CAVA jumps 19.2% on Q2 earnings beat, 9% comp growth

CAVA Group reported Q2 revenue of $368.4 million, up 31.3% year over year and 4.4% above consensus, as traffic drove a 9% same-restaurant sales gain.

Management said the top-line acceleration reflects new restaurant openings and strong comparable performance, while framing the modest margin compression as a trade-off to fund growth and operational upgrades.

EPS came in at $0.19, up from $0.16 a year earlier and 5.6% above the consensus estimate of $0.18. Adjusted EBITDA rose 30% to $54.7 million. Restaurant-level profit increased 28.1% to $93.8 million, though the margin slipped 60 basis points to 25.7% of revenue.

Metric	Actual	Consensus	Beat/Miss
Revenue	$368.4M	$353M	+4.4%
EPS	$0.19	$0.18	+5.6%
Same-restaurant sales	+9.0%	—	—

The company ended the quarter with 476 locations, up 19.6% year over year, and reaffirmed fiscal 2026 guidance for 75 to 77 net new restaurants, same-restaurant sales growth of 4.5% to 6.5%, and adjusted EBITDA of $181 million to $191 million. Shares have surged 19.2% in the past week, pushing the forward price-to-sales ratio to 5.17 versus 3.16 for the Zacks sub-industry.

Food, beverage and packaging costs rose 50 basis points to 30% of revenue, driven by higher salmon input costs and fuel surcharges. Labor costs increased 30 basis points to 25.3% as CAVA implemented an incremental 3% wage investment for team members. Other operating expenses climbed 40 basis points to 12.8% on a higher third-party delivery mix.

The company ended the quarter with zero debt and $435.6 million in cash and investments, plus access to an undrawn $150 million revolver. Year-to-date cash from operations reached $134.5 million, with free cash flow of $44.8 million marking the tenth consecutive positive year-to-date free cash flow quarter.

Industry-wide Cyclospora concerns created a temporary drag on sales, causing a moderation before a recent recovery. Same-restaurant sales have returned to mid-single-digit growth, but management maintained a cautious stance in the full-year outlook.

Menu innovation remains a growth lever, with the nationwide launch of Pomegranate Glazed Salmon performing in line with expectations and a roasted garlic shrimp test concluding successfully. The company is also rolling out pre-marinated chicken to simplify kitchen execution and has added assistant general managers to roughly 70% of the fleet.

For context, Chipotle Mexican Grill reported second-quarter comparable restaurant sales growth of 2.2% and a restaurant-level operating margin of 25.2%. Shake Shack posted same-Shack sales growth of 3.5% and a restaurant-level profit margin of 23.0%.

The guidance implies further margin compression in the second half, with restaurant-level margins expected between 23.7% and 24.3% for the full year. Management attributed the pressure to seasonality, cost inflation and ongoing investments, while emphasizing that unit-level economics remain compelling. Investors will watch whether the sales rebound from Cyclospora-related disruption holds through the back half as the company scales toward its long-term expansion target.

This article is for informational purposes only and does not constitute investment advice.