Shares of Cava Group, a fast-casual Mediterranean food chain, experienced a notable rise today after the company released its third-quarter earnings report, which exceeded expectations. As of 10:30 a.m. ET, the stock had surged by 11%, continuing a trend of positive growth that began last year, thanks to Cava’s appealing Chipotle-like business model.
Cava’s financial performance was impressive, with same-store sales increasing by an remarkable 18%, driven by 13% traffic growth. This boost resulted in a 39% revenue increase to $243.8 million, surpassing the market’s consensus estimate of $233.6 million. Additionally, the average revenue per restaurant climbed from $2.6 million to $2.8 million, indicating stronger business at individual locations. The company reported a restaurant-level profit margin of 25.6%, aligning it with successful operators like Chipotle.
On the profit side, Cava’s net income nearly tripled from $6.8 million to $18 million, while earnings per share jumped from $0.06 to $0.15, exceeding analyst expectations of $0.11.
Cava’s CEO, Brett Schulman, highlighted the company’s strong position, stating, “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 forward, Cava has raised its full-year guidance, now anticipating same-store sales growth of 12%-13%, up from 8.5%-9.5%. The company also adjusted its earnings forecast for adjusted EBITDA to a range of $121 million to $126 million and slightly increased its store opening target to 56-58 locations.
Cava is on a rapid expansion trajectory, with soaring sales across its stores. While its stock might be considered pricey, the strong growth potential and stellar performance indicate that the company’s success story is far from over, suggesting more room for upward movement in its stock price.
Overall, Cava’s positive trajectory signals a bright future as it continues to thrive in the competitive restaurant industry, appealing to a growing consumer base eager for fresh Mediterranean cuisine.