MW Cava stock falls after restaurant chain's sales forecast misses estimates

By Bill Peters

Wedbush analysts said expectations heading into the quarterly results were 'lofty'

Shares of Cava Group Inc. fell after hours on Tuesday after the Mediterranean fast-casual chain forecast full-year same-store sales that were below analysts' expectations, following what some analysts said was a high bar for a restaurant that has grown despite high food prices that have spooked consumers.

Cava $(CAVA)$, which along with its namesake restaurants also owns Zoe's Kitchen, said it expects same-store sales growth of 6% to 8% for the year, compared with Wall Street's estimates for 8.7%.

Shares fell about 4% after hours on Tuesday.

The chain reported earnings in the wake of a 75% gain in its stock price over the past 12 months. Wedbush analysts, in a research note last week, said expectations heading into the results were "lofty." But they said that popular recent menu additions, like grilled steak, and the chain's loyalty program would help results in the months ahead.

"We also expect menu pricing to remain below the peer set, driving an increasing relative value advantage," they said.

In August, Cava Chief Executive Brett Schulman said the chain was seeing customers "trade down from traditional full-service chain dining, trade up from fast food and trade over from legacy fast-casual players."

Many restaurants - including fast-food chains - have raised prices to cover higher wages and food costs, and to guard profit margins. After those higher prices turned off consumers, fast-casual chains that use higher-quality ingredients benefited, as diners felt they could get a better meal without having to pay a whole lot more. Fast-food chains have since launched more value deals in an effort to stay competitive.

This is a developing story. Check back for updates.

-Bill Peters

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February 25, 2025 16:51 ET (21:51 GMT)

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