CAVA’s Q2 Boost in Revenue Meets Slowing Same-Store Sales—and Stock Dips
In the second quarter of 2025, CAVA Group delivered a strong financial performance—reporting revenue of $278.2 million. That’s a solid 20.3% year-over-year increase, a sign of the chain’s expanding footprint and growing customer base. During this period, CAVA added 16 net new restaurants, bringing its total locations to 398—nearly a 17% increase from the prior year.
Despite this expansion, sales at existing restaurants didn’t keep pace. Same-store sales rose just 2.1% year-over-year, falling well short of projections. This slowdown disappointed investors who had anticipated stronger performance given CAVA’s earlier momentum and high expectations.
Profitability Holds Steady—Margins and Earnings Still Look Solid
Even with soft comparable store sales, CAVA maintained robust profitability. Restaurant-level profit stood at $73.3 million, with a profit margin of 26.3%. Adjusted EBITDA also climbed to $42.1 million—up from $34.3 million a year earlier.
Net income for the quarter reached $18.4 million, down slightly from $19.7 million in Q2 2024, though adjusted net income exceeded the prior year’s $16.8 million. Meanwhile, free cash flow stood at a healthy $21.9 million, backed by operating cash flow of nearly $99 million.
Forecast Revision: Expansion Continues, But Same-Store Sales View Turns Cautious
Alongside earnings, CAVA updated its full-year guidance. The company raised its forecast for total restaurant openings to a range of 68-70 for 2025 (up from 64-68).
But it pulled back on its expected same-store sales growth, lowering the forecast to 4%–6%, down from the earlier 6%–8% range. CEO Brett Schulman characterized the current economic environment as a “fog” of uncertainty—making consumer behavior more unpredictable.
Market Reacts: Stock Dives on the Lowered Outlook
The stock market didn’t respond favorably. CAVA shares dropped as much as 24% in pre-market trading—plunging to levels not seen in 16 months. Reuters reports a 21% drop in after-hours trading, one of the steepest single-day declines since the company’s 2023 IPO.
Analysts pointed out that while growth still outpaces some competitors, investors had high hopes for CAVA after its strong Q1 performance. The sharp downward surprise in same-store sales, paired with the lowered outlook, triggered the sell-off.
Balancing Expansion and Caution: Where Does CAVA Go from Here?
CAVA clearly continues to execute on its expansion strategy—opening nearly 400 locations and targeting 1,000 by 2032. But the company now faces the challenge of reinvigorating same-store sales in a tricky consumer climate.
Despite these hurdles, its profitability and cash flow remain solid. As Schulman pointed out, efforts toward margin preservation and digital growth are still on track—and new restaurant designs and innovations could help offset sluggish traffic at existing sites.
