Cava (CAVA) is serving up some savory numbers for its investors.
After the market close on Thursday, the Mediterranean fast-casual chain reported Q2 results that beat estimates across revenue, earnings, and same-store sales.
Net sales jumped 35.2% year-over-year to $233.5 million, in comparison with expectation of $219 million. Adjusted earnings per share got here in at $0.17, versus the $0.13 expected.
Same-store sales jumped 14.4%, greater than the 7.45% Wall Street expected. Sales growth was driven by higher foot traffic, up 9.5% year-over-year, latest locations, and the launch of grilled steak on June 3.
CEO Brett Schulman said on the earnings call that the steak surpass its expectations by a landslide. The corporate is on the “nexus of consumer convergence” as they trade down from fine-dining restaurants, but trade up from fast food.
“At a time when consumers are increasingly feeling the pressure of an uncertain economy and are more discerning about where and the way they spend their money, they’re selecting to dine at Cava,” he said.
Wedbush analyst Nick Setyan said it expects “accelerating two-year transaction trends, led most significantly by the launch of steak.”
On Wednesday, Cava stock hit a record high close of $102.39, and on Thursday hit an intraday high of $104.84. In after-hours trading, share jumped to as much as $112.
Shares are up greater than 140% yr up to now, in comparison with 19% for Chipotle (CMG) and 17% for the S&P 500 (^GSPC).
Slow and regular is Cava’s go-to approach to expansion. By 2032, the corporate plans to have 1,000 Cava locations.
Citi analyst Jon Tower said there’s still room left for growth in a note to clients. “A unit growth opportunity that continues to re-set higher, discrete same-store sales, price, and margin opportunities because the system densifies and margin tailwinds because the footprint shifts towards lower cost markets.”
In Q2, Cava opened 18 latest locations, bringing the overall to 341. That is in comparison with 14 latest locations in Q1.
Cava continues to perform at a time when fast-casual dining appears to be bucking a broader slowdown across the food industry as consumers double down on value.
“Cava was one in all only a handful of publicly traded restaurant brands with positive traffic growth within the second quarter,” Schulman said. “We imagine our performance is a mirrored image of our unique and compelling value proposition.”
Chipotle blew past expectations in its report after same-store sales jumped 11.1% yr over yr, versus the 9.23% Wall Street anticipated. Shake Shack (SHAK) saw same-store sales climb 4%, beating estimates of three.2%.
Sweetgreen (SG) reported its best same-store sales growth in two years, up 9%, driven by higher foot traffic and costs.
Its CEO, Jonathan Neman, told Yahoo Finance that “we will be very judicious in how we use it [pricing power].” Neman claimed the chain took fewer price hikes than its rivals because the pandemic.
“As you have a look at the relative pricing difference between Sweetgreen, a few of our fast-casual competitors after which QSR, the gap has really narrowed. QSR, you possibly can’t get out and in of there for under $15 today,” he told Yahoo Finance.
Here’s what Cava reported, in comparison with Wall Street estimates, per Bloomberg consensus data:
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Revenue: $233.5 million versus $219.5 million
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Adjusted earnings per share: $0.17 versus $0.13
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Same-store sales growth: 14.4% versus 7.45%
The corporate raised its fiscal 2024 outlook for restaurant openings, sales growth and restaurant-level profit margin.
It now expects sales growth of 8.5% to 9.5%, up from 4.5% to six.5% in Q1 and was previously 3% to five%.
Total latest restaurants will now be between 54 to 57, up from 50 to 54. Restaurant-level profit margin is anticipated to are available between 24.2% to 24.7%, up from 23.7% to 24.3%.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.