Cava Group’s (CAVA) stock endured its steepest single-day drop on record after the Mediterranean fast-casual chain reported a sharp slowdown in same-store sales and lowered its growth forecast for the year.
Shares tumbled as much as 22% in late trading, hitting a new 52-week low and extending their year-to-date decline to roughly 38%.
The second quarter marked the first time since its June 2023 IPO that Cava trimmed its full-year comparable sales guidance, now expecting growth of 4%–6%, down from 6%–8%. Same-store sales rose just 2.1% in Q2—barely above flat traffic—falling far short of Wall Street’s expectations for more than 6% growth and a fraction of the double-digit gains posted in prior quarters.
Lapping Steak Launch and the “Honeymoon Effect”
Management pointed to two unusual headwinds for the slowdown. First, the company was up against a tough comparison from last year’s popular steak menu launch, which had boosted sales in mid-2024. Second, Cava experienced what executives called a “honeymoon effect,” in which newly opened stores that significantly outperformed in their first year posted weaker sales once folded into the comp base.
Adding to the pressure, the broader economic backdrop remained challenging. CEO Brett Schulman described the environment as “fluid,” noting that consumer spending energy has cooled. Comparable sales growth decelerated sharply from 10.8% in Q1 and 21.2% in Q4, with traffic flat compared to last year.
Management pointed to two unusual headwinds for the slowdown. First, the company was up against a tough comparison from last year’s popular steak menu launch, which had boosted sales in mid-2024. Second, Cava experienced what executives called a “honeymoon effect,” in which newly opened stores that significantly outperformed in their first year posted weaker sales once folded into the comp base.
Adding to the pressure, the broader economic backdrop remained challenging. CEO Brett Schulman described the environment as “fluid,” noting that consumer spending energy has cooled. Comparable sales growth decelerated sharply from 10.8% in Q1 and 21.2% in Q4, with traffic flat compared to last year.
Expansion Push Continues Despite Near-Term Setback
Despite the slowdown, Cava remains in expansion mode. The chain opened 16 net new restaurants in the quarter, bringing its total to 398—a 16.7% year-over-year increase. The company now expects to open 68–70 new locations in fiscal 2025, up from prior guidance of 64–68. Average unit volume improved to $2.9 million from $2.7 million a year ago, and restaurant-level profit margins held firm at 26.3%.
Revenue climbed 20.3% year-over-year to $278.2 million, though that fell short of consensus estimates of roughly $285 million. Earnings of $0.16 per share topped forecasts by two cents. Management reaffirmed its full-year adjusted EBITDA target of $152–$159 million.
Despite the slowdown, Cava remains in expansion mode. The chain opened 16 net new restaurants in the quarter, bringing its total to 398—a 16.7% year-over-year increase. The company now expects to open 68–70 new locations in fiscal 2025, up from prior guidance of 64–68. Average unit volume improved to $2.9 million from $2.7 million a year ago, and restaurant-level profit margins held firm at 26.3%.
Revenue climbed 20.3% year-over-year to $278.2 million, though that fell short of consensus estimates of roughly $285 million. Earnings of $0.16 per share topped forecasts by two cents. Management reaffirmed its full-year adjusted EBITDA target of $152–$159 million.
Outlook: Short-Term Pain, Long-Term Ambition
While the Q2 results rattled investors, Cava is holding to its long-term goal of operating more than 1,000 restaurants by 2032. The company reported that sales momentum began to pick up again toward the end of Q2 and into Q3, and menu innovation—such as salmon and chicken shawarma—may help lure customers back.
Still, with shares now trading more than 50% below their December 2024 peak, Cava’s once-sizzling growth story has cooled sharply. Investors will be watching closely to see whether the chain can regain its footing in a more value-conscious consumer environment.
While the Q2 results rattled investors, Cava is holding to its long-term goal of operating more than 1,000 restaurants by 2032. The company reported that sales momentum began to pick up again toward the end of Q2 and into Q3, and menu innovation—such as salmon and chicken shawarma—may help lure customers back.
Still, with shares now trading more than 50% below their December 2024 peak, Cava’s once-sizzling growth story has cooled sharply. Investors will be watching closely to see whether the chain can regain its footing in a more value-conscious consumer environment.
Considering a $1,000 investment in these companies?
Our team at Stock Investor carefully curated a list of top stocks with the potential for significant returns, suitable for beginners and seasoned investors alike who are eager to learn a trade and unearth the best stocks to buy. Though not featured in this article, these selected stocks could be game-changers in the future.For those seeking dynamic trading experiences, consider joining our Swing Trade Alerts, Option Income Alert, or our Trading Room. Take advantage of our special offer today, starting at just $1 in the first month.
Unlock the secrets of Smart Money
Explore how billionaires and institutions are influencing the market. Follow their every move with DarkOption Flow and stay updated on essential market insights. Begin your journey to informed investing today!
Education
And if you're a fan of Invest opedia, you'll appreciate what we offer at SharperTrades even more. Explore our comprehensive option trading course and technical trading course, where you can learn trading, analyze stocks, delve into chart patterns for stocks, and gain invaluable insights for making the best company investments.
Unlock Your Stock Market Edge with SharperTrades. Dive into powerful trading tools, learn a trade, and receive expert guidance. Stay up-to-date with regular market updates. Learn trading, basics of investing, and how to pick the best stocks to buy. Whether you're a beginner or seasoned investor and trader, we've got you covered. Get started for free, today!