Core Insights - Cava's fiscal 2025 Q1 financial report shows strong revenue and earnings growth, exceeding expectations [2][3] - The company faces margin pressures due to rising food costs, impacting restaurant-level profit margins [4] - Future same-restaurant sales growth is projected to decelerate, with guidance set between 6% to 8% [5] Financial Performance - Revenue increased from $256.3 million in Q1 2024 to $328.5 million in Q1 2025, a 28% year-over-year growth [2][3] - Earnings per share rose from $0.12 to $0.22, marking an 83% increase [2] - Adjusted EBITDA improved from $33.3 million to $44.9 million, a 35% increase [2] Operational Metrics - The number of restaurants grew from 323 to 382, an 18% increase [2] - Same-restaurant sales increased by nearly 11%, indicating strong operational momentum despite new store openings [3] Margin Analysis - Restaurant-level profit margin decreased by 10 basis points to 25.1% due to higher food costs, particularly from the introduction of grilled steak [4] Future Outlook - Cava maintains its full-year guidance for same-restaurant sales growth of 6% to 8%, which is below the analyst consensus estimate of 8.4% [5] - The company plans to open two additional new restaurants, slightly raising its adjusted EBITDA forecast [5] Market Reaction - The initial market reaction to the earnings report was slightly negative, with shares dropping over 3% in after-hours trading [6] - The stock movement may be influenced by management's comments during the conference call [7] Key Metrics to Watch - Same-restaurant sales growth will be a critical metric, as new restaurant openings may distort actual growth momentum [8] - Economic conditions in the U.S. could impact customer traffic and sales growth moving forward [8]
Cava: Rapid Growth but Some Concerns