Why CAVA Group Stock Popped Today
Key Points
CAVA is expanding its store count at a steady pace.
The company's restaurants are producing strong sales and profits.
- 10 stocks we like better than Cava Group ›
Shares of CAVA Group (NYSE: CAVA) climbed on Wednesday after the Mediterranean-style restaurant chain's healthy sales helped to assuage investors' fears that the Cyclospora outbreak would weigh on its performance.
Image source: CAVA Group.
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Expansion plans remain on track
CAVA's revenue jumped 31% year over year to $365 million in its fiscal second quarter, which ended on July 12.
The fast-casual chain opened 17 new restaurants during the quarter and a total of 94 over the past year, bringing its total to 476 locations.
CAVA's same-restaurant sales, which include revenue from stores open for at least one year, increased 9%, fueled by a 5.3% rise in guest traffic.
Notably, CAVA's average sales per restaurant, a metric known as average unit volume, rose to 7% to $3.1 million. That impressive performance places it on par with industry leader Chipotle Mexican Grill.
All told, CAVA's earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 30% to $55 million.
Cyclospora's impact could be more moderate than expected
CAVA expects to open a total of 75 to 77 restaurants in 2026. Management projects full-year adjusted EBITDA of $181 million to $191 million, driven by these store openings and same-restaurant sales growth of 4.5% to 6.5%.
During a conference call with analysts, CEO Brett Schulman helped to calm investors' fears that the Cyclospora outbreak would weigh heavily on CAVA's business.
"While we do not source leafy greens from Mexico and do not serve iceberg lettuce on our menu, exiting Q2, we saw near-term sales impacts related to broad concerns around lettuce and fresh produce consumption due to the Cyclospora outbreak," Schulman said. "We have since seen same-restaurant sales begin to rebound, a testament to the underlying strength of our long-term brand proposition."
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cava Group and Chipotle Mexican Grill. The Motley Fool recommends the following options: short September 2026 $35 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
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