The restaurant consumer pullback of 2025 hasn’t been kind to the fast-casual segment, as evidenced especially by Chipotle’s recent challenges. CAVA also seems to be feeling the effects, reporting on Tuesday a same-store sales increase of 1.9% in the third quarter and a 20% increase in revenue — both of which were below Wall Street forecasts. Traffic in the quarter was flat.
That said, chief executive officer Brett Schulman noted that the chain has continued to gain a significant amount of market share since 2019 from underpricing its peers, as well as the Consumer Price Index, by nearly 10%. He added that the Mediterranean concept has generated sizeable growth in the past two years, as Q3 lapped a robust 18-plus-percent increase from Q3 2024, and revenue up nearly 70% during the timeframe.
Highlights from the most recent quarter include the Chicken Shawarma launch in September, which performed to expectations. The company is now looking to build on its protein offerings next year from a current salmon test, which has so far yielded “encouraging results,” Schulman said.
CAVA has also experienced 36% membership growth from its rewards program since its relaunch a year ago and recently introduced another upgrade with tiered status levels.
The company is also rolling out a new kitchen display system and is on track to have the technology live in at least 350 restaurants by the end of the year. Schulman said the KDS has yielded higher guest scores from improved accuracy and communication. Further, all of CAVA’s restaurants are now equipped with new TurboChef ovens, which executives said drive more consistency and faster cooking times. They are also enabling the salmon test and will likely pave the way for more menu innovation.
Despite these green shoots, executives said sales began to “moderate” as third quarter went on, “reflecting broader macroeconomic pressures,” chief financial officer Tricia Tolivar said during the call. Those pressures were pronounced among younger consumers, with whom the chain overindexes.
“Entering the fourth quarter, we’re seeing further moderation as we continue to lap stronger same-restaurant sales from the prior year,” she added.
This moderation is why CAVA revised its full-year outlook to include a same-store sales increase of 3% to 4%, down from its prior outlook of 4% to 6% issued in August. The company also expects restaurant-level profit margins to range between 24.4% to 24.8%, down from the previous forecast of 24.8% to 25.2%.
CAVA’s stock price fell nearly 5% following the report Tuesday.
CAVA Q3 by the numbers
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Revenue grew 20% to $289.8 million, compared to $241.5 million in the prior year quarter and 66.8% as compared to the third quarter of fiscal 2023
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17 net new restaurant openings, bringing the chain’s total unit count to 415, a 17.9% increase year-over-year
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Same-store sales growth of 1.9%
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Average unit volumes of $2.9 million as compared to $2.8 million in the prior year quarter excluding the 53rd week of fiscal 2023
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Restaurant-level profit of $71.2 million or growth of 15.1% over the prior year quarter, with restaurant-level profit margin of 24.6%
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Digital revenue mix was 37.6%
Contact Alicia Kelso at [email protected]
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