CAVA Group (CAVA) shares climbed 6.9% in premarket trading Wednesday, reaching $83.50, after the Mediterranean fast-casual chain reported robust first-quarter results that topped analyst expectations and raised its full-year guidance. The company posted a 9.7% rise in same-restaurant sales, driven by a 6.8% increase in guest traffic, a key metric investors are watching as they gauge consumer willingness to spend on fast-casual dining amid tighter budgets.
Financial Highlights
For the first quarter, CAVA reported earnings per share of $0.20, surpassing the $0.17 consensus estimate, while revenue came in at $438.3 million, above the $418.62 million forecast. Revenue surged 32.2% year-over-year to $434.4 million. However, net income fell to $23.6 million, or $0.20 per share, from $25.7 million, or $0.22 per share, in the same period last year, due to a smaller tax benefit and higher depreciation expenses.
Store Expansion and Outlook
CAVA opened 20 net new restaurants during the quarter, bringing its total to 459 locations. The company raised its 2026 outlook, now targeting 75 to 77 net new restaurant openings, same-restaurant sales growth of 4.5% to 6.5%, and adjusted EBITDA between $181 million and $191 million. Adjusted EBITDA for the first quarter came in near $62 million, above Telsey Advisory Group's estimate of $55 million.
Analyst Reactions
Following the results, several analysts raised their price targets on CAVA. Telsey Advisory Group lifted its target to $95 from $92, maintaining an Outperform rating. Jefferies, Stifel, Morgan Stanley, and Mizuho also increased their targets. The positive sentiment reflects CAVA's strong traffic growth and operational execution, which stood out in the fast-casual segment, especially as competitors like Sweetgreen and Wingstop saw sharp declines in comparable sales.
Strategic Initiatives and Challenges
CEO Brett Schulman highlighted the company's ability to "meet the moment for the modern consumer," citing strong traffic and expansions into new markets like Cincinnati, St. Louis, and Columbus. CAVA is also investing in technology platforms, including CAVA Core and CAVA Current, to optimize demand forecasting, staffing, and digital advertising. However, management has cautioned about margin pressures from higher energy costs, labor spending, and the national rollout of salmon, which could drag restaurant-level margins by about 100 basis points starting in the second quarter. The company aims to keep penny profit flat through pricing strategies.
Market Context
CAVA's quarter was a standout in the fast-casual space, with the best same-store sales growth in the segment. CFO Tricia Tolivar noted that the company is "creating a bit of a bridge in a K-shaped economy," referring to the spending divide between higher- and lower-income customers. The traffic-driven growth, rather than reliance on higher menu prices, is seen as a positive sign. Despite the strong performance, CAVA's stock remains expensive relative to earnings, and investors will watch how the company manages expansion costs and consumer sentiment going forward.
