Cava Avoids the Diner Pullback That's Hitting US Restaurants

Mint

15-05-2025

Cava Group Inc. sales rose in the first quarter, defying the consumer malaise that rivals have blamed for a slowdown in restaurant visits.
Sales at established restaurants grew 10.8% in the three months ended April 20, in line with the average estimate of analysts polled by Bloomberg, largely due to an increase in customers. Adjusted earnings per share were ahead of expectations.
Cava shares fell 5.1% at 4:21 p.m. in late trading in New York. The company increased its full-year outlook for a measure of earnings excluding taxes, interest and other items but didn't boost its view for same-store sales. Cava has outpaced competitors in recent quarters, raising expectations among investors.
The first-quarter performance got a boost from an easier comparison to a year earlier, when Cava posted its smallest same-store sales gain since going public in 2023. Still, the results contrast starkly with fast-casual peers such as Sweetgreen Inc. and Chipotle Mexican Grill Inc., which reported slumps that they attributed largely to consumers growing more cautious due to on-again, off-again tariff announcements.
Fast-food chains such as McDonald's and Wendy's have also said weaker consumer sentiment hurt results in their latest quarters.
Meals at Cava, which serves Mediterranean-inspired dishes, generally cost less than those offered by competitors such as Sweetgreen, a factor that appears to be playing in Cava's favor. The company raised prices by 1.7% in January, Chief Executive Officer Brett Schulman said, but isn't planning any further increases this year.
'I think the relative value is very important to consumers when they're being faced with so much uncertainty and pressures around them,' Schulman said in an interview. Customers opted for extras such as pita chips and also purchased pricier proteins such as steak and lamb, he added, while still staying 'within their budgets.'
A chicken and rice bowl came to $12.25 before tax at Cava's Chicago location on Thursday, according to the company's website. Sweetgreen's harvest bowl, which also has chicken, cost $13.95 at a store in the same neighborhood, while the salad chain's crispy rice bowl was $14.25.
Cava's fiscal first quarter included the turbulent period when President Donald Trump announced broad-based tariffs. Yet trends were steady throughout the period, with no noticeable customer pullback, according to the company. Inclement weather across the US and the fires in Los Angeles also hurt the industry in the first few months of the year.
'Our business and guests have been resilient' despite obstacles including challenging weather, fires and tariffs, Schulman said.
The chain slightly raised its outlook for how many locations it will open this year. It bought all the equipment for the new restaurants last year, according to Schulman, so tariffs shouldn't hit its building costs.
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