Mediterranean chain Cava lowers forecast after disappointing same-store sales growth

Core Viewpoint - Cava has lowered its full-year forecast for same-store sales growth to 4% to 6% from a previous range of 6% to 8% following disappointing second-quarter results, leading to a significant drop in its stock price [1][2]. Financial Performance - Cava reported a second-quarter net income of $18.4 million, or 16 cents per share, down from $19.7 million, or 17 cents per share, a year earlier [2]. - Net restaurant sales increased by 20% to $278.2 million, primarily due to new restaurant openings [2]. - Same-store sales rose by 2.1% during the quarter, falling short of Wall Street's expectation of 6.1% growth [3]. - The company's quarterly traffic was described as "roughly flat," contrasting with a 14.4% increase in same-store sales a year earlier [4]. Market Context - Cava's performance reflects broader challenges in the fast-casual dining sector, with competitors like Chipotle and Sweetgreen also experiencing sales declines [6]. Future Projections - Despite lowering the same-store sales forecast, Cava maintained its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) projection of $152 million to $159 million and restaurant-level profit margins of 24.8% to 25.2% for the full year [7]. Strategic Initiatives - Cava participated in a $25 million Series B funding round for Hyphen, a company that automates plate and bowl portioning, aiming to enhance order accuracy and speed during peak hours [8].