Cava Stock Is Crumbling as Growth Slows. Time to Buy?

Core Insights - Cava is facing challenges similar to those affecting the broader restaurant industry, missing analyst estimates for revenue and earnings in its third-quarter results and lowering its outlook for 2025 [1][6] Financial Performance - Revenue increased by 20%, primarily due to the opening of 17 new locations, resulting in a 17.9% year-over-year increase in store count; however, same-restaurant sales only grew by 1.9%, and restaurant-level profit growth lagged behind total revenue [2] - For 2025, Cava revised its same-restaurant sales growth forecast to 3% to 4%, down from the previous estimate of 4% to 6% [2] Stock Performance - Cava's stock has been declining, losing about 66% of its value since its peak at the end of 2024, with further declines expected following the disappointing earnings report [3] Market Position and Competition - Cava operated 415 restaurants at the end of the third quarter, while Chipotle plans to open 345 new locations this year, highlighting the competitive landscape; Cava aims to open up to 70 new locations this year [3] - The fast-casual dining segment, which Cava is part of, may be losing consumer interest, with signs of "slop bowl" fatigue and a shift towards casual dining chains as prices rise [4] Industry Challenges - Other fast-casual chains, including Chipotle and Sweetgreen, are also experiencing difficulties, with Chipotle's comparable sales barely positive and Sweetgreen reporting a 7.6% decline in same-store sales [5]