Shares of Cava Group, a fast-casual Mediterranean restaurant chain, experienced a significant surge on Wednesday, climbing 17% after the company announced its impressive third-quarter results, which exceeded analysts’ expectations. The results reflected notable increases in revenue, profit, and same-store sales when compared to the previous year.
Cava reported a net income of $18 million on revenues of $241.5 million, both figures surpassing consensus estimates compiled by Visible Alpha. This marks a successful quarter for the chain, with same-store sales climbing 18% year-over-year, driven by a combination of a 13% increase in customer traffic and a 5% rise in menu prices and product offerings.
Building on this positive momentum, Cava has once again raised its fiscal 2024 same-store sales growth outlook—anticipating growth between 12% and 13%, a notable increase from the previous guidance of 8.5% to 9.5%. The company also revealed plans to open more locations than initially projected, further signaling its growth ambitions. Additionally, Cava has improved its anticipated profit margins and adjusted EBITDA figures.
Since its initial public offering (IPO) last year, Cava’s stock has shown remarkable growth, now nearly quadrupling in value over the course of the year. Despite the surge, JPMorgan analysts maintained a “neutral” rating, cautioning that the stock’s price may already reflect several years of anticipated growth; however, they did raise their price target from $90 to $110.
This development showcases Cava’s strong market performance and optimistic outlook, suggesting that investors have renewed confidence in the company’s growth potential and strategy. The increasing popularity of Mediterranean cuisine could further bolster Cava’s expansion in the fast-casual dining sector, offering consumers a healthier and flavorful dining option.
Overall, Cava Group’s achievements in this quarter reflect the company’s successful business strategies and position it well for future growth, providing a hopeful outlook for both the brand and its shareholders.