating what is quickly becoming the next major cultural cuisine category.”
Looking ahead, Cava has raised its full-year guidance, projecting same-store sales growth of 12% to 13%, an increase from the earlier estimate of 8.5% to 9.5%. The company anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of $121 million to $126 million, up from a previous estimate of $109 million to $114 million. Additionally, plans for new store openings have been adjusted to between 56 and 58 locations.
Cava’s rapid expansion and increasing sales indicate a promising future. While the stock may be considered pricey, the company’s solid growth trajectory suggests that significant potential for further increases exists. This success story highlights the growing popularity of Mediterranean cuisine and the potential for Cava to become a major player in the fast-casual dining sector.
In summary, Cava Group’s strong financial performance and upward revisions provide a hopeful outlook as it continues to captivate customers and expand its market presence, suggesting that the journey ahead could be filled with more milestones and achievements.