Cava (CAVA) Q2 2025 earnings

Cava Lowers Full-Year Forecast After Disappointing Second Quarter

Cava, a popular fast-casual restaurant chain, has reduced its full-year forecast for same-store sales growth following a disappointing second quarter. The company now expects same-store sales growth of 4% to 6%, down from its previous range of 6% to 8%. This revision comes as a result of weaker-than-expected sales during the quarter, which saw same-store sales rise by only 2.1%, falling short of Wall Street’s projected 6.1% growth.

Second Quarter Performance

During the second quarter, Cava reported net income of $18.4 million, or 16 cents per share, down from $19.7 million, or 17 cents per share, in the same period last year. Net restaurant sales climbed 20% to $278.2 million, largely due to new restaurant openings. However, the chain’s same-store sales growth was lower than expected, and quarterly traffic was “roughly flat.” This is a significant decline from the same period last year, when same-store sales climbed 14.4% fueled by nearly double-digit traffic growth.

Cava’s CEO and co-founder, Brett Schulman, had previously credited the introduction of the chain’s grilled steak option as a key driver of sales growth. However, after the one-year launch of grilled steak, the company saw sales growth slow. This slowdown, combined with a challenging market environment, has led to the revised forecast. Rival fast-casual chains, such as Chipotle Mexican Grill and Sweetgreen, have also struggled with slumping sales, with Chipotle reporting same-store sales declines of 4% and Sweetgreen cutting its outlook for the second straight quarter.

Financial Projections and Investments

Despite the revised forecast, Cava has reiterated other key financial projections for the full year, including adjusted earnings before interest, taxes, depreciation, and amortization of $152 million to $159 million, and restaurant-level profit margins of 24.8% to 25.2%. The company has also announced its participation in a $25 million Series B funding round for Hyphen, a company that automates plate and bowl portioning. This investment, led by Chipotle Mexican Grill, aims to increase order accuracy and speed during peak digital hours while reducing complexity for team members.

Cava’s decision to invest in Hyphen reflects the company’s commitment to innovation and customer experience. By piloting Hyphen’s automated digital makeline, Cava hopes to improve efficiency and reduce errors, ultimately enhancing the overall dining experience for its customers. As the fast-casual market continues to evolve, Cava’s ability to adapt and innovate will be crucial in maintaining its competitive edge and driving long-term growth.