Cava Group has raised its outlook for annual same-store sales, forecasting a gain that exceeds Wall Street expectations, and reported a surprise increase in quarterly same-store sales that sent the company's shares higher in extended trading.
The fast-casual Mediterranean chain said demand for its customizable, protein-forward bowls, pitas and salads - which generally carry price points in the $11 to $16 range - remains resilient. Management highlighted that the menu's combination of protein and fiber appeals to customers adjusting their diets amid broader shifts in weight-management behavior.
Pricing and product moves
Cava plans a modest 1.4% price increase on select premium and side items, while it will keep prices unchanged on its core chicken and falafel bowls and pitas. The company also intends to introduce its first seafood protein bowl at the end of the current quarter.
Margin outlook and cost pressures
Despite the stronger sales outlook, the chain is contending with rising costs. Higher commodity prices - including beef - and elevated packaging expenses tied to U.S. import tariffs reduced restaurant-level profit margin by 60 basis points to 24.4% in fiscal 2025. Management projects that restaurant-level margins for fiscal 2026 will be lower than the fiscal 2025 outcome, estimating a range of 23.7% to 24.2%.
Guidance versus consensus
Cava expects same-restaurant sales for fiscal 2026 to climb between 3% and 5%, a range that sits above the analysts' average estimate of a 3.16% increase, based on data compiled by LSEG. The unexpected quarterly same-store sales increase was 0.5% in the fourth quarter, compared with the consensus estimate of a 0.85% decline.
Competitive and market context
The company noted that rivals in the fast-casual category are facing similar inputs-driven margin pressure. Earlier this month, a major competitor cited higher costs for key ingredients such as beef and uneven consumer spending as factors squeezing margins.
Cava's management emphasized that while macro concerns - including anxiety among younger workers about changes in employment from technological shifts - have surfaced, consumers continue to spend selectively and show sensitivity to where they allocate their discretionary dollars.
Key points
- Cava forecast fiscal 2026 same-store sales growth between 3% and 5%, above the analysts' consensus of a 3.16% rise.
- The chain will implement a 1.4% price increase on premium and side items, keep core chicken and falafel prices unchanged, and launch a seafood protein bowl late in the current quarter.
- Restaurant-level profit margin fell to 24.4% in fiscal 2025 and is expected to be between 23.7% and 24.2% in fiscal 2026 due to higher commodity and packaging costs.
Risks and uncertainties
- Rising commodity costs, including beef, could continue to compress restaurant-level margins - affecting profitability in the restaurant and foodservice sector.
- Elevated packaging costs from U.S. import tariffs may persist, further pressuring margins for chains dependent on imported packaging materials.
- Choppy consumer spending patterns could weigh on same-store sales momentum despite current resilience.