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Yahoo
6 days ago
- Business
- Yahoo
The restaurant industry's Q1 2025 winners and losers
This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. Weather and a pullback in consumer spending made Q1 2025 one of the worst quarters for restaurant chains in recent years, with brands like Wendy's, Burger King, Popeyes and Sweetgreen all posting negative same-store sales growth. Companies continued to focus on their value propositions with McDonald's rolling out its much-anticipated McValue menu in January and Chili's increasing advertising for its 3 for Me deal to better compete with QSRs. Most of last quarter's winners were not surprising; Chili's, Cava and Taco Bell continued to outperform their peers. The quarter did reveal some surprises like a rare decline in sales and traffic at Chipotle and an uptick in sales at Noodles & Company following a menu overhaul. Restaurant Dive identified winning and losing brands from publicly traded restaurant firms, based largely on same-store sales performance and the sense of momentum conveyed by earnings calls and analyst research notes. Chili's had another stellar quarter of over 30% same-store sales growth and 21% comparable traffic growth, making it a clear winner in the casual segment and the restaurant industry as a whole. The company attributed its traffic growth to operational improvements and to its advertising strategy, which has largely focused on its value proposition compared to QSR chains by emphasizing the $10.99 starting point of its 3 For Meal deal. One of its recent campaigns spoofed a payday lender to help guests cover the cost of a fast food combo meal. Operational improvements, including a new kitchen display system, helped the chain improve ticket times even as traffic surged dramatically. The KDS allows chefs to easily reference recipes instead of using hundreds of pages of reference finders. It is also upgrading equipment, such as converting to a TurboChef double batch oven from a conveyor belt oven system. Cava was the clear winner among fast casual chains and was one of the few restaurant brands to post double-digit growth during the quarter. Cava's CFO Tricia Tolivar attributed the chain's ongoing traffic and sales success to the appeal of Mediterranean cuisine and the chain's long-term strategy of keeping prices below inflation. Additionally, the chain is seeing a boost in guest engagement after changing its loyalty program to a point-based system in October. Last quarter it added 50,000 members per week, and is now approaching 8 million total members. Analyst TD Cowen believes Cava could outperform the industry this year and is on a path to reach 1,200 units by 2033, given its dominance in the underrepresented Mediterranean category. With a comparable sales increase of 4.4%, Noodles & Company posted its strongest results since Q1 2023, when comps were up over 6%. CEO Drew Madsen credited the company's menu refresh and an increase in marketing for the boost. The chain rolled out nine new and refreshed items in March several months after it added three dishes in October, as part of a turnaround strategy. A significant push in marketing, including redefining its brand strategy, emphasizing its expertise with noodles, and creating new activations across multiple media channels helped boost brand awareness, as well. The Mexican fast food chain continued to outperform its peers with a 9% increase in same-stores sales during the quarter, one percentage point higher than previous expectations. The chain, which had $2.2 million average unit volumes last year, is targeting an AUV of $3 million as part of the Relentlessly Innovative Next-Generation Growth plan it shared during the first quarter. One way Taco Bell stayed ahead of its peers was through ongoing menu innovation and LTOs, including Crispy Chicken Nuggets, Milk Bar Churros, Cheesy Dipping Burritos and Steak and Queso Crunchwrap Sliders, all of which helped boost sales. The expansion of its Luxe Cravings Box, with the addition of $5 and $9 price points, helped bring in low-income consumers. Dutch Bros posted strong system same-shop sales of 4.7% and transactions of 1.3% during the quarter, maintaining its momentum over its closest public company competitor Starbucks, which continues to suffer a sales and traffic slump. Dutch Bros' company-owned same-store sales and transactions rose higher than the system average with an increase of 6.9% and 3.7%, respectively, according to an earnings release. About 72% of its system transactions came through its loyalty program, a five-point improvement compared to the same period last year, Christine Barone, Dutch Bros CEO, said during the chain's earnings call. Its mobile order ahead channel, which launched in 2024, represented 11% of transaction mix, a three-point improvement from the fourth quarter, she said. In many of its new markets, Order Ahead is seeing transaction penetration rates nearly two times higher than the system average. The coffee chain is also in the midst of testing food to help boost incrementality during the morning and increase frequency. That test was expanded from eight to 32 units as the chain works toward a broader test and eventual rollout in 2026. During the first quarter, the chain also surpassed 1,000 units, reaching 1,012 units compared to 876 in the year-ago quarter, according to an earnings release. It is now on a path to reach 2,029 units by 2029 and said its total addressable market is over 7,000 potential units compared to a previous estimate of 4,000 units. McDonald's saw a pullback not just among low-income households, but also middle-income families during the quarter, contributing to a 3.6% decline in same-store sales in the U.S. This decrease also marked the chain's steepest decline in same-store sales since Q2 2020, when it declined 8.7%. While traffic and sales were anemic last quarter, the chain could move into the winners column later this year as the impact of its value menu takes hold — it was only released in January — and as its sees traffic boosts from popular promotions, like its Minecraft Movie deal, and the May launch of McCrispy Chicken Strips. The chain, which has been in the winner category for several quarters, posted a traffic and sales decline amid the consumer spending slowdown. Chipotle could bump back into the winner category later this year as management expects comparable sales growth in the low to mid-single digit range. If economic conditions don't change, however, those projections might be optimistic — negative traffic trends continued into April. The chain has a few tricks up its sleeve that could help drive traffic, like its Chipotle Honey Chicken LTO that launched in March and had a strong start. It also plans to ramp up marketing spend for the summer to help drive guest engagement. All three of the top publicly traded pizza chains posted negative comparable sales during the first quarter, with Domino's breaking its 10-quarter streak of same-store sales growth. Domino's has been growing its third-party delivery channel, adding DoorDash as a provider in April alongside its existing partnership with Uber Eats. The company expects third-party delivery to become a $1 billion business over time. Pizza Hut posted the biggest decline of 5% amid a tough competitive environment. It will continue to lean into product innovation and group occasions after its Stuffed Crust and Wings promotion and Ultimate Hut bundle increased check and brought in new guests. Papa Johns also had a weak quarter, with a 3% decline, despite CEO Todd Penegor's refocus on the chain's core pizza products. The company did sell 4% more pizzas in the quarter, alongside sequential improvement with multiple pizzas since Q1 2024, Penegor said during an earnings call. It also removed underperforming SKUs from its menu and continued to simplify its menu. Given the turnaround strategy has only been in effect since late last year, it could be a matter of time before Papa Johns ends up back in positive comparable traffic and sales. Recommended Reading The restaurant industry's Q4 2024 winners and losers Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-05-2025
- Business
- Yahoo
Cava surpasses $1 billion in revenue—CFO says no plans for price increases
Good morning. A mix of Mediterranean flavors in healthy dishes—along with a side of pita chips—continues to lure diners to Cava, propelling the company to a major milestone. The company announced Thursday that it has surpassed $1 billion in revenue over the most recent 12-month period. Cava's fast-casual business began in 2010 and started trading on the New York Stock Exchange in 2023. What's behind the momentum? The health-conscious meal options resonate with modern consumers, Cava CFO Tricia Tolivar told me. The chain offers curated bowls, pitas, and salads with a variety of protein options and toppings such as hummus, veggies, feta, and Greek vinaigrette. But it's not just the food—Cava's pricing strategy has also played a crucial role, she said. While the Consumer Price Index rose about 23% from the end of 2019 through 2024, Cava's prices increased only 15%, whereas fast-food prices on average jumped over 30%, Tolivar explained. 'There are no price increases planned for the rest of 2025 at this point,' she said. The company raised menu prices by only 1.7% in January. Tolivar added, 'Cava has taken a disciplined approach to avoid passing cost increases onto our guests—absorbing those costs where we can and continuing to invest in the overall guest experience.' Even as consumers face tough choices amid economic uncertainty and fluctuating tariff policies, Cava's customer base remains strong. In the first quarter of 2025, same-restaurant sales grew 10.8% year over year, driven by a 7.5% increase in traffic. Tolivar noted that this period, through April 20, includes the Trump administration's tariffs announcement on April 2. Cava's competitor Chipotle reported in Q1 that its same-store sales declined by 0.4% and transactions fell by 2.3% as consumers cut back on spending. 'What we're finding in our Q1 data is that our consumer is very resilient,' Tolivar said. Cava continues to see momentum in premium items like pita chips and house-made juices, as well as strong customer representation across all geographies and income levels, she said. Cava has also expanded amid economic uncertainty, with 15 restaurant openings in Q1, bringing the total to 382—an 18.3% increase year over year. Restaurants are now in 26 states and Washington, D.C. 'Nothing has cast any doubt on what we believe our long-term potential is, and so we feel very positively about those new restaurants,' Tolivar said. 'In fact, we raised our guidance this quarter for new restaurant openings.' The company previously projected 62 to 66 new restaurants and has raised that to 64 to 68 for the year. However, Cava maintained its full-year same-store sales forecast of a 6% to 8% increase. As a CFO navigating uncertain times, Tolivar is prioritizing agility in thinking about the near term and, more importantly, the long term. That includes continued investments in team members through wages and benefits, a focus on customers, and driving positive traffic, she said. Tolivar said a major part of Cava's momentum is the company's employees. At least once a quarter, executives spend time working at restaurants. 'Whenever we go out into the restaurants, we always find something that we can do to help our teams and learn more about the guests and how we can make Cava even better,' Tolivar said. What's next for Cava's menu innovation? 'Pita chips are evolving as a platform,' Tolivar said. Cava recently launched Hot Harissa pita chips and garlic ranch pita chips. At the same time, the culinary team is working on a long-term pipeline that includes further menu innovation, she said. I asked Tolivar if pita chips are still her favorite. 'I love everything on the menu, but I do have a very soft spot for pita chips,' she said. 'When my daughter and I dine at Cava, we definitely get them and fight for the last one.' Have a good weekend. See you on Monday. Sheryl ********* Upcoming event: Join us on June 12 from 11 a.m. to noon ET for our next Emerging CFO webinar. AI agents are transforming the workplace and reshaping the boundaries of innovation, driving a new era of efficiency and providing finance leaders with essential tools to innovate and create value across their organizations. In this session, we'll explore what CFOs need to know about this technology, the opportunity costs involved, and how to effectively use agentic AI to streamline workflows, improve decision-making, and augment human productivity at scale. Featured speakers include Jamie Miller, chief financial officer and operating officer of PayPal; Matt Castonguay, CFO of Team Car Care; and Silvio Savarese, EVP and chief scientist at Salesforce AI Research. Fortune, in partnership with Workday, convenes this series to support and inspire emerging CFOs and senior finance leaders. You can find out more information and register here. 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Business Mayor
17-05-2025
- Business
- Business Mayor
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.
Fast Company
16-05-2025
- Business
- Fast Company
Cava is opening up to 68 new restaurants in 2025: See a list of locations coming soon to 5 states
CAVA Group, Inc. (NYSE: CAVA), the parent company of Cava, a Mediterranean fast-casual restaurant brand, announced it is opening up to 68 new U.S. locations in fiscal 2025, after reporting better-than-expected first quarter earnings results. Cava, also known as Cava Grill, currently operates 382 locations across the United States, in 26 states and Washington, D.C. (as of the close of Q1). 2024 was Cava's first full calendar year as a public company. While Cava told Fast Company it does not release a full list of future locations, a look at the website shows the following restaurants are ' coming soon:' Phoenix, AZ Huntington Beach, CA Plantation, FL Bel Air, MD Burlington, NC Charlotte, NC Cava told Fast Company of the targeted 64-68 new restaurants it plans to open this year, it has already opened 15 net new locations (in Q1) representing an 18.3% increase in total restaurants year-over-year. Those are: Three in Florida and New Jersey FL: Ocala, Palm Harbor, Hialeah NJ: East Brunswick, Union, Marlton Two in Massachusetts and Louisiana MA: Chelmsford, Chestnut Hill LA: Lafayette and New Orleans One in Texas, Virginia, Indiana, North Carolina and New York The company previously said it wants to reach 1,000 locations by 2032. At the same time many fast food chains and casual-dining restaurants are struggling, Cava's growth stands out. Chief Financial Officer Tricia Tolivar told CNBC over the last few quarters Cava has found its hitting a sweet spot for customers who are trading up from fast food to purchase Cava's healthy bowls and pitas, while trading down, seeing it as cheaper than other casual-dining options. Cava cofounder and CEO Brett Schulman said the chain has purposely priced food items for the current economic times, while focusing on healthy food and hospitality. 'At a time when guests are being more selective about where they dine, the appeal of our Mediterranean cuisine continues to resonate with the modern consumer,' Schulman told Fast Company. 'We've also stayed focused on delivering our unique value proposition, investing in our guests, and underpricing inflation. We offer a warm, welcoming environment that fosters a genuine human connection. It's why we continue to drive traffic and sales growth, crossing $1B in revenue in the past twelve months.' Speaking of revenue, here's a look at Cava's first-quarter earnings numbers: Revenue grew 28.2% to $328.5 million as compared to $256.3 million in the prior year quarter Same restaurant sales growth of 10.8%, including guest traffic growth of 7.5% CAVA Group net income of $25.7 million compared to $14.0 million of net income and $11.9 million of adjusted net income in the prior year quarter Despite a strong quarter, Cava's same-store sales forecast of a 6%-8% increase remained consistent with last quarter, and could be one reason shares were down about 3% in afternoon trading on Friday. As Fast Company previously reported, while Cava's revenue grew 33% in 2024 along with a 9% jump in traffic, with same-restaurant sales up 13%, last quarter the chain forecast slower growth in the later half of fiscal 2025.
NBC News
16-05-2025
- Business
- NBC News
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: 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.
