Cava, the Mediterranean restaurant chain, has reported strong traffic and better-than-expected quarterly earnings and revenue, leading to a 7% rise in the company’s stock. The company’s market cap has more than doubled this year, reaching approximately $11.6 billion. In the quarter ended July 14, Cava reported earnings per share of 17 cents, surpassing Wall Street expectations of 13 cents. Revenue for the quarter was $233 million, higher than the expected $220 million.
The company’s net income for the second quarter was $19.7 million, or 17 cents per share, compared to $6.5 million, or 21 cents per share, in the same period last year. Net sales increased by 35% to $233 million. Cava’s same-store sales also saw significant growth, rising by 14.4%, exceeding StreetAccount estimates of 7.9%.
While many other restaurant companies have experienced declines in customer visits due to reduced consumer spending, Cava reported a 9.5% increase in traffic during the quarter. Cava CEO and co-founder Brett Schulman attributed this growth to the introduction of a new grilled steak option, which attracted customers to their restaurants.
During the quarter, Cava expanded its presence by opening 18 net new locations, bringing the total number of restaurants to 341. Looking ahead, the company has raised its outlook for fiscal 2024. Cava now expects same-store sales growth of 8.5% to 9.5%, up from the previous range of 4.5% to 6.5%. Additionally, they anticipate opening 54 to 57 new locations this year, surpassing the previous forecast of 50 to 54 restaurants.
Cava also revised its projection for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fiscal year. The company now expects adjusted EBITDA of $109 million to $114 million, compared to the previous projection of $100 million to $105 million.
The strong performance of Cava in the second quarter, with robust traffic and higher-than-expected earnings, showcases the success of their strategic initiatives. The introduction of the grilled steak option appears to have resonated with customers, driving increased footfall to their restaurants. Furthermore, the expansion of their restaurant footprint and the upward revision of their sales growth and new location forecasts demonstrate the company’s confidence in its future prospects.
Cava’s ability to outperform the broader restaurant industry, which has been grappling with reduced consumer spending, highlights its strong brand positioning and customer loyalty. As the company continues to innovate and expand its offerings, it remains well-positioned to capitalize on the growing demand for Mediterranean cuisine. Investors and analysts will be closely monitoring Cava’s performance in the coming quarters to assess its ability to sustain its growth trajectory and deliver value to shareholders.
