Cava (CAVA) is serving up some savory numbers for its investors.
After the market close on Thursday, the Mediterranean fast-casual chain reported second quarter results that beat estimates across revenue, earnings, and same-store sales.
Net sales jumped 35.2% year over year to $233.5 million, compared to expectations of $219 million. Adjusted earnings per share came in at $0.17, versus the $0.13 expected.
Same-store sales jumped 14.4%, more than the 7.45% Wall Street expected. Sales growth was driven by higher foot traffic (up 9.5% year over year), an increase in menu price, new locations, and the launch of grilled steak on June 3.
CEO Brett Schulman said on the earnings call that the steak launch surpassed its expectations by a landslide. The company is at the “nexus of consumer convergence” as consumers trade down from fine-dining restaurants but trade up from fast food.
“At a time when consumers are increasingly feeling the pressure of an uncertain economy and are more discerning about where and how they spend their money, they are choosing to dine at Cava,” he said.
Wedbush analyst Nick Setyan said it expects “accelerating two-year transaction trends, led most importantly by the launch of steak.”
On Wednesday, Cava stock hit a record-high close of $102.39, and on Thursday, it hit an intraday high of $104.84. In after-hours trading, shares jumped to as much as $112.
Shares are up 137% year to date, compared to 17% for both Chipotle (CMG) and the S&P 500 (^GSPC).
Slow and steady is Cava’s go-to approach to expansion. By 2032, the company plans to have 1,000 Cava locations.
Citi analyst Jon Tower said there’s still room left for growth in a note to clients. “A unit growth opportunity that continues to re-set higher, discrete same-store sales, price, and margin opportunities as the system densifies and margin tailwinds as the footprint shifts towards lower cost markets.”
In Q2, Cava opened 18 new locations, bringing the total to 341. That’s compared to 14 new locations in Q1.
Schulman said within existing markets, there is still runway to build more brand awareness. Other…
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