Cava 's revenues for the quarter rose 35.2% year-on-year to $231.4 million. This remarkable performance is the fruit of a well-oiled strategy. Like-for-like sales growth of 14.4% was a key driver, with a 9.5% increase in customer traffic and a 4.9% rise in menu prices and product mix. In other words, not only are more customers coming through Cava's doors, they're also spending more on each visit.
Cava's CFO commented, "We haven't seen any major challenges in consumer spending, our customers are very resilient. ". In addition, CEO Brett Schulman noted that the new steak offering has far exceeded expectations.
The company also opened 18 new restaurants, bringing the total to 341, representing year-on-year restaurant growth of 22.2%.
Restaurant operating margin rose by 0.4 points to 26.5%, while overall operating margin increased from 3.3% to 6.9% year-on-year. These improvements show that Cava is not only growing in size, but is also managing to optimize its operations for greater profitability. For the second consecutive quarter, the company maintained positive free cash flow.
Prospects for the coming year are also encouraging. Cava Group has raised its annual forecasts for sales and adjusted Ebitda. Sales are now expected to rise by 8.5% to 9.5%, compared with a previous range of 4.5% to 6.5%. Adjusted Ebitda is forecast at between $109 and $114 million, compared with $100 to $105 million previously. In addition, the company plans to open between 54 and 57 new restaurants, against an initial estimate of 50 to 54.
Analysts believe that these new forecasts could still be conservative. Cava continues to benefit from its unique market position, combining growing brand awareness, effective marketing and exemplary execution.
Cava doesn't just serve food, it tells a story - the story of healthy, tasty, accessible food. This narrative resonates particularly with modern consumers, who are concerned about their health and the origins of what they consume.
However, some analysts warn that, although Cava 's fundamental story is solid, the current valuation of the stock leaves little margin for error. One wrong move and investors won't hesitate to pull out.