Second-quarter revenue rose 20% while same-store sales grew by only 2.1%.
Cava Group Inc. (CAVA) shares fell over 22% in after-hours trading on Tuesday, after the Mediterranean-style restaurant chain missed comparable sales estimates for the second quarter and lowered its view for the full year.
If the losses hold in Wednesday’s session, it would mark the stock’s worst session decline on record. Cava was among the top five trending tickers on Stocktwits late Tuesday.
The performance is another indicator of the softness in the restaurant sector, as high inflation and economic uncertainty prompt consumers to curb dining out.
Cava was listed on the New York Stock Exchange in June 2023. As of their last close, its shares are down about 50% from their all-time high in November 2024, and 25% down year-to-date.
The company now expects same-store sales growth of 4% to 6% this year, down from its prior range of 6% to 8%.
In the second quarter, revenue rose 20% to $280.6 million, just shy of analysts’ estimate of $285.5 million. Same-store sales rose 2.1%, missing expectations of a 601% growth.
Adjusted net profit rose to $0.16 per share, from $0.14 last year and above expectations of $0.13.
On Stocktwits, retail sentiment for CAVA shifted to ‘extremely bullish’ (96/100) as of late Tuesday, up from ‘bullish’ the previous day, with message volume surging over 1,800% in the last 24 hours.
User posts ranged from calls to “buy the dip” and claims the stock was “oversold” to predictions it could fall to around $50 in the coming days.
“$CAVA I’m cautiously bullish,” said a user. “Same store sales could be flat to negative but honestly the market might overlook this. This is a longer term play and the CEO is a smart dude. I’d say it moves towards $100 after earnings.”
Rival restaurant chains have also struggled this quarter. Chipotle Mexican Grill (CMG) reported same-store sales declines, while salad chain Sweetgreen (SG) cut its outlook for the second straight quarter.
The Future Fund managing partner, Gary Black, noted the similarity in commentary with Chipotle and Sweetgreen after Cava blamed its earnings miss on “ongoing uncertainty among consumers.”
“At 2025 P/E of 147x, the miss will get amplified by both the likely decline in FY’25 estimates and a downward re-rating of the multiple,” he said on X.
According to Koyfin data, CAVA’s forward price-to-earnings ratio is a lot higher than CMG’s 32.7x or even Wingstop Inc.’s 76.4x.
Cava said it opened 16 new restaurants in the quarter, taking the total to over 400. The company also announced that it is investing in food-robotics startup Hyphen, which automates the portioning of plates and bowls.
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