Cava recently announced an increase in its full-year outlook after reporting strong traffic in its restaurants, which contributed to better-than-expected quarterly earnings and revenue. This positive news caused shares of the company to rise by 7% in extended trading. The stock has seen significant growth this year, with its value more than doubling and Cava’s market cap reaching about $11.6 billion.
In the quarter ending July 14, Cava reported earnings per share of 17 cents, surpassing the 13 cents expected by Wall Street analysts. Additionally, the company generated revenue of $233 million, higher than the $220 million expected. The Mediterranean restaurant chain saw a significant increase in net income to $19.7 million, compared to $6.5 million from the previous year. Net sales also climbed by 35% to $233 million. Furthermore, Cava’s same-store sales grew by 14.4%, exceeding estimations of 7.9%.
Despite a trend of declining visits in the restaurant industry due to reduced consumer spending, Cava managed to grow its traffic by 9.5% in the quarter. CEO and co-founder Brett Schulman attributed this success to the introduction of a new grilled steak option, which attracted more customers to the chain’s restaurants. Moreover, Cava expanded its footprint by opening 18 net new locations during the quarter, reaching a total of 341 restaurants.
Future Projections
Looking ahead to fiscal 2024, Cava now anticipates a same-store sales growth of 8.5% to 9.5%, an increase from its previous range of 4.5% to 6.5%. The company also revised its projection for new locations to be opened this year, raising it to 54 to 57 restaurants from the initial forecast of 50 to 54. Previously, Cava had forecasted an adjusted EBITDA of $100 million to $105 million for the fiscal year.
Cava’s strong performance in the recent quarter and its positive outlook for the future indicate a promising trajectory for the company. By capitalizing on innovative menu options, expanding its restaurant presence, and exceeding expectations in key financial metrics, Cava demonstrates resilience and growth potential in the competitive restaurant industry.