Is CAVA Group (CAVA) Still a Buy Amid Margin Strain and Rapid Expansion?

The fast-casual restaurant sector remains a battleground for investors seeking growth in a post-pandemic economy. CAVA Group (CAVA), a Mediterranean-inspired chain with a mission to "reinvent the fast-casual dining experience," has long been a favorite for its scalable model and aggressive expansion. However, recent financial results and analyst forecasts highlight a critical question: Is CAVA still a compelling buy, or are margin pressures and slowing same-restaurant sales growth undermining its long-term potential?

Financial Performance: Growth vs. Margin Strain

CAVA's Q3 2025 results underscored its dual-edged sword of rapid expansion. Revenue surged 20.0% year-over-year to $289.8 million, driven by 17 new restaurant openings, bringing the total to 415 locations. Adjusted EBITDA also rose 19.6% to $40 million, reflecting operational efficiency, despite rising costs. Yet, restaurant-level profit margins contracted to 24.6% from 25.6% in the prior year, pressured by higher third-party delivery costs, insurance expenses, and inflationary food and labor costs.

The company's updated 2025 guidance-restaurant-level profit margins of 24.4–24.8% and adjusted EBITDA of $148–152 million-signals cautious optimism. However, the stock's post-earnings dip in after-hours trading suggests market skepticism about whether these metrics align with investor expectations.

Analyst Optimism: A Long-Term Play on Scale

Analysts remain cautiously bullish, emphasizing CAVA's strategic vision. The company aims to open 68–70 new restaurants in 2026, maintaining its trajectory toward 1,000 locations by 2032. This expansion, coupled with a 17.1% annual revenue growth forecast, positions CAVA to capitalize on shifting consumer preferences for health-conscious, on-the-go dining.

According to a consensus "Moderate Buy" rating, from 12 of 19 analysts, alongside an average price target of $96.41, reflects confidence in CAVA's ability to scale profitably. Analysts at TipRanks note that the company's focus on menu innovation and digital engagement could offset macroeconomic headwinds.

Execution Risks: Slowing Sales and Cost Challenges

Despite the optimism, execution risks loom large. Same-restaurant sales growth slowed dramatically from 11% in Q1 2025 to just 1.9% in Q3. This decline raises concerns about CAVA's ability to retain customers amid a competitive market and shifting consumer spending habits.

Moreover, margin pressures show no signs of abating. While higher sales partially offset rising costs, labor and food inflation remain structural challenges. Analysts at SimplyWall St. warn that CAVA's EPS growth is projected to decline by 0.2% annually, a stark contrast to its revenue trajectory. This divergence highlights the risk of prioritizing top-line growth at the expense of profitability.

### Balancing the Equation: A Calculated Bet
Investors must weigh CAVA's long-term potential against near-term execution risks. The company's expansion strategy is undeniably ambitious, but its success hinges on managing costs and reigniting same-restaurant sales. For instance, CAVA's reliance on third-party delivery-a double-edged sword-could erode margins further if not optimized.

However, the restaurant's digital infrastructure and brand differentiation offer a path forward. As noted by Fool.com, CAVA's ability to adapt to economic cycles and consumer trends will be pivotal in 2026. Investors with a multi-year horizon may find value in its growth story, provided the company can stabilize margins and demonstrate unit economics resilience.

Conclusion: A "Moderate Buy" with Caveats

CAVA Group remains a compelling case study in high-growth restaurant investing. Its financial results and analyst ratings suggest a company poised for long-term success, but margin strains and slowing sales growth demand vigilance. For investors, the key is to balance optimism about CAVA's expansion with skepticism about its ability to execute under pressure. While the stock's current valuation offers upside potential, it is not without risks. Those willing to monitor operational improvements and macroeconomic trends may find CAVA a worthy addition to a diversified portfolio.