Cava increases full-year outlook following strong quarterly performance

York: Cava raised its full-year outlook on Thursday after reporting stronger-than-expected earnings and revenue, driven by increased customer traffic at its restaurants.

Following the announcement, Cava's shares surged by 9% in extended trading. The company's stock has more than doubled in value this year, bringing its market capitalization to approximately 11.6 billion dollars as of Thursday’s close.

For the quarter ending July 14, Cava reported earnings per share of 17 cents, surpassing Wall Street’s expectations of 13 cents, according to a survey of analysts by LSEG. The company also reported revenue of 233 million dollars, exceeding the anticipated 220 million dollars.

The Mediterranean restaurant chain posted a fiscal second-quarter net income of 19.7 million dollars, or 17 cents per share, a significant increase from the 6.5 million dollars , or 21 cents per share, reported in the same period the previous year. Net sales saw a 35 percent jump, reaching 233 million dollars. Additionally, Cava’s same-store sales rose by 14.4 percent, well above StreetAccount’s estimate of 7.9 percent.

While many other restaurant chains have experienced a decline in customer visits due to consumer spending cutbacks, Cava reported a 9.5% increase in traffic during the quarter. CEO and co-founder Brett Schulman attributed the rise in customer visits to the chain’s new grilled steak option, which proved popular among diners.

During the quarter, Cava expanded its footprint by opening 18 net new locations, bringing the total number of restaurants to 341.

Looking ahead, Cava has updated its fiscal 2024 outlook, now expecting same-store sales growth between 8.5 percent and 9.5 percent, up from the previous forecast of 4.5 percent to 6.5 percent. The company also plans to open 54 to 57 new locations this year, an increase from the earlier estimate of 50 to 54 restaurants.

Cava now anticipates reporting adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 109 million dollars to 114 million dollars, up from its previous projection of 100 million dollars to 105 million dollars for the fiscal year.