On Tuesday, Cava Group (NYSE:CAVA) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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The full earnings call is available at https://events.q4inc.com/attendee/922188545
Summary
CAVA Group Inc reported a 32.2% increase in revenue for Q1 2026, with same restaurant sales up 9.7% and traffic growth of 6.8%.
The company opened 20 new restaurants, bringing the total to 459, and reported adjusted EBITDA of $61.7 million, a 37.6% increase year-over-year.
Strategic initiatives include the launch of CAVA Core, a modern data platform, and CAVA Current, a real-time commerce platform, aimed at improving operational efficiency and customer engagement.
CAVA Group Inc introduced its first seafood offering, Pomegranate Glazed Salmon, as part of its culinary innovation, which has received positive feedback.
The company is investing in its Flavor Your Future platform to develop talent, including the new Assistant General Manager role to support growth.
Future guidance was raised to expect 75 to 77 net new restaurant openings and same restaurant sales growth of 4.5% to 6.5% for the full year 2026.
Management remains committed to its long-term strategy, focusing on consistent menu innovation, operational execution, and avoiding significant price increases to maintain customer trust and value.
Full Transcript
OPERATOR
Hello everyone. Thank you for joining us and welcome to CAVA Group Inc Q1 2026 earnings call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press Star one to raise your hand. To withdraw your question, please press Star one again. I will now hand the conference over to Matt Milanovich, SVP of Finance. Please go ahead.
Matt Milanovich
Good afternoon and welcome to CAVA Group Inc’s First Quarter 2026 Financial Results Conference call. Before we begin, if you do not already have a copy, the earnings release and related 8-K furnished to the SEC are available on our websiteat investor.cava.com the purpose of this conference call is to give investors further details regarding the Company’s financial results as well as a general update on the Company’s progress. You will find reconciliations of any non GAAP financial measure discussed on today’s call to the most directly comparable financial measure calculated in accordance with GAAP to the extent available without unreasonable efforts in today’s earnings release and Supplemental deck, each of which is posted on the Company’s website. Before we begin, let me remind everyone that this call will contain forward looking statements for this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements. Investors should be aware that any forward looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in CAVA Group Inc’s most recent Annual Report on Form 10-K as may be updated by its reports on Form 10-Q and other filings with the SEC. Please refer to these filings for a more detailed discussion of forward looking statements in the risks and uncertainties of such statements. All forward looking statements are made as of today and except as required by law, CAVA undertakes no obligation to publicly update or revise any forward looking statements whether as a result of new information, future developments or otherwise. And now I’ll turn the call over to the Company’s co Founder and CEO Brett Shulman. Thanks Matt and welcome to the call everyone. In the first quarter of 2026 we further solidified our position as the clear leader in the Mediterranean Cuisine category while executing against our long term strategy with discipline and conviction. Despite today’s broader macroeconomic environment and geopolitical uncertainty, we sustained strong momentum and delivered exceptional results including positive traffic of 6.8%. Guided by the same steady focus that has shaped our business for the past 15 years, we will continue building for the long term as we gain market share with significant white space ahead while deepening our relationships with guests through a value proposition that clearly resonates our first quarter. Highlights include a 32.2% increase in CAVA Group Inc revenue, same restaurant sales of 9.7% driven by 6.8% traffic 20 net new restaurants ending the quarter with 459 restaurants, a 20.2% increase year over year adjusted EBITDA of 61.7 million, a 37.6% increase over the first quarter of 2025 net income of 23.6 million and 15.5 million in free cash flow. These results are a direct byproduct of the structural strength of our business and the dominant position we hold as the industry leader in Mediterranean, a cuisine category we have pioneered, defined and continue to shape. Central to that leadership is the value proposition rooted first and foremost in doing what is right by our team members and our guests. While many peers have responded to short term cyclical pressures with discounting and promotional activity, we have remained unwavering on our long term strategy. This past January we took an approximate 1.4% price increase while holding baseball and PITA pricing flat. Over the longer term, we have priced well below inflation with price adjustments representing only slightly more than half of cumulative CPI since the end of 2019. These decisions, deliberate and consistent, have compounded over time reinforcing the trust we have built with our guests and strengthening the foundation of our brand. And importantly, that value is not one dimensional. Whether a guest is looking for an accessible everyday meal or choosing to lean into one of our more premium offerings, we have created the flexibility for them to engage with CAVA on their terms in a way that fits their needs and moments. Ultimately, this all ties back to our concept essence making Mediterranean cuisine accessible to communities across the country while delivering it with warm hospitality. Hospitality that is delivered by our outstanding team members who we support with investments like our Flavor Your Future platform, which I will speak to in more detail later. The strength of our category, the competitive positioning of our brand and the power of our concept have enabled the success we saw this past quarter and that we continue to build on for the future. It is that foundation and focus on execution that guides our work across our four strategic pillars. Beginning with our first, expand our Mediterranean way in communities across the country. During the first quarter we opened 20 net new restaurants, ending the quarter with 459 locations across 29 states and the District of Columbia. Our expansion continues with both intention and incredible momentum reflected by recent new market openings at Cincinnati, St. Louis and Columbus and our upcoming entry into Minneapolis, Minnesota later this year, further deepening our presence across the Midwest. We are encouraged by the early performance of our 2026 cohort, which is tracking in line with or ahead of the strength of our 2025 class. With first quarter new restaurant productivity trending above 100% as we expand our reach across the country, our culinary innovation remains at the heart of what draws guests to our brand. This past January, we brought back our fan favorite Roasted White Sweet Potato to a warm reception, with guests embracing it as a complimentary meat and using it as a canvas to craft their own cotton experience. The launch resonated beyond our existing customer base as well, driving increased visit frequency among returning guests while introducing the brand’s new ones. We are pleased with the performance of the seasonal favorite and we look forward to welcoming it back to our menu again in the future. And from beloved returning favorites to new culinary firsts, our pipeline of innovation continues to move forward with discipline and purpose. I’m excited to share that we’ve officially launched our first ever seafood offering, Pomegranate Glazed Salmon across all restaurants nationwide. Our roasted flaky fillet is marinated in a subtly sweet blend of pomegranate, date molasses, harissa, red wine vinegar and bold spices. A protein rich option with omega 3s and essential vitamins like B12 and vitamin D, delivering both bold flavor and genuine nourishment in every bite. Salmon is a natural extension of our menu, fitting seamlessly within the Mediterranean diet while increasing the variety of choices we can offer our guests. This is an important culinary milestone for us and one we approached with care, ensuring it stayed true to our concept. Essence. We have seen promising early results as guests experience salmon for the first time at their local cabo. Shifting to our second pillar Deepen personal relationships with guests Even as we scale, we are encouraged by the strength of our loyalty program and the increasingly creative and engaging ways we are bringing it to life for our guests. This past quarter through our digital experience, we leaned into the cultural touch points that bring our guests together, finding intersections of joy, connection and food that feel organic to who we are. Our flavor bracket in app game and recent partnerships with WNBA number one pick AZ Thudd and NCAA men’s basketball champion Yaxel Lindenberg, each with their own digital exclusive bowl, brought the energy of March Madness to life in a way that felt both timely and uniquely cava. Together, these became one of our most highly engaged digital experiences to date and we will continue to broaden our array of engagement tools and tactics like these to further leverage the loyalty program and first party audience. We are growing. From the beginning it has always been about showing up authentically and becoming a genuine part of what our guests already love. It is through this kind of presence that we continue to deepen the relationships that keep our guests delighted and coming back. Bringing these relationships to life starts at a fundamental level with our people and our restaurants, which is reflected in the progress across our third and fourth pillars. Run great restaurants every location, every shift and operate as a high performing team Operating as a high performing team requires making foundational investments today that position us for the next decade and beyond. We’ve spoken before about being on the precipice of a decade of data transformation, a multi year transformation where data technology and AI will reshape how we run our business. I want to take a moment to share the recent progress we have made. Earlier this year we reached a meaningful milestone with the launch of Kava Core, our modern data platform. It establishes a unified scalable foundation for how we manage and use data across the business, enabling fast execution today while positioning us to leverage emerging AI capabilities. Building on that, we are in the early stages of delivering our new edge enabled operating platform Kava Current. A modular real time commerce platform, Kava Current is live today, actively processing orders across our restaurants and as it scales, it will drive more consistent execution with improved visibility and faster, more localized actions. Together, Kava Core and Kava Current create a connected real time system bringing data, applications and intelligence together to power our business. This enables us to deliver more meaningful personalized experiences for our guests, tailored to their preferences and behaviors, while also advancing more predictive operations that help our teams anticipate demand and better align staffing and preparation in real time. By building this platform internally, we gain greater control, flexibility and the ability to scale more efficiently over time. And while this is an important advancement, it is not a discrete initiative. It is a deliberate structural evolution creating the conditions for us to operate as a real time AI enabled business and move faster and more intelligently across every part of our organization. The work we are doing today will allow us to continue delivering value for our guests, our team members and our business for years to come. And finally, even the most sophisticated infrastructure only creates value when it is in service of the team members running great restaurants, every location, every shift. A core tenet of this strategic pillar is investing in our team members and talent and we remain deeply committed to building the next generation of leaders across our system. Our Flavor your Future initiative continues to show promise, focusing on attracting, developing and retaining talent across the organization. A recent key action under this platform was the launch of our new Assistant General Manager position with the critical goal of developing a deeper bench of role ready leaders to support our growth as we scale. Early indicators from the AGM rollout are promising. Restaurants with AGM coverage are outperforming Those without as AGMs provide additional leadership support during peak dinner and weekend shifts, strengthening operations, deepening the development of future team members, and building more sustainable restaurant teams over time. We look forward to sharing more on the broader Flavor your Future platform in the quarters ahead. And while the early results of the AGM rollout are encouraging, stories like Adriana Cervantes reflect the broader opportunity we are building toward through Flavor your Future Adriana joined CAVA as a Guest Experience Manager in Sherman Oaks and through her leadership, operational impact and commitment to our values, quickly progressed into the Assistant General Manager role before being promoted to General Manager earlier this year. Today she’s already working toward becoming an Academy Manager, helping develop future leaders across the organization. Her journey is a powerful reminder that when we invest in our team members and create opportunities for growth, we are able to build not just stronger restaurants but but meaningful and lasting careers for our people. Before I turn the call over, I want to thank our teams across the country for delivering a strong quarter and for staying true to our mission. It’s the consistency, intentionality and discipline with which we operate that have allowed us to establish ourselves as a clear leader in Mediterranean, the next large scale cultural cuisine category. As we look ahead, we remain committed to bringing heart, health and humanity to food and with that I will hand it over to Tricia to walk you through the financials.
Tricia
Thanks Brett and hello everyone. CAVA Group Inc revenue in the first quarter of 2026 grew 32.2% year over year to 434.4 million. Same restaurant sales increased 9.7% driven by traffic growth of 6%. During the quarter we opened 20 net new restaurants, bringing our total CAVA restaurant count to 459. As Brett noted, we are very pleased with our new restaurant openings which are tracking ahead of or in line with the strength of our 2025 class. New restaurant openings continue to exceed expectations in both top line and margin performance. With new restaurant productivity above 100%, our overall system wide average unit volumes are now $3,000,000. Cabo restaurant level profit in the first quarter was 108.9 million or 25.1% of revenue, compared to 82.3 million or 25.1 percent of revenue in the prior year period, representing a 32.3% increase. Kava’s food, beverage and packaging costs were 29.1% of revenue lower than the first quarter of 2025 by 20 basis points, largely driven by favorable mix. As a reminder, we anticipate Kava’s food, beverage and packaging costs to increase as a percent of revenue for the rest of the year as a result of the recent salmon launch. Kava labor and related costs were 25.7% of revenue approximately flat to the first quarter of 2025. This was driven by sales leverage offset by a 2% investment in team member wages which includes the expansion of our AGM role. CAVA occupancy and related expenses were 6.9% of revenue, an improvement of 50 basis points from the first quarter of 2025 due to sales leverage. CAVA Group Inc other operating expenses were 13.3% of revenue reflecting an increase of 80 basis points in the first quarter of 2025. This increase was primarily driven by a higher mix of third party delivery and other individually significant items shifting to overall performance. Our general and administrative expenses for the quarter including equity based compensation and executive Transition costs were 9.9% of revenue compared with 10.5% of revenue in Q1 of 2025. This 60 basis point improvement was driven by leverage from higher sales partially offset by investments to drive future growth and higher performance based incentive compensation. Preopening expenses were 6.2 million in the current quarter compared with 4.5 million in the prior year quarter. The $1.7 million increase includes a higher number of units under construction. Adjusted EBITDA for the first quarter was 61.7 million, a 37.6% increase versus Q1 of 2025. The increase in adjusted EBITDA was driven by 9.7% same restaurant sales growth. The number and continued strength of new restaurant openings partially offset by investments to support growth including higher reopening costs. For the first quarter of 2026, equity based compensation was $7.7 million. We continue to expect equity based compensation which includes our new programs to provide equity grants, GM and performance based LTI to be between 22 million and 24 million in aggregate for the full year. In the first quarter our effective tax rate was 21.5%. For the full year fiscal 2026. We expect our effective tax rate to be between 23% and 28% with the rate in Q2 being consistent with Q1 based on the timing of equity based vesting. As a reminder, the increase in our tax rate in 2026 versus the prior year is due to the lower permanent benefit from equity based compensation, our cash taxes will continue to be immaterial until we fully utilize our net operating losses. During the first quarter we reported 23.6 million of net income compared to 25.7 million of net income in Q1 of 2025. Diluted EPS was $0.20 in the first quarter compared with $0.22 in the first quarter of 2025. The decrease in net income and diluted EPS is due to the previously mentioned higher permanent benefit from equity based compensation within income tax in the prior year, partially offset by nearly 50% higher earnings before taxes. Turning …
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