Core Insights - Cava Group's same-store sales growth significantly slowed in fiscal Q2, leading to a nearly 40% decline in stock price year-to-date [1][2] - The company reported a 20% year-over-year revenue increase to $278.2 million and opened 16 new restaurants, bringing the total to 398 locations [4][6] Sales Performance - Same-store sales growth was only 2.1% in fiscal Q2, a sharp decline from previous double-digit growth rates and below the expected 6.1% [2][3] - Guest traffic remained largely flat, indicating potential challenges in attracting new customers [2] Financial Metrics - Restaurant-level margins (RLMs) were reported at 26.3%, slightly down from 26.5% a year ago, indicating stable profitability at the restaurant level [5] - Adjusted EBITDA increased by 23% year-over-year to $42.1 million, with operating cash flow of $98.9 million and free cash flow of $21.9 million [6] Future Outlook - Management revised its full-year comps growth outlook down to a range of 4% to 6% from the previous 6% to 8% [7] - The long-term goal is to reach at least 1,000 store locations by 2032, with plans to open 68 to 70 new locations this fiscal year [4][10] Investment Considerations - Cava's stock is trading at a high forward P/E ratio of nearly 123 and a forward P/S ratio of 7, indicating it may not be cheap [11] - If Cava achieves its expansion goals, it could generate close to $4.5 billion in revenue by 2032, with consistent mid-single-digit comps growth [11][12]

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].