CAVA Group Stock Plunges 2.36% to 2024 Low on Earnings Miss, Rising Costs, Expansion Strains

CAVA Group (CAVA) fell 0.09% on Monday, marking its second consecutive day of declines, with the stock dropping 2.03% over two trading sessions. The share price hit its lowest level since April 2024, with an intraday decline of 2.36%, reflecting heightened investor skepticism about the company’s operational and financial trajectory.

Recent earnings reports highlighted underperformance in key metrics, including revenue and same-store sales. Q2 2025 revenue of $280.6 million fell short of forecasts, while same-store sales growth of 2.1% lagged significantly behind expectations. Analysts attribute the weakness to saturation in core markets and waning customer demand, raising concerns about the sustainability of CAVA’s rapid expansion strategy.

Operational challenges have intensified as the company grapples with rising labor and food costs. A 17% increase in restaurant locations over the past year has strained margins, with newly opened locations struggling to meet growth targets. Margins have compressed despite revenue gains, signaling potential inefficiencies in scaling operations and dampening investor confidence in long-term profitability.

Broader macroeconomic factors, including high interest rates and shifting consumer spending habits, further weigh on the fast-casual dining sector. CAVA’s niche focus on Mediterranean cuisine faces intensifying competition and evolving dietary trends, complicating efforts to retain market share. Strategic initiatives such as menu diversification and kitchen automation aim to address these challenges but remain unproven in driving sustained growth.

Investor sentiment remains divided, with institutional stakeholders taking contrasting positions. While some have increased holdings, others have reduced stakes, reflecting uncertainty about CAVA’s ability to navigate its current challenges. Recent strategic moves, including the introduction of Chicken Shawarma and automation investments, have yet to reverse the stock’s downward momentum, leaving the market in a cautious wait-and-see mode.