Flat traffic and post–menu launch slowdown weigh on performance despite revenue growth
Cava (CAVA) shares tumbled 20% in extended trading Tuesday after the Mediterranean fast-casual chain lowered its full-year same-store sales forecast, citing weaker-than-expected second-quarter performance. The company now projects 2024 same-store sales growth of 4% to 6%, down from its prior 6% to 8% range.
For the quarter, Cava reported earnings of $18.4 million, or 16 cents per share, slightly above Wall Street’s expectation of 13 cents. Revenue came in at $280.6 million, falling short of the $285.6 million analysts anticipated, according to LSEG.
Net restaurant sales climbed 20% year over year to $278.2 million, largely driven by new store openings. Same-store sales rose 2.1%, outperforming much of the restaurant industry but missing the 6.1% growth forecast from StreetAccount. Traffic was described as “roughly flat” for the quarter, a sharp contrast to the 14.4% jump a year earlier that was fueled by the launch of grilled steak.
CFO Tricia Tolivar told CNBC the quarter began with strong momentum, but growth slowed once the chain passed the one-year anniversary of its grilled steak debut. Rival fast-casual brands have also struggled recently — Chipotle reported a 4% drop in same-store sales, while Sweetgreen shares fell after another guidance cut.
Despite the reduced outlook, Cava reaffirmed other full-year targets, including adjusted EBITDA of $152 million to $159 million and restaurant-level profit margins between 24.8% and 25.2%.
The company also revealed it participated in a $25 million Series B funding round for Hyphen, an automation startup backed by Chipotle. Cava CEO Brett Schulman said piloting Hyphen’s automated makeline could improve order accuracy, speed, and reduce complexity during peak digital hours.
With shares already down 40% in 2024, the lowered guidance adds pressure on Cava to reignite traffic and recapture the sales momentum it enjoyed last year.
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