Cava (CAVA) serves its investors tasty numbers.
After the market closed Thursday, the Mediterranean fast-casual chain reported second-quarter results that beat expectations for revenue, profit and same-store sales.
Net sales increased 35.2% year over year to $233.5 million, compared to expectations of $219 million. Adjusted earnings per share came in at $0.17, versus the expected $0.13.
Same-store sales rose 14.4%, more than the 7.45% Wall Street expected. Sales growth was driven by increased visitors, up 9.5% year-on-year, new locations and the launch of grilled steak on June 3.
CEO Brett Schulman said during the earnings call that the steak exceeded his expectations by a landslide. The company is at the “nexus of consumer convergence” as it trades down from fine dining but up from fast food.
“At a time when consumers are increasingly feeling the pressure of an uncertain economy and are more discerning about where and how they spend their money, they are choosing to dine at Cava,” he said.
Wedbush analyst Nick Setyan said it expects “accelerating transaction trends over the past two years, led primarily by the launch of steak.”
On Wednesday, Cava stock hit an all-time high of $102.39, and hit an intraday high of $104.84 on Thursday. In after-hours trading, the stock rose as high as $112.
Shares are up more than 140% year to date, compared to 19% for Chipotle (CMG) and 17% for the S&P 500 (^GSPC).
Slow and steady is Cava’s preferred approach to expansion. By 2032, the company plans to have 1,000 Cava locations.
Citi analyst Jon Tower said there is still room for growth in a note to clients. “A unit growth opportunity that continues to create higher, distinct, same-store sales, price and margin opportunities as the system densifies and margins follow suit as the footprint shifts to lower-cost markets.”
In the second quarter, Cava opened 18 new locations, bringing the total to 341. That’s compared to 14 new locations in the first quarter.
Cava continues to perform at a time when fast-casual dining appears to be weathering a broader slowdown in the food industry as consumers double down on their value.
“Cava was one of just a handful of publicly traded restaurant brands with positive visitor growth in the second quarter,” Schulman said. “We believe our performance is a reflection of our unique and compelling value proposition.”
Chipotle beat expectations in its report after same-store sales rose 11.1% year over year, versus the 9.23% expected by Wall Street. Shake Shack ( SHAK ) saw same-store sales rise 4%, better than expectations of 3.2%.
Sweetgreen (SG) reported its best same-store sales growth in two years, up 9%, driven by higher footfall and pricing.
Its CEO, Jonathan Neman, told Yahoo Finance that “we will be very judicious in how we use it [pricing power].” Neman claimed the chain has seen fewer price increases than its rivals since the pandemic.
“If you look at the relative price difference between Sweetgreen, some of our fast-casual competitors and then QSR, the gap has really narrowed. QSR, you can’t get in and out of there for less than $15 today,” he told Yahoo . Finances.
Here’s what Cava reported, compared to Wall Street estimates, according to Bloomberg consensus data:
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Gain: $233.5 million vs. $219.5 million
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Adjusted earnings per share: $0.17 vs. $0.13
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Same-store sales growth: 14.4% versus 7.45%
The company raised its fiscal 2024 guidance for restaurant openings, revenue growth and profit margin at the restaurant level.
It now expects revenue growth of 8.5% to 9.5%, up from 4.5% to 6.5% in the first quarter and previously 3% to 5%.
The total number of new restaurants will now be between 54 and 57, up from 50 to 54. The profit margin at the restaurant level is expected to be between 24.2% and 24.7%, up from 23.7% to 24. 3%.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X on @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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