Cava, the Mediterranean restaurant chain, has significantly raised its full-year outlook following a robust fiscal second quarter, where strong restaurant traffic fueled better-than-expected earnings and revenue. The company’s strong performance led to a 9% increase in its stock during extended trading. Over the course of this year, Cava’s stock has more than doubled, elevating its market capitalization to approximately $11.6 billion as of the latest close.
For the quarter ending July 14, Cava reported earnings per share of 17 cents, surpassing Wall Street’s expectations of 13 cents. Revenue reached $233 million, also exceeding the anticipated $220 million. This marks a significant improvement from the previous year’s net income of $6.5 million, or 21 cents per share, as the company reported a net income of $19.7 million, or 17 cents per share, for the recent quarter. The company’s net sales surged by 35%, reaching $233 million, with same-store sales growing by 14.4%, significantly outpacing the expected 7.9%.
One of the standout factors contributing to this success was the 9.5% increase in traffic to Cava’s restaurants during the quarter, a stark contrast to the declining visits reported by many other restaurant companies as consumers reduce their spending. Cava’s CEO and co-founder, Brett Schulman, attributed this growth to the introduction of a new grilled steak option, which resonated well with customers and drove repeat visits.
During the quarter, Cava expanded its presence by opening 18 net new locations, bringing the total number of restaurants to 341. Looking ahead, the company has updated its expectations for the fiscal year, now projecting same-store sales growth of 8.5% to 9.5%, an increase from the previously anticipated range of 4.5% to 6.5%. Additionally, Cava plans to open 54 to 57 new locations this year, up from its prior forecast of 50 to 54 restaurants.
Moreover, Cava has revised its forecast for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), now expecting to report between $109 million and $114 million for the fiscal year, an increase from the earlier projection of $100 million to $105 million. These upward revisions underscore the company’s confidence in its continued growth and strong market position in the competitive restaurant industry.
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