CAVA's 40% YTD Decline and 334th Volume Rank Highlight Struggles Amid Expansion Push

On August 21, 2025, CAVA Group (CAVA) closed with a 1.78% decline, trading at a volume of $0.26 billion, ranking 334th in daily activity. The stock has fallen nearly 40% year-to-date amid concerns over slowing same-store sales growth. Recent quarterly results showed a sharp deceleration in comparable restaurant sales, from 10.8% in Q1 2025 to 2.1% in Q2, undershooting analyst expectations of 6.1%. This decline followed the lapping of a popular grilled steak menu item introduced the previous year.

Management attributes the slowdown to maturing market penetration and shifting consumer preferences. In response, the company plans to launch chicken shawarma and cinnamon sugar pita chips to reinvigorate growth. Despite the near-term challenges, CAVA continues to expand, opening 16 new locations in Q2 to reach 398 total stores. Its long-term goal of 1,000 locations by 2032 underscores confidence in its expansion runway. Restaurant-level margins (26.3%) and adjusted EBITDA ($42.1 million, up 23% YoY) remain resilient, though full-year comp growth guidance was cut to 4–6%.

Analysts remain divided. While some highlight the stock’s high valuation (forward P/E of ~123) as a risk, others see potential in its unit economics and expansion potential. Recent price targets from UBS, Barclays, and Piper Sandler range from $74 to $100, reflecting cautious optimism. Institutional investors like MIG Capital and Nuveen LLC have added to positions, while others, including Neuberger Berman and Invesco, have sold shares. The stock hit a 52-week low after downgrades, but some argue the dip could create a long-term opportunity if the company executes its innovation and expansion plans.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to present delivered a 6.98% CAGR. However, it faced a 15.59% maximum drawdown in mid-2023, underscoring the risks of high-volume trading strategies. Performance remained steady overall, offering a benchmark for consistent return seekers.