Cava (CAVA) is offering attractive numbers to investors.
After the market closed Thursday, the Mediterranean fast-casual chain reported second-quarter results that beat expectations on all fronts: revenue, profit and same-store sales.
Net sales increased 35.2% year over year to $231.4 million, beating expectations of $219 million. Adjusted earnings per share were $0.17, compared with the expected $0.13.
Same-store sales rose 14.4%, beating Wall Street’s expectations of a 7.45% increase. Sales growth was driven by a 9.5% increase in customer traffic compared to last year, new store openings, and a 1.2% increase in revenue from new stores. Grilled steak.
Before the earnings release, Stifel analyst Chris O’Cull said the steaks “sold out quickly in many markets.”
“Deal activity will accelerate over the next two years, with steak launches being the most significant driver,” Wedbush analyst Nick Setian said in a statement.
CEO Brett Schulman said in a release that these results “demonstrate the strength of our category-defining brands and our unique and compelling value proposition.”
Cava shares hit a record closing price of $102.39 on Wednesday and hit an intraday high of $104.84 on Thursday. In after-hours trading, shares soared to $112.
The stock is up more than 140% since the start of the year, compared with a 19% gain for Chipotle (CMG) and a 17% gain for the S&P 500 (^GSPC).
Slow and steady expansion has been Cava’s go-to approach: The company plans to grow the number of Cava stores to 1,000 by 2032.
Citi analyst John Tower said in a client note that there’s still room to grow: “Increasing store density and margin tailwinds as stores move into lower-cost markets will drive store-level growth opportunities and continue to reposition opportunities for individual same-store sales, price and margin improvement.”
Cava opened 18 new locations in the second quarter, bringing its total to 341 locations. This compares to 14 new locations in the first quarter.
Cava continues to thrive at a time when consumers are becoming more value-conscious and fast-casual dining appears to be bucking the overall food industry slowdown.
Cava CEO Brett Schulman recently told Yahoo Finance Morning Brief in July that the chain is seeing “consistent strength across all revenue segments.”
“We are able to offer a unique mix of Mediterranean cuisine that combines taste and health at a reasonable price,” he said.
Chipotle reported strong beats in its report, reporting same-store sales growth of 11.1% year over year, beating Wall Street’s expectations of 9.23%. Shake Shack (SHAK) saw same-store sales increase of 4%, beating expectations of 3.2%.
Sweetgreen (SG) reported its strongest same-store sales growth in two years, rising 9%, driven by increased foot traffic and higher prices.
“We’re going to be very careful about how we spend it,” the company’s CEO, Jonathan Neman, told Yahoo Finance. [pricing power]Neman argued that the chain has increased prices less than its competitors since the pandemic.
“If you look at the relative price differential between Sweetgreen, its fast-casual competitors and its QSRs, the gap has really closed. At the QSRs, you can’t get in or out for under $15 now,” he told Yahoo Finance.
Here’s how Cava’s report compared to Wall Street expectations, according to Bloomberg consensus data:
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Revenue: $233.5 million vs. $219.5 million
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Adjusted earnings per share: $0.17 vs $0.13
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Existing store sales growth: 14.4% vs 7.45%
The company raised its fiscal 2024 outlook for new restaurant openings, sales growth and restaurant-level profit margins.
The company now expects sales growth to reach 8.5%-9.5% from 4.5%-6.5% in the first quarter, up from 3%-5% previously.
The number of new store openings will increase from 50-54 to 54-57. Restaurant-level profit margins are expected to increase from 23.7-24.3% to 24.2-24.7%.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow @ on X.Brooke DePalma Or email me at bdipalma@yahoofinance.com
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