Photo: Farragutful / CC BY-SA 4.0
Cava’s restaurant-chain revenue rose 22.1% to $353.7 million in the third quarter as the fast-casual operator reached 500 restaurants, but net income declined and restaurant-level profit margins narrowed.
Same-restaurant sales increased 3.1%, with menu pricing and product mix contributing 3.0% and guest traffic slightly positive, according to the company’s earnings release. The quarter ended October 4.
For restaurant operators and investors, the figures distinguish growth from opening more locations from growth at existing restaurants. Cava’s expanding footprint drove a much larger revenue increase than its comparable-sales gain.
Shares fell 11.5% in after-hours trading, according to an Investing.com report published at 4:56 p.m. Wednesday.
Expansion lifts sales, while costs weigh on margins
Cava opened 24 net new restaurants during the quarter. Its total restaurant count rose 20.5% from a year earlier. Consolidated group revenue was $356.4 million, distinct from the $353.7 million CAVA-chain revenue measure.
Restaurant-level profit grew 16.2% to $82.7 million, while the margin fell 120 basis points to 23.4%. The company cited labor investments, a larger share of third-party delivery, and repairs and maintenance spending.
Net income declined to $13.2 million from $14.7 million. Adjusted EBITDA increased 5.7% to $42.3 million. Cava attributed the net-income decline mainly to higher depreciation and amortization and equity-based compensation, partly offset by improved operating performance.
Full-year sales outlook rises
Cava raised its full-year same-restaurant sales outlook to 6%-7% from 4.5%-6.5% and its net new restaurant target to 76-78 from 75-77.
It narrowed restaurant-level margin guidance to 23.7%-24.0% from 23.7%-24.3%. Adjusted EBITDA is now forecast at $184 million-$189 million, compared with the previous $181 million-$191 million range.
JBizNews Desk | Washington
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