Cava (CAVA) is offering some tasty numbers to its investors.
After the market closed on Thursday, the Mediterranean fast-casual chain reported second-quarter results that beat estimates on revenue, earnings and same-store sales.
Its stock jumped 9% in pre-market trading early Friday, hitting a new all-time high.
Net sales rose 35.2% year-over-year to $233.5 million, compared with expectations of $219 million. Adjusted earnings per share were $0.17 versus the $0.13 expected.
Same-store sales rose 14.4%, beating Wall Street expectations of 7.45%. Sales growth was driven by higher foot traffic (up 9.5% year-over-year), increases in menu prices, new locations and launches. Grilled steak On June 3.
CEO Brett Shulman said on the earnings call that steak output beat its expectations by a landslide. The company is at the “nexus of consumer convergence” because consumers are trading up from fine-dining restaurants but also from fast food.
“At a time when consumers are increasingly feeling the pressure of an uncertain economy, they are more savvy about where and how they spend their money, and they are choosing to dine at Cava,” he said.
WedBush analyst Nick Setian expects “two years of transaction trends to accelerate, most notably through the introduction of Steak.”
Cava stock hit a record high of $102.39 on Wednesday and hit an intraday high of $104.84 before closing at $101.98 on Thursday. Shares rose to $111 in pre-market trading on Friday.
Shares are up 137% year to date, compared with 17% for both Chipotle (CMG) and the S&P 500 (^GSPC).
Slow and steady is Kava’s approach to expansion. By 2032, the company plans to have 1,000 Kava locations.
Citi analyst John Tower said there was still room for growth in the note to clients. “Per unit growth opportunity, higher, unique same-store sales, pricing and margin opportunities continue to drive system densification and re-positioning margin opportunities.”
In Q2, Cava opened 18 new locations, bringing the total to 341. Compared to 14 new locations in Q1.
Within existing markets, Shulman said, runway exists to create even greater brand awareness. Other future growth drivers include the relaunch of its loyalty program in October and catering.
The company aims to test catering marketing in major metros by 2025 and launch nationally by 2026.
It currently has 10 Digital Kitchen Hubs and 10 Hybrid Kitchen Hubs at various locations and regular Kava locations testing food delivery.
As consumer value doubles, Kava continues to work on the fast-casual dining scene, fueling a broader slowdown in the food industry.
“Cava was one of the few publicly traded restaurant brands with positive traffic growth in the second quarter,” Schulman said. “We believe our performance is a reflection of our unique and compelling value proposition.”
He added that from 2019 to 2023, the company raised prices by 12%. According to the CPI data, this is lower than the increase in fast food prices and the overall price of groceries.
“Now you’ve got a situation where for $1 or $2 … you can get fresh Mediterranean food for the same price as a traditional fast-food freezer-to-fryer meal,” he said.
Chipotle blew past expectations in its report after same-store sales rose 11.1% year-over-year, versus the 9.23% expected by Wall Street. Shake Shack ( SHAK ) same-store sales rose 4%, beating estimates of 3.2%.
Sweetgreen (SG) posted its best same-store sales growth in two years, up 9%, driven by higher traffic and prices.
“We’re going to be very careful about how we use it,” its CEO, Jonathan Neiman, told Yahoo Finance. [pricing power]Neiman said the chain took fewer price increases than its competitors after the pandemic.
“When you look at the relative price difference between Sweetgreen, some of our fast-casual competitors, and QSR, the gap has narrowed a lot. QSR, you can’t go there for under $15 today,” he told Yahoo. Finance.
Here’s what Cava reported, compared to Wall Street estimates, according to Bloomberg consensus data:
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revenue: $233.5 million and $219.5 million
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Adjusted earnings per share: $0.17 and $0.13
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Same-store sales growth: 14.4% and 7.45%
The company raised its fiscal 2024 restaurant openings, sales growth and restaurant-wide profit margins.
It now expects sales growth of 8.5% to 9.5%, up from 4.5% to 6.5% in Q1 and its previous guidance of 3% to 5%.
The total number of new restaurants will now be 54 to 57, up from 50 to 54. Restaurant-wide profit margin is 24.2% to 24.7%, compared to 23.7% to 24.3%.
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Brooke DePalma is a senior reporter at Yahoo Finance. Follow her @ on XBrooke DePalma Or send an email to [email protected].
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