CAVA projects at least 1,000 restaurants by 2032 amid strong new unit performance and menu innovation

Earnings Call Insights: CAVA Group, Inc. (CAVA) Q2 2025

MANAGEMENT VIEW

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CEO Brett Schulman reported, "a 20.3% increase in CAVA revenue and a 62.6% increase over the last 2 years; CAVA same-restaurant sales growth of 2.1%; restaurant-level profit margin of 26.3%; 16 net new restaurants, ending the quarter with 398 restaurants, a 16.7% increase year-over-year; adjusted EBITDA of $42.1 million, a 22.6% increase over the second quarter of 2024; net income of $18.4 million; and $21.9 million in year-to-date free cash flow." Schulman emphasized confidence in reaching "at least 1,000 restaurants by 2032," citing strong demand, successful market entries in Pittsburgh and Michigan, and robust new restaurant performance with "average unit volumes above $3 million."

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Schulman highlighted menu innovation, stating the company "expects to roll out chicken shawarma as a limited-time offering company-wide in early fall" and is testing salmon as a new protein. He underscored investments in technology and team development, mentioning, "we've recently made an investment in Hyphen" for automated make lines and announced a pilot test of Hyphen equipment in the coming quarters.

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CFO Tricia K. Tolivar stated, "CAVA revenue in the second quarter of 2025 grew 20.3% year-over-year to $278.2 million and 62.6% compared to the second quarter of 2023. CAVA same-restaurant sales increased 2.1%, primarily from menu price and product mix, with guest traffic approximately flat." Tolivar noted "the strength of this class has driven year 1 cash-on-cash returns above 40%, already meeting our year 2 expectations."

OUTLOOK

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Tolivar provided guidance for full year 2025: "68 to 70 net new CAVA restaurant openings; CAVA same-restaurant sales growth of 4% to 6%; CAVA restaurant-level profit margin between 24.8% and 25.2%; preopening costs between $15.5 million and $16.5 million; and adjusted EBITDA, including the burden of preopening costs, between $152 million and $159 million."

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She explained that guidance incorporates "the reacceleration we saw exiting the second quarter and the changing dynamics amidst the current macroeconomic landscape," reaffirming confidence in long-term growth and competitive positioning.

FINANCIAL RESULTS

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Tolivar reported, "CAVA-restaurant level profit in the second quarter was $73.3 million or 26.3% of revenue versus $61.3 million or 26.5% of revenue in the second quarter of 2024, representing a 19.6% increase."

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Additional financial highlights include "GAAP net income of $18.4 million compared to $16.8 million of adjusted net income in Q2 of 2024. Diluted EPS was $0.16 in the second quarter compared with adjusted diluted EPS of $0.14 in the second quarter of 2024."

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The company ended the quarter with "0 debt outstanding, $385.8 million in cash and investments and access to a $75 million undrawn revolver. Year-to-date Q2 cash flow from operations was $98.9 million compared to $87.3 million during the year-to-date period in 2024."

Q&A

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Brian James Harbour, Morgan Stanley: Asked about macro pressures and the "honeymoon dynamic" affecting same-store sales. Tolivar replied, "we're operating in a fluid macroeconomic environment... we didn't see changes in our premium attachments or incident rates... but certainly, it's present... what we're experiencing is incredible results from our 2024 class as well as our '25 class."

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Christopher Thomas O'Cull, Stifel: Sought clarity on third-quarter trends and marketing mix. Tolivar said, "we're seeing that trend continue into Q3, a continued acceleration of that 2-year trend." Schulman added, "we have continued to do a lot of testing around the media mix modeling, and we've seen some very positive results."

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Sara Harkavy Senatore, Bank of America: Asked about the "honeymoon period" and the Harissa Meal. Schulman noted the meal was to "tap into the emotional connection of our guests," and Tolivar confirmed some restaurants from the 2024 class are "experiencing some negative overall comps and impacting same-restaurant sales for us."

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David E. Tarantino, Baird: Queried about comp trends and operational metrics. Tolivar responded, "our current trend line is in line with your expectations" and Schulman stated, "we haven't seen any atypical nature in a region, in an income cohort, urban versus suburban."

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Additional analyst questions focused on innovation, marketing, technology, and operational efficiency, with management reiterating positive trends and readiness to invest in both guest experience and team capabilities.

SENTIMENT ANALYSIS

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Analysts pressed on macro pressures, same-store sales, and sustainability of outsized new restaurant performance, displaying a neutral to slightly cautious tone.

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Management maintained a confident stance, stating "our conviction in the long-term trajectory and structural strength of our business remains unwavering," and emphasizing operational and strategic agility.

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Compared to the previous quarter, analyst tone shifted from congratulatory to more inquiry-driven, reflecting increased scrutiny on comp trends and macro headwinds. Management’s confidence remained steady, with preparedness to address evolving conditions.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for net new restaurant openings was raised from 64–68 in Q1 to 68–70 in Q2, while same-restaurant sales growth guidance was revised down from 6–8% to 4–6%.

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Management continued to highlight robust new restaurant performance, but noted a deceleration in same-restaurant sales in Q2 compared to double-digit growth in Q1, citing the lapping of the steak launch and macroeconomic pressures.

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Analysts in both quarters focused on new unit economics, menu innovation, and competitive positioning, but Q2 featured more questions about the sustainability of growth and the impact of macro headwinds.

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Management’s tone remained optimistic, with increased detail on operational initiatives and investments in technology and people.

RISKS AND CONCERNS

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Macro pressures and consumer uncertainty were directly acknowledged by management as influencing same-restaurant sales.

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Tariff impacts were described as "very modest," with Tolivar stating "all of that has been captured... in our guidance."

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Analysts raised concerns about the sustainability of strong new unit performance, comp trends, and potential impacts from increased competition and operational complexity.

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Management discussed mitigation strategies, including media mix modeling, operational investments, and a focus on long-term brand building rather than short-term promotions.

FINAL TAKEAWAY

CAVA’s leadership reiterated confidence in the Mediterranean category’s long-term growth and the company’s competitive positioning, highlighting strong new restaurant performance, disciplined innovation, and continued investments in technology and team development as key drivers. While near-term same-restaurant sales growth guidance was moderated, expansion targets and operational improvement initiatives underpin management’s outlook for sustained growth and profitability, with a clear path toward at least 1,000 restaurants by 2032.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cava/earnings/transcripts]

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