CAVA Group, Inc. Q2 FY2025 earnings call

• CAVA continues to cement Mediterranean as a major cultural cuisine category, with dominant leadership and growing market share.
• Second quarter highlights include 20.3% revenue increase, 2.1% same-restaurant sales growth, 26.3% restaurant-level profit margin, 16 net new restaurants, adjusted EBITDA of $42.1 million, etc.
• Focus on expanding Mediterranean Way by opening 16 net new restaurants, with new market entries in Pittsburgh and Michigan.
• Project Soul initiative to create inviting spaces for connection, with Project Soul prototype to be finished by fall and design features rolling out in 2026 new openings.
• Culinary innovations: testing chicken shawarma, introducing cinnamon sugar pita chips, and salmon in market testing phase.
• Connected Kitchen initiatives: expanding KDS to 270 locations, rolling out TurboChef ovens, AI camera vision technology in test phase, and investment in Hyphen for automated make lines.
• Talent development: rolling out programs for general managers to be eligible for equity compensation and expanding assistant general manager role.

In the second quarter of 2025, CAVA revenue grew 20.3% to $278.2 million. Same-restaurant sales increased 2.1%. There were 16 net new restaurants, ending the quarter with 398 restaurants. Adjusted EBITDA was $42.1 million, a 22.6% increase over Q2 2024. Restaurant-level profit margin was 26.3%. Year-to-date free cash flow was $21.9 million. Revenue contribution details by segment not explicitly broken down in the transcript.

• Expect 68 to 70 net new CAVA restaurant openings in full year 2025.
• Same-restaurant sales growth expected to be 4% to 6%.
• Restaurant-level profit margin between 24.8% and 25.2%.
• Preopening costs between $15.5 million and $16.5 million.
• Adjusted EBITDA, including preopening costs, between $152 million and $159 million.

• Macro-economic pressures impacting the broader industry, which CAVA is not immune to.
• Tariff impacts on product sourcing, though captured in guidance as of current knowledge.
• Forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from those discussed, as detailed in CAVA's SEC filings.

Q: Could you elaborate just on the same-store sales side? Do you think some of the macro pressures were what explained how you did in the 2Q? Do you think that was pretty broad across restaurants? And then -- or I guess, the honeymoon dynamic you described, do you think that, in fact, was a greater influence on that number and perhaps some of the older stores were delivering a better same-store sales number?

A: Tricia K. Tolivar responded that macro-economic environment creates challenges for consumers, honeymoon effect from 2024 and 2025 restaurant classes with strong performance, and deceleration in Q2 was due to lapping the steak launch, with reacceleration seen in Q3.

Q: Chris O'Cull asked about where CAVA is trending in the third quarter today.

A: Tricia K. Tolivar said current trend line is in line with expectations, with acceleration of 2-year same-restaurant sales stack continuing into Q3.

Q: Christopher Thomas O'Cull followed up with whether CAVA has evaluated its marketing media mix now that higher awareness in new markets.

A: Brett Schulman said there's opportunity to lean into media mix modeling, with marketing as a lever to pull at appropriate time given long-term strategy.

Q: Sara Harkavy Senatore asked about the honeymoon period's magnitude and the Harissa Meal's value component.

A: Brett Schulman said the Harissa Meal is for emotional connection and brand building, not a value meal; Tricia K. Tolivar spoke about 2024 class restaurants delivering on economic model but impacting same-restaurant sales.

Q: David E. Tarantino asked about comp trend and brand/operating metrics change.

A: Tricia K. Tolivar said current trend line is in line with expectations; Brett Schulman said no atypical nature in regions/income cohorts, NPS up, value scores improving, and no trade-down/check management.

Q: Danilo Gargiulo asked about second half guidance and Big Beautiful Bill implications.

A: Tricia K. Tolivar said trial period for steak launch passed, with culinary innovations driving same-restaurant sales; Big Beautiful Bill helps with income taxes but tariff impacts captured in guidance.

Q: Andrew Michael Charles asked about July improvement and long-term same-store sales.

A: Tricia K. Tolivar said July improvement due to lap of steak and media mix modeling; long-term same-store sales outlook remains positive with strong new restaurant openings.

Q: Sharon Zackfia asked about assistant manager addition rollout and purpose.

A: Brett Schulman said rollout starts in November, ramping up to 2/3 of restaurants, with AGM role for leadership support and pipeline building.

Q: Andrew Marc Barish asked about 2Q mix and chicken shawarma pricing.

A: Tricia K. Tolivar said no significant mix changes, chicken shawarma will be premium priced; marketing not highly promotional, focused on long-term brand building.

Q: John William Ivankoe asked about marketing opportunities and competition in New York.

A: Brett Schulman said competition is constant, marketing as lever not yet pulled significantly; scale in markets allows leveraging marketing investments.

Q: Brian Hugh Mullan asked about Hyphen investment and pilot.

A: Brett Schulman said Hyphen investment aims to make restaurants easier to run, free team members for human connection, with pilot focusing on second digital make line.

Q: Jon Michael Tower asked about tech investment store profit improvements and AGM funding.

A: Brett Schulman said KDS in 95 restaurants with improvement in guest satisfaction, AGM role self-funded with transaction growth.

Q: Jeffrey Andrew Bernstein asked about margin and earnings flow-through.

A: Tricia K. Tolivar said strong NRO performance helped manage same-restaurant sales, team agile in adjusting business, and reinvestments focused on team and guest.

Q: Dennis Geiger asked about year 2 performance of new stores.

A: Tricia K. Tolivar said 2023 and 2024 cohorts outpacing expectations in cash-on-cash returns, no significant revision needed as performance pulls forward.

Q: Brian Michael Vaccaro asked about Q2 comps by daypart/day of week and sales transfer.

A: Tricia K. Tolivar said no regional differences, consistent daypart performance, and sales transfer part of growth with 1 plus 1 being 3.

Q: Eric Andrew Gonzalez asked about throughput metrics and capturing excess demand.

A: Brett Schulman said focused on balance between brand building and not frustrating guests, using kitchen systems and labor deployments to improve speed of service, with AGM test aiding in this.