Cava Group Inc. has revised its forecast for same-store sales growth, now anticipating an increase of 4% to 6% for the full year. The company hesitated to pursue such a high profile change, especially considering they had a strong second quarter performance. This drop was an unprecedented reversal from their historic rates of increase. In Q2 last year, Cava posted an impressive 14.4% same-store sales growth, fueled by almost double-digit traffic growth.
Cava’s same-store sales increase halved in its most recent quarterly report, where it reported same-store sales growth of just 2.1%. The company’s traffic through this stretch continued being “pretty much even,” to the point that many investors and industry analysts panicked. Cava’s stock value dropped more than 20% in after-hours trading. This decrease has contributed to a horrifying 40% drop overall for the year.
While Cava was staring at a reduced sales projection, the company continues to boast some stellar numbers. Feed in Net restaurant sales growth, which was up 20%, touching $278.2 million. Most of this growth can be explained by the expansion of new restaurants into new markets. Cava is still maintaining its outlook for strong adjusted earnings before interest and depreciation. They are projecting EBITDA at $152 million to $159 million. Further, the company maintained its same-store sales guidance for the year and reaffirmed its outlook for restaurant-level profitability margins to land between 24.8% and 25.2%.
For his part, Cava’s CEO and co-founder Brett Schulman was optimistic on customer interest. He attributed the debut of grilled steak as a major reason for keeping customers coming back throughout the quarter.
“By piloting Hyphen’s automated digital makeline, we have the opportunity to increase order accuracy and speed during peak digital hours, while reducing complexity for our team members,” – Brett Schulman
In a strategic move, Cava participated in a $25 million Series B funding round for Hyphen, which aims to enhance operational efficiency and streamline service delivery.
Sales forecasts and stock performance have suffered as the sector faces crises in the fast-casual dining market. Businesses are on the front lines of confronting changing consumer preferences and advancing market dynamics. Cava’s efforts to innovate and adapt will be closely monitored by analysts as they assess the company’s ability to recover from this setback.