CAVA Group, Inc. Q3 FY2025 earnings call

Brand Strength

• CAVA continues to lead in the Mediterranean category, with strong average unit volumes and structural strength in the model. Market share is growing despite industry challenges.

Third Quarter Highlights

• 20% increase in revenue and 66.8% increase over 2 years; same restaurant sales growth of 1.9%; 17 net new restaurants, ending with 415 restaurants; adjusted EBITDA of $40 million.

Product Innovation

• Launched chicken shawarma and is testing salmon; introduced cinnamon and sugar pita chips.

Loyalty Program

• Rewards program has grown by ~36% since the 1-year anniversary of its relaunch, with tiered status levels and expanded catalog.

Technology and Operations

• Rolling out new kitchen display system to at least 350 locations by year-end; all restaurants equipped with TurboChef ovens for faster cook times.

Team Member Development

• Introduced Assistant General Manager program to build leadership pipeline; investing in training and development of team members.

In the third quarter of 2025, CAVA revenue grew 20% year-over-year to $289.8 million. CAVA same restaurant sales increased 1.9%. They opened 17 net new restaurants, ending the quarter with 415 restaurants. Restaurant-level profit margin was 24.6% in the third quarter, with adjusted EBITDA of $40 million, a 19.6% increase over the third quarter of 2024. Food, beverage and packaging costs were 30.1% of revenue, labor and related costs were 25.5% of revenue, occupancy and related expenses were 6.7% of revenue, and other operating expenses were 13.1% of revenue.

Full Year 2025 Guidance

• 68 to 70 net new CAVA restaurant openings.
• CAVA same restaurant sales growth of 3% to 4%.
• CAVA restaurant level profit margin between 24.4% and 24.8%.
• Preopening costs between $18 million and $19 million.
• Adjusted EBITDA, including the burden of preopening costs, between $148 million and $152 million.
• Full year equity-based compensation expected to be between $18 million and $20 million.
• Full year effective tax rate expected to be between 10% and 12%.

Risks

• Macro-economic pressures affecting consumer spending.
• Competition in the restaurant industry potentially impacting market share.
• Uncertainties related to the successful rollout of new products and initiatives.

Q: Last quarter, you kind of stack rank some of the choppiness in same-store sales from the steak lap to a little bit of consumer balances to the honeymoon. Can you kind of just let us know on the honeymoon side of things, if that's changed materially? And I'm assuming most of the choppiness you're seeing now is macro-related, but anything geographically you want to point out would be helpful?

A: Andy, thanks for the question. So certainly, the honeymoon impact is very similar to what we experienced last quarter, no change there. We're not seeing anything geographically to call out. So it's more around the macro environment and the pressure on the consumer and certainly lapping the strong same-restaurant sales results that we had in the third quarter of the prior year. So we've noted it on the call, but on 2-year stack basis, we, in fact, accelerated our same-restaurant sales by 350 basis points to 20%.

Q: Just a question on the salmon test. Brett, in the prepared remarks, it sounds like it's going well. Just wondering if you could elaborate a bit on what you're seeing in test. Anything interesting from a daypart perspective between lunch and dinner or maybe just a guest perspective, age, gender, income just -- and also how it's going with the operations?

A: Thanks, Brian, for the question. We did know we have TurboChef ovens in every restaurant now, which is the equipment we use to roast the salmon. So it's a very easy cook procedure and prep and whole procedure. And we've been very encouraged by the results. We have seen it drive incremental occasions and its appeal has been broad-based from a consumer standpoint as well as a daypart standpoint. So it is a unique new menu items to add to the variety of our proteins. It's our first seafood item and excited at its potential. And if things continue to progress on the current track, as we noted, and -- as I noted in the prepared remarks, we expect to launch it in late spring in 2026.