A banner for the popular Mediterranean restaurant chain, Cava, is proudly displayed outside of the New York Stock Exchange (NYSE) as the company successfully goes public on June 15, 2023, in the bustling city of New York.
Photographed by Spencer Platt | Getty Images
Cava has delightfully shared its first profitable quarter since its remarkable initial public offering in June. This exciting news led to a surge of up to 12% in Cava’s stock during extended trading. Since its IPO, the value of Cava’s shares has more than doubled, making it a true standout in the market. As of the close of trading on Tuesday, the Mediterranean restaurant chain boasts an impressive market value of $5.27 billion.
Here are the impressive financial results that Cava has reported for the quarter ended July 9:
- Earnings per share: 21 cents
- Revenue: $172.9 million vs. $163 million
Cava managed to achieve a second-quarter net income of $6.5 million, or 21 cents per share, a remarkable turnaround compared to the net loss of $8.2 million, or $6.23 per share, that it experienced in the same period last year. It is noteworthy to highlight that CNBC refrains from comparing reported earnings per share to Wall Street estimates for a company’s first report post-IPO, as uncertain share counts can create biased expectations.
Demonstrating its incredible growth trajectory, Cava experienced a significant 62% increase in net sales, reaching an impressive $172.9 million. This substantial growth was primarily fueled by the opening of 16 new Cava restaurants during the period, bringing the total count to 279.
Cava’s same-store sales also received a substantial boost, with an 18.2% climb in the quarter. The chain took pride in reporting a traffic increase of 10.3%, a deviation from the broader restaurant industry’s trend of declining customer visits in recent months. CFO Tricia Tolivar attributed this strong traffic to the increased brand awareness following the company’s IPO.
However, Tolivar humbly acknowledged that the growth in same-store sales has slowed down in recent weeks. Additionally, more diners have shifted from delivery orders to picking up their own warm bowls and salads, indicating a possible decrease in spending at Cava’s restaurants. This trend was also observed in rival Sweetgreen’s performance, as delivery orders tend to be more expensive due to added fees.
It is essential to note that Cava’s menu prices have increased by nearly 8% compared to the same period last year. However, the restaurant chain’s executives clarified that there are no further plans to raise prices.
Digital orders played a significant role in Cava’s quarterly sales, accounting for more than a third of the total revenue for the period.
Looking ahead to 2023, Cava confidently anticipates reporting a same-store sales growth between 13% and 15% for the full year. CEO Brett Schulman cited broader economic pressures, such as rising interest rates and gas prices, as the primary reason for the cautious sales forecast. Despite this, the company plans to open an impressive 65 to 70 new locations and forecasts adjusted earnings before interest, taxes, depreciation, and amortization in the range of $62 million to $67 million.
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