CAVA GROUP, INC. (CAVA) Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered mixed results: revenue grew 20.3% y/y to $278.2M for the CAVA segment ($280.6M consolidated), but modest comps (+2.1%) and prior-year steak laps weighed on top-line versus consensus; EPS beat while revenue missed and margin execution remained strong at 26.3% restaurant-level .
• Guidance was updated: net new openings raised (68–70), same-restaurant sales lowered (4–6%), restaurant-level margins maintained (24.8–25.2%), pre-opening costs raised, Adjusted EBITDA maintained—ETR tightened lower to 12–15% .
• Management highlighted robust new unit productivity (first-year AUVs tracking >$3.0M) and operational investments (KDS roll-out, TurboChef ovens, AI camera vision; Hyphen automation pilot) that support accuracy, throughput, and labor reallocation to guest-facing roles .
• Near-term narrative: revenue miss vs Street and lowered comp guidance are the likely stock reaction catalysts; offset by EPS beat, margin strength, sequential comp reacceleration exiting Q2, and innovation pipeline (chicken shawarma LTO; pita chip platform) .

What Went Well and What Went Wrong

What Went Well

• Margin execution: restaurant-level margin of 26.3% (+19.6% y/y profit growth) despite modest comps; Adjusted EBITDA up 22.6% to $42.1M (15.0% margin) .
• New unit productivity: 2025 openings trending above $3.0M first-year AUV; 2024 cohort delivering ~40% year-one cash-on-cash returns; top quartile AUVs >$4M with restaurant-level margins >30% .
• Operational upgrades: KDS expansion to 270 locations by year-end (95 live), TurboChef ovens in all restaurants by year-end, AI camera vision expansion—improving accuracy, productivity, and guest satisfaction .

“Despite the fluid macroeconomic environment, we grew CAVA Revenue 20.3%, and our 2025 new restaurant class is on track to deliver AUVs above $3 million” — Brett Schulman .

What Went Wrong

• Comps deceleration: same-restaurant sales +2.1%, impacted by lapping the 2024 steak launch and “honeymoon” dynamic from outsized new unit openings affecting base comps .
• Revenue vs consensus: consolidated revenue ~$280.6M trailed Street estimates for Q2; management lowered full-year comp guidance to 4–6% (from 6–8%) .
• Slight margin mix headwinds: food, beverage, and packaging at 29.5% (+10bps y/y) reflecting steak input costs; other operating expenses +40bps y/y, and pre-opening costs increased with stronger build cadence .

Financial Results

Sequential performance (oldest → newest)

Year-over-year (Q2 2025 vs Q2 2024)

Versus S&P Global consensus (Q2 2025)

Values retrieved from S&P Global.*

Segment and consolidated breakdown (oldest → newest)

KPIs (oldest → newest)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We recently opened our 400th restaurant… on our path to 1,000 restaurants by 2032” — CEO Brett Schulman .
• “Our 2025 openings are… trending above $3 million in first-year AUVs… ~109% new restaurant productivity” — CFO Tricia Tolivar .
• “Hyphen… automated make lines… focus on our second digital make line… to deliver better accuracy and reallocate labor to guest interaction” — CEO Brett Schulman .
• “As we move through June, we saw a deceleration… driven… by the timing of our steak launch last year… same-restaurant sales regained momentum… reaccelerating as we exited Q2 and continued into Q3” — CFO Tricia Tolivar .

Q&A Highlights

• Comps dynamics: macro headwinds plus lapping steak launch; “honeymoon” effect from outsized new unit volumes impacted base comps; trend reaccelerated into Q3 .
• Marketing/media mix: opportunity to lean in if macro persists; testing OTT/outdoor; paid lower-funnel remains effective .
• Pricing/promotions & shawarma: low promotion stance; chicken shawarma at premium price (below steak) with light operational lift .
• Tech ROI: KDS/TurboChef improve accuracy and productivity; AGM role tests self-funded via transaction growth and stronger shift coverage .
• Throughput: focus on speed without compromising service; labor deployment model driving balanced improvements across dayparts .

Estimates Context

• Q2 2025 vs Street: revenue $285.46M est vs $280.62M actual (miss); EPS $0.138 est vs $0.16 actual (beat). S&P EBITDA est $40.50M vs company Adjusted EBITDA $42.10M; definitional differences may apply.*
• Consensus participation: 14 revenue estimates; 10 EPS estimates.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Mixed quarter: EPS and margin strength but revenue below consensus; comps guidance tempered—expect estimates to reflect lower H2 comp trajectory while sustaining EBITDA/margin expectations .
• New unit momentum offsets comps: first-year AUVs tracking >$3.0M and strong cash-on-cash returns bolster medium-term unit growth and margin durability .
• Operational investments should support accuracy and throughput, enabling labor reallocation to guest-facing roles—monitor KDS rollout pace and Hyphen pilot results for incremental capacity gains .
• Innovation cadence remains intact (chicken shawarma, pita chip flavors), supporting mix and engagement; loyalty tiers could drive frequency uplift—watch attachment and digital mix trends .
• Guidance reset: model FY25 with 68–70 openings, 4–6% comps, 24.8–25.2% restaurant-level margin, Adjusted EBITDA $152–$159M, ETR 12–15%; pre-opening costs higher with back-half weighted openings .
• Near-term trading: narrative hinges on sequential comp reacceleration into Q3, margin discipline, and execution on tech rollout; revenue misses vs beats could drive volatility around catalysts (monthly comp updates, Q3 print) .
• Medium-term thesis: large white space to at least 1,000 units by 2032; consistent AUV uplift across regions supports portability and unit economics resilience .