CAVA Group 2025 Q1 Earnings Beats Expectations with Net Income Growth of 83.7%

CAVA Group (CAVA) reported its fiscal 2025 Q1 earnings on May 15th, 2025. The company surpassed Wall Street expectations, reporting revenue of $331.83 million, which exceeded the consensus estimate of $326.88 million. The earnings per share (EPS) also beat expectations, coming in at $0.22 compared to the anticipated $0.14. Furthermore, CAVA raised its full-year guidance, predicting a higher range of net new restaurant openings and adjusted EBITDA, reflecting confidence in continued growth despite economic uncertainties. The company maintained its same-restaurant sales growth outlook, highlighting its strategic resilience in the fast-casual dining sector.

Revenue

The CAVA Group experienced a substantial 28.1% increase in revenue for Q1 2025, reaching $331.83 million, up from $259.01 million in Q1 2024. This growth was primarily driven by a 10.8% rise in same-restaurant sales, demonstrating strong consumer demand and effective expansion strategies.

Earnings/Net Income

CAVA Group's earnings per share (EPS) surged by 83.3% to $0.22 in Q1 2025, compared to $0.12 in Q1 2024. The company's net income also exhibited significant growth, rising 83.7% to $25.71 million from $13.99 million in the previous year. This performance indicates robust earnings growth, underpinned by strong operational results.

Price Action

The stock price of CAVA Group dipped by 0.48% during the latest trading day. However, it showed resilience over the past month, climbing 11.25%, and increased by 3.25% during the most recent trading week.

Post-Earnings Price Action Review

Investors employing the strategy of purchasing CAVA Group shares following a quarterly revenue drop and holding for 30 days have seen robust returns over the past five years. This approach yielded an impressive overall return of 85.84%, significantly outperforming the benchmark return of 26.44%, resulting in an excess return of 59.40%. The strategy's compound annual growth rate (CAGR) stood at 38.45%. Despite experiencing a maximum drawdown of -57.27%, the approach maintained a relatively high Sharpe ratio of 0.61, suggesting favorable risk-adjusted returns. This performance underscores the effectiveness of the strategy in capitalizing on CAVA's market movements post-earnings announcements.

CEO Commentary

Brett Schulman, Co-Founder & Chief Executive Officer, highlighted CAVA Group's resilience during Q1 2025, emphasizing a 28.2% revenue increase driven by 10.8% same-restaurant sales growth. He noted their strategic focus on expanding the Mediterranean brand in the U.S., with new openings in markets like Indiana and Florida. Schulman praised initiatives like Project Soul that enhance customer connections and expressed optimism about the company's momentum and the strength of their unit economic model.

Guidance

For full-year 2025, CAVA Group expects to open 64 to 68 net new restaurants and same-restaurant sales growth of 6% to 8%, with profit margins between 24.8% and 25.2%. The company forecasts adjusted EBITDA, including preopening costs, to range from $152 million to $159 million, maintaining a strong outlook amid macroeconomic uncertainties.

Additional News

CAVA Group is advancing towards its ambitious goal of operating 1,000 restaurants by 2032. Despite economic uncertainties, CEO Brett Schulman reiterated the brand’s strategic vision and momentum. The company opened 15 new restaurants in Q1, reaching a total of 382 locations, and celebrated surpassing $1 billion in trailing 12-month revenue. Schulman also addressed tariffs, noting limited exposure due to domestic sourcing. Additionally, CAVA's revamped loyalty program has increased sales as a percentage of total revenue, with membership nearing 8 million, further bolstering investor confidence.