CAVA Group Shares Plunge 1.94% to 11-Month Low on Earnings Miss, Rising Costs

CAVA Group, Inc. (NYSE: CAVA) shares fell 1.94% on September 8, 2025, marking their lowest level since April 2024, with an intraday drop of 3.77%. The decline reflects growing investor skepticism over the company’s ability to sustain growth amid operational challenges and shifting market dynamics. Analysts have cited a combination of revenue shortfalls, weaker-than-expected same-store sales, and rising costs as key drivers of the selloff.

Recent earnings reports highlighted a slowdown in growth momentum, with Q2 2025 revenue of $280.6 million falling short of the $283.6 million forecast. The 2.1% same-store sales growth reported for the quarter, well below the 6.2% consensus estimate, raised concerns about the company’s core performance. Analysts from multiple firms have since cut price targets, underscoring risks of further margin compression as new locations struggle to meet expectations and operating costs rise.

Strategic expansion, while ambitious, has introduced operational headwinds. The company’s rapid addition of 17% more restaurants in the past year has coincided with inflationary pressures and logistical inefficiencies. Rising labor and food costs have squeezed profitability, even as revenue grew 28.21% year-over-12-months. Analysts warn that newly opened locations face the risk of negative same-store sales growth, which could undermine long-term profitability.

Broader market factors also weigh on investor sentiment. The fast-casual dining sector is navigating soft consumer spending, driven by high interest rates and economic uncertainty. CAVA’s focus on the Mediterranean cuisine segment, while innovative, faces competitive pressures from rivals like Sweetgreen and Chipotle. Additionally, concerns about consumer fatigue with Mediterranean diets and shifting culinary trends add further uncertainty to the company’s growth narrative.

Valuation debates persist among market participants. While some view the stock’s 43.4% year-to-date decline as an opportunity, others argue that elevated metrics like the P/E ratio of 55.6 suggest overvaluation. The mixed outlook reflects divergent views on CAVA’s ability to execute its expansion goals and adapt to evolving market conditions. Strategic initiatives, including kitchen automation and menu innovation, aim to address immediate challenges but remain unproven in sustaining long-term growth.