Cava cuts full-year forecast, in another warning sign for fast-casual restaurants

Core Insights - Cava has reduced its full-year forecast for the second consecutive quarter due to decreased visits from younger consumers [1][4] Company Performance - Cava's same-store sales are now projected to increase by 3% to 4%, down from a previous forecast of 4% to 6% [4] - The company expects lower restaurant-level profit margins, revising projections to a range of 24.4% to 24.8%, down from 24.8% to 25.2% [4] - Cava's net sales increased by 20% to $292.2 million, driven by new restaurant openings, with a total of 415 locations as of October 5 [7] - The fiscal third-quarter net income was reported at $14.7 million, or 12 cents per share, down from $18 million, or 15 cents per share, a year earlier [8] Market Trends - The 25- to 34-year-old demographic is visiting fast-casual restaurants less frequently, influenced by higher unemployment rates and resumed student loan repayments [2][3] - Cava is gaining market share despite slower same-store sales growth, indicating that younger consumers may be opting to cook at home or pack lunches [6] - Unlike competitors, Cava is experiencing higher same-store sales growth from low-income consumers, attributed to keeping menu prices below inflation [6][7] Earnings Report - Cava's same-store sales rose by 1.9%, falling short of Wall Street's expectations of 2.8% [5] - Revenue reported was $292.2 million, slightly below the expected $292.6 million [9] - Adjusted earnings per share were 12 cents, in line with expectations [9]