CAVA Group Stock Drops 16% After Earnings Report

CAVA Group's Q2 earnings report resulted in a 16% stock drop, despite revenue of $280.62 million and EPS of 16 cents beating expectations. The company lowered its full-year same-store sales growth outlook from 4-6% to 3-4%, citing flat year-over-year traffic and softer demand from lower-income consumers. CAVA still expanded its footprint to 398 locations and plans to reach 1,000 restaurants by 2032.

CAVA Group, Inc. (NYSE: CAVA) reported its second-quarter 2025 financial results, which revealed a 16% drop in stock price despite strong revenue growth and earnings per share (EPS) that exceeded expectations. The company reported revenue of $280.62 million, a 20.3% increase year-over-year, and EPS of 16 cents, which surpassed analyst estimates [1].

Despite the positive financial performance, CAVA Group's stock price fell due to concerns over its full-year same-store sales growth outlook. The company revised its outlook from 4-6% to 3-4% citing flat year-over-year traffic and softer demand from lower-income consumers. The revised outlook was attributed to a challenging macroeconomic environment and a shift in consumer spending patterns [1].

CAVA Group expanded its footprint during the quarter, opening 16 net new restaurants and reaching a total of 398 locations. The company remains committed to its goal of reaching 1,000 restaurants by 2032, demonstrating its long-term growth strategy [1].

The company's restaurant-level profit margin was 26.3%, an increase of 19.6% compared to the prior year quarter. CAVA Group's digital revenue mix was 37.3%, highlighting the company's successful integration of digital channels into its business model [1].

CAVA Group's net income was $18.4 million, compared to $19.7 million in the prior year quarter. Adjusted EBITDA was $42.1 million, an increase of $7.8 million or 22.6% compared to the second quarter of fiscal 2024. The company's net cash provided by operating activities was $98.9 million, with free cash flow of $21.9 million [1].

The company's general and administrative expenses were $32.1 million, or 11.4% of revenue, a decrease of 80 basis points compared to the prior year quarter. The decrease was primarily due to lower performance-based incentive compensation, leverage from higher sales, and lower legal costs [1].

CAVA Group's fiscal full-year 2025 guidance was updated to reflect the current economic conditions. The company now expects to open 68 to 70 net new restaurants, with same-store sales growth of 4.0% to 6.0%. The company's adjusted EBITDA guidance remains unchanged at $152.0 to $159.0 million [1].

Investors will have the opportunity to discuss the second-quarter 2025 financial results and receive a business update during a conference call scheduled for August 12, 2025, at 5:00 PM Eastern Time. The call can be accessed through the company's investor relations website [1].

References:
[1] CAVA Group Reports Second Quarter 2025 Results - Business Wire. Retrieved from https://investor.cava.com/news/news-details/2025/CAVA-Group-Reports-Second-Quarter-2025-Results/default.aspx