CAVA continues its impressive growth, margin expansion
2min read CAVA Group (CAVA) delivered an impressive Q3 performance, significantly exceeding analyst expectations on both EPS and revenue. The company reported EPS of $0.15, well above the $0.11 consensus estimate, and achieved revenue of $243.8 million, representing a 39% year-over-year increase, which also beat the $233.1 million estimate. This strong top-line growth was largely driven by remarkable same-restaurant sales (SSS) growth of 18.1%, which was well above the 12.4% estimate, showcasing CAVA's solid brand momentum and customer engagement.
A standout metric was CAVA’s 12.9% increase in guest traffic, reflecting strong customer demand and brand appeal in the Mediterranean fast-casual space. Additionally, CAVA achieved restaurant-level profitability of $61.8 million, equating to 25.6% of revenue, signaling strong operational efficiency. Adjusted EBITDA also came in robust at $33.5 million, marking a 69% year-over-year increase and surpassing the estimated $29.2 million, further highlighting CAVA’s ability to drive profitability amid growth.
In terms of store expansion, CAVA opened 11 new restaurants in the quarter, bringing its total location count to 352, which was in line with estimates. For full-year guidance, the company raised its forecast for new restaurant openings to 56-58, compared to the previous target of 54-57, indicating confidence in continued growth. CAVA also boosted its guidance for FY adjusted EBITDA to a range of $121-126 million, up from $109-114 million, reflecting sustained momentum in store performance and customer engagement.
The company also improved its full-year restaurant comp sales guidance, now projecting 12-13% growth, up from the prior 8.5-9.5% range. This optimistic outlook aligns with CAVA’s continued traction across key demographics, especially among younger customers, driven by effective social and digital marketing strategies. Management highlighted that brand awareness has grown across various age and income groups, positioning CAVA well for future growth.
Operational initiatives also played a significant role in CAVA’s performance, with new tools aimed at enhancing efficiency and customer experience. The company implemented an AI-driven video monitoring system in select stores, which improves ingredient management, and introduced a labor scheduling model designed to optimize staffing during peak hours. These tools are expected to enhance speed of service, particularly in lower-volume stores, and contribute to positive guest experiences.
However, CAVA faced some cost pressures during the quarter, with food, beverage, and packaging costs increasing to 29.9% of revenue, partly due to the national rollout of steak, a popular new menu item. Additionally, labor costs rose by 10 basis points to 25.4% of revenue, reflecting wage investments and legislative impacts. While these costs slightly impacted margins, the company’s revenue growth and strong operational controls helped offset these increases.
CAVA’s robust cash position, with $367.2 million on hand and zero debt, provides a solid financial foundation to support its expansion and ongoing investments in digital initiatives and infrastructure. The company generated free cash flow of $23.4 million during the quarter and reported $43.9 million in cash flow from operations, underscoring its financial health and ability to fund future growth initiatives.
The market reacted positively to CAVA’s results, with shares climbing following the report. Investors appear encouraged by the company’s continued momentum, strong guidance, and disciplined approach to growth and profitability. As CAVA continues to expand its footprint and engage customers across multiple demographics, it remains well-positioned to capitalize on the growing demand for healthy, Mediterranean-inspired dining options.