Cava Fourth-Quarter Sales Rise on Higher Prices, New Restaurant Openings
The restaurant chain posted a profit of $4.9 million, or 4 cents a share
- Cava Group’s fourth-quarter sales increased due to higher prices and new restaurant performance, though foot traffic fell at existing locations.
- The company reported a $4.9 million Q4 profit and forecast 3% to 5% same-restaurant sales growth for the fiscal year.
- Chief Executive Brett Schulman said Cava focuses on consistent value and does not plan further menu price increases this year.
Cava Group’s CAVA -0.80%decrease; red down pointing triangle fourth-quarter sales rose on higher prices and better-than-expected performance at new restaurants. However, foot traffic fell at existing locations.
The Mediterranean fast-casual restaurant chain said its results show it is resonating with increasingly discerning consumers, who have become more choosy with how they spend. The company also forecast that its same-store sales growth will continue this year.
Chief Executive Brett Schulman said Cava has been focused on delivering value consistently, while its competitors have looked to offer discounts recently after years of hiking prices.
“It’s these intentional decisions made consistently over time that reinforce trust with our guests and strengthen the long-term foundation of our brand,” Schulman said during a call with analysts.
The company said it raised its menu prices by about 1.4% last month, and doesn’t plan to increase prices again this year.
The stock rose 8.9% to $73.80 in after-hours trading. Through market close, shares have fallen 35% in the past year.
Last year, Cava and other fast-casual restaurant chains such as Chipotle saw weaker demand from younger consumers and pointed to economic strains including student loan repayments, inflation and healthcare and housing costs. At the time, Schulman said Cava would work to tout its value proposition to draw increasingly cautious consumers and continue to grow its market share.
Cava on Tuesday posted a fiscal fourth-quarter profit of $4.9 million, or 4 cents a share, compared with $78.6 million, or 66 cents a share, a year earlier. The year-ago quarter was helped by a tax benefit, the company said.
Adjusted earnings per share were 4 cents, compared with estimates of 3 cents a share according to analysts polled by FactSet.
Revenue rose 21% to $275 million, compared with analyst estimates of $268.4 million. The company said the increase was driven in part by new restaurant openings, which are exceeding its expectations.
Same-store sales, which account for restaurant openings and closings, increased 0.5%, compared with analyst expectations for a decline of 0.9%. The growth was due to menu price and product mix, partially offset by a decrease in traffic, the company said.
For the fiscal year, the company guided for same-restaurant sales growth of 3% to 5%, compared with analysts’ forecast of 3.2%.
The company expects to open 74 to 76 net new restaurants this year.