Cava (CAVA) is serving up some savory numbers for its investors.
After the market close on Thursday, the Mediterranean fast-casual chain reported Q2 results that beat estimates across revenue, earnings, and same-store sales.
Net sales jumped 35.2% year-over-year to $233.5 million, compared to expectation of $219 million. Adjusted earnings per share came in at $0.17, versus the $0.13 expected.
Same-store sales jumped 14.4%, more than the 7.45% Wall Street expected. Sales growth was driven by higher foot traffic, up 9.5% year-over-year, new locations, and the launch of grilled steak on June 3.
CEO Brett Schulman said on the earnings call that the steak surpass its expectations by a landslide. The company is at the “nexus of consumer convergence” as they trade down from fine-dining restaurants, but trade up from fast food.
“At a time when consumers are increasingly feeling the pressure of an uncertain economy and are more discerning about where and how they spend their money, they are choosing to dine at Cava,” he said.
Wedbush analyst Nick Setyan said it expects “accelerating two-year transaction trends, led most importantly by the launch of steak.”
On Wednesday, Cava stock hit a record high close of $102.39, and on Thursday hit an intraday high of $104.84. In after-hours trading, share jumped to as much as $112.
Shares are up more than 140% year to date, compared to 19% for Chipotle (CMG) and 17% for the S&P 500 (^GSPC).
Slow and steady is Cava’s go-to approach to expansion. By 2032, the company plans to have 1,000 Cava locations.
Citi analyst Jon Tower said there’s still room left for growth in a note to clients. “A unit growth opportunity that continues to re-set higher, discrete same-store sales, price, and margin opportunities as the system densifies and margin tailwinds as the footprint shifts towards lower cost markets.”
In Q2, Cava opened 18 new locations, bringing the total to 341. That’s compared to 14 new locations in Q1.
Cava continues to perform at a time when fast-casual dining seems to be bucking a broader slowdown across the food industry as consumers double down on value.
“Cava was one of just a handful of publicly traded restaurant brands with positive traffic growth in the second quarter,” Schulman said. “We believe our performance is a reflection of our unique and compelling value proposition.”
Chipotle blew past expectations in its report after same-store sales jumped 11.1% year over year, versus the 9.23% Wall Street anticipated. Shake Shack (SHAK) saw same-store sales climb 4%, beating estimates of 3.2%.
Sweetgreen (SG) reported its best same-store sales growth in two years, up 9%, driven by higher foot traffic and prices.
Its CEO, Jonathan Neman, told Yahoo Finance that “we’re going to be very judicious in how we use it [pricing power].” Neman claimed the chain took fewer price hikes than its rivals since the pandemic.
“As you look at the relative pricing difference between Sweetgreen, some of our fast-casual competitors and then QSR, the gap has really narrowed. QSR, you can’t get in and out of there for under $15 today,” he told Yahoo Finance.
Here’s what Cava reported, compared to Wall Street estimates, per Bloomberg consensus data:
- Revenue: $233.5 million versus $219.5 million
- Adjusted earnings per share: $0.17 versus $0.13
- Same-store sales growth: 14.4% versus 7.45%
The company raised its fiscal 2024 outlook for restaurant openings, sales growth and restaurant-level profit margin.
It now expects sales growth of 8.5% to 9.5%, up from 4.5% to 6.5% in Q1 and was previously 3% to 5%.
Total new restaurants will now be between 54 to 57, up from 50 to 54. Restaurant-level profit margin is expected to come in between 24.2% to 24.7%, up from 23.7% to 24.3%.
