Shares of Cava Group, a fast-casual Mediterranean restaurant chain, saw a significant 17% increase on Wednesday, following the announcement of its impressive third-quarter results, which exceeded analysts’ expectations. The company reported a net income of $18 million and revenue of $241.5 million, both figures representing notable year-over-year growth and surpassing consensus estimates provided by analysts at Visible Alpha.
Cava’s same-store sales experienced a remarkable year-over-year increase of 18%, driven by a 13% rise in customer traffic alongside a 5% uplift attributed to menu price adjustments and product mix enhancements. This positive performance prompted Cava to raise its fiscal 2024 outlook for same-store sales growth, now forecasting an increase of 12% to 13%, a notable revision from previous projections of 8.5% to 9.5%.
Additionally, the company indicated that it plans to open more locations than previously anticipated and raised its expectations for per-restaurant profit margins and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Cava’s share price has experienced steady growth since its initial public offering (IPO) last year, nearly quadrupling in value this year alone. However, JPMorgan analysts maintained a “neutral” rating on the stock, commenting that the current price may reflect expectations of significant growth in the coming years. They adjusted their price target for the stock, increasing it from $90 to $110.
In summary, Cava Group’s robust quarterly performance highlights the chain’s expanding popularity and business viability in a competitive market, showcasing a promising trajectory as it continues to enhance its operational outlook. The upward trend in sales and strategic store expansions paints a hopeful picture for Cava’s future growth potential while indicating investor confidence in the brand’s enduring appeal.