Cava, the fast-casual restaurant chain, has adjusted its growth outlook for the year. Initially, it expected same-store sales growth of 6% to 8%, but now it anticipates just 4% to 6%. This news caused the company’s shares to drop over 20% during after-hours trading.
Cava reported earnings of 16 cents per share, slightly above the expected 13 cents, but revenue at $280.6 million fell short of the anticipated $285.6 million. While net restaurant sales increased by 20% due to new openings, same-store sales only rose 2.1%. That’s a significant drop compared to the 14.4% growth reported last year, which benefitted from strong traffic and new menu items like grilled steak.
Cava’s Chief Financial Officer, Tricia Tolivar, noted that the second quarter started strong. However, once the novelty of new menu items wore off, growth began to stagnate. Many fast-casual competitors are facing similar challenges. For instance, Chipotle reported a 4% decline in same-store sales.
A recent survey found that customers are increasingly value-conscious, which is influencing their dining choices. This trend could explain why some chains, including Cava and Sweetgreen, are tightening their sales forecasts.
Despite the adjustment in growth projections, Cava maintains its estimates for adjusted earnings before interest, taxes, depreciation, and amortization at $152 million to $159 million. They are also focused on improving efficiency by investing in technology. Cava recently took part in a $25 million funding round for Hyphen, a company that automates food portioning. CEO Brett Schulman emphasized the benefits of this technology for improving service speed and accuracy.
In a time when many fast-casual brands are struggling, Cava’s focus on innovation and efficiency could help it carve out a niche. The company continues to explore ways to adapt to a changing market landscape.
Source link
Breaking News: Earnings,Sweetgreen Inc,Chipotle Mexican Grill Inc,Markets,Retail industry,Restaurants,Business,Breaking News: Business,CAVA Group Inc,Dividends,Earnings,Breaking News: Markets,business news
