Cava revenue beats estimates as Mediterranean chain reports double-digit same-store sales growth
Cava on Thursday reported better-than-expected sales in its latest fiscal quarter, shaking off the malaise the broader restaurant industry has felt as consumers have cut back on dining.
The Mediterranean chain said its same-store sales grew 10.8% in the three months that ended April 20, lifted by traffic growth of 7.5%. Analysts surveyed by StreetAccount were projecting same-store sales growth of 10.3%.
'When we look at our consumers in the quarter, we saw an increase in premium attachment on higher priced items, like our pita chips or amazing housemade juices. We also saw that our per person average continued to increase, and then when we look at our results, there's positive traffic across all of our geographies, across all of our income cohorts, as well as the different formats of our restaurants and dayparts,' Chief Financial Officer Tricia Tolivar told CNBC.
She added that diners have been trading up from fast food and down from casual-dining restaurants into Cava's bowls and pitas, a trend the company has seen for several quarters.
Elsewhere in the restaurant industry, companies have been reporting very different behavior from consumers, although many companies' results did not include any time in April, when the industry's sales and traffic performance improved.
Fast-casual rival Chipotle said its transactions fell 2.3% in the first quarter as consumers pulled back their spending in February, spooked by economic uncertainty. Sweetgreen reported its first quarterly same-store sales decline since it went public in 2021. McDonald's CEO Chris Kempczinski said fast-food industry data showed both low- and middle-income consumers spending less. The burger giant said U.S. same-store sales declined 3.6% for the first quarter.
Despite the strong quarterly performance, Cava reiterated its same-store sales forecast, sticking with its projections of a 6% to 8% increase. The chain said last quarter that it is expecting slower growth in the back half of its fiscal 2025.
The stock fell 5% in extended trading. As of Thursday's close, Cava shares have slid 11% so far this year, hurt by investor concerns over its conservative outlook for the fiscal year and the economic fallout from the Trump administration's tariffs.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per share: 22 cents. That may not compare with the 14 cents per share expected by LSEG.
22 cents. That may not compare with the 14 cents per share expected by LSEG. Revenue: $332 million vs. $327 million expected
The company reported fiscal first-quarter net income of $25.71 million, or 22 cents per share, up from $13.99 million, or 12 cents per share, a year earlier. Cava reported an income tax benefit of $10.7 million related to stock-based compensation, which boosted its earnings this quarter.
Net sales climbed 28% to $332 million. On a 12-month trailing basis, Cava's revenue has surpassed $1 billion, representing a major milestone for the company.
The company did raise some of its projections for the fiscal year.
Cava now anticipates adjusted earnings before interest, taxes, depreciation and amortization of $152 million to $159 million, up from its prior forecast of $150 million to $157 million. The company also plans to open between 64 and 68 new locations, higher than its previous outlook of between 62 and 66 restaurant openings.
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There was even a nationwide scaffolding shortage, because 230 miles of the stuff (a Guinness world record) was being used to build the Eden Project's biomes. Just four months after its Mediterranean and tropical biomes and gardens opened to the public, in March 2001, more than 800,000 visitors had passed through its doors. The Eden Project was such a success that its bosses placed adverts in West Country newspapers urging people to stay away. 'I think there was a general consensus at the time that Eden might have been one of the millennium projects most likely to fail, but I think the opposite is true,' says James. The Eden Project quickly became a symbol of Cornwall's prospering tourism industry. It has hosted some of the world's biggest musicians: Elton John, the Beach Boys, Amy Winehouse and Oasis have all played their anthemic hits to the backdrop of brightly lit domes. It marked its territory in popular culture, too. Halle Berry abseiled down one of the biomes in the 2002 Bond film Die Another Day. Ten years after opening, the Eden Project had attracted more than a million visitors per year, far exceeding all expectations and regularly ranking in the top 20 in the Association of Leading Visitor Attractions (ALVA) list. 'It was completely beyond our expectations,' says James. The project, nobody could deny, was proving to be a roaring success. The first cracks began to show in 2012, when the Eden Project trust revealed a deficit of £6.3 million for the year, compared to a surplus of £136,000 the previous year. They put the struggles down to poor weather, the economic downturn and the London 2012 Olympics. That year, the Eden Project reported less than a million visitors for the first time and was forced to make job cuts as a result. Malcolm Bell, the former boss at Visit Cornwall, said at the time that he wasn't surprised: 'Repeat and return business is harder for Cornwall than the likes of London. What is a 'must do' the first time, becomes a 'maybe' the second time,' he said. By 2024, the Eden Project had dropped to number 54 in the ALVA list of top tourist attractions. It reported 673,625 visits, fewer than Clumber Park in the East Midlands, with a year-on-year footfall drop of 6 per cent. That number is almost a third of the 1.8 million visitors who passed through its doors during its first year of operation. While nobody expected the project to maintain the feverish levels of interest of its early days, that still represents a drop of 66 per cent. Why so? James says that, like many tourism businesses, the Eden Project suffered greatly during the pandemic and hasn't fully recovered since. 'When visitors aren't coming to Cornwall, that's a challenge. We saw a bit of that last year. We've also got some unique challenges because of our site: we're in a hole in the ground, and that costs a lot of money to maintain,' he said, adding that worsening floods and storms have affected the site, which sits beneath the water table. With visitor numbers down so dramatically, eyes naturally turn to the price point. An adult ticket on the door is £42 and a child aged between five and 16 costs £16. For a family of four, this means a family ticket costs £116 (booked online in advance: £100). 'It's always a conversation we have at board meetings, almost on a weekly basis. When you pay to come in, that's your annual pass, meaning you can come in as many times as you want for the rest of the year. There are also discounts for locals and for people on universal credit,' says James. 'The real challenge is to keep people wanting to come back, and making Eden not just a bucket list destination but a place where you want to come on a regular basis to see how it's changing and what's going on.' As for the state of the domes, James says: 'The biomes may be 25 years old, but they still look amazing. There are bits that are fraying around the edges. Generally, it's in good nick.' Nobody can accuse the Eden Project bosses of sitting on their hands. Two years ago the project drilled three miles underground and built a geothermal energy plant which now heats its biomes, along with thousands of homes near Truro, local schools and the Royal Cornwall Hospital. The site has also moved with the times in terms of its wider offering. Over the years, new play areas, restaurants, a canopy walkway, a giant swing, a seasonal ice rink and even a zip wire have added a slice of fun to the visitor experience. What's next? The Eden Project has set its sights on growth beyond the south Cornish coast. The Eden Project North, in Morecambe, is expected to open in 2028 and there are plans in the pipeline for outposts in Dundee and Northern Ireland. Farther afield, the Eden Project has a centre in development in Qingdao, China, and proposals for an Eden Project Australia in a former coal mile in Anglesea, Victoria. 'Eden's mission, inspiring positive action for the planet, is more important now than it's ever been,' says James. 'But if we want to have a national role, we need to be more than just delivering our educational work in the bottom left-hand corner of the UK. We need a bigger reach and a bigger audience. 'The best is yet to come for Eden.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
