CAVA Stock Earnings: Shares Plunge 15% as Q2 Results Miss Analyst Expectations

CAVA Group's stock experienced a notable decline, plummeting more than 15% immediately following the market opening on Wednesday. This drop occurred a day after the Mediterranean-themed fast-casual restaurant chain announced a disappointing performance in its second-quarter earnings and adjusted its outlook due to decelerating sales. The company's same-restaurant sales showed a year-over-year growth of 2.1%, starkly missing the anticipated 6.25% increase proposed by analysts surveyed through Visible Alpha. The revenue figures reached $280.6 million, marking a 20% rise, yet failing to meet forecasts. One positive note in the earnings report was the company's adjusted earnings per share of $0.16, surpassing analyst expectations.

During the earnings call, Chief Financial Officer Tricia Tolivar addressed analysts, describing the prevailing macroeconomic environment as "fluid," which presents challenges for consumers due to rapid and constant changes. This contributed to a cautious approach in consumer spending, prompting them to "step off of the gas," as things became unclear. Tolivar mentioned that CAVA started the quarter with momentum, but sales decelerated as the company progressed through June, partially attributed to the timing of last year's steak launch.

Reflecting these dynamics, CAVA Group revised its full-year outlook for same-restaurant sales growth, now expected to be between 4.0% and 6.0%, down from the previous projection of 6.0% to 8.0%. Notably, CAVA Group shares have endured a significant loss, shedding nearly 40% of their value in 2025 so far.

CEO Brett Schulman remarked on the challenging times consumers are facing, referring to them as navigating a 'fog,' coupled with tariff repercussions. Nonetheless, Schulman noted that there has been no sign of a trade-down in their menu items, suggesting that consumers still perceive a daily value at the Mediterranean chain.

The second quarter posed a challenging comparison for CAVA, primarily due to the previous year's significant steak launch, which had boosted same-store sales by 14.4% and traffic by 9.5%. Despite these hurdles, the company continues to expand its footprint, opening 16 new restaurants during the quarter, reaching a total of 398 locations while maintaining its profitability targets. However, CAVA had to lower its same-store sales guidance, reflecting the current market uncertainties and competitive pressures.

Analysts are closely evaluating CAVA Group following its post-earnings dip, with a focus on how the company will navigate the industry landscape influenced by evolving consumer behaviors and external economic factors. As it stands, the Mediterranean dining chain is adeptly adjusting its strategies amid a turbulent environment, balancing growth with cautious optimism. However, the road ahead calls for strategic focus to mitigate the impacts of economic fluctuations and bolster consumer confidence in its offerings.