CAVA is offering some tasty numbers to its investors.
After the market closed on Thursday, the Mediterranean fast-food chain reported second-quarter results that beat estimates across revenue, earnings and same-store sales.
Net sales rose 35.2% year over year to $233.5 million, compared with expectations of $219 million. Adjusted earnings per share were $0.17, compared with expectations of $0.13.
Comparable store sales rose 14.4%, beating Wall Street expectations of 7.45%. Sales growth was driven by higher foot traffic, up 9.5% year over year, new locations, and the launch of grilled steak On June 3.
CEO Brett Schulman said on the earnings call that steaks have significantly exceeded his expectations. The company is at a “consumer convergence crossroads” where it is trending down from fine dining but up from fast food.
“At a time when consumers are increasingly feeling the pressures of an uncertain economy and becoming more discerning about where and how they spend their money, they are choosing to dine at Cava,” he said.
Wedbush analyst Nick Setian said he expects “transaction trends to accelerate over the next two years, most notably the launch of steaks.”
On Wednesday, Kava’s stock hit a record closing high of $102.39, and on Thursday, it hit an intraday high of $104.84. In after-hours trading, the stock jumped to $112.
The company’s shares are up more than 140% since the beginning of the year, compared with 19% for Chipotle (CMG) and 17% for the S&P 500 (^GSPC).
Cava’s approach to expansion is slow and steady. By 2032, the company plans to have 1,000 Cava locations.
There is still room for growth, Citi analyst John Tower said in a note to clients. “Unit growth opportunity that continues to recalibrate separate same-store sales, pricing and margin opportunities as the system ramps up, and margin tailwinds as the footprint shifts toward lower-cost markets.”
In the second quarter, Kava opened 18 new locations, bringing the total number of locations to 341. This is compared to 14 new locations in the first quarter.
Kava continues to deliver at a time when fast-casual dining appears to be bucking the broader slowdown in the food industry as consumers double down on value.
“Kava was one of the few publicly traded restaurant brands to achieve positive traffic growth in the second quarter,” Schulman said. “We believe our performance is a reflection of our unique and compelling value proposition.”
Chipotle beat expectations in its report after comparable-store sales rose 11.1% year over year, versus the 9.23% Wall Street had expected. Shake Shack (SHAK) saw comparable-store sales rise 4%, beating estimates of 3.2%.
Sweetgreen (SG) reported its best same-store sales growth in two years, up 9%, driven by higher foot traffic and prices.
“We’re going to be very careful in how we use it,” CEO Jonathan Neiman told Yahoo Finance. [pricing power]Neiman claimed the chain has seen smaller price increases than its competitors since the pandemic hit.
“When you look at the relative price differential between Sweetgreen, some of our fast-casual competitors, and then QSRs, the gap has really narrowed. You can’t get in and out of a QSR for less than $15 today,” he told Yahoo Finance.
Here’s what Kava reported, compared to Wall Street estimates, according to Bloomberg Consensus data:
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profit: $233.5 million vs. $219.5 million
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Adjusted earnings per share:$0.17 vs $0.13
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same store sales growth: 14.4% vs 7.45%
The company raised its fiscal 2024 outlook for restaurant openings, sales growth and restaurant-level gross margin.
The company now expects sales to grow 8.5% to 9.5%, up from 4.5% to 6.5% in the first quarter and previously 3% to 5%.
The total number of new restaurants is expected to range between 54 and 57, up from 50 to 54. The profit margin at the restaurant level is expected to range between 24.2% and 24.7%, up from 23.7% to 24.3%.
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Brooke DePalma is a Senior Reporter at Yahoo Finance. You can follow her on Twitter @Brooke De Palma Or email her at [email protected].
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